-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FVhd2PrWOFf0zD3gz6zYFtvWCLej/rdqhrvgD3KZQgVHDDLub38FUOiIegrzNk52 K4pJVcmjZMnK8hR0S7654A== 0000930661-99-001853.txt : 19990812 0000930661-99-001853.hdr.sgml : 19990812 ACCESSION NUMBER: 0000930661-99-001853 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990630 FILED AS OF DATE: 19990811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BANK OF THE OZARKS INC CENTRAL INDEX KEY: 0001038205 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 710556208 STATE OF INCORPORATION: AR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-22759 FILM NUMBER: 99684558 BUSINESS ADDRESS: STREET 1: 12615 CHENAL PARKWAY STREET 2: SUITE 3100 CITY: LITTLE ROCK STATE: AR ZIP: 72211 BUSINESS PHONE: 5019782265 MAIL ADDRESS: STREET 1: 12615 CHENAL PARKWAY CITY: LITTLE ROCK STATE: AR ZIP: 72211 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q ________________ (Mark one) (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 1999 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____________ to ____________. Commission File Number 0-22759 BANK OF THE OZARKS, INC. (Exact name of registrant as specified in its charter) ARKANSAS 71-0556208 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification Number) 12615 CHENAL PARKWAY, LITTLE ROCK, ARKANSAS 72211 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (501) 978-2265 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes (X) No ( ) Indicate the number of shares outstanding of each of the registrant's classes of common stock, as of the latest practical date. Class Outstanding at June 30, 1999 - --------------------------------------- -------------------------------- Common Stock, $0.01 par value per share 3,779,555 BANK OF THE OZARKS, INC. FORM 10-Q June 30, 1999 INDEX
PART. Financial Information Item 1. Consolidated Balance Sheets as of June 30, 1999 and 1998 and December 31, 1998 1 Consolidated Statements of Income for the Three Months Ended June 30, 1999 and 1998 and the Six Months Ended June 30, 1999 and 1998 2 Consolidated Statements of Stockholders' Equity for the Six Months Ended June 30, 1999 and 1998 3 Consolidated Statements of Cash Flows for the Six Months Ended June 30, 1999 and 1998 4 Notes to Consolidated Financial Statements 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 Selected and Supplemental Financial Data 19 Item 3. Quantitative and Qualitative Disclosures About Market Risk 21 PART II. Other Information Item 1. Legal Proceedings N/A Item 2 Change in Securities N/A Item 3. Defaults Upon Senior Securities N/A Item 4. Submission of Matters to a Vote of Security Holders 22 Item 5. Other Information N/A Item 6. Exhibits and Reports on Form 8-K (a). Exhibits Reference is made to the Exhibit Index contained at the end of this report. (b). Reports on Form 8-K 22 Signature 23 Exhibit Index 24
BANK OF THE OZARKS, INC. CONSOLIDATED BALANCE SHEETS (Dollars in thousands, except per share amounts) Unaudited
June 30, December 31, -------------------------------- -------------- 1999 1998 1998 ------------- ------------- -------------- ASSETS Cash and due from banks $ 15,695 $ 15,420 $ 14,168 Interest bearing deposits 198 799 856 Investment securities - available for sale 38,675 9,054 17,629 Investment securities - held to maturity 198,628 98,915 158,989 Federal funds sold 275 - - Loans, net of unearned income 419,410 321,719 387,526 Allowance for loan losses (5,248) (3,853) (4,689) Premises and equipment, net 28,678 23,465 27,155 Foreclosed assets held for sale, net 696 370 314 Interest receivable 6,705 4,459 5,517 Intangible assets, net 3,454 2,143 3,665 Other 1,328 1,237 1,301 ------------- ------------- -------------- Total assets $708,494 $473,728 $612,431 ============= ============= ============== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits Demand - non-interest bearing $ 56,140 $ 39,783 $ 50,138 Savings and interest-bearing transaction 107,396 70,554 95,471 Time 423,760 269,933 383,431 ------------- ------------- -------------- Total deposits 587,296 380,270 529,040 Notes payable 108 13,072 12,448 FHLB advances and federal funds purchased 56,490 40,038 26,823 Repurchase agreements 1,850 - 1,408 Accrued interest and other liabilities 2,640 2,466 2,357 ------------- ------------- -------------- Total liabilities 648,384 435,846 572,076 ------------- ------------- -------------- Guaranteed preferred beneficial interest in Company's subordinated debentures 17,250 - - Stockholders' equity Preferred Stock, $0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding - - - Common stock; $0.01 par value; Authorized 10,000,000 shares; 3,779,555 shares issued and outstanding 38 38 38 Additional paid-in capital 14,314 14,314 14,314 Retained earnings 28,351 23,507 25,922 Accumulated other comprehensive income 157 23 81 ------------- ------------- -------------- Total stockholders' equity 42,860 37,882 40,355 ------------- ------------- -------------- Total liabilities and stockholders' equity $708,494 $473,728 $612,431 ============= ============= ==============
See accompanying notes to consolidated financial statements. 1 BANK OF THE OZARKS, INC. CONSOLIDATED STATEMENTS OF INCOME (Dollars in thousands, except per share amounts) Unaudited
Three Months Ended Six Months Ended June 30, June 30, --------------------------------- -------------------------------- 1999 1998 1999 1998 -------------- ------------- ------------- ------------- Interest income Loans $ 8,943 $7,426 $17,560 $14,347 Investment securities - taxable 3,234 1,190 5,992 1,966 - non-taxable 433 273 780 401 Federal funds sold 6 29 9 83 Deposits with banks 1 82 6 196 -------------- ------------- ------------- ------------- Total interest income 12,617 9,000 24,347 16,993 Interest expense Deposits 5,984 4,156 11,701 7,644 Notes payable 179 100 383 208 FHLB advances 314 301 648 542 Federal funds purchased and repurchase agreements 253 13 419 13 -------------- ------------- ------------- ------------- Total interest expense 6,730 4,570 13,151 8,407 -------------- ------------- ------------- ------------- Net interest income 5,887 4,430 11,196 8,586 Provision for loan losses (580) (255) (1,191) (480) -------------- ------------- ------------- ------------- Net interest income after provision for 5,307 4,175 10,005 8,106 loan losses -------------- ------------- ------------- ------------- Other income Trust income 115 99 243 177 Service charges on deposit accounts 599 326 1,101 607 Other income, charges and fees 527 592 1,130 1,149 Gains on sales of securities 50 74 75 125 Other 12 61 23 188 -------------- ------------- ------------- ------------- Total other income 1,303 1,152 2,572 2,246 -------------- ------------- ------------- ------------- Other expense Salaries and employee benefits 2,322 1,955 4,322 3,633 Net occupancy and equipment 619 453 1,255 878 Other operating expenses 1,300 921 2,432 1,742 -------------- ------------- ------------- ------------- Total other expense 4,241 3,329 8,009 6,253 -------------- ------------- ------------- ------------- Income before income taxes and trust distribution 2,369 1,998 4,568 4,099 Provision for income taxes 658 611 1,331 1,338 Distributions on trust preferred securities 52 - 52 - -------------- ------------- ------------- ------------- Net income $ 1,659 $1,387 $ 3,185 $ 2,761 ============== ============= ============= ============= Basic earnings per common share $0.44 $0.37 $0.84 $0.73 ============== ============= ============= ============= Diluted earnings per common share 0.44 0.36 0.84 0.72 ============== ============= ============= ============= Cash dividends declared 0.10 0.06 0.20 0.11 ============== ============= ============= =============
See accompanying notes to consolidated financial statements 2 BANK OF THE OZARKS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Dollars in thousands) Unaudited
Accumulated Additional Other Common Paid-In Retained Comprehensive Stock Capital Earnings Income Total ------- --------- ---------- ------------- --------- Beginning balance - January 1, 1998 $38 $14,314 $21,162 $ 152 $35,666 Comprehensive income: Net income 2,761 2,761 Other comprehensive income Unrealized gains on available for sale securities net of $2 tax effect 2 2 Less: reclassification adjustment for gains included in income net of $81 tax effect (131) (131) --------- Comprehensive income 2,632 --------- Cash dividends (416) (416) ------- --------- ---------- -------- --------- Ending balance - June 30, 1998 $38 $14,314 $23,507 $ 23 $37,882 ======= ========= ========== ======== ========= Beginning balance January 1, 1999 $38 $14,314 $25,922 $ 81 $40,355 Comprehensive income: Net income 3,185 3,185 Other comprehensive income Unrealized gains on available for sale securities net of $90 tax effect 144 144 Less: reclassification adjustment for gains included in income net of $42 tax effect (68) (68) Comprehensive income 3,261 --------- Cash dividends (756) (756) ------- --------- ---------- -------- --------- Ending balance - June 30, 1999 $38 $14,314 $28,351 $ 157 $42,860 ======= ========= ========== ======== =========
3 BANK OF THE OZARKS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Dollars in thousands) Unaudited
Six Months Ended June 30, ---------------------------------------- 1999 1998 --------------- ---------------- Cash flows from operating activities Net income $ 3,185 $ 2,761 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 661 375 Amortization 133 41 Provision for loan losses 1,191 480 Provision for losses on foreclosed assets 41 18 Gain on sales of securities (75) (125) (Increase) decrease in mortgage loans held for sale 4,267 (1,900) Gain on disposition of premises and equipment (5) (15) (Gain) loss on disposition of foreclosed assets 15 (85) Deferred income taxes 47 (243) Changes in assets and liabilities Interest receivable (1,188) (1,446) Other, net (776) 550 Accrued interest and other liabilities 235 629 --------------- ---------------- Net cash provided by operating activities 7,731 1,040 --------------- ---------------- Cash flows from investing activities Purchase of subsidiary, net of funds acquired - 7,164 Proceeds from sales and maturities on investment securities available for sale 19,180 17,033 Purchases of investment securities available for sale (40,076) (827) Proceeds from maturities of investment securities held to maturity 32,186 3,402 Purchase of investment securities held to maturity (71,824) (85,156) Increase in federal funds sold (275) 3,330 Net increase in loans (36,782) (45,186) Proceeds from dispositions of bank premises and equipment 46 15 Purchase of bank premises and equipment (2,226) (9,732) Proceeds from dispositions of foreclosed assets 390 543 --------------- ---------------- Net cash used by investing activities (99,381) (109,414) --------------- ---------------- Cash flows from financing activities Net increase in deposits 58,257 75,360 Net change in FHLB advances and federal funds purchased 29,667 26,021 Net increase in repurchase agreements 442 - Proceeds from notes payable - 13,000 Payments of notes payable (12,340) (5,000) Proceeds from trust preferred securities 17,250 - Dividends paid (756) (416) --------------- ---------------- Net cash provided by financing activities 92,520 108,965 --------------- ---------------- Net increase in cash and cash equivalents 869 591 Cash and cash equivalents - beginning of period 15,024 15,628 --------------- ---------------- Cash and cash equivalents - end of period $ 15,893 $ 16,219 =============== ================ See accompanying notes to consolidated financial statements.
4 4 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Principles of Consolidation: The consolidated financial statements of Bank of the Ozarks, Inc. include the accounts of the parent company and its wholly owned subsidiaries, including Bank of the Ozarks and Ozark Capital Trust (collectively the "Company"). All material intercompany transactions have been eliminated. 2. Basis of Presentation: The accompanying consolidated financial statements have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission ("SEC") in Article 10 of Regulation S-X and with the instructions to Form 10-Q, and in accordance with generally accepted accounting principles for interim financial information. Certain information, accounting policies and footnote disclosures normally included in complete financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted in accordance with such rules and regulations. It is therefore suggested that these consolidated financial statements be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company's annual report on Form 10- K for the year ended December 31, 1998. In the opinion of management all adjustments considered necessary, consisting of normal recurring items, have been included for a fair presentation of the accompanying consolidated financial statements. Operating results for the three and six months ended June 30, 1999 are not necessarily indicative of the results that may be expected for the full year. 3. Earnings Per Common Share: Basic EPS is computed by dividing reported earnings available to common stockholders by weighted average shares outstanding. No dilution for any potentially dilutive securities is included. Diluted EPS includes the dilutive effect of stock options. In computing dilution for stock options, the average share price is used for the reporting period. Basic and diluted earnings per common share is computed as follows:
Three Months Ended Six Months Ended June 30, June 30, ------------------------------- ------------------------------ 1999 1998 1999 1998 ------------- ------------ ------------ ------------- (In thousands, except per share amounts) Common shares - weighted averages................. 3,780 3,780 3,780 3,780 Common share equivalents - weighted averages...... 9 54 12 48 ------ ------ ------ ------ 3,789 3,834 3,792 3,828 ====== ====== ====== ====== Net income........................................ $1,659 $1,387 $3,185 $2,761 Basic earnings per common share................... $ 0.44 $ 0.37 $ 0.84 $ 0.73 Diluted earnings per common share................. 0.44 0.36 0.84 0.72
5 4. Federal Home Loan Bank ("FHLB") Advances FHLB advances with original maturities exceeding one year totaled $25.4 million at June 30, 1999. Interest rates on these advances ranged from 4.16% to 6.47% at June 30, 1999 with a weighted average rate of 5.28%. Aggregate annual maturities (amounts in thousands) and weighted average interest rates of FHLB advances with an original maturity of over one-year at June 30, 1999 are as follows:
Weighted Amounts Average Rate ----------------- ------------------ 1999 $ 2,700 6.47% 2000 2,144 5.77 2001 4,198 5.95 2002 197 6.30 2003 198 6.30 Thereafter 15,988 4.82 ------- $25,425 =======
FHLB advances of $15.0 million maturing in 2008 and 2009 may be called quarterly but the Company has the option to refinance on a long-term basis any amounts called. In addition, at June 30, 1999 the Company had an FHLB advance outstanding with an original maturity of thirty-five days of $20.0 million which bears interest at 5.08% 5. Guaranteed Preferred Beneficial Interest in the Company's Subordinated Debentures On June 18, 1999 Ozark Capital Trust ("Ozark Capital"), a Delaware business trust wholly-owned by Bank of the Ozarks, Inc., sold to investors in a public underwritten offering $17.3 million of 9% cumulative trust preferred securities. The proceeds were used to purchase an equal principal amount of 9% subordinated debentures of Bank of the Ozarks, Inc. Bank of the Ozarks, Inc. has, through various contractual arrangements, fully and unconditionally guaranteed all obligations of Ozark Capital on a subordinated basis with respect to the preferred securities. Subject to certain limitations, the preferred securities qualify as Tier 1 capital and are presented in the Consolidated Balance Sheets as "Guaranteed preferred beneficial interest in the Company's subordinated debentures." The sole asset of Ozark Capital is the subordinated debentures issued by Bank of the Ozarks, Inc. Both the preferred securities of Ozark Capital and the subordinated debentures of Bank of the Ozarks, Inc. will mature on June 18, 2029; however, they may be prepaid, subject to regulatory approval, prior to maturity at any time on or after June 18, 2004, or earlier upon certain changes in tax or investment company laws or regulatory capital requirements. The net proceeds from the offering were used to repay $12.5 million of outstanding borrowings under the Company's revolving line of credit with the balance of the proceeds used for general corporate purposes including a $3.0 million capital investment in the Company's bank subsidiary. 6. Supplementary Data for Cash Flows: Cash payments for interest by the Company during the six months ended June 30, 1999 amounted to $13.2 million and during the six months ended June 30, 1998 amounted to $8.3 million. Cash payments for income taxes during the six months ended June 30, 1999 and 1998 amounted to $885,000 and $902,000, respectively. (The remainder of this page intentionally left blank) 6 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS General Net income was $1,659,000 for the second quarter of 1999, a 19.6% increase over net income of $1,387,000 for the same quarter in 1998. Diluted earnings rose 22.2% to $0.44 per share for the quarter ended June 30, 1999, compared to $0.36 per share for the same quarter in 1998. For the six months ended June 30, 1999, net income totaled $3,185,000, a 15.4% increase over net income of $2,761,000 for the first six months of 1998. Diluted earnings for the first six months of 1999 were $0.84 per share compared to $0.72 for the same period in 1998, a 16.7% increase. The Company's annualized returns on average assets and on average stockholders' equity were 0.96% and 15.80%, respectively, for the second quarter of 1999, compared with 1.25% and 14.92%, respectively, for the same quarter of 1998. Annualized returns on average assets and average stockholders' equity for the six months ended June 30, 1999 were 0.96% and 15.48%, respectively, compared with 1.35% and 15.14%, respectively, for the six month period ended June 30, 1998. Total assets increased from $612.4 million at December 31, 1998, to $708.5 million at June 30, 1999. Loans were $419.4 million at June 30, 1999, compared to $387.5 million at December 31, 1998. Deposits were $587.3 million at June 30, 1999, compared to $529.0 million at December 31, 1998. Stockholders' equity increased from $40.4 million at December 31, 1998, to $42.9 million at June 30, 1999, increasing book value per share from $10.68 to $11.34. Annualized results for these interim periods may not be indicative of those for the full year or future periods. Analysis of Results of Operations The Company's results of operations depend primarily on net interest income, which is the difference between the interest income from earning assets, such as loans and investments, and the interest expense incurred on interest bearing liabilities, such as deposits and other borrowings. The Company also generates non-interest income, including service charges on deposit accounts, mortgage lending income, other charges and fees, trust income, and gains on sales of assets. The Company's non-interest expenses primarily consist of employee compensation and benefits, occupancy, equipment, and other operating expenses. The Company's results of operations are significantly affected by its provision for loan losses. The following discussion provides a summary of the Company's operations for the three and six months ended June 30, 1999 and 1998. (The remainder of this page intentionally left blank) 7 Net Interest Income Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent ("FTE") basis. The adjustment to convert certain income to an FTE basis consists of dividing tax-exempt income by one minus the statutory federal income tax rate (34%). Net interest income (FTE) increased 33.6% to $6,129,000 for the three months ended June 30, 1999, from $4,588,000 for the three months ended June 30, 1998. This increase primarily resulted from a 57.7% increase in average earning assets to $645.5 million for the 1999 period from $409.4 million for the 1998 period. Net interest income (FTE) increased 32.1% to $11,631,000 for the six months ended June 30, 1999 compared to $8,808,000 for the six months ended June 30, 1998. This increase primarily resulted from a 61.8% increase in average earning assets to $618.7 million for the 1999 period from $382.4 for the 1998 period. The increase in average earning assets for the 1999 period resulted from continued growth in the Company's loan portfolio as well as substantial growth in the Company's investment securities portfolio. The Company's net interest margin was 3.81% for the second quarter of 1999 compared with 4.50% for the second quarter of 1998. The net interest margin for the six months ended June 30, 1999 was 3.79% compared with 4.64% for the same period in 1998. Although the Company's interest margin declined throughout 1998 as a result of competitive factors and a reduction in its loan to deposit ratio, the Company's net interest margin has been stable or shown slight improvement during 1999. Net interest margin was 3.77% for the fourth quarter of 1998, 3.77% for the first quarter of 1999 and 3.81% for the second quarter of 1999. Analysis of Net Interest Income (FTE = Fully Taxable Equivalent)
Three Months Ended Six Months Ended June 30, June 30, ------------------------------------ ------------------------------------ 1999 1998 1999 1998 ------------- ------------ ------------- ------------- (Dollars in thousands) (Dollars in thousands) Interest income............................. $12,617 $9,000 $24,347 $16,993 FTE adjustment.............................. 242 158 435 222 ------- ------ ------- ------- Interest income - FTE....................... 12,859 9,158 24,782 17,215 Interest expense............................ 6,730 4,570 13,151 8,407 ------- ------ ------- ------- Net interest income - FTE................... $ 6,129 $4,588 $11,631 $ 8,808 ======= ====== ======= ======= Yield on interest earning assets - FTE...... 7.99% 8.97% 8.08% 9.08% Cost of interest bearing liabilities........ 4.56 5.03 4.66 5.03 Net interest spread - FTE................... 3.43 3.95 3.42 4.05 Net interest margin - FTE................... 3.81 4.50 3.79 4.64
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Average Consolidated Balance Sheets and Net Interest Analysis (Dollars in thousands) Three Months Ended June 30, ------------------------------------------------------------------------- 1999 1998 ------------------------------ ----------------------------------- Average Income/ Yield/ Average Income/ Yield/ ASSETS Balance Expense Rate Balance Expense Rate ------- ------- ---- ------- ------- ---- Earnings assets: Interest bearing deposits........... $ 108 $ 1 4.66% $ 5,781 $ 82 5.69% Federal funds sold.................. 441 6 4.84 2,063 29 5.64 Investment securities: Taxable........................... 196,468 3,233 6.60 70,748 1,190 6.75 Tax-exempt - FTE.................. 39,461 657 6.68 22,885 414 7.26 Loans (net of unearned income)...... 408,974 8,962 8.79 307,882 7,443 9.70 -------- ------- -------- ------ Total earning assets.............. 645,452 12,859 7.99 409,359 9,158 8.97 Non-earning assets.................... 50,127 34,484 -------- -------- Total assets...................... $695,579 $443,843 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities: Deposits: Savings and interest bearing transaction ..................... $106,439 $ 680 2.56% $ 69,333 $ 492 2.85% Time deposit of $100,000 or more.. 193,099 2,356 4.89 77,662 1,093 5.64 Other time deposits............... 234,620 2,948 5.04 181,589 2,571 5.68 -------- ------- -------- ------ Total interest bearing deposits.. 534,158 5,984 4.49 328,584 4,156 5.07 FHLB advances and federal funds..... 45,594 551 4.84 30,601 314 4.12 Repurchase agreements............... 1,606 16 3.88 Notes payable....................... 11,045 179 6.50 5,534 100 7.25 -------- ------- -------- ------ Total interest bearing liabilities..................... 592,403 6,730 4.56 364,719 4,570 5.03 Non-interest liabilities: Non-interest bearing deposits....... 55,957 39,272 Other non-interest liabilities...... 2,821 2,553 -------- -------- Total liabilities................ 651,181 406,544 Trust preferred securities............ 2,275 - Stockholders' equity.................. 42,123 37,299 -------- -------- Total liabilities and stockholders' equity............ $695,579 $443,843 ======== ======== Interest rate spread - FTE............ 3.43% 3.95% ------- ------ Net interest income - FTE............. $ 6,129 $4,588 ======= ====== Net interest margin - FTE............. 3.81% 4.50% Average Consolidated Balance Sheets and Net Interest Analysis (Dollars in thousands) Six Months Ended June 30, ------------------------------------------------------------------------- 1999 1998 ------------------------------ ----------------------------------- Average Income/ Yield/ Average Income/ Yield/ ASSETS Balance Expense Rate Balance Expense Rate ------- ------- ---- ------- ------- ---- Earnings assets: Interest bearing deposits........... $ 227 $ 6 5.26% $ 7,128 $ 196 5.55% Federal funds sold.................. 341 9 4.85 2,940 83 5.69 Investment securities: Taxable........................... 181,596 5,991 6.65 58,690 1,966 6.76 Tax-exempt - FTE.................. 35,221 1,182 6.77 16,319 608 7.51 Loans (net of unearned income)...... 401,277 17,594 8.84 297,323 14,362 9.74 -------- ------- -------- ------- Total earning assets.............. 618,662 24,782 8.08 382,400 17,215 9.08 Non-earning assets.................... 49,885 31,197 -------- -------- Total assets...................... $668,547 $413,597 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY Interest-bearing liabilities: Deposits: Savings and interest bearing transaction ..................... $102,671 $ 1,329 2.61% $ 67,092 $ 944 2.84% Time deposit of $100,000 or more.. 176,226 4,354 4.98 71,124 1,994 5.65 Other time deposits............... 235,379 6,018 5.16 167,262 4,706 5.67 -------- ------- -------- ------- Total interest bearing deposits.. 514,276 11,701 4.59 305,478 7,644 5.05 FHLB advances and federal funds..... 41,846 1,038 5.00 26,289 555 4.26 Repurchase agreements............... 1,493 29 3.91 Notes payable....................... 11,897 383 6.50 5,304 208 7.91 -------- ------- -------- ------- Total interest bearing liabilities..................... $569,512 13,151 4.66 337,071 8,407 5.03 Non-interest liabilities: Non-interest bearing deposits....... 53,489 37,734 Other non-interest liabilities...... 2,920 2,012 -------- -------- Total liabilities................ 625,921 376,817 Trust preferred securities............ 1,144 - Stockholders' equity.................. 41,482 36,780 -------- -------- Total liabilities and stockholders' equity............ $668,547 $413,597 ======== ======== Interest rate spread - FTE............ 3.42% 4.05% ------- ------- Net interest income - FTE............. $11,631 $ 8,808 ======= ======= Net interest margin - FTE............. 3.79% 4.64%
9 Non-Interest Income The Company's non-interest income can primarily be broken down into five main sources: (1) service charges on deposit accounts, (2) mortgage lending income, (3) other charges and fees including appraisal fees and commissions from the sale of credit related insurance products, (4) trust income, and (5) gains on sales of assets. Non-interest income for the second quarter of 1999 was $1,303,000 compared with $1,152,000 for the second quarter of 1998, a 13.1% increase. For the first six months of 1999 non-interest income was $2,572,000 compared with $2,246,000 for the same period in 1998, a 14.5% increase. During the first half of 1999 the Company benefited from record levels of service charges on deposit accounts and increased levels of trust income. The increase in service charges on deposit accounts resulted from continued growth in the number of checking, savings and money market accounts as well as the impact of an increase in service charge rates effective January 1, 1999. The Company's growth in trust income resulted from an increase in the volume of trust business due to expansion and relocation of the Company's trust department to Little Rock in late 1998. Mortgage lending income, which has been the largest contributor to the Company's growth in non-interest income in recent years, declined for the second quarter of 1999 and the first six months of 1999 compared to the levels achieved during the comparative periods in 1998. This decline resulted primarily from a reduction in the volume of mortgage refinancing and new home purchases as mortgage rates have risen. The table below shows non-interest income for the three and six months ended June 30, 1999 and 1998. Non-Interest Income
Three Months Ended Six Months Ended June 30, June 30, -------------------------------- --------------------------------- 1999 1998 1999 1998 ------------ ------------ ------------ ------------ (Dollars in thousands) Service charges on deposit accounts $ 599 $ 326 $1,101 $ 607 Mortgage lending income........................... 351 423 800 818 Other charges and fees............................ 177 169 331 331 Trust income...................................... 115 99 243 177 Gain on sales of foreclosed real estate........... 15 1 5 85 Gain (loss) on sales of other assets.............. (17) 11 (14) 15 Gain on sales of securities....................... 50 74 75 125 Printed check sales............................... 10 43 18 75 Other............................................. 3 6 13 13 ------------ ------------ ------------ ------------ Total non-interest income..................... $1,303 $1,152 $2,572 $2,246 ============ ============ ============ ============
(The remainder of this page intentionally left blank) 10 Non-Interest Expense Non-interest expense for the second quarter of 1999 was $4,241,000 compared with $3,329,000 for the same period in 1998, a 27.4% increase. Non-interest expense for the six months ended June 30, 1999, was $8,009,000 compared with $6,253,000 for the six months ended June 30, 1998, a 28.1% increase. The table below shows non-interest expense for the three and six months ended June 30, 1999 and 1998. Non-Interest Expense
Three Months Ended Six Months Ended June 30, June 30, ------------------------------- --------------------------------- 1999 1998 1999 1998 ------------ ------------ ------------- ------------ (Dollars in thousands) Salaries and employee benefits.................... $2,322 $1,955 $4,322 $3,633 Net occupancy expense............................. 284 197 580 382 Equipment expense................................. 335 256 675 496 Other real estate and foreclosure expense......... 76 17 139 32 Other operating expense: Professional and outside services................ 69 30 136 61 Postage.......................................... 79 52 150 119 Telephone ....................................... 93 78 193 150 Data lines ...................................... 42 51 83 69 Operating supplies............................... 127 108 238 227 Advertising and public relations................. 125 90 301 187 Directors' fees.................................. 30 28 61 56 Software expense................................. 68 41 133 80 Check printing charges........................... 11 42 10 79 ATM expense...................................... 42 31 78 54 FDIC & state assessment.......................... 54 32 102 55 Business development, meals and travel........... 40 33 74 60 Amortization of intangibles...................... 66 22 133 41 Other ........................................... 378 266 601 472 ------------ ------------ ------------- ------------ Total non-interest expense....................... $4,241 $3,329 $8,009 $6,253 ============ ============ ============= ============
During the first six months of 1999 the Company completed a series of organizational enhancements intended to eliminate redundant expenses, improve efficiency, enhance customer service and facilitate the introduction of new products and services in the future. During the first quarter of 1999 the Company consolidated its federal savings bank subsidiary and its operations into its lead bank. During the second quarter of 1999 the Company consolidated its two remaining commercial bank charters and their operations into a single charter. The Company incurred second quarter expenses totaling $151,000 related to this consolidation. The Company has a general cash bonus program in which all employees are eligible to participate. The Company pays such bonuses at year-end if it achieves a net income goal established by management at the beginning of each year. During 1998 the Company's net income did not meet this established goal and accordingly the general cash bonuses were not paid. During the first quarter of 1999 the Company failed to achieve its established net income goal, but the Company did achieve such goal for the second quarter of 1999 and for the year to date through June 30, 1999. As a result the Company's entire accrual for general cash bonuses for the first six months of 1999 was recognized during the second quarter. The increase in the second quarter of 1999 non-interest expenses primarily resulted from these consolidation and bonus accrual costs as well as increased costs associated with the Company's continued growth, including the addition of five new offices in 1998 and two new offices in the first half of 1999. The Company's efficiency ratios (non-interest expenses divided by the sum of net interest income on a tax equivalent basis and non-interest income) improved to 57.06% and 56.39%, respectively, for the second quarter and first six months of 1999 compared to 58.00% and 56.57%, respectively, for the second quarter and first six months of 1998. 11 Income Taxes The provision for income taxes was $658,000 for the quarter ended June 30, 1999, compared to $611,000 for the same period in 1998. The effective income tax rates were 28.4% and 30.6%, respectively, for the second quarters of 1999 and 1998. The provision for income taxes was $1,331,000 for the six months ended June 30, 1999, compared to $1,338,000 for the first six months of 1998. The effective income tax rates were 29.5% and 32.6%, respectively, for these periods. The decrease in effective tax rates for the 1999 periods resulted primarily from the Company's increased investments in tax exempt securities. These include securities exempt from both federal and Arkansas income taxes as well as other securities exempt solely from Arkansas income taxes. Analysis of Financial Condition Loan Portfolio At June 30, 1999, the Company's loan portfolio was $419.4 million, an increase from $387.5 million at December 31, 1998. As of June 30, 1999, the Company's loan portfolio consisted of approximately 63.6% real estate loans, 17.6% consumer loans, 13.5% commercial and industrial loans and 4.6% agricultural loans (non-real estate). The amount and type of loans outstanding at June 30, 1999 and 1998 and December 31, 1998 are reflected in the following table. Loan Portfolio
June 30, December 31, --------------------------------- ------------- 1999 1998 1998 ------------- ------------- ------------- (Dollars in thousands) Real Estate: Single family residential.......... $121,965 $108,076 $121,539 Non-farm/non-residential........... 91,573 53,010 76,563 Agricultural....................... 20,481 14,460 19,463 Construction/land development...... 27,188 19,444 23,305 Multifamily residential............ 5,515 4,213 6,207 ------------- ------------- ------------- Total real estate................ $266,722 $199,203 $247,077 Consumer............................. 73,746 58,931 66,407 Commercial and industrial............ 56,727 43,746 52,192 Agricultural (non-real estate)....... 19,232 16,520 20,068 Other................................ 2,983 3,319 1,782 ------------- ------------- ------------- Total loans...................... $419,410 $321,719 $387,526 ============= ============= =============
Nonperforming Assets Nonperforming assets consist of (1) nonaccrual loans, (2) accruing loans 90 days or more past due, (3) restructured loans providing for a reduction or deferral of interest or principal because of a deterioration in the financial position of the borrower and (4) real estate or other assets that have been acquired in partial or full satisfaction of loan obligations or upon foreclosure. The Company generally places a loan on nonaccrual status when payment of principal or interest is contractually past due 90 days, or earlier when doubt exists as to the ultimate collection of principal and interest. The Company continues to accrue interest on certain loans contractually past due 90 days if such loans are both well secured and in the process of collection. At the time a loan is placed on nonaccrual status, interest previously accrued but uncollected is generally reversed and charged against interest income. If a loan is determined to be uncollectible, the portion of the loan principal determined to be uncollectible will be charged against the allowance for loan losses. Interest income on nonaccrual loans is recognized on a cash basis when and if actually collected. Nonperforming assets as a percent of total assets were 0.70% as of June 30, 1999, compared to 0.50% as of December 31, 1998, and 0.45% as of June 30, 1998. Nonperforming loans as a percent of total loans were 1.01% as of June 30, 1999 compared to 0.70% as of December 31, 1998, and 0.55% as of June 30, 1998. The Company's ratios of non-performing loans and non-performing assets as of June 30, 1999 were impacted by placing $1.6 million of real estate loans to a single borrower on non-accrual status during the first quarter of 1999. These loans were charged down by $103,000 to the current appraised value of the collateral. 12 Management expects non-performing loans and net charge-offs to continue to exhibit volatility, but it does not presently foresee any adverse trends in its asset quality which would materially affect its future results of operations or financial condition. Foreclosed assets held for sale and repossessions are generally written down to estimated market value at the time of transfer from the loan portfolio. The value of such assets is reviewed from time to time throughout the holding period, with the value being adjusted to the then market value, if lower, until disposition. Under Arkansas banking law, other real estate owned is generally required to be written off over a five year period unless approval of the Arkansas State Bank Department can be obtained to write such assets off over an extended period. The following table presents information concerning nonperforming assets, including nonaccrual and restructured loans and foreclosed assets held for sale. Nonperforming Assets
June 30, December 31, ---------------------------------- ------------- 1999 1998 1998 ------------ ------------ ------------- (Dollars in thousands) Nonaccrual loans.......................................... $4,241 $1,705 $2,708 Accruing loans 90 days or more past due................... 7 70 21 Restructured loans........................................ - - - ------ ------ ------ Total nonperforming loans.................... 4,248 1,775 2,729 Foreclosed assets hold for sale and repossessions......... 696 370 314 ------ ------ ------ Total nonperforming assets................... $4,944 $2,145 $3,043 ====== ====== ====== Nonperforming loans to total loans........................ 1.01% 0.55% 0.70% Nonperforming assets to total assets...................... 0.70 0.45 0.50
Allowance and Provision for Loan Losses Allowance for Loan Losses: The following table shows an analysis of the allowance for loan losses for the six month periods ended June 30, 1999 and 1998 and the year ended December 31, 1998.
