Document:

ex10_4.htm

    
      

    

    
      Exhibit
10.4

      

      SUBSCRIPTION
AGREEMENT

      

      CONVERTIBLE
PROMISSORY NOTE

      

      
        	
                 
      

              	
                1.

              	
                Subscription.

              

      

      

      a.           Offering. The
undersigned understands that R SQUARED CONTRACTING, INC., a corporation
organized and existing under the laws of the State of California (the
“Company”), is offering to sell up to an aggregate $750,000.00 principal amount
of unsecured convertible promissory note (the Notes), with a required minimum
raise of $250,000.00. A copy of the Note is attached hereto as Appendix A, and
the terms of the Note are incorporated herein.  The proceeds from the
Note will be used to fund the expansion of, and further develop the product
lines of the Company, pay the expenses of the instant transaction, and fund
working capital needs.  In addition to this Subscription Agreement,
the undersigned had received and reviewed certain Company documents, including
without limitation the Summary of Company Background and the Investor Risk
Factors attached thereto (hereinafter “Investor Packet” collectively), which
relates to this Offering (hereinafter “Offering”). The undersigned understands
that the minimum Note principal is Two Hundred Fifty Thousand Dollars
($250,000.00).

      

      b.           Manner of
Subscription.  The undersigned Subscriber hereby subscribes for
and agrees to purchase $50,000.00 principal amount of the Notes on the terms and
conditions described herein.  The undersigned hereby delivers to the
Company two executed copies of this Subscription Agreement.  Upon
receipt of such funds, the Company agrees to deliver to the undersigned a Note
in the aggregate principal amount of the subscription price then
paid.

      

      c.           The
Subscriber represents that the Subscriber is an “Accredited Investor” as such
term is defined in Rule 501 of Regulation D promulgated under the Securities Act
of 1933, as amended (the “Act”) and that the Subscriber is able to bear the
economic risk and illiquidity of an investment in the Securities.

      

      2.           
 Representation
and Warranties.  The undersigned represents and warrants to the
Company as follows:

      

      a.           I
have received and read, and I understand, the contents of the Investor Packet as
well as the terms and conditions presented to me by the Company, which contain
important information relating to the Company and the Offering and have relied
solely on those documents; no oral representations have been made or oral
information furnished to the undersigned in connection with the purchase of the
Shares which were in any way inconsistent with the Investor Packet.

      

      b.           I
have, or my Purchaser Representative, as defined in Regulation D under the
Securities Act of 1933, as amended (hereinafter “Act”), has had the opportunity
to seek from the Company or its representative(s), and have received from such
parties, all information deemed necessary by the undersigned to evaluate the
merits and risks of the Offering.  I have, or my Purchaser
Representative has, had the opportunity to verify the accuracy of the
information contained in the Investor Packet and to seek investment, tax, or
legal counsel prior to investing in the Company.

      

      c.           I
understand that the Securities offered by my subscription to the Note will not
be registered for sale under the 1933 Act or registered or qualified under any
state securities laws in reliance upon exemptions from such registration and
qualification, and that such exemptions depend in large part on my
representations and warranties herein.

      

      

      Subscription
Agreement

      Page
1 of 9

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      d.         
 If I am acting in a representative capacity for a corporation,
partnership, trust or other entity, or as agent for any person or entity, I have
full authority to execute this Subscription Agreement in such
capacity.

      

      e.          
The Securities offered by my subscription to the Note are being purchased for my
own account for investment and not with a view to resale or distribution to any
person, corporation or other entity.  I also understand that there
will not be any public market for the sale of such Shares at the time of
execution of this Agreement.

      

      f.           I
have carefully reviewed the Investor Packet, and have made my own examination of
the investment, as well as the accounting and tax aspects of this transaction,
and will depend on the advice of my own counsel and accountants, and I agree
that the Company has no responsibility with respect to such matters or such
advice.

      

      g.          I
understand the Securities offered by my subscription to the Note are a
speculative investment which involve a substantial degree of risk of loss of a
substantial portion or possibly my entire investment in the
Company.  I understand and take full cognizance of the risk factors
related to the purchase of the Shares, including without limitation, those set
forth in the Investor Packet.

      

      h.          I
am financially responsible, able to meet all obligations hereunder, and I
acknowledge that this investment will be long-term, and by its nature,
speculative.  Additionally, I am capable of bearing the high degree of
economic risks and burdens of this venture including, but not limited to, the
possibility of complete loss of investment and the lack of a public market which
may make it impossible to readily liquidate the investment whenever
desired.

      

      i.           
I am an “accredited investor” as the term is defined in Regulation D under the
Act or am, otherwise, a sophisticated, knowledgeable investor (either alone or
with the aid of a Purchaser Representative) with adequate net worth and income
for this investment.  I have knowledge and experience in financial and
business matters (either alone or with the aid of a purchaser representative),
am capable of evaluating the merits and risks of an investment in the Company
and its proposed activities and have carefully considered the suitability of an
investment in the Company for my particular financial situation and have
determined the Shares are a suitable investment.

      

      j.           All
information which I have provided to the Company, including without limitation,
my financial positions and my knowledge of financial and business matters is
true, correct and complete as of the date of execution of this Subscription
Agreement.  I understand that the Company will rely, to a material
degree, upon the representations contained herein.

      

      k.        
  I understand that I will not be able to cancel, terminate, or revoke
this Subscription Agreement and it will survive my death or disability, if I am
an individual.

      

      l.         
  I am aware that no federal or state agency has made any finding or
determination as to the fairness of investment in, nor any recommendations or
endorsement of, the Shares.

      

      m.        
 I understand that the Shares are subject to restrictions on
transferability and resale and may not be transferred or resold except as
permitted under the Act and applicable state securities laws, pursuant to
registration or exemption therefrom.

      

      n.         
 I understand that at no time has it been explicitly or implicitly
represented, guaranteed, or warranted to the undersigned by the Company, the
agents and employees of the Company, or any other person that: (1) the
undersigned will or will not have to remain as owner of the Shares an exact or
approximate length of time; (2) a percentage of profit and/or amount or type of
consideration will be realized as a result of this investment; (3) any case
dividends from Company operations or otherwise will be made to shareholders by
any specific date or will be made at all; or (4) any specific tax benefits will
accrue as a result of any investment in the Company.

      

      

      Subscription
Agreement

      Page
2 of 9

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      o.          The
offer to subscribe to the Note was communicated by the Company in such a manner
that I was able to ask questions of, and receive answer from, the Company
concerning the terms and conditions of this transaction and that at no time was
I presented with, or solicited by, any leaflet, public promotional meeting,
newspaper article or magazine article, radio or television advertisement, or any
other form of advertising or general solicitation.

      

      p.           I
certify, under the penalty of perjury, that (1) the Social Security Number or
Tax Identification Number set forth herein is correct and complete; and (2) that
I am not subject to backup withholding as a result of a failure to report all
interest or dividends, or the Internal Revenue Service has notified me that I am
no longer subject to backup withholding.

      

      q.           I
acknowledge and understand that the Investor Packet reflects the Company’s
intentions and estimates at the current time and, as with any developing
company, the precise elements of the Company’s places can be expected to change
from time to time.

