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Exhibit 10.6
 

 
Hallmark Investments, Inc.
 

420 Lexington Avenue, 8th Floor, New York, NY 10170
Tel: (212) 661-2277  (866) 542-5562  Fax: 212 661-2055

September 21, 2009

Russell Earnshaw, President R Squared Contracting, Inc. 5171 Santa Fe Street San
Diego, CA 92109

Dear Mr. Earnshaw:

This letter agreement (this "Agreement") confirms our understanding that R
Squared Contracting, Inc., (Green House or the Company), a Delaware corporation,
and its affiliates, ("Green House" or the "Company"), have decided to engage
Hallmark Investments, Inc., (the "Placement Agent") to act as a placement agent
on a non­exclusive basis in connection with a private placement by the Company
or its affiliates of equity securities (the "Securities") on a "best efforts"
basis in equity securities up to an aggregate offering of approximately Five
million dollars ($5,000,000.00). Unless earlier terminated as provided for under
Section 6 herein, this Agreement shall be effective for a period commencing
September 21, 2009 and ending on______,__, 2010.

Section 1.
Appointment and Acceptance.

The Company hereby appoints the Placement Agent on a non-exclusive basis in
connection with the Private Placement of the Securities. The Placement Agent
accepts such appointment, subject to the terms and conditions of this letter
agreement.

The Placement Agent agrees that in its capacity hereunder it will use
commercially reasonable efforts to arrange the Private Placement. In no event
shall the Placement Agent be obligated to purchase the Securities for its own
account or for the accounts of its customers.

Section 2.
The Transaction

The parties contemplate an initial offering amount of approximately
$5,000,000.00 of equity securities will be offered in the Private Placement. The
Placement Agent will assist in negotiating the terms and conditions for a
successful completion of the Private Placement; provided, however, that any such
terms and conditions must be approved by the Company, in its sole discretion. To
facilitate the Private Placement, the Company shall prepare and deliver to the
Placement Agent any offering documents or other information to be used in the
Private Placement.

Section 3.
Fees and Expenses.

 
 

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As compensation to the Placement Agent for its services hereunder, the Company
agrees: The Company and the Placement Agent shall determine whether more than
one closing shall be necessary. If there is more than one closing, at each
closing the Gross proceeds shall be paid into an escrow account (the Escrow
Account). The Company agrees that immediately upon the closing of a sale of the
Securities the Placement Agent will be compensated for sales of securities the
Placement Agent has actually arranged and that have been collected (Gross
Proceeds Raised"). The Escrow Agent shall make disbursements from the Escrow
Account as follows:

(i)
Hallmark and its designated agents and assigns shall be entitled to a placement
fee consisting of the following: a cash payment equal to ten percent (10%) of
the Gross Proceeds Raised (as defined below), in a sale of equity securities,
and

 
As part of the Placement Agent's compensation hereunder, the Company shall
   
(ii)
A non-accountable expense allowance of 1% of Gross Proceeds Raised As part of
the Placement Agent's compensation hereunder, the Company shall

(iii)
issue to the Placement Agent, at each closing hereunder, warrants to purchase
that number of shares of Common or Preferred Stock equal to ten percent (10%) of
the number of shares of Common or Preferred Stock purchased by the investors
introduced to the Company by the Placement Agent. Such warrants shall have: (A)
an exercise price equal to that of the securities issued pursuant to the
transaction, (B) a five-year term, (C) cashless exercise provisions, (D)
standard anti-dilution protections, and (E) "piggy-back" registration rights.
The underlying Stock will have features identical to the Securities sold to the
investors. While any Placement Agent's warrants are outstanding the Company
shall not take any action that would act to terminate the Placement Agent's
warrants. The Company shall set aside and at all times have available a
sufficient number of shares of the above referenced Securities sold to investors
to be issued upon conversion of the Placement Agent's Warrants. The Placement
Agent may designate that the Placement Agent's Warrants be issued in varying
amounts to its officers and agents and not to the Placement Agent.

(iv)
It is further agreed that references to all fees and amounts raised shall be in
US dollars.

The amounts payable or securities deliverable pursuant to subparts (i), (ii),
(iii) and (iv) above shall be referred to as the "Placement Fee."