Six Months Ended Twelve Months Ended June 30, December 31 --------------------------------------------- ------------------- 1999 1998 1998 ------------------ ------------------ ------------- (Dollars in thousands) Balance, beginning of period ............................. $ 4,689 $ 3,737 $ 3,737 Loans charged off: Real estate........................................ 303 18 93 Consumer .......................................... 275 173 633 Commercial and industrial ......................... 127 202 423 Agricultural (non-real estate)..................... 4 - - ------- ------- ------- Total loans charged off ..................... 709 393 1,149 ------- ------- ------- Recoveries of loans previously charged off: Real estate ....................................... 3 8 9 Consumer .......................................... 71 19 55 Commercial and industrial ......................... 3 2 11 Agricultural (non-real estate) .................... 0 - - ------- ------- ------- Total recoveries............................ 77 29 75 ------- ------- ------- Net loans charged off..................................... 632 364 1,074 Provision charged to operating expense ................... 1,191 480 2,026 ------- ------- ------- Balance, end of period.................................... $ 5,248 $ 3,853 $ 4,689 ======= ======= ======= Net charge-offs to average loans outstanding during the periods indicated............................. 0.32%(1) 0.25%(1) 0.33% Allowance for loan losses to total loans ................. 1.25 1.20 1.21 Allowance for loan losses to nonperforming loans ......... 123.54 217.07 171.82 (1) Annualized
13 The amounts of provisions to the allowance for loan losses are based on management's judgment and evaluation of the loan portfolio utilizing objective and subjective criteria. The objective criteria utilized by the Company to assess the adequacy of its allowance for loan losses and required additions to such reserve are (1) an internal grading system, (2) a peer group analysis, and (3) a historical analysis. In addition to this objective criteria, the Company subjectively assesses adequacy of the allowance for loan losses and the need for additions thereto, with consideration given to the nature and volume of the portfolio, overall portfolio quality, review of specific problem loans, national, regional and local business and economic conditions that may affect the borrowers' ability to pay or the value of collateral securing the loans, and other relevant factors. The Company's allowance for loan losses increased to $5,248,000 at June 30, 1999, or 1.25% of total loans, compared with $4,689,000, or 1.21% of total loans, at December 31, 1998. While management believes the current allowance is adequate, changing economic and other conditions may require future adjustments to the allowance for loan losses. For the first six months of 1999, the annualized net charge-off ratio was 0.32% of average outstanding loans compared with 0.33% for the year of 1998 and 0.25% annualized for the first six months of 1998. The Company's net charge- offs for the first six months of 1999 were impacted by charge-offs of $103,000 taken during the first quarter on real estate loans totaling $1.6 million to a single borrower. The annualized charge-off ratio for the second quarter of 1999 was 0.18%. Provision for Loan Losses: The loan loss provision reflects management's ongoing assessment of the loan portfolio and is evaluated in light of risk factors mentioned above. The provision for loan losses was $1,191,000 for the six months ended June 30, 1999, compared to $480,000 for the same six month period in 1998. Investments and Securities The Company's securities portfolio is the second largest component of earning assets and provides a significant source of revenue for the Company. The table below presents the amortized cost and the fair value of investment securities for each of the dates indicated. Investment Securities
June 30, June 30, December 31, 1999 1998 1998 ------------------- ---------------------- ------------------- Amortized Fair Amortized Fair Amortized Fair Cost Value(1) Cost Value(1) Cost Value(1) ------------------- ---------------------- ------------------- (Dollars in thousands) Securities of U.S. Government Agencies......................... $195,712 $187,650 $ 75,294 $ 75,140 $156,351 $156,331 Mortgage-backed securities............ 240 233 2,324 2,359 2,107 2,117 Obligations of state and political subdivisions..................... 37,825 38,072 27,698 27,882 14,742 14,884 Other securities...................... 3,271 3,338 2,615 2,615 3,286 3,347 -------- -------- -------- -------- -------- -------- Total.......... $237,048 $229,293 $107,931 $107,996 $176,486 $176,679 ======== ======== ======== ======== ======== ========
(1) The fair value of the Company's financial instruments is based on quoted market prices where available. If quoted market prices are not available, fair values are based on market prices for comparable securities. Liquidity and Capital Resources Line of Credit. The Company maintains a revolving line of credit for up to $22 million with a correspondent bank. Interest accrues on all outstanding borrowings due under the line of credit at a variable rate equal to the average prime lending rate reported from time to time by the Wall Street Journal minus 1.25%, provided, however, the rate is not to exceed 7.75%. Interest is payable quarterly. The line of credit is effective through March 31, 2003 subject to an annual compliance review by the lender. No standby or unused commitment fees are payable by the Company under the line of credit. All borrowings under the line of credit are secured by a pledge of 100% of the Company's stock in its bank subsidiary. As of June 30, 1999, there were no borrowings outstanding under this line of credit. 14 The line of credit requires the Company's bank subsidiary to maintain, among other requirements, (1) a return on average assets for each calendar year equal to at least 1.0%, (2) a ratio of capital, as defined in the line of credit, to assets at levels acceptable to bank regulatory authorities but at least 7.0% at each calendar year end, (3) its classified assets as defined by regulatory authorities not in excess of 40% of its capital, (4) non-performing assets (as shown on its call report) in an amount not to exceed 2% of assets as of year end, (5) a loan loss reserve equal to the greater of 1% of total loans or 100% of non-performing assets, and (6) net charges to the reserve for loan losses at less than 1.0% of net loans during any calendar year. In addition, the line of credit requires that the parent Company's aggregate indebtedness not exceed 55.0% of the Company's tangible net worth through March 31, 2000, reducing 5% a year thereafter and that borrowings under the line of credit not exceed 50.0% of the tangible book value of its bank subsidiary stock pledged to secure such borrowings. At June 30, 1999 the Company was in compliance with these requirements. Trust Preferred Securities. On June 18, 1999 Ozark Capital sold to investors $17.3 million of 9% preferred securities. The proceeds were used to purchase an equal principal amount of subordinated debentures of Bank of the Ozarks, Inc. Subject to certain limitations, the preferred securities qualify as Tier 1 capital and are presented in the Consolidated Balance Sheets as "Guaranteed preferred beneficial interest in the Company's subordinated debentures." Both the preferred and the subordinated debentures will mature on June 18, 2029; however, they may be prepaid, subject to regulatory approval, prior to maturity at any time on or after June 18, 2004, or earlier upon certain changes in tax or investment company laws or regulatory capital requirements. The net proceeds from this offering were used to repay $12.5 million outstanding borrowings under the Company's revolving line of credit with the balance of the proceeds used for general corporate purposes including a $3.0 million capital investment in the Company's bank subsidiary. Growth and Expansion. During the second quarter the Company opened its new Harrison banking center which is its second office in Harrison. Construction began on a branch in Clinton, Arkansas with completion expected in the fourth quarter of 1999. The Company has received regulatory approval for a second branch location in North Little Rock and began construction in July 1999 with completion expected in early 2000. The Company has applied for regulatory approval for two additional branches in Little Rock and branches in Fort Smith and Yellville. Subject to regulatory approval, one of the Little Rock branches is expected to open in the last half of 1999 while the other three branches are expected to open during 2000. In the first six months of 1999 the Company spent approximately $2.2 million on acquiring, constructing and furnishing its new branch offices. The Company expects its capital expenditures to be approximately $3.3 million for the remainder of 1999. Bank Liquidity. Liquidity represents an institution's ability to provide funds to satisfy demands from depositors and borrowers by either converting assets into cash or accessing new or existing sources of incremental funds. Generally, the Company's bank subsidiary relies on customer deposits and loan repayments as their primary sources of funds. The Company has used these funds, together with FHLB and other borrowings, to make loans, acquire investment securities and other assets and to fund continuing operations. Deposit levels may be affected by a number of factors, including rates paid by competitors, general interest rate levels, returns available to customers on alternative investments and general economic conditions. Loan repayments are a relatively stable source of funds, but such loans generally are not readily convertible to cash. Accordingly, the Company may be required from time to time to rely on secondary sources of liquidity to meet loan and withdrawal demands or otherwise fund operations. Such sources include FHLB advances, federal funds lines of credit from correspondent banks and borrowings by the Company under its line of credit described above. At June 30, 1999, the Company's bank subsidiary had an aggregate of $40.3 million of unused blanket FHLB borrowing availability. During the quarter the bank subsidiary qualified to participate in the Qualified Loan Review program with the Federal Reserve Bank. This program allows the bank to pledge certain commercial loans as collateral for short-term borrowing. Additionally at June 30, 1999 the bank subsidiary had available substantial federal funds lines of credit. Management anticipates that the Company's bank subsidiary will continue to rely primarily on customer deposits and loan repayments to provide liquidity. Additionally, where necessary, the above described borrowings (including borrowings under the Company's line of credit) will be used to augment the Company's primary funding sources. Year 2000 Liquidity Needs. The Company may experience additional liquidity needs in connection with increased deposit withdrawals due to customer concerns over the Year 2000 issue. The Board of Directors has adopted a Contingency Funding Plan to guide management in handling unusual liquidity needs. In preparing for possible increased Year 2000 liquidity demands, management is taking several actions including: (1) modification of the pricing and terms of certain time deposit products to encourage depositors to accept maturities after year-end, (2) developing plans to place collateral with various sources of secondary liquidity to facilitate short-term borrowing, and (3) developing plans to have additional cash available at the branches and ATMs of the bank subsidiary during the latter part of the year. Although management believes these and other actions will prepare the Company for this potential liquidity need, there can be no assurance these steps will be adequate. 15 Capital Compliance. Bank regulatory authorities in the United States impose certain capital standards on all bank holding companies and banks. These capital standards require compliance with certain minimum "risk-based capital ratios" and a minimum "leverage ratio". The risk-based capital ratios consist of (1) Tier 1 capital (i.e. common stockholders' equity excluding goodwill, certain intangibles and net unrealized gains on available for sale securities, but including, subject to limitations, trust preferred securities and other qualifying items) to total risk-weighted assets and (2) total capital (Tier 1 capital plus Tier 2 capital which is the qualifying portion of the allowance for loan losses and the portion of trust preferred securities not counted as Tier 1 capital) to risk-weighted assets. The leverage ratio is measured as Tier 1 capital to adjusted quarterly average assets. The Company's risk-based and leverage capital ratios exceeded these minimum requirements at June 30, 1999, and December 31, 1998, and are presented below, followed by the capital ratios of the Company's bank subsidiary at June 30, 1999. Consolidated Capital Ratios
June 30, December 31, --------- ----------- 1999 1998 --------- ---------- (Dollars in thousands) Tier 1 capital: Stockholders' equity................................................. $ 42,860 $ 40,355 Allowed amount of guaranteed preferred beneficial interest in Company's subordinated debentures (trust preferred securities)... 14,234 - Less net unrealized gains on available for sale securities........... (157) (81) Less goodwill and certain intangible assets.......................... (3,411) (3,623) --------- --------- Total tier 1 capital................................. $ 53,526 $ 36,651 ========= ========= Tier 2 capital: Qualifying allowance for loan losses................................. 5,248 4,689 Remaining amount of guaranteed preferred beneficial interest in Company's subordinated debentures (trust preferred securities)... 3,016 - --------- --------- Total risk-based capital............................. $ 61,790 $ 41,340 ========= ========= Risk-weighted assets......................................................... $ 449,876 $ 404,879 ========= ========= Ratios at end of period: Leverage............................................................. 7.73% 6.21% Tier 1 risk-based capital............................................ 11.90 9.05 Total risk-based capital............................................. 13.73 10.21 Minimum ratio guidelines: Leverage............................................................. 3.00%(1) 3.00%(1) Tier 1 risk-based capital............................................ 4.00 4.00 Total risk-based capital............................................. 8.00 8.00
Capital Ratios of Bank Subsidiary
June 30, 1999 ------------------------ (Dollars in thousands) Stockholders' equity - Tier 1........................ $51,818 Leverage ratio....................................... 7.48% Risk-based capital ratios: Tier 1....................................... 11.52% Total capital................................ 12.69
(1) Regulatory authorities require institutions to operate at varying levels (ranging from 100-200 basis points) above a minimum leverage ratio of 3% depending upon capitalization classification. 16 Year 2000 The Year 2000 issue relates to the ability of the Company's computer and other systems with imbedded microchips to properly handle Year 2000 date sensitive data and the potential risk to the Company because of relationships with third parties (e.g. software and hardware vendors, loan customers, correspondent banks, utility companies and others) who do not adequately address the Year 2000 issue. Failure in any of these areas could result in a system failure or miscalculations causing disruptions of operations, including, among other things, a temporary inability to process transactions or engage in normal business activities. In late 1997 the Company established a Year 2000 Project Committee to evaluate and assess the Company's exposure to this issue. This Committee has implemented an approach to the Year 2000 issue consisting of four phases. These phases include awareness, assessment, renovation and testing. The awareness phase consisted of defining the Year 2000 problem, developing the resources necessary to perform compliance work, establishing a Year 2000 program committee and program coordinator and developing an overall strategy that encompasses in-house systems, service bureaus, vendors, auditors, customers and suppliers (including correspondents). This phase has been completed. The assessment phase consists of evaluating the size and complexity of the problem and detailing the magnitude of the effort necessary to address the Year 2000 issue. The objective of this phase is to identify all hardware, software, networks, automated teller machines, other various processing platforms, and customer and vendor interdependencies affected by the Year 2000 date change. The assessment phase goes beyond the Company's information systems and includes environmental systems that are dependent on embedded microchips, such as security systems, elevators, sprinkler systems, alarms and vaults. The assessment phase is substantially completed, but is considered an ongoing process for the Company. The renovation phase includes the remediation of any systems identified in the awareness phase as not Year 2000 compliant. The replacement of a proof/capture system was expedited due to lack of Year 2000 compliance earlier in 1998. Also the need for minor upgrades to several proof machines were identified and have been completed. Environmental systems including vault doors, security systems, elevators, sprinkler systems and alarms have been evaluated and assurances from vendors have been received regarding their Year 2000 compliance. The renovation phase is substantially complete with all identified problem areas having been addressed. The Company has completed its testing phase with the primary focus having been on the core software that runs basic bank services including the following applications: checking, savings, time deposits, individual retirement accounts, loans, safe deposit box and general ledger accounting. Complete testing of mission critical systems was substantially complete as of December 31, 1998. Further testing with mission critical vendors and other significant third party vendors was completed by June 30, 1999. The Company has not identified any problems with any of its systems that would have a material adverse impact upon its operations. The Company incurred expenses throughout 1996, 1997, 1998 and in the first half of 1999 related to this project and will continue to incur expenses over the next six months. The Company currently estimates that the cost to remediate both its Year 2000 hardware and software issues to be less than $130,000 with approximately 90% of the costs having already been expended through June 30, 1999. A significant portion of total Year 2000 project expenses is represented by existing staff that have been redeployed to this project. The Company does not believe that the redeployment of existing staff will have a material adverse effect on its business, results of operations or financial position nor have any projects under consideration by the Company been deferred because of Year 2000. Incremental expenses related to the Year 2000 project are not expected to materially impact operating results in any one period. The Company expects to maintain cash balances within its branch network in excess of normal levels during the last four months of 1999 and early 2000. These cash balances will result in lost interest income to the Company. In addition the Company expects to incur additional cost in shipping such cash balances to and from its offices and may also incur additional security cost during this time period. The amount of lost interest and additional cost cannot be determined at this time, but the Company does not expect these costs to materially impact its financial results. The impact of Year 2000 issues on the Company will depend not only on corrective actions that the Company takes, but also on the way in which Year 2000 issues are addressed by governmental agencies, businesses and other third parties that provide services or data to, or receive services or data from, the Company, or whose financial condition or operational capability is important to the Company. To reduce this exposure, the Company has an ongoing process of identifying and contacting mission critical third party vendors and other significant third parties to determine their Year 2000 plans and target dates. Notwithstanding the Company's efforts, there can be no assurance that mission critical third party vendors or other significant third parties will adequately address their Year 2000 issues. 17 The Company has developed contingency plans for implementation in the event that mission critical third party vendors or other significant third parties fail to adequately address Year 2000 issues. Such plans principally involve identifying alternate vendors or internal remediation. There can be no assurance that any such plans will fully mitigate any failures or problems. Furthermore, there may be certain mission critical third parties, such as utilities or telecommunication companies, where alternative arrangements or sources are limited or unavailable. The most reasonably likely worst case scenario would be that the Company may experience disruption in its operations if any of these mission critical third parties experienced system failure. The Company's credit risk associated with borrowers may increase to the extent borrowers fail to adequately address Year 2000 issues. As a result there may be increases in the Company's problem loans and credit losses in future years. The Company is making ongoing efforts to assess the risks associated with loan customers, large depositors and significant employers in the Company's service areas, however, it is not possible to quantify the potential impact of such risks at this time. As remediated and tested systems and other new systems are brought into operation, the Company will need to take steps to avoid the re-introduction of Year 2000 related problems into its systems. This is an ongoing process for the Company because normal operations and other considerations may require that modifications continue to be made to its systems in 1999. To some extent, therefore, all four phases of the Company's project will need to continue throughout 1999 and beyond. The forward-looking statements contained herein with regard to the timing and overall cost estimates of the Company's efforts to address the Year 2000 problem are based upon the Company's experience thus far in this effort. Should the Company encounter unforeseen difficulties either in the continuing review of its computerized systems, their ultimate remediation, or the response of parties with which it does business or from which it obtains services, the actual results could vary significantly from the estimates contained in these forward- looking statements. Forward-Looking Information This Management's Discussion and Analysis of Financial Condition and Results of Operations, other filings made by the Company with the Securities and Exchange Commission and other oral and written statements or reports by the Company and its management, include certain forward-looking statements including, without limitation, statements with respect to anticipated future operating and financial performance, growth opportunities and growth rates, acquisition opportunities and other similar forecasts and statements of expectation. Words such as "anticipate," "believe," "estimate," "expect," "intend" and similar expressions, as they relate to the Company or its management, identify forward-looking statements. Forward-looking statements made by the Company and its management are based on estimates, projections, beliefs and assumptions of management at the time of such statements and are not guarantees of future performance. The Company disclaims any obligation to update or revise any forward-looking statement based on the occurrence of future events, the receipt of new information, or otherwise. Actual future performance, outcomes and results may differ materially from those expressed in forward-looking statements made by the Company and its management due to certain risks, uncertainties and assumptions. Certain factors that may affect operating results of the Company include, but are not limited to, the following: (1) potential delays or other problems in implementing the Company's growth and expansion strategy; (2) the ability to attract new deposits and loans; (3) interest rate fluctuations; (4) competitive factors and pricing pressures; (5) general economic conditions; and (6) changes in legal and regulatory requirements, as well as, other factors described in this and other Company reports and statements. Should one or more of the foregoing risks materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described in the forward-looking statements. (The remainder of this page intentionally left blank) 18 Selected and Supplemental Financial Data The Company is also providing the selected and supplemental financial data in the tables below. The following table sets forth selected consolidated financial data concerning the Company for the three and six month periods ended June 30, 1999 and 1998 and is qualified in its entirety by the consolidated financial statements, including the notes thereto, included elsewhere herein. Selected Consolidated Financial Data (Dollars in thousands, except per share amounts) Unaudited
Three Months Ended Six Months Ended June 30, June 30, ------------------------------ -------------------------------- 1999 1998 1999 1998 -------------- -------------- -------------- --------------- Income statement data: Net interest income............................................... $ 5,887 $ 4,430 $ 11,196 $ 8,586 Provision for loan losses......................................... 580 255 1,191 480 Non-interest income............................................... 1,303 1,152 2,572 2,246 Non-interest expense.............................................. 4,241 3,329 8,009 6,253 Income tax expense................................................ 658 611 1,331 1,338 Distribution on trust preferred securities........................ 52 - 52 - Net income........................................................ 1,659 1,387 3,185 2,761 Per common share data: Earnings - diluted................................................ $ 0.44 $ 0.36 $ 0.84 $ 0.72 Book value........................................................ 11.34 10.02 11.34 10.02 Fully diluted shares outstanding (thousands)...................... 3,789 3,834 3,792 3,828 End of period shares outstanding (thousands) ..................... 3,780 3,780 3,780 3,780 Balance sheet data at period end: Total assets...................................................... $708,494 $473,728 $708,494 $473,728 Total loans....................................................... 419,410 321,719 419,410 321,719 Allowance for loan losses......................................... 5,248 3,853 5,248 3,853 Total investment securities....................................... 237,303 107,969 237,303 107,969 Total deposits.................................................... 587,296 380,270 587,296 380,270 FHLB advances & fed funds purchased............................... 56,490 40,038 56,490 40,038 Notes payable..................................................... 108 13,072 108 13,072 Total stockholders' equity........................................ 42,860 37,882 42,860 37,882 Loan to deposit ratio............................................. 71.41% 84.60% 71.41% 84.60% Performance ratios: Return on average assets*......................................... 0.96% 1.25% 0.96% 1.35% Return on average stockholders' equity*........................... 15.80 14.92 15.48 15.14 Net interest margin - FTE*........................................ 3.81 4.50 3.79 4.64 Overhead ratio* .................................................... 2.45 3.01 2.42 3.05 Efficiency ratio.................................................. 57.06 58.00 56.39 56.57 Asset quality ratios: Net charge-offs as a percentage of average total loans* .......... 0.18% 0.29% 0.32% 0.25% Nonperforming loans to total loans................................ 1.01 0.55 1.01 0.55 Nonperforming assets to total assets.............................. 0.70 0.45 0.70 0.45 Allowance for loan losses as a percentage of: Total loans....................................................... 1.25% 1.20% 1.25% 1.20% Nonperforming loans............................................... 123.54 217.07 123.54 217.07 Capital ratios at period end: Leverage capital ratio............................................ 7.73% 8.09% 7.73% 8.09% Tier 1 risk-based capital......................................... 11.90 10.95 11.90 10.95 Total risk-based capital.......................................... 13.73 12.13 13.73 12.13 *Annualized based on actual days
19 Bank of the Ozarks, Inc. Supplemental Quarterly Financial Data (Dollars in thousands, except per share amounts) Unaudited 9/30/97 12/31/97 3/31/98 6/30/98 9/30/98 12/31/98 3/31/99 6/30/99 -------- --------- -------- -------- -------- --------- -------- -------- Earnings Summary: - ----------------- Net interest income $ 3,703 $ 4,251 $ 4,157 $ 4,430 $ 4,641 $ 5,136 $ 5,309 $ 5,887 Federal tax equivalent adjustment 32 56 72 158 156 56 193 242 -------- --------- -------- -------- -------- --------- -------- -------- Net interest margin - FTE 3,735 4,307 4,229 4,588 4,797 5,192 5,502 6,129 Loan loss provision (150) (465) (225) (255) (742) (804) (611) (580) Non-interest income 662 880 1,094 1,152 1,333 1,452 1,269 1,303 Non-interest expense (2,316) (2,588) (2,924) (3,329) (3,267) (3,599) (3,768) (4,241) -------- --------- -------- -------- -------- --------- -------- -------- Pretax income - FTE 1,931 2,134 2,174 2,156 2,121 2,241 2,392 2,611 FTE adjustment (32) (56) (72) (158) (156) (56) (193) (242) Provision for taxes (698) (709) (728) (611) (544) (738) (673) (658) Distribution on trust preferred securities - - - - - - - (52) -------- --------- -------- -------- -------- --------- -------- -------- Net income $ 1,201 $ 1,369 $ 1,374 $ 1,387 $ 1,421 $ 1,447 $ 1,526 $ 1,659 ======== ========= ======== ======== ======== ========= ======== ======== Earnings per share - diluted $ 0.34 $ 0.36 $ 0.36 $ 0.36 $ 0.37 $ 0.38 $ 0.40 $ 0.44 Non-interest Income Detail: - --------------------------- Trust income $ 39 $ 98 $ 78 $ 99 $ 62 $ 96 $ 128 $ 115 Service charges on deposit accounts 242 263 281 326 366 399 502 599 Mortgage lending income 156 199 395 423 570 748 449 351 Gain (loss) on sale of assets 30 138 88 12 6 6 (5) (5) Security gains - - 51 74 130 - 25 50 Other 195 182 201 218 199 203 170 193 -------- --------- -------- -------- -------- --------- -------- -------- Total non-interest income $ 662 $ 880 $ 1,094 $ 1,152 $ 1,333 $ 1,452 $ 1,269 $ 1,303 Non-interest Expense Detail: - ---------------------------- Salaries and employee benefits $ 1,301 $ 1,502 $ 1,677 $ 1,955 $ 1,651 $ 1,913 $ 2,000 $ 2,322 Net occupancy expense 341 386 426 453 529 553 636 619 Other operating expenses 674 700 821 921 1,087 1,133 1,132 1,300 -------- --------- -------- -------- -------- --------- -------- -------- Total non-interest expense $ 2,316 $ 2,588 $ 2,924 $ 3,329 $ 3,267 $ 3,599 $ 3,768 $ 4,241 Allowance for Loan Losses: - -------------------------- Balance beginning of period $ 3,462 $ 3,535 $ 3,737 $ 3,822 $ 3,853 $ 4,392 $ 4,689 $ 4,850 Net charge offs (77) (263) (140) (224) (203) (507) (450) (182) Loan loss provision 150 465 225 255 742 804 611 580 -------- --------- -------- -------- -------- --------- -------- -------- Balance at end of period $ 3,535 $ 3,737 $ 3,822 $ 3,853 $ 4,392 $ 4,689 $ 4,850 $ 5,248 Selected Ratios: - ---------------- Net interest margin - FTE 4.82% 5.27% 4.83% 4.50% 3.93% 3.77% 3.77% 3.81% Overhead expense ratio* 2.78 2.95 3.10 3.01 2.46 2.41 2.38 2.45 Efficiency ratio 52.67 49.89 54.93 58.00 53.30 54.17 55.65 57.06 Non-performing loans to total loans 0.75 0.25 0.54 0.55 0.65 0.70 1.04 1.01 Non-performing assets to total assets 0.62 0.24 0.40 0.45 0.45 0.50 0.75 0.70 *Annualized
20 PART I (continued) Item 3. Quantitative and Qualitative Disclosures About Market Risk The Company's interest rate risk management is the responsibility of the Asset/Liability Management Committee, which reports to the Board of Directors. This committee establishes policies that monitor and coordinate the Company's sources, uses and pricing of funds. The committee is also involved with management in the Company's planning and budgeting process. The Company regularly reviews its exposure to changes in interest rates. Among the factors considered are changes in the mix of earning assets and interest bearing liabilities, interest rate spreads and repricing periods. Typically, the committee reviews on at least a quarterly basis the bank subsidiary's relative ratio of rate sensitive assets to rate sensitive liabilities and the related cumulative gap for different time periods. Additionally the committee and management review other alternative interest rate risk measures and models in assessing the Company's interest rate sensitivity. Using a simple GAP analysis as shown in the following table, at June 30, 1999, the cumulative ratios of rate sensitive assets to rate sensitive liabilities at six months and one year, respectively, were 49.9% and 50.7%. A financial institution is considered to be liability sensitive, or as having a negative GAP, when the amount of its interest bearing liabilities maturing or repricing within a given time period exceeds the amount of its interest earning assets also maturing or repricing within that time period. Conversely, an institution is considered to be asset sensitive, or as having a positive GAP, when the amount of its interest bearing liabilities maturing and repricing is less than the amount of its interest earning assets also maturing or repricing during the same period. Generally, in a falling interest rate environment, a negative GAP should result in an increase in net interest income, and in a rising interest rate environment this negative GAP should adversely affect net interest income. The converse would be true for a positive GAP. Due to inherent limitations in any static GAP analysis and since conditions change on a daily basis, these conclusions may not reflect future results.
Rate Sensitive Assets and Liabilities June 30, 1999 Rate Rate Cumulative Cumulative Sensitive Sensitive Period Cumulative Gap to RSA(1) to Assets Liabilities Gap Gap Total RSA(1) RSL(2) ------------ ------------- -------------- --------------- --------------- --------------- (Dollars in thousands) Floating rate................. $ 39,208 $ 54,973 $(15,765) $ (15,765) (2.40)% 71.32% Fixed rate repricing in: 1 month............... 43,174 86,140 (42,966) (58,731) (8.94) 58.38 2 month............... 22,617 67,902 (45,285) (104,016) (15.83) 50.23 3 month............... 21,247 45,092 (23,845) (127,861) (19.46) 49.68 4 month............... 22,365 33,599 (11,234) (139,095) (21.17) 51.65 5 month............... 15,833 41,512 (25,679) (164,774) (25.07) 49.95 6 month............... 16,051 32,419 (16,368) (181,142) (27.56) 49.91 6 months - 1 year..... 67,378 127,303 (59,925) (241,067) (36.68) 50.70 1 - 2 years........... 81,039 46,516 34,523 (206,544) (31.43) 61.43 2 - 3 years........... 27,451 15,730 11,721 (194,823) (29.65) 64.65 3 - 4 years........... 38,037 19,759 18,278 (176,545) (26.86) 69.08 4 - 5 years........... 20,326 9,624 10,702 (165,843) (25.24) 71.43 Over 5 years.......... 242,460 26,285 216,175 50,332 7.66 108.29 ------------ ------------- -------------- Total........... $657,186 $606,854 $ 50,332 ============ ============= ==============
(1) Rate Sensitive Assets (2) Rate Sensitive Liabilities The data used in the table above is based on contractual repricing dates for variable or adjustable rate instruments except for interest bearing Now accounts and regular savings accounts which are reflected as repricing prorata during the first four years. Other financial instruments are scheduled on their contractual maturity. This simple GAP analysis gives no consideration to a number of factors which can have a material impact on the Company's interest rate risk position. Such factors include call features on certain assets and liabilities, prepayments, interest rate floors and caps on various assets and liabilities, the current interest rates on assets and liabilities to be repriced in each period, and the relative changes in interest rates on different types of assets and liabilities. 21 PART II Other Information Item 1. Legal Proceedings ----------------- Not Applicable Item 2. Changes in Securities --------------------- Not Applicable Item 3. Defaults Upon Senior Securities ------------------------------- Not Applicable Item 4. Submission of Matters to a Vote of Security Holders --------------------------------------------------- The 1999 Annual Meeting of Stockholders of the Company was held on April 20, 1999. The following item of business was presented to the stockholders: Election of Directors --------------------- The twelve (12) directors were elected as proposed in the Proxy Statement dated March 12, 1999, under the caption "Election of Directors: Total Vote For Total Vote Withheld Each Director From Each Director -------------- ------------------- George Gleason 3,246,645 13,172 Mark Ross 3,246,645 13,172 Linda Gleason 3,246,645 13,172 Roger Collins 3,246,645 13,172 Jerry Davis 3,246,645 13,172 C. E. Dougan 3,246,645 13,172 Robert East 3,246,645 13,172 Porter Hillard 3,246,645 13,172 Henry Mariani 3,246,645 13,172 James Patridge 3,246,645 13,172 R. L. Qualls 3,246,645 13,172 Kennith Smith 3,246,645 13,172 Item 5. Other Information ----------------- Not Applicable Item 6. Exhibits and Reports on Form 8-K -------------------------------- (a). Exhibits Reference is made to the Exhibit Index contained at the end of this report. (b). Reports on Form 8-K Not Applicable 22 SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. Bank of the Ozarks, Inc. DATE: August 11, 1999 /s/ Paul E. Moore ------------------------------- Paul E. Moore Chief Financial Officer (Chief Accounting Officer) 23 Bank of the Ozarks, Inc. Exhibit Index Exhibit Number - ------ 3 (a) Amended and Restated Articles of Incorporation of the Company, effective May 22, 1997, (previously filed as Exhibit 3.1 to the Company's Form S-1 Registration Statement (File No. 333-27641) and incorporated herein by reference). 3 (b) Amended and Restated Bylaws of the Company, dated as of March 13, 1997, (previously filed as Exhibit 3.2 to the Company's Form S-1 Registration Statement (File No. 333-27641) and incorporated herein by reference). 4.1 Amended and Restated Trust Agreement, dated June 18, 1999, relating to the issuance of Ozark Capital Trust's $17,250,000 of 9.0% Cumulative Trust Preferred Securities (attached). 4.2 9.0% Cumulative Trust Preferred Securities Certificate (included as an exhibit to Item 4.1). 4.3 Agreement as to Expenses and Liabilities (included as an exhibit to Item 4.1). 4.4 Subordianted Indenture, dated June 18, 1999, relating to the issuance of the Company's $17,783,510 of 9.0% Subordinated Debentures (attached). 4.5 Form of 9.0% Subordinated Debenture (included as an exhibit to Item 4.4). 4.6 Form of Preferred Securities Guarantee Agreement, dated June 18, 1999 (attached). 10 Modification dated June 10, 1999 of loan agreement dated March 25, 1998 between the Company and Union Planters Bank, N.A. (attached). 27 Financial Data Schedule for the period ended June 30, 1999 (attached). 24 EX-4.1 2 AMENDED AND RESTATED TRUST AGREEMENT EXHIBIT 4.1 OZARK CAPITAL TRUST AMENDED AND RESTATED TRUST AGREEMENT AMONG BANK OF THE OZARKS, INC., AS DEPOSITOR FMB TRUST COMPANY, NATIONAL ASSOCIATION, AS PROPERTY TRUSTEE FIRST OMNI BANK, NATIONAL ASSOCIATION, AS DELAWARE TRUSTEE AND THE ADMINISTRATIVE TRUSTEES NAMED HEREIN DATED AS OF June 18, 1999 TABLE OF CONTENTS Page ARTICLE I DEFINED TERMS Section 1.01. Definitions................................................... 1 ARTICLE II ESTABLISHMENT OF THE TRUST Section 2.01. Name..........................................................10 Section 2.02. Office Of The Delaware Trustee; Principal Place Of Business...10 Section 2.03. Initial Contribution Of Trust Property; Organizational Expenses......................................................10 Section 2.04. Issuance Of The Preferred Securities..........................10 Section 2.05. Issuance Of The Common Securities; Subscription And Purchase Of Subordinated Debentures....................................10 Section 2.06. Declaration Of Trust..........................................11 Section 2.07. Authorization To Enter Into Certain Transactions..............11 Section 2.08. Assets Of Trust...............................................15 Section 2.09. Title to Trust Property.......................................15 ARTICLE III PAYMENT ACCOUNT Section 3.01. Payment Account...............................................16 ARTICLE IV DISTRIBUTIONS; REDEMPTION Section 4.01. Distributions.................................................16 Section 4.02. Redemption....................................................17 Section 4.03. Subordination Of Common Securities............................19 Section 4.04. Payment Procedures............................................20 Section 4.05. Tax Returns And Reports.......................................20 Section 4.06. Payment Of Taxes, Duties, Etc. Of The Trust...................21 Section 4.07. Payments Under Indenture......................................21 ARTICLE V TRUST SECURITIES CERTIFICATES Section 5.01. Initial Ownership.............................................21 Section 5.02. The Trust Securities Certificates.............................21 Section 5.03. Execution And Delivery Of Trust Securities Certificates.......21 Section 5.04. Registration Of Transfer And Exchange Of Preferred Securities Certificates.......................................21 Section 5.05. Mutilated, Destroyed, Lost Or Stolen Trust Securities Certificates..................................................22 Section 5.06. Persons Deemed Securityholders................................23 Section 5.07. Access To List Of Securityholders' Names And Addresses........23 Section 5.08. Maintenance Of Office Or Agency...............................23 Section 5.09. Appointment Of Paying Agent...................................24 Section 5.10. Ownership Of Common Securities By Depositor...................24 Section 5.11. Book-Entry Preferred Securities Certificates; Common Securities Certificate........................................25 Section 5.12. Notices To Clearing Agency....................................25 Section 5.13. Definitive Preferred Securities Certificates..................26 Section 5.14. Rights Of Securityholders.....................................26 ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING Section 6.01. Limitations On Voting Rights..................................27 Section 6.02. Notice Of Meetings............................................28 Section 6.03. Meetings Of Holders Of Preferred Securities...................28 Section 6.04. Voting Rights.................................................29 Section 6.05. Proxies, Etc..................................................29 Section 6.06. Securityholder Action By Written Consent......................29 Section 6.07. Record Date For Voting And Other Purposes.....................29 Section 6.08. Acts Of Securityholders.......................................29 Section 6.09. Inspection Of Records.........................................30 ARTICLE VII REPRESENTATIONS AND WARRANTIES Section 7.01. Representations And Warranties Of The Trust Company And The Property Trustee..........................................30 Section 7.02. Representations And Warranties Of The Delaware Bank And The Delaware Trustee..........................................32 Section 7.03. Representation And Warranties Of Depositor....................33 ii ARTICLE VIII THE TRUSTEES Section 8.01. Certain Duties And Responsibilities...........................33 Section 8.02. Certain Notices...............................................35 Section 8.03. Certain Rights Of Property Trustee............................35 Section 8.04. Not Responsible For Recitals Or Issuance Of Securities........38 Section 8.05. May Hold Securities...........................................38 Section 8.06. Compensation; Indemnity; Fees.................................38 Section 8.07. Corporate Property Trustee Required; Eligibility Of Trustees..39 Section 8.08. Conflicting Interests.........................................40 Section 8.09. Co-Trustees And Separate Trustee..............................40 Section 8.10. Resignation And Removal; Appointment Of Successor.............41 Section 8.11. Acceptance Of Appointment By Successor........................43 Section 8.12. Merger, Conversion, Consolidation Or Succession To Business...43 Section 8.13. Preferential Collection Of Claims Against Depositor Or Trust..43 Section 8.14. Reports By Property Trustee...................................44 Section 8.15. Reports To The Property Trustee...............................44 Section 8.16. Evidence Of Compliance With Conditions Precedent..............44 Section 8.17. Number Of Trustees............................................44 Section 8.18. Delegation Of Power...........................................45 Section 8.19. Voting........................................................45 ARTICLE IX DISSOLUTION, LIQUIDATION AND MERGER Section 9.01. Dissolution Upon Expiration Date..............................45 Section 9.02. Early Dissolution.............................................45 Section 9.03. Termination...................................................46 Section 9.04. Liquidation...................................................46 Section 9.05. Mergers, Consolidations, Amalgamations Or Replacements Of The Trust..................................................48 ARTICLE X MISCELLANEOUS PROVISIONS Section 10.01. Limitation Of Rights Of Securityholders.......................49 Section 10.02. Amendment.....................................................49 Section 10.03. Separability..................................................50 Section 10.04. Governing Law.................................................50 Section 10.05. Payments Due On Non-Business Day..............................51 Section 10.06. Successors....................................................51 iii Section 10.07. Headings......................................................51 Section 10.08. Reports, Notices And Demands..................................51 Section 10.09. Agreement Not To Petition.....................................52 Section 10.10. Trust Indenture Act; Conflict With Trust Indenture Act........52 Section 10.11. Acceptance Of Terms Of Trust Agreement, Guarantee And Indenture.....................................................53 Section 10.12. Counterparts..................................................53 EXHIBITS A - Certificate of Trust B - Certificate Depository Agreement C - Common Securities Certificates D - Agreement as to Expenses and Liabilities E - Preferred Securities Certificates iv An extra section break has been inserted above this paragraph. Do not delete this section break if you plan to add text after the Table of Contents/Authorities. Deleting this break will cause Table of Contents/Authorities headers and footers to appear on any pages following the Table of Contents/Authorities. CROSS REFERENCE TABLE Section of Trust Indenture Act of 1939, Section of Amended and Restated Trust as Amended Agreement 310(a) 8.07; 2.07 310(b) 8.08 310(c) Inapplicable 311(a) 8.13 311(b) 8.13 312(a) 5.07 312(b) 5.07 312(c) 5.07 313(a) 8.14(a) 313(b) 8.14(b) 313(c) 8.14(b) 313(d) 8.14(c) 314(a) 8.15 314(b) Inapplicable 314(c) 8.16 314(d) Inapplicable 314(e) 1.01, 8.16 315(a) 8.01(a); 8.03(a) 315(b) 8.02; 10.08 315(c) 8.01(a) 315(d) 8.01; 8.03 315(e) Inapplicable 316(a) 6.01(b) 316(b) Inapplicable 316(c) 6.07 317(a) 8.13 317(b) 5.09 318(a) 10.10 318(b) 10.10 318(c) 10.10 Note: This Cross Reference Table does not constitute part of this Agreement and shall not affect the interpretation of any of its terms or provisions. AMENDED AND RESTATED TRUST AGREEMENT, dated as of June 18, 1999, among (i) Bank of the Ozarks, Inc., an Arkansas corporation (including any successors or assigns, the "Depositor"), (ii) FMB Trust Company, National Association, a national banking association, duly organized and existing under the laws of the United States, as property trustee (the "Property Trustee" and, in its separate corporate capacity and not in its capacity as Property Trustee, the "Trust Company"), (iii) First Omni Bank, National Association, a national banking association, with its principal place of business located in the State of Delaware, as Delaware trustee (the "Delaware Trustee," and, to the extent expressly provided herein, in its separate corporate capacity and not in its capacity as Delaware Trustee, the "Delaware Bank"), (iv) George Gleason, an individual, Paul Moore, an individual, and Mark Ross, an individual, each of whose address is c/o Bank of the Ozarks, Inc. (each an "Administrative Trustee" and collectively the "Administrative Trustees") (the Property Trustee, the Delaware Trustee and the Administrative Trustees referred to collectively as the "Trustees") and (v) the several Holders, as hereinafter defined. WITNESSETH: WHEREAS, the Depositor, the Delaware Trustee and Paul Moore have heretofore duly declared and formed OZARK CAPITAL TRUST, a business trust (the "Trust"), pursuant to the Delaware Business Trust Act by the entering into of that certain Trust Agreement, dated as of May 14, 1999 (the "Original Trust Agreement"), and by the execution and filing on May 14, 1999, with the Secretary of State of the State of Delaware of the Certificate of Trust, the form of which is attached as EXHIBIT A; and - --------- WHEREAS, the Depositor, the Delaware Trustee and Paul Moore desire to amend and restate the Original Trust Agreement in its entirety as set forth herein to provide for, among other things, (i) the issuance and sale of the Common Securities (as defined below) by the Trust to the Depositor, (ii) the issuance and sale of the Preferred Securities (as defined below) by the Trust pursuant to the Underwriting Agreement, (iii) the acquisition by the Trust from the Depositor of all of the right, title and interest in the Subordinated Debentures (as defined below), (iv) the appointment of the Property Trustee, and (v) the appointment of the Administrative Trustees; NOW THEREFORE, in consideration of the agreements and obligations set forth herein and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, each party, for the benefit of the other parties and for the benefit of the Securityholders, hereby amends and restates the Original Trust Agreement in its entirety and agrees as follows: ARTICLE I DEFINED TERMS Section 1.01. Definitions. For all purposes of this Trust Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) the terms defined in this Article have the meanings assigned to them in this Article and include the plural as well as the singular; (b) all other terms used herein that are defined in the Trust Indenture Act, either directly or by reference therein, have the meanings assigned to them therein; (c) unless the context otherwise requires, any reference to an "Article" or a "Section" refers to an Article or a Section, as the case may be, of this Trust Agreement; and (d) the words "herein", "hereof" and "hereunder" and other words of similar import refer to this Trust Agreement as a whole and not to any particular Article, Section or other subdivision. "Accelerated Maturity Date" has the meaning set forth in Section 1.01 of the Indenture. "Act" has the meaning specified in Section 6.08. "Additional Amount" means, with respect to Trust Securities of a given Liquidation Amount and a given period, the amount of additional interest accrued on interest in arrears and paid by the Depositor on a Like Amount of Subordinated Debentures for such period. "Additional Sums" has the meaning specified in Section 2.05 of the Indenture. "Administrative Trustee" means each of George Gleason, Paul Moore and Mark Ross, solely in each such person's capacity as Administrative Trustee of the Trust continued hereunder and not in such person's individual capacity, or such Administrative Trustee's successor in interest in such capacity, or any successor Administrative Trustee appointed as herein provided. "Affiliate" of any specified Person means any other Person directly or indirectly controlling or controlled by or under direct or indirect common control with such specified Person; provided, however, that an Affiliate of the -------- ------- Depositor shall not be deemed to include the Trust. For the purposes of this definition, "control" when used with respect to any specified Person means the power to direct the management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms "controlling" and "controlled" have meanings correlative to the foregoing. "Bankruptcy Event" means, with respect to any Person: (a) the entry of a decree or order by a court having jurisdiction in the premises adjudging such Person a bankrupt or insolvent, or approving as properly filed a petition seeking liquidation or reorganization of or in respect of such Person under the United States Bankruptcy Code or any other similar applicable federal or state law, and the continuance of any such decree or order unvacated and unstayed for a period of 90 days; or the commencement of an involuntary case under the United States Bankruptcy Code in respect of such Person, which shall continue undismissed for a period of 90 days or entry of an order for relief in such case; or the entry of a decree or order of a court having jurisdiction in the 2 premises for the appointment on the ground of insolvency or bankruptcy of a receiver, custodian, liquidator, trustee or assignee in bankruptcy or insolvency of such Person or of its property, or for the winding up or liquidation of its affairs, and such decree or order shall have remained in force unvacated and unstayed for a period of 90 days; or (b)(i) the commencement by such Person of a voluntary case or proceeding under United States bankruptcy laws, as now or hereafter constituted, or any other applicable Federal, state or foreign bankruptcy, insolvency or other similar law or of any other case or proceeding to be adjudicated a bankrupt or insolvent; or (ii) the consent by such Person to the entry of a decree or order for relief in respect of such Person in an involuntary case or proceeding under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law or to the commencement of any bankruptcy or insolvency case or proceeding against such Person; or (iii) the filing by such Person of a petition or answer or consent seeking reorganization or relief under United States bankruptcy laws, as now or hereafter constituted, or any other applicable federal, state or foreign bankruptcy, insolvency or other similar law; or (iv) the consent by such Person to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee, sequestrator or similar official of such Person or any substantial part of such Person's property or assets, or the making by such Person of an assignment for the benefit of creditors; or (v) the admission by such Person in writing of its inability to pay its debts generally as they become due; or (vi) the taking of corporate action by such Person in furtherance of any such actions. "Bankruptcy Laws" has the meaning specified in Section 10.09. "Book-Entry Preferred Securities Certificates" means Preferred Securities Certificates issued in global, fully registered form to the Clearing Agency as described in Section 5.11. "Business Day" means a day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the State of Delaware are authorized or required by law or executive order to remain closed, or (c) a day on which the Property Trustee's Corporate Trust Office or the corporate trust office of the Debenture Trustee is closed for business. "Certificate Depository Agreement" means the agreement among the Trust, the Depositor and The Depository Trust Company, as the initial Clearing Agency, dated as of the Closing Date, relating to the Preferred Securities Certificates, substantially in the form attached as EXHIBIT B, as the same may be amended and --------- supplemented from time to time. "Certificate of Trust" means, as stated in the recitals to this Trust Agreement, the certificate of trust filed with the Secretary of State of the State of Delaware with respect to the Trust, in the form attached as EXHIBIT A, --------- as the same may be amended or restated from time to time. 3 "Clearing Agency" means an organization registered as a "clearing agency" pursuant to Section 17A of the Exchange Act. The Depository Trust Company will be the initial Clearing Agency. "Clearing Agency Participant" means a broker, dealer, bank, other financial institution or other Person for whom from time to time a Clearing Agency effects book-entry transfers and pledges of securities deposited with the Clearing Agency. "Closing Date" means the date of execution and delivery of this Trust Agreement. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Trust Agreement such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Security" means a common undivided beneficial interest in the assets of the Trust, having a Liquidation Amount of $10.00 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Common Securities Certificate" means a certificate evidencing ownership of Common Securities, substantially in the form attached as EXHIBIT C. --------- "Corporate Trust Office" means the principal corporate trust office of the Property Trustee at which at any particular time its corporate trust business shall be administered, which office at the date hereof is located at 25 Charles Street, Baltimore, MD 21201, Attention: Corporate Trust Services. "Debenture Event of Default" means an "Event of Default" as defined in the Indenture. "Debenture Redemption Date" means, with respect to any Subordinated Debentures to be redeemed under the Indenture, the date fixed for redemption thereof under the Indenture. "Debenture Trustee" means FMB Trust Company, National Association, a trust company organized under the laws of the United States and any successor thereto, as trustee under the Indenture. "Definitive Preferred Securities Certificates" means Preferred Securities Certificates issued in certificated, fully registered form as provided in Section 5.13. "Delaware Bank" has the meaning specified in the preamble to this Trust Agreement. "Delaware Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12 Del. C. Section 3801, et. seq. as it may be amended from time to time. "Delaware Trustee" means the corporation identified as the "Delaware Trustee" in the preamble to this Trust Agreement solely in its capacity as Delaware Trustee of the Trust 4 continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor Delaware Trustee appointed as herein provided. "Depositor" has the meaning specified in the preamble to this Trust Agreement. "Distribution Date" has the meaning specified in Section 4.01(a). "Distributions" means amounts payable in respect of the Trust Securities as provided in Section 4.01. "Event of Default" means any one of the following events that shall have occurred and be continuing (whatever the reason for such Event of Default and whether it shall 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): (a) the occurrence of a Debenture Event of Default; or (b) default by the Trust in the payment of any Distribution when it becomes due and payable, and continuation of such default for a period of 30 days; or (c) default by the Trust in the payment of any Redemption Price of any Trust Security when it becomes due and payable. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Expense Agreement" means the Agreement as to Expenses and Liabilities between the Depositor and the Trust, substantially in the form attached as EXHIBIT D, as amended from time to time. - --------- "Expiration Date" has the meaning specified in Section 9.01. "Extension Period" means the "Extended Interest Payment Period" as defined in the Indenture. "Global Subordinated Debenture" has the meaning specified in the Indenture. "Guarantee" means the Preferred Securities Guarantee Agreement executed and delivered by the Depositor and Property Trustee, as trustee, contemporaneously with the execution and delivery of this Trust Agreement, for the benefit of the Holders of the Preferred Securities, as amended from time to time. "Holder" means a Securityholder. "Indenture" means the Subordinated Indenture, dated as of June 18, 1999, between the Depositor and the Debenture Trustee, as trustee, as amended or supplemented from time to time. 5 "Investment Company Act" means the Investment Company Act of 1940, as amended. "Lien" means any lien, pledge, charge, encumbrance, mortgage, deed of trust, adverse ownership interest, hypothecation, assignment, security interest or preference, priority or other security agreement or preferential arrangement of any kind or nature whatsoever. "Like Amount" means (a) with respect to a redemption of Trust Securities, Trust Securities having an aggregate Liquidation Amount equal to the aggregate principal amount of Subordinated Debentures to be contemporaneously redeemed in accordance with the Indenture and the proceeds of which will be used to pay the Redemption Price of such Trust Securities and (b) with respect to a distribution of Subordinated Debentures to Holders of Trust Securities in connection with a dissolution or liquidation of the Trust, Subordinated Debentures having an aggregate principal amount equal to the aggregate Liquidation Amount of the Trust Securities of the Holder to whom such Subordinated Debentures are distributed. "Liquidation Amount" means the stated amount of $10.00 per Trust Security. "Liquidation Date" means the date on which Subordinated Debentures are to be distributed to Holders of Trust Securities pursuant to Section 9.04(a) in connection with a dissolution and liquidation of the Trust. "Liquidation Distribution" has the meaning specified in Section 9.04(d). "Maturity Date" has the meaning set forth in Section 2.02 of the Indenture. "Officers' Certificate" means a certificate signed by the Chief Executive Officer, the President or a Vice President and by the Chief Accounting Officer or the Controller or an Assistant Controller or the Secretary or an Assistant Secretary, of the Depositor, and delivered to the appropriate Trustee. One of the officers signing an Officers' Certificate given pursuant to Section 8.16 shall be the principal executive, financial or accounting officer of the Depositor. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Trust Agreement shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definitions relating thereto and a brief statement of the nature and scope of the examination or investigation undertaken by each officer rendering the Officer Certificate; (b) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and (c) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. 