PLACEMENT AGENT AGREEMENT

 
April 3, 2008
 

Smart Energy Solutions, Inc.
210 West Parkway
Pompton Plains, NJ 07444

Attn:
Pete Mateja, Chief Executive Officer
Edward Braniff, Chief Financial Officer

 
Gentlemen:

1.
Offering.

 
A. Smart Energy Solutions, Inc., a Nevada corporation (the “Company”), hereby
engages EKN Financial Services, Inc. (“Placement Agent”) to act as its exclusive
placement agent (with permitted sub-placement agents) in connection with the
issuance and sale by the Company (the “Offering”) of $4,000,000 (subject to an
over-allotment option of 25%) of its equity securities (the “Securities”), which
will include shares of the Company’s common stock (the “Common Stock”) and
warrants. For the purposes of this Agreement, the term Securities will not
include certain existing convertible promissory notes, in the aggregate
principal amount of $500,000 (the “Convertible Promissory Notes”), which the
Company is converting on the same terms as the Securities issued in the Offering
at the closing of Offering. The Offering will include Common Stock, which shall
be sold at a 40% discount to the average closing price of the Common Stock as
quoted on the over-the-counter market under the symbol “SMGY” for 15 consecutive
trading days prior to the closing, and warrants to purchase an additional amount
of Common Stock equal to 25% of the aggregate number of shares of Common Stock
sold in the Financing, which warrants shall be exercisable, for a period of five
(5) years from the closing, at an exercise price per share equal to 100% of the
purchase price of the Common Stock sold in the Financing (the “Warrants”). For
the purposes of this Placement Agent Agreement the “Closing” shall be defined as
such time when the Placement Agent and the Company receive and approve executed
Securities Purchase Agreements and subscription funds for a minimum of
$4,000,000. Subject to the over-allotment option of 25%, subsequent closings may
take place up to $5,000,000. Placement Agent is hereby authorized to engage, at
Placement Agent’s option, the services of other broker-dealers who are members
in good standing of the Financial Industry Regulatory Authority (“FINRA”) to
assist Placement Agent in soliciting subscribers and to share with such
broker-dealers the commissions payable to Placement Agent hereunder as Placement
Agent shall determine in accordance with agreements entered into directly
between Placement Agent and such other broker-dealers. The Company shall not
have any obligation or liability to pay commissions, fees, other compensation,
or expenses to any such other broker-dealers. The Offering is subject to the
terms and conditions set forth in the Company’s Securities Purchase Agreement,
dated April 3, 2008, the Registration Rights Agreement, dated April 3, 2008, the
Common Stock Purchase Warrant, dated April 3, 2008, and the Company’s filings
with the Securities and Exchange Commission (“SEC”) each inclusive of all
exhibits, all amendments, supplements and appendices thereto, if any
(collectively the “Transaction Documents”).
 
B. The Company is offering through the Placement Agent $4,000,000 (subject to an
over-allotment option of 25%) of the Company’s Common Stock on a “best efforts”
basis. The Company will issue the certificates representing the Common Stock and
Warrants at a closing after subscriptions for at least $4,000,000 have been
received and approved by the Company and the Placement Agent and when funds from
investors have cleared the banking system in the normal course of business.
 

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C. The Offering commenced on January 25, 2008, it was suspended on March 13,
2008 and resumed on April 1, 2008, and it shall terminate on the earliest of (i)
the date on which $4,000,000 in Common Stock has been sold, or (iii) April 30,
2008, unless the Company and Placement Agent mutually agree to extend the
Offering up and through May 31, 2008 (the “Offering Period”). If the Offering is
not sold prior to the end of the Offering Period, the Offering will be
terminated and all funds received from investors will be returned thereto,
without interest thereon or deduction therefrom. With respect to any
subscriptions that are received by Placement Agent or accepted by the Company
subsequent to the Offering Period, all funds received from investors will be
returned thereto, without interest thereon or deduction therefrom. The Company
reserves the right in its sole discretion to reject any subscription agreements.
 
2. Compensation to Placement Agent. 
 
A. As compensation for the services to be provided the Placement Agent
hereunder, the Company agrees to pay to the Placement Agent: (i) a cash fee
equal to 10% of the gross proceeds of the Offering; provided, however, that for
the purposes of this Section 2A, the gross proceeds of the Offering shall not
include any proceeds resulting from the issuance of the Convertible Promissory
Notes, and no fee whatsoever shall be paid by the Company to the Placement Agent
with respect to the Convertible Promissory Notes and, provided further, that for
any person or entity making an investment of $250,000 or greater the Company
shall pay a cash fee of 7% instead of 10%; and (ii) a warrant to the Placement
Agent or its designee(s) to purchase 15% of the Securities sold in the Offering
(the “Placement Agent Warrants”). The Placement Agent Warrants shall be
exercisable, for a period of seven (7) years from the Closing, at an exercise
price per share equal to (100%) of the purchase price of the Securities sold in
the Offering, shall have unlimited piggyback registration rights, cashless
exercise and anti-dilution provisions and shall be evidenced by a registration
rights agreement in form and substance reasonably satisfactory to the Company
and the Placement Agent. The Placement Agent Warrants shall be executed
and delivered at the Closing. If the Offering is consummated by means of more
than one closing, the Placement Agent shall be entitled to the fees provided
herein at and with respect to each Closing.
 
B. The Securities will be offered without registration under the Securities Act
of 1933, as amended (the “Securities Act”). Purchasers of the Securities will be
granted certain registration rights with respect to the Common Stock and
Warrants as more fully set forth in the Registration Rights Agreement. Placement
Agent will be granted certain registration rights with respect to the shares of
Common Stock issuable upon exercise of the Placement Agent Warrants, as more
fully set forth in the Placement Agent Warrants.
 
