EXHIBIT 4.2


 


FORM OF SUBORDINATED 5 YEAR NOTE


 


OF CS FINANCING CORPORATION


 


5 Year Note – Series A


 


	
   

  	
                   ,
  2005

  
	
   

  	
   

  
	
   

  	
  Minneapolis, Minnesota

  



 


Subject to the restrictions in Section 4 below,
five (5) years from the date hereof, for value received, CS Financing
Corporation (the “Company”) promises to pay
                                        
                                        
                            
at the home office of the Company, 45 San Clemente Drive, Suite B210,
Corte Madera, California 94925 , the principal amount of this 5 Year Note (“5
Year Note”), as represented from time to time on the books and records of the
Company, and to pay interest thereon at the rate of ten percent (10%) per
annum. The interest rate payable on this 5 Year Note is a fixed rate. Interest
on this 5 Year Note will be paid monthly commencing on the date of the month
following the date of this 5 Year Note.


 


This 5 Year Note is one of a duly authorized issue of
5 Year Notes of the Company issued under and subject in all respects to the
terms of an Indenture dated as of
            , 2005
(the “Indenture”), between the Company and U.S. Bank National Association, as
trustee (the “Trustee”). Reference is hereby made to the Indenture and all
supplemental indentures for a statement of the respective rights of the
Company, the Trustee, the agents of the Company and the Trustee. All
capitalized terms used, but not defined, in this 5 Year Note have the meanings
assigned to them in the Indenture. No reference herein to the Indenture and no
provision of this 5 Year Note or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional, to pay the
principal of and interest on this 5 Year Note in the manner herein prescribed.


 


1.                                       Interest
Rate. The holder will receive interest at the rate of ten percent (10%) per
annum.


 


2.                                       Redemption.
The Company can call this 5 Year Note for redemption at any time without
penalty subject to the subordination provisions contained in Section 4 below
and pursuant to procedures set forth in Article 3 of the Indenture, for a
redemption price equal to the principal amount plus any unpaid interest thereon
to the date of redemption. Notice of redemption shall be given by mail to the
holder of this 5 Year Note at his last address as it appears on the records of
the Company not less than 30 nor more than 60 days prior to the date fixed for
redemption. Once notice of redemption is mailed, 5 Year Notes called for
redemption become due and payable on the date of redemption set forth in the
notice of redemption at the redemption price. On or before the redemption date,
the Company shall set aside money sufficient to pay the redemption price of all
5 Year Notes to be redeemed on that date. If the Company has mailed a notice of
redemption to the registered holder and this 5 Year Note is not presented for
redemption within 60 days of the redemption date or such longer period set
forth in the notice of redemption, then the Company may transfer the money
distributable upon redemption to a separate bank account, for the benefit of
the registered holders whose 5 Year Notes are redeemed, and thereupon this 5
Year Note shall be deemed as of the date of redemption to have been redeemed
and no longer outstanding.


 





















 


3.                                       Redemption
if Balance Falls Below $25,000 The Company may, in its sole discretion,
redeem any 5 Year Note in full if the principal balance of such 5 Year Note
falls below $25,000 at any time. The redemption price shall be equal to 100% of
the principal amount of the 5 Year Note plus accrued interest on a daily basis
to the redemption date. This redemption right of the Company is automatic and
no advance notice is required.


 


4.                                       Subordination.
This 5 Year Note is subordinated, in all rights to payment and in all other
respects, to Senior Debt, which means all Debt (present or future) created,
incurred, assumed or guaranteed by the Company (and all renewals, extensions or
refundings thereof), except such Debt that by its terms expressly provides that
such Debt is not senior or superior in right of payment to the 5 Year Notes.
Senior Debt shall include without limitation (i) the guarantee by the
Company of any Debt of any other person (including, without limitation,
subordinated Debt of another person), unless such Debt is expressly
subordinated to any other Debt of the Company, and (ii) all Debt of the
Company currently maintained with banks and finance companies and any line of
credit to be obtained by the Company in the future. Notwithstanding anything
herein to the contrary, Senior Debt shall not include debt of the Company to
any of its subsidiaries or affiliates or under the 5 Year Notes.  Debt means any indebtedness, contingent or
otherwise, in respect of borrowed money (whether or not the recourse of the
lender is to the whole of the assets of the Company or only to a portion
thereof), or evidenced by bonds, notes, debentures or similar instruments or
letters of credit, or representing the balance deferred and unpaid on the
purchase price of any property or interest therein, except any such balance
that constitutes a trade payable, and shall include any guarantee of any
indebtedness described above. The Company agrees, and the 5 Year Noteholder by
accepting this 5 Year Note agrees, to the subordination provisions set forth in
Article 10 of the Indenture.


