Document:

Exhibit 10.1 to CapSource Financial, Inc. Form 8-K dated September 5, 2006

Exhibit 10.1 

DEALER AGREEMENT 

For 

2006 & 2007 

Between 

CapSource Equipment Company, Inc. 

a Nevada corporation
with offices at 

2305 Canyon Blvd, Suite 103, Boulder, CO 80302  

d.b.a. Prime Time Trailers 

4901 E. Rosedale St., Ft. Worth, TX 76105 

and 

HYUNDAI TRANSLEAD 

A CALIFORNIA CORPORATION
with offices at 

880 Rio San Diego Dr., Suite 600
San Diego, CA 92108 

Dated as of August 18, 2006 

This DEALER AGREEMENT (“Agreement”) is entered into at San Diego,
California, as of August 18, 2006, by and between CapSource Equipment Company, Inc., a Nevada Corporation doing business in Texas
as Prime Time Trailers (“Dealer”), and Hyundai Translead, a California Corporation (“Hyundai”). 

Article I

Definitions  

As used in this Agreement, the following terms shall have the following
meanings: 

        1.    “Dealer’s
Facilities” means all facilities of Dealer where Hyundai Goods will be marketed, sold and serviced. 

        2.    “Hyundai
Goods” means new semi-trailers and converter dollies manufactured by Hyundai. No passenger, motorized or
self-·propelled vehicles are included in this term. 

        3.              “Territory” means
the geographical area designated on Exhibit A attached to this Agreement. 

        4.              “Trademark” means
any trade name, trademark, service mark, trade dress, logo, internet domain name or other designation of source or origin used,
licensed or owned by Hyundai, and any confusingly similar designation or mark. 

Article II

Appointment of Dealer  

        Hyundai appoints Dealer, on a
non-exclusive basis, and Dealer accepts such appointment, as an authorized dealer to market, sell and support Hyundai Goods in the
Territory. Hyundai reserves the right during the term of this Agreement to sell Hyundai Goods directly to other parties within the
Territory, and to appoint other dealers to sell Hyundai Goods within the Territory. 

Article III

Obligations of Dealer  

Dealer agrees to: 

        1.              Actively
and vigorously market Hyundai Goods; 

        2.              Use
its best efforts to attain the sales targets set forth on Exhibit A, attached hereto (“Sales Targets”); 

        3.              Display
conspicuously at Dealer’s Facilities, at Dealer’s cost, Hyundai-approved sales, service and parts signs; 

        4.              Establish
and maintain a flooring financing plan in a minimum amount of $225,000.00. 

        5.              Send,
at Dealer’s expense, all of Dealer’s sales persons to all of Hyundai’s regularly scheduled sales and service
meetings for the purpose of obtaining current Hyundai Goods information and policies; 

        6.              Investigate
and handle, at Dealer’s expense, all complaints by customers of Dealer relating to the purchase of Hyundai Goods. All
warranty claims that cannot be expeditiously resolved shall be referred to Hyundai’s Director of Warranty Administration,
together with a report of relevant facts and the name and address of the complaining customer; 

        7.              Not
later than 90 days after the end of Dealer’s fiscal year, provide to Hyundai a copy of Dealer’s annual financial
statement, certified by Dealer’s president to be a true and accurate reflection of Dealer’s financial condition, and
prepared in accordance with Generally Accepted Accounting Standards; 

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        8.              Upon
written request by Hyundai, provide to Hyundai, no later than 20 days following the end of each month, Dealer’s financial
statement for the preceding month. Such financial statements shall be certified by Dealer’s president to be a true and
accurate reflection of Dealer’s financial condition, and prepared in accordance with Generally Accepted Accounting Standards;
and 

        9.              Comply
with all applicable laws, ordinances, regulations and other requirements of all local, state, federal and other governmental
bodies; obtain maintain all permits, licenses and other consents required to perform Dealer’s obligations under this
Agreement; and not engage in any unfair or illegal trade practice or commit any act or engage in any transaction that would
reflect adversely upon the goodwill associated with Hyundai and Hyundai Goods. 

Article IV

Dealer’s Representations and Warranties  

        1.              Dealer
is a Nevada corporation licensed to do business in Texas, in good standing, and has the power to enter into and perform this
Agreement; and this Agreement’s execution has been duly authorized by all necessary corporate action. 

        2.              This
Agreement constitutes a valid and binding obligation on Dealer, enforceable in accordance with its terms.  

        3.              Attached
hereto and marked Exhibit B is a true copy of Dealer’s current financial statement, certified by Dealer’s president to
be a true and accurate reflection of Dealer’s financial condition, and prepared in accordance with Generally Accepted
Accounting Standards. 

        4.              Dealer’s
financial condition, as reflected in Exhibit B, has not changed materially as of the effective date of this Agreement. 

        5.              Dealer
is purchasing Hyundai Goods for resale, and has all necessary permits to do so, such that no sales or use tax will be payable with
respect to Hyundai Goods sold and delivered to Dealer. 

Article V

Relationship of the Parties  

        1.              The
parties acknowledge and agree that the relationship of Dealer to Hyundai under this Agreement is that of an independent
contractor. Nothing in this Agreement shall be construed to (i) constitute a party as principal or agent, legal representative,
employer or employee, franchisor or franchisee, partner, joint venturer, or co-owner of the other; (ii) give either party the
right to control or direct the daily activities of the other; or (iii) allow either party to create or assume any obligation on
behalf of the other party for any purpose, or to represent to any person or entity that such party has any right or power to enter
into any binding obligation on the other party’s behalf. 

        2.              Dealer
acknowledges that it is buying and selling Hyundai Goods for its own account, and no commissions are payable by Hyundai.

        3.              Hyundai
acknowledges that except as expressly provided herein, Dealer is not and will not become obligated to pay to Hyundai any fee or
royalty in consideration for the appointment of Dealer as an authorized Dealer under this Agreement. 

        4.              Dealer
acknowledges and agrees the Hyundai will not control Dealer’s site selection, design or appearance, hours of operation,
personnel policy, advertising or business operation. 

        5.              Dealer
acknowledges and agrees that Hyundai has made no representations or warranties relating to Dealer’s projected sales, earnings
or profits. 

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Article VI

Advertising  

        1.              Hyundai
agrees to advertise Hyundai Goods nationally in such media and to such extent as Hyundai, in its sole discretion, deems
appropriate for the promotion and sale of Hyundai Goods. 

        2.              Subject
to Hyundai’s prior approval, and at Dealer’s expense, Dealer may engage in independent advertising and promotion of
Hyundai Goods. 

        3.              Hyundai
will make available to Dealer brochures and other advertising or promotional material, in accordance with the Hyundai Co-Operative
Advertising Policy, a copy of which is attached hereto and marked Exhibit D. 

Article VII

Terms and Conditions of Sale  

        1.              Each
sale of Hyundai Goods by Hyundai to Dealer shall be pursuant to a Contract of Sale executed by Dealer. The terms and conditions of
the purchase by Dealer of Hyundai Goods shall be in accordance with Hyundai’s standard Contract of Sale, the Terms and
Conditions of which are incorporated herein by reference. A copy of the form of Hyundai’ s Contract of Sale is attached
hereto as Exhibit C. 

        2.    All
Hyundai Goods shall be sold to Dealer as follows:  

	i.  	  	for cash which shall be paid by means of a sight
draft on Dealer’s flooring financing plan. Hyundai agrees to subsidize interest accrued under Dealer’s flooring
financing plan to the date of sale, but not more than 30 days from the date of Payment.   (dealer initials)
/s/ FCB          

OR 

	ii.  	  	pursuant to the terms set out in addendum attached
to this Agreement as Exhibit F. (dealer initials) /s/ FCB           

        3.              If
no default under this Agreement exists as of December 31 in the year of this Agreement, Dealer shall be entitled to the Rebates
set forth on Exhibit A attached to this Agreement. 

        4.              Hyundai
Goods sold to Dealer are warranted as provided in the Terms and Conditions which are page 2 of the Contract of Sale (Exhibit C).
The warranty is transferable by Dealer to the first purchaser of the particular Hyundai Goods from Dealer. 

Article VIII

Default by Dealer  

        The
following events shall constitute a default by Dealer under this Agreement:  

        1.              The
termination for any reason of Dealer’s flooring financing plan;  

        2.              The
failure of Dealer to pay any amount due to Hyundai under this Agreement when
          due;  

        3.              The
breach by Dealer of any term of this Agreement; and  

        4.              A
material change in the financial condition of Dealer, including, without limitation, the filing of a bankruptcy petition under
Title 11, United States Code, by or against Dealer, a general assignment by Dealer for the benefit of creditors, and the inability
of Dealer generally to pay its debts as they come due. 

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Article IX

Term and Termination of the Agreement  

        1.              This
effective date of this Agreement is the date first stated above. Unless earlier terminated as provided below, this Agreement shall
terminate on December 31,2007. This Agreement cannot be renewed or extended by implication or amendment. 

