HOME BANCSHARES INC (Form: S-1, Received: 03/14/2006 17:36:33)

Date of Offering

Description of Offering

Basis of Exemption

From January 1, 2006 through February 28, 2006

14,617 shares of class A preferred shares issued upon exercise of stock options, at a converted exercise price of $0.17 per share

From January 1, 2006 through February 28, 2006

950 shares of class B preferred stock issued upon exercise of options, at a converted exercise price of $18.41 per share

As filed with the Securities and Exchange Commission on March 14, 2006

Registration No. 333-

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form S-1

REGISTRATION STATEMENT

UNDER

THE SECURITIES ACT OF 1933

HOME BANCSHARES, INC.

(Exact name of registrant as specified in its charter)


Arkansas	6022	71-0682831
(State or other jurisdiction of incorporation or organization)	(Primary Standard Industrial Classification Number)	(IRS Employer Identification Number)

719 Harkrider

Conway, Arkansas 72032

(501) 328-4757

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

John W. Allison

Chairman and Chief Executive Officer

Home BancShares, Inc.

719 Harkrider

Conway, Arkansas 72032

(501) 329-9330

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies of Communications to:


John S. Selig, Esq.		Chet A. Fenimore, Esq.
Mitchell, Williams, Selig, Gates &		Jenkens & Gilchrist, P.C.
Woodyard, P.L.L.C.	and	401 Congress Avenue, Suite 2500
425 West Capitol Avenue, Suite 1800		Austin, Texas 78701
Little Rock, Arkansas 72201		Telephone: (512) 499-3800
Telephone: (501) 688-8804		Facsimile: (512) 499-3810
Facsimile: (501) 918-7804

Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement.

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. o

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

CALCULATION OF REGISTRATION FEE




	Proposed Maximum
Title of Each Class of	Aggregate Offering	Amount of
Securities to be Registered	Price(1)(2)	Registration Fee

Common Stock, par value $0.01	$51,750,000	$5,537


(1)	Includes shares of common stock that may be purchased by the underwriters to cover over-allotments, if any.
(2)	Estimated solely for the purpose of calculating the registration fee in accordance with Rule 457(o) under the Securities Act of 1933, as amended.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

The information in this preliminary prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This preliminary prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

SUBJECT TO COMPLETION, DATED , 2006

PRELIMINARY PROSPECTUS

Shares

Common Stock

We are a bank holding company located in Conway, Arkansas, with banking operations in central and north central Arkansas, the Florida Keys and southwestern Florida. We are offering shares of our common stock.

Prior to this offering there has been no public market for our common stock. It is currently estimated that the public offering price will be between $ and $ per share. See “Underwriting” for a discussion of the factors considered in determining the public offering price. The market price of the shares after the offering may be higher or lower than the public offering price.

We have applied to have our common stock listed on The Nasdaq National Market under the symbol “HOMB.”

Investing in our common stock involves risks. Please refer to the section titled “Risk Factors” beginning on page 9.


	Per Share	Total

Public offering price	$	$
Underwriting discount	$	$
Proceeds to us, before expenses	$	$

We have granted the underwriters an option to purchase up to additional shares of our common stock on the same terms as set forth above to cover over-allotments, if any. The underwriters may exercise this option at any time within 30 days after the offering.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

These securities are not savings accounts, deposits or other obligations of any bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency and may lose value.

The underwriters expect to deliver the shares to purchasers on or about , 2006, subject to customary closing conditions.

Stephens Inc.


Piper Jaffray	Sandler O’Neill + Partners

The date of this prospectus is , 2006.

TABLE OF CONTENTS


Summary			1
Risk Factors			9
Cautionary Note Regarding Forward-Looking Statements			16
Use of Proceeds			16
Price Range of Our Common Stock and Dividends			17
Capitalization			18
Dilution			19
Unaudited Pro Forma Condensed Combined Financial Information			20
Management’s Discussion and Analysis of Financial Condition and Results of Operations			22
Business			56
Management			67
Principal Shareholders			78
Supervision and Regulation			80
Description of Capital Stock			92
Shares Eligible for Future Sale			95
Underwriting			98
Legal Matters			99
Experts			100
Change in Independent Registered Public Accounting Firms			100
Where You Can Find More Information			101
Index To Financial Statements			F-1
Agreement and Plan of Merger - July 30, 2003
Agreement and Plan of Merger - December 3, 2004
Agreement and Plan of Merger - January 25, 2005
Stock Purchase Agreement
Restated Articles of Incorporation
Amendment to the Restated Articles of Incorporation
Second Amendment to the Restated Articles of Incorporation
Third Amendment to the Restated Articles of Incorporation
Bylaws
Indenture, dated as of September 7, 2000
Amended and Restated Declaration of Trust, dated as of September 7, 2000
Guarantee Agreement, dated as of September 7, 2000
Indenture, dated as of March 26, 2003
Amended and Restated Declaration of Trust, dated as of March 26, 2003
Guarantee Agreement, dated as of March 26, 2003
Indenture, dated as of March 26, 2003
Amended and Restated Declaration of Trust, dated as of March 26, 2003
Guarantee Agreement, dated as of March 26, 2003
Indenture, dated as of November 10, 2005
Amended and Restated Declaration of Trust, dated as of November 10, 2005
Guarantee Agreement, dated as of November 10, 2005
2006 Stock Option and Performance Incentive Plan
Director and Executive Officer Compensation Summary
401(k) Plan of Home BancShares, Inc.
Retirement Plan of Bank of Cabot
Retirement Plan and Trust of Bank of Mountain View
Lease Agreement, dated as of January 2000
Lease Agreement, dated as of February 1, 2001
Lease Agreement, dated as of April 2003
Lease Agreement, dated as of September 1, 2004
Lease Extension, dated December 2, 2004
Lease Agreement, dated August 31, 2005
Promissory Note, dated as of September 1, 2005
Commercial Pledge Agreement, dated as of September 1, 2005
Business Loan Agreement, dated as of September 1, 2005
Letter from Ernst & Young, LLP
Subsidiaries
Consent of BKD, LLP
Consent of Ernst & Young, LLP
Consent of Hacker, Johnson & Smith, P.A.
Consent of BKD, LLP

You should rely only on the information contained in this prospectus. We have not, and the underwriters have not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the underwriters are not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the cover page of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date.

In this prospectus we rely on and refer to information and statistics regarding the banking industry in the Arkansas and Florida markets. We obtained the market data from independent publications or other publicly available information. Although we believe these sources are reliable, we have not independently verified and do not guarantee the accuracy and completeness of this information.

No action is being taken in any jurisdiction outside the United States to permit a public offering of the common stock or possession or distribution of this prospectus in that jurisdiction. Persons who come into possession of this prospectus in jurisdictions outside the United States are required to inform themselves about and to observe any restrictions as to this offering and the distribution of this prospectus applicable to those jurisdictions.

SUMMARY

This summary highlights selected information contained elsewhere in this prospectus, including a description of the material terms of the offering, and may not contain all of the information that you should consider before investing in our common stock. To understand this offering fully, you should carefully read the entire prospectus, including the sections entitled “Risk Factors,” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” together with our consolidated financial statements and the related notes, before making an investment decision. Unless the context indicates otherwise, all information in this prospectus (i) assumes that the underwriters will not exercise their option to purchase additional shares to cover over-allotments; and (ii) reflects the effect of a three-for-one stock split effected as a stock dividend on May 31, 2005.

Home BancShares

We are a bank holding company headquartered in Conway, Arkansas. Our five wholly owned community bank subsidiaries provide a broad range of commercial and retail banking and related financial services to businesses, real estate developers and investors, individuals, and municipalities. Three of our bank subsidiaries are located in the central Arkansas market area, a fourth serves Stone County in north central Arkansas, and a fifth serves the Florida Keys and southwestern Florida.

We have achieved significant growth through acquisitions, organic growth and de novo branching. Specifically, as of and for the year ended December 31, 2001, to December 31, 2005, we have:


	•	increased our total assets from $322.0 million to $1.9 billion;

	•	increased our loans receivable from $235.7 million to $1.2 billion;

	•	increased our total deposits from $237.3 million to $1.4 billion;

	•	increased our earnings per diluted share from $0.29 for the year ended December 31, 2001, to $0.82 for the same period in 2005; and

	•	expanded our branch network from eight to 45.

Our History and Management Team

We were established in 1998 when an investor group led by John W. Allison, our Chairman and Chief Executive Officer, and Robert H. Adcock, Jr., our former Vice Chairman and the current Arkansas State Bank Commissioner, formed Home BancShares, Inc. to acquire a bank charter and establish First State Bank in Conway, Arkansas. We or members of our management team have also been involved in the formation of two of our other bank subsidiaries — Twin City Bank and Marine Bank — both of which we acquired in 2005. We have also acquired and integrated our two other bank subsidiaries — Community Bank and Bank of Mountain View — in 2003 and 2005, respectively.

We acquire, organize and invest in community banks that serve attractive markets, and build our community banks around experienced bankers with strong local relationships. The historical growth of our two largest bank subsidiaries compares favorably with the fastest growing de novo banks in the United States: First State Bank would rank 20th compared with the 140 commercial banks established in 1998 (based on total asset growth from December 31, 1998, to December 31, 2005), and Twin City Bank would rank seventh compared with the 173 commercial banks established in 2000 (based on total asset growth from December 31, 2000, to December 31, 2005).

Our management team is led by our founder, Chairman and Chief Executive Officer, John W. Allison; our President and Chief Operating Officer, Ron W. Strother; and our Chief Financial Officer, Randy E. Mayor. Mr. Allison has more than 23 years of banking experience, including his service on the board of directors of First Commercial Corporation from 1984 to 1998. Prior to its sale in 1998, First Commercial Corporation was a publicly traded company and the largest bank holding company headquartered in Arkansas, with approximately $7.3 billion in assets. While on the board of First Commercial Corporation, Mr. Allison served as the Chairman of the Executive Committee from 1996 to 1998, and also served as Chairman of the Asset Quality Committee for several years. Mr. Strother joined Home BancShares in 2004 and has more than 33 years of banking experience, which includes serving as Chairman and Chief Executive Officer of Central Bank & Trust Company (Little Rock), and President and Chief Operating Officer of First Commercial Bank (Little Rock). Mr. Mayor joined Home Bancshares in 1998 as Executive Vice President and Finance Officer,

and became our first Chief Financial Officer in 2004. From 1988 until 1998, Mr. Mayor held various positions at First National Bank of Conway, a subsidiary of First Commercial Corporation, including Senior Vice President and Finance Officer from 1992 to 1998.

Our senior management team — the three senior executives of Home BancShares and our five bank presidents — has, on average, more than 27 years of banking experience. Our executive officers and directors beneficially owned approximately 45.1% of our outstanding common stock, as of December 31, 2005.

Since our inception in 1998, we have grown total assets through a combination of organic growth and acquisitions. The table below lists our bank subsidiaries and the dates of the acquisitions of their respective parent companies:


Bank Subsidiary	Location	Effective Date of Acquisition

First State Bank	Conway, Arkansas	October 26, 1998
Community Bank	Cabot, Arkansas	December 1, 2003
Twin City Bank	North Little Rock, Arkansas	January 1, 2005(1)
Marine Bank	Marathon, Florida	June 1, 2005(2)
Bank of Mountain View	Mountain View, Arkansas	September 1, 2005


	(1)	Prior to the date of the acquisition, we owned approximately 32% of the shares of TCBancorp, the parent company of Twin City Bank.

	(2)	In 1995, Mr. Allison, our Chairman and Chief Executive Officer, was a founding board member of Marine Bancorp, the parent company of Marine Bank. He owned approximately 22% of Marine Bancorp’s shares at the time of our acquisition.

In May 2005, we invested $9.1 million to acquire 20% of the common stock of White River Bancshares, Inc., the holding company for Signature Bank in Fayetteville, Arkansas. In January 2006, we invested an additional $3.0 million to maintain this 20% ownership position.

Our Growth Strategy

Our goals are to achieve growth in earnings per share and to create and build shareholder value. Our growth strategy entails the following:


	•	Organic growth — We believe that our current branch network provides us with the capacity to grow significantly within our existing market areas. Twenty-one of our 45 branches (including the branches of the banks we have acquired) have been opened since the beginning of 2001. As these newer branches continue to mature, we expect to see additional organic loan and deposit growth and increased profitability. Furthermore, we plan to broaden the product lines within each of our bank subsidiaries by cross-selling products such as insurance and trust services.

	•	De novo branching — We intend to continue to open de novo branches in our current markets and in other attractive market areas if opportunities arise. In 2006, we plan to add seven to ten new branches, including four or five in Arkansas, one or two in the Florida Keys and two or three along the southwestern coast of Florida.

	•	Strategic acquisitions — We will continue to consider strategic acquisitions, with a primary focus on Arkansas and southwestern Florida. When considering a potential acquisition, we assess a combination of factors, but concentrate on the strength of existing executive officers, the growth potential of the bank and the market, the profitability of the bank, and the valuation of the bank. We believe that potential sellers consider us an acquirer of choice, largely due to our community banking philosophy. With each acquisition we seek to maintain continuity of executive officers and the board of directors, consolidate back office operations, add product lines, and implement our credit policy.

Our Community Banking Philosophy and Operating Strategy

Community Banking Philosophy — Our community banking philosophy consists of four basic principles:


	•	operate largely autonomous community banks managed by experienced bankers and a local board of directors, who are empowered to make customer-related decisions quickly;

	•	provide exceptional service and develop strong customer relationships;

	•	pursue the business relationships of our boards of directors, executive officers, shareholders, and customers to actively promote our community banks; and

	•	maintain our commitment to the communities we serve by supporting their civic and nonprofit organizations.

We believe that these principles are a competitive advantage when serving our customers, particularly as we compete with larger banks headquartered outside of our markets. Through our bank subsidiaries and their boards of directors and employees, we plan to continue building a high-performing banking organization with exceptional customer service.

Operating Strategy — Our operating strategies focus on credit quality, improving profitability, finding experienced bankers, and leveraging our infrastructure:


	•	Emphasis on credit quality — Credit quality is our first priority in the management of our bank subsidiaries. We employ a set of credit standards across our bank subsidiaries that are designed to ensure the proper management of credit risk. Our management team plays an active role in monitoring compliance with these credit standards at each of our bank subsidiaries. We have a centralized loan review process and regularly monitor each of our bank subsidiaries’ loan portfolios, which we believe enables us to take prompt action on potential problem loans. Non-performing assets as a percentage of total assets decreased from 1.18% as of December 31, 2004, to 0.47% as of December 31, 2005.

	•	Continue to improve profitability — We intend to improve our profitability as we leverage the available capacity of our newer branches and employees. We believe our investments in our branch network and centralized technology infrastructure are sufficient to support a larger organization, and therefore believe increases in our expenses should be lower than the corresponding increases in our revenues. We also plan to increase our fee-based revenue by offering all our products and services, including insurance and trust services, through each of our bank subsidiaries.

	•	Attract and motivate experienced bankers — We believe a major factor in our success has been our ability to attract and retain bankers that have experience in and knowledge of their local communities. For example, in January 2006, we hired eight experienced bankers in the Searcy, Arkansas, market (located approximately 50 miles northeast of Little Rock), where we subsequently opened a new branch. Hiring and retaining experienced relationship bankers has been integral to our ability to grow quickly when entering new markets. We will continue to recruit experienced relationship bankers as our banking franchise expands.

	•	Leveraging our infrastructure — The support services we provide to our bank subsidiaries are generally centralized in Conway, Arkansas. These services include finance and accounting, internal audit, compliance, loan review, human resources, training, and data processing. We believe the centralization of our support services enhances efficiencies, maintains consistency in policies and procedures, and enables our employees to focus on developing and strengthening customer relationships.

Our Market Areas

As of December 31, 2005, we conducted business principally through 38 branches in five counties in Arkansas and seven branches in the Florida Keys. We plan to add seven to ten new branches in 2006. Our branch footprint includes markets in which we are the deposit market share leader, as well as markets where we believe we have significant opportunities for deposit market share growth.


	*Arkansas*

We are currently the deposit market share leader in Conway, Cabot, North Little Rock, and Mountain View, Arkansas. In these markets, we plan to continue our organic growth while improving profitability. Furthermore, we plan to open an additional three to four branches in certain growing communities surrounding Cabot, Conway, and North Little Rock in 2006, including the branch in Searcy, Arkansas, opened in February 2006.

North Little Rock — Twin City Bank entered the North Little Rock market in 2000 and, as of June 30, 2005, had a 27.6% deposit market share.

Mountain View — We entered the Mountain View market through the acquisition of Mountain View Bancshares in September 2005 and, as of June 30, 2005, the Bank of Mountain View had an 84.9% deposit market share. Mountain View is located approximately 75 miles north of Conway and is the seat of Stone County.

Little Rock — Twin City Bank began branching into Little Rock in May 2003 and, as of June 30, 2005, had a 2.8% deposit market share. Little Rock is the state capital of Arkansas and is the state’s largest city. Little Rock had an estimated population of 189,364 in 2005, and its per capita income is projected to increase 29.0% between 2005 and 2010. Little Rock should continue to benefit economically from the growing communities on the outer edges of the greater Little Rock metropolitan statistical area, including Conway and Cabot.


	*Florida*

Southwestern Florida — We plan to open a branch in Port Charlotte (Punta Gorda MSA) and Marco Island (Naples-Marco Island MSA) during 2006. As of June 30, 2005, there were more than $12.6 billion deposits and approximately 500,000 residents in these two combined MSAs. The expected population growth between 2005 and 2010 in the Punta Gorda MSA and the Naples-Marco-Island MSA is 11.6% and 22.5%, respectively.

2005 Fourth Quarter Overview

The fourth quarter of 2005 represented the first full quarter in which all of our 2005 acquisitions were consolidated. For the three months ended December 31, 2005, we recorded net income of $3.6 million, or $0.25 diluted earnings per share. For the quarter, our return on average equity was 8.53%, our return on average assets was 0.74%, our net interest margin was 3.48%, and our efficiency ratio was 63.46%.

Recent Developments

Stock Split. On May 31, 2005, we effected a three-for-one stock split by means of a stock dividend. Each holder of shares of our common stock at the time of the stock dividend was issued two additional shares of common stock for each share then held. The information contained in this prospectus has been adjusted to give effect to the stock split, unless otherwise indicated.

Proposed Conversion of Preferred Stock. As of December 31, 2005, we had 2,076,195 shares of Class A preferred stock and 169,079 shares of Class B preferred stock outstanding. We will have, following this offering, the option to convert all of those shares into shares of our common stock, and it is our intent to cause those conversions as soon as practicable after the offering is completed. The applicable conversion rates are 0.789474 share of common stock for each share of Class A preferred stock, and three shares of common stock for each share of Class B preferred stock. Thus, upon conversion of all outstanding shares of Class A preferred stock and Class B preferred stock, approximately 2,146,338 additional shares of our common stock will be issued. If we do not convert the shares of preferred stock, the holders of those shares may, at their option, require us to convert their shares into common stock, using the same conversion rates.

Registration of Our Common Stock. On , 2006, our Form 10 registration statement to register our class of common stock became effective, making us subject to the periodic and other reporting requirements of the Securities Exchange Act of 1934. This filing was required because, as of December 31, 2005, we had more than 500 holders of our outstanding shares of common stock. The first of our periodic filings under that Act is expected to be a Form 10-Q for the quarter ending on June 30, 2006.

Corporate Information

Our headquarters are located at 719 Harkrider, Conway, Arkansas 72032, and our telephone number is (501)328-4757. We maintain a website at www.homebancshares.com. Information on our website is not incorporated by reference and is not a part of this prospectus.

The Offering


Common stock offered		shares(1)

Common stock to be outstanding after this offering		shares(2)

Use of proceeds		We estimate the net proceeds of this offering will be $ , based on the midpoint of the price range on the cover page of this prospectus. We will use the net proceeds of this offering for general corporate purposes, which may include, among other things, our working capital needs and providing investments in our bank subsidiaries. We may also use a portion of the net proceeds to finance bank acquisitions, though we have no present plans in that regard. See “Use of Proceeds.”

Risk factors		See “Risk Factors” beginning on page and other information included in this prospectus for a discussion of factors you should consider carefully before deciding to invest in our common stock.

Dividend policy		We have paid quarterly cash dividends on our common stock beginning with the second quarter of 2003. We anticipate continuing to pay cash dividends on the common stock in the foreseeable future, subject to the prior payment of dividends on our outstanding shares of preferred stock and interest on our subordinated debentures. However, any future determination relating to dividends will be made at the discretion of our board of directors and will depend on a number of factors, including our future earnings, capital requirements, financial condition, future prospects, regulatory restrictions and other factors that our board of directors may deem relevant. See “Price Range of Our Common Stock and Dividends.”

Proposed Nasdaq National Market symbol		We have applied to have our common stock listed on The Nasdaq National Market under the symbol “HOMB.”


(1)	The number of shares offered assumes that the underwriters do not exercise their over-allotment option. If the underwriters do exercise their over-allotment option, we will issue and sell up to an additional shares.

(2)	The number of shares outstanding after this offering is based on the number of shares outstanding as of March 13, 2006, and excludes the following: (i) 1,048,964 shares of common stock issuable upon the exercise of stock options outstanding as of March 13, 2006 (assuming conversion of preferred stock issued on option exercises); (ii) 151,036 shares of common stock as of March 13, 2006, reserved for issuance pursuant to future grants under our 2006 Stock Option and Performance Incentive Plan; (iii) 2,160,464 shares of common stock issuable upon conversion of the shares of our Class A preferred stock and Class B preferred stock that were outstanding as of March 13, 2006; and (iv) up to shares of common stock that may be issued upon the exercise of the underwriters’ over-allotment option.

SUMMARY CONSOLIDATED FINANCIAL DATA

We derived our summary historical consolidated financial data as of December 31, 2005 and 2004, and for each of the three years ended December 31, 2005, 2004, and 2003, from our audited financial statements and related notes included in this prospectus. The summary historical consolidated financial data as of December 31, 2003, 2002, and 2001, and for each of the two years ended December 31, 2002 and 2001, have been derived from our audited financial statements, which are not included in this prospectus. The per share financial data presented below has been adjusted to give effect to the three-for-one stock split in the form of a stock dividend effected on May 31, 2005. You should read the information below in conjunction with the audited financial statements and related notes, along with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included elsewhere in this prospectus.


		As of and For the Years Ended December 31,

		2005			2004			2003			2002			2001

		(Dollars and shares in thousands, except per share data)
Income statement data:
	Total interest income	$	85,458		$	36,681		$	21,538		$	20,361		$	18,216
	Total interest expense		36,002			11,580			8,240			7,490			8,872

	Net interest income		49,456			25,101			13,298			12,871			9,344
	Provision for loan losses		3,827			2,290			807			2,220			1,708

	Net interest income after provision for loan losses		45,629			22,811			12,491			10,651			7,636
	Non-interest income		15,222			13,681			6,739			5,354			2,895
	Gain on sale of equity investment		465			4,410			—			—			—
	Non-interest expense		44,935			26,131			13,070			10,052			8,364

	Income before income taxes and minority interest		16,381			14,771			6,160			5,953			2,167
	Provision for income taxes		4,935			5,030			2,343			2,076			811
	Minority interest		—			582			48			—			—

	Net income	$	11,446		$	9,159		$	3,769		$	3,877		$	1,356

Per share data:
	Basic earnings	$	0.92		$	1.08		$	0.66		$	0.78		$	0.30
	Diluted earnings		0.82			0.94			0.63			0.77			0.29
	Diluted cash earnings(1)		0.89			0.99			0.64			0.77			0.29
	Book value per common share		11.45			10.75			9.79			8.36			7.28
	Book value per share with preferred converted to common(2)		11.63			11.07			10.29			8.36			7.28
	Tangible book value per common share(3)		7.43			7.89			6.63			8.36			7.28
	Tangible book value per share with preferred converted to common(2)(3)		8.21			8.70			7.68			8.36			7.28
	Dividends — common		0.07			0.04			0.01			—			—
	Average common shares outstanding		11,862			7,986			5,721			4,956			4,557
	Average diluted shares outstanding		13,889			9,783			5,964			5,019			4,605
Performance ratios:
	Return on average assets		0.69	%		1.17	%		0.85	%		1.14	%		0.52	%
	Return on average equity		7.27			8.61			8.88			9.87			4.27
	Return on average tangible equity(3)		10.16			11.54			9.44			9.87			4.27
	Net interest margin(4)		3.37			3.75			3.35			4.12			3.92
	Efficiency ratio(5)		64.95			57.65			64.61			55.08			68.18
Asset quality:
	Nonperforming assets as a percentage of total assets		0.47	%		1.18	%		1.24	%		0.54	%		0.44	%
	Nonperforming loans as a percentage of total loans		0.69			1.73			1.73			0.64			0.57
	Allowance for loan losses to nonperforming loans		291.62			182.40			170.10			314.73			286.66
	Allowance for loan losses to total loans		2.01			3.16			2.94			2.00			1.63
	Net charge-offs as a percentage of average total loans		0.38			0.13			0.16			0.14			0.14


		As of and For the Years Ended December 31,

		2005			2004			2003			2002			2001

		(Dollars and shares in thousands, except per share data)
Balance sheet data (period end):
	Total assets	$	1,911,491		$	805,186		$	803,103		$	368,983		$	322,036
	Investment securities		530,302			190,466			161,951			44,317			55,285
	Loans receivable		1,204,589			516,655			500,055			284,764			235,699
	Allowance for loan losses		24,175			16,345			14,717			5,706			3,847
	Intangible assets		48,727			22,816			25,252			—			—
	Non-interest-bearing deposits		209,974			86,186			76,508			31,027			29,202
	Total deposits		1,427,108			552,878			572,218			279,228			237,343
	Subordinated debentures (trust preferred securities)		44,755			24,219			24,238			—			—
	Shareholders’ equity		165,857			106,610			99,472			46,753			35,977
Capital ratios:
	Equity to assets		8.68	%		13.24	%		12.39	%		12.67	%		11.17	%
	Tangible equity to tangible assets(3)		6.29			10.71			9.54			12.67			11.17
	Tier 1 leverage ratio(6)		9.22			13.47			13.15			13.42			11.98
	Tier 1 risk-based capital ratio		12.25			17.39			16.41			14.17			13.34
	Total risk-based capital ratio		13.51			17.39			16.41			15.42			14.77
	Dividend payout — common		7.30			3.71			2.46			—			—


(1)	Diluted cash earnings per share reflect diluted earnings per share plus per share intangible amortization expense, net of the corresponding tax effect. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Table 20.”

(2)	Amounts for December 31, 2005, are adjusted to reflect the conversion of 2,076,195 shares of Class A preferred stock outstanding and 169,079 shares of Class B preferred stock outstanding on such date into 2,146,338 shares of common stock, assuming conversion of the preferred stock.

	Amounts for December 31, 2004, are adjusted to reflect the conversion of 2,077,118 shares of Class A preferred stock outstanding on such date into 1,639,830 shares of common stock, assuming conversion of the preferred stock.

	Amounts for December 31, 2003, are adjusted to reflect the conversion of 2,129,637 shares of Class A preferred stock outstanding on such date into 1,681,292 shares of common stock, assuming conversion of the preferred stock.

(3)	Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis.

(4)	Fully taxable equivalent (tax-exempt interest earnings are adjusted as if interest earnings are taxable).

(5)	The efficiency ratio is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income.

(6)	Leverage ratio is Tier 1 capital to quarterly average total assets less intangible assets and gross unrealized gains/losses on available-for-sale investment securities.

RISK FACTORS

An investment in our common stock involves risks. Before making an investment decision, you should carefully consider the risks described below, together with our consolidated financial statements and the related notes and the other information included in this prospectus. The discussion below presents material risks associated with an investment in our common stock. If any of the following risks actually occur, our business, financial condition and results of operations could be harmed. In such a case, the trading price of our common stock could decline, and you may lose all or part of your investment. The risks discussed below also include forward-looking statements, and our actual results may differ substantially from those discussed in these forward-looking statements. See “Cautionary Note Regarding Forward-Looking Statements.”

Risks Related to Our Business

Our decisions regarding credit risk could be inaccurate and our allowance for loan losses may be inadequate, which would materially and adversely affect our business, financial condition, results of operations and future prospects.

Management makes various assumptions and judgments about the collectibility of our loan portfolio, including the creditworthiness of our borrowers and the value of the real estate and other assets serving as collateral for the repayment of our secured loans. We maintain an allowance for loan losses that we consider adequate to absorb future losses which may occur in our loan portfolio. In determining the size of the allowance, we analyze our loan portfolio based on our historical loss experience, volume and classification of loans, volume and trends in delinquencies and non-accruals, national and local economic conditions, and other pertinent information. As of December 31, 2005, our allowance for loan losses was approximately $24.2 million, or 2.01% of our total loans receivable.

If our assumptions are incorrect, our current allowance may be insufficient to cover future loan losses, and increased loan loss reserves may be needed to respond to different economic conditions or adverse developments in our loan portfolio. In addition, federal and state regulators periodically review our allowance for loan losses and may require us to increase our allowance for loan losses or recognize further loan charge-offs based on judgments different than those of our management. Any increase in our allowance for loan losses or loan charge-offs could have a negative effect on our operating results.

Because we have a high concentration of loans secured by real estate, a downturn in the real estate market could result in losses and materially and adversely affect business, financial condition, results of operations and future prospects.

A significant portion of our loan portfolio is dependent on real estate. As of December 31, 2005, approximately 80.7% of our loans had real estate as a primary or secondary component of collateral. The real estate collateral in each case provides an alternate source of repayment in the event of default by the borrower and may deteriorate in value during the time the credit is extended. An adverse change in the economy affecting values of real estate generally or in our primary markets specifically could significantly impair the value of our collateral and our ability to sell the collateral upon foreclosure. Furthermore, it is likely that we would be required to increase our provision for loan losses. If we are required to liquidate the collateral securing a loan to satisfy the debt during a period of reduced real estate values or to increase our allowance for loan losses, our profitability and financial condition could be adversely impacted.

Because we have a concentration of exposure to a number of individual borrowers, a significant loss on any of those loans could materially and adversely affect our business, financial condition, results of operations, and future prospects.

We have a concentration of exposure to a number of individual borrowers. Under applicable law, each of our bank subsidiaries is generally permitted to make loans to one borrowing relationship up to 20% of their respective capital in the case of our Arkansas bank subsidiaries, and 15% of capital (25% on secured loans) in the case of our Florida bank subsidiary. Historically, when our bank subsidiaries have lending relationships that exceed their individual loan to one borrower limitation, the overline, or amount in excess of the subsidiary bank’s legal lending limit, is participated to our other bank subsidiaries. As a result, on a consolidated basis we may have aggregate exposure to individual or related borrowers in excess of each individual bank subsidiary’s legal lending limit. As of December 31, 2005, the aggregate legal lending limit of our bank subsidiaries for secured loans was approximately $37.3 million. Currently, our board of directors has established an in-house

consolidated lending limit of $16.0 million to any one borrowing relationship without obtaining the approval of our Chairman and our Vice Chairman.

As of December 31, 2005, we had ten borrowing relationships where we had a commitment to loan in excess of $10.0 million, with the aggregate amount of those commitments totaling approximately $134.5 million. The largest of those commitments to one borrowing relationship was $27.3 million, which is 16.5% of our consolidated shareholders’ equity. Given the size of these loan relationships relative to our capital levels and earnings, a significant loss on any one of these loans could materially and adversely affect our business, financial condition, results of operations, and future prospects.

The unexpected loss of key officers may materially and adversely affect our business, financial condition, results of operations and future prospects.

Our success depends significantly on our executive officers, especially John W. Allison, Ron W. Strother, Randy E. Mayor, and on the presidents of our bank subsidiaries. Our bank subsidiaries, in particular, rely heavily on their management team’s relationships in their local communities to generate business. Because we do not have employment agreements or non-compete agreements with our employees, our executive officers and bank presidents are free to resign at any time and accept an employment offer from another company, including a competitor. The loss of services from a member of our current management team may materially and adversely affect our business, financial condition, results of operations and future prospects.

Our growth and expansion strategy may not be successful and our market value and profitability may suffer.

Growth through the acquisition of banks, de novo branching, and the organization of new banks represents an important component of our business strategy. Although we have no present plans to acquire any financial institution or financial services provider, any future acquisitions we might make will be accompanied by the risks commonly encountered in acquisitions. These risks include, among other things:


	•	credit risk associated with the acquired bank’s loans and investments;

	•	difficulty of integrating operations and personnel; and

	•	potential disruption of our ongoing business.

We expect that competition for suitable acquisition candidates may be significant. We may compete with other banks or financial service companies with similar acquisition strategies, many of which are larger and have greater financial and other resources. We cannot assure you that we will be able to successfully identify and acquire suitable acquisition targets on acceptable terms and conditions.

In addition to the acquisition of existing financial institutions, we plan to continue de novo branching, and we may consider the organization of new banks in new market areas. We do not, however, have any current plans to organize a new bank. De novo branching and any acquisition or organization of a new bank carries with it numerous risks, including the following:


	•	the inability to obtain all required regulatory approvals;

	•	significant costs and anticipated operating losses associated with establishing a de novo branch or a new bank;

	•	the inability to secure the services of qualified senior management;

	•	the local market may not accept the services of a new bank owned and managed by a bank holding company headquartered outside of the market area of the new bank;

	•	the inability to obtain attractive locations within a new market at a reasonable cost; and

	•	the additional strain on management resources and internal systems and controls.

We cannot assure that we will be successful in overcoming these risks or any other problems encountered in connection with acquisitions, de novo branching and the organization of new banks. Our inability to overcome these risks could have an adverse effect on our ability to achieve our business strategy and maintain our market value and profitability.

We expect to continue to grow our assets and deposits, the products and services we offer, and the scale of our operations, generally, both internally and through acquisitions. If we continue to grow rapidly, we may not be able to control costs and maintain our asset quality. Our ability to manage our growth successfully will

depend on our ability to maintain cost controls and asset quality while attracting additional loans and deposits on favorable terms. If we grow too quickly and are not able to control costs and maintain asset quality, this rapid growth could materially and adversely affect our financial performance.

There may be undiscovered risks or losses associated with our acquisitions of bank subsidiaries which would have a negative impact upon our future income.

Our growth strategy includes strategic acquisitions of bank subsidiaries. We acquired three bank subsidiaries in 2005, and will continue to consider strategic acquisitions, with a primary focus on Arkansas and southwestern Florida. In most cases, our acquisition of a bank includes the acquisition of all of the target bank’s assets and liabilities, including its loan portfolio. There may be instances when we, under our normal operating procedures, may find after the acquisition, that there may be additional losses or undisclosed liabilities with respect to the assets and liabilities of the target bank, and, with respect to its loan portfolio, that the ability of a borrower to repay a loan may have become impaired, the quality of the value of the collateral securing a loan may fall below our standards, or the allowance for loan losses may not be adequate. One or more of these factors might cause us to have additional losses or liabilities, additional loan charge-offs, or increases in allowances for loan losses, which would have a negative impact upon our future income.

An economic downturn, natural disaster or act of terrorism, especially one affecting our market areas, could adversely affect our business, financial condition, results of operations and future prospects.

Our business is affected by prevailing economic conditions in the United States, including inflation and unemployment rates, but is particularly subject to the local economies in Arkansas, the Florida Keys and southwestern Florida. Our relatively small size and our geographic concentration expose us to greater risk of unfavorable local economic conditions than the larger national or regional banks in our market areas. Adverse changes in local economic factors, such as population growth trends, income levels, deposits and housing starts, may adversely affect our operations.

We are at risk of natural disaster or acts of terrorism, even if our market areas are not primarily affected. Our Florida market, in particular, is subject to risks from hurricanes, which may damage or dislocate our facilities, damage or destroy collateral, adversely affect the livelihood of borrowers or otherwise cause significant economic dislocation in areas we serve.

If and when economic conditions deteriorate, either in our local market areas or nationwide, we may experience a reduction in the demand for our products and services and deterioration in the quality of our loan portfolio and consequently have a material and adverse effect on our business, financial condition, results of operations and future prospects.

Competition from other financial institutions may adversely affect our profitability.

The banking business is highly competitive. We experience strong competition, not only from commercial banks, savings and loan associations, and credit unions, but also from mortgage banking firms, consumer finance companies, securities brokerage firms, insurance companies, money market funds, and other financial institutions operating in or near our market areas. We compete with these institutions both in attracting deposits and in making loans.

Many of our competitors are much larger national and regional financial institutions. We may face a competitive disadvantage against them as a result of our smaller size and resources and our lack of geographic diversification.

We also compete against community banks that have strong local ties. These smaller institutions are likely to cater to the same small and mid-sized businesses that we target and to use a relationship-based approach similar to ours. In addition, our competitors may seek to gain market share by pricing below the current market rates for loans and paying higher rates for deposits. Competitive pressures can adversely affect our profitability.

Our recent results do not indicate our future results, and may not provide guidance to assess the risk of an investment in our common stock.

We are unlikely to sustain our historical rate of growth, and may not even be able to expand our business at all. Further, our recent growth may distort some of our historical financial ratios and statistics. In the future, we may not have the benefit of several recently favorable factors, such as a strong residential housing market

or the ability to find suitable expansion opportunities. Various factors, such as economic conditions, regulatory and legislative considerations and competition, may also impede or prohibit our ability to expand our market presence. If we are not able to successfully grow our business, our financial condition and results of operations could be adversely affected.

We may not be able to raise the additional capital we need to grow and, as a result, our ability to expand our operations could be materially impaired.

Federal and state regulatory authorities require us and our bank subsidiaries to maintain adequate levels of capital to support our operations. While we believe that our capital will be sufficient to support our current operations and anticipated expansion, factors such as faster than anticipated growth, reduced earning levels, operating losses, changes in economic conditions, revisions in regulatory requirements, or additional acquisition opportunities may lead us to seek additional capital.

Our ability to raise additional capital, if needed, will depend on our financial performance and on conditions in the capital markets at that time, which are outside our control. If we need additional capital but cannot raise it on terms acceptable to us, our ability to expand our operations could be materially impaired.

We are considered by the Federal Reserve Board to be a source of “financial strength” for White River Bancshares and may be required to support its capital.

We hold a 20% ownership interest in White River Bancshares, Inc., a bank holding company headquartered in Fayetteville, Arkansas. Our minority ownership means that we lack effective power to control the operations of the holding company. We are, nevertheless, considered by the Federal Reserve Board to be a source of financial strength for that holding company. As a result, we may be required to contribute sufficient funds for White River Bancshares to meet regulatory capital requirements if it is unable to raise funds from other sources. An obligation to support White River Bancshares may be required at times when, in the absence of this Federal Reserve Board policy, we might not be inclined to provide it. As of and for the year ended December 31, 2005, White River Bancshares had total assets of $184.7 million, total shareholders’ equity of $51.2 million, and a net operating loss of $2.7 million.

We may be unable to, or choose not to, pay dividends on our common stock.

Although we have paid a quarterly dividend on our common stock since the second quarter of 2003 and expect to continue this practice, we cannot assure you of our ability to continue. Our ability to pay dividends depends on the following factors, among others:


	•	We may not have sufficient earnings since our primary source of income, the payment of dividends to us by our bank subsidiaries, is subject to federal and state laws that limit the ability of these banks to pay dividends.

	•	Federal Reserve Board policy requires bank holding companies to pay cash dividends on common stock only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition.

	•	Before dividends may be paid on our common stock in any year, dividends of $0.25 per share must first be paid on our Class A preferred stock and $0.57 per share on our Class B preferred stock.

	•	Before dividends may be paid on our common stock in any year, payments must be made on our subordinated debentures.

	•	Our board of directors may determine that, even though funds are available for dividend payments, retaining the funds for internal uses, such as expansion of our operations, is a better strategy.

If we fail to pay dividends, capital appreciation, if any, of our common stock may be your sole opportunity for gains on your investment.

Our directors and executive officers own a significant portion of our common stock and can exert significant control over our business and corporate affairs.

Our directors and executive officers, as a group, will beneficially own approximately % of our common stock immediately following this offering. Consequently, if they vote their shares in concert, they can significantly influence the outcome of all matters submitted to our shareholders for approval, including the

election of directors. The interests of our officers and directors may conflict with the interests of other holders of our common stock, and they may take actions affecting our company with which you disagree.


	*The holders of our subordinated debentures have rights that are senior to those of our shareholders.*

We have $44.8 million of subordinated debentures issued in connection with trust preferred securities. Payments of the principal and interest on the trust preferred securities are unconditionally guaranteed by us. The subordinated debentures are senior to our shares of common stock. As a result, we must make payments on the subordinated debentures (and the related trust preferred securities) before any dividends can be paid on our common stock and, in the event of our bankruptcy, dissolution or liquidation, the holders of the debentures must be satisfied before any distributions can be made to the holders of our common stock. We have the right to defer distributions on the subordinated debentures (and the related trust preferred securities) for up to five years, during which time no dividends may be paid to holders of our common stock.

Risks Related to Our Industry


	*Our profitability is vulnerable to interest rate fluctuations and monetary policy.*

Most of our assets and liabilities are monetary in nature, and thus subject us to significant risks from changes in interest rates. Consequently, our results of operations can be significantly affected by changes in interest rates and our ability to manage interest rate risk. Changes in market interest rates, or changes in the relationships between short-term and long-term market interest rates, or changes in the relationship between different interest rate indices can affect the interest rates charged on interest-earning assets differently than the interest paid on interest-bearing liabilities. This difference could result in an increase in interest expense relative to interest income or a decrease in interest rate spread. In addition to affecting our profitability, changes in interest rates can impact the valuation of our assets and liabilities.

Our results of operations are also affected by the monetary policies of the Federal Reserve Board. Actions by the Federal Reserve Board involving monetary policies could have an adverse effect on our deposit levels, loan demand or business and earnings.


	We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or limitations on the conduct of our business, which limitations or restrictions could adversely affect our profitability.

We are a registered bank holding company primarily regulated by the Federal Reserve Board. Our bank subsidiaries are also primarily regulated by the Federal Reserve Board, the Federal Deposit Insurance Corporation, and the Arkansas State Bank Department or Florida Office of Financial Regulation.

Complying with banking industry regulations is costly and may limit our growth and restrict certain of our activities, including payment of dividends, mergers and acquisitions, investments, loans and interest rates charged, interest rates paid on deposits and locations of offices. We are also subject to capital requirements by our regulators. Violations of various laws, even if unintentional, may result in significant fines or other penalties, including restrictions on branching or bank acquisitions. Recently, banks generally have faced increased regulatory sanctions and scrutiny, particularly under the USA Patriot Act and statutes that promote customer privacy or seek to prevent money laundering. As regulation of the banking industry continues to evolve, we expect the costs of compliance to continue to increase and, thus, to affect our ability to operate profitably.

Upon completion of this offering, we will become subject to the many requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, and the related rules and regulations promulgated by the Securities and Exchange Commission and Nasdaq. These laws and regulations will increase the scope, complexity and cost of our corporate governance, reporting and disclosure practices. Although we are accustomed to conducting business in a highly regulated environment, these laws and regulations have different requirements for compliance than we have previously experienced. Our expenses for accounting, legal and consulting services will increase because of the new obligations we will face as a public company. In addition, the sudden application of these requirements to our business will result in some cultural adjustments and may strain our management resources.

To date, we have not conducted a comprehensive review and confirmation of the adequacy of our existing systems and controls as will be required under Section 404 of the Sarbanes-Oxley Act, and will not do so until

after the completion of this offering. We may discover deficiencies in existing systems and controls. If that is the case, we intend to take the necessary steps to correct any deficiencies. These steps may be costly and strain our resources. A decline in the market price for our common stock may result if we are unable to comply with the Sarbanes-Oxley Act.

Risks Related to This Offering


	*We have broad discretion in the use of the net proceeds from this offering, and our use of those proceeds may not yield a favorable return on your investment.*

We will use the net proceeds of this offering for general corporate purposes, which may include, among other things, our working capital needs and providing investments in our bank subsidiaries. We may also use the net proceeds to finance bank acquisitions, though we have no present plans in that regard. Thus, our management has broad discretion over how these proceeds are used and could spend the proceeds in ways with which you may not agree. We may not invest the proceeds of this offering effectively or in a manner that yields a favorable (or any) return on our common stock, and consequently, this could result in financial losses that could have a material adverse effect on our business or cause the price of our common stock to decline.


	There has been no prior active trading market for our common stock. We cannot assure you that an active public trading market will develop after the offering and, even if it does, our stock price may trade below the public offering price.

There has been no public market for our common stock prior to this offering. An active trading market for our common stock may never develop or be sustained, which could affect your ability to sell your shares.

Even if a market develops for our common stock after the offering, the market price of our common stock may experience significant volatility. Factors that may affect the price of our common stock include the depth and liquidity of the market for our common stock, investor perception of our financial strength, conditions in the banking industry such as credit quality and monetary policies, and general economic and market conditions. Our quarterly operating results, changes in analysts’ earnings estimates, changes in general conditions in the economy or financial markets or other developments affecting us could cause the market price of our common stock to fluctuate substantially. In addition, the initial public offering price has been determined through negotiations between us and the underwriters, and may bear no relationship to the price at which the common stock will trade upon completion of the offering.


	*Investors in this offering will experience immediate and substantial dilution.*

Purchasers in this offering will experience immediate dilution in the net tangible book value of our common stock from the offering price of $ per share. To the extent we raise additional capital by issuing equity securities in the future, our shareholders may experience additional dilution. Our board of directors may determine, from time to time, a need to obtain additional capital through the issuance of additional shares of common stock or other securities. We may issue additional securities at prices or on terms less favorable than or equal to the public offering price and terms of this offering. Additional dilution may also occur upon the exercise of options granted by us under our 2006 Stock Option and Performance Incentive Plan or the conversion of our outstanding shares of Class A preferred stock or Class B preferred stock to common stock.


	The ability of our insiders or the holders of our Class A and Class B preferred stock to sell substantial amounts of common stock after this offering may depress the market price of our common stock or cause it to decline.


There are three potentially significant sources of shares of our common stock that may come on the market after this offering:


	•	Our directors and executive officers will beneficially own approximately % of our common stock immediately after this offering. Although they are subject to “lock-up” agreements with our underwriters, which generally prevent them from selling their shares within 180 days after the offering, the underwriters may release them from those obligations. In any event, after the lock-up agreements expire, approximately 5.9 million additional shares of our common stock could become tradable by our directors and executive officers.

	•	We intend to require that all of the outstanding shares of our Class A preferred stock be converted to common stock as soon as practicable after June 6, 2006, the first date on which we can require

conversion of those shares. We also intend, as soon as practicable after this offering, to require that our Class B preferred stock be converted to common stock. Conversion of our Class A preferred stock and Class B preferred stock will result in as many as 2,241,184 shares of our common stock being issued, including shares issuable upon exercise of preferred stock options. Most of the holders of the newly issued shares of common stock will be eligible immediately to sell their shares.

• We intend to register all common stock that we may issue upon exercise of outstanding options under our 2006 Stock Option and Performance Incentive Plan. Once we register these shares, they can be sold in the public market upon issuance, subject to restrictions under the securities laws and, if applicable, the lock-up agreements described above. As of March 13, 2006, stock options to purchase 968,244 shares of our common stock had been granted under this plan, of which 481,224 are presently exercisable.

Sales of a significant number of shares of our common stock after this offering, or the expectation that these sales may occur, could depress the market price of our common stock.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Some of our statements contained in this prospectus, including matters discussed under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operation,” are “forward-looking statements.” Forward-looking statements relate to future events or our future financial performance and include statements about the competitiveness of the banking industry, potential regulatory obligations, our entrance and expansion into other markets, our other business strategies and other statements that are not historical facts. Forward-looking statements are not guarantees of performance or results. When we use words like “may,” “plan,” “contemplate,” “anticipate,” “believe,” “intend,” “continue,” “expect,” “project,” “predict,” “estimate,” “could,” “should,” “would,” and similar expressions, you should consider them as identifying forward-looking statements, although we may use other phrasing. These forward-looking statements involve risks and uncertainties and are based on our beliefs and assumptions, and on the information available to us at the time that these disclosures were prepared. These forward-looking statements involve risks and uncertainties and may not be realized due to a variety of factors, including, but not limited to, the following:


	•	the effects of future economic conditions, including inflation or a decrease in residential housing values;

	•	governmental monetary and fiscal policies, as well as legislative and regulatory changes;

	•	the risks of changes in interest rates or the level and composition of deposits, loan demand and the values of loan collateral, securities and interest sensitive assets and liabilities;

	•	the effects of terrorism and efforts to combat it;

	•	credit risks;

	•	the effects of competition from other commercial banks, thrifts, mortgage banking firms, consumer finance companies, credit unions, securities brokerage firms, insurance companies, money market and other mutual funds and other financial institutions operating in our market area and elsewhere, including institutions operating regionally, nationally and internationally, together with competitors offering banking products and services by mail, telephone and the Internet;

	•	the effect of any mergers, acquisitions or other transactions to which we or our subsidiaries may from time to time be a party, including our ability to successfully integrate any businesses that we acquire; and

	•	the failure of assumptions underlying the establishment of our allowance for loan losses.

All written or oral forward-looking statements attributable to us are expressly qualified in their entirety by this Cautionary Note. Our actual results may differ significantly from those we discuss in these forward-looking statements. For other factors, risks and uncertainties that could cause our actual results to differ materially from estimates and projections contained in these forward-looking statements, see “Risk Factors” beginning on page 9.

USE OF PROCEEDS

Our net proceeds from the sale of shares of our common stock in this offering (based on the mid-point of the price range on the cover page of this prospectus) will be approximately $ million, after deducting underwriting discounts and commissions and estimated offering expenses payable by us. If the underwriters’ over-allotment option is exercised in full, we estimate that our net proceeds will be approximately $ million.

We will use the net proceeds of this offering for general corporate purposes. Those purposes may include, among other things, meeting our working capital needs and providing investments in our bank subsidiaries to support our growth, including development of additional banking offices. Additionally, we may use the net proceeds to finance bank acquisitions, though we have no present plans in that regard.

We have not specifically allocated the amount of the net proceeds that will be used for these purposes; however, we believe that we will be able to deploy the net proceeds of this offering in a manner that will maximize the return to our investors. We are effecting this offering at this time because we believe that based on our current financial position and considering our historical growth and development and our prospects for the future, we have reached a stage where we are ready to be a public company with access to the public markets.

The precise amounts and timing of our use of the net proceeds will depend upon market conditions and the availability of other funds, among other factors. From time to time, we may engage in additional capital financings as we determine to be appropriate based upon our needs and prevailing market conditions. These additional capital financings may include the sale of securities other than, or in addition to, common stock.

PRICE RANGE OF OUR COMMON STOCK AND DIVIDENDS

Prior to this offering, our common stock has not been traded on an established public trading market and quotations for our common stock were not reported on any market. As a result, there has been no regular market for our common stock. Although our shares have been infrequently traded in private transactions, those transactions have usually been between related parties and at sales prices that did not necessarily reflect the price that would be paid for our common stock in an active market.

We have applied to have our common stock listed on The Nasdaq National Market under the symbol “HOMB.” We believe, but cannot be certain, that a Nasdaq listing will substantially enhance the trading market for our common stock. See “Risk Factors — Risks Related to This Offering,” beginning on page 14. As of December 31, 2005, there were 12,113,865 shares of our common stock outstanding, held by approximately 1,100 holders of record.

Dividends are paid at the discretion of our board of directors. We have paid regular quarterly cash dividends on our common stock beginning with the second quarter of 2003, and our board of directors presently intends to continue the payment of these regular cash dividends. We paid total dividends in the amount of $0.07 per common share in 2005, $0.04 per common share in 2004 and $0.01 per common share in 2003. However, the amount and frequency of cash dividends, if any, will be determined by our board of directors after consideration of our earnings, capital requirements, our financial condition and our ability to service any equity or debt obligations senior to our common stock, and will depend on cash dividends paid to us by our bank subsidiaries. As a result, our ability to pay future dividends will depend on the earnings of our bank subsidiaries, their financial condition and their need for funds.

There are a number of restrictions on our ability to pay cash dividends. It is the policy of the Federal Reserve Board that bank holding companies should pay cash dividends on common stock only out of net income available over the past year and only if prospective earnings retention is consistent with the organization’s expected future needs and financial condition. The policy provides that bank holding companies should not maintain a level of cash dividends that undermines the bank holding company’s ability to serve as a source of strength to its banking subsidiaries. For a foreseeable period of time, our principal source of cash will be dividends paid by our bank subsidiaries with respect to their capital stock. There are certain restrictions on the payment of these dividends imposed by federal banking laws, regulations and authorities. See “Supervision and Regulation — Payment of Dividends.”

Additionally, before any dividend may be paid on our common stock in any year, dividends of $0.25 per share must first be paid on our Class A preferred stock and $0.57 per share paid on our Class B preferred stock. We are also restricted from paying dividends on our common stock if we have deferred payments of interest, or if a default has occurred, on our subordinated debentures.

As of December 31, 2005, no significant funds were available for payment of dividends by our bank subsidiaries to us under applicable regulatory restrictions, without regulatory approval. Regulatory authorities could impose administratively stricter limitations on the ability of our bank subsidiaries to pay dividends to us if such limits were deemed appropriate to preserve certain capital adequacy requirements. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

CAPITALIZATION

The following table shows our consolidated capitalization as of December 31, 2005. Our capitalization is presented on an actual basis and on an as adjusted basis to give effect to the sale of shares of common stock offered in this offering, less the underwriting discount, commissions and estimated expenses, at an assumed offering price of $ per share (the mid-point of the price range set forth on the cover page of this prospectus). This table should be read in conjunction with “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the consolidated financial statements and the related notes included in this prospectus.


		December 31, 2005

		Actual			As adjusted(1)

		(Dollars in thousands, except
		per share data)
Long-term indebtedness: (2)
Subordinated debentures, due 2030		$	3,516		$	3,516
Subordinated debentures, due 2033			20,619			20,619
Subordinated debentures, due 2033, floating rate			5,155			5,155
Subordinated debentures, due 2035			15,465			15,465
Advance on line of credit(3)			14,000			14,000

	Total long-term indebtedness		58,755			58,755

Shareholders’ equity:
Class A preferred stock, $0.01 par value; 2,500,000 shares authorized; 2,076,195 shares issued and outstanding, actual and as adjusted			21			21
Class B preferred stock, $0.01 par value; 3,000,000 shares authorized; 169,079 shares issued and outstanding, actual and as adjusted			2			2
Common stock, $0.01 par value; 25,000,000 shares authorized; 12,113,865 shares issues and outstanding; shares issued and outstanding as adjusted			121
Capital surplus			146,285
Retained earnings			27,331			27,331
Accumulated other comprehensive loss			(7,903	)		(7,903	)

	Total shareholders’ equity		165,857

	Total capitalization (4)	$	224,612

Book value per share with preferred converted to common		$	11.63
Capital ratios:
	Equity to assets		8.68	%
	Tangible equity to tangible assets(5)		6.29
	Tier 1 leverage ratio(6)		9.22
	Tier 1 risk-based capital ratio		12.25
	Total risk-based capital ratio		13.51


(1)	As adjusted to give effect to the assumed issuance of shares of common stock.

(2)	Excludes FHLB advances, which were approximately $99.1 million as of December 31, 2005.

(3)	The advance on the line of credit was fully repaid in January 2006.

(4)	Consists of long-term debt and total shareholders’ equity.

(5)	Tangible calculations eliminate the effect of goodwill and acquisition-related intangible assets and the corresponding amortization expense on a tax-effected basis.

(6)	Leverage ratio is Tier 1 capital to quarterly average total assets less intangible assets and gross unrealized gains/losses on available-for-sale investment securities.

DILUTION

If you invest in our common stock in this offering, your ownership interest in Home BancShares will be diluted to the extent of the difference between the initial public offering price per share and the pro forma net tangible book value per share after this offering. Net tangible book value per share is determined by dividing our tangible net worth (net tangible assets less total liabilities) by the number of shares outstanding. Our net tangible book value as of December 31, 2005, was $117.1 million, or $8.21 per share, based on the number of shares of common stock outstanding plus the conversion of preferred stock to common stock as of December 31, 2005.

After giving effect to our sale of shares in this offering at an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus), assuming the underwriters’ over-allotment option is not exercised, and after deducting estimated underwriting discounts and commissions and estimated offering expenses payable by us, our common stock net tangible book value as of December 31, 2005 would have been $ million, or $ per share. This represents an immediate increase in net tangible book value to present common shareholders of $ per share and an immediate dilution in net tangible book value of $ per share to new investors purchasing shares in this offering at the assumed initial public offering price. Dilution is determined by subtracting pro forma net tangible book value per common share after this offering from the assumed initial offering price of $ per common share.

The following table illustrates the dilution on a per-common-share basis (with preferred stock converted to common stock) as of December 31, 2005:


Assumed initial public offering price				$
	Net tangible book value prior to offering	$	8.21
	Increase in net tangible book value attributable to new investors
	Pro forma net tangible book value after offering
Dilution to new investors(1)				$


(1)	To the extent any outstanding stock options are exercised, you will experience further dilution.

The following table summarizes the total number of shares, the total consideration paid to us and the average price paid per share by existing shareholders and new investors purchasing common stock in this offering. This information is presented on a pro forma basis as of December 31, 2005, after giving effect to the sale of the shares of common stock in this offering at an assumed initial public offering price of $ per share (the midpoint of the range set forth on the cover page of this prospectus).

Shares Purchased

Total Consideration

Average Price

Number

Percent

Amount(1)

Percent(1)

Per Share(1)

(Dollars in thousands, except per share amounts)

Shares previously issued

Shares issued in this offering

Total

(1)

Before deducting estimated underwriting discounts and commissions of $ and estimated offering expenses of approximately $ . In addition, this table does not reflect the exercise of any outstanding stock options. As of March 13, 2006, there were options outstanding under our stock option plan to purchase a total of 968,244 shares of common stock with a weighted average exercise price of $11.22 per share; options outstanding to purchase a total of 11,703 shares of Class A preferred stock with a weighted average exercise price of $6.84 per share (which can convert into 9,239 shares of common stock with a weighted average price of $8.66 per share); and options outstanding to purchase a total of 23,827 shares of Class B preferred stock with a weighted average exercise price of $19.09 per share (which can convert into 71,481 shares of common stock with a weighted average price of $6.36 per share).

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL INFORMATION

The following unaudited pro forma condensed combined statement of income for the year ended December 31, 2005, combines the historical income statements of Home BancShares with Marine Bancorp, Inc. and Mountain View Bancshares, Inc. after giving effect to our acquisitions of Marine Bancorp on June 1, 2005, and Mountain View Bancshares on September 1, 2005.

The pro forma adjustments to the statement of income are computed as if the transactions occurred on January 1, 2005. This unaudited pro forma statement was prepared giving effect to the purchase accounting adjustments and other assumptions described in the accompanying notes. Pro forma balance sheet data is not provided, as our audited consolidated balance sheet as of December 31, 2005, included elsewhere in this prospectus, gives full effect to the Marine Bancorp and Mountain View Bancshares acquisitions.

The unaudited pro forma condensed combined statement of income reflects pro forma adjustments that are described in the accompanying notes and are based on available information and certain assumptions we believe are reasonable but are subject to change. We have made, in our opinion, all adjustments that are necessary to present fairly the pro forma information. The unaudited condensed combined statement of income does not purport to represent what our actual results of operations or financial position would have been if our acquisitions of Marine Bancorp and Mountain View Bancshares had occurred on January 1, 2005, or to project our results of operations or financial position for any future period.


							Mountain
			Home		Marine		View					Pro forma
			BancShares		Bancorp		Bancshares					2005 with
			As		Jan. 1-		Jan. 1-					Marine and
			Reported		May 31,		Aug. 31,					Mountain
			2005		2005		2005		Adjustments			View

			(Dollars and shares in thousands, except per share data)
Interest income
	Loans receivable		$	65,244	$	5,637	$	3,421	$	—		$	74,302
	Investment securities			19,829		325		3,206		(792	)(1)		22,568
	Deposits — other banks			101		5		—		—			106
	Federal funds sold			284		—		117		—			401

Total interest income				85,458		5,967		6,744		(792	)		97,377

Interest expense
	Interest on deposits			26,883		1,532		2,410		—			30,825
	Federal funds purchased			399		—		—		—			399
	FHLB and other borrowings			4,046		413		—		—			4,459
	Securities sold under agreements to repurchase			2,657		—		—		—			2,657
	Subordinated debentures			2,017		155		—		681	(2)		2,853

Total interest expense				36,002		2,100		2,410		681			41,193

Net interest income				49,456		3,867		4,334		(1,473	)		56,184
	Provision for loan losses			3,827		258		360		—			4,445

		Net interest income after provision for loan losses		45,629		3,609		3,974		(1,473	)		51,739


						Mountain
		Home		Marine		View					Pro forma
		BancShares		Bancorp		Bancshares					2005 with
		As		Jan. 1-		Jan. 1-					Marine and
		Reported		May 31,		Aug. 31,					Mountain
		2005		2005		2005		Adjustments			View

		(Dollars and shares in thousands, except per share data)
Non-interest income
	Service charges on deposits		8,319		275		228		—			8,822
	Other service charges and fees		2,099		171		64		—			2,334
	Mortgage banking income		1,651		206		—		—			1,857
	Other income		3,618		15		305		—			3,938

Total non-interest income			15,687		667		597		—			16,951

Non-interest expense
	Salaries and employee benefits		23,901		1,690		1,052		—			26,643
	Occupancy and equipment		6,869		450		351		—			7,670
	Data processing expense		1,991		298		33		—			2,322
	Advertising		2,067		58		30		—			2,155
	Amortization of intangibles		1,466		—		—		330	(3)		1,796
	Other operating expense		8,641		667		385		—			9,693

Total non-interest expense			44,935		3,163		1,851		330			50,279

Income before taxes			16,381		1,113		2,720		(1,803	)		18,411
	Income taxes — pro forma adjustment		4,935		442		—		(707	)(4)		4,670
	Income taxes — Mountain View adjustment		—		—		—		450	(5)		450

Net income		$	11,446	$	671	$	2,720	$	(1,546	)	$	13,291

Basic earnings per share		$	0.92	$	—	$	—	$	—		$	1.05
Diluted earnings per share			0.82		—		—		—			0.93
Preferred stock dividends		$	574	$	41	$	—	$	—		$	615
Basic — weighted average shares outstanding			11,862		—		224		—			12,086
Diluted — weighted average shares outstanding			13,889		203		224		—			14,316


(1)	This adjustment reflects the reduction in interest income that would result from the sale of $34.2 million of securities to fund our purchase of Marine Bancorp and Mountain View Bancshares for the five and eight months, respectively, prior to their acquisition by us. An average rate of 3.87% was used based on the yield of the securities sold.

(2)	This adjustment reflects additional interest expense on subordinated debentures for the eight months prior to the acquisition of Mountain View Bancshares. An average rate of 6.81% was used based on the additional $15.0 million of subordinated debenture issued during 2005.

(3)	This adjustment reflects the amortization expense for Marine Bancorp and Mountain View Bancshares core deposit intangible assets for the five and eight months, respectively, prior to their acquisitions by us.

(4)	This adjustment reflects the estimated tax effect of the pro forma adjustments using a marginal 39.23% tax rate.

(5)	This adjustment reflects the estimated tax effect of the conversion of Mountain View Bancshares from an S corporation to a C corporation tax filer using an estimated effective tax rate of 16.56%. The estimated effective tax rate is low due to the relatively high level of investments in municipal securities owned by Bank of Mountain View.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF

FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis presents our consolidated financial condition and results of operations for the years ended December 31, 2005, 2004 and 2003. This discussion should be read together with the “Summary Consolidated Financial Data,” our financial statements and the notes thereto, and other financial data included in this prospectus. In addition to the historical information provided below, we have made certain estimates and forward-looking statements that involve risks and uncertainties. Our actual results could differ significantly from those anticipated in these estimates and in the forward-looking statements as a result of certain factors, including those discussed in the section of this prospectus captioned “Risk Factors,” beginning on page 9, and elsewhere in this prospectus.

General

We are a bank holding company headquartered in Conway, Arkansas, offering a broad array of financial services through our five wholly owned bank subsidiaries. As of December 31, 2005, we had, on a consolidated basis, total assets of $1.9 billion, loans receivable of $1.2 billion, total deposits of $1.4 billion, and shareholders’ equity of $165.9 million.

We generate most of our revenue from interest on loans and investments, service charges, and mortgage banking income. Deposits are our primary source of funding. Our largest expenses are interest on these deposits and salaries and related employee benefits. We measure our performance by calculating our return on average equity, return on average assets, and net interest margin. We also measure our performance by our efficiency ratio, which is calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income.

Key Financial Measures


	As of or for the Years Ended December 31,

	2005			2004			2003

	(Dollars in thousands, except per share data)
Total assets	$	1,911,491		$	805,186		$	803,103
Loans receivable		1,204,589			516,665			500,055
Total deposits		1,427,108			552,878			572,218
Net income		11,446			9,159			3,769
Basic earnings per share	$	0.92		$	1.08		$	0.66
Diluted earnings per share		0.82			0.94			0.63
Diluted cash earnings per share(1)		0.89			0.99			0.64
Net interest margin		3.37	%		3.75	%		3.35	%
Efficiency ratio		64.95			57.65			64.61
Return on average assets		0.69			1.17			0.85
Return on average equity		7.27			8.61			8.88


(1)	See Table 20 “Diluted Cash Earnings Per Share” for a reconciliation to GAAP for diluted cash earnings per share.

2005 Overview

Our net income increased $2.3 million, or 25.0%, to $11.4 million for the year ended December 31, 2005, from $9.2 million for the same period in 2004. The increase in earnings is primarily associated with our acquisitions during 2005, combined with organic growth of our bank subsidiaries’ earnings. In 2004, our net income included a gain on the sale of our equity investment in Russellville Bancshares. Excluding this after-tax gain of $2.7 million, net income for 2005 would have increased by $5.0 million, or 75.4%, over 2004. Diluted earnings per share decreased $0.12, or 12.8%, to $0.82 for the year ended December 31, 2005, from

$0.94 for 2004. This decrease was primarily the result of the gain of $0.27 per diluted share during 2004, and a 42.0% increase in the average diluted shares outstanding for the year ended December 31, 2005, versus the same period in 2004, resulting from the shares issued in connection with our 2005 acquisitions. Excluding the gain, diluted earnings per share would have increased $0.15, or 22.4%, to $0.82 per diluted share for the year ended December 31, 2005, from $0.67 per diluted share for 2004.

Our return on average equity was 7.27% for the year ended December 31, 2005, compared to 8.61% for 2004. The decrease was primarily due to: (i) the $59.2 million, or 55.6%, increase in shareholders’ equity to $165.9 million as of December 31, 2005, compared to $106.6 million as of December 31, 2004; and (ii) a gain of $2.7 million in 2004. Return on average equity for 2004 would have been 6.07%, excluding this gain. The increase in shareholders’ equity was primarily due to the acquisitions of TCBancorp and Marine Bancorp.

Our return on average assets was 0.69% for the year ended December 31, 2005, compared to 1.17% for 2004. The decrease was primarily due to: (i) the $1.1 billion, or 137.4%, increase in total assets to $1.9 billion as of December 31, 2005, compared to $805.2 million as of December 31, 2004; and (ii) a gain of $2.7 million in 2004. Return on average assets would have been 0.83% excluding this gain. The increase in total assets was primarily due to the acquisitions of TCBancorp, Marine Bancorp, and Mountain View Bancshares.

Our net interest margin was 3.37% for the year ended December 31, 2005, compared to 3.75% for 2004. The decrease was primarily due to the relatively lower net interest margin of 2.77% for Twin City Bank for the year ended December 31, 2005.

Our efficiency ratio (calculated by dividing non-interest expense less amortization of core deposit intangibles by the sum of net interest income on a tax equivalent basis and non-interest income) was 64.95% for the year ended December 31, 2005, compared to 57.65% for 2004. The efficiency ratio for 2004 would have been 64.06% excluding our gain of $2.7 million.

Our total assets increased $1.1 billion, or 137.4%, to $1.9 billion as of December 31, 2005, compared to $805.2 million as of December 31, 2004. Our loan portfolio increased $687.9 million, or 133.2%, to $1.2 billion as of December 31, 2005, from $516.7 million as of December 31, 2004. Shareholders’ equity increased $59.2 million, or 55.6%, to $165.9 million as of December 31, 2005, from $106.6 million as of December 31, 2004. All of these increases were primarily associated with our acquisitions during 2005.

As of December 31, 2005, our asset quality improved as non-performing loans declined to $8.3 million, or 0.69%, of total loans from $9.0 million, or 1.73%, of total loans as of the prior year end. The allowance for loan losses as a percent of non-performing loans improved to 291.6% as of December 31, 2005, compared to 182.4% from the prior year end. These ratios reflect the continuing commitment of our management to maintain sound asset quality.

2005 Fourth Quarter Operating Performance

Critical Accounting Policies

Overview. We prepare our consolidated financial statements based on the selection of certain accounting policies, generally accepted accounting principles and customary practices in the banking industry. These policies, in certain areas, require us to make significant estimates and assumptions. Our accounting policies are described in detail in the notes to our consolidated financial statements included as part of this prospectus.

We consider a policy critical if (i) the accounting estimate requires assumptions about matters that are highly uncertain at the time of the accounting estimate; and (ii) different estimates that could reasonably have been used in the current period, or changes in the accounting estimate that are reasonably likely to occur from period to period, would have a material impact on our financial statements. Using these criteria, we believe

that the accounting policies most critical to us are those associated with our lending practices, including the accounting for the allowance for loan losses, intangible assets and income taxes.

Investments. Securities available for sale are reported at fair value with unrealized holding gains and losses reported as a separate component of shareholders’ equity and other comprehensive income (loss). Securities that are held as available for sale are used as a part of our asset/liability management strategy. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available for sale.

Loans Receivable and Allowance for Loan Losses. Substantially all of our loans receivable are reported at their outstanding principal balance adjusted for any charge-offs, as it is management’s intent to hold them for the foreseeable future or until maturity or payoff. Interest income on loans is accrued over the term of the loans based on the principal balance outstanding.

The allowance for loan losses is established through a provision for loan losses charged against income. The allowance represents an amount that, in management’s judgment, will be adequate to absorb probable credit losses on identifiable loans that may become uncollectible and probable credit losses inherent in the remainder of the loan portfolio. The amounts of provisions for loan losses are based on management’s analysis and evaluation of the loan portfolio for identification of problem credits, internal and external factors that may affect collectibility, relevant credit exposure, particular risks inherent in different kinds of lending, current collateral values and other relevant factors.

We consider a loan to be impaired when, based on current information and events, it is probable that we will be unable to collect all amounts due according to the contractual terms thereof. We apply this policy even if delays or shortfalls in payments are expected to be insignificant. All non-accrual loans and all loans that have been restructured from their original contractual terms are considered impaired loans. The aggregate amount of impaired loans is used in evaluating the adequacy of the allowance for loan losses and amount of provisions thereto. Losses on impaired loans are charged against the allowance for loan losses when in the process of collection it appears likely that losses will be realized. The accrual of interest on impaired loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. When accrual of interest is discontinued, all unpaid accrued interest is reversed.

Loans are placed on non-accrual status when management believes that the borrower’s financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due. Loans are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely. Accrued interest related to non-accrual loans is generally charged against the allowance for loan losses when accrued in prior years and reversed from interest income if accrued in the current year. Interest income on non-accrual loans may be recognized to the extent cash payments are received, although the majority of payments received are usually applied to principal. Non-accrual loans are generally returned to accrual status when principal and interest payments are less than 90 days past due, the customer has made required payments for at least six months, and we reasonably expect to collect all principal and interest.

Intangible Assets. Intangible assets consist of goodwill and core deposit intangibles. Goodwill represents the excess purchase price over the fair value of net assets acquired in business acquisitions. The core deposit intangible represents the excess intangible value of acquired deposit customer relationships as determined by valuation specialists. The core deposit intangibles are being amortized over 84 to 114 months on a straight-line basis. Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis. We perform an annual impairment test of goodwill as required by SFAS No. 142, Goodwill and Other Intangible Assets, in the fourth quarter. No impairment of our goodwill has resulted from these annual impairment tests.

Income Taxes. We use the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based upon the difference between the values of the assets and liabilities as reflected in the financial statements and their related tax basis using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. Any

estimated tax exposure items identified would be considered in a tax contingency reserve. Changes in any tax contingency reserve would be based on specific development, events, or transactions.

We and our subsidiaries file consolidated tax returns. Our subsidiaries provide for income taxes on a separate return basis, and remit to us amounts determined to be currently payable.

Stock Options. We have elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and related interpretations in accounting for employee stock options using the fair value method. Under APB 25, because the exercise price of the options equals the estimated market price of the stock on the issuance date, no compensation expense is recorded.

Acquisitions and Equity Investments

On September 1, 2005, we acquired Mountain View Bancshares, Inc., an Arkansas bank holding company. Mountain View Bancshares owned The Bank of Mountain View, located in Mountain View, Arkansas which had total assets of $186.4 million, loans of $68.8 million and total deposits of $158.0 million on the date of the acquisition. The consideration for the merger was $44.1 million, which was paid approximately 90%, or $39.8 million, in cash and 10%, or $4.3 million, in shares of our common stock. As a result of this transaction, we recorded goodwill of $13.2 million and a core deposit intangible of $3.0 million.

On June 1, 2005, we acquired Marine Bancorp, Inc., a Florida bank holding company. Marine Bancorp owned Marine Bank of the Florida Keys (subsequently renamed Marine Bank), located in Marathon, Florida, which had total assets of $251.5, loans of $215.2 million and total deposits of $200.7 million on the date of the acquisition. The consideration for the merger was $15.6 million comprised of approximately 60.5%, or $9.4 million, in cash and 39.5%, or $6.2 million, in shares of our Class B preferred stock. As a result of this transaction, we recorded goodwill of $4.6 million and a core deposit intangible of $2.0 million.

On January 3, 2005, we purchased 20% of the common stock of White River Bancshares, Inc. of Fayetteville, Arkansas for $9.1 million. White River Bancshares is a newly formed corporation, which owns all of the stock of Signature Bank of Arkansas, with branch locations in northwest Arkansas. As of December 31, 2005, White River Bancshares had total assets of $184.7 million, loans of $131.3 million, and total deposits of $130.3 million. In January 2006, White River Bancshares issued an additional $15.0 million of common stock. To maintain our 20% ownership, we invested an additional $3.0 million in White River Bancshares at that time.

Effective January 1, 2005, we purchased the remaining 67.8% of TCBancorp that we did not previously own. TCBancorp owned Twin City Bank, with branch locations in the Little Rock/ North Little Rock metropolitan area. The purchase brought our ownership of TCBancorp to 100%. TCBancorp had total assets of $630.3 million, loans of $261.9 million and total deposits of $500.1 million at the effective date of the acquisition. The purchase price for the TCBancorp acquisition was $43.9 million, which consisted of approximately $110,000 of cash and the issuance of 3,750,813 shares (split adjusted) of our common stock. As a result of this transaction, we recorded goodwill of $1.1 million and a core deposit intangible of $3.3 million. This transaction also increased our ownership of CB Bancorp and FirsTrust Financial Services to 100%, both of which we had previously co-owned with TCBancorp.

On December 1, 2003, we used CB Bancorp (an acquisition subsidiary that we formed and co-owned, on an 80/20 basis, with TCBancorp) to purchase Community Financial Group, Inc. and its bank subsidiary, Community Bank. Community Bank had total assets of $326.2 million, loans of $199.5 million and total deposits of $279.6 million at the date of the acquisition. The purchase price for the Community Financial Group acquisition was $43.0 million and consisted of cash of $12.6 million from Home BancShares and $8.6 million from TCBancorp, and 2,123,453 shares of our Class A preferred stock at a value of $10 per share. In February 2005, CB Bancorp merged into Home BancShares, and Community Bank then became our wholly owned subsidiary. As a result of this transaction, we recorded goodwill of $18.6 million and a core deposit intangible of $5.0 million.

Sale of Equity Investment in Russellville Bancshares

On September 7, 2004, Russellville Bancshares repurchased the 21.7% equity interest that we had originally acquired in 2001. As a result of this sale, we recorded a pre-tax gain of $4.4 million or an after-tax gain of $2.7 million. This gain increased diluted earnings per share by $0.27 for the year ended December 31, 2004.

Excluding the gain associated with the sale of our interest in Russellville Bancshares, our net income for the year ended December 31, 2004, was $6.5 million, or $0.67 per diluted earnings per share.

Results of Operations as of and for the Years Ended December 31, 2005, 2004 and 2003

Performance Summary. Our net income increased $2.3 million, or 25.0%, to $11.4 million for the year ended December 31, 2005, from $9.2 million for 2004. Our net income increased $5.4 million, or 143.0%, to $9.2 million for the year ended December 31, 2004, from $3.8 million for 2003. The increase in earnings is primarily associated with our acquisitions during 2005, combined with organic growth of our bank subsidiaries. In 2004, our net income included a gain on the sale of our equity investment in Russellville Bancshares. Excluding this after-tax gain of $2.7 million, net income for 2005 would have increased $5.0 million, or 75.4%. The increase in our net income for 2004 as compared to 2003 resulted from: (i) our acquisition of Community Financial Group in December 2003; (ii) a gain of $2.7 million in 2004; and (iii) the organic growth of our bank subsidiaries’ earnings.

On a diluted earnings per share basis, our net earnings were $0.82 for 2005, as compared to $0.94 for 2004 and $0.63 for 2003. The decrease in diluted earnings per share for 2005 is primarily due to the effect of a after-tax gain of $0.27 per diluted share from the sale of our equity ownership in Russellville Banchares during the third quarter of 2004, and a 42.0% increase in the average diluted shares outstanding for the year ended December 31, 2005, versus the same period in 2004. This increase in average diluted shares was the result of the shares issued in connections with our acquisitions in 2005.

Net Interest Income. Net interest income, our principal source of earnings, is the difference between the interest income generated by earning assets and the total interest cost of the deposits and borrowings obtained to fund those assets. Factors affecting the level of net interest income include the volume of earning assets and interest-bearing liabilities, yields earned on loans and investments and rates paid on deposits and other borrowings, the level of non-performing loans and the amount of non-interest-bearing liabilities supporting earning assets. Net interest income is analyzed in the discussion and tables below on a fully taxable equivalent basis. The adjustment to convert certain income to a fully taxable equivalent basis consists of dividing tax-exempt income by one minus the combined federal and state income tax rate.

Net interest income on a fully taxable equivalent basis increased $25.3 million, or 97.3%, to $51.2 million for the year ended December 31, 2005, from $26.0 million for 2004. This increase in net interest income was the result of a $49.7 million increase in interest income offset by $24.4 million increase in interest expense. The $49.7 million increase in interest income for the year ended December 31, 2005, is primarily the result of a $788.5 million increase in average earning assets associated with our acquisitions during 2005, combined with higher short-term interest rates as a result of the rising rate environment. The higher level of earning assets resulted in an improvement in interest income of $46.3 million. The rising rate environment resulted in a $3.4 million increase in interest income during 2005. The $24.4 million increase in interest expense for the year ended December 31, 2005, is primarily the result of a $686.5 million increase in average interest-bearing liabilities associated with our acquisitions during 2005, combined with higher interest rates during 2005 as a result of the rising rate environment. The higher level of interest-bearing liabilities resulted in additional interest expense of $17.3 million. The rising rate environment resulted in a $7.1 million increase in interest expense during 2005.

Net interest income on a fully taxable equivalent basis increased $12.6 million, or 93.9%, to $26.0 million for the year ended December 31, 2004, from $13.4 million for 2003. This increase in net interest income was the result of a $15.9 million increase in interest income and a $3.3 million increase in interest expense. The $15.9 million increase in interest income for the year ended December 31, 2004, is primarily the result of a

$293.8 million increase of average earning assets due to the December 2003 acquisition of Community Financial Group, combined with our internal growth. The higher level of earning assets resulted in an improvement in interest income of $15.5 million. The $3.3 million increase in interest expense for the year ended December 31, 2004, is primarily the result of a $228.9 million increase in average interest-bearing liabilities associated with the acquisition of Community Financial Group, combined with our internal growth. The higher level of interest-bearing liabilities resulted in additional interest expense of $4.2 million.

Tables 1 and 2 reflect an analysis of net interest income on a fully taxable equivalent basis for the years ended December 31, 2005, 2004 and 2003, as well as changes in fully taxable equivalent net interest margin for the years 2005 compared to 2004 and 2004 compared to 2003.

Table 1: Analysis of Net Interest Income


	Years Ended December 31,

	2005			2004			2003

	(Dollars in thousands)
Interest income	$	85,458		$	36,681		$	21,538
Fully taxable equivalent adjustment		1,790			874			95

Interest income — fully taxable equivalent		87,248			37,555			21,633
Interest expense		36,002			11,580			8,240

Net interest income — fully taxable equivalent	$	51,246		$	25,975		$	13,393

Yield on earning assets — fully taxable equivalent		5.74	%		5.42	%		5.42	%
Cost of interest-bearing liabilities		2.75			2.00			2.36
Net interest spread — fully taxable equivalent		2.99			3.42			3.06
Net interest margin — fully taxable equivalent		3.37			3.75			3.35

Table 2: Changes in Fully Taxable Equivalent Net Interest Margin


	2005 vs. 2004		2004 vs. 2003

	(In thousands)
Increase in interest income due to change in earning assets	$	46,333	$	15,453
Increase in interest income due to change in earning asset yields		3,360		469
Increase in interest expense due to change in interest-bearing liabilities		17,339		4,166
Increase (decrease) in interest expense due to change in interest rates paid on interest-bearing liabilities		7,083		(826	)

Increase in net interest income	$	25,271	$	12,582

Table 3 shows, for each major category of earning assets and interest-bearing liabilities, the average amount outstanding, the interest income or expense on that amount and the average rate earned or expensed for the years ended December 31, 2005, 2004 and 2003. The table also shows the average rate earned on all earning assets, the average rate expensed on all interest-bearing liabilities, the net interest spread and the net interest margin for the same periods. The analysis is presented on a fully taxable equivalent basis. Non-accrual loans were included in average loans for the purpose of calculating the rate earned on total loans.

Table 3: Average Balance Sheets and Net Interest Income Analysis


			Years Ended December 31,

			2005							2004							2003

			Average		Income/		Yield/			Average		Income/		Yield/			Average		Income/		Yield/
			Balance		Expenses		Rate			Balance		Expenses		Rate			Balance		Expenses		Rate

			(Dollars in thousands)
ASSETS
Earning assets
Interest-bearing balances due from banks			$	3,159	$	101		3.20	%	$	2,788	$	38		1.36	%	$	625	$	8		1.28	%
Federal funds sold				8,048		284		3.53			16,902		158		0.93			13,637		159		1.17
Investment securities — taxable				442,168		17,103		3.87			144,446		5,764		3.99			61,763		1,584		2.56
Investment securities — non-taxable				66,960		4,301		6.42			34,945		2,331		6.67			4,277		276		6.45
Loans receivable				1,000,906		65,459		6.54			493,969		29,264		5.92			318,975		19,606		6.15

	Total interest-earning assets			1,521,241		87,248		5.74			693,050		37,555		5.42			399,277		21,633		5.42

Non-earning assets				137,601							89,355							41,888

	Total assets		$	1,658,842						$	782,405						$	441,165


LIABILITIES AND SHAREHOLDERS’ EQUITY

Liabilities
Interest-bearing liabilities
Interest-bearing transaction and savings deposits			$	447,433	$	8,267		1.85	%	$	192,426	$	1,435		0.75	%	$	89,250	$	781		0.88	%
Time deposits				624,692		18,616		2.98			281,391		6,171		2.19			187,734		4,919		2.62

		Total interest-bearing deposits		1,072,125		26,883		2.51			473,817		7,606		1.61			276,984		5,700		2.06
Federal funds purchased				13,996		399		2.85			10,773		159		1.48			1,307		29		2.22
Securities sold under agreement to repurchase				85,876		2,657		3.09			23,068		407		1.76			22,859		256		1.12
FHLB and other borrowed funds				109,323		4,046		3.70			46,837		1,840		3.93			32,596		1,220		3.74
Subordinated debentures				29,408		2,017		6.86			24,219		1,568		6.47			16,075		1,035		6.43

		Total interest-bearing liabilities		1,310,728		36,002		2.75			578,714		11,580		2.00			349,821		8,240		2.36

Non-interest-bearing liabilities
	Non-interest-bearing deposits			177,511							79,907							37,038
	Other liabilities			13,125							17,368							11,875

		Total liabilities		1,501,364							675,989							398,734
Shareholders’ equity				157,478							106,416							42,431

	Total liabilities and shareholders’ equity		$	1,658,842						$	782,405						$	441,165

Net interest spread								2.99	%						3.42	%						3.06	%
Net interest income and margin					$	51,246		3.37				$	25,975		3.75				$	13,393		3.35

Table 4 shows changes in interest income and interest expense resulting from changes in volume and changes in interest rates for the year ended December 31, 2005, compared to 2004, and 2004 compared to 2003, on a fully taxable basis. The changes in interest rate and volume have been allocated to changes in average volume and changes in average rates, in proportion to the relationship of absolute dollar amounts of the changes in rates and volume.

Table 4: Volume/ Rate Analysis


		Years Ended December 31,

		2005 over 2004								2004 over 2003

					Yield/							Yield/
		Volume			Rate			Total		Volume		Rate			Total

		(In thousands)
Increase (decrease) in:
Interest income:
	Interest-bearing balances due from banks	$	6		$	57		$	63	$	29	$	1		$	30
	Federal funds sold		(120	)		246			126		34		(35	)		(1	)
	Investment securities — taxable		11,521			(182	)		11,339		2,953		1,227			4,180
	Investment securities — non-taxable		2,059			(89	)		1,970		2,046		9			2,055
	Loans receivable		32,867			3,328			36,195		10,391		(733	)		9,658

	Total interest income		46,333			3,360			49,693		15,453		469			15,922

Interest expense:
	Interest-bearing transaction and savings deposits		3,231			3,601			6,832		785		(131	)		654
	Time deposits		9,616			2,829			12,445		2,153		(901	)		1,252
	Federal funds purchased		59			181			240		143		(13	)		130
	Securities sold under agreement to repurchase		1,762			488			2,250		2		149			151
	FHLB and other borrowed funds		2,319			(113	)		2,206		556		64			620
	Subordinated debentures		352			97			449		527		6			533

	Total interest expense		17,339			7,083			24,422		4,166		(826	)		3,340

Increase (decrease) in net interest income		$	28,994		$	(3,723	)	$	25,271	$	11,287	$	1,295		$	12,582

Provision for Loan Losses. Our management assesses the adequacy of the allowance for loan losses by applying the provisions of Statement of Financial Accounting Standards No. 5 and No. 114. Specific allocations are determined for loans considered to be impaired and loss factors are assigned to the remainder of the loan portfolio to determine an appropriate level in the allowance for loan losses. The allowance is increased, as necessary, by making a provision for loan losses. The specific allocations for impaired loans are assigned based on an estimated net realizable value after a thorough review of the credit relationship. The potential loss factors associated with the remainder of the loan portfolio are based on an internal net loss experience, as well as management’s review of trends within the portfolio and related industries.

Generally, commercial, commercial real estate, and residential real estate loans are assigned a level of risk at origination. Thereafter, these loans are reviewed on a regular basis. The periodic reviews generally include loan payment and collateral status, the borrowers’ financial data, and key ratios such as cash flows, operating income, liquidity, and leverage. A material change in the borrower’s credit analysis can result in an

increase or decrease in the loan’s assigned risk grade. Aggregate dollar volume by risk grade is monitored on an ongoing basis.

Our management reviews certain key loan quality indicators on a monthly basis, including current economic conditions, delinquency trends and ratios, portfolio mix changes, and other information management deems necessary. This review process provides a degree of objective measurement that is used in conjunction with periodic internal evaluations. To the extent that this review process yields differences between estimated and actual observed losses, adjustments are made to the loss factors used to determine the appropriate level of the allowance for loan losses.

The provision for loan losses represents management’s determination of the amount necessary to be charged against the current period’s earnings, to maintain the allowance for loan losses at a level that is considered adequate in relation to the estimated risk inherent in the loan portfolio. The provision was $3.8 million for the year ended December 31, 2005, $2.3 million for 2004, and $807,000 for 2003.

Our provision for loan losses increased $1.5 million, or 67.1%, to $3.8 million for the year ended December 31, 2005, from $2.3 million for 2004. The increase in the provision is primarily associated with our acquisitions during 2005 as a result of their continued loan growth, combined with a charge of $450,000 to the provision expense due to Hurricane Wilma that affected the Florida Keys during the fourth quarter of 2005. This expense was established based on management’s best estimate of the hurricane’s impact on the loan portfolio using currently available information. It is too early to determine with certainty the full extent of the impact, therefore the estimate is based on judgment and subject to change. Management will continue to carefully assess and review the exposure of the loan portfolio to hurricane-related factors.

Our provision increased $1.5 million, or 183.8%, to $2.3 million for the year ended December 31, 2004, from $807,000 in 2003. The increase in the provision is primarily associated with the acquisition of Community Financial Group during the fourth quarter of 2003, combined with losses related to a former loan officer’s portfolio.

Non-Interest Income. Total non-interest income was $15.7 million in 2005, compared to $18.1 million in 2004 and $6.7 million in 2003. Our non-interest income includes service charges on deposit accounts, other service charges and fees, trust fees, data processing fees, mortgage banking income, insurance commissions, income from title services, equity in income of unconsolidated affiliates and other income.

Table 5 measures the various components of our non-interest income for the years ended December 31, 2005, 2004, and 2003, respectively, as well as changes for the years 2005 compared to 2004 and 2004 compared to 2003.

Table 5: Non-Interest Income


		Years Ended December 31,								2005					2004
										Change from					Change from
		2005			2004			2003		2004					2003

		(Dollars in thousands)
Service charges on deposit accounts		$	8,319		$	5,914		$	2,254	$	2,405		40.7	%	$	3,660		162.4	%
Other service charges and fees			2,099			959			474		1,140		118.9			485		102.3
Trust fees			458			158			14		300		189.9			144		1,028.6
Data processing fees			668			1,564			1,378		(896	)	(57.3	)		186		13.5
Mortgage banking income			1,651			1,188			1,220		463		39.0			(32	)	(2.6	)
Insurance commissions			674			631			22		43		6.8			609		2,768.2
Income from title services			823			1,110			81		(287	)	(25.9	)		1,029		1,270.4
Increase in cash value of life insurance			256			244			13		12		4.9			231		1,776.9
Equity in income of unconsolidated affiliates			(592	)		1,560			937		(2,152	)	(138.0	)		623		66.5
Gain on sale of equity investment			465			4,410			—		(3,945	)	(89.5	)		4,410		—
(Loss) gain on securities and loans, net			(10	)		(223	)		135		213		(95.5	)		(358	)	(265.2	)
Other income			876			576			211		300		52.1			365		173.0

	Total non-interest income	$	15,687		$	18,091		$	6,739	$	(2,404	)	(13.3	)%	$	11,352		168.5	%

Non-interest income decreased $2.4 million, or 13.3%, to $15.7 million for the year ended December 31, 2005 from $18.1 million in 2004. The primary factors that resulted in the decrease from 2004 to 2005 include:


	•	The $3.8 million aggregate increase in service charges on deposit accounts, other service charges and fees, and trust fees was primarily a result of our acquisitions during 2005, combined with organic growth of our bank subsidiaries’ earnings.

	•	The $896,000 decrease in data processing fees was primarily associated with the acquisition of TCBancorp. Prior to acquiring complete ownership of TCBancorp, we performed its data processing functions and received fees for this service. We continue to receive data processing fees from White River Bancshares and certain other non-affiliated banks.

	•	The rising interest rate environment during 2005 resulted in decreased mortgage production volumes for the mortgage industry as compared to 2004. While we experienced an increase of $463,000 in this revenue source, the increase primarily resulted from the additional $757,000 mortgage banking revenues associated with the acquisitions of TCBancorp and Marine Bancorp during 2005.

	•	The $287,000 decrease in title fees is primarily associated with lower demand for title fees as a result of the decrease in mortgage production volume associated with the rising interest rate environment in 2005.

	•	The $2.2 million decrease in equity in income of unconsolidated affiliates is the result of acquiring 100% ownership in TCBancorp effective as of January 1, 2005, combined with the $592,000 loss associated with the 20% interest in White River Bancshares that we purchased during 2005.


	•	The $3.9 million decrease in gain on sale of equity investment for 2005 is primarily associated with a $4.4 million pre-tax gain recorded in the third quarter of 2004 from the sale of our equity ownership in Russellville Bancshares. During the third quarter of 2005, we recognized a $465,000 gain on sale of an equity investment. This gain was deferred as a result of our financing the purchase price for this transaction. The gain became recognizable during 2005 as a result of the financing being paid off.

	•	The difference in the loss on securities and loans between 2004 and 2005 is primarily associated with specific transactions for each year. During 2004, a loss of $223,000 was recorded for write-down for other-than-temporary losses in our investment portfolio. In 2005, we made a strategic decision to sell lower-yielding investment securities, resulting in a loss of approximately $539,000. This loss was largely offset by approximately $529,000 in gains resulting from the sale of our SBA loan product.

	•	The $300,000 increase in other income is primarily associated with a $324,000 gain from proceeds associated with fire damage at one of our branch banking locations during 2005.

Non-interest income increased $11.4 million, or 168.5%, to $18.1 million for the year ended December 31, 2004, from $6.7 million in 2003. The increase is primarily associated with a $4.4 million pre-tax gain from selling our equity ownership of Russellville Bancshares during the third quarter of 2004, combined with the Community Financial Group acquisition and our internal growth. The Community Financial Group acquisition also included two non-banking subsidiaries, Community Insurance and Community Title Service, which provided new sources of non-interest income during 2004.

Non-Interest Expense. Non-interest expense consists of salary and employee benefits, occupancy, equipment, data processing, and other expenses such as advertising, core deposit amortization, legal and accounting fees, other professional fees, operating supplies and postage.

Table 6 below sets forth a summary of non-interest expense for the years ended December 31, 2005, 2004, and 2003, respectively, as well as changes for the years ended 2005 compared to 2004 and 2004 compared to 2003.

Table 6: Non-Interest Expense


		Years Ended December 31,						2005				2004
								Change from				Change from
		2005		2004		2003		2004				2003

		(Dollars in thousands)
Salaries and employee benefits		$	23,901	$	14,123	$	7,139	$	9,778	69.2	%	$	6,984	97.8	%
Occupancy and equipment			6,869		3,750		1,659		3,119	83.2			2,091	126.0
Data processing expense			1,991		1,170		893		821	70.2			277	31.0
Other operating expenses
	Advertising		2,067		900		774		1,167	129.7			126	16.3
	Amortization of intangibles		1,466		728		63		738	101.4			665	1,055.6
	ATM expense		427		372		237		55	14.8			135	57.0
	Directors’ fees		505		210		73		295	140.5			137	187.7
	Due from bank service charges		284		197		108		87	44.2			89	82.4
	FDIC and state assessment		503		301		155		202	67.1			146	94.2
	Insurance		504		344		193		160	46.5			151	78.2
	Legal and accounting		941		452		204		489	108.2			248	121.6
	Other professional fees		534		493		315		41	8.3			178	56.5
	Operating supplies		745		530		336		215	40.6			194	57.7
	Postage		580		404		183		176	43.6			221	120.8
	Telephone		669		377		153		292	77.5			224	146.4
	Other expense		2,949		1,780		585		1,169	65.7			1,195	204.3

	Total non-interest expense	$	44,935	$	26,131	$	13,070	$	18,804	72.0	%	$	13,061	99.9	%

Non-interest expense increased $18.8 million, or 72.0%, to $44.9 million for the year ended December 31, 2005, from $26.1 million in 2004. The increase is related to our acquisitions of TCBancorp, Marine Bancorp and Mountain View Bancshares combined with a modest increase in staffing, particularly at the holding company level.

Non-interest expense increased $13.1 million, or 99.9%, to $26.1 million for the year ended December 31, 2004, from $13.1 million in 2003. The increase was primarily the result of our acquisition of Community Financial Group in December 2003.

Amortization of intangibles expense was $1.5 million for the year ended December 31, 2005, $728,000 for 2004, and $63,000 for 2003. The increase was caused by our increase in core deposit intangibles created when we completed each of our acquisitions. Including all of the mergers completed, our estimated amortization of intangibles expense for each of the following five years is $1.8 million.

Income Taxes. The provision for income taxes decreased $95,000, or 1.9%, to $4.9 million for the year ended December 31, 2005, from $5.0 million in 2004. The provision for income taxes increased $2.6 million, or 114.7%, to $4.9 million for the year ended December 31, 2004, from $2.3 million for 2003. The effective income tax rates for the years ended December 31, 2005, 2004, and 2003 were 30.1%, 34.1%, and 38.0%, respectively. The declining effective income tax rates are primarily associated with the lower effective income tax rates associated with the acquisitions of Community Financial Group, TCBancorp, and Mountain View Bancshares.

Financial Conditions as of and for the Years Ended December 31, 2005 and 2004

Our total assets increased $1.1 billion, or 137.4%, to $1.9 billion as of December 31, 2005, from $805,000 as of December 31, 2004. Our loan portfolio increased $687.9 million, or 133.2%, to $1.2 billion as of December 31, 2005, from $516.7 million as of December 31, 2004. Shareholders’ equity increased $59.2 million, or 55.6%, to $165.9 million as of December 31, 2005, compared to $106.6 as of December 31, 2004. All of these increases are primarily associated with our acquisitions during 2005, combined with organic growth of our bank subsidiaries.


	*Loan Portfolio*

Our loan portfolio averaged $1.0 billion during 2005 and $494.0 million in 2004. Net loans were $1.2 billion as of December 31, 2005, compared to $500.3 million as of December 31, 2004. The most significant components of the loan portfolio were commercial and residential real estate, real estate construction, consumer, and commercial and industrial loans. These loans are primarily originated within our market areas of central Arkansas, north central Arkansas and the Florida Keys and are generally secured by residential or commercial real estate or business or personal property within our market areas.

Table 7 presents our loan balances by category as of the dates indicated.

Table 7: Loan Portfolio


			As of December 31,

			2005		2004		2003		2002		2001

			(In thousands)
Real estate:
	Commercial real estate loans:
		Non-farm/non-residential	$	411,839	$	181,995	$	173,743	$	91,352	$	69,876
		Construction/land development		291,515		116,935		74,138		37,969		22,834
		Agricultural		13,112		12,912		5,065		5,024		3,651
	Residential real estate loans:
		Residential 1-4 family		221,831		86,497		79,246		58,899		49,548
		Multifamily residential		34,939		17,708		16,654		6,255		5,778

Total real estate				973,236		416,047		348,846		199,499		151,687
Consumer				39,447		24,624		31,546		22,632		25,733
Commercial and industrial				175,396		69,345		102,350		46,555		47,733
Agricultural				8,466		6,275		14,409		16,078		10,546
Other				8,044		364		2,904		—		—

		Total loans receivable		1,204,589		516,655		500,055		284,764		235,699
Less: Allowance for loan losses				24,175		16,345		14,717		5,706		3,847

		Total loans receivable, net	$	1,180,414	$	500,310	$	485,338	$	279,058	$	231,852

Commercial Real Estate Loans. We originate non-farm and non-residential loans (primarily secured by commercial real estate), construction/land development loans, and agricultural loans, which are generally secured by real estate located in our market areas. As of December 31, 2005, less than 5% of our construction and land development loans were loans made on raw land. Our commercial mortgage loans are generally collateralized by first liens on real estate and amortized over a 10 to 20 year period with balloon payments due at the end of one to five years. These loans are generally underwritten by addressing cash flow (debt service coverage), primary and secondary source of repayment, the financial strength of any guarantor, the strength of the tenant (if any), the borrower’s liquidity and leverage, management experience, ownership structure,

economic conditions and industry specific trends and collateral. Generally, we will loan up to 85% of the value of improved property, 65% of the value of raw land and 75% of the value of land to be acquired and developed. A first lien on the property and assignment of lease is required if the collateral is rental property, with second lien positions considered on a case-by-case basis.

As of December 31, 2005, commercial real estate loans totaled $716.5 million, or 59.5% of our loan portfolio, compared to $311.8 million, or 60.4% of our loan portfolio, for the year ended December 31, 2004. This increase is primarily the result of our acquisitions during 2005, combined with organic growth of our loan portfolio.

Residential Real Estate Loans. We originate one to four family, owner occupied residential mortgage loans generally secured by property located in our primary market area. The majority of our residential mortgage loans consist of loans secured by owner occupied, single family residences. Residential real estate loans generally have a loan-to -value ratio of up to 90%. These loans are underwritten by giving consideration to the borrower’s ability to pay, stability of employment or source of income, debt-to -income ratio, credit history and loan-to -value ratio.

As of December 31, 2005, we had $256.8 million, or 21.3% of our loan portfolio, in residential real estate loans compared to $104.2 million, or 20.2% of our loan portfolio, for the year ended December 31, 2004. This increase is primarily the result of our acquisitions during 2005, combined with organic growth of our loan portfolio.

Consumer Loans. Our consumer loan portfolio is composed of secured and unsecured loans originated by our banks. The performance of consumer loans will be affected by the local and regional economy as well as the rates of personal bankruptcies, job loss, divorce and other individual-specific characteristics.

As of December 31, 2005, our installment consumer loan portfolio totaled $39.4 million, or 3.3% of our total loan portfolio, compared to $24.6 million, or 4.8% of our loan portfolio, for the year ended December 31, 2004. This increase is primarily the result of our acquisitions during 2005, offset by a decrease associated with a strategic decision made by management not to pursue growth in consumer loans due to our risk/reward experience for this type of loan.

Commercial and Industrial Loans. Commercial and industrial loans are made for a variety of business purposes, including working capital, inventory, equipment and capital expansion. The terms for commercial loans are generally one to seven years. Commercial loan applications must be supported by current financial information on the borrower and, where appropriate, by adequate collateral. Commercial loans are generally underwritten by addressing cash flow (debt service coverage), primary and secondary sources of repayment, the financial strength of any guarantor, the borrower’s liquidity and leverage, management experience, ownership structure, economic conditions and industry specific trends and collateral. The loan to value ratio depends on the type of collateral. Generally speaking, accounts receivable are financed at between 50% to 80% of accounts receivable less than 90 days past due. Inventory financing will range between 50% and 80% depending on the borrower and nature of inventory. We require a first lien position for those loans.

As of December 31, 2005, commercial and industrial loans outstanding totaled $175.4 million, or 14.6% of our loan portfolio, compared to $69.3 million, or 13.4% of our loan portfolio, for the year ended December 31, 2004. This increase is primarily the result of our acquisitions during 2005, combined with organic growth in our loan portfolio.

Table 8 presents the distribution of the maturity of our loans as of December 31, 2005. The table also presents the portion of our loans that have fixed interest rates versus interest rates that fluctuate over the life of the loans based on changes in the interest rate environment.

Table 8: Maturity of Loans


						Over One
						Year
				One Year		Through		Over Five
				or Less		Five Years		Years		Total

				(In thousands)
Real estate:
	Commercial real estate loans:
			Non-farm/non-residential	$	94,259	$	234,048	$	83,532	$	411,839
			Construction/land development		182,747		93,716		15,052		291,515
			Agricultural		7,126		4,093		1,893		13,112
	Residential real estate loans:
			Residential 1-4 family		72,868		70,955		78,008		221,831
			Multifamily residential		10,607		20,419		3,913		34,939

Total real estate					367,607		423,231		182,398		973,236
Consumer					16,603		22,107		737		39,447
Commercial and industrial					90,885		69,640		14,871		175,396
Agricultural					6,409		2,057		—		8,466
Other					698		4,412		2,934		8,044

		Total loans receivable		$	482,202	$	521,447	$	200,940	$	1,204,589

With fixed interest rates				$	294,071	$	398,663	$	49,477	$	742,211
With floating interest rates					188,131		122,784		151,463		462,378

		Total		$	482,202	$	521,447	$	200,940	$	1,204,589


	*Non-Performing Assets*

We classify our problem loans into three categories: past due loans, special mention loans and classified loans (accruing and non-accruing).

When management determines that a loan is no longer performing, and that collection of interest appears doubtful, the loan is placed on non-accrual status. All loans that are 90 days past due are placed on non-accrual status unless they are adequately secured and there is reasonable assurance of full collection of both principal and interest. Our management closely monitors all loans that are contractually 90 days past due, treated as “special mention” or otherwise classified or on non-accrual status. Generally, non-accrual loans that are 120 days past due without assurance of repayment are charged off against the allowance for loan losses.

Table 9 sets forth information with respect to our non-performing assets as of December 31, 2005, 2004, 2003, 2002, and 2001. As of these dates, we did not have any restructured loans within the meaning of Statement of Financial Accounting Standards No. 15.

Table 9: Non-performing Assets


				As of December 31,

				2005			2004			2003			2002			2001

				(Dollars in thousands)
Non-accrual loans				$	7,864		$	8,959		$	8,600		$	1,671		$	1,175
Loans past due 90 days or more (principal or interest payments)					426			2			52			142			167

			Total non-performing loans		8,290			8,961			8,652			1,813			1,342

Other non-performing assets
	Foreclosed assets held for sale				758			458			1,274			—			—
	Other non-performing assets				11			53			62			169			90

		Total other non-performing assets			769			511			1,336			169			90

			Total non-performing assets	$	9,059		$	9,472		$	9,988		$	1,982		$	1,432

Allowance for loan losses to non-performing loans					291.62	%		182.40	%		170.10	%		314.73	%		286.66	%
Non-performing loans to total loans					0.69			1.73			1.73			0.64			0.57
Non-performing assets to total assets					0.47			1.18			1.24			0.54			0.44

Our non-performing loans are comprised of non-accrual loans and loans that are contractually past due 90 days. Our bank subsidiaries recognize income principally on the accrual basis of accounting. When loans are classified as non-accrual, the accrued interest is charged off and no further interest is accrued, unless the credit characteristics of the loan improves. If a loan is determined by management to be uncollectible, the portion of the loan determined to be uncollectible is then charged to the allowance for loan losses.

Total non-performing loans were $8.3 million as of December 31, 2005, compared to $9.0 million as of December 31, 2004. The acquisitions completed in 2005 had a minimal impact on non-performing loans as a result of their favorable asset quality.

During 2003, non-performing loans increased $6.8 million from the previous year. This increase in the level of non-performing loans was due to the increase in the volume of non-performing loans associated with the acquisition of Community Financial Group during the fourth quarter of 2003.

If the non-accrual loans had been accruing interest in accordance with the original terms of their respective agreements, interest income of approximately $550,000 for the year ended December 31, 2005, $520,000 in 2004, and $138,000 in 2003 would have been recorded. Interest income recognized on the non-accrual loans for the years ended December 31, 2005, 2004, and 2003 was considered immaterial.

A loan is considered impaired when it is probable that we will not receive all amounts due according to the contracted terms of the loans. Impaired loans include non-performing loans (loans past due 90 days or more and non-accrual loans) and certain other loans identified by management that are still performing. As of December 31, 2005, average impaired loans were $8.5 million, compared to $9.6 million in 2004. The acquisitions completed in 2005 had a minimal impact on non-performing loans as a result of their favorable asset quality. The $1.1 million decrease in impaired loans from December 31, 2004, primarily relates to improvement of the asset quality associated with the loans acquired in the Community Financial Group transaction.


	*Allowance for Loan Losses*

Overview. The allowance for loan losses is maintained at a level which our management believes is adequate to absorb all probable losses on loans in the loan portfolio. The amount of the allowance is affected by: (i) loan charge-offs, which decrease the allowance; (ii) recoveries on loans previously charged off, which increase the allowance; and (iii) the provision of possible loan losses charged to income, which increases the allowance. In determining the provision for possible loan losses, it is necessary for our management to monitor fluctuations in the allowance resulting from actual charge-offs and recoveries and to periodically review the size and composition of the loan portfolio in light of current and anticipated economic conditions. If actual losses exceed the amount of allowance for loan losses, our earnings could be adversely affected.

As we evaluate the allowance for loan losses, we categorize it as follows: (i) specific allocations; (ii) allocations for classified assets with no specific allocation; (iii) general allocations for each major loan category; and (iv) miscellaneous allocations.

Specific Allocations. Specific allocations are made when factors are present requiring a greater reserve than would be required when using the assigned risk rating allocation. As a general rule, if a specific allocation is warranted, it is the result of an analysis of a previously classified credit or relationship. Our evaluation process in specific allocations includes a review of appraisals or other collateral analysis. These values are compared to the remaining outstanding principal balance. If a loss is determined to be reasonably possible, the possible loss is identified as a specific allocation. If the loan is not collateral dependent, the measurement of loss is based on the expected future cash flows of the loan.

Allocations for Classified Assets with No Specific Allocation. We establish allocations for loans rated “special mention” through “loss” in accordance with the guidelines established by the regulatory agencies. A percentage rate is applied to each loan category to determine the level of dollar allocation.

General Allocations. We establish general allocations for each major loan category. This section also includes allocations to loans, which are collectively evaluated for loss such as residential real estate, commercial real estate consumer loans and commercial and industrial loans. The allocations in this section are based on a historical review of loan loss experience and past due accounts. We give consideration to trends, changes in loan mix, delinquencies, prior losses, and other related information.

Miscellaneous Allocations. Allowance allocations other than specific, classified, and general are included in our miscellaneous section.

Charge-offs and Recoveries. Total charge-offs increased $2.4 million, or 111.4%, to $4.6 million for the year ended December 31, 2005, from $2.2 million in 2004. The increase in charge-offs is due to our conservative stance associated with asset quality and does not reflect a downward trend in the asset quality of our overall loan portfolio. The acquisitions completed in 2005 had a minimal impact on the increase in net charge-offs.

Total charge-offs increased $1.5 million, or 222.6%, to $2.2 million for the year ended December 31, 2004, from $676,000 in 2003. The increase in the level of charge-offs during 2004 was primarily related to a former loan officer’s portfolio, combined with the increase in the volume of non-performing loans associated with the acquisition of Community Financial Group during the fourth quarter of 2003.

The increased level of recoveries for 2004 was primarily related to one borrower, combined with the increase in recoveries resulting from the acquisition of Community Financial Group in 2003.

Table 10 shows the allowance for loan losses, charge-offs and recoveries as of and for the years ended December 31, 2005, 2004, 2003, 2002, and 2001.

Table 10: Analysis of Allowance for Loan Losses


				As of December 31,

				2005			2004			2003			2002			2001

				(Dollars in thousands)
Balance, beginning of year				$	16,345		$	14,717		$	5,706		$	3,847		$	2,414
Loans charged off
Real estate:
	Commercial real estate loans:
		Non-farm/non-residential			2,448			—			—			—			—
		Construction/land development			405			5			23			32			—
		Agricultural			15			—			17			—			—
	Residential real estate loans:
		Residential 1-4 family			515			404			138			19			—
		Multifamily residential			—			—			—			—			—

Total real estate					3,383			409			178			51			—
Consumer					—			—			—			—			—
Commercial and industrial					758			499			114			173			75
Agricultural					30			786			80			—			—
Other					440			487			304			277			239

			Total loans charged off		4,611			2,181			676			501			314

Recoveries of loans previously charged off
Real estate:
	Commercial real estate loans:
		Non-farm/non-residential			294			1,057			1			—			—
		Construction/land development			15			13			19			17			—
		Agricultural			—			—			—			—			—
	Residential real estate loans:
		Residential 1-4 family			115			47			31			—			8
		Multifamily residential			—			—			—			31			3

Total real estate					424			1,117			51			48			11
Consumer					—			—			—			—			—
Commercial and industrial					102			254			10			10			—
Agricultural					—			17			45			—			—
Other					324			131			44			82			28

			Total recoveries		850			1,519			150			140			39

		Net loans charged off			3,761			662			526			361			275
Allowance for loan losses of acquired institutions					7,764			—			8,730			—			—
Provision for loan losses					3,827			2,290			807			2,220			1,708

Balance, end of year				$	24,175		$	16,345		$	14,717		$	5,706		$	3,847

Net charge-offs to average loans					0.38	%		0.13	%		0.16	%		0.14	%		0.14	%
Allowance for loan losses to period-end loans					2.01			3.16			2.94			2.00			1.63
Allowance for loan losses to net charge-offs					642			2,469			2,798			1,581			1,399

Allocated Allowance for Loan Losses. We use a risk rating and specific reserve methodology in the calculation and allocation of our allowance for loan losses. While the allowance is allocated to various loan categories in assessing and evaluating the level of the allowance, the allowance is available to cover charge-offs incurred in all loan categories. Because a portion of our portfolio has not matured to the degree necessary to

obtain reliable loss data from which to calculate estimated future losses, the unallocated portion of the allowance is an integral component of the total allowance. Although unassigned to a particular credit relationship or product segment, this portion of the allowance is vital to safeguard against the imprecision inherent in estimating credit losses.

The changes during 2005 in the allocation of the allowance for loan losses for the individual types of loans for the most part are consistent with the changes in the outstanding loan portfolio for those products from December 31, 2004. In the opinion of management, any allocation changes not consistent with the changes in the loan portfolio product would be considered normal operating changes, not downgrading or upgrading of any one particular type of loans in the loan portfolio.

Table 11 presents the allocation of allowance for loan losses as of the dates indicated.

Table 11: Allocation of Allowance for Loan Losses


				As of December 31,

				2005					2004					2003					2002					2001

				Allowance		% of			Allowance		% of			Allowance		% of			Allowance		% of			Allowance		% of
				Amount		Loans(1)			Amount		Loans(1)			Amount		Loans(1)			Amount		Loans(1)			Amount		Loans(1)

				(Dollars in thousands)
Real estate:
	Commercial real estate loans:
		Non-farm/non-residential		$	7,202		34.1	%	$	6,212		35.3	%	$	5,505		34.8	%	$	1,786		32.1	%	$	1,119		29.6	%
		Construction/land development			5,544		24.2			1,690		22.6			1,407		14.8			862		13.3			449		9.7
		Agricultural			407		1.1			493		2.5			491		1.0			123		1.8			77		1.5
	Residential real estate loans:
		Residential 1-4 family			3,317		18.4			2,185		16.7			2,710		15.8			1,005		20.7			673		21.0
		Multifamily residential			423		2.9			156		3.4			85		3.3			107		2.2			78		2.5

Total real estate					16,893		80.7			10,736		80.5			10,198		69.7			3,883		70.1			2,396		64.3
Consumer					682		3.3			526		4.8			724		6.3			440		7.9			410		10.9
Commercial and industrial					4,059		14.6			2,025		13.4			2,241		20.5			908		16.4			766		20.3
Agricultural					505		0.7			316		1.2			572		2.9			475		5.6			275		4.5
Other					—		0.7			—		0.1			—		0.6			—		0.0			—		0.0
Unallocated					2,036					2,742					982					—					—

			Total	$	24,175		100.0	%	$	16,345		100.0	%	$	14,717		100.0	%	$	5,706		100.0	%	$	3,847		100.0	%


(1)	Percentage of loans in each category to loans receivable.


	*Investments and Securities*

Our securities portfolio is the second largest component of earning assets and provides a significant source of revenue. Securities within the portfolio are classified as held-to -maturity, available-for-sale, or trading based on the intent and objective of the investment and the ability to hold to maturity. Fair values of securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities. As of December 31, 2005, we had no held-to -maturity or trading securities.

Securities available-for-sale are reported at fair value with unrealized holding gains and losses reported as a separate component of shareholders’ equity as other comprehensive income. Securities that are held as available-for-sale are used as a part of our asset/liability management strategy. Securities may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available for sale. Available-for-sale securities were $530.3 million as of December 31, 2005, compared to the available-for-sale amount of $190.4 million as of December 31, 2004.

Securities held-to -maturity are reported at amortized historical cost. Securities that management has the intent and ability to hold until maturity or on a long-term basis are classified as held-to -maturity. Held-to -maturity investment securities were zero and $100,000 as of December 31, 2005, and 2004, respectively.

As of December 31, 2005, $256.5 million, or 48.4%, of the available-for-sale securities were invested in mortgaged-backed securities, compared to $126.7 million, or 66.5%, of the available-for-sale securities in the prior year. To reduce our income tax burden, an additional $103.5 million, or 19.5%, of the available-for-sale securities portfolio, as of December 31, 2005, was invested in tax-exempt obligations of state and political subdivisions, compared to $40.1 million, or 21.1%, of the available-for-sale securities as of December 31, 2004. Also, we had approximately $157.5 million, or 29.7%, in obligations of U.S. government agencies in the available-for-sale securities portfolio as of December 31, 2005, compared to $15.6 million, or 8.2%, of the available-for-sale securities in the prior year. The increases in investment securities from 2004 to 2005 are primarily related to the acquisitions of TCBancorp, Marine Bancorp and Mountain View Bancshares.

Certain investment securities are valued at less than their historical cost. These declines primarily resulted from recent increases in market interest rates. Based on evaluation of available evidence, we believe the declines in fair value for these securities are temporary. It is our intent to hold these securities to maturity. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

Table 12 presents the carrying value and fair value of investment securities for each of the years indicated.

Table 12: Investment Securities


		As of December 31,

		2005									2004

				Gross		Gross							Gross		Gross
		Amortized		Unrealized		Unrealized			Estimated		Amortized		Unrealized		Unrealized			Estimated
		Cost		Gains		(Losses)			Fair Value		Cost		Gains		(Losses)			Fair Value

		(In thousands)
Held-to-Maturity
State and political subdivisions		$	—	$	—	$	—		$	—	$	100	$	—	$	—		$	100

	Total	$	—	$	—	$	—		$	—	$	100	$	—	$	—		$	100


Available-for-Sale
U.S. Government agencies		$	162,165	$	27	$	(4,723	)	$	157,469	$	15,646	$	18	$	(86	)	$	15,578
Mortgage-backed securities			264,666		16		(8,209	)		256,473		127,316		249		(898	)		126,667
State and political subdivisions			102,928		1,279		(746	)		103,461		39,564		717		(147	)		40,134
Other securities			13,571		—		(672	)		12,899		8,010		15		(38	)		7,987

	Total	$	543,330	$	1,322	$	(14,350	)	$	530,302	$	190,536	$	999	$	(1,169	)	$	190,366


		As of December 31, 2003

				Gross		Gross
		Amortized		Unrealized		Unrealized			Estimated
		Cost		Gains		(Losses)			Fair Value

		(In thousands)
Held-to-Maturity
State and political subdivisions		$	100	$	3	$	—		$	103

	Total	$	100	$	3	$	—		$	103


Available-for-Sale
U.S. Government agencies			22,019		31		(104	)		21,946
Mortgage-backed securities			103,677		282		(203	)		103,756
State and political subdivisions			30,684		49		(15	)		30,718
Other securities			5,362		126		(57	)		5,431

	Total	$	161,742	$	488	$	(379	)	$	161,851

Table 13 reflects the amortized cost and estimated fair value of debt securities as of December 31, 2005, by contractual maturity and the weighted average yields (for tax-exempt obligations on a fully taxable equivalent basis) of those securities. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations, with or without call or prepayment penalties.

Table 13: Maturity Distribution of Investment Securities


		As of December 31, 2005

					1 Year			5 Years						Total
		1 Year			Through			Through			Over			Amortized			Total Fair
		or Less			5 Years			10 Years			10 Years			Cost			Value

		(Dollars in thousands)
Available-for-Sale
U.S. Government agencies		$	104,496		$	36,648		$	8,594		$	12,427		$	162,165		$	157,469
Mortgage-backed securities			47,740			122,717			45,164			49,045			264,666			256,473
State and political subdivisions			27,224			58,836			13,575			3,293			102,928			103,461
Other securities			276			11,153			2,142			—			13,571			12,899

	Total	$	179,736		$	229,354		$	69,475		$	64,765		$	543,330		$	530,302

Percentage of total			33.1	%		42.2	%		12.8	%		11.9	%		100.0	%

Weighted average yield			4.51	%		4.54	%		5.05	%		4.75	%		4.62	%


	*Deposits*

Our deposits averaged $1.2 billion for the year ended December 31, 2005, and $553.7 million for 2004. Total deposits increased $874.2 million, or 158.1%, to $1.4 billion as of December 31, 2005, from $552.9 million as of December 31, 2004. Deposits are our primary source of funds. We offer a variety of products designed to attract and retain deposit customers. Those products consist of checking accounts, regular savings deposits, NOW accounts, money market accounts and certificates of deposit. Deposits are gathered from individuals, partnerships and corporations in our market areas. In addition, we obtain deposits from state and local entities and, to a lesser extent, U.S. Government and other depository institutions. Our policy also permits the acceptance of brokered deposits.

The interest rates paid are competitively priced for each particular deposit product and structured to meet our funding requirements. We will continue to manage interest expense through deposit pricing and do not anticipate a significant change in total deposits unless our liquidity position changes. We believe that

additional funds can be attracted and deposit growth can be accelerated through deposit pricing if we experience increased loan demand or other liquidity needs. The increase in interest rates paid from 2004 to 2005 is reflective of the Federal Reserve increasing the Federal Funds rate beginning in 2004 and the associated repricing of deposits during those years combined with the acquisition of Marine Bancorp. The acquisition of Marine Bancorp increased our average rate as a result of the higher interest rate environment in the Florida Keys. The decrease in interest rates paid from 2003 to 2004 is reflective of the Federal Reserve decreasing the Federal Funds rate during 2002 and 2003 and the associated repricing of deposits during those years.

Table 14 reflects the classification of the average deposits and the average rate paid on each deposit category, which is in excess of 10 percent of average total deposits for the years ended December 31, 2005, 2004, and 2003.

Table 14: Average Deposit Balances and Rates


			Years Ended December 31,

			2005					2004					2003

			Average		Average			Average		Average			Average		Average
			Amount		Rate Paid			Amount		Rate Paid			Amount		Rate Paid

			(Dollars in thousands)
Non-interest-bearing transaction accounts			$	177,511		—	%	$	79,907		—	%	$	37,038		—	%
Interest-bearing transaction accounts				389,291		1.94			164,538		0.81			76,647		0.95
Savings deposits				58,142		1.24			27,888		0.37			12,603		0.44
Time deposits:
	$100,000 or more			357,464		3.16			135,902		2.11			98,425		2.55
	Other time deposits			267,228		2.74			145,489		2.27			89,309		2.70

		Total	$	1,249,636		2.15	%	$	553,724		1.37	%	$	314,022		1.82	%

Table 15 presents our maturities of large denomination time deposits as of December 31, 2005, and 2004.

Table 15: Maturities of Large Denomination Time Deposits ($100,000 or more)


			As of December 31,

			2005					2004

			Balance		Percent			Balance		Percent

			(Dollars in thousands)
Maturing
	Three months or less		$	164,233		40.8	%	$	44,143		33.9	%
	Over three months to six months			76,664		19.0			35,544		27.3
	Over six months to 12 months			87,792		21.8			27,252		21.0
	Over 12 months through two years			37,949		9.4			20,644		15.9
	Over two years			36,392		9.0			2,408		1.9

		Total	$	403,030		100.0	%	$	129,991		100.0	%


	*FHLB and Other Borrowings*

Our FHLB and other borrowings were $117.1 million as of December 31, 2005, and $74.9 million as of December 31, 2004. The outstanding balance for December 31, 2005, includes $4.0 million of short-term advances and $113.1 million of long-term advances. The outstanding balance for December 31, 2004, includes $31.0 million of short-term advances and $43.9 million of long-term advances. Short-term borrowings consist primarily of short-term FHLB borrowings. Long-term borrowings consist of long-term FHLB borrowings and

a line of credit with another financial institution. Our remaining FHLB borrowing capacity was $222.3 million as of December 31, 2005, and $166.9 million as of December 31, 2004.

We increased our long-term borrowings $69.2 million, or 157.9%, to $113.1 million as of December 31, 2005, from $43.9 million as of December 31, 2004. This increase is primarily a result of the acquisition of TCBancorp and Marine Bancorp during 2005, combined with a modest increase in FHLB borrowings in our other bank subsidiaries and an advance on our line of credit. The FHLB borrowings increase in our other bank subsidiaries is associated with a strategic decision to better manage interest rate risk on specific new loan fundings and commitments made during 2005. The advance on our line of credit is the result of using this line for approximately $14.0 million of the purchase price of Mountain View Bancshares.


	*Subordinated Debentures*

Subordinated debentures, which consist of guaranteed payments on trust preferred securities, were $44.8 million and $24.2 million as of December 31, 2005, and 2004, respectively. The $20.6 million increase in subordinated debentures is primarily associated with a $15.4 million private placement during 2005, combined with $5.2 million acquired in the acquisition of Marine Bancorp.

On November 10, 2005, we completed the private placement of trust preferred securities in an aggregate net principal amount of $15.0 million. We used the $15.0 million of net proceeds from the offering to retire interim financing received in connection with the third quarter acquisition of Mountain View Bancshares.

Table 16 reflects subordinated debentures as of December 31, 2005, and 2004, which consisted of guaranteed payments on trust preferred securities with the following components:

Table 16: Subordinated Debentures


		As of December 31,

		2005		2004

		(In thousands)
Subordinated debentures, due 2030, fixed at 10.60%, callable beginning in 2010 with a prepayment penalty declining from 5.30% to 0.53% depending on the year of prepayment, callable in 2020 without penalty		$	3,516	$	3,600
Subordinated debentures, due 2033, fixed at 6.40%, during the first five years and at a floating rate of 3.15% above the three-month LIBOR rate, reset quarterly, thereafter, callable in 2008 without penalty			20,619		20,619
Subordinated debentures, due 2033, floating rate of 3.15% above the three-month LIBOR rate, reset quarterly, callable in 2008 without penalty			5,155		—
Subordinated debentures, due 2035, fixed rate of 6.81% during the first ten years and at a floating rate of 1.38% above the three-month LIBOR rate, reset quarterly, thereafter, callable in 2010 without penalty			15,465		—

	Total	$	44,755	$	24,219

The trust preferred securities are tax-advantaged issues that qualify for Tier 1 capital treatment subject to certain limitations. Distributions on these securities are included in interest expense. Each of the trusts is a statutory business trust organized for the sole purpose of issuing trust securities and investing the proceeds in our subordinated debentures, the sole asset of each trust. The trust preferred securities of each trust represent preferred beneficial interests in the assets of the respective trusts and are subject to mandatory redemption upon payment of the subordinated debentures held by the trust. We wholly own the common securities of each trust. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon our making payment on the related subordinated debentures. Our obligations under the subordinated securities and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by us of each respective trust’s obligations under the trust securities issued by each respective trust.

Presently, the funds raised from the trust preferred offerings will qualify as Tier 1 capital for regulatory purposes, subject to the applicable limit, with the balance qualifying as Tier 2 capital.


	*Shareholders’ Equity*

Overview. As of December 31, 2005, our shareholders’ equity totaled $165.9 million, and our equity to asset ratio was 8.7%, compared to 13.2% as of December 31, 2004. This decrease is primarily the result of leveraging our balance sheet with the acquisitions completed during 2005.

Stock Split. On May 31, 2005, we completed a three-for-one stock split effected in the form of a stock dividend. This resulted in issuing two additional shares of stock to the common shareholders for each share previously held. As a result of the stock split, the accompanying consolidated financial statements reflect an increase in the number of outstanding shares of common stock and the $78,000 transfer of the par value of these additional shares from capital surplus. All share and per share amounts have been restated to reflect the retroactive effect of the stock split, except for our capitalization.

Cash Dividends. We declared cash dividends on our common stock, Class A preferred stock, and Class B preferred stock of $0.070, $0.250 and $0.330 per share, respectively, for the year ended December 31, 2005, and $0.043, $0.250 and $0.000 per share, respectively, for 2004. No dividends were paid on our Class B preferred stock during 2004 since the Class B preferred stock was not issued until June 2005 in connection with the acquisition of Marine Bancorp. The common per share amounts are reflective of the three-for-one stock split during 2005. Our fourth quarter 2005 cash dividend on common stock was $0.02 per share.

Liquidity and Capital Adequacy Requirements

Parent Company Liquidity. The primary sources for payment of our operating expenses and dividends are current cash on hand ($5.0 million as of December 31, 2005), dividends received from our bank subsidiaries, and a $30.0 million line of credit with another financial institution ($14.0 million borrowed as of December 31, 2005).

Dividend payments by our bank subsidiaries are subject to various regulatory limitations. As the result of special dividends paid by our bank subsidiaries during 2005 (primarily to provide cash for the Marine Bancorp and Mountain View Bancshares acquisitions), as of December 31, 2005, our bank subsidiaries did not have any significant undivided profits available for payment of dividends to us, without prior approval of the regulatory agencies. However, two of our bank subsidiaries had excess capital as of December 31, 2005. In January 2006 we received special approval from the regulatory agencies for those bank subsidiaries to collectively pay $19.0 million in additional dividends to us, and we used those dividends to repay the $14.0 million advance on our line of credit and to fund our additional investment of $3.0 million in White River Bancshares.

During 2006, our Arkansas bank subsidiaries may pay dividends to us up to 75% of their current earnings. Due to Marine Bank’s anticipated organic growth, we do not expect to take dividends from Marine Bank during 2006. See “Supervision and Regulation — Payment of Dividends.”

Risk-Based Capital. We as well as our bank subsidiaries are subject to various regulatory capital requirements administered by the federal banking agencies. Furthermore, we are deemed by federal regulators to be a source of financial strength for White River Bancshares, despite owning only 20% of its equity. Failure to meet minimum capital requirements can initiate certain mandatory and other discretionary actions by regulators that, if enforced, could have a direct material effect on our financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, we must meet specific capital guidelines that involve quantitative measures of our assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. Our capital amounts and classifications are also subject to qualitative judgments by the regulators as to components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require us to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. Management believes that, as of December 31, 2005, we meet all regulatory capital adequacy requirements to which we are subject.

Table 17 presents our risk-based capital ratios as of December 31, 2005 and 2004.

Table 17: Risk-Based Capital


				As of December 31,

				2005			2004

				(Dollars in thousands)
Tier 1 capital
	Shareholders’ equity			$	165,857		$	106,610
	Qualifying trust preferred securities				43,000			23,000
	Goodwill and core deposit intangibles, net				(44,516	)		(22,816	)
	Qualifying minority interest				—			9,238
	Unrealized loss on available-for-sale securities				7,903			858
	Other				—			(11,856	)

			Total Tier 1 capital		172,244			105,034

Tier 2 capital
	Qualifying allowance for loan losses				17,658			7,658
	Other				—			(7,658	)

			Total Tier 2 capital		17,658			—

			Total risk-based capital	$	189,902		$	105,034

Average total assets for leverage ratio				$	1,868,143		$	779,768

Risk weighted assets				$	1,406,131		$	604,046

Ratios at end of year
		Leverage ratio			9.22	%		13.47	%
		Tier 1 risk-based capital			12.25			17.39
		Total risk-based capital			13.51			17.39
Minimum guidelines
		Leverage ratio			4.00	%		4.00	%
		Tier 1 risk-based capital			4.00			4.00
		Total risk-based capital			8.00			8.00

As of the most recent notification from regulatory agencies, our bank subsidiaries were well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, we and our bank subsidiaries must maintain minimum leverage, Tier 1 risk-based capital, and total risk-based capital ratios as set forth in the table. There are no conditions or events since that notification that we believe have changed the bank subsidiaries’ categories.

Table 18 presents actual capital amounts and ratios as of December 31, 2005, and 2004, for us and our bank subsidiaries.

Table 18: Capital and Ratios


													To Be Well
								For Capital					Capitalized Under
								Adequacy					Prompt Corrective
			Actual					Purposes					Action Provision

			Amount		Ratio			Amount		Ratio			Amount		Ratio

			(Dollars in thousands)
As of December 31, 2005
	Leverage ratios:
		Home BancShares	$	172,244		9.22	%	$	74,726		4.00	%	$	N/A		N/A	%
		First State Bank		38,572		8.44			18,281		4.00			22,851		5.00
		Community Bank		23,129		7.59			12,189		4.00			15,236		5.00
		Twin City Bank		51,679		8.07			25,615		4.00			32,019		5.00
		Marine Bank		20,050		7.28			11,016		4.00			13,771		5.00
		Bank of Mountain View		29,468		16.35			7,209		4.00			9,012		5.00
	Tier 1 capital ratios:
		Home BancShares	$	172,244		12.25	%	$	56,243		4.00	%	$	N/A		N/A	%
		First State Bank		38,572		10.01			15,413		4.00			23,120		6.00
		Community Bank		23,129		10.25			9,026		4.00			13,539		6.00
		Twin City Bank		51,679		11.53			17,929		4.00			26,893		6.00
		Marine Bank		20,050		9.08			8,833		4.00			13,249		6.00
		Bank of Mountain View		29,468		29.75			3,962		4.00			5,943		6.00
	Total risk-based capital ratios:
		Home BancShares	$	189,902		13.51	%	$	112,451		8.00	%	$	N/A		N/A	%
		First State Bank		43,362		11.26			30,808		8.00			38,510		10.00
		Community Bank		26,010		11.53			18,047		8.00			22,559		10.00
		Twin City Bank		57,248		12.77			35,864		8.00			44,830		10.00
		Marine Bank		22,815		10.33			17,669		8.00			22,086		10.00
		Bank of Mountain View		30,094		30.38			7,925		8.00			9,906		10.00

As of December 31, 2004
	Leverage ratios:
		Home BancShares	$	105,139		13.47	%	$	31,222		4.00	%	$	N/A		N/A	%
		First State Bank		60,701		13.43			18,079		4.00			22,599		5.00
		Community Bank		22,513		7.44			12,104		4.00			15,130		5.00
	Tier 1 capital ratios:
		Home BancShares	$	105,139		17.39	%	$	24,184		4.00	%	$	N/A		N/A	%
		First State Bank		60,701		15.53			15,635		4.00			23,452		6.00
		Community Bank		22,513		11.97			7,523		4.00			11,285		6.00
	Total risk-based capital ratios:
		Home BancShares	$	105,139		17.39	%	$	48,368		8.00	%	$	N/A		N/A	%
		First State Bank		65,604		16.78			31,277		8.00			39,097		10.00
		Community Bank		24,955		13.27			15,044		8.00			18,806		10.00


	*Off-Balance Sheet Arrangements and Contractual Obligations*

In the normal course of business, we enter into a number of financial commitments. Examples of these commitments include but are not limited to operating lease obligations, FHLB advances, lines of credit, subordinated debentures, unfunded loan commitments and letters of credit.

Commitments to extend credit and letters of credit are legally binding, conditional agreements generally having certain expiration or termination dates. These commitments generally require customers to maintain certain credit standards and are established based on management’s credit assessment of the customer. The commitments may expire without being drawn upon. Therefore, the total commitment does not necessarily represent future requirements.

Table 19 presents the funding requirements of our most significant financial commitments, excluding interest, as of December 31, 2005.

Table 19: Funding Requirements of Financial Commitments


	Payments Due by Period

			One-		Three-		Greater
	Less than		Three		Five		than Five
	One Year		Years		Years		Years		Total

	(In thousands)
Operating lease obligations	$	980	$	1,892	$	1,816	$	5,384	$	10,072
FHLB advances		44,356		37,859		12,777		7,926		102,918
Other borrowed funds		136		—		14,000		—		14,136
Subordinated debentures		—		—		25,774		18,981		44,755
Loan commitments		151,422		78,322		5,610		31,121		266,475
Letters of credit		12,627		3,748		113		4,493		20,981


	*Non-GAAP Financial Measurements*

We had $48.7 million, $22.8 million, and $25.3 million total goodwill, core deposit intangibles and other intangible assets as of December 31, 2005, 2004 and 2003, respectively. Because of our level of intangible assets and related amortization expenses, management believes diluted cash earnings per share and return on average tangible equity are useful in evaluating our operating performance. These calculations, which are similar to the GAAP calculation of diluted earnings per share and return on average shareholders’ equity, are presented in Tables 20 and 21, respectively.

