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Palladium Capital Advisors, LLC
230 Park Avenue, Suite 539
New York, New York 10169

Tel (646) 485-7297     Fax (646) 390-6328

Email jp@palladiumcapital.com

May 6, 2010

Mr. Amit S. Dang, CEO
HepaLife Technologies Inc.
60 State Street
Suite 700
Boston, MA 02109

Re:           Placement Agent Agreement

Dear Mr. Dang:

This will confirm the understanding and agreement (the “Agreement”) between
PALLADIUM CAPITAL ADVISORS, LLC, a Delaware limited liability company
(“Palladium”), and HEPALIFE TECHNOLOGIES INC., a Florida corporation (the
“Company”), as follows:

1.           The Company hereby engages Palladium on a best efforts basis as its
agent in a private placement pursuant to which the Company is selling a minimum
(the “Minimum Number”) of 9,400,000 units and up to a maximum (the “Maximum
Number”) of 20,000,000 units (collectively, the “Units”), of the Company’s
securities at a price of $0.125 per Unit, on a “best efforts, all or none” basis
with respect to the Minimum Number and on a “best efforts” basis with respect to
the remaining 10,600,000 Units (the “Offering”) with each Unit consisting of (i)
one (1) share of common Stock; (ii) one half of one five year Series E Stock
Purchase Warrant that has an exercise price of $0.16 per share; and (iii) one
half of one five year Series F Stock Purchase Warrant that has an exercise price
of $0.20 per share (the “Offering”).

2.           The appointment and authorization of Palladium under Section 1 of
this Agreement shall commence on the date hereof and shall expire on the earlier
of the termination of (i) this Agreement or (ii) the termination of the
Offering  (the “Term”).
 

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3.           The Company acknowledges and agrees that Palladium will be using,
and relying upon, the Company to furnish Palladium, upon request, with written
materials and information, including but not limited to financial statements, to
be provided to potential Investors (the “Materials”) describing the Company and
the Offering concerning the Company’s business, operations, assets, liabilities
and receivables, and Palladium will be using, and relying upon, such Materials
supplied by the Company, its officers, agents, and others and any other publicly
available information without any independent investigation or verification
thereof or independent appraisal by Palladium of the Company or its business or
assets. (For purposes hereof, the “Investors” mean a limited number of
institutional, accredited individual or strategic investors.) Palladium does not
assume responsibility for the accuracy or completeness of the Materials,
including but not limited to any disclosure materials related to the Offering,
except for such information that is independently produced and provided in
writing by Palladium to the Company for inclusion in the Materials. The Company
shall provide Palladium with access to the Company’s officers, directors,
accountants, counsel and other advisors, and shall keep Palladium fully informed
of any events that might have a material effect on the financial condition of
the Company.  The Company represents and warrants to Palladium that all
information concerning the Company, including, without limitation, all
information contained in the Materials, will be true, complete and accurate in
all material respects and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements
therein not misleading in light of the circumstances under which such statements
are made. If at any time prior to the completion of the Offering an event occurs
which would cause the Materials (as supplemented or amended) to contain an
untrue statement of a material fact or to omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, the Company will notify Palladium
immediately of such event.

4.           (a)           The Company agrees to pay Palladium, upon each
closing with Investors in connection with the Offering (each, a “Closing”), the
following compensation: (i) 8% of the aggregate cash consideration raised in
such Closing from such Investors, and (ii) warrants to purchase such number of
shares of the common stock of the Company equal to 8% of the aggregate number of
fully diluted and/or converted shares of common stock as are purchased by
Investors taking into consideration any increase in shares on the same terms and
conditions as the warrants purchased by the Investors (the “Warrants”). Half of
the Warrants that Palladium will receive will be Series E Stock Purchase
Warrants and half of the Warrants that Palladium will receive will be Series F
Stock Purchase Warrants.

(b)           The Company agrees to pay or issue to Palladium, upon and in the
event of receipt by the Company of $250,000 from Ralph Reider or one of his
affiliates on or before May 17, 2010, Two Million (2,000,000) fully paid and
non-assessable shares of the common stock of the Company (the “Compensation
Shares”).

(c)           The Compensation Shares are payable solely upon consummation of
the acquisition of the stock or assets of AquaMed Technologies, Inc. by the
Company and the satisfaction of the conditions set forth in Section 4(b)
above. The fees set forth in Section 4(a) are payable for (i) any Closing that
occurs during the Term with respect to Investors introduced by Palladium, or
(ii) any private placement of unregistered securities by the Company (a “Private
Placement”) at any time during the 18-month period following the Term if such
Private Placement involves an Investor introduced by Palladium that has
previously concluded a Closing with the Company.  Notwithstanding anything to
the contrary set forth herein (including Section 2 of this Agreement), after the
initial Closing, Palladium shall only receive the compensation set forth in
Section 4(a) above solely with respect to Investors introduced to the Company by
Palladium and shall not receive any compensation from proceeds received by the
Company from Investors that were not introduced to the Company by Palladium.
 