      

      3.             Indemnification.  I
hereby indemnify the Company, its affiliates, and its agents, and hold them
harmless from and against any and all loss, damages, liability or expense,
including costs and reasonable attorneys’ fees, incurred by the Company (or its
affiliates or agents) by reason of or in connection with any misrepresentation
made by me, any breach of any of my warranties, or my failure to fulfill any of
my covenants or agreements under this Subscription Agreement.  This
Subscription Agreement and the representations and warranties contained herein
shall survive my purchase of the Shares and shall be binding upon my heirs,
executors, administrators, successors, and assigns.

      

      4.         
   Revocation.  I
understand that I may not cancel, terminate, or revoke the offer to subscribe to
the Note for a period of sixty (60) days or any agreement hereunder at any time
and that this Agreement shall survive my death or disability and shall be
binding upon my heirs, executors, administrators, beneficiaries, successors and
assigns.

      

      5.            
Acceptance or
Rejection of Subscription.  The undersigned understands
that:

      

      a.           The
Company reserves the right to reject any subscription, in whole or in part, at
the sole discretion of the Company for any reason;

      

      b.           This
subscription will be accepted or rejected within sixty (60) days from receipt
thereof and will be effective only upon acceptance by the Company;
and

      

      c.           Upon
acceptance of the subscription by the Company, the subscription will be
irrevocable.

      

      6.          
  Market
Stand-off Agreement.  The undersigned, (on behalf of itself,
its successors, and its assigns), agrees not to sell or otherwise transfer or
dispose of any Shares acquired in the Offering, including any Shares acquired
upon exercise of the Warrants, for a period not to exceed one hundred eighty
(180) days following the effective date of a registration statement of the
Company filed under the Securities Act in connection with an underwritten public
offering of the Company’s Common Stock if so requested by the underwriter of
such offering.  The Company may impose stock transfer instructions
with respect to the Securities subject to the foregoing restriction until the
end of such period.

      

      

      Subscription
Agreement

      Page
3 of 9

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      7.            
 Certain
Securities Law Matters.

      

      a.           The
Securities offered by my subscription to the Note shall not be sold, assigned,
transferred or pledged except upon satisfaction of the conditions specified in
this Section 7, which conditions are intended to ensure compliance with the
provisions of the Act.  The undersigned will cause any proposed
purchaser, assignee, transferee, or pledge of the Shares held by the undersigned
to agree to take and hold such securities subject to the provisions and
conditions of this Section 7.

      

      b.           Each
certificate representing (1) the Shares and (2) any other securities issued in
respect of the Securities offered by my subscription to the Note, upon any stock
split, stock dividend, recapitalization, merger, consolidation, or similar
event, shall (unless otherwise permitted by the provisions of Section 7c below)
be stamped or otherwise imprinted with a legend substantially in the following
form (in additional to any legend required under applicable state securities
laws):

      

      THE
SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.  SUCH
SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL OR OTHER EVIDENCE REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.  COPIES
OF THE AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF
RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE CORPORATION.

      

      The
undersigned consents to the Company making a notation on its records and giving
instructions to any transfer agent of the Shares in order to implement the
restrictions on transfer established in this Section 7.

      

      c.           The
undersigned agrees to comply in all respects with the provisions of this Section
7.  Prior to any proposed sale, assignment, transfer or pledge of any
Shares, unless there is in effect a registration statement under the Act
covering the proposed transfer, the undersigned thereof shall give written
notice to the Company of the undersigned’s intention to effect such transfer,
sale, assignment, pledge.  Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment, or pledge in
sufficient detail, and shall be accompanied with, at the undersigned’s expense,
evidence satisfactory to the Company of the effect that the proposed transfer of
the Shares without registration under the 1933 Act or applicable state
securities law.

      

      8.       
     Investor
Information.  The Company may only accept subscriptions from
persons who meet certain suitability standards; accordingly the undersigned
shall complete and return to Company the Investor Questionnaire which has been
provided herewith.

      

      9.            
Miscellaneous.

      

      a.           All
notices or other communications given or made hereunder shall be in writing and
shall be delivered or mailed by registered or certified mail, return receipt
requested, postage prepaid, to the Company and the undersigned at the address as
set forth below.

      

      

      Subscription
Agreement

      Page
4 of 9

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      b.           This
Agreement shall be governed by and construed in accordance with the laws of the
State of California without reference to conflict of law
principles.  Further, all parties hereto agree to the exclusive
personal jurisdiction of the Courts of the State of California, County of Los
Angeles and/or the United States District Court, Central District of
California.

      

      c.           This
Agreement constitutes the entire understanding between the parties hereto with
respect to the subject matter hereof and supersedes any prior or contemporaneous
understandings, representations, warranties, or agreements (whether oral or
written) and may be amended only by a writing executed by all
parties.

      

      d.           The
undersigned acknowledges that Company may, in its sole and absolute discretion,
accept or reject this subscription offer, whether in whole or in
part.

      

      10.        
   Certification.  The
undersigned represents to Company that (1) the information contained herein or
provided hereunder is complete and accurate as of the date hereof and may be
relied upon by Company; and (2) the undersigned will notify Company immediately
of any change in any such information occurring prior to the acceptance of the
subscription and will promptly send you written confirmation of such
change.  The undersigned hereby further certifies that he has read and
understands, and has had sufficient time to read, consult with independent
counsel, and understand, the contents of the Investor Packet and this
Subscription Agreement.

      

      IN
WITNESS WHEREOF, the undersigned has executed this Subscription Agreement as of
the date first set forth above.

      

      Subscriber’s
Name:  ________________________________________

      (print
or type)

      

      Subscriber’s
Signature:  _____________________________________

      

      Name:  ___________________________________________

      (name
of authorized representative, if applicable)

      

      Its:
______________________________________________

      (title
of authorized representative, if applicable)

      

      Social
Security Number:  ___________________________________

      
         

        
          
            	
                    Subscriber’s
      Note Amount:

                  	 
      	
                    Check
      One:

                  	 
      	 
	
                    $

                  	 	 
      	 
      	
                    □
      Check enclosed

                  	 
      	 
	 
      	 
      	 
      	 
      	
                    □
      Wire transfer initiated on

                  	 
      	 
	 
      	 
      	 
      	 
      	
                    □
      Amount previously sent on

                  	 
      	 

          

        

         

         

        
          	
                  Subscriber’s
      Mailing Address:

                	 
      	
                  Subscriber’s
      Alternative Address:

                
	
                  (for
      formal notice)

                	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      
	 	 	 	 
	 	 	 	 
	 	 	 	 
	
                  Attention:

                	 
      	 
      	
                  Attention:

                	 
      	 
      
	
                  Telephone:

                	 
      	 
      	
                  Telephone:

                	 
      	 
      
	
                  Facsimile:

                	 
      	 
      	
                  Facsimile:

                	 
      	 
      

        

      

       

      

      Subscription
Agreement

      
        Page
5 of 9

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      APPENDIX
A

      

      NEITHER
THIS NOTE NOR THE SHARES OF  EQUITY INTEREST ISSUABLE UPON CONVERSION
OF PRINCIPAL HEREOF OR INTEREST HEREON HAVE BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR UNDER THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION
(TOGETHER, THE “SECURITIES LAWS”) AND MAY NOT BE OFFERED FOR SALE, SOLD OR
OTHERWISE TRANSFERRED OR ENCUMBERED IN THE ABSENCE OF COMPLIANCE WITH SUCH
SECURITIES LAWS AND UNTIL THE ISSUER THEREOF SHALL HAVE RECEIVED AN OPINION FROM
COUNSEL ACCEPTABLE TO IT THAT THE PROPOSED DISPOSITION WILL NOT VIOLATE ANY
APPLICABLE SECURITIES LAWS.