6 "Opinion of Counsel" means a written opinion of counsel, who may be counsel for the Trust, the Property Trustee, the Delaware Trustee or the Depositor, and who may be an employee of any thereof, and who shall be reasonably acceptable to the Property Trustee. "Original Trust Agreement" has the meaning specified in the recitals to this Trust Agreement. "Outstanding," when used with respect to Preferred Securities, means, as of the date of determination, all Preferred Securities theretofore executed and delivered under this Trust Agreement, except: (a) Preferred Securities theretofore canceled by the Securities Registrar or delivered to the Securities Registrar for cancellation; (b) Preferred Securities for whose payment or redemption money in the necessary amount has been theretofore deposited with the Property Trustee or any Paying Agent for the Holders of such Preferred Securities; provided that, if such Preferred Securities are to be redeemed, notice of such redemption has been duly given pursuant to this Trust Agreement; and (c) Preferred Securities which have been paid or in exchange for or in lieu of which other Preferred Securities have been executed and delivered pursuant to Sections 5.04, 5.05, 5.11 and 5.13; provided, however, that in determining whether the Holders of the requisite - -------- ------- Liquidation Amount of the Outstanding Preferred Securities have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Preferred Securities owned by the Depositor, any Trustee, or any Affiliate of the Depositor or any Trustee, shall be disregarded and deemed not to be Outstanding, except that (i) in determining whether any Trustee shall be protected in relying upon any such request, demand, authorization, direction, notice, consent or waiver, only Preferred Securities that such Trustee actually knows to be so owned shall be so disregarded and (ii) the foregoing shall not apply at any time when all of the Outstanding Preferred Securities are owned by the Depositor, one or more of the Trustees and/or any such Affiliate. Preferred Securities so owned which have been pledged in good faith may be regarded as Outstanding if the pledgee establishes to the satisfaction of the Administrative Trustees the pledgee's right as to such Preferred Securities so owned. "Owner" means each Person who is the beneficial owner of Preferred Securities represented by a Book-Entry Preferred Securities Certificate as reflected in the records of the Clearing Agency or, if a Clearing Agency Participant is not the Owner, then as reflected in the records of a Person maintaining an account with such Clearing Agency (directly or indirectly, in accordance with the rules of such Clearing Agency). "Paying Agent" means any paying agent or co-paying agent appointed pursuant to Section 5.09 and shall initially be the Property Trustee. 7 "Payment Account" means a segregated non-interest-bearing corporate trust account maintained by the Property Trustee for the benefit of the Securityholders in which all amounts paid in respect of the Subordinated Debentures will be held and from which the Property Trustee shall make payments to the Securityholders in accordance with Sections 4.01 and 4.02. "Person" means any individual, corporation, partnership, joint venture, trust, limited liability company or corporation, unincorporated organization or government or any agency or political subdivision thereof. "Preferred Security" means a preferred undivided beneficial interest in the assets of the Trust, designated "9.0% Cumulative Preferred Securities," having a Liquidation Amount of $10.00 and having the rights provided therefor in this Trust Agreement, including the right to receive Distributions and a Liquidation Distribution as provided herein. "Preferred Securities Certificate" means a certificate evidencing ownership of Preferred Securities, substantially in the form attached as EXHIBIT E. --------- "Property Trustee" means the commercial bank or trust company identified as the "Property Trustee" in the preamble to this Trust Agreement solely in its capacity as Property Trustee of the Trust heretofore formed and continued hereunder and not in its individual capacity, or its successor in interest in such capacity, or any successor Property Trustee appointed as herein provided. "Redemption Date" means, with respect to any Trust Security to be redeemed, the date fixed for such redemption by or pursuant to this Trust Agreement; provided that each Debenture Redemption Date and the Maturity Date of the Subordinated Debentures shall be a Redemption Date for a Like Amount of Trust Securities. "Redemption Price" means, with respect to any Trust Security to be redeemed, the Liquidation Amount of such Trust Security, plus accumulated and unpaid Distributions to the Redemption Date allocated on a pro rata basis (based on Liquidation Amounts) among the Trust Securities to be redeemed. "Relevant Trustee" shall have the meaning specified in Section 8.10. "Responsible Officer" means any officer within the Corporate Trust Office of the Property Trustee with direct responsibility for the administration of this Trust Agreement and also means, with respect to a particular corporate trust matter, any other officer of the Property Trustee to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 5.04. 8 "Securityholder" means a Person in whose name a Trust Security or Trust Securities is registered in the Securities Register; any such Person is a beneficial owner of the Trust within the meaning of the Delaware Business Trust Act. "Subordinated Debentures" means the $17,783,510 aggregate principal amount of the Depositor's 9.0% Subordinated Debentures due 2029, issued pursuant to the Indenture. "Trust" means Ozark Capital Trust, the Delaware business trust continued hereby and which was created as stated in the recitals to this Trust Agreement. "Trust Agreement" means this Amended and Restated Trust Agreement, as the same may be modified, amended or supplemented in accordance with the applicable provisions hereof, including all exhibits hereto, including, for all purposes of this Trust Agreement and any such modification, amendment or supplement, the provisions of the Trust Indenture Act that are deemed to be a part of and govern this Trust Agreement and any such modification, amendment or supplement, respectively. "Trust Company" has the meaning specified in the preamble to this Trust Agreement. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date as of which this Trust Agreement was executed; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trust Property" means (a) the Subordinated Debentures, (b) the rights of the Property Trustee under the Guarantee, (c) any cash on deposit in, or owing to, the Payment Account and (d) all proceeds and rights in respect of the foregoing and any other property and assets for the time being held or deemed to be held by the Property Trustee pursuant to the trusts of this Trust Agreement. "Trust Security" means any one of the Common Securities or the Preferred Securities. "Trust Securities Certificate" means any one of the Common Securities Certificates or the Preferred Securities Certificates. "Trustee" or "Trustees" means, individually or collectively, any of the Property Trustee, the Delaware Trustee and the Administrative Trustees. "Underwriting Agreement" means the Underwriting Agreement dated as of June 14, 1999, among the Trust, the Depositor and the underwriters named therein. 9 ARTICLE II ESTABLISHMENT OF THE TRUST Section 2.01. Name. The Trust heretofore created and continued hereby shall continue to be known as "OZARK CAPITAL TRUST," as such name may be modified from time to time by the Administrative Trustees following written notice to the Holders of Trust Securities and the other Trustees, in which name the Trustees may conduct the affairs of the Trust, make and execute contracts and other instruments on behalf of the Trust and sue and be sued. Section 2.02. Office Of The Delaware Trustee; Principal Place Of Business. The address of the Delaware Trustee in the State of Delaware is 499 Mitchell Street, Millsboro, Delaware 19966, Attention: Corporate Trust Administration, or such other address in the State of Delaware as the Delaware Trustee may designate by written notice to the Securityholders and the Depositor. The principal executive office of the Trust is c/o Bank of the Ozarks, Inc., 12615 Chenal Parkway, Little Rock, Arkansas 72231. Section 2.03. Initial Contribution Of Trust Property; Organizational Expenses. The Trustees acknowledge receipt in trust from the Depositor in connection with the Original Trust Agreement of the sum of $10, which constituted the initial Trust Property. The Depositor shall pay organizational expenses of the Trust as they arise or shall, upon request of any Trustee, promptly reimburse such Trustee for any such expenses paid by such Trustee. The Depositor shall make no claim upon the Trust Property for the payment of such expenses. Section 2.04. Issuance Of The Preferred Securities. On June 14, 1999, the Depositor and an Administrative Trustee, on behalf of the Trust and pursuant to the Original Trust Agreement, executed and delivered the Underwriting Agreement. Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.02 and deliver, in accordance with the Underwriting Agreement, a Preferred Securities Certificate, registered in the name of the nominee of the initial Clearing Agency, evidencing 1,725,000 Preferred Securities having an aggregate Liquidation Amount of $17,250,000 against receipt of the aggregate purchase price of such Preferred Securities of $17,250,000, which certificate such Administrative Trustee shall promptly deliver to the Property Trustee. Section 2.05. Issuance Of The Common Securities; Subscription And Purchase Of Subordinated Debentures. Contemporaneously with the execution and delivery of this Trust Agreement, an Administrative Trustee, on behalf of the Trust, shall execute in accordance with Section 5.02 and deliver to the Depositor a Common Securities Certificate, registered in the name of the Depositor, evidencing 53,351 Common Securities having an aggregate Liquidation Amount of $533,510 against receipt of such amount from or on behalf of the Depositor. Contemporaneously therewith, an Administrative Trustee, on behalf of the Trust, shall subscribe to and purchase from the Depositor the Subordinated Debentures, registered in the name of the Property Trustee on behalf of the Trust and having an aggregate principal amount equal to 10 $17,783,510, and, in satisfaction of the purchase price for such Subordinated Debentures, the Property Trustee, on behalf of the Trust, shall deliver to the Depositor the sum of $17,783,510. Section 2.06. Declaration Of Trust. The exclusive purposes and functions of the Trust are (a) to issue and sell Trust Securities and use the proceeds from such sale to acquire the Subordinated Debentures, (b) to distribute the Trust's income and assets as provided in this Trust Agreement, and (c) to engage in those activities necessary, convenient or incidental thereto including, without limitation, those activities specified in Sections 2.07(a), 2.07(c), 8.01 and 8.03. The Depositor hereby appoints the Trustees as trustees of the Trust, to have all the rights, powers and duties to the extent set forth herein, and the Trustees hereby accept such appointment. The Property Trustee hereby declares that it will hold the Trust Property in trust upon and subject to the conditions set forth herein for the benefit of the Securityholders. The Administrative Trustees shall have all rights, powers and duties set forth herein and in accordance with applicable law with respect to accomplishing the purposes of the Trust. The Delaware Trustee shall not be entitled to exercise any powers, nor shall the Delaware Trustee have any of the duties and responsibilities, of the Property Trustee or the Administrative Trustees set forth herein. The Delaware Trustee shall be a Trustee of the Trust for the sole and limited purpose of fulfilling the requirements of Section 3807 of the Delaware Business Trust Act. In the event the Delaware Trustee shall at any time be required to take any action or perform any duty under this Trust Agreement, the Delaware Trustee shall be entitled to the benefits of Sections 8.1 and 8.3. No implied covenants or obligations shall be read into this Trust Agreement against the Delaware Trustee. Section 2.07. Authorization To Enter Into Certain Transactions. (a) The Trustees shall conduct the affairs of the Trust in accordance with the terms of this Trust Agreement. Subject to the limitations set forth in paragraph (b) of this Section and Article VIII, and in accordance with the following provisions (i) and (ii), the Administrative Trustees shall have the power and authority, and are hereby authorized and directed, to enter into on behalf of the Trust all transactions and agreements determined by the Administrative Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Administrative Trustees under this Trust Agreement, and to perform all acts in furtherance thereof, including without limitation, the following: (i) As among the Trustees, each Administrative Trustee, acting singly or jointly, shall have the power and authority and is hereby authorized and directed to act on behalf of the Trust with respect to the following matters: (A) to execute, deliver, issue and sell the Trust Securities on behalf of the Trust in accordance with this Trust Agreement, and cause the Trust to execute, deliver, perform and comply with the terms of the Underwriting Agreement regarding the issuance and sale of the Trust Securities; 11 (B) to acquire the Debentures with the proceeds of the sale of the Preferred Securities and the Common Securities; provided, however, that the -------- ------- Administrative Trustees shall cause legal title to the Debentures to be held of record in the name of the Property Trustee for the benefit of the Securityholders; (C) to cause the Trust to enter into, and to execute, deliver and perform on behalf of the Trust, the Expense Agreement and the Certificate Depository Agreement and such other agreements, instruments and documents (including, without limitation, such certificates and cross-receipts as may be necessary in connection with the issuance and sale of the Trust Securities and the purchase of the Debentures) as may be necessary or desirable in connection with the purposes and function of the Trust; (D) to assist in the registration of the Preferred Securities under the Securities Act of 1933, as amended, and under state securities or blue sky laws, and the qualification of this Trust Agreement as a trust indenture under the Trust Indenture Act and to cause the Trust to take any action deemed in such Administrative Trustee's discretion to be necessary, advisable or convenient to comply with the Trust's obligations under the Trust Indenture Act; (E) to assist in the listing of the Preferred Securities upon the NASDAQ Stock Market or such securities exchange or exchanges as shall be determined by the Depositor and, if required, the registration of the Preferred Securities under the Exchange Act, and the preparation and filing of all periodic and other reports and other documents pursuant to the foregoing; (F) to send notices (other than notices of default) and other information regarding the Trust Securities and the Subordinated Debentures to the Securityholders in accordance with this Trust Agreement; (G) to appoint a Paying Agent, authenticating agent and Securities Registrar in accordance with this Trust Agreement; (H) to the extent provided in this Trust Agreement, to wind up the affairs of and liquidate the Trust and prepare, execute and file the certificate of cancellation with the Secretary of State of the State of Delaware; (I) to take all action that may be necessary or appropriate for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory business trust under the laws of the State of Delaware and in each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Preferred Securities or to enable the Trust to effect the purposes for which the Trust was created; (J) to execute and deliver an application for a taxpayer identification number for the Trust; and (K) to take any action incidental to the foregoing as the Administrative Trustees may from time to time determine in their discretion is necessary or advisable to give effect to the 12 terms of this Trust Agreement for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder). (ii) As among the Trustees, the Property Trustee shall have the power and authority and is hereby authorized and directed to act on behalf of the Trust with respect to the following matters: (A) the establishment of the Payment Account; (B) the receipt of and taking title to the Subordinated Debentures; (C) the receipt and collection of interest, principal and any other payments made in respect of the Subordinated Debentures in the Payment Account; (D) the distribution from the Trust Property of amounts owed to the Securityholders in respect of the Trust Securities in accordance with the terms of this Trust Agreement; (E) the exercise of all of the rights, powers and privileges of a holder of the Subordinated Debentures; (F) the sending of notices of default and other information regarding the Trust Securities and the Subordinated Debentures to the Securityholders in accordance with this Trust Agreement; (G) the distribution of the Trust Property in accordance with the terms of this Trust Agreement; (H) to the extent provided in this Trust Agreement, the winding up of the affairs of and liquidation of the Trust and the preparation, execution and filing of the certificate of cancellation with the Secretary of State of the State of Delaware; (I) the taking of any action incidental to the foregoing as the Property Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Trust Agreement and protect and conserve the Trust Property for the benefit of the Securityholders (without consideration of the effect of any such action on any particular Securityholder); (J) acting as Paying Agent and/or Securities Registrar to the extent appointed as such hereunder and executing and delivering letters, documents or instruments with the Clearing Agency relating to the Preferred Securities; including, without limitation, the Certificate Depository Agreement; and (K) except as otherwise provided in this Section 2.07(a)(ii), the Property Trustee shall have none of the duties, liabilities, powers or the authority of the Administrative Trustees set forth in Section 2.07(a)(i). (b) So long as this Trust Agreement remains in effect, the Trust (or the Trustees acting on behalf of the Trust) shall not undertake any business, activities 13 or transaction except as expressly provided herein or contemplated hereby. In particular, the Trust shall not, the Trustees shall not and the Administrative Trustees shall cause the Trust not to (i) acquire any investments or engage in any activities not authorized by this Trust Agreement, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Securityholders, except as expressly provided herein, (iii) take any action that, to such Trustee's actual knowledge, would cause the Trust to fail or cease to qualify as a "grantor trust" for United States federal income tax purposes, (iv) incur any indebtedness for borrowed money or issue any other debt or (v) take or consent to any action that would result in the placement of a Lien on any of the Trust Property. The Administrative Trustees shall defend all claims and demands of all Persons at any time claiming any Lien on any of the Trust Property adverse to the interest of the Trust or the Securityholders in their capacity as Securityholders. (c) In connection with the issue and sale of the Preferred Securities, the Depositor shall have the right, power, authority and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Depositor in furtherance of the following prior to the date of this Trust Agreement are hereby authorized, ratified and confirmed in all respects): (i) the preparation and filing by the Trust with the Commission and the execution on behalf of the Trust of a registration statement on the appropriate form in relation to the Preferred Securities and the Subordinated Debentures, including any amendments thereto; (ii) the determination of the states in which to take appropriate action to qualify or register for sale all or part of the Preferred Securities and Subordinated Debentures and to do any and all such acts, other than actions which must be taken by or on behalf of the Trust, and advise the Trustees of actions they must take on behalf of the Trust, and prepare for execution and filing any documents to be executed and filed by the Trust or on behalf of the Trust, as the Depositor deems necessary or advisable in order to comply with the applicable laws of any such states; (iii) the preparation for filing by the Trust and execution on behalf of the Trust of an application to the NASDAQ Stock Market or a national stock exchange or other organizations for listing upon notice of issuance of any Preferred Securities (or, if applicable, the Subordinated Debentures) and to file or cause an Administrative Trustee to file thereafter with such exchange or organization such notifications and documents as may be necessary from time to time; 14 (iv) if required, the preparation for filing by the Trust with the Commission and the execution on behalf of the Trust of a registration statement on Form 8-A relating to the registration of the Preferred Securities (or, if applicable, the Subordinated Debentures) under Section 12(b) or 12(g) of the Exchange Act, including any amendments thereto; (v) the negotiation of the terms of, and the execution and delivery of, the Underwriting Agreement providing for the sale of the Preferred Securities; (vi) the negotiation of the terms of, and execution of, the Original Trust Agreement, and the preparation of this Trust Agreement and the selection of the Trustees; (vii) the execution, delivery and performance of the Certificate Depository Agreement and such other agreements and instruments as may be necessary or incidental to the purposes and functions of the Trust; and (viii) the taking of any other actions necessary or desirable to carry out any of the foregoing activities. (d) Notwithstanding anything herein to the contrary, the Administrative Trustees are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust will not be deemed to be an "investment company" required to be registered under the Investment Company Act, will be classified as a "grantor trust" and not as an association taxable as a corporation for United States federal income tax purposes and so that the Subordinated Debentures will be treated as indebtedness of the Depositor for United States federal income tax purposes. In this connection, subject to Section 10.02, the Depositor and the Administrative Trustees are authorized to take any action, not inconsistent with applicable law or this Trust Agreement, that each of the Depositor and the Administrative Trustees determines in their discretion to be necessary or desirable for such purposes. In no event shall the Trustees be liable to the Trust or the Securityholders for any failure to comply with this Section that results from a change in law or regulations or in the interpretation thereof. Section 2.08. Assets Of Trust. The assets of the Trust shall consist of the Trust Property. Section 2.09. Title to Trust Property. Legal title to all Trust Property shall be vested at all times in the Property Trustee (in its capacity as such) and shall be held and administered by the Property Trustee for the benefit of the Securityholders in accordance with this Trust Agreement. 15 ARTICLE III PAYMENT ACCOUNT Section 3.01. Payment Account. (a) On or prior to the Closing Date, the Property Trustee shall establish the Payment Account. The Property Trustee and any agent of the Property Trustee shall have exclusive control and sole right of withdrawal with respect to the Payment Account for the purpose of making deposits to and withdrawals from the Payment Account in accordance with this Trust Agreement. All monies and other property deposited or held from time to time in the Payment Account shall be held by the Property Trustee in the Payment Account for the exclusive benefit of the Securityholders and for distribution as herein provided, including (and subject to) any priority of payments provided for herein. (b) The Property Trustee shall deposit in the Payment Account, promptly upon receipt, all payments of principal of or interest on, and any other payments or proceeds with respect to, the Subordinated Debentures. Amounts held in the Payment Account shall not be invested by the Property Trustee pending distribution thereof. ARTICLE IV DISTRIBUTIONS; REDEMPTION Section 4.01. Distributions. (a) Distributions on the Trust Securities shall be cumulative, and will accumulate whether or not there are funds of the Trust available for the payment of Distributions. Distributions shall accumulate from June 18, 1999, and, except during any Extension Period with respect to the Subordinated Debentures, shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 in each year, commencing September 30, 1999. The amount of each Distribution due with respect to the Trust Securities will include amounts accrued through the date the Distribution payment is due. If any date on which a Distribution is otherwise payable on the Trust Securities is not a Business Day, then the payment of such Distribution shall be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that, if such Business Day is in the next succeeding calendar year, payment of such Distribution shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. Each date on which Distributions are payable in accordance with this Section 4.01(a) is a "Distribution Date." (b) The Trust Securities represent undivided beneficial interests in the Trust Property, and the Distributions on the Trust Securities shall be payable at a rate of 9.0% per annum of the Liquidation Amount of the Trust Securities. The amount of Distributions payable for any full period shall be computed on the basis of a 360-day year of twelve 30-day months. The amount of Distributions for any partial period shall be computed on the basis of the number of days elapsed in a 360-day year of twelve 30-day months. During any Extension Period with respect to 16 the Subordinated Debentures, Distributions on the Preferred Securities will be deferred for a period equal to the Extension Period. The amount of Distributions payable for any period shall include the Additional Amounts, if any. (c) Distributions on the Trust Securities shall be made by the Property Trustee solely from the Payment Account and shall be payable on each Distribution Date only to the extent that the Trust has funds actually received by the Property Trustee and immediately available in the Payment Account for the payment of such Distributions. (d) Distributions on the Trust Securities with respect to a Distribution Date shall be payable to the Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be one Business Day prior to such Distribution Date; provided, however, that in the event that the Preferred Securities do not remain in book-entry-only form, the relevant record date shall be the 1st day of the month in which the relevant Distribution Date occurs. Section 4.02. Redemption. (a) On each Debenture Redemption Date and on the Maturity Date of the Subordinated Debentures, the Trust will be required to redeem a Like Amount of Trust Securities at the Redemption Price. (b) Notice of redemption shall be prepared by or on behalf of the Administrative Trustees and delivered to the Property Trustee, and shall then be given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption Date to each Holder of Trust Securities to be redeemed, at such Holder's address appearing in the Securities Register. The Property Trustee shall have no responsibility for the accuracy of any CUSIP number contained in such notice. All notices of redemption shall state: (i) the Redemption Date; (ii) the Redemption Price, or if the Redemption Price cannot be calculated prior to the time the notice is required to be sent, the estimate of the Redemption Price provided pursuant to the Indenture together with a statement that it is an estimate and that the actual Redemption Price will be calculated on the third Business Day prior to the Redemption Date (and, if an estimate is provided, a further notice shall be sent of the actual Redemption Price on the date, or as soon as practicable thereafter, that notice of such actual Redemption Price is received pursuant to the Indenture); (iii) the CUSIP number; (iv) if less than all the Outstanding Trust Securities are to be redeemed, the identification and the aggregate Liquidation Amount of the particular Trust Securities to be redeemed; 17 (v) that on the Redemption Date the Redemption Price will become due and payable upon each such Trust Security to be redeemed and that Distributions thereon will cease to accumulate on and after said date, except as provided in Section 4.02(d) below; and (vi) the place or places where Trust Securities are to be surrendered for the payment of the Redemption Price. (c) The Trust Securities redeemed on each Redemption Date shall be redeemed at the Redemption Price with the proceeds from the contemporaneous redemption of Subordinated Debentures. Redemptions of the Trust Securities shall be made and the Redemption Price shall be payable on each Redemption Date only to the extent that the Trust has funds actually received by the Property Trustee and immediately available in the Payment Account for the payment of such Redemption Price. (d) If the Property Trustee gives a notice of redemption in respect of any Preferred Securities, then, by 12:00 noon New York City time, on the Redemption Date, subject to Section 4.02(c), the Property Trustee will, so long as and to the extent the Preferred Securities are in book-entry-only form, deposit with the Clearing Agency for the Preferred Securities funds sufficient to pay the applicable Redemption Price and will give such Clearing Agency irrevocable instructions and authority to pay the Redemption Price to the Owners thereof. If and to the extent the Preferred Securities are no longer in book-entry-only form, the Property Trustee, subject to Section 4.02(c), will deposit with the Paying Agent funds sufficient to pay the applicable Redemption Price on such Preferred Securities held in definitive form and will give the Paying Agent irrevocable instructions and authority to pay the Redemption Price to the Holders thereof upon surrender of their Preferred Securities Certificates. Notwithstanding the foregoing, Distributions payable on or prior to the Redemption Date for any Trust Securities called for redemption shall be payable to the Holders of such Trust Securities as they appear on the Securities Register for the Trust Securities on the relevant record dates for the related Distribution Dates. If notice of redemption shall have been given and funds deposited as required, then upon the date of such deposit, all rights of Securityholders holding Trust Securities so called for redemption will cease, except the right of such Securityholders to receive the Redemption Price, but without interest on such Redemption Price, and such Trust Securities will cease to be Outstanding. In the event that any date on which any Redemption Price is payable is not a Business Day, then payment of the Redemption Price payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day falls in the next calendar year, such payment will be made on the immediately preceding Business Day, in each case, with the same force and effect as if made on such date. In the event that payment of the Redemption Price in respect of any Trust Securities called for redemption is improperly withheld or refused and not paid either by the Trust or by the Depositor pursuant to the Guarantee, Distributions on such Trust Securities will continue to accumulate, at the then applicable rate, from the Redemption Date originally established by the Trust for such Trust Securities to the date such Redemption Price is actually paid, in which case the actual payment date will be the date fixed for redemption for purposes of calculating the Redemption Price. 18 (e) Payment of the Redemption Price on the Trust Securities shall be made to the record Holders thereof as they appear on the Securities Register for the Trust Securities on the relevant record date, which shall be one Business Day prior to the relevant Redemption Date; provided, however, that in the event that the Preferred Securities do not remain in book-entry-only form, the relevant record date shall be the date fifteen days prior to the relevant Redemption Date. (f) Subject to Section 4.03(a), if less than all the Outstanding Trust Securities are to be redeemed on a Redemption Date, then the aggregate Liquidation Amount of Trust Securities to be redeemed shall be allocated on a pro rata basis (based on Liquidation Amounts) among the Common Securities and the Preferred Securities that are to be redeemed. The particular Preferred Securities to be redeemed shall be selected not more than 60 days prior to the Redemption Date by the Property Trustee from the Outstanding Preferred Securities not previously called for redemption, by such method (including, without limitation, by lot) as the Property Trustee shall deem fair and appropriate and which may provide for the selection for redemption of portions (equal to $10 or an integral multiple of $10 in excess thereof) of the Liquidation Amount of Preferred Securities of a denomination larger than $10. The Property Trustee shall promptly notify the Securities Registrar (unless the Property Trustee is then serving as Securities Registrar) in writing of the Preferred Securities selected for redemption and, in the case of any Preferred Securities selected for partial redemption, the Liquidation Amount thereof to be redeemed, it being understood that, in the case of Preferred Securities registered in the name of and held of record by the Clearing Agency or its nominee, the distribution of the proceeds of such redemption will be made in accordance with the procedures of the Clearing Agency or its nominee. For all purposes of this Trust Agreement, unless the context otherwise requires, all provisions relating to the redemption of Preferred Securities shall relate, in the case of any Preferred Securities redeemed or to be redeemed only in part, to the portion of the Liquidation Amount of Preferred Securities which has been or is to be redeemed. In the event of any redemption in part, the Trust shall not be required to (i) issue, or register the transfer of or exchange of, any Preferred Security during a period beginning at the opening of business 15 days before any selection of the Preferred Securities to be redeemed and ending at the close of business on the earliest date in which the relevant notice of redemption is deemed to have been given to all holders of Preferred Securities to be so redeemed pursuant to Section 10.8 or (ii) register the transfer of or exchange of any Preferred Securities so selected for redemption, in whole or in part, except for the unredeemed portion of any Preferred Securities being redeemed in part. Section 4.03. Subordination Of Common Securities. (a) Payment of Distributions (including Additional Amounts, if applicable) on, and the Redemption Price of, the Trust Securities, as applicable, shall be made, subject to Section 4.02(f), pro rata among the Common Securities and the Preferred Securities based on the Liquidation Amount of the Trust Securities; provided, however, that if on any Distribution Date or Redemption Date any Event of Default resulting from a Debenture Event of Default shall have occurred and be continuing and of which a Responsible Officer of the Property Trustee has actual 19 knowledge, no payment of any Distribution (including Additional Amounts, if applicable) on, or Redemption Price of, any Common Security, and no other payment on account of the redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions (including Additional Amounts, if applicable) on all Outstanding Preferred Securities for all Distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price the full amount of such Redemption Price on all Outstanding Preferred Securities then called for redemption, shall have been made or provided for, and all funds immediately available to the Property Trustee shall first be applied to the payment in full in cash of all Distributions (including Additional Amounts, if applicable) on, or the Redemption Price of, Preferred Securities then due and payable. The existence of an Event of Default does not entitle the Holders of Preferred Securities to accelerate the maturity thereof. (b) In the case of the occurrence of any Event of Default resulting from a Debenture Event of Default, the Holder of Common Securities will be deemed to have waived any right to act with respect to any such Event of Default under this Trust Agreement until the effect of all such Events of Default with respect to the Preferred Securities shall have been cured, waived or otherwise eliminated. Until any such Event of Default under this Trust Agreement with respect to the Preferred Securities shall, to the actual knowledge of a Responsible Officer of the Property Trustee, have been so cured, waived or otherwise eliminated, the Property Trustee shall act solely on behalf of the Holders of the Preferred Securities and not the Holder of the Common Securities, and only the Holders of the Preferred Securities will have the right to direct the Property Trustee to act on their behalf. Section 4.04. Payment Procedures. Payments of Distributions (including Additional Amounts, if applicable) in respect of the Preferred Securities shall be made by check mailed to the address of the Person entitled thereto as such address shall appear on the Securities Register or, if the Preferred Securities are held by a Clearing Agency, such Distributions shall be made to the Clearing Agency in immediately available funds, which shall credit the relevant Persons' accounts at such Clearing Agency on the applicable Distribution Dates. Payments in respect of the Common Securities shall be made in such manner as shall be mutually agreed between the Property Trustee and the Holder of the Common Securities. Section 4.05. Tax Returns And Reports. The Administrative Trustees shall prepare (or cause to be prepared), at the Depositor's expense, and file all United States federal, state and local tax and information returns and reports required to be filed by or in respect of the Trust. In this regard, the Administrative Trustees shall (a) prepare and file (or cause to be prepared and filed) the appropriate Internal Revenue Service Form required to be filed in respect of the Trust in each taxable year of the Trust and (b) prepare and furnish (or cause to be prepared and furnished) to each Securityholder the appropriate Internal Revenue Service form required to be furnished to such Securityholder or the information required to be provided on such form. The Administrative Trustees shall provide the Depositor and the Property Trustee with a copy of all such returns and reports promptly after such filing or furnishing. The Administrative Trustees and the Property Trustee shall comply with United States federal withholding and backup 20 withholding tax laws and information reporting requirements with respect to any payments to Securityholders under the Trust Securities. Section 4.06. Payment Of Taxes, Duties, Etc. Of The Trust. Upon receipt under the Subordinated Debentures of Additional Sums, the Property Trustee, at the written direction of an Administrative Trustee or the Depositor, shall promptly pay from such Additional Sums any taxes, duties or governmental charges of whatsoever nature (other than withholding taxes) imposed on the Trust by the United States or any other taxing authority. Section 4.07. Payments Under Indenture. Any amount payable hereunder to any Holder of Preferred Securities shall be reduced by the amount of any corresponding payment such Holder has directly received under the Indenture pursuant to Section 5.14(b) or (c) hereof. ARTICLE V TRUST SECURITIES CERTIFICATES Section 5.01. Initial Ownership. Upon the creation of the Trust and the contribution by the Depositor pursuant to Section 2.03 and until the issuance of the Trust Securities, and at any time during which no Trust Securities are Outstanding, the Depositor shall be the sole beneficial owner of the Trust. Section 5.02. The Trust Securities Certificates. The Preferred Securities Certificates shall be issued in minimum denominations of $10.00 Liquidation Amount and integral multiples of $10.00 in excess thereof, and the Common Securities Certificates shall be issued in denominations of $10.00 Liquidation Amount and integral multiples of $10.00 in excess thereof. The Trust Securities Certificates shall be executed on behalf of the Trust by manual signature of at least one Administrative Trustee. Trust Securities Certificates bearing the manual signatures of individuals who were, at the time when such signatures shall have been affixed, authorized to sign on behalf of the Trust, shall be validly issued and entitled to the benefits of this Trust Agreement, notwithstanding that such individuals or any of them shall have ceased to be so authorized prior to the delivery of such Trust Securities Certificates or did not hold such offices at the date of delivery of such Trust Securities Certificates. A transferee of a Trust Securities Certificate shall become a Securityholder, and shall be entitled to the rights and subject to the obligations of a Securityholder hereunder, upon due registration of such Trust Securities Certificate in such transferee's name pursuant to Sections 5.04, 5.11 and 5.13. Section 5.03. Execution And Delivery Of Trust Securities Certificates. On the Closing Date, the Administrative Trustees shall cause Trust Securities Certificates, in an aggregate Liquidation Amount as provided in Sections 2.04 and 2.05, to be executed on behalf of the Trust by at least one of the Administrative Trustees and delivered, without further action by the Trust or the Depositor, in authorized denominations. Section 5.04. Registration Of Transfer And Exchange Of Preferred Securities Certificates. The registrar designated by the Property Trustee (the "Securities Registrar") shall keep or cause to be kept, at the office or agency maintained pursuant to Section 5.08, a register or 21 registers for the purpose of registering Trust Securities Certificates and transfers and exchanges of Preferred Securities Certificates (herein referred to as the "Securities Register") in which, subject to such reasonable regulations as it may prescribe, it shall provide for the registration of Preferred Securities Certificates and Common Securities Certificates (subject to Section 5.10 in the case of the Common Securities Certificates) and registration of transfers and exchanges of Preferred Securities Certificates as herein provided. The Property Trustee shall be the initial Securities Registrar. The provisions of this Trust Agreement, including Sections 8.01, 8.03 and 8.06, shall apply to the Property Trustee also in its role as Securities Registrar. Upon surrender for registration of transfer of any Preferred Securities Certificate at the office or agency maintained pursuant to Section 5.08, the Administrative Trustees or any one of them shall execute and deliver, in the name of the designated transferee or transferees, one or more new Preferred Securities Certificates in authorized denominations of a like aggregate Liquidation Amount dated the date of execution by such Administrative Trustee or Trustees. The Securities Registrar shall not be required to register the transfer of any Preferred Securities that have been called for redemption. At the option of a Holder, Preferred Securities Certificates may be exchanged for other Preferred Securities Certificates in authorized denominations of the same class and of a like aggregate Liquidation Amount upon surrender of the Preferred Securities Certificates to be exchanged at the office or agency maintained pursuant to Section 5.08. Every Preferred Securities Certificate presented or surrendered for registration of transfer or exchange shall be accompanied by a written instrument of transfer in form satisfactory to the Depository and the Securities Registrar duly executed by the Holder thereof or such Holder's attorney duly authorized in writing. Each Preferred Securities Certificate surrendered for registration of transfer or exchange and delivered to the Property Trustee shall be canceled and subsequently disposed of by the Property Trustee in accordance with its customary practice. The Trust shall not be required to (i) issue, register the transfer of, or exchange any Preferred Securities during a period beginning at the opening of business 15 calendar days before the date of mailing of a notice of redemption of any Preferred Securities called for redemption and ending at the close of business on the day of such mailing or (ii) register the transfer of or exchange any Preferred Securities so selected for redemption, in whole or in part, except the unredeemed portion of any such Preferred Securities being redeemed in part. No service charge shall be made for any registration of transfer or exchange of Preferred Securities Certificates, but the Securities Registrar may require payment of a sum sufficient to cover any tax or governmental charge that may be imposed in connection with any transfer or exchange of Preferred Securities Certificates. Section 5.05. Mutilated, Destroyed, Lost Or Stolen Trust Securities Certificates. If (a) any mutilated Trust Securities Certificate shall be surrendered to the Securities Registrar, or if the Securities Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Trust Securities Certificate and (b) there shall be delivered to the Securities Registrar and the Administrative Trustees such security or indemnity as may be required by them to save each of them harmless, then in the absence of notice that such Trust Securities Certificate shall have been acquired by a protected purchaser, the Administrative Trustees, or any one of them, on behalf of 22 the Trust shall execute and make available for delivery, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Trust Securities Certificate, a new Trust Securities Certificate of like class, tenor and denomination. In connection with the issuance of any new Trust Securities Certificate under this Section, the Administrative Trustees or the Securities Registrar may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection therewith. Any duplicate Trust Securities Certificate issued pursuant to this Section shall constitute conclusive evidence of an undivided beneficial interest in the assets of the Trust, as if originally issued, whether or not the lost, stolen or destroyed Trust Securities Certificate shall be found at any time. The provisions of this Section 5.05 are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Trust Securities. Section 5.06. Persons Deemed Securityholders. The Trustees, the Paying Agent and the Securities Registrar shall treat the Person in whose name any Trust Securities Certificate shall be registered in the Securities Register as the owner of such Trust Securities Certificate for the purpose of receiving Distributions and for all other purposes whatsoever, and none of the Trustees, the Paying Agent or the Securities Registrar shall be bound by any notice to the contrary. Section 5.07. Access To List Of Securityholders' Names And Addresses. At any time when the Property Trustee is not also acting as the Securities Registrar, the Administrative Trustees or the Depositor shall furnish or cause to be furnished to the Property Trustee (a) semi-annually on or before January 15 and July 15 in each year, a list, in such form as the Property Trustee may reasonably require, of the names and addresses of the Securityholders as of the most recent regular record date (as provided in Section 4.01(d)) and (b) promptly after receipt by any Administrative Trustee or the Depositor of a request therefor from the Property Trustee, the list referred to in Section 5.07(a) above and/or such other information as the Property Trustee may reasonably require in order to enable the Property Trustee to discharge its obligations under this Trust Agreement, in each case to the extent such information is in the possession or control of the Administrative Trustees or the Depositor and is not identical to a previously supplied list or has not otherwise been received by the Property Trustee in its capacity as Securities Registrar. The rights of Securityholders to communicate with other Securityholders with respect to their rights under this Trust Agreement or under the Trust Securities, and the corresponding rights of the Property Trustee shall be as provided in the Trust Indenture Act, except to the extent Section 3819 of the Delaware Business Trust Act would require greater access to such information, in which case the latter shall apply. Each Holder, by receiving and holding a Trust Securities Certificate, and each Owner shall be deemed to have agreed not to hold the Depositor, the Property Trustee or the Administrative Trustees accountable by reason of the disclosure of its name and address, regardless of the source from which such information was derived. Section 5.08. Maintenance Of Office Or Agency. The Administrative Trustees shall maintain an office or offices or agency or agencies where Preferred Securities Certificates may be surrendered for registration of transfer or exchange and where notices and demands to or upon the Trustees in respect of the Trust Securities Certificates may be served. The Administrative Trustees initially designate the principal corporate trust office of the Property Trustee, 25 South 23 Charles Street, Baltimore, Maryland 21203, Attention: Corporate Trust Administration, as the principal corporate trust office for such purposes. The Administrative Trustees shall give prompt written notice to the Depositor, to the Property Trustee and to the Securityholders of any change in the location of the Securities Register or any such office or agency. Section 5.09. Appointment Of Paying Agent. The Paying Agent shall make Distributions to Securityholders from the Payment Account and shall report the amounts of such Distributions to the Property Trustee and the Administrative Trustees. Any Paying Agent shall have the revocable power to withdraw funds from the Payment Account for the purpose of making the Distributions referred to above. The Administrative Trustees may revoke such power and remove the Paying Agent if such Trustees determine in their sole discretion that the Paying Agent shall have failed to perform its obligations under this Trust Agreement in any material respect. The Paying Agent shall initially be the Property Trustee, and any co-paying agent chosen by the Property Trustee, and acceptable to the Administrative Trustees and the Depositor. Any Person acting as Paying Agent shall be permitted to resign as Paying Agent upon 30 days' written notice to the Administrative Trustees, the Property Trustee and the Depositor. In the event that the Property Trustee shall no longer be the Paying Agent or a successor Paying Agent shall resign or its authority to act be revoked, the Administrative Trustees shall appoint a successor that is acceptable to the Property Trustee and the Depositor to act as Paying Agent (which shall be a bank or trust company). The Administrative Trustees shall cause such successor Paying Agent or any additional Paying Agent appointed by the Administrative Trustees to execute and deliver to the Trustees an instrument in which such successor Paying Agent or additional Paying Agent shall agree with the Trustees that as Paying Agent, such successor Paying Agent or additional Paying Agent will hold all sums, if any, held by it for payment to the Securityholders in trust for the benefit of the Securityholders entitled thereto until such sums shall be paid to such Securityholders. The Paying Agent shall return all unclaimed funds to the Property Trustee and upon removal of a Paying Agent such Paying Agent shall also return all funds in its possession to the Property Trustee. The provisions of this Trust Agreement, including Sections 8.01, 8.03 and 8.06, shall apply to the Property Trustee also in its role as Paying Agent, for so long as the Property Trustee shall act as Paying Agent and, to the extent applicable, to any other Paying Agent appointed hereunder. Any reference in this Trust Agreement to the Paying Agent shall include any co-paying agent unless the context requires otherwise. Section 5.10. Ownership Of Common Securities By Depositor. On the Closing Date, the Depositor shall acquire and retain beneficial and record ownership of the Common Securities. To the fullest extent permitted by law, any attempted transfer of the Common Securities (other than a transfer in connection with a merger or consolidation of the Depositor into another corporation pursuant to Section 12.01 of the Indenture) shall be void. The Administrative Trustees shall cause each Common Securities Certificate issued to the Depositor to contain a legend stating "THIS CERTIFICATE IS NOT TRANSFERABLE". 24 Section 5.11. Book-Entry Preferred Securities Certificates; Common Securities Certificate. (a) The Preferred Securities, upon original issuance, will be represented by a typewritten Book-Entry Preferred Securities Certificate or Certificates, to be delivered to, or held by, the Property Trustee as custodian for The Depository Trust Company, as the initial Clearing Agency. Preferred Securities represented by such Book-Entry Preferred Securities Certificate or Certificates shall initially be registered on the Securities Register in the name of Cede & Co., the nominee of the initial Clearing Agency, and no Owner will receive a Definitive Preferred Securities Certificate representing such Owner's interest in such Preferred Securities, except as provided in Section 5.13. To the extent Preferred Securities represented by Book-Entry Preferred Securities Certificates are Outstanding: (i) the provisions of this Section 5.11(a) shall be in full force and effect; (ii) the Securities Registrar, the Paying Agent and the Trustees shall be entitled to deal with the Clearing Agency for all purposes of this Trust Agreement relating to Preferred Securities represented by the Book- Entry Preferred Securities Certificates (including the payment of the Liquidation Amount of and Distributions on such Preferred Securities) as the sole Holder of such Preferred Securities and shall have no obligations to the Owners thereof; (iii) to the extent that the provisions of this Section 5.11 conflict with any other provisions of this Trust Agreement, the provisions of this Section 5.11 shall control; and (iv) the rights of the Owners of Preferred Securities represented by Book-Entry Preferred Securities Certificates shall be exercised only through the Clearing Agency and shall be limited to those established by law and agreements between such Owners and the Clearing Agency and/or the Clearing Agency Participants. Unless and until Definitive Preferred Securities Certificates are issued pursuant to Section 5.13, the Clearing Agency, as sole Holder of Preferred Securities, will receive payments on the Preferred Securities and transmit such payments to the Owners. Any Clearing Agency designated pursuant hereto will not be deemed an agent of the Trustees for any purpose. (b) A single Common Securities Certificate representing the Common Securities shall be issued to the Depositor in the form of a definitive Common Securities Certificate, as set forth in Exhibit C. --------- Section 5.12. Notices To Clearing Agency. To the extent that a notice or other communication to the Owners is required under this Trust Agreement, unless and until Definitive Preferred Securities Certificates shall have been issued to Owners pursuant to Section 5.13, the Trustees shall give all such notices and communications specified herein to be given to Owners to the Clearing Agency, and shall have no obligations to the Owners. 