        2.              This
Agreement may be terminated at any time by the mutual consent of the parties or by either party upon 45 days notice in advance.

        3.              This
Agreement may be terminated by Hyundai upon any default by Dealer. 

        4.              The
parties shall have the following obligations upon termination: 

                 a.              Upon
termination of this Agreement, each party agrees to deliver immediately to the other party all documents, data, records,
notebooks, and similar writings relating in an way to proprietary information of the other party, including copies then in such
party’s possession, whether prepared by that party or others. Neither party shall retain any such documents, data or other
items originated by the other party. 

                 b.              Upon
termination of this Agreement, Dealer shall discontinue use of all Trademarks. 

                 c.              Except
as provided below, all rights and obligations of the parties shall cease on termination of this Agreement. Neither party shall be
liable to the other for damages of any kind, including without limitation incidental or consequential damages, resulting from the
termination of this Agreement. 

                 d.              Hyundai’s
rights under this Agreement shall survive any termination of this Agreement by reason of a default of Dealer under Article VIII of
this Agreement. 

        5.              Termination
of this Agreement will operate as a cancellation of orders for Goods received by Hyundai from Dealer which have not, as of the
termination date, been delivered, unless Hyundai, at its sole discretion, gives written notice of its intention to fill any such
unfilled order. Hyundai will require payment in cash in advance prior to manufacture of the goods and fulfillment of the order.

        6.              Termination
of this Agreement will not operate as a cancellation of any indebtedness owed by Dealer to Hyundai. 

        7.              Dealer
waives any claim against Hyundai for loss or damage of any kind arising out of a failure of the parties to enter into a new dealer
agreement upon termination of this Agreement. Dealer acknowledges and agrees that any amounts which may be spent by Dealer in the
performance of this Agreement will be spent and incurred voluntarily by Dealer with the advance knowledge that this Agreement will
be terminated as provided above. Dealer will make no claim against Hyundai and Hyundai will not be liable with respect to any
investment or expenditure by Dealer made in anticipation of renewal of this Agreement. 

Article X

No Assignment  

        Dealer’s
rights under this Agreement may not be assigned by operation of law or otherwise. Hyundai, in entering into this agreement, is
relying on its confidence in the personal qualities of Dealer, including, without implied limitation, Dealer’s financial
condition and experience and expertise in the marketing of goods such as the Hyundai Goods. 

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Article XI

Trademark  

        1.              Dealer
agrees to use any Trademark solely for the purpose of identifying Hyundai as the source of Hyundai Goods, or of any related
services. 

        2.              Dealer
is granted a non-exclusive license to use the name “Hyundai” solely in connection with its promotion and sale of Hyundai
Goods in the Territory during the term of and in accordance with this Agreement. The license shall terminate upon termination of
this Agreement. 

        3.              Dealer
shall not remove, deface or alter any Trademark or model number affixed to any Hyundai Goods. 

        4.              Dealer
shall not take any action inconsistent with Hyundai’s ownership of the Trademarks, but shall instead identify them as
property of Hyundai. 

Article XII

Indemnification  

        1.              Dealer
will indemnify and forever hold harmless Hyundai, its affiliated companies and their respective officers, directors, employees and
agents from any and all liabilities, claims, causes of action, damages and costs (including, without limitation, Hyundai’s
attorney’s fees) arising out of any breach of any representation or warranty by Dealer or breach of any of Dealer’s
obligations under this Agreement, or under any Contract of Sale entered into between Dealer and Hyundai. This obligation to
indemnify shall survive termination of this Agreement. 

        2.    
Dealer will indemnify Hyundai for any sales or use tax that Hyundai is required to pay on account of any sale of Goods by Hyundai
to Dealer. 

Article XIII

Non-Disclosure and Confidentiality  

        1.              Dealer
agrees to preserve the confidentiality of the terms of this Agreement, and of all information it acquires from Hyundai, and not to
use such information except in the performance of this Agreement. During the term of this Agreement and for three years
thereafter, Dealer agrees to safeguard and, except for the benefit of Hyundai, not to disclose to anyone outside Hyundai any
proprietary or confidential information acquired by Dealer. Such information includes, without limitation, business plans,
customer lists, operating procedures, trade secrets, product development data, sales data, know-how and processes, computer
programs and inventions, discoveries and improvements of any kind. 

        2.              On
termination of this Agreement, Dealer agrees to deliver immediately to Hyundai all documents, data, records, customer lists,
notebooks, and similar writings relating in any way to Hyundai’s proprietary or confidential information as described in
paragraph I of this Article XlII. 

Article XIV

General Provisions  

        1.    Dispute Resolution.  

                 a.    Mediation.   Before
invoking the binding dispute mechanism set forth in paragraph l.b. of this Article XII, the parties shall first participate in
mediation in San Diego, California, of any dispute arising under this Agreement, under the Mediation Rules of the American
Arbitration Association. 

                 b.    Arbitration.   The
parties shall submit all disputes relating to this Agreement (whether in contract, tort, or both) to binding arbitration in San
Diego, California, in accordance with Commercial Rules of the American Arbitration Association. Either party may enforce the award
of the arbitrator under sections 1285 et seq. of the California Code of Civil Procedure. The parties understand that they are
waiving their rights to a jury trial. 

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        2.    Entire
Agreement.   This Agreement constitutes the final, complete, and exclusive statement of the terms of the
agreement between the parties, and supersedes all prior and contemporaneous understandings or agreements of the parties. No party
has been induced to enter into this Agreement by, nor is any party relying on, any representation or warranty outside those
expressly set forth in this Agreement. 

        3.              Notice.   Notice
shall be sufficiently given for all purposes as follows: 

                 a.    Personal
delivery.   When personally delivered to the recipient. Notice is effective on delivery. 

                 b.    First-class
mail.   When mailed first class to the last address of the recipient known to the party giving notice. Notice
is effective three mail delivery days after deposit in a United States Postal Service office or mailbox. 

                 c.    Certified
mail.   When mailed certified mail, return receipt requested. Notice is effective on receipt, if delivery is
confirmed by a return receipt. 

                 d.    Overnight
delivery.   When delivered by overnight delivery Federal Express, charges prepaid or charged to the
sender’s account. Notice is effective on delivery, if delivery is confirmed by the delivery service. 

                 e.    Telex
or facsimile transmission.   When sent by telex or fax to the last telex or fax number of the recipient known
to the party giving notice. Notice is effective on receipt, provided that (a) a duplicate copy of the notice is promptly given by
first-class or certified mail or by overnight delivery, or (b) the receiving party delivers a written confirmation of receipt. Any
notice given by telex or fax shall be deemed received on the next business day if it is received after 5:00 p.m. (recipient’s
time) or on a nonbusiness day. 

Addresses and facsimile numbers for purpose of giving notice are as stated on
the signature page of this Agreement. Any party may change its address or telex or fax number by giving the other party notice of
the change in any manner permitted by this Agreement. 

        4.    Construction.   Except
as otherwise provided, this Agreement: 

                 a.              Covers
the entire understandings of the parties regarding its subject matter, superseding all prior agreements and understandings, and no
modification or amendment of its terms or conditions shall be effective unless in writing and signed by the parties; 

                 b.              Shall
be interpreted such that handwritten or typed words shall have no greater weight than printed words in the interpretation or
construction of this Agreement; 

                 c.              Shall
not be interpreted by reference to any of its titles or headings, which are inserted for purposes of convenience only; 

                 d.              Is
subject to the waiver and release of any of its requirements, as long as the waiver or release is in writing and signed by the
party to be bound, but any such waiver or release shall be construed narrowly and shall not be considered a waiver or release of
any further, similar, or related requirement or occurrence, unless expressly specified; and 

                 e.              Is
made in, and shall be construed under, the laws of the State of California.  

        5.    Ambiguities.   Each
party and its counsel have participated fully in the review and revision of this Agreement. Any rule of construction to the effect
that ambiguities are to be resolved against the drafting party shall not apply in interpreting this Agreement. 

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        6.    Attorneys
Fees.   In any litigation, arbitration, bankruptcy case, or other proceeding (excluding mediation) by which one
party either seeks to enforce its rights under this Agreement (whether in contract, tort or both) or seeks a declaration of any
rights or obligations under this Agreement, the prevailing party shall be awarded reasonable attorney fees, together with any
costs and expenses, to resolve the dispute and to enforce the award and final judgment. 

        7.    Exhibits.   The following Exhibits constitute a part of this Agreement and are           incorporated
into this Agreement by this reference:  

	 	 	a. Exhibit A – Designation of Territory, Minimum
Inventory, Sales Targets and Rebates; 

		 	b. Exhibit B – Dealer’s 2005 Year End
Financial Statement; 

	 	  	c. Exhibit C – Standard Contract of Sale;

	 	  	d. Exhibit D – Hyundai Co-Operative Advertising
Policy; and 

	 	  	e. Exhibit E – Listing of Hyundai Translead
Corporate Accounts; 

	 	  	f. Exhibit F – Funding of Purchase.