Table 20: Diluted Cash Earnings Per Share


	Years Ended December 31,

	2005		2004		2003

	(In thousands, except per share data)
GAAP net income	$	11,446	$	9,159	$	3,769
Intangible amortization after-tax		891		442		38

Cash earnings	$	12,337	$	9,061	$	3,807

GAAP diluted earnings per share	$	0.82	$	0.94	$	0.63
Intangible amortization after-tax		0.07		0.05		0.01

Diluted cash earnings per share	$	0.89	$	0.99	$	0.64

Table 21: Return on Average Tangible Equity


		Years Ended December 31,

		2005			2004			2003

		(Dollars in thousands)
Return on average shareholders’ equity: A/C			7.27	%		8.61	%		8.88	%
Return on average tangible equity: B/(C-D)			10.16			11.54			9.44
	(A) Net income	$	11,446		$	9,159		$	3,769
	(B) Cash earnings		12,337			9,601			3,807
	(C) Average shareholders’ equity		157,478			106,416			42,431
	(D) Average goodwill, core deposits and other intangible assets		36,035			23,247			2,104

Quarterly Results

Table 22 presents selected unaudited quarterly financial information for 2005 and 2004.

Table 22: Quarterly Results


			2005 Quarter

			First		Second		Third		Fourth		Total

			(In thousands, except per share data)
Income statement data:
	Total interest income		$	16,361	$	18,824	$	23,605	$	26,668	$	85,458
	Total interest expense			6,355		7,628		10,139		11,880		36,002

	Net interest income			10,006		11,196		13,466		14,788		49,456
	Provision for loan losses			1,051		863		934		979		3,827

	Net interest income after provision for loan losses			8,955		10,333		12,532		13,809		45,629
	Non-interest income			3,813		3,342		4,031		4,036		15,222
	Gain on sale of equity investment			—		—		465		—		465
	Non-interest expense			9,636		10,374		12,186		12,739		44,935

	Income before income taxes			3,132		3,301		4,842		5,106		16,381
		Provision for income taxes		943		929		1,512		1,551		4,935

	Net income		$	2,189	$	2,372	$	3,330	$	3,555	$	11,446

Per share data:
	Basic earnings		$	0.18	$	0.19	$	0.27	$	0.28	$	0.92
	Diluted earnings			0.16		0.17		0.24		0.25		0.82
	Diluted cash earnings			0.18		0.18		0.26		0.27		0.89


		2004 Quarter

		First		Second		Third		Fourth		Total

		(In thousands, except per share data)
Income statement data:
	Total interest income	$	8,831	$	9,110	$	9,198	$	9,542	$	36,681
	Total interest expense		2,816		2,783		2,918		3,063		11,580

	Net interest income		6,015		6,327		6,280		6,479		25,101
	Provision for loan losses		441		380		588		881		2,290

	Net interest income after provision for loan losses		5,574		5,947		5,692		5,598		22,811
	Non-interest income		3,604		3,475		3,492		3,110		13,681
	Gain on sale of equity investment		—		—		4,410		—		4,410
	Non-interest expense		6,485		6,611		6,310		6,725		26,131

	Income before income taxes and minority interest		2,693		2,811		7,284		1,983		14,771
	Provision for income taxes		855		979		2,147		1,049		5,030
	Minority interest		235		48		172		127		582

	Net income	$	1,603	$	1,784	$	4,965	$	807	$	9,159

Per share data:
	Basic earnings	$	0.19	$	0.20	$	0.61	$	0.08	$	1.08
	Diluted earnings		0.17		0.18		0.51		0.08		0.94
	Diluted cash earnings		0.18		0.19		0.53		0.09		0.99

Quantitative and Qualitative Disclosures About Market Risk


	*Liquidity and Market Risk Management*

Liquidity Management. Liquidity refers to the ability or the financial flexibility to manage future cash flows to meet the needs of depositors and borrowers and fund operations. Maintaining appropriate levels of liquidity allows us to have sufficient funds available for reserve requirements, customer demand for loans, withdrawal of deposit balances and maturities of deposits and other liabilities. Our primary source of liquidity at our holding company is dividends paid by our bank subsidiaries. Applicable statutes and regulations impose restrictions on the amount of dividends that may be declared by our bank subsidiaries. Further, any dividend payments are subject to the continuing ability of the bank subsidiary to maintain compliance with minimum federal regulatory capital requirements and to retain its characterization under federal regulations as a “well-capitalized” institution.

Each of our bank subsidiaries have potential obligations resulting from the issuance of standby letters of credit and commitments to fund future borrowings to our loan customers. Many of these obligations and commitments to fund future borrowings to our loans customers are expected to expire without being drawn upon, therefore the total commitment amounts do not necessarily represent future cash requirements affecting our liquidity position.

Liquidity needs can be met from either assets or liabilities. On the asset side, our primary sources of liquidity include cash and due from banks, federal funds sold, maturities of investment securities and scheduled repayments and maturities of loans. We maintain adequate levels of cash and equivalents to meet our day-to -day needs. As of December 31, 2005, 2004, and 2003, our cash and due from bank balances were $39.2 million, or 2.1% of total assets, $19.4 million, or 2.4% of total assets, and $17.1 million, or 2.1% of total assets, respectively. Our investment securities, interest-earning time deposits, and Fed funds sold were $542.8 million as of December 31, 2005, $193.1 million as of December 31, 2004, and $204.7 million as of December 31, 2003.

As of December 31, 2005, $132.0 million, or 48.2%, of our securities portfolio, excluding mortgage-backed securities, matured within one year, and $106.6 million, or 38.9%, excluding mortgage-backed securities, matured after one year but within five years.

Our commercial and real estate lending activities are concentrated in loans with maturities of less than five years with both fixed and adjustable rates. As of December 31, 2005, approximately $756.4 million, or 62.7%, of our loans matured within one year and/or had adjustable interest rates. As of December 31, 2005, $276.1 million of securities were pledged as collateral for various public fund deposits and securities sold under agreements to repurchase. Additionally, we maintain loan participation agreements with other financial institutions in which we could participate out loans for additional liquidity should the need arise.

On the liability side, our principal sources of liquidity are deposits, borrowed funds, and access to capital markets. Customer deposits are our largest sources of funds. As of December 31, 2005, 2004, and 2003, our total deposits were $1.4 billion, or 74.7% of total assets, $552.9 million, or 68.7% of total assets, and $572.2 million, or 71.3% of total assets, respectively. We attract our deposits primarily from individuals, business, and municipalities located in our market areas.

We may occasionally use our Fed funds lines of credit in order to temporarily satisfy short-term liquidity needs. We have Fed funds lines with three other financial institutions pursuant to which we could have borrowed up to $46.5 million on an unsecured basis as of December 31, 2005. These lines may be terminated by the respective lending institutions at any time.

We also maintain lines of credit with the Federal Home Loan Bank. Our FHLB borrowings were $102.9 million as of December 31, 2005, $74.9 million as of December 31, 2004, and $38.5 million as of December 31, 2003. The outstanding balance for December 31, 2005, included $3.8 million of short-term advances and $99.1 million of long-term advances. The outstanding balance as of December 31, 2004, included $31.0 million of short-term advances and $43.9 million of long-term advances. The outstanding balance as of December 31, 2003, included $11.0 million of short-term advances and $27.5 million of long-term borrowings. Our FHLB borrowing capacity was $222.3 million as of December 31, 2005.

We believe that we have sufficient liquidity to satisfy our current operations.

Market Risk Management. Our primary component of market risk is interest rate volatility. Fluctuations in interest rates will ultimately impact both the level of income and expense recorded on a large portion of our assets and liabilities, and the market value of all interest-earning assets and interest-bearing liabilities, other than those which possess a short term to maturity. We do not hold market risk sensitive instruments for trading purposes. The information provided should be read in connection with our audited consolidated financial statements.

Asset/ Liability Management. Our management actively measures and manages interest rate risk. The asset/liability committees of the boards of directors of our holding company and bank subsidiaries are also responsible for approving our asset/liability management policies, overseeing the formulation and implementation of strategies to improve balance sheet positioning and earnings, and reviewing our interest rate sensitivity position.

One of the tools that our management uses to measure short-term interest rate risk is a net interest income simulation model. This simulation estimates the impact of various changes in the overall level of interest rates over selected time horizons on net interest income. The results help us develop strategies for managing exposure to interest rate risk.

Like any forecasting technique, interest rate simulation modeling is based on a number of assumptions. In this model case, the assumptions relate primarily to loan and deposit growth, asset and liability prepayments, interest rates and balance sheet management strategies. Our management believes that both individually and in the aggregate the assumptions are reasonable. Nevertheless, the simulation modeling process produces only an estimate, not a precise calculation of our exposure.

We also use an economic value of equity model to complement our short-term interest rate risk analysis. The benefit of this model is that it measures exposure to interest rate changes over time.

Economic value analysis has several limitations. For example, the economic values of asset and liability balance sheet positions do not represent the true fair values of the positions, since economic values reflect an analysis at one particular point in time and do not consider the value of our franchise. In addition, an estimate of cash flow for assets and liabilities with indeterminate maturities is required. The analysis requires assumptions about events, which span several time periods. Given these limitations, the economic value of equity model is another tool for evaluating the effect of possible interest rate movements.

Interest Rate Sensitivity. Our primary business is banking and the resulting earnings, primarily net interest income, are susceptible to changes in market interest rates. It is management’s goal to maximize net interest income within acceptable levels of interest rate and liquidity risks.

A key element in the financial performance of financial institutions is the level and type of interest rate risk assumed. The single most significant measure of interest rate risk is the relationship of the repricing periods of earning assets and interest-bearing liabilities. The more closely the repricing periods are correlated, the less interest rate risk we assume. We use repricing gap and simulation modeling as the primary methods in analyzing and managing interest rate risk.

Gap analysis attempts to capture the amounts and timing of balances exposed to changes in interest rates at a given point in time. As of December 31, 2005, our gap position was relatively neutral with a one-year cumulative repricing gap of 0.6%. During these periods, the amount of change our asset base realizes in relation to the total change in market interest rates is approximately that of the liability base. As a result, our net interest income should not have a material positive or negative affect in the current environment of rising rates.

We have a portion of our securities portfolio invested in mortgage-backed securities. Mortgage-backed securities are included based on their final maturity date. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

Table 23 presents a summary of the repricing schedule of our interest-earning assets and interest-bearing liabilities (gap) at year-end 2005.

Table 23: Interest Rate Sensitivity


				Interest Rate Sensitivity Period

				0-30			31-90			91-180			181-365			1-2			2-5			Over 5
				Days			Days			Days			Days			Years			Years			Years			Total

				(Dollars in thousands)
Earning assets
	Interest-bearing deposits due from banks			$	5,431		$	—		$	—		$	—		$	—		$	—		$	—		$	5,431
	Federal funds sold				7,055			—			—			—			—			—			—			7,055
	Investment securities				21,675			15,332			47,070			39,756			100,325			186,163			119,981			530,302
		Loans receivable			476,075			61,427			102,019			172,774			154,489			210,648			27,157			1,204,589

			Total earning assets		510,236			76,759			149,089			212,530			254,814			396,811			147,138			1,747,377

Interest-bearing liabilities
	Interest-bearing transaction and savings deposits				207,043			—			—			—			24,129			98,915			182,097			512,184
	Time deposits				82,210			150,177			129,609			185,018			92,821			64,103			1,012			704,950
	Federal funds purchased				44,495			—			—			—			—			—			—			44,495
	Securities sold under repurchase agreements				76,942			—			—			—			3,823			11,469			11,484			103,718
	FHLB and other borrowed funds				18,322			15,084			10,234			14,320			28,563			21,961			8,570			117,054
	Subordinated debentures				—			5,155			—			—			—			20,619			18,981			44,755

		Total interest-bearing liabilities			429,012			170,416			139,843			199,338			149,336			217,067			222,144			1,527,156

Interest rate sensitivity gap				$	81,224		$	(93,657	)	$	9,246		$	13,192		$	105,478		$	179,744		$	(75,006	)	$	220,221

Cumulative interest rate sensitivity gap				$	81,224		$	(12,433	)	$	(3,187	)	$	10,005		$	115,483		$	295,227		$	220,221
Cumulative rate sensitive assets to rate sensitive liabilities					118.9	%		97.9	%		99.6	%		101.1	%		110.6	%		122.6	%		114.4	%
Cumulative gap as a % of total earning assets					4.6	%		(0.7	)%		(0.2	)%		0.6	%		6.6	%		16.9	%		12.6	%

Recent Accounting Pronouncements

Statement of Position No. 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3) addresses accounting for differences between the contractual cash flows of certain loans and debt securities and the cash flows expected to be collected when loans or debt securities are acquired in a transfer and those cash flow differences are attributable, at least in part, to credit quality. As such, SOP 03-3 applies to loans and debt securities acquired individually, in pools or as part of a business combination and does not apply to originated loans. The application of SOP 03-3 limits the interest income, including accretion of purchase price discounts, which may be recognized for certain loans and debt securities. Additionally, SOP 03-3 does not allow the excess of contractual cash flows over cash flows expected to be collected to be recognized as an adjustment of yield, loss accrual or valuation allowance, such as the allowance for possible loan losses. SOP 03-3 requires that increases in expected cash flows subsequent to the initial investment be recognized prospectively through adjustment of the yield on the loan or debt security over its remaining life. Decreases in

expected cash flows should be recognized as impairment. In the case of loans acquired in a business combination where the loans show signs of credit deterioration, SOP 03-3 represents a significant change from current purchase accounting practice whereby the acquiree’s allowance for loan losses is typically added to the acquirer’s allowance for loan losses. SOP 03-3 was effective for loans and debt securities we acquired beginning January 1, 2005. The adoption of SOP 03-3 did not have a material impact on our acquisitions of TCBancorp or Marine Bancshares. However, during the acquisition of Mountain View Bancshares, we did recognize impairment charges on loans that were deemed to have probable losses. These impairment charges resulted in reducing the acquired allowance for loan losses and gross loan receivable by $506,000.

SFAS No. 123, Share-Based Payment (Revised 2004), establishes standards for the accounting for transactions in which an entity (i) exchanges its equity instruments for goods or services, or (ii) incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of the equity instruments. SFAS 123R eliminates the ability to account for stock-based compensation using APB 25 and requires that such transactions be recognized as compensation cost in the income statement based on their fair values on the measurement date, which is generally the date of the grant. SFAS 123R was to be effective for us on July 1, 2005; however, the required implementation date was delayed until January 1, 2006. We will transition to fair-value based accounting for stock-based compensation using a modified version of prospective application (“modified prospective application”). Under modified prospective application, as it is applicable to us, SFAS 123R applies to new awards and to awards modified, repurchased, or cancelled after January 1, 2006. Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered (generally referring to non-vested awards) that are outstanding as of January 1, 2006, must be recognized as the remaining requisite service is rendered during the period of and/or the periods after the adoption of SFAS 123R. The attribution of compensation cost for those earlier awards will be based on the same method and on the same grant-date fair values previously determined under SFAS 123R for the pro forma disclosures required for companies that did not adopt the fair value accounting method for stock-based employee compensation.

Based on the stock-based compensation awards outstanding as of December 31, 2005, for which the requisite service is not expected to be fully rendered prior to January 1, 2006, we expect to recognize total compensation cost of approximately $460,000 for stock options during 2006, in accordance with the accounting requirements of SFAS 123R. Future levels of compensation cost recognized related to stock-based compensation awards (including the aforementioned expected costs during the period of adoption) may be impacted by new awards and/or modifications, repurchases and cancellations of existing awards after the adoption of SFAS 123R.

SFAS No. 154, Accounting Changes and Error Corrections, A Replacement of APB Opinion No. 20 and FASB Statement No. 3 , establishes unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to a newly adopted accounting principle. Previously, most changes in accounting principle were recognized by including the cumulative effect of changing to the new accounting principle in net income of the period of the change. Under SFAS 154, retrospective application requires (i) the cumulative effect of the change to the new accounting principle on periods prior to those presented to be reflected in the carrying amounts of assets and liabilities as of the beginning of the first period presented, (ii) an offsetting adjustment, if any, to be made to the opening balance of retained earnings (or other appropriate components of equity) for that period, and (iii) financial statements for each individual prior period presented to be adjusted to reflect the direct period-specific effects of applying the new accounting principle. Special retroactive application rules apply in situations where it is impracticable to determine either the period-specific effects or the cumulative effect of the change. Indirect effects of a change in accounting principle are required to be reported in the period in which the accounting change is made. SFAS 154 carries forward the guidance in APB Opinion 20, Accounting Changes, requiring justification of a change in accounting principle on the basis of preferability. SFAS 154 also carries forward without change the guidance contained in APB Opinion 20, for reporting the correction of an error in previously issued financial statements and for a change in an accounting estimate. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15,

2005. We do not expect SFAS 154 will significantly impact our financial statements upon its adoption on January 1, 2006.

FASB Staff Position (FSP) No, 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss should be recognized equal to the difference between the investment’s cost and its fair value. FSP 115-1 nullifies certain provisions of Emerging Issues Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments, while retaining the disclosure requirements of EITF 03-1 which were adopted in 2003. FSP 115-1 is effective for reporting periods beginning after December 15, 2005. We do not expect ESP 115-1 will significantly impact our financial statements upon its adoption on January 1, 2006.

Presently, we are not aware of any other changes from the Financial Accounting Standards Board that will have a material impact on our present or future financial statements.

BUSINESS

Home BancShares

We have achieved significant growth through acquisitions, organic growth and de novo branching. Specifically, as of and for the year ended December 31, 2001, to December 31, 2005, we have:


	•	increased our total assets from $322.0 million to $1.9 billion;

	•	increased our loans receivable from $235.7 million to $1.2 billion;

	•	increased our total deposits from $237.3 million to $1.4 billion;

	•	increased our earnings per diluted share from $0.29 for the year ended December 31, 2001, to $0.82 for the same period in 2005; and

	•	expanded our branch network from eight to 45.

Our Bank Subsidiaries and Investments

We believe that many individuals and businesses prefer banking with a locally managed community bank capable of providing flexibility and quick decisions. The execution of our community banking strategy has allowed us to rapidly build our network of bank subsidiaries.

First State Bank — In October 1998, we acquired Holly Grove Bancshares, Inc. for the purpose of obtaining a bank charter. Following the purchase, we changed the name of the bank subsidiary to First State Bank and relocated the charter to Conway, Arkansas, to serve the central Arkansas market. Since December 31, 1998, First State Bank’s assets have grown from $28.9 million to $450.8 million as of December 31, 2005.

Twin City Bank — In May 2000, we were the largest investor in a group that formed a holding company (subsequently renamed TCBancorp), acquired an existing bank charter, and relocated the charter to North Little Rock, Arkansas. The holding company named its subsidiary “Twin City Bank,” which had been used by North Little Rock’s largest bank until its sale in 1994, and hired Robert F. Birch, Jr., who had been president of the former Twin City Bank. Twin City Bank grew quickly in North Little Rock and, in 2003, expanded into

the adjacent Little Rock market. In January 2005, we acquired through merger the 68% of TCBancorp’s common stock we did not already own. Since December 31, 2000, Twin City Bank’s total assets have grown from $59.9 million to $628.3 million as of December 31, 2005.

Community Bank — In December 2003, we acquired Community Financial Group, Inc., the holding company for Community Bank of Cabot. Prior to this acquisition, we had established a branch in Cabot, Arkansas, and had planned to branch further into this market. These plans were changed when the opportunity to acquire Community Bank of Cabot arose. At the time of the acquisition, Community Bank of Cabot was operating under a supervisory action primarily due to asset quality concerns. After we acquired the bank, the supervisory action was removed and management has worked diligently to improve asset quality. Community Bank’s non-performing loans have decreased from $6.7 million as of September 30, 2003, to $4.3 million as of December 31, 2005. Community Bank had total assets of $331.5 million as of December 31, 2005, and had a deposit market share in Cabot of 46% as of June 30, 2005.

Marine Bank — In June 2005, we acquired Marine Bancorp, Inc., and its subsidiary, Marine Bank, in Marathon, Florida. Marine Bank was established in 1995. Our Chairman and Chief Executive Officer, John W. Allison, was a founding board member and the largest shareholder of Marine Bancorp, owning approximately 22% of its stock at the time of our acquisition. In 2002, to better position itself for growth, Marine Bank hired a new president and added other experienced bankers to its management team. Since December 31, 2002, Marine Bank’s total assets have grown from $114.7 million to $286.5 million as of December 31, 2005.

Bank of Mountain View — In September 2005, we acquired Mountain View Bancshares, Inc., and its subsidiary, Bank of Mountain View. We were attracted to the Bank of Mountain View because of its strong profitability and 85% deposit market share in Mountain View as of June 30, 2005. Bank of Mountain View had $195.6 million total assets as of December 31, 2005.

Investment in White River Bancshares — In May 2005, we invested $9.0 million to acquire 20% of the common stock of White River Bancshares, Inc., the holding company for Signature Bank in Fayetteville, Arkansas. In January 2006, we invested an additional $3.0 million to maintain this 20% ownership position. Signature Bank serves the growing northwest Arkansas market and is led by an experienced community banker with local relationships. Ron W. Strother, our President and Chief Operating Officer, serves on the boards of White River Bancshares and Signature Bank. Since opening in May 2005, Signature Bank has grown to $174.5 million in total assets as of December 31, 2005.

Our Management Team

We have an experienced management team that shares a commitment to community banking, exceptional service and strong credit quality. Our senior management team — the three senior executives of Home BancShares and our five bank presidents — has, on average, more than 27 years of banking experience. See “Management.” As of December 31, 2005, our executive officers and directors beneficially owned approximately 45.1% of our common stock, and will continue to beneficially own approximately % after this offering.

We provide our community bank presidents significant autonomy to operate their banks, but we maintain overall guidance in critical areas such as credit standards. We capitalize on the strengths of our bank presidents, and the products and services that our bank subsidiaries tailor to their markets, by sharing the best practices of each institution. Our chief operating officer and chief financial officer meet weekly with our bank presidents to discuss business issues and opportunities to expand products and services within our network of banks. In addition, our senior management meets monthly with our bank presidents to review financial performance and discuss strategy and opportunities.

Compensation for our management team is designed to promote performance, and includes both cash bonuses and stock appreciation rights. Cash bonus compensation for the bank presidents is tied to several financial performance metrics, including asset quality, profitability and growth. We believe these incentive plans encourage the performance and continuity of our management team.

Our Growth Strategy

Our goals are to achieve growth in earnings per share and to create and build shareholder value. Our growth strategy entails the following:


	•	Organic growth — We believe that our current branch network provides us with the capacity to grow significantly within our existing market areas. Twenty-one of our 45 branches (including branches of banks we have acquired) have been opened since the beginning of 2001. As these newer branches continue to mature, we expect to see additional organic loan and deposit growth and increased profitability. Furthermore, we plan to broaden the product lines within each of our bank subsidiaries by cross-selling products such as insurance and trust services.

	•	De novo branching — We intend to continue to open de novo branches in our current markets and in other attractive market areas if opportunities arise. In 2006, we plan to add seven to ten new branches, including four or five in Arkansas, one or two in the Florida Keys and two or three along the southwestern coast of Florida.

	•	Strategic acquisitions — We will continue to consider strategic acquisitions, with a primary focus on Arkansas and southwestern Florida. When considering a potential acquisition, we assess a combination of factors, but concentrate on the strength of existing management, the growth potential of the bank and the market, the profitability of the bank, and the valuation of the bank. We believe that potential sellers consider us an acquirer of choice, largely due to our community banking philosophy. With each acquisition we seek to maintain continuity of management and the board of directors, consolidate back office operations, add product lines, and implement our credit policy.

Community Banking Philosophy

Our community banking philosophy consists of four basic principles:


	•	operate largely autonomous community banks managed by experienced bankers and a local board of directors, who are empowered to make customer-related decisions quickly;

	•	provide exceptional service and develop strong customer relationships;

	•	pursue the business relationships of our boards of directors, management, shareholders, and customers to actively promote our community banks; and

	•	maintain our commitment to the communities we serve by supporting their civic and nonprofit organizations.

Operating Strategy

Our operating strategies focus on improving credit quality, increasing profitability, finding experienced bankers, and leveraging our infrastructure:


	•	Emphasis on credit quality — Credit quality is our first priority in the management of our bank subsidiaries. We employ a set of credit standards across our bank subsidiaries that are designed to ensure the proper management of credit risk. Our management team plays an active role in monitoring compliance with these credit standards at each of our bank subsidiaries. We have a centralized loan review process and regularly monitor each of our bank subsidiaries’ loan portfolios, which we believe enables us to take prompt action on potential problem loans. Non-performing assets as a percentage of total assets decreased from 1.18% as of December 31, 2004, to 0.47% as of December 31, 2005.


	•	Continue to improve profitability — We intend to improve our profitability as we leverage the available capacity of our newer branches and employees. We believe our investments in our branch network and centralized technology infrastructure are sufficient to support a larger organization, and therefore believe increases in our expenses should be lower than the corresponding increases in our revenues. We also plan to increase our fee-based revenue by offering all our products and services, including insurance and trust services, through each of our bank subsidiaries.

	•	Attract and motivate experienced bankers — We believe a major factor in our success has been our ability to attract and retain bankers who have experience in and knowledge of their local communities. For example, in January 2006, we hired eight experienced bankers in the Searcy, Arkansas, market (located approximately 50 miles northeast of Little Rock), where we subsequently opened a new branch. Hiring and retaining experienced relationship bankers has been integral to our ability to grow quickly when entering new markets. We will continue to recruit experienced relationship bankers as our banking franchise expands.

	•	Leveraging our infrastructure — The support services we provide to our bank subsidiaries are generally centralized in Conway, Arkansas. These services include finance and accounting, internal audit, compliance, loan review, human resources, training, and data processing. We believe the centralization of our support services enhances efficiencies, maintains consistency in policies and procedures, and enables our employees to focus on developing and strengthening customer relationships.

Our Market Areas

As of December 31, 2005, we conducted business principally through 38 branches in five counties in Arkansas and seven branches in the Florida Keys. We plan to add seven to ten new branches in 2006. Our branch footprint includes markets in which we are the deposit market share leader as well as markets where we believe we have significant opportunities for deposit market share growth.

The chart below details our deposits and market share ranking for the largest deposit markets of our bank subsidiaries, based on FDIC data as of June 30, 2005, and provides related demographic data from ESRI, a leading provider of demographic data, for each of our largest deposit markets and for us in total.


							Projected			Projected
	Home				Deposit		Population			Growth in Per
	BancShares		Total Deposits		Market Share		Growth			Capita Income
Selected Markets	Deposits		in Market		Rank		2005-2010			2005-2010

	(Dollars in millions)
North Little Rock, AR	$	299	$	1,084		1		4.0	%		27.6	%
Conway, AR		282		1,041		1		11.6			26.4
Key West-Marathon, FL MSA		214		2,258		4		2.2			21.7
Mountain View, AR		158		187		1		0.2			32.7
Little Rock, AR		152		5,356		9		4.7			29.0
Cabot, AR		145		318		1		16.9			22.9
Total for Home BancShares		1,445		11,030		N/A		6.6	(1)		26.4	(1)
United States Average		N/A		N/A		N/A		6.3			22.8


(1)	Weighted average based on total deposits by city as of June 30, 2005.


	*Arkansas*

We are currently the deposit market share leader in Conway, Cabot, North Little Rock, and Mountain View, Arkansas. In these markets, we plan to continue our organic growth while improving profitability. Furthermore, we plan to open an additional three to four branches in the growing communities surrounding Cabot, Conway, and North Little Rock in 2006.

Conway — First State Bank opened its first branch in Conway in 1999 and, as of June 30, 2005, had a 27.1% deposit market share. Conway is located on Interstate 40, approximately 30 miles northwest of Little Rock. The city of Conway has grown significantly in recent years as a result of the westward expansion of Little Rock businesses and residents. Major employers in Conway include Acxiom Corporation (a large information technology company), two of the state’s leading four-year colleges (University of Central Arkansas and Hendrix College), several large manufacturers, and local healthcare providers. Conway’s estimated population of 49,376 in 2005 is projected to increase by 11.6% between 2005 and 2010. Conway should also benefit from the recent initiation of natural gas exploration and development in the “Fayetteville Shale.” See below, “Recent Developments in Arkansas Market Area.” Southwestern Energy Company has opened a regional office in Conway and has announced plans to employ approximately 150 employees in 2006. Schlumberger Ltd. is also building a regional office and warehouse in Conway expected to open by mid-2006, which reportedly will employ more than 100 people.

Cabot — We entered the Cabot market in 2003 through the acquisition of Community Financial Group and, as of June 30, 2005, had a 45.8% deposit market share. Cabot is located approximately 25 miles north of Little Rock. Cabot’s economy has historically been driven by the education, healthcare, manufacturing, and retail trade industries. Cabot’s estimated population of 18,599 is projected to increase by 16.9% between 2005 and 2010.

North Little Rock — Twin City Bank entered the North Little Rock market in 2000 and, as of June 30, 2005, had a 27.6% deposit market share. The major industries in North Little Rock include education, healthcare, retail trade and manufacturing. In recent years, downtown North Little Rock has experienced an economic revival due in part to the opening of ALLTEL Arena, a large general entertainment venue, and the commencement of construction of a minor league baseball stadium scheduled to open in 2007. North Little Rock’s estimated population of 61,889 in 2005 is projected to increase by 4.0% between 2005 and 2010.

Mountain View — We entered the Mountain View market through the acquisition of Mountain View Bancshares in September 2005 and, as of June 30, 2005, had an 84.9% deposit market share. Mountain View, which is located approximately 75 miles north of Conway, is the seat of Stone County and is a popular tourism and retirement destination. Mountain View’s per capita income is projected to increase 32.7% between 2005 and 2010.

Little Rock — Twin City Bank began branching into Little Rock in May 2003 and, as of June 30, 2005, had a 2.8% deposit market share. Little Rock is Arkansas’s capital and its largest city. It is the home of the University of Arkansas for Medical Sciences (the largest non-governmental employer in the city), the University of Arkansas at Little Rock, and several smaller community colleges. Fortune 500 companies ALLTEL Corporation and Dillard’s, Inc., as well as Acxiom Corporation, are headquartered in Little Rock. Professional services, healthcare, retail trade, and manufacturing are other large sources of employment in Little Rock. The opening of the William Jefferson Clinton Presidential Library in 2004 and ongoing real estate development projects have contributed to the revitalization of downtown Little Rock, while west Little Rock continues to develop new residential communities and business centers. Little Rock had an estimated population of 189,364 in 2005, and its per capita income is projected to increase 29.0% between 2005 and 2010. Little Rock should continue to benefit economically from the growing communities on the outer edges of the greater Little Rock metropolitan statistical area, including Conway and Cabot. We believe we have a significant opportunity for market share growth in Little Rock, as over 48% of the deposits are held by larger regional and national banks headquartered outside of Arkansas.

Recent Developments in Arkansas Market Area — Our Arkansas market areas, especially Conway, are expected to benefit from the discovery and exploration of natural gas in the “Fayetteville Shale.” The Fayetteville Shale has been described as a geologic formation stretching from north central Arkansas east to the Mississippi River. Southwestern Energy has announced that it made $154.5 million in Fayetteville Shale-related investments in 2005, and that it expects to invest more than $300 million in 2006. Other companies, including Chesapeake Energy Corporation, Maverick Oil & Gas, Inc., and Royal Dutch Shell PLC, are reportedly leasing properties in the Fayetteville Shale area.


	*Florida*

Florida Keys (Monroe County) — We entered the Florida Keys in 2005 through the acquisition of Marine Bank. As of June 30, 2005, Marine Bank had a 9.5% deposit market share in Monroe County. The Florida Keys encompass a 100-mile string of islands located in Monroe County on the southern tip of Florida. There are five incorporated cities in the Florida Keys: Key West, Key Colony Beach, Layton, Islamorada and Marathon. We believe that Key West, the largest city in the Florida Keys, provides us with an opportunity for growth. We currently have one branch and a 4.5% deposit market share in Key West, and are planning to open an additional branch in the Old Town section of Key West in 2006. We also plan to open our first branch in Key Largo in 2006. The Florida Keys economy is driven by tourism and real estate development. The area has experienced above-average commercial and residential property price appreciation due to limited property and construction permits and high demand for the property in the area. Real estate development is expected to continue to drive the economy as existing properties are being renovated and improved. Monroe County’s estimated population of 81,227 in 2005 is projected to increase by 2.2% between 2005 and 2010.

Southwestern Florida — We plan to open a branch in Port Charlotte (Punta Gorda MSA) and Marco Island (Naples-Marco Island MSA) during 2006. As of June 30, 2005, there were a combined $12.6 billion deposits and approximately 500,000 residents in these two MSAs. The Southwestern Florida economy is driven by the tourism industry and is a popular retirement destination. The expected population growth for 2005 to 2010 in the Punta Gorda MSA and the Naples-Marco-Island MSA is 11.6% and 25.5%, respectively.

Lending Activities

We originate loans primarily secured by single and multi-family real estate, residential construction and commercial buildings. In addition, we make loans to small and medium-sized commercial businesses, as well as to consumers for a variety of purposes.

Our loan portfolio as of December 31, 2005, was comprised as follows:


		Amount		Percentage of portfolio

		(Dollars in thousands)
Real estate:
Commercial real estate loans:
	Non-farm/non-residential	$	411,839		34.1	%
	Construction/land development		291,515		24.2
	Agricultural		13,112		1.1
Residential real estate loans:
	Residential 1-4 family		221,831		18.4
	Multifamily residential		34,939		2.9

Total real estate			973,236		80.7
Consumer			39,447		3.3
Commercial and industrial			175,396		14.6
Agricultural			8,466		0.7
Other			8,044		0.7

	Total loans receivable	$	1,204,589		100.0	%

In addition, we have entered into contractual obligations, via lines of credit and standby letters of credit, to extend approximately $21.0 million in credit as of December 31, 2005. We use the same credit policies in making these commitments as we do for our other loans.

Real Estate — Non-farm/ Non-residential. Non-farm/non-residential loans consist primarily of loans secured by real estate mortgages on income-producing properties. We make commercial mortgage loans to finance the purchase of real property as well as loans to smaller business ventures, credit lines for working

capital and inventory financing, including letters of credit, that are also secured by real estate. Commercial mortgage lending typically involves higher loan principal amounts, and the repayment of loans is dependent, in large part, on sufficient income from the properties collateralizing the loans to cover operating expenses and debt service.

Real Estate — Construction/ Land Development. We also make construction and development loans to residential and commercial contractors and developers located primarily within our market areas. Construction loans generally are secured by first liens on real estate. As of December 31, 2005, less than 5% of our construction and development loans were made on raw land.

Real Estate — Residential Mortgage. Our residential mortgage loan program primarily originates loans to individuals for the purchase of residential property. We generally do not retain long-term, fixed-rate residential real estate loans in our portfolio due to interest rate and collateral risks and low levels of profitability. Residential loans to individuals retained in our loan portfolio primarily consist of shorter-term first liens on 1-4 family residential mortgages, home equity loans and lines of credit.

Consumer. While our focus is on service to small and medium-sized businesses, we also make a variety of loans to individuals for personal, family and household purposes, including secured and unsecured installment and term loans.

Commercial and Industrial. Our commercial loan portfolio includes loans to smaller business ventures, credit lines for working capital and short-term inventory financing, as well as letters of credit that are generally secured by collateral other than real estate. Commercial borrowers typically secure their loans with assets of the business, personal guaranties of their principals and often mortgages on the principals’ personal residences.

Credit Risks. The principal economic risk associated with each category of the loans that we make is the creditworthiness of the borrower and the ability of the borrower to repay the loan. General economic conditions and the strength of the services and retail market segments affect borrower creditworthiness. General factors affecting a commercial borrower’s ability to repay include interest rates, inflation and the demand for the commercial borrower’s products and services, as well as other factors affecting a borrower’s customers, suppliers and employees.

Risks associated with real estate loans also include fluctuations in the value of real estate, new job creation trends, tenant vacancy rates and, in the case of commercial borrowers, the quality of the borrower’s management. Consumer loan repayments depend upon the borrower’s financial stability and are more likely to be adversely affected by divorce, job loss, illness and other personal hardships.

Lending Policies. We have established common documentation and policies, based on the type of loan, for all of our bank subsidiaries. The board of directors of each bank subsidiary supplements our standard policies to meet local needs and establishes loan approval procedures for that bank. Each bank’s board periodically reviews their lending policies and procedures. There are legal restrictions on the dollar amount of loans available for each lending relationship. The Arkansas Banking Code provides that no loan relationship may exceed 20% of a bank’s capital. The Florida Banking Code provides that no loan relationship may exceed 15% of a bank’s capital, or 25% on a fully secured basis. As of December 31, 2005, our legal lending limit for secured loans was approximately $9.1 million for First State Bank, $6.1 million for Community Bank, $11.5 million for Twin City Bank, $5.8 million for Bank of Mountain View, and $4.8 million for Marine Bank of the Florida Keys.

Our bank subsidiaries are able to leverage their relationships with one another to participate collectively in loans that they otherwise would not be able to extend individually. As of December 31, 2005, the aggregate legal lending limit of our bank subsidiaries for secured loans was approximately $37.3 million, and as of December 31, 2005, we had established an in-house lending limit of $16.0 million to any one borrower, without obtaining the approval of our Chairman and our Vice Chairman.

As of December 31, 2005, our four largest aggregate loan commitments to any one borrower were as follows:


	•	$27.3 million consisting of loans to a developer of apartments;

	•	$21.6 million consisting of loans to a healthcare provider;

	•	$18.1 million consisting of loans to a healthcare provider; and

	•	$15.3 million consisting of loans to a real estate developer and investor.

Including the commitments described above, as of December 31, 2005, we had ten commitments outstanding under which any one borrower could borrow in excess of $10.0 million; those commitments in aggregate totaled approximately $134.5 million.

Loan Approval Procedures. Our bank subsidiaries have supplemented our common loan policies to establish their own loan approval procedures as follows:


	•	Individual Authorities. The board of directors of each bank establishes the authorization levels for individual loan officers on a case-by-case basis. Generally, the more experienced a loan officer, the higher the authorization level. The approval authority for individual loan officers range from $20,000 to $500,000 for secured loans and from $1,000 to $50,000 for unsecured loans.

	•	Officer Loan Committees. Most of our bank subsidiaries also give their Officer Loan Committees loan approval authority. In those banks, credits in excess of individual loan limits are submitted to the appropriate bank’s Officer Loan Committee. The Officer Loan Committees consist of members of the senior management team of that bank and are chaired by that bank’s chief lending officer. The Officer Loan Committees have approval authority up to $750,000 at First State Bank, $750,000 at Community Bank, and $1.0 million at Twin City Bank. At Marine Bank, certain officers are allowed to combine limits on secured loans up to $1.0 million for certain grades of credits.

	•	Directors Loan Committee. Each of our bank subsidiaries has a Directors Loan Committee consisting of outside directors, senior lenders of the bank, and our Chief Operating Officer. Generally, each bank requires a majority of outside directors be present to establish a quorum. Generally, this committee is chaired either by the chief lending officer or the chief executive officer of the bank. Each bank’s board of directors establishes the approval authority for this committee, which may be up to that bank’s legal lending limit.

Deposits and Other Sources of Funds

Our principal source of funds for loans and investing in securities is core deposits. We offer a wide range of deposit services, including checking, savings, money market accounts and certificates of deposit. We obtain most of our deposits from individuals and small businesses, and municipalities in our market areas. We believe that the rates we offer for core deposits are competitive with those offered by other financial institutions in our market areas. Secondary sources of funding include advances from the Federal Home Loan Banks of Dallas and Atlanta and other borrowings. These secondary sources enable us to borrow funds at rates and terms, which, at times, are more beneficial to us.

Other Banking Services

Given customer demand for increased convenience and account access, we offer a range of products and services, including 24-hour Internet banking and voice response information, cash management, overdraft protection, direct deposit, traveler’s checks, safe deposit boxes, United States savings bonds and automatic account transfers. We earn fees for most of these services. We also receive ATM transaction fees from transactions performed by our customers participating in a shared network of automated teller machines and a debit card system that our customers can use throughout the United States, as well as in other countries.

Insurance

Community Insurance Agency, Inc. is an independent insurance agency, originally founded in 1959 and purchased July 1, 2000, by Community Bank. Community Insurance Agency writes policies for commercial and personal lines of business, with approximately 50% of the business coming from each. It is subject to regulation by the Arkansas Insurance Department. The offices of Community Insurance Agency are located in Jacksonville, Cabot, and Conway, Arkansas.

Trust Services

FirsTrust Financial Services, Inc. provides trust services, focusing primarily on personal trusts, corporate trusts and employee benefit trusts. FirsTrust Financial Services has offices in Conway, Little Rock, Cabot, and El Dorado, Arkansas. FirsTrust Financial Services is subject to regulation by the Federal Reserve Board and the Arkansas State Bank Department. Assets under management as of December 31, 2005 were $320.4 million.

Properties

As of December 31, 2005, our bank subsidiaries operated a total of 38 branches in Arkansas and seven branches in Florida, and were in various stages of opening an additional six branches, as shown in the following table:

Owned or

Date

Square

Office Address

City

Leased

Constructed

Feet

First State Bank

620 Chestnut

Conway, AR

Owned

1999

9,000

2500 Dave Ward Drive

Conway, AR

Owned

2002

2,640

1815 East Oak Street

Conway, AR

Owned

2001

2,640

2690 Donaghey

Conway, AR

Leased

2001

2,600

1445 Hogan Lane

Conway, AR

Leased

2004

3,200

945 Salem Road

Conway, AR

Owned

1999

4,200

1208 Oak

Conway, AR

Owned

1999

2,500

582 Highway 365 South

Mayflower, AR

Leased

2000

800

1044 Main Street

Vilonia, AR

Owned

1999

2,640

#8 Business Park Drive

Greenbrier, AR

Owned

2002

2,640

1300 West Beebe-Capps Expwy

Searcy, AR

Owned

Pending

5,000

(1)

Community Bank

218 West Main

Cabot, AR

Owned

1977

1,200

2171 West Main

Cabot, AR

Owned

1999

20,500

3111 Bill Foster Memorial Hwy

Cabot, AR

Leased

(2)

2004

3,500

One City Plaza

Cabot, AR

Owned

1978

22,150

1204 S. Pine Street

Cabot, AR

Owned

1990

3,300

707 Dewitt Henry Drive

Beebe, AR

Owned

1998

2,924

10 Crestview Plaza

Jacksonville, AR

Leased

1997

2,600

1900 John Hardin Drive

Jacksonville, AR

Owned

2000

3,807

1816 West Main

Jacksonville, AR

Owned

2005

5,000

902 North Street

Ward, AR

Owned

1973

2,400

30 Hwy 64 West

Beebe, AR

Owned

Pending

3,425

(1)

Owned or

Date

Square

Office Address

City

Leased

Constructed

Feet

Twin City Bank

2716 Lakewood Village Place

North Little Rock, AR

Leased

2000

3,579

650 Main

North Little Rock, AR

Leased

2000

1,344

4308 Broadway

North Little Rock, AR

Owned

2001

2,060

3811 MacArthur Drive

North Little Rock, AR

Leased

2000

1,300

4515 Camp Robinson Road

North Little Rock, AR

Owned

2004

3,700

9501 Maumelle Boulevard

Maumelle, AR

Owned

2005

4,000

7213 Hwy. 107

Sherwood, AR

Owned

2002

3,700

301 East Kiehl

Sherwood, AR

Owned

1998

2,898

2922 South University

Little Rock, AR

Leased

2003

3,511

10315 Interstate 30

Little Rock, AR

Owned

2003

3,700

718 Broadway

Little Rock, AR

Owned

2005

2,500

520 Bowman

Little Rock, AR

Leased

2003

4,664

5100 Kavanaugh Avenue

Little Rock, AR

Leased

2003

893

2610 Cantrell Road

Little Rock, AR

Leased

2003

5,000

13910 Cantrell Road

Little Rock, AR

Owned

2003

3,700

9712 Rodney Parham

Little Rock, AR

Owned

2003

3,700

Bank of Mountain View

121 East Main Street

Mountain View, AR

Owned

1968

1,354

Oak and Main Street

Mountain View, AR

Owned

1992

1,958

Marine Bank

11290 Overseas Highway

Marathon, FL

Owned

1995

7,414

25000 Overseas Highway

Summerland Key, FL

Leased

1998

296

82787 Overseas Highway

Islamorada, FL

Owned

1988

705

101 Wilder Road

Marathon, FL

Owned

1998

3,456

4594 Overseas Highway

Marathon, FL

Owned

2000

1,450

2514 N. Roosevelt Blvd.

Key West, FL

Leased

(2)

2001

3,756

789 Duck Key Lane

Marathon, FL

Leased

2001

850

22627 Bayshore Road

Charlotte Harbor, FL

Leased

Pending

3,384

(1)

100290 Overseas Highway

Key Largo, FL

Leased

Pending

4,500

(1)

615 Elkham Circle

Marco Island, FL

Leased

Pending

5,000

(1)

1229 Simonton Street

Key West, FL

Leased

Pending

3,440

(1)


(1)	Sizes of pending offices are estimated.

(2)	Office is located on land that we lease.

In addition to the branches listed above, we and our non-bank subsidiaries had offices as shown in the following table:

Owned or

Date

Square

Office Address

City

Leased

Constructed

Feet

719 Harkrider Street

Conway, AR

Owned

1984

33,000

203 Dakota Drive, Suites A and C

Cabot, AR

Leased

2000

2,000

1515 N. Center, Suite 9

Lonoke, AR

Leased

2000

600

#3 Crestview Plaza

Jacksonville, AR

Leased

2000

1,600

715 Chestnut

Conway, AR

Leased

1999

2,100

81011 Overseas Highway

Islamorada, FL

Leased

2002

2,500

1638 Overseas Highway

Marathon, FL

Owned

2003

1,960

We believe that our banking and other offices are in good condition and are suitable to our needs.

Competition

As of December 31, 2005, we conducted business through 45 branches in our primary market areas of Pulaski, Faulkner, Lonoke, Stone, and White Counties in Arkansas and Monroe County in Florida. Many other commercial banks, savings institutions and credit unions have offices in our primary market areas. These institutions include many of the largest banks operating in Arkansas and Florida, including some of the largest banks in the country. Many of our competitors serve the same counties we do. Our competitors often have greater resources, have broader geographic markets, have higher lending limits, offer various services that we may not currently offer and may better afford and make broader use of media advertising, support services and electronic technology than we do. To offset these competitive disadvantages, we depend on our reputation as having greater personal service, consistency, and flexibility and the ability to make credit and other business decisions quickly.

Employees

On December 31, 2005, we had 544 full-time equivalent employees. We expect that our staff will increase as a result of our increased branching activities anticipated in 2006. We consider our employee relations to be good, and we have no collective bargaining agreements with any employees.

Legal Proceedings

While we and our bank subsidiaries and other affiliates are from time to time parties to various legal proceedings arising in the ordinary course of their business, management believes, after consultation with legal counsel, that there are no proceedings threatened or pending against us or our bank subsidiaries or other affiliates that will, individually or in the aggregate, have a material adverse affect on our business or consolidated financial condition.

MANAGEMENT

Directors and Executive Officers

The following table sets forth, as of January 31, 2006, information concerning the individuals who are our directors and executive officers:


				Positions Held
Name	Age		Positions Held	with Bank Subsidiaries

John W. Allison		59	Chairman of the Board and Chief Executive Officer	Chairman of the Board, First State Bank; Director, Community Bank, Twin City Bank, Bank of Mountain View, and Marine Bank
Ron W. Strother		57	President, Chief Operating Officer, and Director	Director, First State Bank, Community Bank, Twin City Bank, and Bank of Mountain View
Randy E. Mayor		41	Chief Financial Officer and Treasurer	Director, First State Bank
C. Randall Sims		51	Director and Secretary	President, Chief Executive Officer, and Director, First State Bank; Director, Community Bank
Richard H. Ashley		50	Vice Chairman of the Board	Director, Twin City Bank and Community Bank
Dale A. Bruns		62	Director	Director, First State Bank and Twin City Bank
Richard A. Buckheim		62	Director	Chairman of the Board, Marine Bank
Jack E. Engelkes		56	Director	Director, First State Bank
Frank D. Hickingbotham		69	Director
Herren C. Hickingbotham		47	Director	Director, Twin City Bank
James G. Hinkle		57	Director	Chairman of the Board, Bank of Mountain View
Alex R. Lieblong		55	Director
Robert Hunter Padgett		47	—	President, Chief Executive Officer, and Director, Marine Bank
William G. Thompson		58	Director	Director, Community Bank
Robert F. Birch, Jr.		55	—	President, Chief Executive Officer, and Director, Twin City Bank
Tracy M. French		44	—	President, Chief Executive Officer, and Director, Community Bank
James Ronnie Sims		59	—	President, Chief Executive Officer, and Director, Bank of Mountain View

John W. Allison is the founder and has been Chairman of the Board of Home BancShares since 1998. He also serves on the Executive Committee and the Asset/ Liability Committee of Home BancShares. Mr. Allison has more than 23 years of banking experience, including service as Chairman of First National Bank of Conway from 1983 until 1998, and as a director of First Commercial Corporation from 1985 (when First Commercial acquired First National Bank of Conway) until 1998. At various times during his tenure on First Commercial’s board, Mr. Allison served as the Chairman of that company’s Executive Committee and as Chairman of its Asset Quality Committee. Prior to its sale to Regions Financial Corporation in 1998, First Commercial was a publicly traded company and the largest bank holding company headquartered in Arkansas, with approximately $7.3 billion in assets.

Ron W. Strother has been President, Chief Operating Officer, and a director of Home BancShares since 2004. He has more than 33 years of banking experience, which includes serving as Regional Chief Executive Officer over central Arkansas for Arvest Bank Group (Bentonville) from 2000 to 2004, Chairman and Chief Executive Officer of Central Bank & Trust Company (Little Rock) from 1996 to 2000, President and Chief Operating Officer of First Commercial Bank (Little Rock) from 1991 to 1994, President of First Commercial Mortgage Company from 1984 to 1987, and President of Commercial National Mortgage Company from 1981 to 1984. Mr. Strother began his career in 1973 with Commercial National Bank (Little Rock), which became First Commercial Bank in 1983.

Randy E. Mayor joined Home Bancshares in 1998 as Executive Vice President and Finance Officer and became our first Chief Financial Officer in 2004. He has more than 19 years of banking experience. From 1988 to 1998, Mr. Mayor held various positions at First National Bank of Conway, a subsidiary of First Commercial, including Senior Vice President and Finance Officer from 1992 to 1998.

C. Randall Sims has been President and Chief Executive Officer of First State Bank and a director of Home BancShares since 1998. Prior to joining First State Bank, Mr. Sims was an executive vice president with First National Bank of Conway. He holds a Juris Doctor degree from the University of Arkansas at Little Rock School of Law and a Bachelor of Arts degree in accounting and business administration from Ouachita Baptist University in Arkadelphia, Arkansas. He attended the Graduate School of Banking at the University of Wisconsin and is an honor graduate of the American Bankers Association National Lending School held at the University of Oklahoma.

Richard H. Ashley has been a director of Home BancShares since 2004 and has served as Vice Chairman of Home BancShares since 2006. He has served on the Executive Committee and the Asset/ Liability Committee of Home BancShares since 2005. Mr. Ashley was one of the original stockholders and organizers of Twin City Bank in 2000. He has served as a director of the bank since 2000 and as Chairman since 2002. Mr. Ashley is President and owner of the Ashley Company, a privately held company involved in land development and investment in seven states throughout the United States since 1978.

Dale A. Bruns has been a director of Home BancShares since 2004 and a director of First State Bank since 1998. Mr. Bruns has also served as a director of Twin City Bank since 2000 and FirsTrust Financial Services since 2004. Mr. Bruns is the chairman of the compensation committees for Home BancShares, First State Bank, and Twin City Bank. Prior to his service with First State Bank, he served as a director of the First National Bank of Conway from 1985 to 1998. Mr. Bruns has owned and operated several McDonald’s restaurants located in central Arkansas. He is also the owner of Central Arkansas Sign Company, Inc. He currently serves on the impact committee for the McDonald’s Great Southern Region and the purchasing committee of the Central Arkansas McDonald’s Cooperative, and is a past member of the McDonald’s National Operator advisory board of directors. Mr. Bruns attended the University of Northern Iowa and the Harvard Business School Program for Management Development.

Richard A. Buckheim has been a director of Home BancShares since 2005. Mr. Buckheim was one of the original organizers of Marine Bank in 1996 and has been active in its management since the bank opened. Since 2000, he has been Chairman of the Board of the bank and has served on the bank’s compensation committee. Mr. Buckheim formerly owned two restaurants in Key West, Florida. Prior to moving to Key West, he founded and served as President of Buckheim and Rowland, Inc., a Michigan-based advertising and marketing company with offices in Ann Arbor, Detroit, New York City and Melbourne, Florida.

Jack E. Engelkes has been a director of Home BancShares since 2004 and a director of First State Bank since 1998. From 1995 to 1998, he served as a director of First National Bank of Conway. Since 1990, Mr. Engelkes has served as managing partner in the accounting firm of Engelkes, Conner and Davis, Ltd. He became President of the Board of Conway Regional Health Foundation in 2006. He has also been a director of the Conway Regional Medical Center since 2005 and the Conway Development Corporation since 2000. Mr. Engelkes holds a bachelor’s degree in Business and Economics from Hendrix College in Conway.

Frank D. Hickingbotham has been a director of Home BancShares and a member of its Executive Committee since 2004. In 1989, Mr. Hickingbotham founded FDH Bancshares, which was acquired by First Commercial Corporation in 1995. Mr. Hickingbotham also founded TCBY Enterprises, Inc., a publicly traded worldwide manufacturer, franchiser and distributor of frozen yogurt, in 1981, and served as the company’s Chairman and Chief Executive Officer until the company was sold in 2000. Since 2000, he has been the Chairman and Chief Executive Officer of Hickingbotham Investments, Inc., a privately held diversified company with interests in banking, real estate, automobile and motorcycle dealerships, and food service equipment sales and distribution. Mr. Hickingbotham is the father of Home BancShares director Herren C. Hickingbotham.

Herren C. Hickingbotham has been a director of Home BancShares since 2004 and a director of Twin City Bank since 2002. From 1986 to 2000, Mr. Hickingbotham served as President and COO of TCBY Enterprises, Inc., a publicly traded worldwide manufacturer, franchiser and distributor of frozen yogurt. He served on the board of directors of TCBY from 1983 to 2000. Since 2000, Mr. Hickingbotham has been a principal in Hickingbotham Investments, Inc., a privately held diversified company with interests in banking, real estate, automobile and motorcycle dealerships, and food service equipment sales and distribution. Mr. Hickingbotham is the son of Home BancShares director Frank D. Hickingbotham.

James G. Hinkle has been a director of Home BancShares since 2005. Mr. Hinkle currently serves as Chairman of the Bank of Mountain View. He has over 25 years of banking experience. From 1995 to 2005, he served as President of Mountain View Bancshares, Inc., until the company’s merger into Home BancShares. He served as President of the Bank of Mountain View from 1981 to 2005. Mr. Hinkle is co-owner of Mountain View Telephone Company, a privately held corporation founded by his family in 1936.

Alex R. Lieblong has been a director of Home BancShares since 2003. He served as a director of First State Bank from 1998 to 2002 and has served as an advisory director of First State Bank since 2002. Mr. Lieblong has been a director of Deltic Timber, a publicly traded natural resources management company, since 1996 and became a director of Lodgian, Inc., a publicly traded owner and operator of hotels, in 2006. He also currently serves on the board of directors of Ballard Petroleum, a privately held energy company. Since 1997, Mr. Lieblong has been an owner and general principal in the brokerage firm of Lieblong & Associates, Inc. Prior to Lieblong & Associates, Inc., he held management positions with Paine Webber, Merrill Lynch, and E.F. Hutton. Mr. Lieblong was a founder and has been managing partner of Key Colony Fund, L.P., a hedge fund, since 1998.

Robert Hunter Padgett joined Marine Bank as President and Chief Executive Officer in 2002. Mr. Padgett has over 25 years of banking experience. From 1995 to 2002, he served as Executive Vice President of TIB Bank (Florida Keys). Mr. Padgett began his career with First National Bank of South Carolina. He later worked for First Union Corporation (currently Wachovia) and SunTrust Banks prior to joining TIB Bank. He is a graduate of Clemson University and the Graduate School of Banking of the South at Louisiana State University.

William G. Thompson has been a director of Home BancShares since 2004 and a director for Community Bank since 1988. He has served on the Audit Committee of Home BancShares since 2004. Mr. Thompson has over 25 years of banking experience. From 2002 to 2004, he served as Chairman of the Board of Community Bank. Mr. Thompson owns several privately held businesses located in Cabot, Arkansas, including Transloading Service, Inc., Thompson Service, Inc., and Thompson Sales, Inc.

Robert F. Birch, Jr. has been the President and Chief Executive Officer and a director of Twin City Bank since he helped found the bank in 2000. Mr. Birch has over 35 years of banking experience. He began his

banking career in 1970 with the original Twin City Bank, which was eventually sold to an out-of -state institution. He is a graduate of the University of Arkansas at Little Rock and the University of Colorado School of Bank Marketing in Boulder.

Tracy M. French has been the President and Chief Executive Officer and a director of Community Bank since 2002. Mr. French has over 20 years of banking experience. Prior to joining Community Bank, he served as Executive Vice President and director of First State Bank of Lonoke, Arkansas (no affiliation to Home BancShares), from 1991 to 2002. He is a graduate of the University of Arkansas at Fayetteville and the Southwestern Graduate School of Banking at Southern Methodist University.

James Ronnie Sims has been the President and Chief Executive Officer and a director of the Bank of Mountain View since 2005. Mr. Sims has 32 years of banking experience. He joined the Bank of Mountain View in 1988. He has attended the Mid South School of Banking in Memphis, Tennessee.

Board Composition

We are governed by a board of directors and various committees of the board that meet throughout the year. We have 12 directors, each of whom serves for a one-year term, subject to resignation or removal. Directors discharge their responsibilities throughout the year at board and committee meetings and also through telephone contact and other communications with the Chairman and Chief Executive Officer and other officers.

Director Independence

Nasdaq rules require that a majority of the directors of Nasdaq-listed companies be “independent.” An “independent director” generally means a person other than an officer or employee of the listed company or its subsidiaries, or any other individual having a relationship which, in the opinion of the listed company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. Certain categories of persons are deemed not to be independent under the Nasdaq rules, such as persons employed by the listed company within the last three years, and persons who have received (or whose immediate family members have received) payments exceeding a specified amount from the listed company within the last three years, excluding payments that are not of a disqualifying nature (such as compensation for board service, payments arising solely from investments in the listed company’s securities, and benefits under a tax-qualified retirement plan). Nasdaq rules impose somewhat more stringent independence requirements on persons who serve as members of the audit committee of a listed company.

Of the 12 persons who will serve on our board of directors immediately after the completion of this offering, the board has determined that nine are “independent” as defined under the Nasdaq National Market listing standards. Messrs. Allison, Strother, and Sims are not considered independent because they are officers of Home BancShares.

Committees of the Board

Our board of directors has four standing committees: the Audit Committee, the Compensation Committee, the Nominating Committee, and the Asset/ Liability Committee.

Audit Committee. Our Audit Committee is comprised of Jack E. Engelkes, Herren C. Hickingbotham, William G. Thompson, and Alex R. Lieblong, all of whom are “independent directors” as defined under the Nasdaq National Market listing standards. We believe that Mr. Engelkes, Chairman of the Audit Committee, qualifies as an “audit committee financial expert” as that term is defined in Securities and Exchange Commission regulations. Our board believes that all of the Audit Committee members have the financial knowledge, business experience and independent judgment necessary for service on the Audit Committee. The Audit Committee has the responsibility of reviewing financial statements, evaluating internal accounting

controls, reviewing reports of regulatory authorities and determining that all audits and examinations required by law are properly and timely conducted. To carry out its duties, our Audit Committee has the power to:


	•	appoint, approve compensation and oversee the work of the independent auditor;

	•	resolve disagreements between management and the auditors regarding financial reporting;

	•	pre-approve all auditing and appropriate non-auditing services performed by the independent auditor;

	•	retain independent counsel and accountants to assist the committee;

	•	seek information it requires from employees or external parties; and

	•	meet with our officers, independent auditors or outside counsel as necessary.

Compensation Committee. Our Board of Directors has adopted a written charter for our Compensation Committee. The Compensation Committee is composed of three directors: Dale A. Bruns, Richard H. Ashley, and Jack E. Engelkes. The Board has determined that each of the Compensation Committee members is independent under applicable rules and regulations of the Nasdaq National Market listing standards and applicable standards of independence prescribed for purposes of any federal securities, tax and other laws relating to the committee’s duties and responsibilities, including Section 162(m) of the Internal Revenue Code. Mr. Bruns serves as the Compensation Committee’s Chairman.

Nominating Committee. Our Nominating Committee is comprised of Alex R. Lieblong, Dale A. Bruns, William G. Thompson, and Frank D. Hickingbotham, all of whom are “independent directors” as defined under the Nasdaq National Market listing standards. Mr. Lieblong is the Chairman of the Nominating Committee. The Nominating Committee has not adopted a formal policy or process for identifying or evaluating director nominees, but informally solicits and considers recommendations from a variety of sources, including other directors, members of the community, our customers and shareholders and professionals in the financial services and other industries. Similarly, the Nominating Committee does not prescribe any specific qualifications or skills that a nominee must possess, although it considers the potential nominee’s business experience, knowledge of us and the financial services industry, experience in serving as one of our directors or as a director of another financial institution or public company generally, wisdom, integrity and analytical ability, familiarity with and participation in the communities served by us, commitment to and availability for service as a director, and any other factors the Nominating Committee deems relevant.

Asset/ Liability Committee. Our Asset/ Liability Committee consists of John W. Allison, Richard H. Ashley, James G. Hinkle, and Ron W. Strother. Mr. Strother serves as Chairman of the Asset/ Liability Committee. The Asset/ Liability Committee is primarily responsible for:


	•	development and control over the implementation of liquidity risk and market risk management policies;

	•	review of interest rate movements, forecasts, and the development of Home BancShares strategy under specific market conditions; and

	•	continued monitoring of the overall asset/liability structure of our bank subsidiaries to minimize interest rate sensitivity and liquidity risk.

Code of Ethics

We have adopted a Code of Ethics that applies to all of our directors, officers, and employees. We believe our Code of Ethics is reasonably designed to deter wrongdoing and to promote honest and ethical conduct, including the ethical handling of conflicts of interest, full, fair and accurate disclosure in filings and other public communications made by us, compliance with applicable laws, prompt internal reporting of ethics violations, and accountability for adherence to the Code of Ethics.

Compensation Committee Interlocks and Insider Participation

During 2005, Messrs. Bruns, Ashley, Engelkes and Allison served as members of the Compensation Committee, together with James M. Park, a former director. Mr. Allison, our Chairman and Chief Executive Officer, resigned from the Compensation Committee on December 31, 2005. None of the other members of the committee served as an officer or employee of Home BancShares or any of our bank subsidiaries. During 2005, none of our executive officers served as a director or member of the Compensation Committee (or group performing equivalent functions) of any other entity for which any of our independent directors served as an executive officer. See “Certain Transactions and Business Relationships” for information concerning transactions during 2005 involving Messrs. Allison and Ashley.

Director Compensation

During 2005, our non-employee directors received $300 ($600 for the chairman) for each meeting of the board or a board committee attended. For 2006, directors will receive $1,000 ($2,000 for the chairman) for each board meeting attended, directors serving on the Audit or Compensation Committees will receive $400 ($800 for the chairman) for each meeting attended of those committees, and directors serving on other board committees will receive $250 ($500 for the chairman) for each meeting attended of those other committees.

Executive Compensation and Other Benefits

The following table sets forth various elements of compensation awarded to or paid by us for services rendered in all capacities by our Chief Executive Officer and our four most highly-compensated executive officers, our “named executive officers,” during the fiscal year ended December 31, 2005:

Summary Compensation Table


							Long Term
	Annual Compensation						Compensation

							Securities
					Other Annual		Underlying		All Other
Name and Principal Positions	Salary		Bonus		Compensation		Options/SARS		Compensation

John W. Allison Chairman and Chief Executive Officer	$	—	$	—	$	23,820		135,000	$	—
Ron W. Strother President and Chief Operating Officer		250,000		50,000		—		—		11,500	(1)
C. Randall Sims President of First State Bank		190,000		80,750		—		36,000		9,761	(1)
Tracy M. French President of Community Bank		197,836		71,500		—		30,000		6,597	(2)
Robert F. Birch, Jr. President of Twin City Bank		190,000		66,500		—		30,000		5,700	(1)


(1)	Includes our annual contribution to the 401(k) plan.

(2)	Includes our annual contribution to the 401(k) plan ($5,717) and life insurance premiums ($881).

Stock Option/SAR Grants in Fiscal Year 2005

The following table contains information about option and SARS awards made to each named executive officer during the fiscal year ended December 31, 2005:


	Number
	of Total		% of Total
	Options/		Options/							Potential Realizable Value at
	SARS		SARS							Assumed Annual Rates of
	Granted		Granted			Exercise				Stock Price Appreciation for
	to		to			Price				Option Term
	Employee		Employee			per		Expiration
Name	in 2005		in 2005			Share		Date		5%		10%

John W. Allison (Options)		75,000		18.03	%	$	12.67		7/27/2015	$	1,547,857	$	2,464,704
John W. Allison (SARS)		60,000		14.42			12.67		1/1/2010		970,229		1,224,310
Ron W. Strother		—		—			—		—		—		—
C. Randall Sims (SARS)		36,000		8.65			12.67		1/1/2010		582,138		734,586
Tracy M. French (SARS)		30,000		7.21			12.67		1/1/2010		485,115		612,155
Robert F. Birch, Jr. (SARS)		30,000		7.21			12.67		1/1/2010		485,115		612,155

Aggregated Option/ SAR Exercises in 2005 and Year-End Option/ SAR Values

The following table shows the number of shares of our common stock covered by exercisable options and SARS held by the named executive officers as of December 31, 2005. Also reported are the values for “in-the -money” options, which represent the positive spread between the exercise price of any such existing options and the year-end price ($12.67 per share) of our common stock. There were no “in-the -money” SARS as of December 31, 2005.


					Number of Securities
					Underlying Unexercised					Value of Unexercised
	Shares				Options/SARS as of					in-the-Money Options/SARS
	Acquired				December 31, 2005					as of December 31, 2005
	on		Value
Name	Exercise		Realized		Exercisable			Unexercisable		Exercisable		Unexercisable

John W. Allison		—		—		96,828	(1)		63,000	$	75,426	$	3,504
Ron W. Strother		24,000	$	12.67		—			96,000		—		—
C. Randall Sims		—		—		61,365			36,000		327,689		—
Tracy M. French		—		—		—			30,000		—		—
Robert F. Birch, Jr.		—		—		50,910			30,000		120,148		—


(1)	Includes 948 shares of Class B preferred stock convertible into 2,844 shares of common stock.

Equity and Benefit Plans


	*Supplemental Executive Retirement Plan*

Community Bank has purchased a life insurance policy on its President and Chief Executive Officer, Tracy M. French. The policy was designed to provide an annual retirement benefit that grows on a tax-deferred basis. A portion of the benefit is determined by an indexed formula. The balance of the benefit is determined by crediting interest. The index used to calculate the amount of the retirement benefit is the earnings on specified life insurance policies. Community Bank retains the opportunity costs on the premiums paid. Prior to Mr. French’s retirement, any earnings in excess of the opportunity costs are accrued to a liability reserve account for his benefit. In addition, that liability account is credited with interest at a rate of 8.0%. At

retirement, this liability reserve account is amortized with interest and paid out over a period of 15 years. Subsequent to the liability account being paid out in full, Mr. French will begin receiving an “index retirement benefit” payable for life. If Mr. French dies while there is a balance in his account, this balance will be paid in a lump sum to Mr. French’s beneficiaries.

Community Bank has all ownership rights in the death benefits and surrender values of the insurance policy on Mr. French. Its obligations under the retirement benefit portion of this policy are unfunded; however, the bank has purchased life insurance policies on Mr. French that are actuarially designed to offset the annual expenses associated with the benefit portion of the policy and will, given reasonable actuarial assumptions, offset all of the cost during Mr. French’s lifetime and provide a complete recovery of costs at death.


	*401(k) Plan*

All our full- and part-time employees over the age of 21 are eligible to participate in our 401(k) Plan immediately. We contribute a matching contribution equal to 50% of the participants’ first 6% of deferred compensation contribution. In addition, we may make a discretionary contribution of up to 3% of total compensation.


	*Health and Insurance Benefits*

Our full-time officers and employees are provided hospitalization and major medical insurance. We pay a substantial part of the premiums for these coverages. All insurance coverage under these plans is provided under group plans on generally the same basis to all of our full-time employees. Also, we provide other basic insurance coverage including dental, life, and long-term disability insurance.

In 2004, First State Bank adopted an endorsement split dollar life insurance plan which provides for the purchase of life insurance policies insuring the life of Mr. Allison. Both the bank and Mr. Allison will have an interest in each of the policies, and therefore, this is classified as an endorsement split-dollar plan. Should Mr. Allison die anytime after six months from the time the bank completes a public offering, Mr. Allison’s beneficiaries will be entitled to an amount equal to 50% of the net-at-risk insurance portion of the total proceeds. The net-at-risk portion is the total proceeds less the cash value of the policy. Mr. Allison recognizes the economic value of this death benefit each year on his individual income tax return. The beneficiaries of the policies are named by Mr. Allison and the bank will receive the remainder of the death benefit. The bank has all ownership rights in the death benefits and surrender values of the policies. The premium paid on June 4, 2004, for the policies was $4.8 million. Six months after this offering, the death benefits payable under these policies will split between us and Mr. Allison’s beneficiaries. If the death benefit were paid in 2006, approximately $7.7 million would be paid to us and approximately $2.4 million would be paid to Mr. Allison’s beneficiaries.


	*Pension Plans*

In connection with the acquisition of Bank of Mountain View and Community Bank, we assumed two defined benefit pension plans. The Community Bank plan was frozen in 2000 and Bank of Mountain View was frozen at the time of the acquisition, as a result there have been no new participants in the plans and no additional benefits earned. We made employer contributions to the plans of $767,000 in 2005. The minimum contribution for 2006 is estimated to be approximately $200,000. Some of our executive officers and board members are participants in these frozen plans. The two plans have combined assets of $3.5 million as of December 31, 2005.


	*2006 Stock Option and Performance Incentive Plan*

On March 13, 2006, our board of directors adopted the 2006 Stock Option and Performance Incentive Plan. The Plan has been submitted to our shareholders for approval at the 2006 annual meeting of shareholders. The purpose of the Plan is to attract and retain highly qualified officers, directors, key employees, and other persons, and to motivate those persons to improve our business results.

The Plan amends and restates various prior plans that were either adopted by us or companies that we acquired. Awards made under any of the prior plans will be subject to the terms and conditions of the Plan, which is designed not to impair the rights of award holders under the prior plans. The Plan goes beyond the prior plans by including new types of awards (such as unrestricted stock, performance shares, and performance and annual incentive awards) in addition to the stock options (incentive and non-qualified), stock appreciation rights, and restricted stock that could have been awarded under one or more of the prior plans.

As of March 13, 2006, options for a total of 613,604 shares of common stock outstanding under the prior plans became subject to the Plan. Also, on that date, our board of directors replaced 341,000 outstanding stock appreciation rights with 354,640 options, each with an exercise price of $13.18. The options issued in replacement of the SARS are subject to achievement of the same financial goals by us and our bank subsidiaries over the five-year period ending January 1, 2010. In addition, our outstanding preferred stock options (which, upon exercise and conversion, will result in the issuance of 80,720 shares of common stock) are also subject to the Plan. As of March 13, 2006 the number of shares remaining available for issuance under Plan was 151,036.

Administration. The Plan is administered by our Compensation Committee. Subject to the terms of the Plan, the Compensation Committee may select participants to receive awards; determine the types of awards, terms, and conditions of awards; and interpret provisions of the Plan.

Source of Shares. The common stock issued or to be issued under the Plan consists of authorized but unissued shares and treasury shares. If any shares covered by an award are not purchased or are forfeited, or if an award otherwise terminates without delivery of any common stock, then the number of shares of common stock counted against the aggregate number of shares available under the Plan with respect to the award will, to the extent of any such forfeiture or termination, again be available for making awards.

If the option price, a withholding obligation or any other payment is satisfied by tendering shares or by withholding shares, only the number of shares issued net of the shares tendered or withheld will be deemed delivered for the purpose of determining the maximum number of shares available for delivery under the Plan.

Eligibility. Awards may be made under the Plan to employees, officers, directors, consultants, and other key persons. In determining to whom awards will be granted, the committee will take into account the nature of the services, potential contributions, and other relevant factors.

Amendment or Termination of the Plan. While our board of directors may suspend, terminate or amend the Plan at any time, no amendment may adversely impair the rights of grantees with respect to outstanding awards. In addition, an amendment will be contingent on approval of our shareholders to the extent required by law. Unless terminated earlier, the Plan will automatically terminate ten years after its adoption by our board of directors.

Options. The Plan permits the granting of options to purchase shares of common stock intended to qualify as incentive stock options under the Internal Revenue Code (incentive stock options) and stock options that do not qualify as incentive stock options (non-qualified stock options). The exercise price of each stock option may not be less than 100% of the fair market value of our common stock on the date of grant. If we were to grant incentive stock options to any 10% shareholder, the exercise price may not be less than 110% of the fair market value of our common stock on the date of grant. We may grant options in substitution for options held by employees of companies that we may acquire.

The term of each stock option will be fixed by the Compensation Committee and may not exceed ten years from the date of grant. The committee determines at what time or times each option may be exercised and the period of time, if any, after retirement, death, disability or termination of employment during which options may be exercised. The exercisability of options may be accelerated by the Compensation Committee. In general, an optionee may pay the exercise price of an option by cash or cash equivalent, or, if permitted by

the committee, by tendering shares of our common stock (which if acquired from us have been held by the optionee for at least six months).

Stock options granted under the Plan may not be sold, transferred, pledged, or assigned other than by will or under applicable laws of descent and distribution or pursuant to a domestic relations order.

Other Awards. The Compensation Committee may also award under the Plan:


	•	restricted shares of common stock, which are shares of our common stock subject to restrictions;

	•	stock units, which are common stock units subject to restrictions;

	•	unrestricted shares of common stock, which are shares of our common stock issued at no cost or for a purchase price determined by the Compensation Committee and which are free from any restrictions under the Plan;

	•	tax offset payments, which are common stock or cash used to pay income taxes incurred as a result of participation in the Plan;

	•	stock appreciation rights, tandem or non-tandem, which are a right to receive a number of shares or, in the discretion of the committee, an amount in cash or a combination of shares and cash, based on the increase in the fair market value of the shares underlying the right during a stated period specified by the Compensation Committee; and

	•	performance and annual incentive awards, ultimately payable in our common stock or cash, as determined by the Compensation Committee. The Compensation Committee may grant multi-year and annual incentive awards subject to achievement of specified goals tied to business criteria (described below). The Compensation Committee may modify, amend or adjust the terms of each award and performance goal.

Section 162(m) of the Internal Revenue Code limits publicly held companies to an annual deduction for federal income tax purposes of $1.0 million for compensation paid to their chief executive officer and the four highest compensated executive officers (other than the chief executive officer) determined at the end of each year (referred to as covered employees). However, performance-based compensation is excluded from this limitation. Although the Plan will not be subject to Section 162(m) because Section 162(m) provides for a grace period for awards following an initial public offering, the Plan is designed to permit the Compensation Committee to grant awards that qualify as performance-based compensation for purposes of satisfying the conditions of Section 162(m) at such time as the Plan becomes subject to Section 162(m).

Business Criteria. The Compensation Committee will use one or more of the following business criteria, on a consolidated basis, and/or with respect to specified subsidiaries (except with respect to the total shareholder return and earnings per share criteria), in establishing performance goals for awards intended to comply with Section 162(m) of the Internal Revenue Code granted to covered employees:


	•	shareholder return;

	•	return on assets;

	•	growth in assets;

	•	return on equity;

	•	gross margin;

	•	earnings per share;

	•	net income;

	•	operating income; and

	•	free cash flow.

Adjustments for Stock Dividends and Similar Events. The Compensation Committee will make appropriate adjustments in outstanding awards and the number of shares available for issuance under the Plan, including the individual limitations on awards, to reflect common stock dividends, stock splits, spin-offs and other similar events.

Employment Agreements

We do not have any employment, salary continuation or severance agreements currently in effect with any of our executive officers.

Certain Transactions and Business Relationships

Banking Transactions. Most of our directors and officers, as well as the firms and businesses with which they or members of their immediate families are associated, are customers of our bank subsidiaries. Our bank subsidiaries have engaged in a variety of loan transactions in the ordinary course of business with these individuals and their families and businesses. As of December 31, 2005, our fourth largest loan commitment, totaling $15.3 million, was to a real estate developer and investor who serves as a director of one of our bank subsidiaries. It is anticipated that such transactions will occur in the future. In the case of all such related party transactions, each transaction was approved by either our board of directors or the bank subsidiary’s board of directors. In addition, these loans were made on the same terms, including interest rates and collateral requirements, as those prevailing at the time for comparable transactions of others. In the opinion of our management, those loan transactions do not involve more than a normal risk of collectibility or present other unfavorable features.

Real Estate Transactions. We lease certain of our properties from persons who are affiliated with us. None of our directors, executive officers or 5% shareholders directly or indirectly received in excess of $60,000 of the amounts we paid during 2005 for these leases.

We believe the terms of each of the agreements described above are no less favorable to us than we could have obtained from an unaffiliated third party. We expect we will continue to engage in similar banking and business transactions in the ordinary course of business with our directors, executive officers, principal shareholders and their associates. In the future, all related party transactions will be reported to the Audit Committee of our board of directors.

PRINCIPAL SHAREHOLDERS

The following table sets forth certain information as of December 31, 2005, concerning the number and percentage of shares of our common stock beneficially owned by our directors, our named executive officers, and all of our directors and executive officers as a group, and by each person known to us who beneficially owned more than 5% of the outstanding shares of our common stock.

Information in this table is based upon “beneficial ownership” concepts described in the rules issued under the Securities Exchange Act of 1934. Under these rules, a person is deemed to be a beneficial owner of any shares of our common stock if that person has or shares “voting power,” which includes the power to vote or direct the voting of the shares, or “investment power,” which includes the right to dispose or direct the disposition of the shares. Thus, under the rules, more than one person may be deemed to be a beneficial owner of the same shares. A person is also deemed to be a beneficial owner of any shares as to which that person has the right to acquire beneficial ownership within 60 days from December 31, 2005.

Except as otherwise indicated, all shares are owned directly, and the named person possesses sole voting and investment power with respect to his shares. The address for each of our directors and named executive officers is c/o Home BancShares, Inc., 719 Harkrider, Suite 300, Conway, Arkansas 72032.


		Amount and Nature		Percent of Shares			Percent of Shares
		of Beneficial		Beneficially Owned			Beneficially Owned
Name of Beneficial Owner		Ownership		Before Offering(1)			After Offering(1)

*5% or greater holders:*
	Robert H. Adcock(2)(3)		861,363		7.1	%			%
*Directors and executive officers:*
	John W. Allison(3)(4)		2,490,792		20.4	%			%
	Richard H. Ashley(3)(5)		1,020,339		8.4
	Robert F. Birch, Jr.(3)(6)		99,129		*			*
	Dale A. Bruns(3)(7)		102,675		*			*
	Richard A. Buckheim		—		—			—
	Jack E. Engelkes(3)(8)		52,842		*			*
	Tracy M. French		—		—			—
	Frank D. Hickingbotham(3)(9)		617,937		5.1
	Herren C. Hickingbotham(3)		222,813		1.8
	James G. Hinkle(10)		167,763		1.4
	Alex R. Lieblong(3)(11)		545,226		4.5
	C. Randall Sims(3)(12)		134,562		1.1
	Ron W. Strother(3)		24,000		*			*
	William G. Thompson		—		—			—
*All directors and executive officers as a group (16 persons)(3)*			5,596,446		45.1	%			%


	*	Less than 1%.

(1)

The percentage of our common stock beneficially owned “before offering” was calculated based on 12,113,865 shares of our common stock outstanding as of December 31, 2005. The percentage of our common stock beneficially owned “after offering” was calculated based on 12,113,865 shares of our common stock outstanding as of December 31, 2005, and assumes the issuance of shares of common stock in connection with this offering but no exercise of the underwriters’ over-allotment option. In each case, the percentage assumes that the person or group shown in each row has exercised all options, and converted to common stock all shares of our preferred stock, that are exercisable or convertible by that person or group within 60 days of December 31, 2005. The table does not reflect any shares that may be acquired by the named person in this offering.


	(2)	All of the shares beneficially owned by Mr. Adcock are held through blind trusts established for his benefit. The trustee’s address is 1225 Front Street, Conway, Arkansas 72032.

	(3)	Includes shares that may be issued upon the exercise of options, as follows: Mr. Adcock, 11,160 shares; Mr. Allison, 93,984 shares; Mr. Ashley, 1,212 shares; Mr. Birch, 50,910 shares; Mr. Bruns, 12,204 shares; Mr. Engelkes, 1,500 shares; Mr. Frank D. Hickingbotham, 1,212 shares; Mr. Herren C. Hickingbotham, 2,424 shares; Mr. Lieblong, 6,750 shares; Mr. Sims, 61,365 shares; and all directors and executive officers as a group, 292,926 shares.

	(4)	Includes 360,000 shares owned by Mr. Allison’s spouse, either individually or as custodian for their children.

	(5)	Includes 354,390 shares owned by Conservative Development Company, a corporation of which Mr. Ashley is president.

	(6)	Includes 9,210 shares owned by Mr. Birch’s 401(k) plan.

	(7)	Includes 90,471 shares that are owned jointly by Mr. Bruns and his spouse.

	(8)	Includes 36,000 shares owned by Mr. Engelkes’ spouse, and 9,000 shares for which Mr. Engelkes is custodian for his children.

	(9)	Includes 616,725 shares owned by FDH Enterprises, Inc., a corporation controlled by Mr. Frank D. Hickingbotham.


(10)	All shares are owned by the James G. Hinkle Revocable Trust.

(11)	Includes 158,550 shares that are owned jointly by Mr. Lieblong and his spouse, and 342,900 shares that are owned by Key Colony Fund L.P., a hedge fund of which Mr. Lieblong is the managing partner.

(12)	Includes 48,999 shares that are owned jointly by Mr. Sims and his spouse, or with his spouse and his children, and 24,198 shares owned by Mr. Sims’ 401(k) plan.

SUPERVISION AND REGULATION

The following is a summary description of the relevant laws, rules and regulations governing banks and bank holding companies. The descriptions of, and references to, the statutes and regulations below are brief summaries and do not purport to be complete. The descriptions are qualified in their entirety by reference to the specific statutes and regulations discussed.

General

We and our subsidiary banks are subject to extensive state and federal banking regulations that impose restrictions on and provide for general regulatory oversight of our company and its operations. These laws generally are intended to protect depositors, the deposit insurance fund of the FDIC and the banking system as a whole, and not shareholders. The following discussion describes the material elements of the regulatory framework that applies to us.

Home BancShares

We are a bank holding company registered under the federal Bank Holding Company Act of 1956 (the “Bank Holding Company Act”) and are subject to supervision, regulation and examination by the Federal Reserve Board. We have elected under the Gramm-Leach-Bliley Act to become a financial holding company. The Bank Holding Company Act and other federal laws subject bank holding companies to particular restrictions on the types of activities in which they may engage, and to a range of supervisory requirements and activities, including regulatory enforcement actions for violations of laws and regulations.

Acquisitions of Banks. The Bank Holding Company Act requires every bank holding company to obtain the Federal Reserve Board’s prior approval before:


	•	acquiring direct or indirect ownership or control of any voting shares of any bank if, after the acquisition, the bank holding company will directly or indirectly own or control more than 5% of the bank’s voting shares;

	•	acquiring all or substantially all of the assets of any bank; or

	•	merging or consolidating with any other bank holding company.

Additionally, the Bank Holding Company Act provides that the Federal Reserve Board may not approve any of these transactions if it would result in or tend to create a monopoly, substantially lessen competition or otherwise function as a restraint of trade, unless the anti-competitive effects of the proposed transaction are clearly outweighed by the public interest in meeting the convenience and needs of the community to be served. The Federal Reserve Board is also required to consider the financial and managerial resources and future prospects of the bank holding companies and banks concerned and the convenience and needs of the community to be served. The Federal Reserve Board’s consideration of financial resources generally focuses on capital adequacy, which is discussed below.

Under the Bank Holding Company Act, if adequately capitalized and adequately managed, we, as well as other banks located within Arkansas or Florida, may purchase a bank located outside of Arkansas or Florida. Conversely, an adequately capitalized and adequately managed bank holding company located outside of Arkansas or Florida may purchase a bank located inside Arkansas or Florida. In each case, however, restrictions may be placed on the acquisition of a bank that has only been in existence for a limited amount of time or will result in specified concentrations of deposits. For example, Florida law prohibits a bank holding company from acquiring control of a Florida financial institution until the target institution has been incorporated for three years.

Change in Bank Control. Subject to various exceptions, the Bank Holding Company Act and the Change in Bank Control Act, together with related regulations, require Federal Reserve Board approval prior to any person or company acquiring “control” of a bank holding company. Control is conclusively presumed to exist if an individual or company acquires 25% or more of any class of voting securities of the bank holding

company. Control is rebuttably presumed to exist if a person or company acquires 10% or more, but less than 25%, of any class of voting securities and either:


	•	the bank holding company has registered securities under Section 12 of the Securities Act of 1934; or

	•	no other person owns a greater percentage of that class of voting securities immediately after the transaction.

Upon completion of this offering, our common stock will be registered under the Securities Exchange Act of 1934, as amended. The regulations provide a procedure for challenging any rebuttable presumption of control.

Permitted Activities. A bank holding company is generally permitted under the Bank Holding Company Act to engage in or acquire direct or indirect control of more than 5% of the voting shares of any company engaged in the following activities:


	•	banking or managing or controlling banks; and

	•	any activity that the Federal Reserve Board determines to be so closely related to banking as to be a proper incident to the business of banking.

Activities that the Federal Reserve Board has found to be so closely related to banking as to be a proper incident to the business of banking include:


	•	factoring accounts receivable;

	•	making, acquiring, brokering or servicing loans and usual related activities;

	•	leasing personal or real property;

	•	operating a non-bank depository institution, such as a savings association;

	•	trust company functions;

	•	financial and investment advisory activities;

	•	conducting discount securities brokerage activities;

	•	underwriting and dealing in government obligations and money market instruments;

	•	providing specified management consulting and counseling activities;

	•	performing selected data processing services and support services;

	•	acting as agent or broker in selling credit life insurance and other types of insurance in connection with credit transactions; and

	•	performing selected insurance underwriting activities.

Despite prior approval, the Federal Reserve Board may order a bank holding company or its subsidiaries to terminate any of these activities or to terminate its ownership or control of any subsidiary when it has reasonable cause to believe that the bank holding company’s continued ownership, activity or control constitutes a serious risk to the financial safety, soundness or stability of it or any of its bank subsidiaries.

Gramm-Leach-Bliley Act; Financial Holding Companies. The Gramm-Leach-Bliley Financial Modernization Act of 1999 revised and expanded the provisions of the Bank Holding Company Act by including a new section that permits a bank holding company to elect to become a financial holding company to engage in a full range of activities that are “financial in nature.” The qualification requirements and the process for a bank holding company that elects to be treated as a financial holding company require that all of the subsidiary banks controlled by the bank holding company at the time of election to become a financial holding company must be and remain at all times “well-capitalized” and “well managed.” Home BancShares made an election to become a financial holding company on May 15, 2003.

The Gramm-Leach-Bliley Act further requires that, in the event that the bank holding company elects to become a financial holding company, the election must be made by filing a written declaration with the appropriate Federal Reserve Bank that:


	•	states that the bank holding company elects to become a financial holding company;

	•	provides the name and head office address of the bank holding company and each depository institution controlled by the bank holding company;

	•	certifies that each depository institution controlled by the bank holding company is “well-capitalized” as of the date the bank holding company submits its declaration;

	•	provides the capital ratios for all relevant capital measures as of the close of the previous quarter for each depository institution controlled by the bank holding company; and

	•	certifies that each depository institution controlled by the bank holding company is “well managed” as of the date the bank holding company submits its declaration.

The bank holding company must have also achieved at least a rating of “satisfactory record of meeting community credit needs” under the Community Reinvestment Act during the institution’s most recent examination.

Financial holding companies may engage, directly or indirectly, in any activity that is determined to be:


	•	financial in nature;

	•	incidental to such financial activity; or

	•	complementary to a financial activity provided it “does not pose a substantial risk to the safety and soundness of depository institutions or the financial system generally.”

The Gramm-Leach-Bliley Act specifically provides that the following activities have been determined to be “financial in nature”: lending, trust and other banking activities; insurance activities; financial or economic advisory services; securitization of assets; securities underwriting and dealing; existing bank holding company domestic activities; existing bank holding company foreign activities, and merchant banking activities. In addition, the Gramm-Leach-Bliley Act specifically gives the Federal Reserve Board the authority, by regulation or order, to expand the list of “financial” or “incidental” activities, but requires consultation with the United States Treasury Department, and gives the Federal Reserve Board authority to allow a financial holding company to engage in any activity that is “complementary” to a financial activity and does not “pose a substantial risk to the safety and soundness of depository institutions or the financial system generally.”

Support of Subsidiary Institutions. Under Federal Reserve Board policy, we are expected to act as a source of financial strength for our subsidiary banks and are required to commit resources to support them. Our obligation to act as a source of financial strength extends to White River Bancshares, Inc., despite the fact that we are a minority owner of that company and thus have no ability to control its operations. Moreover, an obligation to support our bank subsidiaries and White River Bancshares may be required at times when, without this Federal Reserve Board policy, we might not be inclined to provide it. In addition, any capital loans made by us to our subsidiary banks will be repaid only after their deposits and various other obligations are repaid in full. In the unlikely event of our bankruptcy, any commitment by us to a federal bank regulatory agency to maintain the capital of our subsidiary banks and White River Bancshares will be assumed by the bankruptcy trustee and entitled to a priority of payment.

Safe and Sound Banking Practices. Bank holding companies are not permitted to engage in unsafe and unsound banking practices. The Federal Reserve Board’s Regulation Y, for example, generally requires a holding company to give the Federal Reserve Board prior notice of any redemption or repurchase of its own equity securities, if the consideration to be paid, together with the consideration paid for any repurchases or redemptions in the preceding year, is equal to 10% or more of the company’s consolidated net worth. The Federal Reserve Board may oppose the transaction if it believes that the transaction would constitute an unsafe or unsound practice or would violate any law or regulation. Depending upon the circumstances, the

Federal Reserve Board could take the position that paying a dividend would constitute an unsafe or unsound banking practice.

The Federal Reserve Board has broad authority to prohibit activities of bank holding companies and their non-banking subsidiaries which represent unsafe and unsound banking practices or which constitute violations of laws or regulations, and can assess civil money penalties for certain activities conducted on a knowing and reckless basis, if those activities caused a substantial loss to a depository institution. The penalties can be as high as $1 million for each day the activity continues.

Annual Reporting; Examinations. We are required to file annual reports with the Federal Reserve Board, and such additional information as the Federal Reserve Board may require pursuant to the Bank Holding Company Act. The Federal Reserve Board may examine a bank holding company or any of its subsidiaries, and charge the company for the cost of such examination.

Capital Adequacy Requirements. The Federal Reserve Board has adopted a system using risk-based capital guidelines to evaluate the capital adequacy of bank holding companies having $150 million or more in assets on a consolidated basis. We currently have consolidated assets in excess of $150 million, and are therefore subject to the Federal Reserve Board’s capital adequacy guidelines.

Under the guidelines, specific categories of assets are assigned different risk weights, based generally on the perceived credit risk of the asset. These risk weights are multiplied by corresponding asset balances to determine a “risk-weighted” asset base. The guidelines require a minimum total risk-based capital ratio of 8.0% (of which at least 4.0% is required to consist of Tier 1 capital elements). Total capital is the sum of Tier 1 and Tier 2 capital. To be considered “well-capitalized,” a bank holding company must maintain, on a consolidated basis, (i) a Tier 1 risk-based capital ratio of at least 6.0%, and (ii) a total risk-based capital ratio of 10.0% or greater. As of December 31, 2005, our Tier 1 risk-based capital ratio was 12.25% and our total risk-based capital ratio was 13.51%. Thus, we are considered “well-capitalized” for regulatory purposes.

In addition to the risk-based capital guidelines, the Federal Reserve Board uses a leverage ratio as an additional tool to evaluate the capital adequacy of bank holding companies. The leverage ratio is a company’s Tier 1 capital divided by its average total consolidated assets. Certain highly-rated bank holding companies may maintain a minimum leverage ratio of 3.0%, but other bank holding companies are required to maintain a leverage ratio of at least 4.0%. As of December 31, 2005, our leverage ratio was 9.22%.

The federal banking agencies’ risk-based and leverage ratios are minimum supervisory ratios generally applicable to banking organizations that meet certain specified criteria. The federal bank regulatory agencies may set capital requirements for a particular banking organization that are higher than the minimum ratios when circumstances warrant. Federal Reserve Board guidelines also provide that banking organizations experiencing internal growth or making acquisitions will be expected to maintain strong capital positions, substantially above the minimum supervisory levels, without significant reliance on intangible assets.

Cross-guarantees. Under the Federal Deposit Insurance Act, or FDIA, a depository institution (which definition includes both banks and savings associations), the deposits of which are insured by the FDIC, can be held liable for any loss incurred by, or reasonably expected to be incurred by, the FDIC in connection with (1) the default of a commonly controlled FDIC-insured depository institution or (2) any assistance provided by the FDIC to any commonly controlled FDIC-insured depository institution “in danger of default.” “Default” is defined generally as the appointment of a conservator or a receiver and “in danger of default” is defined generally as the existence of certain conditions indicating that default is likely to occur in the absence of regulatory assistance. In some circumstances (depending upon the amount of the loss or anticipated loss suffered by the FDIC), cross-guarantee liability may result in the ultimate failure or insolvency of one or more insured depository institutions in a holding company structure. Any obligation or liability owed by a subsidiary bank to its parent company is subordinated to the subsidiary bank’s cross-guarantee liability with respect to commonly controlled insured depository institutions.

Because we are a legal entity separate and distinct from our subsidiary banks, our right to participate in the distribution of assets of any subsidiary upon the subsidiary’s liquidation or reorganization will be subject to the prior claims of the subsidiary’s creditors. In the event of a liquidation or other resolution of any of our

subsidiary banks, the claims of depositors and other general or subordinated creditors of such bank would be entitled to a priority of payment over the claims of holders of any obligation of such bank to its shareholders, including any depository institution holding company (such as Home BancShares) or any shareholder or creditor of such holding company.

Subsidiary Banks

General. Twin City Bank is chartered as an Arkansas state bank and is a member of the Federal Reserve System, making it primarily subject to regulation and supervision by both the Federal Reserve Board and the Arkansas State Bank Department. First State Bank, Community Bank, and Bank of Mountain View are each chartered as an Arkansas state bank, and are primarily subject to regulation and supervision by both the FDIC and the Arkansas State Bank Department. Marine Bank, which is chartered as a Florida state bank, is primarily subject to regulation and supervision by both the FDIC and the Florida Office of Financial Regulation. First State Bank, Community Bank, Bank of Mountain View, and Marine Bank have applied or are in the process of applying to become members of the Federal Reserve System and will, upon obtaining membership, become primarily subject to regulation at the federal level by the Federal Reserve Board. In addition, our subsidiary banks are subject to various requirements and restrictions under federal and state law, including requirements to maintain reserves against deposits, restrictions on the types and amounts of loans that may be granted and the interest that they may charge, and limitations on the types of investments they may make and on the types of services they may offer. Various consumer laws and regulations also affect the operations of our subsidiary banks.

Prompt Corrective Action. The Federal Deposit Insurance Corporation Improvement Act of 1991 establishes a system of prompt corrective action to resolve the problems of undercapitalized financial institutions. Under this system, the federal banking regulators have established five capital categories (well capitalized, adequately capitalized, undercapitalized, significantly undercapitalized and critically undercapitalized) in which all institutions are placed. Federal banking regulators are required to take various mandatory supervisory actions and are authorized to take other discretionary actions with respect to institutions in the three undercapitalized categories. The severity of the action depends upon the capital category in which the institution is placed. Generally, subject to a narrow exception, the banking regulator must appoint a receiver or conservator for an institution that is critically undercapitalized. The federal banking agencies have specified by regulation the relevant capital level for each category.

An institution that is categorized as undercapitalized, significantly undercapitalized or critically undercapitalized is required to submit an acceptable capital restoration plan to its appropriate federal banking agency. A bank holding company must guarantee that a subsidiary depository institution meets its capital restoration plan, subject to various limitations. The controlling holding company’s obligation to fund a capital restoration plan is limited to the lesser of 5% of an undercapitalized subsidiary’s assets at the time it became undercapitalized or the amount required to meet regulatory capital requirements. An undercapitalized institution is also generally prohibited from increasing its average total assets, making acquisitions, establishing any branches or engaging in any new line of business, except under an accepted capital restoration plan or with FDIC approval. The regulations also establish procedures for downgrading an institution to a lower capital category based on supervisory factors other than capital.

FDIC Insurance Assessments. The FDIC has adopted a risk-based assessment system for insured depository institutions that takes into account the risks attributable to different categories and concentrations of assets and liabilities. The system assigns an institution to one of three capital categories: (1) well capitalized; (2) adequately capitalized; and (3) undercapitalized. These three categories are substantially similar to the prompt corrective action categories described above, with the “undercapitalized” category including institutions that are undercapitalized, significantly undercapitalized and critically undercapitalized for prompt corrective action purposes. The FDIC also assigns an institution to one of three supervisory subgroups based on a supervisory evaluation that the institution’s primary federal regulator provides to the FDIC and information that the FDIC determines to be relevant to the institution’s financial condition and the risk posed to the deposit insurance funds. Assessments range from 0 to 27 cents per $100 of deposits, depending on the institution’s capital group and supervisory subgroup. In recent years, the assessment has

been set at zero for well-capitalized banks in the top supervisory subgroup, but there is expected to be an assessment in 2006 for all banks. The overall level of assessments depends primarily upon claims against the deposit insurance fund. If bank failures were to increase, assessments could rise significantly. In addition, the FDIC imposes assessments to help pay off the $780 million in annual interest payments on the $8 billion Financing Corporation bonds issued in the late 1980s as part of the government rescue of the thrift industry. This assessment rate is adjusted quarterly and is set at 1.34 cents per $100 of deposits for the fourth quarter of 2005. The FDIC may terminate its insurance of deposits if it finds that the institution has engaged in unsafe and unsound practices, is in an unsafe or unsound condition to continue operations, or has violated any applicable law, regulation, rule, order or condition imposed by the FDIC.

Legislative reforms to modernize the Federal Deposit Insurance System, including merging the Bank Insurance Fund (BIF) and the Savings Association Insurance Fund (SAIF) into a new Deposit Insurance Fund, were approved by Congress as part of a $39 billion budget bill and was signed by President Bush on February 15, 2006. In addition to merging the insurance funds, the legislation will:


	•	raise the deposit insurance limit on certain retirement accounts to $250,000 and index that limit for inflation;

	•	require the FDIC and National Credit Union Administration boards, starting in 2010 and every succeeding five years, to consider raising the standard maximum deposit insurance; and

	•	eliminate the current fixed 1.25 percent Designated Reserve Ratio and provide the FDIC with the discretion to set the DRR within a range of 1.15 to 1.50 percent for any given year.

Community Reinvestment Act. The Community Reinvestment Act requires, in connection with examinations of financial institutions, that federal banking regulators evaluate the record of each financial institution in meeting the credit needs of its local community, including low and moderate-income neighborhoods. These facts are also considered in evaluating mergers, acquisitions and applications to open a branch or facility. Failure to adequately meet these criteria could impose additional requirements and limitations on our subsidiary banks. Additionally, we must publicly disclose the terms of various Community Reinvestment Act-related agreements. Each of our subsidiary banks received “satisfactory” CRA ratings from their applicable federal banking regulatory at their last examinations.

Other Regulations. Interest and other charges collected or contracted for by our subsidiary banks are subject to state usury laws and federal laws concerning interest rates.

Federal Laws Applicable to Credit Transactions. The loan operations of our subsidiary banks are also subject to federal laws applicable to credit transactions, such as the:


	•	Truth-In-Lending Act, governing disclosures of credit terms to consumer borrowers;

	•	Home Mortgage Disclosure Act of 1975, requiring financial institutions to provide information to enable the public and public officials to determine whether a financial institution is fulfilling its obligation to help meet the housing needs of the community it serves;

	•	Equal Credit Opportunity Act, prohibiting discrimination on the basis of race, creed or other prohibited factors in extending credit;

	•	Fair Credit Reporting Act of 1978, governing the use and provision of information to credit reporting agencies;

	•	Fair Debt Collection Act, governing the manner in which consumer debts may be collected by collection agencies;

	•	Servicemembers Civil Relief Act, which amended the Soldiers’ and Sailors’ Civil Relief Act of 1940, governing the repayment terms of, and property rights underlying, secured obligations of persons in military service; and

	•	the rules and regulations of the various federal agencies charged with the responsibility of implementing these federal laws.

Federal Laws Applicable to Deposit Operations. The deposit operations of our subsidiary banks are subject to:


	•	the Right to Financial Privacy Act, which imposes a duty to maintain confidentiality of consumer financial records and prescribes procedures for complying with administrative subpoenas of financial records; and

	•	the Electronic Funds Transfer Act and Regulation E issued by the Federal Reserve Board to implement that act, which govern automatic deposits to and withdrawals from deposit accounts and customers’ rights and liabilities arising from the use of automated teller machines and other electronic banking services.

Loans to Insiders. Sections 22(g) and (h) of the Federal Reserve Act and its implementing regulation, Regulation O, place restrictions on loans by a bank to executive officers, directors, and principal shareholders. Under Section 22(h), loans to a director, an executive officer and to a greater than 10% shareholder of a bank and certain of their related interests, or insiders, and insiders of affiliates, may not exceed, together with all other outstanding loans to such person and related interests, the bank’s loans-to -one-borrower limit (generally equal to 15% of the institution’s unimpaired capital and surplus). Section 22(h) also requires that loans to insiders and to insiders of affiliates be made on terms substantially the same as offered in comparable transactions to other persons, unless the loans are made pursuant to a benefit or compensation program that (i) is widely available to employees of the bank and (ii) does not give preference to insiders over other employees of the bank. Section 22(h) also requires prior Board of Directors approval for certain loans, and the aggregate amount of extensions of credit by a bank to all insiders cannot exceed the institution’s unimpaired capital and surplus. Furthermore, Section 22(g) places additional restrictions on loans to executive officers.

Capital Requirements. Our subsidiary banks are also subject to certain restrictions on the payment of dividends as a result of the requirement that it maintain adequate levels of capital in accordance with guidelines promulgated from time to time by applicable regulators.

The Federal Reserve Bank, with respect to our bank subsidiaries that are members of the Federal Reserve System, or the FDIC, with respect to our bank subsidiaries that are not members of the Federal Reserve System, monitor the capital adequacy of our subsidiary banks by using a combination of risk-based guidelines and leverage ratios. The agencies consider each of the bank’s capital levels when taking action on various types of applications and when conducting supervisory activities related to the safety and soundness of individual banks and the banking system.

Under the risk-based capital guidelines, a risk weight factor of 0% to 100% is assigned to each category of assets based generally on the perceived credit risk of the asset class. The risk weights are then multiplied by the corresponding asset balances to determine a “risk-weighted” asset base. At least half of the risk-based capital must consist of core (Tier 1) capital, which is comprised of:


	•	common shareholders’ equity (includes common stock and any related surplus, undivided profits, disclosed capital reserves that represent a segregation of undivided profits, and foreign currency translation adjustments; less net unrealized losses on marketable equity securities);

	•	certain noncumulative perpetual preferred stock and related surplus; and

	•	minority interests in the equity capital accounts of consolidated subsidiaries, and excludes goodwill and various intangible assets.

The remainder, supplementary (Tier 2) capital, may consist of:


	•	allowance for loan losses, up to a maximum of 1.25% of risk-weighted assets;

	•	certain perpetual preferred stock and related surplus;

	•	hybrid capital instruments;

	•	perpetual debt;


	•	mandatory convertible debt securities;

	•	term subordinated debt;

	•	intermediate-term preferred stock; and

	•	certain unrealized holding gains on equity securities.

“Total risk-based capital” is determined by combining core capital and supplementary capital.

Under the regulatory capital guidelines, our subsidiary banks must maintain a total risk-based capital to risk-weighted assets ratio of at least 8.0%, a Tier 1 capital to risk-weighted assets ratio of at least 4.0%, and a Tier 1 capital to adjusted total assets ratio of at least 4.0% (3.0% for banks receiving the highest examination rating) to be considered adequately capitalized. See discussion in the section below entitled “The FDIC Improvement Act.”

FIRREA. The Financial Institutions Reform, Recovery and Enforcement Act of 1989, or FIRREA, includes various provisions that affect or may affect our subsidiary banks. Among other matters, FIRREA generally permits bank holding companies to acquire healthy thrifts as well as failed or failing thrifts. FIRREA removed certain cross-marketing prohibitions previously applicable to thrift and bank subsidiaries of a common holding company. Furthermore, a multi-bank holding company may now be required to indemnify the federal deposit insurance fund against losses it incurs with respect to such company’s affiliated banks, which in effect makes a bank holding company’s equity investments in healthy bank subsidiaries available to the FDIC to assist such company’s failing or failed bank subsidiaries.

In addition, pursuant to FIRREA, any depository institution that has been chartered less than two years, is not in compliance with the minimum capital requirements of its primary federal banking regulator, or is otherwise in a troubled condition must notify its primary federal banking regulator of the proposed addition of any person to the Board of Directors or the employment of any person as a senior executive officer of the institution at least 30 days before such addition or employment becomes effective. During such 30-day period, the applicable federal banking regulatory agency may disapprove of the addition of employment of such director or officer. Our subsidiary banks are not subject to any such requirements.

FIRREA also expanded and increased civil and criminal penalties available for use by the appropriate regulatory agency against certain “institution-affiliated parties” primarily including (i) management, employees and agents of a financial institution, as well as (ii) independent contractors such as attorneys and accountants and others who participate in the conduct of the financial institution’s affairs and who caused or are likely to cause more than minimum financial loss to or a significant adverse affect on the institution, who knowingly or recklessly violate a law or regulation, breach a fiduciary duty or engage in unsafe or unsound practices. Such practices can include the failure of an institution to timely file required reports or the submission of inaccurate reports. Furthermore, FIRREA authorizes the appropriate banking agency to issue cease and desist orders that may, among other things, require affirmative action to correct any harm resulting from a violation or practice, including restitution, reimbursement, indemnifications or guarantees against loss. A financial institution may also be ordered to restrict its growth, dispose of certain assets or take other action as determined by the ordering agency to be appropriate.

The FDIC Improvement Act. The Federal Deposit Insurance Corporation Improvement Act of 1991, or FDICIA, made a number of reforms addressing the safety and soundness of the deposit insurance system, supervision of domestic and foreign depository institutions, and improvement of accounting standards. This statute also limited deposit insurance coverage, implemented changes in consumer protection laws and provided for least-cost resolution and prompt regulatory action with regard to troubled institutions.

FDICIA requires every bank with total assets in excess of $500 million to have an annual independent audit made of the bank’s financial statements by a certified public accountant to verify that the financial statements of the bank are presented in accordance with generally accepted accounting principles and comply with such other disclosure requirements as prescribed by the FDIC.

FDICIA also places certain restrictions on activities of banks depending on their level of capital. FDICIA divides banks into five different categories, depending on their level of capital. Under regulations adopted by the FDIC, a bank is deemed to be “well-capitalized” if it has a total Risk-Based Capital Ratio of 10.00% or more, a Tier 1 Capital Ratio of 6.00% or more and a Leverage Ratio of 5.00% or more, and the bank is not subject to an order or capital directive to meet and maintain a certain capital level. Under such regulations, a bank is deemed to be “adequately capitalized” if it has a total Risk-Based Capital Ratio of 8.00% or more, a Tier 1 Capital Ratio of 4.00% or more and a Leverage Ratio of 4.00% or more (unless it receives the highest composite rating at its most recent examination and is not experiencing or anticipating significant growth, in which instance it must maintain a Leverage Ratio of 3.00% or more). Under such regulations, a bank is deemed to be “undercapitalized” if it has a total Risk-Based Capital Ratio of less than 8.00%, a Tier 1 Capital Ratio of less than 4.00% or a Leverage Ratio of less than 4.00%. Under such regulations, a bank is deemed to be “significantly undercapitalized” if it has a Risk-Based Capital Ratio of less than 6.00%, a Tier 1 Capital Ratio of less than 3.00% and a Leverage Ratio of less than 3.00%. Under such regulations, a bank is deemed to be “critically undercapitalized” if it has a Leverage Ratio of less than or equal to 2.00%. In addition, the FDIC has the ability to downgrade a bank’s classification (but not to “critically undercapitalized”) based on other considerations even if the bank meets the capital guidelines. According to these guidelines, each of our subsidiary banks were classified as “well-capitalized” as of December 31, 2005.

In addition, if a bank is classified as undercapitalized, the bank is required to submit a capital restoration plan to the federal banking regulators. Pursuant to FDICIA, an undercapitalized bank is prohibited from increasing its assets, engaging in a new line of business, acquiring any interest in any company or insured depository institution, or opening or acquiring a new branch office, except under certain circumstances, including the acceptance by the federal banking regulators of a capital restoration plan for the bank.

Furthermore, if a bank is classified as undercapitalized, the federal banking regulators may take certain actions to correct the capital position of the bank; if a bank is classified as significantly undercapitalized or critically undercapitalized, the federal banking regulators would be required to take one or more prompt corrective actions. These actions would include, among other things, requiring: sales of new securities to bolster capital, improvements in management, limits on interest rates paid, prohibitions on transactions with affiliates, termination of certain risky activities and restrictions on compensation paid to executive officers. If a bank is classified as critically undercapitalized, FDICIA requires the bank to be placed into conservatorship or receivership within 90 days, unless the federal banking regulators determines that other action would better achieve the purposes of FDICIA regarding prompt corrective action with respect to undercapitalized banks.

The capital classification of a bank affects the frequency of examinations of the bank and impacts the ability of the bank to engage in certain activities and affects the deposit insurance premiums paid by such bank. Under FDICIA, the federal banking regulators are required to conduct a full-scope, on-site examination of every bank at least once every 12 months. An exception to this rule is made, however, that provides that banks (i) with assets of less than $100 million, (ii) are categorized as “well-capitalized,” (iii) were found to be well managed and its composite rating was outstanding and (iv) has not been subject to a change in control during the last 12 months, need only be examined once every 18 months.

Brokered Deposits. Under FDICIA, banks may be restricted in their ability to accept brokered deposits, depending on their capital classification. “Well-capitalized” banks are permitted to accept brokered deposits, but all banks that are not well-capitalized are not permitted to accept such deposits. The FDIC may, on a case-by-case basis, permit banks that are adequately capitalized to accept brokered deposits if the FDIC determines that acceptance of such deposits would not constitute an unsafe or unsound banking practice with respect to the bank. As of December 31, 2005, we had an insignificant amount of brokered deposits. As previously mentioned, each of our subsidiary banks is currently well-capitalized and therefore is not subject to any limitations with respect to their brokered deposits.

Federal Limitations on Activities and Investments. The equity investments and activities as a principal of FDIC-insured state-chartered banks are generally limited to those that are permissible for national banks. Under regulations dealing with equity investments, an insured state bank generally may not directly or

indirectly acquire or retain any equity investment of a type, or in an amount, that is not permissible for a national bank.

Check Clearing for the 21st Century Act. On October 28, 2003, President Bush signed into law the Check Clearing for the 21st Century Act, also known as Check 21. The new law, which is not effective until October 28, 2004, gives “substitute checks,” such as a digital image of a check and copies made from that image, the same legal standing as the original paper check. Some of the major provisions include:


	•	allowing check truncation without making it mandatory;

	•	demanding that every financial institution communicate to accountholders in writing a description of its substitute check processing program and their rights under the law;

	•	legalizing substitutions for and replacements of paper checks without agreement from consumers;

	•	retaining in place the previously mandated electronic collection and return of checks between financial institutions only when individual agreements are in place;

	•	requiring that when accountholders request verification, financial institutions produce the original check (or a copy that accurately represents the original) and demonstrate that the account debit was accurate and valid; and

	•	requiring recrediting of funds to an individual’s account on the next business day after a consumer proves that the financial institution has erred.

This new legislation will likely affect bank capital spending as many financial institutions assess whether technological or operational changes are necessary to stay competitive and take advantage of the new opportunities presented by Check 21.

Interstate Branching. Effective June 1, 1997, the Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 amended the FDIA and certain other statutes to permit state and national banks with different home states to merge across state lines, with approval of the appropriate federal banking agency, unless the home state of a participating bank had passed legislation prior to May 31, 1997 expressly prohibiting interstate mergers. Under the Riegle-Neal Act amendments, once a state or national bank has established branches in a state, that bank may establish and acquire additional branches at any location in the state at which any bank involved in the interstate merger transaction could have established or acquired branches under applicable federal or state law. If a state opts out of interstate branching within the specified time period, no bank in any other state may establish a branch in the state which has opted out, whether through an acquisition or de novo.

Federal Home Loan Bank System. The Federal Home Loan Bank system, of which each of our subsidiary banks is a member, consists of 12 regional FHLBs governed and regulated by the Federal Housing Finance Board, or FHFB. The FHLBs serve as reserve or credit facilities for member institutions within their assigned regions. They are funded primarily from proceeds derived from the sale of consolidated obligations of the FHLB system. They make loans ( i.e. , advances) to members in accordance with policies and procedures established by the FHLB and the Boards of directors of each regional FHLB.

As a system member, our subsidiary banks are entitled to borrow from the FHLB of their respective region and is required to own a certain amount of capital stock in the FHLB. Each of our subsidiary banks is in compliance with the stock ownership rules described above with respect to such advances, commitments and letters of credit and home mortgage loans and similar obligations. All loans, advances and other extensions of credit made by the FHLB to our subsidiary banks are secured by a portion of the their respective mortgage loan portfolio, certain other investments and the capital stock of the FHLB held by such bank.

Mortgage Banking Operations. Each of our subsidiary banks is subject to the rules and regulations of FHA, VA, FNMA, FHLMC and GNMA with respect to originating, processing, selling and servicing mortgage loans and the issuance and sale of mortgage-backed securities. Those rules and regulations, among other things, prohibit discrimination and establish underwriting guidelines which include provisions for inspections and appraisals, require credit reports on prospective borrowers and fix maximum loan amounts,

and, with respect to VA loans, fix maximum interest rates. Mortgage origination activities are subject to, among others, the Equal Credit Opportunity Act, Federal Truth-in -Lending Act and the Real Estate Settlement Procedures Act and the regulations promulgated thereunder which, among other things, prohibit discrimination and require the disclosure of certain basic information to mortgagors concerning credit terms and settlement costs. Our subsidiary banks are also subject to regulation by the Arkansas State Bank Department or the Florida Department of Financial Regulation, as applicable, with respect to, among other things, the establishment of maximum origination fees on certain types of mortgage loan products.

Payment of Dividends

We are a legal entity separate and distinct from our subsidiary banks and other affiliated entities. The principal sources of our cash flow, including cash flow to pay dividends to our shareholders, are dividends that our subsidiary banks pay to us as their sole shareholder. Statutory and regulatory limitations apply to the dividends that our subsidiary banks can pay to us, as well as to the dividends we can pay to our shareholders.

The policy of the Federal Reserve Board that a bank holding company should serve as a source of strength to its subsidiary banks also results in the position of the Federal Reserve Board that a bank holding company should not maintain a level of cash dividends to its shareholders that places undue pressure on the capital of its bank subsidiaries or that can be funded only through additional borrowings or other arrangements that may undermine the bank holding company’s ability to serve as such a source of strength. Our ability to pay dividends is also subject to the provisions of Arkansas law. See “Description of Capital Stock — Common Stock — Dividend Rights.”

There are certain state-law limitations on the payment of dividends by our bank subsidiaries. First State Bank, Community Bank, Twin City Bank and Bank of Mountain View, which are subject to Arkansas banking laws, may not declare or pay a dividend of 75% or more of the net profits of such bank after all taxes for the current year plus 75% of the retained net profits for the immediately preceding year without the prior approval of the Arkansas State Bank Commissioner. Marine Bank, which is subject to Florida banking laws, may not declare or pay a dividend in excess of 100% of current year earnings and 100% of retained earnings for the prior two years. All of our bank subsidiaries that are members of the Federal Reserve System must also comply with the dividend restrictions with which a national bank would be required to comply. Among other things, these restrictions require that if losses have at any time been sustained by a bank equal to or exceeding its undivided profits then on hand, no dividend may be paid. Although we have regularly paid dividends on our common stock beginning with the second quarter of 2003, there can be no assurances that we will be able to pay dividends in the future under the applicable regulatory limitations.

The payment of dividends by us, or by our subsidiary banks, may also be affected by other factors, such as the requirement to maintain adequate capital above regulatory guidelines. The federal banking agencies have indicated that paying dividends that deplete a depository institution’s capital base to an inadequate level would be an unsafe and unsound banking practice. Under the Federal Deposit Insurance Corporation Improvement Act of 1991, a depository institution may not pay any dividend if payment would result in the depository institution being undercapitalized.

Restrictions on Transactions with Affiliates

We and our subsidiary banks are subject to the provisions of Section 23A of the Federal Reserve Act. Section 23A places limits on the amount of:


	•	a bank’s loans or extensions of credit to affiliates;

	•	a bank’s investment in affiliates;

	•	assets a bank may purchase from affiliates, except for real and personal property exempted by the Federal Reserve Board;

	•	loans or extensions of credit to third parties collateralized by the securities or obligations of affiliates; and

	•	a bank’s guarantee, acceptance or letter of credit issued on behalf of an affiliate.

The total amount of the above transactions is limited in amount, as to any one affiliate, to 10% of a bank’s capital and surplus and, as to all affiliates combined, to 20% of a bank’s capital and surplus. In addition to the limitation on the amount of these transactions, each of the above transactions must also meet specified collateral requirements. Our subsidiary banks must also comply with other provisions designed to avoid the taking of low-quality assets. We and our subsidiary banks are also subject to the provisions of Section 23B of the Federal Reserve Act which, among other things, prohibit an institution from engaging in the above transactions with affiliates unless the transactions are on terms substantially the same, or at least as favorable to the institution or its subsidiaries, as those prevailing at the time for comparable transactions with nonaffiliated companies.

Our subsidiary banks are also subject to restrictions on extensions of credit to their executive officers, directors, principal shareholders and their related interests. These extensions of credit (1) must be made on substantially the same terms, including interest rates and collateral, as those prevailing at the time for comparable transactions with third parties, and (2) must not involve more than the normal risk of repayment or present other unfavorable features.

Privacy

Under the Gramm-Leach-Bliley Act, financial institutions are required to disclose their policies for collecting and protecting confidential information. Customers generally may prevent financial institutions from sharing nonpublic personal financial information with nonaffiliated third parties except under narrow circumstances, such as the processing of transactions requested by the consumer or when the financial institution is jointly sponsoring a product or service with a nonaffiliated third party. Additionally, financial institutions generally may not disclose consumer account numbers to any nonaffiliated third party for use in telemarketing, direct mail marketing or other marketing to consumers. We and all of our subsidiaries have established policies and procedures to assure our compliance with all privacy provisions of the Gramm-Leach-Bliley Act.

Consumer Credit Reporting

On December 4, 2003, President Bush signed the Fair and Accurate Credit Transactions Act amending the federal Fair Credit Reporting Act. These amendments to the Fair Credit Reporting Act (the “FCRA Amendments”) became effective in 2004. The FCRA Amendments include, among other things:


	•	requirements for financial institutions to develop policies and procedures to identify potential identity theft and, upon the request of a consumer, place a fraud alert in the consumer’s credit file stating that the consumer may be the victim of identity theft or other fraud;

	•	consumer notice requirements for lenders that use consumer report information in connection with risk-based credit pricing programs;

	•	for entities that furnish information to consumer reporting agencies (which would include our subsidiary banks), requirements to implement procedures and policies regarding the accuracy and integrity of the furnished information and regarding the correction of previously furnished information that is later determined to be inaccurate; and

	•	a requirement for mortgage lenders to disclose credit scores to consumers.

The FCRA Amendments also prohibit a business that receives consumer information from an affiliate from using that information for marketing purposes unless the consumer is first provided a notice and an opportunity to direct the business not to use the information for such marketing purposes (the “opt-out”), subject to certain exceptions. We do not share consumer information among our affiliated companies for marketing purposes, except as allowed under exceptions to the notice and opt-out requirements. Because no affiliate of Home BancShares is currently sharing consumer information with any other affiliate of Home BancShares for marketing purposes, the limitations on sharing of information for marketing purposes do not have a significant impact on us.

Anti-Terrorism and Money Laundering Legislation

Our subsidiary banks are subject to the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism of 2001 (the “USA PATRIOT Act”), the Bank Secrecy Act and rules and regulations of the Office of Foreign Assets Control (the “OFAC”). These statutes and related rules and regulations impose requirements and limitations on specific financial transactions and account relationships intended to guard against money laundering and terrorism financing. Our subsidiary banks have established a customer identification program pursuant to Section 326 of the USA PATRIOT Act and the Bank Secrecy Act, and otherwise have implemented policies and procedures intended to comply with the foregoing rules.

Proposed Legislation and Regulatory Action

New regulations and statutes are regularly proposed that contain wide-ranging proposals for altering the structures, regulations and competitive relationships of financial institutions operating and doing business in the United States. We cannot predict whether or in what form any proposed regulation or statute will be adopted or the extent to which our business may be affected by any new regulation or statute.

Effect of Governmental Monetary Polices

Our earnings are affected by domestic economic conditions and the monetary and fiscal policies of the United States government and its agencies. The Federal Reserve Board’s monetary policies have had, and are likely to continue to have, an important impact on the operating results of commercial banks through its power to implement national monetary policy in order, among other things, to curb inflation or combat a recession. The monetary policies of the Federal Reserve Board affect the levels of bank loans, investments and deposits through its control over the issuance of United States government securities, its regulation of the discount rate applicable to banks and its influence over reserve requirements to which banks are subject. We cannot predict the nature or impact of future changes in monetary and fiscal policies.

DESCRIPTION OF CAPITAL STOCK

The following information concerning our capital stock summarizes certain provisions of our Articles of Incorporation and Bylaws, as well as certain statutes regulating the rights of holders of our common stock. The information does not purport to be a complete description of such matters and is qualified in all respects by the provisions of the Articles of Incorporation, the Bylaws and the Arkansas Business Corporation Act.

Common Stock

General. Our Articles of Incorporation authorize our board of directors to issue a maximum of 25,000,000 shares of common stock, $0.01 par value. As of March 13, 2006, a total of 12,129,355 shares of common stock were issued and outstanding. In addition, as of March 13, 2006, a total of approximately 1,048,964 shares of common stock were subject to outstanding stock options (including, on an as-converted basis, preferred stock options), 151,036 shares of common stock were reserved for future issuance under our 2006 Stock Option and Performance Incentive Plan, and an additional 2,160,464 shares of common stock were issuable upon conversion of our Class A preferred stock and Class B preferred stock.

Voting Rights. The holders of common stock are entitled to one vote per share, unless otherwise provided by law, and are not entitled to cumulative voting rights in the election of directors. As a result, the holders of a plurality of the shares of our common stock voting in the election of directors present at the meeting for that purpose may elect all of the directors then standing for election. Directors may not be removed except for cause.

Dividend Rights. Subject to the requirement to pay dividends on all preferred shares then outstanding before paying any dividends on common stock, each share of our common stock is entitled to participate equally in dividends as and when declared by the board of directors out of funds legally available therefor. The payment of dividends is further subject to certain regulatory restrictions which prohibit us from paying any

dividends except from retained earnings. We are also restricted from paying dividends on our common stock if we have deferred payments of interest, or if a default has occurred, on our subordinated debentures. See “Supervision and Regulation — Payment of Dividends.” As of December 31, 2005, we had retained earnings of approximately $27.3 million.

No Preemptive Rights. No holder of our common stock has a right pursuant to the Arkansas Business Corporation Act or our Articles of Incorporation or Bylaws to purchase shares of common stock in a subsequent offering. Thus, in the discretion of our board of directors, additional shares may be issued without affording existing shareholders any right to purchase such shares. If such shares are issued to third parties, the voting rights and/or book value per share of existing shareholders could be diluted.

Assessment and Redemption. The shares of common stock presently outstanding are, and the shares that will be issued in connection with this offering will be, fully paid and non-assessable. The board of directors is authorized to repurchase or redeem shares of our common stock from earned surplus or capital surplus other than revaluation surplus. This authorization does not permit the board of directors to redeem common stock without the consent of its holder unless the common stock was issued with a right of repurchase or redemption reserved to us.

Liquidation Rights. In the event of liquidation, dissolution or winding up of Home BancShares, whether voluntarily or involuntarily, the holders of our common stock will be entitled to share ratably in any of the net assets or funds which are available for distribution to shareholders, after the satisfaction of all liabilities and payment to the holders of our preferred stock of the liquidation value of their stock, plus any declared and unpaid dividends.

Modification of Rights. Rights of the holders of our common stock may not be modified by less than a majority vote of the common stock outstanding. Additionally, under the Arkansas Business Corporation Act of 1987, a majority vote is required for the approval of a merger or consolidation with another corporation, and for the sale of all or substantially all of our assets and liquidation or dissolution of Home BancShares.

Preferred Stock

General. Our Articles of Incorporation currently authorize the board of directors to issue up to 5,500,000 shares of preferred stock with a par value of $0.01 per share. As of December 31, 2005, 2,500,000 shares of Class A preferred stock were authorized and 2,076,195 were issued and outstanding, and 3,000,000 shares of Class B preferred stock were authorized, and 169,079 were issued and outstanding.

Class A Preferred Stock. The Class A preferred stock is non-voting, non-cumulative, callable and redeemable, convertible preferred stock with a par value of $0.01 per share, and a value for issuance, conversion to our common stock, liquidation, and other purposes of $10.00 per share. The Class A preferred stock yields an annual non-cumulative dividend of $0.25, to be paid quarterly, if and when authorized and declared by our board of directors. Any such dividend must be paid first to the holders of Class A preferred stock before dividends are paid on any other class of our stock (including the Class B preferred stock). Upon a liquidation, dissolution, or winding up of the affairs of Home BancShares, the holders of Class A preferred stock will receive any declared and unpaid dividend then due (in priority over any other class of our stock, including the Class B preferred stock), and will receive $10.00 per share in parity with the Class B preferred stock.

Each share of the Class A preferred stock may be converted at the holder’s option into 0.789474 shares of our common stock upon the earlier of June 6, 2006, or 180 days after the date of this offering. Fractional shares are to be converted for cash at the rate of $12.67 times the fraction of shares held.

We may, at our option, redeem all of the Class A preferred stock for 0.789474 shares of our common stock (with fractional shares to be redeemed for cash at the rate of $12.67 times the fraction of shares held) at any time after June 6, 2006, or, if earlier, the completion of this offering if (a) the last reported trade is at least $12.67 per share for 20 consecutive trading days or (b) the trades are quoted on a “bid and ask” price basis and the mean between the bid and ask price is at least $12.67 per share for 20 consecutive trading days.

If prior to conversion or redemption of Class A preferred stock the number of outstanding shares of our common stock are increased or decreased or are changed into a different number of shares or a different class due to a merger, reclassification, stock split, or similar transaction, or if a stock dividend share is paid, appropriate proportionate adjustments will be made to the ratio by which shares of common stock is to be issued for the conversion or redemption of Class A preferred stock.

Class B Preferred Stock. Our shares of Class B preferred stock are non-voting, non-cumulative, callable and redeemable, convertible preferred stock with a par value of $0.01 per share, and a value for issuance, conversion to our common stock, liquidation, and other purposes of $38.00 per share.

The Class B preferred stock yields an annual non-cumulative dividend of $0.57 per share, to be paid quarterly, if and when authorized and declared by our board of directors, and has priority in the payment of dividends over our common stock and any class of capital stock created after March 9, 2005, provided that dividends have first been paid on the Class A preferred stock.

In the event of our dissolution, liquidation or winding up, the Class B preferred stock will have priority over our common stock, and over any class of capital stock created after March 9, 2005. Provided that all declared and unpaid dividends are first paid to the holders of the Class A preferred stock, the Class B preferred stock is entitled to receive payment for all declared and unpaid dividends on the Class B preferred stock, and $12.67 per share in parity with the payment of $10.00 per share to holders of Class A preferred stock.

The Class B preferred stock is redeemable by us at any time on the basis of three shares of our common stock for each share of Class B preferred stock. Holders of the Class B preferred stock may convert their shares of Class B preferred stock into shares of our common stock (one share of common stock for each share of Class B preferred stock), upon the occurrence of the earlier of July 6, 2006, or 210 days after the date of this offering.

If a conversion or redemption occurs prior to the end of a quarter in which our board of directors declares a dividend, and subject to the priority in payment of dividends to the Class A preferred stock, a holder of Class B preferred stock is entitled to receive an amount of such dividend, prorated for the number of days in the quarter prior to the date of the notice of conversion or redemption.

If prior to a conversion or redemption of the Class B preferred stock, our outstanding common stock is changed in number of shares or in class by reason of a merger, reclassification, stock split, or similar transaction, or if a stock dividend is paid, an appropriate and proportionate adjustment will be made to the ratio by which a share of our common stock is to be issued in exchange for a share of Class B preferred stock. If we are merged in a cash transaction and we are not the surviving corporation, the holders of Class B preferred stock will have the right to convert their shares of Class B preferred stock for shares of our common stock immediately prior to the conversion on a three-for -one ratio. If at the time of such conversion, however, the Class A preferred stock has not been converted into our common stock, dividends on the shares of our common stock held by former holders of Class B preferred stock may not be paid until dividends are paid on the Class A preferred stock.

Subordinated Debentures; Trust Preferred Securities

We have raised additional capital through the issuance of floating rate junior subordinated debentures in connection with trust preferred securities issuances by various statutory trust subsidiaries. The interest payments on the trust preferred securities and related junior subordinated debentures are currently expected to be funded by dividends paid to us by our subsidiary banks. Our principal and interest payments on the junior subordinated debentures are in a superior position to the liquidation rights of holders of our common stock. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Subordinated Debentures” for additional information.

Director and Officer Indemnification

Our Articles of Incorporation and Bylaws authorize us to indemnify its directors, officers, employees and agents to the full extent permitted by law. Section 4-27-850 of the Arkansas Business Corporation Act of 1987 contains detailed and comprehensive provisions providing for indemnification of directors and officers of Arkansas corporations against expenses, judgments, fines and settlements in connection with litigation. Under Arkansas law, other than an action brought by or in the right of Home BancShares, such indemnification is available if it is determined that the proposed indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interest of Home BancShares and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. In actions brought by or in the right of Home BancShares, such indemnification is limited to expenses (including attorneys’ fees) actually and reasonably incurred in the defense or settlement of such action if the indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interest of Home BancShares and except that no indemnification shall be made in respect of any claim, issues or matters as to which such person has been adjudged to be liable to us unless and only to the extent that a court having jurisdiction in the matter determines upon application that in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

To the extent that the proposed indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding (or any claim, issue or matter therein), he or she must be indemnified against expenses (including attorneys’ fees) actually and reasonably incurred by him or her in connection therewith.

Our Articles of Incorporation provide that no director shall be liable to us or our shareholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by the Arkansas Business Corporation Act. Our Bylaws require us to indemnify our directors and officers to the fullest extent permitted by Arkansas law.

Transfer Agent and Registrar

Computershare, 2 LaSalle Street, Third Floor, Chicago, Illinois 60602, telephone: (312)588-4990, is our transfer agent and registrar.

Listing

We have applied to have our common stock listed on The Nasdaq National Market under the symbol “HOMB.”

SHARES ELIGIBLE FOR FUTURE SALE

If our shareholders sell, or there is a perception they may sell, substantial amounts of our common stock, including shares issued upon the exercise of outstanding options, in the public market following the offering, the market price of our common stock could decline. These sales may also make it more difficult for us to sell equity or equity-related securities in the future at a time and price that we deem appropriate.

Upon completion of this offering, we will have outstanding an aggregate of shares of our common stock (plus any shares issued upon exercise of the underwriters’ over-allotment option) and 1,048,964 shares of common stock issuable upon the exercise of outstanding options. Of these shares, all of the shares sold in the offering (plus any shares issued upon exercise of the underwriter’s over-allotment option) will be freely tradable without restriction or further registration under the Securities Act, unless the shares are purchased by “affiliates,” (as that term is defined in Rule 144 under the Securities Act), which generally include officers, directors or 10% shareholders, which shares will be subject to the resale limitations of Rule 144 and to a 180-day lock-up period. Shares of common stock issued upon the exercise of stock options and shares held by “affiliates” may be sold in the public market only if registered, or if they qualify for an exemption from registration under Rules 144, 144(k) or 701 promulgated under the Securities Act, which are summarized below. The remaining outstanding shares of common stock are freely tradable without restriction

or further registration under the Securities Act as those shares were issued in intrastate offerings which were completed more than nine months before this offering.

Taking into account the lock-up agreements described below, and assuming Stephens Inc. does not release any parties from these agreements, the following shares will be eligible for sale in the public market at the following times:


	•	beginning on the effective date of this offering, only the shares of common stock sold in this offering and the shares of common stock not subject to lock-up agreements and eligible for resale under Rule 144(k) will be immediately available for sale in the public market; and

	•	beginning 180 days after the date of this prospectus, the expiration date for the lock-up agreements, approximately shares of common stock held by affiliates will be eligible for sale pursuant to Rule 144, including the volume restrictions described below, and Rule 701.

Lock-Up Agreements

We, our directors, officers and certain of our existing shareholders beneficially owning approximately % of our outstanding common stock immediately prior to the offering have entered into lock-up agreements generally providing, subject to limited exceptions, that they will not, without the prior written consent of Stephens Inc., directly or indirectly, during the period ending 180 days after the date of this prospectus:


	•	offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of, any shares of common stock of Home Bancshares, or any securities convertible into, exchangeable for or that represent the right to receive shares of common stock of Home Bancshares, whether now owned or hereafter acquired, owned directly (including holding as a custodian) or with respect to which such shareholder has beneficial ownership within the rules and regulations of the SEC, or file or cause to be filed any registration statement under the Securities Act with respect to the foregoing; or

	•	engage in any hedging or other transaction that is designed to or that reasonably could be expected to lead to or result in a sale or disposition of any shares of common stock of Home Bancshares, such prohibited hedging or other transactions to include any short sale or grant of any right (including without limitation any put or call option) with respect to any shares of common stock of Home Bancshares or with respect to any security that includes, relates to, or derives any significant part of its value from such shares.

The 180-day restricted period described above is subject to extension under limited circumstances. In the event that either (1) during the period that begins on the date that is 15 calendar days plus 3 business days before the last day of the 180-day restricted period and ends on the last day of the 180-day restricted period, we issue an earnings release or material news or a material event relating to us occurs; or (2) prior to the expiration of the 180-day restricted period, we announce that we will release earnings results during the 16-day period beginning on the last day of the 180-day restricted period, then the restricted period will continue to apply until the expiration of the date that is 15 calendar days plus three business days after the date on which the earnings release is issued or the material news or material event relating to us occurs.

As a result of these contractual restrictions, notwithstanding possible earlier eligibility for sale under the provisions of Rule 144, 144(k) or 701, shares subject to lock-up agreements will not be eligible for sale until these agreements expire or are waived by Stephens Inc. on behalf of the underwriters.

Rule 144

In general, under Rule 144, as currently in effect, and beginning 90 days after the date of this prospectus, a person (or persons whose shares are aggregated) who has beneficially owned restricted securities for at least

one year or any affiliate is entitled to sell within any three-month period, a number of shares that does not exceed the greater of:


	•	one percent of the total number of our then outstanding shares of common stock (approximately shares immediately after this offering), as shown by our most recent published report or statement at that time; or

	•	the average weekly trading volume of our common stock on The Nasdaq National Market during the four calendar weeks preceding the date on which notice of the sale on Form 144 is filed with the Securities and Exchange Commission.