25 Section 5.13. Definitive Preferred Securities Certificates. If (a) the Depositor advises the Trustees in writing that the Clearing Agency is no longer willing or able to discharge properly its responsibilities with respect to the Preferred Securities Certificates, and the Depositor is unable to locate a qualified successor, (b) the Depositor at its option advises the Trustees in writing that it elects to terminate the book-entry system through the Clearing Agency, or (c) after the occurrence of a Debenture Event of Default, Owners of Preferred Securities representing an aggregate Liquidation Amount equal to not less than a majority of the aggregate Liquidation Amount of all Outstanding Trust Securities cause the Clearing Agency to advise the Property Trustee in writing that the continuation of a book-entry system through the Clearing Agency is no longer in the best interests of the Owners of Preferred Securities, then the Property Trustee shall notify the Clearing Agency, and the Clearing Agency shall notify all Owners of Preferred Securities, of the occurrence of any such event and of the availability of the Definitive Preferred Securities Certificates to Owners of such class or classes, as applicable, requesting the same. Upon surrender to the Property Trustee of the typewritten Book-Entry Preferred Securities Certificate or Certificates by the Clearing Agency, accompanied by registration instructions, the Administrative Trustees, or any one of them, shall execute the Definitive Preferred Securities Certificates in accordance with the instructions of the Clearing Agency. Neither the Securities Registrar nor the Trustees shall be liable for any delay in delivery of such instructions and may conclusively rely on, and shall be protected in relying on, such instructions. Upon the issuance of Definitive Preferred Securities Certificates, the Trustees shall recognize the Holders of the Preferred Securities represented thereby as Securityholders. The Definitive Preferred Securities Certificates shall be printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrative Trustees, as evidenced by the execution thereof by the Administrative Trustees or any one of them. Section 5.14. Rights Of Securityholders. (a) The legal title to the Trust Property is vested exclusively in the Property Trustee (in its capacity as such) in accordance with Section 2.09, and the Securityholders shall not have any right or title therein other than the undivided beneficial interest in the assets of the Trust conferred by their Trust Securities and they shall have no right to call for any partition or division of property, profits or rights of the Trust except as described below. The Trust Securities shall be personal property giving only the rights specifically set forth therein and in this Trust Agreement. The Trust Securities shall have no preemptive or similar rights to subscribe for additional Trust Securities. When issued and delivered to Holders of the Preferred Securities against payment of the purchase price therefor, the Preferred Securities will be validly issued, fully paid and nonassessable undivided beneficial interests in the assets of the Trust. The Holders of the Preferred Securities, in their capacities as such, shall be entitled to the same limitation of personal liability extended to stockholders of private corporations for profit organized under the General Corporation Law of the State of Delaware. (b) For so long as any Preferred Securities remain Outstanding, if, upon a Debenture Event of Default, the Debenture Trustee fails or the holders of not less than 25% in principal amount of the outstanding Subordinated Debentures fail to declare the principal of all of the Subordinated Debentures to be immediately due and payable, the Holders of Preferred Securities 26 having an aggregate Liquidation Amount of not less than 25% of the aggregate Liquidation Amount of the Preferred Securities then Outstanding shall have the right to make such declaration by a notice in writing to the Depositor and the Debenture Trustee; and upon any such declaration such principal amount of and the accrued interest on all of the Subordinated Debentures shall become immediately due and payable, provided that the payment of principal and interest on such Subordinated Debentures shall remain subordinated to the extent provided in the Indenture. If, as a result of a Debenture Event of Default, the Debenture Trustee or the holders of not less than 25% in aggregate outstanding principal amount of the Subordinated Debentures have declared the Subordinated Debentures due and payable and if such default has been cured and a sum sufficient to pay all matured installments due (otherwise than by acceleration) under the Subordinated Debentures has been deposited with the Debenture Trustee, then (if the holders of not less than a majority in aggregate outstanding principal amount of Subordinated Debentures have not rescinded such declaration and waived such default) the Holders of a majority in aggregate Liquidation Amount of the Preferred Securities may rescind such declaration and waive such default. (c) For so long as any Preferred Securities remain outstanding, upon a Debenture Event of Default arising from the failure to pay interest or principal on the Subordinated Debentures, the Holders of any Preferred Securities then Outstanding shall, to the fullest extent permitted by law, have the right to institute directly proceedings for enforcement of payment to such Holders of principal of or interest on the Subordinated Debentures having a principal amount equal to the Liquidation Amount of the Preferred Securities of such Holders. ARTICLE VI ACTS OF SECURITYHOLDERS; MEETINGS; VOTING Section 6.01. Limitations On Voting Rights. (a) Except as provided in this Section, in Sections 5.14, 8.10 and 10.02 of this Trust Agreement and in the Indenture and as otherwise required by law, no Holder of Preferred Securities shall have any right to vote or in any manner otherwise control the administration, operation and management of the Trust or the obligations of the parties hereto, nor shall anything herein set forth, or contained in the terms of the Trust Securities Certificates, be construed so as to constitute the Securityholders from time to time as partners or members of an association. (b) So long as any Subordinated Debentures are held by the Property Trustee, the Trustees shall not (i) direct the time, method and place of conducting any proceeding for any remedy available to the Debenture Trustee, or executing any trust or power conferred on the Debenture Trustee with respect to such Subordinated Debentures, (ii) waive any past default which is waivable under Article Seven of the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Subordinated Debentures shall be due and payable or (iv) consent to any amendment, modification or termination of the Indenture or the Subordinated Debentures, where such consent shall be required, without, in each case, obtaining the prior approval of the Holders not less than a majority in Liquidation Amount of all 27 Outstanding Preferred Securities; provided, however, that where the Indenture expressly provides that a consent thereunder would require the consent of each holder of outstanding Subordinated Debentures affected thereby, no such consent shall be given by the Property Trustee without the prior written consent of each Holder of Preferred Securities. The Administrative Trustees and the Property Trustee shall not revoke any action previously authorized or approved by a vote of the Holders of the Outstanding Preferred Securities, except by a subsequent vote of the Holders of the Outstanding Preferred Securities. The Property Trustee shall notify each Holder of the Outstanding Preferred Securities of any notice of default received from the Debenture Trustee with respect to the Subordinated Debentures. In addition to obtaining the foregoing approvals of the Holders of the Preferred Securities, prior to taking any of the foregoing actions, the Administrative Trustees and the Property Trustee shall, at the expense of the Depositor, obtain an Opinion of Counsel experienced in such matters to the effect that the Trust will continue to be classified as a grantor trust and not as an association taxable as a corporation for United States federal income tax purposes on account of such action. (c) If any proposed amendment to the Trust Agreement provides for, or the Administrative Trustees and the Property Trustee otherwise propose to effect, (i) any action that would adversely affect in any material respect the powers, preferences or special rights of the Preferred Securities, whether by way of amendment to the Trust Agreement or otherwise, or (ii) the dissolution, winding- up or termination of the Trust, other than pursuant to the terms of this Trust Agreement, then the Holders of Outstanding Preferred Securities, voting as a single class, will be entitled to vote on such amendment or proposal and such amendment or proposal shall not be effective except with the approval of the Holders of not less than a majority in Liquidation Amount of the Outstanding Preferred Securities. No amendment to this Trust Agreement may be made if, as a result of such amendment, the Trust would cease to be classified as a grantor trust or would be classified as an association taxable as a corporation for United States federal income tax purposes. Section 6.02. Notice Of Meetings. Notice of all meetings of the Holders of Preferred Securities, stating the time, place and purpose of the meeting, shall be given by the Administrative Trustees pursuant to Section 10.08 to each Holder of Preferred Securities, at such Securityholder's registered address, at least 15 days and not more than 90 days before the meeting. At any such meeting, any business properly before the meeting may be so considered whether or not stated in the notice of the meeting. Any adjourned meeting may be held as adjourned without further notice. Section 6.03. Meetings Of Holders Of Preferred Securities. No annual meeting of Securityholders is required to be held. The Administrative Trustees, however, shall call a meeting of Securityholders to vote on any matter upon the written request of the Holders of not less than 25% of the Outstanding Preferred Securities (based upon their aggregate Liquidation Amount) and the Administrative Trustees or the Property Trustee may, at any time in their discretion, call a meeting of Holders of the Preferred Securities to vote on any matters as to which the Holders of the Preferred Securities are entitled to vote. Holders of record of not less than 50% of the Outstanding Preferred Securities (based upon their aggregate Liquidation Amount), present in person or by proxy, shall constitute a quorum at any meeting of such 28 Securityholders. If a quorum is present at a meeting, an affirmative vote by the Holders of record present, in person or by proxy, holding not less than a majority of the Preferred Securities (based upon their aggregate Liquidation Amount) held by the Holders of Preferred Securities of record present, either in person or by proxy, at such meeting shall constitute the action of the Holders of the Preferred Securities, unless this Trust Agreement specifically requires a greater number of affirmative votes. Section 6.04. Voting Rights. Securityholders shall be entitled to one vote for each $10 of Liquidation Amount represented by their Trust Securities in respect of any matter as to which such Securityholders are entitled to vote. Section 6.05. Proxies, Etc. At any meeting of Securityholders, any Securityholder entitled to vote thereat may vote by proxy, provided that no proxy shall be voted at any meeting unless it shall have been placed on file with the Administrative Trustees, or with such other officer or agent of the Trust as the Administrative Trustees may direct, for verification prior to the time at which such vote shall be taken. When Trust Securities are held jointly by several persons, any one of them may vote at any meeting in person or by proxy in respect of such Trust Securities, but if more than one of them shall be present at such meeting in person or by proxy, and such joint owners or their proxies so present disagree as to any vote to be cast, such vote shall not be received in respect of such Trust Securities. A proxy purporting to be executed by or on behalf of a Securityholder shall be deemed valid unless challenged at or prior to its exercise, and, the burden of proving invalidity shall rest on the challenger. No proxy shall be valid more than three years after its date of execution. Section 6.06. Securityholder Action By Written Consent. Any action which may be taken by Securityholders at a meeting may be taken without a meeting if Securityholders holding not less than a majority of all Outstanding Trust Securities (based upon their aggregate Liquidation Amount) entitled to vote in respect of such action (or such larger proportion thereof as shall be required by any express provision of this Trust Agreement) shall consent to the action in writing. Section 6.07. Record Date For Voting And Other Purposes. For the purposes of determining the Securityholders who are entitled to notice of and to vote at any meeting or by written consent, or to participate in any distribution on the Trust Securities in respect of which a record date is not otherwise provided for in this Trust Agreement, or for the purpose of any other action, the Administrative Trustees may from time to time fix a date, not more than 90 days prior to the date of any meeting of Securityholders or the payment of any distribution or other action, as the case may be, as a record date for the determination of the identity of the Securityholders of record for such purposes. Section 6.08. Acts Of Securityholders. Any request, demand, authorization, direction, notice, consent, waiver or other action provided or permitted by this Trust Agreement to be given, made or taken by Securityholders or Owners may be embodied in and evidenced by one or more instruments of substantially similar tenor signed by such Securityholders or Owners in person or by an agent duly appointed in writing; and, except as otherwise expressly provided 29 herein, such action shall become effective when such instrument or instruments are delivered to an Administrative Trustee. Such instrument or instruments (and the action embodied therein and evidenced thereby) are herein sometimes referred to as the "Act" of the Securityholders or Owners signing such instrument or instruments. Proof of execution of any such instrument or of a writing appointing any such agent shall be sufficient for any purpose of this Trust Agreement and (subject to Section 8.01) conclusive in favor of the Trustees, if made in the manner provided in this Section. The fact and date of the execution by any Person of any such instrument or writing may be proved by the affidavit of a witness of such execution or by a certificate of a notary public or other officer authorized by law to take acknowledgments of deeds, certifying that the individual signing such instrument or writing acknowledged to him or her the execution thereof. Where such execution is by a signer acting in a capacity other than such signer's individual capacity, such certificate or affidavit shall also constitute sufficient proof of such signer's authority. The fact and date of the execution of any such instrument or writing, or the authority of the Person executing the same, may also be proved in any other manner which any Trustee receiving the same deems sufficient. The ownership of Preferred Securities shall be proved by the Securities Register. Any request, demand, authorization, direction, notice, consent, waiver or other Act of the Securityholder of any Trust Security shall bind every future Securityholder of the same Trust Security and the Securityholder of every Trust Security issued upon the registration of transfer thereof or in exchange therefor or in lieu thereof in respect of anything done, omitted or suffered to be done by the Trustees or the Trust in reliance thereon, whether or not notation of such action is made upon such Trust Security. Without limiting the foregoing, a Securityholder entitled hereunder to take any action hereunder with regard to any particular Trust Security may do so with regard to all or any part of the Liquidation Amount of such Trust Security or by one or more duly appointed agents each of which may do so pursuant to such appointment with regard to all or any part of such Liquidation Amount. A Holder of Preferred Securities may institute a legal proceeding directly against the Depositor under the Guarantee to enforce its rights under the Guarantee without first instituting a legal proceeding against the Guarantee Trustee (as defined in the Guarantee), the Trust or any Person. Section 6.09. Inspection Of Records. Upon reasonable notice to the Administrative Trustees and the Property Trustee, the records of the Trust shall be open to inspection by Securityholders during normal business hours for any purpose reasonably related to such Securityholder's interest as a Securityholder. ARTICLE VII REPRESENTATIONS AND WARRANTIES Section 7.01. Representations And Warranties Of The Trust Company And The Property Trustee. The Trust Company, in its separate corporate capacity and as Property Trustee, as of the date hereof, and each successor Property Trustee at the time of the successor Property Trustee's acceptance of its appointment as Property Trustee hereunder (the term "Trust Company" being used hereafter in this Article VII to refer to such successor Property Trustee in 30 its separate corporate capacity and as Property Trustee), hereby represents and warrants (as applicable) for the benefit of the Depositor and the Securityholders that: (a) the Trust Company is a national association duly organized and validly existing under the laws of the United States of America; (b) the Trust Company has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized, executed and delivered by the Trust Company and constitutes the valid and legally binding agreement of the Trust Company enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity; (d) the execution, delivery and performance by the Trust Company of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Trust Company and does not require any approval of the stockholders of the Trust Company and such execution, delivery and performance will not (i) violate the Trust Company's charter or by-laws, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument which is not related to the transactions contemplated by this Trust Agreement and to which the Trust Company is a party or by which it is bound, or (iii) violate any law, governmental rule or regulation of the United States or the State of Delaware, as the case may be, governing the banking and trust powers of the Trust Company, or any order, judgment or decree applicable to the Trust Company; (e) neither the authorization, execution or delivery by the Trust Company of this Trust Agreement nor the consummation of any of the transactions by the Trust Company contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to, any governmental authority or agency under any existing law of the United States or State of Delaware governing the banking and trust powers of the Trust Company; and (f) there are no proceedings pending or, to the best of the Trust Company's knowledge, threatened against or affecting the Trust Company in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Trust Company to 31 enter into or perform its obligations as one of the Trustees under this Trust Agreement. Section 7.02. Representations And Warranties Of The Delaware Bank And The Delaware Trustee. The Delaware Bank in its corporate capacity and as Delaware Trustee, as of the date hereof, and each successor Delaware Trustee at the time of the successor Delaware Trustee's acceptance of its appointment as Delaware Trustee hereunder (the term "Delaware Bank" being used hereafter in this Article VIII to refer to such successor Delaware Trustee in its separate corporate capacity and as Delaware Trustee), hereby represents and warrants (as applicable) for the benefit of the Depositor and the Securityholders that: (a) the Delaware Bank is a national association duly organized and validly existing under the laws of the United States of America; (b) the Delaware Bank has full corporate power, authority and legal right to execute, deliver and perform its obligations under this Trust Agreement and has taken all necessary action to authorize the execution, delivery and performance by it of this Trust Agreement; (c) this Trust Agreement has been duly authorized, executed and delivered by the Delaware Bank and constitutes the valid and legally binding agreement of the Delaware Bank enforceable against it in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general principles of equity; (d) the execution, delivery and performance by the Delaware Bank of this Trust Agreement has been duly authorized by all necessary corporate or other action on the part of the Delaware Bank and does not require any approval of the stockholders of the Delaware Bank and such execution, delivery and performance will not (i) violate the Delaware Bank's charter or by-laws, (ii) violate any provision of, or constitute, with or without notice or lapse of time, a default under, or result in the creation or imposition of, any Lien on any properties included in the Trust Property pursuant to the provisions of, any indenture, mortgage, credit agreement, license or other agreement or instrument which is not related to the transactions contemplated by this Trust Agreement and to which the Delaware Bank is a party or by which it is bound, or (iii) violate any law, governmental rule or regulation of the United States or the State of Delaware, as the case may be, governing the banking or trust powers of the Delaware Bank, or any order, judgment or decree applicable to the Delaware Bank; (e) neither the authorization, execution or delivery by the Delaware Bank of this Trust Agreement nor the consummation of any of the transactions by the Delaware Bank contemplated herein or therein requires the consent or approval of, the giving of notice to, the registration with or the taking of any other action with respect to, any governmental authority or agency under any existing 32 law of the State of Delaware governing the banking or trust powers of the Delaware Bank; and (f) there are no proceedings pending or, to the best of the Delaware Bank's knowledge, threatened against or affecting the Delaware Bank in any court or before any governmental authority, agency or arbitration board or tribunal which, individually or in the aggregate, would materially and adversely affect the Trust or would question the right, power and authority of the Delaware Bank to enter into or perform its obligations as one of the Trustees under this Trust Agreement. Section 7.03. Representation And Warranties Of Depositor. The Depositor hereby represents and warrants for the benefit of the Securityholders and the Trustees that: (a) the Trust Securities Certificates issued on the Closing Date on behalf of the Trust have been duly authorized and will have been duly and validly executed, issued and delivered by the Administrative Trustees pursuant to the terms and provisions of, and in accordance with the requirements of, this Trust Agreement and the Securityholders will be, as of such date, entitled to the benefits of this Trust Agreement; and (b) there are no taxes, fees or other governmental charges payable by the Trust (or the Trustees on behalf of the Trust) under the laws of the State of Delaware or any political subdivision thereof in connection with the execution, delivery and performance by the Trust Company, the Property Trustee, the Delaware Bank or the Delaware Trustee, as the case may be, of this Trust Agreement. Article VIII THE TRUSTEES Section 8.01. Certain Duties And Responsibilities. (a) The duties and responsibilities of the Trustees shall be as provided by this Trust Agreement and, in the case of the Property Trustee, by the Trust Indenture Act. Notwithstanding the foregoing, no provision of this Trust Agreement shall require any Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of any of their duties hereunder, or in the exercise of any of its rights or powers, if it shall have reasonable grounds for believing that repayment of such funds or adequate indemnity against such risk or liability is not reasonably assured to it. No Administrative Trustee nor the Delaware Trustee shall be liable for such Trustee's acts or omissions hereunder except as a result of such Trustee's own bad faith, gross negligence or willful misconduct. The Property Trustee's liability shall be determined under the Trust Indenture Act. Whether or not herein expressly so provided, every provision of this Trust Agreement relating to the conduct or affecting the liability of or affording protection to the Trustees shall be subject to the provisions of this Section. To the extent that, at law or in 33 equity, the Delaware Trustee or an Administrative Trustee has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to the Securityholders, the Delaware Trustee or such Administrative Trustee shall not be liable to the Trust or to any Securityholder for such Trustee's good faith reliance on the provisions of this Trust Agreement. The provisions of this Trust Agreement, to the extent that they restrict the duties and liabilities of the Delaware Trustee or the Administrative Trustees otherwise existing at law or in equity, are agreed by the Depositor and the Securityholders to replace such other duties and liabilities of the Delaware Trustee and the Administrative Trustees. (b) All payments made by the Property Trustee or a Paying Agent in respect of the Trust Securities shall be made only from the revenue and proceeds from the Trust Property and only to the extent that there shall be sufficient revenue or proceeds from the Trust Property to enable the Property Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Securityholder, by such Securityholder's acceptance of a Trust Security, agrees that such Securityholder will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to such Securityholder as herein provided and that the Trustees are not personally liable to such Securityholder for any amount distributable in respect of any Trust Security or for any other liability in respect of any Trust Security. This Section 8.01(b) does not limit the liability of the Trustees expressly set forth elsewhere in this Trust Agreement or, in the case of the Property Trustee, in the Trust Indenture Act. (c) No provision of this Trust Agreement shall be construed to relieve the Property Trustee from liability for its own negligent action, its own negligent failure to act, its bad faith, or its own willful misconduct, except that: (i) the Property Trustee shall not be liable for any error of judgment made in good faith by an authorized officer of the Property Trustee, unless it shall be proved that the Property Trustee was negligent in ascertaining the pertinent facts; (ii) the Property Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a majority in Liquidation Amount of the Trust Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Property Trustee, or exercising any trust or power conferred upon the Property Trustee under this Trust Agreement; (iii) the Property Trustee's sole duty with respect to the custody, safe keeping and physical preservation of the Subordinated Debentures and the Payment Account shall be to deal with such Property in a similar manner as the Property Trustee deals with similar property for its own account, subject to the protections and limitations on liability afforded to the Property Trustee under this Trust Agreement and the Trust Indenture Act; (iv) the Property Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the 34 Depositor and money held by the Property Trustee need not be segregated from other funds held by it except in relation to the Payment Account maintained by the Property Trustee pursuant to Section 3.01 and except to the extent otherwise required by law; and (v) the Property Trustee shall not be responsible for monitoring the compliance by the Administrative Trustees or the Depositor with their respective duties under this Trust Agreement, nor shall the Property Trustee be liable for the negligence, default or misconduct of the Administrative Trustees or the Depositor. Section 8.02. Certain Notices. (a) Within five Business Days after a Responsible Officer of the Property Trustee obtains actual knowledge of occurrence of any Event of Default, the Property Trustee shall transmit, in the manner and to the extent provided in Section 10.08, notice of such Event of Default to the Securityholders, the Administrative Trustees and the Depositor, unless such Responsible Officer shall have actual knowledge that such Event of Default shall have been cured or waived prior to the sending of such notice. (b) The Administrative Trustees shall transmit to the Securityholders and the Property Trustee in the manner and to the extent provided in Section 10.08, notice of the Depositor's election to begin or further extend an Extension Period on the Subordinated Debentures (unless such election shall have been revoked) within the time specified for transmitting such notice to the holders of the Subordinated Debentures pursuant to the Indenture as originally executed. (c) In the event the Depositor elects to accelerate the Maturity Date in accordance with Section 2.02 of the Indenture, the Property Trustee shall give notice to each Holder of Trust Securities of the acceleration of the Maturity Date and the Accelerated Maturity Date not later than five Business Days after the Property Trustee receives the notice provided in Section 2.02(c) of the Indenture. Section 8.03. Certain Rights Of Property Trustee. Subject to the provisions of Section 8.01: (a) the Property Trustee may conclusively rely and shall be protected in acting or refraining from acting in good faith upon any resolution, Opinion of Counsel, certificate, written representation or instruction of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, consent, order, appraisal, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties; (b) if (i) in performing its duties under this Trust Agreement the Property Trustee is required to decide between alternative courses of action or (ii) in construing any of the provisions of this Trust Agreement the Property Trustee finds the same ambiguous or inconsistent with other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Trust Agreement, then, except as to any matter as to which the Holders of the 35 Preferred Securities are entitled to vote under the terms of this Trust Agreement, the Property Trustee shall deliver a notice to the Depositor requesting written instructions of the Depositor as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by the Depositor and shall have no liability whatsoever for such action or inaction except for its own bad faith, negligence or willful misconduct; provided, however, that if the Property Trustee does not receive such instructions of the Depositor within 10 Business Days after it has delivered such notice, or such shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action as it shall deem advisable and in the best interests of the Securityholders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (c) if a Responsible Officer of the Property Trustee has obtained actual knowledge that an Event of Default has occurred and is continuing and, (i) in performing its duties under this Declaration, the Property Trustee is required to decide between alternative courses of action or (ii) in construing any of the provisions in this Declaration, the Property Trustee finds the same ambiguous or inconsistent with any other provisions contained herein or (iii) the Property Trustee is unsure of the application of any provision of this Declaration, then, except as to any matter as to which the Holders of Preferred Securities are specifically entitled to vote under the terms of this Declaration, the Property Trustee may deliver a notice to the Holders requesting written instructions of the Holders as to the course of action to be taken and the Property Trustee shall take such action, or refrain from taking such action, as the Property Trustee shall be instructed in writing to take, or to refrain from taking, by a majority in interest of the Outstanding Preferred Securities and shall have no liability whatsoever for such action or inaction; provided, however, that if the -------- ------- Property Trustee does not receive such instructions of the Holders within ten Business Days after it has delivered such notice, or such shorter period of time set forth in such notice (which to the extent practicable shall not be less than two Business Days), it may, but shall be under no duty to, take or refrain from taking such action not inconsistent with this Declaration as it shall deem advisable and in the best interests of the Holders, in which event the Property Trustee shall have no liability except for its own bad faith, negligence or willful misconduct; (d) any direction or act of the Depositor or the Administrative Trustees contemplated by this Trust Agreement shall be sufficiently evidenced by an Officers' Certificate; (e) whenever in the administration of this Trust Agreement, the Property Trustee shall deem it desirable that a matter be established before undertaking, suffering or omitting any action hereunder, the Property Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officer's Certificate which, upon receipt of such request, shall be promptly delivered by the Depositor or the Administrative Trustees; (f) the Property Trustee shall have no duty to see to any recording, filing or registration of any instrument (including any financing or continuation statement or any filing under tax or securities laws) or any rerecording, refiling or reregistration thereof; 36 (g) the Property Trustee may consult with counsel of its choice and the advice of such counsel shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reliance thereon and in accordance with such advice (such counsel may be counsel to the Depositor or any of its Affiliates, and may include any of its employees); the Property Trustee shall have the right at any time to seek instructions concerning the administration of this Trust Agreement from any court of competent jurisdiction; (h) the Property Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Trust Agreement at the request or direction of any of the Securityholders pursuant to this Trust Agreement, unless such Securityholders shall have offered to the Property Trustee such security and/or indemnity reasonably satisfactory to and requested by the Property Trustee against the costs, expenses and liabilities (including reasonable attorney's fees and expenses) which might be incurred by it in compliance with such request or direction, and including such reasonable advances as may be requested by the Property Trustee; (i) the Property Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, direction, order, approval, bond, debenture, note or other evidence of indebtedness or other paper or document, unless specifically requested and directed to do so in writing by one or more Securityholders, but the Property Trustee may make such further inquiry or investigation into such facts or matters as it may see fit; (j) the Property Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through its agents or attorneys, provided that the Property Trustee shall be responsible for its own negligence or recklessness with respect to selection of any agent or attorney appointed by it hereunder, but shall not be responsible for any misconduct or negligence on the part of such person; (k) whenever in the administration of this Trust Agreement the Property Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Property Trustee (i) may request instructions from the Holders of the Trust Securities which instructions may only be given by the Holders of the same proportion in Liquidation Amount of the Trust Securities as would be entitled to direct the Property Trustee under the terms of the Trust Securities in respect of such remedy, right or action, (ii) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (iii) shall be protected in conclusively relying on or acting in accordance with such instructions; and (l) except as otherwise expressly provided by this Trust Agreement, the Property Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Trust Agreement. No provision of this Trust Agreement shall be deemed to impose any duty or obligation on the Property Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it, in any jurisdiction in which it shall be illegal, or in which the Property Trustee shall be unqualified or incompetent in accordance 37 with applicable law, to perform any such act or acts, or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Property Trustee shall be construed to be a duty. (m) the Property Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence or willful misconduct, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Declaration. Section 8.04. Not Responsible For Recitals Or Issuance Of Securities. The recitals contained herein and in the Trust Securities Certificates shall be taken as the statements of the Trust, and the Trustees do not assume any responsibility for their correctness. The Trustees (as such) shall not be accountable for the use or application by the Depositor of the proceeds of the Subordinated Debentures. The Trustees make no representations as to the value or condition of the Trust Property or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration or the Trust Securities. Section 8.05. May Hold Securities. Any Trustee or any other agent of any Trustee or the Trust, in its individual or any other capacity, may become the owner or pledgee of Trust Securities and, subject to Sections 8.08 and 8.13 and except as provided in the definition of the term "Outstanding" in Article I, may otherwise deal with the Trust with the same rights it would have if it were not a Trustee or such other agent. Section 8.06. Compensation; Indemnity; Fees. The Depositor agrees: (a) to pay to the Trustees such reasonable compensation as the Depositor and each Trustee may agree from time to time in writing for all services rendered by them hereunder (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); (b) except as otherwise expressly provided herein, to reimburse the Trustees upon request for all reasonable expenses, disbursements and advances incurred or made by the Trustees in accordance with any provision of this Trust Agreement (including the reasonable compensation and the expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to such Trustee's negligence, bad faith or willful misconduct (or, in the case of the Administrative Trustees or the Delaware Trustee, any such expense, disbursement or advance as may be attributable to its, his or her gross negligence, bad faith or willful misconduct); and (c) to the fullest extent permitted by applicable law, to indemnify and hold harmless (i) the Trust Company, the Delaware Bank, each Trustee and any predecessor Trustee, (ii) any Affiliate of the Trust Company, the Delaware Bank or any Trustee, (iii) any officer, director, shareholder, employee, representative or agent of the Trust Company, the Delaware Bank or any Trustee, and (iv) any employee or agent of the Trust, (each referred to as an "Indemnified Person") from and against, any loss, damage, liability, tax, penalty, expense or claim of any kind or nature whatsoever incurred by such Indemnified Person arising out of or in connection with 38 the creation, operation or dissolution of the Trust or any act or omission performed or omitted by such Indemnified Person in a manner it reasonably believed to be within the scope of authority conferred on such Indemnified Person by this Trust Agreement, except that no Indemnified Person shall be entitled to be indemnified in respect of any (x) loss, damage or claim to the extent incurred by such Indemnified Person by reason of its own gross negligence, bad faith or willful misconduct with respect to such acts or omissions (or, in the case of the Property Trustee, by reason of its own negligence, bad faith or willful misconduct with respect to such acts or omissions) or (y) income or other taxes payable with respect to compensation for its services. (d) to the fullest extent permitted by applicable law, to advance, from time to time, prior to the final disposition of any claim, demand, action, suit or proceeding for which indemnification is authorized pursuant to subsection (c) above, any expenses (including reasonable legal fees) incurred by an Indemnified Person in defending such claim, demand, action, suit or proceeding upon receipt by the Depositor of an undertaking by or on behalf of the Indemnified Person to repay such amount if it shall be determined that the Indemnified Person is not entitled to be indemnified as authorized in subsection (c) above. This indemnification shall survive the termination of this Declaration. (e) The provisions of this Section 8.06 shall survive the termination of this Trust Agreement and shall survive the resignation or removal of any Trustee. (f) The Depositor and any Trustee may engage in or possess an interest in other business ventures of any nature or description, independently or with others, similar or dissimilar to the business of the Trust, and the Trust and the Holders of Trust Securities shall have no rights by virtue of the Trust Agreement in and to such independent ventures or the income or profits derived therefrom, and the pursuit of any such venture, even if competitive with the business of the Trust, shall not be deemed wrongful or improper. Neither the Depositor nor any Trustee shall be obligated to present any particular investment or other opportunity to the Trust even if such opportunity is of a character that, if presented to the Trust, could be taken by the Trust, and the Depositor or any Trustee shall have the right to take for its own account (individually or as a partner or fiduciary) or to recommend to others any such particular investment or other opportunity. Any Trustee may engage or be interested in any financial or other transaction with the Depositor or any Affiliate of the Depositor, or may act as depository for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Depositor or its Affiliates. (g) No Trustee may claim any Lien on any Trust Property as a result of any amount due pursuant to this Section 8.06. Section 8.07. Corporate Property Trustee Required; Eligibility Of Trustees. (a) There shall at all times be a Property Trustee hereunder with respect to the Trust Securities. The Property Trustee shall be a Person that is eligible pursuant to the Trust Indenture Act to act as such and has a combined capital and surplus of at least $500,000 (and its principal parent holding company having a combined capital and surplus of at least $50 million). If any such Person publishes reports of condition at least annually, pursuant to law or to the 39 requirements of its supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time the Property Trustee with respect to the Trust Securities shall cease to be eligible in accordance with the provisions of this Section, it shall resign immediately in the manner and with the effect hereinafter specified in this Article. (b) There shall at all times be one or more Administrative Trustees hereunder with respect to the Trust Securities. Each Administrative Trustee shall be either a natural person who is at least 21 years of age or a legal entity that shall act through one or more persons authorized to bind that entity. (c) There shall at all times be a Delaware Trustee with respect to the Trust Securities. The Delaware Trustee shall either be (i) a natural person who is at least 21 years of age and a resident of the State of Delaware or (ii) a legal entity with its principal place of business in the State of Delaware and that otherwise meets the requirements of applicable Delaware law that shall act through one or more persons authorized to bind such entity. Section 8.08. Conflicting Interests. If the Property Trustee has or shall acquire a conflicting interest within the meaning of the Trust Indenture Act, the Property Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to the provisions of, the Trust Indenture Act and this Trust Agreement. Section 8.09. Co-Trustees And Separate Trustee. Unless an Event of Default shall have occurred and be continuing, at any time or times, for the purpose of meeting the legal requirements of the Trust Indenture Act or of any jurisdiction in which any part of the Trust Property may at the time be located, the Depositor and the Administrative Trustees shall have power to appoint, and upon the written request of the Property Trustee, the Depositor and the Administrative Trustees shall for such purpose join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to appoint, one or more Persons approved by the Property Trustee either to act as co-trustee, jointly with the Property Trustee, of all or any part of such Trust Property, or to the extent required by law to act as separate trustee of any such property, in either case with such powers as may be provided in the instrument of appointment, and to vest in such Person or Persons in the capacity aforesaid, any property, title, right or power deemed necessary or desirable, subject to the other provisions of this Section. If the Depositor and the Administrative Trustees do not join in such appointment within 15 days after the receipt by them of a request so to do, or in case a Debenture Event of Default has occurred and is continuing, the Property Trustee alone shall have power to make such appointment. Any co-trustee or separate trustee appointed pursuant to this Section shall either be (i) a natural person who is at least 21 years of age and a resident of the United States or (ii) a legal entity with its principal place of business in the United States that shall act through one or more persons authorized to bind such entity. Should any written instrument from the Depositor be required by any co- trustee or separate trustee so appointed for more fully confirming to such co- trustee or separate trustee such 40 property, title, right, or power, any and all such instruments shall, on request, be executed, acknowledged, and delivered by the Depositor. Every co-trustee or separate trustee shall, to the extent permitted by law, but to such extent only, be appointed subject to the following terms, namely: (a) The Trust Securities shall be executed and delivered and all rights, powers, duties and obligations hereunder in respect of the custody of securities, cash and other personal property held by, or required to be deposited or pledged with, the Trustees specified hereunder, shall be exercised, solely by such Trustees and not by such co-trustee or separate trustee. (b) The rights, powers, duties and obligations hereby conferred or imposed upon the Property Trustee in respect of any property covered by such appointment shall be conferred or imposed upon and exercised or performed by the Property Trustee or by the Property Trustee and such co-trustee or separate trustee jointly, as shall be provided in the instrument appointing such co-trustee or separate trustee, except to the extent that under any law of any jurisdiction in which any particular act is to be performed, the Property Trustee shall be incompetent or unqualified to perform such act, in which event such rights, powers, duties and obligations shall be exercised and performed by such co- trustee or separate trustee. (c) The Property Trustee at any time, by an instrument in writing executed by it, with the written concurrence of the Depositor, may accept the resignation of or remove any co-trustee or separate trustee appointed under this Section, and, in case a Debenture Event of Default has occurred and is continuing, the Property Trustee shall have power to accept the resignation of, or remove, any such co-trustee or separate trustee without the concurrence of the Depositor. Upon the written request of the Property Trustee, the Depositor shall join with the Property Trustee in the execution, delivery and performance of all instruments and agreements necessary or proper to effectuate such resignation or removal. A successor to any co-trustee or separate trustee so resigned or removed may be appointed in the manner provided in this Section 8.09. (d) No co-trustee or separate trustee hereunder shall be personally liable by reason of any act or omission of the Property Trustee or any other trustee hereunder. (e) The Property Trustee shall not be liable by reason of any act or omission of a co-trustee or separate trustee or any other trustee hereunder. (f) Any Act of Holders delivered to the Property Trustee shall be deemed to have been delivered to each such co-trustee and separate trustee. Section 8.10. Resignation And Removal; Appointment Of Successor. No resignation or removal of any Trustee (the "Relevant Trustee") and no appointment of a successor Trustee pursuant to this Article shall become effective until the acceptance of appointment by the successor Trustee in accordance with the applicable requirements of Section 8.11. Subject to the immediately preceding paragraph, the Relevant Trustee may resign at any time by giving written notice thereof to the Securityholders. If the instrument of acceptance by 41 the successor Trustee required by Section 8.11 shall not have been delivered to the Relevant Trustee within 30 days after the giving of such notice of resignation, the Relevant Trustee may petition, at the expense of the Depositor, any court of competent jurisdiction for the appointment of a successor Relevant Trustee. Unless a Debenture Event of Default shall have occurred and be continuing, any Trustee may be removed at any time by Act of the Holder of the Common Securities. If a Debenture Event of Default shall have occurred and be continuing, the Property Trustee or the Delaware Trustee, or both of them, may be removed at such time by Act of the Holders of a majority in Liquidation Amount of the Preferred Securities, delivered to such Relevant Trustee (in its individual capacity and on behalf of the Trust). An Administrative Trustee may be removed by the Holder of the Common Securities at any time. In no event will the Holders of the Preferred Securities have the right to vote to appoint, remove or replace the Administrative Trustees. If the Relevant Trustee shall resign, be removed or become incapable of acting as Trustee, or if a vacancy shall occur in the office of such Relevant Trustee for any cause, at a time when no Debenture Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities delivered to the retiring Relevant Trustee, shall promptly appoint a successor Trustee or Trustees with respect to the Trust Securities and the Trust, and the successor Trustee shall comply with the applicable requirements of Section 8.11. If the Property Trustee or the Delaware Trustee shall resign, be removed or become incapable of continuing to act as the Property Trustee or the Delaware Trustee, as the case may be, at a time when a Debenture Event of Default shall have occurred and is continuing, the Holders of the Preferred Securities by Act of the Holders of a majority in Liquidation Amount of the Preferred Securities then Outstanding delivered to the retiring Relevant Trustee, shall promptly appoint a successor Trustee or Trustees, and such successor Trustee shall comply with the applicable requirements of Section 8.11. If an Administrative Trustee shall resign, be removed or become incapable of acting as Administrative Trustee, at a time when a Debenture Event of Default shall have occurred and be continuing, the Holder of the Common Securities, by Act of the Holder of the Common Securities delivered to an Administrative Trustee, shall promptly appoint a successor Administrative Trustee or Administrative Trustees, and such successor Administrative Trustee or Administrative Trustees shall comply with the applicable requirements of Section 8.11. If no successor Trustee with respect to the Trust Securities shall have been so appointed by the Holder of the Common Securities or the Holders of the Preferred Securities, as the case may be, and accepted appointment in the manner required by Section 8.11, any Securityholder who has been a Securityholder for at least six months may, on behalf of such Securityholder and all others similarly situated, petition a court of competent jurisdiction for the appointment of a successor Trustee. The Property Trustee shall give notice of each resignation and each removal of a Relevant Trustee and each appointment of a successor Trustee to all Securityholders in the manner provided in Section 10.08 and shall give notice to the Depositor. Each notice shall include the name of the successor Trustee and the address of its corporate trust office if it is the Property Trustee. 42 Subject to the foregoing or any other provision of this Trust Agreement, in the event any Administrative Trustee or a Delaware Trustee who is a natural person dies or becomes, in the opinion of the Depositor, incompetent or incapacitated, the vacancy created by such death, incompetence or incapacity may be filled by (a) the unanimous act of the remaining Administrative Trustees if there are at least two of them or (b) otherwise by the Depositor (with the successor in each case being a Person who satisfies the eligibility requirement for Administrative Trustees or the Delaware Trustee, as the case may be, set forth in Section 8.07). Section 8.11. Acceptance Of Appointment By Successor. In case of the appointment hereunder of a successor Trustee, the retiring Relevant Trustee and each successor Trustee shall execute and deliver an instrument wherein each successor Trustee shall accept such appointment and which shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, each successor Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust, and upon the execution and delivery of such instrument, the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Trust Securities and the Trust; but, on request of the Trust or any successor Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver to such successor Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder with respect to the Trust Securities and the Trust. Upon request of any such successor Trustee, the Trust shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor Trustee all such rights, powers and trusts referred to in the immediately preceding paragraph, as the case may be. No successor Trustee shall accept its appointment unless at the time of such acceptance such successor Trustee shall be qualified and eligible under this Article. Section 8.12. Merger, Conversion, Consolidation Or Succession To Business. Any Person into or to which a Trustee that is not a natural person may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Relevant Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of such Relevant Trustee, shall be the successor of such Relevant Trustee hereunder, provided such Person shall be otherwise qualified and eligible under this Article, without the execution or filing of any paper or any further act on the part of any of the parties hereto. Section 8.13. Preferential Collection Of Claims Against Depositor Or Trust. If and when the Property Trustee shall be or become a creditor of the Depositor or the Trust (or any other obligor upon the Subordinated Debentures or the Trust Securities), the Property Trustee shall be subject to and shall take all actions necessary in order to comply with the provisions of the Trust Indenture Act regarding the collection of claims against the Depositor or Trust (or any such other obligor). 43 Section 8.14. Reports By Property Trustee. (a) Not later than January 31 of each year commencing with January 31, 2000, the Property Trustee shall transmit to all Securityholders in accordance with Section 10.08, and to the Depositor, a brief report dated as of the preceding December 31 with respect to: (i) its eligibility under Section 8.07 or, in lieu thereof, if to the best of its knowledge it has continued to be eligible under said Section, a written statement to such effect; and (ii) any change in the property and funds in its possession as Property Trustee since the date of its last report and any action taken by the Property Trustee in the performance of its duties hereunder which it has not previously reported and which in its opinion materially affects the Trust Securities. (b) In addition the Property Trustee shall transmit to Securityholders such reports concerning the Property Trustee and its actions under this Trust Agreement as may be required pursuant to the Trust Indenture Act at the times and in the manner provided pursuant thereto. (c) A copy of each such report shall, at the time of such transmission to Holders, be filed by the Property Trustee with each national securities exchange or other organization upon which the Trust Securities are then listed, with the Commission and with the Depositor. Section 8.15. Reports To The Property Trustee. The Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act (if any) and the compliance certificate required by Section 314(a) of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture Act. Section 8.16. Evidence Of Compliance With Conditions Precedent. Each of the Depositor and the Administrative Trustees on behalf of the Trust shall provide to the Property Trustee such evidence of compliance with the conditions precedent, if any, provided for in this Trust Agreement that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) of the Trust Indenture Act shall be given in the form of an Officers' Certificate. Section 8.17. Number Of Trustees. (a) The number of Trustees shall be five, provided that the Holder of the Common Securities by written instrument may increase or decrease the number of Administrative Trustees. The Property Trustee and the Delaware Trustee may be the same Person. (b) If a Trustee ceases to hold office for any reason and the number of Administrative Trustees is not reduced pursuant to Section 8.17(a), or if the number of Trustees 44 is increased pursuant to Section 8.17(a), a vacancy shall occur. The vacancy shall be filled with a Trustee appointed in accordance with Section 8.10. (c) The death, resignation, retirement, removal, bankruptcy, incompetence or incapacity to perform the duties of a Trustee shall not operate to annul the Trust. Whenever a vacancy in the number of Administrative Trustees shall occur, until such vacancy is filled by the appointment of an Administrative Trustee in accordance with Section 8.10, the Administrative Trustees in office, regardless of their number (and notwithstanding any other provision of this Trust Agreement), shall have all the powers granted to the Administrative Trustees and shall discharge all the duties imposed upon the Administrative Trustees by this Trust Agreement. Section 8.18. Delegation Of Power. (a) Any Administrative Trustee may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 his or her power for the purpose of executing any documents contemplated in Section 2.07(a)(i); and (b) The Administrative Trustees shall have power to delegate from time to time to such of their number or to the Depositor the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrative Trustees or otherwise as the Administrative Trustees may deem expedient, to the extent such delegation is not prohibited by applicable law or contrary to the provisions of the Trust, as set forth herein. Section 8.19. Voting. Except as otherwise provided in this Trust Agreement, the consent or approval of the Administrative Trustees shall require consent or approval by not less than a majority of the Administrative Trustees, unless there are only two, in which case the consent or approval of both shall be required. Article IX DISSOLUTION, LIQUIDATION AND MERGER Section 9.01. Dissolution Upon Expiration Date. Unless earlier dissolved, the Trust shall automatically dissolve on June 18, 2029 (the "Expiration Date"), and thereafter the Trust Property shall be distributed in accordance with Section 9.04. Section 9.02. Early Dissolution. The first to occur of any of the following events is an "Early Termination Event," upon the occurrence of which the Trust shall dissolve: (a) the occurrence of a Bankruptcy Event in respect of, or the dissolution or liquidation of, the Depositor; (b) delivery of written direction to the Property Trustee by the Depositor at any time (which direction is wholly optional and within the discretion of the Depositor) to dissolve the Trust and distribute the Subordinated 45 Debentures to Securityholders in exchange for the Preferred Securities in accordance with Section 9.04; (c) the redemption of all of the Preferred Securities in connection with the redemption of all of the Subordinated Debentures; and (d) an order for dissolution of the Trust shall have been entered by a court of competent jurisdiction. Section 9.03. Termination. The respective obligations and responsibilities of the Trustees and the Trust created and continued hereby shall terminate upon the filing of a certificate of cancellation by the Administrative Trustee under the Delaware Business Trust Act, and the occurrence of all of the following: (a) the distribution by the Property Trustee to Securityholders upon the liquidation of the Trust pursuant to Section 9.04, or upon the redemption of all of the Trust Securities pursuant to Section 4.02, of all amounts required to be distributed hereunder upon the final payment of the Trust Securities; (b) the payment of any expenses owed by the Trust; and (c) the discharge of all administrative duties of the Administrative Trustees, including the performance of any tax reporting obligations with respect to the Trust or the Securityholders. Section 9.04. Liquidation. (a) If an Early Termination Event specified in clause (a), (b), or (d) of Section 9.02 occurs or upon the Expiration Date, the Trust shall be liquidated by the Administrative Trustees as expeditiously as the Administrative Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, to each Securityholder a Like Amount of Subordinated Debentures, subject to Section 9.04(d). Notice of liquidation shall be prepared by or on behalf of the Administrative Trustees and given by the Property Trustee by first-class mail, postage prepaid, mailed not less than 30 nor more than 60 days prior to the Liquidation Date to each Holder of Trust Securities at such Holder's address appearing in the Securities Register. All notices of liquidation shall: (i) state the Liquidation Date; (ii) state that from and after the Liquidation Date, the Trust Securities will no longer be deemed to be Outstanding and any Trust Securities Certificates not surrendered for exchange will be deemed to represent a Like Amount of Subordinated Debentures; and (iii) provide such information with respect to the mechanics by which Holders may exchange Trust Securities for Subordinated Debentures, or if Section 46 9.04(d) applies receive a Liquidation Distribution, as the Administrative Trustees or the Property Trustee shall deem appropriate. (b) Except where Section 9.02(c) or 9.04(d) applies, in order to effect the liquidation of the Trust and distribution of the Subordinated Debentures to Securityholders, the Property Trustee shall establish a record date for such distribution (which shall be not more than 45 days prior to the Liquidation Date) and, either itself acting as exchange agent or through the appointment of a separate exchange agent, shall establish such procedures as it shall deem appropriate to effect the distribution of Subordinated Debentures in exchange for the Outstanding Trust Securities. (c) Except where Section 9.02(c) or 9.04(d) applies, after the Liquidation Date, (i) the Trust Securities will no longer be deemed to be Outstanding, (ii) unless the Depositor elects to issue a Global Subordinated Debenture (as defined in the Indenture) pursuant to the provisions of the Indenture, definitive certificates representing a Like Amount of Subordinated Debentures will be issued to Holders of Trust Securities upon surrender of their related Trust Securities Certificates to the Administrative Trustees or their agent for exchange, (iii) the Depositor shall use its reasonable efforts to have the Subordinated Debentures listed on the NASDAQ Stock Market or on such other securities exchange or other organization as the Preferred Securities may then be listed or traded, (iv) any Trust Securities Certificates not so surrendered for exchange will be deemed to represent a Like Amount of Subordinated Debentures, accruing interest at the rate provided for in the Subordinated Debentures from the last Distribution Date on which a Distribution was made on such Trust Securities Certificates until such certificates are so surrendered (and until the Holder surrenders such certificates, no payments of interest or principal will be made to such Holder with respect to such Subordinated Debentures) and (v) all rights of Securityholders holding Trust Securities will cease, except the right of such Securityholders to receive Subordinated Debentures upon surrender of Trust Securities Certificates. (d) In the event that, notwithstanding the other provisions of this Section 9.04, whether because of an order for dissolution entered by a court of competent jurisdiction or otherwise, distribution of the Subordinated Debentures in the manner provided herein is determined by the Property Trustee not to be practical, the Trust shall be dissolved and the Trust Property shall be liquidated by the Property Trustee in such manner as the Property Trustee determines. In such event, on the date of the dissolution of the Trust, Securityholders will be entitled to receive out of the assets of the Trust available for distribution to Securityholders, after satisfaction of liabilities to creditors of the Trust as provided by applicable law, an amount equal to the Liquidation Amount per Trust Security plus accumulated and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"). If, upon any such dissolution, the Liquidation Distribution can be paid only in part because the Trust has insufficient assets legally available to pay in full the aggregate Liquidation Distribution, then, subject to the next succeeding sentence, the amounts payable by the Trust on the Trust Securities shall be paid on a pro rata basis (based upon Liquidation Amounts). The Holder of the Common Securities will be entitled to receive Liquidation Distributions upon any such dissolution, pro rata (determined as aforesaid) with Holders of Preferred Securities, except that, if a Debenture Event 47 of Default has occurred and is continuing, the Preferred Securities shall have a priority over the Common Securities with respect to any distributions. Section 9.05. Mergers, Consolidations, Amalgamations Or Replacements Of The Trust. The Trust may not merge with or into, consolidate, amalgamate, or be replaced by, or be converted to, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other Person, except pursuant to this Section 9.05. At the request of the Depositor, with the consent of the Administrative Trustees and without the consent of the Holders of the Preferred Securities, the Property Trustee or the Delaware Trustee, the Trust may merge with or into, consolidate, amalgamate, be replaced by or be converted to, or convey, transfer or lease its properties and assets substantially as an entirety to a trust organized as such under the laws of any state; provided, that (i) such successor entity either (a) expressly assumes all of the obligations of the Trust with respect to the Preferred Securities or (b) substitutes for the Preferred Securities other securities having substantially the same terms as the Preferred Securities (the "Successor Securities") so long as the Successor Securities rank the same as the Preferred Securities rank in priority with respect to distributions and payments upon liquidation, redemption and otherwise, (ii) the Depositor expressly appoints a trustee of such successor entity possessing substantially the same powers and duties as the Property Trustee as the holder of the Subordinated Debentures, (iii) such merger, consolidation, amalgamation, replacement, conversion, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Preferred Securities (including any Successor Securities) in any material respect, (iv) such successor entity has a purpose identical to that of the Trust, (v) the Successor Securities will be listed or traded on any national securities exchange or other organization on which the Preferred Securities may then be listed, (vi) prior to such merger, consolidation, amalgamation, replacement, conversion, conveyance, transfer or lease, the Depositor has received an Opinion of Counsel experienced in such matters to the effect that (a) such merger, consolidation, amalgamation, replacement, conversion, conveyance, transfer or lease does not adversely affect the rights, preferences and privileges of the Holders of the Preferred Securities (including any Successor Securities) in any material respect, and (b) following such merger, consolidation, amalgamation, replacement, conversion, conveyance, transfer or lease, neither the Trust nor such successor entity will be required to register as an "investment company" under the Investment Company Act and (vii) the Depositor owns all of the Common Securities of such successor entity and guarantees the obligations of such successor entity under the Successor Securities at least to the extent provided by the Guarantee. Notwithstanding the foregoing, the Trust shall not, except with the consent of Holders of 100% in Liquidation Amount of the Preferred Securities, consolidate, amalgamate, merge with or into, or be replaced by, or be converted to or convey, transfer or lease its properties and assets substantially as an entirety to any other Person or permit any other Person to consolidate, amalgamate, merge with or into, or replace it, if such consolidation, amalgamation, merger, replacement or conversion would cause the Trust or the successor entity to be classified as other than a grantor trust for United States federal income tax purposes. 