      

      

      CONVERTIBLE
NOTE

      

      
        	
                Principal
      Amount:  $25,000.00

              	
                October
      22, 2009

              

      

      

      For Value Received, R
SQUARED CONTRACTING, INC., a California Corporation (the “Company”), hereby
promises to pay to the order of Edward Borlenghi (“Holder”), the principal sum
of Twenty Five Thousand AND NO/100 DOLLARS ($25,000.00), together with interest
on the unpaid principal balance thereof at the annual rate of eight percent
(8%), payable semi-annually in arrears in cash.

      

      Article
1

      Payments

      

      1.1            Principal and
Interest.  The
entire outstanding principal amount of the Notes, together with accrued but
unpaid interest thereon, will be due and payable on the earlier of: (1)
twenty-four (24) months from the date of issuance or (2) upon receipt by either
Company of financing, whether through debt or equity, resulting in gross
proceeds of at least $3 million.

      

      1.2            Manner of
Payment.  All
payments of principal and interest shall be made at such place as Holder shall
designate to the Company in writing.  If any payment of principal or
interest on this Note is due on a day that is not a Business Day, such payment
shall be due on the next succeeding Business Day, and such extension of time
shall not be taken into account in calculating the amount of interest payable
under this Note.  “Business Day” means any day other
than a Saturday, Sunday or legal holiday in the District of
Columbia.

      

      Article
2

      Conversion

       

      2.1           Conversion.  Should
Company complete any financings, debt or equity, which include any equity
component or provide for a right to convert into equity, and if the entire
principal of the loan remains outstanding, the Holder (investor) shall have the
option to convert, on an all-or-none basis, the entire principal and outstanding
interest of this Note into said financing at a price equal to eighty-five
percent (85%) of the purchase price of said financing.

       

      Article
3

      Registration
of Shares

      

      3.1           Registration.  If the Company or
any successor or parent company shall determine at any time to proceed with the
preparation and filing with the SEC of a Registration Statement in connection
with the proposed offer and sale of any of its securities by it or any of its
security holders (other than a registration statement on Form S-4, S-8 or other
similar limited purpose form), the Company will give written notice of its
determination to Holder.  Upon receipt of a written request from
Holder within thirty (30) days after receipt of any such notice from the
Company, the Company will, except as herein provided, at its sole cost and
expense (other than customary underwriting discounts or commissions) cause all
Shares to be included in such Registration Statement, all to the extent required
to permit the sale or other disposition by Holder of such Shares. The obligation
of the Company under this provision shall be unlimited as to the number of
Registration Statements to which it applies, but shall terminate 4 years after
issuance of the Loan.

      

      

      Subscription
Agreement

      Page
6 of 9

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Article
4

      Holder
Qualifications

       
 

      4.1          
Qualified
Holder.  The Holder of this note is a qualified entity or
individual, having sufficient funds, as set forth in the Company’s materials
provided, to make the Loan pursuant to this Note.  Holder attests that
no part of the funds used by Holder to fund this Note or to acquire shares in
the Company by Conversion of the Note constitutes assets of any “employee
benefit plan” within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended, or other “benefit plan investor” (as
defined in U.S. Department of Labor Reg. Section 2510.3-101 et seq, as amended) or assets
allocated to any insurance company separate account or general account in which
any such employee benefit plan or benefit plan investor (or related trust) has
any interest.

      

      4.2          
Company
Materials.  The Holder has received and reviewed the Company
Material provided contemporaneously with this Note, and has reviewed and
completed the attached Investor Qualification Statement prior to funding the
Note; the Holder has answered the Investor Qualification Statement completely
and accurately and has had an opportunity to, and has, sought professional
advice prior to funding the Note.

      

      4.3           Risk
Factors.  Included in the Company Materials provided to Holder
is a document entitled Risk Factors.  Holder has reviewed the Risk
Factors associated with ownership of shares in the Company, upon Conversion, and
understands said risk factors.  Prior to funding the Note, Holder has
had an opportunity to, and has, reviewed the Risk Factors with professional
advisors of Holder’s choosing, and a subsequent Conversion election by Holder is
made with full knowledge and understanding of said Risk Factors.

      

      Article
5

      Default
and Remedies

      

      5.1          
Default.  The
occurrence of any of the following events shall constitute a “Default” under
this Note:

      

      (a)        
Company’s failure to remit to Holder the principal or interest hereof as the
same becomes due hereunder;

      

      (b)    
    Company’s assignment for the benefit of creditors, or
filing of a petition in bankruptcy or for reorganization or to effect a plan or
arrangement with creditors;

      

      (c)     
   Company’s application for, or voluntary permission of, the
appointment of a receiver of trustee for any or all Company
property;

      

      

      Subscription
Agreement

      Page
7 of 9

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      (d)      
  any action or proceeding described in the foregoing paragraphs (b)
and (c) is commenced against Company and such action or proceeding is not
vacated within 60 days of its commencement;

      

      (e)        
Company’s dissolution or liquidation; or

      

      5.2           
Remedies Upon
Default.  Upon
any Default:

      

      (a)        
 Holder may without further notice declare the entire remaining Principal
Amount of this Note, together with all interest accrued thereon, immediately due
and payable; and Holder’s failure to declare the entire remaining principal sum
of this Note, together with all interest accrued thereon, immediately due and
payable shall not constitute a waiver by Holder of its right to so declare at
any other time;

      

      (b)        
Holder may employ an attorney to enforce its rights and remedies hereunder and
Company hereby agrees to pay Holder’s reasonable attorneys’ fees and other
reasonable expenses incurred by Holder in exercising any of Holder’s rights and
remedies upon Default; and

      

      (c)        
Holder’s rights and remedies provided hereunder shall be cumulative and may be
pursued singly, successively or together in Holder’s sole discretion; and
Holder’s failure to exercise any such right or remedy shall not be a waiver or
release of such rights or remedies or the right to exercise any of them at
another time.

      

      Article
6

      General
Provisions

      

      6.1           Waiver of Protest,
Presentment and Notice.  The
Company hereby waives presentment, demand for payment, notice of nonpayment or
dishonor, protest, and notice of protest, and agrees to continue to be bound for
the payment of principal, interest and all other sums due under this Note
notwithstanding any extension or alteration of the time or terms of payment
hereon, any renewal or any acceptance of security of any
kind.  Company also hereby waives the right to protest the
domestication or collection of any judgment obtained against the Company with
respect to this Note in any jurisdiction where the Company may now or hereafter
maintain assets or be registered or qualified to transact business.

      

      6.2           Obligations
Absolute.  Company’s
obligations hereunder are absolute, and Company hereby waives any and all rights
to offset, deduct or withhold any payments or charges due hereunder for any
reason whatsoever.

      

      6.3           Priority. The Loan
evidenced by this Note shall be senior to all existing debt and preferred
issuances.

      

      6.4          
Entire Agreement-
Governing Law.  This
Note constitutes the full and entire understanding and agreement between the
parties with regard to the subject matter hereof. This Note shall be governed by
and construed in accordance with the laws of the State of California without
regard to its conflicts-of-law principles.