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IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first written above. 

	 	DEALER  
	 
	    	By:    	/s/   Fred Boethling  
	    	Name:   	Fred Boethling  
	    	Title:	President 
	 
	 
	 	HYUNDAI TRANSLEAD  
	 
	    	By:    	/s/   Stuart James  
	    	Name:   	Stuart James   
	    	Title:	V.P. Sales 
	 

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Exhibit A  

	A.  	  	TERRITORY:    State of Texas  

	B.  	  	SALES TARGETS  

	  	Deleted for 2006 and 2007 Calendar Years 

	C. 	  	REBATE SCHEDULE: 

	  	Deleted for 2006 &2007 Calendar Years 

10 

Exhibit B  

Dealer Financial Statement to be furnished to Hyundai Translead when
completed by Dealers Accountants 

11 

Exhibit C  

HYUNDAI 

TERMS AND CONDITIONS OF SALE  

1.    Goods Sold;
Pricing.   The goods sold (“Goods”) by Hyundai Translead (“Seller”) are described on
page 1 of this Contract of Sale. The prices shown thereon are firm for 30 from the Sales Order Date. If a Contract of Sale is
returned by the Customer more than 30 days after the Sales Order Date, the prices of the Goods will be Seller’s standard
prices then in effect. Prices do not include sales or use taxes applicable to the Goods. Customer agrees to pay any such tax due,
and to reimburse Seller for any such tax Seller is required to pay. 

2.    Shipment.   Except as
otherwise expressly stated in page I of the Contract of Sale \the Goods sold under this agreement will be shipped in lots of size
and number to be determined by Seller, and on dates specified by Seller. Seller, by Shipping Notice to customer, will identity the
goods to the contract. Customer is responsible for all costs of shipment. If shipment is delayed by Customer, the Goods shall be
stored for the Customer’s account, and at the Customer’s expense and risk. Customer designates Seller as its agent to
arrange for a “first shipment” to be placed on any trailer or container to be shipped, and Customer shall be entitled to
the payment for such shipment as an offset against Customer’s shipping charges. 

3.    Payment.   Except as
otherwise expressly stated in the Order Confirmation, payment terms are payment by sight draft on Customer’s flooring line
upon delivery of the goods to Customer. 

4.    Title and Risk of Loss.   Title
and risk of loss shall pass to Customer upon delivery of the Goods by Seller to the carrier for shipment, F.O.B. Hyundai Translead
factory in Tijuana, Baja California, Mexico. 

5.    Seller’s Purchase Money Security
Interest.   Customer grants to Seller, and Seller retains a security interest in the Goods until
Customer’s obligations under this contract have been fully performed. Customer appoints Secured Party as Customer’s
attorney in fact to prepare, sign on Customer’s behalf and file financing statements, continuation statements, statements of
assignment, termination statements, and the like, as necessary to perfect, protect, preserve, or release Secured Party’s
interest in the Goods. Any title documents relating to the transaction shall be delivered to Customer only after the purchase
price has been paid in full, or Seller has been provided reasonable assurance thereof. 

6.    Limited Warranty. 

        a.    What
is covered by this warranty.   Seller warrants to Customer, that the Goods are tree from defects in
material or workmanship. This warranty expires five years from the date of delivery. If the buyer discovers within this period a
failure of the product to conform to specifications, or a defect in material or workmanship, the buyer must promptly notify Seller
in writing. In no event may that notification be received by Seller later than 61 months from the date of shipment. Within a
reasonable time after notification, Seller will correct defects in material or workmanship, with either new or used replacement
parts. Such repair, including both parts and labor, will be performed at Seller’s expense. All warranty service will be
performed at service centers designated by Seller. If Seller is unable to repair the product to conform to the warranty after a
reasonable number of attempts, Seller will provide, at its option, one of the following: a replacement product or a full refund of
the purchase price. These remedies are the purchaser’s only remedies for breach of warranty. 

        b.    Transfer
of Warranty:   This Warranty is transferable only by a Customer who is a Hyundai Dealer only to the first
purchaser of the particular Hyundai Goods from the Dealer. 

        c.    What
is not covered by this warranty.   Seller does not warrant (a) any product, components, or parts not
manufactured by Seller; (b) damage caused by use of the product for purposes other than those for which it was designed; (c)
damage caused by collision or roadway accident; (d) disasters such as fire, flood, wind, and lightning; (e) damage caused by
unauthorized attachments or modifications; (f) damage during shipment; (g) normal wear and tear; or (h) any other abuse or misuse
by the purchaser. 

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        d.    Warranty
of title.   In addition to the warranties set forth herein, Seller warrants that it has good title to the
Goods free of any encumbrance. 

        e.    DISCLAIMER
OF WARRANTY.   THE FOREGOING WARRANTIES ARE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING
BUT NOT LIMITED TO THE IMPLIED WARRANTIES OF MERCHANT ABILITY AND FITNESS FOR A PARTICULAR PURPOSE. 

7.    Limitation of Remedies. 

IN NO EVENT WILL SELLER BE LIABLE FOR ANY SPECIAL, INCIDENTAL, OR
CONSEQUENTIAL DAMAGES BASED ON BREACH OF WARRANTY, BREACH OF CONTRACT, NEGLIGENCE, STRICT TORT, OR ANY OTHER LEGAL THEORY. DAMAGES
THAT SELLER WILL NOT BE RESPONSIBLE FOR INCLUDE, BUT ARE NOT LIMITED TO: LOSS OF PROFITS; LOSS OF SAVINGS OR REVENUE; LOSS OF USE
OF THE PRODUCT OR ANY ASSOCIATED EQUIPMENT; COST OF CAPITAL; COST OF ANY SUBSTITUTE EQUIPMENT, FACILITIES, OR SERVICES; DOWNTIME;
THE CLAIMS OF THIRD PARTIES, INCLUDING CUSTOMERS; AND INJURY TO PROPERTY. THIS LIMITATION DOES NOT APPLY TO DAMAGES CAUSED BY
BREACH OF THE WARRANTY OF TITLE. 

8.    Time Limit for Bringing Claim.   Any
arbitration on a claim for breach of warranty must be commenced, in accordance with Section I3.b., within 6 months following
notice given by Buyer as provided in Section 6.a. 

9.    Allocation of Risks.   This
agreement allocates the risks of product failure between Seller and Customer. This allocation is recognized by both parties and is
reflected in the price of the goods. Customer acknowledges that it has read this agreement, understands it, and is bound by its
terms. 

10.    Force Maieure.   If
Seller fails to perform its obligations because of strikes, lockouts, labor disputes, embargoes, acts of God, inability to obtain
labor or materials or reasonable substitutes for labor or materials, governmental restrictions, governmental regulations,
governmental controls, judicial orders, enemy or hostile governmental action, civil commotion, fire or other casualty, or other
causes beyond the reasonable control of Seller, then Seller’s performance shall be excused for a period equal to the period
of such cause for failure to perform, plus a reasonable time to complete manufacture and shipment of the Goods. 

11.    Applicable Law and Forum.   This
Agreement, and resolution of any dispute arising from the relationship between the parties to this Agreement, shall be governed by
California law, excluding any laws that direct the application of another jurisdiction’s laws. 

12.    Attorney Fees.   In
any litigation, arbitration, bankruptcy or other proceeding by which one party either seeks to enforce its rights under this
Agreement (whether in contract, tort, or both) or seeks a declaration of any rights or obligations under this Agreement, the
prevailing party shall be awarded reasonable attorney fees, together with any costs and expenses, to resolve the dispute and to
enforce the final judgment or order. 

13.    Dispute Resolution. 

        a.    Mediation.   Before
invoking the binding dispute mechanism set forth in Section I4.b. of this Agreement, the parties shall first participate in
mediation of any dispute arising under this Agreement, in San Diego, California, under the Mediation Rules of the American
Arbitration Association. 

        b.    Arbitration.   The
parties shall submit all disputes relating to this Agreement (whether contract, tort, or both) to binding arbitration in San
Diego, California, in accordance with Commercial Rules of the American Arbitration Association. Either party may enforce the
award of the arbitrator under sections 1285 et seq. of the California Code of Civil Procedure. The parties understand that they
are waiving their rights to a jury trial. 

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14.    Entire Agreement.   These
Terms and Conditions, together with the terms of the Order Confirmation on the reverse side, constitute the final, complete, and
exclusive statement of the terms of the Agreement between the parties pertaining to the purchase and sale of the Goods, and
supersedes all prior and contemporaneous understandings or agreements of the parties. No party has been induced to enter into this
Agreement by, nor is any Customer relying on, any representation or warranty, including statements made by salespersons, outside
those expressly set forth in this Agreement. No employee of Seller or any other party is authorized to make any warranty in
addition to those made in this agreement. 

