UNDERWRITER
AGREEMENT
January
30, 2008
Redwood
Securities Group, Inc.
600
California Street, Suite 520
San
Francisco, CA 94108
Ladies
and Gentlemen:
CS
Financing Corporation, a Delaware corporation (the
“Company”), has registered for public sale a
maximum of $100,000,000 in of 5 year Notes (the
“Notes”) under a continuous offering under Rule
415 (the “Offering”). The minimum purchase for the
Notes shall be $25,000 except as otherwise indicated in the
Prospectus.
Redwood
Securities Group, Inc. (“Underwriter”) will be a
Qualified Independent Underwriter (“QIU”) as
defined in section 2720 of the NASD rules and will perform the
duties of a QUI as required under section 2720(c)(3)(A) of the
NASD rules under the Financial Industry Regulatory Authority
(“FINRA”).
In
connection therewith, the Company hereby agrees with the
Underwriter, as follows:
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1.
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Underwriter
may enter into Broker-Dealer Distribution Agreements
(“Distribution Agreement”) in the form approved by
Company with other broker-dealers (each dealer being referred to
herein as a “Underwriter Dealer” and said dealers being
collectively referred to herein as the “Underwriter
Dealers”) who will participate in the distribution of the
Notes.
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2.
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Company
may also, separately, enter into Distribution Agreements with
broker dealers, including Company’s affiliated broker
–dealer, Capital Solutions Distributor, LLC
(“CSD”).
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3.
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Broker-dealers
(whether Underwriter Dealers or broker-dealers who have signed a
Distribution agreement with Company, are referred to as
“Broker-Dealers”) shall receive selling commissions
from the Underwriter or the Company, as the case may be, in
connection with the sale of the Notes.
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4.
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This
Underwriter Agreement shall relate only to the Notes registered
with the Securities and Exchange Commission (the “SEC”)
pursuant to the Registration Statement, which is a shelf
registration under Rule 415 of the Securities Act of 1933, as
amended (“Securities Act”).
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5.
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In
the event of any change in the purchase price or yield of the Notes
being offered and sold in this Offering, the Company shall notify
the Underwriter in writing, and the Underwriter shall notify the
Underwriter Dealers of such change in the purchase price of the
Notes pursuant to the terms of the Distribution
Agreements.
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6.
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The
Company shall have the right to approve any material modifications
or addendums to the form of the Distribution Agreement used by
Underwriter to contract with an Underwriter Dealer.
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7.
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Terms
not defined herein shall have the same meaning as in the
Prospectus.
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8.
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Representations
and Warranties of the Company. The Company represents
and warrants to the Underwriter and each Underwriter Dealer with
whom the Underwriter enters into a Distribution Agreement
that:
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8.1.
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A
registration statement covering the Notes has been registered and
deemed effective in accordance with applicable requirements of the
Securities Act of 1933, as amended (the “Securities
Act”), and the applicable rules and regulations (the
“Rules and Regulations”) of the SEC promulgated
thereunder. The registration statement and prospectus
contained therein, when declared effective by the SEC, and as may
be revised, amended or modified from time to time thereafter by any
amendments (as to the registration statement) and/or supplements
(as to the prospectus), are respectively hereinafter referred to as
the “Registration Statement” and the
“Prospectus.” Copies of the Prospectus
(as amended from time to time) will be delivered to the
Underwriter.
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8.2.
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The
Company has been duly and validly organized and formed as a
corporation under the laws of the State of Delaware, with the power
and authority to conduct its business as described in the
Prospectus.
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8.3.
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As
of the signing, and during the Term, of this Underwriting
Agreement, the Registration Statement and Prospectus comply with
the Securities Act and the Rules and Regulations, and the
Prospectus and any and all authorized sales materials prepared or
approved by the Company for use with potential investors in
connection with the Offering (“Authorized Sales
Materials”), when used in conjunction with the Prospectus, do
not contain any untrue statements of material facts or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading; provided,
however, that the foregoing provisions of this Section 8.3
will not extend to such statements contained in or omitted from the
Registration Statement or Prospectus or Authorized Sales Materials
as are primarily within the knowledge of the Underwriter or any of
the Dealers and are based upon information either (a) furnished by
a Dealer in writing to the Underwriter or the Company, or
(b) furnished by the Underwriter in writing to the Company
specifically for inclusion therein.
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8.4.
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The
Company intends to use the funds received from the sale of the
Notes as set forth in the Prospectus.
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8.5.