Sales under Rule 144 also are subject to manner of sale provisions, notice requirements and the availability of current public information about us. To the extent that shares were acquired from one of our affiliates, such acquiring person’s holding period for purposes of effecting a sale under Rule 144 commences on the date of transfer from the affiliate.

Rule 144(k)

Under Rule 144(k), a person who is not deemed to have been one of our “affiliates” at any time during the three months preceding a sale, and who has beneficially owned the shares proposed to be sold for at least two years, is entitled to sell such shares without complying with the manner of sale, public information, volume limitation, or notice provisions of Rule 144.

Rule 701

In general, under Rule 701 of the Securities Act as currently in effect, any of our employees, consultants or advisors who purchased shares of our common stock from us in connection with a compensatory stock or option plan or other written agreement is eligible to resell those shares (subject to the terms of any applicable lock-up agreements) 90 days after the date of this prospectus in reliance on Rule 144, but without compliance with some of the restrictions, including the holding period, contained in Rule 144.

The Securities and Exchange Commission has approved that Rule 701 will apply to typical stock options granted by an issuer before it becomes subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, along with the shares acquired upon exercise of those options, including exercises after the date of this prospectus. Securities issued in reliance on Rule 701 are restricted securities and, subject to the contractual restrictions described above, beginning 90 days after the date of this prospectus, may be sold by persons other than “affiliates,” as defined in Rule 144, subject only to the manner of sale provisions of Rule 144. Securities issued in reliance on Rule 701 may be sold by “affiliates” under Rule 144 without compliance with its one year minimum holding period requirement.

Stock Options

As of March 13, 2006, options to purchase a total of 968,244 shares of common stock were outstanding, of which 481,224 were vested, and preferred options were outstanding that, upon exercise and conversion, would result in the issuance of an additional 80,720 shares of common stock. As soon as practicable after the completion of this offering, we intend to file a registration statement on Form S-8 under the Securities Act to register all shares of common stock issuable under our 2006 Stock Option and Performance Incentive Plan. Accordingly, shares of common stock underlying these options will be freely tradable and eligible for sale in the public markets, subject to vesting provisions, terms of the lock-up agreements and, in the case of affiliates only, the restrictions of Rule 144 other than the holding period requirement.

UNDERWRITING

Subject to the terms and conditions of the underwriting agreement among us, our bank subsidiaries and Stephens Inc., Piper Jaffray & Co., and Sandler O’Neill & Partners, L.P., as representatives (the “Representatives”), on behalf of the underwriters, the underwriters named below have severally agreed to purchase from us, and we have agreed to sell to the underwriters, severally, the following respective numbers of shares of common stock at the initial public offering price less the underwriting discounts and commissions set forth on the cover page of this prospectus.


Underwriters		Number of Shares

Stephens Inc.
Piper Jaffray & Co.
Sandler O’Neill & Partners, L.P.

	Total

Under the terms and conditions of the underwriting agreement, the underwriters are committed to accept and pay for all of the shares offered by this prospectus, if any are taken. If an underwriter defaults, the underwriting agreement provides that the purchase commitments of the non-defaulting underwriters may be increased or, in certain cases, the underwriting agreement may be terminated. The underwriting agreement provides that the underwriters’ obligations are subject to approval of certain legal matters by their counsel, including, without limitation, the authorization and the validity of the shares, and to various other conditions customary in a firm commitment underwritten public offering, such as receipt by the underwriters of officers’ certificates, legal opinions and comfort letters.

The underwriters propose to offer our common stock directly to the public at the public offering price set forth on the cover page of this prospectus and to selected securities dealers (who may include the underwriters) at that price less a concession not in excess of $ per share. The underwriters may allow, and the selected dealers may re-allow, a concession not in excess of $ per share to certain brokers and dealers. After the initial public offering, the offering price and other selling terms may be changed from time to time by the Representatives of the underwriters. The underwriters expect to deliver the shares of common stock on or about , 2006.

We have granted the underwriters an option, exercisable within 30 days after the date of this prospectus, to purchase up to additional shares solely to cover over-allotments, if any, at the same price per share to be paid by the underwriters for the other shares in this offering. If the underwriters purchase any additional shares under this option, each underwriter will be committed to purchase the additional shares in approximately the same proportion allocated to them in the table above.

The following table shows the per share and total underwriting discounts to be paid by us to the underwriters in connection with this offering. These amounts are shown assuming both no exercise and full exercise of the over-allotment option.


	Without	With
	Over-	Over-
	Allotment	Allotment

Per share
Total

We estimate that the total expenses of the offering payable by us, excluding underwriting discounts and commissions, will be approximately $ .

Prior to this offering, there has been no public market for our common stock. We have applied for quotation of our common stock on the Nasdaq National Market under the symbol “HOMB.” The initial public offering price for the common stock has been determined by negotiations between the Representatives

of the underwriters and us. The principal factors that will be considered in determining the initial public offering price included the following:


	•	prevailing market and general economic conditions;

	•	the market capitalizations, trading histories and stages of development of other publicly traded companies that the underwriters believe to be comparable to us;

	•	our results of operations in recent periods;

	•	our current financial position;

	•	estimates of our business potential and prospects;

	•	an assessment of our management;

	•	the present state of our development; and

	•	the availability for sale in the market of a significant number of shares of our common stock.

In connection with the offering, the underwriters may engage in transactions that are intended to stabilize, maintain or otherwise affect the market price of our common stock during and after the offering, such as the following:


	•	the underwriters may over-allot or otherwise create a short position in the common stock for their own account by selling more shares of common stock than have been sold to them;

	•	the underwriters may elect to cover any such short position by purchasing shares of common stock in the open market or by exercising the over-allotment option;

	•	the underwriters may stabilize or maintain the price of the common stock by bidding; and

	•	the underwriters may impose penalty bids, under which selling concessions allowed to syndicate members or other broker-dealers participating in the offering are reclaimed if shares of common stock previously distributed in the offering are repurchased in connection with stabilization transactions or otherwise.

The effect of these transactions may be to stabilize or maintain the market price of our common stock at a level above that which might otherwise prevail in the open market. The imposition of a penalty bid may also affect the price of our common stock to the extent that it discourages resales of the common stock. The magnitude or effect of any stabilization or other transactions is uncertain. These transactions may be effected on The Nasdaq National Market or otherwise and, if commenced, may be discontinued at any time.

We and our bank subsidiaries have agreed to indemnify the underwriters and their controlling persons against certain liabilities, including liabilities under the Securities Act, or to contribute to payments that the underwriters may be required to make in connection with those liabilities.

Certain of the underwriters have performed and expect to continue to perform financial advisory and investment banking services for us in the ordinary course of their business, and may have received, and may continue to receive, compensation for such services.

LEGAL MATTERS

Certain legal matters in connection with this offering will be passed upon for us by Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., 425 Capitol Avenue, Suite 1800, Little Rock, Arkansas 72201. As of December 31, 2005, the partners and associates of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. beneficially owned approximately 3,876 shares of our outstanding common stock. Certain legal matters in connection with this offering will be passed upon for the underwriters by Jenkens & Gilchrist, P.C., 401 Congress Avenue, Suite 2500, Austin, Texas 78701.

EXPERTS

The consolidated financial statements of Home BancShares as of and for the year ended December 31, 2005, appearing in this prospectus and registration statement have been audited by BKD, LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Home BancShares at December 31, 2004, and for each of the two years in the period ended December 31, 2004, appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of TCBancorp, Inc. at December 31, 2004, and 2003, and for the years then ended, appearing in this prospectus and registration statement have been audited by Ernst & Young LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Marine Bancorp, Inc. at December 31, 2004, and 2003, and for the years then ended, appearing in this prospectus and registration statement have been audited by Hacker, Johnson & Smith, P.A., independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

The consolidated financial statements of Mountain View Bancshares, Inc. as of and for the year ended December 31, 2004, appearing in this prospectus and registration statement have been audited by BKD, LLP, independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

CHANGE IN INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMS

Our consolidated financial statements as of and for the fiscal years ended December 31, 2003, and 2004, were audited by Ernst & Young LLP, an independent registered public accounting firm. On October 21, 2005, following the closing of the Ernst & Young LLP Little Rock, Arkansas office, we dismissed Ernst & Young LLP and appointed BKD, LLP to audit our financial statements for the year ended December 31, 2005. Our board of directors and audit committee approved the dismissal of Ernst & Young LLP and appointment of BKD, LLP as our independent registered public accounting firm.

The reports of Ernst & Young LLP on our financial statements as of and for the years ended December 31, 2003, and 2004, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles. During the years ended December 31, 2003, and 2004, and through October 21, 2005, there were no disagreements with Ernst & Young LLP on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures which disagreements, if not resolved to the satisfaction of Ernst & Young LLP, would have caused them to make reference thereto in their report on the financial statements for such years. During the years ended December 31, 2003, and 2004, and through October 21, 2005, there have been no reportable events as defined in Regulation S-K Item 304(a)(1)(v).

On October 21, 2005, we engaged BKD, LLP as our new independent auditor. Our Audit Committee and board of directors approved this action. During the years ended December 31, 2003, and 2004, respectively, and through October 21, 2005, neither we nor any person on our behalf has consulted with BKD, LLP regarding the application of accounting principles to a specific completed or contemplated transaction, or the type of audit opinion that might be rendered on our financial statements, and we were not provided with a written report or oral advice by BKD, LLP that was an important factor that we considered in reaching a

100

decision as to an accounting, auditing or financial reporting issue. We have delivered a copy of this disclosure to BKD, LLP, and BKD, LLP has not indicated that it disagrees with any of the statements made in this section.

We delivered a copy of this disclosure to Ernst & Young LLP on March 10, 2006, and requested that Ernst & Young LLP furnish us with a letter addressed to the SEC stating whether or not it agrees with the above statements regarding Ernst & Young LLP. Attached as Exhibit 16.1 to the registration statement of which this prospectus forms a part, is a copy of the letter of Ernst & Young LLP to the SEC dated March 13, 2006, stating that it agrees with the statements made in this section.

WHERE YOU CAN FIND MORE INFORMATION

You can review our electronically filed registration statement and exhibits on the SEC’s Internet site at http://www.sec.gov. We have filed with the SEC, Washington, D.C. 20549, a registration statement on Form S-1 under the Securities Act of 1933, as amended, with respect to our common stock offered hereby. This prospectus does not contain all of the information set forth in the registration statement and the exhibits and schedules to the registration statement. Certain items are omitted in accordance with the rules and regulations of the SEC. For further information with respect to our company and our common stock, reference is made to the registration statement and the exhibits and any schedules filed with the registration statement. Statements contained in this prospectus as to the contents of any contract or other document referred to are not necessarily complete and in each instance, if such contract or document is filed as an exhibit, reference is made to the copy of such contract or other documents filed as an exhibit to the registration statement, each statement being qualified in all respects by such reference. You can obtain a copy of the full registration statement, including the exhibits and schedules thereto, from the SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at (202) 942-8090 for further information on the Public Reference Room.

We became subject to the information and periodic reporting requirements of the Securities Exchange Act of 1934, as amended, on , 2006, and after that date are required to file annual, quarterly and current reports, proxy statements and other information with the SEC. We intend to furnish our shareholders written annual reports containing financial statements audited by our independent auditors, and make available to our shareholders quarterly reports for the first three quarters of each year containing unaudited interim financial statements.

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INDEX TO FINANCIAL STATEMENTS


Audited Financial Statements of Home BancShares, Inc. and Subsidiaries

	Report of Independent Registered Public Accounting Firm	F-2
	Report of Independent Registered Public Accounting Firm	F-3
	Consolidated Balance Sheets as of December 31, 2005 and 2004	F-4
	Consolidated Statements of Income for the Years Ended December 31, 2005, 2004 and 2003	F-5
	Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2005, 2004 and 2003	F-6
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2005, 2004 and 2003	F-9
	Notes to Consolidated Financial Statements	F-11

Audited Financial Statements of TCBancorp, Inc. and Subsidiary

	Report of Independent Registered Public Accounting Firm	F-44
	Consolidated Balance Sheets as of December 31, 2004 and 2003	F-45
	Consolidated Statements of Income for the Years Ended December 31, 2004 and 2003	F-46
	Consolidated Statements of Stockholders’ Equity for the Years Ended December 31, 2004 and 2003	F-47
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2004 and 2003	F-48
	Notes to Consolidated Financial Statements	F-49

Audited Financial Statements of Marine Bancorp, Inc. and Subsidiary

	Report of Independent Registered Public Accounting Firm	F-67
	Consolidated Balance Sheets as of December 31, 2004 and 2003	F-68
	Consolidated Statements of Earnings for the Years Ended December 31, 2004 and 2003	F-69
	Consolidated Statements of Changes in Stockholders’ Equity for the Years Ended December 31, 2004 and 2003	F-70
	Consolidated Statements of Cash Flows for the Years Ended December 31, 2004 and 2003	F-71
	Notes to Consolidated Financial Statements	F-72

Audited Financial Statements of Mountain View Bancshares, Inc.

	Report of Independent Registered Public Accounting Firm	F-90
	Consolidated Balance Sheet as of December 31, 2004	F-91
	Consolidated Statement of Income for the Year Ended December 31, 2004	F-92
	Consolidated Statement of Stockholders’ Equity for the Year Ended December 31, 2004	F-93
	Consolidated Statement of Cash Flows for the Years Ended December 31, 2004	F-94
	Notes to Consolidated Financial Statements	F-95

F-1

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

Home BancShares, Inc.

Conway, Arkansas

We have audited the accompanying consolidated balance sheet of Home BancShares, Inc. as of December 31, 2005 and the related consolidated statements of income, stockholders’ equity and cash flows for the year then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 2005 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Home BancShares, Inc. as of December 31, 2005, and the results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.


	/s/ BKD, llp

Little Rock, Arkansas

February 20, 2006

F-2

Report of Independent Registered Public Accounting Firm

The Board of Directors and

Stockholders of Home BancShares, Inc.

We have audited the accompanying consolidated balance sheet of Home BancShares, Inc. and subsidiaries as of December 31, 2004, and the related consolidated statements of income, stockholders’ equity, and cash flows for each of the two years in the period ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Home BancShares, Inc. and subsidiaries at December 31, 2004, and the consolidated results of their operations and their cash flows for each of the two years in the period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.


	/s/ ERNST & YOUNG LLP

March 11, 2005

F-3

Home BancShares, Inc. and Subsidiaries

Consolidated Balance Sheets


		December 31

		2005			2004

		(In thousands, except
		share data)
Assets
Cash and due from banks		$	39,248		$	19,444
Interest-bearing deposits with other banks			5,431			369

	Cash and cash equivalents		44,679			19,813
Federal funds sold			7,055			2,220
Investment securities — available for sale			530,302			190,366
Investment securities — held to maturity			—			100
Loans receivable			1,204,589			516,655
Allowance for loan losses			(24,175	)		(16,345	)

	Loans receivable, net		1,180,414			500,310
Bank premises and equipment, net			51,762			26,066
Foreclosed assets held for sale			758			458
Cash value of life insurance			6,850			6,380
Investments in unconsolidated affiliates			9,813			20,122
Accrued interest receivable			11,158			4,215
Deferred tax asset, net			8,821			3,687
Goodwill			37,527			18,555
Core deposit and other intangibles			11,200			4,261
Other assets			11,152			8,633

Total assets		$	1,911,491		$	805,186


Liabilities and Stockholders’ Equity
Deposits:
	Demand and non-interest-bearing	$	209,974		$	86,186
	Savings and interest-bearing transaction accounts		512,184			196,304
	Time deposits		704,950			270,388

Total deposits			1,427,108			552,878
Federal funds purchased			44,495			7,950
Securities sold under agreements to repurchase			103,718			21,259
FHLB and other borrowed funds			117,054			74,869
Accrued interest payable and other liabilities			8,504			8,163
Subordinated debentures			44,755			24,219

Total liabilities			1,745,634			689,338
Minority interest			—			9,238
Stockholders’ equity:
	Preferred stock A, par value $0.01 in 2005 and 2004; 2,500,000 shares authorized in 2005 and 2004; 2,076,195 and 2,134,068 shares issued in 2005 and 2004, respectively; and 2,076,195 and 2,077,118 shares outstanding in 2005 and 2004, respectively		21			21
	Preferred stock B, par value $0.01 in 2005; 3,000,000 shares authorized in 2005; 169,079 shares issued and outstanding in 2005		2			—
	Common stock, par value $0.01 in 2005 and $0.10 in 2004; shares authorized 25,000,000 in 2005 and 5,000,000 in 2004: shares issued and outstanding 12,113,865 in 2005 and 7,987,485 (split adjusted) in 2004		121			266
	Capital surplus		146,285			90,455
	Retained earnings		27,331			17,295
	Accumulated other comprehensive loss		(7,903	)		(858	)
	Treasury stock at cost		—			(569	)

Total stockholders’ equity			165,857			106,610

Total liabilities and stockholders’ equity		$	1,911,491		$	805,186

See accompanying notes.

F-4

Home BancShares, Inc. and Subsidiaries

Consolidated Statements of Income


			Year Ended December 31

			2005			2004			2003

			(In thousands, except per share
			data)
Interest income:
	Loans		$	65,244		$	29,264		$	19,605
	Investment securities:
		Taxable		17,103			5,764			1,584
		Tax-exempt		2,726			1,457			182
	Deposits — other banks			101			38			8
	Federal funds sold			284			158			159

Total interest income				85,458			36,681			21,538

Interest expense:
	Interest on deposits			26,883			7,606			5,700
	Federal funds purchased			399			159			29
	FHLB and other borrowed funds			4,046			1,840			1,220
	Securities sold under agreements to repurchase			2,657			407			256
	Subordinated debentures			2,017			1,568			1,035

Total interest expense				36,002			11,580			8,240

Net interest income				49,456			25,101			13,298
Provision for loan losses				3,827			2,290			807

Net interest income after provision for loan losses				45,629			22,811			12,491
Non-interest income:
	Service charges on deposit accounts			8,319			5,914			2,254
	Other services charges and fees			2,099			959			474
	Trust fees			458			158			14
	Data processing fees			668			1,564			1,378
	Mortgage banking income			1,651			1,188			1,220
	Insurance commissions			674			631			22
	Income from title services			823			1,110			81
	Increase in cash value of life insurance			256			244			13
	Equity in (loss) income of unconsolidated affiliates			(592	)		1,560			937
	Gain on sale of equity investment			465			4,410			—
	(Loss) gain on securities and loans, net			(10	)		(223	)		135
	Other income			876			576			211

Total non-interest income				15,687			18,091			6,739
Non-interest expense:
	Salaries and employee benefits			23,901			14,123			7,139
	Occupancy and equipment			6,869			3,750			1,659
	Data processing expense			1,991			1,170			893
	Other operating expenses			12,174			7,088			3,379

Total non-interest expense				44,935			26,131			13,070

Income before income taxes and minority interest				16,381			14,771			6,160
Income tax expense				4,935			5,030			2,343
Minority interest in earnings of subsidiaries, net				—			582			48

Net income			$	11,446		$	9,159		$	3,769

Basic earnings per share			$	0.92		$	1.08		$	0.66

Diluted earnings per share			$	0.82		$	0.94		$	0.63

See accompanying notes.

F-5

Home BancShares, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity


																	Accumulated
																	Other
																	Comprehensive
					Preferred		Preferred		Common			Capital		Retained			Income			Treasury
					Stock A		Stock B		Stock			Surplus		Earnings			(Loss)			Stock			Total

					(In thousands, except share data (1))
Balances at January 1, 2003					$	—	$	—	$	1,864		$	39,189	$	5,329		$	371		$	—		$	46,753
	Comprehensive income (loss):
		Net income				—		—		—			—		3,769			—			—			3,769
		Other comprehensive income (loss):
				Unrealized loss on investment securities available for sale, net of $51 tax effect		—		—		—			—		—			(99	)		—			(99	)
				Reclassification adjustment for gains included in income, net of $32 tax effect		—		—		—			—		—			(61	)		—			(61	)
				Net change in equity in unconsolidated affiliates accumulated other comprehensive income		—		—		—			—		—			(442	)		—			(442	)

	Comprehensive income																							3,167
	Sale of stock offerings, net of issuance costs of $37 — 2,374,143 shares					—		—		79			27,619		—			—			—			27,698
	Issuance of stock — employee stock bonus plan — 17,646 shares					—		—		1			205		—			—			—			206
	Issuance of 2,123,453 shares pursuant to acquisition of CFG, Inc.					21		—		—			21,705		—			—			—			21,726
	Issuance of 8,197 shares of convertible preferred stock at $0.17 per share					—		—		—			1		—			—			—			1
	Purchase of 2,013 shares of convertible preferred stock at $10.00 per share					—		—		—			—		—			—			(20	)		(20	)
	Reclassification for change in par value from $1.00 to $0.10 per share					—		—		(1,678	)		1,678		—			—			—			—
	Issuance of 4,500 shares of common stock from exercise of stock options					—		—		—			34		—			—			—			34
	Cash dividends, $0.01 per share					—		—		—			—		(93	)		—			—			(93	)

Balances at December 31, 2003						21		—		266			90,431		9,005			(231	)		(20	)		99,472
	Comprehensive income (loss):
		Net income				—		—		—			—		9,159			—			—			9,159
		Other comprehensive income (loss):
			Unrealized loss on investment securities available for sale, net of $109 tax effect			—		—		—			—		—			(153	)		—			(153	)
			Reclassification adjustment for gains included in income, net of $27 tax effect			—		—		—			—		—			(40	)		—			(40	)
			Net change in equity in unconsolidated affiliates accumulated other comprehensive income			—		—		—			—		—			(434	)		—			(434	)

	Comprehensive income																							8,532

F-6

Home BancShares, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity — (Continued)


																	Accumulated
																	Other
																	Comprehensive
				Preferred		Preferred		Common			Capital			Retained			Income			Treasury
				Stock A		Stock B		Stock			Surplus			Earnings			(Loss)			Stock			Total

				(In thousands, except share data (1))
	Issuance of 2,418 shares of convertible preferred stock at $10 per share				—		—		—			24			—			—			—			24
	Purchase of 54,937 shares of convertible preferred stock at $10 per share				—		—		—			—			—			—			(549	)		(549	)
	Cash dividends — Preferred Stock, $0.250 per share								—			—			(529	)		—			—			(529	)
	Cash dividends — Common Stock, $0.043 per share				—		—		—			—			(340	)		—			—			(340	)

Balances at December 31, 2004					21		—		266			90,455			17,295			(858	)		(569	)		106,610
	Comprehensive income (loss):
		Net income			—		—		—			—			11,446			—			—			11,446
		Other comprehensive income (loss):
			Unrealized loss on investment securities available for sale, net of $5,327 tax effect		—		—		—			—			—			(8,303	)		—			(8,303	)
			Reclassification adjustment for gains included in income, net of $346 tax effect		—		—		—			—			—			539			—			539
			Net change in equity in unconsolidated affiliates accumulated other comprehensive income		—		—		—			—			—			719			—			719

	Comprehensive income																							4,401
	Three for one stock split				—		—		78			(78	)		—			—			—			—
	Reclassification for change in par value from $0.10 to $0.01 per share				—		—		(352	)		352			—			—			—			—
	Net issuance of 40,041 shares of common stock from exercise of stock options				—		—		1			456			—			—			—			457
	Issuance of 15,366 shares of preferred stock A from exercise of stock options				—		—		—			2			—			—			—			2
	Issuance of 7,040 shares of preferred stock B from exercise of stock options				—		—		—			130			—			—			—			130
	Purchase of 16,289 shares of preferred stock A				—		—		—			(163	)		—			—			—			(163	)
	Issuance of 3,750,813 common shares pursuant to acquisition of TCBC				—		—		125			45,186			—			—			—			45,311
	Issuance of 162,039 Preferred B shares pursuant to acquisition of MBI				—		2		—			6,267			—			—			—			6,269
	Issuance of 335,526 common shares pursuant to acquisition of MVBI				—		—		3			4,247			—			—			—			4,250

F-7

Home BancShares, Inc. and Subsidiaries

Consolidated Statements of Stockholders’ Equity — (Continued)


														Accumulated
														Other
														Comprehensive
		Preferred		Preferred		Common		Capital			Retained			Income			Treasury
		Stock A		Stock B		Stock		Surplus			Earnings			(Loss)			Stock		Total

		(In thousands, except share data (1))
	Retirement of treasury stock		—		—		—		(569	)		—			—			569		—
	Cash dividends — Preferred Stock A, $0.25 per share		—		—		—		—			(520	)		—			—		(520	)
	Cash dividends — Preferred Stock B, $0.33 per share		—		—		—		—			(54	)		—			—		(54	)
	Cash dividends — Common Stock, $0.07 per share		—		—		—		—			(836	)		—			—		(836	)

Balances at December 31, 2005		$	21	$	2	$	121	$	146,285		$	27,331		$	(7,903	)	$	—	$	165,857


(1)	All share and per share amounts have been restated to reflect the effect of the 2005 three for one stock split.

See accompanying notes.

F-8

Home BancShares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows


			Year Ended December 31

			2005			2004			2003

			(In thousands)
Operating Activities
Net income			$	11,446		$	9,159		$	3,769
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
	Depreciation			3,624			2,323			964
	Amortization/ Accretion			2,582			1,715			91
	Gain on sale of assets			(605	)		(86	)		(98	)
	Gain on sale of equity investment			(465	)		(4,410	)		—
	Minority interest			—			582			48
	Stock bonus compensation			—			—			206
	Provision for loan losses			3,827			2,290			807
	Deferred income tax (benefit) expense			(128	)		(1,562	)		250
	Equity in loss (income) of unconsolidated affiliates			592			(1,560	)		(937	)
	Increase in cash value of life insurance			(254	)		(244	)		(13	)
	Originations of mortgage loans held for sale			(89,638	)		(50,431	)		(106,947	)
	Proceeds from sales of mortgage loans held for sale			88,939			50,473			107,305
	Changes in assets and liabilities:
		Accrued interest receivable		(741	)		222			241
		Other assets		4,788			3,562			(5,044	)
		Accrued interest payable and other liabilities		(3,549	)		(18,973	)		18,501

Net cash provided by (used in) operating activities				20,418			(6,940	)		19,143

Investing Activities
Net increase (decrease) in federal funds sold				3,556			39,660			(40,055	)
Net increase in loans				(152,155	)		(28,720	)		(16,557	)
Purchases of investment securities available for sale				(157,440	)		(84,299	)		(121,709	)
Proceeds from maturities of investment securities available for sale				201,472			51,209			95,442
Proceeds from sales of investment securities available for sale				58,945			2,936			12,957
Proceeds from maturities of investment securities held to maturity				100			—			185
Proceeds from sale of loans				6,042			4,238			1,435
Proceeds from foreclosed assets held for sale				1,077			2,436			—
Proceeds from sale of fixed assets				—			694			107
Proceeds from sale of investment in RBI				—			13,546			—
Purchases of premises and equipment, net				(5,973	)		(7,846	)		(2,287	)
Paid on sale of branch, net of cash paid				—			(9,333	)		(1,646	)
Purchase of bank owned life insurance				—			(4,800	)		—
Acquisition of financial institutions, net funds disbursed				(31,349	)		—			—
Investments in unconsolidated affiliates				(9,091	)		(180	)		(8,592	)

Net cash used in investing activities				(84,816	)		(20,459	)		(80,720	)

F-9

Home BancShares, Inc. and Subsidiaries

Consolidated Statements of Cash Flows — (Continued)


	Year Ended December 31

	2005			2004			2003

	(In thousands)
Financing Activities
Net increase (decrease) in deposits		15,332			(2,257	)		12,551
Net increase (decrease) in securities sold under agreements to repurchase		36,705			(2,187	)		11,240
Net increase (decrease) in federal funds purchased		36,545			(1,285	)		2,155
Net increase (decrease) in FHLB and other borrowed funds		(27,333	)		36,346			(4,745	)
Net borrowing of line of credit		14,000			—			—
Net proceeds from common stock issuance		—			—			27,700
Net proceeds from preferred stock issuance		—			24			—
Proceeds from issuance of subordinated debentures		15,000			—			20,090
Proceeds from exercise of stock options		588			—			34
Repurchase of stock		(163	)		(549	)		(20	)
Dividends paid		(1,410	)		(869	)		(93	)

Net cash provided by financing activities		89,264			29,223			68,912

Net change in cash and due from banks		24,866			1,824			7,335
Cash and cash equivalents — beginning of year		19,813			17,989			10,654

Cash and cash equivalents — end of year	$	44,679		$	19,813		$	17,989

See accompanying notes.

F-10

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements


1.	Summary of Significant Accounting Policies


	*Nature of Operations*

Home BancShares, Inc. (the Company or HBI) is a financial holding company headquartered in Conway, Arkansas. The Company is primarily engaged in providing a full range of banking services to individual and corporate customers through its subsidiaries and their branch banks in Arkansas and the Florida Keys. The Company is subject to competition from other financial institutions. The Company also is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities.


	*Operating Segments*

The Company is organized on a subsidiary bank-by-bank basis upon which management makes decisions regarding how to allocate resources and assess performance. Each of the subsidiary banks provides a group of similar community banking services, including such products and services as loans, time deposits, checking and savings accounts. The individual bank segments have similar operating and economic characteristics and have been reported as one aggregated operating segment.


	*Use of Estimates*

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the valuation of foreclosed assets. In connection with the determination of the allowance for loan losses and the valuation of foreclosed assets, management obtains independent appraisals for significant properties.


	*Principles of Consolidation*

The consolidated financial statements include the accounts of HBI and its subsidiaries. Significant intercompany accounts and transactions have been eliminated in consolidation.


	*Reclassifications*

Various items within the accompanying financial statements for previous years have been reclassified to provide more comparative information. These reclassifications had no effect on net earnings or stockholders’ equity.


	*Cash and Due from Banks*

Cash and due from banks consists of cash on hand and demand deposits with banks. For purposes of the statement of cash flows, the Company considers due from banks as cash equivalents.


	*Investment Securities*

Interest on investment securities is recorded as income as earned. Gains or losses on the sale of securities are determined using the specific identification method.

F-11

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Management determines the classification of securities as available for sale, held to maturity, or trading at the time of purchase based on the intent and objective of the investment and the ability to hold to maturity. Fair values of securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities. The Company has no trading securities.

Securities available for sale are reported at fair value with unrealized holding gains and losses reported as a separate component of stockholders’ equity and other comprehensive income (loss). Securities that are held as available for sale are used as a part of HBI’s asset/liability management strategy. Securities that may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors are classified as available for sale.

Securities held to maturity are reported at amortized historical cost. Securities that management has the intent and ability to hold until maturity or on a long-term basis are classified as held to maturity.


	*Loans Receivable and Allowance for Loan Losses*

Loans receivable that management has the intent and ability to hold for the foreseeable future or until maturity or payoff are reported at their outstanding principal balance adjusted for any charge-offs, deferred fees or costs on originated loans. Interest income on loans is accrued over the term of the loans based on the principal balance outstanding. Loan origination fees and direct origination costs are capitalized and recognized as adjustments to yield on the related loans.

The allowance for loan losses is established through a provision for loan losses charged against income. The allowance represents an amount that, in management’s judgment, will be adequate to absorb probable credit losses on existing loans that may become uncollectible and probable credit losses inherent in the remainder of the loan portfolio. The amounts of provisions to the allowance for loan losses are based on management’s analysis and evaluation of the loan portfolio for identification of problem credits, internal and external factors that may affect collectibility, relevant credit exposure, particular risks inherent in difference kinds of lending, current collateral values and other relevant factors.

Loans considered impaired, under SFAS No. 114, Accounting by Creditors for Impairment of a Loan , as amended by SFAS No. 118, Accounting by Creditors for Impairment of a Loan-Income Recognition and Disclosures , are loans for which, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company applies this policy even if delays or shortfalls in payment are expected to be insignificant. All non-accrual loans and all loans that have been restructured from their original contractual terms are considered impaired loans. The aggregate amount of impairment of loans is utilized in evaluating the adequacy of the allowance for loan losses and amount of provisions thereto. Losses on impaired loans are charged against the allowance for loan losses when in the process of collection it appears likely that such losses will be realized. The accrual of interest on impaired loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. When accrual of interest is discontinued, all unpaid accrued interest is reversed.

Loans are placed on non-accrual status when management believes that the borrower’s financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due. Loans are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely. Accrued interest related to non-accrual loans is generally charged against the allowance for loan losses when accrued in prior years and reversed from interest income if accrued in the current year. Interest income on non-accrual loans may be recognized to the extent cash payments are received, but payments received are usually applied to principal. Non-accrual loans are generally returned to accrual status when

F-12

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

principal and interest payments are less than 90 days past due, the customer has made required payments for at least three months, and the Company reasonably expects to collect all principal and interest.


	*Foreclosed Assets Held for Sale*

Real estate and personal properties acquired through or in lieu of loan foreclosure are to be sold and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis.

Valuations are periodically performed by management, and the real estate is carried at the lower of book value or fair value less cost to sell. Gains and losses from the sale of other real estate are recorded in non-interest income, and expenses used to maintain the properties are included in non-interest expenses.


	*Bank Premises and Equipment*

Bank premises and equipment are carried at cost or fair market value at the date of acquisition less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Accelerated depreciation methods are used for tax purposes. Leasehold improvements are capitalized and amortized by the straight-line method over the terms of the respective leases or the estimated useful lives of the improvements whichever is shorter. The assets’ estimated useful lives for book purposes are as follows:


Bank premises			15-40 years
Furniture, fixtures, and equipment			3-15 years


	*Investments in Unconsolidated Affiliates*

The Company has a 20.0% investment in White River Bancshares, Inc. (WRBI), which at December 31, 2005 totaled $8.5 million. The investment in WRBI is accounted for on the equity method. The Company’s share of WRBI operating loss included in non-interest income in 2005 totaled $592,000. The Company’s share of WRBI accumulated other comprehensive loss at December 31, 2005 amounted to $18,000. See the “Acquisitions” footnote related to the Company’s acquisition of WRBI during 2005.

The Company had a 32.2% investment in TCBancorp, Inc. (TCB), which at December 31, 2004 totaled $19.4 million. The investment in TCBC was accounted for on the equity method. The Company’s share of earnings of TCB is included in non-interest income, and in 2004 and 2003 totaled $815,000 and $102,000, respectively. The Company’s share of TCB’s accumulated other comprehensive loss at December 31, 2004 and 2003 amounted to $737,000 and $341,000, respectively. See the “Acquisitions” footnote related to the Company’s acquisition of the remaining 67.8% of TCB common stock on January 1, 2005.

The Company had a 50.0% investment in FirsTrust Financial Services, Inc. (FirsTrust), which at December 31, 2004 totaled $2,000. The investment in FirsTrust was accounted for on the equity method. The Company’s share of FirsTrust operating loss is included in non-interest income, and in 2004 and 2003 totaled $186,000 and $149,000, respectively. See the “Acquisitions” footnote related to the Company’s acquisition of the remaining 50.0% of FirsTrust common stock on January 1, 2005.

On September 3, 2004, the Company sold its 21.68% investment in Russellville BancShares, Inc. (RBI), resulting in a gain of $4,410,000. At the date of the sale, the Company’s investment in RBI was $9,175,000. The Company’s share in earnings of RBI included in non-interest income for 2004 (through the sale date) and 2003, totaled $931,000 and $984,000, respectively.

The Company has invested funds representing 100% ownership in four statutory trusts which issue trust preferred securities. The Company’s investment in these trusts was $1.3 million and $712,000 at December 31, 2005 and 2004. Under generally accepted accounting principles, these trusts are not consolidated.

F-13

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The summarized financial information below represents an aggregation of the Company’s unconsolidated affiliates as of December 31, 2005 and 2004, and for the years then ended:


	2005			2004		2003

	(In thousands)
Assets	$	229,072		$	654,112	$	882,263
Liabilities		176,511			591,761		780,751
Equity		52,561			62,351		101,512
Net (loss) income		(2,658	)		2,158		4,932


	*Intangible Assets*

Intangible assets consist of goodwill and core deposit intangibles. Goodwill represents the excess purchase price over the fair value of net assets acquired in business acquisitions. Core deposit intangibles represent the estimated value related to customer deposit relationships in Company’s acquisitions. The core deposit intangibles are being amortized over 84 to 114 months on a straight-line basis. Goodwill is not amortized but rather is evaluated for impairment on at least an annual basis. The Company performed its annual impairment test of goodwill at December 31, 2005 and 2004, as required by SFAS No. 142, Goodwill and Other Intangible Assets. The tests indicated no impairment of the Company’s goodwill.


	*Securities Sold Under Agreements to Repurchase*

The Company sells securities under agreements to repurchase to meet customer needs for sweep accounts. At the point funds deposited by customers become investable, those funds are used to purchase securities owned by the Company and held in its general account with the designation of Customers’ Securities. A third party maintains control over the securities underlying overnight repurchase agreements. The securities involved in these transactions are generally U.S. Treasury or Federal Agency issues. Securities sold under agreements to repurchase generally mature on the banking day following that on which the investment was initially purchased and are treated as collateralized financing transactions which are recorded at the amounts at which the securities were sold plus accrued interest. Interest rates and maturity dates of the securities involved vary and are not intended to be matched with funds from customers.


	*Derivative Financial Instruments*

The Company may enter into derivative contracts for the purposes of managing exposure to interest rate risk. The Company records all derivatives on the balance sheet at fair value. Historically the Company’s policy has been not to invest in derivative type investments but as a result of the acquisition in June 2005, the Company acquired a derivative financial instrument. The fair value hedge acquired was an interest rate swap agreement for one the Company’s subordinated debentures. For derivatives designated as hedging, the exposure to changes in the fair value of the hedged item, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain of the hedging instrument. The fair value hedge is considered to be highly effective and any hedge ineffectiveness was deemed not material. The notional amount of the subordinated debenture being hedged was $5.0 million at December 31, 2005.


	*Income Taxes*

The Company utilizes the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based upon the difference between the values of the assets and liabilities as reflected in the financial statements and their related tax basis using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes. A valuation

F-14

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

allowance is established to reduce deferred tax assets if it is more likely than not that a deferred tax asset will not be realized.

The Company and its subsidiaries file consolidated tax returns. Its subsidiaries provide for income taxes on a separate return basis, and remit to the Company amounts determined to be currently payable.


	*Earnings per Share*

Basic earnings per share are computed based on the weighted average number of shares outstanding during each year. Diluted earnings per share are computed using the weighted average common shares and all potential dilutive common shares outstanding during the period. The following table sets forth the computation of basic and diluted earnings per share (EPS) for the years ended December 31:


	2005			2004			2003

	(In thousands)
Net income available to all shareholders	$	11,446		$	9,159		$	3,769
Less: Preferred stock dividends		(574	)		(529	)		—

Income available to common shareholders	$	10,872		$	8,630		$	3,769

Average shares outstanding	$	11,862		$	7,986		$	5,721
Effect of common stock options		78			114			99
Effect of preferred stock options		22			27			—
Effect of preferred stock conversions		1,927			1,656			144

Diluted shares outstanding	$	13,889		$	9,783		$	5,964

Basic earnings per share	$	0.92		$	1.08		$	0.66
Diluted earnings per share	$	0.82		$	0.94		$	0.63


	*Pension Plan*

As the result of the acquisition during December 2003 and September 2005, the Company has two noncontributory defined benefit plans covering certain employees from those acquisitions. The Company’s policy is to accrue pension costs in accordance with Statement of Financial Accounting Standards No. 87, Employer’s Accounting for Pensions, and to fund such pension costs in accordance with contribution guidelines established by the Employee Retirement Income Security Act of 1974, as amended. The Company uses a measurement date of January 1.

F-15

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


	*Stock Option Plan*

For purposes of pro forma disclosures as required by SFAS Nos. 123 and 148, the estimated fair value of stock options is amortized over the options’ vesting period. The following table represents the required pro forma disclosures related to net income for the years ended December 31 for options granted:


	2005			2004			2003

	(In thousands except
	per share data)
Net income — as reported	$	11,446		$	9,159		$	3,769
Less: Total stock-based employee compensation cost determined under the fair value based method, net of income taxes		(114	)		(43	)		(45	)

Net income — pro forma	$	11,332		$	9,116		$	3,724

Basic earnings per share — as reported	$	0.92		$	1.08		$	0.66
Basic earnings per share — pro forma		0.91			1.08			0.65
Diluted earnings per share — as reported		0.82			0.94			0.63
Diluted earnings per share — pro forma		0.82			0.93			0.62

The above pro forma amounts include only the current year vesting, during 2005, 2004 and 2003 on outstanding options and therefore may not be representative of the pro forma impact in future years.


	*Fair Values of Financial Instruments*

The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed in these notes:

Cash and due from banks and federal funds sold — For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Investment securities — Fair values for investment securities are based on quoted market values.

Loans receivable, net — For variable-rate loans that reprice frequently and with no significant change in credit risk, fair values are assumed to approximate the carrying amounts. The fair values for fixed-rate loans are estimated using discounted cash flow analysis, based on interest rates currently being offered for loans with similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics.

Accrued interest receivable — The carrying amount of accrued interest receivable approximates its fair value.

Deposits and securities sold under agreements to repurchase — The fair values of demand, savings deposits and securities sold under agreements to repurchase are, by definition, equal to the amount payable on demand and therefore approximate their carrying amounts. The fair values for time deposits are estimated using a discounted cash flow calculation that utilizes interest rates currently being offered on time deposits with similar contractual maturities.

Federal funds purchased — The carrying amount of federal funds purchased approximates its fair value.

Accrued interest payable and other liabilities — The carrying amount of accrued interest payable and other liabilities approximates its fair value.

FHLB and other borrowings — For short-term instruments, the carrying amount is a reasonable estimate of fair value. The fair value of long-term debt is estimated based on the current rates available to the Company for debt with similar terms and remaining maturities.

F-16

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Subordinated debentures — The fair value of subordinated debentures is estimated using the rates that would be charged for subordinated debentures of similar remaining maturities.


2.	Acquisitions

On September 1, 2005, HBI acquired Mountain View Bancshares, Inc., an Arkansas bank holding company. Mountain View Bancshares owned The Bank of Mountain View, located in Mountain View, Arkansas which had assets, loans and deposits of approximately $186.4 million, $68.8 million and $158.0 million, respectively, as of the acquisition date. The consideration for the merger was $44.1 million, which was paid approximately 90% in cash and 10% in shares of our common stock. As a result of this transaction, the Company recorded goodwill and a core deposit intangible of $13.2 million and $3.0 million, respectively.

On June 1, 2005, HBI acquired Marine Bancorp, Inc., a Florida bank holding company. Marine Bancorp owned Marine Bank of the Florida Keys (subsequently renamed Marine Bank), located in Marathon, Florida, which had consolidated assets, loans and deposits of approximately $251.5 million, $215.2 million and $200.7 million, respectively, as of the acquisition date. The consideration for the merger was $15.6 million, which was paid approximately 60.5% in cash and 39.5% in shares of our Class B preferred stock. As a result of this transaction, the Company recorded goodwill and a core deposit intangible of $4.6 million and $2.0 million, respectively.

On January 3, 2005, HBI purchased 20% of the common stock of White River Bancshares, Inc. of Fayetteville, Arkansas for $9.1 million. White River Bancshares is a newly formed corporation, which owns all of the stock of Signature Bank of Arkansas, with branch locations in the northwest Arkansas area. At December 31, 2005, White River Bancshares had approximately $184.7 million in total assets, $131.3 million in total loans and $130.3 million in total deposits. In January 2006, White River Bancshares issued an additional $15.0 million of their common stock. To maintain our 20% ownership, the Company made an additional investment in White River Bancshares of $3.0 million in January 2006.

Effective January 1, 2005, HBI purchased the remaining 67.8% of TCBancorp and its subsidiary Twin City Bank with branch locations in the Little Rock/ North Little Rock metropolitan area. The purchase brought our ownership of TCBancorp to 100%. HBI acquired, as of the effective date of this transaction, approximately $630.3 million in total assets, $261.9 million in loans and approximately $500.1 million in deposits. The purchase price for the TCBancorp acquisition was $43.9 million, which consisted of the issuance of 3,750,000 shares (split adjusted) of our common stock and cash of approximately $110,000. As a result of this transaction, the Company recorded goodwill and a core deposit intangible of $1.1 million and $3.3 million, respectively. This transaction also increased to 100% our ownership of CB Bancorp and FirsTrust, both of which the Company had previously co-owned with TCBancorp.

On December 1, 2003, HBI used CB Bancorp (an acquisition subsidiary that the Company formed and co-owned, on an 80/20 basis, with TCBancorp) to purchase Community Financial Group, Inc. and its bank subsidiary, Community Bank. The Company acquired approximately $326.2 million in total assets, $199.5 million in loans and approximately $279.6 million in deposits in this transaction. The purchase price for the Community Financial Group acquisition was $43.0 million and consisted of cash of $12.6 million from Home BancShares and $8.6 million from TCBancorp, and 2,176,291 shares of our convertible Class A preferred stock at a value of $10 per share. In February 2005, CB Bancorp merged into Home BancShares, and Community Bank thus became our wholly owned subsidiary. As a result of this transaction, the Company recorded goodwill and a core deposit intangible of $18.6 million and $5.0 million, respectively.

F-17

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The following table presents condensed pro forma consolidated results of operations as if the acquisitions of TCBancorp, Marine Bancorp, Inc and Mountain View Bancshares, Inc had occurred at the beginning of each year. This information combines the historical results of operations of the Company, TCBancorp, Marine Bancorp, Inc and Mountain View Bancshares after the effect of purchase accounting adjustments. The unaudited pro forma information does not purport to be indicative of the results that would have been obtained if the operations had actually been combined during the period presented and is not necessarily indicative of operating results to be expected in future periods.


	2005		2004

	(In thousands, except
	per share data)
Net interest income	$	56,184	$	50,347
Non-interest income		16,951		22,029

Total revenue	$	73,135	$	72,376

Basic earnings per share	$	1.05	$	1.09

Diluted earnings per share	$	0.93	$	0.96


3.	Investment Securities

The amortized cost and estimated market value of investment securities were as follows:


	December 31, 2005

	Available for Sale

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		(Losses)			Fair Value

	(In thousands)
U.S. Government Agencies	$	162,165	$	27	$	(4,723	)	$	157,469
Mortgage-backed securities		264,666		16		(8,209	)		256,473
State and political subdivisions		102,928		1,279		(746	)		103,461
Other Securities		13,571		—		(672	)		12,899

Total	$	543,330	$	1,322	$	(14,350	)	$	530,302


	December 31, 2004

	Available for Sale

			Gross		Gross
	Amortized		Unrealized		Unrealized			Estimated
	Cost		Gains		(Losses)			Fair Value

	(In thousands)
U.S. Government Agencies	$	15,646	$	18	$	(86	)	$	15,578
Mortgage-backed securities		127,316		249		(898	)		126,667
State and political subdivisions		39,564		717		(147	)		40,134
Other Securities		8,010		15		(38	)		7,987

Total	$	190,536	$	999	$	(1,169	)	$	190,366

Assets, principally investment securities, having a carrying value of approximately $276.1 million and $84.5 million at December 31, 2005 and 2004, respectively, were pledged to secure public deposits and for other purposes required or permitted by law. Also, investment securities pledged as collateral for repurchase

F-18

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

agreements totaled approximately $110.5 million and $22.5 million at December 31, 2005 and 2004, respectively.

The amortized cost and estimated market value of securities at December 31, 2005, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.


	Available-for-Sale

	Amortized		Estimated
	Cost		Fair Value

	(In thousands)
Due in one year or less	$	179,736	$	175,239
Due after one year through five years		229,354		224,570
Due after five years through ten years		69,475		67,765
Due after ten years		64,765		62,728

Total	$	543,330	$	530,302

For purposes of the maturity tables, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on anticipated maturities. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

The amortized cost and estimated market value of the Company’s securities classified as held to maturity was $100,000 at December 31, 2004, which consisted of states and political subdivision securities. All balances were due in one year or less. There were no securities classified as held to maturity at December 31, 2005.

During the years ended December 31, 2005 and 2004, investment securities available for sale with a fair value at the date of sale of approximately $58.9 million and $2.9 million, respectively, were sold. The gross realized gains on such sales totaled $54,000 and $64,000 for the years ended December 31, 2005 and 2004, respectively. The gross realized loss on such sales totaled $593,000 and zero for the years ended December 31, 2005 and 2004, respectively. The income tax expense related to net security gains was $21,000 and $19,000 for the years ended December 31, 2005 and 2004, respectively. The income tax benefit related to net security losses was $228,000 and zero for the years ended December 31, 2005 and 2004, respectively.

Certain investment securities are valued less than their historical cost. These declines primarily resulted from recent increases in market interest rates. Based on evaluation of available evidence, management believes the declines in fair value for these securities are temporary. It is management’s intent to hold these securities to maturity. Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary, impairment is identified.

During the year ended December 31, 2004, in evaluating the Company’s unrealized loss position for other-than-temporary impairment, management determined that a few securities were deemed to have other-than-temporary impairments. Management decided to write down these securities based on the credit quality of the issuers, the nature of the investment and the negative market outlook. The total amount of the impairment write-down was $313,000, which is included in gain (loss) on sales of securities and loans. No securities were deemed to have other-than-temporary impairments for the year ended December 31, 2005.

F-19

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The following shows gross unrealized losses and estimated fair value of investment securities available for sale, aggregated by investment category and length of time that individual investment securities have been in a continuous loss position as of December 31, 2005 and 2004:


	December 31, 2005

	Less Than 12 Months				12 Months or More				Total

			Unrealized				Unrealized				Unrealized
	Fair Value		Losses		Fair Value		Losses		Fair Value		Losses

	(In thousands)
U.S. Government agencies	$	29,083	$	497	$	118,209	$	4,226	$	147,292	$	4,723
State and political subdivisions		13,231		159		25,172		587		38,403		746
Mortgage-backed securities		59,722		1,216		191,328		6,993		251,050		8,209
Other securities		1,860		172		5,945		500		7,805		672

	$	103,896	$	2,044	$	340,654	$	12,306	$	444,550	$	14,350


	December 31, 2004

	Less Than 12 Months				12 Months or More				Total

			Unrealized		Fair		Unrealized				Unrealized
	Fair Value		Losses		Value		Losses		Fair Value		Losses

	(In thousands)
U.S. Government agencies	$	11,757	$	86	$	—	$	—	$	11,757	$	86
State and political subdivisions		13,305		129		2,998		18		16,303		147
Mortgage-backed securities		80,824		785		4,647		113		85,471		898
Other securities		5,133		38		789		—		5,922		38

	$	111,019	$	1,038	$	8,434	$	131	$	119,453	$	1,169

F-20

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


4.	Loans Receivable and Allowance for Loan Losses

The various categories of loans are summarized as follows:


			December 31

			2005		2004

			(In thousands)
Real estate:
	Commercial real estate loans
		Non-farm/non-residential	$	411,839	$	181,995
		Construction/land development		291,515		116,935
		Agricultural		13,112		12,912
	Residential real estate loans
		Residential 1-4 family		221,831		86,497
		Multifamily residential		34,939		17,708

Total real estate				973,236		416,047
Consumer				39,447		24,624
Commercial and industrial				175,396		69,345
Agricultural				8,466		6,275
Other				8,044		364

	Total loans receivable before allowance for loan losses			1,204,589		516,655
Allowance for loan losses				24,175		16,345

Total loans receivable, net			$	1,180,414	$	500,310

The following is a summary of activity within the allowance for loan losses:


		Year Ended December 31

		2005			2004			2003

		(In thousands)
Balance, beginning of year		$	16,345		$	14,717		$	5,706
Loans charged off			(4,611	)		(2,181	)		(676	)
Recoveries on loans previously charged off			850			1,519			150

	Net charge-offs		(3,761	)		(662	)		(526	)
Provision charged to operating expense			3,827			2,290			807
Allowance for loan losses of acquired institutions			7,764			—			8,730

Balance, end of year		$	24,175		$	16,345		$	14,717

At December 31, 2005 and 2004, accruing loans delinquent 90 days or more totaled $426,000 and $2,000, respectively. Non-accruing loans at December 31, 2005 and 2004 were $7.9 million and $9.0 million, respectively.

Real estate securing loans having a carrying value of $1.1 million and $1.3 million were transferred to foreclosed assets held for sale in 2005 and 2004, respectively. The Company is not committed to lend additional funds to customers whose loans have been modified, restructured, or foreclosed upon. During 2005, the Company sold foreclosed real estate with a carrying value of $767,000 and $2.1 million during 2005 and 2004, respectively, which resulted in gains (losses) of $310,000, $319,000 and ($11,000) during 2005, 2004 and 2003, respectively, which are included in other non-interest income.

F-21

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

During 2005 and 2004, the Company sold $5.5 million and $4.2 million, respectively, of the guaranteed portion of certain SBA loans, which resulted in gains of $529,000 and $26,000 during 2005 and 2004, respectively.

Mortgage loans held for resale of approximately $3.0 million and $1.0 million at December 31, 2005 and 2004, respectively, are included in residential 1–4 family loans. The carrying value of these loans approximates their fair value. Mortgage banking revenue is recognized when funds are received from the third party purchaser of the loan.

At December 31, 2005 and 2004, impaired loans totaled $5.1 million and $9.0 million, respectively. As of December 31, 2005, average impaired loans were $8.5 million, compared to $9.6 million in 2004. All impaired loans had designated reserves for possible loan losses. Reserves relative to impaired loans at December 31, 2005, were $1.8 million and $1.3 million at December 31, 2004. Interest recognized on impaired loans during 2005 or 2004 was immaterial.


5.	Goodwill and Core Deposit Intangibles

Changes in the carrying amount of the Company’s goodwill and core deposit intangibles for the years ended December 31, 2005 and 2004 were as follows:


		December 31

		2005			2004

		(In thousands)
Goodwill
Balance, beginning of year		$	18,555		$	20,002
	Acquisitions of financial institutions		18,972			(413	)
	Branch sale		—			(1,034	)

Balance, end of year		$	37,527		$	18,555

Core Deposit Intangibles
Balance, beginning of year		$	4,261		$	5,250
	Acquisitions of financial institutions		8,405			—
	Amortization expense		(1,466	)		(728	)
	Branch sale		—			(261	)

Balance, end of year		$	11,200		$	4,261

The increases in goodwill and core deposit intangibles are the result of the acquisition of TCB, MBI, MVBI and CBB as discussed in Note 2.

The carrying basis and accumulated amortization of core deposit intangibles at December 31, 2005 and 2004, were:


		December 31

		2005		2004

		(In thousands)
Gross carrying amount		$	13,457	$	5,052
	Accumulated amortization		2,257		791

Net carrying amount		$	11,200	$	4,261

F-22

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Core deposit intangible amortization for the years ended December 31, 2005, 2004 and 2003 was approximately $1.5 million, $728,000 and $63,000 respectively. Including all of the mergers completed, HBI’s estimated amortization expense of core deposit for each of the following five years is $1.8 million.

During 2004, the Company sold a branch operation acquired in its acquisition of CBB to its unconsolidated affiliate TCB. The sale resulted in an adjustment of $1.3 million, which was recorded as a reduction of goodwill and core deposit intangible assets due to the sale being within one year of the acquisition date.


6.	Deposits

The aggregate amount of time deposits with a minimum denomination of $100,000 was $403.0 million and $130.0 million at December 31, 2005 and 2004, respectively. Interest expense applicable to certificates in excess of $100,000 totaled $11.3 million and $2.9 million in 2005 and 2004, respectively.

The following is a summary of the scheduled maturities of all time deposits at December 31, 2005 (in thousands):


One month or less	$	82,210
Over 1 month to 3 months		150,177
Over 3 months to 6 months		129,609
Over 6 months to 12 months		185,018
Over 12 months to 2 years		92,821
Over 2 years to 3 years		36,829
Over 3 years to 5 years		27,274
Over 5 years		1,012

Total time certificates of deposit	$	704,950

Deposits totaling approximately $236.1 million and $43.6 million at December 31, 2005 and 2004, respectively, were public funds obtained primarily from state and political subdivisions in the United States.


7.	FHLB and Other Borrowed Funds

The Company’s FHLB and other borrowed funds were $117.1 million and $74.9 million at December 31, 2005 and 2004, respectively. The outstanding balance for December 31, 2005 includes $4.0 million of short-term advances and $113.1 million of long-term advances. The outstanding balance for December 31, 2004 includes $31.0 million of short-term advances and $43.9 million of long-term advances. Short-term borrowings consist of U.S. TT&L notes and short-term FHLB borrowings. Long-term borrowings consist of long-term FHLB borrowings and a line of credit with another financial institution.

Additionally, the Company has $46.5 million and $13.0 million at December 31, 2005 and 2004, respectively, in letters of credit under a FHLB blanket borrowing line of credit, which are used to collateralize public deposits at December 31, 2005 and 2004, respectively.

F-23

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Long-term borrowings at December 31, 2005 and 2004 consisted of the following components.


		2005		2004

		(In thousands)
Line of Credit, due 2009, at a floating rate of 0.75% below Prime, secured by bank stock		$	14,000	$	—
FHLB advances, due 2005 to 2020, 1.58% to 5.96% secured by residential real estate loans			99,118		43,869

	Total long-term borrowings	$	113,118	$	43,869

Maturities of borrowings with original maturities exceeding one year at December 31, 2005, are as follows (in thousands):


2006	$	40,556
2007		28,939
2008		8,920
2009		14,512
2010		12,265
Thereafter		7,926

	$	113,118


8.	Subordinated Debentures

Subordinated Debentures at December 31, 2005 and 2004 consisted of guaranteed payments on trust preferred securities with the following components.


		2005		2004

		(In thousands)
Subordinated debentures, due 2033, fixed at 6.40%, during the first five years and at a floating rate of 3.15% above the three-month LIBOR rate, reset quarterly, thereafter, callable in 2008 without penalty		$	20,619	$	20,619
Subordinated debentures, due 2030, fixed at 10.60%, callable in 2010 with a penalty ranging from 5.30% to 0.53% depending on the year of prepayment, callable in 2020 without penalty			3,516		3,600
Subordinated debentures, due 2033, floating rate of 3.15% above the three-month LIBOR rate, reset quarterly, callable in 2008 without penalty			5,155		—
Subordinated debentures, due 2035, fixed rate of 6.81% during the first ten years and at a floating rate of 1.38% above the three-month LIBOR rate, reset quarterly, thereafter, callable in 2010 without penalty			15,465		—

	Total subordinated debt	$	44,755	$	24,219

As a result of the acquisition of MBI, the Company has an interest rate swap agreement that effectively converts the floating rate on the $5.2 million trust preferred security noted above into a fixed interest rate of 7.29%, thus reducing the impact of interest rate changes on future interest expense until 2009.

F-24

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

subject to mandatory redemption upon payment of the junior subordinated debentures held by the trust. The Company wholly owns the common securities of each trust. Each trust’s ability to pay amounts due on the trust preferred securities is solely dependent upon the Company making payment on the related junior subordinated debentures. The Company’s obligations under the junior subordinated securities and other relevant trust agreements, in aggregate, constitute a full and unconditional guarantee by the Company of each respective trust’s obligations under the trust securities issued by each respective trust.


9.	Income Taxes

The following is a summary of the components of the provision for income taxes:


		Year Ended December 31

		2005			2004			2003

		(In thousands)
Current:
	Federal	$	4,224		$	5,622		$	1,716
	State		839			970			377

Total current			5,063			6,592			2,093

Deferred:
	Federal		(107	)		(1,304	)		250
	State		(21	)		(258	)		—

Total deferred			(128	)		(1,562	)		250

Provision for income taxes		$	4,935		$	5,030		$	2,343

The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows:


	Year Ended December 31

	2005			2004			2003

Statutory federal income tax rate		35.00	%		35.00	%		34.00	%
Effect of nontaxable interest income		(5.93	)		(3.53	)		(0.92	)
Cash surrender value of life insurance		(0.54	)		(0.58	)		(0.08	)
State taxes		2.17			3.63			3.29
Change in effective rate for deferred tax assets		—			(0.33	)		—
Other		(0.57	)		(0.13	)		1.75

Effective income tax rate		30.13	%		34.06	%		38.04	%

F-25

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The types of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities, and their approximate tax effects, are as follows:


		December 31

		2005		2004

		(In thousands)
Deferred tax assets:
	Allowance for loan losses	$	9,229	$	5,792
	Deferred compensation		249		139
	Defined benefit pension plan		109		350
	Non-accrual interest income		466		163
	Investment in unconsolidated subsidiary		336		89
	Unrealized loss on securities		5,105		99
	Gain on sale of branch		—		405
	Other		349		243

Gross deferred tax assets			15,843		7,280
Deferred tax liabilities:
	Accelerated depreciation on premises and equipment		2,237		1,442
	Core deposit intangibles		4,211		1,671
	Market value of cash flow hedge		25		—
	FHLB dividends		393		281
	Other		156		199

Gross deferred tax liabilities			7,022		3,593

Net deferred tax assets included in other assets		$	8,821	$	3,687


10.	Common Stock and Stock Compensation Plans

The Company has a nonqualified stock option plan for employees, officers, and directors of the Company. This plan provides for the granting of incentive nonqualified options to purchase up to 840,000 shares of common stock in the Company. The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and related interpretations in accounting for its employee stock options using the fair value method. Under APB 25, because the exercise price of the options equals the estimated market price of the stock on the issuance date, no compensation expense is recorded. The fair market value was determined based on the per share price of the Company’s most recent private placement equity issue. The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148.

F-26

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The table below summarizes the transactions under the Company’s stock option plans (split adjusted) at December 31, 2005, 2004 and 2003 and changes during the years then ended:


	2005					2004					2003

				Weighted					Weighted					Weighted
				Average					Average					Average
	Shares			Exercisable		Shares			Exercisable		Shares			Exercisable
	(000)			Price		(000)			Price		(000)			Price

Outstanding, beginning of year		453		$	9.46		324		$	8.11		315		$	7.99
Granted		75			12.67		135			12.67		24			11.15
Options of acquired institution		168			10.80		—			n/a		—			n/a
Forfeited		(23	)		8.78		(6	)		9.72		(12	)		9.60
Exercised		(43	)		11.48		—			n/a		(3	)		7.61

Outstanding, end of year		630			10.07		453			9.46		324			8.11

Exercisable, end of year		497		$	9.50		243		$	7.81		231		$	7.53

The weighted-average fair value of options granted during 2005, 2004 and 2003 was $4.64, $2.73 and $2.10 per share (split adjusted), respectively. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	2005			2004			2003

Expected dividend yield		0.63	%		0.00	%		0.00	%
Expected stock price volatility		10.00	%		0.01	%		0.01	%
Risk-free interest rate		4.39	%		3.73	%		3.05	%
Expected life of options		13.0 years			6.5 years			6.5 years

The following is a summary of currently outstanding and exercisable options at December 31, 2005:


Options Outstanding								Options Exercisable

				Weighted-
		Options		Average		Weighted-		Options		Weighted-
		Outstanding		Remaining		Average		Exercisable		Average
		Shares		Contractual Life		Exercise		Shares		Exercise
Exercise Prices		(000s)		(in years)		Price		(000s)		Price

$	7.33 to $ 8.33		230		6.5	$	7.46		229	$	7.46
$	9.33 to $10.31		128		8.1		10.13		113		10.17
$	11.67 to $11.34		87		10.9		11.40		77		11.36
$	12.67 to $12.67		185		12.4		12.67		78		12.67

			630						497

The Company has a stock bonus plan for certain key employees and officers of the Company. This plan provided for the granting of 94,134 shares of Company stock as bonuses ratably over a five-year period. As of December 31, 2005, 2004 and 2003, 91,776 shares have been granted. As of December 31, 2005, 2,358 shares were cancelled. During 2003, 17,646 shares of stock were granted as bonuses. The fair market value of the shares granted in 2003 was determined to be $11.67 per share, based on the issuance price of the Company’s private placement equity offers during 2003. Compensation expense was $206,000 on the 17,646 shares granted in the year ended December 31, 2003. No additional shares of the Company’s stock were granted as bonus shares during the years ended December 31, 2005 and 2004. This share information is reflective of the three-for-one stock split during 2005.

F-27

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

During 2005, the Company completed a three for one stock split. This resulted in issuing two additional shares of stock to the common shareholders. As a result of the stock split, the accompanying consolidated financial statements reflect an increase in the number of outstanding shares of common stock and the $78,000 transfer of the par value of these additional shares from surplus. All share and per share amounts have been restated to reflect the retroactive effect of the stock split, except for the capitalization of the Company.

During 2005, the board of directors of the Company passed a resolution amending the articles of incorporation to lower the par value from $0.10 to $0.01. This resulted in $352,000 reclassified from common stock to capital surplus in stockholders’ equity.

During 2003, the Company issued 2,374,143 (split adjusted) shares of common stock for an offering price of $11.67 per share, pursuant to an exemption provided by the Arkansas Securities Act, the Securities Act of 1933, and Rule 147 of the Securities and Exchange Commission. The proceeds of $27.7 million were recorded to stockholders’ equity, net of issuance costs of $37,000. For a period of two years after the issuance of the shares, the holder of the shares may not sell the shares without the written consent of HBI. In the absence of such consent, the holder may not sell the shares without giving HBI at least forty-five days to purchase the shares on the same terms as offered by a third party in a bona fide offer.

During 2003, the board of directors of the Company passed a resolution amending the articles of incorporation to lower the par value from $1.00 to $0.10. This resulted in $1,678,000 reclassified from common stock to capital surplus in stockholders’ equity.


11.	Preferred Stock A and Preferred Stock A Options

During 2003, the Company issued preferred stock A as a result of the CBB acquisition. The preferred stock A is non-voting, non-cumulative, callable and redeemable, and convertible to the Company’s common stock. The preferred stock A will yield an annual non-cumulative dividend of $0.25 to be paid quarterly if and when authorized and declared by the Company’s board of directors. Dividends must be paid on preferred stock A before any other class of the Company’s stock.

The Preferred Stock A may be converted at the holder’s option or redeemed by the Company at its option under the following terms and conditions (common stock split adjusted):

The Preferred Stock A may be converted at the holder’s option, into HBI common stock upon the earlier of the expiration of thirty months after the effective date of the merger or 180 days after the date any of the HBI common stock is registered pursuant to the Securities Act of 1933 with the Securities and Exchange Commission in connection with an initial public offering of HBI common stock. Each share of Preferred Stock A to be converted and properly surrendered to the Company pursuant to the Company’s instructions for such surrender, shall be converted into 0.789474 shares of HBI Common Stock, with fractional shares of the Preferred Stock A to be converted into cash at the rate of $12.67 times the fraction of shares held.

The Company may, at its option, redeem all of the Preferred Stock A at any time after the expiration of thirty months from the effective date of the merger or earlier if the HBI common stock becomes publicly traded and (a) the last reported trade is at least $12.67 per share for 20 consecutive trading days or (b) if the trades are quoted on a “bid and ask” price basis and the mean between the bid and ask price is at least $12.67 per share for 20 consecutive trading days.

At December 31, 2005, 2004 and 2003, the Company had 26,000, 41,000 and 49,000 preferred stock A options outstanding, respectively. The preferred stock A options became 100% exercisable at the date of the CBB acquisition and are convertible to common stock under the same terms as the outstanding preferred stock A.

F-28

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The table below summarizes the transactions under the Company’s preferred stock A option plan at December 31, 2005, 2004 and 2003 and changes during the years then ended:


	2005					2004					2003

				Weighted					Weighted				Weighted
				Average					Average				Average
	Shares			Exercisable		Shares			Exercisable		Shares		Exercisable
	(000)			Price		(000)			Price		(000)		Price

Outstanding, beginning of year		41		$	2.04		49		$	1.73		—	$	—
Acquired during acquisition		—			—		—			—		49		1.73
Exercised		(15	)		0.17		(8	)		0.17		—		—

Outstanding, end of year		26			3.14		41			2.04		49		1.73

Exercisable, end of year		26		$	3.14		41		$	2.04		49	$	1.73

The following table summarizes information about preferred stock A options under the plan outstanding at December 31, 2005:

Options Outstanding

Options Exercisable

Weighted

Average

Weighted

Number

Remaining

Average

Number

Average

Range of

Outstanding

Contractual

Exercise

Exercisable

Exercise

Exercise Prices

(000)

Life

Price

(000)

Price

$0.17

4 Years

0.17

$6.84

3 Years

6.84


12.	Preferred Stock B and Preferred Stock B Options

During 2005, the Company issued preferred stock B as a result of the MBI acquisition. The Class B Preferred Stock will be non-voting, non-cumulative, callable and redeemable, convertible preferred stock The Class B Preferred Stock will yield an annual non-cumulative dividend of $0.57 to be paid quarterly if and when authorized and declared by HBI’s board of directors, and has priority in the payment of dividends over the HBI Common Stock and any class of capital stock created after the effective date of the merger, provided that dividends have first been paid on the Class A Preferred Stock.

The Class B Preferred Stock is redeemable by HBI at any time on the basis of three shares of HBI Common Stock for each share of Class B Preferred Stock. Holders of the Class B Preferred Stock may convert their shares of Class B Preferred Stock into shares of HBI Common Stock (three shares of HBI Common Stock for each share of Class B Preferred Stock), upon the occurrence of the earlier of July 6, 2006, or two hundred ten (210) days after the date an underwritten initial public offering of the HBI Common Stock is completed.

At December 31, 2005 the Company had 25,000 preferred stock B options outstanding, respectively. The preferred stock B options became 100% exercisable at the date of the MBI acquisition and are convertible to common stock under the same terms as the outstanding preferred stock B.

F-29

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The table below summarizes the transactions under the Company’s preferred stock B option plan at December 31, 2005 and changes during the year then ended:


				Weighted
				Average
	Shares			Exercisable
	(000)			Price

Outstanding, beginning of year		—		$	n/a
Acquired during acquisition		32			18.92
Exercised		(7	)		18.41
Outstanding, end of year		25			19.06
Exercisable, end of year		25		$	19.06

The following table summarizes information about preferred stock B options under the plan outstanding at December 31, 2005:


	Options Outstanding						Options Exercisable

			Weighted
			Average		Weighted				Weighted
	Number		Remaining		Average		Number		Average
Range of	Outstanding		Contractual		Exercise		Exercisable		Exercise
Exercise Prices	(000)		Life		Price		(000)		Price

$18.41		9		5 Years	$	18.41		9	$	18.41
$19.09		10		8 Years	$	19.09		10	$	19.09
$20.05		6		9 Years	$	20.05		6	$	20.05

F-30

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


13.	Non-Interest Expense

The table below shows the components of non-interest expense for the years ended December 31:


		2005		2004		2003

		(In thousands)
Salaries and employee benefits		$	23,901	$	14,123	$	7,139
Occupancy and equipment			6,869		3,750		1,659
Data processing expense			1,991		1,170		893
Other operating expenses:
	Advertising		2,067		900		774
	Amortization of intangibles		1,466		728		63
	ATM expense		427		372		237
	Directors’ fees		505		210		73
	Due from bank service charges		284		197		108
	FDIC and state assessment		503		301		155
	Insurance		504		344		193
	Legal and accounting		941		452		204
	Other professional fees		534		493		315
	Operating supplies		745		530		336
	Postage		580		404		183
	Telephone		669		377		153
	Other expense		2,949		1,780		585

Total other operating expenses			12,174		7,088		3,379

Total non-interest expense		$	44,935	$	26,131	$	13,070


14.	Employee Benefit Plans


	*401(k) Plan*

The Company has a retirement savings 401(k) plan in which substantially all employees may participate. The Company matches employees’ contributions based on a percentage of salary contributed by participants. The plan also allows for discretionary employer contributions. The Company’s expense for the plan was $476,000, $195,000 and $227,000 in 2005, 2004 and 2003, respectively, which is included in salaries and employee benefits expense.


	*Stock Appreciation Rights*

During 2005, the Company issued 341,000 stock appreciation rights at $12.67 for certain executive employees throughout the Company. The appreciation rights are on a five-year cliff-vesting schedule with all appreciation rights vesting on December 31, 2009. The vesting is also subject to various financial performance goals of the Company and the subsidiary banks over the five-year period ending December 31, 2009. At that time, any appreciation on the vested rights can either be paid to the employee with cash or stock of the Company at the option of the employee.

F-31

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


	*Pension Plan*

The following table sets forth the status of the Company’s defined benefit pension plans:


		December 31

		2005			2004			2003

		(In thousands)
Benefit obligation		$	3,494		$	1,840		$	1,896
Fair value of plan assets			2,693			1,025			1,165

Funded status		$	(801	)	$	(815	)	$	(731	)

Accrued benefit cost		$	(552	)	$	(949	)	$	(990	)
Unrecognized net (gain) or loss			(146	)		(212	)		(251	)
Unrecognized prior service cost			117			—			—
Unrecognized net obligation			70			—			—
Weighted-average assumptions:
	Discount rate		6.8	%		6.5	%		6.5	%
	Actual return on plan assets		9.8			6.7			-2.2
	Expected return on plan assets		6.8			6.5			6.5
	Rate of compensation increase		4.0			—			—
Benefit cost		$	196		$	41		$	98
Interest cost			268			117			128
Employer contributions			767			166			165
Employee contributions			—			—			—
Benefits paid			1,095			296			287

The assets of the plans consist primarily of equity securities and mutual funds. The measurement date for the plans is January 1. The plans have been frozen, and there have been no new participants in the plan and no additional benefits earned. Contributions are made based upon at least the minimum amounts required to be funded under provisions of the Employee Retirement Income Security Act of 1974, with the maximum contribution not to exceed the maximum amount deductible under the Internal Revenue Code. The minimum contribution for the year ending December 31, 2006, will be approximately $170,000.

The long-term rate of return on assets is determined by considering the historical returns for the current mix of investments in the Company’s pension plan. In addition, consideration is given to the range of expected returns for the pension plan investment mix provided by the plan’s investment advisors. The Company uses the historical information to determine if there has been a significant change in the pension plan’s investment return history.

The discount rate was determined by projecting cash distributions from the plan and matching them with the appropriate corporate bond yields in a yield curve regression analysis.

Benefit payments for the next ten years are estimated as follows (in thousands):


2006	$	170
2007		172
2008		176
2009		174
2010		146
2010-2015		2,564

F-32

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


15.	Related Party Transactions

In the ordinary course of business, loans may be made to officers and directors and their affiliated companies at substantially the same terms as comparable transactions with other borrowers. At December 31, 2005 and 2004, related party loans were approximately $55.8 million and $38.8 million, respectively. New loans and advances on prior commitments made to the related parties were $19.1 million and $31.4 million for the years ended December 31, 2005 and 2004, respectively. Repayments of loans made by the related parties were $14.5 million and $2.9 million for the years ended December 31, 2005 and 2004, respectively. As a result of acquisitions completed during 2005, the Company acquired $12.4 million of related party loans.

At December 31, 2005 and 2004, directors, officers, and other related interest parties had demand, non-interest-bearing deposits of $37.4 million and $10.1 million, respectively, savings and interest-bearing transaction accounts of $1.3 million and $31,000, respectively, and time certificates of deposit of $13.6 million and $3.9 million, respectively.

During 2005 and 2004, rent expense totaling $181,000 and $414,000, respectively, was paid to related parties. During 2004, a director of the Company sold a building to a subsidiary of the Company for $3.1 million. This subsidiary was leasing space in the building for its operations department. When the building was sold, the subsidiary had paid ten months of rent to the director.

The Company also received various fees from its investments in unconsolidated affiliates primarily for data processing and professional fees. During 2005 and 2004, these fees total $267,000 and $1.4 million, respectively. These fees are recorded in non-interest income.


16.	Leases

At December 31, 2005, the minimum rental commitments under noncancelable operating leases are as follows (in thousands):


2006	$	980
2007		976
2008		916
2009		909
2010		907
Thereafter		5,384

	$	10,072

Rent expense under operating leases was $800,000, $521,000 and $240,000 in 2005, 2004 and 2003, respectively.


17.	Concentration of Credit Risks

The Company’s primary market area is in central Arkansas and the Florida Keys (Monroe County). The Company primarily grants loan to customers located within these geographical areas unless the borrower has an established relationship with the Company.

The diversity of the Company’s economic base tends to provide a stable lending environment. The Company maintains a diversified loan portfolio and does not have a concentration of credit risk in any particular industry or economic sector. Although the Company has a loan portfolio that is diversified in both industry and geographic area, a substantial portion of its debtors’ ability to honor their contracts is dependent upon real estate values, tourism demand and the economic conditions prevailing in its market areas.

F-33

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


18.	Significant Estimates and Concentrations

Accounting principles generally accepted in the United Sates of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for loan losses and certain concentrations of credit risk are reflected in Note 4, while deposit concentrations are reflected in Note 6.


19.	Commitments and Contingencies

In the ordinary course of business, the Company makes various commitments and incurs certain contingent liabilities to fulfill the financing needs of their customers. These commitments and contingent liabilities include lines of credit and commitments to extend credit and issue standby letters of credit. The Company applies the same credit policies and standards as they do in the lending process when making these commitments. The collateral obtained is based on the assessed creditworthiness of the borrower.

At December 31, 2005 and 2004, commitments to extend credit of $266.5 million and $105.5 million, respectively, were outstanding. A percentage of these balances are participated out to other banks; therefore, the Company can call on the participating banks to fund future draws. Since some of these commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements.

Outstanding standby letters of credit are contingent commitments issued by the Company, generally to guarantee the performance of a customer in third-party borrowing arrangements. The term of the guarantee is dependent upon the credit worthiness of the borrower some of which are long-term. The maximum amount of future payments the Company could be required to make under these guarantees at December 31, 2005 and 2004, is $21.0 million and $10.4 million, respectively.

The Company and/or its subsidiary banks have various unrelated legal proceedings, most of which involve loan foreclosure activity pending, which, in the aggregate, are not expected to have a material adverse effect on the financial position of the Company and its subsidiaries.


20.	Financial Instruments

The following table presents the estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.


		December 31, 2005

		Carrying
		Amount		Fair Value

		(In thousands)
Financial assets:
	Cash and due from banks and bank deposits	$	44,679	$	44,679
	Federal funds sold		7,055		7,055
	Investment securities — available for sale		530,302		530,302
	Net loans receivable		1,180,414		1,173,873
	Accrued interest receivable		11,158		11,158

F-34

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


			December 31, 2005

			Carrying
			Amount		Fair Value

			(In thousands)
Financial liabilities:
	Deposits:
		Demand and non-interest-bearing	$	209,974	$	209,974
		Savings and interest-bearing transaction accounts		512,184		512,184
		Time deposits		704,950		706,982
	Federal funds purchased			44,495		44,495
	Securities sold under agreements to repurchase			103,718		103,718
	FHLB and other borrowings			117,054		115,612
	Accrued interest payable and other liabilities			8,504		8,504
	Subordinated debentures			44,755		46,433


			December 31, 2004

			Carrying
			Amount		Fair Value

			(In thousands)
Financial assets:
	Cash and due from banks and bank deposits		$	19,813	$	19,813
	Federal funds sold			2,220		2,220
	Investment securities — available for sale			190,366		190,366
	Investment securities — held to maturity			100		100
	Net loans receivable			500,310		496,570
	Accrued interest receivable			4,215		4,215

Financial liabilities:
	Deposits:
		Demand and non-interest-bearing		86,186		86,186
		Savings and interest-bearing transaction accounts		196,304		196,304
		Time deposits		270,388		271,184
	Federal funds purchased			7,950		7,950
	Securities sold under agreements to repurchase			21,259		21,259
	FHLB and other borrowings			74,869		74,923
	Accrued interest payable and other liabilities			8,163		8,163
	Subordinated debentures			24,219		24,868


21.	Regulatory Matters

The Company’s subsidiaries are subject to a legal limitation on dividends that can be paid to the parent company without prior approval of the applicable regulatory agencies. Arkansas bank regulators have specified that the maximum dividend limit state banks may pay to the parent company without prior approval is 75% of the current year earnings plus 75% of the retained net earnings of the preceding year. Under Florida state banking law, regulatory approval will be required if the total of all dividends declared in any calendar year by the Bank exceeds the Bank’s net profits to date for that year combined with its retained net profits for the preceding two years. As the result of special dividends paid by the Company’s subsidiary banks during to 2005

F-35

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

to help provide cash for the MBI and MVBI acquisitions, the Company’s subsidiary banks did not have any significant undivided profits available for payment of dividends to the Company, without prior approval of the regulatory agencies at December 31, 2005.

The Company’s subsidiaries are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company must meet specific capital guidelines that involve quantitative measures of the Company’s assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The Company’s capital amounts and classifications are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company to maintain minimum amounts and ratios (set forth in the table below) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes that, as of December 31, 2005, the Company meets all capital adequacy requirements to which it is subject.

As of the most recent notification from regulatory agencies, the subsidiaries were well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Company and subsidiaries must maintain minimum total risk-based, Tier 1 risk-based and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the institutions’ categories.

The Company’s actual capital amounts and ratios along with the Company’s subsidiary banks are presented in the following table.


											To Be Well
											Capitalized Under
							For Capital				Prompt Corrective
			Actual				Adequacy Purposes				Action Provision

			Amount		Ratio-%		Amount		Ratio-%		Amount		Ratio-%

			(In thousands)
As of December 31, 2005
	Leverage Ratio
		Home BancShares, Inc.	$	172,244		9.22	$	74,726		4.00	$	N/A
		First State Bank		38,572		8.44		18,281		4.00		22,851		5.00
		Community Bank		23,129		7.59		12,189		4.00		15,236		5.00
		Twin City Bank		51,679		8.07		25,615		4.00		32,019		5.00
		Marine Bank		20,050		7.28		11,016		4.00		13,771		5.00
		Bank of Mountain View		29,468		16.35		7,209		4.00		9,012		5.00
	Tier 1 Capital Ratio
		Home BancShares, Inc.		172,244		12.25		56,243		4.00		N/A
		First State Bank		38,572		10.01		15,413		4.00		23,120		6.00
		Community Bank		23,129		10.25		9,026		4.00		13,539		6.00
		Twin City Bank		51,679		11.53		17,929		4.00		26,893		6.00
		Marine Bank		20,050		9.08		8,833		4.00		13,249		6.00
		Bank of Mountain View		29,468		29.75		3,962		4.00		5,943		6.00

F-36

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


											To Be Well
											Capitalized Under
							For Capital				Prompt Corrective
			Actual				Adequacy Purposes				Action Provision

			Amount		Ratio-%		Amount		Ratio-%		Amount		Ratio-%

			(In thousands)
	Total Risk-Based Capital Ratio
		Home BancShares, Inc.		189,902		13.51		112,451		8.00		N/A
		First State Bank		43,362		11.26		30,808		8.00		38,510		10.00
		Community Bank		26,010		11.53		18,047		8.00		22,559		10.00
		Twin City Bank		57,248		12.77		35,864		8.00		44,830		10.00
		Marine Bank		22,815		10.33		17,669		8.00		22,086		10.00
		Bank of Mountain View		30,094		30.38		7,925		8.00		9,906		10.00
As of December 31, 2004
	Leverage Ratio
		Home BancShares, Inc.	$	105,139		13.47	$	31,222		4.00	$	N/A
		First State Bank		60,701		13.43		18,079		4.00		22,599		5.00
		Community Bank		22,513		7.44		12,104		4.00		15,130		5.00
	Tier 1 Capital Ratio
		Home BancShares, Inc.		105,139		17.39		24,184		4.00		N/A
		First State Bank		60,701		15.53		15,635		4.00		23,452		6.00
		Community Bank		22,513		11.97		7,523		4.00		11,285		6.00
	Total Risk-Based Capital Ratio
		Home BancShares, Inc.		105,139		17.39		48,368		8.00		N/A
		First State Bank		65,604		16.78		31,277		8.00		39,097		10.00
		Community Bank		24,955		13.27		15,044		8.00		18,806		10.00


22.	Additional Cash Flow Information

In connection with 2005 acquisitions accounted for using the purchase method, the Company acquired approximately $1.0 billion in assets, assumed $960 million in liabilities, issued $56 million of equity and paid cash net of funds received of $31 million. The company paid interest and taxes during the years ended as follows:


	2005		2004		2003

	(In thousands)
Interest paid	$	34,282	$	11,584	$	8,563
Income taxes paid		6,000		3,015		4,990


23.	Recent Accounting Pronouncements

Statement of Position No. 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3). SOP 03-3 addresses accounting for differences between the contractual cash flows of certain loans and debt securities and the cash flows expected to be collected when loans or debt securities are acquired in a transfer and those cash flow differences are attributable, at least in part, to credit quality. As such, SOP 03-3 applies to loans and debt securities acquired individually, in pools or as part of a business combination and does not apply to originated loans. The application of SOP 03-3 limits the interest income,

F-37

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

including accretion of purchase price discounts, which may be recognized for certain loans and debt securities. Additionally, SOP 03-3 does not allow the excess of contractual cash flows over cash flows expected to be collected to be recognized as an adjustment of yield, loss accrual or valuation allowance, such as the allowance for possible loan losses. SOP 03-3 requires that increases in expected cash flows subsequent to the initial investment be recognized prospectively through adjustment of the yield on the loan or debt security over its remaining life. Decreases in expected cash flows should be recognized as impairment. In the case of loans acquired in a business combination where the loans show signs of credit deterioration, SOP 03-3 represents a significant change from current purchase accounting practice whereby the acquiree’s allowance for loan losses is typically added to the acquirer’s allowance for loan losses. SOP 03-3 was effective for loans and debt securities the Company acquired beginning January 1, 2005. The adoption of SOP 03-3 did not have a material impact on the Company’s acquisitions of TCB or MBI. However, during the acquisition of MVBI, the Company did recognize impairment charges on loans which were deemed the have probable losses. These impairment charges resulted in reducing the acquired provision for loan losses and gross loan receivable by $506,000.

SFAS No. 123, Share-Based Payment (Revised 2004), establishes standards for the accounting for transactions in which an entity (i) exchanges its equity instruments for goods or services, or (ii) incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of the equity instruments. SFAS 123R eliminates the ability to account for stock-based compensation using APB 25 and requires that such transactions be recognized as compensation cost in the income statement based on their fair values on the measurement date, which is generally the date of the grant. SFAS 123R was to be effective for the Company on July 1, 2005; however, the required implementation date was delayed until January 1, 2006. The Company will transition to fair-value based accounting for stock-based compensation using a modified version of prospective application (“modified prospective application”). Under modified prospective application, as it is applicable to the Company, SFAS 123R applies to new awards and to awards modified, repurchased, or cancelled after January 1, 2006. Additionally, compensation cost for the portion of awards for which the requisite service has not been rendered (generally referring to non-vested awards) that are outstanding as of January 1, 2006 must be recognized as the remaining requisite service is rendered during the period of and/or the periods after the adoption of SFAS 123R. The attribution of compensation cost for those earlier awards will be based on the same method and on the same grant-date fair values previously determined for the pro forma disclosures required for companies that did not adopt the fair value accounting method for stock-based employee compensation.

Based on the stock-based compensation awards outstanding as of December 31, 2005 for which the requisite service is not expected to be fully rendered prior to January 1, 2006, the Company expects to recognize total compensation cost of approximately $460,000 during 2006, in accordance with the accounting requirements of SFAS 123R. Future levels of compensation cost recognized related to stock-based compensation awards (including the aforementioned expected costs during the period of adoption) may be impacted by new awards and/or modifications, repurchases and cancellations of existing awards after the adoption of SFAS 123R.

F-38

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

specific effects of applying the new accounting principle. Special retroactive application rules apply in situations where it is impracticable to determine either the period-specific effects or the cumulative effect of the change. Indirect effects of a change in accounting principle are required to be reported in the period in which the accounting change is made. SFAS 154 carries forward the guidance in APB Opinion 20 “Accounting Changes,” requiring justification of a change in accounting principle on the basis of preferability. SFAS 154 also carries forward without change the guidance contained in APB Opinion 20, for reporting the correction of an error in previously issued financial statements and for a change in an accounting estimate. SFAS 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not expect SFAS 154 will significantly impact its financial statements upon its adoption on January 1, 2006.

FASB Staff Position (FSP) No, 115-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments , provides guidance for determining when an investment is considered impaired, whether impairment is other-than-temporary, and measurement of an impairment loss. An investment is considered impaired if the fair value of the investment is less than its cost. If, after consideration of all available evidence to evaluate the realizable value of its investment, impairment is determined to be other-than-temporary, then an impairment loss should be recognized equal to the difference between the investment’s cost and its fair value. FSP 115-1 nullifies certain provisions of Emerging Issues Task Force (EITF) Issue No. 03-1, The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments , while retaining the disclosure requirements of EITF 03-1 which were adopted in 2003. FSP 115- 1 is effective for reporting periods beginning after December 15, 2005. The Company does not expect ESP 115-1 will significantly impact its financial statements upon its adoption on January 1, 2006.

Presently, the Company is not aware of any other changes from the Financial Accounting Standards Board that will have a material impact on the Company’s present or future financial statements.


24.	Subsequent Events — Unaudited

In January 2006, WRBI issued an additional $15 million of their common stock. To maintain its 20% ownership, HBI made an additional investment in WRBI of $3.0 million in January 2006.

F-39

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


25.	Condensed Financial Information (Parent Company Only)

Condensed Balance Sheets


	December 31

	2005			2004

	(In thousands)
ASSETS
Cash and cash equivalents	$	5,046		$	10,659
Investment securities		5,000			—
Investments in wholly-owned subsidiaries		198,929			97,113
Investments in unconsolidated subsidiaries		9,813			20,122
Premises and equipment		3,917			45
Other assets		3,001			591

Total assets	$	225,706		$	128,530

LIABILITIES
Long-term borrowings	$	14,000		$	—
Subordinated debentures		44,755			20,619
Other liabilities		1,094			1,301

Total Liabilities		59,849			21,920

Stockholders’ Equity
Preferred stock — A		21			21
Preferred stock — B		2			—
Common stock		121			266
Capital surplus		146,285			90,455
Retained earnings		27,331			17,295
Accumulated other comprehensive loss		(7,903	)		(858	)
Treasury stock at cost		—			(569	)

Total stockholders’ equity		165,857			106,610

Total liabilities and stockholders’ equity	$	225,706		$	128,530

F-40

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Condensed Statements of Income


		Years Ended December 31

		2005			2004		2003

		(In thousands)
Income
	Dividends from subsidiaries	$	10,664		$	1,010	$	8,944
	Other income		926			6,333		283

Total income			11,590			7,343		9,227
Expense			4,988			2,489		371

	Income before income taxes and equity in undistributed net income of subsidiaries		6,602			4,854		8,856
	Provision for income taxes		(1,603	)		1,553		—

Income before equity in undistributed net income of subsidiaries			8,205			3,301		8,856
Equity in undistributed net income (loss) of subsidiaries			3,241			5,858		(5,087	)

Net Income		$	11,446		$	9,159	$	3,769

F-41

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Condensed Statements of Cash Flows


				Years Ended December 31

				2005			2004			2003

				(In thousands)
Cash flows from operating activities
	Net income			$	11,446		$	9,159		$	3,769
	Items not requiring (providing) cash
		Depreciation			138			4			—
		Gain on sale of equity investment			(465	)		(4,410	)		—
		Equity in undistributed income of subsidiaries			(3,241	)		(5,858	)		5,087
		Equity in loss (income) of unconsolidated affiliates			592			(1,560	)		(937	)
	Changes in other assets				(1,669	)		15			(340	)
		Other liabilities			(320	)		639			198

			Net cash provided by (used in) operating activities		6,481			(2,011	)		7,777

Cash flows from investing activities
	Purchases of premises and equipment				(276	)		(49	)		—
	Investment in unconsolidated subsidiaries				(9,091	)		(180	)		(8,592	)
	Capital contribution to subsidiaries				(4,000	)		—			(35,097	)
	Return of capital from subsidiaries				27,246			—			—
	Purchase of subsidies				(48,988	)		—			(12,576	)
	Proceeds from sale of investment in RBI				—			13,546			—
	Purchase of investment securities				(5,000	)		—			—

			Net cash (used in) provided by investing activities		(40,109	)		13,317			(56,265	)

Cash flows from financing activities
	Net proceeds from stock issuance				425			24			27,734
	Purchase of treasury stock				—			(549	)		(20	)
	Issuance of subordinated debentures				15,000			—			20,090
	Issuance of long-term borrowings				14,000			—			—
	Dividends paid				(1,410	)		(869	)		(93	)

			Net cash provided by (used in) financing activities		28,015			(1,394	)		47,711

	(Decrease) increase decrease in cash and cash equivalents				(5,613	)		9,912			(777	)
	Cash and cash equivalents, beginning of year				10,659			747			1,524

	Cash and cash equivalents, end of year			$	5,046		$	10,659		$	747

F-42

Home BancShares, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Consolidated Financial Statements

TCBancorp, Inc. and Subsidiary

Years ended December 31, 2004 and 2003

F-43

TCBancorp, Inc. and Subsidiary

Consolidated Financial Statements

Years ended December 31, 2004 and 2003

Contents


Report of Independent Auditors			F-44
Audited Consolidated Financial Statements
Consolidated Balance Sheets			F-45
Consolidated Statements of Income			F-46
Consolidated Statements of Stockholders’ Equity			F-47
Consolidated Statements of Cash Flows			F-48
Notes to Consolidated Financial Statements			F-49

Report of Independent Registered Public Accounting Firm

The Board of Directors and

Stockholders of TCBancorp, Inc.

We have audited the accompanying consolidated balance sheet of TCBancorp, Inc. and subsidiary as of December 31, 2004 and 2003, and the related consolidated statements of income, stockholders’ equity, and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of TCBancorp, Inc. and subsidiary at December 31, 2004 and 2003, and the consolidated results of their operations and their cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.


	/s/ ERNST & YOUNG LLP

March 11, 2005

F-44

TCBancorp, Inc. and Subsidiary

Consolidated Balance Sheets


		December 31

		2004			2003

Assets
Cash and due from banks		$	9,038,802		$	9,221,345
Federal funds sold			3,660,000			—
Investment securities — available for sale			327,189,427			194,278,868
Loans receivable			261,926,661			204,884,112
Allowance for loan losses			(4,740,649	)		(3,483,498	)

	Loans receivable, net		257,186,012			201,400,614
Bank premises and equipment, net			14,590,106			11,099,596
Investments in unconsolidated affiliates			9,243,360			8,659,251
Accrued interest receivable			2,658,800			1,605,161
Goodwill			1,132,109			98,389
Core deposit intangible, net			288,503			—
Other real estate owned			—			1,712,700
Income tax receivable			138,536			534,571
Other assets			5,223,518			1,996,500

Total assets		$	630,349,173		$	430,606,995

Liabilities and Stockholders’ Equity
Deposits:
	Demand, non-interest-bearing	$	56,183,562		$	39,438,879
	Savings and interest-bearing transaction accounts		165,244,655			107,226,763
	Time certificates of deposit		278,715,558			177,820,899

Total deposits			500,143,775			324,486,541
Federal funds purchased			—			9,630,000
Securities sold under agreements to repurchase			45,754,078			35,551,396
Federal Home Loan Bank borrowings			20,883,900			—
Accrued interest and other liabilities			1,928,152			696,475

Total liabilities			568,709,905			370,364,412
Stockholders’ equity:
	Common stock, par value $0.01; 3,000,000 shares authorized; 2,286,515 and 2,283,075 shares issued and outstanding in 2004 and 2003, respectively		22,865			22,831
	Capital surplus		61,217,100			61,122,534
	Retained earnings		2,688,362			157,331
	Accumulated other comprehensive loss		(2,289,059	)		(1,060,113	)

Total stockholders’ equity			61,639,268			60,242,583

Total liabilities and stockholders’ equity		$	630,349,173		$	430,606,995

See accompanying notes.

F-45

TCBancorp, Inc. and Subsidiary

Consolidated Statements of Income


			Year ended December 31

			2004		2003

Interest income:
	Loans		$	12,297,715	$	8,830,893
	Investment securities:
		Taxable		7,948,791		4,365,984
		Tax-exempt		522,771		129,280
	Federal funds sold			68,020		54,793

Total interest income				20,837,297		13,380,950
Interest expense:
	Interest on deposits			6,804,296		4,089,339
	Federal funds purchased			60,556		22,040
	Federal Home Loan Bank borrowings			390,081		—
	Securities sold under agreements to repurchase			150,778		449,495

Total interest expense				7,405,711		4,560,874

Net interest income				13,431,586		8,820,076
Provision for loan losses				1,260,000		1,667,000

Net interest income after provision for loan losses				12,171,586		7,153,076
Non-interest income:
	Service charges on deposit accounts			1,756,345		917,933
	Other income, charges, and fees			733,415		744,306
	Equity in income (loss) of unconsolidated affiliates			396,471		(97,589	)
	Gain on sale of securities			115,534		257,842

Total non-interest income				3,001,765		1,822,492
Non-interest expense:
	Salaries and employee benefits			5,233,085		3,831,782
	Occupancy and equipment			2,399,576		1,488,441
	Other operating expenses			3,886,137		3,075,920

Total non-interest expense				11,518,798		8,396,143

Income before income taxes				3,654,553		579,425
Income tax expense				1,123,522		138,404

Net income			$	2,531,031	$	441,021

See accompanying notes.

F-46

TCBancorp, Inc. and Subsidiary

Consolidated Statements of Stockholders’ Equity


											Accumulated
											Other
								Retained			Comprehensive
				Common		Capital		(Deficit)			Income
				Stock		Surplus		Earnings			(Loss)			Total

Balances at January 1, 2003				$	14,069	$	37,073,816	$	(283,690	)	$	203,295		$	37,007,490
	Comprehensive income (loss):
		Net income			—		—		441,021			—			441,021
		Other comprehensive income (loss):
			Unrealized losses on investment securities available for sale, net of $738,513 tax effect		—		—		—			(1,433,584	)		(1,433,584	)
			Reclassification adjustment for gains included in income, net of $87,666 tax effect		—		—		—			170,176			170,176

Comprehensive loss, net															(822,387	)
	Issuance of stock awards — 3,440 shares				35		94,565		—			—			94,600
	Sale of stock offerings, net of offering costs of $37,140 — 872,728 shares				8,727		23,954,153		—			—			23,962,880

Balances at December 31, 2003					22,831		61,122,534		157,331			(1,060,113	)		60,242,583
	Comprehensive income (loss):
		Net income			—		—		2,531,031			—			2,531,031
		Other comprehensive income (loss):
			Unrealized losses on investment securities available for sale, net of $923,354 tax effect		—		—		—			(1,300,242	)		(1,300,242	)
			Reclassification adjustment for gains included in income, net of $44,238 tax effect		—		—		—			71,296			71,296

Comprehensive gain, net															1,302,085
	Issuance of stock awards — 3,440 shares				34		94,566		—			—			94,600

Balances at December 31, 2004				$	22,865	$	61,217,100	$	2,688,362		$	(2,289,059	)	$	61,639,268

See accompanying notes.

F-47

TCBancorp, Inc. and Subsidiary

Consolidated Statements of Cash Flows


			Year ended December 31

			2004			2003

Operating Activities
Net income			$	2,531,031		$	441,021
Adjustments to reconcile net income to net cash provided by operating activities:
	Depreciation			865,901			470,441
	Amortization			687,127			30,672
	Loss on sale of assets			1,584			—
	Gain on sale of securities available for sale			(115,534	)		(257,842	)
	Stock bonus compensation			94,600			94,600
	Provision for loan losses			1,260,000			1,667,000
	Deferred income taxes			(197,514	)		(38,901	)
	Equity in (income) loss of unconsolidated affiliates			(396,471	)		97,589
	Originations of mortgage loans held for sale			(14,238,978	)		(34,668,915	)
	Proceeds from sale of mortgage loans held for sale			14,526,628			34,583,265
	Changes in operating assets and liabilities:
		Accrued interest receivable		(1,026,639	)		(603,971	)
		Other assets		222,991			(145,981	)
		Accrued interest and other liabilities		1,570,712			(558,747	)

Net cash provided by operating activities				5,785,438			1,110,231
Investing Activities
Purchases of investment securities				(262,677,805	)		(251,189,651	)
Purchase of FHLB stock				(2,373,100	)		—
Proceeds from maturities of investment securities				69,246,288			109,795,286
Proceeds from sales of investment securities				57,909,309			40,958,645
Net increase in loans				(51,422,048	)		(74,978,741	)
Net (increase) decrease in federal funds sold				(3,660,000	)		4,000,000
Purchases of bank premises and equipment, net				(3,762,582	)		(6,802,533	)
Proceeds on sale of other real estate owned				1,718,351			—
Cash acquired in branch acquisition				9,332,790			—
Investments in unconsolidated affiliates				(180,000	)		(8,718,500	)

Net cash used in investing activities				(185,868,797	)		(186,935,494	)
Financing Activities
Net proceeds from common stock issuance				—			23,962,880
Net increase in deposits				158,574,234			139,899,045
Net increase in securities sold under agreements to repurchase				10,072,682			14,181,793
Net increase in FHLB borrowings				20,883,900			—
Increase (decrease) in federal funds purchased				(9,630,000	)		9,630,000

Net cash provided by financing activities				179,900,816			187,673,718

Net change in cash and due from banks				(182,543	)		1,848,455
Cash and due from banks at beginning of year				9,221,345			7,372,890

Cash and due from banks at end of year			$	9,038,802		$	9,221,345

Cash paid for:
	Interest		$	6,825,407		$	4,598,276
	Income taxes			925,000			1,355,000

See accompanying notes.

F-48

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements

December 31, 2004


1.	Summary of Significant Accounting Policies


	*Nature of Operations*

TCBancorp, Inc. (the Company) is a bank holding company headquartered in North Little Rock, Arkansas, which began operations during 2000 after purchasing an existing bank charter. The Company operates under the rules and regulations of the Board of Governors of the Federal Reserve System and owns a state-chartered bank named Twin City Bank (the Bank). The Company and the Bank are subject to the regulation of certain federal and state agencies and undergo periodic examinations by those regulatory authorities. The Bank has branch locations in central Arkansas.


	*Principles of Consolidation*

The consolidated financial statements include the accounts of the Company and its wholly owned subsidiary, Twin City Bank. Significant intercompany transactions and amounts have been eliminated in consolidation.


	*Use of Estimates*

In preparing financial statements in conformity with accounting principles generally accepted in the United States, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the year then ended. Actual results could differ from those estimates.


	*Investment Securities*

Interest on investment securities is recorded as income as it is earned. Gains or losses on the sale of securities are determined using the specific identification method. Management determines the classification of securities as available for sale, held to maturity, or trading. Fair values of securities are based on quoted market prices where available. If quoted market prices are not available, estimated fair values are based on quoted market prices of comparable securities.

Securities available for sale are reported at fair value with unrealized gains and losses reported as a separate component of stockholders’ equity and other comprehensive income (loss). These securities are held for indefinite periods of time and are used as a part of the Company’s asset/liability management strategy and may be sold in response to interest rate changes, changes in prepayment risk, the need to increase regulatory capital, and other similar factors.

Securities held to maturity are reported at amortized historical cost. Securities that management has the intent and ability to hold until maturity are classified as held to maturity. There were no securities classified as held to maturity or trading at December 31, 2004 or 2003.

The allowance for loan losses is established through a provision for loan losses charged against income. The allowance represents an amount that, in management’s judgment, will be adequate to absorb probable losses on existing loans that may become uncollectible. 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

F-49

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

loan losses and required additions to the reserve are (1) an internal grading system and (2) a peer group analysis. In addition to these objective criteria, the Company subjectively assesses the 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.

Loans considered impaired, under SFAS No. 114, Accounting by Creditors for Impairment of a Loan, as amended by SFAS No. 118, Accounting by Creditors for Impairment of a Loan — Income Recognition and Disclosures, are loans for which, based on current information and events, it is probable that the Company will be unable to collect all amounts due according to the contractual terms of the loan agreement. The Company applies this policy even if delays or shortfalls in payment are expected to be insignificant. All non-accrual loans and all loans that have been restructured from their original contractual terms are considered impaired loans. The aggregate amount of impairment of loans is utilized in evaluating the adequacy of the allowance for loan losses and amount of provisions thereto. Losses on impaired loans are charged against the allowance for loan losses when in the process of collection it appears likely that such losses will be realized. The accrual of interest on impaired loans is discontinued when, in management’s opinion, the borrower may be unable to meet payments as they become due. When accrual of interest is discontinued, all unpaid accrued interest is reversed.

Loans are placed on non-accrual status when management believes that the borrower’s financial condition, after giving consideration to economic and business conditions and collection efforts, is such that collection of interest is doubtful, or generally when loans are 90 days or more past due. Loans are charged against the allowance for loan losses when management believes that the collectibility of the principal is unlikely. Accrued interest related to non-accrual loans is generally charged against the allowance for loan losses when accrued in prior years and reversed from interest income if accrued in the current year. Interest income on non-accrual loans may be recognized to the extent cash payments are received, but payments received are usually applied to principal. Non-accrual loans are generally returned to accrual status when principal and interest payments are less than 90 days past due, the customer has made required payments for at least three months, and the Company reasonably expects to collect all principal and interest.


	*Foreclosed Assets Held for Sale*

Real estate and personal properties acquired through or in lieu of loan foreclosure are held for sale and are initially recorded at estimated fair value at the date of foreclosure, establishing a new book value.

Valuations are periodically performed by management, and the real estate is carried at the lower of book value or fair value less cost to sell. Gains and losses from the sale of other real estate are recorded in other income, and expenses used to maintain the properties are included in other operating expenses.

At December 31, 2004 and 2003, real estate acquired in settlement of loans was approximately $0 and $1.71 million, respectively. The amount at December 31, 2003, included a property valued at approximately $1.70 million which was subsequently sold on January 31, 2004, for $1.72 million in net proceeds.


	*Bank Premises and Equipment*

Bank premises and equipment are carried at cost less accumulated depreciation. Depreciation expense is computed using the straight-line method over the estimated useful lives of the assets. Accelerated depreciation methods are used for tax purposes. The assets’ estimated useful lives for book purposes are as follows:


Bank premises			15-40 years
Furniture, fixtures, and equipment			3-15 years

F-50

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)


	*Intangible Assets*

Intangible assets consist of goodwill and core deposit intangible. Goodwill of $110,000 arose from the purchase of an existing charter during 2000 and, prior to 2003, was being amortized using the straight-line method over 15 years. During 2002, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 142, Goodwill and Other Intangible Assets . Under the new rules, goodwill is no longer amortized but subjected to annual impairment tests in accordance with SFAS No. 142. The Company performed its annual impairment test of goodwill as of December 31, 2004, as required by SFAS No. 142. This test indicated no impairment of the Company’s goodwill. At December 31, 2004 and 2003, goodwill totaled $1,132,109 and $98,389, respectively.


	*Investments in Unconsolidated Affiliates*

During 2003, the Company invested $8.6 million, which represents a 20% ownership in CB Bancorp, Inc. (CBB). The remaining 80% is owned by Home Bancshares, Inc. The investment in CBB is accounted for on the equity method. The Company’s share of earnings of CBB is included in non-interest income. The Company’s share of CBB’s earnings in 2004 and 2003 amounted to $582,583 and $51,241, respectively.

On March 1, 2004, the Bank purchased a bank branch operation, which provides a stronger market presence to the Company, from Community Bank, Inc. (CBI), a wholly owned subsidiary of CBB, which is an affiliate of the Company. The Company acquired approximately $5.9 million in loans and approximately $17.1 million in deposits in this transaction. The Company received approximately $9.1 million in cash from CBI as a result of the net settlement of assets acquired and liabilities assumed. This acquisition resulted in recording approximately $1.0 million of goodwill and $327,000 of core deposit intangibles. The recorded goodwill is deductible for tax purposes. The core deposit intangibles are being amortized on a straight-line basis over seven years. Amortization expense related to the core deposit intangibles will be $47,000 for 2005 through 2010 and $7,000 in 2011. The Company has a 20% ownership interest in CBI’s parent company, CB Bancorp, Inc. Operations of the branch are included in the Company’s income statement from March 1, 2004.

During 2001, the Company invested $140,000, which represents a 50% ownership in Firstrust, Inc. (Firstrust). During 2004 and 2003, the Company contributed additional equity in Firstrust of $180,000 and $118,500, respectively. The investment in Firstrust is accounted for on the equity method. The Company’s share of earnings and losses of Firstrust is included in non-interest income. The Company’s share of Firstrust’s operating loss in 2004 and 2003 amounted to $186,112 and $148,830, respectively.

The summarized financial information below represents an aggregation of the Company’s unconsolidated affiliates as of December 31, 2004 and 2003, and for the years then ended:


	2004		2003

Assets	$	325,941,080	$	371,857,655
Liabilities		279,745,658		328,521,425
Equity		46,195,422		43,336,230
Net income		2,540,134		57,979


	*Securities Sold Under Agreements to Repurchase*

The Company sells securities under agreements to repurchase to meet customer needs for sweep accounts. At the point funds deposited by customers become investable, those funds are automatically swept to a companion investment account and are used to purchase securities owned by the Company and held in its general account with the designation of Customers’ Securities. A third party maintains control over the securities underlying overnight repurchase agreements. The securities involved in these transactions are generally U.S. Treasury or Federal Agency issues. Securities sold under agreements to repurchase generally

F-51

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

mature on the banking day following that on which the investment was initially purchased and are treated as collateralized financing transactions which are recorded at the amounts at which the securities were sold plus accrued interest. Interest rates and maturity dates of the securities involved vary and are not intended to be matched with funds from customers.


	*Income Taxes*

The Company utilizes the liability method in accounting for income taxes. Under this method, deferred tax assets and liabilities are determined based upon the difference between the values of the assets and liabilities as reflected in the financial statements and their related tax bases using enacted tax rates in effect for the year in which the differences are expected to be recovered or settled. As changes in tax laws or rates are enacted, deferred tax assets and liabilities are adjusted through the provision for income taxes.

The Company and its subsidiary file consolidated tax returns. Its subsidiary provides for income taxes on a separate return basis, and remits to the Company amounts determined to be currently payable.


	*Advertising and Public Relations*

Advertising and public relations costs are expensed as incurred and totaled $797,272 and $684,787 for the years ended December 31, 2004 and 2003, respectively.


	*Employee Benefit Plan*

The Company has a retirement savings 401(k) plan in which substantially all employees may participate. The Company matches employees’ contributions based on a percentage of salary contributed by participants. The plan also allows for discretionary employer contributions. The Company’s expense for the plan was $203,888 and $157,252 in 2004 and 2003, respectively, which is included in salaries and employee benefits.


	*Regulatory Requirements*

The Bank is required to meet Federal Reserve System average reserve requirements by maintaining certain minimum balances of cash or non-interest-bearing deposits. At December 31, 2004 and 2003, the required minimum balance was $978,000 and $627,000, respectively.


	*Statement of Cash Flows*

The Company considers all cash, amounts due from depository institutions, and interest-bearing deposits in other banks to be cash and due from banks for balance sheet and statement of cash flow purposes.


	*Fair Values of Financial Instruments*

The following methods and assumptions were used by the Company in estimating fair values of financial instruments as disclosed in these notes (see Note 15):

Cash and due from banks — For these short-term instruments, the carrying amount is a reasonable estimate of fair value.

Federal funds sold — The carrying amount of federal funds sold approximates its fair value.

Investment securities — available for sale — Fair values for investment securities available for sale are based on quoted market values.

F-52

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

similar terms to borrowers of similar credit quality. Loan fair value estimates include judgments regarding future expected loss experience and risk characteristics.

Accrued interest receivable — The carrying amount of accrued interest receivable approximates its fair value.

Deposits — The fair values of demand and savings deposits are, by definition, equal to the amount payable on demand and therefore approximate their carrying amounts. The fair values for time deposits are estimated using a discounted cash flow calculation that utilizes interest rates currently being offered on time deposits with similar contractual maturities.

Accrued interest payable — The carrying amount of accrued interest payable approximates its fair value.

Federal funds purchased and securities sold under agreements to repurchase — For federal funds purchased and securities sold under agreements to repurchase, the carrying amount is a reasonable estimate of fair value given the short-term nature of these financial instruments.

Federal Home Loan Bank borrowings — For short-term instruments, the carrying amount is a reasonable estimate of fair value. The fair value of long-term debt is estimated based on the current rates available to the Company for debt with similar terms and remaining maturities.


	*Recent Accounting Pronouncements*

AICPA Statement of Position 03-3, Accounting for Certain Loans or Debt Securities Acquired in a Transfer (SOP 03-3), addresses the accounting for differences between contractual cash flows and cash flows expected to be collected from the initial investment in loans acquired in a transfer if those differences are attributable, at least in part, to credit quality. It includes such loans acquired in purchase business combinations and does not apply to loans originated by the entity. The SOP prohibits carrying over or creation of valuation allowances in the initial accounting for impaired loans acquired in a transfer. It is effective for loans acquired in fiscal years beginning after December 15, 2004. The effects of this new guidance on the Company’s consolidated financial statements will depend on future acquisition activity.

On December 16, 2004, the Financial Accounting Standards Board (FASB) issued FASB Statement No. 123 (revised 2004), Share-Based Payment, which is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation . Statement 123(R) supersedes APB Opinion No. 25, Accounting for Stock Issued to Employees, and amends FASB Statement No. 95, Statement of Cash Flows . Generally the approach in Statement 123(R) is similar to the approach described in Statement 123. However, Statement 123(R) requires all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative.

Statement 123(R) must be adopted as of the beginning of the first annual reporting period that begins after December 15, 2005 (calendar year 2006). The Company expects to adopt Statement 123(R) as of January 1, 2006.

Statement 123(R) permits companies to adopt its requirements using one of two methods: (1) a “modified prospective method in which compensation cost is recognized beginning with the effective date (a) based on the requirements of Statement 123(R) for all share-based payments granted after the effective date and (b) based on the requirements of Statement 123 for all awards granted to employees prior to the effective date of Statement 123(R) that remain unvested on the effective date or (2) a “modified retrospective” method which includes the requirements of the modified prospective method described above, but also permits entities to restate, based on the amounts previously recognized under Statement 123 for purposes of pro forma disclosures, either (a) all prior periods presented or (b) prior interim periods of the year of adoption. The Company is currently evaluating the impact that this

F-53

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

statement will have on its financial statements, and the Company will adopt Statement 123(R) on the effective date.

In March 2004, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 105, Application of Accounting Principles to Loan Commitments . SAB No. 105 summarized the SEC staff views regarding the application of accounting principles generally accepted in the United States to loan commitments accounted for as derivative instruments. Under the provisions of SAB No. 105, interest rate lock commitments for mortgage loans to be sold should be accounted for as derivative instruments and should be measured at fair value without consideration of any expected future cash flows associated with servicing of the underlying loan. SAB No. 105 was effective for loan commitments accounted for as derivatives entered into after March 31, 2004, and did not have a material impact on the Company’s statement of position, results of operations, or cash flows.


2.	Investment Securities

The amortized cost and estimated market value of available-for-sale investment securities were as follows:

December 31, 2004

Gross

Estimated

Amortized

Unrealized

Market

Cost

Gains

Losses

Value

Obligations of U.S. Government agencies and corporations

117,770,213

811

(1,174,033

)

116,596,991

Obligations of states and political subdivisions

22,076,141

72,932

(123,459

)

22,025,614

Mortgage-backed securities

188,654,661

90,237

(2,577,410

)

186,167,488

Other securities

2,410,623

—

(11,289

)

2,399,334

Total

330,911,638

163,980

(3,886,191

)

327,189,427


	December 31, 2003

			Gross		Gross			Estimated
	Amortized		Unrealized		Unrealized			Market
	Cost		Gains		Losses			Value

Obligations of U.S. Government agencies and corporations	$	79,538,193	$	112,001	$	(872,536	)	$	78,777,658
Obligations of states and political subdivisions		9,792,402		96,709		(63,497	)		9,825,614
Mortgage-backed securities		49,183,030		224,659		(239,702	)		49,167,987
CMO agency		57,071,475		92,711		(956,577	)		56,207,609
Corporate bonds		300,000		—		—			300,000

Total	$	195,885,100	$	526,080	$	(2,132,312	)	$	194,278,868

Assets, principally investment securities, having a carrying value of approximately $271,264,000 and $137,765,000 at December 31, 2004 and 2003, respectively, were pledged to secure public deposits and for other purposes required or permitted by law. Also, investment securities pledged as collateral for repurchase agreements were approximately $45,754,000 and $40,225,000 at December 31, 2004 and 2003, respectively.

The amortized cost and estimated market value of available-for-sale securities at December 31, 2004, by contractual maturity, are shown below. Expected maturities may differ from contractual maturities because borrowers may have the right to call or prepay obligations with or without call or prepayment penalties.

F-54

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)


	December 31, 2004

	Amortized		Estimated
	Cost		Market Value

Due in one year or less	$	53,281,065	$	52,783,421
Due after one year through five years		194,429,616		192,167,811
Due after five years through ten years		43,881,720		43,385,718
Due after ten years		39,319,237		38,852,477

Total	$	330,911,638	$	327,189,427

For purposes of the maturity table, mortgage-backed securities, which are not due at a single maturity date, have been allocated over maturity groupings based on anticipated maturities. The mortgage-backed securities may mature earlier than their weighted-average contractual maturities because of principal prepayments.

During the years ended December 31, 2004 and 2003, investment securities available for sale with a fair value at the date of sale of approximately $57,909,000 and $40,959,000, respectively, were sold. The gross realized gains on such sales totaled $199,407 and $257,842 for the years ended December 31, 2004 and 2003, respectively. The gross realized losses totaled $83,873 and $0 for the years ended December 31, 2004 and 2003, respectively. The income tax expense related to net security gains was $44,238 and $87,666 for the years ended December 31, 2004 and 2003, respectively.

The following shows investment securities’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position:

December 31, 2004

Less Than 12 Months

12 Months or More

Total

Fair

Unrealized

Fair

Unrealized

Fair

Unrealized

Value

Loss

Value

Loss

Value

Loss

Obligations of U.S. Government agencies and corporations

81,882,213

579,689

28,405,656

594,345

110,287,869

1,174,034

Obligations of states and political subdivisions

9,302,704

91,838

947,212

31,621

10,249,916

123,459

Mortgage-backed securities

98,414,968

1,383,684

6,885,771

117,578

105,300,739

1,501,262

CMO agency

28,104,053

344,960

17,527,979

715,921

45,632,032

1,060,881

Other securities

2,039,031

26,555

—

2,039,031

26,555

219,742,969

2,426,726

53,766,618

1,459,465

273,509,587

3,886,191

F-55

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)


	December 31, 2003

					12 Months or
	Less Than 12 Months				More				Total

	Fair		Unrealized		Fair		Unrealized		Fair		Unrealized
	Value		Loss		Value		Loss		Value		Loss

Obligations of U.S. Government agencies and corporations	$	59,745,460	$	872,536	$	—	$	—	$	59,745,460	$	872,536
Obligations of states and political subdivisions		2,899,641		63,496		—		—		2,899,641		63,496
Mortgage-backed securities		17,917,233		239,703		—		—		17,917,233		239,703
CMO agency		43,496,657		956,577		—		—		43,496,657		956,577

	$	124,058,991	$	2,132,312	$	—	$	—	$	124,058,991	$	2,132,312

At December 31, 2004, the Company had thirty securities with an unrealized loss for more than 12 months. In evaluating the Company’s unrealized loss positions for other-than-temporary impairment, management considers the credit quality of the issuer, the nature and cause of the unrealized loss, and the severity and duration of the impairments. At December 31, 2004, management determined that substantially all of its unrealized losses were the result of fluctuations in interest rates and did not reflect deteriorations of the credit quality of the investments. Accordingly, management has determined that all of its unrealized losses on investment securities are temporary in nature, and the Company has both the ability and intent to hold these investments until maturity or until fair value recovers above cost.


1.	Loans Receivable and Allowance for Loan Losses

The following is a summary of loans by type:


		December 31

		2004			2003

Real estate:
	Residential 1–4 family	$	25,128,672		$	17,153,581
	Nonfarm/nonresidential		98,814,335			75,094,703
	Agricultural		806,059			860,940
	Construction/land development		52,488,020			42,876,017
	Multifamily residential		2,324,423			2,375,833

Total real estate			179,561,509			138,361,074
Consumer			9,439,963			8,615,990
Commercial and industrial			72,738,948			57,766,364
Agricultural (non-real estate)			186,241			140,684

			261,926,661			204,884,112
Allowance for loan losses			(4,740,649	)		(3,483,498	)

		$	257,186,012		$	201,400,614

Loans of $443,000 and $74,000 were on non-accrual status as of December 31, 2004 and 2003, respectively. The total allowance for loan losses related to these loans totaled $104,000 and $11,000 at December 31, 2004 and 2003, respectively. Interest income recorded during 2004 and 2003 on non-accrual loans was considered immaterial. The average recorded balance of non-accrual loans was $183,000 and $1,982,000 at December 31, 2004 and 2003, respectively. Under the original terms, these loans would have

F-56

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

reported approximately $16,000 and $154,000 of interest income during 2004 and 2003, respectively. All of the Company’s non-accrual loans are considered impaired in conformity with SFAS No. 114, as amended by SFAS No. 118.

Mortgage loans held for resale of approximately $1,258,000 and $288,000 at December 31, 2004 and 2003, respectively, are included in residential one-to-four family loans. The carrying value of these loans approximates their fair value. Mortgage banking revenue is recognized when the loan is sold to a third-party investor.

The following is a summary of activity within the allowance for loan losses:


		Year ended December 31

		2004			2003

Balance — beginning of year		$	3,483,498		$	2,277,920
Loans charged-off			(128,764	)		(478,314	)
Recoveries on loans previously charged-off			125,915			16,892

	Net charge-offs		(2,849	)		(461,422	)
Provision charged to operating expense			1,260,000			1,667,000

Balance — end of year		$	4,740,649		$	3,483,498

The aggregate amount of demand deposit overdrafts that have been reclassified as loans at December 31, 2004 and 2003, totaled $134,000 and $205,000, respectively.


4.	Concentration of Credit Risks

The Company’s primary market area is central Arkansas, and it grants loans to customers located primarily within this geographical area. Although the Company has a diversified loan portfolio, a substantial portion of its debtors’ ability to honor their contracts is dependent upon the economic stability of the geographical area. The diversity of the region’s economic base tends to provide a stable lending environment.


5.	Bank Premises and Equipment

Bank premises and equipment are summarized below:


	December 31

	2004			2003

Land	$	4,253,095		$	2,438,336
Buildings		7,920,133			6,005,498
Leasehold improvements		263,320			270,960
Furniture, fixtures, and equipment		4,058,307			3,408,757

		16,494,855			12,123,551
Accumulated depreciation		(1,904,749	)		(1,023,955	)

Bank premises and equipment, net	$	14,590,106		$	11,099,596

F-57

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)


6.	Income Taxes

The following is a summary of the components of the provision (benefit) for income taxes:


		December 31

		2004			2003

Current:
	Federal	$	1,234,140		$	166,075
	State		86,896			11,230

Total current			1,321,036			177,305
Deferred:
	Federal		(163,985	)		(38,901	)
	State		(33,529	)		—

Total deferred			(197,514	)		(38,901	)

Provision for income taxes		$	1,123,522		$	138,404

The reconciliation between the statutory federal income tax rate and effective income tax rate is as follows:


	December 31

	2004			2003

Statutory federal income tax rate		34.00	%		34.00	%
Effect of nontaxable interest income		(4.85	)		(7.58	)
Other		1.59			(2.53	)

Effective income tax rate		30.74	%		23.89	%

The types of temporary differences between the tax bases of assets and liabilities and their financial reporting amounts that give rise to deferred income tax assets and liabilities and their approximate tax effects are as follows:


		December 31

		2004		2003

Deferred tax assets:
	Allowance for loan losses	$	1,815,195	$	1,184,389
	Investment in unconsolidated subsidiary		30,932		132,755
	Unrealized loss on securities available for sale		1,425,235		546,119
	Other		8,907		87,992

Gross deferred tax assets			3,280,269		1,951,255
Deferred tax liabilities:
	Accelerated depreciation on premises and equipment		794,136		560,392
	Other		24,036		5,396

Gross deferred tax liabilities			818,172		565,788

Net deferred tax assets included in other assets		$	2,462,097	$	1,385,467

F-58

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)


7.	Related Party Transactions

In the ordinary course of business, loans may be made to officers and directors and their affiliated companies at substantially the same terms as comparable transactions with other borrowers. At December 31, 2004 and 2003, related party loans were $10,342,401 and $13,670,542, respectively. New loans and advances on prior commitments made to such related parties were $3,898,000 and $12,235,378 for the years ended December 31, 2004 and 2003, respectively. Repayments of loans made by such related parties were $7,226,341 and $5,302,020 for the years ended December 31, 2004 and 2003, respectively.

At December 31, 2004 and 2003, the Bank had deposits from related parties of approximately $16,228,000 and $7,991,000, respectively.

During 2004 and 2003, the Company incurred data processing fees of $320,256 and $207,846, respectively, to an affiliate, First Data Solutions, Inc., which performs all data processing functions for the Company.

During 2004 and 2003, the Company also incurred various fees to another affiliate, First State Bank, for the following: $1,097,157 and $829,103, respectively, of professional fees for bank operations which include backroom, item processing, human resources, finance, and compliance; and $8,900 and $8,700, respectively, for building rent.

The Company leases land for a branch premise from a corporation controlled, through common ownership, by one of the Company’s directors. The Company incurred $64,390 and $62,322 of rental expense in 2004 and 2003, respectively, related to this lease agreement.

The Company leases office space for bank operations from another affiliate, First State Bank. The Company incurred $9,000 of rental expense in both 2004 and 2003 related to the lease agreement.

In the ordinary course of business, payments totaling approximately $49,000 and $66,000 were made during 2004 and 2003, respectively, to vendors of the Bank who are companies affiliated with members of the Bank’s board of directors.

On February 3, 2004, the Company purchased land from a corporation controlled through common ownership by three of the Company’s directors for a purchase price of approximately $500,000. The land is located on Camp Robinson Road in North Little Rock and was purchased for a bank branch location.

F-59

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)


8.	Non-Interest Expense

The table below shows the components of non-interest expense for the years ended December 31:


		2004		2003

Salaries and employee benefits		$	5,233,085	$	3,831,782
Occupancy and equipment			2,399,576		1,488,441
Other operating expenses:
	Advertising		797,272		684,787
	ATM expense		115,956		72,502
	Directors’ fees		97,200		102,487
	Due from bank service charges		90,404		80,998
	FDIC and state assessment		180,478		106,528
	Insurance		169,060		124,720
	Legal and accounting		141,187		207,004
	Other professional fees		1,576,541		1,084,320
	Operating supplies		245,335		244,180
	Postage		117,378		87,121
	Telephone		112,837		80,941
	Amortization		38,987		—
	Other		203,502		200,332

Total non-interest expense		$	11,518,798	$	8,396,143


9.	Commitments and Contingencies


	*Commitments to Extend Credit*

In the ordinary course of business, the Bank makes various commitments and incurs certain contingent liabilities to fulfill the financing needs of its customers. These commitments and contingent liabilities include lines of credit and commitments to extend credit and issue standby letters of credit.

At December 31, 2004 and 2003, commitments to extend credit of $87,667,277 and $45,392,096, respectively, net of participations sold, were outstanding. Since some of these commitments are expected to expire without being drawn upon, the total commitment amount does not necessarily represent future cash requirements. The Bank applies the same credit policies and standards as it does in the lending process when making these commitments. The collateral obtained is based on the assessed creditworthiness of the borrower.

Outstanding standby letters of credit are contingent commitments issued by the Bank, generally to guarantee the performance of a customer in third-party borrowing arrangements. The term of the guarantee generally is for a period of one year. The maximum amount of future payments the Bank could be required to make under these guarantees at December 31, 2004 and 2003, is $6,759,813 and $474,711, respectively. The Bank holds collateral to support guarantees when deemed necessary. At December 31, 2004 and 2003, the Bank had no collateralized commitments.


	*Interest Rate Risk*

The Bank is principally engaged in providing short-term and medium-term commercial and consumer loans with interest rates that are fixed or fluctuate with the prime lending rate. These assets are primarily funded through short-term demand deposits and long-term certificates of deposit with variable and fixed rates.

F-60

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

Accordingly, the Bank is exposed to interest rate risk because in changing interest rate environments, interest rate adjustments on assets and liabilities may not occur at the same time or in the same amount. The Bank manages the overall rate sensitivity and mix of its asset and liability portfolio and attempts to minimize the effects that interest rate fluctuations will have on its net interest margin.


10.	Leases

At December 31, 2004, the minimum rental commitments under noncancelable operating leases are as follows:


2005	$	342,000
2006		337,500
2007		326,000
2008		326,000
2009		328,000
Thereafter		1,494,000

	$	3,153,500

Rent expense under operating leases was $349,200 and $267,816 in 2004 and 2003, respectively.


11.	Time Certificates of Deposit

The aggregate amount of time deposits with a minimum denomination of $100,000 was $200,260,336 and $123,888,404 at December 31, 2004 and 2003, respectively.

The following is a summary of the scheduled maturities of all time deposits at December 31, 2004:


2005	$	244,603,673
2006		24,763,517
2007		4,218,772
2008		2,864,502
2009		2,265,094

Total time deposits	$	278,715,558

Interest expense applicable to certificates in excess of $100,000 totaled $2,863,968 and $2,139,717 in 2004 and 2003, respectively.

At December 31, 2004 and 2003, brokered deposits totaled approximately $10,316,000 and $10,019,000, respectively, and are included in certificates of deposit.


12.	Stockholders’ Equity

During September 2003, the Company issued 872,728 shares of common stock for an offering price of $27.50 per share, pursuant to an exemption under Section 23-42-503(a)(3) of the Arkansas Securities Act, Section 3(a)(11) of the Securities Act of 1933, and Rule 147 of the Securities and Exchange Commission. Total proceeds from the sale of stock offerings were $23,962,880, net of offering costs of $37,140.


13.	Stock-Based Compensation

The Company has elected to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25), and related interpretations in accounting for its employee stock options.

F-61

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

Under APB 25, because the exercise price of the options equals the market price of the stock on the issuance date, no compensation expense is recorded. The market price was determined based on the per share price of the most recent private placement equity issue. The Company has adopted the disclosure-only provisions of SFAS No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148.

The Company has a nonqualified stock option plan for certain key employees and non-employee directors of the Company. This plan provides for the granting of incentive nonqualified options to purchase up to 64,400 shares of common stock in the Company. As of December 31, 2004, 60,850 options have been issued at option prices ranging from $25.00 to $27.50. These options vest ratably over a five-year period and expire ten years after the vesting date. The options were issued at fair market value, which was determined by the per share price of the Company’s most recent private placement equity issue, when the options were issued.

The following summarizes stock option activity:

2004

Employees

Directors

Total

Outstanding — beginning of the year

38,350

23,000

61,350

Granted

—

Exercised

—

Cancelled

—

(500

)

(500

)

Outstanding — end of the year

38,350

22,500

60,850

Exercisable at end of the year

34,950

7,500

42,450


	2003

	Employees			Directors		Total

Outstanding — beginning of the year		37,600			15,000		52,600
Granted		1,000			8,000		9,000
Exercised		—			—		—
Cancelled		(250	)		—		(250	)

Outstanding — end of the year		38,350			23,000		61,350

Exercisable at end of the year		27,280			3,000		30,280

The weighted-average fair value of options granted during 2003 was $4.95. There were no options granted during 2004. The weighted-average remaining contractual life of the options issued in 2003 was 11.34 years.

The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions:


	2003

Risk-free interest rate		3.05%
Dividend yield		0.00
Expected dividend yield increase		0.00
Expected stock volatility		0.01
Weighted-average expected life		6.50 years

F-62

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

The following is a summary of currently outstanding and exercisable options at December 31, 2004:

Outstanding Options

Weighted-

Options Exercisable

Average

Remaining

Weighted-

Exercise

Options

Contractual

Average

Options

Average

Prices

Outstanding

Life (in Years)

Exercise Price

Exercisable

Exercise Price

25.00

36,350

10.24

25.00

34,350

25.00

27.50

24,500

13.35

27.50

8,100

27.50

60,850

42,450

For purposes of pro forma disclosures as required by SFAS Nos. 123 and 148, the estimated fair value of the options is amortized over the options’ vesting period. The following table represents the required pro forma disclosures related to net income for the years ended December 31 for options granted:


	2004			2003

Net income, as reported	$	2,531,031		$	441,021
Add: Stock-based employee compensation expense included in reported net income, net of related tax effects		65,823			72,000
Deduct: Total stock-based compensation expense determined under fair value-based method for all awards, net of related tax effects		(118,226	)		(116,153	)

Net income, as adjusted	$	2,478,628		$	396,868

The Company has a stock bonus plan for certain key employees and officers of the Company. This plan provides for the granting of Company stock as bonuses. During 2000, 17,200 shares of stock were designated to be granted as bonuses over a five-year period. These shares are restricted and are vested when issued over the five-year period.

In 2004 and 2003, the fair market value of the 3,440 shares issued was determined to be $27.50 per share, based on the issuance price of the Company’s private equity placements during 2004 and 2003, respectively. Compensation expense is recorded when the restricted stock is issued and was $94,600 in each of the years ended December 31, 2004 and 2003.


14.	Borrowings

The Company has a Federal Home Loan Bank (FHLB) borrowing line of credit available. At December 31, 2004, the Company had remaining $113,691,000 of unused FHLB borrowing availability. The FHLB maintains as collateral a blanket lien on a portion of the Company’s real estate, commercial, and agricultural loans.

Borrowings consist of the following at December 31, 2004:


Description	Maturities		Amount

1.93% Federal Home Loan Bank borrowings with interest due monthly		January 2005	$	10,444,000
1.596% to 1.601% Federal Home Loan Bank borrowings with interest due monthly		September 2005		10,439,900

			$	20,883,900

F-63

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)


15.	Financial Instruments

The following table presents the estimated fair values of the Company’s financial instruments.


			December 31, 2004				December 31, 2003

			Carrying				Carrying
			Amount		Fair Value		Amount		Fair Value

Financial assets:
	Cash and due from banks		$	9,038,802	$	9,038,802	$	9,221,345	$	9,221,345
	Federal funds sold			3,660,000		3,660,000		—		—
	Investment securities — available for sale			327,189,247		327,189,247		194,278,868		194,278,868
	Loans receivable, net			257,186,012		255,962,000		201,400,614		202,009,446
	Accrued interest receivable			2,658,800		2,658,800		1,605,161		1,605,161
Financial liabilities:
	Deposits:
		Demand, non-interest-bearing	$	56,183,562	$	56,183,562	$	39,438,879	$	39,438,879
		Savings and interest-bearing transaction accounts		165,244,655		165,244,655		107,226,763		107,226,763
		Time certificates of deposit		278,715,558		279,924,000		177,820,899		178,665,765
	Accrued interest and other liabilities			1,928,152		1,928,152		696,475		696,475
	Federal funds purchased			—		—		9,630,000		9,630,000
	Securities sold under agreements to repurchase			45,754,078		45,754,078		35,551,396		35,551,396
	Federal Home Loan Bank borrowings			20,883,900		20,883,900		—		—


16.	Regulatory Matters

The Company and the Bank are subject to minimum capital requirements, which are administered by various federal and state regulatory authorities. These capital requirements, as defined by federal guidelines, involve quantitative and qualitative measures of assets, liabilities, and certain off-balance sheet instruments. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary, actions by regulators that, if undertaken, could have a direct material effect on the consolidated financial statements.

Management believes, as of December 31, 2004 and 2003, that the Company and Bank meet all capital adequacy requirements to which they are subject. To be categorized as well capitalized, the Company and

F-64

TCBancorp, Inc. and Subsidiary

Notes to Consolidated Financial Statements — (Continued)

Bank must maintain total risk-based, Tier I risk-based, and Tier I leverage ratios (as defined in applicable regulations) as set forth in the following table.