      

      6.5          
Severability.  If
any provision in this Note is held invalid or unenforceable by a court of
competent jurisdiction, the other provisions of this Note will remain in full
force and effect.  Any provision of this Note held invalid or
unenforceable only in part or degree will remain in full force and effect to the
extent not held invalid or unenforceable.

      

      

      Subscription
Agreement

      Page
8 of 9

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      6.6           
Waiver of Right or
Remedy.  No
waiver of any right or remedy under this Note shall be valid unless in writing
executed by the Holder hereof, and any such waiver shall be effective only in
the specific instance and for the specific purpose given.  All rights
and remedies of all present and future Holders of this Note shall be cumulative
and may be exercised singly, concurrently or successively.  This Note
shall bind the Company and its successors and assigns.

      

      6.7           
Notices.  Any
notice required or permitted to be given hereunder shall be made as
follows:

      To the
Company:

      Mr. Sean
Entin

      R Squared
Contracting, Inc.

      5171
Santa Fe Street; Suite I

      San
Diego, CA 92103

      

      To the
Holder:

      
        
          	
                   

                	 
	 	 
	 	 
	 	 
	 	 

        

      

    

    
      

      6.8          
Construction.  The
headings of Sections in this Convertible Note are provided for convenience only
and will not affect its construction or interpretation.  All
references to Articles or Sections refer to Articles and Sections of this Note
unless otherwise specified.

      

      6.9           Attachment
1. Attachment 1 is hereby incorporated by reference as a part of this
Convertible Note. Attachment 1 sets forth the Holder’s status as an accredited
investor and the Risk Factors referenced in Article 4, above.

      

      In Witness Whereof, the
Company has executed and delivered this Convertible Note as of the date first
set forth above.

      

      

      
        	
                Holder

              	 
      	 
      
	 
      	 
      	 
      
	
                Name

              	 
      	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                R
      SQUARED CONTRACTING, INC.

              	 
      
	 
      	 
      	 
      
	 
      	 
      	 
      
	
                By:

              	 
      	 
      
	
                 

              	 
      	 
      
	
                Name:

              	 
      	 
      
	 
      	 
      	 
      
	
                Title:

              	 
      	 
      

      

      

      

      Subscription
Agreement

      Page
9 of 9ex10_5.htm

    
      

    

    Exhibit
10.5

     

    E-Fuel
Limited Exclusive Distributor Agreement

    

     

    This
Agreement, effective 1/14/09 between E-Fuel Corporation, a California
Corporation having its principal office located at 15466 Los Gatos Blvd., #37,
Los Gatos. CA 95032 (hereinafter referred to as E-Fuel) and Green House
(Distributor), an California Corporation with his principal address at 5171
Santa Fe St. Suite I, S.D., CA 92109

    

     

    Recitals

    

     

    E-Fuel is
the exclusive manufacturer and distributor of E-Fuel equipment, parts and
accessories used in the production of ethanol (hereinafter collectively referred
to as "Products").

    

     

    Distributor
has represented as an inducement to E-Fuel to enter into this Agreement,
that

     

    
      	
               
      

            	
              (1)

            	
              Distributor
      is capable of performing to the terms and conditions of this
      Agreement;

            

    

     

    
      	
               
      

            	
              (2)

            	
              Distributor
      wishes to be an exclusive representative in the Territory set forth in
      Exhibit 1 and agrees to pay the required fee set forth in Exhibit
      6;

            

    

     

    
      	
               
      

            	
              (3)

            	
              Distributor
      has sufficient number of trained personnel and adequate facilities to sell
      and service Products;

            

    

     

    
      	
               
      

            	
              (4)

            	
              Distributor
      has adequate financial resources to perform the monetary obligations
      herein;

            

    

     

    
      	
               
      

            	
              (5)

            	
              Distributor
      shall be responsible for all Distributor obligations set forth herein
      whether or not the services were performed directly by Distributor or
      indirectly on behalf of
Distributor.

            

    

     

    E-Fuel
and Distributor acknowledge the importance to maintain both a strong sales and
service program for the products in order:

     

    
      	
               
      

            	
              (1)

            	
              for
      both parties to realize the mutual benefits that should result in
      compliance with the terms and conditions of the relationship established
      by the Agreement;

            

    

    
      	
               
      

            	
              (2)

            	
              that
      the best interest of the purchaser and user of the Products will be
      served;

            

    

     

    
      	
               
      

            	
              (3)

            	
              that
      the reputation of the Products will be
enhanced.

            

    

    

     

    
      	
              1

            	
              ESTABLISHMENT
      OF RELATIONSHIP

            

    

     

    
      	
               
      

            	
              1.1

            	
              Appointment
      of Distributor: E-Fuel hereby appoints Distributor as an exclusive
      authorized Distributor for retail sales and service of the Products only
      in the Territory assigned (set forth in Exhibit 1) and Distributor hereby
      accepts such appointment. Distributor hereby agrees not to sell or offer
      for sale Products in any other territory without the prior written
      authorization of E-Fuel.

            

    

     

    
      	
               
      

            	
              1.2

            	
              Exclusive:
      The rights granted herein are exclusive for so long as this Agreement
      remains in full force and effect.

            

    

     

     

    
      	 
      	 
      
	
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      Counties

            	 
      
	
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      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
              2

            	
              PROMOTION
      AND SALES OF PRODUCTS

            

    

     

    
      	
               
      

            	
              2.1

            	
              Promotion
      and Sales: Distributor agrees to vigorously promote and sell the Products
      and shall continually work to increase the market for the Products in the
      Territory served by Distributor. Distributor agrees to maintain a fully
      qualified sales organization in order to fulfill its responsibilities
      under this Agreement and conduct a continuing program of quality sales
      promotion activities for the
Products.

            

    

     

    
      	
               
      

            	
              2.2

            	
              Performance
      Criteria: Distributor has agreed upon minimum performance criteria as set
      forth in Exhibit 2 in consideration of the exclusive nature of the
      Agreement. With the exception of the initial three (3) year term of this
      Agreement as set forth in 6.1, failure to achieve the minimum performance
      criteria shall constitute a material breach of the Agreement. Within
      ninety (90) days following the effective date of the Agreement or any
      anniversary thereof, Distributor shall supply a comprehensive
      implementation plan (Sales Plan) to E-Fuel for E-Fuel's review and
      approval detailing its efforts for the ensuing 12 months of the Agreement
      by calendar quarter to include, but not limited to, investments and plans
      in marketing, product sales forecast by month, personnel and service. With
      the exception of the initial three (3) year term of this Agreement,
      failure to provide an acceptable Sales Plan to E-Fuel within
      one-hundred-twenty (120) days of the effective date of the Agreement or
      any anniversary thereof shall terminate the Agreement with immediate
      effect on the giving of written notice to Distributor. EE-Fuel's approval
      of the Sales Plan shall not be unreasonably withheld. During the initial
      term of this Agreement, the Sales Plan shall constitute a guideline for
      general performance and considered accordingly in the context of this
      Agreement.

            

    

     

    
      	
               
      

            	
              2.3

            	
              Facilities:
      Distributor shall maintain facilities in the Territory so as to favorably
      reflect on the Products and quality image of E-Fuel. Where practicable
      Distributor agrees to actively and prominently promote the Products on
      Distributor's web site.

