Document:

Unassociated Document

    April
      8, 2008

    

     

    VIA
      FEDERAL EXPRESS

    &
      ELECTRONIC DELIVERY (dennis.block@cwt.com,
      william.mills@cwt.com)
      

    

    Dennis
      Block, Esq.

    William
      Mills, Esq.

    Cadwalader,
      Wickersham & Taft LLP

    One
      World Financial Center

    Suite
      32-106

    New
      York. NY 10281

    Tel:
      212 504-5555

    Fax:
      212 504-5557

    E-mail:
      dennis.block@cwt.com,william.mills@cwt.com

    

    Dear
      Dennis:

    

    This
      letter agreement sets forth the terms of the severance benefits payable under
      Ezra’s May 12, 2006 employment agreement with The Children’s Place Retail
      Stores, Inc. (the “Company”). The terms set forth in this letter agreement are
      the same as presented in my letter to you dated December 28, 2007 with
      additional changes you requested in our conversation on April 8,
      2008.

    

    After
      you
      have had a chance to review this letter agreement with Ezra, kindly have Ezra
      execute this letter agreement in the appropriate space provided below for his
      signature to evidence his agreement with its terms (along with his election).
      Once I have received the fully executed copy of the letter agreement, I will
      process the payment of those benefits payable as a lump sum described below
      under “Section 6.01(a) Lump Sum Payment.”

    

    The
      benefits pertaining to Ezra’s separation, and terms under which the Company is
      prepared to pay these benefits, are described below.

    

    Section
      5.01 Notice.
      

    

    The
      Company continued salary payments and benefits through November 23, 2007, the
      60th day following September 24, 2007, the day of Ezra’s separation from the
      Company’s employ. We understand Ezra has raised an issue regarding the nature of
      his 

    separation.
      Under his position, it is not clear that these salary continuation payments
      (which totaled $173,077) were in fact required to be made. However, the Company
      elected to make salary continuation payments for the 60 day period to address
      the notice provision set forth in section 5.01 of the employment agreement,
      under an interpretation most favorable to Ezra. 

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      
        Dennis
          Block, Esq.

        April
          8,
          2008

        Page 2
          of
          7

      

       

    

    Section
      6.01(a) Lump Sum Payment.
      

    

    As
      noted
      in my letter to you dated December 18, 2007, I understand Ezra has been advised
      that regulations issued under Section 409A of the Internal revenue Code of
      1986,
      as amended (“Section 409A”) provide the basis for a claim that the lump sum
      payable under Section 5.01 may be paid prior to June 2, 2008 without adverse
      tax
      consequences under Section 409A. As agreed, should Ezra wish to receive this
      amount within the 6 month period following his separation (which we now believe
      may be anytime prior to June 2, 2008), the Company will require an
      indemnification to cover the potential tax penalty exposure for failure to
      properly report under Section 409A, in the form set forth in this letter
      agreement. In any event, the amount of the payment would be equal to $3 million,
      plus interest at the applicable federal short-term rate calculated from November
      23, 2007 until the date of payment (less applicable withholdings). 

    

    Section
      6.01(b) and 4.02 Benefits.
      

    

    Bonus,
      Option Vesting.
      No
      bonus was payable with respect to the 2007 fiscal year, and none of Ezra’s
      outstanding options were unvested, so the only benefits payable under this
      section are with respect to benefits generally provided to senior executives
      as
      described in Section 4.02. 

    