The regulatory capital amounts and ratios at December 31, 2004, are presented below:

For Capital

Actual

Adequacy Purposes

Amount

Ratio

TCBancorp, Inc. (consolidated):

Total risk-based capital

67,245,000

17.01

8.00

Tier I risk-based capital

62,504,000

15.81

4.00

Leverage ratio

62,504,000

10.56

3.00

Twin City Bank:

Total risk-based capital

57,847,186

14.97

8.00

Tier I risk-based capital

53,106,537

13.74

4.00

Leverage ratio

53,106,537

8.98

3.00

The regulatory capital amounts and ratios at December 31, 2003, are presented below:


							For Capital
		Actual					Adequacy Purposes

		Amount		Ratio			Ratio

TCBancorp, Inc. (consolidated):
	Total risk-based capital	$	64,687,805		22.65	%		8.00	%
	Tier I risk-based capital		61,204,307		21.43			4.00
	Leverage ratio		61,204,307		18.48			3.00
Twin City Bank:
	Total risk-based capital	$	55,721,058		20.14	%		8.00	%
	Tier I risk-based capital		52,262,520		18.89			4.00
	Leverage ratio		52,262,520		15.81			3.00

Regulations of the FDIC and the Arkansas State Bank Department limit the ability of the bank subsidiary to pay dividends to the Company without the prior approval of such agencies. FDIC regulations prevent insured state banks from paying any dividends from capital and allow the payment of dividends only from net profits on hand after deductions for losses and bad debts. The Arkansas State Bank Department currently limits the amount of dividends that the bank subsidiaries can pay the Company to 75% of the bank’s net profits after taxes for the current year plus 75% of its retained net profits after taxes for the immediately preceding year. The Bank expects to request regulatory approval to pay needed dividends.


17.	Subsequent Event

On January 1, 2005, the remaining 67.8% of the Company’s common stock was purchased by Home BancShares, Inc. (HBI) of Conway, AR. The purchase price of the transaction was $43,900,000, which consisted of the issuance of 1,250,000 shares of HBI’s common stock and $110,000 in cash.

F-65

MARINE BANCORP, INC.

Marathon, Florida

Audited Consolidated Financial Statements

At December 31, 2004 and 2003 and

For the Years then Ended

(Together with Independent Auditors’ Report)

F-66

Independent Auditors’ Report

Marine Bancorp, Inc.

Marathon, Florida:

We have audited the accompanying consolidated balance sheets of Marine Bancorp, Inc. and Subsidiary (the “Company”) at December 31, 2004 and 2003 and the related consolidated statements of earnings, changes in stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing standards as established by the Auditing Standards Board (United States) and in accordance with the auditing standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company at December 31, 2004 and 2003, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

As discussed in Note 9 to the accompanying consolidated financial statements, in 2004, the Company adopted Financial Accounting Standards Board Interpretation No. 46 “Consolidation of Variable Interest Entities” as revised in December, 2003. In accordance with this Interpretation, MBI Statutory Trust is not consolidated in the financial statements of the Company. The Company has also elected to adopt this Interpretation on a retroactive basis and therefore, has restated its 2003 consolidated financial statements.


	/s/ Hacker, Johnson & Smith PA

HACKER, JOHNSON & SMITH PA

Tampa, Florida

April 8, 2005

F-67

MARINE BANCORP, INC. AND SUBSIDIARY

Consolidated Balance Sheets


			December 31,

			2004			2003

			($ in thousands,
			except per share
			amounts)
Assets
Cash and due from banks			$	5,031			4,248
Federal funds sold				3,426			2,106

	Cash and cash equivalents			8,457			6,354
Securities available for sale				19,009			10,266
Loans, net of allowance for loan losses of $2,105 in 2004 and $1,364 in 2003				190,790			134,993
Premises and equipment, net				5,187			5,010
Federal Home Loan Bank stock, at cost				1,802			802
Accrued interest receivable				875			610
Deferred income tax asset				958			551
Other assets				768			688

		Total	$	227,846			159,274


Liabilities and Stockholders’ Equity
Liabilities:
	Noninterest-bearing demand deposits			32,197			22,780
	Savings, NOW and money-market deposits			72,004			48,753
	Time deposits			73,481			55,619

		Total deposits		177,682			127,152
	Federal Home Loan Bank advances			27,423			16,035
	Federal funds purchased			5,565			—
	Other borrowings			851			1,046
	Junior subordinated debentures			5,155			5,155
	Official checks			1,048			1,104
	Accrued interest payable			257			167
	Other liabilities			1,061			681

		Total liabilities		219,042			151,340

Commitments (Notes 4, 10 and 17)
Stockholders’ equity:
	Common stock, $0.10 par value; 5,000,000 shares authorized; 635,208 and 631,008 shares issued and outstanding in 2004 and 2003			64			63
	Additional paid-in capital			5,892			5,843
	Retained earnings			2,951			1,983
	Accumulated other comprehensive income (loss)			(103	)		45

		Total stockholders’ equity		8,804			7,934

		Total	$	227,846			159,274

See accompanying Notes to Consolidated Financial Statements.

F-68

MARINE BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Earnings


			Year Ended
			December 31,

			2004		2003

			(In thousands)
Interest income:
	Loans		$	9,705		7,663
	Securities			659		409
	Other interest-earning assets			94		62

		Total interest income		10,458		8,134

Interest expense:
	Deposits			2,438		1,871
	Junior subordinated debentures			297		167
	Other borrowings			558		313

		Total interest expense		3,293		2,351

		Net interest income		7,165		5,783
Provision for loan losses				821		451

		Net interest income after provision for loan losses		6,344		5,332

Noninterest income:
	Deposit account fees			707		509
	Other fees and service charges			251		197
	Gain on sale of loans held for sale			155		—
	Mortgage brokerage fees			500		631
	Loss on sale of securities available for sale			—		(3	)
	Other			113		86

		Total noninterest income		1,726		1,420

Noninterest expenses:
	Salaries and employee benefits			3,893		3,703
	Occupancy			957		880
	Data processing			614		475
	Professional fees			82		81
	Advertising and promotion			135		125
	Stationery and supplies			140		108
	Telephone			140		137
	Other			584		515

		Total noninterest expenses		6,545		6,024

		Earnings before income taxes		1,525		728
Income taxes				557		264

		Net earnings	$	968		464

See accompanying Notes to Consolidated Financial Statements.

F-69

MARINE BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Changes in Stockholders’ Equity


											Accumulated
			Common Stock								Other
							Additional				Comprehensive			Total
			Number of				Paid-In		Retained		Income			Stockholders’
			Shares		Amount		Capital		Earnings		(Loss)			Equity

			($ in thousands)
Balance at December 31, 2002				630,000	$	63		5,829		1,519		187			7,598

	Comprehensive income:
		Net earnings		—		—		—		464		—			464
		Net change in unrealized gain on securities available for sale, net of tax		—		—		—		—		(142	)		(142	)

	Comprehensive income														322

	Stock options exercised, including tax benefit of $2			1,008		—		14		—		—			14

Balance at December 31, 2003				631,008		63		5,843		1,983		45			7,934

	Comprehensive income:
		Net earnings		—		—		—		968		—			968
		Net change in unrealized gain on securities available for sale, net of tax		—		—		—		—		(107	)		(107	)
	Change in unrealized loss on derivative instrument, net of tax			—		—		—		—		(41	)		(41	)

	Comprehensive income														820

	Stock options exercised			4,200		1		49		—		—			50

	Balance at December 31, 2004			635,208	$	64		5,892		2,951		(103	)		8,804

See accompanying Notes to Consolidated Financial Statements.

F-70

MARINE BANCORP, INC. AND SUBSIDIARY

Consolidated Statements of Cash Flows


				Year Ended
				December 31,

				2004			2003

				(In thousands)
Cash flows from operating activities:
	Net earnings			$	968			464
	Adjustments to reconcile net earnings to net cash provided by operating activities:
		Depreciation and amortization			456			335
		Credit for deferred income taxes			(307	)		(228	)
		Provision for loan losses			821			451
		Loss on sale of securities available for sale			—			3
		Increase in accrued interest receivable			(265	)		(76	)
		Increase in accrued interest payable			90			50
		Increase in other assets			(80	)		(305	)
		Decrease official checks			(56	)		(319	)
		Increase in other liabilities			311			451
		Gain on sale of loans held for sale			(155	)		—
		Proceeds from sale of loans held for sale			24,469			—
		Origination of loans held for sale			(25,880	)		—

			Net cash provided by operating activities		372			826

Cash flows from investing activities:
	Net purchase of securities available for sale				(15,922	)		(8,381	)
	Proceeds from sale of securities available for sale				—			1,001
	Maturities and calls of securities available for sale				3,000			3,000
	Principle repayments on securities available for sale				4,000			3,320
	Net increase in loans				(55,113	)		(43,871	)
	Net purchase of premises and equipment, net				(572	)		(735	)
	Purchase of Federal Home Loan Bank stock				(1,000	)		(375	)

			Net cash used in investing activities		(65,607	)		(46,041	)

Cash flows from financing activities:
	Net increase in deposits				50,530			28,754
	Increase in Federal Home Loan Bank advances				11,388			10,532
	Decrease in other borrowings				(195	)		(621	)
	Increase in federal funds purchased				5,565			—
	Proceeds from sale of junior subordinated debentures				—			5,155
	Proceeds from stock options exercised				50			12

			Net cash provided by financing activities		67,338			43,832

			Net increase (decrease) in cash and cash equivalents		2,103			(1,383	)
Cash and cash equivalents at beginning of year					6,354			7,737

Cash and cash equivalents at end of year				$	8,457			6,354

Supplemental disclosure of cash flow information:
	Cash paid during the year for:
		Interest		$	3,203			2,301

		Income taxes		$	774			266

	Noncash transactions:
		Change in other comprehensive income:
			Change in unrealized gain on securities available for sale, net of tax	$	(107	)		(142	)

			Change in unrealized loss on derivative investment, net of tax	$	(41	)		—

		Tax benefit associated with stock options exercised		$	—			2

See accompanying Notes to Consolidated Financial Statements.

F-71

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

At December 31, 2004 and 2003 and For the Years Then Ended


(1)	Description of Business and Summary of Significant Accounting Policies

Marine Bancorp, Inc., a Florida corporation, is a bank holding company (the “Holding Company”). The Holding Company has no significant operations other than those of its wholly-owned subsidiary, Marine Bank of the Florida Keys (the “Bank”) (collectively the “Company”). The Bank is a state-chartered commercial bank and its deposits are insured by the Federal Deposit Insurance Corporation. The Bank provides a variety of banking and trust services to individuals and businesses through its seven full-service offices located in Monroe County, Florida. In 2004, the Bank established a trust department which had minimal activity and held no assets at December 31, 2004.

The accounting and reporting policies of the Company conform to accounting principles generally accepted in the United States of America and to general practices within the banking industry. The following summarizes the more significant of these policies and practices:

Principles of Consolidation. The consolidated financial statements include the accounts of the Holding Company and the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates. In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities as of the date of the consolidated balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Material estimates that are particularly susceptible to significant change in the near term relate to the determination of the allowance for loan losses and the deferred income tax asset.

Cash and Cash Equivalents. For purposes of the consolidated statements of cash flows, cash and cash equivalents include cash and balances due from banks and federal funds sold, all of which mature within ninety days.

The Bank is required by law or regulation to maintain cash reserves. The reserve balance at December 31, 2004 and 2003 was approximately $498,000 and $120,000, respectively.

Securities. The Company may classify its securities as either trading, held to maturity or available for sale. Trading securities are held principally for resale and recorded at their fair values. Unrealized gains and losses on trading securities are included immediately in earnings. Held-to-maturity securities are those which the Company has the positive intent and ability to hold to maturity and are reported at amortized cost. Available-for-sale securities consist of securities not classified as trading securities nor as held-to-maturity securities. Unrealized holding gains and losses, net of tax, on available-for-sale securities are excluded from earnings and reported in other comprehensive income. Gains and losses on the sale of available-for-sale securities are recorded on the trade date and are determined using the specific-identification method. Premiums and discounts on securities available for sale are recognized in interest income using the interest method over the period to maturity.

Loans. Loans that management has the intent and ability to hold for the foreseeable future or until maturity or pay-off are reported at their outstanding principal adjusted for any charge-offs, the allowance for loan losses and any deferred fees or costs on originated loans. Loan origination fees and certain direct origination costs are capitalized and recognized as an adjustment of the yield of the related loan.

The accrual of interest on loans is discontinued at the time the loan is 90 days delinquent unless the loan is well-secured and in process of collection. In all cases, loans are placed on nonaccrual or charged-off at an earlier date if collection of principal or interest is considered doubtful.

F-72

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

All interest accrued but not collected for loans that are placed on nonaccrual or charged-off is reversed against interest income. The interest on these loans is accounted for on the cash-basis or cost-recovery method, until qualifying for return to accrual. Loans are returned to accrual status when all the principal and interest amounts contractually due are brought current and future payments are reasonably assured.

Loans Held for Sale. Loans originated that are intended to be sold in the secondary market are carried at the lower of cost or estimated fair value in the aggregate. Net unrealized losses are recognized through a valuation allowance by charges to earnings. The Company had approximately $1,566,000 of loans held for sale at December 31, 2004, which are included in loans on the accompanying consolidated balance sheets and the fair value of these loans exceeded book value in the aggregate. The Company had no loans held for sale at December 31, 2003.

Loan origination fees are deferred and direct loan origination costs are capitalized until the related loan is sold, at which time the net fees are included in the gain on the sale of loans in the consolidated statements of earnings.

Allowance for Loan Losses. The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to earnings. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

The allowance for loan losses is evaluated on a regular basis by management and is based upon management’s periodic review of the collectibility of the loans in light of historical experience, the nature and volume of the loan portfolio, adverse situations that may affect the borrower’s ability to repay, estimated value of any underlying collateral and prevailing economic conditions. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as more information becomes available.

The allowance consists of specific and general components. The specific component relates to loans that are classified as either loss, doubtful, substandard or special mention. For such loans that are also classified as impaired, an allowance is established when the discounted cash flows (or collateral value or observable market price) of the impaired loan is lower than the carrying value of that loan. The general component covers nonclassified loans and is based on historical industry loss experience adjusted for qualitative factors.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value, and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record, and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan by loan basis for commercial and commercial real estate loans by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price, or the fair value of the collateral if the loan is collateral dependent.

Large groups of smaller balance homogeneous loans are collectively evaluated for impairment. Accordingly, the Company does not separately identify individual residential or consumer loans for impairment disclosures.

Foreclosed Assets. Assets acquired through, or in lieu of, foreclosure, is initially recorded at the lower of fair value or the loan balance plus acquisition costs at the date of foreclosure. After foreclosure, valuations are periodically performed by management and the real estate is carried at the lower of carrying amount or fair

F-73

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in earnings.

Premises and Equipment. Land is stated at cost. Buildings and furniture and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and amortization expense are computed using the straight-line method over the estimated useful lives of the assets or lease term, if shorter. The lease term includes renewal options if management expects to exercise the lease options.

Transfer of Financial Assets. Transfers of financial assets are accounted for as sales, when control over the assets has been surrendered. Control over transferred assets is deemed to be surrendered when (1) the assets have been isolated from the Company, (2) the transferee obtains the right (free of conditions that constrain it from taking advantage of that right) to pledge or exchange the transferred assets, and (3) the Company does not maintain effective control over the transferred assets through an agreement to repurchase them before their maturity.

Income Taxes. Deferred tax assets and liabilities are determined using the liability (or balance sheet) method. Under this method, the net deferred tax asset or liability is determined based on the tax effects of the temporary differences between the book and tax bases of the various balance sheet assets and liabilities and gives current recognition to changes in tax rates and laws.

The Holding Company and the Bank file consolidated income tax returns. Income taxes are allocated between the Holding Company and the Bank as though separate income tax returns were filed.

Stock Compensation Plan. Statement of Financial Accounting Standards (SFAS) No. 123, Accounting for Stock-Based Compensation, as amended by SFAS No. 148, Accounting for Stock-Based Compensation Transition and Disclosure (collectively “SFAS No. 123”) encourages all entities to adopt a fair value based method of accounting for employee stock compensation plans, whereby compensation cost is measured at the grant date based on the value of the award and is recognized over the service period, which is usually the vesting period. However, it also allows an entity to continue to measure compensation cost for those plans using the intrinsic value based method of accounting prescribed by Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB No. 25”), whereby compensation cost is the excess, if any, of the quoted market price of the stock at the grant date (or other measurement date) over the amount an employee must pay to acquire the stock.

The Company accounts for their stock option plan under the recognition and measurement principles of APB No. 25. No stock-based employee compensation cost is reflected in net earnings, as all options granted under this plan had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net earnings if the Company had applied the fair value recognition provisions of SFAS No. 123 to stock-based employee compensation ($ in thousands).


	Year Ended
	December 31,

	2004			2003

Net earnings, as reported	$	968			464
Deduct: Total stock-based employee compensation determined under the minimum value method for all awards, net of related tax effect		(43	)		(22	)

Proforma net earnings	$	925			442

F-74

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The fair value of each option granted is estimated on the date of grant using the minimum value method with the following assumptions:


	Year Ended
	December 31,

	2004			2003

Risk-free interest rate		4.77	%		4.45	%
Dividend yield		—	%		—	%
Expected volatility		—	%		—	%
Expected life in years		10			10
Per share fair value of options at grant date	$	5.07			4.27

Derivative Financial Instrument. The Company has one derivative instrument which is used to hedge its interest-rate exposure by modifying the characteristics of the related balance sheet instrument. This derivative instrument qualifies as a cash flow hedge under the provisions of Statement of Financial Accounting Standards No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”). Changes in the fair value of a derivative that is highly effective, and that is designated and qualifies as a cash flow hedge, are recorded in other comprehensive income, net of tax.

Off-Balance-Sheet Financial Instruments. In the ordinary course of business the Company has entered into off-balance-sheet financial instruments consisting of unfunded loan commitments, unused lines of credit and standby letters of credit. Such financial instruments are recorded in the consolidated financial statements when they are funded.

Comprehensive Income. Generally accepted accounting principles require that recognized revenue, expenses, gains and losses be included in net earnings. Although certain changes in assets and liabilities, such as unrealized gains and losses on available-for-sale securities, are reported as a separate component of the equity section of the consolidated balance sheet, such items, along with net earnings, are components of comprehensive income. The components of other comprehensive income and related tax effects are as follows (in thousands):


			Before			Tax			After
			Tax			Effect			Tax

*Year Ended December 31, 2004:*
	Holding losses		$	(179	)		72			(107	)
	Holding losses on derivative instrument			(69	)		28			(41	)

		Net unrealized holding loss	$	(248	)		100			(148	)

*Year Ended December 31, 2003:*
	Holding losses			(238	)		94			(144	)
	Losses included in net earnings			3			(1	)		2

		Net unrealized holding loss	$	(235	)		93			(142	)

Advertising. The Company expenses all media advertising as incurred.

Fair Values of Financial Instruments. The fair value of a financial instrument is the current amount that would be exchanged between willing parties, other than in a forced liquidation. Fair value is best determined based upon quoted market prices. However, in many instances, there are no quoted market prices for the Company’s various financial instruments. In cases where quoted market prices are not available, fair values are based on estimates using present value or other valuation techniques. Those techniques are significantly affected by the assumptions used, including the discount rate and estimates of future cash flows.

F-75

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

Accordingly, the fair value estimates may not be realized in an immediate settlement of the instrument or may not necessarily represent the underlying fair value of the Company. The following methods and assumptions were used by the Company in estimating fair values of financial instruments disclosed herein:


	Cash and Cash Equivalents. The carrying amounts of cash and cash equivalents approximate their fair value.

	Securities. Fair values for securities available for sale are based on quoted market prices, where available. If quoted market prices are not available, fair values are based on quoted market prices of comparable instruments.

	Loans. For variable-rate loans that reprice frequently and have no significant change in credit risk, fair values are based on carrying values. Fair values for certain fixed-rate loans are estimated using discounted cash flow analyses, using interest rates currently being offered for loans with similar terms to borrowers of similar credit quality.

	Federal Home Loan Bank Stock. Fair value of the Company’s investment in Federal Home Loan Bank stock is based on its redemption value.

	Deposit Liabilities. The fair values disclosed for demand, NOW, money-market and savings deposits are, by definition, equal to the amount payable on demand at the reporting date (that is, their carrying amounts). Fair values for fixed-rate time deposits are estimated using a discounted cash flow calculation that applies interest rates currently being offered on certificates to a schedule of aggregated expected monthly maturities of time deposits.

	Other Borrowings and Federal Funds Purchased. The carrying amounts of other borrowings and federal funds purchased approximate fair value.

	Federal Home Loan Bank Advances and Junior Subordinated Debentures. Fair values for these borrowings are estimated using discounted cash flow analysis based on the Company’s current incremental borrowing rates for similar types of borrowings.

	Derivative Instrument. Fair value for the derivative instrument (interest-rate swap) is based on current settlement value.

	Accrued Interest. The carrying amounts of accrued interest approximate their fair values.

	Off-Balance-Sheet Financial Instruments. Fair values for off-balance-sheet lending commitments are based on rates currently charged to enter into similar agreements, taking into account the remaining terms of the agreements and the counterparties’ credit standing.

Recent Pronouncements. In December 2003, the American Institute of Certified Public Accountants issued Statement of Position 03-3, “Accounting for Certain Loans and Debt Securities Acquired in a Transfer” (SOP 03-3). SOP 03-3 addresses accounting for differences between contractual cash flows expected to be collected and an investor’s initial investment in loans or debt securities acquired in a transfer if those differences are attributable, at least in part, to credit quality. SOP 03-3 also prohibits “carrying over” or creation of valuation allowances in the initial accounting of all loans acquired in a transfer that are within the scope of SOP 03-3. The prohibition of the valuation allowance carryover applies to the purchase of an individual loan, a pool of loans, a group of loans, and loans acquired in a purchase business combination. SOP 03-3 is effective for loans acquired in fiscal years beginning after December 15, 2004. The Company does not anticipate that the adoption of SOP 03-3 will have a material impact on its consolidated financial condition or results of operations.

In March 2004, the Emerging Issues Task Force reached a consensus on Issue 03-1, “Meaning of Other Than Temporary Impairment” (Issue 03-1). The Task Force reached a consensus on an other-than-

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Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

temporary impairment model for debt and equity securities accounted for under Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” and cost method investments, and required certain additional financial statement disclosures. The implementation of the “Other-Than-Temporary Impairment” component of this consensus has been postponed. Management cannot determine the effect of the adoption of this guidance on the Company’s consolidated financial condition or results of operations.

In December 2004, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 123 (revised 2004), “Share Based Payment.” This Statement requires a nonpublic entity to measure the cost of employee services received in exchange for an award of equity instruments, which includes stock options, based on the grant-date fair value of the award. That cost will be recognized over the period during which an employee is required to provide service in exchange for the award. Nonpublic entities, such as the Company, that used the minimum value method shall apply this Statement prospectively to new awards and to awards modified, repurchased or cancelled beginning the first interim or annual period after December 15, 2005. Management has not determined the effect this Statement will have on the Company’s consolidated financial statements.

In December 2004, the FASB issued SFAS No. 153, “Exchanges of Nonmonetary Assets-an Amendment to APB opinion No. 29.” This Statement addresses the measurement of exchanges of nonmonetary assets. The Statement is effective for fiscal periods beginning after June 15, 2005. Management believes this Statement will not have a material effect on the Company’s consolidated financial statements.

Reclassifications. Certain amounts in the 2003 consolidated financial statements have been reclassified to conform with the 2004 presentation.


(2)	Securities Available for Sale

Securities available for sale have been classified according to management’s intent. The carrying amount of securities available for sale and their fair values are summarized as follows (in thousands):


				Gross		Gross
		Amortized		Unrealized		Unrealized			Approximate
		Cost		Gains		Losses			Fair Value

*December 31, 2004:*
	U.S. Government agencies and corporations	$	2,000		1		(14	)		1,987
	Collateralized mortgage obligations		7,380		28		(50	)		7,358
	Mortgage-backed securities		9,732		20		(88	)		9,664

		$	19,112		49		(152	)		19,009

*December 31, 2003:*
	U.S. Government agencies and corporations	$	3,498		56		(6	)		3,548
	Collateralized mortgage obligations		2,789		16		(12	)		2,793
	Mortgage-backed securities		3,404		22		(17	)		3,409
	Corporate debt		499		17		—			516

		$	10,190		111		(35	)		10,266

F-77

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The scheduled maturities of securities available for sale at December 31, 2004 are summarized as follows (in thousands):


		Amortized		Fair
		Cost		Value

Due in one year or less		$	500		501
Due after one year through five years			1,500		1,486
Collateralized mortgage obligations			7,380		7,358
Mortgage-backed securities			9,732		9,664

	Total	$	19,112		19,009

There were no securities sold in 2004. Sales of securities available for sale during 2003 are summarized as follows (in thousands):


Gross proceeds	$	1,001

Gross realized losses	$	(3	)

Securities with a carrying value of approximately $17.6 million and $9.8 million at December 31, 2004 and 2003, respectively, were pledged for repurchase agreements and for other purposes required or permitted by law.

Securities with gross unrealized losses at December 31, 2004, aggregated by investment category and length of time that individual securities have been in a continuous loss position, is as follows (in thousands):


	Less Than					Over
	Twelve Months					Twelve Months

	Gross					Gross
	Unrealized			Fair		Unrealized			Fair
	Losses			Value		Losses			Value

U.S. Government agencies and corporations	$	(14	)		1,485		—			—
Collateralized mortgage obligations		(33	)		4,230		(17	)		719
Mortgage-backed securities		(72	)		6,337		(16	)		1,396

Total securities available for sale	$	(119	)		12,052		(33	)		2,115

Management evaluates securities for other-than-temporary impairment at least on a quarterly basis, and more frequently when economic or market concerns warrant such evaluation. Consideration is given to (1) the length of time and the extent to which the fair value has been less than cost, (2) the financial condition and near-term prospects of the issuer, and (3) the intent and ability of the Company to retain its investment in the issuer for a period of time sufficient to allow for any anticipated recovery in fair value.

The unrealized losses on investment securities available for sale were caused by interest rate changes. It is expected that the securities would not be settled at a price less than the par value of the investments. Because the decline in fair value is attributable to changes in interest rates and not credit quality, and because the Company has the ability and intent to hold these investments until a market price recovery or maturity, these investments are not considered other-than-temporarily impaired.

F-78

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)


(3)	Loans

The components of loans were as follows (in thousands):


			At December 31,

			2004			2003

Commercial real estate			$	95,296			70,201
Commercial				12,953			9,919
Residential real estate				82,559			54,735
Consumer				2,628			1,955

		Total loans		193,436			136,810
Deduct:
	Deferred loan fees, net			(541	)		(453	)
	Allowance for loan losses			(2,105	)		(1,364	)

		Loans, net	$	190,790			134,993

An analysis of the changes in the allowance for loan losses is summarized as follows (in thousands):


		Year Ended
		December 31,

		2004			2003

Balance at beginning of year		$	1,364			922
	Provision for loan losses		821			451
	Recoveries		15			17
	Charge-offs		(95	)		(26	)

Balance at end of year		$	2,105			1,364

There were no impaired loans during the years ended December 31, 2004 or 2003. Also, there were no nonaccrual loans or loans over ninety days past due still accruing interest at December 31, 2004 or 2003.

(4) Premises and Equipment, Net

A summary of premises and equipment, net follows (in thousands):


		At December 31,

		2004			2003

Land		$	1,582			1,582
Buildings			3,520			3,287
Furniture and equipment			1,442			1,110
Leasehold improvements			70			63
Vehicles			68			68

	Total, at cost		6,682			6,110
Less accumulated depreciation and amortization			(1,495	)		(1,100	)

	Premises and equipment, net	$	5,187			5,010

The Company leases premises under various operating leases. During 2004, the Company entered into a lease for a branch in Key Largo. The lease is for ten years and includes four options to renew for five years. The lease for the Summerland branch expires November 15, 2006 and includes an option to renew for five

F-79

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

years. The lease for the Duck Key branch expires September 30, 2005 and also includes an option to renew for five years. The ground lease for the Key West branch including six three year renewal options expires July 1, 2021 and includes provisions for the escalation of rent every three years based on changes in the consumer price index. The Company also leases an administrative office which expires in December, 2007 and includes an option to renew for five years. Lease expense for the years ended December 31, 2004, and 2003 was approximately $148,000 and $130,000, respectively. The estimated future minimum rental commitments are approximately as follows (in thousands):


Year Ending December 31,	Amount

2005	$	196
2006		160
2007		99
2008		71
2009		73
Thereafter		373

	$	972

(5) Deposits

The aggregate amount of short-term jumbo time deposits, each with a minimum denomination of $100,000 was approximately $40.8 million and $31.6 million at December 31, 2004 and 2003, respectively.

At December 31, 2004, the scheduled maturities of time deposits are as follows (in thousands):


Year Ending December 31,	Amount

2005	$	43,901
2006		10,146
2007		3,106
2008		11,837
2009		4,491

	$	73,481

Included in deposits are deposits from three public entities. The deposits and collateral are as follows (in thousands):


		December 31,

		2004		2003

Public funds on deposit		$	37,959		27,987

Collateral:
	Securities at fair value	$	16,092		5,618

	Letter of credit(1)	$	12,000		9,000


(1)	The letter of credit was issued by the Federal Home Loan Bank.

(6) Benefit Agreement

In 2003, the Company entered into a Salary Continuation Agreement (the “Agreement”) with the President of the Holding Company which requires the Company to provide salary continuation benefits to him

F-80

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

upon retirement. The Agreement requires the Company to pay monthly benefits, as calculated in the Agreement, for ten years beginning in January 2005. The Company accrued the present value of the future benefits over two years and expensed approximately $167,000 and $156,000 in 2004 and 2003, respectively.

(7) Federal Home Loan Bank Advances

The maturities and interest rates on the advances from the Federal Home Loan Bank (“FHLB”) were as follows ($ in thousands):


		Interest Rate						At December 31,

Year Ending December 31,		2004			2003			2004		2003

2004			—	%		1.99	%	$	—		4,500
2005			2.11	%		2.18	%		14,050		6,202
2006			2.65	%		2.75	%		8,000		2,000
2007			3.26	%		3.26	%		600		800
2008			5.34	%		5.96	%		1,523		991
2009			2.96	%		5.05	%		2,250		542
2011(1)			4.53	%		4.53	%		1,000		1,000

	Total							$	27,423		16,035


(1)	The FHLB has a one time call option on December 5, 2006.

At December 31, 2004 and 2003, the FHLB advances and letters of credit outstanding to the FHLB of $12 million and $9.0 million, respectively are collateralized by a blanket floating lien on all one-to-four family, commercial real estate, multifamily and home equity loans.

(8) Other Borrowings

The Company enters into repurchase agreements with customers. These agreements require the Company to pledge securities as collateral for the balance in the accounts. At December 31, 2004 and 2003, the balance totaled approximately $851,000 and $1,046,000, respectively, and at December 31, 2004 and 2003 the Company pledged securities as collateral for these agreements with a carrying value of approximately $982,000 and $1,460,000, respectively.

(9) Junior Subordinated Debentures

MBI Statutory Trust (the “Trust”) was formed for the sole purpose of issuing $5,000,000 of Trust Preferred Securities.

On March 26, 2003, the Trust sold adjustable-rate Trust Preferred Securities due March 26, 2033 in the aggregate principal amount of $5,000,000 (the “Capital Securities”) in a pooled trust preferred securities offering. The interest rate on the Capital Securities adjusts quarterly, to a rate equal to the then current three-month London Interchange Bank Offering Rate (“LIBOR”), plus 315 basis points. In addition, the Holding Company contributed capital of $155,000 to the Trust for the purchase of the common securities of the Trust. The proceeds from these sales were paid to the Holding Company in exchange for $5,155,000 of its adjustable-rate Junior Subordinated Debentures (the “Debentures”) due March 26, 2033. The Debentures have the same terms as the Capital Securities. The sole asset of the Trust, the obligor on the Capital Securities, is the Debentures.

The Holding Company has guaranteed the Trust’s payment of distributions on, payments on any redemptions of, and any liquidation distribution with respect to, the Capital Securities. Cash distributions on

F-81

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

both the Capital Securities and the Debentures are payable quarterly in arrears on March 26, June 26, September 26 and December 26 of each year. Issuance costs of approximately $50,000 associated with the Capital Securities have been capitalized by the Holding Company and are being amortized over the expected life of the securities.

The Capital Securities are subject to mandatory redemption (i) in whole, but not in part, upon repayment of the Debentures at stated maturity or, at the option of the Holding Company, their earlier redemption in whole upon the occurrence of certain changes in the tax treatment or capital treatment of the Capital Securities, or a change in the law such that the Trust would be considered an Investment Company and (ii) in whole or in part at any time on or after March 26, 2008 contemporaneously with the optional redemption by the Holding Company of the Debentures in whole or in part. The Debentures are redeemable prior to maturity at the option of the Holding Company (i) on or after March 26, 2008, in whole at any time or in part from time to time, or (ii) in whole, but not in part, at any time within 90 days following the occurrence and continuation of certain changes in the tax treatment or capital treatment of the Capital Securities, or a change in law such that the Trust would be considered an Investment Company, required to be registered under the Investment Company Act of 1940.

In 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), as revised in December, 2003. The Company adopted this Interpretation as of December 31, 2004. In accordance with this Interpretation, the Trust is not consolidated in the financial statements of the Company, but rather accounted for under the equity method of accounting. The Company also elected to apply FIN 46 on a retroactive basis and restated its 2003 consolidated financial statements. The effect to the 2003 consolidated balance sheet was to record junior subordinated debentures of $5,155,000, eliminate the guaranteed beneficial interest in junior subordinated debentures of $5,000,000 and record the Company’s investment in the Trust of $155,000 in other assets. This Interpretation had no effect on the 2003 consolidated statement of earnings.

During 2004 the Company entered into a five year interest rate swap agreement that effectively converted the floating interest rate of these junior subordinated debentures into a fixed interest rate of 7.29%, thus reducing the impact of interest rate changes on future interest expense for the five year period. In accordance with SFAS 133, this interest rate swap qualifies as a cash flow hedge. The fair value of this interest rate swap is recorded as an asset or liability on the consolidated balance sheet with an offsetting entry recorded in other comprehensive income (loss), net of the income tax effect. At December 31, 2004, the unrealized loss on the derivative instrument was $69,000 ($41,000 net of tax).

(10) Financial Instruments

The Company is a party to financial instruments with off-balance-sheet risk in the normal course of business to meet the financing needs of its customers. These financial instruments are unfunded loan commitments, unused lines of credit and standby letters of credit and may involve, to varying degrees, elements of credit and interest-rate risk in excess of the amount recognized in the consolidated balance sheet. The contract amounts of these instruments reflect the extent of involvement the Company has in these financial instruments.

The Company’s exposure to credit loss in the event of nonperformance by the other party to the financial instrument for unfunded loan commitments, unused lines of credit and standby letters of credit is represented by the contractual amount of those instruments. The Company uses the same credit policies in making commitments as it does for on-balance-sheet instruments.

Commitments to extend credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Commitments generally have fixed-expiration dates or other termination clauses and may require payment of a fee. Since some of the commitments are expected to expire without

F-82

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

being drawn upon, the total commitment amounts do not necessarily represent future cash requirements. The Company evaluates each customer’s credit worthiness on a case-by-case basis. The amount of collateral obtained if deemed necessary by the Company upon extension of credit is based on management’s credit evaluation of the counterparty.

Standby letters-of-credit are conditional lending commitments issued by the Company to guarantee the performance of a customer to a third party and to support private borrowings arrangements. Essentially all letters of credit issued have expiration dates within one year. The credit risk involved in issuing letters-of-credit is essentially the same as that involved in extending credit. The Company may hold collateral supporting those commitments.

The estimated fair values of the Company’s financial instruments were as follows (in thousands):


		At December 31, 2004						At December 31, 2003

		Carrying			Fair			Carrying		Fair
		Amount			Value			Amount		Value

Financial assets:
	Cash and cash equivalents	$	8,457			8,457			6,354		6,354
	Securities available for sale		19,009			19,009			10,266		10,266
	Loans, net		190,790			194,778			134,993		140,817
	Accrued interest receivable		875			875			610		610
	Federal Home Loan Bank stock		1,802			1,802			802		802
Financial liabilities:
	Deposits		177,682			178,041			127,152		127,689
	Federal Home Loan Bank advances		27,423			27,300			16,035		16,124
	Other borrowings		851			851			1,046		1,046
	Federal funds purchased		5,565			5,565			—		—
	Junior subordinated debentures		5,155			5,155			5,155		5,155
Derivative:
	Interest rate swap (loss position)		(69	)		(69	)		—		—

A summary of the amounts of the Company’s financial instruments, which approximate fair value, with off-balance-sheet risk at December 31, 2004, follows (in thousands):


					Estimated
	Contract		Carrying		Fair
	Amount		Amount		Value

Unused loan commitments	$	12,206		—		—

Unused lines of credit	$	9,624		—		—

Standby letters of credit	$	329		—		—

Letters of credit outstanding to FHLB	$	12,000		—		—

(11) Credit Risk

The Company grants loans to borrowers throughout the State of Florida with a majority of the loans in the Florida Keys. Although the Company has a diversified loan portfolio, a significant portion of its borrowers’ ability to honor their contracts is dependent upon the economy of the Florida Keys.

F-83

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

(12) Income Taxes

Allocation of Federal and state income taxes between current and deferred portions is as follows (in thousands):


			Year Ended
			December 31,

			2004			2003

Current:
	Federal		$	731			417
	State			133			75

		Total current		864			492

Deferred:
	Federal			(262	)		(194	)
	State			(45	)		(34	)

		Total deferred		(307	)		(228	)

			$	557			264

The reasons for the differences between the statutory Federal income tax rate and the effective tax rate are summarized as follows ($ in thousands):


		Year Ended December 31,

		2004						2003

					% of Pretax						% of Pretax
		Amount			Earnings			Amount			Earnings

Income taxes at statutory Federal rate		$	519			34.0	%	$	248			34.0	%
Increase (decrease) resulting from:
	State taxes, net of Federal tax benefit		57			3.7			27			3.7
	Tax-exempt income		(37	)		(2.4	)		(24	)		(3.3	)
	Other		18			1.2			13			1.9

		$	557			36.5	%	$	264			36.3	%

F-84

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are presented below (in thousands):


			At December 31,

			2004			2003

Deferred tax assets:
	Allowance for loan losses		$	778			500
	Deferred compensation			122			59
	Accumulated depreciation			12			23
	Unrealized loss on securities available for sale			41			—
	Unrealized loss on derivative instrument			28			—

		Total deferred tax assets		981			582

Deferred tax liabilities:
	Deferred loan costs			(23	)		—
	Unrealized gain on securities available for sale			—			(31	)

		Total deferred tax liabilities		(23	)		(31	)

		Net deferred tax asset	$	958			551

(13) Related Parties

In the ordinary course of business, the Company has made loans at terms and rates prevailing at the time to officers and directors of the Company and to entities in which they hold a financial interest. The aggregate dollar amount of these loans totaled approximately $1,805,000 and $1,713,000 at December 31, 2004 and 2003, respectively. During the year ended December 31, 2004, new loans totaled approximately $184,000 and total principal payments were approximately $92,000. Deposits in the Company from these related parties totaled approximately $2,204,000 and $2,980,000 at December 31, 2004 and 2003, respectively.

(14) Compensation Program

The Company offers a 401(k) Retirement Plan (the “Retirement Plan”) covering all employees of the Company. The Retirement Plan provides that, at the discretion of the Board of Directors, contributions may be made and/or employee contributions to the Retirement Plan may be matched. Company contributions to the Retirement Plan for the years ended December 31, 2004 and 2003 were approximately $52,000 and $48,000, respectively.

(15) Stock Option Plan

The Company has a stock option plan (the “Plan”) for directors, officers and employees. A total of 63,000 shares (amended) have been reserved under this Plan. Under the Plan, the option price is not to be less than 100% of the fair market value of the common stock at the date of grant. Options granted under the Plan vest over a five year period and have a term of up to ten years. At December 31, 2004, no options remain available for grant.

F-85

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

A summary of the Company’s Plan as of December 31, 2004 and 2003 is presented below (dollars in thousands except per share information):


	Number			Range of Per			Weighted-			Aggregate
	of			Share Option			Average Per			Option
	Shares			Price			Share Price			Price

Outstanding at December 31, 2002		40,975		$	11.87-12.31			11.91			488
Options granted		5,000			12.31			12.31			62
Options exercised		(1,008	)		(11.87	)		(11.87	)		(12	)
Options forfeited		(210	)		(11.87	)		(11.87	)		(2	)

Outstanding at December 31, 2003		44,757			11.87-12.50			11.97			536
Options granted		9,000			12.93			12.93			116
Options exercised		(4,200	)		(11.87	)		(11.87	)		(50	)
Options forfeited		(210	)		(11.87	)		(11.87	)		(2	)

Outstanding at December 31, 2004		49,347		$	11.87-12.93			12.16			600

The weighted remaining contractual life of the outstanding stock options at December 31, 2004 and 2003 was 6.1 years and 6.3 years, respectively.

These options are exercisable as follows:


	Number of		Weighted-Average
Year Ending	Shares		Exercise Price

Currently		34,897	$	12.03
2005		5,800		12.54
2006		5,800		12.53
2007		2,050		12.93
2008		800		12.93

		49,347	$	12.16

(16) Regulatory Matters

Banking regulations place certain restrictions on dividends paid and loans or advances made by the Bank to the Holding Company.

The Company (on a consolidated basis) and the Bank are subject to various regulatory capital requirements administered by the regulatory banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on the Company’s and the Bank’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the Bank must meet specific capital guidelines that involve quantitative measures of their assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. The Bank’s capital amounts and classification are also subject to qualitative judgements by the regulators about components, risk weightings, and other factors. Prompt corrective action provisions are not applicable to bank holding companies.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the Bank to maintain minimum amounts and percentages (set forth in the following table) of total and Tier 1 capital (as defined in the regulations) to risk-weighted assets (as defined) and of Tier 1 capital (as defined) to average assets (as defined). Management believes, as of December 31, 2004, that the Company and the Bank met all capital adequacy requirements to which they were subject.

F-86

Marine Bancorp, Inc. and Subsidiaries

Notes to Consolidated Financial Statements — (Continued)

As of December 31, 2004, the most recent notification from the regulatory authorities categorized the Bank as adequately capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, an institution must maintain minimum total risk-based, Tier I risk-based, and Tier I leverage percentages as set forth in the following tables. There are no conditions or events since that notification that management believes have changed the Bank’s category. The Company’s and the Bank’s actual capital amounts and percentages as of December 31, 2004 and 2003 are also presented in the table (dollars in thousands).


													Minimum To Be Well
								For Capital					Capitalized Under
								Adequacy					Prompt Corrective
			Actual					Purposes					Action Provisions

			Amount		%			Amount		%			Amount		%

*As of December 31, 2004:*
	Total capital to Risk-Weighted assets:
		Bank	$	15,588		8.65	%	$	14,422		8.00	%	$	18,028		10.00	%
		Consolidated		16,012		8.97			14,287		8.00			N/A		N/A
	Tier 1 Capital to Risk-Weighted Assets:
		Bank		13,483		7.48			7,211		4.00			10,817		6.00
		Consolidated		11,134		6.23			7,144		4.00			N/A		N/A
	Tier 1 Capital to Average Assets:
		Bank		13,483		6.38			8,447		4.00			10,559		5.00
		Consolidated		11,134		5.27			8,447		4.00			N/A		N/A
*As of December 31, 2003:*
	Total capital to Risk-Weighted assets:
		Bank	$	13,761		12.17	%	$	9,045		8.00	%	$	11,307		10.00	%
		Consolidated		14,252		12.57			9,071		8.00			N/A		N/A
	Tier 1 Capital to Risk-Weighted Assets:
		Bank		12,522		11.07			4,523		4.00			6,784		6.00
		Consolidated		9,861		8.70			4,536		4.00			N/A		N/A
	Tier 1 Capital to Average Assets:
		Bank		12,522		8.12			6,165		4.00			7,707		5.00
		Consolidated		9,861		6.39			6,171		4.00			N/A		N/A

(17) Acquisition

On June 1, 2005, the Company was acquired by Home BancShares, Inc. (“Home”). The total acquisition price was approximately $15.6 million of which approximately $9.4 million was paid in cash and $6.2 million was paid in Class B preferred stock of Home.

F-87

Mountain View Bancshares, Inc.

Accountants’ Report and Consolidated Financial Statements

December 31, 2004

F-88

Mountain View Bancshares, Inc.

December 31, 2004

Contents


Report of Independent Registered Public Accounting Firm		F-90
Consolidated Financial Statements
	Balance Sheet	F-91
	Statement of Income	F-92
	Statement of Stockholders’ Equity	F-93
	Statement of Cash Flows	F-94
	Notes to Financial Statements	F-95

F-89

Report of Independent Registered Public Accounting Firm

Audit Committee, Board of Directors and Stockholders

Mountain View Bancshares, Inc.

Mountain View, Arkansas

We have audited the consolidated balance sheet of Mountain View Bancshares, Inc. (a wholly-owned subsidiary of Home Bancshares, Inc., effective September 1, 2005), as of December 31, 2004, and the related consolidated statements of income, stockholders’ equity and cash flows for the year ended December 31, 2004. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Mountain View Bancshares, Inc. as of December 31, 2004, and the results of its operations and its cash flows for the year ended December 31, 2004, in conformity with accounting principles generally accepted in the United States of America.


	/s/ BKD, LLP

Little Rock, Arkansas

February 17, 2006

F-90

Mountain View Bancshares, Inc.

Consolidated Balance Sheet

December 31, 2004


Assets
Cash and due from banks				$	2,478,507
Federal funds sold					2,105,000

	Cash and cash equivalents				4,583,507
Available-for-sale securities					97,044,267
Loans, net of allowance for loan losses of $913,938 at December 31, 2004					71,218,048
Premises and equipment					2,513,795
Foreclosed assets held for sale, net					77,767
Interest receivable					1,889,320
Core deposit intangible					99,417
Other					42,900

	Total assets			$	177,469,021


Liabilities and Stockholders’ Equity
Liabilities
	Deposits
		Demand		$	16,918,117
		Savings, NOW and money market			44,844,318
		Time			83,713,439

			Total deposits		145,475,874
		Interest payable and other liabilities			341,144

			Total liabilities		145,817,018

Stockholders’ equity
	Common stock, $10 par value; authorized 10,000 shares; issued and outstanding 2004 — 7,982 shares				79,820
	Additional paid-in capital				12,922,675
	Retained earnings				18,312,953
	Accumulated other comprehensive income				336,555

Total stockholders’ equity					31,652,003

Total liabilities and stockholders’ equity				$	177,469,021

See Notes to Consolidated Financial Statements

F-91

Mountain View Bancshares, Inc.

Consolidated Statement of Income

Year Ended December 31, 2004


Interest income
	Loans		$	5,098,960
	Securities
		Taxable		56,272
		Tax-exempt		4,596,036
	Federal funds			52,355

Total interest income				9,803,623
Interest expense
	Deposits			2,887,312

Net interest income				6,916,311
Provision for loan losses				100,000

Net interest income after provision for loan losses				6,816,311

Noninterest income
	Customer service fees			355,146
	Other service charges and fees			115,086
	Net realized gains on sales of held-to-maturity securities			11,275
	Other			20,895

Total noninterest income				502,402

Noninterest expense
	Salaries and employee benefits			1,726,560
	Net occupancy expense			93,354
	Equipment expense			541,353
	Professional fees			44,532
	Marketing expense			51,476
	Printing and office supplies			72,849
	Loss on foreclosed assets, net			45,132
	Other			480,202

Total noninterest expense				3,055,458

Net income			$	4,263,255

Earnings per share			$	534.11

See Notes to Consolidated Financial Statements

F-92

Mountain View Bancshares, Inc.

Consolidated Statement of Stockholders’ Equity

Year Ended December 31, 2004


													Accumulated
				Common Stock				Additional					Other
								Paid-in		Retained			Comprehensive
				Shares		Amount		Capital		Earnings			Income		Total

Balance, January 1, 2003					7,982	$	79,820	$	12,922,675	$	14,640,366		$	—	$	27,642,861
	Comprehensive income
		Net income			—		—		—		4,263,255			—		4,263,255
		Change in unrealized appreciation on available-for-sale securities			—		—		—		—			336,555		336,555

			Total comprehensive income													4,599,810
	Dividends on common stock, $74 per share				—		—		—		(590,668	)		—		(590,668	)

Balance, December 31, 2004					7,982	$	79,820	$	12,922,675	$	18,312,953		$	336,555	$	31,652,003

See Notes to Consolidated Financial Statements

F-93

Mountain View Bancshares, Inc.

Consolidated Statement of Cash Flows

Year Ended December 31, 2004


Operating Activities
	Net income			$	4,263,255
	Items not requiring (providing) cash
		Depreciation and amortization			403,928
		Provision for loan losses			100,000
		Provision for losses on foreclosed assets			36,690
		Amortization of premiums and discounts on securities			(174,363	)
		Net realized gains on held-to-maturity securities			(11,275	)
		Gain on sale of premises and equipment			(1,632	)
	Changes in
		Interest receivable			(165,121	)
		Other assets			(59	)
		Interest payable and other liabilities			33,170

			Net cash provided by operating activities		4,484,593

Investing Activities
	Purchases of securities				(21,392,074	)
	Proceeds from maturities of securities				11,432,549
	Proceeds from the sales of held-to-maturity securities				3,211,275
	Net change in loans				(1,829,603	)
	Purchase of premises and equipment				(370,587	)
	Proceeds from sales of premises and equipment				15,269
	Proceeds from the sale of foreclosed assets				9,000

			Net cash used in investing activities		(8,924,171	)

Financing Activities
	Net increase in demand deposits, money market, NOW and savings accounts				1,277,741
	Net increase in time deposits				3,932,671
	Dividends paid				(590,668	)

			Net cash provided by financing activities		4,619,744

Increase in Cash and Cash Equivalents					180,166
Cash and Cash Equivalents, Beginning of Year					4,403,341

Cash and Cash Equivalents, End of Year				$	4,583,507

Supplemental Cash Flows Information
	Interest paid			$	2,549,358
	Sale and financing of foreclosed assets			$	9,000
	Real estate acquired in settlement of loans			$	91,456

See Notes to Consolidated Financial Statements

F-94

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements


Note 1:	Nature of Operations and Summary of Significant Accounting Policies


	*Nature of Operations*

Mountain View Bancshares, Inc. (the “Company”) is a holding company whose principal activity is the ownership and management of its wholly-owned subsidiary, Bank of Mountain View (the “Bank”). The Bank is primarily engaged in providing a full range of banking and financial services to individual and corporate customers in Mountain View, Arkansas. The Bank is subject to competition from other financial institutions. The Bank is subject to the regulation of certain federal and state agencies and undergoes periodic examinations by those regulatory authorities.


	*Principles of Consolidation*

The consolidated financial statements include the accounts of the Company and the Bank. All significant intercompany accounts and transactions have been eliminated in consolidation.


	*Use of Estimates*

Material estimates that are particularly susceptible to significant change relate to the determination of the allowance for loan losses and the valuation of real estate acquired in connection with foreclosures or in satisfaction of loans. In connection with the determination of the allowance for loan losses and the valuation of foreclosed assets held for sale, management obtains independent appraisals for significant properties.


	*Cash Equivalents*

The Company considers all liquid investments with original maturities of three months or less to be cash equivalents.


	*Securities*

Available-for-sale securities, which include any security for which the Company has no immediate plan to sell but which may be sold in the future, are carried at fair value. Unrealized gains and losses are recorded in other comprehensive income.

Held-to -maturity securities, which include any security for which the Company has the positive intent and ability to hold until maturity, are carried at historical cost adjusted for amortization of premiums and accretion of discounts.

Amortization of premiums and accretion of discounts are recorded as interest income from securities. Realized gains and losses are recorded as net security gains (losses). Gains and losses on sales of securities are determined on the specific-identification method.


	*Loans*

Loans that management has the intent and ability to hold for the foreseeable future or until maturity or payoffs are reported at their outstanding principal balances adjusted for any charge-offs, the allowance for loan losses, any deferred fees or costs on originated loans and unamortized premiums or discounts on purchased loans. Interest income is reported on the interest method and includes amortization of net deferred loan fees

F-95

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)

and costs over the loan term. Generally, loans are placed on non-accrual status at ninety days past due and interest is considered a loss, unless the loan is well-secured and in the process of collection.


	*Allowance for Loan Losses*

The allowance for loan losses is established as losses are estimated to have occurred through a provision for loan losses charged to income. Loan losses are charged against the allowance when management believes the uncollectibility of a loan balance is confirmed. Subsequent recoveries, if any, are credited to the allowance.

A loan is considered impaired when, based on current information and events, it is probable that the Company will be unable to collect the scheduled payments of principal or interest when due according to the contractual terms of the loan agreement. Factors considered by management in determining impairment include payment status, collateral value and the probability of collecting scheduled principal and interest payments when due. Loans that experience insignificant payment delays and payment shortfalls generally are not classified as impaired. Management determines the significance of payment delays and payment shortfalls on a case-by-case basis, taking into consideration all of the circumstances surrounding the loan and the borrower, including the length of the delay, the reasons for the delay, the borrower’s prior payment record and the amount of the shortfall in relation to the principal and interest owed. Impairment is measured on a loan-by-loan basis by either the present value of expected future cash flows discounted at the loan’s effective interest rate, the loan’s obtainable market price or the fair value of the collateral if the loan is collateral dependent.


	*Premises and Equipment*

Depreciable assets are stated at cost less accumulated depreciation. Depreciation is charged to expense using the straight-line method for buildings and the declining balance method for furniture, fixtures and equipment over the estimated useful life of the assets.


	*Foreclosed Assets Held for Sale*

Assets acquired through, or in lieu of, loan foreclosure are held for sale and are initially recorded at fair value at the date of foreclosure, establishing a new cost basis. Subsequent to foreclosure, valuations are periodically performed by management and the assets are carried at the lower of carrying amount or fair value less cost to sell. Revenue and expenses from operations and changes in the valuation allowance are included in net income or expense from foreclosed assets.


	*Core Deposit Intangible*

The core deposit intangible is being amortized on the straight-line basis over a period of 15 years. The asset is periodically evaluated as to the recoverability of its carrying value.


	*Income Taxes*

The Company’s stockholders have elected to have the Company’s income taxed as an “S” Corporation under provisions of the Internal Revenue Code and a similar section of the Arkansas income tax law. Therefore, taxable income or loss is reported to the individual stockholders for inclusion in their respective tax returns and no provision for federal and state income taxes is included in this statement.

F-96

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)


	*Earnings Per Share*

Earnings per share have been computed based upon the weighted-average common shares outstanding during the year. There were no dilutive or potentially dilutive shares during 2004.


Note 2:	Securities

The amortized cost and approximate fair values of securities are as follows:


	December 31, 2004

	Available-for-sale Securities

			Gross		Gross
	Amortized		Unrealized		Unrealized			Approximate
	Cost		Gains		Losses			Fair Value

U.S. government agencies	$	53,097,158	$	133,892	$	(813,110	)	$	52,417,940
Mortgage-backed securities		263,339		3,513		(80	)		226,772
State and political subdivisions		43,347,215		1,058,557		(46,217	)		44,359,555

	$	96,707,712	$	1,195,962	$	(859,407	)	$	97,044,267

The amortized cost and fair value of available-for-sale securities at December 31, 2004, by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because issuers may have the right to call or prepay obligations with or without call or prepayment penalties.


		Available-for-sale

		Amortized
		Cost		Fair Value

Within one year		$	655,353	$	660,544
One to five years			3,334,972		3,371,885
Five to ten years			23,171,507		23,547,919
After ten years			69,282,541		69,197,147

			96,444,373		96,777,495
Mortgage-backed securities			263,339		266,772

	Totals	$	96,707,712	$	97,044,267

The carrying value of securities pledged as collateral, to secure public deposits and for other purposes, was $20,367,605 at December 31, 2004.

Certain investments in debt securities are reported in the financial statements at an amount less than their historical cost. Total fair value of these investments at December 31, 2004, was $42,064,041, which is approximately 43.3%, of the Company’s available-for-sale investment portfolio. These declines primarily resulted from recent increases in market interest rates.

Based on evaluation of available evidence, including recent changes in market interest rates, credit rating information and information obtained from regulatory filings, management believes the declines in fair value for these securities are temporary.

Should the impairment of any of these securities become other than temporary, the cost basis of the investment will be reduced and the resulting loss recognized in net income in the period the other-than-temporary impairment is identified.

F-97

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)

The following table shows our investments’ gross unrealized losses and fair value, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at December 31, 2004:


		Less than 12 Months					12 Months or More					Total

		Fair		Unrealized			Fair		Unrealized			Fair		Unrealized
Description of Securities		Value		Losses			Value		Losses			Value		Losses

U.S. government agencies		$	14,920,685	$	(240,542	)	$	23,540,597	$	(572,568	)	$	38,461,282	$	(813,110	)
Mortgage-backed securities			69,047		(80	)		—		—			69,047		(80	)
State and political subdivisions			2,643,949		(22,485	)		889,763		(23,732	)		3,533,712		(46,217	)

	Total temporarily impaired securities	$	17,633,681	$	(263,107	)	$	24,430,360	$	(596,300	)	$	42,064,041	$	(859,407	)

During 2004 the Company sold eight held-to -maturity securities, with total proceeds of $3,211,275 and a realized gain of $11,275. In accordance with FAS 115, these sales required all of the Company’s securities to be classified as available-for-sale securities. The amount of securities transferred from held-to -maturity at December 31, 2004, was $85,155,517, which included unrealized gains of $355,420 that is reflected in accumulated other comprehensive income.


Note 3:	Loans and Allowance for Loan Losses

Categories of loans at December 31, include:


Commercial and agricultural		$	17,428,204
Financial institutions			159,124
Real estate construction			3,327,893
Commercial real estate			16,841,271
Residential real estate			27,409,108
Consumer			6,849,804
Other			116,582

	Total loans		72,131,986
Less allowance for loan losses			913,938

	Net loans	$	71,218,048

Activity in the allowance for loan losses was as follows:


Balance, beginning of year	$	836,595
Provision charged to expense		100,000
Losses charged off, net of recoveries of $9,631		(22,657	)

Balance, end of year	$	913,938

Impaired loans totaled $337,453 at December 31, 2004. At December 31, 2004, impaired loans of $337,453 had no related allowance for loan losses.

There was no interest recognized on average impaired loans of $434,140 for 2004. There was no interest recognized on impaired loans on a cash basis during 2004.

F-98

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)

At December 31, 2004, there were no accruing loans delinquent 90 days or more. Non-accruing loans at December 31, 2004 were $337,453.


Note 4:	Premises and Equipment

Major classifications of premises and equipment, stated at cost, are as follows:


Land		$	400,517
Buildings and improvements			2,293,528
Equipment			2,170,826

			4,864,871
Less accumulated depreciation			2,351,076

	Net premises and equipment	$	2,513,795


Note 5:	Core Deposit Intangible

The carrying basis and accumulated amortization of recognized intangible assets at December 31, 2004, was:


	Gross Carrying		Accumulated
	Amount		Amortization

Core deposit intangible	$	662,783	$	563,366

Amortization expense for the year ended December 31, 2004, was $44,186. Estimated amortization expense for the remaining three years is:


2005	$	44,186
2006		44,186
2007		11,045

	$	99,417


Note 6:	Interest-bearing Deposits

Interest-bearing deposits in denominations of $100,000 or more were $37,788,789 on December 31, 2004.

At December 31, 2004, the scheduled maturities of time deposits are as follows:


2005	$	58,073,413
2006		8,373,227
2007		5,557,562
2008		8,198,130
2009		3,472,696
Thereafter		38,411

	$	83,713,439


Note 7:	Regulatory Matters

The Company and the subsidiary bank are subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary actions by regulators that, if undertaken, could have a direct

F-99

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)

material effect on the Company’s financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, the Company and the subsidiary banks must meet specific capital guidelines that involve quantitative measures of assets, liabilities and certain off-balance-sheet items as calculated under regulatory accounting practices. The capital amounts and classification are also subject to qualitative judgments by the regulators about components, risk weightings and other factors.

Quantitative measures established by regulation to ensure capital adequacy require the Company and the subsidiary bank to maintain minimum amounts and ratios (set forth in the table below) of total and Tier I capital (as defined in the regulations) to risk-weighted assets (as defined), and of Tier I capital (as defined) to average assets (as defined). Management believes, as of December 31, 2004, that the Company and the subsidiary bank meet all capital adequacy requirements to which they are subject.

As of December 31, 2004, the most recent notification from the Federal Deposit Insurance Corporation categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well-capitalized, the Bank must maintain capital ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the Bank’s category.

The Company and Bank’s actual capital amounts and ratios are also presented in the following table.


													To Be Well
													Capitalized Under
								For Capital Adequacy					Prompt Corrective
			Actual					Purposes					Action Provisions

			Amount		Ratio			Amount		Ratio			Amount		Ratio

As of December 31, 2004
	Total Capital (to risk-weighted assets)
		Consolidated	$	32,090,000		35.9	%	$	7,142,000		8.0	%	$	8,928,000		N/A
		Subsidiary Bank		26,513,000		29.7			7,133,000		8.0			8,916,000		10.0	%
	Tier 1 Capital (to risk-weighted assets)
		Consolidated		31,176,000		34.9			3,571,000		4.0			5,357,000		N/A
		Subsidiary Bank		25,599,000		28.7			3,567,000		4.0			5,350,000		6.0
	Tier 1 Capital (to average assets)
		Consolidated		31,176,000		17.7			7,067,000		4.0			8,833,000		N/A
		Subsidiary Bank		25,599,000		14.5			7,067,000		4.0			8,833,000		5.0

The Bank is subject to certain restrictions on the amount of dividends that it may declare without prior regulatory approval. At December 31, 2004, approximately $642,000 of retained earnings were available for dividend declaration without prior regulatory approval.


Note 8:	Related Party Transactions

At December 31, 2004, the Company had loans outstanding to executive officers, directors, significant shareholders and their affiliates (related parties), in the amount of $376,005.

In management’s opinion, such loans and other extensions of credit and deposits were made in the ordinary course of business and were made on substantially the same terms (including interest rates and collateral) as those prevailing at the time for comparable transactions with other persons. Further, in management’s opinion, these loans did not involve more than normal risk of collectibility or present other unfavorable features.

F-100

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)

Deposits from related parties held by the Company at December 31, 2004, totaled $645,367.


Note 9:	Pension Benefit Plan

Pension benefits for substantially all employees are provided through participation in a multi-employer defined benefit pension plan.

The Company makes monthly contributions to the pension plan except in periods when a moratorium on contributions is in effect due to the plan reaching full funding limitations. The Company paid $183,568 in contributions to the plan during 2004.

Effective September 1, 2005, the plan was frozen, and there have been no new participants in the plan and no additional benefits earned.


Note 10:	Earnings Per Share

Earnings per share (EPS) were computed as follows:


	2004

Net income available to shareholders	$	4,263,255
Average shares outstanding		7,982
Earnings per share	$	534.11


Note 11:	Disclosures about Fair Value of Financial Instruments

The following table presents estimated fair values of the Company’s financial instruments. The fair values of certain of these instruments were calculated by discounting expected cash flows, which involves significant judgments by management and uncertainties. Fair value is the estimated amount at which financial assets or liabilities could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. Because no market exists for certain of these financial instruments and because management does not intend to sell these financial instruments, the Company does not know whether the fair values shown below represent values at which the respective financial instruments could be sold individually or in the aggregate.


		December 31, 2004

		Carrying		Fair
		Amount		Value

Financial assets
	Cash and cash equivalents	$	4,583,507	$	4,583,507
	Available-for-sale securities		97,044,267		97,044,267
	Loans, net of allowance for loan losses		71,218,048		69,875,479
	Interest receivable		1,889,320		1,889,320
Financial liabilities
	Deposits		145,475,874		145,423,576
	Interest payable		317,734		317,734

The following methods and assumptions were used to estimate the fair value of each class of financial instruments.

F-101

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)


	*Cash and Cash Equivalents and Internet Receivable*

The carrying amount approximates fair value.


	*Securities*

Fair values equal quoted market prices, if available. If quoted market prices are not available, fair value is estimated based on quoted market prices of similar securities.


	*Loans*

The fair value of loans is estimated by discounting the future cash flows using the current rates at which similar loans would be made to borrowers with similar credit ratings and for the same remaining maturities. Loans with similar characteristics were aggregated for purposes of the calculations.


	*Deposits*

Deposits include demand deposits, savings accounts, NOW accounts and certain money market deposits. The carrying amount approximates fair value. The fair value of fixed-maturity time deposits is estimated using a discounted cash flow calculation that applies the rates currently offered for deposits of similar remaining maturities.


	*Interest Payable*

The carrying amount approximates fair value.


Note 12:	Significant Estimates and Concentrations

Accounting principles generally accepted in the United States of America require disclosure of certain significant estimates and current vulnerabilities due to certain concentrations. Estimates related to the allowance for loan losses are reflected in the footnote regarding loans. Current vulnerabilities due to certain concentrations of credit risk are discussed in the footnote on commitments and credit risk. Also, one depositor’s deposits exceeded 5% of total deposits at December 31, 2004.


Note 13:	Commitments and Credit Risk

The Company grants agribusiness, commercial and residential loans to customers throughout the state of Arkansas.


	*Standby Letters of Credit*

Standby letters of credit are irrevocable conditional commitments issued by the Company to guarantee the performance of a customer to a third party. Financial standby letters of credit are primarily issued to support public and private borrowing arrangements, including commercial paper, bond financing and similar transactions. Performance standby letters of credit are issued to guarantee performance of certain customers under non-financial contractual obligations. The credit risk involved in issuing standby letters of credit is essentially the same as that involved in extending loans to customers.

The Company had total outstanding standby letters of credit amounting to $417,757 at December 31, 2004, with terms ranging from 1 year to 3 years.

F-102

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)


	*Lines of Credit*

Lines of credit are agreements to lend to a customer as long as there is no violation of any condition established in the contract. Lines of credit generally have fixed expiration dates. Since a portion of the line may expire without being drawn upon, the total unused lines do not necessarily represent future cash requirements. Each customer’s creditworthiness is evaluated on a case-by-case basis. The amount of collateral obtained, if deemed necessary, is based on management’s credit evaluation of the counterparty. Collateral held varies but may include accounts receivable, inventory, property, plant and equipment, commercial real estate and residential real estate. Management uses the same credit policies in granting lines of credit as it does for on-balance-sheet instruments.

At December 31, 2004, the Company had granted unused lines of credit to borrowers aggregating approximately $10,757,314.


Note 14:	Acquisition

On September 1, 2005, the Company was acquired by Home Bancshares, Inc., an Arkansas bank holding company. The consideration for the merger was $44,100,000, which was paid approximately 90% in cash and 10% in shares of Home Bancshares, Inc., stock.


Note 15:	Condensed Financial Information (Parent Company Only)

Presented below is condensed financial information as to financial position, results of operations and cash flows of the Company:

Condensed Balance Sheet


		December 31, 2004

ASSETS
Cash and due from banks		$	3,541,997
Investment in common stock of subsidiary			26,034,685
Dividends receivable from subsidiary			2,075,321

	Total assets	$	31,652,003

Stockholders’ Equity		$	31,652,003

Total liabilities and stockholders’ equity		$	31,652,003

F-103

Mountain View Bancshares, Inc.

Notes to Consolidated Financial Statements — (Continued)

Condensed Statement of Income


			Year Ending
			December 31, 2004

Income
	Dividend income from subsidiary		$	4,172,162

		Total income		4,172,162
Expenses
	Other expenses			50

		Total expenses		50

Income before equity in undistributed income of subsidiaries				4,172,112
Equity in undistributed income of subsidiaries				91,143

Net Income			$	4,263,255

Condensed Statement of Cash Flows


			Year Ended
			December 31, 2004

Operating activities
	Net income		$	4,263,255
	Equity in undistributed earnings of subsidiary			(91,143	)
	Net change in dividends receivable from subsidiary			(75,241	)

		Net cash provided by operating activities		4,096,871

Financing Activities
	Dividends paid			(590,668	)

		Net cash used in financing activities		(590,668	)

Net change in cash and cash equivalents				3,506,203
Cash and cash equivalents at beginning of year				35,794

Cash and cash equivalents at end of year			$	3,541,997

F-104

Shares

Common Stock

PROSPECTUS

Stephens Inc.


Piper Jaffray	Sandler O’Neill + Partners

The date of this prospectus is , 2006

Until , 2006 (25 days after the date of this prospectus), all dealers that buy, sell or trade our common stock, whether or not participating in this offering, may be required to deliver a prospectus. This requirement is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS


Item 13.	*Other Expenses of Issuance and Distribution.*

The following table sets forth the costs and expenses, other than underwriting discounts and commissions, to be paid in connection with the sale of shares of our common stock being registered, all of which will be paid by us. All amounts are estimates except the registration fee and the NASD filing fee.


Securities and Exchange Commission registration fee	$	5,537
NASD filing fee
Nasdaq listing fee
Accounting fees and expenses
Legal fees and expenses
Transfer agent and registrar fees
Printing and engraving expenses
Miscellaneous

Total


Item 14.	*Indemnification of Directors and Officers.*

Our Articles of Incorporation and Bylaws authorize and require us to indemnify our directors, officers, employees and agents to the full extent permitted by law. Section 4-27-850 of the Arkansas Business Corporation Act of 1987 contains detailed and comprehensive provisions providing for indemnification of directors and officers of Arkansas corporations against expenses, judgments, fines and settlements in connection with litigation. Under Arkansas law, other than an action brought by or in the right of Home BancShares, such indemnification is available if it is determined that the proposed indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Home BancShares and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful.

In actions brought by or in the right of Home BancShares, the Arkansas statute limits such indemnification to expenses (including attorneys’ fees) actually and reasonably incurred in the defense or settlement of such action if the indemnitee acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of Home BancShares. However, no indemnification is allowed in actions brought by or in the right of Home BancShares with respect to any claim, issue or matter as to which such person has been adjudged to be liable to us, unless and only to the extent that the court determines upon application that, in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.

To the extent that the proposed indemnitee has been successful on the merits or otherwise in defense of any action, suit or proceeding (or any claim, issue or matter therein), under Arkansas law we must indemnify him or her against expenses (including attorneys’ fees) that he or she actually and reasonably incurred in connection with such defense.

Our Articles of Incorporation also provide that no director shall be liable to us or our shareholders for monetary damages for breach of fiduciary duty as a director to the fullest extent permitted by the Arkansas Business Corporation Act.


Item 15.	*Recent Sales of Unregistered Securities.*

Set forth below are all of the Registrant’s sales of its securities within the past three years that were not registered under the Securities Act of 1933. None of these transactions involved any underwriters or any public offerings and we believe that each of these transactions was exempt from registration requirements

II-1

pursuant to Sections 3(a)(11) or 4(2) of the Securities Act of 1933, as amended, or Rule 701 of the Securities Act of 1933.


Date of Offering	Description of Offering	Basis of Exemption

December 1, 2003	2,123,453 shares of class A preferred stock issued in the acquisition of 80% of the outstanding capital stock Community Financial Group		Rule 147
December 3, 2003	2,374,143 (split adjusted) shares of common stock issued in a cash offering at $35 per share		Rule 147
During 2003	4,500 (split adjusted) shares of common stock issued upon exercise of stock options at exercise prices ranging from $7.33 to $9.33 per share and 17,461 (split adjusted) shares of common stock issued pursuant to an employee stock bonus plan		Rule 701
During 2003	8,197 shares of class A preferred stock issued upon exercise of stock options, at a converted exercise price of $0.17 per share		Rule 701
During 2004	2,418 shares of class A preferred stock issued upon the exercise of stock options, at a converted exercise price of $0.17 per share		Rule 701
January 1, 2005	3,750,813 (split adjusted) shares of common stock issued in the acquisition of 67.8% of the outstanding capital stock of TCBancorp		Rule 147
June 1, 2005	162,039 shares of class B preferred stock issued in the acquisition of 100% of the outstanding capital stock of Marine Bancorp		Rule 506
September 1, 2005	335,526 (split adjusted) shares of common stock issued in the acquisition of 100% of the outstanding capital stock of Mountain View Bancshares		Rule 147
During 2005	40,041 (split adjusted) shares of common stock issued upon exercise of stock options, at exercise prices ranging from $7.33 to $12.67 per share		Rule 701
During 2005	15,366 shares of class A preferred stock issued upon exercise of stock options, at a converted exercise price of $0.17 per share		Rule 701
During 2005	7,040 shares of class B preferred stock issued upon exercise of stock options, at a converted exercise price of $18.41 per share		Rule 701
From January 1, 2006 through February 28, 2006	16,174 (split adjusted) shares of common stock issued upon exercise of stock options, at exercise prices ranging from $7.33 to $12.67 per share		Rule 701

II-2


Item 16.	*Exhibits and Financial Statement Schedules.*

The following exhibits are filed as part of this registration statement:


Exhibit
Number				Description

	1		—	Form of Underwriting Agreement*
	2	.1	—	Agreement and Plan of Merger, dated as of July 30, 2003, between CB Bancorp, Inc. and Home BancShares, Inc. and Community Financial Group, Inc.
	2	.2	—	Agreement and Plan of Merger, dated as of December 3, 2004, between Home BancShares, Inc. and TCBancorp, Inc.
	2	.3	—	Agreement and Plan of Merger, dated as of January 25, 2005, between Home BancShares, Inc. and Marine Bancorp, Inc.
	2	.4	—	Stock Purchase Agreement, dated as of April 20, 2005, among Home BancShares, Inc. and the Shareholders of Mountain View Bancshares, Inc. and Mountain View Bancshares, Inc.
	3	.1	—	Restated Articles of Incorporation of Home BancShares, Inc., as amended.
	3	.2	—	Amendment to the Restated Articles of Incorporation of Home BancShares, Inc.
	3	.3	—	Second Amendment to the Restated Articles of Incorporation of Home BancShares, Inc.
	3	.4	—	Third Amendment to the Restated Articles of Incorporation of Home BancShares, Inc.
	3	.5	—	Restated Bylaws of Home BancShares, Inc.
	4	.1	—	Restated Articles of Incorporation of Home BancShares, Inc. (included in Exhibit 3.1)
	4	.2	—	Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (included in Exhibit 3.2)
	4	.3	—	Second Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (included in Exhibit 3.3)
	4	.4	—	Third Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (included in Exhibit 3.4)
	4	.5	—	Restated Bylaws of Home BancShares, Inc. (included in Exhibit 3.5)
	4	.6	—	Specimen Stock Certificate representing Home BancShares, Inc. Common Stock*
	4	.7	—	Indenture, dated as of September 7, 2000, between Community Financial Group, Inc. and U.S. Bank National Association (f/k/a State Street Bank and Trust Company of Connecticut, National Association)
	4	.8	—	Amended and Restated Declaration of Trust, dated as of September 7, 2000, by and among Community Financial Group, Inc. and U.S. Bank National Association (f/k/a State Street Bank and Trust Company of Connecticut, National Association) and Joseph Park and David Pickney, as Administrators
	4	.9	—	Guarantee Agreement, dated as of September 7, 2000, between Community Financial Group, Inc. and U.S. Bank National Association (f/k/a State Street Bank and Trust Company of Connecticut, National Association)
	4	.10	—	Indenture, dated as of March 26, 2003, between Home BancShares, Inc. and U.S. Bank National Association

II-3


Exhibit
Number				Description

	4	.11	—	Amended and Restated Declaration of Trust, dated as of March 26, 2003, by and among Home BancShares, Inc. and U.S. Bank National Association and John W. Allison, C. Randall Sims and Randy Mayor, as Administrators
	4	.12	—	Guarantee Agreement, dated as of March 26, 2003, between Home BancShares, Inc. and U.S. Bank National Association
	4	.13	—	Indenture, dated as of March 26, 2003, between Marine Bancorp, Inc. and U.S. Bank National Association
	4	.14	—	Amended and Restated Declaration of Trust, dated as of March 26, 2003, by and among Marine Bancorp, Inc. and U.S. Bank National Association and William S. Daniels and Hunter Padgett, as Administrators
	4	.15	—	Guarantee Agreement, dated as of March 26, 2003, between Marine Bancorp, Inc. and U.S. Bank National Association
	4	.16	—	Indenture, dated as of November 10, 2005, between Home BancShares, Inc. and U.S. Bank National Association
	4	.17	—	Amended and Restated Declaration of Trust, dated as of November 10, 2005, by and among Home BancShares, Inc. and U.S. Bank National Association and Randy Mayor and Ron Strother, as Administrators
	4	.18	—	Guarantee Agreement, dated as of November 10, 2005, between Home BancShares, Inc. and U.S. Bank National Association
	5		—	Opinion of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. as to the validity of the shares of common stock being offered*
	10	.1	—	2006 Stock Option and Performance Incentive Plan of Home BancShares, Inc.
	10	.2	—	Director and Executive Officer Compensation Summary
	10	.3	—	401(k) Plan of Home BancShares, Inc.
	10	.4	—	Retirement Plan of Bank of Cabot, as amended and restated effective January 1, 2001
	10	.5	—	Retirement Plan and Trust for Employees of Bank of Mountain View, as amended and restated effective September 1, 2005
	10	.6	—	Lease Agreement, dated as of January 2000, between First State Bank of Conway and Trinity Development Company, Inc.
	10	.7	—	Lease Agreement, dated as of February 1, 2001, between Twin City Bank and Lakewood Village Shopping Park
	10	.8	—	Lease Agreement, dated as of April 2003, between First State Bank and Allison, Adcock, Rankin, LLC
	10	.9	—	Lease Agreement, dated as of September 1, 2004, between First State Bank and Robert H. “Bunny” Adcock, Jr. Blind Trust Agreement dtd 6/4/03
	10	.10	—	Lease Extension, dated December 2, 2004, between First State Bank and Trinity Development Company, Inc.
	10	.11	—	Lease Agreement, dated August 31, 2005, between Home BancShares, Inc. and Allison, Adcock, Rankin, LLC
	10	.12	—	Promissory Note, dated as of September 1, 2005, by Home BancShares, Inc. in favor of First Tennessee Bank National Association
	10	.13	—	Commercial Pledge Agreement, dated as of September 1, 2005, between Home BancShares, Inc. and First Tennessee Bank National Association
	10	.14	—	Business Loan Agreement, dated as of September 1, 2005, between Home BancShares, Inc. and First Tennessee Bank National Association
	16	.1	—	Letter from Ernst & Young, LLP re change in certifying accountant
	21		—	Subsidiaries of Home BancShares
	23	.1	—	Consent of BKD, LLP

II-4


Exhibit
Number				Description

	23	.2	—	Consent of Ernst & Young, LLP
	23	.3	—	Consent of Hacker, Johnson & Smith, P.A
	23	.4	—	Consent of BKD, LLP
	23	.5	—	Consent of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. (included in Exhibit 5)*
	24		—	Power of Attorney (on signature page)


*	To be filed by subsequent amendment.


Item 17.	*Undertakings.*

(a) The undersigned registrant hereby undertakes to provide to the underwriter at the closing specified in the underwriting agreements, certificates in such denominations and registered in such names as required by the underwriter to permit prompt delivery to each purchaser.

(b) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions referenced in Item 14, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of our company in the successful defense of any action, suit or proceeding) is asserted by that director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether this indemnification by us is against public policy as expressed in such Act and will be governed by the final adjudication of such issue.


	(1) For purposes of determining any liability under the Securities Act of 1933, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this registration statement as of the time it was declared effective.

	(2) For the purpose of determining any liability under the Securities Act of 1933, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

II-5

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Conway, State of Arkansas, on March 14, 2006.


	HOME BANCSHARES, INC.

	By: /s/ John W. Allison

	John W. Allison
	Chief Executive Officer and
	Chairman of the Board of Directors

POWER OF ATTORNEY

KNOW BY ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints John W. Allison and Randy E. Mayor, and each of them, his true and lawful attorneys-in -fact and agents, with full power of substitution, for him and in his name place and stead, in any and all capacities, to sign any and all amendments (including post-effective amendments) to this registration statement, and to sign any registration statement for the same offering covered by this registration statement that is to be effective upon filing pursuant to Rule 462(b) promulgated under the Securities Act of 1933, and all post-effective amendments thereto, and to file the same, with all exhibits thereto and all documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in -fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and proposes as he might or could do in person, hereby ratifying and confirming all that each said attorneys-in -fact and agents, or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates indicated.


Signature	Title	Date


/s/ John W. Allison John W. Allison	Chief Executive Officer and Chairman of the Board of Directors (Principal Executive Officer)	March 14, 2006

/s/ Ron W. Strother Ron W. Strother	President, Chief Operating Officer and Director	March 14, 2006

/s/ Randy E. Mayor Randy E. Mayor	Chief Financial Officer and Treasurer (Principal Financial Officer and Principal Accounting Officer)	March 14, 2006

/s/ Richard H. Ashley Richard H. Ashley	Vice Chairman of the Board and Director	March 14, 2006

/s/ Dale A. Bruns Dale A. Bruns	Director	March 14, 2006

II-6


Signature	Title	Date


/s/ Richard A. Buckheim Richard A. Buckheim	Director	March 14, 2006

/s/ Jack E. Engelkes Jack E. Engelkes	Director	March 14, 2006

/s/ Frank D. Hickingbotham Frank D. Hickingbotham	Director	March 14, 2006

/s/ Herren C. Hickingbotham Herren C. Hickingbotham	Director	March 14, 2006

/s/ James G. Hinkle James G. Hinkle	Director	March 14, 2006

/s/ Alex R. Lieblong Alex R. Lieblong	Director	March 14, 2006

/s/ C. Randall Sims C. Randall Sims	Secretary and Director	March 14, 2006

/s/ William G. Thompson William G. Thompson	Director	March 14, 2006

II-7

EXHIBIT LIST


Exhibit
Number				Description

	1		—	Form of Underwriting Agreement*
	2	.1	—	Agreement and Plan of Merger, dated as of July 30, 2003, between CB Bancorp, Inc. and Home BancShares, Inc. and Community Financial Group, Inc.
	2	.2	—	Agreement and Plan of Merger, dated as of December 3, 2004, between Home BancShares, Inc. and TCBancorp, Inc.
	2	.3	—	Agreement and Plan of Merger, dated as of January 25, 2005, between Home BancShares, Inc. and Marine Bancorp, Inc.
	2	.4	—	Stock Purchase Agreement, dated as of April 20, 2005, among Home BancShares, Inc. and the Shareholders of Mountain View Bancshares, Inc. and Mountain View Bancshares, Inc.
	3	.1	—	Restated Articles of Incorporation of Home BancShares, Inc., as amended.
	3	.2	—	Amendment to the Restated Articles of Incorporation of Home BancShares, Inc.
	3	.3	—	Second Amendment to the Restated Articles of Incorporation of Home BancShares, Inc.
	3	.4	—	Third Amendment to the Restated Articles of Incorporation of Home BancShares, Inc.
	3	.5	—	Restated Bylaws of Home BancShares, Inc.
	4	.1	—	Restated Articles of Incorporation of Home BancShares, Inc. (included in Exhibit 3.1)
	4	.2	—	Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (included in Exhibit 3.2)
	4	.3	—	Second Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (included in Exhibit 3.3)
	4	.4	—	Third Amendment to the Restated Articles of Incorporation of Home BancShares, Inc. (included in Exhibit 3.4)
	4	.5	—	Restated Bylaws of Home BancShares, Inc. (included in Exhibit 3.5)
	4	.6	—	Specimen Stock Certificate representing Home BancShares, Inc. Common Stock*
	4	.7	—	Indenture, dated as of September 7, 2000, between Community Financial Group, Inc. and U.S. Bank National Association (f/k/a State Street Bank and Trust Company of Connecticut, National Association)
	4	.8	—	Amended and Restated Declaration of Trust, dated as of September 7, 2000, by and among Community Financial Group, Inc. and U.S. Bank National Association (f/k/a State Street Bank and Trust Company of Connecticut, National Association) and Joseph Park and David Pickney, as Administrators
	4	.9	—	Guarantee Agreement, dated as of September 7, 2000, between Community Financial Group, Inc. and U.S. Bank National Association (f/k/a State Street Bank and Trust Company of Connecticut, National Association)
	4	.10	—	Indenture, dated as of March 26, 2003, between Home BancShares, Inc. and U.S. Bank National Association
	4	.11	—	Amended and Restated Declaration of Trust, dated as of March 26, 2003, by and among Home BancShares, Inc. and U.S. Bank National Association and John W. Allison, C. Randall Sims and Randy Mayor, as Administrators
	4	.12	—	Guarantee Agreement, dated as of March 26, 2003, between Home BancShares, Inc. and U.S. Bank National Association
	4	.13	—	Indenture, dated as of March 26, 2003, between Marine Bancorp, Inc. and U.S. Bank National Association
	4	.14	—	Amended and Restated Declaration of Trust, dated as of March 26, 2003, by and among Marine Bancorp, Inc. and U.S. Bank National Association and William S. Daniels and Hunter Padgett, as Administrators
	4	.15	—	Guarantee Agreement, dated as of March 26, 2003, between Marine Bancorp, Inc. and U.S. Bank National Association
	4	.16	—	Indenture, dated as of November 10, 2005, between Home BancShares, Inc. and U.S. Bank National Association


Exhibit
Number				Description

	4	.17	—	Amended and Restated Declaration of Trust, dated as of November 10, 2005, by and among Home BancShares, Inc. and U.S. Bank National Association and Randy Mayor and Ron Strother, as Administrators
	4	.18	—	Guarantee Agreement, dated as of November 10, 2005, between Home BancShares, Inc. and U.S. Bank National Association
	5		—	Opinion of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. as to the validity of the shares of common stock being offered*
	10	.1	—	2006 Stock Option and Performance Incentive Plan of Home BancShares, Inc.
	10	.2	—	Director and Executive Officer Compensation Summary
	10	.3	—	401(k) Plan of Home BancShares, Inc.
	10	.4	—	Retirement Plan of Bank of Cabot, as amended and restated effective January 1, 2001
	10	.5	—	Retirement Plan and Trust for Employees of Bank of Mountain View, as amended and restated effective September 1, 2005
	10	.6	—	Lease Agreement, dated as of January 2000, between First State Bank of Conway and Trinity Development Company, Inc.
	10	.7	—	Lease Agreement, dated as of February 1, 2001, between Twin City Bank and Lakewood Village Shopping Park
	10	.8	—	Lease Agreement, dated as of April 2003, between First State Bank and Allison, Adcock, Rankin, LLC
	10	.9	—	Lease Agreement, dated as of September 1, 2004, between First State Bank and Robert H. “Bunny” Adcock, Jr. Blind Trust Agreement dtd 6/4/03
	10	.10	—	Lease Extension, dated December 2, 2004, between First State Bank and Trinity Development Company, Inc.
	10	.11	—	Lease Agreement, dated August 31, 2005, between Home BancShares, Inc. and Allison, Adcock, Rankin, LLC
	10	.12	—	Promissory Note, dated as of September 1, 2005, by Home BancShares, Inc. in favor of First Tennessee Bank National Association
	10	.13	—	Commercial Pledge Agreement, dated as of September 1, 2005, between Home BancShares, Inc. and First Tennessee Bank National Association
	10	.14	—	Business Loan Agreement, dated as of September 1, 2005, between Home BancShares, Inc. and First Tennessee Bank National Association
	16	.1	—	Letter from Ernst & Young, LLP re change in certifying accountant
	21		—	Subsidiaries of Home BancShares
	23	.1	—	Consent of BKD, LLP
	23	.2	—	Consent of Ernst & Young, LLP
	23	.3	—	Consent of Hacker, Johnson & Smith, P.A
	23	.4	—	Consent of BKD, LLP
	23	.5	—	Consent of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. (included in Exhibit 5)*
	24		—	Power of Attorney (on signature page)


*	To be filed by subsequent amendment.

EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

BETWEEN

CB BANCORP, INC.

AND

HOME BANCSHARES, INC.

AND

COMMUNITY FINANCIAL GROUP, INC.

DATED AS OF JULY 30, 2003

EXECUTION COPY

TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
RECITALS.................................................................     1
DEFINITIONS..............................................................     2
   ARTICLE I. MERGER.....................................................     7
      1.1 THE MERGER.....................................................     7
          (A) SURVIVING CORPORATION......................................     7
          (B) ARTICLES, BYLAWS, DIRECTORS, OFFICERS......................     7
          (C) EFFECT OF THE MERGER.......................................     7
      1.2 CONTINUATION OF BANKS..........................................     8
      1.3 DISSENTING SHARES..............................................     8
      1.4 EFFECTIVE DATE.................................................     8
   ARTICLE II. CONSIDERATION.............................................     8
      2.1 MERGER CONSIDERATION...........................................     8
      2.2 TRANSMITTAL AND ALLOCATION PROCEDURES..........................    10
      2.3 FRACTIONAL SHARES..............................................    11
      2.4 SHAREHOLDER RIGHTS; STOCK TRANSFERS............................    11
      2.5 EXCEPTION SHARES...............................................    11
      2.6 RESERVATION OF RIGHT TO REVISE TRANSACTION.....................    11
      2.7 OPTIONS........................................................    11
   ARTICLE III. ACTIONS PENDING CONSUMMATION.............................    12
      3.1 CAPITAL STOCK..................................................    12
      3.2 DIVIDENDS, ETC.................................................    12
      3.3 INDEBTEDNESS; LIABILITIES; ETC.................................    12
      3.4 LINE OF BUSINESS; OPERATING PROCEDURES; ETC....................    12
      3.5 LIENS AND ENCUMBRANCES.........................................    13
      3.6 COMPENSATION; EMPLOYMENT AGREEMENTS; ETC.......................    13
      3.7 BENEFIT PLANS..................................................    13
      3.8 CONTINUANCE OF BUSINESS........................................    13
      3.9 AMENDMENTS.....................................................    13
      3.10 CLAIMS........................................................    13
      3.11 CONTRACTS.....................................................    13
      3.12 LOANS.........................................................    13
   ARTICLE IV. REPRESENTATIONS AND WARRANTIES............................    14
      4.1 CFG REPRESENTATIONS AND WARRANTIES.............................    14
          (A) RECITALS...................................................    14
      4.2 CBI AND HBI REPRESENTATIONS AND WARRANTIES.....................    23
          (A) RECITALS...................................................    23
          (B) ORGANIZATION, STANDING AND AUTHORITY.......................    23
          (C) SHARES.....................................................    24

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       (D) CBI AND HBI SUBSIDIARIES...................................    24
       (E) CORPORATE POWER............................................    24
       (F) CORPORATE AUTHORITY........................................    24
       (G) NO DEFAULTS................................................    24
       (H) HBI FINANCIAL REPORTS......................................    25
       (J) NO EVENTS..................................................    25
       (K) LITIGATION; REGULATORY ACTION..............................    25
ARTICLE V. COVENANTS..................................................    25
   5.1 BEST EFFORTS...................................................    25
   5.2 CORPORATE ACTIONS..............................................    26
       (A) THE PROXY..................................................    26
       (B) HBI AMENDMENT..............................................    26
       (C) BEST EFFORTS...............................................    26
   5.3 SECURITIES LAW COMPLIANCE......................................    26
   5.4 PRESS RELEASES.................................................    26
   5.5 ACCESS; INFORMATION............................................    26
   5.6 SOLE AGREEMENT TO SELL.........................................    27
   5.7 HBI COMMON STOCK ADJUSTMENTS...................................    27
   5.8 STATE TAKEOVER LAW.............................................    28
   5.9 NO RIGHTS TRIGGERED............................................    28
   5.10 REGULATORY APPLICATIONS.......................................    28
   5.11 REGULATORY DIVESTITURES.......................................    28
   5.12 CURRENT INFORMATION...........................................    28
   5.13 DIRECTOR AND OFFICER LIABILITY INSURANCE......................    28
ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER..................    29
   6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS.........................    29
   6.2 CONDITIONS TO OBLIGATIONS OF CBI AND HBI.......................    30
   6.3 CONDITIONS TO OBLIGATIONS OF CFG...............................    32
ARTICLE VII. TERMINATION..............................................    32
   7.1 TERMINATION UPON CERTAIN CONDITIONS............................    32
   7.2 TERMINATION FOR BREACH.........................................    33
ARTICLE VIII. OTHER MATTERS...........................................    33
   8.1 SURVIVAL.......................................................    33
   8.2 WAIVER; AMENDMENT..............................................    33
   8.3 COUNTERPARTS...................................................    33
   8.4 GOVERNING LAW..................................................    33
   8.5 EXPENSES.......................................................    34
   8.6 CONFIDENTIALITY................................................    34
   8.7 NOTICES........................................................    34
   8.8 TIME IS OF THE ESSENCE.........................................    34
   8.9 ASSIGNMENT.....................................................    35
   8.10 BINDING EFFECT................................................    35
   8.11 SEVERABILITY..................................................    35

-ii-

      8.12 ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES............    35
      8.13 ENFORCEMENT PROCEEDINGS.......................................    35
      8.14 BENEFIT PLANS.................................................    35
      8.15 HEADINGS......................................................    35

EXHIBITS.................................................................     1

APPENDIX I...............................................................     1

-iii-

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of the 30th day of July, 2003 (this "Agreement" or "Plan"), is by and among CB BANCORP, INC. ("CBI"), an Arkansas corporation, HOME BANCSHARES, INC. ("HBI"), an Arkansas corporation, and COMMUNITY FINANCIAL GROUP, INC. ("CFG"), an Arkansas corporation.

RECITALS

(A) CFG. CFG is a corporation duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in Cabot, Arkansas. CFG is a registered bank holding company under the Bank Holding Company Act of 1956, as amended. As of the date of this Plan, CFG has 1,000,000 authorized shares of common stock, $.25 par value ("CFG Common Stock"), of which 724,033 shares of CFG Common Stock are issued and outstanding (no other class of capital stock being authorized). As of June 30, 2003, CFG had capital of $27,731,897, divided into common stock of $231,260, comprehensive income/surplus of $5,145,154, and retained earnings of $22,355,483. As of the date of this Plan, CFG has 70,000 shares of CFG Common Stock reserved for issuance under a Non-Qualified stock Option Plan pursuant to which options covering 9,359 shares of CFG Common Stock are issued and outstanding as provided in Section 2.7 herein.

(B) COMMUNITY BANK. Community Bank ("CB") is an Arkansas state bank duly organized and existing in good standing under the laws of the State of Arkansas. As of the date of this Plan, CB has 25,000 authorized shares of common stock, $25.00 par value per share ("CB Common Stock") (no other class of capital stock being authorized), of which 25,000 shares of CB Common Stock are issued and outstanding. All of the issued and outstanding shares of CB Common Stock are owned by CFG, the sole shareholder of CB.

(C) CBI. CBI is a newly formed corporation, duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in Conway, Arkansas. CBI is a subsidiary of HBI, which will own 80% of the issued and outstanding shares of CBI. The remaining 20% of the issued and outstanding shares of CBI will be owned by TCBancorp, Inc. Upon approval by the Federal Reserve Board (hereafter defined), CBI will be a registered bank holding company, under the Arkansas Banking Code of 1997, as amended. As of the date of this Plan, CBI has 3,000,000 authorized shares of common stock, $.01 par value ("CBI Common Stock"), of which five (5) shares of CBI Common Stock are issued and outstanding (no other class of capital stock being authorized).

(D) HBI. HBI is a corporation duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in Conway, Arkansas. HBI is a financial holding company subject to regulation by the Federal Reserve Board. As of June 20, 2003, HBI had Capital of $48,379,335, divided into common stock of $1,863,732, comprehensive income/surplus of $39,527,270, and retained earnings of $6,988,333. As of the date of this Plan, HBI has 3,000,000 authorized shares of common stock, $1.00 par value per share ("HBI Common Stock"), of which 1,863,732 shares of HBI Common Stock are issued and outstanding (no other class of capital stock being authorized). This Agreement contemplates that HBI will amend its Articles of Incorporation to authorize preferred stock to be issued in the Merger, as defined herein.

(E) FIRST STATE BANK. First State Bank of Conway ("FSB"), a wholly owned subsidiary of HBI, is a banking corporation duly organized and existing in good standing under the laws of the State of Arkansas.

(F) APPROVALS. At meetings of the respective Boards of Directors of CFG, CBI, and HBI, each such Board has approved and authorized the execution of this Plan in counterparts.

In consideration of their mutual promises and obligations, the Parties further agree as follows:

DEFINITIONS

(A) DEFINITIONS. Capitalized terms used in this Plan have the following meanings:

"ACA" means the Arkansas Code Annotated, as amended.

"Affiliate" means, with respect to any Person, any other Person that, directly or indirectly, through one or more intermediaries, Controls, is Controlled by, or is under common Control with such Person.

"Appraisal Laws" means ACA Section 4-26-1007.

"Arkansas Business Corporation Laws" means (1) as to CFG, ACA Section 4-26-101, et seq., and (2) as to CBI and HBI, ACA Section 4-27-101, et seq.

"Arkansas Resident" means:

(1) A corporation, partnership, trust or other form of business organization which has a principal office within the State of Arkansas on the Effective Date of the Plan.

(2) An individual who principal residence is in the State of Arkansas on the Effective Date of the Plan.

(3) A corporation, partnership, trust or other form of business organization which is organized for the specific purpose of acquiring part of an issue offered pursuant to this Plan, of which all of the beneficial owners of such organization are residents of the State of Arkansas on the Effective Date of the Plan.

"Asset Classification" has the meaning assigned to such term in Section 4.1(U).

"Business Day" means any day other than a Saturday, Sunday, or a day on which FSB is not open for business.

"Capital" means capital stock, surplus and retained earnings determined in accordance with GAAP. Unrealized gains or losses in investment securities will be included when determining Capital.

"Cash Consideration" means the amount of cash the holders of Eligible CFG Common Stock will receive pursuant to Article II.

"CB Common Stock" has the meaning assigned to such term in paragraph (B) of the Recitals.

"CBI" means CB Bancorp, Inc., an Arkansas corporation.

"CFG" means Community Financial Group, Inc., an Arkansas corporation and registered bank holding company.

"CFG Common Stock" has the meaning assigned to such term in paragraph (A) of the Recitals.

"CFG Option" has the meaning assigned to such term in Section 2.7.

"Code" has the meaning assigned to such term in Section 4.1 (R)(2).

"Compensation and Benefit Plans" has the meaning assigned to such term in
Section 4.1(R)(1).

"Control" with respect to any Person means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of such Person, whether through the ownership of voting interests, by contract, or otherwise.

"Derivatives Contract" means an exchange-traded or over-the-counter swap, forward, future, option, cap, floor or collar financial contract or any other contract that (1) is not included on the balance sheet of the Financial Reports of CFG, and (2) is a derivative contract (including various combinations thereof).

"Dissenting Share" has the meaning assigned to such term in Section 1.3.

"Effective Date" has the meaning assigned to such term in Section 1.4.

"Eligible CFG Common Stock" means shares of CFG Common Stock other than Exception Shares and Dissenting Shares.

"Environmental Law" means (1) any federal, state, and/or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any governmental entity, relating to (a) the protection, preservation or restoration of the environment (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource) or to human health or safety, or (b) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Material, in each case as amended and as now in effect, including the Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, and (2) any common law or equitable doctrine (including injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Material.

"ERISA" has the meaning assigned to such term in Section 4.1(R)(2).

"ERISA Affiliate" has the meaning assigned to such term in Section 4.1(R)(3).

"ERISA Plans" has the meaning assigned to such term in Section 4.1(R)(2).

"Exception Shares" has the meaning ascribed to such term in Section 2.1(B).

"Exchange Agent" means Firstrust Financial Services, Inc., an Arkansas corporation whose principal address is 2716 Lakewood Village Place, North Little Rock, Arkansas, 72116.

"Expiration Date" has the meaning assigned to such term in Section 2.2(A)(2).

"FDIC" means the Federal Deposit Insurance Corporation.

"Financial Reports" (1) as to CFG and HBI, means the audited consolidated balance sheets as of December 31, 2001 and December 31, 2002 and the related statements of income, changes in shareholders' equity and cash flows for the fiscal years ended December 31, 2001 and December 31, 2002, and the unaudited consolidated balance sheet as of June 30, 2003 and the related statements of income, changes in shareholders' equity and cash flows for the period ended June 30, 2003; and (2) as to CB means its call reports for the fiscal years ended December 31, 2001 and December 31, 2002 and for the period ending June 30, 2003, and all other financial reports filed or to be filed subsequent to June 30, 2003, in the form filed with the Federal Reserve Board, FDIC and the Arkansas State Bank Department

"Federal Reserve Board" means the Board of Governors of the Federal Reserve System.

"GAAP" means generally accepted accounting principles consistently applied.

"Hazardous Material' means any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law, whether by type or quantity, including any oil or other petroleum product, toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste or petroleum or any derivative or by-product thereof, radon, radioactive material, asbestos, asbestos containing material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.

"HBI" means Home Bancshares, Inc., an Arkansas corporation and registered financial holding company.

"HBI Common Stock" has the meaning assigned to such term in paragraph (D) of the Recitals.

"HBI Option" has the meaning assigned to such term in Section 2.7.

"HBI Preferred Stock" means the convertible preferred stock to be issued by HBI and exchanged pursuant to Section 2.1(B) and as described in Appendix I.

"HBI Transaction" means: (1) a merger, consolidation or similar transaction involving HBI, where HBI is not the corporation surviving such transaction or where a change of Control of HBI is otherwise effected, (2) the disposition, by sale, lease, exchange or otherwise, of assets or deposits of HBI or any of its significant subsidiaries representing in either case 25 percent or more of the consolidated assets or deposits of HBI and its Subsidiaries, or (3) the issuance, sale or other disposition (including by way of merger, consolidation, share exchange or any similar transaction) of securities representing 25 percent or

more of the voting power of HBI or any of its significant subsidiaries other than the issuance of HBI Common Stock upon the exercise of then outstanding options or the conversion of then outstanding convertible securities of HBI.

"Insured Depository Institution" has the meaning given it in the Federal Deposit Insurance Act, as amended, and applicable regulations under such statute.

"Intellectual Property Rights" has the meaning given such term in Section 4.1(L).

"Knowledge" (and "Know" or "Known") means the best knowledge of the Chairman, Chief Executive Officer, Chief Financial Officer, and Chief Lending Officer of the entity, after reasonable due diligence, inquiry, or investigation.

"Liability" means any debts, liabilities, obligations and contracts of the Party, whether the same shall be matured or un-matured; whether accrued, absolute, contingent or otherwise.

"Loan/Fiduciary Property" means any property owned or Controlled by CFG or any of its Subsidiaries or in which CFG or any of its Subsidiaries holds a security or other interest, and, where required by the context, includes any such property where CFG or any of its Subsidiaries constitutes the owner or operator of such property, but only with respect to such property.

"Mailing Date" has the meaning assigned to such term in Section 2.2.

"Material means, with respect to any Party, an event, occurrence or circumstance (including (i) the making of any provisions for possible loan and lease losses, write-downs of other real estate owned and taxes, and (ii) any breach of a representation or warranty contained in this Plan by such Party) that (a) has or is reasonably likely to have a material adverse effect on or constitute a material adverse change in the financial condition, results of operations, business, future operations, or prospects of such Party or, as applicable, its Subsidiaries, or (b) would impair such Party's ability to perform its obligations under this Plan or the consummation of any of the transactions contemplated by this Plan. With respect to CFG, any such event, occurrence or circumstance that has been previously approved by CBI and HBI shall not be deemed material.

"Merger" means the merger of CFG with and into CBI, as described in Section 1.1.

"Merger Consideration" means the HBI Preferred Stock and/or the Cash Consideration a holder of Eligible CFG Common Stock will receive pursuant to Article II.

"Mixed Consideration" has the meaning assigned to such term in Section 2.1(B).

"Multiemployer Plans" has the meaning assigned to such term in Section 4.1(R)(2).

"Participation Facility" means any facility in which CFG or any of its Subsidiaries participates in the management and, where required by the context, includes the owner or operator of such facility.

"Party" means a party to this Plan.

"Pension Plan" has the meaning assigned to such term in Section 4.1(R)(2).

"Per Share Cash Consideration" means the amount of Cash Consideration paid for each share of Eligible CFG Common Stock pursuant to Article II.

"Person" means any individual, corporation (including any non-profit corporation), general or limited partnership, limited liability company, joint venture, estate, trust, association, organization, labor union, governmental body, or other entity.

"Plan" means this Agreement and Plan of Merger, together with all Exhibits and Schedules annexed to, and incorporated by specific reference, as a part of this Plan.

"Preliminary Calculation" has the meaning assigned to such term in Section 2.2(B)(1).

"Proxy Statement" has the meaning assigned to such term in Section 5.2(A).

"Qualified Arkansas Resident" means an Arkansas Resident who provides evidence of that fact in the manner set forth in Section 2.2.

"Regulatory Authorities" means federal or state governmental agencies, authorities or departments (1) charged with the supervision or regulation of depository institutions or (2) engaged in the insurance of deposits.

"Requesting CFG Shareholders" has the meaning assigned to such term in
Section 2.1(B).

"Requested Consideration" has the meaning assigned to such term in Section 2.2(A)(1).

"Required Percentage" has the meaning assigned to such term in Section 2.1(B).

"Rights" means securities or obligations convertible into or exchangeable for, or giving any Person any right to subscribe for or acquire, or any options, calls or commitments relating to, shares of capital stock.

"Rule 147" means Rule 147 promulgated under the Securities Act.

"Securities Act" means the Securities Act of 1933, as amended, together with the rules and regulations promulgated under such statute.

"Stock Conversion Ratio" has the meaning assigned to such term in Section 2.1(B).

"Subsidiary" means, with respect to any entity, each partnership, limited liability company, or corporation the majority of the outstanding partnership interests, membership interests, capital stock or voting power of which is (or upon the exercise of all outstanding warrants, options and other rights would be) owned, directly or indirectly, at the time in question by such entity.

"Surviving Corporation" has the meaning assigned to such term in Section 1.1(A).

"Tax Returns" has the meaning assigned to such term in Section 4.1(BB).

imposed on the income, properties or operations of the respective Party or its Subsidiaries, together with any interest, additions, or penalties with respect thereto and any interest in respect of such additions or penalties.

"Termination Date" has the meaning assigned to such term in Section 5.1.

"Transmittal Form" has the meaning assigned to such term in Section 2.2.

(B) GENERAL INTERPRETATION. Except as otherwise expressly provided in this Plan or unless the context clearly requires otherwise, the terms defined in this Plan include the plural as well as the singular; the words "hereof," "herein," "hereunder," "in this Plan" and other words of similar import refer to this Plan as a whole and not to any particular Article, Section or other subdivision; and references in this Plan to Articles, Sections, Schedules, and Exhibits refer to Articles and Sections of and Schedules and Exhibits to this Plan. Unless otherwise stated, references to Subsections refer to the Subsections of the
Section in which the reference appears. All pronouns used in this Plan include the masculine, feminine and neuter gender, as the context requires. All accounting terms used in this Plan that are not expressly defined in this Plan have the respective meanings given to them in accordance with GAAP.

ARTICLE I. MERGER

1.1 THE MERGER. Subject to the provisions of this Plan, on the Effective Date:

(A) SURVIVING CORPORATION. In accordance with the applicable provisions of the Arkansas Business Corporation Law, CFG shall be merged with and into CBI pursuant to the terms and conditions of this Plan and pursuant to the Articles of Merger substantially in the form of Exhibit A. Upon consummation of the Merger, the separate existence of CFG shall cease and CBI shall continue as the Surviving Corporation under the corporate name it possesses immediately prior to the Effective Date.

(B) ARTICLES, BYLAWS, DIRECTORS, OFFICERS. The Articles of Incorporation and Bylaws of the Surviving Corporation shall be those of CBI, as in effect immediately prior to the Merger becoming effective. The directors and officers of CBI in office immediately prior to the Merger becoming effective shall be the directors and officers of the Surviving Corporation, together with such additional directors and officers as may thereafter be elected, who shall hold office until such time as their successors are elected and qualified.

(C) EFFECT OF THE MERGER. On the Effective Date, the effect of the Merger shall be that (1) the Surviving Corporation shall possess all of the rights, privileges, immunities and franchises, of a public as well as of a private nature, of each of the corporations so merged; (2) all property, real, personal and mixed, and all debts due on whatever account, and all and every other interest, of or belonging to or due to each of the corporations so merged, shall be deemed to be transferred to and vested in the Surviving Corporation without further act or deed and the title to any real estate or any interest therein, vested in each of such institutions, shall not revert or be in any way impaired by reason of the Merger; and (3) the Surviving Corporation shall be liable for all Liabilities of CFG as well as those of CBI whether or not reflected or reserved against in the balance sheets, other financial statements, books of account or records of CFG or CBI, in the same manner as if the Surviving Corporation had itself incurred such Liabilities or obligations; but the Liabilities of CFG and CBI, or of their shareholders,

directors, or officers, shall not be affected, nor shall the rights of the creditors thereof, or of any Persons dealing with such corporations be impaired by the Merger, and any claims existing, or action or proceeding pending, by or against either CFG or CBI may be prosecuted to judgment as if the Merger had not taken place, or the Surviving Corporation may be proceeded against, or substituted, in place of CFG or CBI.

1.2 CONTINUATION OF BANKS. FSB shall continue as a separate bank immediately after the Merger as wholly-owned subsidiaries of HBI, subject to further determination by the Board of Directors of HBI. CB shall continue as a separate bank immediately after the Merger as a wholly-owned subsidiary of CBI, subject to further determination by the Board of Directors of CBI.

1.3 DISSENTING SHARES. Notwithstanding anything to the contrary in this Plan, each Dissenting Share shall not be converted into a right to receive the Merger Consideration, but the holder of such Dissenting Share shall be entitled only to such rights as are granted by the Appraisal Laws, unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost the right to payment under the Appraisal Laws, in which case each such share shall be deemed to have been converted at the Effective Date into the right to receive the Merger Consideration. Each holder of Dissenting Shares who becomes entitled to payment for his CFG Common Stock pursuant to the provisions of the Appraisal Laws shall receive payment for such Dissenting Shares from CBI (but only after the amount thereof shall have been agreed upon or finally determined pursuant to the Appraisal Laws).

1.4 EFFECTIVE DATE. Unless the Parties agree upon another date, the "Effective Date" will be the tenth Business Day after the fulfillment or waiver of each condition precedent set forth in, and the granting of each approval (and expiration of any waiting period) required by, ARTICLE VI. If the Merger is not consummated in accordance with this Plan on or prior to the Termination Date, CFG or HBI may terminate this Plan in accordance with ARTICLE VII. On the Effective Date, Articles of Merger will be filed with the Secretary of State of the State of Arkansas in accordance with applicable law.

ARTICLE II. CONSIDERATION

2.1 MERGER CONSIDERATION. At the Effective Date, without any action on the part of CBI, CFG, or the holder of any of the shares of common stock of CFG, the Merger shall be effected in accordance with the following terms:

(A) All shares of CFG Common Stock owned directly by CFG (including treasury shares), CBI, HBI, or any of their subsidiaries (in each case other than shares in trust accounts or in an another fiduciary capacity, managed accounts and the like or shares held in satisfaction of a debt previously contracted) shall be cancelled and retired and shall not represent capital stock of the Surviving Company and shall not be exchanged for Merger Consideration or any other consideration.

(B) The total Merger Consideration to be paid to holders of Eligible CFG Common Stock is $43,000,000 (representing $58.51 per share for each share of CFG Common Stock Outstanding as of the date hereof), less an amount equal to $58.51 multiplied by the number of Exception Shares and Dissenting Shares. Only Cash Consideration shall be paid, and no shares of HBI Preferred Stock shall be issued, to any holders of CFG Common Stock who are not Qualified Arkansas Residents. For holders of Eligible CFG Common Stock who are Qualifying Arkansas Residents, the Merger Consideration payable to them shall be an amount of HBI Preferred Stock and Cash Consideration sufficient to make the

percentage of HBI Preferred Stock issued as part of the Merger Consideration to Qualified Arkansas Residents equal to 51% of the total Merger Consideration (the "Required Percentage"). HBI agrees to issue sufficient shares of HBI Preferred Stock to equal the Required Percentage. The remainder of the Merger Consideration payable to Qualified Arkansas Residents shall be Cash Consideration. All cash paid by CBI pursuant to this Article II shall be paid by cashier's checks issued by FSB.

The Merger Consideration payable to the holders of Eligible CFG Common Stock who are not Qualified Arkansas Residents shall be Per Share Cash Consideration of $58.51 per share of Eligible CFG Common Stock owned by them.

Holders of Eligible CFG Common Stock who are Qualified Arkansas Residents and who wish to have their Merger Consideration be either all shares of HBI Preferred Stock or all Cash Consideration or such combination of HBI Preferred Stock and Cash Consideration (the "Mixed Consideration) as the holder requests (the "Requesting CFG Shareholders") shall make such written request pursuant to and be subject to the allocation procedures set forth in Section 2.2.

The HBI Preferred Stock shall have a value for Stock Conversation Ratio purposes of Ten Dollars ($10) per share. When HBI Preferred Stock is to be issued to a Qualified Arkansas Resident, they shall be entitled to receive the number of whole shares of HBI Preferred Stock equal to the product of 5.851 times the number of shares of Eligible CFG Common Stock held by such Person times the percentage of HBI Preferred Stock allocated to that Person as part of the Merger Consideration pursuant to Section 2.2(B) (the "Stock Conversion Ratio").

The HBI Preferred Stock to be issued hereunder shall have the characteristics and requirements as set forth in Appendix I.

Notwithstanding any other provision herein, in the event the Effective Date is more than one hundred twenty (120) days after the Effective Date, interest at the rate of two percent (2%) per annum for the period from such 120th day until the Effective Date shall be added to the total Merger Consideration provided for herein with a pro rata adjustment of the Merger Consideration, the Per Share Cash Consideration and the Stock Conversion Ratio.

(C) Each Dissenting Share shall not be converted into or represent a right to receive the Merger Consideration, and the holder thereof shall be entitled only to such rights as are granted by the Appraisal Laws. CFG shall give CBI prompt notice upon receipt by CFG of any such demands for payment of the fair value of such shares of CFG Common Stock and of withdrawals of such notice and any other instruments provided pursuant to applicable law (any shareholder duly making such demand being hereinafter called a "Dissenting Shareholder"). CFG shall not make any payment or offer to settle any such demand or waive any failure by a Dissenting Shareholder of a requirement of the Appraisal Laws. All actions taken in respect of Dissenting Shares shall be taken by the Surviving Company.

(D) If at or prior to the Effective Date any Dissenting Shareholder shall effectively withdraw or lose (through failure to perfect or otherwise) his right to such payment, such holder's shares of CFG Common Stock shall be converted into a right to receive Merger Consideration in accordance with the applicable provisions of this Agreement. If such holder shall effectively withdraw or lose (through failure to perfect or otherwise) his right to such payment after the Effective Date, each share of CFG Common Stock of such holder shall be converted on a share-by-share basis into the right to receive the Per Share Cash Consideration.

2.2 TRANSMITTAL AND ALLOCATION PROCEDURES.

(A) TRANSMITTAL PROCEDURES.

(1) A form (the 'Transmittal Form") shall be mailed (the "Mailing Date") as soon as reasonably practicable after the Effective Date to each holder of Eligible CFG Common Stock of record as of the Effective Date. The Transmittal Form shall request a holder of Eligible CFG Common Stock to evidence that they are or are not Arkansas Residents, that they are aware of the requirements of Rule 147 concerning restrictions on transferability and to agree to the restrictions contained in the Transmittal Form. The Transmittal Form shall contain applicable instructions on transmittal of the holder's Eligible CFG Common Stock and shall contain a section in which a Qualified Arkansas Resident, may request that such holder receive only HBI Preferred Stock, or only Cash Consideration, or the Mixed Consideration (the "Requested Consideration").

(2) Any holder of Eligible CFG Common Stock who does not submit an effective, properly completed Transmittal Form to the Exchange Agent evidencing they are a Qualified Arkansas Resident, accompanied by one or more certificates (or such affidavits and indemnification satisfactory to the Exchange Agent regarding the loss or destruction of such certificates) representing all CFG Common Stock covered by such Transmittal Form, together with all other applicable transmittal materials, within thirty
(30) days of the Mailing Date (the "Expiration Date") shall receive only the Per Share Cash Consideration (without interest thereon) for their shares of Eligible CFG Common Stock upon surrender of the certificates of CFG Common Stock in the manner required by the Exchange Agent. Any Merger Consideration into which shares of such shareholder's CFG Common Stock are converted on the Effective Date, any fractional share checks that such shareholder shall be entitled to receive and any dividends paid on such shares of HBI Preferred Stock for which the record date for determination of shareholders entitled to such dividends is on or after the Effective Date, will be delivered to such shareholder only upon delivery to the Exchange Agent of the certificates representing all of such shares of Eligible CFG Common Stock (or indemnity satisfactory to the Exchange Agent, in its judgment, if any of such certificates are lost, stolen or destroyed). No interest will be paid on the Per Share Cash Consideration or any such fractional shares checks or dividends to which the holder of such shares shall be entitled to receive upon such delivery. Once submitted, the Transmittal Form is irrevocable. Neither CBI, HBI nor the Exchange Agent shall be under any obligation to notify any person of any defect in a Transmittal Form.

(B) ALLOCATION PROCEDURES. As soon as reasonably practicable after the Expiration Date, the Exchange Agent shall determine the number of shares of Eligible CFG Common Stock owned by Qualified Arkansas Residents, the number of other shares of Eligible CFG Common Stock and the number of shares of Qualified Arkansas Residents who requested either all HBI Preferred Stock or all Cash Consideration or a Mixed Consideration for their Merger Consideration. CBI and HBI shall cause the Exchange Agent to allocate the Merger Consideration among the holders of Eligible CFG Common Stock, which shall be effected by the Exchange Agent as follows:

(1) If after giving effect to the shares of Eligible CFG Common Stock owned by Qualified Arkansas Residents and the Requested Consideration (the "Preliminary Calculation"), the amount of shares of HBI Preferred Stock to be issued as part of the Merger Consideration does not equal or exceed the Required Percentage, then the requests for all Per

Share Cash Consideration and all requests for Mixed Consideration shall be disregarded by the Exchange Agent, the requests for all HBI Preferred Stock shall be given effect and the percentage of Merger Consideration that is Cash Consideration given to each Qualified Arkansas Resident shall be reduced on a pro rata basis and the HBI Preferred Stock shall be increased on a pro rata basis by such amount sufficient to cause the amount of HBI Preferred Stock issued as part of the Merger Consideration to equal the Required Percentage.

(2) If after the Preliminary Calculation, the amount of HBI Preferred Stock to be issued as part of the Merger Consideration equals the Required Percentage, the Requested Consideration shall be given effect.

(3) If after the Preliminary Calculation, the amount of HBI Preferred Stock to be issued as part of the Merger Consideration exceeds the Required Percentage, then the requests for all Cash Consideration shall be given effect and the percentage of Merger Consideration that is Cash Consideration given to each Qualified Arkansas Resident shall be increased on a pro rata basis and the requests for HBI Preferred Stock shall be reduced on a pro rata basis to equal the Required Percentage.

2.3 FRACTIONAL SHARES. Notwithstanding any other provision of this Plan, no fractional shares of HBI Preferred Stock and no certificates, scrip or other evidence of ownership of fractional shares will be issued in the Merger. HBI shall pay to each holder of CFG Common Stock who would otherwise be entitled to a fractional share of HBI Preferred Stock an amount in cash determined by multiplying such fraction by $58.51. No such holder shall be entitled to dividends, interest, or any other rights in respect to such fractional shares.

2.4 SHAREHOLDER RIGHTS; STOCK TRANSFERS. On the Effective Date, holders of CFG Common Stock shall cease to be, and shall have no rights as, shareholders of CFG, other than to receive the consideration provided under this ARTICLE II. After the Effective Date, there shall be no transfers on the stock transfer books of CFG or the Surviving Corporation of the shares of CFG Common Stock that were issued and outstanding immediately prior to the Effective Date.

2.5 EXCEPTION SHARES. Each of the Exception Shares of CFG Common Stock shall be canceled and retired upon consummation of the Merger, and no Merger Consideration shall be issued in exchange therefor.

2.6 RESERVATION OF RIGHT TO REVISE TRANSACTION. In its sole discretion, and notwithstanding any other provision in this Plan to the contrary, HBI may at any time change the method of effecting its acquisition of CFG; provided, however, that (A) no such change shall alter or change the amount or kind of consideration to be generally issued to holders of CFG Common Stock as provided for in this Plan, provided that the total Merger Consideration set forth in
Section 2.1(B) is not reduced, (B) no such change shall adversely affect the tax treatment to CFG shareholders as a result of receiving such consideration, and
(C) no delay caused by such a change shall be the basis upon which CBI terminates this Plan pursuant to Section 7.1(C). If CBI elects to change the method of acquisition, CFG will cooperate with and assist CBI with any necessary amendment to this Plan, and with the preparation and filing of such applications, documents, instruments and notices as may be necessary or desirable, in the opinion of counsel for CBI, to obtain all necessary shareholder approvals and approvals of any regulatory agency, administrative body or other governmental entity.

2.7 OPTIONS. On the Effective Date, by virtue of the Merger and without any action on the part of any holder of an option, each outstanding option granted by CFG to purchase shares of CFG Common Stock ("CFG Option") that is then outstanding and unexercised shall immediately and automatically be fully vested and converted into and become an option to purchase HBI Preferred Stock ("HBI Option") on the same terms and conditions as are in effect with respect to CFG Option immediately prior to the Effective Date, except that (A) each such HBI Option may be exercised solely for shares of HBI Preferred Stock, (B) the number of shares of HBI Preferred Stock subject to such HBI Option shall be equal to the number of shares of CFG Common Stock subject to such CFG Option immediately prior to the Effective Date multiplied by 5.851, the product being rounded, if necessary, up or down to the nearest whole share, and (C) the per share exercise price under each such HBI Option shall be adjusted by dividing the per share exercise price of CFG Option by 5.851, and rounding up or down to the nearest cent. The number of shares of CFG Common Stock that are issuable upon exercise of CFG Options as of the date of this Plan and the names of the holders of CFG Options are disclosed in Schedule 2.7.

ARTICLE III. ACTIONS PENDING CONSUMMATION

Unless CBI otherwise agrees in writing, CFG and all of CFG's Subsidiaries shall conduct their respective business in the ordinary and usual course consistent with past practice and shall use its best efforts to maintain and preserve its, and as to CFG each of its Subsidiaries', business organization, employees and advantageous business relationships and retain the services of its, and as to CFG each of its Subsidiaries', officers and key employees identified by CBI, and neither CFG nor CB, without the prior written consent of CBI, will (or cause or allow any of it Subsidiaries to):

3.1 CAPITAL STOCK. Except for the exercise of outstanding CFG Options, or as disclosed in Schedule 4.1(C), issue, sell or otherwise permit to become outstanding any additional shares of capital stock of CFG, CB or any of their Subsidiaries, or any Rights with respect thereto, or enter into any agreement with respect to the foregoing, or permit any additional shares of CFG Common Stock to become subject to grants of employee stock options, stock appreciation rights or similar stock-based employee compensation rights.

3.2 DIVIDENDS,;ETC. Make, declare or pay any dividend on or in respect of, or declare or make any distribution on, or directly or indirectly combine, split, subdivide, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock or, other than as permitted in or contemplated by this Plan, authorize the creation or issuance of, or issue, any additional shares of its capital stock or any Rights with respect thereto.

3.3 INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary course of business consistent with past practice, incur any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an accommodation become responsible or liable for the obligations of any other individual, corporation or other entity.

3.4 LINE OF BUSINESS; OPERATING PROCEDURES; ETC. Except as may be directed by any regulatory agency: (A) change its lending, investment, liability management or other Material banking policies in any Material respect, or (B) commit to incur any further capital expenditures beyond those disclosed in Schedule 3.4 or incurred in the ordinary course of business and not exceeding $15,000 individually or $25,000 in the aggregate.

3.5 LIENS AND ENCUMBRANCES. Subject any of their assets to a lien, charge, or encumbrance (including mortgage, pledge or security interest), or permit any such lien, charge or encumbrance to exist.

3.6 COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as disclosed in Schedule 3.6, enter into or amend any employment, severance or similar agreement or arrangement with any of its directors, officers or employees, or grant any salary or wage increase, amend the terms of any CFG Option or increase any employee benefit (including incentive or bonus payments), except normal individual increases in regular compensation to employees in the ordinary course of business consistent with past practice; provided, however, that no increase of salary or compensation to an officer of CFG shall be made without the approval of CBI.

3.7 BENEFIT PLANS. Except as disclosed in Schedule 3.7, enter into or modify (except as may be required by applicable law) any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement related thereto, in respect of any of its directors, officers or other employees, including taking any action that accelerates the vesting or exercise of any benefits payable thereunder.

3.8 CONTINUANCE OF BUSINESS. Dispose of or discontinue any portion of its assets, business or properties, that is in excess of $25,000 individually or $100,000 in the aggregate, or merge or consolidate with, or acquire all or any portion of, the business or property of any other entity (except foreclosures or acquisitions by CB in its fiduciary capacity, in each case in the ordinary course of business consistent with past practice).

3.9 AMENDMENTS. Amend its Articles of Incorporation or Bylaws.

3.10 CLAIMS. Settle any claim, litigation, action or proceeding involving any Liability for money damages in excess of $25,000 or Material restrictions upon the operations of CFG or any of its Subsidiaries.

3.11 CONTRACTS. Except as disclosed on Schedule 3.11, enter into, renew, terminate or make any change in any contract, agreement or lease (excluding agreements and loans permitted under Section 3.12) of a value or requiring payments during the life of the contract, agreement or lease, including all options, in excess of $25,000, except in the ordinary course of business consistent with past practice with respect to contracts, agreements and leases that are terminable by it without penalty on no more than 60 days prior written notice.

3.12 LOANS. Extend credit or account for loans and leases other than in accordance with existing written lending policies and accounting practices, except that CB shall not, without the prior notice and consultation with FSB's Chief Executive Officer or Chief Credit Administrator make any new loan or renew any existing loan in a principal amount in excess of $250,000.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

4.1 CFG REPRESENTATIONS AND WARRANTIES. CFG and CFG on behalf of CB hereby represents and warrants to CBI, now and as of the Effective Date, as follows:

(A) RECITALS. The facts set forth in the recitals of this plan with respect to CFG and its Subsidiaries are true and correct.

(B) ORGANIZATION, STANDING AND AUTHORITY. Each of CFG, CB, and any other Subsidiary of CFG is duly qualified to do business and is in good standing in the States of the United States and foreign jurisdictions where the failure to be duly qualified, individually or in the aggregate, is reasonably likely to have a Material effect on it. All of such jurisdictions are set forth on Schedule 4.1(B). Each of CFG and CB, and any other Subsidiary of CFG has in effect all federal state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted. CB is the only Subsidiary of CFG that is an Insured Depository Institution, and its deposits are insured by the Bank Insurance Fund of the FDIC. Except as disclosed in Schedule 4.1(B), CB is not subject to any orders, resolutions, commitments, agreements, undertakings, understandings, or consents that affect its status as such Insured Depository Institution.

(C) SHARES. The outstanding shares of CFG and its Subsidiaries' capital stock are validly issued and outstanding, fully paid and non-assessable, and subject to no preemptive rights. Except as disclosed in Schedule 4.1(C), there are no shares of capital stock or other equity securities of CFG or its Subsidiaries outstanding and no outstanding Rights with respect thereto.

(D) CFG SUBSIDIARIES. CFG has disclosed in Schedule 4.1(D) a list of all of its Subsidiaries, and the number of authorized, issued, and outstanding shares of each class of stock and the percentages of ownership of CFG or a CFG Subsidiary. No equity securities of any of its Subsidiaries are or may become required to be issued (other than to CFG or one of its Subsidiaries) by reason of any Rights with respect thereto. There are no contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise issue any shares of such Subsidiary's capital stock, and there are no contracts, commitments, understandings or arrangements relating to the rights of CFG or its Subsidiaries, as applicable, to vote or to dispose of such shares. All of the shares of capital stock of each of its Subsidiaries held by CFG or one of its Subsidiaries are fully paid and non-assessable and are owned by CFG or one of its Subsidiaries free and clear of any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance. Each of its Subsidiaries is in good standing under the laws of the jurisdiction in which it is incorporated or organized, and is duly qualified to do business and in good standing in the jurisdictions where the failure to be duly qualified is reasonably likely, individually or in the aggregate, to have a Material effect on it. All of such jurisdictions are set forth on Schedule 4.1(D). Except as disclosed in Schedule 4.1(D). CFG does not own beneficially, directly or indirectly, any shares of any equity securities or similar interests of any corporation, bank, partnership, joint venture, business trust, association or other organization.

(E) CORPORATE POWER. Each of CFG and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its Material properties and assets.

(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval by its shareholders referred to in Section 6.1, this Plan has been authorized by all necessary corporate action of CFG and this Plan is a valid and binding agreement of CFG, enforceable against CFG in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(G) NO DEFAULTS. Subject to the approval by its shareholders referred to in Section 6.1, the required regulatory approvals referred to in Section 6.1, and the required filings under federal and state securities laws, and except as disclosed in Schedule 4.1(G), the execution, delivery and performance of this Plan and the consummation by CFG do not and will not Materially (1) constitute a breach of, or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of CFG or of any of its Subsidiaries or to which CFG or any of its Subsidiaries or its or their properties is subject or bound, or (2) constitute a breach of, or violation of, or a default under, the Articles of Incorporation, Charter or Bylaws of it or any of its Subsidiaries, or (3) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license or the consent or approval of any other party to any such agreement, indenture or instrument.

(H) CFG FINANCIAL REPORTS. Except as disclosed in Schedule 4.1(H): (a)
the Financial Reports of each of CFG and CB did not and will not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary to make the statements made therein, and in light of the circumstances under which they were made, were not misleading; (b) each of the balance sheets in or incorporated by reference into the Financial Reports (including the related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the financial position of the entity or entities to which it relates as of its date; (c) each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements in the Financial Reports of CB (including any related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the results of operations, changes in shareholders' equity and cash flows, as the case may be, of the entity or entities to which it relates for the periods set forth therein; and (d) in each case in accordance with GAAP during the periods involved, except in each case as may be noted therein, subject to normal and recurring year-end audit adjustments in the case of unaudited statements.

(I) ABSENCE OF UNDISCLOSED LIABILITIES. Neither CFG nor any of its Subsidiaries has any Material Liability, except as disclosed on Schedule 4.1(I). or (1) as reflected in its Financial Reports prior to the date of this Plan, and
(2) for commitments and obligations made, or Liabilities incurred, in the ordinary course of business consistent with past practice since December 31, 2002, and which are fully reflected as liabilities on that entity's books and records. Except as disclosed on Schedule 4.1(I). since December 31,2002, neither CFG nor any of its Subsidiaries has incurred or paid any Material Liability (including any Liability incurred in connection with any acquisitions in which any form of direct financial assistance of the federal government or any agency thereof has been provided to any Subsidiary).

(J) NO EVENTS. Except as disclosed on Schedule 4.1(J). since December
31. 2002, no event has occurred that, individually or in the aggregate, is reasonably likely to have a Material effect on CFG or any of its Subsidiaries.

(K) PROPERTIES. Except as disclosed in Schedule 4.1(K), CFG and each of its Subsidiaries have good and marketable title, free and clear of all liens, encumbrances, charges, defaults, or equities of any character, to all of the properties and assets, tangible and intangible, reflected in the Financial Reports of CFG as being owned by CFG or its Subsidiaries as of the dates thereof. All buildings and all Material fixtures, equipment, and other property and assets that are held under leases or subleases by CFG or any of its Subsidiaries are held under valid leases or subleases enforceable in accordance with their respective terms, other than any such exceptions to validity or enforceability as are disclosed on Schedule 4.1(K). Other than month-to-month leases on operating equipment, all leases and subleases are identified on Schedule 4.1(K), and except as disclosed on such schedule, are fully transferable to CBI as the Surviving Corporation under this Plan. CFG further represents, covenants and warrants that, except as disclosed in Schedule 4.1(K), taking their age and ordinary wear and tear into account, the assets and properties of CFG or any of its Subsidiaries are in good operating condition and repair and have been operated and maintained in the ordinary course of business, consistent with past practice, other than those items of personal property not in use by CFG or its Subsidiaries as of the date hereof.

(L) INTELLECTUAL PROPERTY RIGHTS. Schedule 4.1(L) lists all patents, patent rights, licenses, trade secrets, trademarks, service marks, trademark rights, trade names or trade name rights, copyrights, inventions and other intellectual property rights (Intellectual Property Rights") necessary for the ownership and operation of the business of CFG or any of its Subsidiaries in the manner in which the business has been historically and currently owned and operated by CFG or its Subsidiaries. None of the Intellectual Property Rights interferes with, infringes upon, misappropriates, or violates any intellectual property rights of third parties, and neither CFG nor any of its Subsidiaries has received any written charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation. No third party has interfered with, infringed upon, misappropriated, or violated any of the Intellectual Property Rights. Neither CFG nor any of its Subsidiaries has received any written notice with respect to any outstanding injunction, judgment, order, decree, ruling, or charge relating to any item of the Intellectual Property Rights, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of CFG or any of its Subsidiaries, is threatened which challenges the legality, validity, enforceability, use, or ownership of any of the Intellectual Property Rights.

(M) LITIGATION: REGULATORY ACTION. Except as disclosed in Schedule 4.1(M), no litigation, proceeding or controversy before any court or governmental agency is pending or threatened against CFG or any of its Subsidiaries, including, without limitation, any litigation, proceedings, or controversies that allege claims under any fair lending law or other law relating to discrimination, including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, or allege claims under any fair credit reporting laws or laws for the protection of non-public personal information, including the Fair Credit Reporting Act, and the Gramm-Leach-Bliley Act, and, to its Knowledge, no such litigation, proceeding or controversy has been threatened; and except as disclosed in Schedule 4.1(M), neither CFG nor any of its Subsidiaries or any of its or their Material properties or their officers, directors or Controlling persons is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, any Regulatory Authority or other governmental authority, and neither CFG nor any of its Subsidiaries has been advised by any of such Regulatory Authorities or other governmental authority that such authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum or understanding, commitment letter or similar submission.

(N) COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.1(N), each of CFG and its Subsidiaries:

(1) Has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Regulatory Authorities or other governmental authority that are required in order to permit it to own its businesses presently conducted and that are Material to the business of it and its Subsidiaries taken as a whole; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to its Knowledge, no suspension or cancellation of any of them is threatened; and all such filings, applications and registrations are current;

(2) Has received no notification or communication from any Regulatory Authority or other governmental authority or the staff thereof
(a) asserting that CFG or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Regulatory Authority or governmental authority enforces, (b) threatening to revoke any license, franchise, permit or governmental authorization of CFG or any of its Subsidiaries, or (c) requiring any of CFG or its Subsidiaries (or any of its or their officers, directors or Controlling persons) to enter into a cease and desist order, agreement or memorandum of understanding (or requiring the board of directors thereof to adopt any resolution or policy);

(3) Is not required to give prior notice to any federal banking or thrift agency of the proposed addition of an individual to its board of directors or the employment of an individual as a senior executive; and

(4) Is in compliance in all Material respects with all fair lending laws or other laws relating to discrimination, including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, and all fair credit reporting laws and laws for the protection of non-public personal information, including the Fair Credit Reporting Act and the Gramm-Leach-Bliley Act

(O) MATERIAL CONTRACTS. Except as disclosed in Schedule 4.1(O) (and with a true and correct copy of the document or other item in question attached to such schedule), none of CFG or its Subsidiaries, nor any of their respective assets, businesses or operations, is a party to, or is bound or affected by, or receives benefits under, any contract or agreement or amendment thereto (excluding extensions of credit made in the ordinary course of business) or contracts obligating it or them to pay more than $10,000 in any year and which can be terminated upon not less than 6O day's notice. Except as disclosed in Schedule 4.1(O) neither CFG nor any of its Subsidiaries is in default under any such contract, agreement, commitment, arrangement, lease, insurance policy or other instrument to which it is a party, by which its respective assets, business or operations may be bound or affected or under which it or any of its respective assets, business or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. Except as disclosed in Schedule 4.1(O). neither CFG nor any of its Subsidiaries is subject to or bound by any contract containing covenants that limit the ability of CFG or any of its Subsidiaries to compete in any line of business or with any Person or that involve any restriction of geographical area in which, or method by which, CFG or any of its Subsidiaries may carry on its business (other than as may be required by law or any applicable Regulatory Authority).

