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                                                                   EXHIBIT 10.11


                           PLACEMENT AGENCY AGREEMENT


         This Placement Agency Agreement (this "Agreement") is made and entered
into as of August 26, 2003 (the "Effective Date"), by and between Verdisys,
Inc., a California corporation (the "Company"), and Stonegate Securities, Inc.,
a Texas corporation ("Stonegate").

         WHEREAS, the Company desires to retain Stonegate as its non-exclusive
placement agent, and Stonegate is willing to act in such capacity, in each case
subject to the terms and conditions of this Agreement.

         NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the Company and Stonegate (each a "Party" and
collectively, the "Parties") hereby agree as follows:

1.       RETENTION OF STONEGATE; SCOPE OF SERVICES.

         (a)   Subject to the terms and conditions set forth herein, the Company
               hereby retains Stonegate to act as the non-exclusive placement
               agent to the Company during the Contract Period (as defined in
               Section 2 below), and Stonegate hereby agrees to be so retained.

         (b)   As the non-exclusive placement agent to the Company, Stonegate
               will have the non-exclusive right during the Contract Period to
               identify for the Company prospective purchasers (collectively,
               the "Purchasers" and each individually, a "Purchaser") in one or
               more placements (each , a "Placement", and collectively, the
               "Placements") of debt and/or equity securities to be issued by
               the Company, the type and dollar amount being as mutually agreed
               to by the Parties (the "Securities"). The Company and Stonegate
               understand that the Company intends to undertake an initial
               "bridge" Placement of up to $3 million of Securities (the "Bridge
               Placement"), which Placement shall only qualify as such if it is
               completed on or prior to September 30, 2003. Thereafter, the
               Company intends to undertake a second Placement. All provisions
               of this Agreement applicable to a Placement shall also be
               applicable to the Bridge Placement, unless otherwise provided
               herein.

         (c)   Terms of the Placements shall be as set forth in subscription
               documents, including any stock purchase or subscription
               agreement, escrow agreement, registration rights agreement,
               warrant agreement and/or other documents to be executed and
               delivered in connection with the Placement (collectively, the
               "Subscription Documents"). The Placements are intended to be
               exempt from the registration requirements of the Securities Act
               of 1933, as amended (the "Securities Act"), pursuant to
               Regulation D ("Regulation D") of the rules and regulations of the
               Securities and Exchange Commission (the "SEC") promulgated under
               the Securities Act.

         (d)   Stonegate will act on a best efforts basis and will have no
               obligation to purchase any of the Securities offered in the
               Placements. During the Contract Period, Stonegate shall have the
               non-exclusive right to arrange for all sales of Securities in the
               Placements, including without limitation the non-exclusive right
               to identify potential buyers for the Securities. All sales of
               Securities in the Placements shall be subject to


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               the approval of the Company, which approval may be withheld in
               the Company's sole discretion.

2.       CONTRACT PERIOD AND TERMINATION.

         (a)   Stonegate shall act as the Company's non-exclusive placement
               agent under this Agreement for a period commencing on the
               Effective Date, and continuing until terminated by either Party
               upon 30 days notice to the other Party (the "Contract Period").

         (b)   Upon termination, neither party will have any further obligation
               under this Agreement, except as provided in Sections 5, 6, 7, 8,
               9 and 10 hereof.

3.       REPRESENTATIONS AND WARRANTIES OF THE COMPANY.

         The representations and warranties of the Company made to the
         Purchasers as set forth in the Subscription Documents are hereby
         incorporated by reference as of the date of consummation of the sale of
         the Securities (the "Closing") and all such representations and
         warranties are hereby deemed made by the Company directly to Stonegate
         as though set forth in full herein.

4.       COVENANTS OF THE COMPANY.

         The Company covenants and agrees as follows:

         (a)   Neither the Company nor any affiliate of the Company (as defined
               in Rule 501(b) of Regulation D) will sell, offer for sale or
               solicit offers to buy or otherwise negotiate in respect of any
               security (as defined in the Securities Act) of the Company which
               will be integrated with the sale of the Securities in a manner
               which would require the registration under the Securities Act of
               the Securities.