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No
consent, approval, authorization or other order of any governmental
authority is required in connection with the execution or delivery
by the Company of this Underwriter Agreement (except as provided in
section 27 of this Underwriting Agreement) or the issuance and sale
by the Company of the Notes, except such as may be required under
the Securities Act or applicable state securities
laws.
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8.6.
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There
are no actions, suits or proceedings pending or to the knowledge of
the Company, threatened against the Company at law or in equity or
before or by any federal or state commission, regulatory body or
administrative agency or other governmental body, domestic or
foreign, which will have a material adverse effect on the business
or property of the Company.
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8.7.
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The
execution and delivery of this Underwriter Agreement, the
consummation of the transactions herein contemplated and compliance
with the terms of this Underwriter Agreement by the Company will
not conflict with or constitute a default under any charter,
by-law, indenture, mortgage, deed of trust, lease, rule,
regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over the Company, except to the extent that the
enforceability of the indemnity and/or contribution provisions
contained in Section 15 (Indemnification) of this Underwriter
Agreement may be limited under applicable securities
laws.
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8.8.
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The
Company has full legal right, power and authority to enter into
this Underwriter Agreement and to perform the transactions
contemplated hereby, except to the extent that the enforceability
of the indemnity and/or contribution provisions contained in
Section 15 of this Underwriter Agreement may be limited under
applicable securities laws.
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8.9.
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The
Notes, when subscribed for, paid for and issued, will be duly and
validly issued, fully paid and non-assessable and will conform to
the description thereof contained in the Prospectus; no holder
thereof will be subject to personal liability for the obligations
of the Company solely by reason of being such a holder; and all
corporate action required to be taken for the authorization,
issuance and sale of such Notes shall have been validly and
sufficiently taken.
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8.10.
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The
financial statements of the Company filed as part of the
Registration Statement and those included in the Prospectus present
fairly in all material respects the financial position of the
Company as of the date indicated and the results of its operations
for the periods indicated; said financial statements have been
prepared in conformity with generally accepted accounting
principles applied on a consistent basis.
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8.11.
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The
Company does not intend to conduct its business so as to be an
“investment company” as that term is defined in the
Investment Company Act of 1940, as amended, and the rules and
regulation thereunder, and it will exercise reasonable diligence to
ensure that it does not become an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended.
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8.12.
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Company
will be duly qualified to do business as a foreign corporation in
each jurisdiction in which it will own or lease property of a
nature, or transact business of a type, which will make such
qualification necessary.
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9.
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Representations
and Warranties of Underwriter. The Underwriter
represents and warrants to the Company that:
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9.1.
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As
of the signing, and during the Term, of this Underwriting
Agreement, Underwriter meets all of the requirements of a Qualified
Independent Underwriter as specified in Section 2720(b)(15) of the
NASD rules or as required under any applicable federal or state
securities laws, all as amended from time to time.
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9.2.
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Underwriter
has been duly and validly organized and formed as a corporation
under the laws of the State of California and has the full legal
right, power and authority to enter into this Underwriter Agreement
and to perform the transactions contemplated hereby, except to the
extent the enforceability of the indemnity and/or contribution
provisions contained in Section 15 (Indemnification) of the
Underwriter Agreement may be limited under applicable securities
laws.
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9.3.
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No
consent, approval, authorization or other order of any governmental
authority is required in connection with the execution or delivery
by Underwriter of this Underwriter Agreement (except as provided in
section 27 of this Underwriting Agreement).
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9.4.
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There
are no actions, suits or proceedings pending or to the knowledge of
Underwriter, threatened against Underwriter at law or in equity or
before or by any federal or state commission, regulatory body or
administrative agency or other governmental body, domestic or
foreign, which will have a material adverse effect on the business
or property of Underwriter, except for the current suspension by
FINRA of Aditya Mukerji for 45 days from January 28,2008 through
March 12, 2008 under Docket#
E0120500701/200600401/06-4308/-46541.
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9.5.
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The
execution and delivery of this Underwriter Agreement, the
consummation of the transactions herein contemplated and compliance
with the terms of this Underwriter Agreement by Underwriter will
not conflict with or constitute a default under any charter,
by-law, indenture, mortgage, deed of trust, lease, rule,
regulation, writ, injunction or decree of any government,
governmental instrumentality or court, domestic or foreign, having
jurisdiction over Underwriter, except to the extent that the
enforceability of the indemnity and/or contribution provisions
contained in Section 15 (Indemnification) of this Underwriter
Agreement may be limited under applicable securities
laws.
