EXHIBIT 4.2
EXECUTION COPY
FIRST SUPPLEMENTAL INDENTURE
between
CITIZENS BANKING CORPORATION
and
U.S. Bank National Association,
as Trustee
DATED AS OF OCTOBER 3, 2006
----------
supplementing that certain
Junior Subordinated Indenture
dated as of October 3, 2006
FIRST SUPPLEMENTAL INDENTURE, dated as of October 3, 2006 (this
"Supplemental Indenture"), between CITIZENS BANKING CORPORATION, a Michigan
corporation (hereinafter called the "Company"), having its principal office at
000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx, Xxxxxxxx 00000, and U.S. BANK NATIONAL
ASSOCIATION, a national banking association duly organized and existing under
the laws of the United States of America, having its designated corporate trust
office at 000 Xxxx Xx., Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, as Trustee
(hereinafter called the "Trustee").
RECITALS
WHEREAS, the Company and the Trustee have entered into that certain
Indenture, dated as of October 3, 2006 (the "Indenture") providing for the
issuance from time to time of Securities;
WHEREAS, pursuant to Sections 2.1 and 3.1 of the Indenture, the Company
desires to provide for the establishment of a new series of Securities under the
Indenture to be known as its 7.50% Junior Subordinated Debentures due September
15, 2066, the form and substance of such Securities and the terms, provisions
and conditions thereof to be set forth as provided in the Indenture and this
Supplemental Indenture;
WHEREAS, the conditions set forth in the Indenture for the execution and
delivery of this Supplemental Indenture have been satisfied; and
WHEREAS, all things necessary to make this Supplemental Indenture a valid
agreement of the Company and the Trustee, in accordance with its terms, and a
valid amendment of, and supplement to, the Indenture have been done.
NOW, THEREFORE, in consideration of the premises and the purchase of the
Securities by the Holders thereof from time to time on or after the date hereof,
it is mutually covenanted and agreed, for the equal and proportionate benefit of
all such Holders, that the Indenture is supplemented and amended, to the extent
and for the purposes expressed herein, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Capitalized terms not otherwise defined herein shall have the
meanings set forth in the Indenture.
SECTION 1.2. In addition, the following terms used in this Supplemental
Indenture have the following respective meanings:
"Capital Securities" means the 7.50% Enhanced Trust Preferred Securities,
liquidation amount $25 per security and $150,000,000 in the aggregate, issued by
the Trust pursuant to the Trust Agreement.
-1-
"Change in 1940 Act Law" means a change (including any announced proposed
change) in law or regulation or a change in interpretation or application of law
or regulation by any legislative body, court, governmental agency or regulatory
authority.
"Company" has the meaning set forth in the introductory paragraph to this
instrument.
"Debentures" has the meaning set forth in Section 2.1(a) hereof.
"FRB" means the Board of Governors of the Federal Reserve System and
includes the Federal Reserve Bank of Chicago and any other Federal Reserve Bank
having primary regulatory authority of the Company.
"Indenture" has the meaning set forth in the Recitals.
"Investment Company Event" means the receipt by the Company and the Trust
of an opinion of an independent counsel experienced in matters relating to
investment companies (which opinion shall not have been rescinded), to the
effect that, as a result of any Change in 1940 Act Law that becomes effective on
or after the original issuance of the Capital Securities, the Trust is or will
be considered an "investment company" that is required to be registered under
the Investment Company Act of 1940.
"Regulatory Capital Event" means the reasonable determination by the
Company that, as a result of: (1) any amendment to, or change (including any
announced prospective change) in, the laws or any applicable regulation of the
United States or any political subdivision; or (2) any official or
administrative pronouncement or action or judicial decision for interpreting or
applying such laws or regulations, which amendment or change is effective or
pronouncement or decision is announced on or after the date of original issuance
of the Capital Securities, there is more than an insubstantial risk of
impairment of the Company's ability to treat the Capital Securities (or any
substantial portion thereof) as Tier 1 capital (or its then equivalent) for
purposes of the capital adequacy guidelines of the FRB in effect and applicable
to the Company.
"Special Event" means a Tax Event, a Regulatory Capital Event or an
Investment Company Event.