    Medical,
      Dental Insurance.
      To
      address the provision of benefits for the 36-month period commencing November
      24, 2007 (the “Coverage Period”), the Company has continued to provide benefits
      to Ezra under its self-insured medical, dental and prescription plans. I have
      been advised Ezra completed his COBRA election forms and is being provided
      the
      coverage described in this paragraph to him. The Company will continue to
      provide such benefits for any period up to the eighteen-month period permitted
      under COBRA and, following such period, will purchase from an unaffiliated
      insurer commercially available insurance coverage to provide to Ezra such
      medical, dental and prescription plan benefits as are reasonably equivalent
      to
      those medical, dental and prescription plan benefits provided by the Company
      to
      the Company’s other senior executives (other than those benefits provided under
      or pursuant to separately negotiated individual employment agreements or
      arrangements) at a reasonable equivalent cost for the remaining period of the
      Coverage Period. The Company reserves the option to purchase such commercially
      available coverage for such benefits at any time during the Coverage Period
      in
      full satisfaction of this provision. Under Section 6.03, any medical, dental
      or
      prescription benefits provided to Ezra by an unaffiliated person during the
      Coverage Period shall be primary to the benefits provided by the Company. I
      have
      been advised that payment of these benefits is clearly exempt from the
      applicability of Section 409A.

    

    Life
      Insurance Policy to Replace Ezra’s current Group Insurance.
      The
      cost to replace Ezra’s current group life insurance policy in face amount of
      $750,000 is $18,888, which the Company will pay to Ezra on June 2, 2008, or
      per
      your request is reflected in Option 2 attached hereto, since the payment would
      not be exempt from the applicability of Section 409A.

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      
        Dennis
          Block, Esq.

        April
          8,
          2008

        Page 3
          of
          7

         

      

    

    Individual
      Life Insurance.
      During
      the Coverage Period, the Company will continue to pay $20,000 in annual premiums
      on the existing individual insurance policy on Ezra’s life, provided that Ezra
      will pay any premium payment due after November 23, 2007 and prior to June
      2,
      2008 directly to the insurance carrier, and the Company shall
      reimburse

    Ezra
      for
      such premium payment upon the later of a) the Company’s receipt of documentation
      confirming the payment, and b) June 2, 2008, or as otherwise requested by you
      as
      reflected in Option 2 attached hereto. 

    

    Services
      of a Personal Driver.
      The
      Company will also pay Ezra the sum of $200,000, which has been determined to
      be
      the reasonable costs of a car service to be available to Ezra for 8 hours a
      day
      during the Coverage Period, on June 2, 2008, or as otherwise requested by you
      as
      reflected in Option 2 attached hereto. 

     

    Other
      Benefits.
      The
      only retirement plan provided by the Company is the 401(k) Savings Plan. Ezra
      has already exceeded the covered compensation limit for 2007 and will not be
      eligible to participate in the future since he is not an active employee.
      However, we have agreed that the value of this benefit to Ezra is $10,012,
      which
      the Company will pay on June 2, 2008, or as otherwise requested by you as
      reflected in Option 2 attached hereto. Ezra is ineligible to participate in
      the
      Company’s stock purchase plan due to his level of ownership in the Company.
      Finally, the Company’s short-term disability plans provide benefits in the form
      of salary continuation and the Company’s long term disability plan is designed
      to replace a portion of lost income due to disability. Since Ezra’s severance
      benefit already compensates him for his salary during the Coverage Period,
      there
      is no income to replace. In addition, the Company has been unable to locate
      an
      insurer that will provide this coverage to an unemployed
      individual.

    

    Stock
      Options.
      

    

    The
      1997
      Stock Option Plan pursuant to which Ezra’s options were granted provides that
      his options “shall terminate immediately upon the termination for any reason of
      the holder’s employment or services,” with the holder having 90 days following
      such termination in which to exercise his options. While the language could
      be
      construed otherwise, the Company, through its Compensation Committee on the
      advice of counsel, has taken the position that the options will remain
      exercisable until the earlier of their expiration dates and 90 days following
      his termination of service as a board member, in accordance with applicable
      Company policies. The terms of the January 27, 2006 Transfer Restriction
      Agreement between Ezra and the Company remain in effect.