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(d)           The Warrants will be purchased for a nominal sum and will have the
same terms as the Series E and Series F Stock Purchase Warrants, as the case may
be.

(e)           All cash compensation payable hereunder by the Company to
Palladium shall be paid by wire transfer.

5.           The Company shall reimburse Palladium for its reasonable and
customary out-of-pocket and incidental expenses incurred during the Term,
including the fees and expenses of its legal counsel and those of any advisor
retained by Palladium, not to exceed $5,000 in the aggregate.

6.           The Company agrees to provide indemnification as set forth in Annex
A attached hereto and made a part hereof.

7.           Upon a Closing, the Company agrees that Palladium has the right to
place notices and/or advertisements in financial and other newspapers and
journals (whether in print or on the internet), and to publicize on its own
website and/or marketing materials, at its own expense, describing its services
to the Company hereunder.

8.           The provisions of Sections 4, 5, and 6 (including, without
limitation, the provisions of indemnification referred to in Section 6) shall
survive the expiration or termination of this Agreement.

9.           The Company represents to Palladium that there is no other person
or entity that is or will be entitled to a finder's fee or any type of brokerage
commission in connection with the transactions contemplated by this Agreement as
a result of any agreement or understanding with it; provided, however, it is
understood and agreed that Palladium may work on the Offering with one or more
co-placement agents and it shall be the sole responsibility of Palladium to
compensate such co-placement agents for their fees related to such work.  

10.          Nothing contained in this Agreement shall limit or restrict the
right of Palladium or of any member, employee, agent or representative of
Palladium, to be a shareholder, member, partner, director, officer, employee,
agent or representative of, or to engage in, any other business, whether of a
similar nature or not, nor to limit or restrict the right of Palladium to render
services of any kind to any other corporation, company, firm, individual or
association.
 
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11.           The failure or neglect of the parties hereto to insist, in any one
or more instances, upon the strict performance of any of the terms or conditions
of this Agreement, or their waiver of strict performance of any of the terms or
conditions of this Agreement, shall not be construed as a waiver or
relinquishment in the future of such term or condition, but the same shall
continue in full force and effect.

12.           Any notices hereunder shall be in writing, and shall be sent to
the Company and to Palladium at their respective addresses set forth above.  Any
notice shall be given by registered or certified mail, postage prepaid, and
shall be deemed to have been given when deposited in the United States
mail.  Either party may designate any other address to which notice shall be
given by giving written notice to the other party of such change of address in
the manner herein provided.

13.           This Agreement shall inure to the benefit of and be binding upon
the respective, Affiliates, successors and assigns of the parties hereto.  The
term “Affiliates” shall mean, with respect to any person or entity, any other
person or entity who, directly or indirectly, through one or more intermediaries
controls, is controlled by, or is under common control with such person or
entity and any spouse, parent or issue of any such person; “control” means the
power, directly or indirectly, to direct or cause the direction of the
management and policies of a person or entity whether through ownership of
voting securities, by contract or otherwise.

14.           This Agreement has been made in the State of New York and shall be
construed and governed in accordance with the laws thereof without giving effect
to principles governing conflicts of law.  The parties irrevocably agree that
any legal action or proceeding under, arising out of or in any manner relating
to this Agreement shall be brought exclusively in any court of competent
jurisdiction in the County of New York, State of New York.  Each of the parties,
by its execution and delivery of this Agreement, expressly and irrevocably
assents and submits to the jurisdiction of any of such courts in any such action
or proceeding.  The parties further irrevocably consent to the service of any
complaint, summons, notice or other process relating to any such action or
proceeding by delivery thereof to such party by hand or by registered or
certified mail in the manner prescribed in Section 12 hereof.  The parties
further irrevocably consent that any judgment rendered by such court in the
State of New York may be entered in other court having competent jurisdiction
thereof.

15.           This Agreement contains the entire agreement between the parties,
may not be altered or modified, except in writing and signed by the party to be
charged thereby, and supersedes any and all previous agreements between the
parties relating to the subject matter hereof.

16.           Palladium will not have any rights or obligations in connection
with the sale and purchase of the Units contemplated by this Agreement except as
expressly provided in this Agreement.  In no event will Palladium be obligated
to purchase the Securities for its own account or for the accounts of its
customers.  Palladium will have the right, but not the obligation, however, to
determine the allocation of the Units among potential purchasers introduced by
Palladium (or its co-placement agents), provided that such allocation is
reasonably acceptable to the Company.
 
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17.           Palladium is acting as financial advisor and is not an expert on,
and cannot render opinions regarding, legal, accounting, regulatory or tax
matters. The Company should consult with its other professional advisors
concerning these matters before undertaking the Offering.  All services, advice
and information and reports provided by Palladium to the Company in connection
with this assignment shall be for the sole benefit of the Company and shall not
be relied upon by any other person.  Notwithstanding anything to the contrary
contained herein, it is understood and agreed that there are no third-party
beneficiaries to this Agreement.