            

    

     

    
      	
               
      

            	
              2.4

            	
              Customer
      Relations: Distributor shall provide prompt and courteous service to
      customer inquiries or complaints relating to the Products. Distributor
      shall at all times properly represent the Products and shall not make,
      directly or indirectly, any false, misleading or disparaging
      representations to any customers or persons in regards to E-Fuel
      Products.

            

    

     

    
      	
               
      

            	
              2.5

            	
              Trademark:
      E-Fuel agrees to permit Distributor to identify itself as an authorized
      E-Fuel Distributor for the Products and use the trademarks of E-Fuel in
      connection with Distributor's effort to sell and promote the
      Products.

            

    

     

    
      	
               
      

            	
              2.6

            	
              Financial
      Responsibility: Distributor shall maintain for its operations hereunder
      adequate working capital to enable Distributor to fulfill its
      responsibilities under this
Agreement.

            

    

     

    
      	
               
      

            	
              2.7

            	
              Reports
      and Records: Distributor shall periodically provide to E-Fuel complete and
      accurate data regarding sales and inventories of the Products and such
      other reasonable information as and when requested by
    E-Fuel.

            

    

     

    
      	
               
      

            	
              2.8

            	
              Product
      Development and Changes to Products: E-Fuel may periodically change
      design, models, features of Products, add new Products, or discontinue
      distribution of any and all Products without any accountability to
      Distributor in connection with any Products ordered by Distributor or
      Distributor's inventory of the
Products.

            

    

     

    
      	
               
      

            	
              2.9

            	
              Compliance
      to Laws: Distributor shall conduct and maintain at all times Distributor's
      sales and service operations in strict compliance with all applicable laws
      and regulations. Distributor agrees not to engage in unfair trade
      practices. Distributor shall indemnify and hold E-Fuel harmless for any
      costs and liability that may result from the violation of this
      paragraph.

            

    

    

     

    
      	
              3

            	
              SERVICE
      OF THE PRODUCTS

            

    

     

    
      	
               
      

            	
              3.1

            	
              E-Fuel
      will provide training as outlined in Exhibit 7, training material,
      technical documentation and support as deemed appropriate by E-Fuel to
      familiarize Distributor with the installation, maintenance and repair of
      the Products. Distributor agrees to cooperate with E-Fuel to insure
      Distributor's ability to perform its obligations
  hereunder.

            

    

     

    
      	
               
      

            	
              3.2

            	
              Distributor
      Service Operations: Distributor acknowledges the importance of the service
      responsibilities under this Agreement. Distributor shall establish and
      maintain quality service operations as recommended by E-Fuel, including
      trained personnel, proper tools and equipment and service facilities in
      order to fulfill its responsibilities under this Agreement. Such service
      operations shall provide to owners of the Products prompt, quality and
      courteous service.

            

    

     

    
      	
               
      

            	
              3.3

            	
              Delivery
      and Preparation Obligations: Distributor shall be responsible for and
      agrees to perform inspection, preparation and pre-delivery steps prior to
      delivery of the Products to purchaser thereof. It is the Distributor's
      responsibility to determine whether or not the Products meet the needs of
      the customer, that the customer has obtained any and all required permits
      and approvals, that the customer understands any applicable regulations
      associated with their intended use of the Products, and that the customer
      understands the proper use, placement and care of the Products. Upon
      delivery and installation of the Products to its customer, Distributor
      agrees to instruct the customer in the proper and safe use, maintenance
      and care of the Products.

            

    

     

     

    
      	 
      	 
      
	
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      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
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      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              3.4

            	
              Facilitation
      of Feedstock to Customers: Distributor understands the ready availability
      of feedstock (sugar) is required for the productive use of the Products.
      Distributor agrees to either directly through its sale and delivery of
      feedstock or indirectly through third party feedstock distributors to
      facilitate the ready availability of feedstock so as to insure the
      productive use of the Products by end customers. Failure to establish a
      reliable source of feedstock supply in the Territory shall constitute a
      material breach of this Agreement.

            

    

     

    
      	
               
      

            	
              3.5

            	
              General
      Service: Distributor shall provide to owners of the Products such general
      service and repair for the Products as may be necessary. Any or all
      charges therefore shall be reasonable and consistent with those prevailing
      in the territory and all such services and charges shall be in accordance
      with the applicable law.

            

    

     

    
      	
               
      

            	
              3.6

            	
              Warranty
      Service: Distributor agrees to perform all warranty service on all
      Products brought to Distributor, whether or not sold by Distributor.
      Distributor shall perform such warranty service in accordance with the
      then applicable policies of E-Fuel as they may be issued from time to time
      in E-Fuel service and warranty manuals, warranty service reimbursement
      schedules, and bulletins.

            

    

    

     

    
      	
              4

            	
              PURCHASE
      OF THE PRODUCTS

            

    

     

    
      	
               
      

            	
              4.1

            	
              General
      Terms and Conditions: E-Fuel shall sell the Products to Distributor and
      Distributor shall purchase the Products from E-Fuel in accordance with the
      terms and conditions set forth herein and in accordance with E-Fuel's then
      current "Terms and Conditions of Sale" which are hereby incorporated by
      reference and may be downloaded from E-Fuel's website at www.efuel100.com.
      Where conflict exists between the "Terms and Conditions of Sale" and this
      Agreement, this Agreement shall
prevail.

            

    

     

    
      	
               
      

            	
              4.2

            	
              In
      the course of resale of the Products to Distributor's customers,
      Distributor may recruit, develop, and employ a network of third parties
      (Dealers) to sell to end customers. E-Fuel's obligations under this
      Agreement shall not extend to Dealers however it is incumbent upon
      Distributor to insure its obligations hereunder shall be performed whether
      directly by Distributor or indirectly through
  Dealers.

            

    

     

    
      	
               
      

            	
              4.3

            	
              Orders:
      Distributor shall order the Products from E-Fuel in accordance with
      E-Fuel's the then current ordering procedures. All orders are subject to
      acceptance by E-Fuel based on availability of the Products and
      Distributor's compliance with the terms and conditions hereof. Distributor
      shall use its best efforts to order Products giving E-FUEL at least
      90-days lead time from requested shipment date. E-FUEL shall within 14
      days of receipt of Distributor's order confirm availability and where such
      confirmation is not possible set about using its best efforts to meet
      Distributor's requirements through all reasonable means. Distributor shall
      use its best efforts to make available to E-FUEL an accurate product sales
      forecast called for in Paragraph 2.2 and updated as often as necessary to
      help alleviate potential product availability
  constraints.

            

    

     

    
      	
               
      

            	
              4.4

            	
              Price:
      Distributor shall pay E-Fuel the price and any other charges for the
      Products as set forth on the then current E-Fuel price schedule in effect
      at the time E-Fuel accepts Distributor's order. Current pricing is set
      forth in Exhibit 5 for convenience.

            

    

     

    
      	
               
      

            	
              4.5

            	
              Payment:
      Distributor shall pay the purchase price for the Products at the time of
      delivery thereof, unless E-Fuel has approved other terms of credit for
      Distributor, and agrees to pay within terms of the invoice. E-Fuel may
      cancel any order placed by Distributor or refuse shipment thereof should
      Distributor fail to meet any payment term, credit, or financial
      requirement of E-Fuel. The amount and term of credit extended to
      Distributor, if any, shall be at the discretion of E-Fuel and is subject
      to change as E-Fuel may deem appropriate. Failure to meet any payment
      term(s) shall result in prepayment or Letter of Credit terms for all
      future orders for so long as E-Fuel requires at its sole option. E-Fuel
      may offer prepayment as a means to secure a delivery position in the event
      of product allocation. Distributor may order and prepay for the Products
      and in so doing Distributor's respective order will be placed in queue
      based upon order payment date.

