Document:

ex10_6.htm

    
      

    

    
      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.

                

        

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        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:

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          	
                	
                  (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.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          	
                  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.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      
        	
                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.

              

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        
          	
                	
                  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.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      

      
        
          	
                  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.

      
         

        
          
            
            

          

          
            
            

            
              

            

          

          
            
            

          

        

         

        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.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      
        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:ex10_1.htm

    
      

    

    
       

      EXHIBIT
10.1

      

      

      AGREEMENT
REGARDING LOAN

      

      THIS
AGREEMENT REGARDING LOAN (this “Transfer Agreement”)
is dated and made effective as of January 7, 2010 by and among MATTERHORN
FINANCIAL SERVICES LLC, a California limited liability company (“Borrower”),
PERFORMANCE CAPITAL MANAGEMENT, LLC, a California limited liability company
(“PCM”),
and VÄRDE INVESTMENT PARTNERS, L.P., a Delaware limited partnership (“Lender”).

      

      RECITALS:

      

      WHEREAS,
Borrower, PCM and Lender are parties to that certain Master Loan Agreement dated
as of June 10, 2004, as amended (the “Loan
Agreement”).

      

      WHEREAS,
Borrower and Lender desire to set forth certain additional agreements regarding
the Loan Agreement and related matters.

      

      

      NOW,
THEREFORE, in consideration of the foregoing premises and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:

      

      1.           Definitions.  Capitalized
terms not otherwise defined herein have the meanings ascribed to them in the
Loan Agreement.

      

      2.           Note Payment. Lender
agrees, notwithstanding any provisions of Sections 3.4 and 3.5 of the Loan
Agreement to the contrary, to accept $1,075,425.36 as full payment and
satisfaction of all of the Notes (including any Contingent Payment) (the “Note
Payment”).  Lender agrees that Borrower will retain an
additional $500,000 from the proceeds of the sale of certain remaining Assets to
North Star Capital Acquisition LLC.

      

      3.           Notes Paid in Full; Release
of Security Interests.  Lender agrees that, effective upon
Lender’s receipt of the Note Payment: (i) all of the Notes will be satisfied and
paid in full and (ii) Lender hereby releases any security interest granted in
favor of Lender under the Loan Documents.

      

      4.           Acceleration of Facility
Termination Date.  The Facility Termination Date is hereby
accelerated to be the date first written above.

      

      5.           Indemnity by Borrower and
PCM.  In consideration of Lender’s agreements herein, Borrower
and PCM hereby agree to jointly and severally indemnify, defend and hold Lender
and Lender’s Affiliates harmless from and against any and all losses, damages,
costs, claims, expenses (including reasonable attorneys fees) and liabilities to
third parties growing out of or resulting from any real, personal, or intangible
property owned or serviced by Borrower or PCM or which was ever an “Asset” under
the Loan Agreement.

      
        
           

        

        
           

          
            

          

        

        
           

        

      

       

      6.           Representations. Each
party (as the “Representing Party”)
represents and warrants to the other party that (i) the Representing Party
(including any person signing on behalf of a Representing Party) has the full
power and authority to execute, deliver and perform this Transfer Agreement;
(ii) the execution, delivery and performance of this Transfer Agreement by the
Representing Party and the consummation of the transactions contemplated hereby
by the Representing Party have been duly and validly authorized by the
Representing Party; (iii) the Representing Party has duly executed and delivered
this Transfer Agreement; (iv) this Transfer Agreement evidences the valid,
binding and enforceable obligation of the Representing Party except as limited
by applicable bankruptcy, insolvency or other similar laws affecting creditors’
rights generally or general equitable principles; and (v) all requisite action
has been taken by the Representing Party to make this Transfer Agreement valid
and binding upon the Representing Party in accordance with its
terms.

      

      7.           Free Act and Deed.
This Transfer Agreement and the exhibits hereto have been reviewed by Borrower,
who acknowledges and agrees as follows: (i) Borrower understands fully the terms
of this Transfer Agreement and the consequences of the issuance hereof and
thereof; (ii) Borrower has been afforded an opportunity to have this Transfer
Agreement reviewed by its attorney and to discuss all such documents with such
attorney and other consultants as it may wish; and (iii) Borrower has entered
into this Transfer Agreement of its own free will and accord and without threat
or duress.

      

      8.           Governing
Law.  This Transfer Agreement and the legal relationship
between the parties hereto shall be governed and construed in accordance with
the laws of the State of Minnesota.

      

      9.           Entire
Agreement.  It is understood and agreed that this Transfer
Agreement constitutes the entire agreement between the parties, and no oral or
written statements, promise, or understandings not included in this writing
shall be valid or binding.

      

      10.         Survivability.  This
Transfer Agreement shall be binding on the respective successors, assigns,
distributees, or legal representatives of the parties shall constitute the
entire agreement of the parties, and shall not be modified or amended except by
a writing executed by all parties.  Except as set forth herein, no
other amendment to the Loan Documents is intended and the covenants, agreements,
representations and warranties contained in the Loan Documents and herein shall
survive the execution, delivery and performance of this Transfer
Agreement.

      

      11.         Representations. No
waiver, amendment, or other variation of the terms, conditions or provisions of
this Transfer Agreement shall be valid unless in writing and signed by all of
the signatories hereto, and then only to the extent specifically set forth in
such writing. The parties agree that they will not rely upon any representations
that purport to vary or amend the terms of this instrument or the conditions of
enforcement thereof, in any manner except as set forth in this section,
notwithstanding any assertions of authority to vary this instrument verbally as
given by any person.

      

      12.         Headings. Headings in
this Transfer Agreement are for convenience only and shall not be used to
interpret or construe its provisions.

      
        
           

        

        
          2

          
            

          

        

        
           

        

      

       

      13.         Counterparts. This
Transfer Agreement may be executed in one or more counterparts each of which
shall be deemed an original but all of which together shall constitute on and
the same instrument.

      

      

      [The
remainder of this page was intentionally left blank.]

      
        
           

        

        
          3

          
            

          

        

        
           

        

      

       

      AGREEMENT
REGARDING LOAN

      

      

      SIGNATURE
PAGE

      

      IN
WITNESS WHEREOF, the parties have caused this Transfer Agreement to be executed
as of the date first written above.

      

      

      
        	
                BORROWER:

              	 	
                PCM:

              
	
                MATTERHORN
      FINANCIAL SERVICES LLC, a California limited liability company, by
      Performance Capital Management, LLC, a California limited liability
      company, its Sole Member

                 

                 

                 

                By:     /s/ David J.
      Caldwell                                                                

                Name:   David
      Caldwell

                Its:        Chief
      Operating Officer

                 

              	 	
                PERFORMANCE
      CAPITAL MANAGEMENT, LLC, a California limited liability
      company

                 

                 

                 

                 

                By:     /s/ David J.
      Caldwell                                                                

                Name:  David
      Caldwell

                Its:       Chief
      Operating Officer

              
	 
      	 	
                LENDER:

              
	 
      	 	
                 

                VÄRDE
      INVESTMENT PARTNERS, L.P., a Delaware limited partnership, by Värde
      Investment Partners G.P., LLC, a Delaware limited liability company, its
      General Partner, by Värde Partners, L.P., a Delaware limited partnership,
      its Managing Member, by Värde Partners, Inc., a Delaware corporation, its
      General Partner

                 

                 

                 

                By:     /s/ Christopher N.
      Giles                                                                

                Name:     Christopher N.
      Giles                                                 

                Its:
           Vice President                

                 

              

      

      

       

    

    4

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