15.    Modification.   This
Agreement may be supplemented, amended, or modified only by the mutual agreement of the parties. No supplement, amendment, or
modification of this Agreement shall be binding unless it is in writing and signed by Seller and Customer. 

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Exhibit D  

Hyundai Co-Operative Advertising Policy 

Concept- 

	  	Hyundai Translead, in an effort to encourage self-promotion by its
dealers, will co-op a portion of the cost of advertising for dealers who follow the prescribed approval process as outlined here.

Acceptable for Co-op- 

	  	Various scenarios are outlined here, however questions about
others will arise. Those dealt with here are fuIly explanatory. All others, deemed acceptable or not, will be considered at the
sole discretion of the head of Hyundai Translead’s Marketing Communications Department (MCD), and ultimately by the Vice
President of Trailer Sales. 

YeHow Page Advertising- 

	  	Hyundai Translead will co-op 50% of the cost of a standard Trade
Name and Trade Regular listing in Directories approved by Hyundai Translead’s MCD and placed in the directory on an annual
basis. The dealer will place the ad. The dealer will then invoice Hyundai Translead for the agreed amount. 

	  	Other types of Yellow Page advertising will be considered under
certain conditions, i.e. first year in a market, company name change or under unusual circumstances. 

Trade Publication Advertising- 

	  	Hyundai Translead, upon approval by their MCD, will co-op in
certain publications, deemed acceptable by their MCD, a portion of the cost of the advertising rate based on 50%, if the entire ad
is about new Hyundai trailers. 

	  	When an ad is shared by new Hyundai trailers and used trailers,
new Hyundai trailers and parts or service promotion, or new Hyundai trailers and trailers of another brand, Hyundai will co-op 50%
of the advertising rate for that portion devoted to new Hyundai trailers. 

Sponsorships- 

	  	In some instances, Hyundai Translead will co-op a portion of the
cost of sponsoring an event with a dealer to promote the Hyundai name. This will require approval well in advance of the event by
their MCD and/or the Vice President of Trailer Sales. 

Signage- 

	  	Signs for the exterior of buildings or free standing on poles or
posts will be treated similar to print advertising in publications. Hyundai Translead will co-op 50% of the cost of the sign that
is exclusive to Hyundai trailers and follows the Hyundai TransJead Corporate Identification Policy. Artwork and guidelines are
available from their MCD. Only the cost of the sign itself, not the poles or installation on poles or the building are eligible
for co-op funding. 

	  	The dealer should get two or three quotes on any sign. Local codes
and where the sign is to be installed will determine the size sign desirable. A proposal quote from the sign companies,
accompanied by professionally prepared drawings must accompany the request for co-op funding. 

	  	Approval will be provided in writing by their MCD. The sign
company invoice and a photograph of the sign must accompany the final request for payment. 

15 

Approval Process- 

	  	Hyundai Translead has set forth the following approval procedures
that must be followed, without exception to receive co-op funding for Dealer advertising as outlined above. 

	  	All requests for co-op advertising funding must be directed to
their MCD prior to publication or any commitment being made, in the case of sponsorships. Requests must be made by letter, fax or
e-mail to the MCD, with a copy of the proposed ad layout attached to the request. Once a determination is made concerning the
request, the dealer will be informed as to the amount of co-op funds that have been approved. At this time, the dealer must
acknowledge the approval and indicate in a like manner, their desire to co-sponsor the ad or the event. 

	  	
Once
approval is given, the MCD will either place the ad or instruct the dealer representative
to place the ad or commit to the sponsorship. In the case of the latter, MCD should
receive a copy of the advertising insertion order or the sponsorship commitment letter.  

Co-op Payment- 

If Hyundai Translead places the ad
for the dealer, they will invoice the dealership for the agreed amount, with a copy of the
publishing invoice attached. If the dealer is instructed to place the ad or commit to a
sponsorship, Hyundai Translead will issue a check for the agreed amount upon receipt of a
dealer invoice and a copy of the publication or sponsorship invoice and a copy of the ad
or acknowledgment of the sponsorship. 

	  	Exception-  

	  	
If
a dealership is in arrears on their Hyundai Translead account, no co-op funds will be
paid. In this case, a hold will be placed on payment of these funds until the account is
brought current. Should the dealer relationship cease, it will be applied against the
account as a credit.  

16 

Exhibit E  

Listing of Hyundai Translead Corporate Accounts 

Listed below are the current corporate accounts to be contacted and sold to directly by Hyundai Translead Corporate Offices.

 

	
            
 	
            1.
 	
            AFFES (Army AirForce Exchange)
 

	
            
 	
            2.
 	
            Frito-Lay
 

	
            
 	
            3.
 	
            Allan Richie
 

	
            
 	
            4.
 	
            Dean Foods – Local Dairies
 

	
            
 	
            5.
 	
            Frozen Express
 

	
            
 	
            6.
 	
            Transport Industries
 

	
            
 	
            7.
 	
            Central Transport
 

	
            
 	
            8.
 	
            Pilgrims Pride
 

	
            
 	
            9.
 	
            Safety Kleen Corp.
 

	
            
 	
            10.
 	
            Bimbo Bakeries
 

	
            
 	
            11.
 	
            Trinity Industries Logistics
 

	
            
 	
            12.
 	
            J.C. Penny’s
 

	
            
 	
            13.
 	
            Bright Leasing
 

	
            
 	
            14.
 	
            McLane
 

	
            
 	
            15.
 	
            Radio Shack
 

	
            
 	
            16.
 	
            Stevens Transport
 

	
            
 	
            17.
 	
            Transport Industries Holdings
 

	
            
 	
            18.
 	
            Sysco
 

	
            
 	
            19.
 	
            NFI
 

	
            
 	
            20.
 	
            H.E. Butt Grocery
 

	
            
 	
            21.
 	
            Ben E. Keith
 

	
            
 	
            22.
 	
            Eagle Global Logistics
 

17 

Exhibit F  

Purchase Funding 

CapSource Equipment Company, Inc. to use Navistar Financial as the primary
source of funding for equipment purchased from Hyundai Translead. 

18Exhibit 4.9 to Capsource Financial, Inc. Form SB-2/A dated January 17, 2007

Exhibit 4.9

EXHIBIT “B”

 

THIS WARRANT AND THE SECURITIES ISSUABLE UPON EXERCISE OF THIS WARRANT HAVE NOT BEEN REGISTERED FOR RESALE UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF ANY EFFECTIVE REGISTRATION STATEMENT AS TO SUCH SECURITIES FILED UNDER THE ACT, OR AN EXEMPTION FROM REGISTRATION, AND COMPLIANCE WITH APPLICABLE STATE SECURITIES LAWS. THE ISSUER MAY REQUIRE AN OPINION OF COUNSEL SATISFACTORY TO THE ISSUER HEREOF THAT SUCH REGISTRATION IS NOT REQUIRED AND THAT SUCH LAWS ARE COMPLIED WITH. THIS WARRANT MAY NOT BE SOLD, TRANSFERRED OR ASSIGNED PRIOR TO AUGUST 29, 2004 AND THE REGISTERED HOLDER OF THIS WARRANT, BY ITS/HIS/HER ACCEPTANCE HEREOF, AGREES THAT IT WILL NOT SELL, TRANSFER OR ASSIGN THIS WARRANT PRIOR TO THAT DATE.

 

VOID AFTER 5:00 P.M., BOULDER, COLORADO TIME, ON  AUGUST 29, 2007 

 

Warrant to subscribe for and purchase 34,834 shares of Common Stock, $0.01 par value, of

 

CAPSOURCE FINANCIAL, INC.

 

This is to Certify That, 

 

FOR ONE HUNDRED DOLLARS ($100) AND OTHER VALUE RECEIVED, PUBLIC SECURITIES, INC., a Washington Corporation, (the “Holder”) is entitled to purchase, subject to the provisions of this Warrant, from CAPSOURCE FINANCIAL, INC, a Colorado Corporation (“Company”), at any time on or after August 29, 2004, and not later than 5:00 p.m., Boulder, Colorado Time, on August 29, 2007, a total of 34,834 shares of Common Stock of the Company (“Securities”) exercisable at a purchase price of $2.45 per Share for the Securities . The number of Securities to be received upon the exercise of this Warrant and the price to be paid for the Securities may be adjusted from time to time as hereinafter set forth. The purchase price of a Security in effect at any time and as adjusted from time to time is hereinafter sometimes referred to as the “Exercise Price.” This Warrant is or may be one of a
series of Warrants identical in form issued by the Company to purchase an aggregate of 34,834 Shares of Common Stock. The Securities, as adjusted from time to time, underlying the Warrants are hereinafter sometimes referred to as “Warrant Securities”. The Company has granted this Warrant pursuant to the terms and conditions of the Underwriting Agreement entered into between the Company and Holder as of February 5, 2003, as amended by that certain Agreement dated March 28, 2003, relating to the initial public offering of the Company’s Common Stock pursuant to a Registration Statement on Form SB-2 under the Securities Act of 1933 declared effective on December 30, 2002 (the “Registration Statement”).