         (b)   Any and all filings and documents required to be filed in
               connection with or as a result of the Placement pursuant to
               federal and state securities laws are the responsibility of the
               Company and will be filed by the Company.

         (c)   Any press release to be issued by the Company announcing or
               referring to the Placement shall be subject to the prior review
               of Stonegate, and each such press release shall, at the request
               of Stonegate, identify Stonegate as the placement agent.
               Stonegate shall be permitted to publish a tombstone or similar
               advertisement upon completion of the Placement identifying itself
               as the Company's placement agent with respect thereto. This
               Agreement shall not be filed publicly by the Company without the
               prior written consent of Stonegate, unless required by applicable
               law or regulation.

5.       FURNISHING OF COMPANY INFORMATION; CONFIDENTIALITY.

         (a)   In connection with Stonegate's activities hereunder on the
               Company's behalf, the Company shall furnish Stonegate with all
               reasonable information concerning the Company and its operations
               that Stonegate deems necessary or appropriate (the


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               "Company Information") and shall provide Stonegate with
               reasonable access to the Company's books, records, officers,
               directors, employees, accountants and counsel. The Company
               acknowledges and agrees that, in rendering its services
               hereunder, Stonegate will be using and relying upon the Company
               Information without independent verification thereof or
               independent appraisal of any of the Company's assets and may, in
               its sole discretion, use additional information contained in
               public reports or other information furnished by the Company or
               third parties.

         (b)   Stonegate agrees that the Company Information will be used solely
               for the purpose of performing its services hereunder. Subject to
               the limitations set forth in subsection (c) below, Stonegate will
               keep the Company Information provided hereunder confidential and
               will not disclose such Company Information or any portion
               thereof, except (i) to a third party contacted by Stonegate on
               behalf of, and with the prior approval of, the Company pursuant
               hereto who has agreed to be bound by a confidentiality agreement
               satisfactory in form and substance to the Company, or (ii) to any
               other person for which the Company's consent to disclose such
               Company Information has been obtained.

         (c)   Stonegate's confidentiality obligations under this Agreement
               shall not apply to any portion of the Company Information which
               (i) at the time of disclosure to Stonegate or thereafter is
               generally available to and known by the public (other than as a
               result of a disclosure directly or indirectly by Stonegate in
               violation of this Agreement); (ii) was available to Stonegate on
               a non-confidential basis from a source other than the Company,
               provided that such source is not and was not bound by a
               confidentiality agreement with the Company; (iii) has been
               independently acquired or developed by Stonegate without
               violating any of its obligations under this Agreement; or (iv)
               the disclosure of which is legally compelled (whether by
               deposition, interrogatory, request for documents, subpoena, civil
               or administrative investigative demand or other similar process).
               In the event that Stonegate becomes legally compelled to disclose
               any of the Company Information, Stonegate shall provide the
               Company with prompt prior written notice of such requirement so
               that the Company may seek a protective order or other appropriate
               remedy and/or waive compliance with the terms of this Agreement.

         (d)   The obligations of the Parties under this Section 5 shall survive
               the termination of this Agreement for 12 months.

6.       FEES AND EXPENSES.

         (a)   As compensation for services rendered by Stonegate in connection
               with the Bridge Placement, the Company agrees to pay Stonegate a
               fee of five percent (5%) of the gross proceeds from the sale of
               Securities sold in the Bridge Placement to any Stonegate Contacts
               (as defined in Section 8 below) (the "Bridge Agency Fee"). The
               Bridge Agency Fee shall be paid immediately upon the closing of
               each sale of Securities by the Company in the Bridge Placement.