The Company hereby agrees to complete the following and pay the expenses
associated therewith:

 
 

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(i)
the preparation and printing of the Offering Documents, and any supplements or
amendments thereto, including the cost of all copies thereof;

(ii)
the issuance, sale, transfer and delivery of the Securities, including any
transfer or other taxes payable thereon and the fees of any transfer agent or
registrar;

(iii)
the registration or qualification of the Securities or the securing of an
exemption therefrom under state or foreign "blue sky" or securities laws,
including without limitation, filing fees payable in the jurisdictions in which
such registration or qualification or exemption therefrom is sought and
disbursements in connection therewith and

Gross Proceeds Raised shall include only cash consideration received by the
Company for the purchase of the Securities and shall not include the cash
received by the Company upon the exercise of warrants, participation in a rights
offering, or other convertible securities, if any. In no event shall the Company
be obligated to (1) issue and sell any Securities unless the Company shall have
executed and delivered an investor subscription agreement pertaining to such
sale setting forth the terms of such sale of Securities and (ii) the aggregate
gross proceeds raised in connection with the Private Placement exceeds any
minimum set forth in the Offering. Additionally, the Company shall have complete
and absolute discretion in determining the terms of the Private Placement and
whether or not to sell Securities to any potential purchaser presented by the
Placement Agent.

The Company agrees that if during the terms of this agreement or within eighteen
(18) months from the effective date of the termination of this Agreement, the
Company or any party to whom the Company was introduced by the Placement Agent
or who was contacted by the Placement Agent in connection with its services for
the Company hereunder proposes a Financing involving the Company and the
Placement Agent is not engaged as the Company's financial advisor, agent, and/or
investment banker in connection with such Financing, then, if any such Financing
is consummated, the Company shall pay to the Placement Agent the following fees:

(i)
a cash fee often 10% of the amount of capital raised, invested or committed; and

 
(ii)
issue to the Placement Agent warrants to purchase that number of shares of
Common or Preferred Stock equal to ten percent (10%) of the number of shares of
Common or Preferred Stock purchased by the investors. Such warrants shall have
the same terms and rights as defined in Section 3, (iii) above. The Placement
Agent may designate that the Placement Agent's Warrants be issued in varying
amounts to its officers and agents and not to the Placement Agent.

Such fees shall be payable to the Placement Agent in cash immediately at the
closing or closings of the Financing to which it relates. Any Financing to be
provided to the Company by the Placement Agent or underwriter shall be provided
pursuant to a separate agency or underwriting agreement between the Company and
the Placement Agent which agreement shall contain the terms set forth in Section
3 hereof and such other customary terms, conditions, agreements, covenants,
representations and warrants as the parties may agree upon.

 
 

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Section 4.
Information

In connection with the Placement Agent's engagement, the Company will furnish
the Placement Agent with all information concerning the Company as the Company
and the Placement Agent may reasonably agree and will provide the Placement
Agent with reasonable access to the company's officers, directors, employees,
accountants, counsel and other representatives. The Company acknowledges and
confirms that the Placement Agent (i) will rely solely on such information in
the performance of the services contemplated by this engagement without assuming
any responsibility for independent investigation or verification thereof, (ii)
assumes no responsibility for the accuracy or completeness of such information
or any other information regarding the Company and (iii) will not make any
appraisal of any assets of the Company.

The Company will be solely responsible for the contents of the offering
documents (subject to review by counsel to the Placement Agent) or other
offering document used in connection with the Private Placement (as such private
placement memorandum or other document may be amended or supplemented and
including any information incorporated herein by reference, the "Private
Placement Memorandum") and any and all other written communications provided by
the Company to any actual or prospective purchaser of the Securities.

The Company authorizes the Placement Agent to provide the Offering Memorandum to
prospective purchasers of the Securities at which time the name of the
prospective purchaser will be added to Schedule I hereto. The Placement Agent
shall not make any changes to the offering documents, and except in connection
with performing the services contemplated by and with the consent of the
Company, the Placement Agent shall keep the offering documents confidential and
shall not distribute it or any other materials related to Private Placement.