 


5.                                       Amendments
and Waivers As permitted in the Indenture, the Indenture, other than
subordination provisions, may be amended and the rights and obligations of the
Company and the rights of the holders of the 5 Year Notes under the Indenture
modified at any time by the Company with the consent of the Trustee and holders
of a majority in principal amount of the then outstanding 5 Year Notes. The
Company and the Trustee may not modify the Indenture without the consent of
each holder affected if the modification (i) affects the terms of payment
of, the principal of, or any interest on, any 5 Year Note; (ii) changes
the percentage of 5 Year Note holders who consent to a waiver or modification
as required; (iii) affects the subordination provisions of the Indenture
in a manner that adversely affects the right of any holder; or (iv) waives
any Event of Default in the payment of principal of, and interest on, any 5
Year Note. As permitted by the Indenture, the Trustee and holders of a majority
in principal amount of the then outstanding 5 Year Notes, on behalf of the
holders of all 5 Year Notes, may waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the Indenture and
their consequences, except an Event of Default in the payment of principal or
of interest on the 5 Year Notes.


 


6.                                       Defaults
and Remedies. If an Event of Default, as defined in the Indenture, occurs
and is continuing, the principal of and accrued interest on all 5 Year Notes
may be declared due and payable in the manner and with the effect provided in
the Indenture. The Indenture generally provides that an Event of Default occurs
if: (i) the Company fails to pay the principal of any 5 Year Note when the
same is presented for payment, upon redemption or otherwise, and the failure to
pay continues for a period of thirty (30) days after receipt of written notice
from the holder of the 5 Year Note or the Trustee; (iii) the Company
becomes subject to certain events of bankruptcy or insolvency; or (iv) the
Company fails to comply with any of its other agreements in, or the provisions
of, the 5 Year Note or the Indenture and such failure is not cured or waived
within sixty (60) days after receipt by the Company of a specific written
notice from the Trustee or the holders of at least a majority in principal
amount of the then outstanding 5 Year Notes.


 


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7.                                       Transfer. As provided in the Indenture, this 5 Year Note is transferable only
on the 5 Year Note register maintained by the Registrar, upon surrender of this
5 Year Note for transfer at the office of the Registrar, duly endorsed by, or
accompanied by a written instrument of transfer in a form satisfactory to the
Company and the Registrar duly executed by, the registered holder hereof or his
attorney duly authorized in writing, a copy of which authorization must be
delivered with any such instrument of transfer, and thereupon one or more new 5
Year Notes, of authorized denominations and for the same aggregate principal
amount, will be issued to the designated transferee or transferees. A service
fee may be charged to replace a lost or stolen 5 Year Note, to transfer this 5
Year Note or to issue a replacement payment check. The Company, the Trustee and
any agent of the Company or the Trustee may treat the person in whose name this
5 Year Note is registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the contrary. The
Company currently serves as the Registrar and Paying Agent for the 5 Year
Notes.


 


8.                                       Owners.
The registered 5 Year Noteholder shall be treated as the owner of the 5 Year
Note for all purposes.


 


9.                                       No
Recourse A director, officer, employee or stockholder, as such, of the
Company shall not have any liability for any obligations of the Company under
this 5 Year Note or for any claim based on, or in respect of such obligations
or their creation. The 5 Year Noteholder by accepting this 5 Year Note waives
and releases all such liability. The waiver and release are part of the
consideration for the issue of this 5 Year Note.


 


THIS 5 YEAR NOTE IS NOT A BANK DEPOSIT NOR A BANK OBLIGATION
AND IS NOT INSURED BY THE FDIC.


 


IN WITNESS WHEREOF, the Company has caused this 5 Year
Note to be signed in its corporate name by its President or Vice President and
by its Treasurer or Secretary, at
                          ,
                           ,
on the date first written above.


 


 


	
   

  	
  CS FINANCING CORPORATION

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  President

  	
  Vice
  President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  Treasurer

  	
  Secretary

  



 


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For Payment or Redemption


 


The
within 5 Year Note is hereby presented to the Company by the undersigned for
payment this
                    ,
20    .


 


 


	
   

  	
  Signed

  	
   

  
	
   

  	
  by

  	
   

  



 


 


For Transfer


 


For value received, the undersigned 5 Year Noteholder
hereby sells, assigns and transfers the within 5 Year Note to                                         
                                        
         whose address is
                                       
                                        
                                        
                 
and does hereby authorize and appoint
                                        
                                        
       his attorney to make the necessary
transfer on the books of the Company, with full powers of substitution in the
premises.


 


 


Under
my hand and seal this                     ,
20    .


 


	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  Signature
  of 5 Year Noteholder

  



 


 


	
  Executed
  in the presence of:

  
	
   

  
	
   

  	
   

  
	
  (NOTARY
  SEAL)

  



 


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