         (b)   As compensation for services rendered by Stonegate in connection
               with a Placement (excluding the Bridge Placement), the Company
               agrees to pay Stonegate a fee of


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               eight percent (8%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts in the
               event total gross proceeds are less than $5 million, a fee of
               seven percent (7%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts if total
               gross proceeds are between $5 million and $10 million, and a fee
               of six percent (6%) of the gross proceeds from the sale of
               Securities sold in the Placement to Stonegate Contacts in the
               event total gross proceeds are in excess of $10 million (the
               "Agency Fee"). The Agency Fee shall be paid immediately upon the
               closing of each sale of Securities by the Company

         (c)   In order to compensate Stonegate for its initial diligence
               efforts, upon execution of this Agreement by the Parties, the
               Company shall issue and deliver to Stonegate a certificate
               evidencing 20,000 shares of the Company's common stock, no par
               value (the "Shares"). The Shares will not be registered under the
               Securities Act; provided, however, in the event Purchasers in the
               Placements are granted registration rights, the holders of the
               Shares shall automatically be granted identical registration
               rights.

         (d)   In addition, the Company shall also promptly reimburse Stonegate
               for all reasonable out-of-pocket expenses incurred by Stonegate
               and its directors, officers and employees in connection with the
               performance of Stonegate's services under this Agreement. For
               these purposes, "out-of-pocket expenses" shall include, but not
               be limited to, attorney's fees and costs, long distance
               telephone, facsimile, courier, mail, supplies, travel and similar
               expenses. Except for bills for long distance telephone,
               facsimile, federal express, courier, mail and supplies, Stonegate
               will not incur any expenses without the prior consent of the
               Company; and the Parties shall attempt to have the Company direct
               billed as often as possible for such expenses.

         (e)   Upon closing of the Bridge Placement, the Company agrees to issue
               to Stonegate a Securities Purchase Warrant (the "Bridge
               Representative's Warrant") entitling the holder(s) thereof to
               purchase an amount of Securities equal to five percent (5%) of
               the total number of Securities sold in the Bridge Placement to
               Stonegate Contacts for a period of five (5) years at an exercise
               price per share equal to the price at which the Securities are
               sold to Purchasers. The Representative's Warrant shall otherwise
               be substantially in the form of Exhibit A attached hereto.

         (f)   Upon closing of any Placement (excluding the Bridge Placement),
               the Company agrees to issue to Stonegate an additional
               Representative's Warrant entitling the holder(s) thereof to
               purchase an amount of Securities equal to ten percent (10%) of
               the total number of Securities sold in any such Placement to
               Stonegate Contacts for a period of five (5) years at an exercise
               price per share equal to the price at which the Securities are
               sold to Purchasers.

         (g)   The obligations of the Parties under this Section 6 shall survive
               the termination of this Agreement for any reason.

7.       INDEMNIFICATION.

         (a)   The Company agrees to indemnify and hold Stonegate harmless from
               and against any and all losses, claims, damages or liabilities
               (or actions, including securityholder


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               actions, in respect thereof) related to or arising out of
               Stonegate's engagement hereunder or its role in connection
               herewith, and will reimburse Stonegate for all reasonable
               expenses (including reasonable costs, expenses, awards and
               counsel fees and/or judgments) as they are incurred by Stonegate
               in connection with investigating, preparing for or defending any
               such action or claim, whether or not in connection with pending
               or threatened litigation in which Stonegate is a party. The
               Company will not, however, be responsible for any claims,
               liabilities, losses, damages or expenses which are finally
               judicially determined to have resulted primarily from the bad
               faith, gross negligence or willful misconduct of Stonegate. The
               Company also agrees that Stonegate shall not have any liability
               to the Company for or in connection with such engagement, except
               for any such liability for losses, claims, damages, liabilities
               or expenses incurred by the Company that result primarily from
               the bad faith, gross negligence or willful misconduct of
               Stonegate. In the event that the foregoing indemnity is
               unavailable (except by reason of the bad faith or gross
               negligence of Stonegate), then the Company shall contribute to
               amounts paid or payable by Stonegate in respect of its losses,
               claims, damages and liabilities in such proportion as
               appropriately reflects the relative benefits received by, and
               fault of, the Company and Stonegate in connection with the
               matters as to which such losses, claims, damages or liabilities
               relate, and other equitable considerations. The foregoing shall
               be in addition to any rights that Stonegate may have at common
               law or otherwise and shall extend upon the same terms to and
               inure to the benefit of any director, officer, employee, agent or
               controlling person of Stonegate. The Company hereby consents to
               personal jurisdiction, service and venue in any court in which
               any claim which is subject to this agreement is brought against
               Stonegate or any other person entitled to indemnification or
               contribution under this subsection (a).