(P) REPORTS. Since January 1, 1999 each of CFG and its Subsidiaries has filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with (1) the Arkansas State Bank Department, (2) the FDIC, (3) the Federal Reserve Board, and (4) any other Regulatory Authorities or other governmental authority having jurisdiction with respect to CFG and its Subsidiaries. As of their respective dates (and without giving effect to any amendments or modifications filed after the date of this Plan with respect to reports and documents filed before the date of this Plan), each of such reports and documents, including the financial statements, exhibits and schedules thereto, complied in all Material respects with all of the statutes, rules and regulations enforced or promulgated by the Regulatory Authority with which they were filed and did not contain any untrue statement of a Material fact or omit to state any Material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(Q) BROKERS AND FINDERS. Except as set forth in Schedule 4.1 (Q), neither CFG, CB, any CFG Subsidiary nor any of their respective officers, directors or employees has employed any broker or finder, or agreed to pay any fees to any director or former director or incurred any Liability for any financial advisory fees, brokerage fees, commissions or finder's fees, and no broker or finder, or director or former director of CFG and CB, has acted directly or indirectly for CFG, CB or any CFG Subsidiary, in connection with this Plan or the transactions contemplated hereby.

(R) EMPLOYEE BENEFIT PLANS.

(1) Schedule 4.1(R)(1) contains a complete list of all bonus, deferred compensation, pension, retirement, profit-sharing, thrift savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option plans, all employment or severance contracts, all medical, dental, health and life insurance plans, all other employee benefit plans, contracts or arrangements and any applicable "change of control" or similar provisions in any plan, contract or arrangement maintained or contributed to by CFG or any of its Subsidiaries for the benefit of employees, former employees, directors, former directors or their beneficiaries (the "Compensation and Benefit Plans"). True and complete copies of all Compensation and Benefit Plans of CFG and its Subsidiaries, including any trust instruments and/or insurance contracts, if any, forming a part thereof, and all amendments thereto, have been supplied to the other Parties.

(2) All "employee benefit plans" within the meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), other than "multiemployer plans" within the meaning of Section 3(37) of ERISA ("Multiemployer Plans"), covering employees or former employees of CFG and its Subsidiaries (the "ERISA Plans"), to the extent subject to ERISA, are in substantial compliance with ERISA. Except as disclosed in Schedule 4.1(R)(2) each ERISA Plan which is an "employee pension benefit plan" within the meaning of Section 3(2) of ERISA ("Pension Plan") and which is intended to be qualified under Section 401(a) of the Internal Revenue Code of 1986 (as amended, the "Code") has received a favorable determination letter from the Internal Revenue Service, and it is not aware of any circumstances reasonably likely to result in the revocation or denial of any such favorable determination letter or the inability to receive such a favorable determination letter. There is no Material pending or, to its Knowledge, threatened litigation relating to the ERISA Plans. Neither CFG nor any of its Subsidiaries has engaged in a transaction with respect to any ERISA Plan that could subject CFG or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an amount which would be Material.

(3) No Liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by CFG or any of its Subsidiaries with respect to any ongoing, frozen or terminated "single-employer plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of any entity which is considered one employer with CFG under Section 4001(a)(15) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither CFG nor any of its Subsidiaries presently contributes to a Multiemployer Plan, nor have they contributed to such a plan within the past five calendar years. No notice of a "reportable event," within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the past 12-month period.

(4) All contributions required to be made under the terms of any ERISA Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA, except as disclosed in Schedule
4.1(R)(4). Neither CFG nor any of its Subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.

(5) Except as disclosed in Schedule 4.1(R)(5), under each Pension Plan which is a single-employer plan, as of the last day of the most recent plan year, the actuarially determined present value of all "benefit liabilities," within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the plan's most recent actuarial valuation) did not exceed the then current value of the assets of such plan, and there has been no Material change in the financial condition of such plan since the last day of the most recent plan year.

(6) Neither CFG nor any of its Subsidiaries has any obligations for retiree health and life benefits under any plan, except as set forth in Schedule 4.1(R)(6). There are no restrictions on the rights of CFG or any of its Subsidiaries to amend or terminate any such plan without incurring any Liability thereunder.

(7) Except as disclosed in Schedule 4.1(R)(7), neither the execution and delivery of this Plan nor the consummation of the transactions contemplated by this Plan will (a) result in any payment (including severance, unemployment compensation, golden parachute or otherwise) becoming due to any director or any employee of CFG or any of its Subsidiaries under any Compensation and Benefit Plan or otherwise from CFG or any of its Subsidiaries, (b) increase any benefits otherwise payable under any Compensation and Benefit Plan, or (c) result in any acceleration of the time of payment or vesting of any such benefit.

(S) NO KNOWLEDGE. CFG and its Subsidiaries Know of no reason why the regulatory approvals referred to in Section 6.1 should not be obtained.

(T) LABOR AGREEMENTS. Neither CFG nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is CFG or any of its Subsidiaries the subject of a proceeding asserting that it or any such Subsidiary has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel it or such Subsidiary to bargain with any labor organization as

to wages and conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or, to its Knowledge, threatened, nor is it aware of any activity involving its or any of the Subsidiaries' employees seeking to certify a collective bargaining unit or engaging in any other organization activity.

(U) ASSET CLASSIFICATION. CFG and its Subsidiaries have disclosed in Schedule 4.1(U) a list, accurate and complete in all Material respects, of the aggregate amounts of loans, extensions of credit or other assets of CFG and its Subsidiaries that have been classified by it as of March 31, 2003 (the "Asset Classification"); and no amounts of loans, extensions of credit or other assets that have been classified as of March 31, 2003 by any regulatory examiner as "Other Loans Specially Mentioned," "Substandard," "Doubtful" "Loss," or words of similar import are excluded from the amounts disclosed in the Asset Classification, other than amounts of loans, extensions of credit or other assets that were charged off by CFG or any Subsidiary prior to March 31, 2003, and which are also disclosed on Schedule 4.1(U).

(V) ALLOWANCE FOR POSSIBLE LOAN LOSSES. Except as disclosed on Schedule 4.1(V), lie allowance for possible loan losses shown on the consolidated balance sheets in the December 31, 2002 Financial Reports of CFG was, and the allowance for possible loan losses to be shown on subsequent Financial Reports of CFG shall be adequate, to the Knowledge of the Board of Directors of CFG, to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including accrued interest receivable) as of the date thereof.

(W) INSURANCE. Each of CFG and its Subsidiaries has taken all requisite action (including the making of claims and the giving of notices) pursuant to its directors' and officers' liability insurance policy or policies in order to preserve all rights thereunder with respect to all matters that are Known to CFG, except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material Adverse Effect on CFG or its Subsidiaries. Set forth in Schedule 4.1(W) is a list of all insurance policies maintained by or for the benefit of CFG or its Subsidiaries or their respective directors, officers, employees or agents.

(X) BOOKS AND RECORDS. All books of account, minute books, stock record books and other records of CFG and all of its Subsidiaries, all of which have been made available to CBI and/or HBI, are complete and correct in all Material respects and have been maintained in accordance with the laws of the State of Arkansas for banks, bank holding companies, and corporations, and applicable rules and regulations promulgated thereunder and in accordance with sound business practices. The minute books of CFG and its Subsidiaries contain accurate and complete records in all Material respects of all meetings held of, and corporate action taken by, the shareholders, the Board of Directors and committees of the Board of Directors of Company (as applicable), and no meeting of any such shareholders, Board of Directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records shall be in the possession of CFG and shall be delivered to CBI.

(Y) STATE TAKEOVER LAWS. ARTICLES OF INCORPORATION. CFG and its Subsidiaries have taken all necessary action to exempt (or ensure the continued exemption of) this Plan and the transactions contemplated by this Plan from (1) any applicable state takeover laws and (2) any takeover-related provisions of CFG's and its Subsidiaries' Articles of Incorporation.

(Z) NO FURTHER ACTION. CFG and its Subsidiaries have taken all action so that the entering into of this Plan and the consummation of the transactions contemplated by this Plan, or any other action or combination of actions, or any other transactions, contemplated by this Plan do not and will not (1) require a vote of shareholders (other than as set forth in Section 6.1), or (2) result in the grant of any rights to any Person under the Articles of Incorporation, Charter or Bylaws of CFG or any of its Subsidiaries or under any agreement to which CFG or any such Subsidiaries is a party, or (iii) restrict or impair in any way the ability of the other Parties to exercise the rights granted under this Plan.

(AA) ENVIRONMENTAL MATTERS.

(1) The Participation Facilities and the Loan/Fiduciary Properties are, and have been, in compliance with all Environmental Laws, except as disclosed on Schedule 4.1(AA).

(2) There is no investigation or proceeding pending or, to CFG's Knowledge, threatened by or before any court, governmental agency or board or other forum in which CFG or any of its Subsidiaries or any Participation Facility has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a site owned, leased or operated by CFG or any of its Subsidiaries or any Participation Facility, except as disclosed in Schedule 4.1(AA)(2).

(3) There is no investigation or proceeding pending or, to CFG's Knowledge, threatened by or before any court, governmental agency or board or other forum in which any Loan/Fiduciary Property (or CFG or any of its Subsidiaries in respect of any Loan/Fiduciary Property) has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance
(including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a Loan/Fiduciary Property, except for such investigations or proceedings disclosed in Schedule 4.1(AA)(3).

(4) To CFG's Knowledge, there is no reasonable basis for any investigation or proceeding of a type described in subparagraph (2) or
(3) of this paragraph (AA), except as has been disclosed in Schedule 4.1(AA)(4).

(5) To CFG's Knowledge, and except as disclosed on Schedule 4.1(AA)(5), during the period of (a) ownership or operation by CFG or any of its Subsidiaries of any of their respective current properties,
(b) participation in the management of any Participation Facility by CFG or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by CFG or any of its Subsidiaries, there have been no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan/Fiduciary Property that violate Environmental Laws.

(6) To CFG's Knowledge, and except as disclosed on Schedule 4.1(AA)(6), prior to the period of (a) ownership or operation by CFG or any of its Subsidiaries of any of their respective current properties, (b) participation in the management of any Participation Facility by CFG or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by CFG or any of its Subsidiaries, there were no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan Fiduciary Property.

(7) No underground storage tanks are located on any property of CFG or any of its Subsidiaries, or any Participation Facility or any Loan/Fiduciary Property except as disclosed in Schedule 4.1(AA)(7).

(8) To CFG's Knowledge, and except as disclosed in Schedule 4.1(AA)(8), neither CFG's nor any of its Subsidiaries' facilities have building components containing friable asbestos.

(BB) TAX RETURNS. Except as disclosed in Schedule 4.1(BB), (1) all reports and returns with respect to Taxes that are required to be filed by or with respect to CFG or its Subsidiaries, including consolidated federal income tax returns of CFG and its Subsidiaries (collectively, the 'Tax Returns"), have been duly filed, or requests for extensions have been timely filed and have not expired, for periods ended on or prior to the most recent fiscal year-end, and such Tax Returns were true, complete and accurate in all Material respects, (2) all Taxes shown to be due on the Tax Returns have been paid in full, (3) the Tax Returns have been examined by the Internal Revenue Service or the appropriate state, local or foreign taxing authority, or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (4) all Taxes due with respect to completed and settled examinations have been paid in full, (5) no issues have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns which are reasonably likely, individually or in the aggregate, to result in a determination that would have a Material effect on CFG or its Subsidiaries, except as reserved against in the Financial Reports of CFG, and (6) no waivers of statutes of limitations (excluding such statutes that relate to years under examination by the Internal Revenue Service) have been given by or requested with respect to any Taxes of CFG or its Subsidiaries.

(CC) ACCURACY OF INFORMATION. The statements with respect to CFG and its Subsidiaries contained in this Plan, the Schedules and any other written documents executed and delivered by or on behalf of CFG or any other Party pursuant to the terms of or relating to this Plan are now and as of the Effective Date true and correct in all Material respects, and such statements and documents do not omit any Material fact necessary to make the statements contained therein, and in light of the circumstances under which they were made, are not now and as of the Effective Date shall not be misleading.

(DD) DERIVATIVES CONTRACTS. None of CFG or its Subsidiaries is a party to or has agreed to enter into a Derivatives Contract or owns securities that are referred to as "structured notes" except for those Derivatives Contracts and structured notes disclosed in Schedule 4.1(DD). Schedule 4.1(DD) includes a list of any assets of CFG or its Subsidiaries that are pledged as security for each such Derivatives Contract.

(EE) ACCOUNTING CONTROLS. Each of CFG and its Subsidiaries has devised and maintained systems of internal accounting controls sufficient to provide reasonable assurances that (1)

all Material transactions are executed in accordance with management's general or specific authorization, (2) all Material transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP, and to maintain proper accountability for items, (3) access to the Material property and assets of CFG and its Subsidiaries is permitted only in accordance with management's general or specific authorization, and (4) the recorded accountability for items is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

(FF) COMMITMENTS AND CONTRACTS. Neither CFG nor any of its Subsidiaries is a party or subject to any of the following (whether written or oral, express or implied):

(1) except as disclosed in Schedule 4.1(FF)(1), any employment contract or understanding (including any understandings or obligations with respect to severance or termination pay Liabilities or fringe benefits) with any present or former officer, director or employee (other than those which are terminable at will by CFG or any such Subsidiary without any obligation on the part of CFG or any such Subsidiary to make any payment in connection with such termination);

(2) except as disclosed in Schedule 4.1(FF)(2), any contract, commitment, or understanding with any Person related to or under the Control of any present or former officer, director, or employee of CFG or any of its Subsidiaries, to the extent that such contract, commitment or understanding Materially impacts the financial condition of any of CFG or its Subsidiaries.

(3) except as disclosed in Schedule 4.1 (FF)(3), any real or personal property lease with annual rental payments aggregating $10,000 or more; or

(4) except as disclosed in Schedule 4.1(FF)(4), any Material contract with any Affiliate.

(GG) CLAIMS OF OFFICERS, DIRECTORS, AND EMPLOYEES. Except as disclosed on Schedule 4.1(GG), no officer or director of CFG or any of its Subsidiaries has any claims against CFG or its Subsidiary, other than for their regular accrued but unpaid salary and/or director's fee. Except as disclosed on Schedule 4.1(GG), here are no outstanding or potential claims by a present or former employee against CFG or any of its Subsidiaries under federal or state law, under any employment agreement, or otherwise, other than for wages, salary, or overtime pay owed in respect of the current pay period, or vacation or sick pay or time off owed in respect of the current fiscal year.

4.2 CBI AND HBI REPRESENTATIONS AND WARRANTIES. CBI and HBI, as to their respective entities, hereby represent and warrant to CFG now and as of the Effective Date as follows:

(A) RECITALS. The facts set forth in the Recitals of this Plan with respect to CBI and HBI are true and correct.

(B) ORGANIZATION. STANDING AND AUTHORITY. Each of CBI and HBI is duly qualified to do business and is in good standing in the State of Arkansas. Each of CBI and HBI has in effect, or will have as of the Effective Date, all federal state, and local governmental authorizations

necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted.

(C) SHARES. The outstanding shares of CBI's and HBI's capital stock are validly issued and outstanding, fully paid and non-assessable, and subject to no preemptive rights. Except as disclosed in Schedule 4.2(C), there are no shares of capital stock or other equity securities of CBI or HBI outstanding and no outstanding Rights with respect thereto.

(D) CBI AND HBI SUBSIDIARIES.

(1) There are no Subsidiaries of CBI prior to the Effective Date.

(2) HBI has disclosed in Schedule 4.2(D) a list of all of its Subsidiaries. FSB is the only Subsidiary that is a bank and FSB is an Insured Depository institution. No equity securities of any of its Subsidiaries are or may become required to be issued (other than to HBI or one of its Subsidiaries) by reason of any Rights with respect thereto. There are no contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise issue any shares of such Subsidiary's capital stock, and there are no contracts, commitments, understandings or arrangements relating to the rights of HBI or its Subsidiaries, as applicable, to vote or to dispose of such shares. All of the shares of capital stock of each of its Subsidiaries held by HBI or one of its Subsidiaries are fully paid and non-assessable and are owned by HBI or one of its Subsidiaries free and clear of any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance. Each of its Subsidiaries is in good standing under the laws of the jurisdiction in which it is incorporated or organized, and is duly qualified to do business and in good standing in the jurisdictions where the failure to be duly qualified is reasonably likely, individually or in the aggregate, to have a Material effect on it. Except as disclosed in Schedule 4.2(D), HBI does not own beneficially, directly or indirectly, any shares of any equity securities or similar interests of any corporation, bank, partnership, joint venture, business trust, association or other organization.

(E) CORPORATE POWER. Each of CBI and HBI has the corporate power and authority to carry on its business as it is now being conducted and to own all its Material properties and assets.

(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval by its shareholders referred to in Section 6.1, this Plan has been authorized by all necessary corporate action of CBI and HBI and such agreement is a valid and binding agreement of each of CBI and HBI, enforceable against CBI and HBI in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(G) NO DEFAULTS. Subject to receipt of the required regulatory approvals referred to in Section 6.1, and the required filings under federal and state securities laws, and except as disclosed in Schedule 4.2(G), the execution, delivery and performance of its obligation under this Plan and the Employment Agreements and the consummation by CBI and HBI of the transactions contemplated by this Plan do not and will not Materially (I) constitute a breach or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of CBI or HBI or to which CBI or HBI or their properties is subject or bound, (2) constitute a breach or violation of, or a default under, the articles of incorporation, charter or bylaws of CBI or HBI,

or (3) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license or the consent or approval of any other party to any such agreement, indenture or instrument, other than any such consent or approval that is disclosed on Schedule 4.2(G).

(H) HBI FINANCIAL REPORTS. Except as disclosed in Schedule 4.2(H). the Financial Reports of HBI did not and will not contain any untrue statement of a Material feet or omit to state a Material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; and each of the balance sheets in or incorporated by reference into the Financial Reports of HBI (including the related notes and schedules thereto) fairly presents and will fairly present the financial position of the entity or entities to which it relates as of its date, and each of the statements of income and changes in shareholders' equity and cash flows (including any related notes and schedules thereto) fairly presents and will fairly present the results of operations, changes in shareholders' equity and cash flows, as the case may be, of the entity or entities to which it relates for the periods set forth therein, in each case in accordance with GAAP during the periods involved, except in each case as may be noted therein, subject to normal and recurring year-end audit adjustments in the case of unaudited statements.

(I) ABSENCE OF UNDISCLOSED LIABILITIES. Neither CBI nor HBI has any Material Liability, except as disclosed on Schedule 4.2(I). or (1) as reflected in HBI's Financial Reports prior to the date of this Plan, and (2) for commitments and obligations made, or Liabilities incurred, in the ordinary course of business consistent with past practice since December 31, 2002. Except as disclosed on Schedule 4.2(I).. since December 31,2002, and which are fully reflected as liabilities on the entity's books and records, neither CBI nor HBI has incurred or paid any obligation or Liability (including any obligation or liability incurred in connection with any acquisitions in which any form of direct financial assistance of the federal government or any agency thereof has been provided to any Subsidiary) that, individually or in the aggregate, is reasonably likely to have a Material effect on it.

(J) NO EVENTS. Except as disclosed on Schedule 4.2(J). since December 31, 2002, no event has occurred which is reasonably likely to have a Material effect on CBI or HBI.

(K) LITIGATION: REGULATORY ACTION. Except as disclosed in Schedule 4.2(L) no litigation, proceeding or controversy before any court or governmental agency is pending that, individually or in the aggregate, is reasonably likely to have a Material effect on CBI or HBI's ability to consummate the Plan or any transaction contemplated hereunder.

(L) NO KNOWLEDGE. CBI and HBI Know of no reason why the regulatory approvals referred to in Section 6.1 should not be obtained.

(M) ACCURACY OF INFORMATION. The statements with respect to CBI and HBI contained in this Plan, the Schedules and any other written documents executed and delivered by or on behalf of CBI or HBI or any other Party pursuant to the terms of this Plan are now, except as specifically noted hereunder, and as of the Effective Date true and correct in all Material respects, and such statements and documents do not omit any Material fact necessary to make the statements contained therein, and in light of the circumstances under which they were made, are not now and as of the Effective Date shall not be misleading.

ARTICLE V. COVENANTS

CFG hereby covenants to CBI and HBI, and CBI and HBI hereby covenant to CFG, that:

5.1 BEST EFFORTS. Subject to the terms and conditions of this Plan, each Party shall use its best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of the Merger by December 31, 2003 (the "Termination Date"), and to otherwise enable consummation of the transactions contemplated by this Plan, and shall cooperate fully with the other Parties to that end (it being understood that a re-solicitation of proxies as a consequence of a HBI Transaction shall not violate this covenant).

5.2 CORPORATE ACTIONS.

(A) THE PROXY. CFG, CBI, and HBI shall promptly assist each other in the preparation of a combination proxy statement and offering circular (the "Proxy Statement") to be mailed to the holders of CFG Common Stock and CBI Common Stock in connection with the transactions contemplated by this Plan, which shall conform to all applicable legal requirements, and include relevant disclosure to CFG shareholders with regard to HBI as required by applicable securities laws for the offering of HBI Preferred Stock, and both CFG and CBI shall call a special meeting of the holders of CFG Common Stock and CBI Common Stock to be held as soon as practicable for purposes of voting upon the transactions contemplated by this Plan (including the Merger).

(B) HBI AMENDMENT. HBI shall call a special meeting of the holders of HBI Common Stock to be held as soon as practicable for the purposes of voting upon an Amendment to the HBI Articles of Incorporation to authorize the requisite number of HBI Preferred Stock shares.

(C) BEST EFFORTS. Each of CFG, CBI, and HBI shall use their best efforts to solicit and obtain votes of the holders of their common stock in favor of their respective transactions contemplated by this Plan and, subject to the exercise of their fiduciary duties, the Board of Directors of CFG, CBI, and HBI shall recommend approval of such transactions by such holders.

5.3 SECURITIES LAW COMPLIANCE. HBI shall comply with all applicable federal and state securities laws with regard to the offering, sale, and issuance of the HBI Preferred Stock.

5.4 PRESS RELEASES. No Party hereto, nor any Subsidiary of a Party, shall without the prior approval of each other Party hereto issue any press release or written statement for general circulation relating to the transactions contemplated by this Plan, except as otherwise required by law.

5.5 ACCESS; INFORMATION.

(A) Upon reasonable notice, CFG and CB shall afford each of CBI and HBI and their officers, employees, counsel, accountants and other authorized representatives, access, during normal business hours throughout the period up to the Effective Date, to all of the properties, books, contracts, commitments and records of CFG and its Subsidiaries and, during such period, CFG and CB shall furnish

promptly (and cause its accountants and other agents to furnish promptly) to CBI and/or HBI (1) a copy of each report, schedule and other document filed by CFG and its Subsidiaries with any Regulatory Authority or other governmental authority, and (2) all other information concerning the business, properties and personnel of CFG and its Subsidiaries as CBI and/or HBI may reasonably request, provided that no investigation pursuant to this Section 5.5 shall affect or be deemed to modify or waive any representation or warranty made by CFG or CB in this Plan or the conditions to the obligations of CFG and CB to consummate the transactions contemplated by this Plan; and

(B) Neither CBI nor HBI will use any information obtained pursuant to this Section 5.5 for any purpose unrelated to the consummation of the transactions contemplated by this Plan and, if this Plan is terminated, each of CBI and HBI will hold all confidential information and documents obtained pursuant to this paragraph in confidence (as provided in Section 8.6) unless and until such information or documents becomes publicly available other than by reason of any action or failure to act by CBI or HBI or as either of them is advised by counsel that any such information or document is required by law to be disclosed, and in the event of the termination of this Plan, CBI and HBI will, upon request by CFG, deliver to CFG all documents so obtained by CBI or HBI or destroy such documents and, in the case of destruction, will certify such fact to CFG.

(C) Upon reasonable notice, CBI and HBI shall furnish promptly (and cause its accountants and other agents to furnish promptly) to CFG a copy of each Material report, schedule and other document filed by CBI or HBI with any Regulatory Authority or other governmental authority, as CFG may reasonably request, provided that no investigation pursuant to this Section 5.5 shall affect or be deemed to modify or waive any representation or warranty made by CBI or HBI in this Plan or the conditions to the obligations of CBI and HBI to consummate the transactions contemplated by this Plan; and

(D) CFG will not use any information obtained pursuant to this Section 5.5 for any purpose unrelated to the consummation of the transactions contemplated by this Plan and, if this Plan is terminated, will hold all confidential information and documents obtained pursuant to this paragraph in confidence (as provided in Section 8.6) unless and until such time as such information or documents become publicly available other than by reason of any action or failure to act by CFG or as it is advised by counsel that any such information or document is required by law to be disclosed, and in the event of the termination of this Plan, CFG will, upon request by CBI or HBI, deliver to each of CBI and HBI, respectively, all documents so obtained by CFG or destroy such documents and, in the case of destruction, will certify such fact to CBI or HBI, as applicable.

5.6 SOLE AGREEMENT TO SELL. Without the prior written consent of CBI, CFG shall not, and it shall cause its Subsidiaries not to, solicit, initiate or encourage inquiries or proposals with respect to, or furnish any nonpublic information relating to or participate in any negotiations or discussions concerning, any acquisition or purchase of all or a substantial portion of the assets of, or a substantial equity interest in, CFG or any of its Subsidiaries or any merger or other business combination with CFG or any of its Subsidiaries other than as contemplated by this Plan; it shall instruct its and its Subsidiaries' officers, directors, agents, advisors and Affiliates to refrain from doing any of the foregoing; and it shall notify CBI and HBI immediately if any such inquiries or proposals are received by, or any such negotiations or discussions are sought to be initiated with, CFG or any of its Subsidiaries. The Parties agree that a breach of this provision by CFG shall be deemed a Material breach of this Agreement, regardless of whether such action was taken pursuant to the fiduciary duty of CFG's Board of Directors

or otherwise, for which CBI and/or HBI may seek injunctive relief or terminate this Agreement pursuant to Section 7.2, and seek monetary relief for damages from CFG. CFG expressly agrees not to assert or impose any defense to such breach of this Agreement based on the exercise of its fiduciary duty.

5.7 HBI COMMON STOCK ADJUSTMENTS. In the event that HBI changes the number of shares of HBI Common Stock issued and authorized prior to the time that a holder of HBI Preferred Stock converts such HBI Preferred Stock to HBI Common Stock as a result of a stock split, stock dividend, recapitalization, or similar transaction with respect to the outstanding HBI Common Stock, the amount of HBI Common Stock to be issued to the HBI Preferred Stock holder, as set forth in the Preferred Stock Description in Appendix I shall be adjusted accordingly.

5.8 STATE TAKEOVER LAW. CFG shall not take any action that would cause the transactions contemplated by this Plan to be subject to any applicable state takeover statute, and CFG shall take all necessary steps to exempt (or ensure the continued exemption of) the transactions contemplated by this Plan from, or, if necessary, challenge the validity or applicability of, any applicable state takeover law.

5.9 NO RIGHTS TRIGGERED. Except for those consents of Third Parties disclosed on Schedule 4.1(G). CFG shall take all necessary steps to ensure that the entering into of this Plan and the consummation of the transactions contemplated by this Plan (including the Merger) and any other action or combination of actions, or any other transactions contemplated by this Plan, do not and will not (A) result in the grant of any rights to any Person under the Articles of Incorporation or Bylaws of CFG or under any agreement to which CFG or any of its Subsidiaries is a party, or (B) restrict or impair in any way the ability of CBI or HBI to exercise the rights granted under this Plan.

5.10 REGULATORY APPLICATIONS. CBI shall (A) promptly prepare and submit applications to the appropriate Regulatory Authorities for approval of the Merger, and (B) promptly make all other appropriate filings to secure all other approvals, consents and rulings that are necessary for the consummation of the Merger by CBI.

5.11 REGULATORY DIVESTITURES. No later than the Effective Date, CFG shall cease engaging in such activities as CBI or HBI shall advise CFG in writing are not permitted to be engaged in by CBI or HBI under applicable law following the Effective Date and, to the extent required by any Regulatory Authority as a condition of approval of the transactions contemplated by this Plan, CFG shall divest any Subsidiary engaged in activities or holding assets that are impermissible for CBI or HBI, on terms and conditions agreed to by CBI or HBI, as applicable; provided, however, that prior to CFG taking such action, CBI or HBI shall certify that the conditions to its obligations under Sections 6.1 and 6.2 to consummate the transactions contemplated by this Plan have been satisfied or waived.

5.12 CURRENT INFORMATION.

(A) During the period from the date of this Plan to the Effective Date, each of CFG and CBI shall, and shall cause its representatives to, confer on a regular and frequent basis with representatives of the other. In addition, during such period, CBI and HBI shall be entitled to have its representatives attend all meetings of the boards of directors of CFG and CB, as well as all committees of

CFG and CB, and CFG and CB shall provide notice to CBI and HBI at least two (2) Business Days in advance of all such meetings.

(B) Each of CFG, CBI, and HBI shall promptly notify the other of (1)
any Material change in the business or operations of it or its Subsidiaries, (2) any Material complaints, investigations or hearings (or communications indicating that the same may be contemplated) of any Regulatory Authority or other governmental authority relating to it, or as applicable its Subsidiaries,
(3) the initiation or threat of Material litigation involving or relating to it or its Subsidiaries, or (4) any Material event or condition.

5.13 DIRECTOR AND OFFICER LIABILITY INSURANCE. Prior to the Effective Date, CFG shall obtain and prepay "tail" coverage on director and officer liability insurance for a period of three (3) years following the Effective Date, with policy limits not in excess of $2,000,000 per occurrence, on each person serving as an officer or director of CFG and each CFG Subsidiary immediately prior to the Effective Date against all damages, Liabilities, judgments, and claims (and related expenses, including reasonable attorney fees and amounts paid in settlement) with respect to acts or omissions of such officers and directors based upon or arising from his or her capacity as an officer or director of CFG or a CFG Subsidiary, occurring on or prior to the Effective Date.

ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER

6.1 CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligation of each Party to effect the transactions contemplated hereby shall be subject to the fulfillment, at or prior to the Effective Date, of the following conditions:

(A) SHAREHOLDER VOTE. The shareholders of CFG and the shareholders of CBI shall have approved of the transactions contemplated herein (including approval of the Merger), and the shareholders of HBI shall have approved of the HBI Charter Amendment authorizing the requisite number of HBI Preferred Stock to be issued at the time of the Merger, by the requisite vote.

(B) REGULATORY APPROVALS. The Parties shall have procured all necessary regulatory consents and approvals by the appropriate Regulatory Authorities, and any waiting periods relating thereto shall have expired; provided, however, that no such approval or consent shall have imposed any condition or requirement not normally imposed in such transactions that, in the opinion of CBI or HBI, would deprive CBI or HBI of the Material economic or business benefits of the transactions contemplated by this Plan.

(C) NO PENDING OR THREATENED CLAIMS. No claim, action, suit, investigation or other proceeding shall be pending or threatened before any court or governmental agency which presents a Material risk of the restraint or the prohibition of the transactions contemplated by this Plan or the obtaining of Material damages or other relief in connection therewith.

(D) NO INJUNCTION. There shall not be in effect any order, decree or injunction of any court or agency of competent jurisdiction that enjoins or prohibits consummation of any of the transactions contemplated by this Plan.

(E) TAX OPINION. CBI, HBI, and CFG shall have received an opinion from Gerrish & McCreary, P.C. in the form of Exhibit B to the effect that (1) the Merger constitutes a

reorganization under Section 368 of the Code, and (2) no gain or loss will be recognized by shareholders of CFG to the extent they receive shares of HBI Preferred Stock in exchange for their shares of CFG Common Stock, except that gain or loss may be recognized as to cash received in lieu of fractional share interests, and, in rendering their opinion, Gerrish & McCreary, P.C. may require and rely upon representations contained in certificates of officers of CBI, HBI, CFG and others.

(F) SCHEDULES AND EXHIBITS. Each Party responsible for Schedules or Exhibits to be attached hereto shall provide such Schedule or Exhibit to the other Party for their review not less than fifteen (15) Business Days from the execution of this Agreement. The Party receiving such Schedules and Exhibits shall have five (5) Business Days within which to object (the "Objecting Party"), in writing, to all or part of the Schedules or Exhibits submitted. If the receiving Party does not object within such five Business Days period, that Party shall be deemed to have waived any objection thereto, and this Agreement shall remain in full force and effect as if the Schedules and Exhibits were attached at the time of execution of this Agreement. The Parties shall use their best efforts to resolve any objections of an Objecting Party within ten (10) Business Days and if not so resolved to the satisfaction of the Objecting Party, the Objecting Party may terminate this Agreement pursuant to Section 7.1.

6.2 CONDITIONS TO OBLIGATIONS OF CBI AND HBI. Unless waived in writing by CBI and HBI, the obligations of CBI and HBI to consummate the transactions contemplated by this Plan are subject to the satisfaction at or prior to the Effective Date of the following conditions:

(A) PERFORMANCE. Each of the acts, undertakings, and covenants and other agreements of CFG to be performed at or before the Effective Date shall have been duly performed, and CFG shall not have breached any of the representations, warranties, covenants, and other agreements set forth herein.

(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties of CFG contained in this Plan shall be true and correct, in all Material respects, on and as of the Effective Date with the same effect as though made on and at the Effective Date, except for any such representations and warranties that specifically relate to an earlier date, which shall be true and correct as of such earlier date.

(C) OFFICER'S CERTIFICATE. In addition to the documents described elsewhere in this Plan, CBI shall have received the following documents and instruments:

(i) A certificate signed by the Secretary or Assistant Secretary of CFG and CB certifying that: (A) CFG'S and CB's boards of directors and shareholders have duly adopted resolutions (copies of which shall be attached to such certificate) approving the substantive terms of this Plan and authorizing the consummation of the transactions contemplated by this Plan and certifying that such resolutions have not been amended and remain in full force and effect; (B) each person executing this Plan on behalf of CFG and CB is an officer of CFG, holding the office or offices specified therein, with full power and authority to execute this Plan and any and all other documents in connection with the Plan, and the signature of each person on such documents is his or her genuine signature; and (C) the Articles of Incorporation and Bylaws of CFG and CB (copies of which shall be attached to such certificate) remain in full force and effect; and

(ii) A certificate signed by the President, Chief Financial Officer, and Chief Lending Officer of CFG and CB dated the Effective Date stating that the conditions set forth in Sections 6.2(A); 6.2(B) and 6.2(E) of this Plan have been satisfied Effective Date.

(D) LEGAL OPINION. CBI shall have received a legal opinion, dated this Date, from Gerrish & McCreary, P.C., substantially in the form of Exhibit C.

(E) NO MATERIAL CHANGE. During the period from December 31, 2 Effective Date, no Material change in the business, property, assets (including loan portfolios), prospects, operations, liquidity, income or condition (financial or otherwise) of CFG and/or CB occurred.

(F) DESTRUCTION OF PROPERTY. Between the date of this Plan Effective Date, there shall have been no damage to or destruction of real property, improvements or personal property of CFG and CB which Materially reduces the market value of such property, and no zoning or other order, limitation or restriction imposed against the same that might have a Material impact upon the operations, business, future operations, or prospects of CFG and CB; provided, however, that the availability of insurance coverage may be taken into account in determining whether there has been such a Material impact or Material reduction in market value.

(G) INSPECTIONS PERMITTED. Between the date of this Plan and the Effective Date, CFG and CB shall have afforded CBI and HBI and their authorized agents and representatives reasonable access during normal business hours to the properties, operations, books, records, contracts, documents, loan files and other information of or relating to CFG and CB. CFG and CB shall have caused all CFG and CB personnel to provide reasonable assistance to CBI and HBI in their investigations of all matters related to CFG and CB.

(H) OTHER BUSINESS COMBINATIONS. ETC. Other than as contemplated hereunder, subsequent to the date of this Plan, neither CFG nor CB shall have entered into any agreement, letter of intent, understanding or other arrangement pursuant to which CFG and CB would merge, consolidate with, effect a business combination with, or sell any substantial part of CFG's or CB's assets; acquire a significant part of the share of assets of any other person or entity (financial or otherwise); or adopt any "poison pill" or other type of anti-takeover arrangement, any shareholder rights provision, or any "golden parachute" or similar program which would have the effect of Materially decreasing the value of CFG and CB or the benefits of acquiring CFG Common Stock.

(I) MAINTENANCE OF CERTAIN COVENANTS. At the Effective Date: (i) neither CFG nor CB shall have issued or repurchased from the date hereof any additional equity or debt securities, or any rights to purchase or repurchase such securities (therefore, there shall be not more than the number of shares of CFG Common Stock and CFG Options set forth in the Recitals of this Plan validly issued and outstanding at the Effective Date); and (ii) from December 31, 2002, there shall have been no extraordinary sale of assets by CFG or CB.

(J) NO LITIGATION.

(i) Except as disclosed en Schedule 6.2(3) and as stated in
Section 6.2(J)(ii), no action, suit, or other proceeding before any court or any governmental authority pertaining

to the transactions contemplated by this Plan or against CFG or any of its Subsidiaries or Materially affecting CFG or any of its Subsidiaries shall have been instituted or threatened on or before the Closing Date.

(ii) CBI shall have received from CFG's liability insurance insurer(s), in form and substance satisfactory to CBI, a letter to the effect that the insurer will assume responsibility, without any reservation of rights, for the defense of CFG and CB in the lawsuit styled "J. Michael Sentell, Individually and as Trustee of the J. Michael Sentell Living Trust and Interactive Management.Com, Inc. v. Community Bank and Community Financial Group, Inc., Case No. 2003-277, In the Circuit Court of White County, Arkansas" (the "Sentell Litigation"), and that it or they will pay such amount as CFG and/or CB may by final non-appealable judgment or agreed settlement, be determined to be liable or responsible for in the Sentell Litigation, up to it or their policy limits, which in no event shall such limits be less than $2,000,000.00.

6.3 CONDITIONS TO OBLIGATIONS OF CFG. Unless waived in writing by CFG, the obligation of CFG to consummate the transactions contemplated by this Plan is subject to the satisfaction of CFG at or prior to the Effective Date of the following conditions:

(A) PERFORMANCE. Each of the acts, undertakings, and covenants of CBI and HBI to be performed at or before the Effective Date shall have been duly performed, and neither CBI nor HBI shall have breached any of their respective representations, warranties, covenants, and other agreements set forth herein.

(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties of CBI and HBI contained in this Plan shall be true and correct, in all Material respects, on and as of the Effective Date with the same effect as though made on and at the Effective Date, except for any such representations and warranties that specifically relate to an earlier date, which shall be true and correct as of such earlier date.

(C) OFFICER'S CERTIFICATE. In addition to the documents described elsewhere in this Plan, CFG and CB shall have received certificates signed by the respective Presidents of CBI and HBI dated the Effective Date stating that the conditions set forth in Sections 6.3(A); 6.3(B) and 6.3(E) of this Plan have been satisfied as of the Effective Date.

(D) LEGAL OPINION. CFG shall have received a legal opinion, dated the Effective Date, from Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., in substantially the form of Exhibit D.

(E) NO MATERIAL CHANGE. During the period from December 31, 2002 to the Effective Date, no Material Adverse Change in the business, properly, assets (including loan portfolios), Liabilities, prospects, operations, liquidity, income or condition (financial or otherwise) of CBI or HBI shall have occurred.

(F) FAIRNESS OPINION. CFG shall have received, within fifteen (15)
days from the execution of this Agreement, an opinion of Mercer Capital, Memphis, Tennessee to the effect that the financial terms of the Merger are fair from a financial point of view to CFG's shareholders. Such opinion

shall be updated prior to the mailing of the Proxy Statement to CFG's shareholders and shall not have been withdrawn prior to the Effective Date.

ARTICLE VII. TERMINATION

7.1 TERMINATION UPON CERTAIN CONDITIONS. In the event of the termination or abandonment of this Plan pursuant to the provisions of Section 7.1, this Plan shall become void and have no force or effect, without any liability on the part of the Parties or any of their respective directors or officers or shareholders with respect to this Plan. This Plan may be terminated prior to the Effective Date, either before or after receipt of required shareholder approvals under the following conditions:

(A) MUTUAL CONSENT. By the mutual consent of CBI, HBI, and CFG, if the Board of Directors of each so determines by vote of a majority of the members of its entire board.

(B) FAILURE TO AGREE ON SCHEDULES. By CBI, HBI, or CFG if the Parties fail to agree on the Schedules and Exhibits within the time provided in Section 6.1(F).

(C) DELAY. By CBI, HBI, or CFG in the event the Merger is not consummated by the Termination Date, unless the failure of the consummation of the transactions to occur shall be due to the failure of the Party seeking to terminate this Plan to perform its obligations hereunder in a timely manner; provided, however, that HBI may not terminate the Plan pursuant to this Section 7.2(C), if such delay results from the resolicitation of proxies as a consequence of a HBI Transaction, or any other acquisition or sale transaction, or any offering of securities, in which HBI is involved, or (b) a change in the method of acquisition pursuant to Section 2.6, and provided, further, that a Party may not terminate the Plan pursuant to this Section 7.1(C) if it is in Material breach of any of the provisions of the Plan.

(D) NO FAIRNESS OPINION. By CFG in the event the fairness opinion described in Section 6.3(F) is not provided; provided, however, that CFG may not terminate the Plan pursuant to this Section 7.1(D) unless it has used its best efforts to obtain such opinion in a timely manner.

(E) NO REGULATORY APPROVALS. By CFG, CBI, or HBI, in the event that, absent the Material breach of a Party, any of the required regulatory approvals set forth in Section 6.1(B) are denied (or should any such required approval be conditioned upon a substantial deviation from the transactions contemplated); provided however, that either Party may extend the term of this Plan for a sixty
(60) day period to prosecute diligently and overturn such denial provided that such denial has been appealed within fourteen (14) Business Days of the receipt thereof.

7.2 TERMINATION FOR BREACH. This Plan may be terminated prior to the Effective Date, either before or after receipt of required shareholder approvals, by CBI, HBI, or CFG if there has been a Material breach on the part of the other Party of its representations, warranties, covenants, or other agreements set forth herein or in any Schedule or certificate delivered pursuant hereto. The non-breaching Party or Parties expressly reserve all rights and remedies available in law or equity if this Agreement is terminated for breach.

ARTICLE VII. OTHER MATTERS

8.1 SURVIVAL. Only the representations, warranties, covenants, or other agreements contained in Articles I and II of this Plan shall survive the Effective Date, regardless of whether a provision specifically states that such provision survives. If the Merger is abandoned and this Flan is terminated, the agreements of the Parties in Sections 7.1, 8.5, 8.6, and 8.13 shall survive such abandonment and termination.

8.2 WAIVER; AMENDMENT. Prior to the Effective Date, any provision of this Plan may be (A) waived in writing by the Party benefited by the provision, or (B) amended or modified at any time (including the structure of the transactions contemplated by this Plan) by an agreement in writing among the Parties approved by their respective Boards of Directors and executed in the same manner as this Plan, except that, after the vote by the shareholders of CFG, the consideration to be received by the shareholders of CFG for each share of CFG Common Stock shall not thereby be altered. Nothing contained in this Section 8.2 is intended to modify HBI'S rights pursuant to Section 2.7.

8.3 COUNTERPARTS. This Plan may be executed in one or more facsimile counterparts, each of which shall be deemed to constitute an original. This Plan shall become effective when one counterpart has been signed by each Party.

8.4 GOVERNING LAW. This Plan shall be governed by, and interpreted in accordance with, the laws of the State of Arkansas, except as federal law may be applicable.

8.5 EXPENSES. Each Party will bear all expenses incurred by it in connection with this Plan and the transactions contemplated by this Plan, except printing and mailing expenses which shall be shared equally between CFG and CBI; provided, however, that CBI shall have the right to approve CFG's expenses for legal, accounting, or other professional fees, which approval shall not be unreasonably withheld.

8.6 CONFIDENTIALITY. Each of the Parties and their respective agents, attorneys and accountants will maintain the confidentiality of all information provided in connection herewith which has not been publicly disclosed.

8.7 NOTICES. All notices, demands, and requests given or required to be given by either Party to another Party shall be in writing. All such notices, demands, and requests shall be deemed to have been properly given served in person, sent by telefacsimile (and receipt confirmed) or by prepaid nationally recognized overnight delivery service providing proof of delivery, addressed as follows:

If to CBI or HBI:    HOME BANCSHARES, INC.
                     620 Chestnut Street
                     Conway, Arkansas 72032
                     Attn: Randy Sims

                     Fax: 501-328-4658

With a copy to:      Mitchell Williams Selig Gates & Woodyard, P.L.L.C.
                     425 W. Capital Avenue, Suite 1800
                     Little Rock, Arkansas 72201
                     Attn: John S. Selig, Esq.

                     Fax: 501-918-7804

If to CFG or CB, to: COMMUNITY FINANCIAL GROUP, INC.
                     2171 West Main
                     Cabot, Arkansas 72023
                     Attn: Tracy French, President

                     Fax: 501-843-0466

With a copy to:      Gerrish & McCreary, P.C.
                     700 Colonial Road, Suite 200
                     Memphis, TN 38117
                     Attn: Jeffrey C. Gerrish

                     Fax: 901-684-2339

Notices, demands and requests sent pursuant to this section shall be deemed to be received if received by telefacsimile (and receipt confirmed) or by person on the date of delivery and if sent by prepaid overnight delivery service on the next Business Day

8.8 TIME IS OF THE ESSENCE. The Parties hereto agree that time is of the essence with respect to be Closing Date and each and every condition and covenant contained herein.

8.9 ASSIGNMENT. The assignment of this Plan by any Party without the express written consent of the other Parties hereto shall be void.

8.10 BINDING EFFECT. This Agreement shall be binding upon the Parties and their respective successors and assigns.

8.11 SEVERABILITY. The holding of any provision of this Plan invalid, illegal, or unenforceable, in whole or in part, shall not effect the other provisions of this Plan, which shall remain in full force and effect.

8.12 ENTIRE UNDERSTANDING: NO THIRD PARTY BENEFICIARIES. This Plan represents the entire understanding of the Parties with reference to transactions contemplated by this Plan and supersedes any and all other oral or written agreements previously made. Nothing in this Plan, expressed or implied, is intended to confer upon any Person other than the Parties any rights, remedies, obligations or Liabilities under or by reason of this Plan.

8.13 ENFORCEMENT PROCEEDINGS. The Parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Plan were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be

entitled to an injunction or injunctions to prevent breaches of this Plan and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. In any action or proceeding in connection with the enforcement of this Plan, the prevailing Party will be entitled to reimbursement of its reasonable attorneys' fees and expenses from the non-prevailing Party.

8.14 BENEFIT PLANS. Upon consummation of the Merger, all employees of CFG and its Subsidiaries, except those with whom CBI enters into written employment agreements, shall be deemed to be at-will employees of CBI. From and after the Effective Date, employees of CFG and its Subsidiaries shall be entitled to participate in the pension, employee benefit and similar plans (including stock option, bonus or other incentive plans) on substantially the same terms and conditions as similarly situated employees of CBI. With the exception of stock option plans, where participation will be based upon years of service at CBI (one year wait from the Effective Date for officers/five year wait from the Effective Date for non-officer personnel), for the purpose of determining eligibility to participate in such plans and the vesting of benefits under such plans (but not for the accrual of benefits), CBI shall give effect to years of service with CFG or CFG's Subsidiaries, as the case may be, as if such service were with CBI. Employees of CFG and its Subsidiaries will be entitled to carry over unused vacation days and sick leave accrued as of the Effective Date. CBI shall use its commercially reasonable efforts to facilitate the rollover of the 401(k) plan maintained by CFG and CB.

8.15 HEADINGS. The headings contained in this Plan are for reference purposes only and are not part of this Plan.

IN WITNESS WHEREOF, the Parties have caused this instrument to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.

COMMUNITY FINANCIAL GROUP, INC.         CB BANCORP, INC.


By: /s/ Illegible                       By: /s/ Illegible
    ---------------------------------       ------------------------------------
Printed Name: Illegible                 Printed Name: Illegible
Title: CEO                              Title: President


                                        HOME BANCSHARES, INC.


                                        By: /s/ Illegible
                                            ------------------------------------
                                        Printed Name: Illegible
                                        Title: Chairman

SEE REVISED APPENDIX I
IN AMENDMENT NO. 2

APPENDIX I

PREFERRED STOCK DESCRIPTION

The characteristics and requirements of the HBI Preferred Stock to be authorized and issued by HBI as set forth in Section 2.1(B), all of which characteristics and requirements shall be set forth in a HBI Articles of Incorporation Amendment to be adopted and filed with the Arkansas Secretary of State Prior to the Merger, shall be as follows:

1. HBI shall authorize and issue as consideration in the Merger up to 2,193,000 shares of HBI Preferred Stock, with a $0.01 par value and which shall have a value for Stock Conversion Ratio purposes of $10 per share. The HBI Preferred Stock shall be non-voting and shall yield an annual non-cumulative dividend of twenty-five cents ($0.25) payable if and when declared, quarterly on the last day of January, April, July, and October. No interest shall be payable on any declared and unpaid dividends. No dividends shall be declared or paid on any common shares or any other shares of HBI until the foregoing dividend is paid on the HBI Preferred Stock. In the event of any dissolution, liquidation or winding up of HBI, whether voluntary or involuntary, the holders of the then outstanding HBI Preferred Stock shall be entitled to receive $10.00 per share plus, a sum equal to the amount of all declared and unpaid dividends thereon at the dividend rate set forth herein. After such payment to such holders of preferred shares, the remaining assets and funds of HBI shall be distributed pro rata among the holders of the common shares. A consolidation, merger or reorganization of HBI with any other corporation or corporations or a sale of all or substantially all of the assets of HBI shall not be considered a dissolution, liquidation or winding up of HBI within the meaning of these provisions.

2. Convertible Shares. The Preferred Stock shall be convertible into common shares of HBI upon the following terms and conditions:

(a) The holder of any shares of HBI Preferred Stock shall have the right to elect to convert such HBI Preferred Stock into $1.00 par value HBI voting common stock, thirty (30) months after the Effective Date or one hundred eighty (180) days following an underwritten "public" offering of HBI Common Stock, whichever occurs first. In order to convert the shares of HBI Preferred Stock to HBI Common Stock, the holder of HBI Preferred Stock shall surrender and deliver, duly endorsed in blank, the certificate or certificates representing the shares to be converted to the Secretary of HBI at the Secretary's office, and at the same time notify the Secretary in writing over his or her signature that he or she desires to convert his or her HBI Preferred Shares into HBI Common Shares pursuant to these provisions.

(b) Upon receipt by the Secretary of a certificate or certificates representing shares of HBI Preferred Stock, with the notice that the holder thereof desires to convert the same, all as

aforesaid, HBI shall forthwith cause to be issued to the holder of the HBI Preferred Shares, 0.263158 shares of HBI Common Stock for each share of HBI Preferred Stock surrendered for conversion. Such conversion ratio is based on a value of HBI Common Stock at $38.00 per share. HBI shall issue and deliver to such holder, a certificate in due form for such HBI Common Shares. Such HBI Common Stock shall be voting common stock as is currently authorized under HBI's Articles of Incorporation subject to such changes as may be made prior to the date of conversion.

(c) HBI shall have the right to redeem all of the HBI Preferred Stock in exchange for HBI Common Stock on or after thirty (30) months from the Merger or prior to the expiration of such thirty (30) month period if HBI becomes publicly traded and the last reported trade is equal to or greater than Thirty-Eight Dollars ($38.00) per share for twenty (20) consecutive trading days. In the event HBI elects to redeem such HBI Preferred Stock, all of such HBI Preferred Stock shall be redeemed and each holder of HBI Preferred Stock shall receive 0.263158 shares of HBI Common Stock in exchange for one share of HBI Preferred Stock. Such conversion ratio is based on a value of HBI Common Stock at $38 per share. Such HBI Common Stock shall be voting common stock as is currently authorized under the HBI Articles of Incorporation subject to such changes as may be made prior to the date of conversion.

SCHEDULES OF
COMMUNITY FINANCIAL GROUP, INC.
DELIVERED PURSUANT TO

AGREEMENT AND PLAN OF MERGER
BETWEEN
ACQUISITION SUBSIDIARY, INC.
AND
HOME BANCSHARES, INC.
AND
COMMUNITY FINANCIAL GROUP, INC.

SCHEDULES OF COMMUNITY FINANCIAL GROUP, INC.
DELIVERED PURSUANT TO AGREEMENT AND PLAN OF MERGER
BETWEEN ACQUISITION SUBSIDIARY, INC., HOME BANCSHARES, INC. AND
COMMUNITY FINANCIAL GROUP, INC.

The following schedules are delivered by Community Financial Group, Inc. pursuant to the above-captioned Agreement. References to section numbers herein are to sections of the Agreement. Capitalized terms have the meaning given them in the Agreement.

CFG DISCLOSURES

Schedule 2.1(B)       HBI Charter Amendment
Schedule 2.7          Outstanding Options
Schedule 3.4          Changes to Line of Business, Operating Procedures, etc.
Schedule 3.6          New or Changes to Compensation, Employment Agreements,
                      etc.
Schedule 3.7          New or Modifications to Benefit Plans
Schedule 3.11         New or Changes to Material Contracts
Schedule 4.1(B)       Jurisdictions Where CFG and its Subsidiaries Are Qualified
                      to Do Business
Schedule 4.1(C)       Shares Outstanding
Schedule 4.1(D)       CFG Subsidiaries

Schedule 4.1(G)       No Defaults - Agreements Requiring Third Party Consent
Schedule 4.1(H)       CFG Financial Reports
Schedule 4.1(I)       Undisclosed Liabilities of CFG
Schedule 4.1(J)       No Events Causing Material Adverse Effect
Schedule 4.1(K)       Properties: Leases, Subleases, Defects of Title or Condition
Schedule 4.1(L)       Intellectual Property Rights
Schedule 4.1(M)       Litigation, Regulatory Action
Schedule 4.1(N)       Compliance with Laws
Schedule 4.1(O)       Material Contracts
Schedule 4.1(Q)       Brokers and Finders
Schedule 4.1(R)(1)    List of Employee Benefit Plans
Schedule 4.1(R)(2)    Employee Benefit Plans Not Qualified Under ERISA

Schedule 4.1(R)(4)    Pension Accumulated Funding Deficiency
Schedule 4.1(R)(5)    Amount by Which Benefit Liabilities Exceed Plan Assets
Schedule 4.1(R)(6)    Obligations for Retiree Health and Life Benefits
Schedule 4.1(R)(7)    Agreements Resulting in Payments to Employees Under Any
                      Compensation and Benefit Plan with Respect to Proposed Transaction
Schedule 4.1(U)       Asset Classification
Schedule 4.1(V)       Inadequate Allowance for Loan Losses
Schedule 4.1(W)       Insurance
Schedule 4.1(AA)(1)   Noncompliance with Environmental Laws
Schedule 4.1(AA)(2)   Pending Proceedings with Respect to Environmental Matters
Schedule 4.1(AA)(3)   Pending Proceedings with Respect to Environmental Matters
                      Involving Loan/Fiduciary Property
Schedule 4.1(AA)(4)   Pending Proceedings with Respect to Environmental Matters
                      Listed in Sections 4.1(AA)(2) or (3)

Schedule 4.1(AA)(5)   Actions During Ownership Which could Have Material Adverse
                      Effect with Respect to Environmental Matters
Schedule 4.1(AA)(6)   Actions Prior to Ownership Which could Have Material
                      Adverse Effect with Respect to Environmental Matters
Schedule 4.1(AA)(7)   Underground Storage Tanks
Schedule 4.1(AA)(8)   Facilities Containing Friable Asbestos
Schedule 4.1(BB)      Tax Return Matters
Schedule 4.1(DD)      Derivative Contracts, including a list of any assets pledged as
                      security for such Derivative Contracts
Schedule 4.1(FF)(1)   Employment Contracts Requiring Payment In Connection with
                      Termination
Schedule 4.1(FF)(2)   Employment Contracts With Any Person Under Control of
                      Management
Schedule 4.1(FF)(3)   Leases with Aggregate Annual Rent Exceeding $ 10,000
Schedule 4.1(FF)(4)   Material Contracts with Affiliates
Schedule 4.1(GG)      Claims of Officers, Directors, Employees

CBI AND HBI DISCLOSURES

Schedule 4.2(C)       CBI and HBI Shares Outstanding
Schedule 4.2(D)       HBI Subsidiaries
Schedule 4.2(G)       No Defaults - Agreements Requiring Third Party Consent
Schedule 4.2(H)       Financial Reports
Schedule 4.2(I)       Undisclosed Liabilities
Schedule 4.2(J)       No Events Causing Material Adverse Effect
Schedule 4.2(L)       Litigation, Regulatory Action
Schedule 6.2(J)       Pending Litigation

These Schedules are delivered this 20th day of August, 2003.

COMMUNITY FINANCIAL GROUP, INC.

By: /s/ Illegible
    ------------------------------------
Printed Name: Illegible
Title: CEO

CB BANCORP, INC.

By: /s/ Illegible
    ------------------------------------
Printed Name: Illegible
Title: President

HOME BANCSHARES, INC.

By: /s/ Illegible
    ------------------------------------
Printed Name: Illegible
Title: President

SCHEDULES OF HBI AND CBI

Schedule 4.2(C)

OUTSTANDING SHARES OF CB BANCORP, INC.
AND HOME BANCSHARES, INC.

Schedule 4.2(D)

HOME BANCSHARES, INC. SUBSIDIARIES

Schedule 4.2(G)

NO DEFAULTS - AGREEMENTS REQUIRING THIRD PARTY CONSENT

Schedule 4.2(H)

FINANCIAL REPORTS

Schedule 4.2(I)

UNDISCLOSED LIABILITIES

Schedule 4.2(J)

NO EVENTS CAUSING MATERIAL ADVERSE EFFECT

Schedule 4.2(K)

LITIGATION, REGULATORY ACTION

EXHIBITS

Exhibit A Articles of Merger
Exhibit B Tax Opinion of Gerrish & McCreary Exhibit C Legal Opinion of Gerrish & McCreary Exhibit D Legal Opinion of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.

AMENDMENT NO. 1 TO

AGREEMENT AND PLAN OF MERGER

This Amendment No. 1 is entered into by and among Community Financial Group, Inc., CB Bancorp, Inc., and Home Bancshares, Inc., as of the 6th day of November, 2003, as an amendment to the Agreement and Plan of Merger executed by the parties dated July 30, 2003 (the "Agreement"). All capitalized terms used in this Amendment No. 1 shall have the meaning given them in the Agreement.

The parties agree to amend the Agreement as follows:

1. Paragraph A of the Recitals is hereby deleted in its entirety and the following is added in its place:

(A) CFG. CFG is a corporation duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in Cabot, Arkansas. CFG is a registered bank holding company under the Bank Holding Company Act of 1956, as amended. As of the date of this Plan, CFG has 1,000,000 authorized shares of common stock, $.25 par value ("CFG Common Stock"), of which 724,033 shares of CFG Common Stock are issued and outstanding (no other class of capital stock being authorized). As of the date of this Plan, CFG has 70,000 shares of CFG Common Stock reserved for issuance under a Non-Qualified Stock Option Plan pursuant to which options covering 9,359 shares of CFG Common Stock are issued and outstanding and 1,500 shares of CFG Common Stock reserved for issuance as Incentive Stock Options (collectively with the 724,033 shares issued and outstanding, the "CFG Common Stock Outstanding"). As of June 30, 2003, CFG had capital of $27,731,897, divided into common stock of $231,260, comprehensive income/surplus of $5,145,154, and retained earnings of $22,355,483.

2. The Definitions section is hereby amended by adding the following definition of "CFG Common Stock Outstanding":

"CFG Common Stock Outstanding" shall have the meaning given it in the Recitals, paragraph A, excluding Exception Shares.

3. The definition of "Exception Shares" is hereby amended to read as follows:

"Exception Shares" has the meaning ascribed to such term in Section 2.1(A).

4. Section 2.1(A), is hereby deleted in its entirety and amended to read as follows:

in satisfaction of a debt previously contracted) (the "Exception Shares") shall be cancelled and retired and shall not represent capital stock of the surviving company and shall not be exchanged for merger consideration or any other consideration.

5. Section 2.1(B), sixth paragraph is hereby deleted in its entirety and amended to read as follows:

Notwithstanding any other provision herein, in the event the Closing Date is more than one hundred twenty (120) days after the date of this Agreement, interest at the rate of two percent (2%) per annum for the period from such 120th day until the Effective Date shall be added to the total Merger Consideration provided for herein with a pro rata adjustment of the Merger Consideration, the Per Share Cash Consideration and the Stock Conversion Ratio.

6. Section 2.2(B)(4) is hereby added as follows:

(4) Notwithstanding any other provision of this section 2.2(B), if a properly completed Transmittal Form is received on or before December 15, 2003 from a holder of CFG Common Stock who is not a Qualified Arkansas Resident, and such Transmittal Form indicates the holder's election to receive Cash Consideration only, then the Exchange Agent shall pay the Cash Consideration to such holder on or before December 31, 2003.

7. All other terms and provisions of the Agreement not otherwise amended herein shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 as of the date first above written.

COMMUNITY FINANCIAL GROUP, INC.         CB BANCORP, INC.


By: /s/ Illegible                       By: /s/ Illegible
    ---------------------------------       ------------------------------------
Printed Name: Illegible                 Printed Name: Illegible
Title: CEO                              Title: President


                                        HOME BANCSHARES, INC.


                                        By: /s/ Illegible
                                            ------------------------------------
                                        Printed Name: Illegible
                                        Title: Chairman

-2-

AMENDMENT NO. 2 TO

AGREEMENT AND PLAN OF MERGER

This Amendment No. 2 is entered into by and among Community Financial Group, Inc., CB Bancorp, Inc., and Home Bancshares, Inc., as of the 6th day of November, 2003, as an amendment to the Agreement and Plan of Merger executed by the parties dated July 30, 2003 (the "Agreement"). All capitalized terms used in this Amendment No. 2 shall have the meaning given them in the Agreement.

The parties agree to amend the Agreement as follows:

1. Section 6.2(J)(ii) is hereby deleted and Section 6.2(k) is hereby added to read as follows:

Immediately prior to the Effective Date, CB, HBI, CFG, Community Bank and FirsTrust Financial Services, Inc. ("Escrow Agent") shall enter into an Escrow Agreement (the "Escrow Agreement") in the form of Exhibit E hereto, providing for the Escrow Agent to hold $2,000,000 of the Merger Consideration, consisting of $980,000 in cash and 102,000 shares of HBI Preferred Stock in escrow (the "Escrow Fund") pending the agreed settlement or final, non-appealable judgment in the lawsuit styled "J. Michael Sentell, Individually and as Trustee of the J. Michael Sentell Living Trust and Interactive Management.com, Inc. vs. Community Bank and Community Financial Group, Inc., Case No. 2002-277, in the Circuit Court of White County, Arkansas (the "Sentell Litigation"). The Exchange Agent shall allocate the cash and HBI Preferred Stock among the holders of Eligible CFG Common Stock in the manner set forth in the Escrow Agreement and neither they nor CB or HBI shall be deemed to have received, or have any entitlement, to the Escrow Fund until the Sentell Litigation is finally resolved in the manner set forth in the Escrow Fund and then only under the circumstances set forth therein.

2. Appendix I (Preferred Stock Description) is hereby amended to add the following at the end of paragraph (c) and add new paragraphs (d) and (e):

In the event a redemption occurs as provided herein prior to the end of a quarter in which the Board declares a dividend, a holder of the HBI Preferred Stock being redeemed shall be entitled to receive an amount of such dividend pro rated for the number of days in the quarter prior to the date of the notice of redemption.

(d) If prior to the conversion or redemption, the outstanding shares of HBI Common Stock are increased or decreased, or are changed into a different number of shares or a different class by reason of any merger, recapitalization, reclassification, stock split, or similar transaction, or if a stock dividend shall be paid, an appropriate and proportionate adjustment or adjustments will be made to the ratio by which a share of HBI Common Stock, or a fraction thereof, is to

be issued in exchange for each share of Class A Preferred Stock. In the event of a merger of HBI for cash in which it is not the surviving corporation, the holders of HBI Preferred Stock will be given the right to convert their shares of Preferred Stock for shares of HBI Common Stock, immediately prior to the conversion on a ratio of 0.263158 shares of HBI Common Stock for 1 share of HBI Preferred Stock.

(e) In the event HBI offers HBI Common Stock within one (1) year following the Effective Date (the "Prior to One Year Offering") either for cash at a price less than $35 per share or in a merger, consolidation or other stock exchange with TC Bancorp, Inc. or Russellville Bancshares, Inc. at a price or multiple equal to less than $35 per share, HBI shall authorize, if required, and shall offer the holders of the HBI Preferred Stock the right to purchase, pro rata, such amount of additional shares of HBI Preferred Stock at $10 per share as would be necessary to enable the holders of the HBI Preferred Stock in the aggregate to own the same percentage of HBI Common Stock following the conversion of all of the HBI Preferred Stock to HBI Common Stock as they would have owned if the Prior to One Year Offering had been at a price or a multiple equal to $35 per share. For example if the Prior to One Year Offering is at a price of $30 per share and $20 million of HBI Common Stock is sold, the holders of HBI Preferred Stock would be entitled to purchase, pro rata, an additional 85,767 shares of HBI Preferred Stock computed as follows: 1) determine the total number of shares of HBI Common Stock outstanding following the completion of the Prior to One Year Offering as if the price or multiple is equal to $35 (assuming 1,863,732 shares are now outstanding and a $20 million offering, including the number of shares of HBI Common Stock the HBI Preferred Stock is convertible into (577,105), the shares outstanding would be 3,012,266); 2) determine the percentage of ownership of HBI Common Stock the holders of HBI Preferred Stock would own if the HBI Preferred Stock was converted to HBI Common Stock at that time at a ratio of 0.263158 shares of HBI Common Stock for 1 share of HBI Preferred Stock (the "Baseline Percentage") (for a $20 million stock offering, the Baseline Percentage is 19.15852%); 3) determine the number of additional shares of the HBI Common Stock the holders of the HBI Preferred Stock would need to own following the conversion to attain the Baseline Percentage (22,570); and 4) determine the amount of additional shares of HBI Preferred Stock which must be sold at a conversion ratio of 0.263158 shares of HBI Common Stock for 1 share of HBI Preferred Stock to achieve the Baseline Percentage (85,767).

-2-

3. The Articles of Merger attached as Exhibit A are hereby replaced in their entirety by the Articles of Merger attached as Exhibit A hereto.

4. The last paragraph of Section 2.01(B) (the first) is hereby amended to read as follows:

Notwithstanding any other provision herein, in the event the Effective Date is more than one hundred twenty (120) days plus the number of days from November 1, 2003 to the date the Federal Reserve approves the merger (the "Extended Date") after the July 30, 2003, interest at the rate of two percent (2%) per annum for the period from such Extended Date until the Effective Date shall be added to the total Merger Consideration provided for herein with a pro rata adjustment of the Merger Consideration, the Per Share Cash Consideration and the Stock Conversion Ratio.

5. Section 2.01(B), the second, and 2.01(C) are hereby renumbered 2.01(C) and 2.01(D), respectively.

4. All other terms and provisions of the Agreement not otherwise amended herein shall remain in full force and effect.

IN WITNESS WHEREOF, the parties have executed this Amendment No. 2 as of the date first above written.

COMMUNITY FINANCIAL GROUP, INC.         CB BANCORP, INC.


By: /s/ Illegible                       By: /s/ Illegible
    ---------------------------------       ------------------------------------
Printed Name: Illegible                 Printed Name: Illegible
Title: CEO                              Title: President


                                        HOME BANCSHARES, INC.


                                        By: /s/ Illegible
                                            ------------------------------------
                                        Printed Name: Illegible
                                        Title: President

-3-

EXHIBIT E

ESCROW AGREEMENT

EXHIBIT 2.2

AGREEMENT AND PLAN OF MERGER

BETWEEN

HOME BANCSHARES, INC.

AND

TCBANCORP, INC.

DATED AS OF DECEMBER 3, 2004

TABLE OF CONTENTS

RECITALS...................................................................    1

DEFINITIONS................................................................    2

ARTICLE I. MERGER..........................................................    8
     1.1.  THE MERGER......................................................    8
     1.2.  DISSENTING SHARES...............................................    8
     1.3.  EFFECTIVE DATE..................................................    9

ARTICLE II. CONSIDERATION..................................................    9
     2.1.  MERGER CONSIDERATION............................................    9
     2.2.  TRANSMITTAL AND ALLOCATION PROCEDURES...........................   10
     2.3.  SHAREHOLDER RIGHTS; STOCK TRANSFERS.............................   12
     2.4.  RESERVATION OF RIGHT TO REVISE TRANSACTION......................   12
     2.5.  OPTIONS.........................................................   12

ARTICLE III. CONDUCT OF BUSINESS PENDING CONSUMMATION......................   13

ARTICLE IV. REPRESENTATIONS AND WARRANTIES.................................   13
     4.1.  TCB REPRESENTATIONS AND WARRANTIES..............................   13
     4.2.  HBI REPRESENTATIONS AND WARRANTIES..............................   24

ARTICLE V. COVENANTS.......................................................   34
     5.1.  BEST EFFORTS....................................................   34
     5.2.  CORPORATE ACTIONS...............................................   34
     5.3.  SECURITIES LAW COMPLIANCE.......................................   34
     5.4.  PUBLICITY.......................................................   35
     5.5.  ACCESS; INFORMATION; CONFIDENTIALITY............................   35
     5.6.  SOLE AGREEMENT TO SELL..........................................   36
     5.7.  HBI COMMON STOCK ADJUSTMENTS....................................   36
     5.8.  NO RIGHTS TRIGGERED.............................................   36
     5.9.  REGULATORY APPLICATIONS.........................................   36
    5.10.  REGULATORY DIVESTITURES.........................................   36
    5.11.  DIRECTOR AND OFFICER LIABILITY INSURANCE........................   37

ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER.......................   37
     6.1.  CONDITIONS TO EACH PARTY'S OBLIGATIONS..........................   37
     6.2.  CONDITIONS TO OBLIGATIONS OF HBI................................   38
     6.3.  CONDITIONS TO OBLIGATIONS OF TCB................................   40

ARTICLE VII. TERMINATION...................................................   41
     7.1.  TERMINATION UPON CERTAIN CONDITIONS.............................   41
     7.2.  TERMINATION FOR BREACH..........................................   41

ARTICLE VIII. OTHER MATTERS................................................   42
     8.1.  SURVIVAL........................................................   42
     8.2.  WAIVER; AMENDMENT...............................................   42
     8.3.  COUNTERPARTS....................................................   42
     8.4.  GOVERNING LAW...................................................   42
     8.5.  EXPENSES........................................................   42
     8.6.  CONFIDENTIALITY.................................................   42
     8.7.  NOTICES.........................................................   42
     8.8.  TIME IS OF THE ESSENCE..........................................   43
     8.9.  ASSIGNMENT......................................................   43
    8.10.  BINDING EFFECT..................................................   43
    8.11.  SEVERABILITY....................................................   43
    8.12.  ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES..............   43
    8.13.  ENFORCEMENT PROCEEDINGS.........................................   43
    8.14.  BENEFIT PLANS...................................................   44
    8.15.  HEADINGS........................................................   44

EXHIBITS

SCHEDULES OF TCB

SCHEDULES OF HBI

AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of the 3rd day of December, 2004 (this "Agreement" or "Plan"), is by and between HOME BANCSHARES, INC. ("HBI"), an Arkansas corporation, and TCBANCORP, INC. ("TCB"), an Arkansas corporation.

RECITALS

(A) TCB. TCB is a corporation duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in North Little Rock, Arkansas. TCB is a financial holding company subject to regulation by the Federal Reserve Board. As of the date of this Plan, TCB has 3,000,000 authorized shares of common stock, $0.01 par value ("TCB Common Stock"), of which 2,283,075 shares of TCB Common Stock are issued and outstanding (no other class of capital stock being authorized) and 3,340 shares are set aside to be gifted to certain employees of TCB on December 31, 2004. As of September 30, 2004, TCB had Capital of $61,441,430, divided into common stock of $22,831, capital surplus of $61,122,534, comprehensive income/surplus of $(1,782,107), and retained earnings of $2,078,172. As of the date of this Plan, options covering 61,350 shares of TCB Common Stock are issued and outstanding as provided in Section 2.5 herein.

(B) TWIN CITY BANK. Twin City Bank ("Twin City") is an Arkansas state bank duly organized and existing in good standing under the laws of the State of Arkansas. As of the date of this Plan, Twin City has 17,000 authorized shares of common stock, $10.00 par value per share ("Twin City Common Stock") (no other class of capital stock being authorized), of which 17,000 shares of Twin City Common Stock are issued and outstanding. All of the issued and outstanding shares of Twin City Common Stock are owned by TCB, the sole shareholder of Twin City.

(C) HBI. HBI is a corporation duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in Conway, Arkansas. HBI is a financial holding company subject to regulation by the Federal Reserve Board. As of its unaudited financial statements for the period ended September 30, 2004, HBI had Capital of $107,178,288, divided into common stock of $266,250, preferred stock of $21,341, preferred treasury stock of $(20,130), accumulated other comprehensive income/surplus of $(481,807), capital surplus of $90,483,188, and retained earnings of $16,909,446. As of September 30, 2004, HBI has 5,000,000 authorized shares of common stock, $0.10 par value per share ("HBI Common Stock"), of which 2,662,495 shares are issued and outstanding. HBI has 5,500,000 authorized shares of preferred stock, $0.01 par value, of which 2,500,000 shares of Class A Preferred Stock are authorized and 2,134,068 are issued and outstanding, and 3,000,000 shares of Class B Preferred Stock are authorized, and none are issued and outstanding.

(D) APPROVALS. At meetings of the respective Boards of Directors of TCB and HBI, each such Board has approved and authorized the execution of this Plan in counterparts.

In consideration of their mutual promises and obligations, the Parties further agree as follows:

DEFINITIONS

(A) DEFINITIONS. Capitalized terms used in this Plan have the following meanings:

"A.C.A." means the Arkansas Code Annotated, as amended.

"Allocation" means the allocation of Merger Consideration to holders of Eligible TCB Common Stock as Stock Consideration and/or Cash Consideration, pursuant to Section 2.2(B).

"Appraisal Laws" means A.C.A. Section 4-27-1301, et seq.

"Arkansas Resident" means:

(1) A corporation, partnership, trust or other form of business organization which has a principal office within the State of Arkansas on the Effective Date of the Plan.

(2) An individual whose principal residence is in the State of Arkansas on the Effective Date of the Plan.

"Business Day" means any day other than a Saturday, Sunday, or a day on which FSB is not open for business.

"Capital" means capital stock, surplus and retained earnings determined in accordance with GAAP. Unrealized gains or losses in investment securities will be included when determining Capital.

"Cash Consideration" has the meaning assigned to such term in Section 2.1(B)(2).

"CFG Merger" - see definition of Community Bank.

"Code" means the Internal Revenue Code of 1986 (as amended).

"Community Bank" means Community Bank of Cabot, Arkansas, acquired by CB Bancorp, Inc. in the merger of Community Financial Group, Inc. with CB Bancorp, Inc., effective as of January 6, 2004 (the "CFG Merger"). Community Bank is a wholly-owned

subsidiary of CB Bancorp, Inc., an Arkansas corporation and registered bank holding company that is owned 80% by HBI and 20% by TCB.

"Compensation and Benefit Plans" means all bonus, deferred compensation, pension, retirement, profit-sharing, thrift savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option plans, all employment or severance contracts, all medical, dental, health and life insurance plans, all other employee benefit plans, contracts or arrangements and any applicable "change of control" or similar provisions in any plan, contract or arrangement maintained or contributed to by a Party or any of its Subsidiaries for the benefit of employees, former employees, directors, former directors or their beneficiaries.

"Conditions" has the meaning assigned to such term in Section 2.1(C).

"Contract" has the meaning assigned to such term in Section 4.1(O).

"Derivatives Contract" means an exchange-traded or over-the-counter swap, forward, future, option, cap, floor or collar financial contract or any other contract that (1) is not included on the balance sheet of the Financial Reports of TCB, and (2) is a derivative contract (including various combinations thereof).

"Disclosing Party" has the meaning assigned to such term in Section 5.5(A).

"Dissenting Share" means the shares of TCB Common Stock held by those shareholders ("Dissenting Shareholders") of TCB who have timely and properly exercised their dissenters' rights in accordance with the Appraisal Laws.

"Effective Date" has the meaning assigned to such term in Section 1.3.

"Eligible TCB Common Stock" means shares of TCB Common Stock other than Exception Shares and Dissenting Shares.

"Elect" (or "Election") has the meaning assigned to such term in Section 2.2(A)(1).

Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, and (2) any common law or equitable doctrine (including injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose Liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Material.

"ERISA" means the Employee Retirement Income Security Act of 1974 (as amended).

"ERISA Affiliate" means any entity which is considered one employer with the applicable Party under Section 4001(a)(15) of ERISA or Section 414 of the Code.

"ERISA Plans" means all employee benefit plans within the meaning of
Section 3(3) of ERISA.

"Exception Shares" has the meaning ascribed to such term in Section 2.1(A).

"Exchange Agent" means FirsTrust Financial Services, Inc., an Arkansas corporation whose principal address is 2610 Cantrell Road, Little Rock, Arkansas, 72202.

"Expiration Date" has the meaning assigned to such term in Section 2.2(A)(2).

"FDIC" means the Federal Deposit Insurance Corporation.

"Financial Reports" (1) as to TCB and HBI, means their respective audited consolidated balance sheets as of December 31, 2001, December 31, 2002, and December 31, 2003 and the related statements of income, changes in shareholders' equity and cash flows for the fiscal years ended December 31, 2001, December 31, 2002, and December 31, 2003, and their respective unaudited consolidated balance sheet as of the nine (9)-month period ended September 30, 2004 and the related statements of income, changes in shareholders' equity and cash flows for the
(9)-month period ended September 30, 2004; (2) as to Twin City, FSB and Community Bank means their respective call reports for the fiscal years ended December 31, 2002 and December 31, 2003; and (3) all other financial reports filed or to be filed subsequent to December 31, 2003, in the form filed with the Federal Reserve Board, FDIC and the Arkansas State Bank Department.

"Federal Reserve Board" means the Board of Governors of the Federal Reserve System.

"FSB" means First State Bank, the wholly-owned subsidiary bank of HBI. First State Bank is an Arkansas corporation with its principal office in Conway, Arkansas.

"Fraction" and "Fractional Share Consideration" have the meanings assigned to such terms in Section 2.1(B)(3).

"GAAP" means generally accepted accounting principles consistently applied.

"Governing Documents" means the articles of incorporation, charter, and bylaws of the subject entity, including all amendments thereto.

"Hazardous Material" means any substance presently listed, defined, designated or classified as hazardous, toxic, radioactive or dangerous, or otherwise regulated, under any Environmental Law, whether by type or quantity, including any oil or other petroleum product, toxic waste, pollutant, contaminant, hazardous substance, toxic substance, hazardous waste, special waste or petroleum or any derivative or by-product thereof, radon, radioactive material, asbestos, asbestos containing material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.

"HBI" means Home BancShares, Inc., an Arkansas corporation and registered financial holding company.

"HBI Common Stock" has the meaning assigned to such term in paragraph (C) of the Recitals.

"HBI Option" has the meaning assigned to such term in Section 2.5(A).

"HBI Transaction" means: (1) a merger, consolidation or similar transaction involving HBI, where HBI is not the corporation surviving such transaction or where a change of Control of HBI is otherwise effected, (2) the disposition, by sale, lease, exchange or otherwise, of assets or deposits of HBI or any of its significant subsidiaries representing in either case 25% or more of the consolidated assets or deposits of HBI and its Subsidiaries, or (3) the issuance, sale or other disposition (including by way of merger, consolidation, share exchange or any similar transaction) of securities representing 25% or more of the voting power of HBI or any of its significant subsidiaries other than the issuance of HBI Common Stock upon the exercise of then outstanding options or the conversion of then outstanding convertible securities of HBI.

"Insured Depository Institution" has the meaning given it in the Federal Deposit Insurance Act, as amended, and applicable regulations under such statute.

"Intellectual Property Rights" has the meaning given such term in Section 4.1(L).

"Knowledge" (and "Know" or "Known") means the best knowledge of the Chairman, President, Chief Financial Officer, and Chief Lending Officer of the entity, after reasonable due diligence, inquiry, or investigation.

"Liability" means any debts, liabilities, obligations and contracts of the Party, whether the same shall be matured or un-matured; whether accrued, absolute, contingent or otherwise.

"Loan/Fiduciary Property" means any property owned or Controlled by the applicable Party or any of its Subsidiaries or in which such Party or any of its Subsidiaries holds a security or other interest, and, where required by the context, includes any such property where the Party

or any of its Subsidiaries constitutes the owner or operator of such property, but only with respect to such property.

"Mailing Date" has the meaning assigned to such term in Section 2.2.

"Material" means, with respect to any Party, an event, occurrence or circumstance (including (i) the making of any provisions for possible loan and lease losses, write-downs of other real estate owned and taxes, and (ii) any breach of a representation or warranty contained in this Plan by such Party) that (a) has or is reasonably likely to have a material adverse effect on or constitute a material adverse change in the financial condition, results of operations, business, future operations, or prospects of such Party or, as applicable, its Subsidiaries, or (b) would impair such Party's ability to perform its obligations under this Plan or the consummation of any of the transactions contemplated by this Plan. With respect to TCB, any such event, occurrence or circumstance that has been previously approved by HBI shall not be deemed material.

"Merger" means the merger of TCB with and into HBI, as described in Section 1.1.

"Merger Consideration" means the HBI Common Stock and/or the Cash Consideration a holder of Eligible TCB Common Stock will receive pursuant to Article II.

"Multiemployer Plans" has the meaning assigned to such term in Section 3(37) of ERISA.

"Participation Facility" means any facility in which the applicable Party or any of its Subsidiaries participates in the management and, where required by the context, includes the owner or operator of such facility.

"Party" means a party to this Plan.

"Pension Plan" means an employee pension plan within the meaning of Section 3(2) of ERISA, and which is intended to be qualified under Section 401(a) of the Code.

"Plan" means this Agreement and Plan of Merger, together with all Exhibits and Schedules annexed hereto, which are hereby incorporated by reference.

"Pre-Closing Review" and "Pre-Closing Review Period" have the meanings assigned to such terms in Section 6.2(H)(iii).

"Proxy Statement" has the meaning assigned to such term in Section 5.2(A).

"Qualified Arkansas Resident" has the meaning assigned to such term in
Section 2.1(C)(2).

"Receiving Party" has the meaning assigned to such term in Section 5.5(A).

"Rule 147" means Rule 147 promulgated under the Securities Act.

"Rule 147 Restrictions" has the meaning assigned to such term in Section 2.1(C)(1).

"Securities Act" means the Securities Act of 1933, as amended, together with the rules and regulations promulgated under such statute.

"Stock Consideration" has the meaning assigned to such term in Section 2.1(B)(1).

"Surviving Corporation" has the meaning assigned to such term in Section 1.1(A).

"Tax Returns" means all reports and returns with respect to Taxes that are required to be filed by an applicable Party and its Subsidiaries, including consolidated federal income tax returns of the Party and its Subsidiaries.

"Taxes" means federal, state, local or foreign income, gross receipts, windfall profits, severance, property, production, sales, use, license, excise, franchise, employment, withholding or similar taxes imposed on the income, properties or operations of the respective Party or its Subsidiaries, together with any interest, additions, or penalties with respect thereto and any interest in respect of such additions or penalties.

"TCB" means TCBancorp, Inc., an Arkansas Corporation and bank holding company.

"TCB Common Stock" has the meaning assigned to such term in paragraph (A) of the Recitals.

"TCB Option" has the meaning assigned to such term in Section 2.5(A).

"Termination Date" has the meaning assigned to such term in Section 5.1.

"Transmittal Form" has the meaning assigned to such term in Section 2.2.

(B) GENERAL INTERPRETATION. Except as otherwise expressly provided in this Plan or unless the context clearly requires otherwise, the terms defined in this Plan include the plural as well as the singular; the word "including" means including without limitation; the words "hereof," "herein," "hereunder," "in this Plan" and other words of similar import refer to this Plan as a whole and not to any particular Article, Section or other subdivision; and references in this Plan to Articles, Sections, Schedules, and Exhibits refer to Articles and Sections of and Schedules and Exhibits to this Plan. Unless otherwise stated, references to Subsections refer to the Subsections of the Section in which the reference appears. All pronouns used in this Plan include the masculine, feminine and neuter gender, as the context requires. All accounting terms used in this Plan that are not expressly defined in this Plan have the respective meanings given to them in accordance with GAAP.

ARTICLE I. MERGER

1.1. THE MERGER. Subject to the provisions of this Plan, on the Effective Date:

(A) SURVIVING CORPORATION. In accordance with the applicable provisions of the Arkansas Business Corporation Act of 1987, A.C.A. Section 4-27-101, et seq., TCB shall be merged with and into HBI pursuant to the terms and conditions of this Plan and pursuant to the Articles of Merger substantially in the form of EXHIBIT A. Upon consummation of the Merger, the separate existence of TCB shall cease and HBI shall continue as the Surviving Corporation (the "Surviving Corporation") under the corporate name it possesses immediately prior to the Effective Date.

(B) ARTICLES, BYLAWS, DIRECTORS, OFFICERS. The Governing Documents of the Surviving Corporation shall be those of HBI, as in effect immediately prior to the Merger becoming effective. The directors and officers of HBI in office immediately prior to the Merger becoming effective shall be the directors and officers of the Surviving Corporation, together with such additional directors and officers as may thereafter be elected, who shall hold office until such time as their successors are elected and qualified.

(C) EFFECT OF THE MERGER. On the Effective Date, the effect of the Merger shall be that (1) the title to all real estate and other property owned by TCB is vested in the Surviving Corporation and shall not revert or be in any way impaired by reason of the Merger; (2) the Surviving Corporation shall be liable for all Liabilities of TCB whether or not reflected or reserved against in the balance sheets, other financial statements, books of account or records of TCB in the same manner as if the Surviving Corporation had itself incurred such Liabilities or obligations; and (3) a proceeding pending by or against TCB may be continued as if the Merger had not taken place, or the Surviving Corporation may be substituted in place of TCB.

Appraisal Laws, unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost the right to payment under the Appraisal Laws, in which case each such share shall be deemed to have been converted at the Effective Date into the right to receive the Merger Consideration. Each holder of Dissenting Shares who becomes entitled to payment for his TCB Common Stock pursuant to the provisions of the Appraisal Laws shall receive payment for such Dissenting Shares from HBI (but only after the amount thereof shall have been agreed upon or finally determined pursuant to the Appraisal Laws).

1.3. EFFECTIVE DATE. Unless the Parties agree upon another date, the "Effective Date" will be the tenth Business Day after the fulfillment or waiver of each condition precedent set forth in, and the granting of each approval (and expiration of any waiting period) required by, ARTICLE VI. If the Merger is not consummated in accordance with this Plan on or prior to the Termination Date, TCB or HBI may terminate this Plan in accordance with ARTICLE VII. On the Effective Date, Articles of Merger will be filed with the Secretary of State of the State of Arkansas in accordance with applicable law.

ARTICLE II. CONSIDERATION

2.1. MERGER CONSIDERATION. At the Effective Date, without any action on the part of HBI, TCB, or the holder of any of the shares of common stock of TCB, the Merger shall be effected in accordance with the following terms:

(A) EXCEPTION SHARES. All shares of TCB Common Stock owned directly by TCB (including treasury shares), HBI, or any of their Subsidiaries (in each case other than shares in trust accounts or in an another fiduciary capacity, managed accounts and the like or shares held in satisfaction of a debt previously contracted) (the "Exception Shares") shall be cancelled and retired and shall not represent capital stock of the Surviving Company and shall not be exchanged for Merger Consideration or any other consideration.

(B) METHOD OF PAYMENT. The total amount paid for the TCB Common Stock shall be divided between Stock Consideration and Cash Consideration, and, subject to the Conditions set forth in Section 2.1(C), shall be paid by HBI to holders of Eligible TCB Common Stock as follows:

(1) The portion of the Merger Consideration to be paid to holders of Eligible TCB Common Stock who are Qualified Arkansas Residents is .8081 shares of HBI Common Stock for each whole share of Eligible TCB Common Stock held by such Qualified Arkansas Resident as of the date hereof (the "Stock Consideration").

(2) The portion of the Merger Consideration to be paid to the holders of Eligible TCB Common Stock who are not Qualified Arkansas Residents or who, subject to Sections 2.1(C)(2) and 2.2(B), Elect to receive cash, is cash in an amount equal to $35.00 multiplied by the product of the number of shares of Eligible TCB Common Stock held by such non-Qualified Arkansas Resident times .8081 (the "Cash Consideration"). No interest shall be paid on any Cash Consideration.

(3) Notwithstanding any other provision of this Plan, no fractional

shares of HBI Common Stock and no certificates, scrip, or other evidence of ownership of fractional shares will be issued in the Merger. HBI shall pay to each holder of Eligible TCB Common Stock who would otherwise be entitled to a fractional or partial share of HBI Common Stock (the "Fraction") an amount of cash equal to $35.00 multiplied by the product of .8081 times the Fraction (the "Fractional Share Consideration"). No such holder shall be entitled to dividends, interest, or any other rights in respect to such fractional shares and no interest shall be paid on the Fractional Share Consideration.

(C) CONDITIONS TO METHOD OF PAYMENT. The method of payment of Merger Consideration by HBI shall be subject to the following conditions (the "Conditions"):

(1) No HBI Common Stock shall be paid as Stock Consideration to a holder of Eligible TCB Common Stock unless such holder is a Qualified Arkansas Resident. A "Qualified Arkansas Resident" is a holder of Eligible TCB Common Stock who, in the manner required by Section 2.2, represents and warrants to HBI (1) that such holder is an Arkansas resident, (2) that such holder is aware of the requirements of Rule 147 promulgated under the Securities Act concerning restrictions on transferability of the HBI Common Stock received as Stock Consideration (the "Rule 147 Restrictions"), and
(3) agrees to Rule 147 Restrictions.

(2) The total Cash consideration shall not exceed forty-nine percent (49%) of the total Merger Consideration. A holder of Eligible TCB Common Stock who Elects to receive Cash Consideration who is a Qualified Arkansas Resident, may, as a result of the Allocation procedures in Section 2.2(B), receive Stock Consideration.

(D) NON-PERFECTING DISSENTERS. If, at or prior to the Effective Date, any Dissenting Shareholder shall effectively withdraw or lose (through failure to perfect or otherwise) his right to such payment, such holder's shares of TCB Common Stock shall be converted into a right to receive Merger Consideration in accordance with the applicable provisions of this Plan. If such holder shall effectively withdraw or lose (through failure to perfect or otherwise) his right to such payment after the Effective Date, each of such holder's shares of TCB Common Stock shall be converted on a share-by-share basis into the right to receive the Cash Consideration.

2.2. TRANSMITTAL AND ALLOCATION PROCEDURES.

(A) TRANSMITTAL PROCEDURES.

(1) A form (the "Transmittal Form") shall be mailed (the "Mailing Date") as soon as reasonably practicable after the Effective Date to each holder of Eligible TCB Common Stock of record as of the Effective Date. The Transmittal Form shall contain applicable instructions on transmittal of the holder's Eligible TCB Common Stock and shall request a holder of Eligible TCB Common Stock to (a) elect ("Elect") to receive Cash Consideration or Stock Consideration, (b) evidence that they are or are not Arkansas Residents, and (c) evidence that they are aware of and agree to the Rule 147 Restrictions. A holder's Election made on the Transmittal Form is subject to the

Conditions set forth in Section 2.1(C) and, subject to the Allocation made by the Exchange Agent, as set forth in 2.2(B).

(2) Each holder of Eligible TCB Common Stock shall submit the Transmittal Form, properly completed and signed, together with one or more certificates, (or such affidavits and indemnification satisfactory to the Exchange Agent regarding the loss or destruction of such certificates) representing all Eligible TCB Common Stock covered by such Transmittal Form, together with all other applicable transmittal materials, within thirty (30) days of the Mailing Date (the "Expiration Date"). Once submitted, the Transmittal Form is irrevocable. Neither HBI nor the Exchange Agent shall be under any obligation to notify any person of any defect in a Transmittal Form. No interest will be paid on the Cash Consideration or any such fractional shares checks or dividends to which the holder of any surrendered shares shall be entitled to receive upon such delivery.

(3) Any holder of Eligible TCB Common Stock who does not submit an effective, properly completed Transmittal Form to the Exchange Agent by the Expiration Date shall receive only the Cash Consideration for their shares of Eligible TCB Common Stock upon surrender of the certificates of TCB Common Stock in the manner required by the Exchange Agent. Any Merger Consideration into which shares of such shareholder's TCB Common Stock are converted on the Effective Date, any fractional share checks that such shareholder shall be entitled to receive and any dividends paid on such shares of HBI Common Stock for which the record date for determination of shareholders entitled to such dividends is on or after the Effective Date, will be delivered to such shareholder only upon delivery to the Exchange Agent of the effective, properly completed Transmittal Form accompanied by the certificates representing all of such shares of Eligible TCB Common Stock (or indemnity satisfactory to the Exchange Agent, in its judgment, if any of such certificates are lost, stolen or destroyed).

(B) ALLOCATION PROCEDURES.

(1) As soon as reasonably practicable after the Expiration Date, the Exchange Agent shall determine the number of shares of Eligible TCB Common Stock held by Qualified Arkansas Residents, the number of other shares of Eligible TCB Common Stock, and the number of shares of Qualified Arkansas Residents who requested Cash Consideration as their Merger Consideration.

(2) Based on that determination, HBI shall cause the Exchange Agent to allocate (the "Allocation") the Merger Consideration among the holders of Eligible TCB Common Stock pursuant to the following procedures:

(a) All Qualified Arkansas Residents who do not Elect to receive Cash Consideration shall receive the Stock Consideration.

(b) If, after giving effect to the shares of Eligible TCB Common Stock owned by holders who are not Qualified Arkansas Residents and

the shares owned by holders who are Qualified Arkansas Residents and Elected to receive Cash Consideration, the amount of Cash Consideration to be paid as part of the Merger Consideration and payments of cash as Fractional Share Consideration exceeds 49%, then the Exchange Agent shall pay the Cash Consideration to holders who are Qualified Arkansas Residents and who elected Cash Consideration, on a pro rata basis.

(c) A Qualified Arkansas Resident who Elected to receive Cash Consideration but whose Cash Consideration was pro rated, as set forth in the preceding paragraph, will receive the balance of such holder's Merger Consideration as Stock Consideration.

2.3. SHAREHOLDER RIGHTS; STOCK TRANSFERS. Except with respect to the rights of a Dissenting Shareholder who perfects those rights under the Appraisal Laws, on the Effective Date, holders of TCB Common Stock shall cease to be, and shall have no rights as, shareholders of TCB, other than to receive the Merger Consideration provided under this ARTICLE II. After the Effective Date, there shall be no transfers on the stock transfer books of TCB or the Surviving Corporation of the shares of TCB Common Stock that were issued and outstanding immediately prior to the Effective Date.

2.4. RESERVATION OF RIGHT TO REVISE TRANSACTION. In its sole discretion, and notwithstanding any other provision in this Plan to the contrary, HBI may at any time change the method of effecting its acquisition of TCB including offering the HBI Common Stock pursuant to a registration statement filed with the Securities and Exchange Commission; provided, however, that (A) no such change shall reduce the amount of the Total Merger Consideration provided in
Section 2.1(B) or change the kind of consideration to be generally issued to holders of TCB Common Stock as provided for in this Plan; (B) such change shall not result in the tax opinion required by Section 6.1(E) not being rendered, and
(C) no delay caused by such a change shall be the basis upon which HBI terminates this Plan pursuant to Section 7.1(C). If HBI elects to change the method of acquisition, TCB will cooperate with and assist HBI with any necessary amendment to this Plan, and with the preparation and filing of such applications, documents, instruments and notices as may be necessary or desirable, in the opinion of counsel for HBI, to obtain all necessary shareholder approvals and approvals of any regulatory agency, administrative body or other governmental entity.

2.5. OPTIONS. On the Effective Date, by virtue of the Merger and without any action on the part of any holder of an option, each outstanding option granted by TCB to purchase shares of TCB Common Stock ("TCB Option") that is then outstanding and unexercised shall immediately and automatically be fully vested and converted into and become an option to purchase HBI Common Stock ("HBI Option") on the same terms and conditions as are in effect with respect to TCB Option immediately prior to the Effective Date, except that (A) each such HBI Option may be exercised solely for shares of HBI Common Stock, (B) the number of shares of HBI Common Stock subject to such HBI Option shall be equal to the number of shares of TCB Common Stock subject to such TCB Option immediately prior to the Effective Date multiplied by .8081, the product being rounded, if necessary, up or down to the nearest whole share, and (C) the per share exercise price under each such HBI Option shall be

adjusted by dividing the per share exercise price of TCB Option by .8081, and rounding up or down to the nearest cent. The number of shares of TCB Common Stock that are issuable upon exercise of TCB Options as of the date of this Plan and the names of the holders of TCB Options are disclosed in Schedule 2.5.

ARTICLE III. CONDUCT OF BUSINESS PENDING CONSUMMATION

Unless HBI otherwise agrees in writing between the date of this Agreement and the Effective Date, TCB shall, and shall cause each of its Subsidiaries to, conduct their respective business in the ordinary and usual course consistent with past practice and not issue any additional shares of capital stock (except upon the exercise of outstanding TCB Options) and shall use its commercially reasonable best efforts to maintain and preserve their respective business organizations, employees and advantageous business relationships and retain the services of their officers and key employees identified by HBI.

Unless TCB otherwise agrees in writing, between the date of this Agreement and the Effective Date, HBI shall, and shall cause each of its Subsidiaries to conduct their respective business in the ordinary and usual course of business consistent with past practice (except that nothing contained in this Article III shall prohibit HBI from entering into acquisition or merger agreements in which HBI or an Affiliated corporation is the surviving corporation) and not issue any additional shares of capital stock (except in connection with such acquisitions or mergers or in connections with the grant of options, whether or not presently outstanding provided that any grant or grants of new options shall not exceed 30,000 shares of HBI Common Stock in the aggregate) and shall use its commercially reasonable best efforts to maintain and preserve their respective business organizations, employees and advantageous business relationships and retain the services of their officers and key employees identified by TCB.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

4.1. TCB REPRESENTATIONS AND WARRANTIES. TCB hereby represents and warrants to HBI, now and as of the Effective Date, as follows:

(A) RECITALS. The facts set forth in the recitals of this plan with respect to TCB and its Subsidiaries are true and correct.

(B) ORGANIZATION, STANDING AND AUTHORITY. Each of TCB, Twin City, and any other Subsidiary of TCB is in good standing under the laws of the jurisdiction in which it is incorporated or organized and is duly qualified to do business in the States of the United States and foreign jurisdictions where the failure to be duly qualified, individually or in the aggregate, is reasonably likely to have a Material effect on it. All of such jurisdictions are set forth on Schedule 4.1(B). Each of TCB and Twin City, and any other Subsidiary of TCB has in effect all federal, state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted. Twin City is the only Subsidiary of TCB that is an Insured Depository Institution, and its deposits are insured by the Bank Insurance Fund of the FDIC. Except as disclosed in Schedule 4.1(B), Twin City is not subject to any orders, resolutions, commitments, agreements,

undertakings, understandings, or consents that affect its status as such Insured Depository Institution.

(C) SHARES. The outstanding shares of TCB and its Subsidiaries' capital stock are validly issued and outstanding, fully paid and non-assessable, and subject to no preemptive rights. Except as disclosed in Schedule 4.1(C), there are no shares of capital stock or other equity securities of TCB or its Subsidiaries outstanding and no outstanding Rights with respect thereto.

(D) TCB SUBSIDIARIES. TCB has disclosed in Schedule 4.1(D) a list of all of its Subsidiaries, and the number of authorized, issued, and outstanding shares of each class of stock and the percentages of ownership of TCB or a TCB Subsidiary. No equity securities of any of its Subsidiaries are or may become required to be issued (other than to TCB or one of its Subsidiaries) by reason of any Rights with respect thereto. There are no Contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise issue any shares of such Subsidiary's capital stock, and there are no Contracts, commitments, understandings or arrangements relating to the rights of TCB or its Subsidiaries, as applicable, to vote or to dispose of such shares. All of the shares of capital stock of each of its Subsidiaries held by TCB or one of its Subsidiaries are fully paid and non-assessable and are owned by TCB or one of its Subsidiaries free and clear of any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance. Except as disclosed in Schedule 4.1(D), TCB does not own beneficially, directly or indirectly, any shares of any equity securities or similar interests of any corporation, bank, partnership, joint venture, business trust, association or other organization.

(E) CORPORATE POWER. Each of TCB and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its Material properties and assets.

(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval by its shareholders referred to in Section 6.1 and required regulatory approvals, this Plan has been authorized by all necessary corporate action of TCB and this Plan is a valid and binding agreement of TCB, enforceable against TCB in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(G) NO DEFAULTS. Subject to the approval by its shareholders referred to in Section 6.1, the required regulatory approvals referred to in Section 6.1, and the required filings under federal and state securities laws, and except as disclosed in Schedule 4.1(G), the execution, delivery and performance of this Plan and the consummation by TCB do not and will not Materially (1) constitute a breach of, or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of TCB or of any of its Subsidiaries or to which TCB or any of its Subsidiaries or its or their properties is subject or bound, or (2) constitute a breach of, or violation of, or a default under, the Governing Documents of it or any of its Subsidiaries, or (3) require any consent or approval under any such law, rule, regulation, judgment, decree, order,

governmental permit or license or the consent or approval of any other party to any such agreement, indenture or instrument.

(H) TCB FINANCIAL REPORTS. Except as disclosed in Schedule 4.1(H): (a)
the Financial Reports of each of TCB and Twin City did not and will not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (b) each of the balance sheets in or incorporated by reference into the Financial Reports (including the related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the financial position of the entity or entities to which it relates as of its date; (c) each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements in the Financial Reports of Twin City (including any related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the results of operations, changes in shareholders' equity and cash flows, as the case may be, of the entity or entities to which it relates for the periods set forth therein; and (d) in each case in accordance with GAAP during the periods involved, except in each case as may be noted therein, subject to normal and recurring year-end audit adjustments in the case of unaudited statements.

(I) ABSENCE OF UNDISCLOSED LIABILITIES. To TCB's Knowledge, neither it nor any of its Subsidiaries has any Material Liability, except (1) as disclosed on Schedule 4.1(I), (2) as reflected in its Financial Reports prior to the date of this Plan, or (3) for commitments and obligations made, or Liabilities incurred, in the ordinary and usual course of business consistent with past practice since September 30, 2004, and which are fully reflected as liabilities on that entity's books and records. Except as disclosed on Schedule 4.1(I), since September 30, 2004, neither TCB nor any of its Subsidiaries has incurred or paid any Material Liability (including any Liability incurred in connection with any acquisitions in which any form of direct financial assistance of the federal government or any agency thereof has been provided to any Subsidiary).

(J) NO EVENTS. Except as disclosed on Schedule 4.1(J), since September 30, 2004, no event has occurred that, individually or in the aggregate, is reasonably likely to have a Material effect on TCB or any of its Subsidiaries.

(K) PROPERTIES. Except as disclosed in Schedule 4.1(K), TCB and each of its Subsidiaries have good and marketable title, free and clear of all liens, encumbrances, charges, defaults, or equities of any character, to all of the properties and assets, tangible and intangible, reflected in the Financial Reports of TCB as being owned by TCB or its Subsidiaries as of the dates thereof. All buildings and all Material fixtures, equipment, and other property and assets that are held under leases or subleases by TCB or any of its Subsidiaries are held under valid leases or subleases enforceable in accordance with their respective terms, other than any such exceptions to validity or enforceability as are disclosed on Schedule 4.1(K). Other than month-to-month leases on operating equipment, all leases and subleases are identified on Schedule 4.1(K), and except as disclosed on such schedule, are fully transferrable to HBI as the Surviving Corporation under this Plan. TCB further represents, covenants and warrants that,

except as disclosed in Schedule 4.1(K), taking their age and ordinary wear and tear into account, the assets and properties of TCB or any of its Subsidiaries are in good operating condition and repair and have been operated and maintained in the ordinary and usual course of business, consistent with past practice, other than those items of personal property not in use by TCB or its Subsidiaries as of the date hereof.

(L) INTELLECTUAL PROPERTY RIGHTS. Schedule 4.1(L) lists all patents, patent rights, licenses, trade secrets, trademarks, service marks, trademark rights, trade names or trade name rights, copyrights, inventions and other intellectual property rights ("Intellectual Property Rights") necessary for the ownership and operation of the business of TCB or any of its Subsidiaries in the manner in which the business has been historically and currently owned and operated by TCB or its Subsidiaries. To TCB's Knowledge, none of the Intellectual Property Rights interferes with, infringes upon, misappropriates, or violates any intellectual property rights of third parties, and neither TCB nor any of its Subsidiaries has received any written charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation. To TCB's Knowledge, no third party has interfered with, infringed upon, misappropriated, or violated any of the Intellectual Property Rights. Neither TCB nor any of its Subsidiaries has received any written notice with respect to any outstanding injunction, judgment, order, decree, ruling, or charge relating to any item of the Intellectual Property Rights, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of TCB or any of its Subsidiaries, is threatened which challenges the legality, validity, enforceability, use, or ownership of any of the Intellectual Property Rights.

(M) LITIGATION; REGULATORY ACTION. Except as disclosed in Schedule 4.1(M) and except for foreclosures or collection matters initiated by TCB or its Subsidiaries in the ordinary and usual course of business, no litigation, proceeding or controversy before any court or governmental agency is pending or, to TCB's Knowledge, threatened against TCB or any of its Subsidiaries, including, without limitation, any litigation, proceedings, or controversies that allege claims under any fair lending law or other law relating to discrimination, including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, or allege claims under any fair credit reporting laws or laws for the protection of non-public personal information, including the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, and the Fair and Accurate Credit Transaction Act and, to its Knowledge, no such litigation, proceeding or controversy has been, to TCB's Knowledge, threatened; and except as disclosed in Schedule 4.1(M), neither TCB nor any of its Subsidiaries or any of its or their Material properties or their officers, directors or Controlling persons is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, any Regulatory Authority or other governmental authority, and neither TCB nor any of its Subsidiaries has been advised by any of such Regulatory Authorities or other governmental authority that such authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum or understanding, commitment letter or similar submission.

(N) COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.1(N), each of TCB and its Subsidiaries:

(1) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Regulatory Authorities or other governmental authority that are required in order to permit it to own its businesses presently conducted and that are Material to the business of it and its Subsidiaries taken as a whole; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to its Knowledge, no suspension or cancellation of any of them is threatened; and all such filings, applications and registrations are current;

(2) has received no notification or communication from any Regulatory Authority or other governmental authority or the staff thereof
(a) asserting that TCB or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Regulatory Authority or governmental authority enforces, (b) threatening to revoke any license, franchise, permit or governmental authorization of TCB or any of its Subsidiaries, or (c) requiring any of TCB any of its Subsidiaries (or any of its or their officers, directors or Controlling persons) to enter into a cease and desist order, agreement or memorandum of understanding (or requiring the board of directors thereof to adopt any resolution or policy);

(3) is not required to give prior notice to any federal banking or thrift agency of the proposed addition of an individual to its board of directors or the employment of an individual as a senior executive; and

(4) is in compliance in all Material respects with all fair lending laws or other laws relating to discrimination, including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, and all fair credit reporting laws and laws for the protection of non-public personal information, including the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, and the Fair and Accurate Credit Transaction Act.

(O) MATERIAL CONTRACTS. Except as disclosed in Schedule 4.1(O) (and with a true and complete copy of the document or other item in question attached to such schedule), none of TCB or its Subsidiaries, nor any of their respective assets, businesses or operations, is a party to, or is bound or affected by, or receives benefits under, any Contract or amendment thereto by which its respective assets, business or operations may be bound or affected or under which it or any of its respective assets, business or operations receives benefits (excluding extensions of credit made in the ordinary and usual course of business) or Contracts (other than lease Contracts) obligating it or them to pay more than $20,000 in any year and lease Contracts obligating it or them to pay more than $100,000 in any year and which can be terminated upon not less than 60 day's notice. Except as disclosed in Schedule 4.1(O), to TCB's Knowledge, neither TCB nor any of its Subsidiaries is in default under any such Contract, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. Except as disclosed in Schedule 4.1(O), neither TCB nor any of its Subsidiaries is subject to or bound by any Contract containing covenants that limit the ability of TCB or any of its Subsidiaries to compete in any line of business or with any Person or that

involve any restriction of geographical area in which, or method by which, TCB or any of its Subsidiaries may carry on its business (other than as may be required by law or any applicable Regulatory Authority).

(P) REPORTS. Since January 1, 2001, each of TCB and its Subsidiaries has filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with (1) the Arkansas State Bank Department, (2) the FDIC, (3) the Federal Reserve Board, and (4) any other Regulatory Authorities or other governmental authority having jurisdiction with respect to TCB and its Subsidiaries. As of their respective dates (and without giving effect to any amendments or modifications filed after the date of this Plan with respect to reports and documents filed before the date of this Plan), each of such reports and documents, including the financial statements, exhibits and schedules thereto, complied in all Material respects with all of the statutes, rules and regulations enforced or promulgated by the Regulatory Authority with which they were filed and did not contain any untrue statement of a Material fact or omit to state any Material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(Q) BROKERS AND FINDERS. Except as set forth in Schedule 4.1(Q), neither TCB, Twin City, any TCB Subsidiary nor any of their respective officers, directors or employees has employed any broker or finder, or agreed to pay any fees to any director or former director or incurred any Liability for any financial advisory fees, brokerage fees, commissions or finder's fees, and no broker or finder, or director or former director of TCB and Twin City, has acted directly or indirectly for TCB, Twin City or any TCB Subsidiary, in connection with this Plan or the transactions contemplated hereby.

(R) EMPLOYEE BENEFIT PLANS.

(1) Schedule 4.1(R)(1) contains a complete list of Compensation and Benefit Plans of TCB. True and complete copies of all Compensation and Benefit Plans of TCB and its Subsidiaries, including any trust instruments and/or insurance contracts, if any, forming a part thereof, and all amendments thereto, have been supplied to the other Parties.

(2) All ERISA Plans, other than Multiemployer Plans, covering employees or former employees of TCB and its Subsidiaries, to the extent subject to ERISA, are in Material compliance with ERISA. Except as disclosed in Schedule 4.1(R)(2) each Pension Plan of TCB has received a favorable determination letter from the Internal Revenue Service, and TCB is not aware of any circumstances reasonably likely to result in the revocation or denial of any such favorable determination letter or the inability to receive such a favorable determination letter. There is no Material pending or, to TCB's Knowledge, threatened litigation relating to the ERISA Plans. To TCB's Knowledge, neither it nor any of its Subsidiaries has engaged in a transaction with respect to any ERISA Plan that could subject TCB or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an amount which would be Material.

(3) No Liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by TCB or any of its Subsidiaries with respect to any ongoing, frozen or terminated "single-employer plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of an ERISA Affiliate of TCB. Neither TCB nor any of its Subsidiaries presently contributes to a Multiemployer Plan, nor have they contributed to such a plan within the past five calendar years. No notice of a "reportable event," within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the past 12-month period.

(4) All contributions required to be made under the terms of any ERISA Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA, except as disclosed in Schedule
4.1(R)(4). Neither TCB nor any of its Subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.

(6) Neither TCB nor any of its Subsidiaries has any obligations for retiree health and life benefits under any plan, except as set forth in Schedule 4.1(R)(6). There are no restrictions on the rights of TCB or any of its Subsidiaries to amend or terminate any such plan without incurring any Liability thereunder.

(7) Except as disclosed in Schedule 4.l(R)(7), neither the execution and delivery of this Plan nor the consummation of the transactions contemplated by this Plan will (a) result in any payment (including severance, unemployment compensation, golden parachute or otherwise) becoming due to any director or any employee of TCB or any of its Subsidiaries under any Compensation and Benefit Plan or otherwise from TCB or any of its Subsidiaries, (b) increase any benefits otherwise payable under any Compensation and Benefit Plan, or (c) result in any acceleration of the time of payment or vesting of any such benefit.

(S) NO KNOWLEDGE. TCB and its Subsidiaries Know of no reason why the regulatory approvals referred to in Section 6.1 should not be obtained.

(T) LABOR AGREEMENTS. Neither TCB nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, Contract or other agreement or understanding with a labor union or labor organization, nor is TCB or any of its Subsidiaries the

subject of a proceeding asserting that it or any such Subsidiary has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel it or such Subsidiary to bargain with any labor organization as to wages and conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or, to its Knowledge, threatened, nor is it aware of any activity involving its or any of the Subsidiaries' employees seeking to certify a collective bargaining unit or engaging in any other organization activity.

(U) ASSET CLASSIFICATION. TCB and its Subsidiaries have disclosed in Schedule 4.1(U) a list, accurate and complete in all Material respects, of the aggregate amounts of loans, extensions of credit or other assets of TCB and its Subsidiaries that have been classified by it as of the date of the Plan; and no amounts of loans, extensions of credit or other assets that have been classified as of such date by any regulatory examiner as "Other Loans Specially Mentioned," "Substandard," "Doubtful" "Loss," or words of similar import are excluded from the amounts disclosed in such asset classification, other than amounts of loans, extensions of credit or other assets that were charged off by TCB or any Subsidiary prior to such date, and which are also disclosed on Schedule 4.1(U).

(V) ALLOWANCE FOR POSSIBLE LOAN LOSSES. Except as disclosed on Schedule 4.1(V), the allowance for possible loan losses shown on the consolidated balance sheets in the September 30, 2004 Financial Reports of TCB was, and the allowance for possible loan losses to be shown on subsequent Financial Reports of TCB shall be adequate, to the Knowledge of TCB, to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including accrued interest receivable) as of the date thereof.

(W) INSURANCE. Each of TCB and its Subsidiaries has taken all requisite action (including the making of claims and the giving of notices) pursuant to its directors' and officers' liability insurance policy or policies in order to preserve all rights thereunder with respect to all matters that are Known to TCB, except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material adverse effect on TCB or its Subsidiaries. Set forth in Schedule 4.l(W) is a list of all insurance policies maintained by or for the benefit of TCB or its Subsidiaries or their respective directors, officers, employees or agents.

(X) BOOKS AND RECORDS. All books of account, minute books, stock record books and other records of TCB and all of its Subsidiaries, all of which have been made available to HBI, are complete and correct in all Material respects and have been maintained in accordance with the laws of the State of Arkansas for banks, bank holding companies, and corporations, and applicable rules and regulations promulgated thereunder and in accordance with sound business practices. The minute books of TCB and its Subsidiaries contain accurate and complete records in all Material respects of all meetings held of, and corporate action taken by, the shareholders, the Board of Directors and committees of the Board of Directors of Company (as applicable), and no meeting of any such shareholders, Board of Directors or committee has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing, all of those books and records shall be in the possession of TCB and shall be delivered to HBI.

(Y) NO FURTHER ACTION. TCB and its Subsidiaries have taken all action so that the entering into of this Plan and the consummation of the transactions contemplated by this Plan, or any other action or combination of actions, or any other transactions, contemplated by this Plan do not and will not (1) require a vote of shareholders (other than as set forth in Section 6.1), or (2) result in the grant of any rights to any Person under the Governing Documents of TCB or any of its Subsidiaries or under any agreement to which TCB or any such Subsidiaries is a party, or (3) restrict or impair in any way the ability of the Parties to exercise the rights granted under this Plan.

(Z) ENVIRONMENTAL MATTERS.

(1) To TCB's Knowledge, the Participation Facilities and the Loan/Fiduciary Properties are, and have been, in compliance with all Environmental Laws, except as disclosed on Schedule 4.1(Z)(1).

(2) There is no investigation or proceeding pending or, to TCB's Knowledge, threatened by or before any court, governmental agency or board or other forum in which TCB or any of its Subsidiaries or any Participation Facility has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a site owned, leased or operated by TCB or any of its Subsidiaries or any Participation Facility, except as disclosed in Schedule 4.1(Z)(2).

(3) There is no investigation or proceeding pending or, to TCB's Knowledge, threatened by or before any court, governmental agency or board or other forum in which any Loan/Fiduciary Property (or TCB or any of its Subsidiaries in respect of any Loan/Fiduciary Property) has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a Loan/Fiduciary Property, except for such investigations or proceedings disclosed in Schedule 4.1(Z)(3).

(4) To TCB's Knowledge, there is no reasonable basis for any investigation or proceeding of a type described in subparagraph (2) or (3) of this paragraph (Z), except as has been disclosed in Schedule 4.1(Z)(4).

(5) To TCB's Knowledge, and except as disclosed on Schedule 4.1(Z)(5), during the period of (a) ownership or operation by TCB or any of its Subsidiaries of any of their respective current properties, (b) participation in the management of any Participation Facility by TCB or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by TCB or any of its Subsidiaries, there have been no releases of Hazardous Material in, on, under or affecting

any such property, Participation Facility or Loan/Fiduciary Property that violate Environmental Laws.

(6) To TCB's Knowledge, and except as disclosed on Schedule 4.1(Z)(6), prior to the period of (a) ownership or operation by TCB or any of its Subsidiaries of any of their respective current properties, (b) participation in the management of any Participation Facility by TCB or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by TCB or any of its Subsidiaries, there were no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan Fiduciary Property.

(7) To TCB's Knowledge, no underground storage tanks are located on any property of TCB or any of its Subsidiaries, or any Participation Facility or any Loan/Fiduciary Property except as disclosed in Schedule 4.1(Z)(7).

(8) To TCB's Knowledge, and except as disclosed in Schedule 4.1(Z)(8), neither TCB's nor any of its Subsidiaries' facilities have building components containing friable asbestos.

(AA) TAX RETURNS. Except as disclosed in Schedule 4.1(AA), (1) all Tax Returns of TCB have been duly filed, or requests for extensions have been timely filed and have not expired, for periods ended on or prior to the most recent fiscal year-end, and such Tax Returns were true, complete and accurate in all Material respects, (2) all Taxes shown to be due on the Tax Returns have been paid in full, (3) the Tax Returns have been examined by the Internal Revenue Service or the appropriate state, local or foreign taxing authority, or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (4) all Taxes due with respect to completed and settled examinations have been paid in full, (5) no issues have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns which are reasonably likely, individually or in the aggregate, to result in a determination that would have a Material effect on TCB or its Subsidiaries, except as reserved against in the Financial Reports of TCB, and
(6) no waivers of statutes of limitations (excluding such statutes that relate to years under examination by the Internal Revenue Service) have been given by or requested with respect to any Taxes of TCB or its Subsidiaries.

(BB) ACCURACY OF INFORMATION. The statements with respect to TCB and its Subsidiaries contained in this Plan, the Schedules and any other written documents executed and delivered by or on behalf of TCB pursuant to the terms of or relating to this Plan are now and as of the Effective Date true and correct in all Material respects, and such statements and documents do not omit any Material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, now and as of the Effective Date, not misleading.

(CC) DERIVATIVES CONTRACTS. None of TCB or its Subsidiaries is a party to or has agreed to enter into a Derivatives Contract or owns securities that are referred to as "structured notes" except for those Derivatives Contracts and structured notes disclosed in

Schedule 4.1(CC). Schedule 4.1(CC) includes a list of any assets of TCB or its Subsidiaries that are pledged as security for each such Derivatives Contract.

(DD) ACCOUNTING CONTROLS. Each of TCB and its Subsidiaries has devised and maintained systems of internal accounting controls sufficient to provide reasonable assurances that (1) all Material transactions are executed in accordance with management's general or specific authorization, (2) all Material transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP, and to maintain proper accountability for items, (3) access to the Material property and assets of TCB and its Subsidiaries is permitted only in accordance with management's general or specific authorization, and (4) the recorded accountability for items is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

(EE) COMMITMENTS AND CONTRACTS. Neither TCB nor any of its Subsidiaries is a party or subject to any of the following (whether written or oral, express or implied):

(1) except as disclosed in Schedule 4.1(EE)(1), any employment contract or understanding (including any understandings or obligations with respect to severance or termination pay Liabilities or fringe benefits) with any present or former officer, director or employee (other than those which are terminable at will by TCB or any such Subsidiary without any obligation on the part of TCB or any such Subsidiary to make any payment in connection with such termination);

(2) except as disclosed in Schedule 4.1(EE)(2), any Contract, commitment, or understanding with any Person related to or under the Control of any present or former officer, director, or employee of TCB or any of its Subsidiaries, to the extent that such Contract, commitment or understanding Materially impacts the financial condition of any of TCB or its Subsidiaries.

(3) except as disclosed in Schedule 4.1(EE)(3), any real or personal property lease with annual rental payments aggregating $20,000 or more; or

(4) except as disclosed in Schedule 4.1(EE)(4), any Material Contract with any Affiliate.

(FF) CLAIMS OF OFFICERS, DIRECTORS, AND EMPLOYEES. Except as disclosed on Schedule 4.1(FF), to TCB's Knowledge, no officer or director of TCB or any of its Subsidiaries has any claims against TCB or its Subsidiary, other than for their regular accrued but unpaid salary and/or director's fee. Except as disclosed on Schedule 4.1(FF), there are no outstanding or, to TCB's Knowledge, potential claims by a present or former employee against TCB or any of its Subsidiaries under federal or state law, under any employment agreement, or otherwise, other than for wages, salary, or overtime pay owed in respect of the current pay period, or vacation or sick pay or time off owed in respect of the current fiscal year.

(GG) TAKEOVER RESTRICTIONS. TCB and its Subsidiaries have taken all necessary action to exempt (or ensure the continued exemption of) this Plan and the transactions

contemplated by this Plan from any takeover related provisions of TCB's and its Subsidiaries' articles of incorporation.

4.2. HBI REPRESENTATIONS AND WARRANTIES. HBI hereby represents and warrants to TCB now and as of the Effective Date as follows; provided, however, that as to Community Bank, no representations are made or warranties given for any period prior to the effective date of the CFG Merger:

(A) RECITALS. The facts set forth in the Recitals of this Plan with respect to HBI and its Subsidiaries are true and correct.

(B) ORGANIZATION, STANDING AND AUTHORITY. Each of HBI and its Subsidiaries is in good standing under the laws of the jurisdiction in which it is incorporated or organized and is duly qualified to do business and is in good standing in the States of the United States and foreign jurisdictions where the failure to be duly qualified, individually or in the aggregate, is reasonably likely to have a Material effect on it. All of such jurisdictions are set forth on Schedule 4.2(B). Each of HBI and its Subsidiaries has in effect all federal, state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted. FSB and Community Bank are the only Subsidiaries of HBI that are Insured Depository Institutions, and their deposits are insured by the Bank Insurance Fund of the FDIC. Except as disclosed in Schedule 4.2(B), neither FSB nor Community Bank is subject to any orders, resolutions, commitments, agreements, undertakings, understandings, or consents that affect its status as such Insured Depository Institution.

(C) SHARES. The outstanding shares of HBI's and its Subsidiaries' capital stock are validly issued and outstanding, fully paid and non-assessable, and subject to no preemptive rights. Except as disclosed in Schedule 4.2(C), there are no shares of capital stock or other equity securities of HBI and its Subsidiaries outstanding and no outstanding Rights with respect thereto.

(D) HBI SUBSIDIARIES. HBI has disclosed in Schedule 4.2(D) a list of all of its Subsidiaries and the percentages of ownership by HBI. No equity securities of any of its Subsidiaries are or may become required to be issued (other than to HBI or one of its Subsidiaries) by reason of any Rights with respect thereto. There are no Contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise issue any shares of such Subsidiary's capital stock, and there are no Contracts, commitments, understandings or arrangements relating to the rights of HBI or its Subsidiaries, as applicable, to vote or to dispose of such shares. All of the shares of capital stock of each of its Subsidiaries held by HBI or one of its Subsidiaries are fully paid and non-assessable and are owned by HBI or one of its Subsidiaries free and clear of any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance. Except as disclosed in Schedule 4.2(D), HBI does not own beneficially, directly or indirectly, any shares of any equity securities or similar interests of any corporation, bank, partnership, joint venture, business trust, association or other organization.

(E) CORPORATE POWER. HBI and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its Material properties and assets.

(F) CORPORATE AUTHORITY. Subject to the authorization of its Board of Directors on or about December 10, 2004 and any necessary receipt of approval by its shareholders referred to in Section 6.1 and required regulatory approvals, this Plan has been authorized by all necessary corporate action of HBI and such agreement is a valid and binding agreement of HBI, enforceable against HBI in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(G) NO DEFAULTS. Subject to receipt of the required regulatory approvals referred to in Section 6.1, and the required filings under federal and state securities laws, and except as disclosed in Schedule 4.2(G), the execution, delivery and performance of its obligation under this Plan and the consummation by HBI of the transactions contemplated by this Plan do not and will not Materially (1) constitute a breach or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of HBI or any of its Subsidiaries or to which HBI or any of its Subsidiaries or its properties is subject or bound, (2) constitute a breach or violation of, or a default under, the Governing Documents of it or any of its Subsidiaries, or (3) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license or the consent or approval of any other party to any such agreement, indenture or instrument, other than any such consent or approval that is disclosed on Schedule 4.2(G).

(H) HBI FINANCIAL REPORTS. Except as disclosed in Schedule 4.2(H): (a)
the Financial Reports of HBI did not and will not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary to make the statements made therein, in light of the circumstances under which they were made, not misleading; (b) each of the balance sheets in or incorporated by reference into the Financial Reports of HBI (including the related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the financial position of the entity or entities to which it relates as of its date; (c) each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements in the Financial Reports of FSB and Community Bank (including any related notes and schedules thereto) fairly presents and will fairly present the results of operations, changes in shareholders' equity and cash flows, as the case may be, of the entity or entities to which it relates for the periods set forth therein; and (d) in each case in accordance with GAAP during the periods involved, except in each case as may be noted therein, subject to normal and recurring year-end audit adjustments in the case of unaudited statements.

(I) ABSENCE OF UNDISCLOSED LIABILITIES. To HBI's Knowledge, neither it nor any of its Subsidiaries have any Material Liability, except (1) as disclosed on Schedule 4.2(I), (2) as reflected in HBI's Financial Reports prior to the date of this Plan, or (3) for commitments and obligations made, or Liabilities incurred, in the ordinary and usual course of business consistent with past practice since September 30, 2004 and which are fully reflected

as liabilities on the entity's books and records. Except as disclosed on Schedule 4.2(I), since September 30, 2004, neither HBI nor any of its Subsidiaries have incurred or paid any obligation or Liability (including any obligation or Liability incurred in connection with any acquisitions in which any form of direct financial assistance of the federal government or any agency thereof has been provided to any Subsidiary) that, individually or in the aggregate, is reasonably likely to have a Material effect on it.

(J) NO EVENTS. Except as disclosed on Schedule 4.2(J), since September 30, 2004, no event has occurred which is reasonably likely to have a Material effect on HBI or any of its subsidiaries.

(K) PROPERTIES. Except as disclosed in Schedule 4.2(K), HBI and each of its Subsidiaries has good and marketable title, free and clear of all liens, encumbrances, charges, defaults, or equities of any character, to all of the properties and assets, tangible and intangible, reflected in the Financial Reports of HBI as being owned by HBI or its Subsidiaries as of the dates thereof. All buildings and all Material fixtures, equipment, and other property and assets that are held under leases or subleases by HBI or any of its Subsidiaries are held under valid leases or subleases enforceable in accordance with their respective terms, other than any such exceptions to validity or enforceability as are disclosed on Schedule 4.2(K). Other than month-to-month leases on operating equipment, all leases and subleases are identified on Schedule 4.2(K). HBI further represents, covenants and warrants that, except as disclosed in Schedule 4.2(K), taking their age and ordinary wear and tear into account, the assets and properties of HBI or any of its Subsidiaries are in good operating condition and repair and have been operated and maintained in the ordinary and usual course of business, consistent with past practice, other than those items of personal property not in use by HBI as of the date hereof.

(L) INTELLECTUAL PROPERTY RIGHTS. Schedule 4.2(L) lists all Intellectual Property Rights necessary for the ownership and operation of the business of HBI or any of its Subsidiaries in the manner in which the business has been historically and currently owned and operated by HBI. To HBI's Knowledge, none of the Intellectual Property Rights interferes with, infringes upon, misappropriates, or violates any intellectual property rights of third parties, and HBI has not received any written charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation. To HBI's Knowledge, no third party has interfered with, infringed upon, misappropriated, or violated any of the Intellectual Property Rights. Neither HBI nor any of its Subsidiaries has received any written notice with respect to any outstanding injunction, judgment, order, decree, ruling, or charge relating to any item of the Intellectual Property Rights, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of HBI or any of its Subsidiaries, is threatened which challenges the legality, validity, enforceability, use, or ownership of any of the Intellectual Property Rights.

(M) LITIGATION; REGULATORY ACTION. Except as disclosed in Schedule 4.2(M) and except for foreclosures or collection matters initiated by HBI or its Subsidiaries in the ordinary and usual course of business, no litigation, proceeding or controversy before any court or governmental agency is pending, to HBI's Knowledge, or threatened against HBI or any of its Subsidiaries, including, without limitation, any litigation,

proceedings, or controversies that allege claims under any fair lending law or other law relating to discrimination, including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, or allege claims under any fair credit reporting laws or laws for the protection of non-public personal information, including the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, and the Fair and Accurate Credit Transaction Act, and, to its Knowledge, no such litigation, proceeding or controversy has been, to HBI's Knowledge, threatened; and except as disclosed in Schedule 4.2(M), neither HBI nor any of its Subsidiaries or any of its or their Material properties or their officers, directors or Controlling persons is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, any Regulatory Authority or other governmental authority, and neither HBI nor any of its Subsidiaries has been advised by any of such Regulatory Authorities or other governmental authority that such authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum or understanding, commitment letter or similar submission.

(N) COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.2(N), each of HBI or any of its Subsidiaries:

(2) has received no notification or communication from any Regulatory Authority or other governmental authority or the staff thereof
(a) asserting that HBI or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Regulatory Authority or governmental authority enforces, (b) threatening to revoke any license, franchise, permit or governmental authorization of HBI or any of its Subsidiaries, or (c) requiring any of HBI or any of its Subsidiaries (or any of its officers, directors or Controlling persons) to enter into a cease and desist order, agreement or memorandum of understanding (or requiring the board of directors thereof to adopt any resolution or policy);

(O) MATERIAL CONTRACTS. Except as disclosed in Schedule 4.2(O) (and with a true and complete copy of the document or other item in question attached to such schedule), neither HBI nor its Subsidiaries nor its assets, businesses or operations, is a party to, or is bound or affected by, or receives benefits under, any Contract, or amendment thereto, by which its assets, business or operations may be bound or affected or under which it or any of its assets, business or operations receives benefits (excluding extensions of credit made in the ordinary and usual course of business), or Contracts (other than lease Contracts) obligating it to pay more than $20,000 in any year and lease Contracts obligating it or them to pay more than $100,000 in any year and which can be terminated upon not less than 60 day's notice. Except as disclosed in Schedule 4.2(O), to HBI's Knowledge, neither HBI nor any of its Subsidiaries is in default under any such Contract, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. Except as disclosed in Schedule 4.2(O), neither HBI nor any of its Subsidiaries is subject to or bound by any Contract containing covenants that limit the ability of HBI or any of its Subsidiaries to compete in any line of business or with any Person or that involve any restriction of geographical area in which, or method by which, HBI or any of its Subsidiaries may carry on its business (other than as may be required by law or any applicable Regulatory Authority).

(P) REPORTS. Since January 1, 2001, each of HBI and its Subsidiaries has filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with (1) the Arkansas State Bank Department, (2) the FDIC, (3) the Federal Reserve Board, and (4) any other Regulatory Authorities or other governmental authority having jurisdiction with respect to HBI and its Subsidiaries. As of their respective dates (and without giving effect to any amendments or modifications filed after the date of this Plan with respect to reports and documents filed before the date of this Plan), each of such reports and documents, including the financial statements, exhibits and schedules thereto, complied in all Material respects with all of the statutes, rules and regulations enforced or promulgated by the Regulatory Authority with which they were filed and did not contain any untrue statement of a Material fact or omit to state any Material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(Q) BROKERS AND FINDERS. Except as set forth in Schedule 4.2(Q), neither HBI, any of its Subsidiaries nor any of its officers, directors or employees has employed any broker or finder, or agreed to pay any fees to any director or former director or incurred any Liability for any financial advisory fees, brokerage fees, commissions or finder's fees, and no broker or finder, or director or former director of HBI or any of its Subsidiaries have acted directly or indirectly for HBI or any of its Subsidiaries in connection with this Plan or the transactions contemplated hereby.

(R) EMPLOYEE BENEFIT PLANS.

(1) Schedule 4.2(R)(1) contains a complete list of all Compensation and Benefit Plans of HBI and its Subsidiaries. True and complete copies of all Compensation and Benefit Plans of HBI, including any trust instruments and/or insurance contracts, if any, forming a part thereof, and all amendments thereto, have been supplied to the other Parties.

(2) All ERISA Plans, other than Multiemployer Plans, covering employees or former employees of HBI and its Subsidiaries, to the extent subject to ERISA, are in Material compliance with ERISA. Except as disclosed in Schedule 4.2(R)(2) each Pension Plan of HBI has received a favorable determination letter from the Internal Revenue Service, and HBI is not aware of any circumstances reasonably likely to result in the revocation or denial of any such favorable determination letter or the inability to receive such a favorable determination letter. There is no Material pending or, to HBI's Knowledge, threatened litigation relating to the ERISA Plans. To HBI's Knowledge, neither it nor any of its Subsidiaries has engaged in a transaction with respect to any ERISA Plan that could subject HBI or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an amount which would be Material.

(3) No Liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by HBI or any of its Subsidiaries with respect to any ongoing, frozen or terminated "single-employer plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of an ERISA Affiliate of HBI. Neither HBI nor any of its Subsidiaries presently contribute to a Multiemployer Plan, nor has it contributed to such a plan within the past five calendar years. No notice of a "reportable event," within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the past 12-month period.

(4) All contributions required to be made under the terms of any ERISA Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA, except as disclosed in Schedule
4.2(R)(4). Neither HBI nor any of its Subsidiaries has provided, and is not required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.

(5) Except as disclosed in Schedule 4.2(R)(5), under each Pension Plan which is a single-employer plan, as of the last day of the most recent plan year, the actuarially determined present value of all "benefit liabilities," within the meaning of Section 4001(a)(16) of ERISA (as determined on the basis of the actuarial assumptions contained in the plan's most recent actuarial valuation) did not exceed the then current value of the assets of such plan, and there has been no Material change in the financial condition of such plan since the last day of the most recent plan year.

(6) Neither HBI nor any of its Subsidiaries has any obligations for retiree health and life benefits under any plan, except as set forth in Schedule 4.2(R)(6). There are no restrictions on the rights of HBI to amend or terminate any such plan without incurring any Liability thereunder.

(7) Except as disclosed in Schedule 4.2(R)(7), neither the execution and delivery of this Plan nor the consummation of the transactions contemplated by this Plan will (a) result in any payment (including severance, unemployment compensation, golden parachute or otherwise) becoming due to any director or any employee of HBI or any of its Subsidiaries under any Compensation and Benefit Plan or otherwise from HBI or any of its Subsidiaries, (b) increase any benefits otherwise payable under any Compensation and Benefit Plan, or (c) result in any acceleration of the time of payment or vesting of any such benefit.

(S) NO KNOWLEDGE. HBI and its Subsidiaries Know of no reason why the regulatory approvals referred to in Section 6.1 should not be obtained.

(T) LABOR AGREEMENTS. Neither HBI nor any of its Subsidiaries is a party to or bound by any collective bargaining agreement, Contract or other agreement or understanding with a labor union or labor organization, nor is HBI or any of its Subsidiaries the subject of a proceeding asserting that it has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel it to bargain with any labor organization as to wages and conditions of employment, nor is there any strike or other labor dispute involving it pending or, to its Knowledge, threatened, nor is it aware of any activity involving its or employees seeking to certify a collective bargaining unit or engaging in any other organization activity.

(U) ASSET CLASSIFICATION. HBI and its Subsidiaries have disclosed in Schedule 4.2(U) a list, accurate and complete in all Material respects, of the aggregate amounts of loans, extensions of credit or other assets of HBI and its Subsidiaries that have been classified by it as of the date of the Plan; and no amounts of loans, extensions of credit or other assets that have been classified as of such date by any regulatory examiner as "Other Loans Specially Mentioned," "Substandard," "Doubtful" "Loss," or words of similar import are excluded from the amounts disclosed in such asset classification, other than amounts of loans, extensions of credit or other assets that were charged off by HBI or any of its Subsidiaries prior to such date, and which are also disclosed on Schedule 4.2(U).

