AGREEMENT
AND COMPLETE AND

    FULL GENERAL
RELEASE

     

    Dana A.
Marshall (“Executive”) and Applied Energetics, Inc., (the “Company”), have
agreed to conclude their employment relationship.  The parties have
agreed that, based upon Executive’s past service to Company and the parties’
mutual desire to amicably conclude the employment relationship, that Executive
and Company enter into this Agreement and Complete and Full General Release
(“Agreement”).  In consideration of the sum to be paid and other
promises set out in this Agreement, the receipt and sufficiency of which are
hereby acknowledged, and intending to be legally bound, the parties agree to the
following terms (capitalized terms used herein and not otherwise defined herein
shall have the same meanings as ascribed to such terms in the Employment
Agreement entered into on August 18, 2008 by and between the Company and the
Executive, as amended (the “Employment Agreement”)):

     

    1.           Conclusion of
Employment.  Executive’s employment by Company will terminate
on March 31, 2009 (“Separation Date”).  Executive hereby terminates
his position as Chairman of the Board, Chief Executive Officer and President (a
reporting a person and a named executive officer with respect to the Company
under the federal securities laws) and director and any other positions he holds
with the Company or any subsidiary of the Company.  Executive and the
Company hereby waive any and all rights to receive notice of termination of
Executive’s employment under the Employment Agreement.

     

    2.           Payment Upon Separation;
Consideration for Executive’s Agreements.  Assuming the
Executive does not revoke this Agreement within the revocation period set forth
in Paragraph 6, below, in consideration for executing this Agreement and
complying with its terms, Executive will receive as severance payments from the
Company pursuant to Section 5.4.2 of the Employment Agreement (i) $135,000 upon
the expiration of the revocation period set forth in Section 6 and (ii) twelve
(12) monthly payments of $29,167 per month, less appropriate tax withholdings
and authorized deductions, commencing on the first Company pay date subsequent
to the expiration of the revocation period.  Notwithstanding the
vesting and exercisability schedule in any stock option agreement between the
Company and the Executive, all unvested stock options granted by the Company to
the Executive shall vest and become exercisable upon the expiration of the
revocation period and all other unvested equity awards shall vest upon the
expiration of the revocation period.

     

    The
Company shall assume Executive’s obligations under (i) the lease for the
residence rented by Executive in Tucson, Arizona pursuant to the Employment
Agreement through the expiration of the lease term on September 30, 2009 and
(ii) the lease for the automobile leased by Executive pursuant to the Employment
Agreement through the expiration of the lease term on September 25,
2009.  Executive represents and warrants to the Company that a true
and correct copy of the lease have been delivered to the
Company.  Executive shall vacate the premises covered by the
residential lease and deliver all sets of keys to such premises and the original
lease to the Company on or before May 31, 2009, and leave such premises in good
condition.  Executive shall deliver the automobile in good condition
and all sets of keys and the original registration and the original lease to
such automobile to the Company upon execution of this Agreement.  The
Company agrees to indemnify and hold harmless Executive for all losses,
liabilities, expenses and claims under the leases described in this Section 2
(other than for damages caused to the leased premises or automobile by
Executive).

    


    Initials:
Executive _________    Company _________

    
      
         


      

      
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    3.           Health Insurance Transitional
Support.  Company will comply with its obligations and provide
all required notices to Executive of Executive’s rights under the Consolidated
Omnibus Budget Reconciliation Act ("COBRA").

     

    4.           Confidentiality.  Executive
agrees to keep the terms of this Agreement strictly
confidential.  Executive may only disclose the information in this
Agreement to Executive’s immediate family, attorney(s) and/or tax advisor(s)
unless ordered to do so by a duly authorized subpoena issued by an appropriate
agency or court of law.

     

    5.           Confidential Information;
Non-solicitation and Cooperation.   Executive
acknowledges, it agrees and reaffirms that he remains bound by the provisions of
Sections 7 and 8 of the Employment Agreement, which sections are incorporated
herein and remain in full force and effect.