 

	
            (1.)
 	
            Exercise of Warrant. Subject to the provisions of Section (7) hereof, this Warrant may be exercised in whole or in part at anytime or from time to time on or after August 29, 2004, but not later than 5:00 p.m., Boulder, Colorado Time on August 29, 2007, or if August 29, 2007 is a day on which banking institutions are authorized by law to close, then on the next succeeding day which shall not be such a day, by presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, with the Purchase Form annexed hereto duly executed and accompanied by payment of the Exercise Price for the number of shares of Securities as specified in such Form, together with all federal and state taxes applicable upon such exercise. During the term of this Warrant, the Company agrees that the Holder shall be entitled to
participate in any tender offer being made for the Securities and to so notify the Holder within a reasonable time of such tender offer no later than the third business day after the day the Company becomes aware that any tender offer is being made for the Securities. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the right of the Holder to purchase the balance of the Securities purchasable hereunder not purchased. Upon receipt by the Company of this Warrant at the office of the Company or at the office of the Company’s stock transfer agent, in proper form for exercise and accompanied by the total Exercise Price, the Holder shall be deemed to be the holder of record of the Securities issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such Securities shall not then be
actually delivered to the Holder. 
 

 

	
            (2.)
 	
            Reservation of Securities. The Company hereby agrees that at all times there shall be reserved for issuance and/or delivery upon exercise of this Warrant such number of shares of Securities as shall be required for issuance or delivery upon exercise of this Warrant. The Company covenants and agrees that, upon exercise of this Warrant and payment of the Exercise Price therefor, all Securities issuable upon such exercise shall be duly and validly issued, fully paid, non-assessable and not subject to the preemptive rights of any stockholder. 
 

 

	
            (3.)
 	
            Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant. With respect to any fraction of a share called for upon any exercise hereof, the Company shall pay to the Holder an amount in cash equal to such fraction multiplied by the current market value of such fractional share, determined as follows: 
 

 

	
             
 	
            (a)
 	
            If the Securities are listed on a national securities exchange or admitted to unlisted trading privileges on such exchange, the current value shall be the last reported sale price of the Common Stock on such exchange on the last business day prior to the date of exercise of this Warrant or if no such sale is made on such day, the average of the closing bid and asked prices for such day on such exchange; or, 
 

 

	
             
 	
            (b) 
 	
            If the Securities are not so listed or admitted to unlisted trading privileges, the current value shall be the mean of the last reported bid and asked prices reported by the National Association of Securities Dealers Automated Quotation System (or, if not so quoted on NASDAQ or quoted by the National Quotation Bureau, Inc.) on the last business day prior to the date of the exercise of this Warrant; or (c) If the Securities are not so listed or admitted to unlisted trading privileges and bid and asked prices are not so reported, the current value shall be an amount, not less than book value, determined in such reasonable manner as may be prescribed by the Board of Directors of the Company, such determination to be final and binding on the Holder. 
 

 

	
            (4.)
 	
            Exchange, Assignment or Loss of Warrant. This Warrant is exchangeable, without expense, at the option of the Holder, upon presentation and surrender hereof to the Company or at the office of its stock transfer agent, if any, for other Warrants of different denominations entitling the Holder thereof to purchase (under the same terms and conditions as provided by this Warrant) in the aggregate the same number of Securities purchasable hereunder. This Warrant may not be sold, transferred, assigned, or hypothecated until after one year from the effective date of the Registration Statement except that it may be (i) assigned in whole or in part to the officers of the “Underwriter(s)”, and (ii) transferred to any successor to the business of the “Underwriter(s).” Any such assignment shall be made by surrender of this
Warrant to the Company, or at the office of its stock transfer agent, if any, with the Assignment Form annexed hereto duly executed and with funds sufficient to pay any transfer tax; whereupon the Company shall, without charge, execute and deliver a new Warrant in the name of the assignee named in such instrument of assignment, and this Warrant shall promptly be canceled. This Warrant may be divided or combined with other Warrants which carry the same rights upon presentation hereof at the office of the Company or at the office of its stock transfer agent, if any, together with a written notice specifying the names and denominations in which new Warrants are to be issued and signed by the Holder hereof. The term “Warrant” as used herein includes any Warrants issued in substitution for or replacement of this Warrant, or into which this Warrant may be divided or exchanged. Until this Warrant is duly transferred on the books of the Company, the Company may treat the registered
holder of this Warrant as absolute owner hereof for all purposes without being affected by any notice to the contrary. Each successive holder of this Warrant, or any portion of the rights represented thereby, shall be bound by the terms and conditions set forth herein. Upon receipt by the Company of evidence satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company will execute and deliver a new Warrant of like tenor and date. Any such new Warrant executed and delivered shall constitute an additional contractual obligation on the part of the Company, whether or not the Warrant so lost, stolen, destroyed, or mutilated shall be at any time enforceable by anyone. 
 

	
            (5.)
 	
            Rights of the Holder. The Holder shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or equity, and the rights of the Holder are limited to those expressed in the Warrant and are not enforceable against the Company except to the extent set forth herein. 
 

 

	
            (6.)
 	
            Notices to Warrant Holders. So long as this Warrant shall be outstanding and unexercised (i) if the Company shall pay any dividend or make any distribution upon the Common Stock, or (ii) if the Company shall offer to the holders of Common Stock for subscription or purchase by them any shares of stock of any class or any other rights, or (iii) if any capital reorganization of the Company, reclassification of the capital stock of the Company, consolidation or merger of the Company with or into another corporation, sale, lease or transfer of all or substantially all of the property and assets of the Company to another corporation which is effected in such a manner that the holders of Common Stock shall be entitled to receive stock, securities or assets with respect to or in exchange for Common Stock, or voluntary or involuntary
dissolution, liquidation or winding up of the Company shall be effected, then, in any such case, the Company shall cause to be delivered to the Holder, at least ten (10) days prior to the date specified in (x) or (y) below, as the case may be, a notice containing a brief description of the proposed action and stating the date on which (x) a record is to be taken for the purpose of such dividend, distribution or rights, or (y) such reclassification, reorganization, consolidation, merger, conveyance, lease, dissolution, liquidation or winding up is to take place and the date, if any, is to be fixed, as of which the holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for equivalent securities or other property deliverable upon such reclassification, reorganization, consolidation, merger, conveyance, dissolution, liquidation or winding up. 
 

 

	
            (7.)
 	
            Adjustment of Exercise Price and Number of Shares of Common Stock Deliverable. 
 

 

	
             
 	
            (A)
 	
             

 
 

	
             
 	
            (i)
 	
            Except as hereinafter provided, in the event the Company shall, at any time or from time to time after the date hereof, issue any shares of Common Stock as a stock dividend to the holders of Common Stock, or subdivide or combine the outstanding shares of Common Stock into a greater or lesser number of shares (any such issuance, subdivision or combination being herein call a “Change of Shares”), then, and thereafter upon each further Change of Shares, the Exercise Price of the Common Stock issuable upon the exercise of the Warrant in effect immediately prior to such Change of Shares shall be changed to a price (including any applicable fraction of a cent to the nearest cent) determined by dividing (i) the sum of (a) the total number of shares of Common Stock outstanding immediately prior to such Change of Shares, multiplied by the Exercise Price in
effect immediately prior to such Change of Shares, and (b) the consideration, if any, received by the Company upon such issuance, subdivision or combination by (ii) the total number of shares of Common Stock outstanding immediately after such Change of Shares; provided, however, that in no event shall the Exercise Price be adjusted pursuant to this computation to an amount in excess of the Exercise Price in effect immediately prior to such computation, except in the case of a combination of outstanding shares of Common Stock. 
 

 

For the purposes of any adjustment to be made in accordance with this Section (7) the following provisions shall be applicable: 

 

	
             
 	
            (I)
 	
            Shares of Common Stock issuable by way of dividend or other distribution on any capital stock of the Company shall be deemed to have been issued immediately after the opening of business on the day following the record date for the determination of shareholders entitled to receive such dividend or other distribution and shall be deemed to have been issued without consideration. 
 

 

	
             
 	
            (II)
 	
            The number of shares of Common Stock at any one time outstanding shall not be deemed to include the number of shares issuable (subject to readjustment upon the actual issuance thereof) upon the exercise of options, rights or warrants and upon the conversion or exchange of convertible or exchangeable securities. 
 

	
             
 	
            (ii)
 	
            Upon each adjustment of the Exercise Price pursuant to this Section (7), the number of shares of Securities purchasable upon the exercise of each Warrant shall be the number derived by multiplying the number of shares of Securities purchasable immediately prior to such adjustment by the Exercise Price in effect prior to such adjustment and dividing the product so obtained by the applicable adjusted Exercise Price. 
 