(V) ALLOWANCE FOR POSSIBLE LOAN LOSSES. Except as disclosed on Schedule 4.2(V), the allowance for possible loan losses shown on the consolidated balance sheets in the September 30, 2004 Financial Reports of HBI was, and the allowance for possible loan losses to be shown on subsequent Financial Reports of HBI shall be adequate, to the Knowledge of HBI, to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including accrued interest receivable) as of the date thereof.

(W) INSURANCE. Each of HBI and its Subsidiaries has taken all requisite action (including the making of claims and the giving of notices) pursuant to its directors' and officers' liability insurance policy or policies in order to preserve all rights thereunder with

respect to all matters that are Known to HBI, except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material adverse effect on HBI or its Subsidiaries. Set forth in Schedule 4.2(W) is a list of all insurance policies maintained by or for the benefit of HBI or its directors, officers, employees or agents.

(X) BOOKS AND RECORDS. All books of account, minute books, stock record books and other records of HBI and its Subsidiaries, all of which have been made available to TCB, are complete and correct in all Material respects and have been maintained in accordance with the laws of the State of Arkansas for banks, bank holding companies, and corporations, and applicable rules and regulations promulgated thereunder and in accordance with sound business practices. The minute books of HBI and its Subsidiaries contains accurate and complete records in all Material respects of all meetings held of, and corporate action taken by, the shareholders, the Board of Directors and committees of the Board of Directors of Company (as applicable), and no meeting of any such shareholders, Board of Directors or committee has been held for which minutes have not been prepared and are not contained in such minute books.

(Y) NO FURTHER ACTION. HBI and its Subsidiaries have taken all action so that the entering into of this Plan and the consummation of the transactions contemplated by this Plan, or any other action or combination of actions, or any other transactions, contemplated by this Plan do not and will not (1) require a vote of shareholders (other than as set forth in Section 6.1), or (2) result in the grant of any rights to any Person under the Governing Documents of HBI or any of its Subsidiaries or under any agreement to which HBI or any of its Subsidiaries is a party, or (3) restrict or impair in any way the ability of the Parties to exercise the rights granted under this Plan.

(Z) ENVIRONMENTAL MATTERS.

(1) To HBI's Knowledge, the Participation Facilities and the Loan/Fiduciary Properties are, and have been, in compliance with all Environmental Laws, except as disclosed on Schedule 4.2(Z)(1).

(2) There is no investigation or proceeding pending or, to HBI's Knowledge, threatened by or before any court, governmental agency or board or other forum in which HBI or any of its Subsidiaries or any Participation Facility has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a site owned, leased or operated by HBI or any of its Subsidiaries or any Participation Facility, except as disclosed in Schedule 4.2(Z)(2).

(3) There is no investigation or proceeding pending or, to HBI's Knowledge, threatened by or before any court, governmental agency or board or other forum in which any Loan/Fiduciary Property (or HBI or any of its Subsidiaries in respect of any Loan/Fiduciary Property) has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially

responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a Loan/Fiduciary Property, except for such investigations or proceedings disclosed in Schedule 4.2(Z)(3).

(4) To HBI's Knowledge, there is no reasonable basis for any investigation or proceeding of a type described in subparagraph (2) or (3) of this paragraph (Z), except as has been disclosed in Schedule 4.2(Z)(4).

(5) To HBI's Knowledge, and except as disclosed on Schedule 4.2(Z)(5), during the period of (a) ownership or operation by HBI of any of its current properties, (b) participation in the management of any Participation Facility by HBI or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by HBI or any of its Subsidiaries, there have been no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan/Fiduciary Property that violate Environmental Laws.

(6) To HBI's Knowledge, and except as disclosed on Schedule 4.2(Z)(6), prior to the period of (a) ownership or operation by HBI or any of its Subsidiaries of any of its current properties, (b) participation in the management of any Participation Facility by HBI or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by HBI or any of its Subsidiaries, there were no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan Fiduciary Property.

(7) To HBI's Knowledge, no underground storage tanks are located on any property of HBI or any of its Subsidiaries, or any Participation Facility or any Loan/Fiduciary Property except as disclosed in Schedule 4.2(Z)(7).

(8) To HBI's Knowledge, and except as disclosed in Schedule 4.2(Z)(8), neither HBI's nor any of its Subsidiaries' facilities have any building components containing friable asbestos.

(AA) TAX RETURNS. Except as disclosed in Schedule 4.2(AA), (1) all Tax Returns of HBI have been duly filed, or requests for extensions have been timely filed and have not expired, for periods ended on or prior to the most recent fiscal year-end, and such Tax Returns were true, complete and accurate in all Material respects, (2) all Taxes shown to be due on the Tax Returns have been paid in full, (3) the Tax Returns have been examined by the Internal Revenue Service or the appropriate state, local or foreign taxing authority, or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (4) all Taxes due with respect to completed and settled examinations have been paid in full, (5) no issues have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns which are reasonably likely, individually or in the aggregate, to result in a determination that would have a Material effect on HBI or any of its Subsidiaries, except as reserved against in the Financial Reports of HBI, and (6) no waivers of

statutes of limitations (excluding such statutes that relate to years under examination by the Internal Revenue Service) have been given by or requested with respect to any Taxes of HBI.

(BB) ACCURACY OF INFORMATION. The statements with respect to HBI and its Subsidiaries contained in this Plan, the Schedules and any other written documents executed and delivered by or on behalf of HBI pursuant to the terms of or relating to this Plan are now and as of the Effective Date true and correct in all Material respects, and such statements and documents do not omit any Material fact necessary to make the statements contained therein, in light of the circumstances under which they were made, now and as of the Effective Date, not misleading.

(CC) DERIVATIVES CONTRACTS. None of HBI or its Subsidiaries is a party to, has not agreed to enter into a Derivatives Contract, and does not own securities that are referred to as "structured notes" except for those Derivatives Contracts and structured notes disclosed in Schedule 4.2(CC). Schedule 4.2(CC) includes a list of any assets of HBI or its Subsidiaries that are pledged as security for each such Derivatives Contract.

(DD) ACCOUNTING CONTROLS. HBI and its Subsidiaries have devised and maintain a system of internal accounting controls sufficient to provide reasonable assurances that (1) all Material transactions are executed in accordance with management's general or specific authorization, (2) all Material transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP, and to maintain proper accountability for items, (3) access to the Material property and assets of HBI and its Subsidiaries is permitted only in accordance with management's general or specific authorization, and (4) the recorded accountability for items is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

(EE) COMMITMENTS AND CONTRACTS. Neither HBI nor any of its Subsidiaries is a party or subject to any of the following (whether written or oral, express or implied):

(1) except as disclosed in Schedule 4.2(EE)(1), any employment contract or understanding (including any understandings or obligations with respect to severance or termination pay Liabilities or fringe benefits) with any present or former officer, director or employee (other than those which are terminable at will by HBI without any obligation on the part of HBI or any such Subsidiary to make any payment in connection with such termination);

(2) except as disclosed in Schedule 4.2(EE)(2), any Contract, commitment, or understanding with any Person related to or under the Control of any present or former officer, director, or employee of HBI or any of its Subsidiaries, to the extent that such Contract, commitment or understanding Materially impacts the financial condition of HBI.

(3) except as disclosed in Schedule 4.2(EE)(3), any real or personal property lease with annual rental payments aggregating $20,000 or more; or

(4) except as disclosed in Schedule 4.2(EE)(4), any Material Contract with any Affiliate.

(FF) CLAIMS OF OFFICERS, DIRECTORS, AND EMPLOYEES. Except as disclosed on Schedule 4.2(FF) to HBI's Knowledge, no officer or director of HBI or any of its Subsidiaries has any claims against HBI or its Subsidiaries, other than for their regular accrued but unpaid salary and/or director's fee. Except as disclosed on Schedule 4.2(FF), there are no outstanding or, to HBI's Knowledge, potential claims by a present or former employee against HBI or any of its Subsidiaries under federal or state law, under any employment agreement, or otherwise, other than for wages, salary, or overtime pay owed in respect of the current pay period, or vacation or sick pay or time off owed in respect of the current fiscal year.

ARTICLE V. COVENANTS

TCB hereby covenants to HBI, and HBI hereby covenants to TCB, as applicable, that:

5.1. BEST EFFORTS. Subject to the terms and conditions of this Plan, each Party shall use its commercially reasonable best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of the Merger by March 31, 2005 (the "Termination Date"), and otherwise to enable consummation of the transactions contemplated by this Plan, and shall cooperate fully with the other Parties to that end (it being understood that a re-solicitation of proxies as a consequence of an HBI Transaction shall not violate this covenant).

5.2. CORPORATE ACTIONS.

(A) SHAREHOLDER VOTE. Each of TCB and HBI shall use their commercially reasonable best efforts to solicit and obtain votes of the holders of their common stock in favor of their respective transactions contemplated by this Plan and, subject to the exercise of their fiduciary duties, the Board of Directors of TCB and HBI shall recommend approval of such transactions by such holders. TCB and HBI shall call a special meeting of the holders of TCB Common Stock and HBI Common Stock, respectively, to be held as soon as practicable for purposes of voting upon the transactions contemplated by this Plan (including the Merger).

(B) THE PROXY. TCB and HBI shall promptly assist each other in the preparation of a combination proxy statement and offering circular (the "Proxy Statement") to be mailed to the holders of TCB Common Stock and HBI Common Stock in connection with the transactions contemplated by this Plan, which shall conform to all applicable legal requirements, and include relevant disclosure to TCB shareholders with regard to HBI as required by applicable securities laws for the offering of HBI Common Stock.

5.3. SECURITIES LAW COMPLIANCE. HBI shall comply with all applicable federal and state securities laws with regard to the offering, sale, and issuance of the HBI Common Stock.

5.4. PUBLICITY. The Parties agree that (a) no communication of any kind, whether written, electronic, or oral, to the shareholders of TCB or HBI or otherwise regarding the Plan, including but not limited to, proxy statements and prospectuses, shall be made without the express prior written consent of the authorized officers of HBI and TCB, and (b) the contents of any such communication shall conform in all respects, whether written, electronic or oral, to the language agreed upon between the Parties; provided, however, if HBI is required by federal or state securities laws or otherwise to make disclosure of certain matters or take other action which would otherwise be covered by the terms of this section, it may make such disclosure or communication without the express prior written consent of TCB, after first giving TCB what HBI, in the exercise of its judgment, determines to be reasonable notice of such disclosure or communication.

5.5. ACCESS; INFORMATION; CONFIDENTIALITY.

(A) Upon reasonable notice, a Party (the "Disclosing Party") shall afford the other Party (the "Receiving Party") and its officers, employees, counsel, accountants and other authorized representatives, access, during normal business hours throughout the period up to the Effective Date, to all of the properties, books, contracts, documents, loan files, commitments, records, and any other information of or relating to the Disclosing Party or its Subsidiaries.

(B) A Receiving Party and its respective agents, attorneys and accountants will maintain the confidentiality of all information provided in connection herewith which has not been publicly disclosed, and shall not use any information obtained pursuant to this Plan for any purpose unrelated to the consummation of the transactions contemplated by this Plan. If this Plan is terminated, each Receiving Party will hold all confidential information and documents obtained pursuant to this paragraph in confidence unless and until such information or documents becomes publicly available other than by reason of any action or failure to act by a Receiving Party or as such Receiving Party is advised by counsel that any such information or document is required by law to be disclosed. In the event of the termination of this Plan, a Receiving Party will, upon request by a Disclosing Party, deliver to the Disclosing Party all documents so obtained by the Receiving Party or destroy such documents and, in the case of destruction, will certify such fact to the Disclosing Party.

(C) A Disclosing Party shall furnish promptly (and cause its accountants and other agents to furnish promptly) to a Receiving Party a copy of each Material report, schedule and other document filed by a Disclosing Party with any Regulatory Authority or other governmental authority, and upon reasonable notice given by a Receiving Party, any other information regarding the business, properties, and personnel of a Disclosing Party as Receiving Party may reasonably request, provided that no investigation pursuant to this Section 5.5 shall affect or be deemed to modify or waive any representation or warranty made by a Disclosing Party in this Plan or the conditions to the obligations of a Disclosing Party to consummate the transactions contemplated by this Plan.

(D) During the period from the date of this Plan to the Effective Date, each Party shall cause its representatives to, confer on a regular and frequent basis with representatives of the other Party.

(E) Each Party shall promptly notify the other Party of (1) any Material change in the business or operations of it or its Subsidiaries, (2) any Material complaints, investigations or hearings (or communications indicating that the same may be contemplated) of any Regulatory Authority or other governmental authority relating to it, or as applicable its Subsidiaries, (3) the initiation or threat of Material litigation involving or relating to it or its Subsidiaries, or (4) any Material event or condition.

5.6. SOLE AGREEMENT TO SELL. Without the prior written consent of HBI, TCB shall not, and it shall cause its Subsidiaries not to, solicit, initiate or encourage inquiries or proposals with respect to, or furnish any nonpublic information relating to or participate in any negotiations or discussions concerning, any acquisition or purchase of all or a substantial portion of the assets of, or a substantial equity interest in, TCB or any of its Subsidiaries or any merger or other business combination with TCB or any of its Subsidiaries other than as contemplated by this Plan. TCB shall instruct its and its Subsidiaries' officers, directors, agents, advisors and Affiliates to refrain from doing any of the foregoing and shall notify HBI immediately if any such inquiries or proposals are received by, or any such negotiations or discussions are sought to be initiated with, TCB or any of its Subsidiaries. The Parties agree that a breach of this provision by TCB shall be deemed a Material breach of this Agreement, regardless of whether such action was taken pursuant to the fiduciary duty of TCB's Board of Directors or otherwise, for which HBI may seek injunctive relief or terminate this Agreement pursuant to Section 7.2, and seek monetary relief for damages from TCB. TCB expressly agrees not to assert or impose any defense to such breach of this Agreement based on the exercise of its fiduciary duty.

5.7. HBI COMMON STOCK ADJUSTMENTS. In the event that HBI changes the number of shares of HBI Common Stock issued and authorized prior to Effective Date of this Plan as a result of a stock split, stock dividend, or similar transaction with respect to the outstanding HBI Common Stock, the amount of HBI Common Stock to be issued to a holder of TCB Common Stock hereunder shall be adjusted accordingly.

5.8. NO RIGHTS TRIGGERED. Except for those consents of Third Parties disclosed on Schedule 4.1(G), TCB and HBI shall take all necessary steps to ensure that the entering into of this Plan and the consummation of the transactions contemplated by this Plan (including the Merger) and any other action or combination of actions, or any other transactions contemplated by this Plan, do not and will not (A) result in the grant of any Rights to any Person under their respective Governing Documents or under any agreement to which TCB or any of its Subsidiaries or HBI, respectively, is a party, or (B) restrict or impair in any way the ability of HBI or TCB, respectively, to exercise the rights granted under this Plan.

5.9. REGULATORY APPLICATIONS. HBI shall (A) promptly prepare and submit applications to the appropriate Regulatory Authorities for approval of the Merger, and (B) promptly make all other appropriate filings to secure all other approvals, consents and rulings that are necessary for the consummation of the Merger by HBI and TCB.

5.10. REGULATORY DIVESTITURES. No later than the Effective Date, TCB shall cease engaging in such activities as HBI shall advise TCB in writing is not permitted to be engaged in by HBI under applicable law following the Effective Date and, to the extent required

by any Regulatory Authority as a condition of approval of the transactions contemplated by this Plan, TCB shall divest any Subsidiary engaged in activities or holding assets that are impermissible for HBI, on terms and conditions agreed to by HBI, as applicable; provided, however, that prior to TCB taking such action, HBI shall certify that the conditions to its obligations under Sections 6.1 and 6.2 to consummate the transactions contemplated by this Plan have been satisfied or waived.

5.11. DIRECTOR AND OFFICER LIABILITY INSURANCE. Prior to the Effective Date, TCB may obtain and prepay "tail" coverage on director and officer liability insurance for a period of three (3) years following the Effective Date, with policy limits not in excess of $2,000,000 per occurrence, on each person serving as an officer or director of TCB and each TCB Subsidiary immediately prior to the Effective Date against all damages, Liabilities, judgments, and claims (and related expenses, including reasonable attorney fees and amounts paid in settlement) with respect to acts or omissions of such officers and directors based upon or arising from his or her capacity as an officer or director of TCB or a TCB Subsidiary, occurring on or prior to the Effective Date.

ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER

6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligation of each Party to effect the transactions contemplated hereby shall be subject to the fulfillment, at or prior to the Effective Date, of the following conditions:

(A) SHAREHOLDER VOTE. The shareholders of TCB and the shareholders of HBI shall have approved of the transactions contemplated herein (including approval of the Merger).

(B) REGULATORY APPROVALS. The Parties shall have procured all necessary regulatory consents and approvals by the appropriate Regulatory Authorities, and any waiting periods relating thereto shall have expired; provided, however, that no such approval or consent shall have imposed any condition or requirement not normally imposed in such transactions that, in the opinion of HBI, would deprive HBI of the Material economic or business benefits of the transactions contemplated by this Plan.

(E) TAX OPINION. HBI and TCB shall have received an opinion from Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C. in the form of EXHIBIT B to the effect that (1) the Merger constitutes a reorganization under Section 368 of the Code, and (2) no gain or

loss will be recognized by shareholders of TCB to the extent they receive shares of HBI Common Stock in exchange for their shares of TCB Common Stock, except that gain or loss may be recognized as to cash received in lieu of fractional share interests. In rendering their opinion, they may require and rely upon representations contained in certificates of officers of HBI, TCB and others.

6.2. CONDITIONS TO OBLIGATIONS OF HBI. Unless waived in writing by HBI, the obligations of HBI to consummate the transactions contemplated by this Plan are subject to the satisfaction at or prior to the Effective Date of the following conditions:

(A) PERFORMANCE. Each of the acts, undertakings, and covenants and other agreements of TCB to be performed at or before the Effective Date shall have been duly performed, and TCB shall not have breached any of the representations, warranties, covenants, and other agreements set forth herein.

(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties of TCB contained in this Plan shall be true and correct, in all Material respects, on and as of the Effective Date with the same effect as though made on and at the Effective Date, except for any such representations and warranties that specifically relate to an earlier date, which shall be true and correct as of such earlier date.

(C) OFFICER'S CERTIFICATE. In addition to the documents described elsewhere in this Plan, HBI shall have received the following documents and instruments:

(i) A certificate signed by the Secretary or Assistant Secretary of TCB certifying that: (A) TCB's board of directors and shareholders have duly adopted resolutions (copies of which shall be attached to such certificate) approving the substantive terms of this Plan and authorizing the consummation of the transactions contemplated by this Plan and certifying that such resolutions have not been amended and remain in full force and effect; (B) each person executing this Plan on behalf of TCB is an officer of TCB, holding the office or offices specified therein, with full power and authority to execute this Plan and any and all other documents in connection with the Plan, and the signature of each person on such documents is his or her genuine signature; and (C) the Governing Documents of TCB (copies of which shall be attached to such certificate) remain in full force and effect; and

(ii) A certificate signed by the President of TCB dated the Effective Date stating that the conditions set forth in Sections 6.2(A); 6.2(B) and 6.2(E) of this Plan have been satisfied as of the Effective Date.

(D) LEGAL OPINION. HBI shall have received a legal opinion, dated the Effective Date, from Hilburn, Calhoon, Harper, Pruniski & Calhoun, Ltd., in substantially the form of EXHIBIT C.

(E) NO MATERIAL CHANGE. During the period from September 30, 2004 to the Effective Date, no Material change in the business, property, assets (including the quality

and value of the loan portfolios and investments), Liabilities, prospects, operations, liquidity, income or condition (financial or otherwise) of TCB and/or Twin City shall have occurred, except for any divestitures required by
Section 5.10.

(F) DESTRUCTION OF PROPERTY. Between the date of this Plan and the Effective Date, there shall have been no damage to or destruction of real property, improvements or personal property of TCB and Twin City which Materially reduces the market value of such property, and no zoning or other order, limitation or restriction imposed against the same that might have a Material impact upon the operations, business, future operations, or prospects of TCB and Twin City; provided, however, that the availability of insurance coverage may be taken into account in determining whether there has been such a Material impact or Material reduction in market value.

(G) OTHER BUSINESS COMBINATIONS, ETC. Other than as contemplated hereunder, subsequent to the date of this Plan, neither TCB nor Twin City shall have entered into any agreement, letter of intent, understanding or other arrangement pursuant to which TCB and Twin City would merge, consolidate with, effect a business combination with, or sell any substantial part of TCB's or Twin City's assets; acquire a significant part of the share of assets of any other person or entity (financial or otherwise); or adopt any "poison pill" or other type of anti-takeover arrangement, any shareholder rights provision, or any "golden parachute" or similar program which would have the effect of Materially decreasing the value of TCB and Twin City or the benefits of acquiring TCB Common Stock.

(H) MAINTENANCE OF CERTAIN COVENANTS. At the Effective Date:

(i) neither TCB nor Twin City shall have issued or repurchased from the date hereof any additional equity or debt securities, or any rights to purchase or repurchase such securities (therefore, there shall be not more than the number of shares of TCB Common Stock and TCB Options set forth in the Recitals of this Plan validly issued and outstanding at the Effective Date); and

(ii) from September 30, 2004, there shall have been no extraordinary sale of assets by TCB or Twin City; and

(I) NO LITIGATION. No action, suit, or other proceeding before any court or any governmental authority pertaining to the transactions contemplated by this Plan or against TCB or any of its subsidiaries or Materially affecting TCB or any of its Subsidiaries shall have been instituted or threatened on or before the Effective Date.

(J) FAIRNESS OPINION. HBI shall have received, within 15 Business Days from the execution of this Agreement, an opinion from Stifel, Nicolaus & Co., St. Louis, Missouri, to the effect that the financial terms of the Merger are fair from a financial point of view to HBI shareholders. Such opinion shall be updated prior to the mailing of the Proxy Statement to HBI's shareholders and shall not have been withdrawn prior to the Effective Date.

6.3. CONDITIONS TO OBLIGATIONS OF TCB. Unless waived in writing by TCB, the obligations of TCB to consummate the transactions contemplated by this Plan are subject to the satisfaction of TCB at or prior to the Effective Date of the following conditions:

(A) PERFORMANCE. Each of the acts, undertakings, and covenants of HBI to be performed at or before the Effective Date shall have been duly performed, and HBI shall not have breached any of its representations, warranties, covenants, and other agreements set forth herein.

(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties of HBI contained in this Plan shall be true and correct, in all Material respects, on and as of the Effective Date with the same effect as though made on and at the Effective Date, except for any such representations and warranties that specifically relate to an earlier date, which shall be true and correct as of such earlier date.

(C) OFFICER'S CERTIFICATE. In addition to the documents described elsewhere in this Plan, TCB shall have received the following documents and instruments:

(i) A certificate signed by the Secretary or Assistant Secretary of HBI certifying that: (A) HBI's board of directors and shareholders have duly adopted resolutions (copies of which shall be attached to such certificate) approving the substantive terms of this Plan and authorizing the consummation of the transactions contemplated by this Plan and certifying that such resolutions have not been amended and remain in full force and effect; (B) each person executing this Plan on behalf of HBI is an officer of HBI, holding the office or offices specified therein, with full power and authority to execute this Plan and any and all other documents in connection with the Plan, and the signature of each person on such documents is his or her genuine signature; and (C) the Governing Documents of HBI (copies of which shall be attached to such certificate) remain in full force and effect; and

(ii) A certificate signed by the President of HBI dated the Effective Date stating that the conditions set forth in Sections 6.3(A); 6.3(B) and 6.3(E) of this Plan have been satisfied as of the Effective Date.

(D) LEGAL OPINION. TCB shall have received a legal opinion, dated the Effective Date, from Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., in substantially the form of Exhibit D.

(E) NO MATERIAL CHANGE. During the period from September 30, 2004 to the Effective Date, no Material change in the business, property, assets (including the quality and value of the loan portfolios and investments), Liabilities, prospects, operations, liquidity, income or condition (financial or otherwise) of HBI shall have occurred.

(F) FAIRNESS OPINION. TCB shall have received, within fifteen (15)
Business Days from the execution of this Agreement, an opinion of Mercer Capital, Memphis, Tennessee, to the effect that the financial terms of the Merger are fair from a financial point of

view to TCB's shareholders. Such opinion shall be updated prior to the mailing of the Proxy Statement to TCB's shareholders and shall not have been withdrawn prior to the Effective Date.

ARTICLE VII. TERMINATION

7.1. TERMINATION UPON CERTAIN CONDITIONS. In the event of the termination or abandonment of this Plan pursuant to the provisions of Section 7.1, this Plan shall become void and have no force or effect, without any liability on the part of the Parties or any of their respective directors or officers or shareholders with respect to this Plan. This Plan may be terminated prior to the Effective Date, either before or after receipt of required shareholder approvals, under the following conditions:

(A) MUTUAL CONSENT. By the mutual consent of HBI and TCB, if the Board of Directors of each so determines by vote of a majority of the members of its entire board.

(B) DELAY. By HBI or TCB in the event the Merger is not consummated by the Termination Date, unless the failure of the consummation of the transactions to occur shall be due to the failure of the Party seeking to terminate this Plan to perform its obligations hereunder in a timely manner; provided, however, that HBI may not terminate the Plan pursuant to this Section 7.2(B), if such delay results from the resolicitation of proxies as a consequence of an HBI Transaction, or any other acquisition or sale transaction, or any offering of securities, in which HBI is involved, or (b) a change in the method of acquisition pursuant to Section 2.4, and provided, further, that a Party may not terminate the Plan pursuant to this Section 7.1(B) if it is in Material breach of any of the provisions of the Plan.

(C) NO FAIRNESS OPINION. By TCB or HBI, respectively, in the event the fairness opinion respectively described in Section 6.3(F) or 6.2(J) is not provided; provided, however, that TCB or HBI may not terminate the Plan pursuant to this Section 7.1(C) unless it has used its commercially reasonable best efforts to obtain such opinion in a timely manner.

(D) NO REGULATORY APPROVALS. By TCB or HBI, in the event that, absent the Material breach of a Party, any of the required regulatory approvals set forth in Section 6.1(B) are denied (or should any such required approval be conditioned upon a substantial deviation from the transactions contemplated); provided however, that either Party may extend the term of this Plan for a sixty
(60) day period to prosecute diligently and overturn such denial provided that such denial has been appealed within fourteen (14) Business Days of the receipt thereof.

7.2. TERMINATION FOR BREACH. This Plan may be terminated prior to the Effective Date, either before or after receipt of required shareholder approvals, by HBI or TCB if there has been a Material breach on the part of the other Party of its representations, warranties, covenants, or other agreements set forth herein or in any Schedule or certificate delivered pursuant hereto. The non-breaching Party or Parties expressly reserve all rights and remedies available in law or equity if this Agreement is terminated for breach.

ARTICLE VIII. OTHER MATTERS

8.1. SURVIVAL. Only the representations, warranties, covenants, or other agreements contained in Articles I and II of this Plan shall survive the Effective Date, regardless of whether a provision specifically states that such provision survives. If the Merger is abandoned and this Plan is terminated, the agreements of the Parties in Sections 7.1, 8.5, 8.6, and 8.13 shall survive such abandonment and termination.

8.2. WAIVER; AMENDMENT. Prior to the Effective Date, any provision of this Plan may be (A) waived in writing by the Party benefited by the provision, or (B) amended or modified at any time (including the structure of the transactions contemplated by this Plan) by an agreement in writing among the Parties approved by their respective Boards of Directors and executed in the same manner as this Plan, except that, after the vote by the shareholders of TCB, the consideration to be received by the shareholders of TCB for each share of TCB Common Stock shall not thereby be altered. Nothing contained in this Section 8.2 is intended to modify HBI'S rights pursuant to Section 2.4.

8.3. COUNTERPARTS. This Plan may be executed in one or more facsimile counterparts, each of which shall be deemed to constitute an original. This Plan shall become effective when one counterpart has been signed by each Party.

8.4. GOVERNING LAW. This Plan shall be governed by, and interpreted in accordance with, the laws of the State of Arkansas, except as federal law may be applicable.

8.5. EXPENSES. Each Party will bear all expenses incurred by it in connection with this Plan and the transactions contemplated by this Plan, except printing and mailing expenses which shall be shared equally between TCB and HBI.

8.6. CONFIDENTIALITY. Each of the Parties and their respective agents, attorneys and accountants will maintain the confidentiality of all information provided in connection herewith which has not been publicly disclosed.

8.7. NOTICES. All notices, demands, and requests given or required to be given by either Party to another Party shall be in writing. All such notices, demands, and requests shall be deemed to have been properly given if served in person, sent by telefacsimile (and receipt confirmed) or by prepaid nationally recognized overnight delivery service providing proof of delivery, addressed as follows:

If to HBI:      HOME BANCSHARES, INC.
                719 Harkrider, Suite 300
                Conway, Arkansas 72032
                Attn: Ron Strother, President
                Fax: 501-993-8701

With a copy to: Mitchell, Williams, Selig, Gates & Woodyard,
                P.L.L.C.
                425 W. Capitol Avenue, Suite 1800
                Little Rock, Arkansas 72201

                              Attn: John S. Selig, Esq.
                              Fax: 501-918-7804

If to TCB or Twin City, to:   TCBANCORP, INC.
                              2716 Lakewood Village Place
                              North Little Rock, Arkansas 72231
                              Attn: Bob Birch, President
                              Fax: 501-812-1459

With a copy to:               Hillburn, Calhoon, Harper, Pruniski &
                              Calhoun, Ltd.
                              One Riverfront Place, Suite 800
                              P.O. Box 5551
                              North Little Rock, Arkansas 72119
                              Attn: John E. Pruniski, III
                              Fax: 501-372-2029

Notices, demands and requests sent pursuant to this section shall be deemed to be received if received by telefacsimile (and receipt confirmed) or by person, on the date of delivery and if sent by prepaid overnight delivery service, on the next Business Day.

8.8. TIME IS OF THE ESSENCE. The Parties hereto agree that time is of the essence with respect to the Effective Date and each and every condition and covenant contained herein.

8.9. ASSIGNMENT. The assignment of this Plan by any Party without the express written consent of the other Parties hereto shall be void.

8.10. BINDING EFFECT. This Agreement shall be binding upon the Parties and their respective successors and assigns.

8.11. SEVERABILITY. The holding of any provision of this Plan invalid, illegal, or unenforceable, in whole or in part, shall not affect the other provisions of this Plan, which shall remain in full force and effect.

8.12. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Plan represents the entire understanding of the Parties with reference to transactions contemplated by this Plan and supersedes any and all other oral or written agreements previously made. Nothing in this Plan, expressed or implied, is intended to confer upon any Person other than the Parties any rights, remedies, obligations or Liabilities under or by reason of this Plan.

8.13. ENFORCEMENT PROCEEDINGS. The Parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Plan were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to an injunction or injunctions to prevent breaches of this Plan and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law

or in equity. In any action or proceeding in connection with the enforcement of this Plan, the prevailing Party will be entitled to reimbursement of its reasonable attorneys' fees and expenses from the non-prevailing Party.

8.14. BENEFIT PLANS. Upon consummation of the Merger, all employees of TCB and its Subsidiaries, except those with whom HBI enters into written employment agreements, shall be deemed to be at-will employees of HBI. From and after the Effective Date, employees of TCB and its Subsidiaries shall be entitled to participate in the pension, employee benefit and similar plans (including stock option, bonus or other incentive plans) on substantially the same terms and conditions as similarly situated employees of HBI. With the exception of stock option plans, where participation will be based upon years of service at HBI for the purpose of determining eligibility to participate in such plans and the vesting of benefits under such plans, HBI shall give effect to years of service with TCB or TCB's Subsidiaries, as the case may be, as if such service were with HBI. Employees of TCB and its Subsidiaries will be entitled to carry over unused vacation days and sick leave accrued as of the Effective Date.

8.15. HEADINGS. The headings contained in this Plan are for reference purposes only and are not part of this Plan.

(Signatures on page following.)

IN WITNESS WHEREOF, the Parties have caused this instrument to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.

TCBANCORP, INC.

By: /s/ BOB BIRCH
    -----------------------------------------
Printed Name: Bob Birch
Title: President

HOME BANCSHARES, INC.

By: /s/ RON STROTHER
    -----------------------------------------
Printed Name: Ron Strother
Title: President

EXHIBITS

Exhibit A   Articles of Merger
Exhibit B   Tax Opinion of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.
Exhibit C   Legal Opinion of Hillburn, Calhoon, Harper, Pruniski & Calhoun, Ltd.
Exhibit D   Legal Opinion of Mitchell, Williams, Selig, Gates & Woodyard,
            P.L.L.C.

Appendix 1, Page A-1

SCHEDULES OF TCB

Schedule 2.5          TCB Option to Purchase Outstanding and Unexercised TCB
                      Common Stock

Schedule 4.1(B)       Jurisdictions Where TCB and its Subsidiaries are Qualified
                      to do Business; Orders, etc. Affecting Status

Schedule 4.1(C)       Shares Outstanding

Schedule 4.1(D)       TCB Subsidiaries

Schedule 4.1(G)       No Defaults - Agreements Requiring Third Party Consent

Schedule 4.1(H)       TCB Financial Reports

Schedule 4.1(I)       Undisclosed Liabilities of TCB

Schedule 4.1(J)       No Events Causing Material Adverse Effect

Schedule 4.1(K)       Properties:  Leases, Subleases, Defects of Title or
                      Condition

Schedule 4.1(L)       Intellectual Property Rights

Schedule 4.1(M)       Litigation, Regulatory Action

Schedule 4.1(N)       Compliance with Laws

Schedule 4.1(O)       Material Contracts

Schedule 4.1(Q)       Brokers and Finders

Schedule 4.1(R)(1)    List of Employee Benefit Plans

Schedule 4.1(R)(2)    Employee Benefit Plans Not Qualified Under ERISA

Schedule 4.1(R)(4)    Pension Accumulated Funding Deficiency

Schedule 4.1(R)(5)    Amount by Which Benefit Liabilities Exceed Plan Assets

Schedule 4.1(R)(6)    Obligations for Retiree Health and Life Benefits

Schedule 4.1(R)(7)    Agreements Resulting in Payments to Employees Under Any
                      Compensation and Benefit Plan with Respect to Proposed
                      Transaction

Schedule 4.1(U)       Asset Classification

Schedule 4.1(V)       Inadequate Allowance for Loan Losses

Schedule 4.1(W)       Insurance

Schedule 4.1(Z)(1)   Noncompliance with Environmental Laws

Schedule 4.1(Z)(2)    Pending Proceedings with Respect to Environmental Matters

Schedule 4.1(Z)(3)    Pending Proceedings with Respect to Environmental Matters
                      Involving Loan/Fiduciary Property

Schedule 4.1(Z)(4)    Pending Proceedings with Respect to Environmental Matters
                      Listed in Sections 4.1(Z)(2) or (3)

Schedule 4.1(Z)(5)    Releases of Hazardous Material During Ownership

Schedule 4.1(Z)(6)    Releases of Hazardous Material Prior to Ownership

Schedule 4.1(Z)(7)    Underground Storage Tanks

Schedule 4.1(Z)(8)    Building Components with Friable Asbestos

Schedule 4.1(AA)      Tax Return Matters

Schedule 4.1(CC)      Derivative Contracts, including a list of any assets
                      pledged as security for such Derivative Contracts

Schedule 4.1(EE)(1)   Employment Contracts Requiring Payment In Connection with
                      Termination

Schedule 4.1(EE)(2)   Contracts with Related Persons

Schedule 4.1(EE)(3)   Leases with Aggregate Annual Rent Exceeding $20,000

Schedule 4.1(EE)(4)   Material Contracts with Affiliates

Schedule 4.1(FF)      Claims of Officers, Directors, Employees

                                SCHEDULES OF HBI

Schedule 4.2(B)       Jurisdictions Where HBI and its Subsidiaries are Qualified
                      to do Business; Orders, etc. Affecting Status

Schedule 4.2(C)       Shares Outstanding

Schedule 4.2(D)       HBI Subsidiaries

Schedule 4.2(G)       No Defaults - Agreements Requiring Third Party Consent

Schedule 4.2(H)       HBI Financial Reports

Schedule 4.2(I)       Undisclosed Liabilities of HBI

Schedule 4.2(J)       No Events Causing Material Effect

Schedule 4.2(K)       Properties:  Leases, Subleases, Defects of Title or
                      Condition

Schedule 4.2(L)       Intellectual Property Rights

Schedule 4.2(M)       Litigation, Regulatory Action

Schedule 4.2(N)       Compliance with Laws

Schedule 4.2(O)       Material Contracts

Schedule 4.2(Q)       Brokers and Finders

Schedule 4.2(R)(1)    List of Employee Benefit Plans

Schedule 4.2(R)(2)    Employee Benefit Plans Not Qualified Under ERISA

Schedule 4.2(R)(4)    Pension Accumulated Funding Deficiency

Schedule 4.2(R)(5)    Amount by Which Benefit Liabilities Exceed Plan Assets

Schedule 4.2(R)(6)    Obligations for Retiree Health and Life Benefits

Schedule 4.2(R)(7)    Agreements Resulting in Payments to Employees Under Any
                      Compensation and Benefit Plan with Respect to Proposed
                      Transaction

Schedule 4.2(U)       Asset Classification

Schedule 4.2(V)       Inadequate Allowance for Loan Losses

Schedule 4.2(W)       Insurance

Schedule 4.2(Z)(1)    Noncompliance with Environmental Laws

Schedule 4.2(Z)(2)    Pending Proceedings with Respect to Environmental Matters

Schedule 4.2(Z)(3)    Pending Proceedings with Respect to Environmental Matters
                      Involving Loan/Fiduciary Property

Schedule 4.2(Z)(4)    Pending Proceedings with Respect to Environmental Matters
                      Listed in Sections 4.2(Z)(2) or (3)

Schedule 4.2(Z)(5)    Releases of Hazardous Material During Ownership

Schedule 4.2(Z)(6)    Releases of Hazardous Material Prior to Ownership

Schedule 4.2(Z)(7)    Underground Storage Tanks

Schedule 4.2(Z)(8)    Building Components with Friable Asbestos

Schedule 4.2(AA)      Tax Return Matters

Schedule 4.2(CC)      Derivative Contracts, including a list of any assets
                      pledged as security for such Derivative Contracts

Schedule 4.2(EE)(1)   Employment Contracts Requiring Payment In Connection with
                      Termination

Schedule 4.2(EE)(2)   Contracts with Related Parties

Schedule 4.2(EE)(3)   Leases with Aggregate Annual Rent Exceeding $20,000

Schedule 4.2(EE)(4)   Material Contracts with Affiliates

Schedule 4.2(FF)      Claims of Officers, Directors, Employees

EXHIBIT 2.3

AGREEMENT AND PLAN OF MERGER

BETWEEN

HOME BANCSHARES, INC.

AND

MARINE BANCORP, INC.

DATED AS OF JANUARY 25, 2005

TABLE OF CONTENTS

RECITALS..................................................................    1

DEFINITIONS...............................................................    2

ARTICLE I. MERGER.........................................................    8
   1.1.  THE MERGER.......................................................    8
   1.2.  DISSENTING SHARES................................................    9
   1.3.  EFFECTIVE DATE...................................................    9

ARTICLE II. CONSIDERATION.................................................    9
   2.1.  MERGER CONSIDERATION.............................................    9
   2.2.  TRANSMITTAL PROCEDURES...........................................   11
   2.3.  MBI SHAREHOLDER RIGHTS; STOCK TRANSFERS..........................   12
   2.4.  RESERVATION OF RIGHT TO REVISE TRANSACTION.......................   12
   2.5.  OPTIONS..........................................................   13

ARTICLE III. ACTIONS PENDING CONSUMMATION.................................   13
   3.1.  CAPITAL STOCK....................................................   13
   3.2.  DIVIDENDS, ETC...................................................   14
   3.3.  INDEBTEDNESS; LIABILITIES; ETC...................................   14
   3.4.  LINE OF BUSINESS; OPERATING PROCEDURES; ETC......................   14
   3.5.  LIENS AND ENCUMBRANCES...........................................   14
   3.6.  COMPENSATION; EMPLOYMENT AGREEMENTS; ETC.........................   14
   3.7.  BENEFIT PLANS....................................................   14
   3.8.  CONTINUANCE OF BUSINESS..........................................   14
   3.9.  AMENDMENTS.......................................................   15
   3.10. CLAIMS...........................................................   15
   3.11. CONTRACTS........................................................   15
   3.12. LOANS............................................................   15

ARTICLE IV. REPRESENTATIONS AND WARRANTIES................................   15
   4.1.  REPRESENTATIONS AND WARRANTIES OF MBI............................   15
   4.2.  REPRESENTATIONS AND WARRANTIES OF HBI............................   26

ARTICLE V. COVENANTS......................................................   30
   5.1.  BEST EFFORTS.....................................................   30
   5.2.  CORPORATE ACTIONS................................................   30
   5.3.  SECURITIES LAW COMPLIANCE........................................   31
   5.4.  PUBLICITY........................................................   31

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   5.5.  ACCESS; DUE DILIGENCE INFORMATION; CONFIDENTIALITY...............   31
   5.6.  SOLE AGREEMENT TO SELL...........................................   32
   5.7.  HBI COMMON STOCK ADJUSTMENTS.....................................   33
   5.8.  STATE TAKEOVER LAW...............................................   34
   5.9.  NO RIGHTS TRIGGERED..............................................   34
   5.10. REGULATORY APPLICATIONS..........................................   34
   5.11. REGULATORY DIVESTITURES..........................................   34
   5.12. CURRENT INFORMATION..............................................   34
   5.13. DIRECTOR AND OFFICER LIABILITY INSURANCE.........................   35

ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER......................   35
   6.1.  CONDITIONS TO EACH PARTY'S OBLIGATIONS...........................   35
   6.2.  CONDITIONS TO OBLIGATIONS OF HBI.................................   36
   6.3.  CONDITIONS TO OBLIGATIONS OF MBI.................................   38

ARTICLE VII. TERMINATION..................................................   39
   7.1.  TERMINATION UPON CERTAIN CONDITIONS..............................   39
   7.2.  TERMINATION FOR BREACH...........................................   40

ARTICLE VIII. OTHER MATTERS...............................................   41
   8.1.  SURVIVAL.........................................................   41
   8.2.  WAIVER; AMENDMENT................................................   41
   8.3.  COUNTERPARTS.....................................................   41
   8.4.  GOVERNING LAW....................................................   41
   8.5.  EXPENSES.........................................................   41
   8.6.  NOTICES..........................................................   41
   8.7.  TIME IS OF THE ESSENCE...........................................   42
   8.8.  ASSIGNMENT.......................................................   42
   8.9.  BINDING EFFECT...................................................   42
   8.10. SEVERABILITY.....................................................   42
   8.11. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES...............   42
   8.12. ENFORCEMENT PROCEEDINGS..........................................   43
   8.13. BENEFIT PLANS....................................................   43
   8.14. HEADINGS.........................................................   43

LIST OF EXHIBITS

MBI SCHEDULES

HBI SCHEDULES

APPENDIX 1 CLASS B PREFERRED STOCK DESCRIPTION

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AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of the 25th day of January, 2005 (this "Agreement" or "Plan"), is by and between HOME BANCSHARES, INC. ("HBI"), an Arkansas corporation, and MARINE BANCORP, INC. ("MBI"), a Florida corporation.

RECITALS

(A) MBI. MBI is a corporation duly organized and existing in good standing under the laws of the State of Florida, with its principal executive offices located in Marathon, Florida. MBI is a registered bank holding company under the Bank Holding Company Act of 1956, as amended. As of the date of this Plan, MBI has 5,000,000 authorized shares of common stock, $0.10 par value ("MBI Common Stock"), of which 635,208 shares of MBI Common Stock are issued and outstanding (no other class of capital stock being authorized). As of September 30, 2004, MBI had Capital (as hereafter defined) of $8,475,435, divided into common stock of $63,521, additional paid in capital of $5,892,337, comprehensive income/surplus of $141,941, and retained earnings of $2,661,564. As of the date of this Plan, options covering 49,347 shares of MBI Common Stock are issued and outstanding which options shall be exercised pursuant to Section 2.5 herein. There are no other options issued and outstanding.

(B) MARINE BANK OF THE FLORIDA KEYS. Marine Bank of the Florida Keys ("Marine") is a Florida state bank duly organized and existing in good standing under the laws of the State of Florida with its main office located in Marathon, Florida. As of the date of this Plan, Marine has 1,000,000 authorized shares of common stock, $5.00 par value per share ("Marine Common Stock") (no other class of capital stock being authorized), of which 630,000 shares are issued and outstanding. All of the issued and outstanding shares of Marine Common Stock are owned by MBI.

(C) HBI. HBI is a corporation duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in Conway, Arkansas. HBI is a financial holding company subject to regulation by the Federal Reserve Board. As represented in its unaudited financial statements for the period ended September 30, 2004, HBI had Capital of $107,178,288, divided into common stock of $266,250, preferred stock of $21,341, preferred treasury stock of $(20,130), accumulated other comprehensive income/surplus of $(481,807), capital surplus of $90,483,188 and retained earnings of $16,909,446. As of the date of this Plan, HBI has 5,000,000 authorized shares of common stock, $0.10 par value ("HBI Common Stock"), of which 2,662,495 shares are issued and outstanding. HBI has 5,500,000 authorized shares of preferred stock, $0.01 par value, of which 2,500,000 shares of Class A Preferred Stock are authorized and 2,134,068 are issued and outstanding, and 3,000,000 shares of Class B Preferred Stock are authorized, and none are issued and outstanding.

(D) APPROVALS. At meetings of the respective Boards of Directors of MBI and HBI, each such Board has approved and authorized the execution of this Plan in counterparts.

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In consideration of their mutual promises and obligations, the Parties further agree as follows:

DEFINITIONS

(A) DEFINITIONS. Capitalized terms used in this Plan have the following meanings:

"A.C.A," means the Arkansas Code Annotated, as amended.

"Accredited Investor" has the meaning assigned to such term in Rule 501 promulgated under the Securities Act.

"Acquisition Proposal" has the meaning assigned to such term in Section 5.6(D).

"Appraisal Laws" means Fla. Stat. Section 607.1301 through Section 607.1333.

"Asset Classification" has the meaning assigned to such term in Section 4.1(U).

"Business Day" means any day other than a Saturday, Sunday, or a day on which FSB is not open for business.

"Capital" means capital stock, surplus and retained earnings determined in accordance with GAAP. Unrealized gains or losses in investment securities will be included when determining Capital.

"Cash Consideration" has the meaning assigned to such term in Section 2.1 (A).

"CFG Merger" means the merger of Community Financial Group, Inc. with and into CB Bancorp, Inc., with CB Bancorp, Inc. as the surviving corporation, effective on December 6, 2003.

"Change of Control Transaction" has the meaning assigned to such term in
Section 7.3.

"Class B Preferred Stock" means the convertible Class B preferred stock to be issued by HBI and exchanged pursuant to Section 2.1(C), and as described in Appendix I.

"Code" has the meaning assigned to such term in Section 4.1(R)(2).

"Community Bank" means Community Bank of Cabot, Arkansas, an Arkansas banking corporation and wholly-owned subsidiary bank of CB Bancorp, Inc., an Arkansas corporation and registered bank holding company, that is an 80% owned Subsidiary of HBI and is the surviving corporation in the CFG Merger.

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"Compensation and Benefit Plans" has the meaning assigned to such term in Section

"Confidentiality Agreement" means that certain Confidentiality Agreement executed by and between MBI and HBI on July 9, 2004.

"Contract" has the meaning assigned to such term in Section 4.1(O).

"Derivatives Contract" means an exchange-traded or over-the-counter swap, forward, future, option, cap, floor or collar financial contract or any other contract that (1) is not included on the balance sheet of the Financial Reports of MBI, and (2) is a derivative contract (including various combinations thereof).

"Dissenting Shares" means the shares of MBI Common Stock held by those shareholders of MBI who have timely and properly exercised their dissenters' rights in accordance with the Appraisal Laws.

"Dissenting Shareholder" has the meaning assigned to such term in Section 1.2.

"Effective Date" has the meaning assigned to such term in Section 1.3.

"Election" has the meaning assigned to such term in Section 2.1 (A).

"Environmental Law" means (1) any federal, state, and/or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any governmental entity, relating to (a) the protection, preservation or restoration of the environment (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource) or to human health or safety, or (b) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Material, in each case as amended and as now in effect, including the Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, and (2) any common law or equitable doctrine (including injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose Liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Material.

"ERISA" has the meaning assigned to such term in Section 4.1(R)(2).

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"ERISA Affiliate" has the meaning assigned to such term in Section 4.1(R)(3).

"ERISA Plans" has the meaning assigned to such term in Section 4.1(R)(2).

"Exception Shares" has the meaning ascribed to such term in Section 2.1(B).

"Exchange Agent" means FirsTrust Financial Services, Inc., an Arkansas corporation whose principal address is 2610 Cantrell Road, Little Rock, Arkansas, 72202.

"Expiration Date" has the meaning assigned to such term in Section 2.2(B).

"FDIC" means the Federal Deposit Insurance Corporation.

"Federal Reserve Board" means the Board of Governors of the Federal Reserve System.

"Financial Reports" (1) as to MBI and HBI, means their respective audited consolidated balance sheets and the related statements of income, changes in shareholders' equity and cash flows for the fiscal years or periods ended December 31, 2001, December 31, 2002 and December 31, 2003, and unaudited consolidated balance sheets and the related statements of income, changes in shareholders' equity and cash flows for the nine (9)-month period ended September 30, 2004; (2) as to Marine, means its call reports for the fiscal years ended December 31, 2001, December 31, 2002, and December 31, 2003; and (3) all other financial reports filed or to be filed subsequent to December 31, 2003, in the form filed with the Federal Reserve Board, FDIC and the Florida Department of Financial Services.

"Florida Banking Laws" means the Florida Interstate Banking Act, Fla. Stat.
Section 658.295, and if applicable Fla. Stat. Section 658.28.

"Fraction" has the meaning assigned to such term in Section 2.1(E).

"Fractional Share Consideration" has the meaning assigned to such term in
Section 2.1(E)

"FSB" means First State Bank, the wholly-owned subsidiary bank of HBI. First State Bank is an Arkansas banking corporation with its principal office in Conway, Arkansas.

"GAAP" means generally accepted accounting principles consistently applied.

"Governing Documents" means the articles of incorporation, charter, and bylaws of the subject entity, including all amendments thereto.

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asbestos, asbestos containing material, urea formaldehyde foam insulation, lead and polychlorinated biphenyl.

"HBI" means Home BancShares, Inc., an Arkansas corporation and registered financial holding company.

"HBI Banks" means FSB and Community Bank.

"HBI Common Stock" has the meaning assigned to such term in paragraph (C) of the Recitals.

"HBI Option" has the meaning assigned to such term in Section 2.5.

"HBI Transaction" means: (1) a merger, consolidation or similar transaction involving HBI, where HBI is not the corporation surviving such transaction or where a change of Control of HBI is otherwise effected, or (2) the disposition, by sale, lease, exchange or otherwise, of assets or deposits of HBI or any of its significant Subsidiaries representing in either case 25% or more of the consolidated assets or deposits of HBI and its Subsidiaries, or (3) the issuance, sale or other disposition (including by way of merger, consolidation, share exchange or any similar transaction) of securities representing 25% or more of the voting power of HBI or any of its significant Subsidiaries other than the issuance of HBI Common Stock upon the exercise of then outstanding options or the conversion of then outstanding convertible securities of HBI.

"Holder" means a holder of any of the shares of MBI Common Stock, excluding Exception Shares and Dissenting Shares, on the Effective Date.

"Insured Depository Institution" has the meaning given it in the Federal Deposit Insurance Act, as amended, and applicable regulations under such statute.

"Intellectual Property Rights" has the meaning given such term in Section 4.1(L).

"Knowledge" (and "Know" or "Known") means the actual (but not the constructive) knowledge of the Chairman, Chief Executive Officer, President, Chief Financial Officer, and Chief Lending Officer of the entity.

"Liability" means any debts, liabilities, obligations and Contracts of the Party, whether the same shall be matured or un-matured; whether accrued, absolute, contingent or otherwise.

"Loan/Fiduciary Property" means any property owned or Controlled by MBI or any of its Subsidiaries or in which MBI or any of its Subsidiaries holds a security or other interest, and, where required by the context, includes any such property where MBI or any of its Subsidiaries constitutes the owner or operator of such property, but only with respect to such property.

"Mailing Date" has the meaning assigned to such term in Section 2.2(B).

"Marine" means Marine Bank of the Florida Keys, as set forth in paragraph (D) of the Recitals.

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"Material" means, with respect to either Party, an event, occurrence or circumstance (including (i) the making of any provisions for possible loan and lease losses, write-downs of other real estate owned and taxes, and (ii) any breach of a representation or warranty contained in this Plan by such Party) that (a) has or is reasonably likely to have a material adverse effect on or constitute a material adverse change in the financial condition, results of operations, business, or future operations of such Party or, as applicable, its Subsidiaries, or (b) would impair such Party's ability to perform its obligations under this Plan or the consummation of any of the transactions contemplated by this Plan; provided, however that the occurrence of the following event or circumstance will not be deemed "Material": (i) acts of terrorism or war (whether or not declared); (ii) a change in laws or regulations applicable to MBI; or (iii) general business or financial condition effecting the commercial banking industry generally. With respect to MBI, any such event, occurrence or circumstance that has been previously disclosed to HBI in writing prior to the date of this Agreement shall not be deemed Material.

"MBI" means Marine Bancorp, Inc., a Florida corporation as set forth in paragraph (A) of the Recitals.

"MBI Common Stock" has the meaning assigned to such term in paragraph (A) of the Recitals.

"MBI Option" has the meaning assigned to such term in Section 2.5.

"Merger" means the merger of MBI with and into HBI as described in Section 1.1.

"Merger Consideration" means the Stock Consideration, Cash Consideration, Mixed Consideration or Fractional Share Consideration a Holder of MBI Common Stock will receive pursuant to ARTICLE II.

"Mixed Consideration" has the meaning assigned to such term in Section 2.1 (A).

"Multiemployer Plans" has the meaning assigned to such term in Section 4.1(R)(2).

"Non-accredited Investor" means a Person who does not represent in his/her/its Transmittal Form that he/she/it is an Accredited Investor or for whom HBI does not have a reasonable belief that such person is an Accredited Investor.

"Non-perfecting Dissenter" has the meaning assigned to such term in Section 2.1(G).

"Participation Facility" means any facility in which MBI or any of its Subsidiaries participates in the management and, where required by the context, includes the owner or operator of such facility.

"Party" means a party to this Plan.

"Pension Plan" has the meaning assigned to such term in Section 4.1 (R)(2).

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"Plan" means this Agreement and Plan of Merger, together with all Exhibits and Schedules annexed hereto, and incorporated by specific reference, as apart of this Plan.

"Proxy Statement" has the meaning assigned to such term in Section 5.2(B).

"Regulation D" means Regulation D promulgated under the Securities Act.

"Required Rule 506 Representations" has the meaning assigned to such term in Section 2.2(C).

"Required Rule 506 Restrictions" has the meaning assigned to such term in
Section 2.2(C).

"Restricted Securities" has the meaning assigned to such term in Regulation D.

"Rule 506" means Rule 506 promulgated under Section 4(2) of the Securities Act.

"Securities Act" means the Securities Act of 1933, as amended, together with the rules and regulations promulgated under such statute.

"Stock Consideration" has the meaning assigned to such term in Section 2.1 (A).

"Superior Proposal" has the meaning assigned such term in Section 5.6(E).

"Surviving Corporation" has the meaning assigned to such term in Section
l.l(A).

"Takeover Restrictions" has the meaning assigned to such term in Section 4.1(Y).

"Tax Returns" has the meaning assigned to such term in Section 4.1(BB).

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"Termination Date" has the meaning assigned to such term in Section 5.1.

"Termination Fee" has the meaning assigned to such term in Section 7.1(F).

"Third Party" means any person or group and their respective directors, officers, employees, representatives, and agents other than HBI, MBI, or any of their Subsidiaries, and their respective directors, officers, employees, representatives, and agents.

"Transmittal Form" has the meaning assigned to such term in Section 2.2(B).

(B) GENERAL INTERPRETATION. Except as otherwise expressly provided in this Plan or unless the context clearly requires otherwise, the terms defined in this Plan include the plural as well as the singular; the word "including" means including without limitation; the words "hereof," "herein," "hereunder," "in this Plan" and other words of similar import refer to this Plan as a whole and not to any particular Article, Section or other subdivision; and references in this Plan to Articles, Sections, Schedules, and Exhibits refer to Articles and Sections of and Schedules and Exhibits to this Plan. Unless otherwise stated, references to Subsections refer to the Subsections of the Section in which the reference appears. All pronouns used in this Plan include the masculine, feminine and neuter gender, as the context requires. All accounting terms used in this Plan that are not expressly defined in this Plan have the respective meanings given to them in accordance with GAAP.

ARTICLE I. MERGER

1.1. THE MERGER. Subject to the provisions of this Plan, on the Effective Date:

(A) SURVIVING CORPORATION. In accordance with the applicable provisions of the Arkansas Business Corporation Act of 1987, A.C.A. Section 4-27-101, et seq., and of Fla. Stat. Section 6076.1107, MBI shall be merged with and into HBI pursuant to the terms and conditions of this Plan and pursuant to the Articles of Merger substantially in the form of EXHIBIT A. Upon consummation of the Merger, the separate existence of MBI shall cease and HBI shall continue as the surviving corporation (the "Surviving Corporation"') under the corporate name it possesses immediately prior to the Effective Date.

(B) GOVERNING DOCUMENTS. The Governing Documents of the Surviving Corporation shall be those of HBI, as in effect immediately prior to the Merger becoming effective. The directors and officers of HBI in office immediately prior to the Merger becoming effective shall be the directors and officers of the Surviving Corporation, together with such additional directors and officers as may thereafter be elected, who shall hold office until such time as their successors are elected and qualified.

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(C) EFFECT OF THE MERGER. On the Effective Date, the effect of the Merger shall be that (1) the title to all real estate and other property owned by MBI is vested in the Surviving Corporation and shall not revert or be in any way impaired by reason of the Merger; (2) the Surviving Corporation shall be liable for all Liabilities of MBI, whether or not reflected or reserved against in the balance sheets, other financial statements, books of account or records of MBI, in the same manner as if the Surviving Corporation had itself incurred such Liabilities or obligations; and (3) a proceeding pending by or against MBI may be continued as if the Merger had not taken place, or the Surviving Corporation may be substituted in place of MBI.

1.2. DISSENTING SHARES. Notwithstanding anything to the contrary in this Plan, each Dissenting Share shall not be converted into a right to receive the Merger Consideration, but the holder of such Dissenting Share shall be entitled only to such rights as are granted by the Appraisal Laws unless and until such holder shall have failed to perfect or shall have effectively withdrawn or lost the right to payment under the Appraisal Laws, in which case each such share shall be deemed to have been converted at the Effective Date into the right to receive the Merger Consideration. MBI shall give HBI prompt notice upon receipt by MBI of any such demands for payment of the fair value of such shares of MBI Common Stock and of withdrawals of such notice and any other instruments provided pursuant to applicable law (any shareholder duly making such demand being called a "Dissenting Shareholder"). MBI shall not make any payment or offer to settle any such demand or waive any failure by a Dissenting Shareholder of a requirement of the Appraisal Laws. Each Dissenting Shareholder who becomes entitled to payment for his MBI Common Stock pursuant to the provisions of the Appraisal Laws shall receive payment for such Dissenting Shares from HBI (but only after the amount thereof shall have been agreed upon or finally determined pursuant to the Appraisal Laws).

1.3. EFFECTIVE DATE. Unless the Parties agree upon another date, the "Effective Date" will be the tenth Business Day after the fulfillment or waiver of each condition precedent set forth in, and the granting of each approval (and expiration of any waiting period) required by, ARTICLE VI. If the Merger is not consummated in accordance with this Plan on or prior to the Termination Date, either Party may terminate this Plan in accordance with ARTICLE VII. On or before the Effective Date, Articles of Merger will be filed with the Secretary of State of Arkansas and Secretary of State of Florida in accordance with applicable law.

ARTICLE II. CONSIDERATION

2.1. MERGER CONSIDERATION. On the Effective Date, without any action on the part of HBI, MBI, or the holder of any of the shares of MBI Common Stock, the Merger shall be effected in accordance with the following terms:

(A) METHOD OF PAYMENT. The total value paid for the MBI Common Stock shall be represented as thirty-nine and one-half percent (39.5%) by Class B Preferred Stock (the "Stock Consideration") and sixty and one-half percent (60.5%) by cash (the "Cash Consideration"). Subject to the provisions of Sections 2.1 and 2.2 of the Plan, a Holder may receive his Merger Consideration as either all Stock Consideration, a combination of Stock Consideration and Cash Consideration as the Holder may specify (the "Mixed Consideration"), or all Cash Consideration, and shall state such Holder's preference (the "Election") on the

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Transmittal Form as provided in Section 2.2(C). Subject to Section 2.1(F), any Holder who does not make such Election shall be entitled only to receive Cash Consideration. However, all Elections for Mixed Consideration and all Cash Consideration shall be subject to an adjustment by the Exchange Agent as provided in Section 2.2(E).

(B) EXCEPTION SHARES. All shares of MBI Common Stock owned directly by MBI (including treasury shares), or any of its Subsidiaries (in each case other than shares in trust accounts or in another fiduciary capacity, managed accounts and the like or shares held in satisfaction of a debt previously contracted) (the "Exception Shares") shall be cancelled and retired as of the Effective Date and shall not thereafter represent capital stock of the Surviving Corporation and shall not be exchanged for Merger Consideration or any other consideration.

(C) STOCK CONSIDERATION. Subject to the provisions of Sections 2.1(A), 2.1(E) through (H), and 2.2, each Holder who elects to receive all or part of his Merger Consideration as Stock Consideration shall receive the number of whole shares of Class B Preferred Stock equal to the product of 0.644737 and the number of shares of such Holder's MBI Common Stock surrendered for Stock Consideration. The shares of Class B Preferred Stock issued as Stock Consideration shall be valued for purposes of the exchange at Thirty-eight Dollars ($38.00) per share. No interest shall be paid on any Stock Consideration.

(D) CASH CONSIDERATION. A Holder who is not eligible for the Stock Consideration pursuant to the provisions of Sections 2.1 or 2.2, or who, subject to Sections 2.1(A) and 2.2(C), elects to receive Cash Consideration shall receive an amount of cash equal to $38.00 multiplied by the product of 0.644737 and the number of shares of such Holder's MBI Common Stock surrendered for such Cash Consideration. No interest shall be paid on any Cash Consideration.

(E) FRACTIONAL SHARE CONSIDERATION. Notwithstanding any other provision of this Plan, no fractional shares of Class B Preferred Stock and no certificates, scrip or other evidence of ownership of fractional shares will be issued in the Merger. HBI shall pay to each Holder of MBI Common Stock who would otherwise be entitled to a fractional or partial share of Class B Preferred Stock (the "Fraction") an amount of cash equal to $38.00 multiplied by the product of 0.644737 and the Fraction (the "Fractional Share Consideration"). No such Holder shall be entitled to dividends, interest, or any other rights in respect to such fractional shares and no interest shall be paid on the Fractional Share Consideration.

(F) RULE 506 EXEMPTION. The offering of Class B Preferred Stock to Holders of MBI Common Stock is being made pursuant to the exemption from registration under Section 4(2) of the Securities Act and Rule 506. Each Holder who does not make the Required Rule 506 Representations and/or does not agree to the Required Rule 506 Restrictions as required hereby and in his Transmittal Form by the Expiration Date shall receive only the Cash Consideration as Merger Consideration. Pursuant to the exemption from registration provided by Rule 506, no more than thirty-five (35) Holders who elect to receive Stock Consideration or Mixed Consideration and who are Non-accredited Investors may receive Class B Preferred Stock. In counting the 35 Holders who will be eligible to receive Stock Consideration or Mixed

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Consideration, the Exchange Agent shall give priority to the Non-accredited Investors making such Election who hold the largest number of shares of MBI Common Stock. All other Holders who are Non-accredited Investors electing Stock Consideration or Mixed Consideration will receive only Cash Consideration. In addition, a Holder who lives in a state (other than Florida or Arkansas) which would require HBI or its employees to register as a broker-dealer, agent, or similar registration under applicable state securities laws in connection with or as a condition to the offering of Class B Preferred Stock shall not be eligible to receive Class B Preferred Stock and shall receive only Cash Consideration.

(G) LIMITATION ON CLASS B PREFERRED SHARES ISSUED. Notwithstanding that a Holder is otherwise eligible to receive Class B Preferred Stock as all or part of such Holder's Merger Consideration, the Class B Preferred Stock will only be issued to the first 200 such Holders who hold the largest number of shares of MBI Common Stock, and as a result the issuance of the Class B Preferred Stock is subject to the Adjustment provided in Section 2.2(E).

(H) NON-PERFECTING DISSENTERS. Shares of MBI Common Stock owned by a Dissenting Shareholder who has either failed to perfect or effectively withdraws or loses the right to payment under the Appraisal Laws (a "Non-perfecting Dissenter") shall be deemed to have been converted at the Effective Date into the right to receive as Merger Consideration only the Cash Consideration.

2.2. TRANSMITTAL PROCEDURES.

(A) TENDER OF SHARES OF MBI COMMON STOCK AND DELIVERY OF CONSIDERATION. Any Merger Consideration into which shares of a Holder's MBI Common Stock are converted on the Effective Date, and any dividends paid on shares of Class B Preferred Stock issued as Stock Consideration for which the record date for determination of shareholders entitled to such dividends is on or after the Effective Date, will be delivered to such Holder only upon delivery to the Exchange Agent of the certificates representing all of such Holder's shares of MBI Common Stock (or an affidavit for indemnity satisfactory to the Exchange Agent, in its judgment, if any of such certificates are lost, stolen or destroyed). No interest shall be paid on any dividends to which such Holder shall be entitled.

(B) TRANSMITTAL FORM. A form (the "Transmittal Form") shall be mailed as soon as reasonably practicable after the Effective Date (the "Mailing Date") to each Holder of record as of the Effective Date containing (i) applicable instructions on transmittal of the Holder's MBI Common Stock, (ii) the Holder's Election as to the Holder's preference for type of Merger Consideration, and
(iii) the required representations and agreements described in Section 2.2(C). Each Holder shall submit to the Exchange Agent a properly completed Transmittal Form on or before the expiration of thirty (30) days from the Mailing Date (the "Expiration Date"), together with his certificate(s) evidencing shares of MBI Common Stock owned by such Holder. Once submitted, the Transmittal Form is irrevocable. Neither HBI nor the Exchange Agent shall be under any obligation to notify any persons of any defect in a Transmittal Form.

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(C) REQUIRED REPRESENTATIONS AND AGREEMENTS, The Transmittal Form shall request a Holder to (i) evidence whether or not they are an Accredited Investor, (ii) make the representations required of persons who wish to acquire securities pursuant to Rule 506 (the "Required Rule 506 Representations"), (iii) agree to the restrictions required by Regulation D and Rule 506 and acknowledge that each share of Class B Preferred Stock to be issued hereunder constitutes Restricted Securities (collectively, the "Required Rule 506 Restrictions"), and
(iv) agree to any other restrictions contained in the Transmittal Form.

(D) MERGER CONSIDERATION ELECTION. The Holder shall make the Election on the Transmittal Form as to the Holder's preference to receive the Merger Consideration as all Stock Consideration, Mixed Consideration, or all Cash Consideration. The Election is a preference only and is subject to an Adjustment by the Exchange Agent as provided in Section 2.2(E).

(E) ADJUSTMENTS. All Elections may be subject to an adjustment determined by the Exchange Agent to (1) achieve a minimum of 39.5% of the total Merger Consideration being paid as Stock Consideration, (2) preserve the exemption from registration pursuant to Rule 506 by limiting to 35 the number of Non-accredited Investors who receive Stock Consideration or Mixed Consideration, as provided in Section 2.1(F); and (3) limit to two hundred (200) the number of Holders who receive Class B Preferred Stock as all or part of their Merger Consideration, as provided in Section 2.1(G).

(F) IMPROPER TENDER. Any Holder who does not submit a properly completed Transmittal Form to the Exchange Agent by the Expiration Date, accompanied by one or more certificates (or such affidavits and indemnification satisfactory to the Exchange Agent regarding the loss or destruction of such certificates) representing all of the shares of MBI Common Stock covered by such Transmittal Form, together with all other applicable transmittal materials, shall receive only Cash Consideration for their shares of MBI Common Stock upon surrender of their certificates of MBI Common Stock in the manner required by the Exchange Agent.

2.3. MBI SHAREHOLDER RIGHTS; STOCK TRANSFERS. On the Effective Date, holders of MBI Common Stock shall cease to be, and shall have no rights as, shareholders of MBI other than to receive the consideration provided under this ARTICLE II, or the rights of a Dissenting Shareholder who perfects those rights under the Appraised Laws. On and after the Effective Date, there shall be no transfers on the stock transfer books of MBI or the Surviving Corporation of the shares of MBI Common Stock that were issued and outstanding immediately prior to the Effective Date.

2.4. RESERVATION OF RIGHT TO REVISE TRANSACTION. In its sole discretion, and notwithstanding any other provision in this Plan to the contrary, HBI may at any time prior to the Effective Date revise the transaction as follows:

(A) HBI may change the method of effecting its acquisition of MBI including, but not limited to, the formation of a subsidiary of HBI for the purpose of acquiring MBI and becoming the Surviving Corporation in the Merger; provided, however, that (i) no such change shall

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change the amount, value or kind of consideration to be generally issued to Holders as provided for in this Plan and, provided further that the Merger Consideration set forth in Section 2.1 is not reduced, (ii) no such change shall result in the tax opinion required by Section 6.1(E) not being rendered, and
(iii) no delay caused by such a change shall be the basis upon which HBI terminates this Plan pursuant to Section 7.1(B).

(B) HBI reserves the right at any time prior to the issuance of the Class B Preferred Stock to offer such stock pursuant to a registration statement filed with the Securities and Exchange Commission and, if required by state law, with the appropriate securities administrators of all applicable states.

(C) If HBI elects to change the method of acquisition pursuant to this
Section 2.4, MBI will cooperate with and assist HBI with any necessary amendment to this Plan, and with the preparation and filing of such applications, documents, instruments and notices as may be necessary or desirable, in the opinion of counsel for HBI, to obtain all necessary shareholder approvals and approvals of any regulatory agency, administrative body or other governmental entity.

2.5. OPTIONS. MBI has granted options to purchase 49,347 shares of MBI Common Stock ("MBI Option"). On the Effective Date, by virtue of the Merger and without any action on the part of any holder of an option, each MBI Option that is then outstanding and unexercised shall immediately and automatically be converted into and become an option to purchase Class B Preferred Stock ("HBI Option") on the same terms and conditions as are in effect with respect to such MBI Option immediately prior to the Effective Date, except that (A) each such HBI Option may be exercised solely for shares of Class B Preferred Stock, (B) the number of shares of Class B Preferred Stock subject to such HBI Option shall be equal to the number of shares of MBI Common Stock subject to such MBI Option immediately prior to the Effective Date multiplied by 0.644737, the product being rounded, if necessary, up or down to the nearest whole share, and (C) the per share exercise price under each such HBI Option shall be adjusted by dividing the per share exercise price of MBI Option by 0.644737, and rounding up or down to the nearest cent. The number of shares of MBI Common Stock that are issuable upon exercise of MBI Options as of the date of this Plan and the names of the holders of MBI Options are disclosed in Schedule 2.5.

ARTICLE III. ACTIONS PENDING CONSUMMATION

Unless HBI otherwise agrees in writing, MBI shall and shall cause its Subsidiaries to conduct their respective business in the ordinary and usual course consistent with past practice and MBI shall use its best efforts to maintain and preserve MBI's and each of its Subsidiaries' business organization, employees and advantageous business relationships and retain the services of MBI's or, as applicable, its Subsidiaries' officers and key employees identified by HBI, and neither MBI nor Marine, without the prior written consent of HBI, will (or cause or allow any of its Subsidiaries to):

3.1. CAPITAL STOCK. Except for the exercise of outstanding MBI Options, or as disclosed in Schedule 4.1(C). issue, sell or otherwise permit to become outstanding any

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additional shares of capital stock of MBI or any of its Subsidiaries, or any Rights with respect thereto, or enter into any agreement with respect to the foregoing, or permit any additional shares of MBI Common Stock to become subject to grants of employee stock options, stock appreciation rights or similar stock-based employee compensation rights.

3.2. DIVIDENDS, ETC. Except for dividends made from the MBI Subsidiaries to MBI consistent with past practices, make, declare or pay any dividend on or in respect of, or declare or make any distribution on, or directly or indirectly combine, split, subdivide, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock or, other than as permitted in or contemplated by this Plan, authorize the creation or issuance of, or issue, any additional shares of its capital stock or any Rights with respect thereto.

3.3. INDEBTEDNESS; LIABILITIES; ETC. Other than in the ordinary and usual course of business consistent with past practice, incur any indebtedness for borrowed money, assume, guarantee, endorse or otherwise as an accommodation become responsible or liable for the obligations of any other individual, corporation or other entity.

3.4. LINE OF BUSINESS; OPERATING PROCEDURES: ETC. Except as may be directed by any regulatory agency: (A) change its lending, investment, liability management or other Material banking policies in any Material respect, or (B) commit to incur any further capital expenditures beyond those disclosed in Schedule 3.4 or incurred in the ordinary and usual course of business consistent with past practices and not exceeding $15,000 individually or $25,000 in the aggregate.

3.5. LIENS AND ENCUMBRANCES. Subject any of its assets to a lien, charge, or encumbrance (including mortgage, pledge or security interest), or permit any such lien, charge or encumbrance to exist.

3.6. COMPENSATION; EMPLOYMENT AGREEMENTS: ETC. Except as disclosed in Schedule 3.6. enter into or amend any employment, severance or similar agreement or arrangement with any of its directors, officers or employees, or grant any salary or wage increase, amend the terms of any MBI Option or increase any employee benefit (including incentive or bonus payments), except normal individual increases in regular compensation to employees in the ordinary and usual course of business consistent with past practice; provided, however, that no increase of salary or compensation to an officer of MBI shall exceed fifteen percent (15%) of such officer's current salary without the approval of HBI.

3.7. BENEFIT PLANS. Except as disclosed in Schedule 3.7, enter into or modify (except as may be required by applicable law) any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement related thereto, in respect of any of its directors, officers or other employees, including taking any action that accelerates the vesting or exercise of any benefits payable thereunder.

3.8. CONTINUANCE OF BUSINESS. Except as disclosed in Schedule 3.6, dispose of or discontinue any portion of its assets, business or properties, that is in excess of $25,000

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individually or $100,000 in the aggregate, or merge or consolidate with, or acquire all or any portion of, the business or property of any other entity (except foreclosures or acquisitions by Marine in its fiduciary capacity, in each case in the ordinary and usual course of business consistent with past practice).

3.9. AMENDMENTS. Amend its Governing Documents.

3.10. CLAIMS. Settle any claim, litigation, action or proceeding involving any Liability for money damages in excess of $25,000 or Material restrictions upon the operations of MBI or any of its Subsidiaries.

3.11. CONTRACTS. Except as disclosed on Schedule 3.11, enter into, renew, terminate or make any change in any Contract (excluding agreements and loans permitted under Section 3.12) of a value or requiring payments during the life of the Contract, including all options, in excess of $25,000, except in the ordinary and usual course of business consistent with past practice with respect to Contracts that are terminable by it without penalty on no more than 60 days prior written notice.

3.12. LOANS. Extend credit or account for loans and leases other than in accordance with existing written lending policies and accounting practices, except that Marine shall not, without the prior notice and consultation with HBI's Chairman or President make any new loan or renew any existing loan in a principal amount in excess of $1,000,000 unless such loans are within MBI's commercial loan policy. To the extent a loan by MBI would be a violation of this
Section 3.12, MBI shall give written notice to HBI of its desire to make such loan and HBI will be permitted two business days to object to such loan. MBI, however, may make such loan after such time period expires if no objection is made by HBI.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

4.1. REPRESENTATIONS AND WARRANTIES OF MBI. MBI hereby represents and warrants to HBI, now and as of the Effective Date, as follows:

(A) RECITALS. The facts set forth in the Recitals of this Plan with respect to MBI and its Subsidiaries are true and correct.

(B) ORGANIZATION, STANDING AND AUTHORITY. Each of MBI, Marine, and any other Subsidiary of MBI is in good standing under the laws of the jurisdiction in which it is incorporated or organized and is duly qualified to do business and is in good standing in the states of the United States and foreign jurisdictions where the failure to be duly qualified, individually or in the aggregate, is reasonably likely to have a Material effect on it. All of such jurisdictions are set forth on Schedule 4.1(B). Each of MBI and Marine, and any other Subsidiary of MBI has in effect all federal, state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted. Marine is the only Subsidiary of MBI that is an Insured Depository Institution, and its deposits are insured by the Bank Insurance Fund of the FDIC. Except as disclosed in Schedule 4.1(B), Marine is not subject to any orders, resolutions, commitments, agreements,

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undertakings, understandings, or consents that affect its status as such Insured Depository Institution.

(C) SHARES. The outstanding shares of MBI and its Subsidiaries' capital stock are validly issued and outstanding, fully paid and non-assessable, and subject to no preemptive rights. Except as disclosed in Schedule 4.1(C), there are no shares of capital stock or other equity securities of MBI or its Subsidiaries outstanding and no outstanding Rights with respect thereto.

(D) MBI SUBSIDIARIES. MBI has disclosed in Schedule 4.1(D) a list of all of its Subsidiaries, and the number of authorized, issued, and outstanding shares of each class of stock and the percentages of ownership of MBI or a MBI Subsidiary. No equity securities of any of its Subsidiaries are or may become required to be issued (other than to MBI or one of its Subsidiaries) by reason of any Rights with respect thereto. There are no Contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise issue any shares of such Subsidiary's capital stock, and there are no Contracts, commitments, understandings or arrangements relating to the rights of MBI or its Subsidiaries, as applicable, to vote or to dispose of such shares. All of the shares of capital stock of each of its Subsidiaries held by MBI or one of its Subsidiaries are fully paid and non assessable and are owned by MBI or one of its Subsidiaries free and clear of any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance. Except as disclosed in Schedule 4.1(D), MBI does not own beneficially, directly or indirectly, any shares of any equity securities or similar interests of any corporation, bank, partnership, joint venture, business trust, association or other organization.

(E) CORPORATE POWER. Each of MBI and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its Material properties and assets.

(F) CORPORATE AUTHORITY. Subject to any necessary receipt of approval by its shareholders referred to in Section 6.1, this Plan has been authorized by all necessary corporate action of MBI and this Plan is a valid and binding agreement of MBI, enforceable against MBI in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(G) NO DEFAULTS. Subject to the approval by its shareholders referred to in Section 6.1, the required regulatory approvals referred to in Section 6.1, and any required filings under federal and state securities laws, and except as disclosed in Schedule 4.1(G), the execution, delivery and performance of this Plan and the consummation by MBI of the transactions contemplated by this Plan do not and will not Materially (1) constitute a breach of, or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of MBI or of any of its Subsidiaries or to which MBI or any of its Subsidiaries or its or their properties is subject or bound, or (2) constitute a breach of, or violation of, or a default under, the Governing Documents of it or any of its Subsidiaries, or (3) require any consent or approval under any such law, rule, regulation,

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judgment, decree, order, governmental permit or license or the consent or approval of any other party to any such agreement, indenture or instrument.

(H) MBI FINANCIAL REPORTS. Except as disclosed in Schedule 4.1(H), the Financial Reports of each of MBI and Marine: (a) did not and will not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary in order to make the statements made therein, and in light of the circumstances under which they were made, were not misleading; (b) each of the balance sheets in or incorporated by reference into the Financial Reports (including the related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the financial position of the entity or entities to which it relates as of its date; (c) each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements in the Financial Reports (including any related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the results of operations, changes in shareholders' equity and cash flows, as the case may be, of the entity or entities to which it relates for the periods set forth therein; and (d) in each case in accordance with GAAP during the periods involved, except in each case as may be noted therein, subject to normal and recurring year-end audit adjustments in the case of unaudited statements.

(I) ABSENCE OF UNDISCLOSED LIABILITIES. Neither MBI nor any of its Subsidiaries has any Material Liability, except (1) as disclosed on Schedule 4.1(I), (2) as reflected in its Financial Reports prior to the date of this Plan, and (3) for commitments and obligations made, or Liabilities incurred, in the ordinary and usual course of business consistent with past practice since September 30, 2004 and which are fully reflected as liabilities on that entity's books and records. Except as disclosed on Schedule 4.1(I), since September 30, 2004, neither MBI nor any of its Subsidiaries has incurred or paid any Material Liability (including any Liability incurred in connection with any acquisitions in which any form of direct financial assistance of the federal government or any agency thereof has been provided to any Subsidiary).

(K) PROPERTIES. Except as disclosed in Schedule 4.1(K), MBI and each of its Subsidiaries have good and marketable title, free and clear of all liens, encumbrances, charges, defaults, or equities of any character, to all of the properties and assets, tangible and intangible, reflected in the Financial Reports of MBI as being owned by MBI or its Subsidiaries as of the dates thereof. All buildings and all Material fixtures, equipment, and other property and assets that are held under leases or subleases by MBI or any of its Subsidiaries are held under valid leases or subleases enforceable in accordance with their respective terms, other than any such exceptions to validity or enforceability as are disclosed on Schedule 4.1(K), Other than month-to-month leases on operating equipment, all leases and subleases are identified on Schedule 4.1(K), and except as disclosed on such schedule, are fully transferable to HBI as the Surviving Corporation under this Plan. MBI further represents, covenants and warrants that, except as disclosed in Schedule 4.1(K), taking their age and ordinary wear and tear into account, the assets

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and properties of MBI or any of its Subsidiaries are in good operating condition and repair and have been operated and maintained in the ordinary and usual course of business, consistent with past practice, other than those items of personal property not in use by MBI or its Subsidiaries as of the date hereof.

(L) INTELLECTUAL PROPERTY RIGHTS. Schedule 4.1(L) lists all patents, patent rights, licenses, trade secrets, trademarks, service marks, trademark rights, trade names or trade name rights, copyrights, inventions and other intellectual property rights ("Intellectual Property Rights") necessary for the ownership and operation of the business of MBI or any of its Subsidiaries in the manner in which the business has been historically and currently owned and operated by MBI or its Subsidiaries. None of the Intellectual Property Rights interferes with, infringes upon, misappropriates, or violates any intellectual property rights of third parties, and neither MBI nor any of its subsidiaries has received any written charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation. To MBI's Knowledge, no third party has interfered with, infringed upon, misappropriated, or violated any of the Intellectual Property Rights. Neither MBI nor any of its Subsidiaries has received any written notice with respect to any outstanding injunction, judgment, order, decree, ruling, or charge relating to any item of the Intellectual Property Rights, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of MBI or any of its Subsidiaries, is threatened which challenges the legality, validity, enforceability, use, or ownership of any of the Intellectual Property Rights.

(M) LITIGATION: REGULATORY ACTION. Except as disclosed in Schedule 4.1(M), no litigation, proceeding or controversy before any court or governmental agency is pending or threatened against MBI or any of its Subsidiaries, including, without limitation, any litigation, proceedings, or controversies that allege claims under any fair lending law or other law relating to discrimination, including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, or allege claims under any fair credit reporting laws or laws for the protection of non-public personal information, including the Fair Credit Reporting Act, and the Gramm-Leach-Bliley Act, and, to its Knowledge, no such litigation, proceeding or controversy has been threatened; and except as disclosed in Schedule 4.1(M), neither MBI nor any of its Subsidiaries or any of its or their Material properties or their officers, directors or Controlling persons is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, any Regulatory Authority or other governmental authority, and neither MBI nor any of its Subsidiaries has been advised by any of such Regulatory Authorities or other governmental authority that such authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum or understanding, commitment letter or similar submission.

(N) COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.1(N), each of MBI and its Subsidiaries:

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(2) Has received no notification or communication from any Regulatory Authority or other governmental authority or the staff thereof
(a) asserting that MBI or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Regulatory Authority or governmental authority enforces, (b) threatening to revoke any license, franchise, permit or governmental authorization of MBI or any of its Subsidiaries, or (c) requiring any of MBI or its Subsidiaries (or any of its or their officers, directors or Controlling persons) to enter into a cease and desist order, agreement or memorandum of understanding (or requiring the board of directors thereof to adopt any resolution or policy);

(3) Is not required to give prior notice to any federal banking or thrift agency of the proposed addition of an individual to its Board of Directors or the employment of an individual as a senior executive; and

(O) MATERIAL CONTRACTS. Except as disclosed in Schedule 4.1(O) (and with a true and complete copy of the document or other item in question attached to such schedule), none of MBI or its Subsidiaries, nor any of their respective assets, businesses or operations, is a party to, or is bound or affected by, or receives benefits under, any written or oral contract, indenture, agreement, lease, standby letter of credit, mortgage, loan or commitment ("Contract") or Contracts obligating it or them to pay more than $25,000 in any year and which can be terminated upon not less than sixty (60) days' notice, excluding those Contracts evidencing loans actually made by Marine in the ordinary and usual course of business in an amount less than $50,000. Except as disclosed in Schedule 4.1(O), neither MBI nor any of its Subsidiaries is in default under any such Contract to which it is a party, by which its respective assets, business or operations may be bound or affected, or under which it or any of its respective assets, business or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. Except as disclosed in Schedule 4.1(0), neither MBI nor any of its Subsidiaries is subject to or bound by any Contract containing covenants that limit the ability of MBI or any of its Subsidiaries to compete in any line of business or with any Person or that involve any restriction of geographical

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area in which, or method by which, MBI or any of its Subsidiaries may carry on its business (other than as may be required by law or any applicable Regulatory Authority).

(P) REPORTS. Since January 1, 2001 each of MBI and its Subsidiaries has filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with (1) the Florida Department of Financial Services, (2) the FDIC, (3) the Federal Reserve Board, and (4) any other Regulatory Authorities or other governmental authority having jurisdiction with respect to MBI and its Subsidiaries. As of their respective dates (and without giving effect to any amendments or modifications filed after the date of this Plan with respect to reports and documents filed before the date of this Plan), each of such reports and documents, including the financial statements, exhibits and schedules thereto, complied in all Material respects with all of the statutes, rules and regulations enforced or promulgated by the Regulatory Authority with which they were filed and did not contain any untrue statement of a Material fact or omit to state any Material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not misleading.

(Q) BROKERS AND FINDERS. Except as set forth in Schedule 4.1(0), neither MBI, Marine, any MBI Subsidiary, nor any of their respective officers, directors or employees has employed any broker or finder, or agreed to pay any fees to any director or former director or incurred any Liability for any financial advisory fees, brokerage fees, commissions or finder's fees, and no broker or finder, or director or former director of MBI and Marine, has acted directly or indirectly for MBI, Marine or any MBI Subsidiary, in connection with this Plan or the transactions contemplated hereby.

(R) EMPLOYEE BENEFIT PLANS.

(1) Schedule 4.1(R)(1) contains a complete list of all bonus, deferred compensation, pension, retirement, profit-sharing, thrift savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option plans, all employment or severance contracts, all medical, dental, health and life insurance plans, all other employee benefit plans, Contracts or arrangements and any applicable "change of control" or similar provisions in any plan, Contract or arrangement maintained or contributed to by MBI or any of its Subsidiaries for the benefit of employees, former employees, directors, former directors or their beneficiaries (the "Compensation and Benefit Plans"). True and complete copies of all Compensation and Benefit Plans of MBI and its Subsidiaries, including any trust instruments and/or insurance contracts, if any, forming a part thereof, and all amendments thereto, have been supplied to HBI.

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ERISA ("Pension Plan") and which is intended to be qualified under Section
401 (a) of the Internal Revenue Code of 1986 (as amended, the "Code") has received a favorable determination letter from the Internal Revenue Service, and it is not aware of any circumstances reasonably likely to result in the revocation or denial of any such favorable determination letter or the inability to receive such a favorable determination letter. There is no Material litigation relating to the ERISA Plans pending or, to MBI's Knowledge, threatened. Neither MBI nor any of its Subsidiaries has engaged in a transaction with respect to any ERISA Plan that could subject MBI or any of its Subsidiaries to a tax or penalty imposed by either
Section 4975 of the Code or Section 502(i) of ERISA in an amount which would be Material.

(3) No Liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by MBI or any of its Subsidiaries with respect to any ongoing, frozen or terminated "single-employer plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single- employer plan of any entity which is considered one employer with MBI under Section 4001(a)(15) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither MBI nor any of its Subsidiaries presently contributes to a Multiemployer Plan, nor have they contributed to such a plan within the past five calendar years. No notice of a "reportable event," within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the past 12-month period.

(4) All contributions required to be made under the terms of any ERISA Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA, except as disclosed in Schedule
4.1(R)(4). Neither MBI nor any of its Subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.

(6) Neither MBI nor any of its Subsidiaries has any obligations for retiree health and life benefits under any plan, except as set forth in Schedule 4.1(R)(6). There are no restrictions on the rights of MBI or any of its Subsidiaries to amend or terminate any such plan without incurring any Liability thereunder.

(7) Except as disclosed in Schedule 4.1(R)(7), neither the execution and delivery of this Plan nor the consummation of the transactions contemplated by this

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Plan will (a) result in any payment (including severance, unemployment compensation, golden parachute or otherwise) becoming due to any director or any employee of MBI or any of its Subsidiaries under any Compensation and Benefit Plan or otherwise from MBI or any of its Subsidiaries, (b) increase any benefits otherwise payable under any Compensation and Benefit Plan, or (c) result in any acceleration of the time of payment or vesting of any such benefit.

(S) NO KNOWLEDGE. MBI and its Subsidiaries Know of no reason why the regulatory approvals referred to in Section 6.1 should not be obtained.

(T) LABOR AGREEMENTS. Neither MBI nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, Contract or other agreement or understanding with a labor union or labor organization, nor is MBI or any of its Subsidiaries the subject of a proceeding asserting that it or any such Subsidiary has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel it or such Subsidiary to bargain with any labor organization as to wages and conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or, to its Knowledge, threatened, nor is it aware of any activity involving its or any of the Subsidiaries' employees seeking to certify a collective bargaining unit or engaging in any other organization activity.

(U) ASSET CLASSIFICATION. MBI and its Subsidiaries have disclosed in Schedule 4.1(U) a list, accurate and complete in all Material respects, of the aggregate amounts of loans, extensions of credit or other assets of MBI and its Subsidiaries that have been classified by it as of September 30, 2004 (the "Asset Classification"); and no amounts of loans, extensions of credit or other assets that have been classified as of September 30, 2004 by any regulatory examiner as "Other Loans Specially Mentioned," "Substandard," "Doubtful" "Loss," or words of similar import are excluded from the amounts disclosed in the Asset Classification, other than amounts of loans, extensions of credit or other assets that were charged off by MBI or any Subsidiary prior to September 30, 2004, and which are also disclosed on Schedule 4.1(U).

(V) ALLOWANCE FOR POSSIBLE LOAN LOSSES. Except as disclosed on Schedule 4.1(V), the allowance for possible loan losses shown on the consolidated balance sheets in the September 30, 2004 Financial Reports of MBI and to be shown on subsequent Financial Reports of MBI was and, to the Knowledge of MBI, shall be adequate to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including accrued interest receivable) as of the date thereof.

(W) INSURANCE. Each of MBI and its Subsidiaries has taken all requisite action (including the making of claims and the giving of notices) pursuant to its directors' and officers' liability insurance policy or policies in order to preserve all rights thereunder with respect to all matters that are Known to MBI, except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material adverse effect on MBI or its Subsidiaries. Set forth in Schedule 4.1(W) is a list of all insurance policies maintained by or for the benefit of MBI or its Subsidiaries or their respective directors, officers, employees or agents.

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(X) BOOKS AND RECORDS. All books of account, minute books, stock record books and other records of MBI and all of its Subsidiaries, all of which have been made available to HBI, are complete and correct in all Material respects and have been maintained in accordance with the laws of the State of Florida for banks, bank holding companies, and corporations, and applicable rules and regulations promulgated thereunder and in accordance with sound business practices. The minute books of MBI and its Subsidiaries contain accurate and complete records in all Material respects of all meetings held of, and corporate action taken by, the shareholders, the Boards of Directors and committees of the Boards of Directors of MBI or a Subsidiary of MBI (as applicable), and no meeting of any such shareholders, Boards of Directors or committees has been held for which minutes have not been prepared and are not contained in such minute books. At the Effective Date, all of those books and records shall be in the possession of MBI and shall be delivered to HBI.

(Y) STATE TAKEOVER LAWS; ARTICLES OF INCORPORATION. MBI and its Subsidiaries have taken all necessary action to exempt (or ensure the continued exemption of) this Plan and the transactions contemplated by this Plan from (1) the provisions of Fla. Stat. Sections 607.0901 and 607.0902, (2) any other applicable state takeover or similar laws, affecting or restricting the ability of MBI to merge into HBI or otherwise consummate this Plan, and (3) any takeover-related provisions of MBI's and its Subsidiaries' Governing Documents (phrases (1), (2), and (3) collectively, the "Takeover Restrictions").

(Z) NO FURTHER ACTION. MBI and its Subsidiaries have taken all action so that the entering into of this Plan and the consummation of the transactions contemplated by this Plan, or any other action or combination of actions, or any other transactions, contemplated by this Plan do not and will not (1) require a vote of shareholders (other than as set forth in Section 6.1), or (2) result in the grant of any rights to any Person under the Governing Documents of MBI or any of its Subsidiaries or under any agreement to which MBI or any such Subsidiaries is a party, or (iii) restrict or impair in any way the ability of any Party to exercise the rights granted under this Plan.

(AA) ENVIRONMENTAL MATTERS.

(1) The Participation Facilities and the Loan/Fiduciary Properties are, and have been, in compliance with all Environmental Laws, except as disclosed on Schedule 4.1(AA)(1).

(2) There is no investigation or proceeding pending or, to MBI's Knowledge, threatened by or before any court, governmental agency or board or other forum in which MBI or any of its Subsidiaries or any Participation Facility has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a site owned, leased or operated by MBI or any of its Subsidiaries or any Participation Facility, except as disclosed in Schedule 4.1(AA)(2).

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(3) There is no investigation or proceeding pending or, to MBI's Knowledge, threatened by or before any court, governmental agency or board or other forum in which any Loan/Fiduciary Property (or MBI or any of its Subsidiaries in respect of any Loan/Fiduciary Property) has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a Loan/Fiduciary Property, except for such investigations or proceedings disclosed in Schedule 4.1(AA)(3).

(4) To MBI's Knowledge, there is no reasonable basis for any investigation or proceeding of a type described in subparagraph (2) or (3) of this paragraph (AA), except as has been disclosed in Schedule 41(AA)(4).

(5) To MBI's Knowledge, and except as disclosed on Schedule 4.1(AA)(5); during the period of (a) ownership or operation by MBI or any of its Subsidiaries of any of their respective current properties, (b) participation in the management of any Participation Facility by MBI or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by MBI or any of its Subsidiaries, there have been no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan/Fiduciary Property that violate Environmental Laws.

(6) To MBI's Knowledge, and except as disclosed on Schedule 4.1(AA)(6); prior to the period of (a) ownership or operation by MBI or any of its Subsidiaries of any of their respective current properties, (b) participation in the management of any Participation Facility by MBI or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by MBI or any of its Subsidiaries, there were no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan Fiduciary Property.

(7) No underground storage tanks are located on any property of MBI or any of its Subsidiaries, or any Participation Facility or any Loan/Fiduciary Property except as disclosed in Schedule 4.1(AA)(7).

(8) To MBI's Knowledge, and except as disclosed in Schedule 4.1(AA)(8), neither MBI's nor any of its Subsidiaries' facilities have building components containing friable asbestos.

(BB) TAX RETURNS. Except as disclosed in Schedule 4.1(BB), (1) all reports and returns with respect to Taxes that are required to be filed by or with respect to MBI or its Subsidiaries, including consolidated federal income tax returns of MBI and its Subsidiaries (collectively, the "Tax Returns"), have been duly filed, or requests for extensions have been timely filed and have not expired, for periods ended on or prior to the most recent fiscal year-end, and such Tax Returns were true, complete and accurate in all Material respects, (2) all Taxes

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shown to be due on the Tax Returns have been paid in full, (3) the Tax Returns have been examined by the Internal Revenue Service or the appropriate state, local or foreign taxing authority, or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (4) all Taxes due with respect to completed and settled examinations have been paid in full, (5) no issues have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns which are reasonably likely, individually or in the aggregate, to result in a determination that would have a Material effect on MBI or its Subsidiaries, except as reserved against in the Financial Reports of MBI, and (6) no waivers of statutes of limitations (excluding such statutes that relate to years under examination by the Internal Revenue Service) have been given by or requested with respect to any Taxes of MBI or its Subsidiaries.

(CC) ACCURACY OF INFORMATION. The statements with respect to MBI and its Subsidiaries contained in this Plan, the Schedules and any other written documents executed and delivered by or on behalf of MBI pursuant to the terms of or relating to this Plan are now, except as specifically noted hereunder, and as of the Effective Date true and correct in all Material respects, and do not omit any Material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, now and as of the Effective Date, not misleading.

(DD) DERIVATIVES CONTRACTS. None of MBI or its Subsidiaries is a party to or has agreed to enter into a Derivatives Contract or owns securities that are referred to as "structured notes" except for those Derivatives Contracts and structured notes disclosed in Schedule 4.1(DD). Schedule 4.1(DD) includes a list of any assets of MBI or its Subsidiaries that are pledged as security for each such Derivatives Contract.

(EE) ACCOUNTING CONTROLS. Each of MBI and its Subsidiaries has devised and maintained systems of internal accounting controls sufficient to provide reasonable assurances that (1) all Material transactions are executed in accordance with management's general or specific authorization in all material respects, (2) all Material transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP in all material respects, and to maintain proper accountability for items, (3) access to the Material property and assets of MBI and its Subsidiaries is permitted only in accordance with management's general or specific authorization, and (4) the recorded accountability for items is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

(FF) COMMITMENTS AND CONTRACTS. Neither MBI nor any of its Subsidiaries is a party or subject to any of the following (whether written or oral, express or implied):

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such Subsidiary without any obligation on the part of MBI or any such Subsidiary to make any payment in connection with such termination);

(2) except as disclosed in Schedule 4A(FF)(2), any Contract, commitment, or understanding with any Person related to or under the Control of any present or former officer, director, or employee of MBI or any of its Subsidiaries, to the extent that such Contract, commitment or understanding Materially impacts the financial condition of any of MBI or its Subsidiaries.

(3) except as disclosed in Schedule 4.1(FF)(3), any real or personal property lease with annual rental payments aggregating $50,000 or more; or

(4) except as disclosed in Schedule 4A(FF)(4), any Material Contract with any Affiliate.

(GG) CLAIMS OF OFFICERS, DIRECTORS, AND EMPLOYEES. Except as disclosed on Schedule 4.1(GG), no officer or director of MBI or any of its Subsidiaries has any claims against MBI or any of its Subsidiaries, other than for their regular accrued but unpaid salary and/or director's fee. Except as disclosed on Schedule 4.1(GG), there are no outstanding or potential claims by a present or former employee against MBI or any of its Subsidiaries under federal or state law, under any employment agreement, or otherwise, other than for wages, salary, or overtime pay owed in respect of the current pay period, or vacation or sick pay or time off owed in respect of the current fiscal year.

4.2. REPRESENTATIONS AND WARRANTIES OF HBI. HBI hereby represents and warrants to MBI now and as of the Effective Date as follows; provided, however, that as to Community Bank no representations are made or warranties given for any period prior to the effective date of the CFG Merger:

(A) RECITALS. The facts set forth in the Recitals of this Plan with respect to HBI are true and correct.

(B) ORGANIZATION, STANDING AND AUTHORITY. Each of HBI, the HBI Banks, and any other Subsidiary of HBI is in good standing under the laws of the jurisdiction in which it is incorporated or organized, and is duly qualified to do business and is in good standing in the states of the United States and foreign jurisdictions where the failure to be duly qualified, individually or in the aggregate, is reasonably likely to have a Material effect on it. All of such jurisdictions are set forth on Schedule 4.2(B). Each of HBI, the HBI Banks, and any other Subsidiary of HBI has in effect all federal state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted.

(C) SHARES. The outstanding shares of HBI and its Subsidiaries' capital stock are validly issued and outstanding, fully paid and non-assessable, and subject to no preemptive rights. Except as disclosed in Schedule 4.2(C), there are no shares of capital stock or

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other equity securities of HBI or its Subsidiaries outstanding and no outstanding Rights with respect thereto.

(D) HBI SUBSIDIARIES. HBI has disclosed in Schedule 4.2(D) a list of all of its Subsidiaries, and the number of authorized, issued, and outstanding shares of each class of stock and the percentages of ownership of HBI or a HBI Subsidiary. No equity securities of any of its Subsidiaries are or may become required to be issued (other than to HBI or one of its Subsidiaries) by reason of any Rights with respect thereto. There are no Contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise issue any shares of such Subsidiary's capital stock, and there are no Contracts, commitments, understandings or arrangements relating to the rights of HBI or its Subsidiaries, as applicable, to vote or to dispose of such shares. All of the shares of capital stock of each of its Subsidiaries held by HBI or one of its Subsidiaries are fully paid and non-assessable and are owned by HBI or one of its Subsidiaries free and clear of any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance. Each of its Subsidiaries is in good standing under the laws of the jurisdiction in which it is incorporated or organized. Except as disclosed in Schedule 4.2(D), HBI does not own beneficially, directly or indirectly, any shares of any equity securities or similar interests of any corporation, bank, partnership, joint venture, business trust, association or other organization.

(E) CORPORATE POWER. Each of HBI and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its Material properties and assets.

(F) CORPORATE AUTHORITY. This Plan has been authorized by all necessary corporate action of HBI and this Plan is a valid and binding agreement of HBI, enforceable against HBI in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(G) NO DEFAULTS. Subject to the approval by its shareholders referred to in Section 6.1, the required regulatory approvals referred to in Section 6.1, and any required filings under federal and state securities laws, and except as disclosed in Schedule 4.2(G), the execution, delivery and performance of this Plan and the consummation by HBI of the transactions contemplated by this Plan do not and will not Materially (1) constitute a breach of, or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of HBI or to which HBI or its properties is subject or bound, or (2) constitute a breach of, or violation of, or a default under, the Governing Documents of HBI, or (3) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license or the consent or approval of any other party to any such agreement, indenture or instrument.

(H) HBI FINANCIAL REPORTS. Except as disclosed in Schedule 4.2(H), the Financial Reports of HBI: (a) did not and will not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not

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misleading; (b) each of the balance sheets in or incorporated by reference into the Financial Reports (including the related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the financial position of the entity or entities to which it relates as of its date; (c) each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements in the Financial Reports (including any related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the results of operations, changes in shareholders' equity and cash flows, as the case may be, of the entity or entities to which it relates for the periods set forth therein; and (d) in each case in accordance with GAAP during the periods involved, except in each case as may be noted therein, subject to normal and recurring year-end audit adjustments in the case of unaudited statements.

(I) ABSENCE OF UNDISCLOSED LIABILITIES, HBI has no Material Liability, except (1) as disclosed on Schedule 4.2(I). (2) as reflected in its Financial Reports prior to the date of this Plan, and (3) for commitments and obligations made, or Liabilities incurred, in the ordinary and usual course of business consistent with past practice since September 30, 2004. Except as disclosed on Schedule 4.2(I). or as fully reflected as liabilities on its books and records, since September 30, 2004, HBI has not incurred or paid any Material Liability (including any Liability incurred in connection with any acquisitions in which any form of direct financial assistance of the federal government or any agency thereof has been provided to any Subsidiary), that, individually or in the aggregate, is reasonably likely to have a Material effect on it.

(J) NO EVENTS. Except as disclosed on Schedule 4,2(J)fl. since September 30, 2004, no event has occurred that, individually or in the aggregate, is reasonably likely to have a Material effect on HBI.

(K) LITIGATION: REGULATORY ACTION. Except as disclosed in Schedule
4.2(K). no litigation, proceeding or controversy before any court or governmental agency is pending or, to the knowledge of HBI, threatened against HBI that, individually, or in the aggregate, is reasonably likely to have a Material effect on HBI's ability to consummate the Plan or any transaction contemplated hereunder.

(L) NO KNOWLEDGE. HBI Knows of no reason why the regulatory approvals referred to in Section 6.1 should not be obtained.

(M) ACCURACY OF INFORMATION. The statements with respect to HBI contained in this Plan, the Schedules and any other written documents executed and delivered by or on behalf of HBI pursuant to the terms of this Plan are now, except as specifically noted hereunder, and as of the Effective Date true and correct in all Material respects, and such statements and documents do not omit any Material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, now and as of the Effective Date, not misleading.

(N) COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.2(N). each of HBI and its Subsidiaries:

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(2) Has received no notification or communication from any Regulatory Authority or other governmental authority or the staff thereof
(a) asserting that HBI or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Regulatory Authority or governmental authority enforces, (b) threatening to revoke any license, franchise, permit or governmental authorization of HBI or any of its Subsidiaries, or (c) requiring any of HBI or its Subsidiaries (or any of its or their officers, directors or Controlling persons) to enter into a cease and desist order, agreement or memorandum of understanding (or requiring the board of directors thereof to adopt any resolution or policy);

(O) BROKERS AND FINDERS. Except as set forth in Schedule 4.2(O), neither HBI and any HBI Subsidiary, nor any of their respective officers, directors or employees has employed any broker or finder, or agreed to pay any fees to any director or former director or incurred any Liability for any financial advisory fees, brokerage fees, commissions or finder's fees, and no broker or finder, or director or former director of HBI, has acted directly or indirectly for HBI, or any HBI Subsidiary, in connection with this Plan or the transactions contemplated hereby.

(P) ALLOWANCE FOR POSSIBLE LOAN LOSSES. Except as disclosed on Schedule 4.2(P). the allowance for possible loan losses shown on the consolidated balance sheets in the September 30, 2004 Financial Reports of HBI and to be shown on subsequent Financial Reports of HBI was and, to the Knowledge of HBI, shall be adequate to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including accrued interest receivable) as of the date thereof.

(Q) TAX RETURNS. Except as disclosed in Schedule 4.2(Q), (1) all reports and returns with respect to Taxes that are required to be filed by or with respect to HBI or its

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Subsidiaries, including consolidated federal income tax returns of HBI and its Subsidiaries (collectively, the "Tax Returns"), have been duly filed, or requests for extensions have been timely filed and have not expired, for periods ended on or prior to the most recent fiscal year-end, and such Tax Returns were true, complete and accurate in all Material respects, (2) all Taxes shown to be due on the Tax Returns have been paid in full, (3) the Tax Returns have been examined by the Internal Revenue Service or the appropriate state, local or foreign taxing authority, or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has expired, (4) all Taxes due with respect to completed and settled examinations have been paid in full,
(5) no issues have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns which are reasonably likely, individually or in the aggregate, to result in a determination that would have a Material effect on HBI or its Subsidiaries, except as reserved against in the Financial Reports of HBI, and (6) no waivers of statutes of limitations (excluding such statutes that relate to years under examination by the Internal Revenue Service) have been given by or requested with respect to any Taxes of HBI or its Subsidiaries.

ARTICLE V. COVENANTS

MBI hereby covenants to HBI, and HBI hereby covenants to MBI, as applicable, that:

5.1. BEST EFFORTS.

Each Party shall use its best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all other things necessary, proper or desirable, or advisable under applicable laws, including, as to MBI, the Takeover Restrictions and as to HBI, the Florida Banking Laws, so as to permit consummation of the Merger by May 31, 2005, (the "Termination Date"), and otherwise to enable consummation of the transactions contemplated by this Plan, and shall cooperate fully with the Party to that end (it being understood that a re-solicitation of proxies as a consequence of an HBI Transaction shall not violate this covenant).

5.2. CORPORATE ACTIONS.

(A) SHAREHOLDER VOTE. MBI shall use its best efforts to solicit and obtain votes of the holders of MBI Common Stock in favor of the Merger and of its transactions contemplated by this Plan and, subject to the exercise of its fiduciary duties, the Board of Directors of MBI shall recommend approval of the Merger and such transactions by its shareholders. MBI shall call a special meeting of the holders of MBI Common Stock to be held as soon as practicable for voting on the transactions contemplated by this Plan (including the Merger).

(B) PROXY STATEMENT. Each Party shall promptly assist the other in the preparation of a combination proxy statement and offering circular (the "Proxy Statement") to be mailed to the holders of MBI Common Stock in connection with their approval of the Merger and any other transactions contemplated by the Plan. The Proxy Statement shall conform to all applicable legal requirements, and shall include relevant disclosures regarding HBI and MBI as required by applicable securities laws for the offering of Class B Preferred Stock.

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(C) HBI AMENDMENT. HBI shall, prior to the Effective Date, file an amendment to its Restated Articles of Incorporation, pursuant to the requisite approval of its Board of Directors, or if required by law, its shareholders, containing the characteristics, rights, and preferences of the Class B Preferred Stock to be issued as Merger Consideration, which characteristics, rights, and preferences shall be, at a minimum, those specified in Appendix I.

5.3. SECURITIES LAW COMPLIANCE. HBI shall comply with all applicable federal and state securities laws with regard to the offering, sale, and issuance of the Class B Preferred Stock.

5.4. PUBLICITY. The Parties agree that (a) no communication of any kind, whether written, electronic, or oral, to the shareholders of MBI or HBI or otherwise regarding the Plan, including but not limited to, proxy statements and prospectuses, shall be made without the express prior written consent of the authorized officers of HBI and MBI, and (b) the contents of any such communication shall conform in all respects, whether written, electronic or oral, to the language agreed upon between the Parties; provided, however, if HBI or MBI is required by federal or state securities laws or otherwise to make disclosure of certain matters or take other action which would otherwise be covered by the terms of this section, it may make such disclosure or communication without the express prior written consent of the other Party, after first giving the other Party what the disclosing Party, in the exercise of its judgment, determines to be reasonable notice of such disclosure or communication.

5.5. ACCESS; DUE DILIGENCE INFORMATION: CONFIDENTIALITY.

(A) Upon reasonable notice, each Party shall afford the other Party or a Subsidiary of such Party and its officers, employees, counsel, accountants and other authorized representatives, full access, during normal business hours throughout the period up to the Effective Date, to all of their respective properties, books, Contracts, commitments and records of the Party or its Subsidiaries and shall furnish or cause to be furnished all such information as such Party may reasonably request.

(B) Each Party agrees to complete its due diligence review by February 10, 2005 and to notify the other Party in writing whether its review was satisfactory or unsatisfactory by February 15, 2005. Failure of a Party to provide this notification in the time and manner required shall result in that Party not having any right of termination under Section 7.1(E).

(C) HBI, MBI and their respective agents, attorneys and accountants will maintain the confidentiality of all information provided in connection herewith in accordance with the terms of the Confidentiality Agreement.

(D) Each Party (the "Disclosing Party") shall furnish promptly (and cause its accountants and other agents to furnish promptly) to the other Party (the "Requesting Party") a copy of each Material report, schedule and other document filed by the Disclosing Party with any Regulatory Authority or other governmental authority, and upon reasonable notice given by the Requesting Party, any other information regarding the business, properties, and personnel of the Disclosing Party as the Requesting Party may reasonably request, provided that no investigation

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pursuant to this Section 5.5 shall affect or be deemed to modify or waive any representation or warranty made by the Disclosing Party in this Plan or the conditions to the obligations of the Disclosing Party to consummate the transactions contemplated by this Plan.

5.6. SOLE AGREEMENT TO SELL.

(A) Without the prior written consent of HBI, MBI, so long as this Plan is not terminated, shall not, and it shall cause its Subsidiaries not to, solicit, initiate or encourage inquiries or proposals with respect to, or except as otherwise provided in Section 5.6(B), furnish any nonpublic information relating to or participate in any negotiations or discussions concerning, any acquisition or purchase of all or a substantial portion of the assets of, or a substantial equity interest in, MBI or any of its Subsidiaries or any merger or other business combination with MBI or any of its Subsidiaries other than as contemplated by this Plan. MBI shall instruct its and its Subsidiaries' officers, directors, agents, advisors and Affiliates to refrain from doing any of the foregoing and shall notify HBI immediately if any such inquiries or proposals are received by, or any such negotiations or discussions are sought to be initiated with, MBI or any of its Subsidiaries.

(B) Notwithstanding the foregoing, in response to a written Acquisition Proposal that did not result from a breach of Section 5.6(A), MBI may (i) request clarifications from (but not enter into negotiations with or furnish nonpublic information to) any Third Party which makes such written Acquisition Proposal if such action is taken solely for the purpose of obtaining information reasonably necessary to ascertain whether such Acquisition Proposal is a Superior Proposal (defined below) or (ii) participate in discussions and negotiations with, request clarifications from, or furnish nonpublic information to, any Third Party which makes such written Acquisition Proposal if (A) such action is taken subject to a confidentiality agreement with terms not more favorable to such Third Party than the terms of the Confidentiality Agreement, (B) after consultation with outside legal counsel to MBI, a majority of the members of the entire Board of Directors of MBI determines in good faith that such Acquisition Proposal is a Superior Proposal and (C) a majority of the members of the entire Board of Directors of MBI determines in good faith, after receiving advice from outside legal counsel to MBI, that the taking of such action is necessary or appropriate to comply with the fiduciary duties of the Board of Directors under applicable law.

(C) Notwithstanding anything contained in this Plan to the contrary, an exercise of MBI's or its Board of Directors' rights under Section 5.6(B) shall not constitute a breach of this Agreement by MBI.

(D) The term "Acquisition Proposal" means any proposal or offer (including, without limitation, any public proposal to stockholders of MBI) from any Third Party relating to (i) any direct or indirect acquisition or purchase of 20% or more of the consolidated assets of MBI and its subsidiaries or 10% or more of any class of equity securities of MBI or any of its subsidiaries, (ii) any tender offer or exchange offer that, if consummated, would result in any Third Party beneficially owning 10% or more of any class of equity securities of MBI or any of its subsidiaries, (iii) any merger, consolidation, business combination, recapitalization, liquidation, dissolution or similar transaction involving MBI or any of its subsidiaries or (iv) any

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transaction other than any transactions contemplated by this Plan, the consummation of which would reasonably be expected to impede, interfere with, prevent or materially delay the Merger.

(E) The term "Superior Proposal" means a bona fide written offer made by a Third Party to acquire all of the MBI Common Stock pursuant to a tender offer or a merger or to acquire all or substantially all of the assets of MBI and its subsidiaries on terms which a majority of the members of the entire Board of Directors of MBI determines in good faith to have a higher value than the consideration to be received by the MBI shareholders pursuant to this Plan (taking into account, among other things, all legal, financial, regulatory and other aspects of such proposal, and including, without limitation, conditions imposed by such Third Party on its obligations to consummate the transactions contemplated by such offer).

(F) In addition to the obligations of MBI set forth in this Section 5.6, within Five Business Days of the receipt or occurrence of any Acquisition Proposal by MBI, MBI shall advise HBI of the receipt or occurrence of such Acquisition Proposal and MBI shall provide to HBI copies of any written materials received by MBI in connection with such Acquisition Proposal, including the identity of the Third Party making such Acquisition Proposal. MBI shall keep HBI informed of the status and material details (including amendments or proposed amendments) to any such Acquisition Proposal and keep HBI informed as to the material details of any information requested of or provided by MBI and as to the material details of all discussions or negotiations (if any) with respect to any such Acquisition Proposal. MBI shall promptly provide to HBI any non-public information concerning MBI provided to any Third Party in connection with any Acquisition Proposal which had not previously been provided to HBI.

(G) If MBI determines (in accordance with this Section 5.6 or otherwise) that it has received a Superior Proposal, which it desires to accept, MBI shall provide a written notice to HBI of its intent to terminate to this Plan and enter into an agreement to consummate the Superior Proposal, pursuant to Section 7.1(F), such notice to be provided to HBI not less than fifteen (15) Business Days prior to the date of the intended termination of this Plan. During the 15 Business Days following delivery to HBI of such notice MBI shall cooperate with HBI with the intent of enabling HBI and MBI to negotiate a modification of the terms and conditions of this Plan so that the transactions contemplated hereby may be consummated. At the end of such 15-Business Day period, the Board of Directors of MBI shall meet to vote on the modifications proposed by HBI, and if a majority of the members of the entire Board of Directors of MBI continues to determine in good faith, taking into account such modifications to this Plan offered by HBI, that termination of this Plan and MBI's entering into an agreement to effect such Superior Proposal is necessary or appropriate to comply with the fiduciary duties of the Board of Directors of MBI under applicable law, MBI may terminate pursuant to the provisions of
Section 7.1(F), provided that on or prior to such termination HBI receives all fees and expense reimbursements and the Termination Fee set forth in Section 7.1(F) by wire transfer in same day funds and simultaneously or substantially simultaneously with such termination MBI enters into a definitive acquisition, merger or similar agreement to effect such Superior Proposal.

5.7. HBI COMMON STOCK ADJUSTMENTS. In the event that HBI changes the number of shares of HBI Common Stock issued and authorized prior to the time that a holder of

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Class B Preferred Stock converts such Class B Preferred Stock to HBI Common Stock as a result of a stock split, stock dividend, or similar transaction with respect to the outstanding HBI Common Stock, the amount of HBI Common Stock to be issued to the Class B Preferred Stock holder, as set forth in the Class B Preferred Stock Description in Appendix I shall be adjusted accordingly.

5.8. STATE TAKEOVER LAW. MBI shall not take any action that would cause the transactions contemplated by this Plan to be subject to any Takeover Restrictions, and MBI shall take all necessary steps to exempt (or ensure the continued exemption of) the transactions contemplated by this Plan from any Takeover Restrictions.

5.9. NO RIGHTS TRIGGERED. Except for those consents of Third Parties disclosed on Schedule 4.1(G), MBI shall take all necessary steps to ensure that the entering into of this Plan and the consummation of the transactions contemplated by this Plan (including the Merger) and any other action or combination of actions, or any other transactions contemplated by this Plan, do not and will not (A) result in the grant of any Rights to any Person under the Governing Documents of MBI or under any agreement to which MBI or any of its Subsidiaries is a party, or (B) restrict or impair in any way, including but not limited to a violation of Section 5.8 with respect to Takeover Restrictions, the ability of HBI to exercise the rights granted under this Plan.

5.10. REGULATORY APPLICATIONS. HBI shall (A) promptly prepare and submit applications to the appropriate Regulatory Authorities for approval of the Merger, including pursuant to the Florida Banking Laws, and (B) promptly make all other appropriate filings to secure all other approvals, consents and rulings that are necessary for the consummation of the Merger by HBI.

5.11. REGULATORY DIVESTITURES. No later than the Effective Date, MBI shall cease engaging in such activities as HBI shall advise MBI in writing are not permitted to be engaged in by HBI under applicable law following the Effective Date and, to the extent required by any Regulatory Authority as a condition of approval of the transactions contemplated by this Plan, MBI shall divest any Subsidiary engaged in activities or holding assets that are impermissible for HBI, on terms and conditions agreed to by HBI; provided, however, that prior to MBI taking such action, HBI shall certify that the conditions to its obligations under Sections 6.1 and 6.2 to consummate the transactions contemplated by this Plan have been satisfied or waived.

5.12. CURRENT INFORMATION.

(A) During the period from the date of this Plan to the Effective Date, each of MBI and HBI shall, and shall cause its representatives to, confer on a regular and frequent basis with representatives of the other.

(B) Each of MBI and HBI shall promptly notify the other of (1) any Material change in the business or operations of it or its Subsidiaries, (2) any Material complaints, investigations or hearings (or communications indicating that the same may be contemplated) of

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any Regulatory Authority or other governmental authority relating to it, or as applicable its Subsidiaries, (3) the initiation or threat of Material litigation involving or relating to it or its Subsidiaries, or (4) any Material event or condition.

5.13. DIRECTOR AND OFFICER LIABILITY INSURANCE. Prior to the Effective Date, MBI may obtain and prepay "tail" coverage on director and officer liability insurance for a period of three (3) years following the Effective Date, with policy limits not in excess of $2,000,000 per occurrence, on each person serving as an officer or director of MBI and each MBI Subsidiary immediately prior to the Effective Date against all damages, Liabilities, judgments, and claims (and related expenses, including reasonable attorney fees and amounts paid in settlement) with respect to acts or omissions of such officers and directors based upon or arising from his or her capacity as an officer or director of MBI or a MBI Subsidiary, occurring on or prior to the Effective Date.

ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER

(A) SHAREHOLDER VOTE. The shareholders of MBI shall have approved of the transactions contemplated herein (including approval of the Merger) as provided in Section 5.2.

(B) REGULATORY APPROVALS. The Parties shall have procured all necessary regulatory consents and approvals by the appropriate Regulatory Authorities, and any waiting periods relating thereto shall have expired; provided, however, that no such approval or consent shall have imposed any condition or requirement not normally imposed in such transactions that, in the opinion of HBI, would deprive HBI of the Material economic or business benefits of the transactions contemplated by this Plan.

(E) TAX OPINION. Each Party shall have received an opinion from Igler and Dougherty, P.A., in the form of EXHIBIT B to the effect that (1) the Merger constitutes a reorganization under Section 368 of the Code, and (2) no gain or loss will be recognized by shareholders of MBI to the extent they receive shares of Class B Preferred Stock in exchange for their shares of MBI Common Stock, except that gain or loss may be recognized as to cash

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received in lieu of fractional share interests, and, in rendering their opinion, Igler and Dougherty, P.A. may require and rely upon representations contained in certificates of officers of HBI, MBI and others.

(A) PERFORMANCE. Each of the acts, undertakings, and covenants and other agreements of MBI to be performed at or before the Effective Date shall have been duly performed, and MBI shall not have breached any of the representations, warranties, covenants, and other agreements set forth herein.

(B) EXEMPTION FROM TAKEOVER RESTRICTIONS. MBI shall have taken all steps necessary to exempt and to ensure the continued exemption of the transactions contemplated herein as provided in Sections 4.1(Y) and 5.8.

(C) REPRESENTATIONS AND WARRANTIES. The representations and warranties of MBI contained in this Plan shall be true and correct, in all Material respects, on and as of the Effective Date with the same effect as though made on and at the Effective Date, except for any such representations and warranties that specifically relate to an earlier date, which shall be true and correct as of such earlier date.

(D) OFFICER'S CERTIFICATE. In addition to the documents described elsewhere in this Plan, HBI shall have received the following documents and instruments:

(i) A certificate signed by the Secretary or Assistant Secretary of MBI certifying that: (A) MBI's Board of Directors and shareholders have duly adopted resolutions (copies of which shall be attached to such certificate) approving the substantive terms of this Plan and authorizing the consummation of the transactions contemplated by this Plan and certifying that such resolutions have not been amended and remain in full force and effect; (B) each person executing this Plan on behalf of MBI is an officer of MBI, holding the office or offices specified therein, with full power and authority to execute this Plan and any and all other documents in connection with the Plan, and the signature of each person on such documents is his or her genuine signature; and (C) the Governing Documents of MBI (copies of which shall be attached to such certificate) remain in full force and effect; and

(ii) A certificate signed by the President and Chief Financial Officer of MBI dated the Effective Date stating that the conditions set forth in Sections 6.2(A), 6.2(B), 6.2(C), and 6.2(F) of this Plan have been satisfied as of the Effective Date.

(E) LEGAL OPINION. HBI shall have received a legal opinion, dated the Effective Date, from Akerman Senterfitt, in substantially the form of EXHIBIT C.

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(F) NO MATERIAL CHANGE. During the period from September 30, 2004 to the Effective Date, no Material change in the business, property, assets (including loan portfolios), Liabilities, prospects, operations, liquidity, income or condition (financial or otherwise) of MBI and/or Marine shall have occurred.

(G) DESTRUCTION OF PROPERTY. Between the date of this Plan and the Effective Date, there shall have been no damage to or destruction of real property, improvements or personal property of MBI or Marine which Materially reduces the market value of such property, and no zoning or other order, limitation or restriction imposed against the same, that might have a Material impact upon the operations, business, future operations, or prospects of MBI or Marine; provided, however, that the availability of insurance coverage may be taken into account in determining whether there has been such a Material impact or Material reduction in market value.

(H) INSPECTIONS PERMITTED. Between the date of this Plan and the Effective Date, MBI shall have afforded HBI and its authorized agents and representatives reasonable access during normal business hours to the properties, operations, books, records, Contracts, documents, loan files and other information of or relating to MBI and Marine. MBI and Marine shall have caused all MBI and Marine personnel to provide reasonable assistance to HBI in its investigations of all matters related to MBI and Marine.

(I) OTHER BUSINESS COMBINATIONS. ETC. Other than as contemplated hereunder, subsequent to the date of this Plan, neither MBI nor Marine shall have entered into any agreement, letter of intent, understanding or other arrangement pursuant to which MBI and Marine would merge, consolidate with, effect a business combination with, or sell any substantial part of MBI's or Marine's assets; acquire a significant part of the share of assets of any other person or entity (financial or otherwise); or adopt any "poison pill" or other type of anti-takeover arrangement, any shareholder rights provision, or any "golden parachute" or similar program which would have the effect of Materially decreasing the value of MBI or Marine or the benefits of acquiring MBI Common Stock.

(J) MAINTENANCE OF CERTAIN COVENANTS. At the Effective Date: (i)
neither MBI nor Marine shall have issued or repurchased from the date hereof any additional equity or debt securities, or any rights to purchase or repurchase such securities (therefore, there shall be not more than the number of shares of MBI Common Stock and MBI Options set forth in the Recitals of this Plan validly issued and outstanding at the Effective Date); and (ii) from September 30, 2004, there shall have been no extraordinary sale of assets by MBI or Marine.

(K) NO LITIGATION. Except as disclosed on Schedule 6.2(K), no action, suit, or other proceeding before any court or any governmental authority pertaining to the transactions contemplated by this Plan or against MBI or any of its Subsidiaries or Materially affecting MBI or any of its Subsidiaries shall have been instituted or threatened on or before the Effective Date.

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6.3. CONDITIONS TO OBLIGATIONS OF MBI. Unless waived in writing by MBI, the obligations of MBI to consummate the transactions contemplated by this Plan are subject to the satisfaction of MBI at or prior to the Effective Date of the following conditions:

(A) PERFORMANCE. Each of the acts, undertakings, and covenants of HBI to be performed at or before the Effective Date shall have been duly performed, and HBI shall not have breached any of its respective representations, warranties, covenants, and other agreements set forth herein.

(C) OFFICER'S CERTIFICATE. In addition to the documents described elsewhere in this Plan, MBI shall have received the following documents and instruments:

(i) A certificate signed by the Secretary or Assistant Secretary of HBI certifying that: (A) HBFs Board of Directors and shareholders have duly adopted resolutions (copies of which shall be attached to such certificate) approving the substantive terms of this Plan and authorizing the consummation of the transactions contemplated by this Plan and certifying that such resolutions have not been amended and remain in full force and effect; (B) each person executing this Plan on behalf of HBI is an officer of HBI, holding the office or offices specified therein, with full power and authority to execute this Plan and any and all other documents in connection with the Plan, and the signature of each person on such documents is his or her genuine signature; and (C) the Governing Documents of HBI (copies of which shall be attached to such certificate) remain in full force and effect; and

(ii) A certificate signed by the President and Chief Financial Officer of HBI dated the Effective Date stating that the conditions set forth in Sections 6.3(A), 6.3(B), and 6.3(E) of this Plan have been satisfied as of the Effective Date.

(D) LEGAL OPINION. MBI shall have received a legal opinion, dated the Effective Date, from Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C, in substantially the form of Exhibit D.

(E) NO MATERIAL CHANGE. During the period from September 30, 2004 to the Effective Date, no Material change in the business, property, assets (including loan portfolios), Liabilities, prospects, operations, liquidity, income or condition (financial or otherwise) of HBI shall have occurred.

(F) FAIRNESS OPINION. MBI shall have received, within sixty (60) days from the execution of this Agreement unless the parties agree in writing to a different date, an

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opinion of Hovde Financial, LLC or such firm as MBI may determine, to the effect that the financial terms of the Merger are fair from a financial point of view to MBI's shareholders. Such opinion shall be updated prior to the mailing of the Joint Proxy Statement to MBI's shareholders and shall not have been withdrawn prior to the Effective Date.

(G) INSPECTIONS PERMITTED. Between the date of this Plan and the Effective Date, HBI shall have afforded MBI and its authorized agents and representatives reasonable access during normal business hours to the properties, operations, books, records, Contracts, documents, loan files and other information of or relating to HBI or the HBI Banks. HBI and the HBI Banks shall have caused all HBI and the HBI Banks' personnel to provide reasonable assistance to MBI in its investigations of all matters related to HBI and the HBI Banks.

ARTICLE VII. TERMINATION

7.1. TERMINATION UPON CERTAIN CONDITIONS. In the event of the termination or abandonment of this Plan pursuant to the provisions of Section 7.1, this Plan shall become void and have no force or effect, without any further liability on the part of either Party or its respective directors or officers or shareholders with respect to this Plan. This Plan may be terminated prior to the Effective Date, either before or after receipt of required shareholder approvals, under the following conditions:

(A) MUTUAL CONSENT. By the mutual consent of the Parties, if the Board of Directors of each Party so determines by vote of a majority of the members of its entire board;

(B) DELAY. By either Party in the event the Merger is not consummated by the Termination Date, unless the failure of the consummation of the transactions to occur shall be due to the failure of the Party seeking to terminate this Plan to perform its obligations hereunder in a timely manner; provided, however, that neither party may terminate the Plan pursuant to this
Section 7.1(B), if such delay results from the resolicitation of proxies as a consequence of an HBI Transaction, or any other acquisition or sale transaction, or any offering of securities, in which HBI is involved, or (b) a change in the method of acquisition pursuant to Section 2.4, and provided, further, that a Party may not terminate the Plan pursuant to this Section 7.1 (B) if it is in Material breach of any of the provisions of the Plan;

(C) NO FAIRNESS OPINION. By MBI in the event the fairness opinion described in Section 6.3(F) is not provided; provided, however, that MBI may not terminate the Plan pursuant to this Section 7.1(C) unless it has used its best efforts to obtain such opinion in a timely manner;

(D) NO REGULATORY APPROVALS. By either Party, in the event that, absent the Material breach of the terminating Party, any of the required regulatory approvals set forth in Section 6.1(B) are denied (or should any such required approval be conditioned upon a substantial deviation from the transactions contemplated); provided, however, that either Party may extend the term of this Plan for a sixty (60)-day period to prosecute diligently and overturn

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such denial provided that such denial has been appealed within fifteen (15) Business Days of the receipt thereof;

(E) UNSATISFACTORY DUE DILIGENCE. By either HBI or MBI, if on or before February 25, 2005, either Party (i) during the course of its due diligence review discovers events, occurrences or circumstances that, either individually or in the aggregate, would be expected, in the exercise of that Party's reasonable judgment, to cause a material adverse effect with respect to the financial condition, results of operations, business or future operations of the other Party and (ii) the discovering Party gives written notice to the other Party that such Party is exercising the right of termination pursuant to this
Section 7.1(E).

(F) SECURITIES LAW EXEMPTION. By HBI, in the event it believes, in the exercise of its or its counsel's reasonable judgment, that the issuance of the Class B Preferred Stock (1) is not or may not be exempt from registration under the Securities Act pursuant to Rule 506 or any applicable state securities laws, or (2) would require HBFs registration as a broker-dealer, agent or similar registration under any applicable state securities laws; provided, however, that unless the termination by HBI was due to the issuance of the Class B Preferred Stock not being exempt from registration under the Securities Act due to actions or the failure to take action of one or more Holders or MBI, HBI may not terminate this Agreement pursuant to this Section 7.1(E) until HBI has reimbursed MBI in immediately available funds an amount, not in excess of One Hundred Fifty Thousand and No/100 Dollars ($150,000), for the documented out- of-pocket fees and expenses of MBI and its Subsidiaries incurred related to the negotiations for and drafting of the Plan, and to the performance by HBI or its Subsidiaries of obligations related to the transactions contemplated hereby (including, without limitation, printing fees, filing fees and fees and expenses of its legal and financial advisors); or

(G) ACCEPTANCE OF SUPERIOR PROPOSAL. By MBI, in order to accept a Superior Proposal, provided that MBI has complied with the provisions of Section 5.6 and has reimbursed HBI in immediately available funds an amount, not in excess of One Hundred Fifty Thousand and No/100 Dollars ($150,000), for the documented out-of-pocket fees and expenses of HBI and its Subsidiaries incurred related to the negotiations for and drafting of the Plan, and to the performance by HBI or its Subsidiaries of obligations related to the transactions contemplated hereby (including, without limitation, printing fees, filing fees and fees and expenses of its legal and financial advisors), plus the sum of Three Hundred Thousand and No/100 Dollars ($300,000) (the "Termination Fee").

7.2. TERMINATION FOR BREACH. This Plan may be terminated prior to the Effective Date, either before or after receipt of required shareholder approvals, by either Party if there has been a Material breach on the part of the other Party of its representations, warranties, covenants, or other agreements set forth herein or in any Schedule or certificate delivered pursuant hereto. Solely for purposes of this Section 7.2, each of the representations and warranties set forth in Section 4.2 shall be deemed to have been made with respect to Community Bank for periods prior to the CFG Merger. The non-breaching Party expressly reserves all rights and remedies available in law or equity if this Agreement is terminated for breach, except that where the breach by HBI is of its representations, warranties, covenants, or other agreements set forth herein or in any Schedule or certificate delivered pursuant hereto with respect to

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Community Bank for periods prior to the CFG Merger, the only remedy of MBI, notwithstanding anything to the contrary stated herein shall be to terminate this Plan, which shall be without liability to HBI or MBI.

7.3. TERMINATION FOR MAJOR TRANSACTION. In the event HBI enters into an agreement to effect a Change of Control Transaction, MBI shall have the right to terminate this Agreement. A "Change of Control Transaction" shall mean a transaction or series of related transactions in which more than 40% of the voting power of HBI is disposed of, or the consolidation, merger or other business combination of HBI with or into any other entity where HBI or an affiliate (prior to the consummation of a Change of Control Transaction) is not the survivor.

ARTICLE VIII. OTHER MATTERS

8.1. SURVIVAL. Only the representations, warranties, covenants, or other agreements contained in Articles I and II of this Plan shall survive the Effective Date, regardless of whether a provision specifically states that such provision survives. If the Merger is abandoned and this Plan is terminated, the agreements of the Parties in Sections 5.5(B) and (C), 7.1, 8.5, and 8.12 shall survive such abandonment and termination.

8.2. WAIVER; AMENDMENT. Prior to the Effective Date, any provision of this Plan may be (A) waived in writing by the Party benefited by the provision, or (B) amended or modified at any time (including the structure of the transactions contemplated by this Plan) by an agreement in writing between the Parties approved by their respective Boards of Directors and executed in the same manner as this Plan, except that, after the vote by the shareholders of MBI, the consideration to be received by a Holder of MBI Common Stock shall not thereby be altered. Nothing contained in this Section 8.2 is intended to modify HBI's rights pursuant to Section 2.4.

8.4. GOVERNING LAW. This Plan shall be governed by, and interpreted in accordance with, the laws of the State of Arkansas, except as federal law may be applicable.

8.5. EXPENSES. Each Party will bear all expenses incurred by it in connection with this Plan and the transactions contemplated by this Plan, except expenses of printing and mailing the Proxy Statement which shall be shared equally between the Parties.