     

    6.           Waiver of
Claims.  Executive, individually and on behalf of Executive’s
estate, heirs, personal representatives, and assigns hereby release, remise and
forever discharge the Company of and from any and all actions, causes of action,
claims, debts, dues, accounts, accountings, losses, liabilities, contracts,
commitments, rights, obligations, damages, costs and expenses, including without
limitation litigation expenses and attorneys fees, of any nature whatsoever,
whether known or unknown, liquidated or contingent, whether now existing or
hereafter arising, (each individually a “Claim” and all of the foregoing
collectively called “Claims”), which Executive had, now has, or may in the
future have, including without limitation any Claims: (a) for libel, slander,
defamation, or tortuous interference with actual or prospective business or
contractual relations, which are based in whole or in part on any facts,
circumstances or events which are now existing or which occurred on or prior to
the date hereof, or (b) for breach of contract, wrongful discharge, non-payment
of wages or other sums with the sole exception of Claims arising under the
express provisions of this Agreement.

     

    Except as
expressly provided to the contrary in the first paragraph of this Section 6, the
Claims and rights being released in this section include, but are not limited
to: all Claims and rights arising from or in connection with any agreement of
any kind Executive may have had with Company, or in connection with Executive’s
status or separation of employment from Company; all Claims and rights for
wrongful discharge (whether in common law or pursuant to the Arizona Employment
Protection Act), breach of contract, either express or implied, emotional
distress, back pay, front pay, benefits, fraud, or misrepresentation; all Claims
and rights, if any, arising under the Civil Rights Acts of 1964 and 1991, as
amended, (which prohibits the discrimination in employment based on race, color,
national origin, religion or sex), the Americans with Disabilities Act (ADA), as
amended (which prohibits discrimination in employment based on disability), the
Age Discrimination in Employment Act (ADEA), as amended (which prohibits age
discrimination in employment), the Employee Retirement Income Act of 1974
(ERISA), as amended, all other wage and hour/wage payment statutes and laws, the
Arizona Civil Rights Act and all similar state or local fair employment
practices statutes and laws, and the Health Insurance Portability and
Accountability Act (HIPPA), to the extent such statutes and laws may be
applicable; and, any and all other Claims or rights whether arising under
federal, state, or local law, rule, regulation, constitution, ordinance or
public policy.

    


    Initials:
Executive _________    Company _________

    
      
         


      

      
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    Executive
acknowledges that the Executive is waiving any rights Executive may have under
the Age Discrimination in Employment Act, that Executive was advised to review
this Agreement with Executive’s legal counsel before signing the Agreement, that
Executive has been advised to carefully read the provisions of this release,
that Executive understands its contents, that Executive has twenty one (21) days
from the date Executive received a copy of this release to consider entering
into this release and accepting the payments provided for herein, and that if
Executive signs and returns this release before the end of the 21-day period,
Executive will have voluntarily waived Executive’s right to consider this
release for the full twenty one (21) days.

     

    Executive
acknowledges that Executive may revoke this release within seven (7) days of
Executive’s execution of this Agreement by submitting written notice of
Executive’s revocation of this release and of this Agreement to the Chief
Financial Officer of the Company.  Executive also understands that
this release and Agreement shall not become effective or enforceable until the
expiration of that 7-day period without Executive having given such
notice.  If Executive gives such notice of revocation, then this
Agreement will be null and void and of no further force and effect.

     

    Executive
agrees that if any provision of this release is or shall be declared invalid or
unenforceable by a court of competent jurisdiction, then such provision will be
modified only to the extent necessary to cure such invalidity and with a view to
enforcing the parties’ intention as set forth in this release to the extent
permissible and the remaining provisions of this release shall not be affected
thereby and shall remain in full force and effect.

     

    7.           No Wronging by
Company.  Executive acknowledges and understands that by
offering and/or executing this Agreement, Company does not admit, and indeed
expressly denies, that Company, its employees, managers, agents, directors and
officers have done anything improper or violated any law.  The signing
of this Agreement is not an admission of liability or wrongdoing by Company, its
employees, managers, agents, directors or officers.