            

    

     

    
      	
               
      

            	
              4.6

            	
              Shipment:
      E-Fuel shall use its best efforts to ship all accepted orders for the
      Products to Distributor F.O.B. E-Fuel's facility or warehouse. Shipments
      outside the United States shall be Ex. Works E-Fuel's facility (INCOTERMS
      2000).

            

    

     

    
      	
               
      

            	
              4.7

            	
              Taxes:
      Distributor represents and warrants that all Products purchased hereunder
      are purchased for resale in the ordinary course of Distributor's business.
      Distributor agrees it is responsible for and shall comply with all laws
      calling for the collection and/or payment of all taxes, including sales
      and use taxes and ad valorem taxes. Distributor agrees to perfect
      Distributor's tax exempt status by providing E-Fuel documentation to
      perfect same. In the absence of such documentation or in the event E-Fuel
      reasonably believes a tax liability may exist, E-Fuel may collect tax from
      Distributor until such time as tax exemption is perfected to E-Fuel's
      satisfaction. Any tax collected and still held by E-Fuel prior to
      submitting tax exempt status will be refunded to Distributor if
      Distributor can prove that a tax exemption was in effect prior to such
      purchase. Reimbursement of taxes paid by E-Fuel to tax authorities must be
      reclaimed by Distributor from the respective tax authority at
      Distributor's expense.

            

    

     

     

    
      	 
      	 
      
	
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      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
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      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              4.8

            	
              Cancel/Reschedule
      Orders: Distributor may cancel or reschedule orders at no penalty up to 90
      days prior to scheduled shipment date. Between 90 and 60 days of scheduled
      shipment a penalty of 10% of the amount of the order shall apply to cancel
      and a 5% penalty shall apply to reschedule. Between 60-30 days of
      scheduled shipment a penalty of 25% shall apply to cancel, 10% to
      reschedule. Within 30 days of scheduled shipment a penalty of 50% shall
      apply to cancel and a 25% penalty to
reschedule.

            

    

    

     

    
      	
              5

            	
              CONFIDENTIAL
      INFORMATION

            

    

     

    
      	
               
      

            	
              5.1

            	
              "Confidential
      Information" shall mean any information which is marked as "Confidential"
      or "Proprietary" by E-Fuel or otherwise intended by E-Fuel to be
      maintained as confidential.

            

    

     

    
      	
               
      

            	
              5.2

            	
              Distributor,
      its employees and agents shall retain all Confidential Information and to
      prevent disclosure of such except as provided for herein. E-Fuel hereby
      states that the Product designs constitute a valuable asset of E-Fuel and
      are to be considered Confidential Information. Access by Distributor to
      Confidential Information shall be restricted to Distributor's employees
      who have a need to have access.

            

    

     

    
      	
               
      

            	
              5.3

            	
              Distributor
      shall not use, make, have made, distribute or disclose any copies of the
      Confidential Information in whole or in part, without the prior written
      authorization of E-Fuel.

            

    

     

    
      	
               
      

            	
              5.4

            	
              Distributor
      shall inform its employees and agents having access to the Confidential
      Information of Distributor's limitations, duties and obligations regarding
      nondisclosure and copying of the Confidential Information. Distributor
      agrees to protect and secure the Confidential Information with the same
      degree of care and confidentiality that it employs to protect its own
      proprietary and/or confidential information. Distributor shall have a
      signed agreement with Distributor's employees and agents having access to
      the Confidential Information containing similar provisions to those set
      forth herein to insure compliance with this
  paragraph.

            

    

    

     

    
      	
              6

            	
              TERMINATION

            

    

     

    
      	
               
      

            	
              6.1

            	
              Effectiveness:
      This Agreement shall be effective upon the date of execution and shall
      remain in effect for three (3) years following the first customer shipment
      of the production MicroFueler and shall upon mutual written agreement
      renew for additional one (1) year term(s). E-FUEL's agreement to renew
      shall not be unreasonably withheld so long as Distributor has met its
      obligations herein and consistently achieved its Sales
    Plan.

            

    

     

    
      	
               
      

            	
              6.2

            	
              Termination
      for Cause (immediate effect): E-Fuel may terminate this Agreement with
      immediate effect on the giving of written notice to Distributor should any
      of the following events occur, such events being of such nature so as to
      constitute good cause for immediate termination by
  E-Fuel:

            

    

     

    
      	
               
      

            	
               
      6.2.1

            	
              Any
      misrepresentations by Distributor in entering into this Agreement of the
      submission by Distributor of any false or fraudulent application, claim or
      report in connection with its sales or service
  operations.

            

    

     

    
      	
               
      

            	
               
      6.2.2

            	
              lnsolvency
      of Distributor resulting in the inability of Distributor to meet its debts
      as they mature, or the filling by Distributor of a petition of bankruptcy
      under any chapter of the bankruptcy
laws.

            

    

     

    
      	
               
      

            	
               
      6.2.3

            	
              Any
      transfer or any attempted transfer of any interest in, or right,
      privilege, or obligations under this Agreement or any transfer of the
      principal assets of Distributor's operations hereunder, or change in the
      direct or indirect ownership or operating management of Distributor,
      however accomplished, without the written consent of E-Fuel, which consent
      shall not be unreasonably withheld.

            

    

     

    
      	
               
      

            	
               
      6.2.4

            	
              Any
      act of Distributor and any person involved in the ownership or operating
      management of Distributor which violates the law and affects adversely
      Distributor operations.

            

    

     

    
      	
               
      

            	
               
      6.2.5

            	
              Revocation
      of any license or permit necessary to conduct its operations
      hereunder.

            

    

     

    
      	
               
      

            	
              6.3

            	
              Termination
      - General nonperformance: Unless otherwise proscribed by law, E-Fuel or
      Distributor may terminate this Agreement on the giving of at least 60 days
      prior written notice to the other for failure of either party to fulfill
      any and all responsibilities and obligations as set forth in this
      Agreement.

            

    

     

     

    
      	 
      	 
      
	
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      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
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      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              6.4

            	
              Termination
      - Death, Incapacity, Change in Key Personnel: As an inducement in entering
      into this Agreement, Distributor has represented (as set forth in the
      Distributor Profile, Exhibit 4) that the persons identified shall continue
      to actively participate in the ownership and operating management of
      Distributor; and, therefore, during the initial term of this Agreement
      E-Fuel may terminate this Agreement on the giving to Distributor of at
      least 60 days prior written notice in the event of Death, or physical or
      mental incapacity of any of the identified persons or in the event any of
      the key personnel ceases to be involved in an active and substantial role
      in the operations of Distributor where E-Fuel reasonably believes
      Distributor's ability to achieve its business plan may be at
      risk.