Palladium is delighted to accept this engagement and looks forward to working
with you on this assignment.  Please confirm that the foregoing correctly sets
forth our understanding by signing the enclosed duplicate of this letter in the
space provided and returning it, whereupon this letter shall constitute a
binding agreement as of the date first above written.
 

 
Very truly yours,

PALLADIUM CAPITAL ADVISORS, LLC
         
 
By: 
/s/ Joel Padowitz      
Joel Padowitz, Chief Executive Officer
         

 
ACCEPTED AND AGREED
AS OF THE DATE FIRST
ABOVE WRITTEN:

HEPALIFE TECHNOLOGIES INC.
       
By: 
/s/ Amit S. Dang    
Amit S. Dang, Chief Executive Officer
       

 
[Annex A follows]
 
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Annex A
 
Indemnification Provisions

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In connection with the engagement of Palladium by the Company pursuant to the
Agreement, the Company hereby agrees as follows:

1.
In connection with or arising out of or relating to the engagement of Palladium
under the Agreement, or any actions taken or omitted, services performed or
matters contemplated by or in connection with the Agreement, the Company agrees
to reimburse Palladium, its affiliates and their respective members, officers,
employees, agents and controlling persons (each an “Indemnified Party”) promptly
upon demand for actual, out-of-pocket expenses (including reasonable fees and
expenses for legal counsel) as they are incurred in connection with the
investigation of, preparation for or defense of any pending or threatened claim,
or any litigation, proceeding or other action in respect thereof (collectively,
a “Claim”).  The Company also agrees (in connection with the foregoing) to
indemnify and hold harmless each Indemnified Party from and against any and all
out-of-pocket losses, claims, damages and liabilities, joint or several, to
which any Indemnified Party may become subject, including any amount paid in
settlement of any litigation or other action (commenced or threatened) to which
the Company shall have consented in writing (such consent not to be unreasonably
withheld), whether or not any Indemnified Party is a party and whether or not
liability resulted; provided, however, that the Company shall not be liable
pursuant to this paragraph in respect of any loss, claim, damage or liability to
the extent that a court or other agency having competent jurisdiction shall have
determined by final judgment (not subject to further appeal) that such loss,
claim, damage or liability was incurred solely as a direct result of the willful
misconduct or gross negligence of such Indemnified Party.  The Company also
agrees that no Indemnified Party shall have any liability (whether direct or
indirect, in contract or tort or otherwise) to the Company or its partners,
security holders or creditors related to or arising out of the engagement of
Palladium pursuant to, or the performance by Palladium of the services
contemplated by, this Agreement except to the extent that any loss, claim,
damage or liability is determined in a final judgment (not subject to further
appeal) by a court to have resulted solely from willful misconduct or gross
negligence of Palladium.

2.
The Company will not, without the prior written consent of each Indemnified
Party, settle, compromise or consent to the entry of any judgment in any pending
or threatened Claim in respect of which indemnification may be reasonably sought
hereunder (whether or not any Indemnified Person is an actual or potential party
to such Claim), unless such settlement, compromise or consent includes an
unconditional, irrevocable release of each Indemnified Person against whom such
Claim may be brought hereunder from any and all liability arising out of such
Claim.

 
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3.
In the event any Indemnified Party is requested or required to appear as a
witness in any action, suit or proceeding brought by or on behalf of or against
the Company or any affiliate or any participant in the Offering covered hereby
in which such Indemnified Party is not named as a defendant, the Company agrees
to reimburse Palladium and such Indemnified Party for all reasonable
disbursements incurred by them in connection with such Indemnified Party’s
appearing and preparing to appear as a witness, including, without limitation,
the fees and disbursements of their legal counsel, and to compensate Palladium
and such Indemnified Party in an amount to be mutually agreed upon.

4.
All amounts due under the Indemnification Provisions of this Annex A shall be
payable within ten (10) days after written notice of such event giving rise to
the indemnification obligations, and if not paid within such 10-day period, such
amounts shall bear interest at a rate of 1.5% per month or at the highest rate
permitted under the laws of the State of New York, whichever rate is lower.

5.
These Indemnification Provisions shall remain in full force and effect in
connection with the transactions contemplated by the Agreement whether or not
consummated, and shall survive the expiration or termination of the Agreement,
and shall be in addition to any liability that the Company might otherwise have
to any Indemnified Party under the Agreement or otherwise.

6.
Each party hereto consents to personal jurisdiction and service of process and
venue in any court in the State of New York in which any claim for indemnity is
brought by any Indemnified Person.

 
 
PALLADIUM CAPITAL
ADVISORS, LLC
 
HEPALIFE TECHNOLOGIES INC.
                         
By: 
/s/ Joel Padowitz  
By: 
/s/ Amit S. Dang    
Joel Padowitz
Chief Executive Officer
   
Amit S. Dang
Chief Executive Officer
             

 
 
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