8.6. NOTICES. All notices, demands, and requests given or required to be given by one Party to the other Party shall be in writing. All such notices, demands, and requests shall be deemed to have been properly given if served in person, sent by telefacsimile (and receipt confirmed) or by prepaid nationally recognized overnight delivery service providing proof of delivery, addressed as follows:

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If to HBI, to   Home BancShares, Inc.
                719 Harkrider
                Conway, Arkansas 72032
                Attn: Ron Strother, President
                Fax: 501-329-2991

With a copy to: Mitchell Williams Selig Gates & Woodyard, P.L.L.C.
                425 W. Capitol Avenue, Suite 1800
                Little Rock, Arkansas 72201
                Attn: John S. Selig, Esq.
                Fax: 501-918-7804

If to MBI, to:  Marine Bancorp, Inc.
                11290 Overseas Hwy.
                Marathon, Florida 33050
                Attn: W. S. Daniels, President and Chairman
                Fax: (305)743-0313

With a copy to: Akerman Senterfitt
                One Southeast Third Avenue, 28th Floor
                Miami, Florida 33131-1714
                Attn: Martin T. Schrier, Esq.
                Fax: (305)374-5095

Notices, demands and requests sent pursuant to this section shall be deemed to be received (A) on the date of delivery if received by telefacsimile (and receipt confirmed) or by person and, (B) on the next Business Day if sent by prepaid overnight delivery service.

8.7. TIME IS OF THE ESSENCE. The Parties hereto agree that time is of the essence with respect to the Effective Date and each and every condition and covenant contained herein.

8.8. ASSIGNMENT. The assignment of this Plan by a Party without the express written consent of the other Party hereto shall be void; provided, however, that this Section 8.8 is not intended to modify HBI's rights pursuant to Section 2.4.

8.9. BINDING EFFECT. This Agreement shall be binding upon the Parties and their respective successors and assigns.

8.10. SEVERABILITY. The holding of any provision of this Plan invalid, illegal, or unenforceable, in whole or in part, shall not affect the other provisions of this Plan, which shall remain in full force and effect.

8.11. ENTIRE UNDERSTANDING: NO THIRD PARTY BENEFICIARIES. This Plan and the Confidentiality Agreement represent the entire understanding of the Parties with reference to transactions contemplated by this Plan and supersede any and all other oral or

-42-

written agreements previously made. Nothing in this Plan, expressed or implied, is intended to confer upon any Person other than the Parties any rights, remedies, obligations or Liabilities under or by reason of this Plan.

8.12. ENFORCEMENT PROCEEDINGS. The Parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Plan were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each Party shall be entitled to an injunction or injunctions to prevent breaches of this Plan and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. In any action or proceeding in connection with the enforcement of this Plan, the prevailing Party will be entitled to reimbursement of its reasonable attorneys' fees and expenses from the non-prevailing Party.

8.13. BENEFIT PLANS. Upon consummation of the Merger, all employees of MBI and its Subsidiaries, except those with whom HBI enters into written employment agreements, shall be deemed to be at-will employees of HBI. From and after the Effective Date, employees of MBI and its Subsidiaries shall be entitled to participate in the pension, employee benefit and similar plans (including stock option, bonus or other incentive plans) on substantially the same terms and conditions as similarly situated employees of HBI. With the exception of stock option plans, where participation will be based upon years of service at HBI (and type of personnel), for the purpose of determining eligibility to participate in such plans and the vesting of benefits under such plans, HBI shall give effect to years of service with MBI or its Subsidiaries, as the case may be, as if such service were with HBI. Employees of MBI and its Subsidiaries will be entitled to carry over unused vacation days and sick leave accrued as of the Effective Date.

8.14. HEADINGS. The headings contained in this Plan are for reference purposes only and are not part of this Plan.

(Signatures on page following.)

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IN WITNESS WHEREOF, the Parties have caused this instrument to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.

MARINE BANCORP, INC.

By: /s/ W. S. Daniels
    -------------------------------------
    W. S. Daniels
    President and Chairman

HOME BANCSHARES, INC.

By: /s/ Ron W. Strother
    ------------------------------------
    Ron W. Strother
    President and Chief Operating
    Officer

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LIST OF EXHIBITS

EXHIBITS:

Exhibit A   Articles of Merger

Exhibit B   Tax Opinion of Igler and Dougherty, P.A.

Exhibit C   Legal Opinion of Akerman Senterfitt

Exhibit D   Legal Opinion of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C.

APPENDIX 1

CLASS B PREFERRED STOCK DESCRIPTION

The characteristics and requirements of the Class B Preferred Stock (as defined in the Plan) to be authorized and issued by HBI as set forth in Section 2.1(C) of the Plan, all of which characteristics and requirements shall be set forth in an Amendment to the Restated Articles of Incorporation of HBI to be adopted and filed with the Arkansas Secretary of State prior to the Merger, shall be as follows:

1. HBI shall issue as consideration in the Merger a number of shares of its Class B Preferred Stock, $0.01 par value per share, up to the number of shares required to equal 39.5% of the total consideration for the Merger. Such shares of Class B Preferred Stock shall have a value for Stock Conversion Ratio purposes of $38.00 (the "Stock Value") per share. The Class B Preferred Stock shall be non-voting and shall yield an annual non-cumulative dividend of 1.5% of the Stock Value payable if and when declared, quarterly on the last day of January, April, July, and October. No interest shall be payable on any declared and unpaid dividends.

2. No dividends shall be declared or paid on any common shares ("Common Stock") or any other shares of capital stock of HBI, other than shares of Class A Preferred Stock, until the foregoing dividend is paid on the Class B Preferred Stock; provided, however, that the Class B Preferred Stock shall be subordinate to HBI Class A Preferred Stock in the payment of dividends.

3. In the event of any dissolution, liquidation or winding up of HBI, whether voluntary or involuntary, the holders of the then outstanding Class B Preferred Stock shall be entitled to receive, after the payment of any declared and unpaid dividends to the holders of HBI Class A Preferred Stock, (a) a sum equal to the amount of any declared and unpaid dividends on the Class B Preferred Stock at the dividend rate set forth herein, and
(b) $38.00 per share on a parity with the payment of $10.00 per share to holders of Class A Preferred Stock. The Class B Preferred Stock will rank prior to any class or series of capital stock hereafter created. After payment to the holders of preferred shares, the remaining assets and funds of HBI shall be distributed pro rata among the holders of the Common Stock. A consolidation, merger or reorganization of HBI with any other corporation or corporations or a sale of all or substantially all of the assets of HBI shall not be considered a dissolution, liquidation or winding up of HBI within the meaning of these provisions.

4. The Class B Preferred Stock shall be convertible into Common Stock upon the following terms and conditions:

(a) The holder of shares of Class B Preferred Stock shall have the right to elect to convert such Class B Preferred Stock into Common Stock upon the earliest to occur of:

Appendix 1, Page A-l

(i) July 6, 2006; or

(ii) two hundred ten (210) days after the date an underwritten initial public offering of Common Stock is completed.

(b) HBI shall have the right to redeem all of the Class B Preferred Stock in exchange for Common Stock at any time.

(c) In the event a holder of the Class B Preferred Stock elects to convert such stock into Common Stock pursuant to (a) or HBI elects to redeem such Class B Preferred Stock pursuant to (b), such Class B Preferred Stock shall be converted or redeemed at an exchange ratio of one (1) share of Common Stock in exchange for one share of Class B Preferred Stock. Such Common Stock shall be HBI voting common stock as is currently authorized under HBI's Articles of Incorporation subject to such changes as may be made prior to the date of conversion or redemption. In the event such conversion or redemption occurs prior to the end of a quarter in which HBI's Board of Directors declares a dividend, and subject to the priority in payment of dividends to the Class A Preferred Stock, a holder of Class B Preferred Stock being converted or redeemed shall be entitled to receive an amount of such dividend, prorated for the number of days in the quarter prior to the date of the notice of redemption.

(d) If prior to the conversion or redemption of Class B Preferred Stock, the outstanding shares of Common Stock are increased or decreased or are changed into a different number of shares or a different class by reason of any merger, reclassification, stock split, or similar transaction, or if a stock dividend shall be paid, an appropriate and proportionate adjustment or adjustments will be made to the ratio by which a share of Common Stock, or a fraction thereof, is to be issued in exchange for each share of Class B Preferred Stock. In the event of a merger of HBI for cash in which it is not the surviving corporation, the holders of Class B Preferred Stock will be given the right to convert their shares of Class B Preferred Stock for shares of Common Stock, immediately prior to the conversion on a ratio of one (1) share of Common Stock for one (1) share of Class B Preferred Stock.

Appendix 1, Page A-2

MBI SCHEDULES

Schedule 3.4          Changes or Commitments Respecting Line of Business or
                      Operating Procedures
Schedule 3.6          New or Changes to Compensation, Employment Agreements,
                      Etc.
Schedule 3.7          New or Changes to Benefit Plans
Schedule 3.11         New or Changes to Contracts
Schedule 4.1(B)       Jurisdictions Where MBI and its Subsidiaries are
                      Qualified to do Business; Orders, etc. Affecting Status
Schedule 4.1(C)       Shares Outstanding
Schedule 4.1(D)       MBI Subsidiaries
Schedule 4.1(G)       No Defaults - Agreements Requiring Third Party Consent
Schedule 4.1(H)       MBI Financial Reports
Schedule 4.1(I)       Undisclosed Liabilities of MBI
Schedule 4.1(J)       No Events Causing Material Adverse Effect
Schedule 4.1(K)       Properties: Leases, Subleases, Defects of Title or
                      Condition
Schedule 4.1(L)       Intellectual Property Rights
Schedule 4.1(M)       Litigation, Regulatory Action
Schedule 4.1(N)       Compliance with Laws
Schedule 4.1(O)       Material Contracts
Schedule 4.1(Q)       Brokers and Finders
Schedule 4.1(R)(1)    List of Employee Benefit Plans
Schedule 4.1(R)(2)    Employee Benefit Plans Not Qualified Under ERISA
Schedule 4.1(R)(4)    Pension Accumulated Funding Deficiency
Schedule 4.1(R)(5)    Amount by Which Benefit Liabilities Exceed Plan Assets
Schedule 4.1(R)(6)    Obligations for Retiree Health and Life Benefits
Schedule 4.1(R)(7)    Agreements Resulting in Payments to Employees Under Any
                      Compensation and Benefit Plan with Respect to Proposed
                      Transaction
Schedule 4.1(U)       Asset Classification
Schedule 4.1(V)       Inadequate Allowance for Loan Losses
Schedule 4.1(W)       Insurance
Schedule 4.1(AA)(1)   Noncompliance with Environmental Laws

Schedule 4.1(AA)(2)   Pending Proceedings with Respect to Environmental Matters
Schedule 4.1(AA)(3)   Pending Proceedings with Respect to Environmental Matters
                      Involving Loan/Fiduciary Property
Schedule 4.1(AA)(4)   Pending Proceedings with Respect to Environmental Matters
                      Listed in Sections 4.1(Z)(2) or (3)
Schedule 4.1(AA)(5)   Actions During Ownership Which Could Have Material Adverse
                      Effect with Respect to Environmental Matters
Schedule 4.1(AA)(6)   Actions Prior to Ownership Which could Have Material
                      Adverse Effect with Respect to Environmental Matters
Schedule 4.1(AA)(7)   Underground Storage Tanks
Schedule 4.1(AA)(8)   Building Components with Friable Asbestos
Schedule 4.1(BB)      Tax Return Matters
Schedule 4.1(DD)      Derivative Contracts, including a list of any assets
                      pledged as security for such Derivative Contracts
Schedule 4.1(FF)(1)   Employment Contracts Requiring Payment In Connection with
                      Termination
Schedule 4.1(FF)(2)   Contracts with Related Persons
Schedule 4.1(FF)(3)   Leases with Aggregate Annual Rent Exceeding $50,000
Schedule 4.1(FF)(4)   Material Contracts with Affiliates
Schedule 4.1(GG)      Claims of Officers, Directors, Employees
Schedule 6.2(K)       Litigation or Proceedings Materially Affecting MBI or its
                      Subsidiaries Prior to Effective Date

HBI SCHEDULES

Schedule 4.2(B)       Jurisdictions Where HBI and its Subsidiaries are Qualified
                      to do Business; Orders, etc. Affecting Status
Schedule 4.2(C)       Shares Outstanding
Schedule 4.2(D)       HBI Subsidiaries
Schedule 4.2(G)       No Defaults - Agreements Requiring Third Party Consent
Schedule 4.2(H)       HBI Financial Reports
Schedule 4.2(1)       Undisclosed Liabilities of HBI
Schedule 4.2(J)       Events Causing Material Adverse Effect
Schedule 4.2(K)       Litigation, Regulatory Action
Schedule 4.2(N)       Compliance with Law
Schedule 4.2(O)       Brokers and Finders
Schedule 4.2(Q)       Tax Returns

EXHIBIT 2.4

STOCK PURCHASE AGREEMENT

AMONG

HOME BANCSHARES, INC.

AND

THE SHAREHOLDERS OF
MOUNTAIN VIEW BANCSHARES, INC.

AND

MOUNTAIN VIEW BANCSHARES, INC.

DATED AS OF APRIL 20, 2005

TABLE OF CONTENTS

RECITALS...................................................................    1

DEFINITIONS................................................................    2


ARTICLE I. STOCK PURCHASE..................................................    7

   1.1.  PURCHASE OF SHARES................................................    7
   1.2.  CLOSING DATE......................................................    7
   1.3.  CLOSING...........................................................    8

ARTICLE II. CONSIDERATION..................................................    8

   2.1.  PURCHASE PRICE....................................................    8
   2.2.  MVBI EARNINGS.....................................................    9
   2.3.  SECURITIES LAW EXEMPTION..........................................    9

ARTICLE III. ACTIONS PENDING CLOSING.......................................   10

   3.1.  CAPITAL STOCK.....................................................   10
   3.2.  DIVIDENDS, ETC....................................................   11
   3.3.  INDEBTEDNESS; LIABILITIES; ETC....................................   11
   3.4.  LINE OF BUSINESS; OPERATING PROCEDURES; ETC.......................   11
   3.5.  LIENS AND ENCUMBRANCES............................................   11
   3.6.  COMPENSATION; EMPLOYMENT AGREEMENTS; ETC..........................   11
   3.7.  BENEFIT PLANS.....................................................   11
   3.8.  CONTINUANCE OF BUSINESS...........................................   11
   3.9.  AMENDMENTS........................................................   12
   3.10. CLAIMS............................................................   12
   3.11. CONTRACTS.........................................................   12
   3.12. LOANS.............................................................   12

ARTICLE IV. REPRESENTATIONS AND WARRANTIES.................................   12

   4.1.  REPRESENTATIONS AND WARRANTIES OF SELLERS AND MVBI................   12
   4.2.  REPRESENTATIONS AND WARRANTIES OF HBI.............................   23

ARTICLE V. COVENANTS.......................................................   26

   5.1.  BEST EFFORTS......................................................   26
   5.2.  PUBLICITY.........................................................   26
   5.3.  ACCESS; DUE DILIGENCE INFORMATION; CONFIDENTIALITY................   26
   5.4.  SOLE AGREEMENT TO SELL............................................   27
   5.5.  NO RIGHTS TRIGGERED...............................................   27
   5.6.  REGULATORY APPLICATIONS...........................................   27
   5.7.  REGULATORY DIVESTITURES...........................................   28
   5.8.  CURRENT INFORMATION...............................................   28
   5.9.  DIRECTOR AND OFFICER LIABILITY INSURANCE..........................   28

   5.10. SHORT-YEAR TAX RETURN.............................................   28
   5.11. BMV DEFINED BENEFIT PLAN..........................................   29
   5.12. MVBI INVESTMENT PORTFOLIO.........................................   29
   5.13. CONTINUED PARTICIPATION OF HINKLE AND SUTTON......................   29
   5.14. MOUNTAIN VIEW AVIATION, LLC.......................................   30
   5.15. REAL PROPERTIES OF MVBI...........................................   30
   5.16. RESERVATION OF RIGHT TO REVISE TRANSACTION........................   30

ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER.......................   30

   6.1.  CONDITIONS TO EACH PARTY'S OBLIGATIONS............................   30
   6.2.  CONDITIONS TO OBLIGATIONS OF HBI..................................   31
   6.3.  CONDITIONS TO OBLIGATIONS OF MVBI.................................   33

ARTICLE VII. TERMINATION...................................................   34

   7.1.  TERMINATION UPON CERTAIN CONDITIONS...............................   34
   7.2.  TERMINATION FOR BREACH............................................   36

ARTICLE VIII. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION..   36

   8.1.  SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.............   36
   8.2.  SELLERS' INDEMNITY................................................   36
   8.3.  HBI'S INDEMNITY...................................................   36
   8.4.  LIMITATIONS.......................................................   36
   8.5.  DEFENSE OF THIRD PARTY CLAIMS.....................................   37

ARTICLE IX. OTHER MATTERS..................................................   38

   9.1.  WAIVER; AMENDMENT.................................................   38
   9.2.  COUNTERPARTS......................................................   38
   9.3.  GOVERNING LAW.....................................................   38
   9.4.  EXPENSES..........................................................   38
   9.5.  NOTICES...........................................................   39
   9.6.  SELLERS' REPRESENTATIVES - APPOINTMENT OF AGENT...................   40
   9.7.  TIME IS OF THE ESSENCE............................................   41
   9.8.  ASSIGNMENT........................................................   41
   9.9.  BINDING EFFECT....................................................   41
   9.10. SEVERABILITY......................................................   41
   9.11. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES................   41
   9.12. ENFORCEMENT PROCEEDINGS...........................................   41
   9.13. BENEFIT PLANS.....................................................   41
   9.14. HEADINGS..........................................................   42

MVBI SCHEDULES
HBI SCHEDULES

STOCK PURCHASE AGREEMENT

This STOCK PURCHASE AGREEMENT, dated as of the 20th day of April, 2005 (this "Agreement"), is by and among Home BancShares, Inc. ("HBI"), an Arkansas corporation, the undersigned shareholders of Mountain View Bancshares, Inc. ("SELLERS" or individually, a "SELLER") and Mountain View Bancshares, Inc. ("MVBI"), an Arkansas corporation.

RECITALS

(A) MVBI. MVBI is a corporation duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in Mountain View, Arkansas. MVBI is a registered bank holding company under the Bank Holding Company Act of 1956, as amended. As of December 31, 2004, MVBI had Capital (as hereafter defined) of $31,295,000, divided into common stock of $80,000, comprehensive income/surplus of $12,923,000, and retained earnings of $18,292,000. Since December 31, 2004, MVBI paid a cash dividend of $5,611,346.00. There are no options to purchase MVBI Stock issued and outstanding. As of the date of this Agreement, MVBI has 10,000 authorized shares of common stock, $10.00 par value ("MVBI Stock"), of which 7,982 shares are issued and outstanding (no other class of capital stock being authorized), and all of which are owned by Sellers.

(B) BANK OF MOUNTAIN VIEW. Bank of Mountain View ("BMV") is an Arkansas state bank duly organized and existing in good standing under the laws of the State of Arkansas with its main office located in Mountain View, Arkansas. As of the date of this Agreement, BMV has 4,000 authorized shares of common stock, $25.00 par value per share (no other class of capital stock being authorized), of which 4,000 shares are issued and outstanding, and 100% owned by MVBI.

(C) HBI. HBI is a corporation duly organized and existing in good standing under the laws of the State of Arkansas, with its principal executive offices located in Conway, Arkansas. HBI is a financial holding company subject to regulation by the Federal Reserve Board (hereafter defined). As of December 31, 2004, HBI had Capital of $106,610,000, divided into common stock of $266,000, preferred stock of $21,000, preferred treasury stock of $(569,000), accumulated other comprehensive loss of $(858,000), capital surplus of $90,455,000 and retained earnings of $17,295,000. As of the date of this Agreement, HBI has 5,000,000 authorized shares of common stock, $0.10 par value ("HBI Common Stock"). On April 18, 2005, the common shareholders of HBI voted to reduce the par value of the HBI Common Stock to $0.01 per share and increase the number of authorized shares to 25,000,000. There are 3,915,230 shares of HBI Common Stock issued and outstanding. HBI has 5,500,000 authorized shares of preferred stock, $0.01 par value, of which 2,500,000 shares of Class A Preferred Stock are authorized and 2,134,068 are issued and outstanding, and 3,000,000 shares of Class B Preferred Stock are authorized, and none are issued and outstanding.

In consideration of their mutual promises and obligations, the Parties further agree as follows:

DEFINITIONS

(A) DEFINITIONS. Capitalized terms used in this Agreement have the following meanings:

"Accredited Investor" has the meaning assigned to such term in Rule 501 promulgated under the Securities Act.

"Acquisition" has the meaning assigned to such term in Section 1.1.

"Agreement" means this Stock Purchase Agreement, together with all Exhibits and Schedules annexed hereto, and incorporated by specific reference, as a part of this Agreement.

"Arkansas Resident" means:

(1) A corporation, partnership, trust or other form of business organization which has a principal office within the State of Arkansas on the date of execution of this Agreement and on the Closing Date.

(2) An individual whose principal residence is in the State of Arkansas on the date of execution of this Agreement and on the Closing Date.

(3) A corporation, partnership, trust or other form of business organization which is organized for the specific purpose of acquiring part of an issue offered pursuant to this Agreement, of which all of the beneficial owners of such organization are residents of the State of Arkansas on the date of execution of this Agreement and on the Closing Date.

"Asset Classification" has the meaning assigned to such term in Section 4.1(U).

"BMV" means Bank of Mountain View, as set forth in paragraph (B) of the Recitals.

"Business Day" means any day other than a Saturday, Sunday, or a day on which the HBI Banks are not open for business.

"Capital" means capital stock, surplus and retained earnings determined in accordance with GAAP. Unrealized gains or losses in investment securities will be included when determining Capital.

"Cash Consideration" has the meaning assigned to such term in Section 2.1.

"Closing Date" has the meaning assigned to such term in Section 1.2.

"Code" has the meaning assigned to such term in Section 4.1(R)(2).

"Compensation and Benefit Plans" has the meaning assigned to such term in
Section 4.1(R)(1).

"Contract" has the meaning assigned to such term in Section 4.1(O).

"Derivatives Contract" means an exchange-traded or over-the-counter swap, forward, future, option, cap, floor or collar financial contract or any other contract that (1) is not included on the balance sheet of the Financial Reports of MVBI, and (2) is a derivative contract (including various combinations thereof).

"Earnings Calculation" has the meaning assigned to such term in Section 2.2.

"Environmental Law" means (1) any federal, state, and/or local law, statute, ordinance, rule, regulation, code, license, permit, authorization, approval, consent, legal doctrine, order, judgment, decree, injunction, requirement or agreement with any governmental entity, relating to (a) the protection, preservation or restoration of the environment (including air, water vapor, surface water, groundwater, drinking water supply, surface land, subsurface land, plant and animal life or any other natural resource) or to human health or safety, or (b) the exposure to, or the use, storage, recycling, treatment, generation, transportation, processing, handling, labeling, production, release or disposal of Hazardous Material, in each case as amended and as now in effect, including the Federal Comprehensive Environmental Response, Compensation, and Liability Act of 1980, the Superfund Amendments and Reauthorization Act, the Federal Water Pollution Control Act of 1972, the Federal Clean Air Act, the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act of 1976 (including the Hazardous and Solid Waste Amendments thereto), the Federal Solid Waste Disposal and the Federal Toxic Substances Control Act, and the Federal Insecticide, Fungicide and Rodenticide Act, the Federal Occupational Safety and Health Act of 1970, and (2) any common law or equitable doctrine (including injunctive relief and tort doctrines such as negligence, nuisance, trespass and strict liability) that may impose Liability or obligations for injuries or damages due to, or threatened as a result of, the presence of or exposure to any Hazardous Material.

"ERISA" has the meaning assigned to such term in Section 4.1(R)(2).

"ERISA Affiliate" has the meaning assigned to such term in Section 4.1(R)(3).

"ERISA Plans" has the meaning assigned to such term in Section 4.1(R)(2).

"FDIC" means the Federal Deposit Insurance Corporation.

"Federal Reserve Board" means the Board of Governors of the Federal Reserve System.

"Financial Reports" (1) as to HBI, means its respective audited consolidated balance sheets and the related statements of income, changes in shareholders' equity and cash flows for

the fiscal years or periods ended December 31, 2002, December 31, 2003 and December 31, 2004, unaudited consolidated balance sheets and the related statements of income, changes in shareholders' equity and cash flows for the three (3)-month period ended March 31, 2005, and all financial reports filed or to be filed by HBI, subsequent to December 31, 2004, in the form filed with the Federal Reserve Board, FDIC and the Arkansas State Bank Department and (2) as to MVBI, means its respective unaudited, compiled consolidated balance sheets and the related statements of income, changes in shareholders' equity and cash flows for the fiscal years or periods ended December 31, 2002, December 31, 2003 and December 31, 2004, prepared in accordance with GAAP, unaudited consolidated balance sheets and the related statements of income, changes in shareholders' equity and cash flows for the three (3)-month period ended March 31, 2005 and all financial reports filed or to be filed by MVBI subsequent to December 31, 2004, in the form filed with the Federal Reserve Board, FDIC and the Arkansas State Bank Department; and as to BMV, means its call reports for the fiscal years ended December 31, 2002, December 31, 2003, and December 31, 2004.

"GAAP" means generally accepted accounting principles consistently applied.

"Governing Documents" means the articles of incorporation, charter, and bylaws of the subject entity, including all amendments thereto.

"HBI" means Home BancShares, Inc., an Arkansas corporation and registered financial holding company as set forth in paragraph (C) of the Recitals.

"HBI Banks" means the following wholly-owned subsidiary banks of HBI: First State Bank, an Arkansas banking corporation with its principal office in Conway, Arkansas, Community Bank, an Arkansas banking corporation with its principal office in Cabot, Arkansas, Twin City Bank, an Arkansas banking corporation with its principal office in North Little Rock, and upon the closing of the merger between HBI and Marine Bancorp, Inc., Marine Bank of the Florida Keys, a Florida banking corporation with its principal office in Marathon, Florida.

"HBI Common Stock" has the meaning assigned to such term in paragraph (C) of the Recitals.

transaction) of securities representing 25% or more of the voting power of HBI or any of its significant Subsidiaries other than the issuance of HBI Common Stock upon the exercise of then outstanding options or the conversion of then outstanding convertible securities of HBI.

"Hinkle" means James G. Hinkle.

"Indemnified Party" has the meaning assigned to such term in Section 8.5(A).

"Indemnifying Party" has the meaning assigned to such term in Section 8.5(A).

"Insured Depository Institution" has the meaning given it in the Federal Deposit Insurance Act, as amended, and applicable regulations under such statute.

"Intellectual Property Rights" has the meaning given such term in Section 4.1(L).

"Knowledge" (and "Know" or "Known") means the actual (but not the constructive) knowledge of the individual or, if an entity, the Chairman, Chief Executive Officer, President, Chief Financial Officer, and Chief Lending Officer of the entity.

"Liability" means any debts, liabilities and obligations of the Party, whether the same shall be matured or un-matured; whether by Contract or otherwise, whether accrued, absolute, contingent or otherwise.

"Loan/Fiduciary Property" means any property owned or Controlled by MVBI or any of its Subsidiaries or in which MVBI or any of its Subsidiaries holds a security or other interest, and, where required by the context, includes any such property where MVBI or any of its Subsidiaries constitutes the owner or operator of such property, but only with respect to such property.

"Losses" has the meaning assigned to such term in Section 8.2.

"Material" means, with respect to either Party, an event, occurrence or circumstance (including (i) the making of any provisions for possible loan and lease losses, write-downs of other real estate owned and taxes, and (ii) any breach of a representation or warranty contained in this Agreement by such Party) that (a) has or is reasonably likely to have a material adverse effect on or constitute a material adverse change in the financial condition, results of operations, business, future operations or prospects of such Party or, as applicable, its Subsidiaries, or (b) would impair such Party's ability to perform its obligations under this Agreement or the consummation of any of the transactions contemplated by this Agreement; provided, however that the occurrence of the following event or circumstance will not be deemed "Material":
(i) acts of terrorism or war (whether or not declared); (ii) a change in laws or regulations applicable to either Party; or (iii) general business or financial condition effecting the commercial banking industry generally.

"MVBI" means Mountain View Bancshares, Inc., an Arkansas corporation as set forth in paragraph (A) of the Recitals.

"MVBI Earnings" has the meaning assigned to such term in Section 2.2.

"MVBI Stock" has the meaning assigned to such term in paragraph (A) of the Recitals.

"Multiemployer Plans" has the meaning assigned to such term in Section 4.1(R)(2).

"Participation Facility" means any loan facility in which MVBI or any of its Subsidiaries participates in the management and, where required by the context, includes the owner or operator of such facility.

"Party" means a party to this Agreement.

"Pension Plan" has the meaning assigned to such term in Section 4.1(R)(2).

"Purchase Price" means the price to be paid by HBI for the MVBI Stock as set forth in Section 2.1.

"Securities Act" means the Securities Act of 1933, as amended, together with the rules and regulations promulgated under such statute.

"Sellers' Representatives" means James G. Hinkle and Kenneth W. Sutton, as appointed pursuant to Section 9.6.

"Short-Year Return" has the meaning assigned to such term in Section 5.10.

"Stock Consideration" has the meaning assigned to such term in Section 2.1.

"Stock Restrictions" has the meaning assigned to such term in Section 1.1.

"Sutton" means Kenneth W. Sutton.

"Tax Returns" has the meaning assigned to such term in Section 4.1(BB).

"Termination Date" has the meaning assigned to such term in Section 5.1.

"Third Party" means any person or group and their respective directors, officers, employees, representatives, and agents other than HBI, MVBI, or any of their Subsidiaries, and their respective directors, officers, employees, representatives, and agents.

"Third Party Claim(s)" has the meaning assigned to such term in Section 8.5.

(B) GENERAL INTERPRETATION. Except as otherwise expressly provided in this Agreement or unless the context clearly requires otherwise, the terms defined in this Agreement include the plural as well as the singular; the word "including" means including without limitation; the words "hereof," "herein," "hereunder," "in this Agreement" and other words of similar import refer to this Agreement as a whole and not to any particular Article, Section or other subdivision; and references in this Agreement to Articles, Sections, Schedules, and Exhibits refer to Articles and Sections of and Schedules and Exhibits to this Agreement. Unless otherwise stated, references to Subsections refer to the Subsections of the Section in which the reference appears. All pronouns used in this Agreement include the masculine, feminine and neuter gender, as the context requires. All accounting terms used in this Agreement that are not expressly defined in this Agreement have the respective meanings given to them in accordance with GAAP.

ARTICLE I. STOCK PURCHASE

1.1. PURCHASE OF SHARES. Subject to the provisions of this Agreement, on the Closing Date, the Sellers agree to sell and convey to HBI one hundred percent (100%) of the MVBI Stock issued and outstanding on the Closing Date for the consideration set forth herein, free and clear of all liens, encumbrances, security agreements, equities, options, claims, charges, and restrictions of any kind or nature whatsoever ("Stock Restrictions") and HBI agrees to purchase the MVBI Stock from the Sellers upon the terms and conditions set forth herein (the "Acquisition").

1.2. CLOSING DATE. Unless the Parties agree upon another date, the "Closing Date" will be the tenth (10th) Business Day after the fulfillment or waiver of each condition precedent set forth in, and the granting of each approval (and expiration of any waiting period) required by, ARTICLE VI. If the Acquisition is not consummated in accordance with this Agreement on or prior to the Termination Date, either Party may terminate this Agreement in accordance with ARTICLE VII.

1.3. CLOSING. The closing ("Closing") of the Acquisition shall take place on the Closing Date at the offices of Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., 425 West Capitol Avenue, Suite 1800, Little Rock, Arkansas 72201.

(A) At the Closing, the Sellers will deliver to HBI all of the issued and outstanding shares of MVBI Stock, properly endorsed in blank, with signatures guaranteed in form and substance satisfactory to HBI. Such shares shall be fully paid and non-assessable, and shall be free and clear of all Stock Restrictions. If any certificate representing such shares have been lost or destroyed, then the holder of such shares shall, at HBI's option, deliver at the Closing an affidavit to that fact, or such indemnity as may be acceptable to HBI.

(B) HBI shall pay the Cash Consideration at the Closing in immediately available funds in Little Rock, Arkansas. The Stock Consideration shall be paid as validly issued, fully paid and non-assessable shares of HBI Common Stock, which shall bear the restrictive legend set forth in Section 2.3(B).

(C) If not paid prior to Closing, MVBI may distribute to its shareholders at Closing MVBI's earnings, calculated in accordance with GAAP, for the period beginning January 1, 2005 and ending March 3, 2005. This distribution shall be in addition to the Purchase Price and the MVBI Earnings.

ARTICLE II. CONSIDERATION

2.1. PURCHASE PRICE. On the Closing Date, HBI shall pay to the Sellers the total amount of $43,750,000 represented $39,374,984 by payments in cash (the "Cash Consideration") and $4,375,016 by the issuance by HBI of 115,132 shares of HBI Common Stock valued for purposes of the exchange at $38.00 per share (the "Stock Consideration").

(A) The Cash Consideration shall be distributed to the Sellers pro rata in proportion to their percentage of ownership of MVBI Stock, after taking into account in the portions to be paid to Hinkle and Sutton, the Stock Consideration paid to them.

(B) The Stock Consideration will be paid fifty percent (50%), or 57,566 shares, to Hinkle and fifty percent (50%), or 57,566 shares, to Sutton, subject to the provisions of Section 2.2.

(1) If prior to the issuance of HBI Common Stock as Stock Consideration, the outstanding shares of HBI Common Stock are increased, decreased, or are changed into a different number of shares or a different class by reason of any merger, recapitalization, reclassification, stock split, or similar transaction, or if a stock dividend shall be paid, an appropriate and proportionate adjustment or adjustments will be made to the number of shares to be issued as Stock Consideration so that the full amount of the Stock Consideration is paid.

(2) If, at any time during the period beginning on March 3, 2005 and ending within twelve (12) months following the Closing Date, HBI offers its Common

Stock in (i) a public offering or (ii) as stock consideration for the purchase of stock or assets of a Third Party for a value less than $38 per share, such value being adjusted for any of the changes in HBI Common Stock set forth in Section 2.1(B)(1), the number of shares of HBI Common Stock required to pay the Stock Consideration shall be adjusted, and, within ten
(10) Business Days after the completion of such offering, HBI shall issue to each of Hinkle and Sutton such additional number of shares of HBI Common Stock (to the nearest whole share) so that the full amount of the Stock Consideration of $4,375,016 is paid.

For example: if HBI Common Stock is offered in a public offering at $31 per share, the additional number of shares of HBI Common Stock required to satisfy the Stock Consideration would be calculated as: the Stock Consideration of $4,375,016 divided by the offering price of $31, the dividend of which is 141,129, then subtracting 141,129 from 115,132 (the number of shares issued on the Closing Date) yielding an additional 25,997 shares of HBI Common Stock, or 12,998 shares to each of Hinkle and Sutton.

2.2. MVBI EARNINGS. In addition to the Purchase Price, MVBI and Sellers agree that MVBI shall not distribute the earnings of MVBI for the period from March 4, 2005 through the Closing Date (the "MVBI Earnings") to Sellers, but instead agree that an additional Purchase Price amount equal to one-half (1/2) such earnings shall be paid by HBI to Sellers. In addition, MVBI and Sellers agree that neither MVBI nor Sellers shall make any adjustments to the books and records of MVBI (other than in the ordinary and usual course of business consistent with past practices or as required for legal or regulatory purposes) that will have the affect of increasing or inflating the MVBI Earnings, without the prior written consent of HBI. Within ten (10) Business Days following the Closing Date, HBI will calculate the MVBI Earnings in accordance with GAAP and then pay one-half (1/2) of such amount to the Sellers by bank check pro rata in proportion to their percentage of ownership of MVBI Stock. Following this determination of MVBI's Earnings, a written memorandum showing that determination shall be prepared by HBI and annexed to this Agreement.

2.3. SECURITIES LAW EXEMPTION. The offering of HBI Common Stock to Hinkle and Sutton is being made pursuant to an exemption from registration under the Securities Act and in compliance with Rule 147. Therefore, Hinkle and Sutton, in their individual capacities, as evidenced by their signatures at the end of this Agreement, each hereby represents and warrants to HBI that, on the date of this Agreement and as of the Closing Date, he:

(A) acknowledges that the shares HBI Common Stock to be issued hereunder are not registered under the Securities Act, nor under the Arkansas Securities Act and further acknowledges that the HBI Common Stock is being offered and sold pursuant to exemptions from registration pursuant to Section 3(a)(11) of the Securities Act and Rule 147 promulgated thereunder and Section 23-42-503(a)(3) of the Arkansas Securities Act.;

(B) acknowledges that pursuant to the exemption provided under Section 3(a)(11) of the Securities Act and Rule 147: (i) for a period of nine (9) months from the date of the original issuance of the HBI Common Stock to him, the Shares may only be resold to persons resident within the State of Arkansas; (ii) HBI will issue stop transfer instructions to its

Exchange Agent prohibiting the transfer of shares in violation of Rule 147, and
(iii) the shares so issued will bear the following restrictive legend:

"The securities evidenced by this certificate have not been registered under the Securities Act of 1933 or the securities laws of the state of Arkansas and are being offered and sold in reliance on exemptions from the registration requirements of the Securities Act of 1933 and the Arkansas Securities Act. The securities are subject to restrictions on transferability and resale. During the period in which the securities are being offered and sold by the issuer, and for a period of nine (9) months from the date of the last sale by the issuer of the securities, all resales of any part of the securities shall be made only to persons resident within the state of Arkansas."

(C) is an Arkansas Resident in that his principal residence is located in Arkansas at the address set forth following his signature;

(D) is an Accredited Investor as that term is defined in Section 2(a)(15) of the Securities Act and Rule 501(a) promulgated thereunder, and (i) is fully familiar with HBI's business, financial condition, and operations, prospects and future potential, (ii) has such other information, financial and otherwise, including all of the information he would be provided in an offering registered under the Securities Act, which he has deemed material in formulating a decision to acquire the HBI Common Stock on the terms and conditions set forth herein, and (iii) has had the opportunity to ask questions of and receive answers from HBI;

(E) is acquiring the HBI Common Stock for his own account, solely for investment purposes, and not for a view to resale of said HBI Common Stock;

(F) is able to bear the economic risks of this investment; and

(G) acknowledges that the shares of HBI Common Stock acquired hereunder will not be resold or otherwise transferred or assigned without compliance with the registration provisions of the Securities Act and applicable state blue sky laws or exemption therefrom.

ARTICLE III. ACTIONS PENDING CLOSING

Unless HBI otherwise agrees in writing between the date hereof and the Closing Date, the Sellers shall cause MVBI, and MVBI shall and shall cause each of its Subsidiaries to conduct its respective business in the ordinary and usual course consistent with past practice and shall use their respective best efforts to maintain and preserve MVBI's and each of its Subsidiaries' business organization, employees and advantageous business relationships and retain the services of MVBI's or, as applicable, its Subsidiaries' officers and key employees identified by HBI, and Sellers shall cause MVBI not to do any of the following, and MVBI shall not do, and shall cause BMV not to do any of the following, without the prior written consent of HBI:

3.1. CAPITAL STOCK. Except as disclosed in Schedule 4.1(C), issue, sell or otherwise permit to become outstanding any additional shares of capital stock of MVBI or BMV,

or any Rights with respect thereto, or enter into any agreement with respect to the foregoing, or permit any additional shares of MVBI Stock to become subject to grants of employee stock options, stock appreciation rights or similar stock-based employee compensation rights.

3.2. DIVIDENDS, ETC. Except as permitted by Section 1.3(C), declare or pay any dividend on or in respect of, or declare or make any distribution on, or directly or indirectly combine, split, subdivide, redeem, reclassify, purchase or otherwise acquire, any shares of its capital stock or, other than as permitted in or contemplated by this Agreement, authorize the creation or issuance of, or issue, any additional shares of its capital stock or any Rights with respect thereto.

3.4. LINE OF BUSINESS; OPERATING PROCEDURES; ETC. Except as may be directed by any regulatory agency: (A) change its lending, investment, liability management or other Material banking policies in any Material respect, or (B) commit to incur any further capital expenditures beyond those disclosed in Schedule 3.4 or incurred in the ordinary and usual course of business consistent with past practices and not exceeding $15,000 individually or $25,000 in the aggregate.

3.5. LIENS AND ENCUMBRANCES. Except as disclosed in Schedule 3.5 or incurred in the ordinary and usual course of business consistent with past practices, subject any of its assets to a lien, charge, or encumbrance (including mortgage, pledge or security interest), or permit any such lien, charge or encumbrance to exist.

3.6. COMPENSATION; EMPLOYMENT AGREEMENTS; ETC. Except as disclosed in Schedule 3.6, enter into or amend any employment, severance or similar agreement or arrangement with any of its directors, officers or employees, or grant any salary or wage increase, or increase any employee benefit (including incentive or bonus payments), except normal individual increases in regular compensation to officers or employees in the ordinary and usual course of business consistent with past practice.

3.7. BENEFIT PLANS. Except as provided in Section 5.11, or as disclosed in Schedule 3.7, enter into or modify (except as may be required by applicable law or by this Agreement) any pension, retirement, stock option, stock purchase, savings, profit sharing, deferred compensation, consulting, bonus, group insurance or other employee benefit, incentive or welfare contract, plan or arrangement, or any trust agreement related thereto, in respect of any of its directors, officers or other employees, including taking any action that accelerates the vesting or exercise of any benefits payable thereunder.

3.8. CONTINUANCE OF BUSINESS. Except pursuant to Sections 5.13, 5.14 and 5.15, or as disclosed in Schedule 3.8, dispose of or discontinue any portion of its assets, business or properties, that is in excess of $25,000 individually or $100,000 in the aggregate, or merge or consolidate with, or acquire all or any portion of, the business or property of any other entity

(except foreclosures or acquisitions by BMV in its fiduciary capacity, in each case in the ordinary and usual course of business consistent with past practice).

3.9. AMENDMENTS. Amend its Governing Documents.

3.10. CLAIMS. Settle any claim, litigation, action or proceeding involving any Liability for money damages in excess of $25,000 or Material restrictions upon the operations of MVBI or BMV.

3.12. LOANS. Extend credit or account for loans and leases other than in the ordinary and usual course of business of MVBI and in accordance with written lending policies and accounting practices in existence at the date of the execution of this Agreement, except that BMV shall not, without the prior notice and consultation with HBI's Chairman or President make any new loan or renew any existing loan in a principal amount in excess of $1,000,000.

ARTICLE IV. REPRESENTATIONS AND WARRANTIES

4.1. REPRESENTATIONS AND WARRANTIES OF SELLERS AND MVBI. Each of the Sellers and MVBI hereby represents and warrants to HBI, now and as of the Closing Date, as follows:

(A) RECITALS. The facts set forth in the Recitals of this Agreement with respect to MVBI and BMV are true and correct.

(B) ORGANIZATION, STANDING AND AUTHORITY. Each of MVBI, BMV, and any other Subsidiary of MVBI, is incorporated under the laws of the State of Arkansas, and is in good standing under the laws of the State of Arkansas and is duly qualified to do business and is in good standing in the states of the United States and foreign jurisdictions where the failure to be duly qualified, individually or in the aggregate, is reasonably likely to have a Material effect on it. All of such foreign jurisdictions are set forth on Schedule 4.1(B). Each of MVBI, BMV, and any other Subsidiary of MVBI has in effect all federal, state, local and foreign governmental authorizations necessary for it to own or lease its properties and assets and to carry on its business as it is now conducted. BMV is the only Subsidiary of MVBI that is an Insured Depository Institution, and its deposits are insured by the Bank Insurance Fund of the FDIC. Except as disclosed in Schedule 4.1(B), BMV is not subject to any orders, resolutions, commitments, agreements, undertakings, understandings, or consents that affect its status as such Insured Depository Institution.

(C) SHARES. The outstanding shares of MVBI's and its Subsidiaries' capital stock are validly issued and outstanding, fully paid and non-assessable, and subject to no preemptive rights. Except as disclosed in Schedule 4.1(C), there are no shares of capital stock or other equity securities of MVBI or its Subsidiaries outstanding and no outstanding Rights with respect thereto.

(D) MVBI SUBSIDIARIES. MVBI has disclosed on Schedule 4.1(D) a list of all of its Subsidiaries, and the number of authorized, issued, and outstanding shares of each class of stock and percentages of ownership of MVBI or BMV. No equity securities of BMV are or may become required to be issued (other than to MVBI or one of its Subsidiaries) by reason of any Rights with respect thereto. There are no Contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise issue any shares of such Subsidiary's capital stock, and there are no Contracts, commitments, understandings or arrangements relating to the rights of MVBI or its Subsidiaries, as applicable, to vote or to dispose of such shares. All of the shares of capital stock of each of its Subsidiaries held by MVBI are fully paid and non-assessable and are owned by MVBI or one of its Subsidiaries free and clear of any Stock Restrictions. Except as disclosed in Schedule 4.1(D), MVBI does not own beneficially, directly or indirectly, any shares of any equity securities or similar interests of any corporation, bank, partnership, joint venture, business trust, association or organization other than BMV.

(E) CORPORATE POWER. Each of MVBI and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its Material properties and assets.

(F) AUTHORITY. This Agreement, and each of the MVBI obligations set forth herein, has been authorized by all necessary corporate action of MVBI. To the extent any of the Sellers is an entity, this Agreement has been duly authorized by all necessary action of that entity. This Agreement is a valid and binding agreement of the Sellers and MVBI, enforceable against them in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(G) NO DEFAULTS. Subject to the required regulatory approvals referred to in Section 6.1, any required filings under federal and state securities laws, and, except as disclosed in Schedule 4.1(G), the execution, delivery and performance of this Agreement and the consummation by the Sellers and MVBI of the transactions contemplated by this Agreement do not and will not Materially
(1) constitute a breach of, or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of the Sellers or MVBI or any of its Subsidiaries or to which the Sellers or MVBI or any of its Subsidiaries or any of their properties is subject or bound, or (2) constitute a breach of, or violation of, or a default under, the Governing Documents of MVBI or any of its Subsidiaries, or (3) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license or the consent or approval of any other party to any such agreement, indenture or instrument.

(H) MVBI FINANCIAL REPORTS. Except as disclosed in Schedule 4.1(H), the Financial Reports of each of MVBI and BMV: (1) did not and will not contain any untrue

statement of a Material fact or omit to state a Material fact required to be stated therein or necessary in order to make the statements made therein, and in light of the circumstances under which they were made, not Materially misleading; (2) each of the balance sheets in or incorporated by reference into the Financial Reports (including the related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the financial position of the entity or entities to which it relates as of its date; (3) each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements in the Financial Reports (including any related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the results of operations, changes in shareholders' equity and cash flows, as the case may be, of the entity or entities to which it relates for the periods set forth therein; and (4) in each case in accordance with GAAP during the periods involved, except in each case as may be noted therein, subject to normal and recurring year-end adjustments, related notes and schedules in the case of such statements.

(I) ABSENCE OF UNDISCLOSED LIABILITIES. Neither MVBI nor any of its Subsidiaries has any Material Liability, except (1) as disclosed on Schedule 4.1(I), (2) as reflected in its Financial Reports prior to the date of this Agreement, and (3) for commitments and obligations made, or Liabilities incurred, in the ordinary and usual course of business consistent with past practice since December 31, 2004 and which are fully reflected as liabilities on that entity's books and records. Except (x) as disclosed on Schedule 4.1(I) and
(y) for commitments and obligations made, or Liabilities incurred, in the ordinary and usual course of business consistent with past practice since December 31, 2004 and which are fully reflected as liabilities on that entity's books and records, since December 31, 2004, neither MVBI nor any of its Subsidiaries has incurred or paid any Material Liability (including any Liability incurred in connection with any acquisitions in which any form of direct financial assistance of the federal government or any agency thereof has been provided to any Subsidiary).

(J) NO EVENTS. Except (x) as disclosed on Schedule 4.1(J) and (y) for events occurring in the ordinary and usual course of business consistent with past practice since December 31, 2004 and which are fully reflected as liabilities on that entity's books and records, since December 31, 2004, no event has occurred that, individually or in the aggregate, is reasonably likely to have a Material effect on MVBI or any of its Subsidiaries.

(K) PROPERTIES. Except as disclosed in Schedule 4.1(K), MVBI and each of its Subsidiaries have good and marketable title, free and clear of all liens, encumbrances, charges, defaults, or equities of any character, to all of the properties and assets, tangible and intangible, reflected in the Financial Reports of MVBI as being owned by MVBI or its Subsidiaries as of the dates thereof. All buildings and all Material fixtures, equipment, and other property and assets that are held under leases or subleases by MVBI or any of its Subsidiaries are held under valid leases or subleases enforceable in accordance with their respective terms, other than any such exceptions to validity or enforceability as are disclosed on Schedule 4.1(K). Other than month-to-month leases on operating equipment, all leases and subleases are identified on Schedule 4.1(K), and except as disclosed on such schedule, are fully transferrable to HBI upon consummation of this Agreement. MVBI further represents, covenants and warrants that, except as disclosed in Schedule 4.1(K), taking their age and ordinary wear and tear into account, the

assets and properties of MVBI or any of its Subsidiaries are in good operating condition and repair and have been operated and maintained in the ordinary and usual course of business, consistent with past practice, other than those items of personal property not in use by MVBI or its Subsidiaries as of the date hereof.

(L) INTELLECTUAL PROPERTY RIGHTS. Schedule 4.1(L) lists all patents, patent rights, licenses, trade secrets, trademarks, service marks, trademark rights, trade names or trade name rights, copyrights, inventions and other intellectual property rights ("Intellectual Property Rights") necessary for the ownership and operation of the business of MVBI or any of its Subsidiaries in the manner in which the business has been historically and currently owned and operated by MVBI or its Subsidiaries. none of the Intellectual Property Rights interferes with, infringes upon, misappropriates, or violates any intellectual property rights of third parties, and neither Sellers nor MVBI nor any of its Subsidiaries has received any written charge, complaint, claim, demand, or notice alleging any such interference, infringement, misappropriation, or violation. To MVBI's Knowledge, no Third Party has interfered with, infringed upon, misappropriated, or violated any of the Intellectual Property Rights. Neither Sellers nor MVBI nor any of its Subsidiaries has received any written notice with respect to any outstanding injunction, judgment, order, decree, ruling, or charge relating to any item of the Intellectual Property Rights, and no action, suit, proceeding, hearing, investigation, charge, complaint, claim, or demand is pending or, to the Knowledge of the Sellers or MVBI or any of its Subsidiaries, is threatened which challenges the legality, validity, enforceability, use, or ownership of any of the Intellectual Property Rights.

(M) LITIGATION; REGULATORY ACTION. Except as disclosed in Schedule
4.l(M), no litigation, proceeding or controversy before any court or governmental agency is pending to the Knowledge of the Sellers or MVBI against MVBI or any of its Subsidiaries, including, without limitation, any litigation, proceedings, or controversies that allege claims under any fair lending law or other law relating to discrimination, including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, or allege claims under any fair credit reporting laws or laws for the protection of non-public personal information, including the Fair Credit Reporting Act, and the Gramm-Leach-Bliley Act, and, to the Knowledge of the Sellers or MVBI, no such litigation, proceeding or controversy has been threatened; and except as disclosed in Schedule 4.1(M), neither MVBI nor any of its Subsidiaries or any of its or their Material properties or their officers, directors or Controlling persons is a party to or is subject to any order, decree, agreement, memorandum of understanding or similar arrangement with, or a commitment letter or similar submission to, any Regulatory Authority or other governmental authority, and neither Sellers nor MVBI nor any of its Subsidiaries has been advised by any of such Regulatory Authorities or other governmental authority that such authority is contemplating issuing or requesting (or is considering the appropriateness of issuing or requesting) any such order, decree, agreement, memorandum or understanding, commitment letter or similar submission.

(N) COMPLIANCE WITH LAWS. Except as disclosed in Schedule 4.1(N), each of MVBI and its Subsidiaries:

(1) has all permits, licenses, authorizations, orders and approvals of, and has made all filings, applications and registrations with, all Regulatory Authorities or other governmental authority that are required in order to permit it to own its businesses presently conducted and that are Material to the business of it and its Subsidiaries, taken as a whole; all such permits, licenses, certificates of authority, orders and approvals are in full force and effect and, to the Knowledge of the Sellers and MVBI, no suspension or cancellation of any of them is threatened; and all such filings, applications and registrations are current;

(2) has received no notification or communication from any Regulatory Authority or other governmental authority or the staff thereof
(a) asserting that MVBI or any of its Subsidiaries is not in compliance with any of the statutes, regulations or ordinances which such Regulatory Authority or governmental authority enforces, (b) threatening to revoke any license, franchise, permit or governmental authorization of MVBI or any of its Subsidiaries, or (c) requiring any of MVBI or BMV (or any of its officers, directors or Controlling persons) to enter into a cease and desist order, agreement or memorandum of understanding (or requiring the board of directors thereof to adopt any resolution or policy);

(3) is not required to give prior notice to any federal banking or thrift agency of the proposed addition of an individual to its Board of Directors or the employment of an individual as a senior executive; and

(4) BMV is in compliance in all Material respects with all fair lending laws or other laws relating to discrimination, including the Equal Credit Opportunity Act, the Fair Housing Act, the Community Reinvestment Act and the Home Mortgage Disclosure Act, and all fair credit reporting laws and laws for the protection of non-public personal information, including the Fair Credit Reporting Act, the Gramm-Leach-Bliley Act, and the Fair and Accurate Credit Transaction Act.

(O) MATERIAL CONTRACTS. Except as disclosed in Schedule 4.1(O) (and with a true and complete copy of the document or other item in question attached to such schedule), none of MVBI or its Subsidiaries, nor any of their respective assets, businesses or operations, is a party to, or is bound or affected by, or receives benefits under, any written or oral contract, indenture, agreement, lease, standby letter of credit, mortgage, loan or commitment ("Contract") or Contracts obligating it or them to pay more than $25,000 in any year and which cannot be terminated upon notice of sixty (60) days or less. Except as disclosed in Schedule 4.1(O), neither MVBI nor any of its Subsidiaries is in default under any such Contract to which it is a party, by which its respective assets, business or operations may be bound or affected, or under which it or any of its respective assets, business or operations receives benefits, and there has not occurred any event that, with the lapse of time or the giving of notice or both, would constitute such a default. Except as disclosed in Schedule 4.1(O), neither MVBI nor any of its Subsidiaries is subject to or bound by any Contract containing covenants that limit the ability of MVBI or any of its Subsidiaries to compete in any line of business or with any Person or that involve any restriction of geographical area in which, or method by which, MVBI or BMV may

carry on its business (other than as may be required by law or any applicable Regulatory Authority).

(P) REPORTS. Since January 1, 2002 each of MVBI and BMV has filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with (1) the Arkansas State Bank Department, (2) the FDIC, (3) the Federal Reserve Board, and (4) any other Regulatory Authorities or other governmental authority having jurisdiction with respect to MVBI and its Subsidiaries. As of their respective dates (and without giving effect to any amendments or modifications filed after the date of this Agreement with respect to reports and documents filed before the date of this Agreement), each of such reports and documents, including the financial statements, exhibits and schedules thereto, complied in all Material respects with all of the statutes, rules and regulations enforced or promulgated by the Regulatory Authority with which they were filed and did not contain any untrue statement of a Material fact or omit to state any Material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not Materially misleading.

(Q) BROKERS AND FINDERS. Except as set forth in Schedule 4.1(Q), neither the Sellers nor MVBI, BMV, any of their Subsidiaries, nor any of their respective officers, directors or employees has employed any broker or finder, or agreed to pay any fees to any director or former director or incurred any Liability for any financial advisory fees, brokerage fees, commissions or finder's fees, and no broker or finder, or director or former director of MVBI and BMV, has acted directly or indirectly for the Sellers or MVBI or any of its Subsidiaries in connection with this Agreement or the transactions contemplated hereby.

(R) EMPLOYEE BENEFIT PLANS.

(1) Schedule 4.1(R)(1) contains a complete list of all bonus, deferred compensation, pension, retirement, profit-sharing, thrift savings, employee stock ownership, stock bonus, stock purchase, restricted stock and stock option plans, all employment or severance contracts, all medical, dental, health and life insurance plans, all other employee benefit plans, Contracts or arrangements and any applicable "change of control" or similar provisions in any plan, Contract or arrangement maintained or contributed to by MVBI or any of its Subsidiaries for the benefit of employees, former employees, directors, former directors or their beneficiaries (the "Compensation and Benefit Plans"). True and complete copies of all Compensation and Benefit Plans of MVBI and its Subsidiaries, including any trust instruments and/or insurance contracts, if any, forming a part thereof, and all amendments thereto, have been supplied to HBI.

the Internal Revenue Code of 1986 (as amended, the "Code") has received a favorable determination letter from the Internal Revenue Service, and Sellers and MVBI are not aware of any circumstances reasonably likely to result in the revocation or denial of any such favorable determination letter or the inability to receive such a favorable determination letter. There is no Material litigation relating to the ERISA Plans pending or, to the Sellers' or MVBI's Knowledge, threatened. Neither MVBI nor any of its Subsidiaries has engaged in a transaction with respect to any ERISA Plan that could subject MVBI or any of its Subsidiaries to a tax or penalty imposed by either Section 4975 of the Code or Section 502(i) of ERISA in an amount which would be Material.

(3) No Liability under Subtitle C or D of Title IV of ERISA has been or is expected to be incurred by MVBI or any of its Subsidiaries with respect to any ongoing, frozen or terminated "single-employer plan," within the meaning of Section 4001(a)(15) of ERISA, currently or formerly maintained by any of them, or the single-employer plan of any entity which is considered one employer with MVBI under Section 4001(a)(15) of ERISA or
Section 414 of the Code (an "ERISA Affiliate"). Neither MVBI nor any of its Subsidiaries presently contributes to a Multiemployer Plan, nor have they contributed to such a plan within the past five calendar years. No notice of a "reportable event," within the meaning of Section 4043 of ERISA for which the 30-day reporting requirement has not been waived, has been required to be filed for any Pension Plan or by any ERISA Affiliate within the past 12-month period.

(4) All contributions required to be made under the terms of any ERISA Plan have been timely made. Neither any Pension Plan nor any single-employer plan of an ERISA Affiliate has an "accumulated funding deficiency" (whether or not waived) within the meaning of Section 412 of the Code or Section 302 of ERISA, except as disclosed in Schedule
4.1(R)(4). Neither MVBI nor any of its Subsidiaries has provided, or is required to provide, security to any Pension Plan or to any single-employer plan of an ERISA Affiliate pursuant to Section 401(a)(29) of the Code.

(6) Neither MVBI nor any of its Subsidiaries has any obligations for retiree health and life benefits under any plan, except as set forth in Schedule 4.1(R)(6). There are no restrictions on the rights of MVBI or its Subsidiaries to amend or terminate any such plan without incurring any Liability thereunder.

(7) Except as disclosed in Schedule 4.l(R)(7), neither the execution and delivery of this Agreement nor the consummation of the transactions contemplated by this Agreement will (a) result in any payment (including severance, unemployment compensation, golden parachute or otherwise) becoming due to any director or any

employee of MVBI or any of its Subsidiaries under any Compensation and Benefit Plan or otherwise from MVBI or any of its Subsidiaries, (b) increase any benefits otherwise payable under any Compensation and Benefit Plan, or (c) result in any acceleration of the time of payment or vesting of any such benefit.

(S) NO KNOWLEDGE. Neither the Sellers nor MVBI and its Subsidiaries Know of any reason why the regulatory approvals referred to in Section 6.1 should not be obtained.

(T) LABOR AGREEMENTS. Neither MVBI nor any of its Subsidiaries is a party to or is bound by any collective bargaining agreement, Contract or other agreement or understanding with a labor union or labor organization, nor is MVBI or any of its Subsidiaries the subject of a proceeding asserting that it or any such Subsidiary has committed an unfair labor practice (within the meaning of the National Labor Relations Act) or seeking to compel it or such Subsidiary to bargain with any labor organization as to wages and conditions of employment, nor is there any strike or other labor dispute involving it or any of its Subsidiaries pending or, to the Sellers' or MVBI's Knowledge, threatened, nor are they aware of any activity involving MVBI or any of the Subsidiaries' employees seeking to certify a collective bargaining unit or engaging in any other organization activity.

(U) ASSET CLASSIFICATION. MVBI and its Subsidiaries have disclosed in Schedule 4.1(U) a list, accurate and complete in all Material respects, of the aggregate amounts of loans, extensions of credit or other assets of MVBI and its Subsidiaries that have been classified by it as of December 31, 2004 (the "Asset Classification"); and no amounts of loans, extensions of credit or other assets that have been classified as of December 31, 2004 by any regulatory examiner as "Other Loans Specially Mentioned," "Substandard," "Doubtful" "Loss," or words of similar import are excluded from the amounts disclosed in the Asset Classification, other than amounts of loans, extensions of credit or other assets that were charged off by MVBI or any Subsidiary prior to December 31, 2004, and which are also disclosed on Schedule 4.1(U).

(V) ALLOWANCE FOR POSSIBLE LOAN LOSSES. Except as disclosed on Schedule 4.1(V), the allowance for possible loan losses shown on the consolidated balance sheets in the December 31, 2004 Financial Reports of MVBI and to be shown on subsequent Financial Reports of MVBI was and, to the Knowledge of the Sellers and MVBI, shall be adequate to provide for possible losses, net of recoveries relating to loans previously charged off, on loans outstanding (including accrued interest receivable) as of the date thereof.

(W) INSURANCE. Each of MVBI and its Subsidiaries has taken all requisite action (including the making of claims and the giving of notices) pursuant to its directors' and officers' liability insurance policy or policies in order to preserve all rights thereunder with respect to all matters that are Known to the Sellers and MVBI, except for such matters that, individually or in the aggregate, are not reasonably likely to have a Material adverse effect on MVBI or its Subsidiaries. Set forth in Schedule 4.l(W) is a list of all insurance policies maintained by or for the benefit of MVBI or its Subsidiaries or their respective directors, officers, employees or agents.

(X) BOOKS AND RECORDS. All books of account, minute books, stock record books and other records of MVBI and all of its Subsidiaries, all of which have been made available to HBI, are complete and correct in all Material respects and since January 1, 1995 have been maintained in accordance with the laws of the State of Arkansas for banks, bank holding companies, and corporations, and applicable rules and regulations promulgated thereunder and in accordance with sound business practices. The minute books of MVBI and its Subsidiaries contain accurate and complete summary of all Material actions taken at meetings held of, and corporate action taken by, the shareholders, the Boards of Directors and committees of the Boards of Directors of MVBI or a Subsidiary of MVBI (as applicable) since January 1, 1995, and no meeting of any such shareholders, Boards of Directors or committees has been held for which minutes have not been prepared and are not contained in such minute books. At the Closing Date, all of those books and records shall be in the possession of MVBI and shall be delivered to HBI.

(Y) TAKEOVER-RELATED PROVISIONS. MVBI and its Subsidiaries have taken all necessary action to exempt (or ensure the continued exemption of) this Agreement and the transactions contemplated by this Agreement from the provisions of any takeover-related provisions of MVBI's and its Subsidiaries' Governing Documents.

(Z) NO FURTHER ACTION. The Sellers and MVBI and its Subsidiaries have taken all action so that the entering into of this Agreement and the consummation of the transactions contemplated by this Agreement, or any other action or combination of actions, or any other transactions, contemplated by this Agreement do not and will not (1) require a vote of shareholders of MVBI, or (2) result in the grant of any rights to any Person under the Governing Documents of MVBI or its Subsidiaries or under any agreement to which MVBI or any such Subsidiary is a party, or (iii) restrict or impair in any way the ability of any Party to exercise the rights granted under this Agreement.

(AA) ENVIRONMENTAL MATTERS.

(1) The Participation Facilities and the Loan/Fiduciary Properties are, and have been, in compliance with all Environmental Laws, except as disclosed on Schedule 4.1(AA)(1).

(2) There is no investigation or proceeding pending or, to the Sellers' or MVBI's Knowledge, threatened by or before any court, governmental agency or board or other forum in which MVBI or any of its Subsidiaries or any Participation Facility has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or
(b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a site owned, leased or operated by MVBI or any of its Subsidiaries or any Participation Facility, except as disclosed in Schedule 4.1(AA)(2).

(3) There is no investigation or proceeding pending, or to Sellers' or MVBI's knowledge, threatened by or before any court, governmental agency or board or

other forum in which any Loan/Fiduciary Property (or MVBI or any of its Subsidiaries in respect of any Loan/Fiduciary Property) has been, or with respect to threatened investigations or proceedings, reasonably would be expected to be, named as a defendant or potentially responsible party (a) for alleged noncompliance (including by any predecessor) with any Environmental Law, or (b) relating to the release or threatened release into the environment of any Hazardous Material, whether or not occurring at or on a Loan/Fiduciary Property, except for such investigations or proceedings disclosed in Schedule 4.1(AA)(3).

(4) To the Sellers' and MVBI's Knowledge, there is no reasonable basis for any investigation or proceeding of a type described in subparagraph (2) or (3) of this paragraph (AA), except as has been disclosed in Schedule 4.1(AA)(4).

(5) To the Sellers' and MVBI's Knowledge, and except as disclosed on Schedule 4.1(AA)(5), during the period of (a) ownership or operation by MVBI or any of its Subsidiaries of any of their respective current properties, (b) participation in the management of any Participation Facility by MVBI or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by MVBI or any of its Subsidiaries, there have been no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan/Fiduciary Property that violate Environmental Laws.

(6) To the Sellers' and MVBI's Knowledge, and except as disclosed on Schedule 4.1(AA)(6), prior to the period of (a) ownership or operation by MVBI or any of its Subsidiaries of any of their respective current properties, (b) participation in the management of any Participation Facility by MVBI or any of its Subsidiaries, or (c) holding of a security or other interest in a Loan/Fiduciary Property by MVBI or any of its Subsidiaries, there were no releases of Hazardous Material in, on, under or affecting any such property, Participation Facility or Loan Fiduciary Property.

(7) To the Sellers' and MVBI's Knowledge, and except as disclosed in Schedule 4.1(AA)(7), no underground storage tanks are located on any property of MVBI or any of its Subsidiaries or any Loan/Fiduciary Property.

(8) To the Sellers' and MVBI's Knowledge, and except as disclosed in Schedule 4.1(AA)(8), neither MVBI's nor any of its Subsidiaries' facilities have building components containing friable asbestos.

(BB) TAX RETURNS. Except as disclosed in Schedule 4.1(BB), (1) all reports and returns with respect to Taxes that are required to be filed by or with respect to MVBI or its Subsidiaries, including consolidated federal income tax returns of MVBI and BMV (collectively, the "Tax Returns"), have been duly filed, or requests for extensions have been timely filed and have not expired, for periods ended on or prior to the most recent fiscal year-end, and such Tax Returns were true, complete and accurate in all Material respects, (2) all Taxes shown to be due on the Tax Returns have been paid in full, (3) the Tax Returns have not been examined by the Internal Revenue Service or the appropriate state, local or foreign taxing authority, or the period for assessment of the Taxes in respect of which such Tax Returns were required to be filed has

expired, (4) all Taxes due with respect to completed and settled examinations have been paid in full, (5) no issues have been raised by the relevant taxing authority in connection with the examination of any of the Tax Returns which are reasonably likely, individually or in the aggregate, to result in a determination that would have a Material effect on MVBI or its Subsidiaries, except as reserved against in the Financial Reports of MVBI, and (6) no waivers of statutes of limitations (excluding such statutes that relate to years under examination by the Internal Revenue Service) have been given by or requested with respect to any Taxes of MVBI or its Subsidiaries.

(CC) ACCURACY OF INFORMATION. The statements with respect to MVBI and its Subsidiaries contained in this Agreement, the Schedules and any other written documents executed and delivered by or on behalf of Sellers or MVBI pursuant to the terms of or relating to this Agreement are now, except as specifically noted hereunder, and will be as of the Closing Date true and correct in all Material respects, and do not omit any Material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, now and as of the Closing Date, not misleading.

(DD) DERIVATIVES CONTRACTS. Neither MVBI nor any of its Subsidiaries is a party to or has agreed to enter into a Derivatives Contract or owns securities that are referred to as "structured notes" except for those Derivatives Contracts and structured notes disclosed in Schedule 4.1(DD). Schedule 4.1(DD) includes a list of any assets of MVBI or its Subsidiaries that are pledged as security for each such Derivatives Contract.

(EE) ACCOUNTING CONTROLS. Each of MVBI and its Subsidiaries has devised and maintained systems of internal accounting controls sufficient to provide reasonable assurances that (1) all Material transactions are executed in accordance with management's general or specific authorization in all material respects, (2) all Material transactions are recorded as necessary to permit the preparation of financial statements in conformity with GAAP in all material respects, and to maintain proper accountability for items, (3) access to the Material property and assets of MVBI and its Subsidiaries is permitted only in accordance with management's general or specific authorization, and (4) the recorded accountability for items is compared with the actual levels at reasonable intervals and appropriate action is taken with respect to any differences.

(FF) COMMITMENTS AND CONTRACTS. Neither MVBI nor any of its Subsidiaries is a party or subject to any of the following (whether written or oral, express or implied):

(1) except as disclosed in Schedule 4.1(FF)(1), any employment Contract or understanding (including any understandings or obligations with respect to severance or termination pay Liabilities or fringe benefits) with any present or former officer, director or employee (other than those which are terminable at will by MVBI or any such Subsidiary without any obligation on the part of MVBI or any such Subsidiary to make any payment in connection with such termination);

(2) except as disclosed in Schedule 4.1(FF)(2), any Contract, commitment, or understanding with any Person related to or under the Control of any

present or former officer, director, or employee of MVBI or any of its Subsidiaries, to the extent that such Contract, commitment or understanding Materially impacts the financial condition of any of MVBI or its Subsidiaries;

(3) except as disclosed in Schedule 4.1(FF)(3), any real or personal property lease with annual rental payments aggregating $50,000 or more; or

(4) except as disclosed in Schedule 4.1(FF)(4), any Material Contract with any Affiliate.

(GG) CLAIMS OF OFFICERS, DIRECTORS, AND EMPLOYEES. Except as disclosed on Schedule 4.1(GG), no officer or director of MVBI or BMV has any claims against MVBI or any of its Subsidiaries, other than for their regular accrued but unpaid salary and/or director's fee. Except as disclosed on Schedule 4.1(GG), there are no outstanding or, to Knowledge of MVBI, potential claims by a present or former employee against MVBI or any of its Subsidiaries under federal or state law, under any employment agreement, or otherwise, other than for wages, salary, or overtime pay owed in respect of the current pay period, or vacation or sick pay or time off owed in respect of the current fiscal year.

(HH) DISCLOSURE. Matters disclosed by MVBI or Sellers on a Schedule to this Agreement shall be a disclosure for each other Schedule to which such matter reasonably pertains and for all other purposes of this Agreement.

(II) DISCLAIMER. THE PARTIES HERETO AGREE THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, INCLUDING THE SCHEDULES HERETO, MVBI AND SELLERS MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED.

4.2. REPRESENTATIONS AND WARRANTIES OF HBI. HBI hereby represents and warrants to MVBI now and as of the Closing Date as follows:

(A) RECITALS. The facts set forth in the Recitals of this Agreement with respect to HBI are true and correct.

other equity securities of HBI or its Subsidiaries outstanding and no outstanding Rights with respect thereto.

(D) HBI SUBSIDIARIES. HBI has disclosed in Schedule 4.2(D) a list of all of its Subsidiaries, and the number of authorized, issued, and outstanding shares of each class of stock and the percentages of ownership of HBI or an HBI Subsidiary. No equity securities of any of its Subsidiaries are or may become required to be issued (other than to HBI or one of its Subsidiaries) by reason of any Rights with respect thereto. There are no Contracts, commitments, understandings or arrangements by which any of its Subsidiaries is or may be bound to sell or otherwise issue any shares of such Subsidiary's capital stock, and there are no Contracts, commitments, understandings or arrangements relating to the rights of HBI or its Subsidiaries, as applicable, to vote or to dispose of such shares. All of the shares of capital stock of each of its Subsidiaries held by HBI or one of its Subsidiaries are fully paid and non-assessable and are owned by HBI or one of its Subsidiaries free and clear of any charge, mortgage, pledge, security interest, restriction, claim, lien or encumbrance. Each of its Subsidiaries is in good standing under the laws of the jurisdiction in which it is incorporated or organized. Except as disclosed in Schedule 4.2(D), HBI does not own beneficially, directly or indirectly, any shares of any equity securities or similar interests of any corporation, bank, partnership, joint venture, business trust, association or other organization.

(E) CORPORATE POWER. Each of HBI and its Subsidiaries has the corporate power and authority to carry on its business as it is now being conducted and to own all its Material properties and assets.

(F) CORPORATE AUTHORITY. This Agreement, and each of the HBI obligations set forth herein, has been authorized by all necessary corporate action of HBI and this Agreement is a valid and binding agreement of HBI, enforceable against HBI in accordance with its terms, subject to bankruptcy, insolvency and other laws of general applicability relating to or affecting creditors' rights and to general equity principles.

(G) NO DEFAULTS. Subject to the required regulatory approvals referred to in Section 6.1, and any required filings under federal and state securities laws, and except as disclosed in Schedule 4.2(G), the execution, delivery and performance of this Agreement and the consummation by HBI of the transactions contemplated by this Agreement do not and will not Materially (1) constitute a breach of, or violation of, or a default under, any law, rule or regulation or any judgment, decree, order, governmental permit or license, or agreement, indenture or instrument of HBI or to which HBI or its properties is subject or bound, or (2) constitute a breach of, or violation of, or a default under, the Governing Documents of HBI, or (3) require any consent or approval under any such law, rule, regulation, judgment, decree, order, governmental permit or license or the consent or approval of any other party to any such agreement, indenture or instrument.

(H) HBI FINANCIAL REPORTS. Except as disclosed in Schedule 4.2(H), the Financial Reports of HBI: (1) did not and will not contain any untrue statement of a Material fact or omit to state a Material fact required to be stated therein or necessary in order to make the statements made therein, in light of the circumstances under which they were made, not Materially misleading; (2) each of the balance sheets in or incorporated by reference into the

Financial Reports (including the related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the financial position of the entity or entities to which it relates as of its date; (3) each of the statements of income and changes in shareholders' equity and cash flows or equivalent statements in the Financial Reports (including any related notes and schedules thereto) are correct, complete, and in accordance with the books and records of and fairly presents and will fairly present the results of operations, changes in shareholders' equity and cash flows, as the case may be, of the entity or entities to which it relates for the periods set forth therein; and (4) in each case in accordance with GAAP during the periods involved, except in each case as may be noted therein, subject to normal and recurring year-end audit adjustments, related notes and schedules in the case of unaudited statements.

(I) REPORTS. Since January 1, 2002 each of HBI and the HBI Banks has filed all reports and statements, together with any amendments required to be made with respect thereto, that it was required to file with (1) the Arkansas State Bank Department, (2) the FDIC, (3) the Federal Reserve Board, and (4) any other Regulatory Authorities or other governmental authority having jurisdiction with respect to HBI and its Subsidiaries. As of their respective dates (and subject to any amendments or modifications filed after the date of this Agreement with respect to reports and documents filed before the date of this Agreement), each of such reports and documents, including the financial statements, exhibits and schedules thereto, complied in all Material respects with all of the statutes, rules and regulations enforced or promulgated by the Regulatory Authority with which they were filed and did not contain any untrue statement of a Material fact or omit to state any Material fact necessary in order to make the statements made therein, in light of the circumstances under which they were made, not Materially misleading.

Notwithstanding the foregoing, HBI makes no warranty under this Section 4.2(I) as to reports, statements, or related amendments made by an HBI Bank, other than First State Bank, prior to the date of its acquisition by HBI.

(J) ACCURACY OF INFORMATION. The statements with respect to HBI contained in this Agreement, the Schedules and any other written documents executed and delivered by or on behalf of HBI pursuant to the terms of or relating to this Agreement are now, except as specifically noted hereunder, and as of the Closing Date true and correct in all Material respects and do not omit any Material fact necessary in order to make the statements contained therein, in light of the circumstances under which they were made, now and as of the Closing Date, not misleading.

(K) BROKERS AND FINDERS. Except as set forth in Schedule 4.2(J), neither HBI and any HBI Subsidiary, nor any of their respective officers, directors or employees has employed any broker or finder, or agreed to pay any fees to any director or former director or incurred any Liability for any financial advisory fees, brokerage fees, commissions or finder's fees, and no broker or finder, or director or former director of HBI, has acted directly or indirectly for HBI, or any HBI Subsidiary, in connection with this Agreement or the transactions contemplated hereby.

(L) DISCLOSURE. Matters disclosed by HBI on a Schedule to this Agreement shall be a disclosure for each other Schedule to which such matter reasonably pertains and for all other purposes of this Agreement.

(M) DISCLAIMER. THE PARTIES HERETO AGREE THAT EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT, INCLUDING THE SCHEDULES HERETO, HBI MAKE NO REPRESENTATIONS OR WARRANTIES OF ANY KIND OR CHARACTER, EXPRESS OR IMPLIED.

ARTICLE V. COVENANTS

The Sellers and MVBI hereby covenants to HBI, and HBI hereby covenants to the Sellers and MVBI, as applicable, that:

5.1. BEST EFFORTS. Each Party shall use its best efforts in good faith to take, or cause to be taken, all actions, and to do, or cause to be done, all other things necessary, proper or desirable, or advisable under applicable laws, so as to permit consummation of the Acquisition by October 1, 2005, (the "Termination Date"), and otherwise to enable consummation of Acquisition, and shall cooperate fully with the Party to that end (it being understood that a re-solicitation of proxies as a consequence of an HBI Transaction shall not violate this covenant).

5.2. PUBLICITY. The Parties agree that (a) no communication of any kind, whether written, electronic, or oral, to the shareholders of MVBI or HBI, to the public media, or otherwise, regarding the Agreement, shall be made without the express prior written consent of the authorized officers of HBI and MVBI, and
(b) the contents of any such communication shall conform in all respects, whether written, electronic or oral, to the language agreed upon between the Parties; provided, however, if HBI or MVBI is required by federal or state securities laws or otherwise to make disclosure of certain matters or take other action which would otherwise be covered by the terms of this section, it may make such disclosure or communication without the express prior written consent of the other Party, after first giving the other Party what the disclosing Party, in the exercise of its judgment, determines to be reasonable prior notice of such disclosure or communication.

5.3. ACCESS; DUE DILIGENCE INFORMATION; CONFIDENTIALITY.

(A) Upon reasonable notice, MVBI shall afford HBI and its officers, employees, counsel, accountants and other authorized representatives, full access, during normal business hours throughout the period up to the Closing Date, to all of MVBI's and its Subsidiaries' respective properties, books, Contracts, commitments and records of MVBI or its Subsidiaries and shall furnish or cause to be furnished all such information as HBI may reasonably request.

(B) HBI agrees to complete its due diligence review by the fifteenth
(15th) Business Day after the execution of this Agreement and to notify Sellers' Representatives in writing whether its review was satisfactory or unsatisfactory within five (5) Business Days thereafter. Failure of HBI to provide this notification in the time and manner required shall result in HBI not having any right of termination under Section 7.1(D).

(C) HBI, MVBI, Sellers and their respective agents, attorneys and accountants will maintain the confidentiality of all information provided in connection herewith in accordance with the terms of the Mutual Confidentiality and Non-Disclosure Agreement executed between the Parties on December 2, 2004, which is incorporated herein by reference and made a part hereof. The provisions of the Mutual Confidentiality and Non-Disclosure Agreement shall survive the termination of this Agreement indefinitely.

(D) Each Party furnishing information to the other Party pursuant to this Agreement (the "Disclosing Party") shall furnish promptly (and cause its accountants and other agents to furnish promptly) to the other Party (the "Requesting Party") a copy of each Material report, schedule and other document filed by the Disclosing Party with any Regulatory Authority or other governmental authority, and upon reasonable notice given by the Requesting Party, any other information regarding the business, properties, and personnel of the Disclosing Party as the Requesting Party may reasonably request, provided that no investigation pursuant to this Section 5.3 shall affect or be deemed to modify or waive any representation or warranty made by the Disclosing Party in this Agreement or the conditions to the obligations of the Disclosing Party to consummate the transactions contemplated by this Agreement.

5.4. SOLE AGREEMENT TO SELL. Without the prior written consent of HBI and so long as this Agreement is not terminated, the Sellers shall not, and shall cause MVBI and its Subsidiaries not to, and MVBI and its Subsidiaries shall not, solicit, initiate or encourage inquiries or proposals with respect to, or furnish any nonpublic information relating to or participate in any negotiations or discussions concerning, any acquisition or purchase of all or a substantial portion of the assets of, or a substantial equity interest in, MVBI or any of its Subsidiaries or any merger or other business combination with MVBI or any of its Subsidiaries other than as contemplated by this Agreement. Sellers and MVBI shall instruct MVBI and its Subsidiaries' officers, directors, agents, advisors and Affiliates to refrain from doing any of the foregoing and shall notify HBI immediately if any such inquiries or proposals are received by, or any such negotiations or discussions are sought to be initiated with, MVBI or any of its Subsidiaries.

5.5. NO RIGHTS TRIGGERED. Except for those consents of Third Parties disclosed on Schedule 4.1(G) and consents disclosed on Schedule 4.1(K), the Sellers and MVBI shall take all necessary steps to ensure that the entering into of this Agreement and the consummation of the transactions contemplated by this Agreement and any other action or combination of actions contemplated by this Agreement, do not and will not (A) result in the grant of any Rights to any Person under the Governing Documents of MVBI or under any agreement to which MVBI or any of its Subsidiaries is a Party, or (B) restrict or impair in any way the ability of HBI to exercise the rights granted under this Agreement.

5.6. REGULATORY APPLICATIONS. HBI shall (A) promptly prepare and submit applications to the appropriate Regulatory Authorities for approval of the Acquisition, and (B) promptly make all other appropriate filings to secure all other approvals, consents and rulings that are necessary for the consummation of the Acquisition by HBI. HBI will provide drafts of such applications to Sellers Representatives for review and approval by Sellers Representatives prior to submission to the Regulatory Authorities. Sellers Representatives will

promptly review such drafts and advise HBI of objections, if any, and HBI will work cooperatively and in good faith to resolve any such objections prior to submitting such applications.

5.7. REGULATORY DIVESTITURES. No later than the Closing Date, MVBI shall cease engaging in such activities as HBI shall advise MVBI in writing are not permitted to be engaged in by HBI under applicable law following the Closing Date and, to the extent required by any Regulatory Authority as a condition of approval of the transactions contemplated by this Agreement, MVBI shall divest any Subsidiary engaged in activities or holding assets that are impermissible for HBI, on terms and conditions agreed to by HBI; provided, however, that prior to MVBI taking such action, HBI shall certify that the conditions of Sections 6.1 and 6.2 to HBI's obligations to consummate the transactions contemplated by this Agreement have been satisfied or waived.

5.8. CURRENT INFORMATION.

(A) During the period from the date of this Agreement to the Closing Date, Sellers' Representatives and HBI shall confer on a regular and frequent basis with the other. In addition, HBI shall be entitled to have its representatives attend all meetings of the boards of directors of MVBI and BMV, as well as all committees of MVBI and BMV, and MVBI and BMV shall provide notice to HBI at least two (2) days in advance of all of such meetings.

(B) Each of MVBI and HBI shall promptly notify the other of (1) any Material change in the business or operations of it or its Subsidiaries, (2) any Material complaints, investigations or hearings (or communications indicating that the same may be contemplated) of any Regulatory Authority or other governmental authority relating to it, or as applicable its Subsidiaries, (3) the initiation or threat of Material litigation involving or relating to it or its Subsidiaries, or (4) any Material event or condition.

5.9. DIRECTOR AND OFFICER LIABILITY INSURANCE. Prior to the Closing Date, MVBI may obtain and prepay, at Sellers' expense, "tail" coverage on director and officer liability insurance for a period of three (3) years following the Closing Date, with policy limits not in excess of $2,000,000 per occurrence, on each person serving as an officer or director of MVBI and each MVBI Subsidiary immediately prior to the Closing Date against all damages, Liabilities, judgments, and claims (and related expenses, including reasonable attorney fees and amounts paid in settlement) with respect to acts or omissions of such officers and directors based upon or arising from his or her capacity as an officer or director of MVBI or a MVBI Subsidiary, occurring on or prior to the Closing Date.

5.10. SHORT-YEAR TAX RETURN. Upon the earlier of (i) the date MVBI terminates it subchapter S corporation status or (ii) the Closing Date (the "Sub S Termination Date"), the books and records of MVBI shall be closed and a short-year return (the "Short-Year Return") shall be prepared for MVBI. Notwithstanding any provisions of this Agreement to the contrary, HBI consents to the termination of the subchapter S corporation status of MVBI and its Subsidiaries at any time prior to the Closing Date, as solely determined by Sellers. After the Closing Date, HBI shall thereafter operate the business in whatever form so chosen by HBI. MVBI's accountant shall after the Sub S Termination Date determine MVBI's income for the

period from January 1, 2005, to the Sub S Termination Date and allocate the income to each of the Sellers by preparation of a federal Form 1120S with attached Forms K-1. An Arkansas Form AR 1100S shall likewise be prepared for MVBI for such period. Sellers and MVBI represent and warrant to HBI that such Short-Year Return shall be true, complete and accurate in all Material respects and that all Taxes shown to be due on the Short-Year Return shall be paid in full.

5.11. BMV DEFINED BENEFIT PLAN. HBI and MVBI agree that, on the Closing Date, the BMV defined benefit pension plan will be frozen and all benefits accrued under the plan will become fully vested. Following the Closing (the time and manner to be determined by HBI it its sole discretion), the plan will be terminated and distributed according to the terms of the plan. Sellers shall fully fund such plan on or before the Closing Date, and such funding shall not reduce or otherwise be taken into account in calculating the MVBI Earnings or the 50% of such MVBI Earnings due to HBI at Closing.

5.12. MVBI INVESTMENT PORTFOLIO. If, under GAAP, the investment portfolio of MVBI should be adjusted for an impairment, whether or not such adjustment would be required to be reflected in MVBI's financial statements, MVBI shall make such adjustment at or prior to the Closing and such adjustment shall be taken into account in calculating the MVBI Earnings the 50% of such MVBI Earnings due to Sellers and the 50% of such MVBI Earnings to be retained by HBI at Closing.

5.13. CONTINUED PARTICIPATION OF HINKLE AND SUTTON.

(A) Hinkle and Sutton currently serve on the board of directors and the loan committee of BMV. Following the Closing, Hinkle and Sutton will continue to serve at the pleasure of HBI (i) as members of the BMV board of directors and on the BMV loan committee, and (ii) in such other board or committee capacities with BMV and with such duties on such BMV boards and committees as HBI may designate, and each agrees to resign from such board or committee positions or other capacities immediately if so requested by HBI. For each month in which Hinkle or Sutton serve BMV in one or more of these capacities, BMV will pay to the person so serving a monthly fee of Two Thousand and No/100 Dollars ($2,000.00).

(B) While thus employed by BMV, the services to be provided by Hinkle shall include the continued management of BMV's current airplane loan portfolio by Hinkle.

(C) Hinkle and Sutton shall be entitled to the following benefits while a director or committee member or employed by BMV in any capacity without expense to Hinkle or Sutton: (i) continued use of each of their current offices (and parking spaces) located at BMV; (ii) administrative assistance provided by the staff currently assigned to them on the date of this Agreement (or a replacement thereof), subject to the willingness of such staff members to remain in the employ of BMV; (iii) the continued use of the vehicle currently provided to Hinkle at the date of execution of this Agreement; and (iv) health benefits equivalent to the benefits currently available to them at the date of execution of this Agreement. HBI acknowledges that Sutton is not currently provided health insurance benefits by BMV and agrees that Sutton shall be provided such benefits without charge to Sutton at Sutton's request. In the event Hinkle or Sutton are no longer providing services to BMV, BMV shall provide COBRA coverage for the

period required by law without the requirement that Hinkle or Sutton pay for such benefits and coverage.

(D) On or before the Closing Date, Hinkle shall be entitled to purchase from BMV the 2003 Lexus GX-470 at its book value.

5.14. MOUNTAIN VIEW AVIATION, LLC. Mountain View Aviation, LLC, the wholly-owned subsidiary of BMV, owns as its sole assets (i) a King Air 200 airplane and (ii) cash. The parties agree that on or before June 30, 2005 (a) BMV shall write down or reduce the value of this airplane on its books to $250,000 and (b) the Sellers (or one or more of them) shall purchase all of the Membership Units of Mountain View Aviation, LLC owned by BMV for $250,000; provided that prior to such purchase all cash of Mountain View Aviation, LLC shall be distributed to BMV. The loss, if any, recognized by BMV on such write down shall not be taken into account for purposes of determining the MVBI Earnings and the division of such Earnings by Sellers and HBI. Title to the Membership Units and the airplane shall be transferred to the purchaser(s) free and clear of any lien or encumbrance.

5.15. REAL PROPERTIES OF MVBI. Except for the real property described on Schedule 5.15, all real property owned by MVBI or its Subsidiaries as of the date of this Agreement shall remain an asset of MVBI following the Closing. The parties agree that the Sellers (or any one of them) shall purchase the real property described in Schedule 5.15 at or prior to the Closing for one dollar ($1). Title to such property shall be transferred to such purchaser(s) by general warranty deed and free and clear of any lien or encumbrance.

5.16. RESERVATION OF RIGHT TO REVISE TRANSACTION. In its sole discretion, and notwithstanding any other provision in this Agreement to the contrary, HBI may at any time change the method of effecting the Acquisition by requiring MVBI to pay a dividend to Sellers, which dividend shall be deemed a dollar for dollar payment of the Cash Consideration; provided, however, that (A) the payment of such dividend shall have received Regulatory Approval; (B) the payment of such dividend to Sellers shall be a "qualified dividend" for purposes of the Internal Revenue Code of 1986 (as determined by Sellers) and (C) no delay caused by such a change shall be the basis upon which HBI terminates this Agreement pursuant to
Section 7.1(B). If HBI elects to change the method of acquisition, MVBI and Sellers will cooperate with and assist HBI with any necessary amendment to this Agreement, and with the preparation and filing of such applications, documents, instruments and notices as may be necessary or desirable, in the opinion of counsel for HBI, to obtain all necessary shareholder approvals and approvals of any regulatory agency, administrative body or other governmental entity.

ARTICLE VI. CONDITIONS TO CONSUMMATION OF THE MERGER

6.1. CONDITIONS TO EACH PARTY'S OBLIGATIONS. The obligation of the Sellers and HBI to effect the transactions contemplated hereby shall be subject to the fulfillment, at or prior to the Closing Date, of the following conditions:

(A) REGULATORY APPROVALS. The Parties shall have procured all necessary regulatory consents and approvals by the appropriate Regulatory Authorities, and any waiting periods relating thereto shall have expired; provided, however, that no such approval or consent shall have imposed any condition or requirement which cannot be satisfied through the rights granted in
Section 5.7 of this Agreement.

(B) NO PENDING OR THREATENED CLAIMS. No claim, action, suit, investigation or other proceeding shall be pending or threatened in writing before any court or governmental agency which presents a Material risk of the restraint or the prohibition of the transactions contemplated by this Agreement or the obtaining of Material damages or other relief in connection therewith.

(C) NO INJUNCTION. There shall not be in effect any order, decree or injunction of any court or agency of competent jurisdiction that enjoins or prohibits consummation of any of the transactions contemplated by this Agreement.

(D) SCHEDULES AND EXHIBITS. Each Party responsible for Schedules or Exhibits to be attached hereto shall provide such Schedule or Exhibit to the other Party for their review not less than fifteen (15) Business Days from the execution of this Agreement. The Party receiving such Schedules and Exhibits shall have five (5) Business Days within which to object (the "Objecting Party"), in writing, to all or part of the Schedules or Exhibits submitted. If the receiving Party does not object within such five Business Days period, that Party shall be deemed to have waived any objection thereto, and this Agreement shall remain in full force and effect as if the Schedules and Exhibits were attached at the time of execution of this Agreement. The Parties shall use their best efforts to resolve any objections of an Objecting Party within ten (10) Business Days and if not so resolved to the satisfaction of the Objecting Party, the Objecting Party may terminate this Agreement pursuant to Section 7.1.

6.2. CONDITIONS TO OBLIGATIONS OF HBI. Unless waived in writing by HBI, the obligations of HBI to consummate the transactions contemplated by this Agreement are subject to the satisfaction at or prior to the Closing Date of the following conditions:

(A) PERFORMANCE. Each of the acts, undertakings, and covenants and other agreements of the Sellers and MVBI to be performed at or before the Closing Date shall have been duly performed, and the Sellers and MVBI shall not have breached any of their covenants and other agreements set forth herein.

(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties of the Sellers and MVBI contained in this Agreement shall be true and correct, in all Material respects, on and as of the Closing Date with the same effect as though made on and at the Closing Date, except for any such representations and warranties that specifically relate to an earlier date, which shall be true and correct as of such earlier date.

(C) CERTIFICATES. In addition to the documents described elsewhere in this Agreement, HBI shall have received the following documents and instruments:

(i) A certificate signed by the Secretary or Assistant Secretary of MVBI certifying that: (A) MVBI's Board of Directors has duly adopted a resolution (a copy of which shall be attached to such certificate) authorizing MVBI to enter into this Agreement and certifying that such resolution has not been amended and remain in full force and effect; (B) each person executing this Agreement on behalf of MVBI is an officer of MVBI, holding the office or offices specified therein, with full power and authority to execute this Agreement and any and all other documents in connection with the Agreement, and the signature of each person on such documents is his or her genuine signature; and (C) the Governing Documents of MVBI (copies of which shall be attached to such certificate) remain in full force and effect;

(ii) A certificate signed by the Sellers' Representatives and the President and Chief Financial Officer of MVBI dated the Closing Date stating that the conditions set forth in Sections 6.2(A), 6.2(B) and 6.2(E) of this Agreement have been satisfied as of the Closing Date; and

(iii) For any Seller that is not a natural person, a certificate signed by the officer or representative of such Seller stating that such representative is duly authorized to sign this Agreement on behalf of such Seller in the capacity stated herein, and stating the basis for such authority.

(D) LEGAL OPINION. HBI shall have received a legal opinion, dated the Closing Date, from Baxter & Jewell, P.A., in substantially the form of EXHIBIT
A.

(E) NO MATERIAL CHANGE. During the period from December 31, 2004 to the Closing Date, no Material change in the business, property, assets (including loan portfolios), Liabilities, prospects, operations, liquidity, income or condition (financial or otherwise) of MVBI and/or BMV shall have occurred.

(F) DESTRUCTION OF PROPERTY. Between the date of this Agreement and the Closing Date, there shall have been no damage to or destruction of real property, improvements or personal property of MVBI or BMV which Materially reduces the market value of such property, and no zoning or other order, limitation or restriction imposed against the same, that might have a Material impact upon the operations, business, future operations, or prospects of MVBI or BMV; provided, however, in the event there is insurance coverage to repair or replace the affected real or personal property, such damage or destruction shall not result in, or deemed to result in, a Material impact or Material reduction in market value.

(G) INSPECTIONS PERMITTED. Between the date of this Agreement and the Closing Date, MVBI shall have afforded HBI and its authorized agents and representatives reasonable access during normal business hours to the properties, operations, books, records, Contracts, documents, loan files and other information of or relating to MVBI and BMV. MVBI and BMV shall have caused all MVBI and BMV personnel to provide reasonable assistance to HBI in its investigations of all matters related to MVBI and BMV.

(H) OTHER BUSINESS COMBINATIONS, ETC. Other than as contemplated hereunder, subsequent to the date of this Agreement, neither the Sellers, MVBI nor BMV shall have entered into any agreement, letter of intent, understanding or other arrangement pursuant to which the Sellers would sell the MVBI Stock or MVBI and BMV would merge, consolidate with, effect a business combination with, or sell any substantial part of MVBI's or BMV's assets; acquire a significant part of the share of assets of any other person or entity (financial or otherwise); or adopt any "poison pill" or other type of anti-takeover arrangement, any shareholder rights provision, or any "golden parachute" or similar program which would have the effect of Materially decreasing the value of MVBI or BMV or the benefits of acquiring MVBI Stock.

(I) MAINTENANCE OF CERTAIN COVENANTS. At the Closing Date: (i) neither MVBI nor BMV shall have issued or repurchased from the date hereof any additional equity or debt securities, or any rights to purchase or repurchase such securities (therefore, there shall be not more than the number of shares of MVBI Stock set forth in the Recitals of this Agreement validly issued and outstanding at the Closing Date); and (ii) from December 31, 2004, there shall have been no extraordinary sale of assets by MVBI or BMV other than those permitted by this Agreement.

(J) NO LITIGATION. Except as disclosed on Schedule 6.2(K), no action, suit, or other proceeding before any court or any governmental authority pertaining to the transactions contemplated by this Agreement or against the Sellers, MVBI or any of MVBI's Subsidiaries or Materially affecting MVBI or any of its Subsidiaries shall have been instituted or threatened on or before the Closing Date.

(K) NO ENVIRONMENTAL LIABILITIES. HBI shall not have discovered any material liability relating to the Participating Facilities with respect to environmental matters, such discovery to include, without limitation, at HBI's option and expense, a Phase I environmental site assessment for each Participation Facility. If as a result of a Phase I environmental site assessment, HBI should determine in its reasonable judgment that further testing is required, all such further testing shall be performed at the Sellers' expense.

(L) COVENANTS NOT TO COMPETE. Each of Hinkle and Sutton shall have executed the Covenants Not To Compete in substantially the form of EXHIBIT B.

6.3. CONDITIONS TO OBLIGATIONS OF MVBI. Unless waived in writing by the Sellers' Representatives, the obligations of the Sellers to consummate the transactions contemplated by this Agreement are subject to the satisfaction of Sellers' Representatives at or prior to the Closing Date of the following conditions:

(A) PERFORMANCE. Each of the acts, undertakings, and covenants of HBI to be performed at or before the Closing Date shall have been duly performed, and HBI shall not have breached any of its respective covenants and other agreements set forth herein.

(B) REPRESENTATIONS AND WARRANTIES. The representations and warranties of HBI contained in this Agreement shall be true and correct, in all Material respects, on and as of the Closing Date with the same effect as though made on and at the Closing Date,

except for any such representations and warranties that specifically relate to an earlier date, which shall be true and correct as of such earlier date.

(C) OFFICER'S CERTIFICATE. In addition to the documents described elsewhere in this Agreement, the Sellers' Representatives shall have received the following documents and instruments:

(i) A certificate signed by the Secretary or Assistant Secretary of HBI certifying that: (A) HBI's Board of Directors has duly adopted a resolution (a copy of which shall be attached to such certificate) approving the substantive terms of this Agreement and authorizing the consummation of the transactions contemplated by this Agreement and certifying that such resolutions have not been amended and remain in full force and effect; (B) each person executing this Agreement on behalf of HBI is an officer of HBI, holding the office or offices specified therein, with full power and authority to execute this Agreement and any and all other documents in connection with the Agreement, and the signature of each person on such documents is his or her genuine signature; and (C) the Governing Documents of HBI (copies of which shall be attached to such certificate) remain in full force and effect; and

(ii) A certificate signed by the President and Chief Financial Officer of HBI dated the Closing Date stating that the conditions set forth in Sections 6.3(A), 6.3(B), and 6.3(E) of this Agreement have been satisfied as of the Closing Date.

(D) LEGAL OPINION. MVBI shall have received a legal opinion, dated the Closing Date, from Mitchell, Williams, Selig, Gates & Woodyard, P.L.L.C., in substantially the form of EXHIBIT C.

(F) NO LITIGATION. Except as disclosed on Schedule 6.3(F), no action, suit, or other proceeding before any court or any governmental authority pertaining to the transactions contemplated by this Agreement or against HBI or any of its Subsidiaries or Materially affecting HBI or any of its Subsidiaries shall have been instituted or threatened on or before the Closing Date.

ARTICLE VII. TERMINATION

7.1. TERMINATION UPON CERTAIN CONDITIONS. In the event of the termination or abandonment of this Agreement pursuant to the provisions of this Section 7.1, the Agreement shall become void and have no force or effect, without any further liability on the part of the Sellers or HBI, MVBI, or their directors or officers or shareholders with respect to

this Agreement. This Agreement may be terminated prior to the Closing Date, either before or after receipt of required shareholder approvals, under the following conditions:

(A) MUTUAL CONSENT. By the mutual consent evidenced by a writing signed by the Sellers' Representatives and HBI;

(B) DELAY. By either Sellers' Representatives or HBI in the event the Acquisition is not consummated by the Termination Date, unless the failure of the consummation of the transactions to occur shall be due to the failure of the Party seeking to terminate this Agreement to perform its obligations hereunder in a timely manner; provided, however, that neither may terminate the Agreement pursuant to this Section 7.1(B), if such delay results from (a) an HBI Transaction, or any other acquisition or sale transaction, or any offering of securities, in which HBI is involved, or (b) a change in the method of acquisition pursuant to Section 5.16 (provided that if the Acquisition is consummated after the Termination Date as a result of (a) or (b), then, in addition to the MVBI Earnings provided for in Section 2.2, beginning on the Termination Date and thereafter through the Closing Date, Sellers shall receive seventy-five percent (75%) of the earnings of MVBI), and provided, further, that neither the Sellers' Representatives nor HBI may not terminate the Agreement pursuant to this Section 7.1(B) if it is in Material breach of any of the provisions of the Agreement;

(C) NO REGULATORY APPROVALS. By Sellers' Representatives or HBI, in the event that, absent the Material breach of the terminating party, any of the required regulatory approvals set forth in Section 6.1(A) are denied (or should any such required approval be conditioned upon a substantial deviation from the transactions contemplated); provided, however, that either the Sellers' Representatives or HBI may extend the term of this Agreement for a sixty
(60)-day period to prosecute diligently and overturn such denial provided that such denial has been appealed within fifteen (15) Business Days of the receipt thereof;

(D) UNSATISFACTORY DUE DILIGENCE. By HBI, if on or before the last date set forth in Section 5.3(B), HBI (i) during the course of its due diligence review discovers events, occurrences or circumstances that, either individually or in the aggregate, would be expected, in the exercise of HBI's reasonable judgment, to cause a Material adverse effect with respect to the financial condition, results of operations, business, future operations or prospects of MVBI or any of its Subsidiaries and (ii) HBI gives written notice to the Sellers' Representatives that HBI is exercising the right of termination pursuant to this Section 7.1(D); or

(E) SECURITIES LAW EXEMPTION. By HBI, in the event it believes, in the exercise of its or its counsel's reasonable judgment, that the issuance of the HBI Common Stock (1) is not or may not be exempt from registration under the Securities Act or any applicable state securities laws, or (2) would require HBI's registration as a broker-dealer, agent or similar registration under any applicable state securities laws; provided that HBI may only terminate the Agreement pursuant to this subsection (E) by providing notice to MVBI and Sellers on or before July 1, 2005.

(F) FAILURE TO AGREE ON SCHEDULES. By HBI, Sellers or MVBI if the Parties fail to agree on the Schedules and Exhibits within the time provided in
Section 6.1(D).

(G) EFFECT OF TERMINATION. In the event this Agreement is terminated pursuant to subsections (A) through (E) of this Section 7.1, then each Party shall bear its own fees and expenses (including attorneys fees, consulting fees or accountants fees) incurred in pursuing the transaction contemplated by this Agreement and each Party does fully and forever release, relinquish and discharge the other Party from any and all claims, debts, liabilities, demands, obligations, promises, acts, costs, fees, performance and delivery dates, expenses, attorneys' fees, damages, including, but not limited to consequential, special or punitive damages, loss of profits, loss of benefits, actions and causes of action of whatever kind or nature whether now known or unknown, which a Party has, ever had, or hereafter can, shall or may have against the other Party based on, arising out of, or in connection pursing the transaction contemplated by this Agreement; provided that such release shall not apply to a breach of a Party's obligations pursuant to Section 5.2 and 5.3 of this Agreement.

7.2. TERMINATION FOR BREACH. This Agreement may be terminated prior to the Closing Date, either before or after receipt of required shareholder approvals, by either Sellers' Representatives or HBI if there has been a Material breach on the part of the other Party of its representations, warranties, covenants, or other agreements set forth herein or in any Schedule or certificate delivered pursuant hereto. The non-breaching Party expressly reserves all rights and remedies available in law or equity if this Agreement is terminated for breach.

ARTICLE VIII. SURVIVAL OF REPRESENTATIONS
AND WARRANTIES; INDEMNIFICATION

8.1. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The representations, warranties and covenants contained in this Agreement and all other terms and conditions hereof shall survive for a period of two (2) years following the Closing Date after which time they shall be of no further force and effect; provided, however, the covenants set forth in Sections 5.3(C), 5.10. 8.2 through 8.5, 9.4, 9.5, 9.6 and 9.12, hereof shall survive indefinitely and the Covenants Not To Compete in Schedule 6.2(L) shall survive for the period stated therein.

8.2. SELLERS' INDEMNITY. Subject to Section 8.4 hereof, Sellers hereby severally agree to indemnify, defend and hold HBI harmless against, and in respect of, any and all claims, demands, losses, damages and expenses, including, but not limited to, reasonable attorneys' fees (collectively, "Losses"), which HBI shall incur or suffer, which arise, result from, or relate to any default, breach or violation of, or inaccuracy in, or failure by any Seller or MVBI to perform any of their or its representations, warranties, covenants or agreements in this Agreement or in any other instrument furnished or to be furnished under this Agreement.

8.3. HBI'S INDEMNITY. HBI hereby agrees to indemnify, defend and hold Sellers harmless against, and in respect of, any and all Losses, which Sellers shall incur or suffer, which arise, result from, or relate to any default, breach or violation of, or inaccuracy in or failure by HBI to perform any of its representations, warranties, covenants or agreements in this Agreement or in any other instrument furnished or to be furnished under this Agreement.

8.4. LIMITATIONS.

(A) No Party shall be liable for any claim for indemnification hereunder unless written notice of a claim for indemnification is delivered by the Party seeking indemnification to the Party from whom indemnification is sought with respect to any such breach before the applicable survival date specified in Section 8.1 hereof (in which case such indemnification obligation shall survive the time at which it would otherwise terminate pursuant to Section 8.1). All notices given pursuant to Sections 8.2 through 8.5 shall set forth with reasonable specificity the basis for such claim for indemnification.

(B) Notwithstanding anything in this Agreement to the contrary:

(1) Except with respect to indemnification obligations under this Article XIII, neither Party shall assert any claim against the other for indemnification hereunder with respect to any breach of such warranties or representations unless and until the amount of such claim or claims shall exceed $25,000 calculated on a cumulative basis and not a per item basis, and then only in respect to the excess over said amount; and

(2) Neither Party shall be entitled to recover from the other an amount greater than $17,500,000 with respect to all claims for indemnity or damages whether such claims are brought under this Article XIII or otherwise.

8.5. DEFENSE OF THIRD PARTY CLAIMS. The obligations of Sellers, MVBI, and HBI with respect to their respective indemnities hereunder resulting from any claim or other assertion of liability by third parties (hereinafter collectively, "Third Party Claim(s)"), shall be subject to the following terms and conditions:

(A) The Party seeking indemnification (the "Indemnified Party") shall give written notice of any such Third Party Claim to the Party from whom identification is sought (the "Indemnifying Party") within a reasonable time after the Indemnified Party receives notice thereof; provided, however, the failure to give notice timely shall not affect the Indemnifying Party's obligation hereunder except to the extent that such failure prejudices the Indemnifying Party or its ability to defend such Third Party Claims.

(B) The Indemnifying Party shall have the right to undertake, at its own expense, with counsel or other representatives of its own choosing and reasonably acceptable to the Indemnified Party, the defense or settlement of any such Third Party Claim.

(C) In the event that the Indemnifying Party shall have the right to undertake the defense of any Third Party Claim, but shall fail to notify the Indemnified Party within ten (10) Business Days of receipt of the notice that it has elected to undertake such defense or settlement, or if at any time the Indemnifying Party shall otherwise fail to diligently defend or pursue settlement of such claim, then the Indemnified Party shall have the right to undertake the defense, compromise, or settlement of such claim, subject to subsection 8.5(D), with counsel reasonably acceptable to the Indemnifying Party.

(D) Neither Party shall settle any Third Party Claim without the prior written consent of the other Party, which consent shall not be unreasonably withheld or delayed. In the event the Indemnifying Party submits to the Indemnified Party a bona fide settlement offer from

the third party claimant of any Third Party Claim (which settlement offer shall include as an unconditional term thereof the giving by the claimant or the plaintiff to the Indemnified Party of a release from all liability in respect of such claim) and the Indemnified Party refuses to consent to such settlement, then thereafter the Indemnifying Party's liability to the Indemnified Party for indemnification hereunder with respect to such Third Party Claim shall not exceed the settlement amount included in said bona fide settlement offer, and the Indemnified Party shall either assume the defense of such Third Party Claim or pay the Indemnified Party's attorney fees and other out-of-pocket costs incurred thereafter in continuing the defense of such claim.

(E) Regardless of which Party is conducting the defense of any such Third Party Claim, the other Party, with counsel or other representatives of its own choosing and at its sole cost and expense, shall have the right to consult with the Party conducting the defense of such claim and its counsel or other representatives concerning such claim and the Indemnifying Party and the Indemnified Party and their respective counsel or other representatives shall cooperate with respect to such claim, and the Party conducting the defense of any such claim and its counsel shall in any case keep the other Party and its counsel (if any) fully informed as to the status of any claim and any matters relating thereto. Each Party shall provide to the other Party such records, books, documents and other materials as shall reasonably be necessary for such Party to conduct or evaluate the defense of any Third Party Claim and will generally cooperate with respect to any matters relating thereto.

(F) Any amount of an Indemnified Party's indemnification costs that become due with respect to Third Party Claims, whether or not through settlement or adjudication, including periodic costs to defend any claim or demand, shall be paid promptly by the Indemnifying Party within thirty (30) days after written demand therefor.

ARTICLE IX. OTHER MATTERS

9.1. WAIVER; AMENDMENT. Prior to the Closing Date, any provision of this Agreement may be (A) waived in writing by the Party benefited by the provision, or (B) amended or modified at any time (including the structure of the transactions contemplated by this Agreement) by an agreement in writing among the Sellers' Representatives, MVBI and HBI. Nothing contained in this Section 9.1 is intended to modify HBI's rights pursuant to Section 5.16.

9.2. COUNTERPARTS. This Agreement may be executed in one or more facsimile counterparts, each of which shall be deemed to constitute an original. This Agreement shall become effective when one counterpart has been signed by each Party.

9.3. GOVERNING LAW. This Agreement shall be governed by, and interpreted in accordance with, the laws of the State of Arkansas, except as federal law may be applicable.

9.4. EXPENSES. Each Party will bear all expenses incurred by it in connection with this Agreement and the transactions contemplated by this Agreement. Notwithstanding, HBI agrees that BMV may pay the fees and expenses of Baxter & Jewell, P.A. incurred by Sellers,

MVBI and BMV and billed prior to the Closing for services with respect to the Acquisition, including reasonable estimated fees for post-Closing services rendered related to the Acquisition.

9.5. NOTICES. All notices, demands, and requests given or required to be given by one Party to the other Parties shall be in writing. All such notices, demands, and requests shall be deemed to have been properly given if served in person, sent by telefacsimile (and receipt confirmed) or by prepaid nationally recognized overnight delivery service providing proof of delivery, addressed as follows:

If to HBI, to                   Home BancShares, Inc.
                                719 Harkrider
                                Conway, Arkansas  72032
                                Attn: Ron Strother, President
                                Fax: (501) 329-2991

With a copy to:                 Mitchell Williams Selig Gates
                                & Woodyard, P.L.L.C.
                                425 W. Capitol Avenue, Suite 1800
                                Little Rock, Arkansas 72201
                                Attn: John S. Selig, Esq.
                                Fax: (501) 918-7804

If to Sellers' Representatives: James G. Hinkle
                                855 Woodland Hills
                                Mountain View, AR 72560
                                Fax: (870) 269-4601
                                Kenneth W. Sutton
                                505 South Bayou
                                Mountain View, AR 72560
                                Fax: (870) 269-6011

With a copy to:                 Baxter & Jewell, P.A.
                                1 Information Way, Suite 210
                                Little Rock, Arkansas 72202
                                Attn: Samuel R. Baxter, Esq.
                                Fax: (501) 664-9559

If to MVBI, to:                 Mountain View Bancshares, Inc.
                                121 Main Street
                                Mountain View, Arkansas 72560-1228
                                Attn: James G. Hinkle, President
                                Fax: (870) 269-2899

With a copy to:                 Baxter & Jewell, P.A.

1 Information Way, Suite 210 Little Rock, Arkansas 72202 Attn: Samuel R. Baxter, Esq.

Fax: (501) 664-9559

9.6. SELLERS' REPRESENTATIVES - APPOINTMENT OF AGENT.

(A) The Sellers make, constitute and appoint Hinkle and Sutton their true and lawful agents and attorneys-in-fact (the "Sellers' Representatives") and authorize and empower them, acting jointly, to fulfill the role of Sellers' Representatives hereunder; provided however, that in the event of death, resignation, unavailability or incapacity of Hinkle or Sutton the other shall act as the sole Sellers' Representative in his place unless the Sellers provide HBI unanimous written instructions to the contrary.

(B) The Sellers' Representatives are hereby fully authorized by the Sellers for them and in their names (i) to receive all notices and other communications directed to Sellers under this Agreement and (ii) to take any action (or to determine to take no action), with respect thereto as they may deem appropriate as effectively as the Sellers could act themselves, including, without limitation, the settlement or compromise of any dispute or controversy, to consummate the sale of the MVBI Stock as provided in this and accompanying agreements in connection therewith, but without limitation, to execute all documents, make all applications, provide and verify any information and data, deliver and update all instruments, schedules, and other matters required, contemplated or which might become necessary in order to consummate the sale of the MVBI Stock as herein contracted, including the execution and delivery of all documents, instruments and certificates at Closing.

(C) The appointment of the Sellers' Representatives shall be deemed coupled with an interest and shall be irrevocable, and HBI and any other Person may conclusively and absolutely rely, without inquiry, upon any action of the Sellers' Representatives as the act of Sellers in all matters referred to in this Agreement. Each Seller hereby ratifies and confirms all that the Sellers' Representatives shall do or cause to be done by virtue of their appointment as Sellers' Representatives of such Seller. The Sellers' Representatives shall act for Sellers on all of the matters set forth in this agreement in the manner the Sellers' Representatives believes to be in the best interest of the Sellers and consistent with their obligations under this Agreement.

(D) Each Seller hereby expressly acknowledges and agrees that the Sellers' Representatives are authorized to act on behalf of such Seller notwithstanding any dispute or disagreement among the Sellers, and that HBI shall be entitled to rely on any and all action taken by the Sellers' Representatives under this Agreement without liability to, or obligation to inquire of, any of the Sellers. Upon receipt of any writing which reasonably appears to have been signed by the Sellers' Representatives, HBI may act upon the same without any further duty of inquiry as to the genuineness of the writing.

(E) EACH SELLER INTENDS THAT THE AUTHORITY AND AGENCY OF THE SELLERS' REPRESENTATIVES UNDER THIS SECTION 9.6 SHALL BE IRREVOCABLE AND SHALL NOT TERMINATE AS A RESULT OF THE TERMINATION OF ANY TRUST OR CHANGE OF TRUSTEE THEREOF.

9.7. TIME IS OF THE ESSENCE. The Parties hereto agree that time is of the essence with respect to the Closing Date and each and every condition and covenant contained herein.

9.8. ASSIGNMENT. The assignment of this Agreement by a Party without the express written consent of the other Parties hereto shall be void; provided, however, that this Section 9.8 is not intended to modify HBI's rights pursuant to Section 5.16.

9.9. BINDING EFFECT. This Agreement shall be binding upon the Parties and their respective successors and assigns.

9.10. SEVERABILITY. The holding of any provision of this Agreement invalid, illegal, or unenforceable, in whole or in part, shall not affect the other provisions of this Agreement, which shall remain in full force and effect.

9.11. ENTIRE UNDERSTANDING; NO THIRD PARTY BENEFICIARIES. This Agreement and the Mutual Confidentiality and Non-Disclosure Agreement represent the entire understanding of the Parties with reference to transactions contemplated by this Agreement and supersede any and all other oral or written agreements previously made. Nothing in this Agreement, expressed or implied, is intended to confer upon any Person other than the Parties any rights, remedies, obligations or Liabilities under or by reason of this Agreement.

9.12. ENFORCEMENT PROCEEDINGS. The Parties hereto agree that irreparable damage may occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that each Party shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity. In any action or proceeding in connection with the enforcement of this Agreement, the prevailing Party will be entitled to reimbursement of its reasonable attorneys' fees and expenses from the non-prevailing Party.

9.13. BENEFIT PLANS. Upon consummation of the Acquisition, all employees of MVBI and BMV, except those with whom HBI enters into written employment agreements, shall be deemed to be at-will employees of HBI. From and after the Closing Date, employees of MVBI and BMV shall be entitled to participate in the pension, employee benefit and similar plans (including stock option, bonus or other incentive plans) on substantially the same terms and conditions as similarly situated employees of HBI. For the purpose of determining eligibility to participate in such plans and the vesting of benefits under such plans, HBI shall give effect to years of service with MVBI or BMV, as the case may be, as if such service were with HBI. Employees of MVBI and BMV will be entitled to carry over unused vacation days and sick leave accrued as of the Closing Date.

9.14. HEADINGS. The headings contained in this Agreement are for reference purposes only and are not part of this Agreement.

(Signatures on page following.)

IN WITNESS WHEREOF, the Parties have caused this instrument to be executed in counterparts by their duly authorized officers, all as of the day and year first above written.

MOUNTAIN VIEW BANCSHARES, INC.

By: /s/ JAMES G. HINKLE
    ------------------------------------
    James G. Hinkle, President

HOME BANCSHARES, INC.

By: /s/ RON W. STROTHER
    ------------------------------------
    Ron W. Strother,
    President and Chief Operating
    Officer

SELLERS

HINKLE FAMILY REVOCABLE LIVING TRUST

By: /s/ JAMES G. HINKLE
    ------------------------------------
    James G. Hinkle, Trustee
    790 shares

JENNIE LOU HINKLE REVOCABLE TRUST

By: /s/ JAMES G. HINKLE
    ------------------------------------
    James G. Hinkle, Trustee
    790 shares


/s/ JAMES G. HINKLE
----------------------------------------
James G. Hinkle
1,213 shares

Address: 855 Woodland Hills Mountain View, AR 72560

/s/ KAY S. HINKLE
----------------------------------------
Kay S. Hinkle
1,212 shares


/s/ KATHERINE L. HINKLE
----------------------------------------
Katherine Linn Hinkle
388 shares


/s/ LEAANN WALKER
----------------------------------------
LeaAnn Hinkle Walker
388 shares


/s/ KENNETH W. SUTTON
----------------------------------------
Kenneth W. Sutton
1,064 shares

Address: 505 South Bayou Mountain View, AR 72560

/s/ JANICE SUTTON
----------------------------------------
Janice Sutton
1,005 shares


/s/ JENIFER S. TUCKER
----------------------------------------
Jenifer Sutton Tucker
566 shares


/s/ ROBERT W. SUTTON
----------------------------------------
Robert Sutton
566 shares

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF STONE )

On this 21st day of April, 2005, before me the undersigned officer, personally appeared James G. Hinkle, known to me (or satisfactorily proven) to be the person whose name is subscribed as Trustee for the HINKLE FAMILY REVOCABLE LIVING TRUST, and acknowledged that he executed the same as the act of his principal for the purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal this 21st day of April, 2005.

                                        /s/ KARI S. WINNINGHAM
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/18/2008
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF STONE )

On this 21st day of April, 2005, before me the undersigned officer, personally appeared James G. Hinkle, known to me (or satisfactorily proven) to be the person whose name is subscribed as Trustee for the JENNIE LOU HINKLE REVOCABLE TRUST, and acknowledged that he executed the same as the act of his principal for the purposes therein contained.

IN WITNESS WHEREOF, I hereunto set my hand and official seal this 21st day of April, 2005.

                                        /s/ KARI S. WINNINGHAM
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/18/2008
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF STONE )

On this 21st day of April, 2005, before me, the undersigned officer, personally appeared JAMES G. HINKLE, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 21st day of April, 2005.

                                        /s/ KARI S. WINNINGHAM
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/18/2008
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF STONE )

On this 21st day of April, 2005, before me, the undersigned officer, personally appeared KAY S. HINKLE, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 21st day of April, 2005.

                                        /s/ KARI S. WINNINGHAM
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/18/2008
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF PULASKI )

On this 28th day of April, 2005, before me, the undersigned officer, personally appeared KATHERINE LINN HINKLE, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 28th day of April, 2005.

                                        /s/ SAMUEL R. BAXTER
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/15/2010
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF STONE )

On this 21st day of April, 2005, before me, the undersigned officer, personally appeared LEA ANN HINKLE WALKER, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 21st day of April, 2005.

                                        /s/ KARI S. WINNINGHAM
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/18/2008
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF STONE )

On this 21st day of April, 2005, before me, the undersigned officer, personally appeared KENNETH W. SUTTON, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 21st day of April, 2005.

                                        /s/ KARI S. WINNINGHAM
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/18/2008
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF STONE )

On this 21st day of April, 2005, before me, the undersigned officer, personally appeared JANICE SUTTON, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 21st day of April, 2005.

                                        /s/ KARI S. WINNINGHAM
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/18/2008
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF PULASKI )

On this 28th day of April, 2005, before me, the undersigned officer, personally appeared JENIFER SUTTON TUCKER, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 28th day of April, 2005.

                                        /s/ SAMUEL R. BAXTER
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/15/2010
  (SEAL)

STATE OF ARKANSAS )

) SS: ACKNOWLEDGMENT

COUNTY OF PULASKI )

On this 28th day of April, 2005, before me, the undersigned officer, personally appeared ROBERT SUTTON, known to me (or satisfactorily proven) to be the person whose name is subscribed to the within instrument and acknowledged that he/she executed the same for the purposes therein contained.

IN WITNESS WHEREOF, I have hereunto set my hand and official seal this 28th day of April, 2005.

                                        /s/ SAMUEL R. BAXTER
                                        ----------------------------------------
                                        Notary Public

My Commission Expires:

08/15/2010
  (SEAL)

LIST OF MVBI SCHEDULES

Schedule 3.4           Changes or Commitments Respecting Line of Business or
                       Operating Procedures

Schedule 3.5           Liens or Encumbrances

Schedule 3.6           New or Changes to Compensation, Employment Agreements,
                       Etc.

Schedule 3.7           New or Changes to Benefit Plans

Section 3.8            Continuance of Business

Schedule 3.11          New or Changes to Contracts

Schedule 4.1(B)        Jurisdictions Where MVBI and BMV are Qualified to do
                       Business; Orders, etc. Affecting Status

Schedule 4.1(C)        Shares Outstanding

Schedule 4.1(D)        MVBI Subsidiaries

Schedule 4.1(G)        No Defaults - Agreements Requiring Third Party Consent

Schedule 4.1(H)        MVBI Financial Reports

Schedule 4.1(I)        Undisclosed Liabilities of MVBI

Schedule 4.1(J)        No Events Causing Material Adverse Effect

Schedule 4.1(K)        Properties: Leases, Subleases, Defects of Title or
                       Condition

Schedule 4.1(L)        Intellectual Property Rights

Schedule 4.1(M)       Litigation, Regulatory Action

Schedule 4.1(N)        Compliance with Laws

Schedule 4.1(O)        Material Contracts

Schedule 4.1(Q)        Brokers and Finders

Schedule 4.1(R)(1)     List of Employee Benefit Plans

Schedule 4.1(R)(2)     Employee Benefit Plans Not Qualified Under ERISA

Schedule 4.1(R)(4)     Pension Accumulated Funding Deficiency

Schedule 4.1(R)(5)     Amount by Which Benefit Liabilities Exceed Agreement
                       Assets

Schedule 4.1(R)(6)     Obligations for Retiree Health and Life Benefits

Schedule 4.1(R)(7)     Agreements Resulting in Payments to Employees Under Any
                       Compensation and Benefit Plan with Respect to Proposed
                       Transaction

Schedule 4.1(U)        Asset Classification

Schedule 4.1(V)        Inadequate Allowance for Loan Losses

Schedule 4.1(W)        Insurance

Schedule 4.1(AA)(1)    Noncompliance with Environmental Laws

Schedule 4.1(AA)(2)    Pending Proceedings with Respect to Environmental Matters

Schedule 4.1(AA)(3)    Pending Proceedings with Respect to Environmental Matters
                       Involving Loan/Fiduciary Property

Schedule 4.1(AA)(4)    Pending Proceedings with Respect to Environmental Matters
                       Listed in Sections 4.1(Z)(2) or (3)

Schedule 4.1(AA)(5)    Actions During Ownership Which Could Have Material
                       Adverse Effect with Respect to Environmental Matters

Schedule 4.1(AA)(6)    Actions Prior to Ownership Which could Have Material
                       Adverse Effect with Respect to Environmental Matters

Schedule 4.1(AA)(7)    Underground Storage Tanks

Schedule 4.1(AA)(8)    Building Components with Friable Asbestos

Schedule 4.1(BB)       Tax Return Matters

Schedule 4.1(DD)       Derivative Contracts, including a list of any assets
                       pledged as security for such Derivative Contracts

Schedule 4.1(FF)(1)    Employment Contracts Requiring Payment In Connection with
                       Termination

Schedule 4.1(FF)(2)    Contracts with Related Persons

Schedule 4.1(FF)(3)    Leases with Aggregate Annual Rent Exceeding $50,000

Schedule 4.1(FF)(4)    Material Contracts with Affiliates

Schedule 4.1(GG)       Claims of Officers, Directors, Employees

Schedule 5.15          Real Property Sold to Sellers

Schedule 6.2(J)        Litigation or  Proceedings  Materially  Affecting  MVBI
                       or BMV Prior to Closing Date

Schedule 6.2(L)        Covenants Not To Compete

LIST OF HBI SCHEDULES

Schedule 4.2(B)   Jurisdictions Where HBI and its Subsidiaries are Qualified to
                  do Business; Orders, etc. Affecting Status

Schedule 4.2(C)   Shares Outstanding

Schedule 4.2(D)   HBI Subsidiaries

Schedule 4.2(G)   No Defaults - Agreements Requiring Third Party Consent

Schedule 4.2(H)   HBI Financial Reports

Schedule 4.2(J)   Brokers and Finders

Schedule 6.3(F)   Litigation or Proceedings Materially Affecting HBI or its
                  Subsidiaries Prior to Closing Date

EXHIBIT 3.1

RESTATED

ARTICLES OF INCORPORATION
OF
HOME BANCSHARES, INC.

Pursuant to the Arkansas Business Corporation Act, Home Bancshares, Inc. does hereby adopt the following Restated Articles of Incorporation:

FIRST:   The name of the corporation is Home BancShares, Inc.

SECOND:  The nature of the business of this Corporation and the objects and
         purposes purposed to be transacted, promoted or carried on by it are as
         follows, to-wit:

               (a) To act as a holding company and to acquire and own stock or
          other interest in other businesses of any lawful character, including
          specifically banks, mortgage loan and servicing businesses, factoring
          businesses, and other financially oriented businesses; and as
          shareholder or as owner of other interest in such businesses, to
          exercise all rights incident thereto;

               (b) To do all things herein set forth, and in addition, all such
          other acts and things necessary or convenient or intended for the
          attainment of any of the purposes of this Corporation and to
          participate in, engage in, carry on and conduct any business that a
          natural person lawfully might or could do insofar as such acts and
          business undertakings are permitted to be done by a corporation
          organized under the general corporation laws of the State of Arkansas,
          with all powers conferred upon corporations, specifically or by
          inference, under the laws of the State of Arkansas.

THIRD:   The authorized capital stock of this corporation shall consist of
         3,000,000 shares of common stock having a par value of $1.00 per share.

FOURTH:  The Chairman and Secretary of the corporation shall have the authority
         on behalf of the corporation to enter into any contract between the
         corporation and all of its shareholders (a) imposing restrictions on
         the future transfer (whether inter vivos, by inheritance or
         testamentary gift), hypothecation or other disposition of its shares;
         (b) granting purchase options to the corporation or its shareholders;
         or (c) requiring the corporation or its shareholders to purchase such
         shares upon stated contingencies. In addition, any and all of such
         restrictions, options or requirements may be imposed on all shares of
         the corporation, issued and unissued, upon the unanimous resolution of
         the Board of Directors and the consent of all stockholders as of the
         date of the Board's resolution.

FIFTH:   The registered office of this corporation shall be located at 945 Salem
         Road, Conway, Faulkner County, Arkansas 72032. The registered agent of
         this corporation, at the registered office address set forth herein
         shall be John Allison.

SIXTH:   The Board of Directors of this Corporation shall consist of not less
         than two (2) nor more than fifteen (15) persons, the exact number of
         directors within such minimum and maximum limits to be fixed and
         determined, from time to time, by resolution of majority of the full
         Board of Directors or by resolution of the shareholders at any annual
         or special meeting thereof. Any vacancy in the Board of Directors for
         any reason, including an increase in the number thereof, may be filled
         by action of the Board of Directors.

SEVENTH: The name and address of the incorporators of this corporation are:

         Ruth T. Dearing               Donald R. Dearing
         P.O. Box 496                  P.O. Box B
         Holly Grove, Arkansas 72069   Holly Grove, Arkansas 72069

                                       Herd E. Stone
                                       P.O. Box A
                                       Holly Grove, Arkansas 72069

EIGHTH:  To the maximum extent permitted by the Arkansas Business Corporation
         Act of 1987, as it now exists or may hereafter be amended, a director
         of this corporation shall not be liable to the corporation or its
         shareholders for monetary damages for any breach of fiduciary duties as
         a director.

NINTH:   (a) Every person who was or is a party of, is threatened to be made
         party to, or is involved in, any action, suit or proceeding, whether
         civil, criminal, administrative or investigative, by reason of the fact
         that he is or was a director or officer of the Corporation (or is or
         was serving at the request of the Corporation as a director or officer
         of another corporation, or as its representative in a partnership,
         joint venture, trust or other enterprise) shall be indemnified and held
         harmless to the fullest extent legally permissible under and pursuant
         to any procedure specified in the Arkansas Business Corporation Act, as
         amended and as the same may be amended hereafter, against all expenses,
         liabilities and losses (including attorney's fees, judgments, fines and
         amounts paid or to be paid in settlement) reasonably incurred or
         suffered by him in connection therewith. Such right of indemnification
         shall be a contract right that may enforced in any lawful manner by
         such person, and the Corporation may in the discretion of the Board of
         Directors enter into indemnification agreements with its directors and
         officers. Such right of indemnification shall not be exclusive of any
         other right which such director or officer may have or hereafter
         acquire and, without limiting the generality of such statement, he
         shall be entitled to his rights of indemnification under any agreement,
         vote of stockholders, provision of law or otherwise, as well as his
         rights under this section.

(b) The Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is, or was, a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation or as its representative in a partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person.

(c) Expenses incurred by a director or officer of the Corporation in defending a civil or criminal action, suit or proceeding by reason of the fact that he is, or was, a director or officer of the Corporation (or is or was serving at the Corporation's request as a director or officer of another corporation or as its representative in a partnership, joint venture, trust or other enterprise) shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding (1) upon authorization (i) by the Board of Directors by a majority vote of a quorum consisting of directors who are not parties to the action, suit or proceeding, (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, then by independent legal counsel in a written opinion, or (iii) by the shareholders; and (2) upon receipt of an undertaking by, or on behalf of, such person to repay such amount, if it shall ultimately be determined that he or she is not entitled to be indemnified by the Corporation as authorized by relevant provisions of the Arkansas Business Corporation Act as the same now exists or as it may hereafter be amended.

(d) If any provision of this Article or the application thereof to any person or circumstance is adjudicated invalid, such invalidity shall not affect other provisions or applications of this Article which lawfully can be given without the invalid provision of this Article.

IN WITNESS WHEREOF, the President and Chairman of the Corporation has set his hand this 12th day of March, 1999.

HOME BANCSHARES, INC.

By /s/ JOHN ALLISON
   -------------------------------------
   John Allison, Chairman

EXHIBIT 3.2

AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION
OF
HOME BANCSHARES, INC.

Pursuant to Arkansas Business Corporation Act, Home BancShares, Inc. (the "Corporation") does hereby adopt the following amendment to its Restated Articles of Incorporation dated March 12, 1999 ("the Articles of Incorporation"):

1. Article THIRD is hereby amended to read in its entirety as follows:

THIRD: The authorized capital stock (the "Capital Stock") of this Corporation shall be 5,000,000 shares of voting common stock (the "Common Stock") having a value of $.10 per share, and 5,500,000 shares of $0.01 par value preferred stock (the "Preferred Stock"), divided into 2,500,000 shares of class A non-voting, non-cumulative, callable and redeemable, convertible preferred stock ("Class A Preferred Stock") and 3,000,000 shares of class B preferred stock ("Class B Preferred Stock"). Shares of $1.00 par value common stock which are outstanding as of the date of this amendment shall remain outstanding but shall be converted into $.10 par value and the difference between $1.00 and $.10 per share shall be transferred from paid-in capital to capital surplus on the books and records of the Corporation.

Voting Rights. The Common Stock shall have one vote per share on all matters submitted to the shareholders for a vote. The Preferred Stock shall have no right to vote on any matter except to the extent the specific right to vote is expressly required to be granted to the holder of Preferred Stock by the Arkansas Business Corporation Act of 1987. No holder of Capital Stock shall have the right to cumulate their votes in the election of directors.

Dividends. Class A Preferred Stock will pay non-cumulative annual dividends of $0.25, payable quarterly, on the last day of January, April, July, and October, if and when authorized

and declared by the Board of Directors of the Corporation. Dividends may not be declared unless the requirements for the payment of dividends under Arkansas law are met, and are payable only if and to the extent that the Board of Directors determines that earnings are available. The Class A Preferred Stock has preference over the Class B Preferred Stock and the Common Stock for the payment of dividends; therefore, dividends may not be paid on the Class B Preferred Stock or Common Stock until the dividends on the Class A Preferred Stock for the corresponding period have been paid in full. No interest shall be payable on any declared and unpaid dividends.

Preference on Liquidation, Dissolution or Winding Up. The Class A Preferred Stock has priority over the Common Stock in the event of liquidation, dissolution, or winding up of the Corporation. In that event, holders of Class A Preferred Stock shall be entitled to receive $10.00 per share plus any declared and unpaid dividends then due before any payment is made to the holders of Common Stock. However, once these payments are made, the holders of Class A Preferred Stock are not entitled to any further payments. After payments to the holders of Class A Preferred Stock, the remaining assets and funds of the Corporation shall be distributed pro rata among the holders of the Common Stock. A consolidation, merger or reorganization of the Corporation with any other corporation or a sale of all or substantially all of the Corporation's assets shall not be considered a dissolution, liquidation or winding up of the Corporation for purposes of these provisions.

Convertible Shares. The Class A Preferred Stock may be converted (the "Conversion" or "Convert"), at the election of the holder, into Common Stock upon the earlier of:

(a) the expiration of thirty (30) months after the date the first share of Class A Preferred Stock is issued, or

(b) one hundred eighty (180) days following the date any shares of Common Stock are registered with the United States Securities and Exchange Commission pursuant to the Securities Act of 1933, in connection with an initial public offering of the Common Stock.

To Convert the shares of Class A Preferred Stock to Common Stock, the holder of Class A Preferred Stock shall surrender and deliver, duly endorsed in blank, signature guaranteed, the certificate or certificates representing the shares to be Converted to the Secretary of the Corporation at the Corporation's principal offices, and at the same time notify the Secretary in writing over his or her signature that he or she desires to Convert his or her Preferred Stock into Common Stock pursuant to these provisions. Each share of Class A Preferred Stock properly surrendered for conversion shall be converted into 0.263158 shares of Common Stock. No factional shares of Common Stock shall be issued to any former holder of Class A Preferred Stock as part of the Conversion; instead a holder shall be entitled to receive, in lieu of a fractional share an amount payable in cash equal to the fraction of a share of Common Stock they otherwise would be entitled to receive multiplied by $38.00.