48 ARTICLE X MISCELLANEOUS PROVISIONS Section 10.01. Limitation Of Rights Of Securityholders. The death or incapacity of any Person having an interest, beneficial or otherwise, in Trust Securities shall not operate to terminate this Trust Agreement, nor entitle the legal representatives or heirs of such Person, to claim an accounting, take any action or bring any proceeding in any court for a partition or winding-up of the arrangements contemplated hereby, nor otherwise affect the rights, obligations and liabilities of the parties hereto or any of them. Section 10.02. Amendment. (a) This Trust Agreement may be amended from time to time by the Trustees and the Depositor, without the consent of any Securityholders, (i) as provided in Section 8.11 with respect to acceptance of appointment by a successor Trustee, (ii) to cure any ambiguity, correct or supplement any provision herein or therein which may be inconsistent with any other provision herein or therein, or to make any other provisions with respect to matters or questions arising under this Trust Agreement, that shall not be inconsistent with the other provisions of this Trust Agreement, or (iii) to modify, eliminate or add to any provisions of this Trust Agreement to such extent as shall be necessary to ensure that the Trust will be classified for United States federal income tax purposes as a grantor trust at all times that any Trust Securities are Outstanding or to ensure that the Trust will not be required to register as an "investment company" under the Investment Company Act; provided, however, that in the case of clause (ii), such action shall not adversely affect in any material respect the interests of any Securityholder, and any amendments of this Trust Agreement shall become effective when notice thereof is given to the Securityholders. (b) Except as provided in Section 6.01(c) or Section 10.02(c) hereof, any provision of this Trust Agreement may be amended by the Trustees and the Depositor (i) with the consent of Securityholders representing not less than a majority (based upon Liquidation Amounts) of the Trust Securities then Outstanding and (ii) upon receipt by the Trustees of an Opinion of Counsel to the effect that such amendment or the exercise of any power granted to the Trustees in accordance with such amendment will not affect the Trust's status as a grantor trust for United States federal income tax purposes or the Trust's exemption from status of an "investment company" under the Investment Company Act. (c) In addition to and notwithstanding any other provision in this Trust Agreement, without the consent of each affected Securityholder (such consent being obtained in accordance with Section 6.03 or 6.06 hereof), this Trust Agreement may not be amended to (i) change the amount or timing of any distribution on the Trust Securities or otherwise adversely affect the amount of any distribution required to be made in respect of the Trust Securities as of a specified date or (ii) restrict the right of a Securityholder to institute suit for the enforcement of any such payment on or after such date; notwithstanding any other provision herein, without the 49 unanimous consent of the Securityholders (such consent being obtained in accordance with Section 6.03 or 6.06 hereof), this paragraph (c) of this Section 10.02 may not be amended. (d) Notwithstanding any other provisions of this Trust Agreement, no Trustee shall enter into or consent in writing to any amendment to this Trust Agreement which would cause the Trust to fail or cease to qualify for the exemption from status of an "investment company" under the Investment Company Act or to fail or cease to be classified as a grantor trust for United States federal income tax purposes. (e) Notwithstanding anything in this Trust Agreement to the contrary, without the consent of the Depositor, this Trust Agreement may not be amended in a manner which imposes any additional obligation on the Depositor. (f) In the event that any amendment to this Trust Agreement is made, the Administrative Trustees shall promptly provide to the Depositor and each other Trustee a copy of such amendment. (g) Neither the Property Trustee nor the Delaware Trustee shall be required to enter into any amendment to this Trust Agreement, including to this Section 10.02(g), which affects its own rights, powers, duties or immunities under this Trust Agreement, and any such amendment or purported amendment shall be void and ineffective without the prior written consent of such Trustee, which consent may be withheld in its sole discretion. The Property Trustee and Delaware Trustee shall be entitled to receive an Opinion of Counsel and an Officers' Certificate stating that any amendment to this Trust Agreement is in compliance with this Trust Agreement. Section 10.03. Separability. In case any provision in this Trust Agreement or in the Trust Securities Certificates 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 10.04. Governing Law. THIS TRUST AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF EACH OF THE SECURITYHOLDERS, THE TRUST AND THE TRUSTEES WITH RESPECT TO THIS TRUST AGREEMENT AND THE TRUST SECURITIES SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES). PROVIDED, HOWEVER, THAT, TO THE FULLEST -------- ------- EXTENT PERMITTED BY LAW, THERE SHALL NOT BE APPLICABLE TO THE PARTIES HEREUNDER OR THIS DECLARATION ANY PROVISION OF THE LAWS (COMMON OR STATUTORY) OF THE STATE OF DELAWARE PERTAINING TO TRUSTS THAT RELATE TO OR REGULATE, IN A MANNER INCONSISTENT WITH THE TERMS HEREOF (A) THE FILING WITH ANY COURT OR GOVERNMENTAL BODY OR AGENCY OF TRUSTEE ACCOUNTS OR SCHEDULES OF TRUSTEE FEES AND CHARGES, (B) AFFIRMATIVE REQUIREMENTS TO POST BONDS FOR TRUSTEES, OFFICERS, AGENTS OR 50 EMPLOYEES OF A TRUST, (C) THE NECESSITY FOR OBTAINING COURT OR OTHER GOVERNMENTAL APPROVAL CONCERNING THE ACQUISITION, HOLDING OR DISPOSITION OF REAL OR PERSONAL PROPERTY, (D) FEES OR OTHER SUMS PAYABLE TO TRUSTEES, OFFICERS, AGENTS OR EMPLOYEES OF A TRUST, (E) THE ALLOCATION OF RECEIPTS AND EXPENDITURES TO INCOME OR PRINCIPAL, (F) RESTRICTIONS OR LIMITATIONS ON THE PERMISSIBLE NATURE, AMOUNT OR CONCENTRATION OF TRUST INVESTMENTS OR REQUIREMENTS RELATING TO THE TITLING, STORAGE OR OTHER MANNER OF HOLDING OR INVESTING TRUST ASSETS OR (G) THE ESTABLISHMENT OF FIDUCIARY OR OTHER STANDARDS OF RESPONSIBILITY OR LIMITATIONS ON THE ACTS OR POWERS OF TRUSTEES THAT ARE INCONSISTENT WITH THE LIMITATIONS OR AUTHORITIES AND POWERS OF THE TRUSTEES HEREUNDER AS SET FORTH OR REFERENCED IN THIS DECLARATION. SECTION 3540 OF TITLE 12 OF THE DELAWARE CODE SHALL NOT APPLY TO THE TRUST. Section 10.05. Payments Due On Non-Business Day. If the date fixed for any payment on any Trust Security shall be a day that is not a Business Day, then such payment need not be made on such date but may be made on the next succeeding day which is a Business Day (except as otherwise provided in Sections 4.01(a) and 4.02(d)), with the same force and effect as though made on the date fixed for such payment, and no Distribution shall accumulate thereon for the period after such date. Section 10.06. Successors. This Trust Agreement shall be binding upon and shall inure to the benefit of any successor to the Depositor, the Trust or the Relevant Trustee(s), including any successor by operation of law. Except in connection with a consolidation, merger or sale involving the Depositor that is permitted under Article Twelve of the Indenture and pursuant to which the assignee agrees in writing to perform the Depositor's obligations hereunder, the Depositor shall not assign its obligations hereunder. Section 10.07. Headings. The Article and Section headings are for convenience only and shall not affect the construction of this Trust Agreement. Section 10.08. Reports, Notices And Demands. Any report, notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon any Securityholder or the Depositor may be given or served in writing by deposit thereof, first-class postage prepaid, in the United States mail, hand delivery or facsimile transmission, in each case, addressed, (a) in the case of a Holder of Preferred Securities, to such Securityholder as such Securityholder's name and address may appear on the Securities Register; and (b) in the case of the Holder of the Common Securities or the Depositor, to Bank of the Ozarks, Inc., 12615 Chenal Parkway, Little Rock, Arkansas 72231, Attention: Chief Executive Officer; Facsimile No.: (501) 978-2205. Any notice to the Holders of the Preferred Securities shall also be given to such Owners as have, within two years preceding the giving of such notice, filed their names and addresses with the Property Trustee for that purpose. Such notice, demand or other communication to or upon a Securityholder shall be deemed to have been sufficiently given or made, for all purposes, upon hand delivery, mailing or transmission. 51 Any notice, demand or other communication which by any provision of this Trust Agreement is required or permitted to be given or served to or upon the Trust, the Property Trustee, the Delaware Trustee or the Administrative Trustees shall be given in writing addressed (until another address is published by the Trust) as follows: (a) with respect to the Property Trustee to FMB Trust Company, National Association, Mail Code 101-591, 25 South Charles Street, Baltimore, Maryland 21203, Attention: Corporate Trust Services; (b) with respect to the Delaware Trustee, to First Omni Bank, National Association, Mail Code 101-591, 499 Mitchell Street, Millsboro, Delaware 19966, Attention: Corporate Trust Services; and (c) with respect to the Administrative Trustees, to them at the address above for notices to the Depositor, marked "Attention: Administrative Trustees of Ozark Capital Trust." Such notice, demand or other communication to or upon the Trust, the Delaware Trustee or the Property Trustee shall be deemed to have been sufficiently given or made only upon actual receipt of the writing by such Person. Section 10.09. Agreement Not To Petition. Each of the Trustees and the Depositor agree for the benefit of the Securityholders that, until at least one year and one day after the Trust has been terminated in accordance with Article IX, they shall not file, or join in the filing of, a petition against the Trust under any bankruptcy, insolvency, reorganization or other similar law (including, without limitation, the United States Bankruptcy Code) (collectively, "Bankruptcy Laws") or otherwise join in the commencement of any proceeding against the Trust under any Bankruptcy Law. In the event the Depositor takes action in violation of this Section 10.09, the Property Trustee agrees, for the benefit of Securityholders, that at the expense of the Depositor (which expense shall be paid prior to the filing), it shall file an answer with the bankruptcy court or otherwise properly contest the filing of such petition by the Depositor against the Trust or the commencement of such action and raise the defense that the Depositor has agreed in writing not to take such action and should be stopped and precluded therefrom. The provisions of this Section 10.09 shall survive the termination of this Trust Agreement. Section 10.10. Trust Indenture Act; Conflict With Trust Indenture Act. (a) This Trust Agreement is subject to the provisions of the Trust Indenture Act that are required to be part of this Trust Agreement and shall, to the extent applicable, be governed by such provisions. (b) The Property Trustee shall be the only Trustee which is a trustee for the purposes of the Trust Indenture Act. (c) If any provision hereof limits, qualifies or conflicts with another provision hereof which is required to be included in this Trust Agreement by any of the provisions of the Trust Indenture Act, such required provision shall control. If any provision of this Trust Agreement modifies or excludes any provision of the Trust Indenture Act which may be so modified or excluded, the latter provision shall be deemed to apply to this Trust Agreement as so modified or to be excluded, as the case may be. 52 (d) The application of the Trust Indenture Act to this Trust Agreement shall not affect the nature of the Trust Securities as equity securities representing undivided beneficial interests in the assets of the Trust. Section 10.11. Acceptance Of Terms Of Trust Agreement, Guarantee And Indenture. THE RECEIPT AND ACCEPTANCE OF A TRUST SECURITY OR ANY INTEREST THEREIN BY OR ON BEHALF OF A SECURITYHOLDER OR ANY BENEFICIAL OWNER, WITHOUT ANY SIGNATURE OR FURTHER MANIFESTATION OF ASSENT, SHALL CONSTITUTE THE UNCONDITIONAL ACCEPTANCE BY THE SECURITYHOLDER AND ALL OTHERS HAVING A BENEFICIAL INTEREST IN SUCH TRUST SECURITY OF ALL THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT AND AGREEMENT TO THE SUBORDINATION PROVISIONS AND OTHER TERMS OF THE GUARANTEE AND THE INDENTURE, AND SHALL CONSTITUTE THE AGREEMENT OF THE TRUST, SUCH SECURITYHOLDER AND SUCH OTHERS THAT THE TERMS AND PROVISIONS OF THIS TRUST AGREEMENT SHALL BE BINDING, OPERATIVE AND EFFECTIVE AS BETWEEN THE TRUST AND SUCH SECURITYHOLDER AND SUCH OTHERS. Section 10.12. Counterparts. This Trust Agreement may be executed in any number of counterparts, each of which when so executed and delivered shall be an original, and all of which counterparts together shall constitute one and the same agreement. [SIGNATURE PAGE FOLLOWS] 53 BANK OF THE OZARKS, INC., as Depositor By: /s/ George G. Gleason -------------------------------------------- George Gleason Chairman and Chief Executive Officer FMB TRUST COMPANY, NATIONAL ASSOCIATION, as Property Trustee By: /s/ Donald C. Hargadon -------------------------------------------- Name: Donald C. Hargadon Title: Assistant Vice President By: /s/ Robert D. Brown -------------------------------------------- Name: Robert D. Brown Title: Vice President FIRST OMNI BANK, National Association, as Delaware Trustee, and not in its individual capacity By: /s/ Robert D. Brown -------------------------------------------- Name: Robert D. Brown Title: Vice President /s/ George G. Gleason ------------------------------------------------- George Gleason, as Administrative Trustee /s/ Paul Moore ------------------------------------------------- Paul Moore, as Administrative Trustee /s/ Mark D. Ross ------------------------------------------------- Mark Ross, as Administrative Trustee 54 EXHIBIT C THIS CERTIFICATE IS NOT TRANSFERABLE CERTIFICATE NUMBER NUMBER OF SECURITIES ONE *53,351* CERTIFICATE EVIDENCING COMMON SECURITIES OF OZARK CAPITAL TRUST 9.0% COMMON SECURITIES (LIQUIDATION AMOUNT $10.00 PER COMMON SECURITY) OZARK CAPITAL TRUST, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Bank of the Ozarks, Inc. (the "Holder") is the registered owner of Fifty Three Thousand Three Hundred Fifty-One (53,351) securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the "9.0% Common Securities" (liquidation amount $10.00 per Common Security) (the "Common Securities"). In accordance with Section 5.10 of the Trust Agreement (as defined below), the Common Securities are not transferable and any attempted transfer hereof shall be void. The designations, rights, privileges, restrictions, preferences, and other terms and provisions of the Common Securities are set forth in, and this certificate and the Common Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of June 18, 1999, as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of Common Securities as set forth therein. The Trust will furnish a copy of the Trust Agreement to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate this 18th day of June, 1999. OZARK CAPITAL TRUST By: ------------------------------------ Paul Moore, Administrative Trustee EXHIBIT D AGREEMENT AS TO EXPENSES AND LIABILITIES AGREEMENT dated as of June 18, 1999, between BANK OF THE OZARKS, INC., an Arkansas corporation (the "Company"), and OZARK CAPITAL TRUST, a Delaware business trust (the "Trust"). WHEREAS, the Trust intends to issue its Common Securities (the "Common Securities") to, and receive 9.0% Subordinated Debentures due 2029 (the "Subordinated Debentures") from, the Company and to issue and sell 9.0% Cumulative Preferred Securities (the "Preferred Securities") with such powers, preferences and special rights and restrictions as are set forth in the Amended and Restated Trust Agreement of the Trust dated as of June 18, 1999, as the same may be amended from time to time (the "Trust Agreement"); and WHEREAS, the Company will directly or indirectly own all of the Common Securities of the Trust and will issue the Subordinated Debentures. NOW, THEREFORE, in consideration of the purchase by each holder of the Preferred Securities, which purchase the Company hereby agrees shall benefit the Company and which purchase the Company acknowledges will be made in reliance upon the execution and delivery of this Agreement, the Company, including in its capacity as holder of the Common Securities, and the Trust hereby agree as follows: ARTICLE I SECTION 1.01. GUARANTEE BY THE COMPANY. Subject to the terms and conditions hereof, the Company, including in its capacity as holder of the Common Securities, hereby irrevocably and unconditionally guarantees to each person or entity to whom the Trust is now or hereafter becomes indebted or liable (the "Beneficiaries") the full payment, when and as due, of any and all Obligations (as hereinafter defined) to such Beneficiaries. As used herein, "Obligations" means any costs, expenses or liabilities of the Trust other than obligations of the Trust to pay to holders of any Preferred Securities or other similar interests in the Trust the amounts due such holders pursuant to the terms of the Preferred Securities or such other similar interests, as the case may be. This Agreement is intended to be for the benefit of, and to be enforceable by, all such Beneficiaries, whether or not such Beneficiaries have received notice hereof. SECTION 1.02. TERM OF AGREEMENT. This Agreement shall terminate and be of no further force and effect upon the later of (a) the date on which full payment has been made of all amounts payable to all holders of all the Preferred Securities (whether upon redemption, liquidation, exchange or otherwise) and (b) the date on which there are no Beneficiaries remaining; provided, however, that this Agreement shall continue to be effective or shall be reinstated, as the case may be, if at any time any holder of Preferred Securities or any Beneficiary must restore payment of any sums paid under the Preferred Securities, under any Obligation, 1 under the Preferred Securities Guarantee Agreement dated the date hereof by the Company and Property Trustee as Guarantee Trustee or under this Agreement, for any reason whatsoever. This Agreement is continuing, irrevocable, unconditional and absolute. SECTION 1.03. WAIVER OF NOTICE. The Company hereby waives notice of acceptance of this Agreement and of any Obligation to which it applies or may apply, and the Company hereby waives presentment, demand for payment, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. SECTION 1.04. NO IMPAIRMENT. The obligations, covenants, agreements and duties of the Company under this Agreement shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the extension of time for the payment by the Trust of all or any portion of the Obligations or for the performance of any other obligation under, arising out of, or in connection with, the Obligations; (b) any failure, omission, delay or lack of diligence on the part of the Beneficiaries to enforce, assert or exercise any right, privilege, power or remedy conferred on the Beneficiaries with respect to the Obligations or any action on the part of the Trust granting indulgence or extension of any kind; or (c) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust. The Beneficiaries shall not be obligated to give notice to, or obtain the consent of, the Company with respect to the happening of any of the foregoing. SECTION 1.05. ENFORCEMENT. A Beneficiary may enforce this Agreement directly against the Company, and the Company waives any right or remedy to require that any action be brought against the Trust or any other person or entity before proceeding against the Company. ARTICLE II SECTION 2.01. BINDING EFFECT. All guarantees and agreements contained in this Agreement shall bind the successors, assigns, receivers, trustees and representatives of the Company and shall inure to the benefit of the Beneficiaries. SECTION 2.02. AMENDMENT. So long as there remains any Beneficiary or any Preferred Securities are outstanding, this Agreement shall not be modified or amended in any manner adverse to such Beneficiary or to the holders of the Preferred Securities. SECTION 2.03. NOTICES. Any notice, request or other communication required or permitted to be given hereunder shall be given in writing by delivering the same by facsimile 2 transmission (confirmed by mail), telex, or by registered or certified mail, addressed as follows (and if so given, shall be deemed given when mailed or upon receipt of an answer back, if sent by telex): Ozark Capital Trust c/o FMB Trust Company, National Association 25 South Charles Street Baltimore, Maryland 21203 Facsimile No.: (410) 244-4236 Attention: Corporate Trust Services Bank of the Ozarks, Inc. 12615 Chenal Parkway Little Rock, Arkansas 72231 Facsimile No.: (501) 978-2205 Attention: George Gleason SECTION 2.04. GOVERNING LAW. This Agreement shall be governed by and construed and interpreted in accordance with the laws of the State of Delaware (without regard to conflict of laws principles). THIS AGREEMENT is executed as of the day and year first above written. BANK OF THE OZARKS, INC. By: ----------------------------------------- George Gleason, Chairman and Chief Executive Officer OZARK CAPITAL TRUST By: ----------------------------------------- Paul Moore, Administrative Trustee 3 EXHIBIT E This Preferred Security is a global security within the meaning of the Trust Agreement hereinafter referred to and is registered in the name of The Depository Trust Company, a New York corporation (the "Depositary") or a nominee of the Depositary. This Preferred Security is exchangeable for Preferred Securities registered in the name of a person other than the Depositary or its nominee only in the limited circumstances described in the Trust Agreement (as defined below) and no transfer of this Preferred Security (other than a transfer of this Preferred Security as a whole by the Depositary to a nominee of the Depositary or by a nominee of the Depositary to the Depositary or another nominee of the Depositary) may be registered except in limited circumstances. Unless this Preferred Security Certificate is presented by an authorized representative of the Depositary to OZARK CAPITAL TRUST or its agent for registration of transfer, exchange or payment, and any Preferred Security issued is registered in the name of Cede & Co., or such other name as requested by an authorized representative of the Depositary (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of the Depositary), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner hereof, Cede & Co. has an interest herein. Certificate Number Number of Preferred Securities **1** 1,725,000 CUSIP NO. 69 2619 20 8 Certificate Evidencing Preferred Securities of Ozark Capital Trust 9.0% Cumulative Preferred Securities (liquidation amount $10.00 per Preferred Security) OZARK CAPITAL TRUST, a statutory business trust created under the laws of the State of Delaware (the "Trust"), hereby certifies that Cede & Co. (the "Holder") is the registered owner of One Million Seven Hundred Twenty-Five Thousand (1,725,000) preferred securities of the Trust representing undivided beneficial interests in the assets of the Trust and designated the 9.0% Cumulative Preferred Securities (liquidation amount $10.00 per Preferred Security) (the "Preferred Securities"). The Preferred Securities are transferable on the books and records of the Trust, in person or by a duly authorized attorney, upon surrender of this certificate duly endorsed and in proper form for transfer as provided in Section 5.04 of the Trust Agreement (as defined below). The designations, rights, privileges, restrictions, preferences, and other terms and provisions of the Preferred Securities are set forth in, and this certificate and the Preferred Securities represented hereby are issued and shall in all respects be subject to the terms and provisions of, the Amended and Restated Trust Agreement of the Trust dated as of June 18, 1999, as the same may be amended from time to time (the "Trust Agreement"), including the designation of the terms of Preferred Securities as set forth therein. The Holder is entitled to the benefits of the Preferred Securities Guarantee Agreement entered into by Bank of the Ozarks, Inc., an Arkansas corporation, and FMB Trust Company, National Association, as guarantee trustee, dated as of June 18, 1999 (the "Guarantee"), to the extent provided therein. The Trust will furnish a copy of the Trust Agreement and the Guarantee to the Holder without charge upon written request to the Trust at its principal place of business or registered office. Upon receipt of this certificate, the Holder is bound by the Trust Agreement and is entitled to the benefits thereunder. IN WITNESS WHEREOF, one of the Administrative Trustees of the Trust has executed this certificate this 18th day of June, 1999. OZARK CAPITAL TRUST By: ------------------------------------------ --------------------------- Administrative Trustee EX-4.4 3 SUBORDINATED INDENTURE EXHIBIT 4.4 ================================================================================ SUBORDINATED INDENTURE BANK OF THE OZARKS, INC., as Issuer to FMB TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee 9.0% Subordinated Debentures Dated as of June 18, 1999 ================================================================================ BANK OF THE OZARKS, INC. RECONCILIATION AND TIE BETWEEN TRUST INDENTURE ACT OF 1939, AS AMENDED, AND SUBORDINATED INDENTURE, DATED AS OF JUNE 18, 1999 Trust Indenture Act Section Subordinated Indenture Section 310(a) 9.09 310(b) 9.08; 9.10 310(c) Inapplicable 311(a) 9.14 311(b) 9.14 311(c) Inapplicable 312(a) 6.01; 6.02(a) 312(b) 6.02 313(a) 6.04(a) 313(b) 6.04(b) 313(c) 6.04(a); 6.04(b) 313(d) 6.04(c) 314(a) 6.03 314(b) Inapplicable 314(c) 15.07(a) 314(d) Inapplicable 314(e) 15.07(b) 314(f) Inapplicable 315(a) 9.01(a); 9.03 315(b) 9.02 315(c) 9.01(a) 315(d) 9.01(b) 315(e) 7.07 316(a) 7.06; 10.04 316(b) 7.04 316(c) 2.05(a); 6.01 317(a) 7.02 317(b) 5.03 318 15.09 Note: This reconciliation and tie shall not, for any purpose, be deemed to be a part of the Subordinated Indenture. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS.................................................................1 ARTICLE II REGISTRATION AND EXCHANGE OF THE SUBORDINATED DEBENTURES Section 2.01. Designation and Principal Amount.............................8 Section 2.02. Maturity.....................................................8 Section 2.03. Form and Payment.............................................9 Section 2.04. Global Subordinated Debenture................................9 Section 2.05. Interest....................................................11 Section 2.06. Execution, Authentication, Delivery and Dating..............12 Section 2.07. Registration and Transfer...................................12 Section 2.08. Mutilated, Destroyed, Lost and Stolen Subordinated Debentures..................................................13 Section 2.09. CUSIP Numbers...............................................14 ARTICLE III REDEMPTION OF SUBORDINATED DEBENTURES Section 3.01. Redemption..................................................14 Section 3.02. Special Event Redemption....................................14 Section 3.03. Optional Redemption by Company..............................15 Section 3.04. Notice of Redemption........................................15 Section 3.05. Payment Upon Redemption.....................................16 Section 3.06. No Sinking Fund.............................................17 ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD Section 4.01. Extension of Interest Payment Period........................17 Section 4.02. Notice of Extension.........................................17 Section 4.03. Limitation of Transactions During Extension.................18 TABLE OF CONTENTS (continued) Page ARTICLE V PARTICULAR COVENANTS OF THE COMPANY Section 5.01. Payment of Principal and Interest...........................18 Section 5.02. Maintenance of Agency.......................................18 Section 5.03. Paying Agents...............................................19 Section 5.04. Appointment to Fill Vacancy in Office of Trustee............20 Section 5.05. Compliance with Consolidation Provisions....................20 Section 5.06. Restrictions on Certain Payments............................20 Section 5.07. Covenants as to the Trust...................................20 ARTICLE VI SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE Section 6.01. Company to Furnish Trustee Names and Addresses of Securityholders..........................................21 Section 6.02. Preservation of Information; Communications with Securityholders........................................21 Section 6.03. Reports by the Company......................................22 Section 6.04. Reports by the Trustee......................................22 ARTICLE VII REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT Section 7.01. Events of Default...........................................23 Section 7.02. Collection of Indebtedness and Suits for Enforcement by Trustee......................................24 Section 7.03. Application of Moneys Collected.............................26 Section 7.04. Limitation on Suits.........................................26 Section 7.05. Rights and Remedies Cumulative; Delay or Omission Not Waiver......................................27 Section 7.06. Control by Securityholders..................................27 Section 7.07. Undertaking to Pay Costs....................................28 ARTICLE VIII FORM OF SUBORDINATED DEBENTURE AND ORIGINAL ISSUE Section 8.01. Form of Subordinated Debenture..............................28 Section 8.02. Original Issue of Subordinated Debentures...................28 ii TABLE OF CONTENTS (continued) Page ARTICLE IX CONCERNING THE TRUSTEE Section 9.01. Certain Duties and Responsibilities of the Trustee..........29 Section 9.02. Notice of Defaults..........................................30 Section 9.03. Certain Rights of Trustee...................................30 Section 9.04. Trustee not Responsible for Recitals or Issuance of the Subordinated Debentures..............................31 Section 9.05. May Hold Subordinated Debentures............................32 Section 9.06. Moneys Held in Trust........................................32 Section 9.07. Compensation and Reimbursement..............................32 Section 9.08. Reliance on Officers' Certificate...........................33 Section 9.09. Disqualification; Conflicting Interests.....................33 Section 9.10. Corporate Trustee Required; Eligibility.....................33 Section 9.11. Resignation and Removal; Appointment of Successor...........33 Section 9.12. Acceptance of Appointment by Successor......................35 Section 9.13. Merger, Conversion, Consolidation or Succession to Business......................................35 Section 9.14. Preferential Collection of Claims Against the Company.......35 Section 9.15. Appointment of Authenticating Agent.........................36 ARTICLE X CONCERNING THE SECURITYHOLDERS Section 10.01. Evidence of Action by Securityholders......................37 Section 10.02. Proof of Execution by Securityholders......................38 Section 10.03. Who May be Deemed Owners...................................38 Section 10.04. Certain Subordinated Debentures Owned by Company Disregarded.....................................38 Section 10.05. Actions Binding on Future Securityholders..................39 ARTICLE XI SUPPLEMENTAL INDENTURES Section 11.01. Supplemental Indentures Without the Consent of Securityholders.........................................39 Section 11.02. Supplemental Indentures With Consent of Securityholders............................................40 Section 11.03. Effect of Supplemental Indentures..........................40 Section 11.04. Subordinated Debentures Affected by Supplemental Indentures....................................40 Section 11.05. Execution of Supplemental Indentures.......................41 iii TABLE OF CONTENTS (continued) Page ARTICLE XII SUCCESSOR CORPORATION Section 12.01. Company May Consolidate, Etc...............................41 Section 12.02. Successor Substituted......................................41 Section 12.03. Evidence of Consolidation, etc., to Trustee................42 ARTICLE XIII SATISFACTION AND DISCHARGE Section 13.01. Satisfaction and Discharge of Indenture....................42 Section 13.02. Discharge of Obligations...................................43 Section 13.03. Deposited Moneys to be Held in Trust.......................43 Section 13.04. Payment of Moneys held by Paying Agents....................43 Section 13.05. Repayment to Company.......................................43 ARTICLE XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS Section 14.01. No Recourse................................................43 ARTICLE XV MISCELLANEOUS PROVISIONS Section 15.01. Effect on Successors and Assigns...........................44 Section 15.02. Actions by Successor.......................................44 Section 15.03. Surrender of Company Powers................................44 Section 15.04. Notices....................................................44 Section 15.05. Governing Law..............................................45 Section 15.06. Treatment of Subordinated Debentures as Debt...............45 Section 15.07. Compliance Certificates and Opinions.......................45 Section 15.08. Payments on Business Days..................................45 Section 15.09. Conflict with Trust Indenture Act..........................45 Section 15.10. Counterparts...............................................45 Section 15.11. Separability...............................................46 Section 15.12. Assignment.................................................46 Section 15.13. Acknowledgment of Rights...................................46 iv TABLE OF CONTENTS (continued) Page ARTICLE XVI SUBORDINATION OF SUBORDINATED DEBENTURES Section 16.01. Agreement to Subordinate...................................46 Section 16.02. Default on Senior and Subordinated Debt....................47 Section 16.03. Liquidation; Dissolution; Bankruptcy.......................47 Section 16.04. Subrogation................................................48 Section 16.05. Trustee to Effectuate Subordination........................49 Section 16.06. Notice by the Company......................................49 Section 16.07. Rights of the Trustee; Holders of Senior and Subordinated Debt......................................50 Section 16.08. Subordination May Not be Impaired..........................50 EXHIBIT A FORM OF SUBORDINATED DEBENTURE v SUBORDINATED INDENTURE (the "Indenture"), dated as of June 18, 1999, between BANK OF THE OZARKS, INC., an Arkansas corporation (the "Company") and FMB TRUST COMPANY, NATIONAL ASSOCIATION, a national banking association, as trustee (the "Trustee"); WHEREAS, for its lawful corporate purposes, the Company has duly authorized the execution and delivery of this Indenture to provide for the issuance of its securities to be known as its 9.0% Subordinated Debentures due June 18, 2029 (hereinafter referred to as the "Subordinated Debentures"), the form and substance of such Subordinated Debentures and the terms, provisions and conditions thereof to be set forth as provided in this Indenture; and WHEREAS, Bank of the Ozarks Trust, a Delaware statutory business trust (the "Trust"), has offered to the public $17,250,000 aggregate liquidation amount of its 9.0% Cumulative Trust Preferred Securities (the "Preferred Securities"), representing preferred undivided beneficial interests in the assets of the Trust and proposes to invest the proceeds from such offering, together with the proceeds of the issuance and sale by the Trust to the Company of $533,510 aggregate liquidation amount of its 9.0% Common Securities, in $17,783,510 aggregate principal amount of the Subordinated Debentures; and WHEREAS, the Company has requested that the Trustee execute and deliver this Indenture and has satisfied all requirements necessary to make this Indenture a valid instrument in accordance with its terms, and to make the Subordinated Debentures, when executed by the Company and authenticated and delivered by the Trustee, the valid obligations of the Company; and WHEREAS, to provide the terms and conditions upon which the Subordinated Debentures are to be authenticated, issued and delivered, the Company has duly authorized the execution, delivery and performance of this Indenture; and WHEREAS, all things necessary to make this Indenture a valid agreement of the Company, in accordance with its terms, have been done. NOW, THEREFORE, in consideration of the premises and the purchase of the Subordinated Debentures by the holders thereof, it is mutually covenanted and agreed as follows for the equal and ratable benefit of the holders of Subordinated Debentures: ARTICLE I DEFINITIONS The terms defined in this Section (except as in this Indenture otherwise expressly provided or unless the context otherwise requires) for all purposes of this Indenture and of any indenture supplemental hereto shall have the respective meanings specified in this Section and shall include the plural as well as the singular. All other terms used in this Indenture that are defined in the Trust Indenture Act of 1939, as amended, or that are by reference in said Trust Indenture Act defined in the Securities Act of 1933, as amended (except as herein otherwise expressly provided or unless the context otherwise requires), shall have the meanings assigned to such terms in said Trust Indenture Act and in said Securities Act as in force at the date of the execution of this Indenture. "25% Capital Limitation" means the limitation imposed by the FRB that the proceeds of certain qualifying securities like the Preferred Securities will qualify as Tier 1 capital of the issuer up to an amount not to exceed 25% of the Issuer's Tier 1 capital, or any subsequent limitation adopted by the FRB. "Accelerated Maturity Date" means, if the Company elects to accelerate the Maturity Date in accordance with Section 2.02, the date selected by the Company which is prior to the Scheduled Maturity Date, but is after June 18, 2004. "Additional Sums" shall have the meaning set forth in Section 2.05(c). "Administrative Trustees" has the meaning set forth in the Trust Agreement. "Affiliate" means, with respect to a specified Person, (a) any Person directly or indirectly owning, controlling or holding with power to vote 10% or more of the outstanding voting securities or other ownership interests of the specified Person, (b) any Person 10% or more of whose outstanding voting securities or other ownership interests are directly or indirectly owned, controlled or held with power to vote by the specified Person, (c) any Person directly or indirectly controlling, controlled by, or under common control with the specified Person, (d) a partnership in which the specified Person is a general partner, (e) any officer or director of the specified Person, and (f) if the specified Person is an individual, any entity of which the specified Person is an officer, director or general partner. "Authenticating Agent" means an authenticating agent with respect to the Subordinated Debentures appointed by the Trustee pursuant to Section 9.15. "Bankruptcy Law" means Title 11, U.S. Code, or any similar federal or state law for the relief of debtors. "Board of Directors" means the Board of Directors of the Company or any duly authorized committee of such Board. "Board Resolution" means a copy of a resolution certified by the Secretary or an Assistant Secretary of the Company to have been duly adopted by the Board of Directors and to be in full force and effect on the date of such certification. "Business Day" means any day other than a day on which federal or state banking institutions in the State of Delaware are authorized or obligated by law, executive order or regulation to close or a day on which the Trustee is closed. "Capital Treatment Event" means the reasonable determination by the Company that, as a result of any amendment to, or change (including any proposed change) in, the laws (or any regulations thereunder) of the United States or any political subdivision thereof or therein, or as a result of any official or administrative pronouncement or action or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or such proposed 2 change, pronouncement or decision is announced on or after the date of issuance of the Preferred Securities under the Trust Agreement, there is more than an insubstantial risk of impairment of the Company's ability to treat the Preferred Securities (or any substantial portion thereof) as tier I Capital (or the then equivalent thereof), except for the 25% Capital Limitation, for purposes of any then applicable capital adequacy guidelines of the FRB, as then in effect and applicable to the Company. "Certificate" means a certificate signed by the principal executive officer, the principal financial officer or the principal accounting officer of the Company. The Certificate need not comply with the provisions of Section 15.07. "Commission" means the Securities and Exchange Commission, as from time to time constituted, created under the Exchange Act, or, if at any time after the execution of this Indenture such Commission is not existing and performing the duties now assigned to it under the Trust Indenture Act, then the body performing such duties at such time. "Common Securities" means common undivided beneficial interests in the assets of the Trust which rank pari passu with Preferred Securities issued by the Trust; provided, however, that upon the occurrence of an Event of Default, the rights of holders of Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of Preferred Securities. "Company" means Bank of the Ozarks, Inc., a corporation duly organized and existing under the laws of the State of Arkansas, and, subject to the provisions of Article XII, shall also include its successors and assigns. "Compounded Interest" shall have the meaning set forth in Section 4.01. "Corporate Trust Office" means the office of the Trustee at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at FMB Trust Company, National Association, 25 Charles Street, Baltimore, Maryland 21201, Attention: Corporate Trust Services. "Coupon Rate" shall have the meaning set forth in Section 2.05(a). "Custodian" means any receiver, trustee, assignee, liquidator, or similar official under any Bankruptcy Law. "Debt" means with respect to any Person, whether recourse is to all or a portion of the assets of such Person and whether or not contingent, (a) every obligation of such Person for money borrowed; (b) every obligation of such Person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (c) every reimbursement obligation of such Person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such Person; (d) every obligation of such Person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (e) every capital lease obligation of such Person; and (f) every obligation of the type referred to in clauses (a) through (e) of another Person and all dividends of another 3 Person the payment of which, in either case, such Person has guaranteed or for which such Person is responsible or liable, directly or indirectly, as obligor or otherwise. "Default" means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default. "Deferred Interest" shall have the meaning set forth in Section 4.01. "Depositary" means, with respect to Subordinated Debentures issued as a Global Subordinated Debenture, The Depository Trust Company, New York, New York, another clearing agency, or any successor registered as a clearing agency under the Exchange Act, or other applicable statute or regulation, which, in each case, shall be designated by the Company pursuant to either Section 2.01 or 2.04. "Dissolution Event" means that as a result of the occurrence and continuation of a Special Event, the Trust is to be dissolved in accordance with the Trust Agreement and the Subordinated Debentures held by the Property Trustee are to be distributed to the holders of the Trust Securities issued by the Trust pro rata in accordance with the Trust Agreement. "Distributions" shall have the meaning set forth in the Trust Agreement. "Event of Default" shall have the meaning set forth in Section 7.01. "Exchange Act" means the Securities Exchange Act of 1934, as amended. "Extended Interest Payment Period" shall have the meaning set forth in Section 4.01. "FRB" means the Board of Governors of the Federal Reserve System. "Global Subordinated Debenture" has the meaning specified in Section 2.04(a) and complying with the form of debenture attached as Exhibit A to this --------- Indenture, evidencing all Outstanding Subordinated Debentures, issued to and registered in the name of the Depositary or its nominee, all in accordance with this Indenture. "Governmental Obligations" means securities that are (a) direct obligations of the United States of America for the payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of the United States of America, the payment of which is unconditionally guaranteed as a full faith and credit obligation by the United States of America that, in either case, are not callable or redeemable at the option of the issuer thereof, and shall also include a depositary receipt issued by a bank (as defined in Section 3(a)(2) of the Securities Act of 1933, as amended) as custodian with respect to any such Governmental Obligation or a specific payment of principal of or interest on any such Governmental Obligation held by such custodian for the account of the holder of such depositary receipt; provided, however, that (except as required by law) such custodian is not authorized to make any deduction from the amount payable to the holder of such depositary receipt from any amount received by the custodian in respect of the Governmental Obligation or the specific payment of principal of or interest on the Governmental Obligation evidenced by such depositary receipt. 4 "Herein," "hereof" and "hereunder," and other words of similar import, refer to this Indenture as a whole and not to any particular Article, Section or other subdivision. "Indenture" means this instrument as originally executed or as it may from time to time be supplemented or amended by one or more indentures supplemental hereto entered into in accordance with the terms hereof. "Interest Payment Date," when used with respect to any installment of interest on the Subordinated Debentures, means the date specified in the Subordinated Debenture as the fixed date on which an installment of interest with respect to the Subordinated Debentures is due and payable. "Investment Company Act" means the Investment Company Act of 1940, as amended. "Investment Company Event" means the receipt by the Company and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of the occurrence of a 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 (a "Change in Investment Company Act Law"), there is more than an insubstantial risk that the Trust is or will be considered an "investment company" that is required to be registered under the Investment Company Act, which Change in Investment Company Act Law becomes effective on or after the date of original issuance of the Preferred Securities under the Trust Agreement. "Liquidation Amount" means the stated amount of $10.00 per Trust Security. "Maturity Date" shall have the meaning set forth in Section 2.02. "Non Book-Entry Preferred Securities" shall have the meaning set forth in Section 2.04(a). "Officers' Certificate" means a certificate signed by the Chief Executive Officer, the President or a Vice President and by the Chief Accounting Officer or the Controller or an Assistant Controller or the Secretary or an Assistant Secretary of the Company that is delivered to the Trustee in accordance with the terms hereof. Each such certificate shall include the statements provided for in Section 15.07, if and to the extent required by the provisions thereof. "Opinion of Counsel" means an opinion in writing of legal counsel, who may be an employee of or counsel for the Company, that is delivered to the Trustee in accordance with the terms hereof. Each such opinion shall include the statements provided for in Section 15.07, if and to the extent required by the provisions thereof. "Outstanding," when used with reference to Subordinated Debentures means, subject to the provisions of Section 10.04, as of any particular time, all Subordinated Debentures theretofore authenticated and delivered by the Trustee under this Indenture, except (a) Subordinated Debentures theretofore canceled by the Trustee or any paying agent, or delivered to the Trustee or any paying agent for cancellation; (b) Subordinated Debentures or portions thereof for the payment or redemption of which moneys or Governmental Obligations in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than 5 the Company) or shall have been set aside and segregated in trust by the Company (if the Company shall act as its own paying agent); provided, however, that if such Subordinated Debentures or portions of such Subordinated Debentures are to be redeemed prior to the maturity thereof, notice of such redemption shall have been given as provided in Article III, or provision satisfactory to the Trustee shall have been made for giving such notice; and (c) Subordinated Debentures in lieu of or in substitution for which other Subordinated Debentures shall have been authenticated and delivered pursuant to the terms of Section 2.08. "Person" means any individual, corporation, partnership, joint venture, joint-stock company, unincorporated organization or government or any agency or political subdivision thereof. "Predecessor Subordinated Debenture" means every previous Subordinated Debenture evidencing all or a portion of the same debt as that evidenced by such particular Subordinated Debenture; and, for the purposes of this definition, any Subordinated Debenture authenticated and delivered under Section 2.08 in lieu of a lost, destroyed or stolen Subordinated Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Subordinated Debenture. "Preferred Securities" means preferred undivided beneficial interests in the assets of the Trust which rank pari passu with Common Securities issued by the Trust; provided, however, that upon the occurrence of an Event of Default, the rights of holders of Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of Preferred Securities. "Preferred Securities Certificate" has the meaning set forth in the Trust Agreement. "Preferred Securities Guarantee" means any guarantee that the Company may enter into with the Property Trustee or other Persons that operates directly or indirectly for the benefit of holders of Preferred Securities of the Trust. "Property Trustee" has the meaning set forth in the Trust Agreement. "Redemption Price" means the amount equal to 100% of the principal amount of Subordinated Debentures to be redeemed plus any accrued and unpaid interest thereon to the date of the redemption of such Subordinated Debentures. "Responsible Officer" means any officer within the Corporate Trust Office of the Property Trustee with direct responsibility for the administration of this Trust Agreement and also means, with respect to a particular corporate trust matter, any other officer of the Property Trustee to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Scheduled Maturity Date" means June 18, 2029. "Securities" or "Security" means any debt securities or debt, as the case may be, authenticated and delivered under this Indenture. 6 "Securities Register" and "Securities Registrar" have the respective meanings specified in Section 2.07. "Securityholder," "Holder," "Registered Holder," or other similar term, means the Person or Persons in whose name or names particular Subordinated Debentures shall be registered in the Securities Register. "Senior and Subordinated Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Company whether or not such claim for post-petition interest is allowed in such proceeding), on Debt of the Company, whether incurred on or prior to the date of this Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Subordinated Debentures or to other Debt which is pari passu with, or subordinated to, the Subordinated Debentures; provided, however, that Senior and Subordinated Debt shall not be deemed to include (a) any Debt of the Company which when incurred and without respect to any election under section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to the Company, (b) any Debt of the Company to any of its Subsidiaries, (c) any Debt to any employee of the Company, (d) the Preferred Securities Guarantee, and (e) any other Securities issued pursuant to this Indenture. "Special Event" means a Tax Event, an Investment Company Event or a Capital Treatment Event. "Subordinated Debentures" means the 9.0% Subordinated Debentures due 2029 authenticated and delivered under this Indenture. "Subsidiary" means, with respect to any Person, (a) any corporation at least a majority of whose outstanding Voting Stock shall at the time be owned, directly or indirectly, by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, (b) any general partnership, joint venture or similar entity, at least a majority of whose outstanding partnership or similar interests shall at the time be owned by such Person, or by one or more of its Subsidiaries, or by such Person and one or more of its Subsidiaries, and (c) any limited partnership of which such Person or any of its Subsidiaries is a general partner. "Tax Event" means the receipt by the Company and the Trust of an Opinion of Counsel experienced in such matters to the effect that, as a result of any amendment to, or change (including any announced prospective change) in, the laws (or any regulations thereunder) of the United States or any political subdivision or taxing authority thereof or therein, or as a result of any official administrative pronouncement or judicial decision interpreting or applying such laws or regulations, which amendment or change is effective or which pronouncement or decision is announced on or after the date of issuance of the Subordinated Debentures there is more than an insubstantial risk that (a) interest payable by the Company on the Subordinated Debentures is not, or within 90 days after the date of such Opinion of Counsel will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes, (b) the Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to United States federal income tax with respect to income received or accrued on the Subordinated Debentures, or (c) 7 the Trust is, or will be within 90 days after the date of such Opinion of Counsel, subject to more than a de minimis amount of other taxes, duties, assessments or other governmental charges. "Trust" means Bank of the Ozarks Trust, a Delaware statutory business trust created for the purpose of issuing Trust Securities in connection with the issuance of Subordinated Debentures under this Indenture. "Trust Agreement" means the Bank of the Ozarks Trust Amended and Restated Trust Agreement, dated as of June 18, 1999, as amended from time to time. "Trustee" means the Person identified as "Trustee" in the preamble to this Indenture and, subject to the provisions of Article IX, shall also include its successors and assigns, and, if at any time there is more than one Person acting in such capacity hereunder, "Trustee" shall mean each such Person. "Trust Indenture Act" means the Trust Indenture Act of 1939 as in force at the date of execution of this Indenture; provided, however, that in the event the Trust Indenture Act of 1939 is amended after such date, "Trust Indenture Act" means, to the extent required by any such amendment, the Trust Indenture Act of 1939 as so amended. "Trust Securities" means Common Securities and Preferred Securities of the Trust. "Voting Stock" as applied to stock of any Person, means shares, interests, participations or other equivalents in the equity interest (however designated) in such Person having ordinary voting power for the election of a majority of the directors (or the equivalent) of such Person, other than shares, interests, participations or other equivalents having such power only by reason of the occurrence of a contingency. ARTICLE II REGISTRATION and EXCHANGE OF THE SUBORDINATED DEBENTURES Section 2.01. Designation and Principal Amount. There is hereby authorized a series of Securities designated the "9.0% Subordinated Debentures due 2029," limited in aggregate principal amount to $17,783,510, which amount shall be as set forth in any written order of the Company for the authentication and delivery of Subordinated Debentures pursuant to Section 8.02 of this Indenture. Section 2.02. Maturity. (a) The Maturity Date will be either: (i) the Scheduled Maturity Date; or (ii) if the Company elects to accelerate the Maturity Date to be a date prior to the Scheduled Maturity Date in accordance with Section 2.02(b), the Accelerated Maturity Date. 8 (b) The Company may, at any time before the day which is 90 days before the Scheduled Maturity Date, elect to shorten the Maturity Date only once to the Accelerated Maturity Date, provided that the Company has received the prior approval of the FRB, if then required under applicable capital guidelines, policies or regulations of the FRB, but in no case shall such Accelerated Maturity Date be a date before June 18, 2004. (c) If the Company elects to accelerate the Maturity Date in accordance with Section 2.02(b), the Company shall give notice to the Registered Holders of the Subordinated Debentures, the Property Trustee and the Trustee of the acceleration of the Maturity Date and the Accelerated Maturity Date at least 90 days before the Accelerated Maturity Date. Section 2.03. Form and Payment. Except as provided in Section 2.04, the Subordinated Debentures shall be issued in fully registered certificated form without interest coupons. Principal and interest on the Subordinated Debentures issued in certificated form will be payable, the transfer of such Subordinated Debentures will be registrable and such Subordinated Debentures will be exchangeable for Subordinated Debentures bearing identical terms and provisions at the office or agency of the Trustee; provided, however, that payment of interest may be made at the option of the Company by check mailed to the Holder at such address as shall appear in the Securities Register. Notwithstanding the foregoing, so long as the Holder of any Subordinated Debentures is the Property Trustee, the payment of the principal of and interest (including Compounded Interest and Additional Sums, if any) on such Subordinated Debentures held by the Property Trustee will be made at such place and to such account as may be designated by the Property Trustee. Section 2.04. Global Subordinated Debenture. (a) In connection with a Dissolution Event: (i) the Subordinated Debentures in certificated form may be presented to the Trustee by the Property Trustee in exchange for a Global Subordinated Debenture in an aggregate principal amount equal to the aggregate principal amount of all outstanding Subordinated Debentures (a "Global Subordinated Debenture"), to be registered in the name of the Depositary, or its nominee, and delivered by the Trustee to the Depositary for crediting to the accounts of its participants pursuant to the instructions of the Administrative Trustees. The Company upon any such presentation shall execute a Global Subordinated Debenture in such aggregate principal amount and deliver the same to the Trustee for authentication and delivery in accordance with this Indenture. Payments on the Subordinated Debentures issued as a Global Subordinated Debenture will be made to the Depositary; and (ii) if any Preferred Securities are held in non book-entry certificated form, the Subordinated Debentures in certificated form may be presented to the Trustee by the Property Trustee and any Preferred Securities Certificate which represents Preferred Securities other than Preferred Securities held by the Depositary or its nominee ("Non Book-Entry Preferred Securities") will be 9 deemed to represent beneficial interests in Subordinated Debentures presented to the Trustee by the Property Trustee having an aggregate principal amount equal to the aggregate Liquidation Amount of the Non Book-Entry Preferred Securities until such Preferred Securities Certificates are presented to the Securities Registrar for transfer or reissuance at which time such Preferred Securities Certificates will be canceled and a Subordinated Debenture, registered in the name of the holder of the Preferred Securities Certificate or the transferee of the holder of such Preferred Securities Certificate, as the case may be, with an aggregate principal amount equal to the aggregate Liquidation Amount of the Preferred Securities Certificate canceled, will be executed by the Company and delivered to the Trustee for authentication and delivery in accordance with this Indenture. On issue of such Subordinated Debentures, Subordinated Debentures with an equivalent aggregate principal amount that were presented by the Property Trustee to the Trustee will be deemed to have been canceled. (b) A Global Subordinated Debenture may be transferred, in whole but not in part, only to another nominee of the Depositary, or to a successor Depositary selected or approved by the Company or to a nominee of such successor Depositary. (c) If (i)(A) at any time the Depositary notifies the Company that it is unwilling or unable to continue as Depositary or (B) at any time the Depositary for such series shall no longer be registered or in good standing under the Exchange Act or other applicable statute or regulation, and a successor Depositary for such series is not appointed by the Company within 90 days after the Company receives such notice or becomes aware of such condition, as the case may be, or (ii) there shall have occurred and be continuing an Event of Default, the Company will execute, and the Trustee, upon written notice from the Company, will authenticate and deliver in exchange for such Global Subordinated Debenture the Subordinated Debentures in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Subordinated Debenture. In addition, the Company may at any time determine that the Subordinated Debentures shall no longer be represented by a Global Subordinated Debenture. In such event the Company will execute, and the Trustee, upon receipt of an Officers' Certificate evidencing such determination by the Company, will authenticate and deliver in exchange for such Global Subordinated Debenture the Subordinated Debentures in definitive registered form without coupons, in authorized denominations, and in an aggregate principal amount equal to the principal amount of the Global Subordinated Debenture. Upon the exchange of the Global Subordinated Debenture for such Subordinated Debentures in definitive registered form without coupons, in authorized denominations, the Global Subordinated Debenture shall be canceled by the Trustee. Such Subordinated Debentures in definitive registered form issued in exchange for the Global Subordinated Debenture shall be registered in such names and in such authorized denominations as the Depositary, pursuant to instructions from its direct or indirect participants or otherwise, shall instruct the Trustee. The Trustee shall deliver such Subordinated Debentures to the Depositary for delivery to the Persons in whose names such Subordinated Debentures are so registered. 