<PAGE>
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
<PAGE>
BANK OF THE OZARKS, INC.
FORM 10-Q
June 30, 1999
INDEX
<TABLE>
<CAPTION>
PART. Financial Information
<S> <C>
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
</TABLE>
<PAGE>
BANK OF THE OZARKS, INC.
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
June 30, December 31,
-------------------------------- --------------
1999 1998 1998
------------- ------------- --------------
<S> <C> <C> <C>
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
============= ============= ==============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
BANK OF THE OZARKS, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
Unaudited
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------------- --------------------------------
1999 1998 1999 1998
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
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
============== ============= ============= =============
</TABLE>
See accompanying notes to consolidated financial statements
2
<PAGE>
BANK OF THE OZARKS, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
Unaudited
<TABLE>
<CAPTION>
Accumulated
Additional Other
Common Paid-In Retained Comprehensive
Stock Capital Earnings Income Total
------- --------- ---------- ------------- ---------
<S> <C> <C> <C> <C> <C>
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
======= ========= ========== ======== =========
</TABLE>
3
<PAGE>
BANK OF THE OZARKS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Unaudited
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------------------------
1999 1998
--------------- ----------------
<S> <C> <C>
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.
</TABLE>
4
4
<PAGE>
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:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ------------------------------
1999 1998 1999 1998
------------- ------------ ------------ -------------
(In thousands, except per share amounts)
<S> <C> <C> <C> <C>
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
</TABLE>
5
<PAGE>
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:
<TABLE>
<CAPTION>
Weighted
Amounts Average Rate
----------------- ------------------
<S> <C> <C>
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
=======
</TABLE>
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
<PAGE>
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
<PAGE>
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)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------------ ------------------------------------
1999 1998 1999 1998
------------- ------------ ------------- -------------
(Dollars in thousands) (Dollars in thousands)
<S> <C> <C> <C> <C>
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
</TABLE>
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8
<PAGE>
<TABLE>
<CAPTION>
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
------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
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%
<CAPTION>
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
------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
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%
</TABLE>
9
<PAGE>
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
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
-------------------------------- ---------------------------------
1999 1998 1999 1998
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
(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
============ ============ ============ ============
</TABLE>
(The remainder of this page intentionally left blank)
10
<PAGE>
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
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------- ---------------------------------
1999 1998 1999 1998
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
(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
============ ============ ============= ============
</TABLE>
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
<PAGE>
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
<TABLE>
<CAPTION>
June 30, December 31,
--------------------------------- -------------
1999 1998 1998
------------- ------------- -------------
(Dollars in thousands)
<S> <C> <C> <C>
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
============= ============= =============
</TABLE>
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
<PAGE>
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
<TABLE>
<CAPTION>
June 30, December 31,
---------------------------------- -------------
1999 1998 1998
------------ ------------ -------------
<S> <C> <C> <C>
(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
</TABLE>
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.
<TABLE>
<CAPTION>
Six Months Ended Twelve Months Ended
June 30, December 31
--------------------------------------------- -------------------
1999 1998 1998
------------------ ------------------ -------------
(Dollars in thousands)
<S> <C> <C> <C>
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
</TABLE>
13
<PAGE>
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
<TABLE>
<CAPTION>
June 30, June 30, December 31,
1999 1998 1998
------------------- ---------------------- -------------------
Amortized Fair Amortized Fair Amortized Fair
Cost Value(1) Cost Value(1) Cost Value(1)
------------------- ---------------------- -------------------
<S> <C> <C> <C> <C> <C> <C>
(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
======== ======== ======== ======== ======== ========
</TABLE>
(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
<PAGE>
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
<PAGE>
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
<TABLE>
<CAPTION>
June 30, December 31,
--------- -----------
1999 1998
--------- ----------
<S> <C> <C>
(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
</TABLE>
Capital Ratios of Bank Subsidiary
<TABLE>
<CAPTION>
June 30, 1999
------------------------
(Dollars in thousands)
<S> <C>
Stockholders' equity - Tier 1........................ $51,818
Leverage ratio....................................... 7.48%
Risk-based capital ratios:
Tier 1....................................... 11.52%
Total capital................................ 12.69
</TABLE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------------ --------------------------------
1999 1998 1999 1998
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C>
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
</TABLE>
19
<PAGE>
Bank of the Ozarks, Inc.