3.
Payment.

 
A. The Common Stock and Warrants shall have the terms set forth in and shall be
offered by the Company by means of the Transaction Documents. Payment for the
Common Stock shall be made by check, money order or wire transfer as more fully
described in the Securities Purchase Agreement. The minimum purchase by any
purchaser shall be $25,000, unless subscriptions for lesser amounts are accepted
at the discretion of the Company and Placement Agent. Placement Agent and the
Company agree that the Common Stock and Warrants will be offered and sold only
to “accredited investors” within the meaning of Rule 501 of Regulation D
(“Accredited Investors”) promulgated under the Securities Act and Rule 506 of
Regulation D under the Securities Act.
 
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B. All Funds received from subscriptions arranged by Placement Agent and its
agents will be promptly transmitted to the escrow account set up by the Company
and maintained at Capital One Bank, 24-02A Fairlawn Avenue, Fair Lawn, NJ 07410
(the “Escrow Agent”) and designated as “Capital One Bank as Escrow Agent for
Smart Energy Solutions, Inc” (the “Escrow Account”). The Escrow Agent shall,
upon the Closing of at least $4,000,000 (or additional closings if there shall
be more than one): (i) deliver to the Company, by wire transfer of immediately
available funds, the funds deposited in the Escrow Account in payment for the
Securities, less the amounts payable to the Placement Agent pursuant to Section
2A above. The Placement Agent shall receive all cash compensation under this
Placement Agent Agreement by wire transfer of immediately available funds
directly from the Escrow Agent at the time of the Closing.
 
In addition, the Company will furnish to the Placement Agent copies of such
agreements, opinions, certificates and other documents delivered at the Closing
as the Placement Agent may reasonably request, including, without limitation, an
opinion of Company counsel to the effect that the placement of the Securities
was exempt from registration under the Securities Act.
 
C. Company and Placement Agent each reserve the right to reject any subscriber,
in whole or in part, in their sole discretion. Funds received by the Company
from any subscriber whose subscription is rejected will be returned to such
subscriber, without deduction therefrom or interest thereon, but no sooner than
such funds have cleared the banking system in the normal course of business.
 
D. If, at any time after the end of the Offering Period and before the first
anniversary of the end of the Offering Period, the Company shall consummate a
private equity and/or debt financing transaction, including any variant of the
Offering, with any party contacted or identified by the Placement Agent in
connection with the Offering, the Placement Agent will be entitled to payment in
full of the compensation described in paragraph 2 of this Agreement as to all
such parties.
 
4.
Representations, Warranties and Covenants of Placement Agent.

 
Placement Agent represents warrants and covenants as follows:
 
(i) Placement Agent has the necessary power to enter into this Agreement and to
consummate the transactions contemplated hereby.
 
(ii) The execution and delivery by Placement Agent of this Agreement and the
consummation of the transactions contemplated herein will not result in any
violation of, or be in conflict with, or constitute a default under, any
agreement or instrument to which Placement Agent is a party or by which
Placement Agent is bound, or any judgment, decree, order or, to Placement
Agent’s knowledge, any statute, rule or regulation applicable to Placement
Agent. This Agreement constitutes the legal, valid and binding obligation of
Placement Agent, enforceable against Placement Agent in accordance with its
terms, except to the extent that (a) the enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws from time to
time in effect and affecting the rights of creditors generally, (b) the
enforceability hereof is subject to general principles of equity, or (c) the
provisions hereof may be held to be violative of public policy.
 
(iii) Placement Agent will deliver to each Accredited Investor, prior to any
submission to such person of a written offer relating to the purchase of the
Common Stock, a copy of the Transaction Documents, as it may have been most
recently amended or supplemented by the Company. Placement Agent agrees not to
engage in any activities in connection with the Offering in any state (i) in
which the Offering is not qualified for sale or exempt from qualification under
the applicable securities or blue sky laws thereof; (ii) in which Placement
Agent or its agents may not lawfully so engage, or (iii) in which it or its
agents are not a registered broker-dealer.
 
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(iv) Upon receipt of all executed Transaction Documents, Placement Agent will
promptly forward copies of same to the Company.
 
(v) Placement Agent will not deliver the Transaction Documents to any person it
does not reasonably believe to be an Accredited Investor, and will offer and
sell the Securities only to Accredited Investors as that term is defined if Rule
501 (a) promulgated under the Securities Act. Further, Placement Agent will not
make any representations on behalf of the Company to any prospective purchasers
of any material fact not contained in the Transaction Documents, and will
provide Company’s counsel with copies of all agreements with any of its
broker-dealer agents assisting Placement Agent in the Offering.
 
(vi) Placement Agent will not take any action which it reasonably believes would
cause the Offering to violate the provisions of the Securities Act, the
Securities Exchange Act of 1934, as amended (the “Exchange Act”), or the
respective rules and regulations promulgated thereunder (the “Rules and
Regulations”).
 
(vii) Placement Agent shall use all reasonable efforts to determine (a) whether
any prospective purchaser is an Accredited Investor; and (b) that any
information furnished by a prospective investor is true and accurate, provided
that for this purpose the Placement Agent shall conclusively be entitled to rely
upon an executed Investor Questionnaire in the form accompanying the Securities
Purchase Agreement by a subscriber. Placement Agent shall have no obligation to
insure that any check, note, draft or other means of payment for the Common
Stock will be honored, paid or enforceable against the subscriber in accordance
with its terms.
 