10 Section 2.05. Interest. (a) Each Subordinated Debenture will bear interest at the rate of 9.0% per annum (the "Coupon Rate") from the original date of issuance until the principal thereof becomes due and payable, and on any overdue principal and (to the extent that payment of such interest is enforceable under applicable law) on any overdue installment of interest at the Coupon Rate, compounded quarterly, payable (subject to the provisions of Article IV) quarterly in arrears on March 31, June 30, September 30 and December 31 in each year, commencing on September 30, 1999. If any date on which interest is otherwise payable on the Subordinated Debentures is not a Business Day, then the payment of such interest shall be on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay) except that if such Business Day is in the next succeeding calendar year, payment of such interest shall be on the immediately preceding Business Day, in each case with the same force and effect as if made on such date (each such date, an "Interest Payment Date"). Interest shall be payable to the Person in whose name such Subordinated Debenture or any Predecessor Subordinated Debenture is registered at the close of business on the regular record date for such interest installment, which, in respect of (i) Subordinated Debentures of which the Property Trustee is the Holder and the Preferred Securities are in book-entry-only form or (ii) a Global Subordinated Debenture, shall be the close of business on the Business Day next preceding that Interest Payment Date. Notwithstanding the foregoing sentence, if (A) the Subordinated Debentures are held by the Property Trustee and the Preferred Securities are no longer in book-entry only form or (B) the Subordinated Debentures are not held by the Property Trustee and are not represented by a Global Subordinated Debenture, the record date for such interest installment shall be the first day of the month in which such payment is to be made. The amount of each interest payment due with respect to the Subordinated Debentures will include amounts accrued through the date the interest payment is due. (b) The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months. Except as provided in the following sentence, the amount of interest payable for any period shorter than a full quarterly period for which interest is computed will be computed on the basis of the actual number of days elapsed in such a quarterly period. In the event that any date on which interest is payable on the Subordinated Debentures is not a Business Day, then payment of 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), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. (c) If, at any time while the Property Trustee is the Holder of any Subordinated Debentures, the Trust or the Property Trustee is required to pay any taxes, duties, assessments or governmental charges of whatever nature (other than withholding taxes) imposed by the United States, or any other taxing authority, then, in any case, the Company will pay as additional interest ("Additional Sums") on the Subordinated Debentures held by the Property Trustee such additional amounts as shall be required so 11 that the net amounts received and retained by the Trust and the Property Trustee after paying such taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust and the Property Trustee would have received had no such taxes, duties, assessments or other government charges been imposed. Section 2.06. Execution, Authentication, Delivery and Dating. The Subordinated Debentures shall be executed on behalf of the Company by its Chief Executive Officer, its President or any Vice President and attested by its Secretary or Assistant Secretary. The signature of any of these officers on the Subordinated Debentures may be manual or facsimile. Subordinated Debentures bearing the manual or facsimile signatures of individuals who were at any time the proper officers of the Company shall bind the Company, notwithstanding that such individuals or any of them have ceased to hold such offices prior to the authentication and delivery of such Subordinated Debentures or did not hold such offices at the date of such Subordinated Debentures. At any time and from time to time after the execution and delivery of this Indenture, the Company may deliver Subordinated Debentures executed by the Company to the Trustee for authentication, together with a Company order for the authentication and delivery of such Subordinated Debentures. The Trustee in accordance with such Company order shall authenticate and deliver such Subordinated Debentures. Upon the initial issuance, each Subordinated Debenture shall be dated June 18, 1999, and thereafter Subordinated Debentures issued hereunder shall be dated the date of their authentication. No Subordinated Debenture shall be entitled to any benefit under this Indenture or be valid or obligatory for any purpose unless there appears on such Subordinated Debenture a certificate of authentication substantially in the form provided for herein executed by the Trustee by manual signature, and such certificate upon any Subordinated Debenture shall be conclusive evidence, and the only evidence, that such Subordinated Debenture has been duly authenticated and delivered hereunder and is entitled to the benefits of this Indenture. Section 2.07. Registration and Transfer. The Company shall cause to be kept at the Corporate Trust Office of the Trustee a register (the register maintained in such office or any other office or agency pursuant to Section 5.02 being herein sometimes referred to as the "Securities Register") in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration of the Subordinated Debentures and transfers of the Subordinated Debentures. The Trustee is hereby appointed "Securities Registrar" for the purpose of registering the Subordinated Debentures and transfers of the Subordinated Debentures as herein provided. Upon surrender for registration of transfer of any Subordinated Debenture at an office or agency of the Company designated pursuant to Section 5.02 for such purpose, the Company shall execute, and the Trustee shall authenticate and deliver, in the name of the designated transferee or transferees, a new Subordinated Debenture of the authorized denomination. 12 All Subordinated Debentures issued upon any registration of transfer of Subordinated Debentures shall be valid obligations of the Company, evidencing the same debt and entitled to the same benefits under this Indenture as the Subordinated Debentures surrendered upon such registration of transfer. Every Subordinated Debenture presented or surrendered for registration of transfer shall be duly endorsed for transfer (if so required by the Company or the Trustee), or shall be accompanied by a written instrument of transfer in form satisfactory to the Company and the Securities Registrar duly executed by the Holder thereof or such Holder's attorney duly authorized in writing. No service charge shall be made for any registration of transfer of Subordinated Debentures, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in connection with any registration of transfer of Subordinated Debentures. The Company shall not be required to issue or register the transfer of any Subordinated Debenture during a period beginning at the opening of business 15 days before the day of the mailing of a notice of redemption of Subordinated Debentures selected for redemption pursuant to Article III and ending at the close of business on the day of such mailing. Section 2.08. Mutilated, Destroyed, Lost and Stolen Subordinated Debentures. If any mutilated Subordinated Debenture is surrendered to the Trustee, the Company shall execute and the Trustee shall authenticate and deliver in exchange therefor a new Subordinated Debenture of like tenor and principal amount and bearing a number not contemporaneously outstanding. If there shall be delivered to the Company and the Trustee (a) evidence to their satisfaction of the destruction, loss or theft of any Subordinated Debenture and (b) such security or indemnity as may be required by them to save each of them harmless, then, in the absence of notice to the Company or the Trustee that such Subordinated Debenture has been acquired by a bona fide purchaser, the Company shall execute and upon its written request the Trustee shall authenticate and deliver, in lieu of any such destroyed, lost or stolen Subordinated Debenture, a new Subordinated Debenture of like tenor and principal amount and bearing a number not contemporaneously outstanding. In case any such mutilated, destroyed, lost or stolen Subordinated Debenture has become or is about to become due and payable, the Company in its discretion may, instead of issuing a new Subordinated Debenture, pay such Subordinated Debenture. Upon the issuance of any new Subordinated Debenture under this Section, the Company may require the payment of a sum sufficient to cover any tax or other governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Trustee) connected therewith. Every new Subordinated Debenture issued pursuant to this Section in lieu of any destroyed, lost or stolen Subordinated Debenture shall constitute an original additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Subordinated 13 Debenture shall be at any time enforceable by anyone, and shall be entitled to all of the benefits of this Indenture. The provisions of this Section are exclusive and shall preclude (to the extent lawful) all other rights and remedies with respect to the replacement or payment of mutilated, destroyed, lost or stolen Subordinated Debentures. Section 2.09. CUSIP Numbers. The Company in issuing the Debentures may use "CUSIP" numbers (if then generally in use), and, if so, the Indenture Trustee shall use such "CUSIP" number provided to it by the Company in notices of redemption as a convenience to Holders; provided, that any such notice may state that no representation is made as to the correctness of such number either as printed on the Debentures or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Debentures, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Indenture Trustee of any change in CUSIP numbers. ARTICLE III REDEMPTION OF SUBORDINATED DEBENTURES Section 3.01. Redemption. Subject to the Company having received prior approval of the FRB, if then required under the applicable capital guidelines, regulations or policies of the FRB, the Company may redeem the Subordinated Debentures in accordance with this Article III. Section 3.02. Special Event Redemption. Subject to the Company having received the prior approval of the FRB, if then required under the applicable capital guidelines or policies of the FRB, if a Special Event has occurred and is continuing, then, notwithstanding Section 3.03, the Company shall have the right upon not less than 30 days' nor more than 60 days' notice to the Holders of the Subordinated Debentures to redeem the Subordinated Debentures, in whole but not in part, for cash within 90 days following the occurrence of such Special Event (the "90-Day Period") at the Redemption Price, provided that if at the time there is available to the Company the opportunity to eliminate, within the 90-Day Period, the Tax Event by taking some ministerial action ("Ministerial Action"), such as filing a form or making an election, or pursuing some other similar reasonable measure which has no adverse effect on the Company, the Trust or the Holders of the Trust Securities issued by the Trust, the Company shall pursue such Ministerial Action in lieu of redemption, and, provided, further, that the Company shall have no right to redeem the Subordinated Debentures while the Trust is pursuing any Ministerial Action to eliminate the Tax Event (however, the 90-Day Period shall be tolled while the Trust is pursuing any such Ministerial Action). The Redemption Price shall be paid prior to 1:00 p.m., Little Rock, Arkansas, time, on the date of such redemption or such earlier time as the Company determines, provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price by 11:00 a.m., Little Rock, Arkansas, time, on the date such Redemption Price is to be paid. 14 Section 3.03. Optional Redemption by Company. (a) Except as otherwise may be specified in this Indenture, the Company shall have the right to redeem the Subordinated Debentures, in whole or in part, from time to time, on or after June 18, 2004, at the Redemption Price. Any redemption pursuant to this Section 3.03 will be made upon not less than 30 days' nor more than 60 days' notice to the Holders of the Subordinated Debentures, at the Redemption Price. If the Subordinated Debentures are only partially redeemed pursuant to this Section 3.03, the Subordinated Debentures will be redeemed pro rata or by lot or by any other method utilized by the Trustee; provided, that if at the time of redemption the Subordinated Debentures are registered as a Global Subordinated Debenture, the Depositary shall determine, in accordance with its procedures, the principal amount of such Subordinated Debentures held by each Holder of Subordinated Debentures to be redeemed. The Redemption Price shall be paid prior to 1:00 p.m., Little Rock, Arkansas time, on the date of such redemption or at such earlier time as the Company determines provided that the Company shall deposit with the Trustee an amount sufficient to pay the Redemption Price by 11:00 a.m., Little Rock, Arkansas time, on the date such Redemption Price is to be paid. (b) If a partial redemption of the Subordinated Debentures would result in the delisting of the Preferred Securities issued by the Trust from the NASDAQ National Market or any national securities exchange or other organization on which the Preferred Securities may then be listed, if any, the Company shall not be permitted to effect such partial redemption and may only redeem the Subordinated Debentures in whole or in part to such extent as would not cause such delisting. Section 3.04. Notice of Redemption. (a) In case the Company shall desire to exercise such right to redeem all or, as the case may be, a portion of the Subordinated Debentures in accordance with the right reserved so to do, the Company shall, or shall cause the Trustee to, give notice of such redemption to Holders of the Subordinated Debentures to be redeemed by mailing, first class postage prepaid, a notice of such redemption not less than 30 days and not more than 60 days before the date fixed for redemption to such Holders at their last addresses as they shall appear upon the Securities Register. Any notice that is mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the Registered Holder receives the notice. In any case, failure duly to give such notice to the Holder of any Subordinated Debenture designated for redemption in whole or in part, or any defect in the notice, shall not affect the validity of the proceedings for the redemption of any other Subordinated Debentures. In the case of any redemption of Subordinated Debentures prior to the expiration of any restriction on such redemption provided elsewhere in this Indenture, the Company shall furnish the Trustee with an Officers' Certificate evidencing compliance with any such restriction. Each such notice of redemption shall specify the date fixed for redemption and the Redemption Price, and shall state that payment of the Redemption Price of such Subordinated Debentures to be redeemed will be made at the office or agency of the 15 Company in Little Rock, Arkansas, upon presentation and surrender of such Subordinated Debentures, that interest accrued to the date fixed for redemption will be paid as specified in said notice, that from and after said date interest will cease to accrue. If less than all the Subordinated Debentures are to be redeemed, the notice to the Holders of Subordinated Debentures to be redeemed in whole or in part shall specify the particular Subordinated Debentures to be so redeemed. In case any Subordinated Debenture is to be redeemed in part only, the notice that relates to such Subordinated Debenture shall state the portion of the principal amount thereof to be redeemed, and shall state that on and after the redemption date, upon surrender of such Subordinated Debenture, a new Subordinated Debenture or Subordinated Debentures in principal amount equal to the unredeemed portion thereof shall be issued to the Holder. (b) If less than all the Subordinated Debentures are to be redeemed, the Company shall give the Trustee at least 45 days' notice in advance of the date fixed for redemption as to the aggregate principal amount of Subordinated Debentures to be redeemed, and thereupon the Trustee shall select, by lot or in such other manner as it shall deem appropriate and fair in its discretion and that may provide for the selection of a portion or portions (equal to ten dollars U.S. ($10) or any integral multiple thereof), the Subordinated Debentures to be redeemed and shall thereafter promptly notify the Company in writing of the numbers of the Subordinated Debentures to be redeemed, in whole or in part. The Company may, if and whenever it shall so elect, by delivery of instructions signed on its behalf by its Chief Executive Officer, its President or any Vice President, instruct the Trustee or any paying agent to call all or any part of the Subordinated Debentures for redemption and to give notice of redemption in the manner set forth in this Section, such notice to be in the name of the Company or in the name of the Trustee or the paying agent, as the Trustee or such paying agent may deem advisable. In any case in which notice of redemption is to be given by the Trustee or any such paying agent, the Company shall deliver or cause to be delivered to, or permit to remain with, the Trustee or such paying agent, as the case may be, such Securities Register, transfer books or other records, or suitable copies or extracts therefrom, sufficient to enable the Trustee or such paying agent to give any notice by mail that may be required under the provisions of this Section. Section 3.05. Payment Upon Redemption. (a) If the giving of notice of redemption shall have been completed as above provided, the Subordinated Debentures or portions of Subordinated Debentures to be redeemed specified in such notice shall become due and payable on the date and at the place stated in such notice at the Redemption Price (which includes interest accrued to the date fixed for redemption) and interest on such Subordinated Debentures or portions of Subordinated Debentures shall cease to accrue on and after the date fixed for redemption, unless the Company shall default in the payment of such Redemption Price with respect to any such Subordinated Debentures or portions thereof. On presentation and surrender of such Subordinated Debentures on or after the date fixed for redemption at the place of payment specified in the notice, such Subordinated Debentures shall be paid and redeemed at the Redemption Price (which includes the interest accrued thereon 16 to the date fixed for redemption) (but if the date fixed for redemption is an Interest Payment Date, the interest installment payable on such date shall be payable to the Registered Holder at the close of business on the applicable record date pursuant to Section 2.05(a)). (b) Upon presentation of any Subordinated Debenture that is to be redeemed in part only, the Company shall execute and the Trustee shall authenticate and the office or agency where the Subordinated Debenture is presented shall deliver to the Holder thereof, at the expense of the Company, a new Subordinated Debenture or Subordinated Debentures of authorized denominations in principal amount equal to the unredeemed portion of the Subordinated Debenture so presented. Section 3.06. No Sinking Fund. The Subordinated Debentures are not entitled to the benefit of any sinking fund. ARTICLE IV EXTENSION OF INTEREST PAYMENT PERIOD Section 4.01. Extension of Interest Payment Period. 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 the Subordinated Debentures, to defer payments of interest by extending the interest payment period of such Subordinated Debentures for a period not exceeding 20 consecutive quarters (the "Extended Interest Payment Period"), during which Extended Interest Payment Period no interest shall be due and payable; provided that no Extended Interest Payment Period may extend beyond the Maturity Date. To the extent permitted by applicable law, interest, the payment of which has been deferred because of the extension of the interest payment period pursuant to this Section 4.01, will bear interest thereon at the Coupon Rate compounded quarterly for each quarter of the Extended Interest Payment Period ("Compounded Interest"). At the end of the Extended Interest Payment Period, the Company shall pay all interest accrued and unpaid on the Subordinated Debentures, including any Additional Sums and Compounded Interest (together, "Deferred Interest") that shall be payable to the Holders of the Subordinated Debentures in whose names the Subordinated Debentures are registered in the Securities Register on the record date for the Interest Payment Date coinciding with the end of the Extended Interest Payment Period. Before the termination of any Extended Interest Payment Period, the Company may further extend such period, provided that such period together with all such further extensions thereof shall not exceed 20 consecutive quarters, or extend beyond the Maturity Date. Upon the termination of any Extended Interest Payment Period and upon the payment of all Deferred Interest then due, the Company may commence a new Extended Interest Payment Period, subject to the foregoing requirements. No interest shall be due and payable during an Extended Interest Payment Period, except at the end thereof, but the Company may prepay at any time all or any portion of the interest accrued during an Extended Interest Payment Period. Section 4.02. Notice of Extension. (a) If the Property Trustee is the only Registered Holder of the Subordinated Debentures at the time the Company selects an Extended Interest Payment Period, the 17 Company shall give written notice to the Administrative Trustees, the Property Trustee and the Trustee of its selection of such Extended Interest Payment Period one Business Day before the earlier of (i) the next succeeding date on which Distributions are payable, or (ii) the date the Trust is required to give notice of the record date, or the date such Distributions are payable, to the Preferred Securities holders or to the NASDAQ National Market or other applicable self-regulatory organization, if any, but in any event at least one Business Day before such record date. (b) If the Property Trustee is not the only Holder of the Subordinated Debentures at the time the Company selects an Extended Interest Payment Period, the Company shall give the Holders of the Subordinated Debentures and the Trustee written notice of its selection of such Extended Interest Payment Period at least one Business Day before the earlier of (i) the next succeeding Interest Payment Date, or (ii) the date the Company is required to give notice of the record or payment date of such interest payment to the Holders of the Subordinated Debentures or to the NASDAQ National Market or other applicable self-regulatory organization, if any. (c) The quarter in which any notice is given pursuant to paragraph (a) or paragraph (b) of this Section 4.02 shall be counted as one of the 20 quarters permitted in the maximum Extended Interest Payment Period permitted under Section 4.01. Section 4.03. Limitation of Transactions During Extension. If (a) the Company shall exercise its right to defer payment of interest as provided in Section 4.01; or (b) there shall have occurred any Event of Default, then the Company shall be subject to the restrictions on payments set forth under Section 5.06. ARTICLE V PARTICULAR COVENANTS OF THE COMPANY Section 5.01. Payment of Principal and Interest. The Company will duly and punctually pay or cause to be paid the principal of and interest (including any Additional Sums) on the Subordinated Debentures at the time and place and in the manner provided herein and established with respect to such Subordinated Debentures. Section 5.02. Maintenance of Agency. So long as any Subordinated Debentures remain Outstanding, the Company agrees to maintain an office or agency in Little Rock, Arkansas, or at such other location or locations as may be designated as provided in this Section 5.02, where (a) Subordinated Debentures may be presented for payment, (b) Subordinated Debentures may be presented as hereinabove authorized for registration of transfer and exchange, and (c) notices and demands to or upon the Company in respect of the Subordinated Debentures and this Indenture may be given or served, such designation to continue with respect to such office or agency until the Company shall, by written notice signed by its Chief Executive Officer, its President or a Vice President and delivered to the Trustee, designate some other office or agency for such purposes or any of them. If at any time the Company shall fail to maintain any such required office or agency or shall fail to furnish the Trustee with the address thereof, such presentations, notices and demands may be made or served at the Corporate Trust Office of the Trustee, and the 18 Company hereby appoints the Trustee as its agent to receive all such presentations, notices and demands. Section 5.03. Paying Agents. (a) If the Company shall appoint one or more paying agents for the Subordinated Debentures, other than the Trustee, the Company will cause each such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provisions of this Section: (i) that it will hold all sums held by it as such agent for the payment of the principal of or interest on the Subordinated Debentures (whether such sums have been paid to it by the Company or by any other obligor) in trust for the benefit of the Persons entitled thereto; (ii) that it will give the Trustee notice of any failure by the Company (or by any other obligor) to make any payment of the principal of or interest on the Subordinated Debentures when the same shall be due and payable; (iii) that it will, at any time during the continuance of any failure referred to in the preceding paragraph (a)(ii) above, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent; and (iv) that it will perform all other duties of paying agent as set forth in this Indenture. (b) If the Company shall act as its own paying agent with respect to the Subordinated Debentures, it will on or before each due date of the principal of or interest on Subordinated Debentures, set aside, segregate and hold in trust for the benefit of the Persons entitled thereto a sum sufficient to pay such principal or interest so becoming due until such sums shall be paid to such Persons or otherwise disposed of as herein provided and will promptly notify the Trustee of such action, or any failure (by it or any other obligor) to take such action. Whenever the Company shall have one or more paying agents for the Subordinated Debentures, it will, prior to each due date of the principal of or interest on the Subordinated Debentures, deposit with the paying agent a sum sufficient to pay the principal or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled to such principal or interest, and (unless such paying agent is the Trustee) the Company will promptly notify the Trustee of this action or failure so to act. (c) Notwithstanding anything in this Section to the contrary, (i) the agreement to hold sums in trust as provided in this Section is subject to the provisions of Section 13.05, and (ii) the Company may at any time, for the purpose of obtaining the satisfaction and discharge of this Indenture or for any other purpose, pay, or direct any paying agent to pay, to the Trustee all sums held in trust by the Company or such paying agent, such sums to be held by the Trustee upon the same terms and conditions as those upon which such sums were held by the Company or such paying agent; and, upon such payment by 19 any paying agent to the Trustee, such paying agent shall be released from all further liability with respect to such money. Section 5.04. Appointment to Fill Vacancy in Office of Trustee. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 9.11, a Trustee, so that there shall at all times be a Trustee hereunder. Section 5.05. Compliance with Consolidation Provisions. The Company will not, while any of the Subordinated Debentures remain Outstanding, consolidate with, or merge into, or merge into itself, or sell or convey all or substantially all of its property to any other company unless the provisions of Article XII hereof are complied with. Section 5.06. Restrictions on Certain Payments. If at any time (a) there shall have occurred any event of which the Company has actual knowledge that (i) with the giving of notice or the lapse of time, or both, would constitute an Event of Default and (ii) in respect to which the Company shall not have taken reasonable steps to cure, or (b) the Company shall have given notice of its election of an Extended Interest Payment Period as provided herein with respect to the Subordinated Debentures and shall not have rescinded such notice, or such Extended Interest Payment Period, or any extension thereof, shall be continuing; or (c) while the Subordinated Debentures are held by the Trust, the Company shall be in default with respect to its payment of any obligation under the Preferred Securities Guarantee, then the Company will not (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, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company (including the Subordinated Debentures) that rank pari passu with or junior in interest to the Subordinated Debentures or 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 or junior in interest to the Subordinated Debentures (other than (A) dividends or distributions in shares of common stock, (B) any declaration of a dividend in connection with any shareholders' rights plan, or the issuance of rights, stock or other property under any shareholders' rights plan, or the redemption or repurchase of rights pursuant to the plan, (C) payments under the Preferred Securities Guarantee and (D) repurchases, redemptions or other acquisitions of shares of the Company's common stock 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, or a dividend reinvestment or shareholder stock purchase plan). Section 5.07. Covenants as to the Trust. For so long as the Trust Securities of the Trust remain outstanding, the Company will (a) maintain 100% direct or indirect ownership of the Common Securities of the Trust; provided, however, that any permitted successor of the Company under this Indenture may succeed to the Company's ownership of the Common Securities, (b) use its reasonable efforts to cause the Trust (i) to remain a business trust, except in connection with a distribution of Subordinated Debentures, the redemption of all of the Trust Securities of the Trust or certain mergers, consolidations or amalgamations, each as permitted by the Trust Agreement, and (ii) to otherwise continue not to be treated as an association taxable as a corporation or partnership for United States federal income tax purposes and (c) to use its 20 reasonable efforts to cause each Holder of Trust Securities to be treated as owning an individual undivided beneficial interest in the Subordinated Debentures. If the Subordinated Debentures are to be issued as a Global Subordinated Debenture in connection with the distribution of the Subordinated Debentures to the holders of the Preferred Securities issued by the Trust upon a Dissolution Event, the Company will use its reasonable best efforts to list such Subordinated Debentures on the NASDAQ National Market or on such other exchange as the Preferred Securities may then be listed. ARTICLE VI SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE Section 6.01. Company to Furnish Trustee Names and Addresses of Securityholders. The Company will furnish or cause to be furnished to the Trustee (a) on each regular record date (as defined in Section 2.05(a)) a list, in such form as the Trustee may reasonably require, of the names and addresses of the Holders as of such regular record date, provided that the Company shall not be obligated to furnish or cause to furnish such list at any time that the list shall not differ in any respect from the most recent list furnished to the Trustee by the Company and (b) at such other times as the Trustee may request in writing within 30 days after the receipt by the Company of any such request, a list of similar form and content as of a date not more than 15 days prior to the time such list is furnished; provided, however, that, in either case, no such list need be furnished if the Trustee shall be the Securities Registrar. Section 6.02. Preservation of Information; Communications with Securityholders. (a) The Trustee shall preserve, in as current a form as is reasonably practicable, all information as to the names and addresses of the Holders contained in the most recent list furnished to it as provided in Section 6.01 and as to the names and addresses of Holders received by the Trustee in its capacity as Securities Registrar (if acting in such capacity). (b) The Trustee may destroy any list furnished to it as provided in Section 6.01 upon receipt of a new list so furnished. (c) Securityholders may communicate as provided in Section 312(b) of the Trust Indenture Act with other Securityholders with respect to their rights under this Indenture or under the Subordinated Debentures. (d) Every Holder of Subordinated Debentures, by receiving and holding the same, agrees with the Company and the Trustee that neither the Company nor the Trustee nor any agent of either of them shall be held accountable by reason of the disclosure of information as to the names and addresses of the Holders made pursuant to the Trust Indenture Act. 21 Section 6.03. Reports by the Company. (a) The Company covenants and agrees to file with the Trustee, within 15 days after the Company is required to file the same with the Commission (after taking into account any extensions allowed by the Commission), copies of the annual reports and of the information, documents and other reports (or copies of such portions of any of the foregoing as the Commission may from time to time by rules and regulations prescribe) that the Company may be required to file with the Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or, if the Company is not required to file information, documents or reports pursuant to either of such sections, then to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such of the supplementary and periodic information, documents and reports that may be required pursuant to any applicable rules and regulations of the Commission. (b) The Company covenants and agrees to file with the Trustee and the Commission, in accordance with the rules and regulations prescribed from time to time by the Commission, such additional information, documents and reports with respect to compliance by the Company with the conditions and covenants provided for in this Indenture as may be required from time to time by such rules and regulations. (c) The Company covenants and agrees to transmit by mail, first class postage prepaid, or reputable overnight delivery service that provides for evidence of receipt, to the Securityholders, as their names and addresses appear upon the Securities Register, within 30 days after the filing thereof with the Trustee, such summaries of any information, documents and reports required to be filed by the Company pursuant to subsections (a) and (b) of this Section as may be required by rules and regulations prescribed from time to time by the Commission. (d) Delivery of such reports, information and documents to the Trustee is for informational purposes only and the Trustee's receipt of such shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Company's compliance with any of its covenants hereunder (as to which the Trustee is entitled to rely exclusively on Officer's Certificates). Section 6.04. Reports by the Trustee. (a) Beginning January 31, 2000, on or before January 31 in each year in which any of the Subordinated Debentures are Outstanding, the Trustee shall transmit by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Securities Register, a brief report dated as of the preceding December 31, if and to the extent required under Section 313(a) of the Trust Indenture Act. (b) The Trustee shall comply with Section 313(b) and 313(c) of the Trust Indenture Act. 22 (c) A copy of each such report shall, at the time of such transmission to Securityholders, be filed by the Trustee with the Company, and also with the Commission. ARTICLE VII REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT Section 7.01. Events of Default. (a) Whenever used herein, "Event of Default" means any one or more of the following events that has occurred and is continuing: (i) the Company defaults in the payment of any installment of interest upon any of the Subordinated Debentures, as and when the same shall become due and payable, and continuance of such default for a period of 30 days; provided, however, that a valid extension of an interest payment period by the Company in accordance with the terms of this Indenture shall not constitute a default in the payment of interest for this purpose; (ii) the Company defaults in the payment of the principal of any of the Subordinated Debentures as and when the same shall become due and payable whether at maturity, upon redemption, by declaration or otherwise; (iii) Reserved; (iv) the Company pursuant to or within the meaning of any Bankruptcy Law (A) commences a voluntary case, (B) consents to the entry of an order for relief against it in an involuntary case, (C) consents to the appointment of a custodian of it or for all or substantially all of its property or (D) makes a general assignment for the benefit of its creditors; (v) a court of competent jurisdiction enters an order under any Bankruptcy Law that (A) is for relief against the Company in an involuntary case, (B) appoints a custodian of the Company for all or substantially all of its property, or (C) orders the liquidation of the Company, and the order or decree remains unstayed and in effect for 90 days; or (vi) in the event Subordinated Debentures are issued to the Trust or a trustee of the Trust in connection with the issuance of Trust Securities by the Trust, the Trust shall have voluntarily or involuntarily dissolved, wound up its business or otherwise terminated its existence, except in connection with (A) the distribution of Subordinated Debentures to holders of Trust Securities in liquidation of their interests in the Trust, (B) the redemption of all of the outstanding Trust Securities of the Trust or (C) certain mergers, consolidations or amalgamations, each as permitted by the Trust Agreement. 23 (b) In each and every such case, unless the principal of all the Subordinated Debentures shall have already become due and payable, either the Trustee or the Holders of not less than 25% in aggregate principal amount of the Subordinated Debentures then Outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by such Securityholders) may declare the principal of all the Subordinated Debentures to be due and payable immediately, and upon any such declaration the same shall become and shall be immediately due and payable, notwithstanding anything contained in this Indenture or in the Subordinated Debentures to the contrary. (c) At any time after the principal of the Subordinated Debentures shall have been so declared due and payable, and before any judgment or decree for the payment of the moneys due shall have been obtained or entered as hereinafter provided, the Holders of a majority in aggregate principal amount of the Subordinated Debentures then Outstanding, by written notice to the Company and the Trustee, may rescind and annul such declaration and its consequences if: (i) the Company has paid or deposited with the Trustee a sum sufficient to pay all matured installments of interest upon all the Subordinated Debentures and the principal of any and all Subordinated Debentures that shall have become due otherwise than by acceleration (with interest upon such principal and, to the extent that such payment is enforceable under applicable law, upon overdue installments of interest, at the rate per annum expressed in the Subordinated Debentures to the date of such payment or deposit) and all amounts payable to the Trustee under Section 9.07, and (ii) any and all Events of Default under this Indenture, other than the nonpayment of principal on Subordinated Debentures that shall not have become due by their terms, shall have been remedied or waived as provided in Section 7.06. Should the Holders fail to annul such declaration and waive such default, then the holders of a majority in aggregate Liquidation Amount of the Preferred Securities shall have such right. No such rescission and annulment shall extend to or shall affect any subsequent default or impair any right consequent thereon. (d) In case the Trustee shall have proceeded to enforce any right with respect to Subordinated Debentures under this Indenture and such proceedings shall have been discontinued or abandoned because of such rescission or annulment or for any other reason or shall have been determined adversely to the Trustee, then and in every such case the Company and the Trustee shall be restored respectively to their former positions and rights hereunder, and all rights, remedies and powers of the Company and the Trustee shall continue as though no such proceedings had been taken. Section 7.02. Collection of Indebtedness and Suits for Enforcement by Trustee. (a) The Company covenants that (i) in case it shall default in the payment of any installment of interest on any of the Subordinated Debentures as and when the same shall have become due and payable, and such default shall have continued for a period of 90 Business Days, or (ii) in case it shall default in the payment of the principal of any of the Subordinated Debentures when the same shall have become due and payable, whether upon maturity of the Subordinated Debentures or upon redemption or upon declaration or 24 otherwise, then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the Holders of the Subordinated Debentures, the whole amount that then shall have become due and payable on all such Subordinated Debentures for principal or interest, or both, as the case may be, with interest upon the overdue principal and (to the extent that payment of such interest is enforceable under applicable law and, if the Subordinated Debentures are held by the Trust or a trustee of the Trust, without duplication of any other amounts paid by the Trust or trustee in respect thereof) upon overdue installments of interest at the rate per annum expressed in the Subordinated Debentures; and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, and all amounts payable to the Trustee under Section 9.07. (b) If the Company shall fail to pay such amounts forthwith upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any action or proceedings at law or in equity for the collection of the sums so due and unpaid, and may prosecute any such action or proceeding to judgment or final decree, and may enforce any such judgment or final decree against the Company or other obligor upon the Subordinated Debentures and collect the moneys adjudged or decreed to be payable in the manner provided by law out of the property of the Company or other obligor upon the Subordinated Debentures, wherever situated. (c) In case of any receivership, insolvency, liquidation, bankruptcy, reorganization, readjustment, arrangement, composition or judicial proceedings affecting the Company or the creditors or property of either, the Trustee shall have power to intervene in such proceedings and take any action therein that may be permitted by the court and shall (except as may be otherwise provided by law) be entitled to file such proofs of claim and other papers and documents as may be necessary or advisable in order to have the claims of the Trustee and of the Holders of Subordinated Debentures allowed for the entire amount due and payable by the Company under this Indenture at the date of institution of such proceedings and for any additional amount that may become due and payable by the Company after such date, and to collect and receive any moneys or other property payable or deliverable on any such claim, and to distribute the same after the deduction of the amount payable to the Trustee under Section 9.07; and any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Holders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to such Securityholders, to pay to the Trustee all amounts due it under Section 9.07. (d) All rights of action and of asserting claims under this Indenture may be enforced by the Trustee without the possession of any of the Subordinated Debentures, or the production thereof at any trial or other proceeding relative thereto, and any such suit or proceeding instituted by the Trustee shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall, after provision for payment to the Trustee of all amounts due under Section 9.07, be for the ratable benefit of the Holders of the Subordinated Debentures. 25 In case of an Event of Default hereunder, the Trustee may in its discretion proceed to protect and enforce the rights vested in it by this Indenture by such appropriate judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either at law or in equity or in bankruptcy or otherwise, whether for the specific enforcement of any covenant or agreement contained in this Indenture or in aid of the exercise of any power granted in this Indenture, or to enforce any other legal or equitable right vested in the Trustee by this Indenture or by law. Nothing contained herein shall be deemed to authorize the Trustee to authorize or consent to or accept or adopt on behalf of any Securityholder any plan of reorganization, arrangement, adjustment or composition affecting the Subordinated Debentures or the rights of any Holder thereof or to authorize the Trustee to vote in respect of the claim of any Securityholder in any such proceeding. In any proceedings brought by the Trustee (and also any proceedings involving the interpretation of any provision of this Indenture to which the Trustee shall be a party) the Trustee shall be held to represent all the holders of the Subordinated Debentures, and it shall not be necessary to make any holders of the Subordinated Debentures parties to any such proceedings. Section 7.03. Application of Moneys Collected. Any moneys collected by the Trustee pursuant to this Article with respect to the Subordinated Debentures shall be applied in the following order, at the date or dates fixed by the Trustee and, in case of the distribution of such moneys on account of principal or interest, upon presentation of the Subordinated Debentures, and notation thereon the payment, if only partially paid, and upon surrender thereof if fully paid: FIRST, to the payment of costs and expenses of collection and of all amounts payable to the Trustee under Section 9.07; SECOND, to the payment of all Senior and Subordinated Debt of the Company if and to the extent required by Article XVI; and THIRD, to the payment of the amounts then due and unpaid upon Subordinated Debentures for principal and interest, in respect of which or for the benefit of which such money has been collected, ratably, without preference or priority of any kind, according to the amounts due and payable on such Subordinated Debentures for principal and interest, respectively. Section 7.04. Limitation on Suits. No Holder shall have any right by virtue of or by availing any provision of this Indenture to institute any suit, action or proceeding in equity or at law upon or under or with respect to this Indenture or for the appointment of a receiver or trustee, or for any other remedy hereunder, unless (a) such Holder previously shall have given to the Trustee written notice of an Event of Default and of the continuance thereof; (b) the Holders of not less than 25% in aggregate principal amount of the Subordinated Debentures then Outstanding shall have made written request upon the Trustee to institute such action, suit or proceeding in its own name as trustee hereunder; (c) such Holder or Holders shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred therein or thereby; and (d) the Trustee for 60 days after its receipt of such notice, 26 request and offer of indemnity shall have failed to institute any such action, suit or proceeding; and (e) during such 60-day period, the Holders of a majority in principal amount of the Subordinated Debentures do not give the Trustee a direction inconsistent with the request. Notwithstanding any other provisions of this Indenture to the contrary, the right of any Holder to receive payment of the principal of and interest on the Subordinated Debentures on or after the respective due dates (or in the case of redemption, on the redemption date), or to institute suit for the enforcement of any such payment on or after such respective dates or redemption date, shall not be impaired or affected without the consent of such Holder; and by accepting a Subordinated Debenture hereunder it is expressly understood, intended and covenanted by the Holder thereof with every other such Holder and the Trustee, that no one or more Holders shall have any right in any manner whatsoever by virtue of or by availing any provision of this Indenture to affect, disturb or prejudice the rights of any other Holders, or to obtain or seek to obtain priority over or preference to any such other Holders, or to enforce any right under this Indenture, except in the manner herein provided and for the equal, ratable and common benefit of all Holders of Subordinated Debentures. For the protection and enforcement of the provisions of this Section, each and every Securityholder and the Trustee shall be entitled to such relief as can be given either at law or in equity. Section 7.05. Rights and Remedies Cumulative; Delay or Omission Not Waiver. (a) Except as otherwise provided in Section 7.02, all powers and remedies given by this Article to the Trustee or to the Securityholders shall, to the extent permitted by law, be deemed cumulative and not exclusive of any other powers and remedies available to the Trustee or the Holders of the Subordinated Debentures, by judicial proceedings or otherwise, to enforce the performance or observance of the covenants and agreements contained in this Indenture or otherwise established with respect to such Subordinated Debentures. (b) No delay or omission of the Trustee or of any Holder of any of the Subordinated Debentures to exercise any right or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right or power, or shall be construed to be a waiver of any such default or on acquiescence therein; and, subject to the provisions of Section 7.04, every power and remedy given by this Article or by law to the Trustee or the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders. Section 7.06. Control by Securityholders. The Holders of a majority in aggregate principal amount of the Subordinated Debentures at the time Outstanding, determined in accordance with Section 10.04, shall have the right to direct the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred on the Trustee; provided, however, that such direction shall not be in conflict with any rule of law or with this Indenture. Subject to the provisions of Section 9.01, the Trustee shall have the right to decline to follow any such direction if the Trustee in good faith shall, by a Responsible Officer or Officers of the Trustee, determine that the proceeding so directed would involve the Trustee in personal liability. The Holders of a majority in aggregate principal amount of the Subordinated Debentures at the time Outstanding affected thereby, determined in 27 accordance with Section 10.04, may on behalf of the Holders of all of the Subordinated Debentures waive any past default in the performance of any of the covenants contained herein and its consequences, except (a) a default in the payment of the principal of or interest on any of the Subordinated Debentures as and when the same shall become due by its terms otherwise than by acceleration (unless such default has been cured and a sum sufficient to pay all matured installments of interest and principal has been deposited with the Trustee in accordance with Section 7.01(c)), (b) a default in the covenants contained in Section 5.06 or (c) in respect of a covenant or provision hereof which under Article XI cannot be modified or amended without the consent of the Holder of each Outstanding Subordinated Debenture affected; provided, however, that if the Subordinated Debentures are held by the Trust or a trustee of the Trust, such waiver or modification to such waiver shall not be effective until the Holders of a majority in Liquidation Amount of Trust Securities of the Trust shall have consented to such waiver or modification to such waiver; provided further, that if the consent of the Holder of each Outstanding Subordinated Debenture is required, such waiver shall not be effective until each Holder (as defined in the Trust Agreement) of the Trust Securities of the Trust shall have consented to such waiver. Upon any such waiver, the default covered thereby shall be deemed to be cured for all purposes of this Indenture and the Company, the Trustee and the Holders of the Subordinated Debentures shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or impair any right consequent thereon. Section 7.07. Undertaking to Pay Costs. All parties to this Indenture agree, and each Holder of any Subordinated Debentures by such Holder's acceptance thereof shall be deemed to have agreed, that any court may in its discretion require, in any suit for the enforcement of any right or remedy under this Indenture, or in any suit against the Trustee for any action taken or omitted by it as Trustee, the filing by any party litigant in such suit of an undertaking to pay the costs of such suit, and that such court may in its discretion assess reasonable costs, including reasonable attorneys' fees, against any party litigant in such suit, having due regard to the merits and good faith of the claims or defenses made by such party litigant; but the provisions of this Section shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding more than 10% in aggregate principal amount of the Outstanding Subordinated Debentures, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of or interest on the Subordinated Debentures on or after the due dates thereof. ARTICLE VIII FORM OF SUBORDINATED DEBENTURE AND ORIGINAL ISSUE Section 8.01. Form of Subordinated Debenture. The Subordinated Debenture and the Trustee's Certificate of Authentication to be endorsed thereon are to be substantially in the forms contained as Exhibit A to this Indenture, attached --------- hereto and incorporated herein by reference. Section 8.02. Original Issue of Subordinated Debentures. Subordinated Debentures in the aggregate principal amount of $17,783,510 may, upon execution of this Indenture, be executed by the Company and delivered to the Trustee for authentication, and the Trustee shall thereupon authenticate and deliver the Subordinated Debentures to or upon the written order of 28 the Company, signed by its Chairman, its Vice Chairman, its Chief Executive Officer, its President or any Vice President, without any further action by the Company. ARTICLE IX CONCERNING THE TRUSTEE Section 9.01. Certain Duties and Responsibilities of the Trustee. (a) The Trustee, prior to the occurrence of an Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform with respect to the Subordinated Debentures such duties and only such duties as are specifically set forth in this Indenture, and no implied covenants shall be read into this Indenture against the Trustee. In case an Event of Default has occurred (that has not been cured or waived), the Trustee shall exercise such of the rights and powers vested in it by this Indenture, and use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs. (b) No provision of this Indenture shall be construed to relieve the Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct or bad faith, except that: (i) prior to the occurrence of an Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Trustee shall be determined solely by the express provisions of this Indenture, and the Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee; and (B) in the absence of willful misconduct or bad faith on the part of the Trustee, the Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Trustee and conforming to the requirements of this Indenture; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Trustee, the Trustee shall be under a duty to examine the same to determine only whether or not on their face they conform to the requirement of this Indenture; (ii) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Responsible Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; (iii) the Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the 29 Holders of not less than a majority in principal amount of the Subordinated Debentures at the time Outstanding relating to the time, method and place of conducting any proceeding for any remedy available to the Trustee, or exercising any trust or power conferred upon the Trustee under this Indenture; and (iv) none of the provisions contained in this Indenture shall require the Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers, if the Trustee reasonably believes that the repayment of such funds or liability is not reasonably assured to it under the terms of this Indenture or adequate indemnity against such risk is not reasonably assured to it. Section 9.02. Notice of Defaults. Within 90 days after a Responsible Officer of the Trustee has actual knowledge of the occurrence of any default hereunder with respect to the Subordinated Debentures, the Trustee shall transmit by mail to all holders of the Subordinated Debentures, as their names and addresses appear in the Securities Register, notice of such default, unless such default shall have been cured or waived; provided, however, that except in the case of a default in the payment of the principal and interest (including any Additional Sums) on any Subordinated Debenture, the Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Trustee determines in good faith that the withholding of such notice is in the interests of the holders of such Subordinated Debentures; and provided, further, that in the case of any default of the character specified in section 7.01(a)(iii), no such notice to holders of the Subordinated Debentures need be sent until at least 30 days after the occurrence thereof. For the purposes of this Section 9.02, the term "default" means any event which is, or after notice or lapse of time or both, would become, an Event of Default with respect to the Subordinated Debentures. Section 9.03. Certain Rights of Trustee. Except as otherwise provided in Section 9.01: (a) the Trustee may rely and shall be protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other paper or document believed by it to be genuine and to have been signed or presented by the proper party or parties; (b) any request, direction, order or demand of the Company mentioned herein shall be sufficiently evidenced by a Board Resolution or an instrument signed in the name of the Company by the Chief Executive Officer, the President or any Vice President and by the Secretary or an Assistant Secretary or the Chief Accounting Officer thereof (unless other evidence in respect thereof is specifically prescribed herein); (c) the Trustee may consult with counsel and the written advice of such counsel or any Opinion of Counsel shall be full and complete authorization and protection in respect of any action taken or suffered or omitted hereunder in good faith and in reliance thereon; (d) the Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Indenture at the request, order or direction of any of the 30 Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee security or indemnity reasonably satisfactory to the Trustee against the costs, expenses and liabilities that may be incurred therein or thereby; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default (that has not been cured or waived) to exercise such of the rights and powers vested in it by this Indenture, and to use the same degree of care and skill in their exercise as a prudent man would exercise or use under the circumstances in the conduct of his own affairs; (e) the Trustee shall not be liable for any action taken or omitted to be taken by it in good faith and believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Indenture; (f) the Trustee shall not be bound to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, approval, bond, security or other papers or documents, unless requested in writing so to do by the Holders of not less than a majority in principal amount of the Outstanding Subordinated Debentures (determined as provided in Section 10.04); provided, however, that if the payment within a reasonable time to the Trustee of the costs, expenses or liabilities likely to be incurred by it in the making of such investigation is, in the opinion of the Trustee, not reasonably assured to the Trustee by the security afforded to it by the terms of this Indenture, the Trustee may require reasonable indemnity against such costs, expenses or liabilities as a condition to so proceeding. The reasonable expense of every such examination shall be paid by the Company or, if paid by the Trustee, shall be repaid by the Company upon demand; and (g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents or attorneys and the Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. Section 9.04. Trustee not Responsible for Recitals or Issuance of the Subordinated Debentures. (a) The recitals contained herein and in the Subordinated Debentures shall be taken as the statements of the Company and the Trustee assumes no responsibility for the correctness of the same. (b) The Trustee makes no representations as to the validity or sufficiency of this Indenture or of the Subordinated Debentures. (c) The Trustee shall not be accountable for the use or application by the Company of any of the Subordinated Debentures or of the proceeds of such Subordinated Debentures, or for the use or application of any moneys paid over by the Trustee in accordance with any provision of this Indenture, or for the use or application of any moneys received by any paying agent other than the Trustee. 31 Section 9.05. May Hold Subordinated Debentures. The Trustee or any paying agent or Securities Registrar, in its individual or any other capacity, may become the owner or pledgee of Subordinated Debentures with the same rights it would have if it were not Trustee, paying agent or Securities Registrar. Section 9.06. Moneys Held in Trust. Subject to the provisions of Section 13.05, all moneys received by the Trustee shall, until used or applied as herein provided, be held in trust for the purposes for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee shall be under no liability for interest on any moneys received by it hereunder except such as it may otherwise agree in writing with the Company to pay thereon. Section 9.07. Compensation and Reimbursement. (a) The Company covenants and agrees to pay to the Trustee, and the Trustee shall be entitled to, such reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), as the Company and the Trustee may from time to time agree in writing, for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Trustee, and, except as otherwise expressly provided herein, the Company will pay or reimburse the Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Trustee in accordance with any of the provisions of this Indenture (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its willful misconduct, negligence or bad faith. To the fullest extent permitted by law, the Company hereby indemnifies the Trustee (including in its individual capacity) (and its officers, agents, directors and employees) for, and holds it harmless against, any loss, liability or expense to the extent incurred without willful misconduct, negligence or bad faith on the part of the Trustee and arising out of or in connection with the acceptance or administration of this Indenture or the performance of its duties or exercise of its rights or powers hereunder, including the costs and expenses of defending itself against any claim or liability in connection with the exercise or performance of any of its rights, powers or duties hereunder. (b) The obligations of the Company under this Section to compensate and indemnify the Trustee and to pay or reimburse the Trustee for expenses, disbursements and advances shall constitute additional indebtedness hereunder. Such additional indebtedness shall be secured by a lien prior to that of the Subordinated Debentures upon all property and funds held or collected by the Trustee as such, except funds held in trust for the benefit of the Holders of the Subordinated Debentures. (c) When the Trustee incurs expenses or renders services after an Event of Default specified in Section 7.01(a)(iv), (v) or (vi) occurs, the expenses and compensation for the services are intended to constitute expenses of administration under any Bankruptcy Law or a successor statute. 