            

    

     

    
      	
               
      

            	
              6.5

            	
              Transition:
      E-Fuel may terminate this Agreement at any time on giving to Distributor
      of at least 30 days prior written notice in the event E-Fuel is acquired.
      Upon any such event and notwithstanding any term otherwise set forth in
      this Agreement, this Agreement shall extend for three (3) years from the
      date of E-Fuel's acquisition so long as Distributor continues to satisfy
      its obligations hereunder after which there shall be no requirement to
      renew or extend this Agreement for any
reason.

            

    

     

    
      	
               
      

            	
              6.6

            	
              Responsibilities
      Upon Termination: Distributor shall immediately pay to E-Fuel all amounts
      owed, whether due or not. Upon termination, Distributor shall discontinue
      use of trademarks, including use of advertising, business materials,
      remove all signs and references designating Distributor as an authorized
      Distributor for the Products, and instruct all publications to discontinue
      listing of Distributor as an authorized E-Fuel Distributor. Upon
      termination, Distributor shall immediately return any property of E-Fuel
      together with sales manuals, service manuals, technical data, Confidential
      Information and marketing
materials.

            

    

     

    
      	
               
      

            	
              6.7

            	
              Survival
      of Certain Terms: The provisions of Paragraphs 2.7 (Reports and Records),
      2.9 (Compliance to Laws), 3.3 (Delivery and Preparation Obligations), 4.1
      (General Terms and Conditions), 4.5 (Payment), 4.7 (Taxes), 5
      (Confidential Information), 6 (Termination), 7
      (Miscellaneous).

            

    

    

     

    
      	
              7

            	
              MISCELLANEOUS

            

    

     

    
      	
               
      

            	
              7.1

            	
              Relationship
      of the Parties: This Agreement does not in any way create the relationship
      of principal and agent between Distributor and E-Fuel and in no
      circumstance Distributor, its Dealers, agents or employees shall be
      considered as agents of E-Fuel. Distributor shall not create or attempt to
      assume to create any obligation or make any contract, agreement,
      representation or warranty on behalf of or in the name of E-Fuel, except
      those authorized in writing by E-Fuel. Distributor shall indemnify and
      hold E-Fuel harmless from any costs and liability caused by any
      unauthorized acts prohibited by this paragraph, whether by Distributor,
      its Dealers, agents or employees.

            

    

     

    
      	
               
      

            	
              7.2

            	
              Force
      Majeure: Both E-Fuel and Distributor are not liable or responsible for
      failure to perform any part of this Agreement resulting from or
      contributed by any foreign or domestic embargoes, seizures, acts of God,
      insurrections, wars, adoption or enactment of any laws, ordinance,
      regulation, fires, floods, explosions, strikes, extraordinary currency
      devaluations, taxes, or custom duties or other events or contingencies
      beyond its control.

            

    

     

    
      	
               
      

            	
              7.3

            	
              Entire
      Agreement: This Agreement supersedes and terminates any and all prior
      Distributor agreements, written or oral, entered into between E-Fuel and
      Distributor. This Agreement including E-Fuel's then current Terms and
      Conditions of Sale constitutes the entire agreement between E-Fuel and
      Distributor.

            

    

     

    
      	
               
      

            	
              7.4

            	
              Assignment:
      Distributor may not assign, directly or indirectly, all or part of its
      rights or obligations under this Agreement without the prior written
      consent of E-Fuel, which consent shall not be unreasonably withheld or
      delayed.

            

    

     

    
      	
               
      

            	
              7.5

            	
              Governing
      Law: This Agreement shall be governed by and construed in accordance with
      the laws of the State of California. United States of America. The parties
      hereto agree that the sole proper venue for any action related to this
      Agreement shall be a court of competent jurisdiction located in Santa
      Clara County, California and the parties hereby irrevocably commit to the
      jurisdiction and venue of such court and waive any claims of forum non conveniens or
      other such causes for change of
venue.

            

    

     

    
      	
               
      

            	
              7.6

            	
              Construction:
      This Agreement and all words, terms and provisions hereof shall be
      construed in accordance with the usual and ordinary meanings, and not in
      favor of or against either party hereto. Paragraph headings are not part
      of this Agreement, but are only for
convenience.

            

    

     

    
      	
               
      

            	
              7.7

            	
              Nonwaiver
      of Rights: Failure of either party hereto to enforce any of the provisions
      of this Agreement or any rights with respect thereto or failure to
      exercise any election provided for herein shall in no way be considered to
      be waiver of such provisions, rights or elections or in any way effect the
      validity of this Agreement. The failure of either party to exercise any of
      said provisions, rights or elections shall not preclude or prejudice such
      part from later enforcing or exercising the same or any other provisions,
      rights or elections which it may have under this
  Agreement.

            

    

     

     

    
      	 
      	 
      
	
              Confidential

            	
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      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

     

    
      	
               
      

            	
              7.8

            	
              Invalidity:
      If any term, provision, covenant or condition of this Agreement is held by
      a court of competent jurisdiction to be invalid, void or unenforceable,
      the remainder of the provisions shall remain in full force and effect and
      shall in no way be affected, impaired or
  invalidated.

            

    

     

    
      	
               
      

            	
              7.9

            	
              Notices:
      All notices required or permitted to be given or made under this Agreement
      may be affected in writing by certified mail, postage prepaid, return
      receipt requested, and shall be deemed communicated three days from
      mailing thereof to the addresses set forth in Exhibit
  3.

            

    

     

    
      	
            	
              7.10

            	
              Attorneys
      Fees: In the event any legal action is necessary to enforce any of the
      terms and conditions of this Agreement, the prevailing party shall be
      entitled to all costs and fees incurred, including reasonable attorney's
      fees.

            

    

     

    
      	
            	
              7.11

            	
              Currency:
      All monetary figures set forth in this Agreement and arising out of this
      Agreement shall be in the legal currency of the United States of
      America.

            

    

     

    
      	
            	
              7.12

            	
              Limitation
      of Liability: E-Fuel's liability on any claim of any kind, including
      negligence, for any loss or damage arising out of, connected with, or
      resulting from this Agreement or the performance or breach thereof, or
      from the design, manufacture, sales, delivery, resale, installation,
      repair, operation or use of any Products covered by or furnished under
      this Agreement shall in no case exceed the purchase price of the Products
      which gives rise to the claim. IN NO EVENT, WHETHER AS A RESULT OF BREACH
      OF CONTRACT OR WARRANTY OR NEGLIGENCE OR OTHERWISE, SHALL E-FUEL BE LIABLE
      FOR SPECIAL. INDIRECT. INCIDENTAL OR CONSEQUENTIAL DAMAGES INCLUDIING, BUT
      NOT LIMITED TO, LOSS OF PROFITS OR REVENUE, LOSS OF USE OF PRODUCTS OR ANY
      OTHER EQUIPMENT, COST OF CAPITAL, COST OF SUBSTITUTE EQUIPMENT, FACILITIES
      OR SERVICES, DOWNTIME COSTS, OR CLAIMS OF CUSTOMERS OF DISTRIBUTOR FOR
      SUCH DAMAGES EVEN IF E-FUEL HAS BEEN INFORMED OF THE POSSIBILITY OF SUCH
      DAMAGE OR LOSS BY DISTRIBUTOR OR ANY THIRD
  PARTY.

            

    

    

     

    IN
WITNESS WHEREOF, the parties hereto have executed this Agreement as of the day
and year first above written.