(viii) Placement Agent and the other broker-dealers that Placement Agent elects
to act as its agents for this Placement are and at all times during the Offering
Period will remain members in good standing of FINRA and be and remain
broker-dealers registered as such under the Exchange Act and under the
securities laws of the states in which the Securities will be offered or sold by
Placement Agent and its agents, unless an exemption for such state registration
is available to Placement Agent or its agents. Placement Agent and its agents
are in compliance with all material rules and regulations applicable to
Placement Agent and its agents generally and to Placement Agent’s and its
agent’s participation in the Offering.
 
(ix) Placement Agent acknowledges that the Company is a public reporting issuer
and, as such, is subject to a broad range of U.S. federal securities laws
including, without limitation, prohibitions against selective disclosure of
material, non-public information pursuant to Regulation FD. Placement Agent
understands and agrees that the Company is relying on Placement Agent’s
acknowledgement herein with respect to the confidential treatment by Placement
Agent and its agents of the Transaction Documents and all of the information set
forth therein and which Placement Agent otherwise may obtain from the Company
and its affiliates, employees, advisors and agents.
 
5.
Representations, Warranties and Covenants of the Company.

 
The Company represents, warrants and covenants as follows:
 
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(i) The execution, delivery and performance of each of this Agreement, the
Transaction Documents and the Escrow Agreement has been or will be duly and
validly authorized by the Company and is, or with respect to the Securities
Purchase Agreement, will be, a valid and binding obligation of the Company,
enforceable in accordance with its respective terms, except to the extent that
(a) the enforceability hereof or thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws from time to time in
effect and affecting the rights of creditors generally, (b) the enforceability
hereof or thereof is subject to general principles of equity; or (c) the
indemnification provisions hereof or thereof may be held to be violative of
public policy. The issuance, sale and delivery by the Company of the Securities
have been or will be prior to the Closing duly authorized by all requisite
corporate action of the Company and, when issued and paid for in accordance with
this Agreement and the Transaction Documents, will be valid and binding
obligations of the Company, enforceable in accordance with their respective
terms, except to the extent that (a) the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar laws from time
to time in effect and affecting the rights of creditors generally; and (b) the
enforceability thereof is subject to general principles of equity.
 
(ii) All issued and outstanding securities of the Company have been duly
authorized and validly issued, fully paid and non-assessable and were issued in
compliance with all applicable federal and state securities laws; the holders
thereof have no rights of rescission or preemptive rights with respect thereto
and are not subject to personal liability solely by reason of being security
holders; and none of such securities was issued in violation of the preemptive
rights of any holders of any security of the Company. The Company as of March
27, 2008 has 500,000,000 shares of authorized Common Stock, 84,672,679 shares of
which are issued and outstanding, and 1,000,000 shares of authorized Preferred
Stock, none of which are outstanding.
 
(iii) Except as set forth in the Transaction Documents, the Company’s SEC
filings or Exhibit A attached hereto, there are: (a) no outstanding options,
warrants, rights (including conversion or preemptive rights) or agreements
pursuant to which the Company is or may become obligated to issue, sell or
repurchase any securities of the Company; (b) no restrictions on the transfer of
the Company’s capital stock imposed by the Company’s Certificate of
Incorporation or By-laws or any agreement to which the Company is a party, any
order of any court or any governmental agency to which the Company is subject or
any statute other than those imposed by relevant state and federal securities
laws; (c) no cumulative voting or preemptive rights for any of the Company’s
capital stock; (d) no registration rights under the Securities Act with respect
to the Company’s capital stock; (e) no anti-dilution adjustment provisions or
similar rights with respect to the outstanding securities of the Company will be
triggered by the issuance of the Securities; (f) no voting trusts or agreements,
shareholders agreements, pledge agreements, buy-sell, rights of first offer,
negotiation or refusal or proxies or similar arrangements relating to any
securities of the Company to which the Company is a party; and (g) to the best
of the Company’s knowledge, no options or other rights to purchase securities
from its shareholders granted by such shareholders. The Company has, or shall
have at the time of issuance, good and marketable title to, all the Securities
contemplated in the Offering (including the Common Stock, Warrants and Placement
Agent Warrants) free and clear of all liens, encumbrances, claims, security
interests and defects of any nature whatsoever, except as may be specifically
set forth in the Transaction Documents.
 
(iv) The Securities and the Placement Agent Warrants, when issued in accordance
with the terms of the Securities Purchase Agreement and the terms of this
Agreement, as the case may be, will be validly issued, fully-paid and
non-assessable. Upon exercise of the Placement Agent Warrants in accordance with
the terms thereof, the shares of Common Stock underlying the Placement Agent
Warrants will be validly issued, fully-paid and non-assessable. Upon exercise of
the Warrants in accordance with the terms thereof, the shares of Common Stock
underlying the Warrants will be validly issued, fully-paid and non-assessable.
The holders of the Securities will not be subject to personal liability under
the Company’s Certificate of Incorporation or By-laws or the laws of the State
of Nevada solely by reason of being such holders; the Securities are not and
will not be subject to the preemptive rights of any holder of any security of
the Company.
 
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(v) There is no litigation or governmental proceeding pending or, to the best of
the Company’s knowledge, threatened against, or involving the Company or its
properties or business, except as set forth in the Transaction Documents or the
Company’s SEC filings. The Company is not a party to any order, writ,
injunction, judgment or decree of any court.
 