 

	
             
 	
            (B)
 	
            
In case of any reclassification or change of outstanding Securities issuable upon exercise of the Warrants (other than a change in
par value, or from par value to no par value, or from no par value to par value or as a result of a subdivision or combination),
or in case of any consolidation or merger of the Company with or into another corporation other than a merger with a
“Subsidiary” (which shall mean any corporation or corporations, as the case may be, of which capital stock having
ordinary power to elect a majority of the Board of Directors of such corporation (regardless of whether or not at the time capital
stock of any other class or classes of such corporation shall have or may have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned by the Company or by one or more Subsidiaries or by the Company and one
or more Subsidiaries in which merger the Company is the continuing corporation and which does not result in any reclassification
or change of the then outstanding shares of Common Stock or other capital stock issuable upon exercise of the Warrants (other than
a change in par value, or from par value to no par value, or from no par value to par value or as a result of subdivision or
combination) or in case of any sale or conveyance to another corporation of the property of the Company as an entirety or
substantially as an entirety, then, as a condition of such reclassification, change, consolidation, merger, sale or conveyance,
the Company, or such successor or purchasing corporation, as the case may be, shall make lawful and adequate provision whereby the
Holder of each Warrant then outstanding shall have the right thereafter to receive on exercise of such Warrant the kind and amount
of securities and property receivable upon such reclassification, change, consolidation, merger, sale or conveyance by a holder of
the number of securities issuable upon exercise of such Warrant immediately prior to such reclassification, change, consolidation,
merger, sale or conveyance and shall forthwith file at the principal office of the Company a statement signed on its behalf by its
President or a Vice President and by its Treasurer or an Assistant Treasurer or its Secretary or an Assistant Secretary evidencing
such provision. Such provisions shall include provision for adjustments which shall be as nearly equivalent as may be practicable
to the adjustments provided for in Section (7)(A). The above provisions of this Section (7)(B) shall similarly apply to successive
reclassifications and changes of shares of Common Stock and to successive consolidations, mergers, sales or conveyances.

 

 

	
             
 	
            (C)
 	
            Irrespective of any adjustments or changes in the Exercise Price or the number of Securities purchasable upon exercise of the Warrants, the Warrant Certificates theretofore and thereafter issued shall (unless the Company shall exercise its option to issue new Warrant Certificates pursuant hereto) continue to express the Exercise Price per share and the number of shares purchasable thereunder as the Exercise Price per share and the number of shares purchasable thereunder as expressed in the Warrant Certificates when the same were originally issued. 
 

 

	
             
 	
            (D)
 	
            After each adjustment of the Exercise Price pursuant to this Section (7), the Company will promptly prepare a certificate signed on its behalf by the President or Vice President, and by the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary, of the Company setting forth: (i) the Exercise Price as so adjusted, (ii) the number of Securities purchasable upon exercise of each Warrant, after such adjustment, and (iii) a brief statement of the facts accounting for such adjustment. The Company will promptly file such certificate in the Company’s minute books and cause a brief summary thereof to be sent by ordinary first class mail to each Holder at his last address as it shall appear on the registry books of the Company. No failure to mail such notice nor any defect therein or in the mailing thereof shall affect the validity thereof
except as to the holder to whom the Company failed to mail such notice, or except as to the holder whose notice was defective. The affidavit of an officer or the Secretary or an Assistant Secretary of the Company that such notice has been mailed shall, in the absence of fraud, be prima facie evidence of the facts stated therein. 
 

	
             
 	
            (i)
 	
            Intent of Provisions. Notwithstanding any provision to the contrary, if any event occurs as to which, in the opinion of the Board of Directors of the Company, the other provisions of this Section 7 are not strictly applicable or if strictly applicable, would not fairly protect the rights of the Holders’ Warrant in accordance with the essential intent and principles of such provisions, then such Board of Directors shall appoint a firm of independent certified public accountants (which may be the regular auditors of the Company) which shall give its opinion upon the adjustment, if any, on a basis consistent with such essential intent and principles, necessary to preserve, without dilution, the rights of the Holders. Upon receipt of such opinion by the Board of Directors of the Company, the Company shall forthwith make the
adjustments described therein.
 

 

	
             
 	
            (E)
 	
            No adjustment of the Exercise Price shall be made as a result of or in connection with the issuance or sale of Securities if the amount of said adjustment shall be less than $0.10, provided, however, that in such case, any adjustment that would otherwise be required then to be made shall be carried forward and shall be made at the time of and together with the next subsequent adjustment that shall amount, together with any adjustment so carried forward, to at least $.10. In addition, Holders shall not be entitled to cash dividends paid by the Company prior to the exercise of any Warrant or Warrants held by them. 
 

 

	
             
 	
            (F)
 	
            In the event that the Company shall at any time prior to the exercise of all Warrants declare a dividend consisting solely of shares of Common Stock or otherwise distribute to its stockholders any assets, property, rights, or evidences of indebtedness, the Holders of the unexercised Warrants shall thereafter be entitled, in addition to the Securities or other securities and property receivable upon the exercise thereof, to receive, upon the exercise of such Warrants, the same property, assets, rights, or evidences of indebtedness, that they would have been entitled to receive at the time of such dividend or distribution as if the Warrants had been exercised immediately prior to such dividend or distribution. At the time of any such dividend or distribution, the Company shall make appropriate reserves to ensure the timely performance of the provisions of this
Section (7). 
 

 

	
             
 	
            (G)
 	
             

 
 

	
             
 	
            (G.1) 
 	
            Right to Exercise on a Net Issuance Basis. In lieu of exercising this Warrant for cash, the Holder shall have the right to exercise this Warrant or any portion thereof (the “Net Issuance Right”) into Common Stock as provided in this Section G.1 at any time or from time to time during the period specified on page one of this Warrant Agreement, hereof by the surrender of this Warrant to the Company with a duly executed and completed Exercise Form marked to reflect net issuance exercise. Upon exercise of the Net Issuance Right with respect to a particular number of shares of the Securities subject to this Warrant and noted on the Exercise Form (the “Net Issuance Warrant Shares”), the Company shall deliver to the Holder (without payment by the Holder of any Exercise Price or any cash or other consideration) (X) that
number of shares of fully paid and nonassessable shares of Common Stock equal to the quotient obtained by dividing the value of this Warrant (or the specified portion hereof) on the Net Issuance Exercise Date, which value shall be determined by subtracting (A) the aggregate Exercise Price of the Net Issuance Warrant Shares immediately prior to the exercise of the Net Issuance Right from (B) the aggregate fair market value of the Net Issuance Warrant Shares issuable upon exercise of this Warrant (or the specified portion hereof) on the Net Issuance Exercise Date (as herein defined) by (Y) the fair market value one share of Common Stock on the Net Issuance Exercise Date (as herein defined). Expressed as a formula as shown below, such net issuance exercise shall be computed as follows: X = B-A ÷ Y Where: X = the number of shares of Common Stock that may be issued to the Holder, Y = the fair market value (“FMV”) of one share of Common Stock as of the Net Issuance Exercise
Date, A = the aggregate Exercise Price (i.e. the product determined by multiplying the Net Issuance Warrant Shares by the Exercise Price) and B = the aggregate FMV (i.e. the product determined by multiplying the FMV by the Net Issuance Warrant Shares). 
 

	
             
 	
            (G.1.2) 
 	
            
Determination of Fair Market Value. For purposes of this Section G.1.2, “fair market
value” of a share of Common Stock as of the Net Issuance Exercise Date shall mean: 

 

	
             
 	
            (i)
 	
            if the Net Issuance Right is exercised in connection with and contingent upon a Public Offering, and if the Company’s registration Statement relating to such Public Offering has been declared effective by the SEC, then the initial “Price to Public” specified in the final Prospectus with respect to such offering. 
 

 

	
             
 	
            (ii)
 	
            if the Net Issuance Right is not exercised in connection with and contingent upon a Public Offering, then as follows: 
 

 

	
             
 	
            (a)
 	
            If traded on a securities exchange, the fair market value of the Common Stock shall be deemed to be the last reported sale price or if no reported sale takes place, the average of the last reported sale prices for the last three (3) trading days prior to the Net Issuance Date; 
 

 

	
             
 	
            (b)
 	
            If traded on the Nasdaq National Market or the Nasdaq Small Cap Market, the fair market value of the Common Stock shall be deemed to be the average of the last reported sale price of the common Stock on such Market over the last three (3) trading days prior to the Net Issuance Exercise Date; 
 

 

	
             
 	
            (c)
 	
            If traded over-the-counter other than on the Nasdaq National market or the Nasdaq SmallCap Market, the fair market value of the Common Stock shall be deemed to be the average of the midpoint between the closing bid and ask prices of the Common Stock over the 3-day trading period prior to the Net Issuance Exercise Date; and, 
 

 

	
             
 	
            (d)
 	
            If there is no public market for the Common Stock, then the fair market value shall be determined by mutual agreement of the Warrantholder and the Company, and if the Warrantholder and the Company are unable to so agree, at the Company’s sole expense, by an investment banker of national reputation selected by the Company and reasonably acceptable to the Warrantholder. 
 