"Supplemental Indenture" has the meaning set forth in the introductory
paragraph to this instrument.
"Tax Event" means the receipt by the Company or the Trust of an opinion of
tax counsel (which may be the Company's counsel or counsel of an Affiliate but
not an employee and must be reasonably acceptable to the Property Trustee)
experienced in such matters (which opinion shall not have been rescinded), to
the effect that, as a result of any amendment to, or change in, the laws (or any
regulations thereunder) of the United States or any political subdivision or
taxing authority thereof or therein that is enacted or becomes effective after
the initial issuance of the Capital Securities; proposed change in those laws
(or any regulations under those laws) that is announced after the initial
issuance of the Capital Securities; official interpretation or application of
those laws or regulations by any court, governmental agency or regulatory
authority that is announced after the initial issuance of the Capital
Securities; or threatened challenge asserted in connection with an audit of the
Company, the Trust or Company
-2-
subsidiaries or a threatened challenge asserted in writing against any other
taxpayer that has raised capital through the issuance of securities that are
substantially similar to the Debentures or the Capital Securities; there is more
than an insubstantial risk that (1) the Trust is or will be subject to United
States federal income tax with respect to income received or accrued on the
Debentures; (2) interest payable by the Company on the Debentures is not or will
not be deductible, in whole or in part, by the Company, for United States
federal income tax purposes; or (3) the Trust is or will be subject to more than
a de minimis amount of other taxes, duties or other governmental charges.
"Trust" has the meaning set forth in Section 2.1(a) hereof.
"Trust Agreement" has the meaning set forth in Section 2.1(a) hereof.
"Trustee" has the meaning set forth in the introductory paragraph to this
instrument.
ARTICLE II
TERMS OF SERIES OF SECURITIES
SECTION 2.1. Pursuant to Sections 2.1 and 3.1 of the Indenture, there is
hereby established a series of Securities, the terms of which shall be as
follows:
(a) Designation. The Securities of this series shall be known and
designated as the "7.50% Junior Subordinated Debentures due September 15,
2066" of the Company (the "Debentures"). The Debentures initially shall be
issued to Citizens Capital Trust I, a Delaware statutory trust (the
"Trust"). The Trust Agreement for the Trust shall be the Amended and
Restated Trust Agreement, dated as of October 3, 2006, among the Company,
as Depositor, U.S. Bank Trust National Association, as Delaware Trustee,
U.S. Bank National Association, as Property Trustee, and the Administrative
Trustees named therein (the "Trust Agreement"). The Company will guarantee
the obligations of the Trust to the extent set forth in the Guarantee
Agreement, dated as of October 3, 2006, between the Company and U.S. Bank
National Association, as Guarantee Trustee.
(b) Aggregate Principal Amount. The maximum aggregate principal amount
of the Debentures which may be authenticated and delivered under the
Indenture and this Supplemental Indenture is $150,010,000 (except for
Debentures authenticated and delivered upon registration of transfer of, or
exchange for, or in lieu of, other Debentures pursuant to Section 3.4, 3.6,
3.7, 9.6 or 11.6 of the Indenture).
(c) Denominations. The Debentures will be issued only in fully
registered form, and the authorized minimum denomination of the Debentures
shall be $25 principal amount and any integral multiple thereof.
(d) Maturity. The principal amount of the Debentures shall be payable
in full on September 15, 2066 subject to and in accordance with the
provisions of the Indenture and this Supplemental Indenture.
-3-
(e) Rate of Interest. The rate at which the Debentures shall bear
interest will be 7.50% per annum; the date from which such interest shall
accrue is October 3, 2006; the Interest Payment Dates (as defined in the
Indenture) on which such interest shall be payable are March 15, June 15,
September 15 and December 15 of each year, commencing December 15, 2006.
Interest payments not paid when due will themselves accrue Additional
Interest at the annual rate of 7.50% on the amount of unpaid interest, to
the extent permitted by law, compounded quarterly. The amount of interest
payable for any period will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The amount of interest payable for any
period shorter than a full quarterly period will be computed on the basis
of a 30-day month and, for periods of less than a month, the actual number
of days elapsed per 30-day month. If an Interest Payment Date falls on a
day that is not a Business Day, the interest payment shall be postponed to
the next succeeding Business Day, without any interest or other payment in
respect of such delay.