     

     

    
      
        	
                E-Fuel
      Corporation

              	 	
                Distributor

              
	 
      	 	 	 
      	 
	
                BY:

              	/s/
      Thomas J. Quinn	 	
                BY:

              	/s/
      John W. Galt
	 
      	 	 	 
      	 
	
                Name:

              	Thomas
      J. Quinn	 	
                Name:

              	John
      W. Galt
	 
      	 	 	 
      	 
	
                Title:

              	CEO	 	
                Title:

              	CEO
	 	 	 	 	 
	Date:	Feb
      15 2009	 	Date:	11/14/09

      

    

     

     

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              Confidential

            	
              Page
      6

            
	
              E-Fuel
      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
1

     

    Territory

    

     

    The
following geographical regions shall constitute the Territory for purposes of
this Agreement:

    

     

    San Diego
County, Orange County and Los Angeles County as defined by the State of
California

     

    
      
        
          

        

      

    

     

     

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              Confidential

            	
              Page
      7

            
	
              E-Fuel
      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
2

     

    Minimum
Performance Criteria

    

     

    Opening
Order: 25 MicroFueler units. Total amount of the opening order shall be 50%
pre-paid (equipment only) within ninety (90) days of the effective date of this
Agreement or as may be otherwise mutually agreed. The remaining 50% shall be due
according to the payment terms established with Distributor.

     

    Minimum
re-order: 25 MicroFueler units (less than 25 units shall incur a processing fee
of $150 per unit)

    

     

    Minimum
unit purchases required year 1: As mutually agreed in sales plan

     

    Minimum
unit purchases required year 2: As mutually agreed in sales plan

     

    Minimum
unit purchases required year 3: As mutually agreed in sales plan

    

     

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              Confidential

            	
              Page
      8

            
	
              E-Fuel
      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
3

     

    Notices

    

     

    Pursuant
to Section 7.8, Notices to be given under this Agreement shall be sent to the
following addresses:

    

     

    E-FUEL:

    

     

    E-Fuel
Corporation

    15466
Los Gatos Blvd., #37

    Los
Gatos, CA 95032 UNITED STATES OF AMERICA

    

     

    DISTRIBUTOR

    

    
      
        	
                Green
      House

              	 
      
	 
      	 
      
	
                5171
      Santa Fe Street

              	 
      
	 
      	 
      
	
                Suite
      I

              	 
      
	 
      	 
      
	
                S.D.,
      Ca 92109

              	 
      

      

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              Confidential

            	
              Page
      9

            
	
              E-Fuel
      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
4

    

    Distributor
Profile

    

    

    
      	
              Company
      Name:

            	 
      	 
      	
              Contact
      Name:

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Address:

            	 
      	 
      	
              Title:

            	 
      
	 
      	 
      	 
      	 
      
	 
      	 
      	
              Phone
      #:

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              City:

            	 
      	 
      	
              Fax
      #:

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              State/Zip:

            	 
      	 
      	
              Email
      address:

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Country:

            	 
      	 
      	
              Website:

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Years
      in business:

            	 
      	
              #
      Employees:

            	 
      	 
      	
              Type
      (Corp, LLC):

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Principal
      Owner(s):

            	 
      
	 
      
	 

    

    

    
      	
              Revenues
      (US$ last year):

            	 
      	 
      	
              Gross
      Margin (last year):

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Inventory
      (% revenue):

            	 
      	 
      	
              New
      Product Sales (% revenue)

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Parts
      Sales (% revenue):

            	 
      	 
      	
              Service
      Sales (% revenue):

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Growth
      Rate % (last year):

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Short
      term debt (% Revenue):

            	 
      	 
      	
              Long
      term debt (% Revenue):

            	 
      

    

    

    

    
      	
              Product
      line 1/Years represented:

            	 
      
	 
      	 
      
	
              Product
      line 2/Years represented:

            	 
      
	 
      	 
      
	
              Product
      line 3/Years represented:

            	 
      

    

    

    
      	
              Territory
      served:

            	 
      
	 
      	 
      
	
              # of Sales
      Personnel:

            	 
      	 
      	
              #
      of Service Personnel:

            	 
      

    

    

    

    
      	
              Key
      Managers:

            	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              President:

            	 
      	 
      	
              Sales:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Administration:

            	 
      	 
      	
              Operations:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Other:

            	 
      	 
      	
              Other:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	 	 	 	 	 
	
              Profile
      prepared by:

            	 
      	 
      	
              Title/Date:

            	 
      

    

    

    

    
      	 
      	 
      
	
              Confidential

            	
              Page
      10

            
	
              E-Fuel
      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
5

     

    Distributor
Price Schedule

    

     

    Efuel100
MicroFueler assembled:    $8,000.00

    

     

    Prices
are FOB E-Fuel facility and are subject to change as E-Fuel may publish revised
Distributor Price schedules. Any such price changes shall supersede those set
forth herein.

    

     

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              Confidential

            	
              Page
      11

            
	
              E-Fuel
      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
6

     

    Limited
Exclusive Distribution Fee

    

     

    For
valuable consideration, to include but not limited to the granting of exclusive
distribution rights hereunder, E-Fuel shall invoice Distributor in the amount of
$500,000.00 upon execution of this Agreement and Distributor shall promptly pay
said invoice within 15 days of the invoice date. Failure to pay the invoice by
the due date shall constitute a material breach of the Agreement and shall
result in termination with immediate effect. Failure to execute this Agreement
on or before January 15, 2009 shall terminate this offer upon which E-Fuel shall
have no further obligation to Distributor.

     

    In
support of Distributor's efforts hereunder, E-Fuel agrees to ship on or before
September 30, 2009 and Distributor agrees to accept delivery of 3 beta
production units of the MicroFueler at no cost to Distributor.

    

    

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              Confidential

            	
              Page
      12

            
	
              E-Fuel
      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

            	 
      

    

    
      
         

      

      
         

        
          

        

      

      
         

      

    

    Exhibit
7

     

    Training

    

     

    E-FUEL
shall undertake to provide training to assist Distributor in its obligations
herein with respect to sales and service. Except as noted below, travel, lodging
and per diem expenses shall be the responsibility of the respective Parties.
Training shall include but not be limited to the following:

    

    

    Sales:

     

    
      	
               
      

            	
              (1)

            	
              Paso
      Robles, CA: 5 days on-site to include product orientation, industry
      overview, product features/benefits, market opportunities, and sales
      presentations.

            

    

     

    
      	
               
      

            	
              (2)

            	
              OPTIONAL
      - In the Territory: 5-10 days in the Territory to include joint "buddy"
      sales calls, additional product training, forecast development and review,
      Sales Plan development assistance, target account review and assistance,
      and one-on-one coaching.

            

    

    

    

    Service:

     

    
      	
               
      

            	
              (1)

            	
              Paso
      Robles, CA: 5 days of detailed technical product training to include final
      assembly and test procedures for the Products, sub-assembly testing
      procedures and repair, field preventative maintenance procedures,
      trouble-shooting techniques, service manual review, and warranty service
      program.

            

    

     

    
      	
               
      

            	
              (2)

            	
              In
      The Territory: 1-2 days of assistance in Distributor's service and test
      facility to insure product quality, proper procedures, return materials
      handling, and warranty procedures.

            

    

    

     

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              Confidential

            	
              Page
      13

            
	
              E-Fuel
      Distributor Agreement - Exclusive for San Diego, Orange and LA
      Counties

            	 
      
	
              Rev.
      1B1/08

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