(vi) The Company is duly organized and validly exists as a corporation in good
standing under its respective jurisdiction of incorporation. Except as set forth
in the Transaction Documents or the Company’s SEC filings, the Company does not
own or control, directly or indirectly, an interest in any other corporation,
partnership, trust, joint venture or other business entity. The Company is duly
qualified or licensed and in good standing as a foreign corporation in each
jurisdiction in which the character of its operations requires such
qualification or licensing and where failure to so qualify would have a material
adverse effect on the Company. The Company has all requisite corporate power and
authority, and all material and necessary authorizations, approvals, orders,
licenses, certificates and permits of and from all governmental regulatory
officials and bodies (domestic and foreign) to conduct its businesses (and
proposed business) as described in the Transaction Documents, and the Company is
doing business in compliance with all such authorizations, approvals, orders,
licenses, certificates and permits and all foreign, federal, state and local
laws, rules and regulations concerning the business in which it is engaged,
except where failure to so comply would not have a material adverse effect on
the Company. Any disclosures in the Transaction Documents concerning the effects
of foreign, federal, state and local regulation on the Company’s business as
currently conducted and as contemplated are correct in all material respects and
do not omit to state a material fact. The Company has all corporate power and
authority to enter into this Agreement, the Transaction Documents and all
agreements related to the Offering and to carry out the provisions and
conditions hereof and thereof and to issue, sell and deliver the Securities. No
consents, authorizations, approvals, or orders of, or registration,
qualification, declaration or filing with, any federal, state or local
governmental authority on the part of the Company is required in connection
herewith and therewith or to issue, sell and deliver the Securities, other than
registration or qualification, or taking such action to secure exemption from
such registration or qualification of the Securities under applicable state or
federal securities laws, which actions have been taken by the Company or will be
taken by the Company prior to the Closing.
 
(vii) There has been no material adverse change in the condition or prospects of
the Company, financial or otherwise, from that on the latest dates as of which
such condition or prospects, respectively, are set forth in the Transaction
Documents and the most recent SEC filings, and the outstanding debt and the
business of the Company conforms in all material respects to the descriptions
thereof contained in the Transaction Documents and/or the Company’s SEC filings.
 
(viii) The Company is not in breach of, or in default under, any term or
provision of any indenture, mortgage, deed of trust, lease, note, loan or credit
agreement or any other agreement or instrument evidencing an obligation for
borrowed money, or any other agreement or instrument to which it is a party or
by which it or any of its properties may be bound. The Company is not in
violation of any provision of its charter or Bylaws or in violation of any
franchise, license, permit, judgment, decree or order, or in violation of any
statute, rule or regulation. Neither the execution and delivery of this
Agreement and the Securities Purchase Agreement, nor the issuance and sale or
delivery of the Securities, nor the consummation of any of the transactions
contemplated herein or in the Securities Purchase Agreement, nor the compliance
by the Company with the terms and provisions hereof or thereof, has conflicted
with or will conflict with, or has resulted in or will result in a breach of,
any of the terms and provisions of, or has constituted or will constitute a
default under, or has resulted in or will result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company
pursuant to the terms of any indenture, mortgage, deed of trust, note, loan or
credit agreement or any other agreement or instrument evidencing an obligation
for borrowed money, or any other agreement or instrument to which the Company
may be bound or to which any of the property or assets of the Company is subject
except where such default, lien, charge or encumbrance would not have a material
adverse effect on the Company; nor will such action result in any violation of
the provisions of the charter or the By-laws of the Company, any statute, order,
rule or regulation applicable to the Company of any court or of any foreign,
federal, state or other regulatory authority or other government body having
jurisdiction over the Company.
 
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(ix) The Securities and the Securities Purchase Agreement conform in all
material respects to all statements in relation thereto contained in the
Transaction Documents and/or the Company’s SEC filings.
 
(x) Subsequent to the dates as of which information is given in the Transaction
Documents and the Company’s filings with the SEC, and except as may otherwise be
indicated or contemplated herein or therein, the Company has not (a) issued any
securities or incurred any liability or obligation, direct or contingent, for
borrowed money, (b) entered into any transaction other than in the ordinary
course of business or (c) declared or paid any dividend or authorized or made
any other distribution on or in respect of its capital stock.
 
(xi) Neither the Company nor any of its officers, directors, employees or
stockholders has employed any broker or finder in connection with the
transactions contemplated by this Agreement other than Placement Agent and there
are no claims for services in the nature of a finder’s or origination fee with
respect to the sale of the Securities.
 
(xii) The Company owns or possess, free and clear of all liens or encumbrances
and rights thereto or therein by third parties, the requisite licenses or other
rights to use all trademarks, service marks, copyrights, service names, trade
names, patents, patent applications and licenses necessary to conduct its
business (including, without limitation, any such licenses or rights described
in the Transaction Documents and the Company’s filings with the SEC, as being
owned or possessed by the Company) and there is no claim or action by any person
pertaining to, or proceeding, pending or threatened, which challenges the rights
of the Company with respect to any trademarks, service marks, copyrights,
service names, trade names, patents, patent applications and licenses used in
the conduct of the Company’s businesses (including, without limitation, any such
licenses or rights described in the Transaction Documents and the Company’s
filings with the SEC as being owned or possessed by the Company) except any
claim or action that would not have a material adverse effect on the Company; to
the best of the Company’s knowledge, the Company’s current products, services or
processes do not infringe or will not infringe on the patents currently held by
any third party.
 
(xiii) The Company is not under any obligation to pay royalties or fees of any
kind whatsoever to any third party with respect to any trademarks, service
marks, copyrights, service names, trade names, patents, patent applications,
licenses or technology it has developed, uses, employs or intends to use or
employ, other than to their respective licensors.
 