32 (d) Notwithstanding anything in this Indenture or any Subordinated Debenture to the contrary, the Trustee shall have no obligation whatsoever to advance funds to pay any principal of or interest on or other amounts with respect to the Subordinated Debentures or otherwise advance funds to or on behalf of the Company. (e) The provisions of this Section 9.07 shall survive the discharge or termination of this Indenture and shall survive the resignation or removal of the Trustee. Section 9.08. Reliance on Officers' Certificate. Except as otherwise provided in Section 9.01, whenever in the administration of the provisions of this Indenture the Trustee shall deem it necessary or desirable that a matter be proved or established prior to taking or suffering or omitting to take any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of willful misconduct, negligence or bad faith on the part of the Trustee, be deemed to be conclusively proved and established by an Officers' Certificate delivered to the Trustee and such certificate, in the absence of willful misconduct, negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken, suffered or omitted to be taken by it under the provisions of this Indenture upon the faith thereof. Section 9.09. Disqualification; Conflicting Interests. If the Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the Company shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. Section 9.10. Corporate Trustee Required; Eligibility. There shall at all times be a Trustee with respect to the Subordinated Debentures issued hereunder which shall at all times be a Person organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a corporation or other Person permitted to act as trustee by the Commission, authorized under such laws to exercise trust powers, having a combined capital and surplus of at least $500,000 (and its parent holding company, if any, having a combined capital and surplus of at least $50,000,000) and subject to supervision or examination by federal, state, territorial, or District of Columbia authority. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of the aforesaid supervising or examining authority, then for the purposes of this Section, the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. No Affiliate of the Company may serve as Trustee. In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section, the Trustee shall resign immediately in the manner and with the effect specified in Section 9.11. Section 9.11. Resignation and Removal; Appointment of Successor. (a) The Trustee, or any successor hereafter appointed, may at any time resign by giving written notice thereof to the Company and by transmitting notice of resignation by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Securities Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee by written instrument, in duplicate, 33 executed by order of the Board of Directors, one copy of which instrument shall be delivered to the resigning Trustee and one copy to the successor trustee. If no successor trustee shall have been so appointed and have accepted appointment within 30 days after the mailing of such notice of resignation, the resigning Trustee may petition any court of competent jurisdiction for the appointment of a successor trustee, or any Securityholder who has been a bona fide Holder of Subordinated Debentures for at least six months may, subject to the provisions of Section 7.07, on behalf of such Securityholder and all other Holders, petition any such court for the appointment of a successor trustee. Such court may thereupon, after such notice, if any, as it may deem proper and prescribe, appoint a successor trustee. (b) In case at any time any one of the following shall occur: (i) the Trustee shall fail to comply with the provisions of Section 9.09 after written request therefor by the Company or by any Securityholder who has been a bona fide Holder of Subordinated Debentures for at least six months; or (ii) the Trustee shall cease to be eligible in accordance with the provisions of Section 9.10 and shall fail to resign after written request therefor by the Company or by any such Securityholder; or (iii) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or commence a voluntary bankruptcy proceeding, or a receiver of the Trustee or of its property shall be appointed or consented to, or any public officer shall take charge or control of the Trustee or of its property or affairs for the purpose of rehabilitation, conservation or liquidation, then, in any such case, the Company may remove the Trustee and appoint a successor trustee by written instrument, in duplicate, executed by order of the Board of Directors, one copy of which instrument shall be delivered to the Trustee so removed and one copy to the successor trustee, or, subject to the provisions of Section 7.07, unless the Trustee's duty to resign is stayed as provided herein, any Securityholder who has been a bona fide Holder of Subordinated Debentures for at least six months may, on behalf of that Holder and all other Holders, petition any court of competent jurisdiction for the removal of the Trustee and the appointment of a successor trustee. Such court may thereupon after such notice, if any, as it may deem proper and prescribe, remove the Trustee and appoint a successor trustee. (c) The Holders of a majority in aggregate principal amount of the Subordinated Debentures at the time Outstanding may at any time remove the Trustee by so notifying the Trustee and the Company and may appoint a successor Trustee with the consent of the Company. (d) Any resignation or removal of the Trustee and appointment of a successor trustee pursuant to any of the provisions of this Section shall become effective upon acceptance of appointment by the successor trustee as provided in Section 9.12. 34 Section 9.12. Acceptance of Appointment by Successor. (a) In case of the appointment hereunder of a successor trustee, every such successor trustee so appointed shall execute, acknowledge and deliver to the Company and to the retiring Trustee an instrument accepting such appointment, and thereupon the resignation or removal of the retiring Trustee shall become effective and such successor trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Trustee; but, on the request of the Company or the successor trustee, such retiring Trustee shall, upon its receipt of all amounts payable for it under Section 9.07, execute and deliver an instrument transferring to such successor trustee all the rights, powers, and trusts of the retiring Trustee and shall duly assign, transfer and deliver to such successor trustee all property and money held by such retiring Trustee hereunder. Any trustee ceasing to act shall, nevertheless, retain a lien upon all property or funds held or collected by such trustee to secure any amounts then due to it pursuant to the provisions of Section 9.07. (b) Upon request of any such successor trustee, the Company shall execute any and all instruments for more fully and certainly vesting in and confirming to such successor trustee all such rights, powers and trusts referred to in paragraph (a) of this Section. (c) No successor trustee shall accept its appointment unless at the time of such acceptance such successor trustee shall be qualified and eligible under this Article. (d) Upon acceptance of appointment by a successor trustee as provided in this Section, the Company shall transmit notice of the succession of such trustee hereunder by mail, first class postage prepaid, to the Securityholders, as their names and addresses appear upon the Securities Register. If the Company fails to transmit such notice within ten days after acceptance of appointment by the successor trustee, the successor trustee shall cause such notice to be transmitted at the expense of the Company. Section 9.13. Merger, Conversion, Consolidation or Succession to Business. Any Person into which the Trustee may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any Person succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided that such Person shall be qualified and eligible under the provisions of this Article IX, without the execution or filing of any paper or any further act on the part of any of the parties hereto, anything herein to the contrary notwithstanding. In case any Subordinated Debentures shall have been authenticated, but not delivered, by the Trustee then in office, any successor by merger, conversion or consolidation to such authenticating Trustee may adopt such authentication and deliver the Subordinated Debentures so authenticated with the same effect as if such successor Trustee had itself authenticated such Subordinated Debentures. Section 9.14. Preferential Collection of Claims Against the Company. The Trustee shall comply with Section 311(a) of the Trust Indenture Act, excluding any creditor relationship described in Section 311(b) of the Trust Indenture Act. A Trustee who has resigned or been 35 removed shall be subject to Section 311(a) of the Trust Indenture Act to the extent included therein. Section 9.15. Appointment of Authenticating Agent. At any time when any of the Subordinated Debentures remain Outstanding, the Trustee may appoint an Authenticating Agent or Agents which shall be authorized to act on behalf of the Trustee to authenticate Subordinated Debentures issued upon original issuance, exchange, registration of transfer or partial redemption thereof or pursuant to Section 2.08, and Subordinated Debentures so authenticated shall be entitled to the benefits of this Indenture and shall be valid and obligatory for all purposes as if authenticated by the Trustee hereunder. Wherever reference is made in this Indenture to the authentication and delivery of Subordinated Debentures by the Trustee or the Trustee's certificate of authentication, such reference shall be deemed to include authentication and delivery on behalf of the Trustee by an Authenticating Agent and a certificate of authentication executed on behalf of the Trustee by an Authenticating Agent. Each Authenticating Agent shall be acceptable to the Company and shall at all times be a Person organized and doing business under the laws of the United States of America, any state thereof or the District of Columbia, authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of not less than $500,000 (and its parent holding company having a combined capital and surplus of at least $50,000,000) and subject to supervision or examination by federal or state authority. If such Authenticating Agent publishes reports of condition at least annually, pursuant to law or to the requirements of such supervision or examining authority, for the purposes of this Section, the combined capital and surplus of such Authenticating Agent shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. If at any time an Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, such Authenticating Agent shall resign immediately in the manner and with the effect specified in this Section. Any Person into which an Authenticating Agent may be merged or converted or with which it may be consolidated, or any Person resulting from any merger, conversion or consolidation to which such Authenticating Agent shall be a party, or any Person succeeding to the corporate agency or corporate trust business of an Authenticating Agent, shall continue to be an Authenticating Agent, provided such corporation shall be otherwise eligible under this Section, without the execution or filing of any paper or any further act on the part of the Trustee or the Authenticating Agent. An Authenticating Agent may resign at any time by giving written notice thereof to the Trustee and to the Company. The Trustee may at any time terminate the agency of an Authenticating Agent by giving written notice thereof to such Authenticating Agent and to the Company. Upon receiving such notice of resignation or upon such termination, or in case at any time such Authenticating Agent shall cease to be eligible in accordance with the provisions of this Section, the Trustee may appoint a successor Authenticating Agent which shall be acceptable to the Company and shall mail written notice of such appointment by first class mail, postage prepaid, to all Securityholders as their names and addresses appear in the Securities Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all the rights, powers and duties of its predecessor hereunder, with the like effect as if originally named as an Authenticating Agent herein. No successor Authenticating Agent shall be appointed unless eligible under the provisions of this Section. 36 The Company agrees to pay to each Authenticating Agent such reasonable compensation as the Company and the Authenticating Agent may from time to time have agreed to in writing for its services under this Section, and pursuant to the provisions of Section 9.07 the Trustee shall be entitled to be reimbursed for such payments, if any, it makes to an Authenticating Agent. If an appointment is made pursuant to this Section, the Subordinated Debentures may have endorsed thereon, in lieu of the form of certificate of authentication set forth in Section 8.01, a certificate of authentication in the following form: "This is one of the Subordinated Debentures described in the within mentioned Indenture." ---------------------------------------, as Trustee By ------------------------------------, as Authenticating Agent By ------------------------------------, Authorized Signature Article X CONCERNING THE SECURITYHOLDERS Section 10.01. Evidence of Action by Securityholders. Whenever in this Indenture it is provided that the Holders of a majority or specified percentage in aggregate principal amount of the Subordinated Debentures may take any action (including the making of any demand or request, the giving of any notice, consent or waiver or the taking of any other action), the fact that at the time of taking any such action the Holders of such majority or specified percentage have joined therein may be evidenced by any instrument or any number of instruments of similar tenor executed by such Holders in Person or by agent or proxy appointed in writing. If the Company shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other action, the Company may, at its option, as evidenced by an Officers' Certificate, fix in advance a record date for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action, but the Company shall have no obligation to do so. If such a record date is fixed, such request, demand, authorization, direction, notice, consent, waiver or other action may be given before or after the record date, but only the Securityholders of record at the close of business on the record date shall be deemed to be Securityholders for the purposes of determining whether Securityholders of the requisite proportion of Outstanding Subordinated Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action, and for that purpose the Outstanding Subordinated Debentures shall be computed as of the record date; provided, however, that no such authorization, 37 agreement or consent by such Securityholders on the record date shall be deemed effective unless it shall become effective pursuant to the provisions of this Indenture not later than six months after the record date. Section 10.02. Proof of Execution by Securityholders. Subject to the provisions of Sections 6.01, 9.01, 9.03 and 10.05, proof of the execution of any instrument by a Securityholder (such proof will not require notarization) or his agent or proxy and proof of the holding by any Person of any of the Subordinated Debentures shall be sufficient if made in the following manner: (a) The fact and date of the execution by any such Person of any instrument may be proved in any reasonable manner acceptable to the Trustee. (b) The ownership of Subordinated Debentures shall be proved by the Securities Register or by a certificate of the Securities Registrar thereof. (c) The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary. Section 10.03. Who May be Deemed Owners. Prior to the due presentment for registration of transfer of any Subordinated Debenture, the Company, the Trustee, any paying agent and any Securities Registrar may deem and treat the Person in whose name such Subordinated Debenture shall be registered upon the Security Register as the absolute owner of such Subordinated Debenture (whether or not such Subordinated Debenture shall be overdue and notwithstanding any notice of ownership or writing thereon made by anyone other than the Securities Registrar) for the purpose of receiving payment of or on account of the principal of and (subject to Section 2.05) interest on such Subordinated Debenture and for all other purposes; and neither the Company nor the Trustee nor any paying agent nor any Securities Registrar shall be affected by any notice to the contrary. All such payments so made to any holder shall be valid and, to the extent of the sum or sums so paid, effective to satisfy and discharge the liability for monies payable upon any such Subordinated Debenture. Section 10.04. Certain Subordinated Debentures Owned by Company Disregarded. In determining whether the Holders of the requisite aggregate principal amount of Subordinated Debentures have concurred in any direction, consent or waiver under this Indenture, the Subordinated Debentures that are owned by the Company or any other obligor on the Subordinated Debentures or by any Person directly or indirectly controlling or controlled by or under common control with the Company or any other obligor on the Subordinated Debentures shall be disregarded and deemed not to be Outstanding for the purpose of any such determination, except that for the purpose of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Subordinated Debentures that a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. The Subordinated Debentures so owned that have been pledged in good faith may be regarded as Outstanding for the purposes of this Section, if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Subordinated Debentures and that the pledgee is not a Person directly or indirectly controlling or controlled by or under direct or indirect common 38 control with the Company or any such other obligor. In case of a dispute as to such right, any decision by the Trustee taken upon the advice of counsel shall be full protection to the Trustee. Section 10.05. Actions Binding on Future Securityholders. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 10.01, of the taking of any action by the Holders of the percentage in aggregate principal amount of the Subordinated Debentures specified in this Indenture in connection with such action, any Holder who is shown by the evidence to have consented to such action may, by filing written notice with the Trustee, and upon proof of holding as provided in Section 10.02, revoke such action so far as concerns such Holder's Subordinated Debentures. Except as aforesaid any such action taken by the Holder shall be conclusive and binding upon such Holder and upon all future Holders and owners of such Holder's Subordinated Debentures, and of any Subordinated Debentures issued in exchange therefor, on registration of transfer thereof or in place thereof, irrespective of whether or not any notation in regard thereto is made upon such Subordinated Debentures. Any action taken by the Holders of the percentage in aggregate principal amount of the Subordinated Debentures specified in this Indenture in connection with such action shall be conclusively binding upon the Company, the Trustee and the Holders of all the Subordinated Debentures. Article XI SUPPLEMENTAL INDENTURES Section 11.01. Supplemental Indentures Without the Consent of Securityholders. In addition to any supplemental indenture otherwise authorized by this Indenture, the Company and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect), without the consent of the Securityholders, for one or more of the following purposes: (a) to cure any ambiguity, defect, or inconsistency herein, or in the Subordinated Debentures, provided that any such action does not materially adversely affect the interests of the Holders or the holders of the Preferred Securities so long as they remain outstanding; (b) to comply with Article XII; (c) to provide for uncertificated Subordinated Debentures in addition to or in place of certificated Subordinated Debentures; (d) to add to the covenants of the Company for the benefit of the Holders or to surrender any right or power herein conferred upon the Company; (e) to make any change that does not adversely affect the rights of any Securityholder in any material respect; or (f) to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture or to add to the rights of the Holders. 39 The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, and to make any further appropriate agreements and stipulations that may be therein contained, but the Trustee shall not be obligated to, but may in its discretion, enter into any such supplemental indenture that affects the Trustee's own rights, duties or immunities under this Indenture or otherwise. Any supplemental indenture authorized by the provisions of this Section may be executed by the Company and the Trustee without the consent of the Holders of any of the Subordinated Debentures at the time Outstanding, notwithstanding any of the provisions of Section 11.02. Section 11.02. Supplemental Indentures With Consent of Securityholders. With the consent (evidenced as provided in Section 10.01) of the Holders of not less than a majority in aggregate principal amount of the Subordinated Debentures at the time Outstanding, the Company, when authorized by Board Resolutions, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto (which shall conform to the provisions of the Trust Indenture Act as then in effect) for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of this Indenture or of any supplemental indenture or of modifying in any manner not covered by Section 11.01 the rights of the Holders of the Subordinated Debentures under this Indenture; provided, however, that no such supplemental indenture shall without the consent of the Holders of each Subordinated Debenture then Outstanding, (a) change (except as expressly provided herein pursuant to Section 2.02) the stated maturity of the Subordinated Debentures or reduce the principal amount thereof; or reduce the rate or extend (except as expressly provided herein pursuant to Section 4.01) the time of payment of interest thereon; or (b) reduce the percentage of principal amount of Subordinated Debentures, the Holders of which are required to consent to any such supplemental indenture; provided, further, that if the Subordinated Debentures are held by the Trust or a trustee of the Trust, such supplemental indenture shall not be effective until the holders of a majority in aggregate Liquidation Amount of Preferred Securities shall have consented to such supplemental indenture; provided further, that if the consent of the Holder of each Outstanding Subordinated Debenture is required, such supplemental indenture shall not be effective until each Holder of the Trust Securities shall have consented to such supplemental indenture. It shall not be necessary for the consent of the Securityholders to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof. Section 11.03. Effect of Supplemental Indentures. Upon the execution of any supplemental indenture pursuant to the provisions of this Article or of Section 12.01, this Indenture shall be and be deemed to be modified and amended in accordance therewith . Section 11.04. Subordinated Debentures Affected by Supplemental Indentures. Subordinated Debentures, affected by a supplemental indenture, authenticated and delivered after the execution of such supplemental indenture pursuant to the provisions of this Article or of Section 12.01, may bear a notation in form approved by the Company, as to any matter provided for in such supplemental indenture. If the Company shall so determine, new Subordinated Debentures so modified as to conform, in the opinion of the Board of Directors, to any modification of this Indenture contained in any such supplemental indenture may be prepared 40 and executed by the Company, authenticated by the Trustee or the Authenticating Agent and delivered in exchange for the Subordinated Debentures then Outstanding. Section 11.05. Execution of Supplemental Indentures. Upon the request of the Company, accompanied by Board Resolutions authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders required to consent thereto as aforesaid, the Trustee shall join with the Company in the execution of such supplemental indenture unless such supplemental indenture affects the Trustee's own rights, duties or immunities under this Indenture or otherwise, in which case the Trustee may in its discretion but shall not be obligated to enter into such supplemental indenture. The Trustee, subject to the provisions of Sections 9.01 and 9.03, may receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article is authorized or permitted by, and conforms to, and complies with the requirements of, the Trust Indenture Act and the terms of this Article and that it is proper for the Trustee under the provisions of this Article to join in the execution thereof. Promptly after the execution by the Company and the Trustee of any supplemental indenture pursuant to the provisions of this Section, the Trustee shall transmit by mail, first class postage prepaid, a notice, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Securities Register. Any failure of the Trustee to mail such notice, or any defect therein, shall not, however, in any way impair or affect the validity of any such supplemental indenture. Article XII SUCCESSOR CORPORATION Section 12.01. Company May Consolidate, Etc. The Company shall not consolidate with or merge into any other Person or convey, transfer or lease its properties and assets substantially as an entirety to any Person, and no Person shall consolidate with or merge into the Company or convey, transfer or lease its properties and assets substantially as an entirety to the Company, unless (a) in case the Company consolidates with or merges into another Person or conveys or transfers its properties and assets substantially as an entirety to any Person, the successor Person is organized under the laws of the United States or any state or the District of Columbia, and such successor Person expressly assumes the Company's obligations on the Subordinated Debentures issued under this Indenture; (b) immediately after giving effect thereto, no Event of Default, and no event which, after notice or lapse of time or both, would become an Event of Default, shall have occurred and be continuing; and (c) such successor Person expressly assumes the due and punctual performance and observance of all the covenants and conditions of this Indenture to be kept and performed by the Company by executing and delivering a supplemental indenture in form and substance satisfactory to the Trustee. Section 12.02. Successor Substituted. (a) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor Person by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, 41 of the due and punctual payment of the principal of and interest on all of the Subordinated Debentures Outstanding and the due and punctual performance of all of the covenants and conditions of this Indenture to be performed by the Company, such successor Person shall succeed to and be substituted for the Company, with the same effect as if it had been named as the Company herein, and thereupon the predecessor corporation shall be relieved of all obligations and covenants under this Indenture and the Subordinated Debentures. (b) In case of any such consolidation, merger, sale, conveyance, transfer or other disposition such changes in phraseology and form (but not in substance) may be made in the Subordinated Debentures thereafter to be issued as may be appropriate. Section 12.03. Evidence of Consolidation, etc., to Trustee. The Trustee, subject to the provisions of Sections 9.01 and 9.03, may receive an Opinion of Counsel as conclusive evidence that any such consolidation, merger, sale, conveyance, transfer or other disposition, and any such assumption, comply with the provisions of this Article. Article XIII SATISFACTION AND DISCHARGE Section 13.01. Satisfaction and Discharge of Indenture. If at any time: (a) the Company shall have delivered to the Trustee for cancellation all Subordinated Debentures theretofore authenticated (other than any Subordinated Debentures that shall have been destroyed, lost or stolen and that shall have been replaced or paid as provided in Section 2.08) and not theretofore cancelled and Subordinated Debentures for whose payment money or Governmental Obligations have theretofore been deposited in trust or segregated and held in trust by the Company (and thereupon repaid to the Company or discharged from such trust, as provided in Section 13.05); or (b) all such Subordinated Debentures not theretofore delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within one year or are to be called for redemption within one year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit or cause to be deposited with the Trustee as trust funds the entire amount in moneys or Governmental Obligations sufficient or a combination thereof sufficient, in the opinion of a nationally recognized firm of independent public accountants expressed in a written certification thereof delivered to the Trustee, to pay at maturity or upon redemption all Subordinated Debentures not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company; then this Indenture shall thereupon cease to be of further effect except for the provisions of Sections 2.02, 2.03, 2.04, 2.05, 4.01, 4.02, 4.03 and 9.11, that shall survive until the date of maturity or redemption date, as the case may be, and Sections 9.07 and 13.05, that shall survive to such date and thereafter, and the Trustee, on demand of the Company accompanied by an Officer's Certificate and Opinion of Counsel, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. 42 Section 13.02. Discharge of Obligations. If at any time all such Subordinated Debentures not theretofore delivered to the Trustee for cancellation or that have not become due and payable as described in Section 13.01 shall have been paid by the Company by depositing irrevocably with the Trustee, as trust funds, moneys or an amount of Governmental Obligations sufficient to pay at maturity or upon redemption all such Subordinated Debentures not theretofore delivered to the Trustee for cancellation, including principal and interest due or to become due to such date of maturity or date fixed for redemption, as the case may be, and if the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then after the date such moneys or Governmental Obligations, as the case may be, are deposited with the Trustee the obligations of the Company under this Indenture shall cease to be of further effect except for the provisions of Sections 2.02, 2.03, 2.04, 2.05, 4.01, 4.02, 4.03, 9.07, 9.11 and 13.05 hereof that shall survive until such Subordinated Debentures shall mature and be paid. Thereafter, Sections 9.07 and 13.05 shall survive. Section 13.03. Deposited Moneys to be Held in Trust. All moneys or Governmental Obligations deposited with the Trustee pursuant to Sections 13.01 or 13.02 shall be held in trust and shall be available for payment as due, either directly or through any paying agent (including the Company acting as its own paying agent), to the Holders of the Subordinated Debentures for the payment or redemption of which such moneys or Governmental Obligations have been deposited with the Trustee. Section 13.04. Payment of Moneys held by Paying Agents. In connection with the satisfaction and discharge of this Indenture all moneys or Governmental Obligations then held by any paying agent under the provisions of this Indenture shall, upon demand of the Company, be paid to the Trustee and thereupon such paying agent shall be released from all further liability with respect to such moneys or Governmental Obligations. Section 13.05. Repayment to Company. Any moneys or Governmental Obligations deposited with any paying agent or the Trustee, or then held by the Company in trust for payment of principal of or interest on the Subordinated Debentures that are not applied but remain unclaimed by the Holders of such Subordinated Debentures for at least two years after the date upon which the principal of or interest on such Subordinated Debentures shall have respectively become due and payable, shall be repaid to the Company on the second annual anniversary of when such payment was originally due or (if then held by the Company) shall be discharged from such trust; and thereupon the paying agent and the Trustee shall be released from all further liability with respect to such moneys or Governmental Obligations, and the Holder of any of the Subordinated Debentures entitled to receive such payment shall thereafter, as an unsecured general creditor, look only to the Company for the payment thereof. Article XIV IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS Section 14.01. No Recourse. No recourse under or upon any obligation, covenant or agreement of this Indenture, or of any Subordinated Debenture, or for any claim based thereon or otherwise in respect thereof, shall be had against any incorporator, stockholder, officer or 43 director as such, past, present or future, of the Company or of any predecessor or successor corporation, either directly or through the Company or any such predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise; it being expressly understood that this Indenture and the obligations issued hereunder are solely corporate obligations, and that no such personal liability whatever shall attach to, or is or shall be incurred by, the incorporators, stockholders, officers or directors as such, of the Company or of any predecessor or successor corporation, or any of them, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Subordinated Debentures or implied therefrom; and that any and all such personal liability of every name and nature, either at common law or in equity or by constitution or statute, of, and any and all such rights and claims against, every such incorporator, stockholder, officer or director as such, because of the creation of the indebtedness hereby authorized, or under or by reason of the obligations, covenants or agreements contained in this Indenture or in any of the Subordinated Debentures or implied therefrom, are hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issuance of such Subordinated Debentures. Article XV MISCELLANEOUS PROVISIONS Section 15.01. Effect on Successors and Assigns. All the covenants, stipulations, promises and agreements in this Indenture contained by or on behalf of the Company or the Trustee shall bind their respective successors and assigns, whether so expressed or not. Section 15.02. Actions by Successor. Any act or proceeding by any provision of this Indenture authorized or required to be done or performed by any board, committee or officer of the Company shall and may be done and performed with like force and effect by the corresponding board, committee or officer of any Person that shall at the time be the lawful sole successor of the Company. Section 15.03. Surrender of Company Powers. The Company by instrument in writing executed by authority of two-thirds of its Board of Directors and delivered to the Trustee may surrender any of the powers reserved to the Company, and thereupon such power so surrendered shall terminate both as to the Company and as to any successor corporation. Section 15.04. Notices. Except as otherwise expressly provided herein any notice or demand that by any provision of this Indenture is required or permitted to be given or served by the Trustee or by the Holders of Subordinated Debentures to or on the Company may be given or served by being deposited first class postage prepaid in a post-office letterbox addressed (until another address is filed in writing by the Company with the Trustee), as follows: c/o Bank of the Ozarks, Inc., 12615 Chenal Parkway, Little Rock, Arkansas 72231, Attention: Chief Executive Officer. Any notice, election, request or demand by the Company or any Securityholder to or upon the Trustee shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the Corporate Trust Office of the Trustee. 44 Section 15.05. Governing Law. This Indenture and each Subordinated Debenture shall be deemed to be a contract made under the internal laws of the State of Maryland and for all purposes shall be construed in accordance with the laws of said state. Section 15.06. Treatment of Subordinated Debentures as Debt. It is intended that the Subordinated Debentures will be treated as indebtedness and not as equity for federal income tax purposes. The provisions of this Indenture shall be interpreted to further this intention. Section 15.07. Compliance Certificates and Opinions. (a) Upon any application or demand by the Company to the Trustee to take any action under any of the provisions of this Indenture, the Company shall furnish to the Trustee an Officers' Certificate stating that all conditions precedent provided for in this Indenture relating to the proposed action have been complied with and an Opinion of Counsel stating that in the opinion of such counsel all such conditions precedent have been complied with, except that in the case of any such application or demand as to which the furnishing of such documents is specifically required by any provision of this Indenture relating to such particular application or demand, no additional certificate or opinion need be furnished. (b) Every certificate or opinion delivered to the Trustee with respect to compliance with a condition or covenant in this Indenture shall include (i) a statement that the Person making such certificate or opinion has read such covenant or condition; (ii) a brief statement as to the nature and scope of the examination or investigation upon which the statements or opinions contained in such certificate or opinion are based; (iii) a statement that, in the opinion of such Person, such Person has made such examination or investigation as is necessary to enable such Person to express an informed opinion as to whether or not such covenant or condition has been complied with; and (iv) a statement as to whether or not, in the opinion of such Person, such condition or covenant has been complied with. Section 15.08. Payments on Business Days. In any case where the date of maturity of interest or principal of the Subordinated Debentures or the date of redemption of the Subordinated Debentures shall not be a Business Day, then payment of interest or principal will be made on the next succeeding Business Day (without any additional interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on the date such payment was originally payable. Section 15.09. Conflict with Trust Indenture Act. If and to the extent that any provision of this Indenture limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. Section 15.10. Counterparts. This Indenture may be executed in any number of counterparts, each of which shall be an original, but such counterparts shall together constitute but one and the same instrument. 45 Section 15.11. Separability. In case any one or more of the provisions contained in this Indenture or in the Subordinated Debentures shall for any reason be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provisions of this Indenture or of the Subordinated Debentures, but this Indenture and the Subordinated Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein. Section 15.12. Assignment. The Company will have the right at all times to assign any of its respective rights or obligations under this Indenture to a direct or indirect wholly owned Subsidiary of the Company, provided that, in the event of any such assignment, the Company will remain liable for all such obligations. Subject to the foregoing, this Indenture is binding upon and inures to the benefit of the parties thereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties hereto. Section 15.13. Acknowledgment of Rights. The Company acknowledges that, with respect to any Subordinated Debentures held by the Trust or a trustee of the Trust, if the Property Trustee of the Trust fails to enforce its rights under this Indenture as the Holder of the Subordinated Debentures held as the assets of the Trust, any holder of Preferred Securities may institute legal proceedings either in law or equity directly against the Company to enforce such Property Trustee's rights under this Indenture without first instituting any legal proceedings against such Property Trustee or any other Person or entity. Notwithstanding the foregoing, if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Company to pay interest or principal on the Subordinated Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), the Company acknowledges that a holder of Preferred Securities may directly institute a proceeding for enforcement of payment to such holder of the principal of or interest on the Subordinated Debentures having a principal amount equal to the aggregate Liquidation Amount of the Preferred Securities of such holder on or after the respective due date specified in the Subordinated Debentures. This Section 15.13 may not be amended without the prior written consent of the holders of all of the Preferred Securities. Article XVI SUBORDINATION OF SUBORDINATED DEBENTURES Section 16.01. Agreement to Subordinate. The Company covenants and agrees, and each Holder of Subordinated Debentures issued hereunder by such Holder's acceptance thereof likewise covenants and agrees, that all Subordinated Debentures shall be issued subject to the provisions of this Article XVI; and each Holder, whether upon original issue or upon transfer or assignment thereof, accepts and agrees to be bound by such provisions. The payment by the Company of the principal of and interest on all Subordinated Debentures issued hereunder shall, to the extent and in the manner hereinafter set forth, be subordinated and junior in right of payment to the prior payment in full of all Senior and Subordinated Debt, whether outstanding at the date of this Indenture or thereafter incurred. 46 No provision of this Article XVI shall prevent the occurrence of any default or Event of Default hereunder. Section 16.02. Default on Senior and Subordinated Debt. In the event and during the continuation of any default by the Company in the payment of principal, premium, interest or any other payment due on any Senior and Subordinated Debt of the Company or in the event that the maturity of any Senior and Subordinated Debt of the Company has been accelerated because of a default, then, in either case, no payment shall be made by the Company with respect to the principal of or interest on the Subordinated Debentures. In the event that, notwithstanding the foregoing, any payment shall be received by the Trustee when such payment is prohibited by the preceding paragraph of this Section 16.02, and a Responsible Officer of the Trustee has actual knowledge of such prohibition prior to the disposition of such payment by the Trustee pursuant to a provision of this Indenture, such payment shall be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior and Subordinated Debt or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior and Subordinated Debt may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior and Subordinated Debt (or their representative or representatives or a trustee) notify the Trustee in writing within 90 days of such payment of the amounts then due and owing on the Senior and Subordinated Debt and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior and Subordinated Debt. Section 16.03. Liquidation; Dissolution; Bankruptcy. Upon any payment by the Company or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to creditors upon any dissolution or winding-up or liquidation or reorganization of the Company, whether voluntary or involuntary or in bankruptcy, insolvency, receivership or other proceedings, all amounts due upon all Senior and Subordinated Debt of the Company shall first be paid in full, or payment thereof provided for in money in accordance with its terms, before any payment is made by the Company on account of the principal or interest on the Subordinated Debentures; and upon any such dissolution or winding-up or liquidation or reorganization, any payment by the Company, or distribution of assets of the Company of any kind or character, whether in cash, property or securities, to which the Holders or the Trustee would be entitled to receive from the Company, except for the provisions of this Article XVI, shall be paid by the Company or by any receiver, trustee in bankruptcy, liquidating trustee, agent or other Person making such payment or distribution, or by the Holders or by the Trustee under the Indenture if received by them or it, directly to the holders of Senior and Subordinated Debt of the Company (pro rata to such holders on the basis of the respective amounts of Senior and Subordinated Debt held by such holders, as calculated by the Company) or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior and Subordinated Debt may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior and Subordinated Debt in full, in money or money's worth, after giving effect to any concurrent payment or distribution to or for the holders of such Senior and Subordinated Debt, before any payment or distribution is made to the Holders or to the Trustee. 47 In the event that, notwithstanding the foregoing, any payment or distribution of assets of the Company of any kind or character, whether in cash, property or securities, prohibited by the foregoing, shall be received by the Trustee before all Senior and Subordinated Debt of the Company is paid in full, or provision is made for such payment in money in accordance with its terms, such payment or distribution shall be held in trust for the benefit of and shall be paid over or delivered to the holders of such Senior and Subordinated Debt or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior and Subordinated Debt may have been issued, and their respective interests may appear, as calculated by the Company, for application to the payment of all Senior and Subordinated Debt of the Company, as the case may be, remaining unpaid to the extent necessary to pay such Senior and Subordinated Debt in full in money in accordance with its terms, after giving effect to any concurrent payment or distribution to or for the benefit of the holders of such Senior and Subordinated Debt. For purposes of this Article XVI, the words "cash, property or securities" shall not be deemed to include shares of stock of the Company as reorganized or readjusted, or securities of the Company or any other corporation provided for by a plan of reorganization or readjustment, the payment of which is subordinated at least to the extent provided in this Article XVI with respect to the Subordinated Debentures to the payment of all Senior and Subordinated Debt of the Company, as the case may be, that may at the time be outstanding, provided that (a) such Senior and Subordinated Debt is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and (b) the rights of the holders of such Senior and Subordinated Debt are not, without the consent of such holders, altered by such reorganization or readjustment. The consolidation of the Company with, or the merger of the Company into, another corporation or the liquidation or dissolution of the Company following the conveyance or transfer of its property as an entirety, or substantially as an entirety, to another corporation upon the terms and conditions provided for in Article XII of this Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section 16.03 if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article XII of this Indenture. Nothing in Section 16.02 or in this Section 16.03 shall apply to claims of, or payments to, the Trustee under or pursuant to Section 9.07 of this Indenture. Section 16.04. Subrogation. Subject to the payment in full of all Senior and Subordinated Debt of the Company, the rights of the Holders of the Subordinated Debentures shall be subrogated to the rights of the holders of such Senior and Subordinated Debt to receive payments or distributions of cash, property or securities of the Company, as the case may be, applicable to such Senior and Subordinated Debt until the principal of and interest on the Subordinated Debentures shall be paid in full; and, for the purposes of such subrogation, no payments or distributions to the holders of such Senior and Subordinated Debt of any cash, property or securities to which the Holders of the Subordinated Debentures or the Trustee would be entitled except for the provisions of this Article XVI, and no payment over pursuant to the provisions of this Article XVI to or for the benefit of the holders of such Senior and Subordinated Debt by Holders of the Subordinated Debentures or the Trustee, shall, as between the Company, its creditors other than holders of Senior and Subordinated Debt of the Company, and the Holders of the Subordinated Debentures, be deemed to be a payment by the Company to or on account of such Senior and Subordinated Debt. It is understood that the provisions of this 48 Article XVI are and are intended solely for the purposes of defining the relative rights of the Holders of the Subordinated Debentures, on the one hand, and the holders of such Senior and Subordinated Debt on the other hand. Nothing contained in this Article XVI or elsewhere in this Indenture or in the Subordinated Debentures is intended to or shall impair, as between the Company, its creditors other than the holders of Senior and Subordinated Debt of the Company, and the Holders of the Subordinated Debentures, the obligation of the Company, which is absolute and unconditional, to pay to the Holders of the Subordinated Debentures the principal of and interest on the Subordinated Debentures as and when the same shall become due and payable in accordance with their terms, or is intended to or shall affect the relative rights of the Holders of the Subordinated Debentures and creditors of the Company, other than the holders of Senior and Subordinated Debt of the Company, nor shall anything herein or therein prevent the Trustee or the Holder of any Subordinated Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XVI of the holders of such Senior and Subordinated Debt in respect of cash, property or securities of the Company, as the case may be, received upon the exercise of any such remedy. Upon any payment or distribution of assets of the Company referred to in this Article XVI, the Trustee and the Holders of the Subordinated Debentures shall be entitled to conclusively rely upon any order or decree made by any court of competent jurisdiction in which such dissolution, winding-up, liquidation or reorganization proceedings are pending, or a certificate of the receiver, trustee in bankruptcy, liquidation trustee, agent or other Person making such payment or distribution, delivered to the Trustee or to the Holders of the Subordinated Debentures, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior and Subordinated Debt and other indebtedness of the Company, as the case may be, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XVI. Section 16.05. Trustee to Effectuate Subordination. Each Holder of Subordinated Debentures by such Holder's acceptance thereof authorizes and directs the Trustee on such Holder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XVI and appoints the Trustee such Holder's attorney-in-fact for any and all such purposes. Section 16.06. Notice by the Company. The Company shall give prompt written notice to a Responsible Officer of the Trustee of any fact known to the Company that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Subordinated Debentures pursuant to the provisions of this Article XVI. Notwithstanding the provisions of this Article XVI or any other provision of this Indenture, the Trustee shall not be charged with knowledge of the existence of any facts that would prohibit the making of any payment of moneys to or by the Trustee in respect of the Subordinated Debentures pursuant to the provisions of this Article XVI, unless and until a Responsible Officer of the Trustee shall have received written notice thereof from the Company or a holder or holders of Senior and Subordinated Debt or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Sections 9.01 and 9.03, shall be entitled in all respects to assume that no such facts exist; provided, however, that if the Trustee shall not have received the notice 49 provided for in this Section 16.06 at least two Business Days prior to the date upon which by the terms hereof any money may become payable for any purpose (including, without limitation, the payment of the principal of or interest on any Subordinated Debenture), then, anything herein contained to the contrary notwithstanding, the Trustee shall have full power and authority to receive such money and to apply the same to the purposes for which it was received, and shall not be affected by any notice to the contrary that may be received by it within two Business Days prior to such date. The Trustee, subject to the provisions of Sections 9.01 and 9.03, shall be entitled to conclusively rely on the delivery to it of a written notice by a Person representing himself to be a holder of Senior and Subordinated Debt of the Company (or a trustee on behalf of such holder), to establish that such notice has been given by a holder of such Senior and Subordinated Debt or a trustee on behalf of any such holder or holders. In the event that the Trustee determines in good faith that further evidence is required with respect to the right of any Person as a holder of such Senior and Subordinated Debt to participate in any payment or distribution pursuant to this Article XVI, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior and Subordinated Debt held by such Person, the extent to which such Person is entitled to participate in such payment or distribution and any other facts pertinent to the rights of such Person under this Article XVI, and, if such evidence is not furnished, the Trustee may defer any payment to such Person pending judicial determination as to the right of such Person to receive such payment. Section 16.07. Rights of the Trustee; Holders of Senior and Subordinated Debt. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XVI in respect of any Senior and Subordinated Debt at any time held by it, to the same extent as any other holder of Senior and Subordinated Debt, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder. With respect to the holders of Senior and Subordinated Debt of the Company, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XVI, and no implied covenants or obligations with respect to the holders of such Senior and Subordinated Debt shall be read into this Indenture against the Trustee. The Trustee shall not be deemed to owe any fiduciary duty to the holders of such Senior and Subordinated Debt and, subject to the provisions of Sections 9.01 and 9.03, the Trustee shall not be liable to any holder of such Senior and Subordinated Debt if it shall pay over or deliver to Holders of Subordinated Debentures, the Company or any other Person money or assets to which any holder of such Senior and Subordinated Debt shall be entitled by virtue of this Article XVI or otherwise. Section 16.08. Subordination May Not be Impaired. No right of any present or future holder of any Senior and Subordinated Debt of the Company to enforce subordination as herein provided shall at any time in any way be prejudiced or impaired by any act or failure to act on the part of the Company or by any act or failure to act, in good faith, by any such holder, or by any noncompliance by the Company with the terms, provisions and covenants of this Indenture, regardless of any knowledge thereof that any such holder may have or otherwise be charged with. 50 Without in any way limiting the generality of the foregoing paragraph, the holders of Senior and Subordinated Debt of the Company may, at any time and from time to time, without the consent of or notice to the Trustee or the Holders of the Subordinated Debentures, without incurring responsibility to the Holders of the Subordinated Debentures and without impairing or releasing the subordination provided in this Article XVI or the obligations hereunder of the Holders of the Subordinated Debentures to the holders of such Senior and Subordinated Debt, do any one or more of the following: (a) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior and Subordinated Debt, or otherwise amend or supplement in any manner such Senior and Subordinated Debt or any instrument evidencing the same or any agreement under which such Senior and Subordinated Debt is outstanding; (b) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior and Subordinated Debt; (c) release any Person liable in any manner for the collection of such Senior and Subordinated Debt; and (d) exercise or refrain from exercising any rights against the Company and any other Person. 51 IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed as of the day and year first above written. BANK OF THE OZARKS, INC. By /s/ George G. Gleason --------------------- George G. Gleason, II Chairman and Chief Executive Officer FMB TRUST COMPANY, NATIONAL ASSOCIATION, as Trustee By /s/ Donald C. Hargadon ---------------------- Name Donald C. Hargadon ------------------ Title Assistant Vice President ------------------------ STATE OF ARKANSAS ) ) ss. COUNTY OF PULASKI ) On the 18th day of June, 1999, before me personally came George G. Gleason, II, to me known, who, being by me duly sworn, did depose and say that he is the Chairman and Chief Executive Officer of BANK OF THE OZARKS, INC., one of the corporations described in and which executed the above instrument; and that he signed his name thereto on behalf of said corporation by authority of the Board of Directors of said corporation. Witness my hand and official seal: /s/ Donna Quandt ---------------- Notary Public My Commission Expires: September 26, 2005 - ------------------ 52 STATE OF MARYLAND ) ) ss. CITY OF BALTIMORE ) On the 16th day of June, 1999, before me personally came Donald C. Hargadon, to me known, who, being by me duly sworn, did depose and say that he/she is the Assistant Vice President of FMB Trust Company, National Association, one of the corporations described in and which executed the above instrument; and that he/she signed his/her name thereto on behalf of said corporation by authority of the Board of Directors of said corporation. Witness my hand and official seal: /s/ Deborah K. Bailey ---------------------- Notary Public My Commission Expires: 4/13/02 - ------- 53 EXHIBIT A (FORM OF FACE OF SUBORDINATED DEBENTURE) This Subordinated Debenture is a Subordinated Debenture within the meaning of the Indenture hereinafter referred to and is registered in the name of FMB Trust Company, National Association, as Property Trustee. This Subordinated Debenture is exchangeable for Subordinated Debentures registered in the name of a person other than FMB Trust Company, National Association, as Property Trustee only in the limited circumstances described in the Indenture, and no transfer of this Subordinated Debenture may be registered except in such limited circumstances. Unless this Subordinated Debenture is presented by an authorized representative of FMB Trust Company, National Association, 25 Charles Street, Baltimore, Maryland 22201, Attention: Corporate Trust Services, to the issuer or its agent for registration of transfer, exchange or payment, and any Subordinated Debenture issued is registered in the name of Cede & Co. or such other name as requested by an authorized representative of FMB Trust Company, National Association (and any payment hereon is made to Cede & Co. or to such other entity as is requested by an authorized representative of FMB Trust Company, National Association), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch the registered owner hereof, Cede & Co., has an interest herein. Registered Principal Amount Registered No. 000001 $17,783,510 BANK OF THE OZARKS, INC. 9.0% SUBORDINATED DEBENTURE DUE JUNE 18, 2029 Bank of the Ozarks, Inc., an Arkansas corporation (the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to TRUSTEE or registered assigns, the principal sum of Seventeen Million Seven Hundred Eighty Three Thousand Five Hundred Ten Dollars ($17,783,510) on June 18, 2029 (which date may be shortened as provided in the Indenture, the "Stated Maturity"), and to pay interest on said principal sum from June 18, 1999, or from the most recent interest payment date (each such date, an "Interest Payment Date") to which interest has been paid or duly provided for, quarterly (subject to deferral as set forth herein) in arrears on March 31, June 30, September 30 and December 31 in each year commencing September 30, 1999, at the rate of 9.0% 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 each interest payment due with respect to the Subordinated Debentures will include amounts accrued through the date the interest payment is due. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Subordinated Debenture is not a Business Day (as defined in the Indenture), then payment of interest payable on such date will be made on the next succeeding day that is a Business Day (and without any interest or other payment in respect of any such delay), except that, if such Business Day is in the next succeeding calendar year, such payment shall be made on the immediately preceding Business Day, in each case with the same force and effect as if made on such date. 