         (b)   Stonegate agrees to indemnify and hold the Company harmless from
               and against any and all losses, claims, damages or liabilities
               (or actions, including securityholder actions, in respect
               thereof) which are finally judicially determined to have resulted
               primarily from the bad faith, gross negligence or willful
               misconduct of Stonegate, and will reimburse the Company for all
               reasonable expenses (including reasonable costs, expenses, awards
               and counsel fees and/or judgments) as they are incurred by the
               Company in connection with investigating, preparing for or
               defending any such action or claim, whether or not in connection
               with pending or threatened litigation in which the Company is a
               party. In the event that the foregoing indemnity is unavailable,
               then Stonegate shall contribute to amounts paid or payable by the
               Company in respect of its losses, claims, damages and liabilities
               in such proportion as appropriately reflects the relative
               benefits received by, and fault of, the Company and Stonegate in
               connection with the matters as to which such losses, claims,
               damages or liabilities relate, and other equitable
               considerations. The foregoing shall be in addition to any rights
               that the Company may have at common law or otherwise and shall
               extend upon the same terms to and inure to the benefit of any
               director, officer, employee, agent or controlling person of the
               Company. Stonegate hereby consents to personal jurisdiction,
               service and venue in any court in which any claim, which is
               subject to this agreement, is brought against the Company or any
               other person entitled to indemnification or contribution under
               this subsection (b).


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         (c)   The obligations of the Parties under this Section 7 shall survive
               the termination of this Agreement.

8.       NON-CIRCUMVENTION.

         The Company hereby agrees that, for a period of one year from the end
         of the Contract Period or other termination of this Agreement, the
         Company will not enter into any agreement, transaction or arrangement
         with any of the institutions (including their agents, principals and
         affiliates and the accounts and funds which they manage or advise)
         which Stonegate has introduced, directly or indirectly, to the Company
         as prospective purchasers of the Securities in the Placements
         (collectively, the "Stonegate Contacts"), regardless of whether a
         transaction is consummated with such prospective purchasers, unless the
         Company notifies Stonegate in writing of the agreement, transaction or
         arrangement, and pays Stonegate a fee equal to the Agency Fee for
         securities of the Company sold to Stonegate Contacts.

9.       GOVERNING LAW.

         THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
         THE LAWS OF THE STATE OF TEXAS, WITHOUT GIVING EFFECT TO ANY CONFLICT
         OF LAWS PROVISIONS THEREOF.

10.      ARBITRATION.

         Stonegate and the Company will attempt to settle any claim or
         controversy arising out of this Agreement through consultation and
         negotiation in good faith and a spirit of mutual cooperation. Any
         dispute which the parties cannot resolve may then be submitted by
         either party to binding arbitration in Dallas, Texas under the rules of
         the American Arbitration Association for resolution. Nothing in this
         paragraph will prevent either party from resorting to judicial
         proceedings if (a) good faith efforts to resolve the dispute under
         these procedures have been unsuccessful or (b) interim relief from a
         court is necessary to prevent serious and irreparable injury.

11.      NO WAIVER.

         The failure or neglect of any party hereto to insist, in any one or
         more instances, upon the strict performance of any of the terms or
         conditions of this Agreement, or waiver by any party 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.      SUCCESSORS AND ASSIGNS.

         The benefits of this Agreement shall inure to the benefit of the
         Parties, their respective successors, assigns and representatives, and
         the obligations and liabilities assumed in this Agreement by the
         Parties shall be binding upon their respective successors and assigns.
         This Agreement may not be assigned by either Party without the express
         written consent of the other Party, which consent shall not be
         unreasonably withheld.