The Company represents and warrants that the Offering Memorandum and such other
communications will not, as of the date of any delivery by the Placement Agent
to a perspective purchaser and as of the time of sale of any Securities pursuant
to the Private Placement contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances in which they were
made, not misleading. If at any time prior to the completion of the offer and
sale of the Securities or the closing date of any such sale an event occurs as a
result of which the Offering Memorandum (as then supplemented or amended) would
include any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, the Company, will
promptly notify the Placement Agent of such event and the Placement Agent will
promptly suspend solicitations of prospective purchasers of the Securities and
distribution of the Offering Memorandum until such time as the Company shall
prepare (and the Company agrees that, if it shall have notified the Placement
Agent to suspend solicitations after the Company has accepted orders from
prospective purchasers, it will promptly prepare) a supplement or amendment to
the Offering Memorandum which corrects such statement(s) or omission(s). Each
party hereto shall be responsible for violations of their respective agents and
advisors of the obligations set forth in this agreement.

 
 

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Section 5.
Exemption from Registration; Restrictions on Offer and Sale of Same or Similar
Securities

 
It is understood that the offer and sale of the Securities will be exempt from
the registration requirements of The Securities Act of 1933, as amended (the
"Act"). The Company will not, directly or indirectly, makes any offer or sale of
Securities or of securities of the same or of similar class as the Securities if
as a result the offer and sale of Securities contemplated hereby would fail to
be entitled to the exemption from the registration requirements of the Act.

The Placement Agent will not, directly or indirectly, make any offer of
Securities, if as a result the offer of Securities contemplated hereby would
fail to be entitled to the exemption from the registration requirements of the
Act. In addition, the Placement Agent will solicit offers only for the
Securities and will not, directly or indirectly make any offer of securities of
the same or similar class of the securities.

A.
Additional Restrictions on the Company and the Placement Agent

In connection with all offers and sales of the securities:

(a)
The Company will not offer or sell the Securities by means of any form of
general solicitation or general advertising. The Placement Agent will not

(b)
offer the Securities by means of any form of general solicitations or general
advertising.

(c)
The Company will not offer or sell the Securities to any person who is not an
"accredited investor" as the term is defined in Section 501(a) or Regulation D
of the Securities Act of 1933, as amended ("Regulation D"). The Placement Agent
will not offer the Securities to any person who is not a "qualified client" as
defined in Regulation D.

 
(d)
The Company will exercise reasonable care to ensure that purchasers of the
Securities are not underwriters within the meaning of Section 2(11) of the Act
and, without limiting the foregoing, that such purchases will comply with Rule
502(d) under the Act.

 
 

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B.
Compliance With Securities Laws, Broker/Dealer Regulations And Relevant
Self-Regulation Organizations.

The company will make such notice filings and pay such fees under the securities
laws of such jurisdictions in the United States as the Company may reasonably
determine, in each case to the extent required under Section 18(c) (2) of the
Act, and in such other jurisdictions as required by applicable law

The Placement Agent hereby represents and warrants that it is (1) Act of 1934,
(the "Exchange Act"), (2) it is a (a) associated with a broker/dealer, which is
a person other than a natural person, and (b) registered with the National
Association of Securities Dealers as a registered representative or (3) exempt
from the regulation requirement of Section 15(a) (1) of the Exchange Act and
applicable state laws.

Section 6.
Term and Termination.

This Agreement shall be effective for the period commencing September 21, 2009
and ending___________,__2010, unless sooner ended terminated as provided below.
Either The Company or the Placement may terminate this agreement upon thirty
days written notice to the other party by certified mail to the address in
Section 10 herein.
No termination of the Placement Agent's engagements hereunder shall affect (i)
the Company's obligation to reimburse the Placement Agent for expenses as
provided herein or (ii) the provisions of Sections 3 and 9 of this letter
agreement.

Section 7.
General.