(f) To Whom Interest Payable. Interest will be payable to the person
in whose name the Debentures are registered at the close of business on the
Regular Record Date next preceding the Interest Payment Date, except that,
interest payable on the Stated Maturity of the principal of the Debentures
shall be paid to the Person to whom principal is paid.
(g) Option to Defer Interest Payments. Interest payments on the
Debentures shall be subject to deferral to the extent and in the manner
provided in Section 3.12 of the Indenture for one or more Extension Periods
of up to 40 consecutive quarterly periods. If the Company has deferred
interest payments under this clause (g) for an Extension Period consisting
of 40 consecutive quarterly periods, no interest will be due or payable on
the Interest Payment Date relating to the last such quarterly period;
provided, however, that all accrued and unpaid interest (including any
Additional Interest) will become due and payable on the next subsequent
Interest Payment Date. With respect to each Interest Payment Date, the
Company shall deliver to the Trustee written notice of any optional
deferral pursuant to this clause (g) at least 10 Business Days and not more
than 60 Business Days prior to such Interest Payment Date (which notice
requirement shall be in lieu of, and not in addition to, the notice
requirement described in the last sentence of the first paragraph of
Section 3.12 of the Indenture, which shall not apply to the Debentures).
(h) Events of Default and Remedies. For the Debentures, Sections 5.1
and 5.2 of the Indenture shall not apply and shall be replaced with Annex A
attached hereto.
(i) Location of Payment. Payment of the principal of (and premium, if
any) and interest on the Debentures will be made at the corporate trust
office of the Trustee, in such coin or currency of the United States of
America as at the time of payment is legal tender for payment of public and
private debts; provided, however, that at the option of the Company payment
of interest may be made (i) by check mailed to the address of the Person
entitled thereto as such address shall appear in the Securities Register or
(ii) by wire transfer in immediately available funds at such place and to
such account as may be designated by the Person entitled thereto as
specified in the Securities Register; provided, further, that, for so long
as the Trust appears on the Securities Register as a Holder of
-4-
Debentures and in a timely manner has provided wire transfer instructions
to the Company with respect to payments on the Debentures, all payments to
the Trust as Holder of Debentures shall be made by wire transfer in
immediately available funds to the account specified in such wire transfer
instructions. The office where the Debentures may be presented or
surrendered for payment and the office where the Debentures may be
surrendered for transfer or exchange and where notices and demands to or
upon the Company in respect of the Debentures and the Indenture may be
served shall be the Corporate Trust Office. The Trustee shall act as Paying
Agent.
(j) Redemption. The Debentures are redeemable at the option of the
Company, subject to the terms and conditions of Article XI of the Indenture
and subject to the Company having received prior approval from the FRB if
then required under applicable capital guidelines or policies of the FRB,
at 100% of their principal amount plus accrued and unpaid interest (1) in
whole or in part, on one or more occasions at any time on or after
September 15, 2011, or (2) in whole at any time if a Special Event has
occurred and is continuing and the Company cannot cure the Special Event by
some reasonable action, in which case the Company may redeem the Debentures
within 90 days following the occurrence of the Special Event.
(k) Sinking Fund. The Debentures shall not be subject to any sinking
fund or analogous provisions.
(l) Forms. The Debentures shall be substantially in the form of Annex
B attached hereto, with such modifications thereto as may be approved by
the authorized officer executing the same. The Trust Agreement shall be
substantially in the form of Annex C attached hereto, with such
modifications thereto as may be approved by the authorized officer
executing the same. The Guarantee Agreement shall be substantially in the
form of Annex D attached hereto, with such modifications thereto as may be
approved by the authorized officer executing the same.