(xiv) Subject to the performance by Placement Agent of its obligations
hereunder, and the accuracy of the representations and warranties made by the
respective investors in the Securities Purchase Agreements, the Transaction
Documents and the offer and sale of the Securities comply, and will continue to
comply, through the Offering Period in all material respects with the
requirements of Rule 506 of Regulation D promulgated by the Commission pursuant
to the Securities Act and any other applicable federal and state laws, rules,
regulations and executive orders. Neither the Transaction Documents nor any
amendment or supplement thereto nor any other documents prepared by the Company
in connection with the Offering (collectively, the “Offering Documents”) contain
any untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading. All
statements of material facts in the Offering Documents are true and correct as
of the date of the Offering Documents, or as of the respective dates of
documents referred to therein, and will be true and correct in all material
respects on the date of each Closing. If at any time prior to the completion of
the Offering or other termination of this Agreement any event shall occur as a
result of which it might become necessary to amend or supplement the Offering
Documents so that they do not include any untrue statement of any material fact
or omit to state any material fact necessary in order to make the statements
therein, in light of the circumstances then existing, not misleading, the
Company will promptly notify Placement Agent and will supply Placement Agent
with amendments or supplements correcting such statement or omission.
 
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(xv) All taxes which are due and payable from the Company have been paid in full
and the Company does not have any tax deficiency or claim outstanding assessed
or proposed against it, whether or not liquidated to a sum certain.
 
(xvi) The financial information of the Company included in the Company’s filings
with the SEC accurately presents the financial position of the Company on the
respective dates thereof.
 
(xvii) Neither the Company nor any of its respective officers, directors,
employees or agents, nor any other person acting on behalf of the Company, has,
directly or indirectly, given or agreed to give any money, gift or similar
benefit (other than legal price concessions to customers in the ordinary course
of business) to any customer, supplier, employee or agent of a customer or
supplier, or official or employee of any governmental agency or instrumentality
of any government (domestic or foreign) or any political party or candidate for
office (domestic or foreign) or other person who is or may be in a position to
help or hinder the business of the Company (or assist it in connection with any
actual or proposed transaction) which (A) might subject the Company to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding, or (B) if not given in the past, might have had a materially adverse
effect on the assets, business or operations of the Company as reflected in any
of the financial statements contained in the Company’s filings with the SEC, or
(C) if not continued in the future, might adversely affect the assets, business,
operations or prospects of the Company in the future.
 
(xviii) Assuming (i) the accuracy of the information provided by the respective
investors in the Securities Purchase Agreements and (ii) that the Placement
Agent has complied in all material respects with its obligations under this
Agreement and the provisions of Regulation D promulgated under the Securities
Act, the offer and sale of the Common Stock pursuant to the terms of the
Transaction Documents are exempt from the registration requirements of the
Securities Act and the rules and regulations promulgated thereunder.
 
(xix) When the Common Stock, Warrants and Placement Agent Warrants shall have
been duly delivered to each acquiring person or entity (including the Placement
Agent) and payment shall have been made therefor, the acquiring person or entity
(including the Placement Agent) shall have good and marketable title to the
Common Stock, Warrants and Placement Agent Warrants, as the case may be, free
and clear of all liens, encumbrances, claims, security interests and defects of
any nature whatsoever (with the exception of claims arising through the acts or
omissions of the purchasers and except as arising from applicable federal and
state securities laws) and the Company shall have paid all taxes, if any, in
respect of the original issuance thereof.
 
(xx) The Company understands and agrees that the foregoing representations and
warranties shall conclusively be deemed material and conclusively deemed relied
upon by Placement Agent. No representation or warranty by the Company in this
Agreement, and no written statement contained in any document, certificate or
other writing delivered by the Company to Placement Agent contains any untrue
statement of material fact or omits to state any material fact necessary to make
the statements herein or therein, in light of the circumstances under which they
were made, not misleading.
 
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(xxi) Upon receipt of an executed Securities Purchase Agreement, the Company
will promptly forward copies of the Securities Purchase Agreement to the
Placement Agent if received directly by Company from any prospective investors.
 
(xxii) The Company will not deliver the Transaction Documents to any person it
does not reasonably believe to be an Accredited Investor.
 
(xxiii) The Company will not intentionally take any action which it reasonably
believes would cause the Offering to violate the provisions of the Securities
Act, Exchange Act, or the Rules and Regulations.
 
(xxiv) The Company is in compliance, to the extent applicable, with all
reporting obligations under Section 12(g) of the Exchange Act. The Common Stock
is quoted on the Over-the-Counter Market; and the Company has filed all
documents required to be filed pursuant to all reporting obligations, under
either Section 13(a) or 15(d) of the Exchange Act, since May 11, 1999. None of
the Company’s filings with the Commission since November 30, 2004 contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; the Company has,
since November 30, 2004, timely filed all requisite forms, report and exhibits
thereto with the Commission; and all reports and forms filed subsequent thereto
by the Company with the Commission, no such reports contained any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
 
6.
Certain Covenants and Agreements of the Company.

 
The Company covenants and agrees at its expense, and without any expense to
Placement Agent, as follows:
 
A. To advise Placement Agent of any adverse change in the Company’s financial
condition, prospects or business or of any development materially affecting the
Company or rendering untrue or misleading any material statement in the
Transaction Documents occurring at any time prior to a Closing as soon as
reasonably practicable after the Company is either informed or becomes aware
thereof.
 
B. To use its best efforts to cause the Securities to be qualified or registered
for sale, or to obtain exemptions from such qualification or registration
requirements, on terms consistent with those stated in the Transaction
Documents, the Common Stock, Warrants and the Placement Agent Warrants under the
securities laws of such jurisdictions as Placement Agent shall reasonably
request, provided that such states and jurisdictions do not require the Company
to qualify as a foreign corporation. Qualification, registration and exemption
charges and fees shall be at the sole cost and expense of the Company. The
Company’s counsel shall perform the required “Blue Sky” services, and all
reasonable expenses and disbursements of the Company’s counsel relating to such
“Blue Sky” matters and relating to the Offering shall be paid by the Company.
 