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 Subordinated Debenture (or one or more Predecessor Subordinated Debentures, as defined in the Indenture) is registered at the close of business on the regular record date for such interest installment, which shall be the close of business on the business day next preceding such Interest Payment Date unless otherwise provided in the Indenture. The principal of and the interest on this Subordinated Debenture shall be payable at the office or agency of the Trustee (as defined in the Indenture) maintained for that purpose in any coin or currency of the United States of America that at the time of payment is legal tender for payment of public and private debts; provided, however, that payment of interest may be made at the option of the Company by check mailed to the Registered Holder (as defined in the Indenture) at such address as shall appear in the Securities Register (as defined in the Indenture). Notwithstanding the foregoing, so long as the Holder of this Subordinated Debenture is the Property Trustee (as defined in the Indenture), the payment of the principal of and interest on this Subordinated Debenture will be made at such place and to such account as may be designated by the Property Trustee. The Stated Maturity may be shortened at any time by the Company to any date not earlier than June 18, 2004, subject to the Company having received prior approval of the FRB (as defined in the Indenture) if then required under applicable capital guidelines or policies of the FRB. The indebtedness evidenced by this Subordinated Debenture is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior and Subordinated Debt (as defined in the Indenture), and this Subordinated Debenture is issued subject to the provisions of the Indenture with respect thereto. Each Holder of this Subordinated Debenture, by accepting the same, (a) agrees to and shall be bound by such provisions, (b) authorizes and directs the Trustee on his or her behalf to take such action as may be necessary or appropriate to acknowledge or effectuate the subordination so provided and (c) appoints the Trustee his or her attorney-in- fact for any and all such purposes. Each Holder hereof, by his or her acceptance hereof, hereby waives all notice of the acceptance of the subordination provisions contained herein and in the Indenture by each holder of Senior and Subordinated Debt, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions. This Subordinated Debenture shall not be entitled to any benefit under the Indenture, be valid or become obligatory for any purpose until the Certificate of Authentication hereon shall have been signed by or on behalf of the Trustee. The provisions of this Subordinated Debenture are continued on the reverse side hereof and such continued provisions shall for all purposes have the same effect as though fully set forth at this place. A-2 IN WITNESS WHEREOF, the Company has caused this instrument to be executed. Dated: June 18, 1999 BANK OF THE OZARKS, INC. By -------------------------- George G. Gleason, II Chairman and Chief Executive Officer Attest: By ----------------------- Donna Quandt, Secretary A-3 [FORM OF CERTIFICATE OF AUTHENTICATION] CERTIFICATE OF AUTHENTICATION This is one of the Subordinated Debentures described in the within- mentioned Indenture. Dated: June 18, 19999 FMB Trust Company, National Association, as Trustee By --------------------------- Authorized Signature A-4 [FORM OF REVERSE OF SUBORDINATED DEBENTURE] 9.0% SUBORDINATED DEBENTURE (CONTINUED) This Subordinated Debenture is one of the Subordinated Debentures of the Company (herein sometimes referred to as the "Subordinated Debentures"), specified in the Indenture, all issued under and pursuant to a Subordinated Indenture dated as of June 18, 1999 (the "Indenture") duly executed and delivered between the Company and FMB Trust Company, National Association, as Trustee (the "Trustee"), to which Indenture reference is hereby made for a description of the rights, limitations of rights, obligations, duties and immunities thereunder of the Trustee, the Company and the Holders of the Subordinated Debentures. The Subordinated Debentures are limited in aggregate principal amount as specified in the Indenture. Because of the occurrence and continuation of a Special Event (as defined in the Indenture), in certain circumstances, this Subordinated Debenture may become due and payable at the option of the Company at the principal amount together with any interest accrued thereon (the "Redemption Price"). The Redemption Price shall be paid prior to 1:00 p.m. Little Rock, Arkansas time, on the date of such redemption or at such earlier time as the Company determines. The Company shall have the right to redeem this Subordinated Debenture at the option of the Company, in whole or in part, from time to time, on or after June 18, 2004, at a redemption price equal to 100% of the principal amount to be redeemed plus any accrued but unpaid interest thereon to the date of such redemption. Any redemption pursuant to this paragraph will be made upon not less than 30 days' nor more than 60 days' notice. If the Subordinated Debentures are only partially redeemed by the Company pursuant to this paragraph, the Subordinated Debentures will be redeemed pro rata or by lot or by any other method utilized by the Trustee; provided that if, at the time of redemption, the Subordinated Debentures are registered as a Global Subordinated Debenture (as defined in the Indenture), the Depositary (as defined in the Indenture) shall determine the principal amount of such Subordinated Debentures held by each Subordinated Debenture Holder to be redeemed in accordance with its procedures. In the event of redemption of this Subordinated Debenture in part only, a new Subordinated Debenture for the unredeemed portion hereof will be issued in the name of the Holder hereof upon the cancellation hereof. Notwithstanding the foregoing, any prepayment of the Subordinated Debentures by the Company shall be subject to the prior approval of the Board of Governors of the Federal Reserve System (the "Federal Reserve System"), if such approval is then required under applicable capital guidelines or policies of the Federal Reserve, and the receipt of any other required regulatory approvals. In case an Event of Default (as defined in the Indenture), shall have occurred and be continuing, the principal of all of the Subordinated Debentures may be declared, and upon such declaration shall become, due and payable, in the manner, with the effect and subject to the conditions provided in the Indenture. A-5 The Indenture contains provisions permitting the Company and the Trustee, with the consent of the Holders of not less than a majority in aggregate principal amount of the Subordinated Debentures at the time Outstanding, as defined in the Indenture, to execute supplemental indentures for the purpose of adding any provisions to or changing in any manner or eliminating any of the provisions of the Indenture or of any supplemental indenture or of modifying in any manner the rights of the Holders of the Subordinated Debentures; provided, however, that no such supplemental indenture shall (i) change the stated maturity of the Subordinated Debentures except as provided in the Indenture, or reduce the principal amount thereof, or reduce the rate or extend the time of payment of interest thereon, without the consent of the Holder of each Subordinated Debenture so affected, or (ii) reduce the aforesaid percentage of Subordinated Debentures, the Holders of which are required to consent to any such supplemental indenture, without the consent of the Holders of each Subordinated Debenture then Outstanding and affected thereby. The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Subordinated Debentures at the time Outstanding, on behalf of all of the Holders of the Subordinated Debentures, to waive any past default in the performance of any of the covenants contained in the Indenture, or established pursuant to the Indenture, and its consequences, except a default in the payment of the principal of or interest on any of the Subordinated Debentures. Any such consent or waiver by the registered Holder of this Subordinated Debenture (unless revoked as provided in the Indenture) shall be conclusive and binding upon such Holder and upon all future Holders and owners of this Subordinated Debenture and of any Subordinated Debenture issued in exchange herefor or in place hereof (whether by registration of transfer or otherwise), irrespective of whether or not any notation of such consent or waiver is made upon this Subordinated Debenture. No reference herein to the Indenture and no provision of this Subordinated Debenture 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 Subordinated Debenture at the time and place and at the rate and in the money herein prescribed. The Company shall have the right at any time during the term of the Subordinated Debentures and from time to time to extend the interest payment period of such Subordinated Debentures for up to 20 consecutive quarters (an "Extended Interest Payment Period"), at the end of which period the Company shall pay all interest then accrued and unpaid (together with interest thereon at the rate specified for the Subordinated Debentures to the extent that payment of such interest is enforceable under applicable law). Before the termination of any such Extended Interest Payment Period, the Company may further extend such Extended Interest Payment Period, provided that such Extended Interest Payment Period together with all such further extensions thereof shall not exceed 20 consecutive quarters or extend beyond the Stated Maturity. At the termination of any such Extended Interest Payment Period and upon the payment of all accrued and unpaid interest and any additional amounts then due, the Company may commence a new Extended Interest Payment Period. The Company has agreed that if at any time (a) there shall have occurred any event of which the Company has actual knowledge that (i) with the giving of notice or the lapse of time, or both, would constitute an Event of Default and (ii) in respect to which the Company shall not have taken reasonable steps to cure, or (b) the Company shall have given notice of its election of an Extended Interest Payment Period as provided herein and shall not have rescinded such A-6 notice, or such Extended Interest Payment Period, or any extension thereof, shall be continuing; or (c) while the Subordinated Debentures are held by the Trust, the Company shall be in default with respect to its payment of any obligation under the Preferred Securities Guarantee, then the Company will not (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, interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company (including the Subordinated Debentures) that rank pari passu with or junior in interest to the Subordinated Debentures or 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 or junior in interest to the Subordinated Debentures (other than (A) dividends or distributions in common stock, (B) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase of any such rights pursuant thereto, (C) payments under the Preferred Securities Guarantee and (D) purchases of common stock related to the issuance of common stock or rights under any of the Company's benefit plans for its directors, officers or employees). As provided in the Indenture and subject to certain limitations therein set forth, this Subordinated Debenture is transferable by the registered Holder hereof on the Securities Register of the Company, upon surrender of this Subordinated Debenture for registration of transfer at the office or agency of the Trustee accompanied by a written instrument or instruments of transfer in form satisfactory to the Company or the Trustee duly executed by the registered Holder hereof or such Holder's attorney duly authorized in writing, and thereupon one or more new Subordinated Debentures of authorized denominations and for the same aggregate principal amount will be issued to the designated transferee or transferees. No service charge will be made for any such transfer, but the Company may require payment of a sum sufficient to cover any tax or other governmental charge payable in relation thereto. Prior to due presentment for registration of transfer of this Subordinated Debenture, the Company, the Trustee, any paying agent and the Securities Registrar (as defined in the Indenture) may deem and treat the Registered Holder hereof as the absolute owner hereof (whether or not this Subordinated Debenture shall be overdue and notwithstanding any notice of ownership or writing hereon made by anyone other than the Securities Registrar) for the purpose of receiving payment of or on account of the principal hereof and interest due hereon and for all other purposes, and neither the Company nor the Trustee nor any paying agent nor any Securities Registrar shall be affected by any notice to the contrary. No recourse shall be had for the payment of the principal of or the interest on this Subordinated Debenture, or for any claim based hereon, or otherwise in respect hereof, or based on or in respect of the Indenture, against any incorporator, stockholder, officer or director, past, present or future, as such, of the Company or of any predecessor or successor corporation, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment or penalty or otherwise, all such liability being, by the acceptance hereof and as part of the consideration for the issuance hereof, expressly waived and released. The Subordinated Debentures are issuable only in registered form without coupons in denominations of $10.00 and any integral multiple thereof. [This Global Subordinated A-7 Debenture is exchangeable for Subordinated Debentures in definitive form only under certain limited circumstances set forth in the Indenture. Subordinated Debentures so issued are issuable only in registered form without coupons in denominations of $10.00 and any integral multiple thereof.] All terms used in this Subordinated Debenture that are defined in the Indenture shall have the meanings assigned to them in the Indenture. A-8 EX-4.6 4 FORM OF PREFERRED SECURITIES GUARANTEE AGREEMENT EXHIBIT 4.6 PREFERRED SECURITIES GUARANTEE AGREEMENT BANK OF THE OZARKS, INC. and FMB TRUST COMPANY, NATIONAL ASSOCIATION Dated: June 18, 1999 CROSS REFERENCE TABLE Section of Trust Indenture Act of Section of Guarantee Agreement 1939, as Amended 310(a) 4.01(a) 310(b) 4.01(c), 2.08 310(c) Inapplicable 311(a) 2.02(b) 311(b) 2.02(b) 311(c) Inapplicable 312(a) 2.02(a) 312(b) 2.02(b) 313 2.03 314(a) 2.04 314(b) Inapplicable 314(c) 2.05 314(d) Inapplicable 314(e) 1.01, 2.05, 3.02 314(f) 2.01, 3.02 315(a) 3.01(d) 315(b) 2.07 315(c) 3.01(c) 315(d) 3.01(d) 316(a) 1.01, 2.06, 5.04 316(b) 5.03 316(c) 2.02 317(a) 3.01(b) 317(b) Inapplicable 318(a) 2.01(a) 318(b) 2.01 318(c) 2.01(b) Note: This Cross Reference Table does not constitute part of this Agreement and shall not affect the interpretation of any of its terms or provisions. TABLE OF CONTENTS Page ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.01. Definitions and Interpretations................................1 ARTICLE II TRUST INDENTURE ACT Section 2.01. Trust Indenture Act; Application...............................5 Section 2.02. Lists of Holders of Securities.................................5 Section 2.03. Reports by the Preferred Guarantee Trustee.....................5 Section 2.04. Periodic Reports to Preferred Guarantee Trustee................6 Section 2.05. Evidence of Compliance with Conditions Precedent...............6 Section 2.06. Events of Default; Waiver......................................6 Section 2.07. Event of Default; Notice.......................................6 Section 2.08. Conflicting Interests..........................................6 ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE Section 3.01. Powers and Duties of the Preferred Guarantee Trustee...........7 Section 3.02. Certain Rights of Preferred Guarantee Trustee..................8 Section 3.03. Not Responsible for Recitals or Issuance of Guarantee.........10 Section 3.04. Compensation and Reimbursement................................11 ARTICLE IV PREFERRED GUARANTEE TRUSTEE Section 4.01. Preferred Guarantee Trustee; Eligibility......................11 Section 4.02. Appointment, Removal and Resignation of Preferred Guarantee Trustees............................................12 ARTICLE V GUARANTEE Section 5.01. Guarantee.....................................................13 Section 5.02. Waiver of Notice and Demand...................................13 Section 5.03. Obligations Not Affected......................................13 Section 5.04. Rights of Holders.............................................14 Section 5.05. Guarantee of Payment..........................................14 Section 5.01. Subrogation...................................................14 Section 5.02. Independent Obligations.......................................14 ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION Section 6.01. Limitation of Transactions....................................15 Section 6.02. Ranking.......................................................15 ARTICLE VII TERMINATION Section 7.01. Termination...................................................15 ARTICLE VIII INDEMNIFICATION Section 8.01. Exculpation...................................................16 Section 8.02. Indemnification...............................................16 ARTICLE IX MISCELLANEOUS Section 9.01. Successors and Assigns........................................17 Section 9.02. Amendments....................................................17 Section 9.03. Notices.......................................................17 Section 9.04. Benefit.......................................................18 Section 9.05. Governing Law.................................................18 ii PREFERRED SECURITIES GUARANTEE AGREEMENT This GUARANTEE AGREEMENT (the "Preferred Securities Guarantee"), dated as of June 18, 1999, is executed and delivered by BANK OF THE OZARKS, INC., an Arkansas corporation (the "Guarantor"), and FMB TRUST COMPANY, NATIONAL ASSOCIATION, as trustee (the "Preferred Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Preferred Securities (as defined herein) of OZARK CAPITAL TRUST, a Delaware statutory business trust ("the Trust"). WHEREAS, pursuant to an Amended and Restated Trust Agreement (the "Trust Agreement") dated as of June 18, 1999 among the trustees of the Trust named therein, the Guarantor, as sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Trust, the Trust is issuing on the date hereof 1,725,000 preferred securities, having an aggregate liquidation amount of $17,250,000 designated the 9.0% Cumulative Trust Preferred Securities (the "Preferred Securities"); and WHEREAS, as incentive for the Holders to purchase the Preferred Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Preferred Securities Guarantee, to pay to the Holders of the Preferred Securities the Guarantee Payments (as defined herein) and to make certain other payments on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the purchase by each Holder of Preferred Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Preferred Securities Guarantee for the benefit of the Holders. ARTICLE I DEFINITIONS AND INTERPRETATION Section 1.01. Definitions and Interpretations. In this Preferred Securities Guarantee, unless the context otherwise requires: (a) capitalized terms used in this Preferred Securities Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.01; (b) a term defined anywhere in this Preferred Securities Guarantee has the same meaning throughout; (c) all references to "the Preferred Securities Guarantee" or "this Preferred Securities Guarantee" are to this Preferred Securities Guarantee as modified, supplemented or amended from time to time; (d) all references in this Preferred Securities Guarantee to Articles and Sections are to Articles and Sections of this Preferred Securities Guarantee, unless otherwise specified; (e) a term defined in the Trust Indenture Act has the same meaning when used in this Preferred Securities Guarantee, unless otherwise defined in this Preferred Securities Guarantee or unless the context otherwise requires; and (f) a reference to the singular includes the plural and vice versa. "Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act of 1933, as amended, or any successor rule thereunder. "Business Day" means any day other than (a) a Saturday or Sunday, (b) a day on which banking institutions in the State of Delaware are authorized or required by law or executive order to remain closed, or (c) a day on which the Preferred Guarantee Trustee's Corporate Trust Office is closed for business. "Corporate Trust Office" means the office of the Preferred Guarantee Trustee at which the corporate trust business of the Preferred Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Agreement is located at 25 Charles Street, Baltimore, Maryland 21201, Attention: Corporate Trust Services. "Covered Person" means any Holder or beneficial owner of Preferred Securities. "Debt" means with respect to any person, whether recourse is to all or a portion of the assets of such person and whether or not contingent: (a) every obligation of such person for money borrowed; (b) every obligation of such person evidenced by bonds, debentures, notes or other similar instruments, including obligations incurred in connection with the acquisition of property, assets or businesses; (c) every reimbursement obligation of such person with respect to letters of credit, bankers' acceptances or similar facilities issued for the account of such person; (d) every obligation of such person issued or assumed as the deferred purchase price of property or services (but excluding trade accounts payable or accrued liabilities arising in the ordinary course of business); (e) every capital lease obligation of such person; and (f) every obligation of the type referred to in clauses (a) through (e) of another person and all dividends of another person the payment of which, in either case, such person has guaranteed or for which such person is responsible or liable, directly or indirectly, as obligor or otherwise. "Event of Default" means a default by the Guarantor on any of its payment or other obligations under this Preferred Securities Guarantee. "Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Preferred Securities, to the extent not paid or made by the Trust: (a) any accrued and unpaid Distributions (as defined in the Trust Agreement) that are required to be paid on such Preferred Securities to the extent the Trust shall have funds available therefor, (b) the redemption price, including all accrued and unpaid Distributions to the date of redemption 2 (the "Redemption Price") to the extent the Trust has funds available therefor, with respect to any Preferred Securities called for redemption by the Trust, and (c) upon a voluntary or involuntary dissolution, winding-up or termination of the Trust (other than in connection with the distribution of Subordinated Debentures to the Holders in exchange for Preferred Securities as provided in the Trust Agreement), the lesser of (i) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Preferred Securities to the date of payment, to the extent the Trust shall have funds available therefor, and (ii) the amount of assets of the Trust remaining available for distribution to Holders in liquidation of the Trust (in either case, the "Liquidation Distribution"). "Holder" shall mean any holder, as registered on the books and records of the Trust of any Preferred Securities; provided, however, that, in determining whether the holders of the requisite percentage of Preferred Securities have given any request, notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or any Affiliate of the Guarantor. "Indemnified Person" means the Preferred Guarantee Trustee (including in its individual capacity), any Affiliate of the Preferred Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Preferred Guarantee Trustee. "Indenture" means the Subordinated Indenture dated as of June 18, 1999, among the Guarantor (the "Debenture Issuer") and FMB Trust Company, National Association, as trustee, and any indenture supplemental thereto pursuant to which the Subordinated Debentures are to be issued to the Property Trustee (as defined in the Trust Agreement) of the Trust. "Majority in liquidation amount of the Preferred Securities" means, except as provided by the Trust Indenture Act, a vote by Holders of Preferred Securities, voting separately as a class, of more than 50% of the liquidation amount (including the stated amount that would be paid on redemption, liquidation or otherwise, plus accrued and unpaid Distributions to the date upon which the voting percentages are determined) of all Preferred Securities. "Officers' Certificate" means, with respect to any Person, a certificate signed by two Authorized officers of such Person. Any Officers' Certificate delivered with respect to compliance with a condition or covenant provided for in this Preferred Securities Guarantee shall include: (a) a statement that each officer signing the Officers' Certificate has read the covenant or condition and the definition relating thereto; (b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officers' Certificate; (c) a statement that each such officer has made such examination or investigation as, in such officer's opinion, is necessary to enable such officer to express an informed opinion as to whether or not such covenant or condition has been complied with; and 3 (d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with. "Person" means a legal person, including any individual, corporation, estate, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated association, or government or any agency or political subdivision thereof, or any other entity of whatever nature. "Preferred Guarantee Trustee" means FMB Trust Company, National Association, until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Preferred Securities Guarantee and thereafter means each such Successor Preferred Guarantee Trustee. "Responsible Officer" means, with respect to the Preferred Guarantee Trustee, any officer within the Corporate Trust Office of the Preferred Guarantee Trustee, including any vice-president, any assistant vice-president, any assistant secretary, the treasurer, any assistant treasurer or other officer in the Corporate Trust Office of the Preferred Guarantee Trustee, with direct responsibility for the administration of this Preferred Securities Guarantee and also means, with respect to a particular corporate trust matter, any other officer of the Preferred Guarantee Trustee to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject. "Subordinated Debentures" means the series of subordinated deferrable interest debt securities of the Guarantor designated the 9.0% Subordinated Debentures due 2029 held by the Property Trustee of the Trust. "Successor Preferred Guarantee Trustee" means a successor Preferred Guarantee Trustee possessing the qualifications to act as Preferred Guarantee Trustee under Section 4.01. "Senior and Subordinated Debt" means the principal of (and premium, if any) and interest, if any (including interest accruing on or after the filing of any petition in bankruptcy or for reorganization relating to the Guarantor whether or not such claim for post-petition interest is allowed in such proceeding), on Debt of the Guarantor, whether incurred on or prior to the date of the Indenture or thereafter incurred, unless, in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are not superior in right of payment to the Preferred Securities Guarantee or to other Debt which is pari passu with, or subordinated to, the Preferred Securities Guarantee; provided, however, that Senior and Subordinated Debt shall not be deemed to include (a) any Debt of the Guarantor which when incurred and without respect to any election under section 1111(b) of the United States Bankruptcy Code of 1978, as amended, was without recourse to the Guarantor, (b) any Debt of the Guarantor to any of its subsidiaries, (c) any Debt to any employee of the Guarantor, (d) any Debt which by its terms is subordinated to trade accounts payable or accrued liabilities arising in the ordinary course of business to the extent that payments made to the holders of such Debt by the holders of the Subordinated Debentures as a result of the subordination provisions of the Indenture would be greater than they otherwise would have been as a result of any obligation of such holders to pay amounts over to the obligees on such trade accounts payable or accrued 4 liabilities arising in the ordinary course of business as a result of the subordination provisions to which such Debt is subject, (e) the Subordinated Debentures, and (f) any other debt securities issued pursuant to the Indenture. "Trust Indenture Act" means the Trust Indenture Act of 1939, as amended. ARTICLE II TRUST INDENTURE ACT Section 2.01. Trust Indenture Act; Application. (a) This Preferred Securities Guarantee is subject to the provisions of the Trust Indenture Act that are required to be part of this Preferred Securities Guarantee and shall, to the extent applicable, be governed by such provisions; and (b) If and to the extent that any provision of this Preferred Securities Guarantee limits, qualifies or conflicts with the duties imposed by Sections 310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall control. Section 2.02. Lists of Holders of Securities. (a) The Guarantor shall provide the Preferred Guarantee Trustee with a list, in such form as the Preferred Guarantee Trustee may reasonably require, of the names and addresses of the Holders of the Preferred Securities ("List of Holders") (i) on or before January 15 and July 15 of each year, and (ii) at any other time within 30 days of receipt by the Guarantor of a written request for a List of Holders, as of a date no more than 14 days before such List of Holders is given to the Preferred Guarantee Trustee provided, that the Guarantor shall not be obligated to provide such List of Holders at any time the List of Holders does not differ from the most recent List of Holders given to the Preferred Guarantee Trustee by the Guarantor. The Preferred Guarantee Trustee may destroy any List of Holders previously given to it on receipt of a new List of Holders. (b) The Preferred Guarantee Trustee shall comply with its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust Indenture Act. Section 2.03. Reports by the Preferred Guarantee Trustee. On or before July 15 of each year, the Preferred Guarantee Trustee shall provide to the Holders of the Preferred Securities such reports as are required by Section 313 of the Trust Indenture Act, if any, in the form and in the manner provided by Section 313 of the Trust Indenture Act. The Preferred Guarantee Trustee shall also comply with the requirements of Section 313(d) of the Trust Indenture Act. 5 Section 2.04. Periodic Reports to Preferred Guarantee Trustee. The Guarantor shall provide to the Preferred Guarantee Trustee such documents, reports and information as required by Section 314 of the Trust Indenture Act, if any, and the compliance certificate required by Section 314 of the Trust Indenture Act in the form, in the manner and at the times required by Section 314 of the Trust Indenture. Delivery of such reports, information and documents to the Preferred Guarantee Trustee is for informational purposes only and the Preferred Guarantee Trustee's receipt of Guarantor's compliance with any of its covenants hereunder (as to which the Preferred Guarantee Trustee is entitled to rely exclusively on Officer's Certificates). Section 2.05. Evidence of Compliance with Conditions Precedent. The Guarantor shall provide to the Preferred Guarantee Trustee such evidence of compliance with the conditions precedent, if any, provided for in this Preferred Securities Guarantee that relate to any of the matters set forth in Section 314(c) of the Trust Indenture Act. Any certificate or opinion required to be given by an officer pursuant to Section 314(c)(1) may be given in the form of an Officers' Certificate. Section 2.06. Events of Default; Waiver. The Holders of a Majority in liquidation amount of Preferred Securities may, by vote, on behalf of the Holders of all of the Preferred Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and any Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Preferred Securities Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Section 2.07. Event of Default; Notice. (a) The Preferred Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default with respect to this Preferred Securities Guarantee actually known to a Responsible Officer of the Preferred Guarantee Trustee, transmit by mail, first class postage prepaid, to the Holders of the Preferred Securities, notices of all such Events of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, that, the Preferred Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Preferred Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Preferred Securities. (b) The Preferred Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Preferred Guarantee Trustee shall have received a properly addressed written notice, or of which a Responsible Officer of the Preferred Guarantee Trustee charged with the administration of the Trust Agreement shall have obtained actual knowledge. Section 2.08. Conflicting Interests. The Trust Agreement shall be deemed to be specifically described in this Preferred Securities Guarantee for the purposes of clause (i) of the first proviso contained in Section 310(b) of the Trust Indenture Act. 6 ARTICLE III POWERS, DUTIES AND RIGHTS OF PREFERRED GUARANTEE TRUSTEE Section 3.01. Powers and Duties of the Preferred Guarantee Trustee. (a) This Preferred Securities Guarantee shall be held by the Preferred Guarantee Trustee for the benefit of the Holders of the Preferred Securities, and the Preferred Guarantee Trustee shall not transfer this Preferred Securities Guarantee to any Person except a Holder of Preferred Securities exercising such Holder's rights pursuant to Section 5.04(b) or to a Successor Preferred Guarantee Trustee on acceptance by such Successor Preferred Guarantee Trustee of its appointment to act as Successor Preferred Guarantee Trustee. The right, title and interest of the Preferred Guarantee Trustee shall automatically vest in any Successor Preferred Guarantee Trustee, and such vesting and cessation of title shall be effective whether or not conveyancing documents have been executed and delivered pursuant to the appointment of such Successor Preferred Guarantee Trustee. (b) If an Event of Default actually known to a Responsible Officer of the Preferred Guarantee Trustee has occurred and is continuing, the Preferred Guarantee Trustee shall enforce this Preferred Securities Guarantee for the benefit of the Holders of the Preferred Securities. (c) The Preferred Guarantee Trustee, before the occurrence of any Event of Default and after the curing of all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.06) and is actually known to a Responsible Officer of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall exercise such of the rights and powers vested in it by this Preferred Securities Guarantee, and use the same degree of care and skill in its exercise thereof, as a prudent person would exercise or use under the circumstances in the conduct of such person's own affairs. (d) No provision of this Preferred Securities Guarantee shall be construed to relieve the Preferred Guarantee Trustee from liability for its own negligent action, its own negligent failure to act, or its own willful misconduct, except that: (i) prior to the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred: (A) the duties and obligations of the Preferred Guarantee Trustee shall be determined solely by the express provisions of this Preferred Securities Guarantee, and the Preferred Guarantee Trustee shall not be 7 liable except for the performance of such duties and obligations as are specifically set forth in this Preferred Securities Guarantee, and no implied covenants or obligations shall be read into this Preferred Securities Guarantee against the Preferred Guarantee Trustee; and (B) in the absence of bad faith on the part of the Preferred Guarantee Trustee, the Preferred Guarantee Trustee may conclusively rely, as to the truth of the statements and the correctness of the opinions expressed therein, upon any certificates or opinions furnished to the Preferred Guarantee Trustee and conforming to the requirements of this Preferred Securities Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Preferred Guarantee Trustee, the Preferred Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Preferred Securities Guarantee; (ii) the Preferred Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Preferred Guarantee Trustee, unless it shall be proved that the Preferred Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made; (iii) the Preferred Guarantee Trustee shall not be liable with respect to any action taken or omitted to be taken by it in good faith in accordance with the direction of the Holders of not less than a Majority in liquidation amount of the Preferred Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Preferred Guarantee Trustee, or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee; and (iv) no provision of this Preferred Securities Guarantee shall require the Preferred Guarantee Trustee to expend or risk its own funds or otherwise incur personal financial liability in the performance of any of its duties or in the exercise of any of its rights or powers if the Preferred Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds or liability is not reasonably assured to it under the terms of this Preferred Securities Guarantee or indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against such risk or liability is not reasonably assured to it. Section 3.02. Certain Rights of Preferred Guarantee Trustee. (a) Subject to the provisions of Section 3.01: (i) The Preferred Guarantee Trustee may conclusively rely upon, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, 8 consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document believed by it to be genuine and to have been signed, sent or presented by the proper party or parties. (ii) Any direction or act of the Guarantor contemplated by this Preferred Securities Guarantee shall be sufficiently evidenced by an Officers' Certificate. (iii) Whenever, in the administration of this Preferred Securities Guarantee, the Preferred Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the Preferred Guarantee Trustee (unless other evidence is herein specifically prescribed) may, in the absence of bad faith on its part, request and conclusively rely upon an Officers' Certificate which, upon receipt of such request, shall be promptly delivered by the Guarantor. (iv) The Preferred Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any re-recording, re-filing or registration thereof). (v) The Preferred Guarantee Trustee may consult with counsel, and the written advice or opinion of such counsel with respect to legal matters shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in accordance with such advice or opinion. Such counsel may be counsel to the Guarantor or any of its Affiliates and may include any of its employees. The Preferred Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Preferred Securities Guarantee from any court of competent jurisdiction. (vi) The Preferred Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Preferred Securities Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Preferred Guarantee Trustee such security and indemnity, reasonably satisfactory to the Preferred Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the Preferred Guarantee Trustee's agents, nominees or custodians) and liabilities that might be incurred by it in complying with such request or direction, including such reasonable advances as may be requested by the Preferred Guarantee Trustee; provided that, nothing contained in this Section 3.02(a)(vi) shall be taken to relieve the Preferred Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Preferred Securities Guarantee. (vii) The Preferred Guarantee Trustee shall have no obligation or duty to make any investigation into the facts or matters stated in any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, 9 consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Preferred Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit. (viii) The Preferred Guarantee Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents, nominees, custodians or attorneys, and the Preferred Guarantee Trustee shall not be responsible for any misconduct or negligence on the part of any agent or attorney appointed with due care by it hereunder. (ix) Any action taken by the Preferred Guarantee Trustee or its agents hereunder shall bind the Holders of the Preferred Securities, and the signature of the Preferred Guarantee Trustee or its agents alone shall be sufficient and effective to perform any such action. No third party shall be required to inquire as to the authority of the Preferred Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Preferred Securities Guarantee, both of which shall be conclusively evidenced by the Preferred Guarantee Trustee's or its agent's taking such action. (x) Whenever in the administration of this Preferred Securities Guarantee the Preferred Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Preferred Guarantee Trustee (A) may request instructions from the Holders of a Majority in liquidation amount of the Preferred Securities, (B) may refrain from enforcing such remedy or right or taking such other action until such instructions are received, and (C) shall be protected in conclusively relying on or acting in accordance with such instructions. (xi) The Preferred Guarantee Trustee shall not be liable for any action taken, suffered or omitted to be taken by it in good faith and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Preferred Securities Guarantee. (b) No provision of this Preferred Securities Guarantee shall be deemed to impose any duty or obligation on the Preferred Guarantee Trustee to perform any act or acts or exercise any right, power, duty or obligation conferred or imposed on it in any jurisdiction in which it shall be illegal, or in which the Preferred Guarantee Trustee shall be unqualified or incompetent in accordance with applicable law, to perform any such act or acts or to exercise any such right, power, duty or obligation. No permissive power or authority available to the Preferred Guarantee Trustee shall be construed to be a duty. Section 3.03. Not Responsible for Recitals or Issuance of Guarantee. The recitals contained in this Preferred Securities Guarantee shall be taken as the statements of the Guarantor, and the Preferred Guarantee Trustee does not assume any responsibility for their correctness. 10 The Preferred Guarantee Trustee makes no representation as to the validity or sufficiency of this Preferred Securities Guarantee. Section 3.04. Compensation and Reimbursement. The Guarantor covenants and agrees to pay to the Preferred Guarantee Trustee, and the Preferred Guarantee Trustee shall be entitled to, such reasonable compensation (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), as the Guarantee and the Preferred Guarantor Trustee may from time to time agree in writing, for all services rendered by it in the execution of the trusts hereby created and in the exercise and performance of any of the powers and duties hereunder of the Preferred Guarantee Trustee, and, except as otherwise expressly provided herein, the Guarantor will pay or reimburse the Preferred Guarantee Trustee upon its request for all reasonable expenses, disbursements and advances incurred or made by the Preferred Guarantor Trustee in accordance with any of the provisions of this Preferred Securities Guarantee (including the reasonable compensation and the expenses and disbursements of its counsel and of all Persons not regularly in its employ) except any such expense, disbursement or advance as may arise from its willful misconduct, negligence or bad faith. The Guarantor hereby indemnifies and holds harmless the Preferred Guarantor Trustee (and its officers, agents, directors and employees) for, and against, any loss, liability or expense incurred without willful misconduct, negligence or bad faith on the part of the Preferred Guarantor Trustee and arising out of or in connection with the acceptance or administration of this trust, including the costs and expenses of defending itself against any claims of liability in the premises. ARTICLE IV PREFERRED GUARANTEE TRUSTEE Section 4.01. Preferred Guarantee Trustee; Eligibility. (a) There shall at all times be a Preferred Guarantee Trustee which shall: (i) not be an Affiliate of the Guarantor; and (ii) be organized and doing business under the laws of the United States of America or any state or territory thereof or of the District of Columbia, or a Person permitted by the Securities and Exchange Commission to act as an institutional trustee under the Trust Indenture Act, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least with respect to the initial Trustee $500,000 (and its principal parent holding company having a combined capital and surplus of at least $50,000,000) and with respect to any successor Trustee $50,000,000, and subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such Person publishes reports of condition at least annually, pursuant to law or to the requirements of the supervising or examining authority referred to above, then, for the purposes of this Section 4.01(a)(ii), the combined capital and surplus of such Person shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published. 11 (b) If at any time the Preferred Guarantee Trustee shall cease to be eligible to so act under Section 4.01(a), the Preferred Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 4.02(c). (c) If the Preferred Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Preferred Guarantee Trustee and Guarantor shall in all respects comply with the provisions of Section 310(b) of the Trust Indenture Act. Section 4.02. Appointment, Removal and Resignation of Preferred Guarantee Trustees. (a) Subject to Section 4.02(b), the Preferred Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor. (b) The Preferred Guarantee Trustee shall not be removed in accordance with Section 4.02(a) until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor. (c) The Preferred Guarantee Trustee appointed to office shall hold office until a Successor Preferred Guarantee Trustee shall have been appointed or until its removal or resignation. The Preferred Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Preferred Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Preferred Guarantee Trustee has been appointed and has accepted such appointment by instrument in writing executed by such Successor Preferred Guarantee Trustee and delivered to the Guarantor and the resigning Preferred Guarantee Trustee. (d) If no Successor Preferred Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 4.02 within 60 days after delivery to the Guarantor of an instrument of resignation, the resigning Preferred Guarantee Trustee may petition any court of competent jurisdiction for appointment of a Successor Preferred Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Preferred Guarantee Trustee. (e) No Preferred Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Preferred Guarantee Trustee. (f) Upon termination of this Preferred Securities Guarantee or removal or resignation of the Preferred Guarantee Trustee pursuant to this Section 4.02, the Guarantor shall pay to the Preferred Guarantee Trustee all amounts accrued to the date of such termination, removal or resignation. 12 ARTICLE V GUARANTEE Section 5.01. Guarantee. The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Trust), as and when due, regardless of any defense, right of set-off or counterclaim that the Trust may have or assert. The Guarantor's obligation to make a Guarantee Payment may be satisfied by direct payment of the required amounts by the Guarantor to the Holders or by causing the Trust to pay such amounts to the Holders. Section 5.02. Waiver of Notice and Demand. The Guarantor hereby waives notice of acceptance of this Preferred Securities Guarantee and of any liability to which it applies or may apply, presentment, demand for payment, any right to require a proceeding first against the Trust or any other Person before proceeding against the Guarantor, protest, notice of nonpayment, notice of dishonor, notice of redemption and all other notices and demands. Section 5.03. Obligations Not Affected. The obligations, covenants, agreements and duties of the Guarantor under this Preferred Securities Guarantee shall in no way be affected or impaired by reason of the happening from time to time of any of the following: (a) the release or waiver, by operation of law or otherwise, of the performance or observance by the Trust of any express or implied agreement, covenant, term or condition relating to the Preferred Securities to be performed or observed by the Trust; (b) the extension of time for the payment by the Trust of all or any portion of the Distributions, Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Preferred Securities or the extension of time for the performance of any other obligation under, arising out of, or in connection with, the Preferred Securities (other than an extension of time for payment of Distributions, Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Subordinated Debentures or any extension of the maturity date of the Subordinated Debentures permitted by the Indenture); (c) any failure, omission, delay or lack of diligence on the part of the Holders to enforce, assert or exercise any right, privilege, power or remedy conferred on the Holders pursuant to the terms of the Preferred Securities, or any action on the part of the Trust granting indulgence or extension of any kind; (d) the voluntary or involuntary liquidation, dissolution, sale of any collateral, receivership, insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, composition or readjustment of debt of, or other similar proceedings affecting, the Trust or any of the assets of the Trust; (e) any invalidity of, or defect or deficiency in, the Preferred Securities; 13 (f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or (g) any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of a guarantor, it being the intent of this Section 5.03 that the obligations of the Guarantor hereunder shall be absolute and unconditional under any and all circumstances. There shall be no obligation of the Holders to give notice to, or obtain consent of, the Guarantor with respect to the happening of any of the foregoing. Section 5.04. Rights of Holders. (a) The Holders of a Majority in liquidation amount of the Preferred Securities have the right to direct the time, method and place of conducting of any proceeding for any remedy available to the Preferred Guarantee Trustee in respect of this Preferred Securities Guarantee or exercising any trust or power conferred upon the Preferred Guarantee Trustee under this Preferred Securities Guarantee. (b) Any Holder of Preferred Securities may institute a legal proceeding directly against the Guarantor to enforce its rights under this Preferred Securities Guarantee, without first instituting a legal proceeding against the Trust, the Preferred Guarantee Trustee or any other Person. The Guarantor waives any right or remedy to require that any action be brought first against the Trust or any other person or entity before proceeding directly against the Guarantor. Section 5.05. Guarantee of Payment. This Preferred Securities Guarantee creates a guarantee of payment and not of collection. Section 5.06. Subrogation. The Guarantor shall be subrogated to all (if any) rights of the Holders of Preferred Securities against the Trust in respect of any amounts paid to such Holders by the Guarantor under this Preferred Securities Guarantee; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any right that it may acquire by way of subrogation or any indemnity, reimbursement or other agreement, in all cases as a result of payment under this Preferred Securities Guarantee, if, at the time of any such payment, any amounts are due and unpaid under this Preferred Securities Guarantee. If any amount shall be paid to the Guarantor in violation of the preceding sentence, the Guarantor agrees to hold such amount in trust for the Holders and to pay over such amount to the Holders. Section 5.07. Independent Obligations. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Trust with respect to the Preferred Securities, and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Preferred Securities Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 5.03. 14 ARTICLE VI LIMITATION OF TRANSACTIONS; SUBORDINATION Section 6.01. Limitation of Transactions. So long as any Preferred Securities remain outstanding, if there shall have occurred and be continuing an Event of Default or an event of default under the Trust Agreement, then (a) the Guarantor shall not declare or pay any dividend or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of its capital stock, (b) the Guarantor shall not make any payment of interest, principal or premium, if any, on or repay, repurchase or redeem any debt securities issued by the Guarantor (including other Subordinated Debentures) which rank pari passu with or junior in interest to the Subordinated Debentures or (c) the Guarantor shall not make any guarantee payments with respect to any guarantee by the guarantor of the debt securities of any subsidiary of the Guarantor if such guarantee ranks pari passu or junior in interest to the Subordinated Debentures (other than (i) dividends or distributions in common stock, (ii) any declaration of a dividend in connection with the implementation of a shareholders' rights plan, or the issuance of stock under any such plan in the future or the redemption or repurchase of any such rights pursuant thereto, (iii) payments under this Preferred Securities Guarantee and (iv) purchases of common stock related to the issuances of common stock or rights under any of the Guarantor's benefit plans for its directors, officers or employees). Section 6.02. Ranking. This Preferred Securities Guarantee will constitute an unsecured obligation of the Guarantor and will rank (i) subordinate and junior in right of payment to all Senior and Subordinated Debt of the Guarantor, and (ii) pari passu with the Subordinated Debentures. ARTICLE VII TERMINATION Section 7.01. Termination. This Preferred Securities Guarantee shall terminate upon (a) full payment of the Redemption Price of all Preferred Securities, (b) upon full payment of the amounts payable in accordance with the Trust Agreement upon liquidation of the Trust or (c) upon distribution of the Subordinated Debentures to the Holders of the Preferred Securities. Notwithstanding the foregoing, this Preferred Securities Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Preferred Securities must restore payment of any sums paid under the Preferred Securities or under this Preferred Securities Guarantee. 15 ARTICLE VIII INDEMNIFICATION Section 8.01. Exculpation. (a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Guarantor or any Covered Person for any loss, damage or claim incurred by reason of any act or omission performed or omitted by such Indemnified Person in good faith in accordance with this Preferred Securities Guarantee and in a manner that such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Preferred Securities Guarantee or by law, except that an Indemnified Person shall be liable for any such loss, damage or claim incurred by reason of such Indemnified Person's bad faith, negligence or willful misconduct with respect to such acts or omissions. (b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Guarantor and upon such information, opinions, reports or statements presented to the Guarantor by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and who has been selected with reasonable care by or on behalf of the Guarantor, including information, opinions, reports or statements as to the value and amount of the assets, liabilities, profits, losses, or any other facts pertinent to the existence and amount of assets from which Distributions to Holders of Preferred Securities might properly be paid. Section 8.02. Indemnification. (a) The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any loss, liability or expense incurred without willful misconduct, negligence or bad faith on its part, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including the costs and expenses (including reasonable legal fees and expenses) of defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of its powers or duties hereunder. (b) The Guarantor agrees to pay the Preferred Guarantee Trustee, from time to time, such compensation for all services rendered by the Preferred Guarantee Trustee hereunder as may be mutually agreed upon in writing by the Guarantor and the Preferred Guarantee Trustee, and except as otherwise expressly provided herein, to reimburse the Preferred Guarantee Trustee upon its request for all reasonable expenses (including counsel fees and expenses), disbursements and advances incurred or made by the Preferred Guarantee Trustee in accordance with the provisions of this Preferred Securities Guarantee, except any such expense, disbursements or advance as may arise from its willful misconduct, negligence or bad faith. 16 (c) The provisions as set forth in this Section 8.02 shall survive the termination of this Preferred Securities Guarantee and shall survive the resignation or removal of the Preferred Guarantee Trustee. ARTICLE IX MISCELLANEOUS Section 9.01. Successors and Assigns. All guaranties and agreements contained in this Preferred Securities Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Preferred Securities then outstanding. Section 9.02. Amendments. Except with respect to any changes that do not materially adversely affect the rights of Holders (in which case no consent of Holders will be required), this Preferred Securities Guarantee may only be amended with the prior approval of the Holders of at least a Majority in liquidation amount of the Preferred Securities. The provisions of Article VI of the Trust Agreement with respect to meetings of Holders of the Securities apply to the giving of such approval. This Preferred Securities Guarantee may not be amended, and no amendment hereof that affects the Preferred Guarantee Trustee's rights, powers, duties or immunities hereunder or otherwise, shall be effective, unless such amendment is executed by the Preferred Guarantee Trustee (which shall have no obligation to execute any such amendment, but may do so in its sole discretion). Section 9.03. Notices. All notices provided for in this Preferred Securities Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by registered or certified mail, as follows: (a) If given to the Preferred Guarantee Trustee, at the Preferred Guarantee Trustee's mailing address set forth below (or such other address as the Preferred Guarantee Trustee may give notice of to the Holders of the Preferred Securities): FMB Trust Company, National Association 25 Charles Street Baltimore, Maryland 21201 Attention: Corporate Trust Services Facsimile: (410) 244-4236 (b) If given to the Guarantor, at the Guarantor's mailing address set forth below (or such other address as the Guarantor may give notice of to the Holders of the Preferred Securities): 17 BANK OF THE OZARKS, INC. 12615 Chenal Parkway Little Rock, Arkansas 72231 Attention: Chief Executive Officer Facsimile: (501) 978-2205 (c) If given to any Holder of Preferred Securities, at the address set forth on the books and records of the Trust. All such notices shall be deemed to have been given when received in person, telecopied with receipt confirmed, or mailed by first class mail, postage prepaid except that if a notice or other document is refused delivery or cannot be delivered because of a changed address of which no notice was given, such notice or other document shall be deemed to have been delivered on the date of such refusal or inability to deliver. Section 9.04. Benefit. This Preferred Securities Guarantee is solely for the benefit of the Holders of the Preferred Securities and, subject to Section 3.01(a), is not separately transferable from the Preferred Securities. Section 9.05. Governing Law. THIS PREFERRED SECURITIES GUARANTEE, INCLUDING THE IMMUNITIES AND THE STANDARD OF CARE OF THE TRUSTEE, SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF MARYLAND WITH REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. [Signature Page Follows] 18 THIS PREFERRED SECURITIES GUARANTEE is executed as of the day and year first above written. BANK OF THE OZARKS, INC., as Guarantor By /s/ George G. Gleason --------------------- George G. Gleason, II Chairman and Chief Executive Officer FMB TRUST COMPANY, NATIONAL ASSOCIATION, as Preferred Guarantee Trustee By /s/ Donald C. Hargadon ---------------------- Name Donald C. Hargadon ------------------ Title Assistant Vice President ------------------------ By /s/ Robert D. Brown ------------------- Name Robert D. Brown --------------- Title Vice President -------------- 19 EX-10 5 MODIFICATION OF LOAN AGREEMENT EXHIBIT 10 MODIFICATION AGREEMENT This Agreement is made and entered into this 10th day of June, 1999, by and between UNION PLANTERS BANK, N.A. a national banking association with offices at 6200 Poplar Avenue, Memphis, Tennessee 38119 (hereinafter referred to as the "Lender"), and BANK OF THE OZARKS, INC., an Arkansas corporation (hereinafter referred to as the "Borrower"), having as an address for purposes of notice of Chenal Parkway & West Markham Street, P.O. Box 8811, Little Rock, Arkansas, 72231-8811. WITNESSETH THAT: WHEREAS, Borrower is indebted to Lender for advances made to it (the "1998 Loan") pursuant to a Loan Agreement dated March 25, 1998 (the "1998 Loan Agreement"), and as evidenced by a Promissory Note of Borrower (the "1998 Note") in the face amount of $22,000,000.00; and WHEREAS, in order to accommodate the issuance of certain shares of preferred stock of a newly formed trust subsidiary of the the Borrower (the "Preferred Stock" and the "Trust Preferred Stock"), the Borrower has requested and Lender has agreed to certain modifications of the terms, conditions, covenants and agreements set forth in the 1998 Loan Agreement, all as more fully set forth herein; NOW THEREFORE, in consideration of the premises and the mutual covenants contained herein, the receipt and sufficiency of which is hereby acknowledged, the parties do hereby agree as follows: 1. Modification of Terms. The definition of the term "Liabilities" and --------------------- the parties' understanding of the terms "indebtedness" and "borrowed money" as set forth in Section 1.15.2 and used in Sections 7.1 and 7.5 of the 1998 Loan Agreement, are hereby modified to exclude the liabilities of the Borrower under the terms of the Preferred Stock or Trust Preferred Stock, provided that the same are treated as "minority interests" under the generally accepted accounting principles as consistently applied. 2. Modification of Borrower's Affirmative Covenants. Borrower agrees to ------------------------------------------------ the following modifications: a. Borrower agrees to reimburse the Lender for its reasonable expenses incurred in the performance of the inspections permitted under Section 6.5 of the 1998 Loan Agreement. b. Borrower agrees to the addition of the following to Section 6.7 of the 1998 Loan Agreement: 6.7.4 Borrower shall cause each Subsidiary Bank to maintain its "classified assets" as such term is used by the applicable bank regulatory authorities in an amount not to exceed forty percent (40%) of the Subsidiary Bank's Net Worth at each calendar year end. 6.7.5 Borrower shall cause each Subsidiary Bank to maintain its non- performing assets (as shown on its call report) in an amount not to exceed two percent (2%) of all of the Assets at each calendar year end. 6.7.6 Borrower shall cause each Subsidiary Bank to maintain a loan loss reserve in an amount equal to the greater of: (i) one percent (1%) of its total loans; (ii) one hundred percent (100%) of its non- performing Assets; or (iii) in such amount as is required by the applicable bank regulatory authorities. 3. Agreement of Borrower. Borrower agrees to keep and perform all the --------------------- covenants, terms, and conditions contained in the 1998 Loan Agreement, the Line of Credit Note, any security agreements, assignments and any other document executed in connection therewith and hereby acknowledges and agrees that the terms, covenants and conditions of the 1998 Loan Agreements, the Line of Credit Note, and any other agreements executed therewith shall remain in full force and effect, and shall in no manner be affected by the execution of this Agreement, except as expressly provided herein. 4. No Discharge. The execution of this Agreement shall in no manner ------------ release or discharge any of the makers, obligors, endorsers, sureties or guarantors of the promissory notes and all rights of the Lender against any and all of same are expressly reserved. 5. Capitalized Terms. All capitalized terms used herein shall have the ----------------- meanings ascribed thereto in the 1998 Loan Agreement. All accounting terms not specifically defined in this Agreement shall have the meanings given to them under accounting principles and practices generally accepted in the United States, applied on a basis consistent with prior periods. 6. Binding Effect. This Agreement shall be binding upon and inure to the -------------- benefit of the parties hereto, their respective successors and assigns. 7. Governing Law. This Agreement and the rights of the parties hereunder ------------- shall be governed by and construed in accordance with the laws of the State of Tennessee and the parties hereto subject themselves to the jurisdiction of the Courts of Shelby County, Tennessee for the resolution of any dispute hereunder. 2 IN WITNESS WHEREOF, the parties hereunto have executed this Agreement as of the day and year first above written. UNION PLANTERS BANK, N.A. By:________________________________ Wayne F. Massing Vice President BANK OF THE OZARKS, INC. By:________________________________ George G. Gleason, II Chairman 3 EX-27 6 FINANCIAL DATA SCHEDULE
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO INCORPORATED BY REFERENCE IN QUARTERLY REPORT 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 6-MOS DEC-31-1999 JAN-01-1999 JUN-30-1999 15,695 198 275 0 38,675 198,628 190,618 419,410 5,248 708,494 587,296 32,915 2,640 25,533 17,250 0 38 42,822 708,494 17,560 6,772 15 24,347 11,701 13,151 11,196 1,191 75 8,009 4,568 4,568 0 0 3,185 0.84 0.84 3.79 4,241 7 0 2,913 4,689 709 77 5,248 5,248 0 0
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