(m) Subordination. The subordination provisions of Article XIII of the
Indenture shall apply; provided, however, that for the purposes of the
Debentures (but not for the purposes of any other Securities unless
specifically set forth in the terms of such Securities),
(1) "Senior Indebtedness" shall mean any obligation of the Company to
its creditors, whether now outstanding or subsequently incurred,
other than any obligation as to which, in the instrument creating
or evidencing the obligation or pursuant to which the obligation
is outstanding, it is provided that such obligation is not Senior
Indebtedness; provided, however, that Senior Indebtedness does
not include (a) Pari Passu Securities, (b) any accounts payable
or other liability to trade creditors (including guarantees
thereof or instruments evidencing such liabilities) or (c) any
accrued liabilities arising in the ordinary course of business.
(2) "Pari Passu Securities" shall mean (i) indebtedness (A) that
qualifies or is issued to financing vehicles issuing securities
that qualify as Tier 1 capital of the Company under the capital
guidelines of the FRB and (B) the terms of which provide that
such indebtedness ranks equally with the Debentures in right of
payment and upon liquidation; and (ii) guarantees of indebtedness
described in clause (i) or securities issued by one or more
financing vehicles described in clause (i)(A).
ARTICLE III
MISCELLANEOUS
SECTION 3.1. If any provision of this Supplemental Indenture limits,
qualifies or conflicts with the duties imposed by any of Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939 through operation of Section
318(c) thereof, such imposed duties shall control.
SECTION 3.2. The Article headings herein are for convenience only and shall
not effect the construction hereof.
SECTION 3.3. All covenants and agreements in this Supplemental Indenture by
the Company shall bind its successors and assigns, whether so expressed or not.
-5-
SECTION 3.4. In case any provision of this Supplemental Indenture shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
SECTION 3.5. Nothing in this Supplemental Indenture is intended to or shall
provide any rights to any parties other than those expressly contemplated by
this Supplemental Indenture.
SECTION 3.6. THIS SUPPLEMENTAL INDENTURE SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES THEREOF.
SECTION 3.7. The Trustee makes no representations as to the validity or
sufficiency of this Supplemental Indenture. The recitals and statements herein
are deemed to be those of the Company and not of the Trustee.
* * *
This instrument may be executed in any number of counterparts, each of
which so executed shall be deemed to be an original, but all such counterparts
shall together constitute but one and the same instrument.
-6-
IN WITNESS WHEREOF, the parties hereto have caused this Supplemental
Indenture to be duly executed, all as of the day and year first above written.
CITIZENS BANKING CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxx
Title: General Counsel and Secretary
U.S. BANK NATIONAL ASSOCIATION,
as Trustee
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
[Signature page to First Supplemental Indenture]
ANNEX A
Section 5.1. Events of Default; Debenture Default.
(a) "Event of Default", wherever used herein with respect to the
Debentures, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be occasioned by the provisions of Article
XIII or be voluntary or involuntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(1) any non-payment of interest, whether due to an optional deferral
or otherwise, that continues for ten consecutive years with all accrued and
unpaid interest (including compounded interest) having been paid in full;
or
(2) the Trust shall have voluntarily or involuntarily dissolved,
wound-up its business or otherwise terminated its existence, except in
connection with (i) distribution of the Debentures to holders of the
Capital Securities, (ii) the redemption of all of the outstanding Capital
Securities or (iii) a merger, consolidation or amalgamation of the Trust
permitted under the Trust Agreement; or
(3) the entry of a decree or order by a court having jurisdiction in
the premises adjudging the Company a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization of the Company under the
Bankruptcy Code or any other similar applicable Federal or State law, which
decree or order shall have continued undischarged and unstayed for a period
of 60 days; or the entry of a decree or order of a court having
jurisdiction in the premises for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the
Company or of its property, or for the winding up or liquidation of its
affairs, which decree or order shall have continued undischarged and
unstayed for a period of 60 days; or
(4) the commencement by the Company of voluntary proceedings to be
adjudicated a bankrupt, or consent by the Company to the filing of a
bankruptcy proceeding against it, or the filing by the Company of a
petition or answer or consent seeking reorganization under the Bankruptcy
Code or any other similar Federal or State law, or consent by the Company
to the filing of any such petition, or the consent by the Company to the
appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of it or of its property, or the making by the
Company of an assignment for the benefit of creditors, or the admission by
the Company in writing of its inability to pay its debts generally as they
become due.