Supplemental Quarterly Financial Data
(Dollars in thousands, except per share amounts)
Unaudited
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
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
</TABLE>
20
<PAGE>
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.
<TABLE>
<CAPTION>
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)
------------ ------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C>
(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
============ ============= ==============
</TABLE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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.
<PAGE>
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.
<PAGE>
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;
<PAGE>
(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
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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
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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.
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"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
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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.
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"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.
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"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.
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"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.
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"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.
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"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.
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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
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$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;
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(B) to acquire the Debentures with the proceeds of the sale of the
Preferred Securities and the Common Securities; provided, however, that the
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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
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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
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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;
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(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.
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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
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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;
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(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.
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(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
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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
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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
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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
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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
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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".
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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.
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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.
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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
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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;
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(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
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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
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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
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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
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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
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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.
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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).
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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
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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
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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
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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
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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.
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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
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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
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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.
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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.
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(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]
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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
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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
<PAGE>
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,
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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
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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
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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.
<PAGE>
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
<PAGE>
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
================================================================================
<PAGE>
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.
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
"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
<PAGE>
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
<PAGE>
"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)
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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.
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(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
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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.
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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
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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.
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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
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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.
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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
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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
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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
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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
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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
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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
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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.
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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.
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(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.
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(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
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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.
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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,
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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
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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
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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
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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
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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.
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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.
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(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,
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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.
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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
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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.
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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,
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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
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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.
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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
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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,
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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.
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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
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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.
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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.
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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.
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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.
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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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
[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
<PAGE>
[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
<PAGE>
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
<PAGE>
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
<PAGE>
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
<PAGE>
EXHIBIT 4.6
PREFERRED SECURITIES GUARANTEE AGREEMENT
BANK OF THE OZARKS, INC.
and
FMB TRUST COMPANY, NATIONAL ASSOCIATION
Dated: June 18, 1999
<PAGE>
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.
<PAGE>
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
<PAGE>
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
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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;
<PAGE>
(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
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(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
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<PAGE>
(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
<PAGE>
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
<PAGE>
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
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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
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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
<PAGE>
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,
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<PAGE>
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.
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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
<PAGE>
(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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
(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
<PAGE>
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
<PAGE>
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
<PAGE>
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:
<PAGE>
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
<PAGE>
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
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
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.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 15,695
<INT-BEARING-DEPOSITS> 198
<FED-FUNDS-SOLD> 275
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 38,675
<INVESTMENTS-CARRYING> 198,628
<INVESTMENTS-MARKET> 190,618
<LOANS> 419,410
<ALLOWANCE> 5,248
<TOTAL-ASSETS> 708,494
<DEPOSITS> 587,296
<SHORT-TERM> 32,915
<LIABILITIES-OTHER> 2,640
<LONG-TERM> 25,533
17,250
0
<COMMON> 38
<OTHER-SE> 42,822
<TOTAL-LIABILITIES-AND-EQUITY> 708,494
<INTEREST-LOAN> 17,560
<INTEREST-INVEST> 6,772
<INTEREST-OTHER> 15
<INTEREST-TOTAL> 24,347
<INTEREST-DEPOSIT> 11,701
<INTEREST-EXPENSE> 13,151
<INTEREST-INCOME-NET> 11,196
<LOAN-LOSSES> 1,191
<SECURITIES-GAINS> 75
<EXPENSE-OTHER> 8,009
<INCOME-PRETAX> 4,568
<INCOME-PRE-EXTRAORDINARY> 4,568
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,185
<EPS-BASIC> 0.84
<EPS-DILUTED> 0.84
<YIELD-ACTUAL> 3.79
<LOANS-NON> 4,241
<LOANS-PAST> 7
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,913
<ALLOWANCE-OPEN> 4,689
<CHARGE-OFFS> 709
<RECOVERIES> 77
<ALLOWANCE-CLOSE> 5,248
<ALLOWANCE-DOMESTIC> 5,248
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