 

	
            (8.)
 	
            Piggyback Registration. If, at any time commencing one year from the effective date of the registration statement and expiring four (4) years thereafter, the Company proposes to register any of its securities under the Securities Act of 1933, as amended (the “Act”) (other than in connection with a merger or pursuant to Form S-8, S-4 or other comparable registration statement) it will give written notice by registered mail, at least thirty (30) days prior to the filing of each such registration statement, to the Holders and to all other Holders of the Warrants and/or the Warrant Securities of its intention to do so. If the Holder or other Holders of the Warrants and/or Warrant Securities notify the Company within twenty (20) days after receipt of any such notice of its or their desire to include the resale of any such
securities in such proposed registration statement, the Company shall afford each of the Underwriter and such Holders of the Warrants and/or Warrant Securities the opportunity to have the resale of any such Warrant Securities registered under such registration statement. In the event any underwriter underwriting the sale of securities registered by such registration statement shall limit the number of securities includable in such registration by shareholders of the Company, the number of such securities shall be allocated pro rata among the holders of Warrants and the holders of other securities entitled to piggyback registration rights. Notwithstanding the provisions of this Section, the Company shall have the right at any time after it shall have given written notice pursuant to this Section (irrespective of whether a written request for inclusion of any such securities shall have been made) to elect not to file any such proposed registration statement, or to withdraw the same
after the filing but prior to the effective date thereof. 
 

	
            (9.)
 	
            Demand Registration. 
 

 

	
             
 	
            (a)
 	
            In the event that: (i) counsel satisfactory to the Underwriter is of the opinion that the Net Issuance Exercise of this Warrant by the Underwriter as provided in Section 7(G.1) is not permissible; (ii) the Company is eligible to file a registration statement on Form S-3 under the Securities Act of 1933, (iii) Company Counsel is unable to furnish the opinion letter under section 16, and (iv)  the Company has received or will receive the payment of $50,000  of the Exercise Price of this Common Stock Purchase Warrant in cash,  then upon the demand of the Underwriter at any time commencing at least one year from the effective date of the Registration Sstatement and expiring four (4) years thereafter, provided that the conditions of subparagraphs (i) through (iv) above have been satisfied, the Holders of the Warrants and/or Warrant Securities representing a
“Majority” (as hereinafter defined) of such securities (assuming the exercise of all of the Warrants) shall have the right (which right is in addition to the registration rights under Section (8) hereof), exercisable by written notice to the Company, to have the Company prepare and file with the Securities and Exchange Commission (the “Commission”), on one occasion, a registration statement on Form S-3 and such other documents, including a prospectus, as may be necessary in the opinion of both counsel for the Company and counsel for the Underwriter and Holders, in order to comply with the provisions of the Act, so as to permit a public offering and sale of their respective Warrant Securities for nine (9) consecutive months by such Holders and any other holders of the Warrants and/or Warrant Securities who notify the Company within ten (10) days after receiving notice from the Company of such request. 
 

 

	
             
 	
            (b)
 	
            The Company covenants and agrees to give written notice of any registration request under  Section 9(a) by any Holder or Holders to all other registered Holders of the Warrants and the Warrant Securities within ten (10) days from the date of the receipt of any such registration request. 
 

 

	
             
 	
            (c)
 	
            In addition to the registration rights under this Section (9) at any time commencing one year after the effective date of the registration statement and expiring four (4) years thereafter, the Holders of Representative’s Warrants and/or Warrant Securities shall have the right, exercisable by written request to the Company, to have the Company prepare and file, on one occasion, with the Commission a registration statement so as to permit a public offering and sale for nine (9) consecutive months by such Holders of its Warrant Securities; provided, however, that the provisions of Section (9)(a) hereof shall not apply to any such registration request and registration and all costs incident thereto shall be at the expense of the Holder or Holders making such request. 
 

 

	
            (10.)
 	
            Covenants of the Company With Respect to Registration. In connection with any registration under Section (8) or (9) hereof, the Company covenants and agrees as follows: 
 

 

	
             
 	
            (a)
 	
            The Company shall use its best efforts to file a registration statement within thirty (30) days of receipt of any demand therefor, shall use its best efforts to have any registration statement declared effective at the earliest possible time, and shall furnish each Holder desiring to sell Warrant Securities such number of prospectuses as shall reasonably be requested. 
 

 

	
             
 	
            (b)
 	
            The Company shall pay all costs (excluding fees and expenses of Holder(s)’ counsel and any underwriting or selling commissions), fees and expenses in connection with all registration statements filed pursuant to Sections 8 and 9(a), hereof including, without limitation, the Company’s legal and accounting fees, printing expenses, blue sky fees and expenses. If the Company shall fail to comply with the provisions of Section (10)(a), the Company shall, in addition to any other equitable or other relief available to the Holder(s), extend the Exercise Period by such number of days as shall equal the delay caused by the Company’s failure. 
 

 

	
             
 	
            (c)
 	
            The Company will take all necessary action which may be required in qualifying or registering the Warrant Securities included in a registration statement for resale under the securities or blue sky laws of such states as are reasonably requested by the Holder(s), provided that the Company shall not be obligated to execute or file any general consent to service of process or to qualify as a foreign corporation to do business under the laws of any such jurisdiction. 
 

	
             
 	
            (d)
 	
            The Company shall indemnify the Holder(s) of the Warrant Securities to be resold pursuant to any registration statement and each person, if any, who controls such Holders within the meaning of Section 15 of the Act or Section 20(a) of the Securities Exchange Act of 1934, as amended (“Exchange Act”), from and against all loss, claim, damage, expense or liability (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which any of them may become subject under the Act, the Exchange Act or otherwise, arising from such registration statement but only to the same extent and with the same effect as the provisions pursuant to which the Company has agreed to indemnify the Underwriter contained in Section 7 of the Underwriting Agreement relating to the offering. 
 

 

	
             
 	
            (e)
 	
            The Holder(s) of the Warrant Securities to be resold pursuant to a registration statement, and their successors and assigns, shall severally, and not jointly, indemnify the Company, its officers and directors and each person, if any, who controls the Company within the meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against all loss, claim, damage or expense or liability (including all expenses reasonably incurred in investigating, preparing or defending against any claim whatsoever) to which they may become subject under the Act, the Exchange Act or otherwise, arising from information furnished by or on behalf of such Holders, or their successors or assigns, for specific inclusion in such registration statement to the same extent with the same effect as the provisions contained in Section 7 of the Underwriting Agreement pursuant to which
the Underwriter has agreed to indemnify the Company. 
 

 

	
             
 	
            (f)
 	
            The Holder(s) may exercise their Warrants prior to the initial filing of any registration statement or the effectiveness thereof. 
 

 

	
             
 	
            (g)
 	
            The Company shall not permit the inclusion of any securities other than the Warrant Securities to be included in any registration statement filed pursuant to Section (9) hereof, or permit any other registration statement to be or remain effective during the effectiveness of a registration statement filed pursuant to Section (9) hereof, other than a secondary offering of equity securities of the Company, without the prior written consent of the Holders of the Warrants and Warrant Securities representing a Majority of such securities.
 

 

	
             
 	
            (h)
 	
            The Company shall furnish to each Holder participating in the offering and to each underwriter, if any, a signed counterpart, addressed to such Holder or underwriter, of (x) an opinion of counsel to the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, an opinion dated the date of the closing under the underwriting agreement), and (y) a “cold comfort” letter dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, a letter dated the date of the closing under the underwriting agreement) signed by the independent public accountants who have issued a report on the Company’s financial statements included in such registration statement, in each case covering substantially the same matters with respect
to such registration statement (and the prospectus included therein) and, in the case of such accountants’ letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer’s counsel and in accountants’ letters delivered to underwriters in underwritten public offerings of securities. 
 

 

	
             
 	
            (i)
 	
            The Company shall as soon as practicable after the effective date of the registration statement, and in any event within 15 months thereafter, make “generally available to its security holders” (within the meaning of Rule 158 under the Act) an earnings statement (which need not be audited) complying with Section 11(a) of the Act and covering a period of at least 12 consecutive months beginning after the effective date of the registration statement. 
 

 

	
             
 	
            (j)
 	
            For purposes of this Agreement, the term “Majority” in reference to the Holders of Warrants or Warrant Securities, shall mean in excess of fifty (50%) of the then outstanding Warrants and Warrant Securities that (i) are not held by the Company, an affiliate, officer, creditor, employee or agent thereof or any of their respective affiliates, members of their family, persons acting as nominees or in conjunction therewith or (ii) have not been resold to the public pursuant to a registration statement filed with the Commission under the Act. 
 

 

	
            (11.)
 	