(b) "Debenture Default", wherever used herein with respect to
Debentures, means any one of the following events (whatever the reason for such
Default and whether it shall be occasioned by the provisions of Article XIII or
be voluntary or involuntary or be effected by operation of law or pursuant to
any judgment, decree or order of any court or any order, rule or regulation or
any administrative or governmental body):
(1) an Event of Default with respect to Debentures; or
A-1
(2) a default in the payment of any installment of interest (including
any Additional Interest) on any Debenture when such interest becomes due
and payable and such default continues for a period of 30 days (subject to
the deferral of any due date in the case of an Extension Period), or
(3) a default in the payment of the principal of (or premium, if any,
on) any Debenture at its Maturity; or
(4) failure on the part of the Company duly to observe or perform any
other of the covenants or agreements on the part of the Company in the
Debentures or in the Indenture for a period of 90 days after the date on
which written notice of such failure, requiring the Company to remedy the
same, shall have been given to the Company by the Trustee by registered or
certified mail or to the Company and the Trustee by the Holders of at least
25% in aggregate principal amount of the Outstanding Debentures.
Section 5.2. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default described in clause (1) or (2) of Section 5.1(a)
with respect to the Debentures occurs and is continuing, then and in every such
case the Trustee or the Holders of not less than 25% in aggregate principal
amount of the Outstanding Debentures may declare the principal amount of all the
Debentures to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by Holders), provided that, for so long as
the Trust is the holder of all of the Outstanding Debentures, if, upon such an
Event of Default, the Trustee fails to declare the principal of all the
Outstanding Debentures to be immediately due and payable, the holders of at
least 25% in aggregate Liquidation Amount (as defined in the Trust Agreement) of
the Capital Securities then outstanding shall have the right to make such
declaration by a notice in writing to the Company and the Trustee; and upon any
such declaration such principal amount (or specified portion thereof) of and the
accrued interest (including any Additional Interest) on all the Debentures shall
become immediately due and payable. Payment of principal and interest (including
any Additional Interest) on the Debentures shall remain subordinated to the
extent provided in the Indenture notwithstanding that such amount shall become
immediately due and payable as herein provided. If an Event of Default described
in Section 5.1(a)(3) or 5.1(a)(4) with respect to Debentures occurs, the
principal amount of all the Debentures shall automatically, and without any
declaration or other action on the part of the Trustee or any Holder, become
immediately due and payable.
At any time after such a declaration of acceleration with respect to the
Debentures has been made and before a judgment or decree for payment of the
money due has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Debentures, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay:
(A) all overdue installments of interest (including any
Additional Interest) on all the Debentures,
A-2
(B) the principal of (and premium, if any, on) the Debentures
that have become due otherwise than by such declaration of
acceleration and interest thereon at the rate borne by the Debentures,
and
(C) all sums paid or advanced by the Trustee hereunder and the
reasonable compensation, expenses, disbursements and advances of the
Trustee, its agents and counsel; and
(2) all Events of Default with respect to the Debentures, other than
the non-payment of the principal of the Debentures that has become due
solely by such acceleration, have been cured or waived as provided in
Section 5.13.