In connection with this engagement, the Placement Agent is acting as an
independent contractor and not in any other capacity, with duties owing solely
to the Company. All aspects of the relationship created by this agreement shall
be governed by and construed in accordance with the laws of the state of New
York, applicable to contracts made and to be performed therein. Each of the
Placement Agent and the Company waives all right to trial by jury in any action,
suit proceeding or counter claim (whether based upon contract tort or otherwise)
relating to or arising out of the engagement of the Placement Agent pursuant to,
or the performance by the Placement Agent of the services contemplated by, this
agreement. All actions and proceedings arising out of or relating to this letter
agreement shall be heard and determined exclusively in any New York State court
or federal court sitting in the state of New York to whose jurisdiction the
company and the Placement Agent hereby irrevocably submit. The Company and the
Placement Agent irrevocably waive any defense or objection to the New York forum
designated above.

This letter agreement contains the entire agreement of the parties with respect
to the subject matter hereof and supersedes and takes precedence over all prior
agreements or understandings, whether oral or written, between the Placement
Agent and the Company. The invalidity or enforceability of any provision of the
letter agreement shall not affect the validity or enforceability of any other
provisions of this agreement, which shall remain in full force and effect.

 
 

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Section 8.
Governing Law; Jurisdiction; Waiver of Jury Trail.

This Agreement shall be governed by and construed in accordance with the laws of
the State of New York applicable to agreements made and to be fully performed
therein, with disregard to conflicts of law principles. The Company irrevocably
submits to the exclusive jurisdiction of any court of the State of New York or
the United States District Court for the Southern District of the State of New
York for the purpose of any suit, action or other proceeding arising out of this
Agreement, or any of the agreements or transactions contemplated hereby, which
is brought by or against the Company. All notices provided hereunder shall be
given in writing and either delivered personally or by overnight courier service
or sent by certified mail, return receipt requested, or by facsimile
transmission, if to Hallmark Investments, Inc., 420 Lexington Avenue, New York,
NY 10170, Fax No.: (212) 661-2055, and if to the Company, to the address, set
forth on the first page of this Agreement: Russell Earnshaw, President, R
Squared Contracting, Inc., 5171 SantaFe Street, San Diego, CA 92109. The parties
hereby expressly waive all right to trial by jury in any suit, action or
proceeding arising under this Agreement.

Section 9.
Indemnification Provisions

The Company agrees to indemnify and hold harmless the Placement Agent and any
indemnified parties identified herein from and against any and all losses,
claims, damages, obligations, penalties, judgments, awards, liabilities, costs,
expenses and disbursements, and any and all actions, suits, proceedings and
investigations in respect thereof and any and all legal and other costs,
expenses and disbursements in giving testimony or furnishing documents in
response to a subpoena or otherwise (including, without limitation, the costs,
expenses and disbursements, as and when incurred, of investigating, preparing,
pursing or defending any such action, suit, proceeding or investigation (whether
or not in connection with litigation in which any Indemnified Party is a
party))(collectively, "Losses"), directly or indirectly, caused by, relating to,
based upon, arising out of, or in connection with, the Placement Agent acting
for the Company, including, without limitation, any act or omission by the
Placement Agent in connection with its acceptance of or the performance or
non-performance of its obligations under the Agreement between the Company and
the Placement Agent to which these indemnification provisions are attached and
form a part (the "Agreement"), any breach by the Company of any representation,
warranty, covenant or agreement contained in the Agreement (or in any
instrument, document or agreement relating thereto, including any Agency
Agreement), or the enforcement by Placement Agent of its rights under the
Agreement or these indemnification provisions, except to the extent that ant
such Losses are found in a final judgment by a court of competent jurisdiction
(not subject to further appeal) to have resulted primarily and directly from the
gross negligence or willful misconduct of the Indemnified Party seeking
indemnification hereunder. The Company also agrees that no Indemnified Party
shall have any liability (whether direct or indirect, in contract or tort or
otherwise) to the Company for its connection with the engagement of the
Placement Agent by the Company or for any other reason, except to the extent
that any such liability is found in a final judgment by a court of competent
jurisdiction (not subject to further appeal) to have resulted primarily and
directly from such Indemnified Party's gross negligence or willful misconduct.
 