    

    In
      summary, to address all of Ezra’s benefits remaining payable by the Company, in
      addition to the $173,077 it has already paid to Ezra, the Company proposes
      two
      options by which Ezra’s benefits will be delivered. Please have Ezra execute his
      name following the option he selects, in the signature block provided for this
      purpose. By executing his name under either option, Ezra agrees he is
      voluntarily and knowingly releasing the Company (including its affiliated
      companies), and the officers, directors and agents thereof (collectively, the
      “Releasees”) from any and all claims pertaining to benefits under the May 12,
      2006 employment agreement between him and all applicable employment laws
      identified in Annex 1, and the Company’s reporting of such benefits to
      applicable taxing authorities. Ezra has the right to consider this release
      for
      21 days and, for seven (7) calendar days following his execution of this letter
      agreement, to revoke it. To be effective, his revocation must be in writing
      and
      delivered by hand or overnight mail and received by the Company within the
      seven
      day period. This letter agreement will not be effective or enforceable until
      the
      seven day revocation period has expired. This release does not waive rights
      or
      claims that may arise when this release is executed. In addition, in the case
      of
      the second option, Ezra agrees to indemnify the Releasees for, and hold the
      Releasees harmless from and against, any and all claims, liabilities and
      exposures arising out of any determination that the payment to Ezra of benefits
      prior to June 2, 2008 does not comply with Section 409A (it being understood
      and
      agreed that each of Ezra and the Company will be responsible for the fees and
      expenses of its own counsel).

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      
        Dennis
          Block, Esq.

        April
          8,
          2008

        Page 4
          of
          7

         

      

    

    Option
      1
      and Option 2 follow on page 5 and 6 respectively.

    

    Any
      deliveries to Ezra will be made by (a) certified mail, return receipt requested,
      (b) recognized overnight courier or (c) personal delivery service, in each
      case
      addressed to Ezra Dabah at 35 Pheasant Road, Great Neck, New York 11024 and
      will
      be deemed delivered, in the case of (a), on the fifth business day following
      the
      date postmarked, in the case of (b), the next business day, and, in the case
      of
      (c), the date of delivery to the delivery service as documented by the Company’s
      records.

    

    Please
      let me know immediately in writing if Ezra would prefer deliveries to be made
      to
      an alternate address.

    

    Please
      feel free to call me with any questions or comments.

    

    Very
      truly yours,

    

    The
      Children’s Place Retail Stores, Inc.

    

    
      	By	/s/
              Patricia A. Gray	 
	 	
              Patricia
                A. Gray

              Senior
                Vice President, General Counsel and Secretary

              Direct:
                (201) 453-7472

              Facsimile:
                (201) 453-7560

            	 

    

    
    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

       

      
        Dennis
          Block, Esq.

        April
          8,
          2008

        Page 5
          of
          7

      

    

     

    Option
      1:
      The Company will make the following payments and deliveries to Ezra Dabah,
      in
      full satisfaction of its obligations under Ezra’s employment
      agreement:

    

    (a)
      continued coverage under the Company’s self-insured medical, dental and
      hospitalization plans for a period up to the period permitted under COBRA,
      and
      delivery to Mr. Dabah of a commercially available medical, dental and
      prescription benefits policy to continue coverage of reasonably equivalent
      benefits (as provided by the Company to other senior executives) at a reasonably
      equivalent cost to the Company for the remaining portion of the Coverage Period,
      (b) deliver, on June 2, 2008, the amount of $18,888 to cover the cost of
      replacing the group life insurance policy coverage in face amount of $750,000
      with a term of 3 years of coverage,

    c)
      reimburse Mr. Dabah on June 2, 2008 (or such later date as the Company receives
      documentation confirming payment by Mr. Dabah) for any documented premium
      payment due and paid by Mr. Dabah after November 23, 2007 and prior to June
      2,
      2008, and continue to pay the remaining premiums during the Coverage Period
      (of
      $20,000 per year) on the existing individual insurance policy on Mr. Dabah’s
      life,

    (d)
      deliver, on June 2, 2008 a lump sum payment of $200,000, to cover the costs
      of
      the car service during the Coverage Period,

    (e)
      deliver, on June 2, 2008 a lump sum of $10,012, reflecting the value of Company
      matching contributions under the 401(k) plan, and

    (f)
      deliver, on June 2, 2008, a lump sum payment equal to $3,000,000 plus interest
      calculated at the applicable federal short-term rate from November 23, 2007
      until the date of payment (less applicable withholdings).