            Buy-Out of Registration Demand. In lieu of carrying out its obligations to effect a Piggyback Registration or Demand Registration of any registrable securities pursuant to the Section, the Company may carry out such obligation by offering to purchase and purchasing such Registrable Securities requested to be registered in an amount in cash equal to the difference between (a) 95% of the last sale price of the Common Stock on the day the request for registration is made and (b) the Exercise Price in effect on such day; the purchase transaction closing within three (3) business days; provided however, that the Holder or Holders may decline such request rather than accept such offer by the Company. 
 

 

	
            (12.)
 	
            Conditions of Company’s Obligations. The Company’s obligation under Sections 9 and 10 hereof shall be conditioned as to each such public offering, upon a timely receipt by the Company in writing of:  information as to the terms of such public offering furnished by or on behalf of the Holders making a public distribution of their Warrant Securities. 
 

 

	
            (13.)
 	
            Continuing Effect of Agreement. The Company’s agreements with respect to the Warrant Securities in this Warrant will continue in effect regardless of the exercise or surrender of this Warrant. 
 

 

	
            (14.)
 	
            Notices. Any notices or certificates by the Company to the Holder and by the Holder to the Company shall be deemed delivered if in writing and delivered personally or sent by certified mail, to the Holder, addressed to him or sent to                                               300 North Argonne Road, Suite 202, Spokane, Washington  99212, or, if the Holder has designated, by notice in writing to the Company, any other address, to such other address, and, if to the Company, addressed to Fred Boethling, President, 2305 Canyon Boulevard, Suite 103, Boulder, CO 80302. The Company may change its address by written notice to the Holder.                                            
 

 

	
            (15.)
 	
            Limited Transferability. The Warrant may be divided or combined, upon request to the Company by the Warrant holder, into a certificate or certificates evidencing the same aggregate number of Warrants. The Warrant may not be offered, sold, transferred, pledged or hypothecated in the absence of any effective registration statement as to such Warrant filed under the Act, or an exemption from the requirement of such registration, and compliance with the applicable federal and state securities laws. The Company shall permit the Holder or his duly authorized attorney, upon written request during ordinary business hours, to inspect and copy or make extracts from its books showing the registered holders of Warrants. 
 

 

	
            (16.)
 	
            Transfer to Comply With the Securities Act of 1933.  The Company may cause the following legend, or one similar thereto, to be set forth on the Warrants and on each certificate representing Warrant Securities, or any other security issued or issuable upon exercise of this Warrant not theretofore distributed to the public or sold to underwriters for distribution to the public pursuant to Sections (8) or (9) hereof; unless counsel satisfactory to the Company is of the opinion as to any such certificate that such legend, or one similar thereto, is unnecessary: “The warrants represented by this certificate are restricted securities and may not be offered for sale, sold or otherwise transferred unless an opinion of counsel satisfactory to the Company is obtained stating that such offer, sale or transfer is in compliance  with
state and federal securities law. With respect to Warrant Securities that have not theretofore been subject to a registration statement pursuant to Sections 8 or 9 hereof, upon request, the Company will arrange at its expense to have an opinion of counsel satisfactory to the Company issued, which will provide that to the extent Warrant Securities were acquired through the Net Issuance Exercise of this Warrant as provided in Section 7(G.1) without the payment of any cash, the Holder’s date of acquisition of such Warrant Securities will be the date of acquisition of the Warrant. The issuance of any opinion relating to the transferability of any Warrant or Warrant Securities will be conditioned upon the Holder providing evidence satisfactory to such counsel of the proper acquisition and exercise of this Warrant, the completion and filing of all forms or other documents required to comply with federal and state securities laws and the continued applicability of the current
interpretation of Rule 144(d)(3)(ii) as expressed in items 4, 61 and 64 of the Division of Corporation Finance Manual of Publicly Available Telephone Interpretations. The Company will provide upon request to any Holder a list of the registered holders of Warrants. Such costs and expenses of Counsel shall be at its sole cost and expense The Company represents and warrants, it will not hinder, delay or impede in any fashion, the assignment and/or exercise of the this Warrant, the issuance of any underlying securities, and/or the resale of such underlying securities. To effect such transaction, the Company shall cause such legal opinions to issue in a timely and professional manner upon demand by the Underwriter.
 

	
            (17.)
 	
            Applicable Law. This Warrant shall be governed by, and construed in accordance with, the laws of the State of Colorado, without giving effect to conflict of law principles. 
 

 

	
            (18.)
 	
            Amendment. This Warrant may not be amended except in a writing signed by each Holder and the Company. 
 

 

	
            (19.)
 	
            Severability. If any provisions of this Warrant shall be held to be invalid or unenforceable, such invalidity or enforceability shall not affect any other provision of this Warrant. 
 

 

	
            (20.)
 	
            Survival of Indemnification Provisions. The indemnification provisions of this Warrant shall survive until August 29, 2013.
 

 

	
            (21.)
 	
            Company to Provide Reports. Etc. While this Warrant Certificate remains outstanding, the Company shall mail to the persons in whose name this Warrant Certificate is registered copies of all reports and correspondence which the Company mails to its stockholders.
 

 

	
            (22.)
 	
            Representations and Warranties of Holder. The Holder hereby represents and warrants to the Company:
 

 

	
             
 	
            (a) 
 	
            The Holder understands that this Warrant Certificate and the Common Shares to be issued herein, HAS NOT BEEN APPROVED OR DlSAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION, THE STATE OF COLORADO, OR ANY OTHER STATE SECURITIES AGENCIES.
 

 

	
             
 	
            (b) 
 	
            This Warrant Certificate and the Common Stock to be issued herein may not be transferred, encumbered, sold, hypothecated, or otherwise disposed of to any person, without the express prior written consent of the Company and the prior opinion of counsel for the Company, that such disposition will not violate Federal and/or State Securities Acts. Disposition shall include, but is not limited to acts of selling, assigning, transferring, pledging, encumbering, hypothecating, giving, and any form of conveying, whether voluntary or not.
 

 

	
             
 	
            (c) 
 	
            To the extent that any Federal and/or State Securities laws shall require, the Holder hereby agrees that any shares acquired pursuant to this Warrant Certificate shall be without preference as to dividends, assets, or voting rights and shall have no greater or lesser rights per share than the securities issued for cash or its equivalent.
 

 

	
             
 	
            (d) 
 	
            This Warrant is subject in all respects to the terms and provisions of an Underwriting Agreement between the Company and Public Securities, Inc., (the Underwriter therein and the initial Holder hereof), relating to a public offering of the Common Stock and Warrants of the Company dated February 5, 2003, as amended by that certain Agreement dated March 28, 2003.
 

 

IN WITNESS WHEREOF, the Company has caused this Warrant to be signed by its duly authorized officers and to be sealed with the seal of the Company this 29th day of August, 2003.

 

	
            CAPSOURCE FINANCIAL, INC.
 
	
            By 
 	
            
 /s/ Fred Boethling
 
	
             
 	
            Fred Boethling, President 
 

 

	
            Date:
 	
             
 
	
            Attest: 
 	
             
 

 

	
            /s/ Steven E. Reichert
 
	
            Secretary
 

 

PURCHASE FORM

 

The Undersigned hereby exercises the Warrant Certificate to subscribe for and purchase shares of Common Stock, $0.01 par value (“Common Shares”), of CAPSOURCE FINANCIAL, INC, a Colorado Corporation, evidenced by the within the Warrant Certificate and herewith makes payment of the Exercise Price. Kindly issue certificates for the Common Shares in accordance with the instructions given below. The certificate for the unexercised balance, if any, of the within Warrant Certificate will be registered in the name of the undersigned.

 

Dated:

 

	
             
 
	
            (Signature)
 

 

Instructions for registration of Common Shares

 

	
             
 
	
            Name (Please print)
 

 

	
             
 
	
            Social Security or Other Identifying Number:
 

 

	
             
 
	
            Address:
 

 

	
             
 
	
            Street
 

 

	
             
 
	
            City, State and Zip Code 
 

 

HOLDER:

 

PUBLIC SECURITIES, INC.

 

	
            By:
 	
             
 
	
            Title:
 	
            President
 

 

Instructions for registration of certificate representing the unexercised balance of Warrant (if any)

 

	
             
 
	
            Name (Please print)
 

 

	
             
 
	
            Social Security or Other Identifying Number:
 

 

	
             
 
	
            Address:
 

 

	
             
 
	
            Street
 

 

	
             
 
	
            City, State and Zip Code 
 

 

FORM OF ASSIGNMENT

(to be executed by the registered holder hereof)

 

FOR VALUE RECEIVED, ________________________
does hereby sell, assign and transfer unto _______________________________ the right to purchase shares of the Common Stock of the Company, $0.01 par value
(“Common Shares”), of CAPSOURCE FINANCIAL, INC, a Colorado Corporation, evidenced by the within Warrant, and does hereby
irrevocably constitute and appoint _____________________________ attorney, to transfer such right on the books of the
Company with full power of substitution in the premises.

 

DATED: ___________________ , 200_

 

 

	
             
 
	
            (Signature)
 

 

	
             
 
	
            (Signature guaranteed)

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