     

    8.           Taxes.  Company will
withhold all appropriate taxes and issue to Executive an IRS Tax Form
W-2.  The parties acknowledge, however, that there may be tax
consequences for Executive in excess of the amounts withheld from the
consideration described in Paragraphs 2 and 3 of this Agreement.  It
is expressly understood that Executive is responsible for all taxes which
Executive may owe as a result of Executive receiving the consideration under
this Agreement.  Executive expressly understands that if
Executive or Executive’s family owe taxes, or additional taxes, at any time as a
result of the impact of this Agreement, that Executive alone is responsible for
making those payments and that Executive will not seek additional sums from
Company to make those payments.  Similarly, if Executive seeks to
recover certain portions of or all of the withheld amounts from the appropriate
taxation authorities, such a recovery would be a private matter between
Executive and the appropriate government agency or agencies.  Company
will not provide Executive with, nor will Executive ask for, any additional funds to
offset the amount paid or owed in taxes, accrued interest, penalties or for
attorneys fees which Executive may incur in resolving Executive’s claims with
any government agency or agencies or courts of law.

     

    Initials:
Executive _________    Company _________

    
      
         


      

      
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    9.           Executive’s Coverage Under Directors
and Officers Liability Policy.  The conclusion of Executive’s
employment with Company does not affect Executive’s coverage under Company’s
Directors and Officers Liability Policy for acts or omissions by Executive which
occurred in the course of Executive’s performance of Executive’s duties and
responsibilities on behalf of Company.  Executive will not have
coverage under Company’s Directors and Officers Liability Policy for services,
acts or omissions to act by Executive subsequent to the Separation
Date.

     

    10.           Complete
Interpretation.  The terms contained in this Agreement are the
only terms agreed upon by Executive and Company.  Notwithstanding any
other statements, all benefits which Executive had as a result of Executive’s
employment, and which are not expressly listed in this Agreement, terminate in
accordance with Company’s benefit contracts, but in no case later than the end
of the revocation period referred to in Section 6.  It is the express
intent of the parties that this Agreement fully integrates and expressly
replaces any other terms (other than sections 7 and 8 of the Employment
Agreement which sections are incorporated herein and remain in full force and
effect), conditions, conversations, discussions, or any other issues which were
discussed regarding Executive’s employment at Company, or for any and all
reasons based on conduct which has occurred through the date of executing this
Agreement.  With the exception of the Confidentiality and Assignment
Acknowledgement and Agreement signed by Executive while employed by Company and
Sections 7 and 8 of the Employment Agreement (which sections are incorporated
herein and remain in full force and effect), any other conversations, promises
or conditions which do not appear in this document are waived or rejected by
agreement of Executive and Company.

     

    11.           Interpretation and
Enforcement.  Because Executive has been advised to seek
counsel prior to signing this Agreement, the parties agree that the general rule
that the document shall be interpreted against the party that drafted it shall
not apply to any subsequent issue of interpretation.  In the event a
dispute arises over the terms of this Agreement, both Executive and Company are
equal without regard to who authored this document.  All claims,
disputes or issues of interpretation which arise, or may arise, out of this
Agreement shall be resolved by an Arbitrator under the American Arbitration
Association’s Rules and Procedures for Employment Cases.  The
Arbitrator shall have the power to order appropriate remedies for any proven
breaches of this Agreement.  However, each side shall bear its own
attorneys fees.  The decision and award of any Arbitrator shall be
final and binding.  The Parties agree to keep any Decision and Award
confidential.

     

    Initials:
Executive _________    Company _________

    
      
         


      

      
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    12.           Counterparts.  This
Agreement may be signed in separate counterparts.

     

    13.           Signatures

    


    
      
        	
                \s\ Dana A. Marshall

              	 
      	
                March
      31, 2009

              
	
                Dana
      A. Marshall

              	 
      	 
      
	
                  \s\ Kenneth M.
      Wallace

              	 
      	
                March
      31, 2009

              
	
                Applied
      Energetics, Inc.

              	
                  

              	 
      


      

    

    


    
      
        
          	
                  By:

                	
                  Kenneth
      M. Wallace

                
	 
      	
                  Chief
      Financial Officer

                


        

      

    

    


    Authorized
Agent of Company

    


    Presented
to Executive on: March 30, 2009 and finalized March 31, 2009

    


    Initials:
Executive _________    Company _________

    
      
         


      

      
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