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These Indemnification Provisions shall extend to the following persons
(collectively, the "Indemnified Parties"): the Placement Agent, its present and
former affiliated entities, managers, members, officers, employees, legal
counsel, agents and controlling persons (within the meaning of the federal
securities laws), and the officers, directors, partners stockholders, members,
managers, employees, legal counsel, agents and controlling persons of any of
them. These indemnification provisions shall be in addition to any liability,
which the Company may otherwise have to any Indemnified Party.  If any action,
suit, proceeding or investigation is commenced, as to which an Indemnified Party
proposes to demand indemnification, it shall notify the Company with reasonable
promptness; provided, however, that any failure by an Indemnified party to
notify the Company shall not relieve the Company from its obligations hereunder.
An Indemnified Party shall have the right to retain counsel of its own choice to
represent it, and the fees, expenses and disbursements of such counsel shall be
borne by the Company. Any such counsel shall, to the extent consistent with its
professional responsibilities, cooperate with the Company and any counsel
designated by the Company. The Company shall be liable for any settlement of any
claim against any Indemnified Party made with the Company's written consent. The
Company shall not, without the prior written consent of the Placement Agent
settle or compromise any claim, or permit a default or consent to the entry of
any judgment in respect thereof, unless such settlement, compromise or consent
(I) includes, as an unconditional term thereof, the giving by the claimant to
all of the Indemnified Parties of an unconditional release from all liability in
respect of such claim, and (ii) does not contain any factual or legal admission
by or with respect to an Indemnified Party or an adverse statement with respect
to the character, professionalism, expertise of any of the Indemnified Party or
any action or inaction of any Indemnified Party.
 
In order to provide for just and equitable contribution, if a claim or
indemnification pursuant to these indemnification provisions Is made but is
found in a final judgment by a court competent jurisdiction (not subject to
further appeal) that such indemnification may not be enforced in such case, even
though the express provisions hereof provide for indemnification in such case,
then the Company shall contribute to the Losses to which any Indemnified Party
may be subject to in accordance with the relative benefits received by the
Company and its stockholders, subsidiaries and affiliates, on the one hand, and
the Indemnified Party, on the other hand and (ii) if (and only if) the
allocation provided in clause (I) of this sentence is not permitted by
applicable law, in such proportion as to reflect not only the relative benefits,
but also the relative fault of the Company, on the one hand, and the Indemnified
Party, on the other hand, in connection with statements, acts or omissions which
results in such Losses as well as any relevant equitable considerations. No
person found liable for a fraudulent misrepresentation shall be entitled to
contribution from any person who is not also found liable for fraudulent
misrepresentation. The relative benefits received (or anticipated to be
received) by the Company and its stockholders, subsidiaries and affiliates shall
be deemed to be equal to the aggregate consideration payable or receivable by
such parties in connection with the transaction or transactions to which the
Agreement relates relative to the amount of fees actually received by the
Placement Agent in connection with such transaction or transactions.
Notwithstanding the foregoing, in no event shall the amount contributed by all
Indemnified Parties exceed the amount of fees previously received by Placement
Agent pursuant to the Agreement.

 
 

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Neither termination nor completion of the Agreement shall affect these
Indemnified Provisions which shall remain operative and in full force and
effect. The Indemnified Provisions shall be binding upon the Company and its
successors and assigns and shall inure to the benefit of the Indemnified Parties
and their respective successors, assigns, heirs and personal representatives.

Section 10
Notices.

All notices provided hereunder shall be given in writing and either delivered
personally or by overnight courier service or sent by certified, return receipt
requested, or by facsimile transmission, if to Hallmark Investments Inc., 420
Lexington Avenue, New York, NY 10170, Fax No.: 212 661-2055, and if to the
Company, Russell Earnshaw, President, R Squared Contracting, Inc., 5171 Santa Fe
Street, San Diego, CA 92109 Fax No:_____-_______-_____

We are delighted that you have accepted this engagement and look forward to
working with you on this assignment. Please confirm that the foregoing is in
accordance with your understanding by signing and returning to us the enclosed
duplicate of this agreement

 
Very truly yours,
           
Hallmark Investments, Inc.
           
By:
     
Title
   

ACCEPTED AND AGREED TO
AS OF THE DATE FIRST ABOVE WRITTEN
R. Squared Contracting, Inc.,
     
By:
   
Title:
   

 
 

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