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9.6.
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As
of the signing, and during the Term, of this Underwriting
Agreement, Underwriter is registered as a broker –dealer
under section 15(d) of the Securities and Exchange Act of 1934
(“Exchange Act”) and is a member, in good standing, of
FINRA and that its employees and representatives have all the
required licenses and registrations to act as contemplated under
this Underwriting Agreement..
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9.7.
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As
of the signing, and during the Term, of this Underwriting
Agreement, Underwriter agrees that it will use only those
Underwriter Dealers who shall be, at the time they sign a
Distribution Agreement with Underwriter and throughout the time
such a person is an Underwriter Dealer, members in good standing of
FINRA.
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9.8.
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As
of the signing, and during the Term, of this Underwriting
Agreement, the Underwriter represents and warrants to the Company
that it will, not use any sales literature not authorized and
approved by the Company, or use any “broker-dealer use
only” materials with members of the public in connection with
the offer or sale of Notes.
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9.9.
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As
of the signing, and during the Term, of this Underwriting
Agreement, the Underwriter further represents and warrants to the
Company that it shall promptly (a) notify the Underwriter
Dealers of any supplement or amendment to the Prospectus, and
(b) supply the Underwriter Dealers with reasonable quantities
of the Prospectus and any supplements or amendments thereto, to the
extent provided to the Underwriter by the Company. In addition, the
Underwriter represents and warrants to the Company that, in
connection with the sale of Notes to customers of the Underwriter
in transactions pursuant to which the Underwriter rather than an
Underwriter Dealer is acting as the broker-dealer of record, it
will deliver or make available a copy of the Prospectus as provided
to the Underwriter by the Company from time to time.
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9.10.
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As
of the signing, and during the Term, of this Underwriting
Agreement, the Underwriter will offer the Notes, and in its
agreements with Underwriter Dealers will require that the
Underwriter Dealers offer the Notes, only to persons who meet the
suitability standards set forth in the Prospectus or in any
suitability letter or memorandum sent to it by the Company and will
only make offers to persons in the states in which it is advised in
writing that the Notes are qualified for sale or that such
qualification is not required. In offering the Notes, the
Underwriter will, and in its agreements with Underwriter Dealers,
the Underwriter will, require that the Underwriter Dealers comply
with the provisions of all applicable rules and regulations
relating to suitability of investors, and shall specifically
require that the Underwriter Dealers comply with the FINRA rules
contained in Rules 2730, 2740, 2740 and 2420 of NASD.
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10.
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Company
will furnish the Underwriter, at no expense to the Underwriter,
with such number of printed copies of the Prospectus as the
Underwriter may reasonably request.
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11.
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If
at any time the SEC or any state securities commission shall issue
any stop order suspending the effectiveness of the Registration
Statement, and to the extent the Company determines that such
action is in the best interest of its shareholders, it will use its
best efforts to obtain the lifting of such order at the earliest
possible time.
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12.
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If
at any time when a Prospectus is required to be delivered under the
Securities Act any event occurs as a result of which, in the
opinion of either the Company or the Underwriter, the Prospectus or
any other prospectus then in effect would include an untrue
statement of a material fact or, in view of the circumstances under
which they were made, omit to state any material fact necessary to
make the statements therein not misleading, the Company will
promptly notify the Underwriter thereof (unless the information
shall have been received from the Underwriter) and will effect the
preparation of an amended or supplemental prospectus which will
correct such statement or omission. The Company will then promptly
prepare such amended or supplemental prospectus or prospectuses as
may be necessary to comply with the requirements of Section 10
of the Securities Act.
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13.
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The
Underwriter and the Underwriter Dealers will suspend or terminate
offering of the Notes upon request of the Company at any time and
will resume offering the Notes upon subsequent request of the
Company.
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14.
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Compensation. As
compensation for the services performed by Underwriter under this
Underwriting Agreement, the Company agrees that it will pay to
Underwriter a selling commission in the amount of 0.375% of the
face value of the Notes sold to the public (that is, multiplying
the factor of 0.00375 by the amount of the face value of the Note)
during the Term of this Underwriting; provided that such selling
commission shall only be paid with respect to the Notes
sold after the effective date of this Underwriting Agreement (under
section 27), and for not more that $90 million of face value of the
Notes.
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14.1.
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No
selling commissions or underwriter fee shall be paid with respect
to Notes sold: (a) pursuant to any exchange or
divid
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