C. To use the net proceeds of the Offering to fund the Company’s general working
capital needs, including the ongoing development and marketing of the Company’s
products. Pending utilization, the net proceeds will be invested in short-term,
interest bearing investments, certificates of deposit or guaranteed United
States government obligations.
 
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D. To comply with the terms of the Securities Purchase Agreement, Common Stock,
Warrants and Placement Agent Warrants, including, without limitation, the
registration rights provisions thereof.
 
E. Neither the Company nor any of their respective officers, directors,
stockholders or affiliates (within the meaning of the Rules and Regulations)
will take, directly or indirectly, any action designed to, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company.
 
F. To issue to Placement Agent or its designees, at the Closing, the Placement
Agent Warrants exercisable for a period of seven years commencing on the date of
issuance and terminating on the seventh anniversary of the final Closing as
evidenced by a Placement Agent Warrant of the Company executed and delivered to
Placement Agent on the date of such Closing which shall provide for registration
by the Company of the Placement Agent Shares.
 
G. To keep available out of its authorized and designated Common Stock, solely
for the purpose of issuance upon the exercise or conversion of the Warrants and
Placement Agent Warrants such number of shares of Common Stock, as shall then be
issuable upon the exercise of all outstanding Warrants and Placement Agent
Warrants.
 
7.
Indemnification.

 
The Company agrees to indemnify and hold harmless Placement Agent, its
affiliates, the directors, officers, members, agents, employees and associated
persons of Placement Agent and its affiliates, and each other person or entity,
if any, controlling Placement Agent or any of its affiliates (collectively,
“Indemnified Persons”), from and against, any losses, claims, damages, verdicts,
judgments, awards, settlements and any and all other liabilities and expenses
(including reasonable counsel fees and expenses, and costs of investigation)
(collectively, the “Losses”) relating to or arising out of any complaint, action
claim, proceeding, or investigation by any private person or entity,
governmental or regulatory authority, or any self-regulatory body (collectively,
“Action”), brought by or against any person, including but limited to,
stockholders of the Company, (A) related to or arising out of (i) the Company’s
action or failure to act, (ii) any statements or omissions made in any
disclosure or other information or materials used in connection with the
transaction(s) described in or contemplated by this Placement Agent Agreement
(collectively, the “Transactions”) (iii) the services, commitment and/or other
obligations undertaken or performed by Placement Agent arising out of this
Placement Agent Agreement (collectively, “Placement Agent’s Role”), or (iii) the
action or failure to act by an Indemnified Person with the Company’s consent or
in reliance on the Company’s action or failure to act or (B) otherwise related
to or arising out of the Transactions or Placement Agent’s Role, or any other
matter referred to in this Placement Agent Agreement agreement, except that this
clause (B) shall not apply to the Losses of an Indemnified Person that are
determined by a court of competent jurisdiction in a final judgment not subject
to appeal to have resulted from the bad faith or gross negligence of such
Indemnified Person. If such indemnification is for any reason not available or
insufficient to hold an Indemnified Person harmless, the Company agrees to
contribute to the Losses involved in such proportion as is appropriate to
reflect the relative benefits received (or anticipated to be received) by the
Company, any affiliate of the Company and any guarantor of the Company’s
obligations hereunder or in the Transactions and any of their securityholders,
on the one hand, and any guarantor of the Company’s obligations hereunder or in
the Transaction(s) to which such indemnification relates or would have related
or, if such allocation is judicially determined by a court of competent
jurisdiction in a final judgment not subject to appeal to be unavailable or if
it is insufficient to hold an Indemnified Person harmless in such proportion as
is appropriate to reflect not only such relative benefits, but also other
equitable consideration such as the relative fault of the Company or any such
affiliate or guarantor, on the one hand, and of Placement Agent, on the other
hand; provided, however, that the Company shall be responsible for all Losses
which in the aggregate are in excess of the amount of all fees actually received
by Placement Agent from the Company in connection with Placement Agent’s Role as
to such Transaction(s) to which such indemnification relates or would have
related shall be deemed to be in the same proportion as (i) the total gross
proceeds (before costs, expenses and placement compensation) received, or the
total value paid or proposed to be paid or received or proposed to be received,
in each case by or on behalf of the Company, each such affiliate, each such
guarantor and their securityholders, as the case may be, pursuant to such
Transaction(s), whether or not consummated, bears to (ii) all fees paid or
proposed to be paid to Placement Agent by the Company in connection with
Placement Agent’s Role as to such Transaction(s). Notwithstanding anything to
the contrary herein, the Company agrees that no Indemnified Person shall have
any liability to the Company or its owners, parents, affiliates, directors,
officers, agents, servants, security holders and/or creditors for, any Losses of
the Company.
 
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The Company will reimburse each Indemnified Person for all expenses (including
fees and disbursements of counsel) as they are incurred by such Indemnified
Person in connection with investigating, preparing for or defending any Action
(or enforcing this letter agreement or any related engagement agreement),
whether or not in connection with pending or threatened litigation in which any
Indemnified Person is a party, and whether or not such Action is brought by
Placement Agent. The Company agrees that it will not settle or compromise or
consent to the entry of any judgment in any pending or threatened Action in
respect of which indemnification may be sought hereunder (whether or not an
Indemnified Person is a party therein) unless the Company has given Placement
Agent reasonable prior written notice thereof and obtained an unconditional
release of each Indemnified Person from all liability arising therefrom.