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13.      NOTICES.

         All notices and other communications required or permitted to be given
         under this Agreement shall be in writing and shall be delivered
         personally or sent by certified mail, return receipt requested,
         recognized overnight delivery service, or facsimile as follows:

                   If to the Company:

                   Verdisys, Inc.
                   201 Tipperary Lane
                   Alameda, CA 94502
                   Facsimile: (408) 873-0550
                   Attention: Andrew Wilson, Chief Financial Officer


                   If to Stonegate:

                   Stonegate Securities, Inc.
                   5950 Sherry Lane, Suite 410
                   Dallas, Texas  75225
                   Facsimile: (214) 987-1981
                   Attention: Scott Griffith, President


         Either Party may change its address or facsimile number set forth above
         by giving the other Party notice of such change in accordance with the
         provisions of this Section 13. A notice shall be deemed given (a) if by
         personal delivery, on the date of such delivery, (b) if by certified
         mail, on the date shown on the applicable return receipt, (c) if by
         overnight delivery service, on the day after the date delivered to the
         service, or (d) if by facsimile, on the date of transmission.

14.      NATURE OF RELATIONSHIP.

         The Parties intend that Stonegate's relationship to the Company and the
         relationship of each director, officer, employee or agent of Stonegate
         to the Company shall be that of an independent contractor and not as an
         employee of the Company or an affiliate thereof. Nothing contained in
         this Agreement shall constitute or be construed to be or create a
         partnership or joint venture between Stonegate and the Company or their
         respective successors or assigns. Neither Stonegate nor any director,
         officer, employee or agent of Stonegate shall be considered to be an
         employee of the Company by virtue of the services provided hereunder.

15.      MISCELLANEOUS.

         Stonegate's obligations under this Agreement are subject to the
         following general conditions:

         (a)   All relevant terms, conditions, and circumstances relating to the
               Placement will be reasonably satisfactory to Stonegate and its
               counsel.


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         (b)   Stonegate reserves the right to solicit the assistance of outside
               dealers ("Dealers") to assist in the offer and sale of the
               Placements; provided, however, that any such Dealers agree in
               writing to be bound by the terms of the Placement. It is
               understood that Stonegate, in its sole discretion, shall be
               entitled to pay over to any such Dealers any portion of the
               compensation received by Stonegate hereunder. The Company shall
               have no financial liability for any fees or expenses of any such
               Dealers.

16.      CAPTIONS.

         The Section titles herein are for reference purposes only and do not
         control or affect the meaning or interpretation of any term or
         provision hereof.

17.      AMENDMENTS.

         No alteration, amendment, change or addition hereto shall be binding or
         effective unless the same is set forth in a writing signed by a duly
         authorized representative of each Party.

18.      PARTIAL INVALIDITY.

         If it is finally determined that any term or provision hereof is
         invalid or unenforceable, (a) the remaining terms and provisions hereof
         shall be unimpaired, and (b) the invalid or unenforceable term or
         provision shall be replaced by a term or provision that is valid and
         enforceable and that comes as close as possible to expressing the
         intention of the invalid or unenforceable term or provision.

19.      ENTIRE AGREEMENT.

         This Agreement embodies the entire agreement and understanding of the
         Parties and supersedes any and all prior agreements, arrangements and
         understandings relating to the matters provided for herein.

20.      COUNTERPARTS.

         This Agreement may be executed in one or more counterparts, each of
         which shall be an original, but all of which together shall be
         considered one and the same agreement.


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         IN WITNESS WHEREOF, this Agreement has been executed as of the date
first written above by duly authorized representatives of the Company and
Stonegate.

                                             VERDISYS, INC.


                                             By: /s/ Andrew Wilson
                                             Title: Chief Financial Officer




                                             STONEGATE SECURITIES, INC.


                                             By: /s/ Scott Griffith
                                             Title: President


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