A-3
ANNEX B
FORM OF DEBENTURES(1)
CITIZENS BANKING CORPORATION
7.50% JUNIOR SUBORDINATED DEBENTURES DUE 2066
NO. [__]
$_______
CUSIP NO. [__]
CITIZENS BANKING CORPORATION, a corporation organized and existing under
the laws of the State of Michigan (hereinafter called the "Company," which term
includes any successor corporation under the Indenture hereinafter referred to),
for value received, hereby promises to pay U.S. Bank National Association, as
Property Trustee of CITIZENS CAPITAL TRUST I, or registered assigns, the
principal sum of ________ dollars ($_______) on September 15, 2066. The Company
further promises to pay interest on said principal sum from October 3, 2006 or
from the most recent interest payment date (each such date, an "Interest Payment
Date") on which interest has been paid or duly provided for, quarterly (subject
to deferral as set forth herein) in arrears on March 15, June 15, September 15
and December 15 of each year, commencing December 15, 2006, at the rate of 7.50%
per annum, until the principal hereof shall have become due and payable, and on
any overdue principal and (without duplication and to the extent that payment of
such interest is enforceable under applicable law) on any overdue installment of
interest at the same rate per annum, compounded quarterly. The amount of
interest payable for any period will be computed on the basis of a 360-day year
comprised of twelve 30-day months. The amount of interest payable for any period
shorter than a full quarterly period will be computed on the basis of a 30-day
month period and, for periods of less than a month, the actual number of days
elapsed per 30-day month. In the event that any date on which interest is
payable on this Security is not a Business Day, then a payment of the interest
payable on such date will be made on the next succeeding day which is a Business
Day (and without any interest or other payment in respect of any such delay). A
"Business Day" shall mean any day other than (i) a Saturday or Sunday, (ii) a
day on which banking institutions in The City of New York are authorized or
required by law or executive order to remain closed or (iii) a day on which the
Corporate Trust Office of the Property Trustee or the designated office of the
Property Trustee under the Trust Agreement hereinafter referred to for Citizens
Capital Trust I, is closed for business. The interest installment so payable,
and punctually paid or duly provided for, on any Interest Payment Date will, as
provided in the Indenture, be paid to the Person in whose name this Security (or
one or more Predecessor Securities) is registered at the close of business on
the Regular Record Date for such interest installment, which shall be (i) the
Business Day next preceding such Interest Payment Date if this Security is
issued in the form of a Global Security, or (ii) the fifteenth (15) day (whether
or not a Business Day) preceding such Interest
----------
(1) This form assumes that Citizens Capital Trust I is the sole holder of
record of the Debentures. If Debentures are held by any other Person,
pursuant to Section 2.1 of the Indenture the Company shall establish by
Board Resolution a revised form of Debenture.
B-1
Payment Date if this Security is not issued in the form of a Global Security.
Any such interest installment not so punctually paid or duly provided for shall
forthwith cease to be payable to the Holder on such Regular Record Date and may
either be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on a Special
Record Date for the payment of such Defaulted Interest to be fixed by the
Trustee, notice whereof shall be given to Holders of Securities of this series
not less than ten (10) days prior to such Special Record Date, or be paid at any
time in any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be listed, and
upon such notice as may be required by such exchange, all as more fully provided
in said Indenture.
So long as no Event of Default has occurred and is continuing, the Company
shall have the right at any time and from time to time during the term of this
Security to defer payment of interest on this Security for up to forty
consecutive quarterly interest payment periods with respect to each deferral
period (each an "Extension Period"), but shall pay all interest then accrued and
unpaid (together with interest thereon to the extent permitted by applicable
law, compounded quarterly at the rate specified in this Security) on the first
Interest Payment Date following the termination of such Extension Period;
provided, however, that no Extension Period shall extend beyond the Stated
Maturity of the principal of this Security. Upon termination of any such
Extension Period and upon the payment of all accrued and unpaid interest
(including any Additional Interest) then due, the Company may elect to begin a
new Extension Period, subject to the above requirements. No interest shall be
due and payable during an Extension Period except on the first Interest Payment
Date thereafter.
The Company shall not pay on any Interest Payment Date interest that has
accrued on this Security during the quarterly interest period immediately
preceding such Interest Payment Date, unless the Company pays therewith all
accrued and unpaid interest (including any Additional Interest) at such time
outstanding on this Security, including without limitation accrued and unpaid
interest that has been deferred pursuant to the provisions described in the
preceding paragraph.