The Company’s reimbursement, indemnity and contribution obligations hereunder
shall be in addition to any liability that it may otherwise have, and shall
insure to the benefit of any successors, assigns, heirs and representatives of
any Indemnified Person. , The Company hereby consents to personal jurisdiction
and venue in any court in which any Action is brought. In the event that an
arbitration is commenced against an Indemnified Person in which a claim is
asserted that relates to or arises out of any of the matters referred to in
clause (A) or (B) of the first sentence of this Section 6, the Company agrees to
arbitration of any claims Indemnified Persons may have against the Company
pursuant to this letter agreement under the same rules as, and under the
auspices of the same organization as, the arbitration in which the claim is
asserted against the Indemnified Person. The Company acknowledges that, in
connection with Placement Agent’s Role, Placement Agent is acting as an
independent contractor with duties owing solely to Placement Agent. The
provisions of this Section 6 shall survive any termination of the letter
agreement or completion of the Transaction or Placement Agent’s Role. PLACEMENT
AGENT HEREBY AGREES AND THE COMPANY HEREBY AGREES, ON ITS OWN BEHALF AND ON
BEHALF OF ITS SECURITYHOLDERS, TO WAIVE ANY RIGHT TO TRIAL BY JURY WITH RESPECT
TO ANY CLAIM, COUNTER-CLAIM OR ACTION ARISING OUT OF PLACEMENT AGENT’S ROLE OR
THIS PLACEMENT AGENT AGREEMENT.

8.
Conditions of the Closing.

 
The Closing shall be held at the offices of the Company’s counsel or such other
place as determined by the Company. The obligations of Placement Agent hereunder
shall be subject to the continuing accuracy of the representations and
warranties of the Company herein as of the date hereof and as of the date of the
Closing as if such representations and warranties had been made on and as of
such Closing; the accuracy on and as of the date of each Closing of the
representations, warranties and covenants of the Company made pursuant to the
provisions hereof; and the performance by the Company on and as of each Closing
of its covenants and obligations hereunder and to the following further
conditions:
 
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A. At and prior to the Closing, (i) there shall have been no material adverse
change nor development involving a prospective change in the condition or
prospects or the business activities, financial or otherwise, of the Company
from the latest dates as of which such condition is set forth in the Transaction
Documents and/or the Company’s SEC filings; (ii) there shall have been no
material transaction, not in the ordinary course of business, entered into by
the Company which has not been disclosed as having taken place or being
contemplated in the Transaction Documents or to Placement Agent in writing;
(iii) the Company shall not be in default under any provision of any instrument
relating to any outstanding indebtedness for which a waiver or extension has not
been otherwise received; (iv) except as set forth in the Transaction Documents
or the Company’s filings with the SEC, the Company shall not have issued any
securities (other than those set forth in the Transaction Documents or pursuant
to the exercise of outstanding warrants or options) or declared or paid any
dividend or made any distribution of its capital stock of any class and there
shall not have been any material adverse change in the indebtedness (long or
short term) or liabilities or obligations of the Company (contingent or
otherwise); (v) no material amount of the assets of the Company shall have been
pledged or mortgaged, except with respect to assets in the normal course of
business and as indicated in the Transaction Documents; and (v) no action, suit
or proceeding, at law or in equity, against the Company or affecting any of its
properties or businesses shall be pending or threatened before or by any court
or federal or state commission, board or other administrative agency, domestic
or foreign, wherein an unfavorable decision, ruling or finding could materially
adversely affect the businesses, prospects or financial condition or income of
the Company, except as set forth in the Transaction Documents.
 
B. The Offering will become qualified or be exempt from qualification under the
securities laws of the several states as contemplated by Section 5(B) no later
than the date of the Closing and no stop order suspending the sale of the Common
Stock shall have been issued, and no proceedings for that purpose shall have
been initiated or threatened.
 
C. At the Closing, Placement Agent shall have received a certificate of the
Company signed by its chief executive officer and chief financial officer, dated
as of the date of the Closing, to the effect that the conditions set forth in
subparagraph (C) above have been satisfied and that, as of the date of the
Closing, the representations and warranties of the Company set forth herein are
true and correct.
 
D. At the Closing, or within three (3) business days thereafter, the Company
shall have duly executed and delivered the appropriate number and designation of
Common Stock to the respective holders thereof.
 
E. At the Closing or within three (3) business days thereafter, the Company
shall have executed and delivered the appropriate number of Warrants to the
respective holders thereof.
 
F. At the Closing, the Company shall duly and validly issue the Placement Agent
Warrants in accordance with the terms hereof and shall pay the Placement Agent
compensation provided in Section 2(B).
 
9.
Termination.

 
This Agreement shall terminate if a Closing does not take place on or before the
expiration of the Offering Period or as soon thereafter as the funds received
from subscriptions have cleared the banking system in the normal course of
business. Upon any termination of the Offering, all subscription documents and
payments for the Securities not previously delivered to the purchasers thereof,
shall be returned to the respective subscribers, without interest thereon or
deduction therefrom, and neither party hereto shall have any further obligation
to each other, except as specifically provided herein
 
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10.
Miscellaneous.

 
A. This Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all which shall be deemed to be one and
the same instrument. Facsimile signatures shall suffice in lieu of originals.
 