    

    Accepted
      and Agreed, in accordance with the terms set forth in this letter
      agreement:

     

    
      	 	 	
              Dated:

            	 
	Ezra Dabah	 	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Dennis
        Block, Esq.

      April
        8,
        2008

      Page 6
        of
        7

    

     

    Option
      2:
      The Company will make the following payments and deliveries to Ezra Dabah,
      in
      full satisfaction of its obligations under Ezra’s employment
      agreement:

    

    (a)
      continued coverage under the Company’s self-insured medical, dental and
      hospitalization plans for a period up to the period permitted under COBRA,
      and
      delivery to Mr. Dabah of a commercially available medical, dental and
      prescription benefits policy to continue coverage of reasonably equivalent
      benefits (as provided by the Company to other senior executives) at a reasonably
      equivalent cost to the Company for the remaining portion of the Coverage Period,
      (b) deliver, on (i) June 2, 2008, the amount of $6,296 to cover the cost of
      replacing the group life insurance policy coverage in face amount of $750,000
      during 2008, and (ii) January 5, 2009, the amount of $12,592 to cover the cost
      of replacing the group life insurance policy coverage in the face amount of
      $750,000 during the remainder of the Coverage Period,

    (c)
      reimburse Mr. Dabah on June 2, 2008 (or such later date during 2008 that the
      Company receives documentation confirming payment by Mr. Dabah) for any
      documented premium payment due and paid by Mr. Dabah after November 23, 2007
      and
      prior to June 2, 2008, and continue to pay the remaining premiums during the
      Coverage Period (of $20,000 per year) on the existing individual insurance
      policy on Mr. Dabah’s life,

    (d)
      deliver, on (i) June 2, 2008 a lump sum payment of $66,667, to cover the costs
      of the car service during 2008, and (ii) January 5, 2009 a lump sum payment
      of
      $133,333 to cover the cost of the car service during the remainder of the
      Coverage Period,

    (e)
      deliver, on (i) June 2, 2008 a lump sum of $3,337, reflecting the value of
      Company matching contributions under the 401(k) plan, that you would have
      received during 2008, and (ii) January 5, 2009 a lump sum of $6,675, reflecting
      the value of Company matching contributions under the 401(k)

    (f)
      provided that you have executed on April 8, 2008 and have not rescinded this
      agreement on or before April 15, 2008, the Company will deliver at the close
      of
      business on April 15, 2008 a lump sum payment equal to $3,000,000 plus interest
      calculated at the applicable federal short-term rate from November 23, 2007
      until the date of payment (less applicable withholdings).

    

    Accepted
      and Agreed, in accordance with the terms set forth in this letter
      agreement:

    

    
      	/s/
              Ezra Dabah	 	
              Dated:
                April 8, 2008

            
	Ezra Dabah	 	 

    

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    
       

      Dennis
        Block, Esq.

      April
        8,
        2008

      Page 7
        of
        7

       

    

    ANNEX
      1

    

    Federal,
      state or local employment statutes or civil rights laws, including but not
      limited to:

    

    Title
      VII
      of the Civil Rights Act of 1964, as amended

    Age
      Discrimination in Employment Act

    Old
      Workers Benefit Protection Act

    Americans
      with Disabilities Act

    Family
      and Medical Disabilities Leave Act

    Fair
      Labor Standards Act of 1938 as amended by the Equal Pay Act of 1963 and compared
      state laws

    Employment
      Retirement Income Security Act of 1974

    New
      Jersey Conscientious Employee Protection Act

    New
      Jersey Law Against Discrimination;

    New
      Jersey Family Leave Act

    New
      Jersey Wage Payment Act

    New
      York
      Human Rights ActPLACEMENT
      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.
      

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    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. 

     

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    (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:

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (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.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    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:

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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 

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    
      	
              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.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    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 

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    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.

              

      

    

     

    
      
        
        

      

      
        15

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