During any such Extension Period and until all accrued but unpaid interest
is paid in full, the Company shall not, and shall not permit any Subsidiary of
the Company to, (i) declare or pay any dividends or distributions on or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Company's capital stock or (ii) make any payment of principal of or interest or
premium, if any, on or repay, repurchase or redeem any debt securities of the
Company that rank pari passu with or junior in interest to this Security or
(iii) make any guarantee payments with respect to any guarantee by the Company
of the debt securities of any Subsidiary of the Company if such guarantee ranks
pari passu with or junior in interest to the Security (other than (a)
repurchases, redemptions or other acquisitions of shares of capital stock of the
Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of any one or more employees,
officers, directors or consultants, in connection with a dividend reinvestment
or shareholder stock purchase plan or in connection with the issuance of capital
stock of the Company (or securities convertible into or exercisable for such
stock) as consideration in an acquisition transaction entered into prior to the
Extension Period, (b) as a result of an exchange or conversion of any class of
series of the Company's capital stock for any other indebtedness for any class
or series of the Company's
B-2
capital stock, (c) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange provisions of
such capital stock or the security being converted or exchanged, (d) any
declaration of a dividend in connection with the implementation or amendment of
the Company shareholders' rights plan (or any successor thereto), or the
issuance of rights, stock or other property under any such rights plan, or the
redemption or repurchase of rights pursuant to, or (e) any dividend in the form
of stock, warrants, options or other rights where the dividend stock or the
stock issuable upon exercise of such warrants, options or other rights is the
same stock as that on which the dividend is being paid or ranks pari passu with
or junior to such stock).
Payment of principal of (and premium, if any) and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in the United States, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts; provided, however, that at the option of the Company payment of interest
may be made (i) by check mailed to the address of the Person entitled thereto as
such address shall appear in the Securities Register or (ii) by wire transfer in
immediately available funds at such place and to such account as may be
designated in writing at least fifteen (15) days before the relevant Interest
Payment Date by the Person entitled thereto as specified in the Securities
Register; provided, further, that for so long as Citizens Capital Trust I
appears on the Securities Register as a Holder of Debentures and in a timely
manner has provided wire transfer instructions to the Company with respect to
payments on the Debentures, all payments to Citizens Capital Trust I as Holder
of Debenture shall be made by wire transfer in immediately available funds to
the account specified in such wire transfer instructions.
The indebtedness evidenced by this Security is, to the extent provided in
the Indenture, subordinated and subject in right of payments to the prior
payment in full of all Senior Indebtedness, and this Security is issued subject
to the provisions of the Indenture with respect thereto. Each Holder of this
Security, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
actions as may be necessary or appropriate to effectuate the subordination so
provided and (c) appoints the Trustee his attorney-in-fact for any and all such
purposes. Each Holder hereof, by his acceptance hereof, waives all notice of the
acceptance of the subordination provisions contained herein and in the Indenture
by each holder of Senior Indebtedness, whether now outstanding or hereafter
incurred, and waives reliance by each such holder upon said provisions.
Reference is made hereby to the further provisions of this Security set
forth on the reverse hereof, which further provisions shall for all purposes
have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Trustee referred to on the reverse hereof by manual signature, this Security
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed under its corporate seal.
B-3
CITIZENS BANKING CORPORATION
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Attest:
------------------------------------
Assistant Secretary
B-4
REVERSE OF SECURITY
This Security is one of a duly authorized issue of securities of the
Company (herein called the "Securities"), issued and to be issued in one or more
series under a Junior Subordinated Indenture, dated as of October 3, 2006, as
supplemented by the First Supplemental Indenture, dated as of October 3, 2006
(herein together called the "Indenture"), between the Company and U.S. Bank
National Association, as Trustee (herein called the "Trustee," which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof, limited in
aggregate principal amount of $150,010,000 issuable on one or more occasions.
All terms used in this Security that are defined in the Indenture or in the
Amended and Restated Trust Agreement, dated as of October 3, 2006 (the "Trust
Agreement"), for Citizens Capital Trust I, among Citizens Banking Corporation,
as Depositor, and the Trustees named therein, shall have the meanings assigned
to them in the Indenture or the Trust Agreement, as the case may be.
The Company may at any time, at its option, on or after September 15, 2011,
and subject to the terms and conditions of Article XI of the Indenture and
Section 2.1(j) of the First Supplemental Indenture, and subject to prior
approval by the Board of Governors of the Federal Reserve System if then
required, redeem this Security in whole at any time or in part from time to
time, without premium or penalty, at a redemption price equal to 100% of the
principal amount thereof plus accrued and unpaid interest including Additional
Interest, if any, to the Redemption Date.