B. Any notice required or permitted to be given hereunder shall be given in
writing and shall be deemed effective when deposited in the United States mail,
postage prepaid, or when received if personally delivered, sent by overnight
courier or faxed, addressed as follows:
To Placement Agent:
 
EKN Financial Services, Inc.
44 Wall Street - 10th Floor
New York, NY 10005
Fax: (212) 785-3416
Attention: Peter N. Christos
 
with a copy to:
 
EKN Financial Services, Inc.
135 Crossways Park Drive
Woodbury, NY 11797
Fax: (516) 369-1289
Attention: Glen Stifelman

To the Company:
 
Smart Energy Solutions, Inc.
210 West Parkway
Pompton Plains, NJ 07444
Fax: (973) 248-8088
Attention: Ed Braniff

with a copy to:
 
David Lubin & Associates
26 East Hawthorne Avenue
Valley Stream, NY 11580
Fax: (516) 887-8250
Attn: David Lubin, Esq.

 
or to such other address of which written notice is given to the others.
 
C. In addition to the Company, the Placement Agent shall have the exclusive
right to publish a tombstone advertisement following the final closing of the
Offering and to use it from time to time, in its marketing materials.
 
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D. This Placement Agent Agreement was, and shall be deemed to have been,
executed in the State of New York, and shall be governed by, and construed in
all respects under, the laws of the State of New York, without regard to its
conflict of laws rules or principles. Any suit, action, proceeding or litigation
arising out of or relating to this Agreement shall only be brought and
prosecuted in any New York State court sitting in the County of New York and any
Federal court sitting in the Southern District of the State of New York. The
parties hereby irrevocably and unconditionally consent to the jurisdiction of
each such court or courts located within the State of New York and to service of
process by registered or certified mail, return receipt requested, or by any
other manner provided by applicable law, and hereby irrevocably and
unconditionally waive any right to claim that any suit, action, proceeding or
litigation so commenced has been commenced in an inconvenient forum.
 
E. This Agreement and the other agreements referenced herein contain the entire
understanding between the parties hereto and may not be modified or amended
except by a writing duly signed by the party against whom enforcement of the
modification or amendment is sought. Any and all other or prior agreements
between the parties are hereby merged in and subsumed by this Placement Agent
Agreement.
 
F. If any provision of this Agreement shall be held to be invalid or
unenforceable, such invalidity or unenforceability shall not affect any other
provision of this Agreement.
 
G. The representations and warranties of the parties hereto as contained in this
Agreement shall survive the closing of the Offering.
 
H.  This Placement Agent Agreement has been mutually drafted by the parties, and
in the case of any dispute or disagreement arising out of any of the terms
hereof, or language contained herein, neither party shall be entitled to a
presumption against the other as the party causing this Placement Agent
Agreement to be drafted.
 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.

EKN Financial Services, Inc.
   
By:
/s/ Peter N. Christos
 
Name: Peter N. Christos
 
Title: Director of Investment Banking

 
 
AGREED TO AND ACCEPTED
 
THIS 4 DAY OF April 2008:
 

Smart Energy Solutions, Inc.

By:      /s/ Edward Braniff       
Name: Edward Braniff
Title: Chief Financial Officer

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Exhibit A

In addition to the relevant information disclosed in the Company’s filings with
the Securities and Exchange Commission, the Company has:

1.
granted piggyback registration rights with respect to 2,600,000 units, each
consisting of one share of common stock and one warrant, which were issued
during the first quarter of 2008;

2.
37,029,528 shares of outstanding common stock that are subject to lock-up
agreements, which expire on June 4, 2008; and

3.
granted certain registration rights and the right to appoint 40% of the
Company’s directors to Aharon Y. Levinas, pursuant to the asset purchase
agreement, dated March 23, 2005, between the Company and Mr. Levinas.

In addition, the Company has the warrants and options listed on the spread sheet
below outstanding as of the date of this Placement Agent Agreement.
 

March 27, 2007
 
Stock Price
 
Common Stock Equivalents
 
Warrants & Options, etc.
 
Fully Diluted Basis
 
Paid in Capital
                         
Preferred Stock Outstanding(1)
         
0
   
0
   
0
   
0
 
Common Stock Outstanding
         
84,622,679
         
84,622,679
   
5,279,572
 
Common Stock Purchase Warrants(2)
 
$
0.45
         
5,555,555
   
5,555,555
   
2,500,000
 
Common Stock Purchase Warrants(3)
 
$
0.75
         
13,740,000
   
13,740,000
   
10,305,000
 
Common Stock Purchase Warrants(4)
 
$
0.75
         
1,150,000
   
1,150,000
   
862,500
 
Common Stock Purchase Warrants(5)
 
$
0.40
         
2,600,000
   
2,600,000
       
Employee/Consultants Common Stock Options(6)
         
13,134,183
         
13,134,183
   
132,687
                                   
Total
         
97,756,862
   
23,045,555
   
120,802,417
   
19,079,759
                                                                     
Notes:
                             
(1) Authorized 1,000,000 shares
                             
(2) Expire September 2008
                             
(3) Expire September 2008
                             
(4) Expire June 2009
                             
(5) Expire January 2010
                             
(6) Exercise prices as follows: 25,000 ($0.75); 4,247,183 ($0.45); 540,000
($0.35); 50,000 ($0.30); 4,622,000 ($0.15); 1,000,000 ($0.05); 2,650,000 ($0.00)
(7) The Company has (3) convertible notes of $500,000 each (annual interest of
15%/15%/12%) due in May, June and September of 2008.
The holder of the convertible notes has agreed to extend all notes (at the same
interest rates) by one year from their respective due dates, without payment of
any additional consideration.
The conversion price shall be equal to 95% of the average of the last bid and
ask price of the common stock as quoted on the
Over-The-Counter-Bulletin Board or such other exchange where the common stock is
quoted or listed for the five trading days prior to conversion.

 
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