Upon the occurrence and during the continuation of a Tax Event, Investment
Company Event or a Regulatory Capital Event in respect of a Trust, the Company
may, at its option, at any time within 90 days of the occurrence of such Tax
Event, Investment Company Event or Regulatory Capital Event redeem this
Security, in whole but not in part, subject to the provisions of Article XI of
the Indenture, at a redemption price equal to 100% of the principal amount
thereof plus accrued and unpaid interest, including Additional Interest, if any,
to the Redemption Date.
The Indenture contains provisions for satisfaction and discharge of the
entire indebtedness of this Security upon compliance by the Company of certain
conditions set forth in the Indenture.
The Indenture permits, with certain exceptions as therein provided, the
Company and the Trustee at any time to enter into a supplemental indenture or
indentures for the purpose of modifying in any manner the rights and obligations
of the Company and of the Holders of the Securities, with the consent of the
Holders of not less than a majority in principal amount of the Outstanding
Securities of all series to be affected by such supplemental indenture. The
Indenture also contains provisions permitting Holders of specified percentages
in principal amount of the Securities of all series at the time Outstanding, on
behalf of the Holders of all Securities of such
B-5
series, to waive compliance by the Company with certain provisions of the
Indenture and certain past defaults under the Indenture and their consequences.
Any such consent or waiver by the Holders of this Security and of any Security
issued upon the registration and transfer hereof or in exchange hereof or in
lieu hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture, if an Event
of Default with respect to the Securities of this series at the time Outstanding
occurs and is continuing, then and in every such case the Trustee or the Holders
of not less that 25% in principal amount of the Outstanding Securities of this
series may declare the principal amount of all the Securities of this series to
be due and payable immediately, by a notice in writing to the Company (and to
the Trustee if given by the Holders), provided that, in the case of the
Securities of this series issued to a Trust, if upon an Event of Default, the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities of this series fails to declare the principal of all the
Securities of this series to be immediately due and payable, the holders of at
least 25% in aggregate Liquidation Amount of the Capital Securities then
outstanding shall have such right by a notice in writing to the Company and the
Trustee; and upon any such declaration the principal amount of and the accrued
interest (including Additional Interest) on all the Securities of this series
shall become immediately due and payable, provided that the payment of principal
and interest (including Additional Interest) on such Securities shall remain
subordinated to the extent provided in Article XIII of the Indenture and Section
2.1(m) of the First Supplemental Indenture.
No reference herein to the Indenture and no provision of this Security or
of the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of (and premium, if any) and
interest on this Security at the times, places and rate, and in the coin or
currency, herein prescribed (subject to the deferral rights of the Company
described in the Indenture).
As provided in the Indenture and subject to certain limitations therein set
forth, the transfer of this Security is registrable in the Securities Register,
upon surrender of this Security for registration of transfer at the office or
agency of the Company maintained under Section 10.2 of the Indenture duly
endorsed by, or accompanied by written instrument of transfer in form
satisfactory to the Company and the Securities Registrar duly executed by, the
Holder hereof or his attorney duly authorized in writing, and thereupon one or
more new Securities of this series, of authorized denominations and for the same
aggregate principal amount, will be issued to the designated transferee or
transferees. No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration or transfer, the
Company, the Trustee and any agent of the Company or the Trustee may treat the
Person in whose name this Security is registered as the owner hereof for all
purposes, whether or not this Security be overdue, and neither the Company, the
Trustee nor any such agent shall be affected by notice to the contrary.
The Securities of this series are issuable only in registered form without
coupons in denominations of $25 and in any multiple thereof. As provided in the
Indenture and subject to
B-6
certain limitations therein set forth, Securities of this series are
exchangeable for like aggregate principal amount of Securities of such series of
a different authorized denomination, as requested by the Holder surrendering the
same.
The Company and, by its acceptance of this Security or a beneficial
interest therein, the Holder of, and any Person that acquires beneficial
interest in, this Security agree that for United States federal, state and local
tax purposes it is intended that this Security constitute indebtedness.
THE INDENTURE AND THIS SECURITY SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICTS
OF LAWS PRINCIPLES THEREOF.
This is one of the Securities referred to in the mentioned Indenture.
U.S. BANK NATIONAL
ASSOCIATION, as Trustee
By:
------------------------------------
Authorized Signatory
Dated: _____, 2006
B-7