Redemption. The Class A Preferred Stock is redeemable (the "Redemption" or "Redeem") at the option of the Corporation in whole or in part at any time after thirty (30) months from the date the first share of Class A Preferred Stock is issued or prior to the expiration of such 30 months if the Common Stock of the Corporation becomes publicly traded and (a) the last reported trade is equal to or greater than Thirty-eight Dollars ($38) per share for twenty (20) consecutive trading days, or (b) if the trades are quoted a "bid and ask" price basis, the mean between the bid and ask prices is equal to or greater than $38 per share for twenty (20) consecutive trading days. In the event the Corporation elects to Redeem any Class A Preferred Stock, all of the Class A Preferred Stock must and shall be Redeemed. In such event, the

Corporation shall provide written notice ("Notice") to holders of the Class A Preferred Stock. Upon receipt of such Notice, and within the time period required by the Notice, each holder of Class A Preferred Stock shall (a) tender to the Corporation the certificate(s) for his or her shares (the "Certificate(s)") duly endorsed by the holder as the holder's name appears on such Certificate(s), for transfer to the Corporation; (b) execute a separate Irrevocable Stock Power, provided with the Notice; (c) complete any and all other requirements deemed necessary by the Corporation's directors; and (d) return the Irrevocable Stock Power and the Certificate(s) to the Secretary of the Corporation at the Corporation's principal offices, or as otherwise instructed in the Notice. Upon receipt of the Irrevocable Stock Power and the Certificate(s), and any other required documentation, the Corporation shall issue to each holder of Class A Preferred Stock 0.263158 shares of Common Stock in exchange for one share of Class A Preferred Stock. No fractional shares of Common Stock shall be issued to any former holder of Class A Preferred Stock as part of the Redemption; instead a holder shall be entitled to receive, in lieu of a fractional share an amount payable in cash equal to the fraction of a share of Common Stock they otherwise would be entitled to receive multiplied by $38.00. In the event a Redemption occurs as provided herein prior to the end of a quarter in which the Board declares a dividend, a holder of the Class A Preferred Stock being Redeemed shall be entitled to receive an amount of such dividend pro rated for the number of days in the quarter prior to the date of the Notice of Redemption.

Anti-dilution. If prior to the Conversion or Redemption, the outstanding shares of Common Stock are increased or decreased, or are changed into a different number of shares or a different class by reason of any merger, recapitalization, reclassification, stock split, or similar transaction, or if a stock dividend shall be paid, an appropriate and proportionate adjustment or

adjustments will be made to the ratio by which a share of Common Stock, or a fraction thereof, is to be issued in exchange for each share of Class A Preferred Stock.

Class B Preferred Stock. The Class B Preferred Stock shall contain such preferences, limitations, relative rights and terms as the Board of Directors of the Corporation, acting pursuant to the authority contained herein and in Arkansas Code Ann. Section 4-27-602 et seq., may determine; provided, however, that before issuing any shares of Class B Preferred Stock, the Corporation shall file with the Secretary of State of Arkansas Articles of Amendment containing the text of the amendment, preferences, limitations, relative rights and terms of the Class B Preferred Stock, and provided further, that the holders of the Class B Preferred Stock shall have no greater preferences or relative rights than have the holders of Class A Preferred Stock.

EXECUTED this 23rd day of October, 2003.

/S/ JOHN ALLISON
----------------------------------------
John Allison, Chairman

EXHIBIT 3.3

SECOND AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION
OF
HOME BANCSHARES, INC.

Article THIRD is hereby amended to add the following after the existing paragraph entitled "Class B Preferred Stock":

The Board of Directors of the Corporation, acting pursuant to such authority hereby determines that the Class B Preferred Stock shall contain the following limitations, relative rights and terms:

Dividends. Class B Preferred Stock will pay non-cumulative annual dividends of $0.57, payable quarterly, on the last day of January, April, July, and October, if and when authorized and declared by the Board of Directors of the Corporation. Dividends may not be declared unless the requirements for the payment of dividends under Arkansas law are met, and are payable only if and to the extent that the Board of Directors determines that earnings are available. The Class B Preferred Stock has preference over the Common Stock and over any class or series of capital stock of the Corporation hereafter created, but is subordinate to the Class A Preferred Stock, for the payment of dividends. Therefore, dividends may not be paid on the Common Stock until dividends on the Class B Preferred Stock for the corresponding period have been paid in full. No interest shall be payable on any declared and unpaid dividends.

Preference on Liquidation, Dissolution or Winding Up. After the payment of any declared and unpaid dividends to the holders of Class A Preferred Stock, the Class B Preferred Stock, in parity with the Class A Preferred Stock, has priority over the Common Stock, and over any class or series of capital stock hereafter created, in the event of liquidation, dissolution, or winding up of the Corporation. In that event, holders of Class B Preferred Stock shall be entitled to receive $38.00 per share plus any declared and unpaid dividends then due before any payment is made to the holders of Common Stock or any other class or series of capital stock hereafter created. However, once these payments are made, the holders of Class B Preferred Stock are not entitled to any further payments. After payments to the holders of Class B Preferred Stock, the remaining assets and funds of the Corporation shall be distributed pro rata among the holders of the Common Stock. A consolidation, merger or reorganization of the Corporation with any other corporation or a sale of all or substantially all of the Corporation's assets shall not be considered a dissolution, liquidation or winding up of the Corporation for purposes of these provisions.

Convertible Shares. The Class B Preferred Stock may be converted ("Convert" or the "Conversion"), at the election of the holder, into Common Stock upon the earlier of:

(a) July 6, 2006, or

(b) two hundred ten (210) days following the date any shares of Common Stock are registered with the United States Securities and Exchange Commission pursuant to the Securities Act of 1933, in connection with an initial public offering of the Common Stock.

To Convert the shares of Class B Preferred Stock to Common Stock, the holder of Class B Preferred Stock shall surrender and deliver, duly endorsed in blank, signature guaranteed, the certificate or certificates representing the shares to be Converted to the Secretary of the Corporation at the Corporation's principal offices, and at the same time notify the Secretary in

writing over his or her signature the he or she desires to Convert his or her Class B Preferred Stock into Common Stock pursuant to these provisions. Each share of Class B Preferred Stock properly surrendered for conversion shall be converted into one (1) share of Common Stock.

Redemption. The Class B Preferred Stock is redeemable ("Redeem" or the "Redemption") at the option of the Corporation in whole or in part at any time. In such event, the Corporation shall provide written notice ("Notice") to holders of the Class B Preferred Stock. Upon receipt of such Notice, and within the time period required by the Notice, each holder of Class B Preferred Stock shall (a) tender to the Corporation the certificate(s) for his or her shares (the "Certificate(s)") duly endorsed by the holder as the holder's name appears on such Certificate(s), for transfer to the Corporation; (b) execute a separate Irrevocable Stock Power, provided with the Notice; (c) complete any and all other requirements deemed necessary by the Corporation's directors; and (d) return the Irrevocable Stock Power and the Certificate(s) to the Secretary of the Corporation at the Corporation's principal offices, or as otherwise instructed in the Notice. Upon receipt of the Irrevocable Stock Power and the Certificate(s), and any other required documentation, the Corporation shall issue to each holder of Class B Preferred Stock one (1) share of Common Stock in exchange for one share of Class B Preferred Stock. In the event a Redemption occurs as provided herein prior to the end of a quarter in which the Board declares a dividend, a holder of the Class B Preferred Stock being Redeemed shall be entitled to receive an amount of such dividend pro rated for the number of days in the quarter prior to the date of the Notice of Redemption.

transaction, or if a stock dividend shall be paid, an appropriate and proportionate adjustment or adjustments will be made to the ratio by which a share of Common Stock, or a fraction thereof, is to be issued in exchange for each share of Class B Preferred Stock. In the event of a merger of the Corporation for cash in which it is not the surviving corporation, the holders of Class B Preferred Stock will be given the right to convert their shares of Class B Preferred Stock for shares of Common Stock, immediately prior to the conversion on a ratio of one (1) share of Common Stock for one (1) share of Class B Preferred Stock.

EXECUTED this 9th day of March, 2005.

/S/ JOHN ALLISON
----------------------------------------
John Allison, Chairman

EXHIBIT 3.4

THIRD AMENDMENT TO THE
RESTATED ARTICLES OF INCORPORATION
OF
HOME BANCSHARES, INC.

Pursuant to Arkansas Business Corporation Act, Home BancShares, Inc. (the "Corporation") does hereby adopt the following articles of amendment to its Restated Articles of Incorporation, as previously amended on March 12, 1999, October 23, 2003, and March 10, 2005 (the "Articles of Incorporation"):

1. The first paragraph Article THIRD is hereby amended to read in its entirety as follows:

The authorized capital stock (the "Capital Stock") of this Corporation shall be 25,000,000 shares of voting common stock (the "Common Stock") having a par value of $.01 per share, and 5,500,000 shares of $0.01 par value preferred stock (the "Preferred Stock"), divided into 2,500,000 shares of class A non-voting, non-cumulative, callable and redeemable, convertible preferred stock ("Class A Preferred Stock") and 3,000,000 shares of class B non-voting, non-cumulative, callable and redeemable, convertible preferred stock ("Class B Preferred Stock"). Shares of $.10 par value common stock which are outstanding as of the date of this amendment shall remain outstanding but shall be converted into $.01 par value and the difference between $.10 and $.01 per share shall be transferred from paid-in capital to capital surplus on the books and records of the Corporation.

EXECUTED this 18th day of April, 2005.

/S/ JOHN ALLISON
----------------------------------------
John Allison, Chairman

EXHIBIT 3.5

RESTATED

BYLAWS
OF
HOME BANCSHARES, INC.

ARTICLE I
STOCK

1. Certificates. Certificates of stock shall be issued to each holder of fully paid stock in numerical order. Each certificate shall be signed by the President and attested by the Secretary. A record of each certificate shall be kept in the Corporation's records.

2. Form. The form of the certificate to represent stock ownership in the Corporation shall be fixed, and may be changed from time to time, by the Board of Directors. Each certificate must state on its face the following information:

a. Name of issuing corporation;

b. A statement that the corporation is organized under Arkansas law;

c. Name of person to whom shares are issued;

d. Number and class of shares (and designation of series (if any), that the certificates represents;

e. Statement of par value of such shares; and

3. Transfer. Shares of the Corporation shall be transferred on its books only upon the surrender to the Corporation of the share certificates duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer. In that event, the surrendered certificates shall be canceled, new certificates issued to the person entitled to them, and the transaction recorded on the books of the Corporation.

4. Lost Certificates. The Board of Directors shall direct a new certificate to be issued in place of a certificate alleged to have been destroyed or lost if the owner makes an affidavit that it is destroyed or lost, but the Board in its discretion may, as a condition precedent to issuing the new certificate, require the owner to give the Corporation a bond or security acceptable to the Board as indemnity against any claim that may be made against the Corporation on the certificate allegedly destroyed or lost.

5. Restrictions on Transfer. The President and Secretary of the Corporation shall have authority on behalf of the Corporation to enter into any contract between the Corporation and any or all of its shareholders (a) imposing restrictions on the future transfer (whether inter vivos, by inheritance or testamentary gift), hypothecation or other disposition of its shares; (b) granting purchase options to the Corporation or its shareholders; or (c) requiring the Corporation

or its shareholders to purchase such shares upon stated contingencies. In addition, any or all of such restrictions, options or requirements may be imposed on all shares of the Corporation, issued and unissued, upon the resolution of the Board of Directors and the consent of all stockholders as of the date of the Board's resolution.

6. Book Entry. Notwithstanding the foregoing provisions regarding share certificates, officers of the Corporation may provide that some or all of any or all classes or series of the Corporation's common or any preferred shares may be uncertificated shares.

ARTICLE II
STOCKHOLDERS

1. Annual Meeting. The annual meeting of the stockholders of this Corporation shall be held at such place within the continental limits of the United States as the Directors shall designate, the date of the meeting to be the last business day of the Corporation's fiscal year or at such other date as designated by the Board of Directors.

2. Special Meetings. Special meetings of the stockholders may be called at any time by the President, by resolution of the Board of Directors, or by not less than ten percent (10%) of the holders of shares entitled to vote on any action to be presented at such meeting.

3. Notice. Written notice of stockholders meetings shall be given either personally or by mail, to each stockholder of record at his address, as the same appears on the stock book of the Corporation, not less than ten (10) nor more than sixty (60) days before the meeting is to be held. If a proposal to increase the authorized capital stock or bonded indebtedness is to be submitted, notice must be given not less than sixty (60) nor more than seventy-five (75) days before the meeting. In case of special meetings, the notice shall also include a statement of the purpose or purposes for which the meeting is called and no other business may be transacted or considered. If at any annual meeting there shall be presented a proposal to increase the authorized capital stock or bonded indebtedness, to dissolve, merge or consolidate, or to sell, lease, exchange, or otherwise dispose of all or substantially all of the Corporation's assets, to amend the Articles of Incorporation or to effect any other fundamental corporate change, then that annual meeting shall be deemed, for the purpose of notice, a special meeting. Notice of any meeting or service of such notice may be waived in writing before or after the meeting by a stockholder or by the attendance in person or by proxy of any stockholder at such meeting. No irregularity of notice of any regular or special meeting of the stockholders shall invalidate such meeting or any proceeding thereat.

4. Quorum. A quorum at any meeting of the stockholders shall consist of a majority in interest in the stock issued and outstanding then entitled to vote, represented in person or by proxy. A majority of such quorum shall decide any question that may come before the meeting.

5. Proxies. A stockholder may vote at any meeting of the stockholders by being present in person or by giving to some other person present at the meeting a written proxy.

6. Voting. Directors shall be elected at the annual meeting of stockholders. No cumulative voting is permitted. On all matters, the holders of shares of stock then entitled to vote shall be entitled to cast votes equal to the number of shares held.

7. Informal Action by Shareholders. Unless otherwise provided by law, any action required to be taken at a meeting of the shareholders, or any other action which may be taken at a meeting of the shareholders, may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by all of the shareholders entitled to vote with respect to the subject matter thereof.

ARTICLE III
DIRECTORS

1. General Powers. The business and affairs of the Corporation shall be managed by its Board of Directors.

2. Number. Tenure and qualifications. The number of directors shall be not less than two (2) nor more than fifteen (15), as determined by the shareholders or the directors subject to A.C.A. Section 4-27-803. Thereafter, the number directors shall be not less than two (2) nor more than fifteen (15), as determined by the shareholders or the directors subject to A.C.A. Section 4-27-803. The directors shall be elected for a term of one (1) year and until their successors are elected and qualified. Directors need not be residents of Arkansas nor shareholders of the Corporation.

3. Vacancies. If a vacancy occurs in the Board of Directors by reason of death or resignation, or if the stockholders fail to fill all the vacancies in the Board of Directors at the annual meeting of stockholders or any meeting for the purpose of electing Directors, the vacancies shall be filled by the affirmative vote of a majority of the remaining members of the Board of Directors. Any vacancy caused by removal of a director shall be filled by the shareholders and may be filled at the shareholders' meeting at which the vacancy is created or at a subsequent meeting.

4. Resignations. A Director may resign at any time by filing his written resignation with the Secretary.

5. Removal. A Director may be removed at any time, with or without cause, by a special stockholders' meeting called expressly for that purpose.

6. Meetings. Meetings of the Board of Directors shall be held on call for any member after giving notice in writing or otherwise to all members at least twenty-four hours thereto. Notice of any meeting or service of such notice may be waived in writing before or after the meeting by a Director or by attendance at such meeting. No irregularity of notice of such meeting shall invalidate such meeting or any proceeding thereat.

7. Quorum. A quorum of any meeting of the Board of Directors shall consist of a majority of the entire membership of the Board. A majority of such quorum shall decide any question that may come before the meeting.

8. Informal Action. Action taken by a majority of the Directors without a meeting in respect to any corporate matter shall be valid if, before or after such action, all Board members sign and file with the Secretary for inclusion in the Corporate Minute Book a memorandum showing (a) the nature of the action taken, (b) the consent of each Board member, and (c) the names of Directors approving the Directors opposing such action.

9. Proxies. Directors may not vote by proxy.

10. Election of Officers. Officers of the Corporation shall be elected by the Board of Directors and shall serve at the pleasure of the Board of Directors subject to any contracts of employment entered into by the Corporation. The Board of Directors shall fix the compensation of all officers of the Corporation.

ARTICLE IV
OFFICERS

1. Numbers. The offices of the Corporation shall be a Chairman, a Vice Chairman, a Secretary, a Treasurer and such other officers as may be elected in accordance with these bylaws. If there is only one (1) shareholder, any two (2) or more offices may be held by the same person. If there is more than one (1) shareholder any two (2) or more offices may be held by the same person.

2. Vacancies. When a vacancy occurs in one of the executive offices by death, resignation or otherwise, it shall be filled by the Board of Directors. The officer so selected shall hold office until his successor is chosen and qualified.

3. Execution of Written Instruments. The Board of Directors may authorize any one (1) or more officers or employees to execute contracts in the ordinary course of business on behalf of the Corporation, and such authority may be general or confined to specific instances.

4. Checks and Notes. Checks, notes, drafts and demands for money shall be signed by any one (1) or more officers or employees who may from time to time be designated by the Board of Directors.

5. Voting Shares in Other Corporations. In the absence of other arrangements by the Board of Directors, shares of stock issued by any other corporation and owned or controlled by this Corporation may be voted at any shareholders meeting of the other corporation by the President of this Corporation or, if he is not present at the meeting, by the Vice-President of this Corporation; and in the event the President nor the Vice-President is to be present at a meeting, the shares may be voted by such person as the President and Secretary of the Corporation shall by duly elected proxy designate to represent the Corporation at the meeting.

ARTICLE V
INDEMNITY

1. Directors and Officers Indemnification. Every person who was or is a party or is threatened to be made a party to, or is involved in, any action, suit or proceeding, whether civil, criminal, administrative, or investigative, by reason of the fact that he is or was a director or officer of another corporation, or as its enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under and pursuant to any procedure specified in the Arkansas Business Corporation Act of the State of Arkansas, as amended and as the same may be amended hereafter, against all expenses, liabilities, and losses (including attorneys' fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection therewith. Such right of indemnification shall be a contract right that may be enforced in any lawful manner by such person. Such right of indemnification shall not be exclusive of any other right which such statement, he shall be entitled to his rights of indemnification under any agreement, vote of stockholders, provision of law or otherwise, as well as his rights under this paragraph. The board of directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have power to indemnify such person.

2. Advancement of Expenses. Expenses incurred by a director or officer of the Corporation in defending a civil or criminal action, suit or proceeding by reason of the fact that he is, or was, a director or officer of the Corporation (or was serving at the Corporation's request as a director or officer of another corporation, or as its representative in a partnership, joint venture, trust or other enterprise) shall be paid by the Corporation in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by, or on behalf of, such person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Corporation as authorized by relevant provision of the Arkansas Business Corporation Act as the same now exists or as it may hereafter be amended.

ARTICLE VI
AMENDMENTS

Bylaws may be adopted, amended or repealed at any meeting of the Board of Directors by the vote of a majority thereof, unless the Articles of Incorporation provide for the adoption, amendment or repeal by the shareholders, in which event action thereon may be taken at any meeting of the shareholders by vote of a majority of the voting shares outstanding and a majority of the outstanding shares of any other class which may be substantially adversely affected by such action.

CERTIFICATE OF ADOPTION

The foregoing Restated Bylaws of the Corporation have been duly adopted this 13th day of March, 2006, by action of the Board of Directors of the Corporation pursuant to the laws of this State.

IN TESTIMONY THEREOF, witness the hand of the undersigned as Secretary of the Corporation on such date.

(SEAL)

/s/ C. RANDALL SIMS
----------------------------------------
C. Randall Sims, Secretary

APPROVED:

/s/ JOHN W. ALLISON
----------------------------------------
John W. Allison, Chairman

Exhibit 4.7

COMMUNITY FINANCIAL GROUP, INC.,
AS ISSUER

INDENTURE

DATED AS OF SEPTEMBER 7, 2000

STATE STREET BANK AND TRUST COMPANY, OF CONNECTICUT, NATIONAL
ASSOCIATION,
AS TRUSTEE

JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

DUE 2030

TABLE OF CONTENTS

                                                                            Page
                                                                            ----
ARTICLE I. DEFINITIONS ..................................................     1
   Section 1.1.   Definitions ...........................................     1

ARTICLE II. DEBT SECURITIES .............................................     8
   Section 2.1.   Authentication and Dating .............................     8
   Section 2.2.   Form of Trustee's Certificate of Authentication .......     8
   Section 2.3.   Form and Denomination of Debt Securities ..............     9
   Section 2.4.   Execution of Debt Securities ..........................     9
   Section 2.5.   Exchange and Registration of Transfer of Debt
                  Securities ............................................     9
   Section 2.6.   Mutilated, Destroyed, Lost or Stolen Debt Securities ..    11
   Section 2.7.   Temporary Debt Securities .............................    11
   Section 2.8.   Payment of Interest and Additional Interest ...........    12
   Section 2.9.   Cancellation of Debt Securities Paid, etc .............    13
   Section 2.10.  Computation of Interest ...............................    13
   Section 2.11.  Extension of Interest Payment Period ..................    13
   Section 2.12.  CUSIP Numbers .........................................    14

ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY ........................    14
   Section 3.1.   Payment of Principal, Premium and Interest; Agreed
                  Treatment of the Debt Securities ......................    14
   Section 3.2.   Offices for Notices and Payments, etc .................    15
   Section 3.3.   Appointments to Fill Vacancies in Trustee's Office ....    15
   Section 3.4.   Provision as to Paying Agent ..........................    15
   Section 3.5.   Certificate to Trustee ................................    16
   Section 3.6.   Additional Sums .......................................    16
   Section 3.7.   Compliance with Consolidation Provisions ..............    17
   Section 3.8.   Limitation on Dividends ...............................    17
   Section 3.9.   Covenants as to the Trust .............................    17

ARTICLE IV. SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND
            THE TRUSTEE .................................................    18
   Section 4.1.   Securityholders' Lists ................................    18
   Section 4.2.   Preservation and Disclosure of Lists ..................    18

ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF
           DEFAULT ......................................................    19
   Section 5.1.   Events of Default .....................................    19
   Section 5.2.   Payment of Debt Securities on Default; Suit Therefor ..    20
   Section 5.3.   Application of Moneys Collected by Trustee ............    22
   Section 5.4.   Proceedings by Securityholders ........................    22
   Section 5.5.   Proceedings by Trustee ................................    23
   Section 5.6.   Remedies Cumulative and Continuing; Delay or Omission
                  Not a Waiver ..........................................    23
   Section 5.7.   Direction of Proceedings and Waiver of Defaults by
                  Majority of Securityholders ...........................    23

   Section 5.8.   Notice of Defaults ....................................    24
   Section 5.9.   Undertaking to Pay Costs ..............................    24

ARTICLE VI. CONCERNING THE TRUSTEE ......................................    24
   Section 6.1.   Duties and Responsibilities of Trustee ................    24
   Section 6.2.   Reliance on Documents, Opinions, etc ..................    25
   Section 6.3.   No Responsibility for Recitals, etc ...................    26
   Section 6.4.   Trustee, Authenticating Agent, Paying Agents, Transfer
                  Agents or Registrar May Own Debt Securities ...........    26
   Section 6.5.   Moneys to be Held in Trust ............................    27
   Section 6.6.   Compensation and Expenses of Trustee ..................    27
   Section 6.7.   Officers' Certificate as Evidence .....................    27
   Section 6.8.   Eligibility of Trustee ................................    28
   Section 6.9.   Resignation or Removal of Trustee .....................    28
   Section 6.10.  Acceptance by Successor Trustee .......................    29
   Section 6.11.  Succession by Merger, etc .............................    30
   Section 6.12.  Authenticating Agents .................................    30

ARTICLE VII. CONCERNING THE SECURITYHOLDERS .............................    31
   Section 7.1.   Action by Securityholders .............................    31
   Section 7.2.   Proof of Execution by Securityholders .................    31
   Section 7.3.   Who Are Deemed Absolute Owners ........................    32
   Section 7.4.   Debt Securities Owned by Company Deemed Not
                  Outstanding ...........................................    32
   Section 7.5.   Revocation of Consents; Future Holders Bound ..........    32

ARTICLE VIII. SECURITYHOLDERS' MEETINGS .................................    33
   Section 8.1.   Purposes of Meetings ..................................    33
   Section 8.2.   Call of Meetings by Trustee ...........................    33
   Section 8.3.   Call of Meetings by Company or Securityholders ........    33
   Section 8.4.   Qualifications for Voting .............................    33
   Section 8.5.   Regulations ...........................................    33
   Section 8.6.   Voting ................................................    34
   Section 8.7.   Quorum; Actions .......................................    34

ARTICLE IX. SUPPLEMENTAL INDENTURES .....................................    35
   Section 9.1.   Supplemental Indentures without Consent of
                  Securityholders .......................................    35
   Section 9.2.   Supplemental Indentures with Consent of
                  Securityholders .......................................    36
   Section 9.3.   Effect of Supplemental Indentures .....................    37
   Section 9.4.   Notation on Debt Securities ...........................    37
   Section 9.5.   Evidence of Compliance of Supplemental Indenture to be
                  Furnished to Trustee ..................................    37

ARTICLE X. REDEMPTION OF SECURITIES .....................................    37
   Section 10.1.  Optional Redemption ...................................    37
   Section 10.2.  Special Event Redemption ..............................    37
   Section 10.3.  Notice of Redemption; Selection of Debt Securities ....    38
   Section 10.4.  Payment of Debt Securities Called for Redemption ......    38

ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE ...........    39
   Section 11.1.  Company May Consolidate, etc., on Certain Terms .......    39
   Section 11.2.  Successor Entity to be Substituted ....................    39
   Section 11.3.  Opinion of Counsel to be Given to Trustee .............    40

ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE ....................    40
   Section 12.1.  Discharge of Indenture ................................    40
   Section 12.2.  Deposited Moneys to be Held in Trust by Trustee .......    40
   Section 12.3.  Paying Agent to Repay Moneys Held .....................    41
   Section 12.4.  Return of Unclaimed Moneys ............................    41

ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
              DIRECTORS .................................................    41
   Section 13.1.  Indenture and Debt Securities Solely Corporate
                  Obligations ...........................................    41

ARTICLE XIV. MISCELLANEOUS PROVISIONS ...................................    41
   Section 14.1.  Successors ............................................    41
   Section 14.2.  Official Acts by Successor Entity .....................    41
   Section 14.3.  Surrender of Company Powers ...........................    41
   Section 14.4.  Addresses for Notices, etc ............................    41
   Section 14.5.  Governing Law .........................................    42
   Section 14.6.  Evidence of Compliance with Conditions Precedent ......    42
   Section 14.7.  Non-Business Days .....................................    42
   Section 14.8.  Table of Contents, Headings, etc ......................    42
   Section 14.9.  Execution in Counterparts .............................    42
   Section 14.10. Separability ..........................................    42
   Section 14.11. Assignment ............................................    43
   Section 14.12. Acknowledgment of Rights ..............................    43

ARTICLE XV. SUBORDINATION OF DEBT SECURITIES ............................    43
   Section 15.1.  Agreement to Subordinate ..............................    43
   Section 15.2.  Default on Senior Indebtedness ........................    43
   Section 15.3.  Liquidation, Dissolution, Bankruptcy ..................    44
   Section 15.4.  Subrogation ...........................................    45
   Section 15.5.  Trustee to Effectuate Subordination ...................    45
   Section 15.6.  Notice by the Company .................................    45
   Section 15.7.  Rights of the Trustee; Holders of Senior
                  Indebtedness ..........................................    46
   Section 15.8.  Subordination May Not Be Impaired .....................    46

Exhibit A Form of Junior Subordinated Deferrable Interest Debenture

iii

THIS INDENTURE, dated as of September 7, 2000, between Community Financial Group, Inc., an Arkansas corporation (hereinafter sometimes called the "Company"), and State Street Bank and Trust Company of Connecticut, National Association, a national banking association organized under the laws of the United States of America, as debt securities trustee (hereinafter sometimes called the "Trustee"),

WITNESSETH:

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its 10.60% Junior Subordinated Deferrable Interest Debentures due 2030 (the "Debt Securities") under this Indenture to provide, among other things, for the execution and authentication, delivery and administration thereof, the Company has duly authorized the execution of this Indenture; and

WHEREAS, all acts and things necessary to make this Indenture a valid agreement according to its terms, have been done and performed;

NOW, THEREFORE, This Indenture Witnesseth:

In consideration of the premises, and the purchase of the Debt Securities by the holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Debt Securities as follows:

ARTICLE I.
DEFINITIONS

SECTION 1.1. DEFINITIONS. The terms defined in this Section 1.1 (except as herein 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 1.1. All accounting terms used herein and not expressly defined shall have the meanings assigned to such terms in accordance with generally accepted accounting principles and the term "generally accepted accounting principles" means such accounting principles as are generally accepted in the United States at the time of any computation. The words "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.

"Additional Interest" means interest, if any, that shall accrue on any interest on the Debt Securities the payment of which has not been made on the applicable Interest Payment Date and which shall accrue at the Interest Rate, compounded semi-annually (to the extent permitted by law).

"Additional Sums" has the meaning set forth in Section 3.6.

"Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder.

"Authenticating Agent" means any agent or agents of the Trustee which at the time shall be appointed and acting pursuant to Section 6.12.

"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 or the executive committee or any other duly authorized designated officers of the Company.

"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 and delivered to the Trustee.

"Business Day" means any day other than a Saturday, Sunday or any other day on which banking institutions in New York City or Hartford, Connecticut are permitted or required by any applicable law to close.

"Capital Securities" means undivided beneficial interests in the assets of Community Financial Statutory Trust I which rank pari passu with Common Securities issued by the Trust; provided, however, that upon the occurrence of an Event of Default (as defined in the Declaration), the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities.

"Capital Securities Guarantee" means the guarantee agreement that the Company enters into with State Street Bank and Trust Company of Connecticut, National Association, as guarantee trustee, or other Persons that operates directly or indirectly for the benefit of holders of Capital Securities of the Trust.

"Capital Treatment Event" means the receipt by the Company of an opinion of counsel experienced in such matters that, as a result of the occurrence of any amendment to, or change (including any announced prospective change) in, the laws of the United States or any political subdivision thereof or therein, or as the result of any official or administrative pronouncement or action or decision interpreting or applying such laws, rules or regulations, which amendment or change is effective or which pronouncement, action or decision is announced on or after the date of issuance of the Debt Securities, there is more than an insubstantial risk that the Company will not be entitled to treat an amount equal to the aggregate Liquidation Amount of the Debt Securities as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company; provided, however, that the inability of the Company to treat all or any portion of the Liquidation Amount of the Debt Securities as Tier 1 Capital shall not constitute the basis for a Capital Treatment Event if such inability results from the Company having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve now or may hereafter accord Tier 1 Capital treatment in excess of the amount which may qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines for the Federal Reserve; provided further, however, that the distribution of Debt Securities in connection with the dissolution of the Trust shall not in and of itself constitute a Capital Treatment Event unless such dissolution shall have occurred in connection with a Tax Event or an Investment Company Event.

"Certificate" means a certificate signed by any one of the principal executive officer, the principal financial officer or the principal accounting officer of the Company.

"Common Securities" means undivided beneficial interests in the assets of the Trust which rank pari passu with Capital Securities issued by the Trust; provided, however, that upon the occurrence of an Event of Default (as defined in the Declaration), the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities.

"Company" means Community Financial Group, Inc., an Arkansas corporation, and, subject to the provisions of Article XI, shall include its successors and assigns.

practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life. If no United States Treasury security has a maturity which is within a period from three months before to three months after September 7, 2010, the two most closely corresponding United States Treasury securities, as selected by the Quotation Agent, shall be used as the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or extrapolated on a straight-line basis, rounding to the nearest month using such securities.

"Comparable Treasury Price" means (a) the average of five Reference Treasury Dealer Quotations for such Special Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (b) if the Quotation Agent obtains fewer than five such Reference Treasury Dealer Quotations, the average of all such Quotations.

"Custodian" means any receiver, trustee, assignee, liquidator, or similar official under any Bankruptcy Law.

"Debt Security" or "Debt Securities" has the meaning stated in the first recital of this Indenture.

"Debt Security Register" has the meaning specified in Section 2.5.

"Declaration" means the Amended and Restated Declaration of Trust of the Trust, as amended or supplemented from time to time.

"Default" means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

"Defaulted Interest" has the meaning set forth in Section 2.8.

"Event of Default" means any event specified in Section 5.1, continued for the period of time, if any, and after the giving of the notice, if any, therein designated.

"Extension Period" has the meaning set forth in Section 2.11.

"Federal Reserve" means the Board of Governors of the Federal Reserve System.

"Indenture" means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented, or both.

"Institutional Trustee" has the meaning set forth in the Declaration.

"Interest Payment Date," means each March 7 and September 7 during the term of this Indenture.

"Interest Rate" means 10.60%.

"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 written change (including any announced prospective change) in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, 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 of 1940, as amended which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Debt Securities.

"Liquidation Amount" means the stated amount of $ 1,000 per Trust Security.

"Maturity Date" means September 7, 2030.

"Officers' Certificate" means a certificate signed by the [Chairman of the Board, the Vice Chairman, the President, any Managing Director or any Vice President, and by the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or an Assistant Secretary] of the Company, and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 14.6 if and to the extent required by the provisions of such Section.

"Opinion of Counsel" means an opinion in writing signed by legal counsel, who may be an employee of or counsel to the Company, or may be other counsel reasonably satisfactory to the Trustee. Each such opinion shall include the statements provided for in Section 14.6 if and to the extent required by the provisions of such Section.

The term "outstanding," when used with reference to Debt Securities, means, subject to the provisions of Section 7.4, as of any particular time, all Debt Securities authenticated and delivered by the Trustee or the Authenticating Agent under this Indenture, except:

(a) Debt Securities theretofore canceled by the Trustee or the Authenticating Agent or delivered to the Trustee for cancellation;

(b) Debt Securities, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than 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 Debt Securities, or portions thereof, are to be redeemed prior to maturity thereof, notice of such redemption shall have been given as provided in Article XIV or provision satisfactory to the Trustee shall have been made for giving such notice;

(c) Debt Securities paid pursuant to Section 2.6 or in lieu of or in substitution for which other Debt Securities shall have been authenticated and delivered pursuant to the terms of Section 2.6 unless proof satisfactory to the Company and the Trustee is presented that any such Debt Securities are held by bona fide holders in due course; and

(d) Debt Securities held in accordance with Section 7.4 hereof.

"Person" means any individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization or government or any agency or political subdivision thereof.

"Predecessor Security" of any particular Debt Security means every previous Debt Security evidencing all or a portion of the same debt as that evidenced by such particular Debt Security; and, for the purposes of this definition, any Debt Security authenticated and delivered under Section 2.6 in lieu of a lost, destroyed or stolen Debt Security shall be deemed to evidence the same debt as the lost, destroyed or stolen Debt Security.

"Primary Treasury Dealer" means either a nationally recognized primary United States Government securities dealer or an entity of nationally recognized standing in matters pertaining to the quotation of treasury securities that is reasonably acceptable to the Company and the Trustee.

the execution of this Indenture shall be 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103.

"Quotation Agent" means State Street Bank and Trust Company or its designee, and its successors; provided, however, that if the foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

"Redemption Date" has the meaning set forth in Section 10.1.

"Redemption Price" means the price set forth in the following table for any Redemption Date that occurs within the twelve-month period beginning in the relevant year indicated below, expressed as the percentage of the principal amount of the Debt Securities being redeemed:

Year Beginning                Percentage
--------------                ----------
September 7, 2010              105.300%
September 7, 2011              104.770%
September 7, 2012              104.240%
September 7, 2013              103.710%
September 7, 2014              103.180%
September 7, 2015              102.650%
September 7, 2016              102.120%
September 7, 2017              101.590%
September 7, 2018              101.060%
September 7, 2019              100.530%
September 7, 2020 and after    100.000%

plus accrued and unpaid interest on such Debt Securities to the Redemption Date.

"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any other Primary Treasury Dealer selected by the Trustee after consultation with the Company.

"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Redemption Date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Quotation Agent by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

"Remaining Life" means, with respect to any Debt Security, the period from the Special Redemption Date for such Debt Security to September 7, 2010.

secretary, the treasurer, any assistant treasurer, any trust officer or other officer of the Principal Trust Office of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

"Securities Act" means the Securities Act of 1933, as amended from time to time or any successor legislation.

"Securityholder," "holder of Debt Securities," or other similar terms, means any Person in whose name at the time a particular Debt Security is registered on the register kept by the Company or the Trustee for that purpose in accordance with the terms hereof.

"Senior Indebtedness" means, with respect to the Company, (i) the principal, premium, if any, and interest in respect of (A) indebtedness of the Company for money borrowed and (B) indebtedness evidenced by securities, debentures, notes, bonds or other similar instruments issued by the Company;
(ii) all capital lease obligations of the Company; (iii) all obligations of the Company issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Company and all obligations of the Company under any title retention agreement (but excluding trade accounts payable arising in the ordinary course of business); (iv) all obligations of the Company for the reimbursement of any letter of credit, any banker's acceptance, any security purchase facility, any repurchase agreement or similar arrangement, any interest rate swap, any other hedging arrangement, any obligation under options or any similar credit or other transaction; (v) all obligations of the type referred to in clauses (i) through (iv) above of other Persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) above of other Persons secured by any lien on any property or asset of the Company (whether or not such obligation is assumed by 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 or pari passu in right of payment to the Debt Securities, except for
(1) any indebtedness between or among the Company and any non-financial institution Affiliate of the Company and (2) Debt Securities issued pursuant to this Indenture and guarantees in respect of such Debt Securities. Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the subordination provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness.

"Special Event" means any of a Capital Treatment Event, an Investment Company Event or a Tax Event.

"Special Redemption Date" has the meaning set forth in Section 10.2.

"Special Redemption Price" means (a) if the Special Redemption Date is before September 7, 2010, the greater of (i) 100% of the principal amount of the Debt Securities, plus accrued and unpaid interest on the Debt Securities to such Special Redemption Date, or (ii) as determined by a Quotation Agent, the sum of (A) the present value of the principal amount of the Debt Securities set forth in the table under the definition of "Redemption Price" for the September 7, 2010 Redemption Date and the present value of interest payable on the Debt Securities from such Special Redemption Date to September 7, 2010 (the "Remaining Life"), each discounted to the Special Redemption Date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months at the Treasury Rate), plus (B) accrued and unpaid interest on the Debt Securities to such Special Redemption Date, or (b) if the Special Redemption Date is on or after September 7, 2010, the price for the Debt Securities set forth in the table under the definition of "Redemption Price" for such Special Redemption Date.

"Subsidiary" means with respect to any Person, (i) any corporation at least a majority of the outstanding voting stock of which is 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, (ii) any general partnership, joint venture or similar entity, at least a majority of the outstanding partnership or similar interests of which 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 (iii) any limited partnership of which such Person or any of its Subsidiaries is a general partner. For the purposes of this definition, "voting stock" 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.

"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 (including any private letter ruling, technical advice memorandum, field service advice, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations (an "Administrative Action")) or judicial decision interpreting or applying such laws or regulations, regardless of whether such Administrative Action or judicial decision is issued to or in connection with a proceeding involving the Company or the Trust and whether or not subject to review or appeal, which amendment, clarification, change, Administrative Action or decision is enacted, promulgated or announced, in each case on or after the date of issuance of the Debt Securities, there is more than an insubstantial risk that: (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Debt Securities; (ii) interest payable by the Company on the Debt Securities is not, or within 90 days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

"Treasury Rate" means (i) the yield, under the heading which represents the average for the week immediately prior to the date of calculation, appearing in the most recently published statistical release designated H.15 (519) or any successor publication which is published weekly by the Federal Reserve and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Remaining Life (if no maturity is within three months before or after the Remaining Life, yields for the two published maturities most closely corresponding to the Remaining Life shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Special Redemption Date. The Treasury Rate shall be calculated by the Quotation Agent on the third Business Day preceding the Special Redemption Date.

"Trust" shall mean Community Financial Statutory Trust I, a Connecticut statutory trust, or any other similar trust created for the purpose of issuing Capital Securities in connection with the issuance of Debt Securities under this Indenture, of which the Company is the sponsor.

"Trust Securities" means Common Securities and Capital Securities of the Trust.

"Trustee" means the Person identified as "Trustee" in the first paragraph hereof, and, subject to the provisions of Article VI hereof, shall also include its successors and assigns as Trustee hereunder.

ARTICLE II.
DEBT SECURITIES

SECTION 2.1. AUTHENTICATION AND DATING. Upon the execution and delivery of this Indenture, or from time to time thereafter, Debt Securities in an aggregate principal amount not in excess of $3,093,000 may be executed and delivered by the Company to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Debt Securities to or upon the written order of the Company, signed by [its Chairman of the Board of Directors, Vice Chairman, the President, one of its Managing Directors or one of its Vice Presidents and by its Secretary, any Assistant Secretary, Treasurer or any Assistant Treasurer], without any further action by the Company hereunder. In authenticating such Debt Securities, and accepting the additional responsibilities under this Indenture in relation to such Debt Securities, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon:

(a) a copy of any Board Resolution or Board Resolutions relating thereto and, if applicable, an appropriate record of any action taken pursuant to such resolution, in each case certified by the Secretary or an Assistant Secretary of the Company as the case may be; and

(b) an Opinion of Counsel prepared in accordance with Section 14.6 which shall also state:

(1) that such Debt Securities, when authenticated and delivered by the Trustee and issued by the Company in each case in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company subject to or limited by applicable bankruptcy, insolvency, reorganization, conservatorship, receivership, moratorium and other statutory or decisional laws relating to or affecting creditors' rights or the reorganization of financial institutions (including, without limitation, preference and fraudulent conveyance or transfer laws), heretofore or hereafter enacted or in effect, affecting the rights of creditors generally; and

(2) that all laws and requirements in respect of the execution and delivery by the Company of the Debt Securities, have been complied with and that authentication and delivery of the Debt Securities by the Trustee will not violate the terms of this Indenture.

The Trustee shall have the right to decline to authenticate and deliver any Debt Securities under this Section if the Trustee, being advised in writing by counsel, determines that such action may not lawfully be taken or if a Responsible Officer of the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing holders.

The definitive Debt Securities shall be typed, printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debt Securities, as evidenced by their execution of such Debt Securities.

SECTION 2.2. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The Trustee's certificate of authentication on all Debt Securities shall be in substantially the following form:

This is one of the Debt Securities referred to in the within-mentioned Indenture.

State Street Bank and Trust Company of Connecticut, National Association, as Trustee

By
Authorized Signer

SECTION 2.3. FORM AND DENOMINATION OF DEBT SECURITIES. The Debt Securities shall be in registered, certificated form without coupons and in minimum denominations of $500,000 and any multiple of $1,000 in excess thereof. Any attempted transfer of the Debt Securities in a block having an aggregate principal amount of less than $500,000 shall be deemed to be voided and of no legal effect whatsoever. Any such purported transferee shall be deemed not to be a holder of such Debt Securities for any purpose, including, but not limited to the receipt of payments on such Debt Securities, and such purported transferee shall be deemed to have no interest whatsoever in such Debt Securities. The Debt Securities shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as the officers executing the same may determine with the approval of the Trustee as evidenced by the execution and authentication thereof.

SECTION 2.4. EXECUTION OF DEBT SECURITIES. The Debt Securities shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chairman of the Board of Directors, Vice Chairman, President, one of its Managing Directors or one of its Executive Vice Presidents, Senior Vice Presidents or Vice Presidents and by the manual or facsimile signature of its Secretary, one of its Assistant Secretaries, its Treasurer or one of its Assistant Treasurers, under its corporate seal which may be affixed thereto or printed, engraved or otherwise reproduced thereon, by facsimile or otherwise, and which need not be attested. Only such Debt Securities as shall bear thereon a certificate of authentication substantially in the form herein before recited, executed by the Trustee or the Authenticating Agent by the manual signature of an authorized signer, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee or the Authenticating Agent upon any Debt Security executed by the Company shall be conclusive evidence that the Debt Security so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture.

In case any officer of the Company who shall have signed any of the Debt Securities shall cease to be such officer before the Debt Securities so signed shall have been authenticated and delivered by the Trustee or the Authenticating Agent, or disposed of by the Company, such Debt Securities nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Debt Securities had not ceased to be such officer of the Company; and any Debt Security may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Debt Security, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer.

Every Debt Security shall be dated the date of its authentication.

SECTION 2.5. EXCHANGE AND REGISTRATION OF TRANSFER OF DEBT SECURITIES. The Company shall cause to be kept, at the office or agency maintained for the purpose of registration of transfer and for exchange as provided in Section 3.2, a register (the "Debt Security Register") for the Debt Securities issued hereunder in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration and transfer of all Debt Securities as in this Article II provided. The Debt Security Register shall be in written form or in any other form capable of being converted into written form within a reasonable time.

Debt Securities to be exchanged may be surrendered at the principal corporate trust office of the Trustee or at any office or agency to be maintained by the Company for such purpose as provided in Section 3.2, and the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in exchange therefor the Debt Security or Debt Securities which the Securityholder making the exchange shall be entitled to receive. Upon due presentment for registration of transfer of any Debt Security at the principal corporate trust office of the Trustee or at any office or agency of the Company maintained for such purpose as provided in Section 3.2, the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in the name of the transferee or transferees a new Debt Security for a like aggregate principal amount. Registration or registration of transfer of any Debt Security by the Trustee or by any agent of the Company appointed pursuant to Section 3.2, and delivery of such Debt Security, shall be deemed to complete the registration or registration of transfer of such Debt Security.

All Debt Securities presented for registration of transfer or for exchange or payment shall (if so required by the Company or the Trustee or the Authenticating Agent) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee or the Authenticating Agent duly executed by the holder or his attorney duly authorized in writing.

No service charge shall be made for any exchange or registration of transfer of Debt Securities, but the Company or the Trustee may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection therewith.

The Company or the Trustee shall not be required to exchange or register a transfer of any Debt Security for a period of 15 days next preceding the date of selection of Debt Securities for redemption.

Notwithstanding anything herein to the contrary, Debt Securities may not be transferred except in compliance with the restricted securities legend set forth below (the "Restrictive Securities Legend"), unless otherwise determined by the Company, upon the advice of counsel expert in securities law, in accordance with applicable law:

DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

SECTION 2.6. MUTILATED, DESTROYED, LOST OR STOLEN DEBT SECURITIES. In case any Debt Security shall become mutilated or be destroyed, lost or stolen, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, a new Debt Security bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Debt Security, or in lieu of and in substitution for the Debt Security so destroyed, lost or stolen. In every case the applicant for a substituted Debt Security shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of such Debt Security and of the ownership thereof.

The Trustee may authenticate any such substituted Debt Security and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Debt Security, 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 connected therewith. In case any Debt Security which has matured or is about to mature or has been called for redemption in full shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Debt Security, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Debt Security) if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless and, in case of destruction, loss or theft, evidence satisfactory to the Company and to the Trustee of the destruction, loss or theft of such Debt Security and of the ownership thereof.

Every substituted Debt Security issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any such Debt Security is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debt Security shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debt Securities duly issued hereunder. All Debt Securities shall be held and owned upon the express condition that, to the extent permitted by applicable law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debt Securities and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

SECTION 2.7. TEMPORARY DEBT SECURITIES. Pending the preparation of definitive Debt Securities, the Company may execute and the Trustee shall authenticate and make available for delivery temporary Debt Securities that are typed, printed or lithographed. Temporary Debt Securities shall be issuable in any authorized denomination, and substantially in the form of the definitive Debt Securities in lieu of which they are issued but with such omissions, insertions and variations as may be appropriate for temporary Debt Securities, all as may be determined by the Company. Every such temporary Debt Security shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Debt Securities. Without unreasonable delay the Company will execute and deliver to the Trustee or the Authenticating Agent

definitive Debt Securities and thereupon any or all temporary Debt Securities may be surrendered in exchange therefor, at the principal corporate trust office of the Trustee or at any office or agency maintained by the Company for such purpose as provided in Section 3.2, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in exchange for such temporary Debt Securities a like aggregate principal amount of such definitive Debt Securities. Such exchange shall be made by the Company at its own expense and without any charge therefor except that in case of any such exchange involving a registration of transfer the Company may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. Until so exchanged, the temporary Debt Securities shall in all respects be entitled to the same benefits under this Indenture as definitive Debt Securities authenticated and delivered hereunder.

SECTION 2.8. PAYMENT OF INTEREST AND ADDITIONAL INTEREST. Interest at the Interest Rate and any Additional Interest on any Debt Security that is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Debt Securities shall be paid to the Person in whose name said Debt Security (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment except that interest and any Additional Interest payable on the Maturity Date shall be paid to the Person to whom principal is paid. In the event that any Debt Security or portion thereof is called for redemption and the redemption date is subsequent to a regular record date with respect to any Interest Payment Date and prior to such Interest Payment Date, interest on such Debt Security will be paid upon presentation and surrender of such Debt Security.

Any interest on any Debt Security, other than Additional Interest, that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Company to the Persons in whose names such Debt Securities (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner: the Company shall notify the Trustee in writing at least 25 days prior to the date of the proposed payment of the amount of Defaulted Interest proposed to be paid on each such Debt Security and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Securityholder at its address as it appears in the Debt Security Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Debt Securities (or their respective Predecessor Securities) are registered on such special record date and shall be no longer payable.

The Company may make payment of any Defaulted Interest on any Debt Securities in any other lawful manner after notice given by the Company to the Trustee of the proposed payment method; provided, however, the Trustee in its sole discretion deems such payment method to be practical.

Any interest scheduled to become payable on an Interest Payment Date occurring during an Extension Period shall not be Defaulted Interest and shall be payable on such other date as may be specified in the terms of such Debt Securities.

The term "regular record date" as used in this Section shall mean the close of business on the 15th day next preceding the applicable Interest Payment Date.

Subject to the foregoing provisions of this Section, each Debt Security delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debt Security shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Debt Security.

SECTION 2.9. CANCELLATION OF DEBT SECURITIES PAID, ETC. All Debt Securities surrendered for the purpose of payment, redemption, exchange or registration of transfer, shall, if surrendered to the Company or any paying agent, be surrendered to the Trustee and promptly canceled by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be promptly canceled by it, and no Debt Securities shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. All Debt Securities canceled by any Authenticating Agent shall be delivered to the Trustee. The Trustee shall destroy all canceled Debt Securities unless the Company otherwise directs the Trustee in writing. If the Company shall acquire any of the Debt Securities, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Debt Securities unless and until the same are surrendered to the Trustee for cancellation.

SECTION 2.10. COMPUTATION OF INTEREST. The amount of interest payable for any period will be computed on the basis of a 360-day year of twelve 30-day months.

SECTION 2.11. EXTENSION OF INTEREST PAYMENT PERIOD. So long as no Event of Default has occurred and is continuing, the Company shall have the right, from time to time, and without causing an Event of Default, to defer payments of interest on the Debt Securities by extending the interest payment period on the Debt Securities at any time and from time to time during the term of the Debt Securities, for up to 10 consecutive semi-annual periods (each such extended interest payment period, an "Extension Period"), during which Extension Period no interest shall be due and payable. No Extension Period may end on a date other than an Interest Payment Date. At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Debt Securities (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date; provided further, however, that during any such Extension Period, the Company shall not and shall not permit any Affiliate to (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's or such Affiliate's capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debt Securities (other than, with respect to clauses (i) or (ii) above, (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of any exchange or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (c) the purchase of

fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or
(f) payments under the Capital Securities Guarantee). Prior to the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest to the extent permitted by applicable law. The Company must give the Trustee notice of its election to begin such Extension Period at least 5 Business Days prior to the earlier of (i) the date interest on the Debt Securities would have been payable except for the election to begin such Extension Period or (ii) the date such interest is payable, but in any event not less than 5 Business Days prior to such record date. The Trustee shall give notice of the Company's election to begin a new Extension Period to the Securityholders.

SECTION 2.12. CUSIP NUMBERS. The Company in issuing the Debt Securities may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Securityholders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers either as printed on the Debt Securities or as contained in any notice of a redemption and that reliance may be placed only on the other identification numbers printed on the Debt Securities, and any such redemption shall not be affected by any defect in or omission of such numbers. The Company will promptly notify the Trustee in writing of any change in the CUSIP numbers.

ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY

SECTION 3.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST; AGREED TREATMENT OF THE DEBT SECURITIES.

(a) The Company covenants and agrees that it will duly and punctually pay or cause to be paid the principal of and premium, if any, and interest and any Additional Interest on the Debt Securities at the place, at the respective times and in the manner provided in this Indenture and the Debt Securities. Each installment of interest on the Debt Securities may be paid (i) by mailing checks for such interest payable to the order of the holder of Debt Securities entitled thereto as they appear on the registry books of the Company if a request for a wire transfer has not been received by the Company or (ii) by wire transfer to any account with a banking institution located in the United States designated in writing by such Person to the paying agent no later than the related record date. Notwithstanding the foregoing, so long as the holder of this Debt Security is the Institutional Trustee, the payment of the principal of and interest on this Debt Security will be made in immediately available funds at such place and to such account as may be designated by the Institutional Trustee.

(b) The Company will treat the Debt Securities as indebtedness, and the amounts payable in respect of the principal amount of such Debt Securities as interest, for all United States federal income tax

purposes. All payments in respect of such Debt Securities will be made free and clear of United States withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W8 BEN (or any substitute or successor form) establishing its non-United States status for United States federal income tax purposes.

(c) The Company has no present intention to exercise its right under
Section 2.11 to defer payments of interest on the Debt Securities by commencing an Extension Period.

(d) The Company believes that the likelihood that it would exercise its right under Section 2.11 to defer payments of interest on the Debt Securities by commencing an Extension Period at any time during which the Debt Securities are outstanding is remote because of the restrictions that would be imposed on the Company's ability to declare or pay dividends or distributions on, or to redeem, purchase or make a liquidation payment with respect to, any of its outstanding equity and on the Company's ability to make any payments of principal of or interest on, or repurchase or redeem, any of its debt securities that rank pari passu in all respects with (or junior in interest to) the Debt Securities.

SECTION 3.2. OFFICES FOR NOTICES AND PAYMENTS, ETC. So long as any of the Debt Securities remain outstanding, the Company will maintain in Hartford, Connecticut, an office or agency where the Debt Securities may be presented for payment, an office or agency where the Debt Securities may be presented for registration of transfer and for exchange as in this Indenture provided and an office or agency where notices and demands to or upon the Company in respect of the Debt Securities or of this Indenture may be served. The Company will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. Until otherwise designated from time to time by the Company in a notice to the Trustee, or specified as contemplated by Section 2.5, such office or agency for all of the above purposes shall be the office or agency of the Trustee. In case the Company shall fail to maintain any such office or agency in Hartford, Connecticut, or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the principal corporate trust office of the Trustee.

In addition to any such office or agency, the Company may from time to time designate one or more offices or agencies outside Hartford, Connecticut, where the Debt Securities may be presented for registration of transfer and for exchange in the manner provided in this Indenture, and the Company may from time to time rescind such designation, as the Company may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain any such office or agency in Hartford, Connecticut, for the purposes above mentioned. The Company will give to the Trustee prompt written notice of any such designation or rescission thereof.

SECTION 3.3. APPOINTMENTS TO FILL VACANCIES IN TRUSTEE'S OFFICE. The Company, whenever necessary to avoid or fill a vacancy in the office of Trustee, will appoint, in the manner provided in Section 6.9, a Trustee, so that there shall at all times be a Trustee hereunder.

SECTION 3.4. PROVISION AS TO PAYING AGENT.

(a) If the Company shall appoint a paying agent other than the Trustee, it will cause such paying agent to execute and deliver to the Trustee an instrument in which such agent shall agree with the Trustee, subject to the provision of this Section 3.4,

(1) that it will hold all sums held by it as such agent for the payment of the principal of and premium, if any, or interest, if any, on the Debt Securities (whether such sums have been paid to it by the Company or by any other obligor on the Debt Securities) in trust for the benefit of the holders of the Debt Securities;

(2) that it will give the Trustee prompt written notice of any failure by the Company (or by any other obligor on the Debt Securities) to make any payment of the principal of and premium, if any, or interest, if any, on the Debt Securities when the same shall be due and payable; and

(3) that it will, at any time during the continuance of any Event of Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent.

(b) If the Company shall act as its own paying agent, it will, on or before each due date of the principal of and premium, if any, or interest, if any, on the Debt Securities, set aside, segregate and hold in trust for the benefit of the holders of the Debt Securities a sum sufficient to pay such principal, premium or interest so becoming due and will notify the Trustee in writing of any failure to take such action and of any failure by the Company (or by any other obligor under the Debt Securities) to make any payment of the principal of and premium, if any, or interest, if any, on the Debt Securities when the same shall become due and payable.

Whenever the Company shall have one or more paying agents for the Debt Securities, it will, on or prior to each due date of the principal of and premium, if any, or interest, if any, on the Debt Securities, deposit with a paying agent a sum sufficient to pay the principal, premium or interest so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto and (unless such paying agent is the Trustee) the Company shall promptly notify the Trustee in writing of its action or failure to act.

(c) Anything in this Section 3.4 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge with respect to the Debt Securities, or for any other reason, pay, or direct any paying agent to pay to the Trustee all sums held in trust by the Company or any such paying agent, such sums to be held by the Trustee upon the trusts herein contained.

(d) Anything in this Section 3.4 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 3.4 is subject to Sections 12.3 and 12.4.

SECTION 3.5. CERTIFICATE TO TRUSTEE. The Company will deliver to the Trustee on or before 120 days after the end of each fiscal year, so long as Debt Securities are outstanding hereunder, a Certificate stating that in the course of the performance by the signers of their duties as officers of the Company they would normally have knowledge of any default during such fiscal year by the Company in the performance of any covenants contained herein, stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signers have knowledge and the nature and states thereof.

SECTION 3.6. ADDITIONAL SUMS. If and for so long as the Trust is the holder of all Debt Securities and the Trust is required to pay any additional taxes, duties, assessments or other governmental charges as a result of a Tax Event, the Company will pay such additional amounts ("Additional Sums") on the Debt Securities as shall be required so that the net amounts received and retained by the Trust after paying taxes, duties, assessments or other governmental charges will be equal to the amounts the Trust would have received if no such taxes, duties, assessments or other governmental charges had been imposed. Whenever in this Indenture or the Debt Securities there is a reference in any context to the payment of principal of or interest on the Debt Securities, such mention shall be deemed to include mention of payments of the Additional Sums provided for in this paragraph to the extent that, in such context, Additional Sums are, were or would be payable in respect thereof pursuant to the provisions of this paragraph and express mention of the payment of Additional Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Sums in those provisions hereof where such express mention is not made; provided, however, that the deferral of the payment of interest during an Extension

Period pursuant to Section 2.11 shall not defer the payment of any Additional Sums that may be due and payable.

SECTION 3.7. COMPLIANCE WITH CONSOLIDATION PROVISIONS. The Company will not, while any of the Debt Securities 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 Person unless the provisions of Article XI hereof are complied with.

SECTION 3.8. LIMITATION ON DIVIDENDS. If Debt Securities are initially issued to the Trust or a trustee of such trust in connection with the issuance of Trust Securities by the Trust (regardless of whether Debt Securities continue to be held by such Trust) and (i) there shall have occurred and be continuing any event that would constitute an Event of Default, (ii) the Company shall be in default with respect to its payment of any obligations under the Capital Securities Guarantee, or (iii) the Company shall have given notice of its election to defer payments of interest on the Debt Securities by extending the interest payment period as provided herein and such period, or any extension thereof, shall be continuing, then the Company shall not, and shall not allow any Affiliate of the Company to, (x) 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 its Affiliates' capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debt Securities (other than, with respect to clauses (x) and (y) above, (1) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, if any, (2) as a result of any exchange or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (3) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (4) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, (5) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (6) payments under the Capital Securities Guarantee).

SECTION 3.9. COVENANTS AS TO THE TRUST. For so long as the Trust Securities remain outstanding, the Company shall maintain 100% ownership of the Common Securities; provided, however, that any permitted successor of the Company under this Indenture may succeed to the Company's ownership of such Common Securities. The Company, as owner of the Common Securities, shall cause the Trust (a) to remain a statutory trust, except in connection with a distribution of Debt Securities to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, (b) to otherwise continue to be classified as a grantor trust for United States federal income tax purposes and (c) to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Debt Securities.

ARTICLE IV.
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

SECTION 4.1. SECURITYHOLDERS' LISTS. The Company covenants and agrees that it will furnish or caused to be furnished to the Trustee:

(a) on each regular record date for the Debt Securities, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Securityholders of the Debt Securities as of such record date; and

except that no such lists need be furnished under this Section 4.1 so long as the Trustee is in possession thereof by reason of its acting as Debt Security registrar.

SECTION 4.2. PRESERVATION AND DISCLOSURE OF LISTS.

(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 of Debt Securities (1) contained in the most recent list furnished to it as provided in Section 4.1 or (2) received by it in the capacity of Debt Securities registrar (if so acting) hereunder. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished.

(b) In case three or more holders of Debt Securities (hereinafter referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Debt Security for a period of at least 6 months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Debt Securities with respect to their rights under this Indenture or under such Debt Securities and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall within 5 Business Days after the receipt of such application, at its election, either:

(1) afford such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection
(a) of this Section 4.2, or

(2) inform such applicants as to the approximate number of holders of Debt Securities whose names and addresses appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application.

best interests of the holders of all Debt Securities, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If said Commission, as permitted or required by applicable law, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, said Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

(c) Each and every holder of Debt Securities, by receiving and holding the same, agrees with Company and the Trustee that neither the Company nor the Trustee nor any paying agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Debt Securities in accordance with the provisions of subsection (b) of this
Section 4.2, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under said subsection (b).

ARTICLE V.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
UPON AN EVENT OF DEFAULT

SECTION 5.1. EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events (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 Company defaults in the payment of any interest upon any Debt Security when it becomes due and payable, and fails to cure 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; or

(b) the Company defaults in the payment of all or any part of the principal of (or premium, if any, on) any Debt Securities as and when the same shall become due and payable either at maturity, upon redemption (including redemption for any sinking fund), by declaration of acceleration or otherwise; or

(c) the Company defaults in the performance of, or breaches, any of its covenants or agreements in this Indenture or in the terms of the Debt Securities established as contemplated in this Indenture (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the outstanding Debt Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

(d) a court of competent jurisdiction shall enter a decree or order for relief in respect of the Company in an involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of the Company or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

(e) the Company shall commence a voluntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of the Company or of any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due; or

(f) the Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up its business or otherwise terminated its existence except in connection with (i) the distribution of the Debt Securities to holders of such Trust Securities in liquidation of their interests in the Trust, (ii) the redemption of all of the outstanding Trust Securities or (iii) certain mergers, consolidations or amalgamations, each as permitted by the Declaration.

If an Event of Default occurs and is continuing with respect to the Debt Securities, then, and in each and every such case, unless the principal of the Debt Securities shall have already become due and payable, either the Trustee or the holders of not less than 25% in aggregate principal amount of the Debt Securities then outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the entire principal of the Debt Securities and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.

The foregoing provisions, however, are subject to the condition that if, at any time after the principal of the Debt Securities 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 Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Debt Securities and the principal of and premium, if any, on the Debt Securities which shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and Additional Interest) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other amounts due to the Trustee pursuant to Section 6.6, and if any and all Events of Default under this Indenture, other than the non-payment of the principal of or premium, if any, on Debt Securities which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein -- then and in every such case the holders of a majority in aggregate principal amount of the Debt Securities then outstanding, by written notice to the Company and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

In case the Trustee shall have proceeded to enforce any right 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, the Trustee and the holders of the Debt Securities shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the holders of the Debt Securities shall continue as though no such proceeding had been taken.

SECTION 5.2. PAYMENT OF DEBT SECURITIES ON DEFAULT; SUIT THEREFOR. The Company covenants that (a) in case default shall be made in the payment of any installment of interest upon any of the Debt Securities as and when the same shall become due and payable, and such default shall have continued for a period of 30 days, or (b) in case default shall be made in the payment of the principal of or premium, if any, on any of the Debt Securities as and when the same shall have become due and payable, whether at maturity of the Debt Securities or upon redemption or by declaration of acceleration or

otherwise -- then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Debt Securities the whole amount that then shall have become due and payable on all Debt Securities for principal and premium, if any, or interest, or both, as the case may be, with Additional Interest accrued on the Debt Securities (to the extent that payment of such interest is enforceable under applicable law and, if the Debt Securities are held by the Trust or a trustee of such Trust, without duplication of any other amounts paid by the Trust or a trustee in respect thereof); and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including a reasonable compensation to the Trustee, its agents, attorneys and counsel, and any other amounts due to the Trustee under
Section 6.6. In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions 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 any other obligor on such Debt Securities and collect in the manner provided by law out of the property of the Company or any other obligor on such Debt Securities wherever situated the moneys adjudged or decreed to be payable.

(i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Debt Securities and, in case of any judicial proceedings,

(ii) to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all other amounts due to the Trustee under Section 6.6, and of the Securityholders allowed in such judicial proceedings relative to the Company or any other obligor on the Debt Securities, or to the creditors or property of the Company or such other obligor, unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Debt Securities in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or Person performing similar functions in comparable proceedings,

(iii) to collect and receive any moneys or other property payable or deliverable on any such claims, and

(iv) to distribute the same after the deduction of its charges and expenses.

Any receiver, assignee or trustee in bankruptcy or reorganization is hereby authorized by each of the Securityholders to make such payments to the Trustee, and, in the event that the Trustee shall consent to the making of such payments directly to the Securityholders, to pay to the Trustee such amounts as shall be sufficient to cover reasonable compensation to the Trustee, each predecessor Trustee and their respective agents, attorneys and counsel, and all other amounts due to the Trustee under Section 6.6.

Nothing herein contained shall be construed 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 Debt Securities 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.

All rights of action and of asserting claims under this Indenture, or under any of the Debt Securities, may be enforced by the Trustee without the possession of any of the Debt Securities, 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 be for the ratable benefit of the holders of the Debt Securities.

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 Debt Securities, and it shall not be necessary to make any holders of the Debt Securities parties to any such proceedings.

SECTION 5.3. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys collected by the Trustee pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Debt Securities in respect of which moneys have been collected, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid:

First: To the payment of costs and expenses incurred by, and reasonable fees of, the Trustee, its agents, attorneys and counsel, and of all other amounts due to the Trustee under Section 6.6;

Second: To the payment of all Senior Indebtedness of the Company if and to the extent required by Article XV;

Third: To the payment of the amounts then due and unpaid upon Debt Securities for principal (and premium, if any), and interest on the Debt Securities, in respect of which or for the benefit of which money has been collected, ratably, without preference or priority of any kind, according to the amounts due on such Debt Securities for principal (and premium, if any) and interest, respectively; and

Fourth: The balance, if any, to the Company.

SECTION 5.4. PROCEEDINGS BY SECURITYHOLDERS. No holder of any Debt Security shall have any right to institute any suit, action or proceeding for any remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default with respect to the Debt Securities and unless the holders of not less than 25% in aggregate principal amount of the Debt Securities then outstanding shall have given the Trustee a written request to institute such action, suit or proceeding and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action, suit or proceeding; provided, however, that no holder of Debt Securities shall have any right to prejudice the rights of any other holder of Debt Securities, obtain priority or preference over any other such holder or enforce any right under this Indenture except in the manner herein provided and for the equal, ratable and common benefit of all holders of Debt Securities.

Notwithstanding any other provisions in this Indenture, however, the right of any holder of any Debt Security to receive payment of the principal of, premium, if any, and interest, on such Debt Security when due, or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the consent of such holder and by accepting a Debt Security hereunder it is expressly understood,

intended and covenanted by the taker and holder of every Debt Security with every other such taker and holder and the Trustee, that no one or more holders of Debt Securities shall have any right in any manner whatsoever by virtue or by availing itself of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other Debt Securities, or to obtain or seek to obtain priority over or preference to any other such holder, 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 Debt Securities. 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 5.5. PROCEEDINGS BY TRUSTEE. 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 by suit in equity or by action at law or by proceeding 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.

SECTION 5.6. REMEDIES CUMULATIVE AND CONTINUING; DELAY OR OMISSION NOT A WAIVER. Except as otherwise provided in Section 2.6, all powers and remedies given by this Article V 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 Debt Securities, 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 the Debt Securities, and no delay or omission of the Trustee or of any holder of any of the Debt Securities 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 an acquiescence therein; and, subject to the provisions of Section 5.4, every power and remedy given by this Article V or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee or by the Securityholders.

No delay or omission of the Trustee or any Securityholder to exercise any right or remedy accruing upon any Event of Default shall impair any such right or remedy or constitute a waiver of any such Event of Default or an acquiescence therein. Every right and remedy given by this Article or by law to the Trustee or to any Securityholder may be exercised from time to time, and as often as may be deemed expedient, by the Trustee (in accordance with its duties under Section 6.1 hereof) or by such holder, as the case may be.

SECTION 5.7. DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF SECURITYHOLDERS. The holders of a majority in aggregate principal amount of the Debt Securities affected (voting as one class) at the time outstanding 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 with respect to such Debt Securities; provided, however, that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine that the action so directed would be unjustly prejudicial to the holders not taking part in such direction or if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if a Responsible Officer of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability.

Prior to any declaration accelerating the maturity of the Debt Securities, the holders of a majority in aggregate principal amount of the Debt Securities at the time outstanding may on behalf of the holders of all of the Debt Securities waive (or modify any previously granted waiver of) any past default or Event

of Default, and its consequences, except a default (a) in the payment of principal of, premium, if any, or interest on any of the Debt Securities, (b) in respect of covenants or provisions hereof which cannot be modified or amended without the consent of the holder of each Debt Security affected, or (c) in respect of the covenants contained in Section 3.9; provided, however, that if the Debt Securities are held by the Trust or a trustee of such 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 Debt Security is required, such waiver shall not be effective until each holder 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 Debt Securities shall be restored to their former positions and rights hereunder, respectively; but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon. Whenever any default or Event of Default hereunder shall have been waived as permitted by this Section, said default or Event of Default shall for all purposes of the Debt Securities and this Indenture be deemed to have been cured and to be not continuing.

SECTION 5.8. NOTICE OF DEFAULTS. The Trustee shall, within 90 days after the actual knowledge by a Responsible Officer of the Trustee of the occurrence of a default with respect to the Debt Securities, mail to all Securityholders, as the names and addresses of such holders appear upon the Debt Security Register, notice of all defaults with respect to the Debt Securities known to the Trustee, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of this Section 5.8 being hereby defined to be the events specified in clauses (a), (b), (c), (d) and (e) of Section 5.1, not including periods of grace, if any, provided for therein; provided, however, that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the Debt Securities, the Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders.

SECTION 5.9. UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and each holder of any Debt Security by his 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 and expenses, 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; provided, however, that the provisions of this Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Debt Securities outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debt Security against the Company on or after the same shall have become due and payable.

ARTICLE VI.
CONCERNING THE TRUSTEE

SECTION 6.1. DUTIES AND RESPONSIBILITIES OF TRUSTEE. With respect to the holders of Debt Securities issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Debt Securities and after the curing or waiving of all Events of Default which may have occurred, with respect to the Debt Securities, undertakes to perform 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 with respect to the Debt Securities has occurred (which 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.

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, except that:

(a) prior to the occurrence of an Event of Default with respect to Debt Securities and after the curing or waiving of all Events of Default which may have occurred

(1) the duties and obligations of the Trustee with respect to Debt Securities 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 with respect to the Debt Securities as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee, and

(2) in the absence of 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 which 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 whether or not they conform to the requirements of this Indenture;

(b) the Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer or Officers of the Trustee, unless it shall be proved that the Trustee was negligent in ascertaining the pertinent facts; and

(c) 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 Securityholders pursuant to Section 5.7, 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.

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 there is ground for believing that the repayment of such funds or liability is not assured to it under the terms of this Indenture or indemnity satisfactory to the Trustee against such risk is not reasonably assured to it.

SECTION 6.2. RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as otherwise provided in Section 6.1:

(a) the Trustee may conclusively rely and shall be fully protected in acting or refraining from acting upon any resolution, certificate, statement, instrument, opinion, report, notice, request, consent, order, bond, note, debenture 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 an Officers' Certificate (unless other evidence in respect thereof be herein specifically prescribed); and any Board Resolution may be evidenced to the Trustee by a copy thereof certified by the Secretary or an Assistant Secretary of the Company;

(c) the Trustee may consult with counsel of its selection and any advice or Opinion of 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 accordance with such advice or Opinion of Counsel;

(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 Securityholders, pursuant to the provisions of this Indenture, unless such Securityholders shall have offered to the Trustee reasonable security or indemnity against the costs, expenses and liabilities which may be incurred therein or thereby;

(e) the Trustee shall not be liable for any action taken or omitted 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; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default with respect to the Debt Securities (that has not been cured or waived) to exercise with respect to Debt Securities 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;

(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, debenture, coupon or other paper or document, unless requested in writing to do so by the holders of not less than a majority in aggregate principal amount of the outstanding Debt Securities affected thereby; 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 expense or liability as a condition to so proceeding;

(g) the Trustee may execute any of the trusts or powers hereunder or perform any duties hereunder either directly or by or through agents (including any Authenticating Agent) or attorneys, and the Trustee shall not be responsible for any misconduct or negligence on the part of any such agent or attorney appointed by it with due care; and

(h) with the exceptions of defaults under Sections 5.1(a) or 5.1(b), the Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Debt Securities unless a written notice of such Default or Event of Default shall have been given to the Trustee by the Company or any other obligor on the Debt Securities or by any holder of the Debt Securities.

SECTION 6.3. NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained herein and in the Debt Securities (except in the certificate of authentication of the Trustee or the Authenticating Agent) shall be taken as the statements of the Company, and the Trustee and the Authenticating Agent assume no responsibility for the correctness of the same. The Trustee and the Authenticating Agent make no representations as to the validity or sufficiency of this Indenture or of the Debt Securities. The Trustee and the Authenticating Agent shall not be accountable for the use or application by the Company of any Debt Securities or the proceeds of any Debt Securities authenticated and delivered by the Trustee or the Authenticating Agent in conformity with the provisions of this Indenture.

SECTION 6.4. TRUSTEE, AUTHENTICATING AGENT, PAYING AGENTS, TRANSFER AGENTS OR REGISTRAR MAY OWN DEBT SECURITIES. The Trustee or any Authenticating Agent or any paying agent or any transfer agent or any Debt Security registrar, in its individual or any other capacity, may become the owner or pledgee of Debt Securities with the same rights it would have if it were not Trustee, Authenticating Agent, paying agent, transfer agent or Debt Security registrar.

SECTION 6.5. MONEYS TO BE HELD IN TRUST. Subject to the provisions of
Section 12.4, all moneys received by the Trustee or any paying agent shall, until used or applied as herein provided, be held in trust for the purpose for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee and any paying agent shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such moneys shall be paid from time to time upon the written order of the Company, signed by the
[Chairman of the Board of Directors, the President, a Managing Director, a Vice President the Treasurer or an Assistant Treasurer] of the Company.

SECTION 6.6. COMPENSATION AND EXPENSES OF TRUSTEE. The Company covenants and agrees to pay to the Trustee from time to time, and the Trustee shall be entitled to, such compensation as shall be agreed to in writing between the Company and the Trustee (which shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust), and 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 negligence or willful misconduct. The Company also covenants to indemnify each of the Trustee or any predecessor Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Trustee) incurred without negligence or willful misconduct on the part of the 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 claim of liability. The obligations of the Company under this Section 6.6 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 Debt Securities 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 particular Debt Securities.

Without prejudice to any other rights available to the Trustee under applicable law, when the Trustee incurs expenses or renders services in connection with an Event of Default specified in Section 5.1(d), Section 5.1(e) or Section 5.1(f), the expenses (including the reasonable charges and expenses of its counsel) and the compensation for the services are intended to constitute expenses of administration under any applicable federal or state bankruptcy, insolvency or other similar law.

The provisions of this Section shall survive the resignation or removal of the Trustee and the defeasance or other termination of this Indenture.

Notwithstanding anything in this Indenture or any Debt Security 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 Debt Securities or otherwise advance funds to or on behalf of the Company.

SECTION 6.7. OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise provided in Sections 6.1 and 6.2, 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 omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of 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 negligence or bad faith on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof.

SECTION 6.8. ELIGIBILITY OF TRUSTEE. The Trustee hereunder shall at all times be a corporation 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 authorized under such laws to exercise corporate trust powers, having (or whose obligations under this Indenture are guaranteed by an affiliate having) a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000) and subject to supervision or examination by federal, state, territorial, or District of Columbia authority. If such corporation 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 6.8 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent records of condition so published.

The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee.

In case at any time the Trustee shall cease to be eligible in accordance with the provisions of this Section 6.8, the Trustee shall resign immediately in the manner and with the effect specified in Section 6.9.

SECTION 6.9. RESIGNATION OR REMOVAL OF TRUSTEE

(a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign by giving written notice of such resignation to the Company and by mailing notice thereof, at the Company's expense, to the holders of the Debt Securities at their addresses as they shall appear on the Debt Security Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee or trustees by written instrument, in duplicate, executed by order of its 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 to the affected Securityholders, 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 a Debt Security or Debt Securities for at least six months may, subject to the provisions of Section 5.9, on behalf of himself and all others similarly situated, 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 of the following shall occur --

(1) the Trustee shall fail to comply with the provisions of Section 6.8 after written request therefor by the Company or by any Securityholder who has been a bona fide holder of a Debt Security or Debt Securities for at least 6 months, or

(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.8 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or

(3) the Trustee shall become incapable of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, 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,

to the successor Trustee, or, subject to the provisions of Section 5.9, any Securityholder who has been a bona fide holder of a Debt Security or Debt Securities for at least 6 months may, on behalf of himself and all others similarly situated, 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 successor Trustee.

(c) Upon prior written notice to the Company and the Trustee, the holders of a majority in aggregate principal amount of the Debt Securities at the time outstanding may at any time remove the Trustee and nominate a successor Trustee, which shall be deemed appointed as successor Trustee unless within 10 Business Days after such nomination the Company objects thereto, in which case, or in the case of a failure by such holders to nominate a successor Trustee, the Trustee so removed or any Securityholder, upon the terms and conditions and otherwise as in subsection (a) of this Section 6.9 provided, may petition any court of competent jurisdiction for an appointment of a successor.

(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 6.10.

SECTION 6.10. ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor Trustee appointed as provided in Section 6.9 shall execute, acknowledge and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment hereunder, 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, duties and obligations with respect to the Debt Securities of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor Trustee, the Trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 6.6, execute and deliver an instrument transferring to such successor Trustee all the rights and powers of the Trustee so ceasing to act and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee thereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers. 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 it pursuant to the provisions of
Section 6.6.

If a successor Trustee is appointed, the Company, the retiring Trustee and the successor Trustee shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debt Securities as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the Trust hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee.

No successor Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Trustee shall be eligible under the provisions of Section 6.8.

In no event shall a retiring Trustee be liable for the acts or omissions of any successor Trustee hereunder.

Upon acceptance of appointment by a successor Trustee as provided in this
Section 6.10, the Company shall mail notice of the succession of such Trustee hereunder to the holders of Debt Securities at their addresses as they shall appear on the Debt Security Register. If the Company fails to mail such notice within 10 Business Days after the acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Company.

SECTION 6.11. SUCCESSION BY MERGER, ETC. Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided such corporation shall be otherwise eligible and qualified under this Article.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Debt Securities shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Debt Securities so authenticated; and in case at that time any of the Debt Securities shall not have been authenticated, any successor to the Trustee may authenticate such Debt Securities either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Debt Securities or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Debt Securities in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

SECTION 6.12. AUTHENTICATING AGENTS. There may be one or more Authenticating Agents appointed by the Trustee upon the request of the Company with power to act on its behalf and subject to its direction in the authentication and delivery of Debt Securities issued upon exchange or registration of transfer thereof as fully to all intents and purposes as though any such Authenticating Agent had been expressly authorized to authenticate and deliver Debt Securities; provided, however, that the Trustee shall have no liability to the Company for any acts or omissions of the Authenticating Agent with respect to the authentication and delivery of Debt Securities. Any such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States or of any state or territory thereof or of the District of Columbia authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of at least $5,000,000 and being subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 6.12 the combined capital and surplus of such corporation 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, it shall resign immediately in the manner and with the effect herein specified in this Section.

Any corporation into which any Authenticating Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, consolidation or conversion to which any Authenticating Agent shall be a party, or any corporation succeeding to all or substantially all of the corporate trust business of any Authenticating Agent, shall be the successor of such Authenticating Agent hereunder, if such successor corporation is otherwise eligible under this Section 6.12 without the execution or filing of any paper or any further act on the part of the parties hereto or such Authenticating Agent.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating

Agent with respect to the Debt Securities by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 6.12, the Trustee may, and upon the request of the Company shall, promptly appoint a successor Authenticating Agent eligible under this Section 6.12, shall give written notice of such appointment to the Company and shall mail notice of such appointment to all holders of Debt Securities as the names and addresses of such holders appear on the Debt Security Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities with respect to the Debt Securities of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein.

The Company agrees to pay to any Authenticating Agent from time to time reasonable compensation for its services. Any Authenticating Agent shall have no responsibility or liability for any action taken by it as such in accordance with the directions of the Trustee.

ARTICLE VII.
CONCERNING THE SECURITYHOLDERS

SECTION 7.1. ACTION BY SECURITYHOLDERS. Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate principal amount of the Debt Securities 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 specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by such Securityholders in person or by agent or proxy appointed in writing, or (b) by the record of such holders of Debt Securities voting in favor thereof at any meeting of such Securityholders duly called and held in accordance with the provisions of Article VIII, or (c) by a combination of such instrument or instruments and any such record of such a meeting of such Securityholders or (d) by any other method the Trustee deems satisfactory.

If the Company shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, the Company may, at its option, as evidenced by an Officers' Certificate, fix in advance a record date for such Debt Securities for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, 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 or revocation of the same 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 Debt Securities have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, and for that purpose the outstanding Debt Securities shall be computed as of the record date; provided, however, that no such authorization, 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 6 months after the record date.

SECTION 7.2. PROOF OF EXECUTION BY SECURITYHOLDERS. Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of the execution of any instrument by a Securityholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Debt Securities shall be proved by the Debt Security Register or by a certificate of the Debt Security

registrar. The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary.

The record of any Securityholders' meeting shall be proved in the manner provided in Section 8.6.

SECTION 7.3. WHO ARE DEEMED ABSOLUTE OWNERS. Prior to due presentment for registration of transfer of any Debt Security, the Company, the Trustee, any Authenticating Agent, any paying agent, any transfer agent and any Debt Security registrar may deem the Person in whose name such Debt Security shall be registered upon the Debt Security Register to be, and may treat him as, the absolute owner of such Debt Security (whether or not such Debt Security shall be overdue) for the purpose of receiving payment of or on account of the principal of, premium, if any, and interest on such Debt Security and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any transfer agent nor any Debt Security registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being or upon his order shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debt Security.

SECTION 7.4. DEBT SECURITIES OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining whether the holders of the requisite aggregate principal amount of Debt Securities have concurred in any direction, consent or waiver under this Indenture, Debt Securities which are owned by the Company or any other obligor on the Debt Securities or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Debt Securities shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided, however, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Debt Securities which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Debt Securities so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 7.4 if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Debt Securities and that the pledgee is not the Company or any such other obligor or Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In the 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 7.5. REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the holders of the percentage in aggregate principal amount of the Debt Securities specified in this Indenture in connection with such action, any holder (in cases where no record date has been set pursuant to Section 7.1) or any holder as of an applicable record date (in cases where a record date has been set pursuant to Section 7.1) of a Debt Security (or any Debt Security issued in whole or in part in exchange or substitution therefor) the serial number of which is shown by the evidence to be included in the Debt Securities the holders of which have consented to such action may, by filing written notice with the Trustee at the Principal Office of the Trustee and upon proof of holding as provided in Section 7.2, revoke such action so far as concerns such Debt Security (or so far as concerns the principal amount represented by any exchanged or substituted Debt Security). Except as aforesaid any such action taken by the holder of any Debt Security shall be conclusive and binding upon such holder and upon all future holders and owners of such Debt Security, and of any Debt Security issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon such Debt Security or any Debt Security issued in exchange or substitution therefor.

ARTICLE VIII.
SECURITYHOLDERS' MEETINGS

SECTION 8.1. PURPOSES OF MEETINGS. A meeting of Securityholders may be called at any time and from time to time pursuant to the provisions of this Article VIII for any of the following purposes:

(a) to give any notice to the Company or to the Trustee, or to give any directions to the Trustee, or to consent to the waiving of any default hereunder and its consequences, or to take any other action authorized to be taken by Securityholders pursuant to any of the provisions of Article V;

(b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article VI;

(c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 9.2; or

(d) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of such Debt Securities under any other provision of this Indenture or under applicable law.

SECTION 8.2. CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 8.1, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders of Debt Securities affected at their addresses as they shall appear on the Debt Securities Register and, if the Company is not a holder of Debt Securities, to the Company. Such notice shall be mailed not less than 20 nor more than 180 days prior to the date fixed for the meeting.

SECTION 8.3. CALL OF MEETINGS BY COMPANY OR SECURITYHOLDERS. In case at any time the Company pursuant to a Board Resolution, or the holders of at least 10% in aggregate principal amount of the Debt Securities, as the case may be, then outstanding, shall have requested the Trustee to call a meeting of Securityholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place for such meeting and may call such meeting to take any action authorized in
Section 8.1, by mailing notice thereof as provided in Section 8.2.

SECTION 8.4. QUALIFICATIONS FOR VOTING. To be entitled to vote at any meeting of Securityholders a Person shall (a) be a holder of one or more Debt Securities with respect to which the meeting is being held or (b) a Person appointed by an instrument in writing as proxy by a holder of one or more such Debt Securities. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

SECTION 8.5. REGULATIONS. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Debt Securities and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.

The Trustee shall, by an instrument in writing, appoint a temporary chairman of the meeting, unless the meeting shall have been called by the Company or by Securityholders as provided in Section 8.3, in which case the Company or the Securityholders calling the meeting, as the case may be, shall in like manner appoint a temporary chairman. A permanent chairman and a permanent secretary of the meeting shall be elected by majority vote of the meeting.

Subject to the provisions of Section 7.4, at any meeting each holder of Debt Securities with respect to which such meeting is being held or proxy therefor shall be entitled to one vote for each $1,000 principal amount of Debt Securities held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Debt Security challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Debt Securities held by him or instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Securityholders. Any meeting of Securityholders duly called pursuant to the provisions of Section 8.2 or 8.3 may be adjourned from time to time by a majority of those present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

SECTION 8.6. VOTING. The vote upon any resolution submitted to any meeting of holders of Debt Securities with respect to which such meeting is being held shall be by written ballots on which shall be subscribed the signatures of such holders or of their representatives by proxy and the serial number or numbers of the Debt Securities held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 8.2. The record shall show the serial numbers of the Debt Securities voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.

Any record so signed and verified shall be conclusive evidence of the matters therein stated.

SECTION 8.7. QUORUM; ACTIONS. The Persons entitled to vote a majority in principal amount of the Debt Securities shall constitute a quorum for a meeting of Securityholders; provided, however, that if any action is to be taken at such meeting with respect to a consent, waiver, request, demand, notice, authorization, direction or other action which may be given by the holders of not less than a specified percentage in principal amount of the Debt Securities, the Persons holding or representing such specified percentage in principal amount of the Debt Securities will constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Securityholders, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.2, except that such notice need be given only once not less than 5 days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Debt Securities which shall constitute a quorum.

Except as limited by the proviso in the first paragraph of Section 9.2, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the holders of a majority in principal amount of the Debt Securities; provided, however, that, except as limited by the proviso in the first paragraph of
Section 9.2, any resolution with respect to any consent, waiver, request, demand, notice, authorization, direction or other action which this Indenture expressly provides may be given by the holders of not less than a specified percentage in principal amount of the Debt Securities may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the holders of a not less than such specified percentage in principal amount of the Debt Securities.

Any resolution passed or decision taken at any meeting of holders of Debt Securities duly held in accordance with this Section shall be binding on all the Securityholders, whether or not present or represented at the meeting.

ARTICLE IX.
SUPPLEMENTAL INDENTURES

SECTION 9.1. SUPPLEMENTAL INDENTURES WITHOUT CONSENT OF SECURITYHOLDERS. The Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto, without the consent of the Securityholders, for one or more of the following purposes:

(a) to evidence the succession of another Person to the Company, or successive successions, and the assumption by the successor Person of the covenants, agreements and obligations of the Company, pursuant to Article XI hereof;

(b) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the holders of Debt Securities as the Board of Directors shall consider to be for the protection of the holders of such Debt Securities, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions or conditions a default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant restriction or condition such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default;

(c) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture; provided that any such action shall not adversely affect the interests of the holders of the Debt Securities;

(d) to add to, delete from, or revise the terms of Debt Securities, including, without limitation, any terms relating to the issuance, exchange, registration or transfer of Debt Securities, including to provide for transfer procedures and restrictions substantially similar to those applicable to the Capital Securities as required by Section 2.5 (for purposes of assuring that no registration of Debt Securities is required under the Securities Act of 1933, as amended); provided, however, that any such action shall not adversely affect the interests of the holders of the Debt Securities then outstanding (it being understood, for purposes of this proviso, that transfer restrictions on Debt Securities substantially similar to those that were applicable to Capital Securities shall not be deemed to adversely affect the holders of the Debt Securities);

(e) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debt Securities and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee, pursuant to the requirements of Section 6.11;

(f) to make any change (other than as elsewhere provided in this paragraph) that does not adversely affect the rights of any Securityholder in any material respect; or

(g) to provide for the issuance of and establish the form and terms and conditions of the Debt Securities, to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture or the Debt Securities, or to add to the rights of the holders of Debt Securities.

The Trustee is hereby authorized to join with the Company in the execution of any such supplemental indenture, to make any further appropriate agreements and stipulations which may be therein contained and to accept the conveyance, transfer and assignment of any property thereunder, but the Trustee shall not be obligated to, but may in its discretion, enter into any such supplemental indenture which affects the Trustee's own rights, duties or immunities under this Indenture or otherwise.

Any supplemental indenture authorized by the provisions of this Section 9.1 may be executed by the Company and the Trustee without the consent of the holders of any of the Debt Securities at the time outstanding, notwithstanding any of the provisions of Section 9.2.

SECTION 9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With the consent (evidenced as provided in Section 7.1) of the holders of not less than a majority in aggregate principal amount of the Debt Securities at the time outstanding affected by such supplemental indenture (voting as a class), the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto 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 the rights of the holders of the Debt Securities; provided, however, that no such supplemental indenture shall without the consent of the holders of each Debt Security then outstanding and affected thereby (i) change the fixed maturity of any Debt Security, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof or any interest or premium thereon payable in any coin or currency other than that provided in the Debt Securities, or impair or affect the right of any Securityholder to institute suit for payment thereof or impair the right of repayment, if any, at the option of the holder, or (ii) reduce the aforesaid percentage of Debt Securities the holders of which are required to consent to any such supplemental indenture; provided further, however, that if the Debt Securities are held by a trust or a trustee of such trust, such supplemental indenture shall not be effective until the holders of a majority in Liquidation Amount of Trust Securities shall have consented to such supplemental indenture; provided further, however, that if the consent of the Securityholder of each outstanding Debt Security is required, such supplemental indenture shall not be effective until each holder of the Trust Securities shall have consented to such supplemental indenture.

Upon the request of the Company accompanied by a Board Resolution authorizing the execution of any such supplemental indenture, and upon the filing with the Trustee of evidence of the consent of Securityholders 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.

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, prepared by the Company, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Debt Security 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.

It shall not be necessary for the consent of the Securityholders under this
Section 9.2 to approve the particular form of any proposed supplemental indenture, but it shall be sufficient if such consent shall approve the substance thereof.

SECTION 9.3. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Debt Securities shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

SECTION 9.4. NOTATION ON DEBT SECURITIES. Debt Securities authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Debt Securities so modified as to conform, in the opinion of the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Company, authenticated by the Trustee or the Authenticating Agent and delivered in exchange for the Debt Securities then outstanding.

SECTION 9.5. EVIDENCE OF COMPLIANCE OF SUPPLEMENTAL INDENTURE TO BE FURNISHED TO TRUSTEE. The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall, in addition to the documents required by Section 14.6, receive an Officers' Certificate and an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant hereto complies with the requirements of this Article IX. The Trustee shall receive an Opinion of Counsel as conclusive evidence that any supplemental indenture executed pursuant to this Article IX is authorized or permitted by, and conforms to, the terms of this Article IX and that it is proper for the Trustee under the provisions of this Article IX to join in the execution thereof.

ARTICLE X.
REDEMPTION OF SECURITIES

SECTION 10.1. OPTIONAL REDEMPTION. The Company shall have the right, subject to the receipt by the Company of prior approval from the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve, to redeem the Debt Securities, in whole or in part, but in all cases in a principal amount with integral multiples of $1,000, on any March 7 or September 7 on or after September 7, 2010 (the "Redemption Date"), at the Redemption Price.

SECTION 10.2. SPECIAL EVENT REDEMPTION. If a Special Event shall occur and be continuing, the Company shall have the right, subject to the receipt by the Company of prior approval from the Federal Reserve if then required under applicable capital guidelines or policies of the Federal Reserve, to redeem the Debt Securities in whole, but not in part, at any time, within 90 days following the occurrence of such Special Event (the "Special Redemption Date") at the Special Redemption Price. The Company shall appoint a Quotation Agent, which initially shall be State Street Bank and Trust Company, for the purpose of performing the services contemplated in, or by reference in, the definition of Special

Redemption Price. Any error in the calculation of the Special Redemption Price by the Quotation Agent or the Trustee may be corrected at any time by notice delivered to the Company and the holders of the Debt Securities. Subject to the corrective rights set forth above, all certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions relating to the payment and calculation of the Special Redemption Price on the Debt Securities by the Trustee or the Quotation Agent, as the case may be, shall (in the absence of willful default, bad faith or manifest error) be final, conclusive and binding on the holders of the Debt Securities and the Company, and no liability shall attach (except as provided above) to the Trustee or the Quotation Agent in connection with the exercise or non-exercise by any of them of their respective powers, duties and discretion.

SECTION 10.3. NOTICE OF REDEMPTION; SELECTION OF DEBT SECURITIES. In case the Company shall desire to exercise the right to redeem all, or, as the case may be, any part of the Debt Securities, it shall cause to be mailed a notice of such redemption at least 30 and not more than 60 days prior to the Redemption Date or the Special Redemption Date to the holders of Debt Securities so to be redeemed as a whole or in part at their last addresses as the same appear on the Debt Security Register. Such mailing shall be by first class mail. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Debt Security designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debt Security.

Each such notice of redemption shall specify the CUSIP number, if any, of the Debt Securities to be redeemed, the Redemption Date or the Special Redemption Date, as applicable, the Redemption Price, the Special Redemption Price or the method by which such Special Redemption Price is to be calculated, as applicable, at which Debt Securities are to be redeemed, the place or places of payment, that payment will be made upon presentation and surrender of such Debt Securities, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. If less than all the Debt Securities are to be redeemed the notice of redemption shall specify the numbers of the Debt Securities to be redeemed. In case the Debt Securities are to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Debt Security, a new Debt Security or Debt Securities in principal amount equal to the unredeemed portion thereof will be issued.

Prior to 10:00 a.m. New York City time on the Redemption Date or Special Redemption Date, as applicable, the Company will deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date or the Special Redemption Date, as applicable, all the Debt Securities so called for redemption at the appropriate Redemption Price or Special Redemption Price, together with accrued interest to the Redemption Date or Special Redemption Date, as applicable.

If all, or less than all, the Debt Securities are to be redeemed, the Company will give the Trustee notice not less than 45 nor more than 60 days, respectively, prior to the Redemption Date or Special Redemption Date, as applicable, as to the aggregate principal amount of Debt Securities to be redeemed and the Trustee shall select, in such manner as in its sole discretion it shall deem appropriate and fair, the Debt Securities or portions thereof (in integral multiples of $1,000) to be redeemed.

SECTION 10.4. PAYMENT OF DEBT SECURITIES CALLED FOR REDEMPTION. If notice of redemption has been given as provided in Section 10.3, the Debt Securities or portions of Debt Securities with respect to which such notice has been given shall become due and payable on the Redemption Date or Special Redemption Date, as applicable, and at the place or places stated in such notice at the applicable

Redemption Price or Special Redemption Price, together with interest accrued to the Redemption Date or Special Redemption Date, as applicable, and on and after said date (unless the Company shall default in the payment of such Debt Securities at the Redemption Price or Special Redemption Price, as applicable, together with interest accrued to said date) interest on the Debt Securities or portions of Debt Securities so called for redemption shall cease to accrue. On presentation and surrender of such Debt Securities at a place of payment specified in said notice, such Debt Securities or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price or Special Redemption Price, together with interest accrued thereon to the Redemption Date or Special Redemption Date, as applicable.

Upon presentation of any Debt Security redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Company, a new Debt Security or Debt Securities of authorized denominations, in principal amount equal to the unredeemed portion of the Debt Security so presented.

ARTICLE XI.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

SECTION 11.1. COMPANY MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. Nothing contained in this Indenture or in the Debt Securities shall prevent any consolidation or merger of the Company with or into any other Person (whether or not affiliated with the Company) or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other disposition of the property of the Company or its successor or successors as an entirety, or substantially as an entirety, to any other Person (whether or not affiliated with the Company, or its successor or successors) authorized to acquire and operate the same; provided, however, that the Company hereby covenants and agrees that, upon any such consolidation, merger (where the Company is not the surviving corporation), sale, conveyance, transfer or other disposition, the due and punctual payment of the principal of (and premium, if any) and interest on all of the Debt Securities in accordance with their terms, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be kept or performed by the Company, shall be expressly assumed by supplemental indenture satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by such consolidation, or into which the Company shall have been merged, or by the entity which shall have acquired such property.

SECTION 11.2. SUCCESSOR ENTITY TO BE SUBSTITUTED. In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor entity, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and premium, if any, and interest on all of the Debt Securities and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Company, such successor entity shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the Company, and thereupon the predecessor entity shall be relieved of any further liability or obligation hereunder or upon the Debt Securities. Such successor entity thereupon may cause to be signed, and may issue in its own name, any or all of the Debt Securities issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee or the Authenticating Agent; and, upon the order of such successor entity instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate and deliver any Debt Securities which previously shall have been signed and delivered by the officers of the Company, to the Trustee or the Authenticating Agent for authentication, and any Debt Securities which such successor entity thereafter shall cause to be signed and delivered to the Trustee or the Authenticating Agent for that purpose. All the Debt Securities so issued shall in all respects have the same legal rank and benefit under

this Indenture as the Debt Securities theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Debt Securities had been issued at the date of the execution hereof.

SECTION 11.3. OPINION OF COUNSEL TO BE GIVEN TO TRUSTEE. The Trustee, subject to the provisions of Sections 6.1 and 6.2, shall receive, in addition to the Opinion of Counsel required by Section 9.5, an Opinion of Counsel as conclusive evidence that any consolidation, merger, sale, conveyance, transfer or other disposition, and any assumption, permitted or required by the terms of this Article XI complies with the provisions of this Article XI.

ARTICLE XII.
SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 12.1. DISCHARGE OF INDENTURE. When

(a) the Company shall deliver to the Trustee for cancellation all Debt Securities theretofore authenticated (other than any Debt Securities which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.6) and not theretofore canceled, or

(b) all the Debt Securities not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within 1 year or are to be called for redemption within 1 year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee, in trust, funds, which shall be immediately due and payable, sufficient to pay at maturity or upon redemption all of the Debt Securities (other than any Debt Securities which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.6) not theretofore canceled or delivered to the Trustee for cancellation, including principal and premium, if any, and interest due or to become due to such date of maturity or redemption date, as the case may be, but excluding, however, the amount of any moneys for the payment of principal of, and premium, if any, or interest on the Debt Securities
(1) theretofore repaid to the Company in accordance with the provisions of Section 12.4, or (2) paid to any state or to the District of Columbia pursuant to its unclaimed property or similar laws,

and if in the case of either clause (a) or clause (b) the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect except for the provisions of Sections 2.5, 2.6, 3.1, 3.2, 3.4, 6.6, 6.8 and 12.4 hereof shall survive until such Debt Securities shall mature and be paid. Thereafter, Sections 6.6 and 12.4 shall survive, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Debt Securities.

SECTION 12.2. DEPOSITED MONEYS TO BE HELD IN TRUST BY TRUSTEE. Subject to the provisions of Section 12.4, all moneys deposited with the Trustee pursuant to Section 12.1 shall be held in trust in a non-interest bearing account and applied by it to the payment, either directly or through any paying agent (including the Company if acting as its own paying agent), to the holders of the particular Debt Securities for the payment of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal, and premium, if any, and interest.

SECTION 12.3. PAYING AGENT TO REPAY MONEYS HELD. Upon the satisfaction and discharge of this Indenture all moneys then held by any paying agent of the Debt Securities (other than the Trustee) shall, upon demand of the Company, be repaid to it or paid to the Trustee, and thereupon such paying agent shall be released from all further liability with respect to such moneys.

SECTION 12.4. RETURN OF UNCLAIMED MONEYS. Any moneys deposited with or paid to the Trustee or any paying agent for payment of the principal of, and premium, if any, or interest on Debt Securities and not applied but remaining unclaimed by the holders of Debt Securities for 2 years after the date upon which the principal of, and premium, if any, or interest on such Debt Securities, as the case may be, shall have become due and payable, shall, subject to applicable escheatment laws, be repaid to the Company by the Trustee or such paying agent on written demand; and the holder of any of the Debt Securities shall thereafter look only to the Company for any payment which such holder may be entitled to collect, and all liability of the Trustee or such paying agent with respect to such moneys shall thereupon cease.

ARTICLE XIII.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS

SECTION 13.1. INDENTURE AND DEBT SECURITIES SOLELY CORPORATE OBLIGATIONS. No recourse for the payment of the principal of or premium, if any, or interest on any Debt Security, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture, or in any such Debt Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, officer or director, as such, past, present or future, of the Company or of any successor Person of the Company, either directly or through the Company or any successor Person of the Company, 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 all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Debt Securities.

ARTICLE XIV.
MISCELLANEOUS PROVISIONS

SECTION 14.1. SUCCESSORS. All the covenants, stipulations, promises and agreements in this Indenture contained by the Company shall bind its successors and assigns whether so expressed or not.

SECTION 14.2. OFFICIAL ACTS BY SUCCESSOR ENTITY. 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 like board, committee, officer or other authorized Person of any entity that shall at the time be the lawful successor of the Company.

SECTION 14.3. SURRENDER OF COMPANY POWERS. The Company by instrument in writing executed by authority of at least 2/3 (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 permitted successor.

office letter box addressed (until another address is filed by the Company, with the Trustee for the purpose) to the Company, One City Plaza, Box 1028, Cabot, Arkansas 72023, Attention: David Pickney. Any notice, consent, direction, request, authorization, waiver or demand by any Securityholder or the Company 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 office of the Trustee, addressed to the Trustee, 225 Asylum Street, Goodwin Square, Hartford, Connecticut, 06103 Attention: Vice President, Corporate Trust Department, with a copy to State Street Bank and Trust Company, P.O. Box 778, Boston, Massachusetts 02102-0778, Attention: Paul D. Allen, Corporate Trust Department. Any notice, consent, direction, request, authorization, waiver or demand on or to any Securityholder shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the address set forth in the Debt Security Register.

SECTION 14.5. GOVERNING LAW. This Indenture and each Debt Security shall be deemed to be a contract made under the law of the State of New York, and for all purposes shall be governed by and construed in accordance with the law of said State, without regard to conflict of laws principles thereof.

SECTION 14.6. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT. 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 in the opinion of the signers all conditions precedent, if any, 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.

Each certificate or opinion provided for in this Indenture and delivered to the Trustee with respect to compliance with a condition or covenant provided for in this Indenture shall include (1) a statement that the person making such certificate or opinion has read such covenant or condition; (2) 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; (3) a statement that, in the opinion of such person, he has made such examination or investigation as is necessary to enable him to express an informed opinion as to whether or not such covenant or condition has been complied with; and (4) a statement as to whether or not in the opinion of such person, such condition or covenant has been complied with.

SECTION 14.7. NON-BUSINESS DAYS. In any case where the date of payment of interest on or principal of the Debt Securities will be a day that is not a Business Day, the payment of such interest on or principal of the Debt Securities need not be made on such date but may be made on the next succeeding Business Day, 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 original date of payment, and no interest shall accrue for the period from and after such date.

SECTION 14.8. TABLE OF CONTENTS, HEADINGS, ETC. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

SECTION 14.9. EXECUTION IN 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.

SECTION 14.10. SEPARABILITY. In case any one or more of the provisions contained in this Indenture or in the Debt Securities 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 such Debt Securities, but this Indenture and such Debt Securities shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

SECTION 14.11. ASSIGNMENT. The Company will have the right at all times to assign any of its 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 hereto and their respective successors and assigns. This Indenture may not otherwise be assigned by the parties hereto.

SECTION 14.12. ACKNOWLEDGMENT OF RIGHTS. The Company agrees that, with respect to any Debt Securities held by the Trust or the Institutional Trustee of the Trust, if the Institutional Trustee of the Trust fails to enforce its rights under this Indenture as the holder of Debt Securities held as the assets of such Trust after the holders of a majority in Liquidation Amount of the Capital Securities of such Trust have so directed such Institutional Trustee, a holder of record of such Capital Securities may, to the fullest extent permitted by law, institute legal proceedings directly against the Company to enforce such Institutional Trustee's rights under this Indenture without first instituting any legal proceedings against such trustee or any other Person. 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 premium, if any) or principal on the Debt Securities on the date such interest (or premium, if any) or principal is otherwise payable (or in the case of redemption, on the redemption date), the Company agrees that a holder of record of Capital Securities of the Trust may directly institute a proceeding against the Company for enforcement of payment to such holder directly of the principal of (or premium, if any) or interest on the Debt Securities having an aggregate principal amount equal to the aggregate Liquidation Amount of the Capital Securities of such holder on or after the respective due date specified in the Debt Securities.

ARTICLE XV.
SUBORDINATION OF DEBT SECURITIES

SECTION 15.1. AGREEMENT TO SUBORDINATE. The Company covenants and agrees, and each holder of Debt Securities by such Securityholder's acceptance thereof likewise covenants and agrees, that all Debt Securities shall be issued subject to the provisions of this Article XV; and each holder of a Debt Security, 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 premium, if any, and interest on all Debt Securities 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 Indebtedness of the Company, whether outstanding at the date of this Indenture or thereafter incurred.

No provision of this Article XV shall prevent the occurrence of any default or Event of Default hereunder.

SECTION 15.2. DEFAULT ON SENIOR INDEBTEDNESS. 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 Indebtedness of the Company following any grace period, or in the event that the maturity of any Senior Indebtedness 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 (including redemption and sinking fund payments) of, or premium, if any, or interest on the Debt Securities.

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 15.2, such payment shall, subject to Section 15.7, be held in trust for the benefit of, and shall be paid over or delivered to, the holders of Senior Indebtedness or their respective representatives, or to the trustee or trustees under any indenture pursuant to which any of such Senior Indebtedness may have been issued, as their respective interests may appear, but only to the extent that the holders of the Senior Indebtedness (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 Indebtedness and only the amounts specified in such notice to the Trustee shall be paid to the holders of Senior Indebtedness.

SECTION 15.3. 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 Indebtedness 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 (and premium, if any) or interest on the Debt Securities. 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, which the Securityholders or the Trustee would be entitled to receive from the Company, except for the provisions of this Article XV, 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 Securityholders or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness 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 Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness 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 Indebtedness, before any payment or distribution is made to the Securityholders or to the Trustee.

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 Indebtedness 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 Indebtedness or their representative or representatives, or to the trustee or trustees under any indenture pursuant to which any instruments evidencing such Senior Indebtedness may have been issued, as their respective interests may appear, as calculated by the Company, for application to the payment of all Senior Indebtedness, remaining unpaid to the extent necessary to pay such Senior Indebtedness 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 Indebtedness.

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 X of this Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article X of this Indenture. Nothing in Section 15.2 or in this Section shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6 of this Indenture.

SECTION 15.4. SUBROGATION. Subject to the payment in full of all Senior Indebtedness, the Securityholders shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company, applicable to such Senior Indebtedness until the principal of (and premium, if any) and interest on the Debt Securities shall be paid in full. For the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Securityholders or the Trustee would be entitled except for the provisions of this Article XV, and no payment over pursuant to the provisions of this Article XV to or for the benefit of the holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness of the Company, and the holders of the Debt Securities be deemed to be a payment or distribution by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article XV are and are intended solely for the purposes of defining the relative rights of the holders of the Securities, on the one hand, and the holders of such Senior Indebtedness, on the other hand.

Nothing contained in this Article XV or elsewhere in this Indenture or in the Debt Securities is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the holders of the Debt Securities, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Debt Securities the principal of (and premium, if any) and interest on the Debt Securities 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 Debt Securities and creditors of the Company, other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Debt Security from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XV of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company, received upon the exercise of any such remedy.

Upon any payment or distribution of assets of the Company referred to in this Article XV, the Trustee, subject to the provisions of Article VI of this Indenture, and the Securityholders 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 Securityholders, for the purposes of ascertaining the Persons entitled to participate in such distribution, the holders of Senior Indebtedness and other indebtedness of the Company, the amount thereof or payable thereon, the amount or amounts paid or distributed thereon and all other facts pertinent thereto or to this Article XV.

SECTION 15.5. TRUSTEE TO EFFECTUATE SUBORDINATION. Each Securityholder by such Securityholder's acceptance thereof authorizes and directs the Trustee on such Securityholder's behalf to take such action as may be necessary or appropriate to effectuate the subordination provided in this Article XV and appoints the Trustee such Securityholder's attorney-in-fact for any and all such purposes.

SECTION 15.6. NOTICE BY THE COMPANY. The Company shall give prompt written notice to a Responsible Officer of the Trustee at the Principal Office of the Trustee of any fact known to the

Company that would prohibit the making of any payment of monies to or by the Trustee in respect of the Debt Securities pursuant to the provisions of this Article XV. Notwithstanding the provisions of this Article XV 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 monies to or by the Trustee in respect of the Debt Securities pursuant to the provisions of this Article XV, unless and until a Responsible Officer of the Trustee at the Principal Office of the Trustee shall have received written notice thereof from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Article VI of this Indenture, 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 provided for in this
Section at least 2 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 premium, if any) or interest on any Debt Security), 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 they were received, and shall not be affected by any notice to the contrary that may be received by it within 2 Business Days prior to such date.

The Trustee, subject to the provisions of Article VI of this Indenture, 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 Indebtedness (or a trustee or representative on behalf of such holder), to establish that such notice has been given by a holder of such Senior Indebtedness or a trustee or representative 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 Indebtedness to participate in any payment or distribution pursuant to this Article XV, the Trustee may request such Person to furnish evidence to the reasonable satisfaction of the Trustee as to the amount of such Senior Indebtedness 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 XV, 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 15.7. RIGHTS OF THE TRUSTEE; HOLDERS OF SENIOR INDEBTEDNESS. The Trustee in its individual capacity shall be entitled to all the rights set forth in this Article XV in respect of any Senior Indebtedness at any time held by it, to the same extent as any other holder of Senior Indebtedness, and nothing in this Indenture shall deprive the Trustee of any of its rights as such holder.

With respect to the holders of Senior Indebtedness, the Trustee undertakes to perform or to observe only such of its covenants and obligations as are specifically set forth in this Article XV, and no implied covenants or obligations with respect to the holders of such Senior Indebtedness 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 Indebtedness and, subject to the provisions of Article VI of this Indenture, the Trustee shall not be liable to any holder of such Senior Indebtedness if it shall pay over or deliver to Securityholders, the Company or any other Person money or assets to which any holder of such Senior Indebtedness shall be entitled by virtue of this Article XV or otherwise.

Nothing in this Article XV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.

SECTION 15.8. SUBORDINATION MAY NOT BE IMPAIRED. No right of any present or future holder of any Senior Indebtedness 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.

Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Securityholders, without incurring responsibility to the Securityholders and without impairing or releasing the subordination provided in this Article XV or the obligations hereunder of the holders of the Debt Securities to the holders of such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company, and any other Person.

[SIGNATURE PAGE FOLLOWS THIS PAGE]

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written.

COMMUNITY FINANCIAL GROUP, INC.

By /s/ Illegible
   -------------------------------------
Name: Illegible
Title: PRESIDENT

STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as
Trustee

By /s/ Illegible
   -------------------------------------
Name: Illegible
Title: Vice President

47-A

FORM OF JUNIOR SUBORDINATED DEBENTURE

[FORM OF FACE OF SECURITY]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (C) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

10.60% Junior Subordinated Deferrable Interest Debenture

Community Financial Group, Inc.

Community Financial Group, Inc., an Arkansas corporation (the "Company" which term includes any successor Person under the Indenture hereinafter referred to), for value received promises to pay to State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity but solely as Institutional Trustee for Community Financial Statutory Trust I (the "Holder") or registered assigns, the principal sum of Three Million Ninety Three Thousand ($3,093,000) on September 7, 2030, and to pay interest on said principal sum from September 7, 2000, 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, semi-annually (subject to deferral as set forth herein) in arrears on March 7 and September 7 of each year commencing March 7, 2001, at an annual rate equal to 10.60% until the principal hereof

A-1-1

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 an annual rate equal to 10.60% compounded semi-annually. The amount of interest payable on any Interest Payment Date shall be computed on the basis of a 360-day year of twelve 30-day months. In the event that any date on which interest is payable on this Debt Security is not a Business Day, 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 Debt Security (or one or more Predecessor Securities, as defined in said Indenture) is registered at the close of business on the Record Date for such interest installment, which shall be the close of business on the 15th day next preceding such Interest Payment Date. Any such interest installment not punctually paid or duly provided for shall forthwith cease to be payable to the registered holders on such Record Date and may be paid to the Person in whose name this Debt Security (or one or more Predecessor Debt Securities) is registered at the close of business on a special record date to be fixed by the Trustee for the payment of such defaulted interest, notice whereof shall be given to the registered holders of the Debt Securities not less than 10 days prior to such special record date, all as more fully provided in the Indenture. The principal of and interest on this Debt Security shall be payable at the office or agency of the Trustee (or other paying agent appointed by the Company) 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 by check mailed to the registered holder at such address as shall appear in the Debt Security Register if a request for a wire transfer by such holder has not been received by the Company or by wire transfer to an account appropriately designated by the holder hereof. Notwithstanding the foregoing, so long as the holder of this Debt Security is the Institutional Trustee, the payment of the principal of and interest on this Debt Security will be made in immediately available funds at such place and to such account as may be designated by the Trustee.

So long as no Event of Default has occurred and is continuing, the Company shall have the right, from time to time, and without causing an Event of Default, to defer payments of interest on the Debt Securities by extending the interest payment period on the Debt Securities at any time and from time to time during the term of the Debt Securities, for up to 10 consecutive semi-annual periods (each such extended interest payment period, an "Extension Period"), during which Extension Period no interest shall be due and payable. No Extension Period may end on a date other than an Interest Payment Date. At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Debt Securities (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date; provided further, however, that during any such Extension Period, the Company shall not and shall not permit any Affiliate to (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's or such Affiliate's capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debt Securities (other than, with respect to clauses (i) and (ii) above, (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period,
(b) as a result of any exchange or conversion of any class or series of the

A-1-2

Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (c) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (f) payments under the Capital Securities Guarantee). Prior to the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. The Company must give the Trustee notice of its election to begin such Extension Period at least five Business Days prior to the earlier of (i) the date interest on the Debt Securities would have been payable except for the election to begin such Extension Period or (ii) the date such interest is payable, but in any event not less than five Business Days prior to such record date.

The indebtedness evidenced by this Debt Security is, to the extent provided in the Indenture, subordinate and junior in right of payment to the prior payment in full of all Senior Indebtedness, and this Debt Security is issued subject to the provisions of the Indenture with respect thereto. Each holder of this Debt Security, 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 Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

This Debt Security shall not be entitled to any benefit under the Indenture hereinafter referred to, 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.

Capitalized terms used and not defined in this Debt Security shall have the meanings assigned in the Indenture dated as of the date of this Debt Security between the Trustee and the Company.

A-1-3

IN WITNESS WHEREOF, the Company has duly executed this certificate.

COMMUNITY FINANCIAL GROUP, INC.

Name:
Title:

Dated:

CERTIFICATE OF AUTHENTICATION

This is one of the Debt Securities referred to in the within-mentioned Indenture.

STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION, as
Trustee

By:
Authorized Officer

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EXHIBIT 4.8

AMENDED AND RESTATED DECLARATION
OF TRUST

BY AND AMONG

STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION,
AS INSTITUTIONAL TRUSTEE,

COMMUNITY FINANCIAL GROUP, INC.,
AS SPONSOR,

JOSEPH PARK AND DAVID PICKNEY,
AS ADMINISTRATORS

DATED AS OF SEPTEMBER 7, 2000

TABLE OF CONTENTS

                                                                            Page
                                                                            ----
ARTICLE I INTERPRETATION AND DEFINITIONS ................................     1
   Section 1.1.  Definitions ............................................     1

ARTICLE II ORGANIZATION .................................................     7
   Section 2.1.  Name ...................................................     7
   Section 2.2.  Office .................................................     7
   Section 2.3.  Purpose ................................................     7
   Section 2.4.  Authority ..............................................     7
   Section 2.5.  Title to Property of the Trust .........................     8
   Section 2.6.  Powers and Duties of the Trustees and the
                    Administrators ......................................     8
   Section 2.7.  Prohibition of Actions by the Trust and the Trustees ...    11
   Section 2.8.  Powers and Duties of the Institutional Trustee .........    12
   Section 2.9.  Certain Duties and Responsibilities of the Trustees and
                    Administrators ......................................    13
   Section 2.10. Certain Rights of Institutional Trustee ................    14
   Section 2.11. Execution of Documents .................................    16
   Section 2.12. Not Responsible for Recitals or Issuance of
                    Securities ..........................................    16
   Section 2.13. Duration of Trust ......................................    16
   Section 2.14. Mergers ................................................    16

ARTICLE III SPONSOR .....................................................    18
   Section 3.1.  Sponsor's Purchase of Common Securities ................    18
   Section 3.2.  Responsibilities of the Sponsor ........................    18
   Section 3.3.  Expenses ...............................................    18
   Section 3.4.  Right to Proceed .......................................    19

ARTICLE IV TRUSTEES AND ADMINISTRATORS ..................................    19
   Section 4.1.  Number of Trustees .....................................    19
   Section 4.2.  Institutional Trustee; Eligibility .....................    19
   Section 4.3.  Administrators .........................................    20
   Section 4.4.  Appointment, Removal and Resignation of Trustees and
                    Administrators ......................................    20
   Section 4.5.  Vacancies Among Trustees ...............................    21
   Section 4.6.  Effect of Vacancies ....................................    21
   Section 4.7.  Meetings of the Trustees and the Administrators ........    21
   Section 4.8.  Delegation of Power ....................................    22
   Section 4.9.  Conversion, Consolidation or Succession to Business ....    22

ARTICLE V DISTRIBUTIONS .................................................    22
   Section 5.1.  Distributions ..........................................    22

ARTICLE VI ISSUANCE OF SECURITIES .......................................    22
   Section 6.1.  General Provisions Regarding Securities ................    22
   Section 6.2.  Paying Agent, Transfer Agent and Registrar .............    23
   Section 6.3.  Form and Dating ........................................    23
   Section 6.4.  Mutilated, Destroyed, Lost or Stolen Certificates ......    24
   Section 6.5.  Temporary Securities ...................................    24
   Section 6.6.  Cancellation ...........................................    24

   Section 6.7.  Rights of Holders; Waivers of Past Defaults ............    24

ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST ........................    26
   Section 7.1.  Dissolution and Termination of Trust ...................    26

ARTICLE VIII TRANSFER OF INTERESTS ......................................    27
   Section 8.1.  General ................................................    27
   Section 8.2.  Transfer Procedures and Restrictions ...................    28
   Section 8.3.  Deemed Security Holders ................................    29

ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES
                OR OTHERS ...............................................    29
   Section 9.1.  Liability ..............................................    29
   Section 9.2.  Exculpation ............................................    29
   Section 9.3.  Fiduciary Duty .........................................    30
   Section 9.4.  Indemnification ........................................    30
   Section 9.5.  Outside Businesses .....................................    32
   Section 9.6.  Compensation; Fee ......................................    32

ARTICLE X ACCOUNTING ....................................................    33
   Section 10.1. Fiscal Year ............................................    33
   Section 10.2. Certain Accounting Matters .............................    33
   Section 10.3. Banking ................................................    33
   Section 10.4. Withholding ............................................    34

ARTICLE XI AMENDMENTS AND MEETINGS ......................................    34
   Section 11.1. Amendments .............................................    34
   Section 11.2. Meetings of the Holders of Securities; Action by Written
                    Consent .............................................    35

ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE ....................    36
   Section 12.1. Representations and Warranties of Institutional
                    Trustee .............................................    36

ARTICLE XIII MISCELLANEOUS ..............................................    37
   Section 13.1. Notices ................................................    37
   Section 13.2. Governing Law ..........................................    38
   Section 13.3. Intention of the Parties ...............................    38
   Section 13.4. Headings ...............................................    38
   Section 13.5. Successors and Assigns .................................    38
   Section 13.6. Partial Enforceability .................................    38
   Section 13.7. Counterparts ...........................................    39

Annex I .......   Terms of Securities
Exhibit A-I ...   Form of Capital Security Certificate
Exhibit A-2 ...   Form of Common Security Certificate
Exhibit B .....   Specimen of Initial Debenture
Exhibit C .....   Placement Agreement

AMENDED AND RESTATED

DECLARATION OF TRUST

COMMUNITY FINANCIAL STATUTORY TRUST I

SEPTEMBER 7, 2000

AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and effective as of September 7, 2000, by the Trustees (as defined herein), the Administrators (as defined herein), the Sponsor (as defined herein) and by the holders, from time to time, of undivided beneficial interests in the Trust (as defined herein) to be issued pursuant to this Declaration;

WHEREAS, the Trustees, the Administrators and the Sponsor established Community Financial Statutory Trust I (the "Trust"), a statutory trust under the Connecticut Statutory Trust Act pursuant to a Declaration of Trust dated as of August 25, 2000 (the "Original Declaration"), and a Certificate of Trust filed with the Secretary of State of the State of Connecticut on August 28, 2000, for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in certain debentures of the Debenture Issuer (as defined herein);

WHEREAS, as of the date hereof, no interests in the Trust have been issued; and

WHEREAS, all of the Trustees, the Administrators and the Sponsor, by this Declaration, amend and restate each and every term and provision of the Original Declaration;

NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a statutory trust under the Statutory Trust Act (as defined herein) and that this Declaration constitutes the governing instrument of such statutory trust, the Trustees declare that all assets contributed to the Trust will be held in trust for the benefit of the holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. The parties hereto hereby agree as follows:

ARTICLE I

INTERPRETATION AND DEFINITIONS

SECTION 1.1.DEFINITIONS. Unless the context otherwise requires:

(a) Capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b) a term defined anywhere in this Declaration has the same meaning throughout;

(c) all references to "the Declaration" or "this Declaration" are to this Declaration as modified, supplemented or amended from time to time;

(d) all references in this Declaration to Articles and Sections and Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise specified; and

(e) a reference to the singular includes the plural and vice versa.

"Additional Interest" has the meaning set forth in the Indenture.

"Administrators" means each of Joseph Park and David Pickney, solely in such Person's capacity as Administrator of the Trust created and continued hereunder and not in such Person's individual capacity, or such Administrator's successor in interest in such capacity, or any successor appointed as herein provided.

"Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder.

"Authorized Officer" of a Person means any Person that is authorized to bind such Person.

"Bankruptcy Event" means, with respect to any Person:

(a) a court having jurisdiction in the premises shall enter a decree or order for relief in respect of such Person in an involuntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its property, or ordering the winding-up or liquidation of its affairs and such decree or order shall remain unstayed and in effect for a period of 90 consecutive days; or

(b) such Person shall commence a voluntary case under any applicable bankruptcy, insolvency or other similar law now or hereafter in effect, shall consent to the entry of an order for relief in an involuntary case under any such law, or shall consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator (or other similar official) of such Person of any substantial part of its property, or shall make any general assignment for the benefit of creditors, or shall fail generally to pay its debts as they become due.

"Business Day" means any day other than Saturday, Sunday or any other day on which banking institutions in New York City or Hartford, Connecticut are permitted or required by any applicable law to close.

"Capital Securities" has the meaning set forth in Section 6.1(a).

"Capital Security Certificate" means a definitive Certificate in fully registered form representing a Capital Security substantially in the form of Exhibit A-1.

"Capital Treatment Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Certificate" means any certificate evidencing Securities.

"Closing Date" has the meaning set forth in the Placement Agreement.

"Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation.

"Commission" means the Securities and Exchange Commission.

"Common Securities" has the meaning set forth in Section 6.1(a).

"Common Security Certificate" means a definitive Certificate in fully registered form representing a Common Security substantially in the form of Exhibit A-2.

"Company Indemnified Person" means (a) any Administrator; (b) any Affiliate of any Administrator; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Administrator; or (d) any officer, employee or agent of the Trust or its Affiliates.

"Comparable Treasury Issue" has the meaning set forth in paragraph 4(a) of Annex I.

"Comparable Treasury Price" has the meaning set forth in paragraph 4(a) of Annex I.

"Corporate Trust Office" means the office of the Institutional Trustee at which the corporate trust business of the Institutional Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Declaration is located at 225 Asylum Street, Goodwin Square, Hartford, Connecticut.

"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.

"Covered Person" means: (a) any Administrator, officer, director, shareholder, partner, member, representative, employee or agent of (i) the Trust or (ii) any of the Trust's Affiliates; and (b) any Holder of Securities.

"Creditor" has the meaning set forth in Section 3.3.

"Debenture Issuer" means Community Financial Group, Inc., an Arkansas corporation, in its capacity as issuer of the Debentures under the Indenture.

"Debenture Trustee" means State Street Bank and Trust Company of Connecticut, National Association, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee.

"Debentures" means the 10.60% Junior Subordinated Deferrable Interest Debentures due 2030 to be issued by the Debenture Issuer under the Indenture.

"Defaulted Interest" has the meaning set forth in the Indenture.

"Direct Action" has the meaning set forth in Section 2.8(d).

"Distribution" means a distribution payable to Holders of Securities in accordance with Section 5.1.

"Distribution Payment Date" has the meaning set forth in paragraph 2(b) of Annex I.

"Event of Default" means any one of the following events (whatever the reason for such event 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 an Indenture Event of Default; or

(b) default by the Trust in the payment of any Redemption Price of any Security when it becomes due and payable; or

(c) default in the performance, or breach, in any material respect, of any covenant or warranty of the Trustees in this Declaration (other than those specified in clause (a) or (b) above) and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail to the Trustees and to the Sponsor by the Holders of at least 25% in aggregate liquidation amount of the outstanding Capital Securities a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

(d) the occurrence of a Bankruptcy Event with respect to the Institutional Trustee if a successor Institutional Trustee has not been appointed within 90 days thereof.

"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time, or any successor legislation.

"Extension Period" has the meaning set forth in paragraph 2(b) of Annex I.

"Federal Reserve" has the meaning set forth in paragraph 3 of Annex I.

"Fiduciary Indemnified Person" shall mean the Institutional Trustee, any Affiliate of the Institutional Trustee and any officers, directors, shareholders, members, partners, employees, representatives, custodians, nominees or agents of the Institutional Trustee.

"Fiscal Year" has the meaning set forth in Section 10.1.

"Guarantee" means the guarantee agreement to be dated as of the Closing Date, of the Sponsor in respect of the Capital Securities.

"Holder" means a Person in whose name a Certificate representing a Security is registered, such Person being a beneficial owner within the meaning of the Statutory Trust Act.

"Indemnified Person" means a Company Indemnified Person or a Fiduciary Indemnified Person.

"Indenture" means the Indenture dated as of the Closing Date, between the Debenture Issuer and the Debenture Trustee, and any indenture supplemental thereto pursuant to which the Debentures are to be issued, as such Indenture and any supplemental indenture may be amended, supplemented or otherwise modified from time to time.

"Indenture Event of Default" means an "Event of Default" as defined in the Indenture.

"Institutional Trustee" means the Trustee meeting the eligibility requirements set forth in Section 4.2.

"Interest" means any interest due on the Debentures including any Additional Interest and Defaulted Interest.

"Investment Company" means an investment company as defined in the Investment Company Act.

"Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation.

"Investment Company Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Legal Action" has the meaning set forth in Section 2.8(d).

"Liquidation" has the meaning set forth in paragraph 3 of Annex I.

"Liquidation Distribution" has the meaning set forth in paragraph 3 of Annex I.

"Majority in liquidation amount of the Securities" means Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of more than 50% of the aggregate 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 outstanding Securities of the relevant class.

"Officers' Certificates" 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 providing for it in this Declaration shall include:

(a) a statement that each officer signing the Certificate has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the 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

(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

"Paying Agent" has the meaning specified in Section 6.2.

"Payment Amount" has the meaning set forth in Section 5.1.

"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.

"Placement Agreement" means the Placement Agreement relating to the offering and sale of Capital Securities in the form of Exhibit C.

"Primary Treasury Dealer" has the meaning set forth in paragraph 4(a) of Annex I. "Property Account" has the meaning set forth in Section 2.8(c).

"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.

"Quorum" means a majority of the Administrators or, if there are only two Administrators, both of them.

"Quotation Agent" has the meaning set forth in paragraph 4(a) of Annex I.

"Redemption/Distribution Notice" has the meaning set forth in paragraph 4(e) of Annex I.

"Redemption Price" has the meaning set forth in paragraph 4(a) of Annex I.

"Registrar" has the meaning set forth in Section 6.2.

"Reference Treasury Dealer" has the meaning set forth in paragraph 4(a) of Annex I.

"Reference Treasury Dealer Quotations" has the meaning set forth in paragraph 4(a) of Annex I.

"Relevant Trustee" has the meaning set forth in Section 4.4(a).

"Remaining Life" has the meaning set forth in paragraph 4(a) of Annex I.

"Responsible Officer" means, with respect to the Institutional Trustee, any officer within the Corporate Trust Office of the Institutional Trustee, including any vice-president, any assistant vice-president, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or other officer of the Corporate Trust Office of the Institutional Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

"Restricted Securities Legend" has the meaning set forth in Section 8.2(b).

"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.

"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.

"Securities" means the Common Securities and the Capital Securities.

"Securities Act" means the Securities Act of 1933, as amended from time to time or any successor legislation.

"Special Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Special Redemption Date" has the meaning set forth in paragraph 4(a) of Annex I.

"Special Redemption Price" has the meaning set forth in paragraph 4(a) of Annex I.

"Sponsor" means Community Financial Group, Inc., an Arkansas corporation, or any successor entity in a merger, consolidation or amalgamation, in its capacity as sponsor of the Trust.

"Statutory Trust Act" means Chapter 615 of Title 34 of the Connecticut General Statutes, Sections 500, et seq. as may be amended from time to time.

"Successor Entity" has the meaning set forth in Section 2.14(b).

"Successor Institutional Trustee" has the meaning set forth in Section 4.4(a).

"Successor Securities" has the meaning set forth in Section 2.14(b).

"Super Majority" has the meaning set forth in paragraph 5(b) of Annex I.

"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.

"10% in liquidation amount of the Securities" means Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Capital Securities or

Holders of outstanding Common Securities voting separately as a class, who are the record owners of 10% or more of the aggregate 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 outstanding Securities of the relevant class.

"Transfer Agent" has the meaning set forth in Section 6.2.

"Treasury Rate" has the meaning set forth in paragraph 4(a) of Annex I.

"Treasury Regulations" means the income tax regulations, including temporary and proposed regulations, promulgated under the Code by the United States Treasury, as such regulations may be amended from time to time (including corresponding provisions of succeeding regulations).

"Trustee" or "Trustees" means each Person who has signed this Declaration as a trustee, so long as such Person shall continue in office in accordance with the terms hereof, and all other Persons who may from time to time be duly appointed, qualified and serving as Trustees in accordance with the provisions hereof, and references herein to a Trustee or the Trustees shall refer to such Person or Persons solely in their capacity as trustees hereunder.

"Trust Property" means (a) the Debentures, (b) any cash on deposit in, or owing to, the Property Account and (c) 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 Institutional Trustee pursuant to the trusts of this Declaration.

"U.S. Person" means a United States Person as defined in Section 7701(a)(30) of the Code.

ARTICLE II

ORGANIZATION

SECTION 2.1.NAME. The Trust is named "Community Financial Statutory Trust I," as such name may be modified from time to time by the Administrators following written notice to the Holders of the Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Administrators.

SECTION 2.2.OFFICE. The address of the principal office of the Trust is c/o State Street Bank and Trust Company of Connecticut, National Association, 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103. On at least 10 Business Days written notice to the Holders of the Securities, the Administrators may designate another principal office, which shall be in a state of the United States or in the District of Columbia.

SECTION 2.3.PURPOSE. The exclusive purposes and functions of the Trust are
(a) to issue and sell the Securities representing undivided beneficial interests in the assets of the Trust, (b) to invest the gross proceeds from such sale to acquire the Debentures, (c) to facilitate direct investment in the assets of the Trust through issuance of the Common Securities and the Capital Securities and
(d) except as otherwise limited herein, to engage in only those other activities necessary or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States federal income tax purposes as a grantor trust.

SECTION 2.4.AUTHORITY. Except as specifically provided in this Declaration, the Institutional Trustee shall have exclusive and complete authority to carry out the purposes of the Trust. An action

taken by a Trustee in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Trustees acting on behalf of the Trust, no Person shall be required to inquire into the authority of the Trustees to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Trustees as set forth in this Declaration. The Administrators shall have only those ministerial duties set forth herein with respect to accomplishing the purposes of the Trust and are not intended to be trustees or fiduciaries with respect to the Trust or the Holders. The Institutional Trustee shall have the right, but shall not be obligated except as provided in Section 2.6, to perform those duties assigned to the Administrators.

SECTION 2.5.TITLE TO PROPERTY OF THE TRUST. Except as provided in Section 2.8 with respect to the Debentures and the Property Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust.

SECTION 2.6.POWERS AND DUTIES OF THE TRUSTEES AND THE ADMINISTRATORS.

(a) The Trustees and the Administrators shall conduct the affairs of the Trust in accordance with the terms of this Declaration. Subject to the limitations set forth in paragraph (b) of this Section, and in accordance with the following provisions (i) and (ii), the Trustees and the Administrators shall have the authority to enter into all transactions and agreements determined by the Trustees to be appropriate in exercising the authority, express or implied, otherwise granted to the Trustees or the Administrators, as the case may be, under this Declaration, and to perform all acts in furtherance thereof, including without limitation, the following:

(i) Each Administrator shall have the power and authority to act on behalf of the Trust with respect to the following matters:

(A) the issuance and sale of the Securities;

(B) to cause the Trust to enter into, and to execute and deliver on behalf of the Trust, such agreements as may be necessary or desirable in connection with the purposes and function of the Trust, including agreements with the Paying Agent;

(D) the sending of notices (other than notices of default), and other information regarding the Securities and the Debentures to the Holders in accordance with this Declaration;

(E) the consent to the appointment of a Paying Agent, Transfer Agent and Registrar in accordance with this Declaration, which consent shall not be unreasonably withheld or delayed;

(F) execution and delivery of the Securities in accordance with this Declaration;

(G) execution and delivery of closing certificates, pursuant to the Placement Agreement and the application for a taxpayer identification number;

Administrators) any documents that the Administrators have the power to execute pursuant to this Declaration;

(I) the taking of any action incidental to the foregoing as the Institutional Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Declaration for the benefit of the Holders (without consideration of the effect of any such action on any particular Holder);

(J) to establish a record date with respect to all actions to be taken hereunder that require a record date be established, including Distributions, voting rights, redemptions and exchanges, and to issue relevant notices to the Holders of Capital Securities and Holders of Common Securities as to such actions and applicable record dates; and

(K) to duly prepare and file all applicable tax returns and tax information reports that are required to be filed with respect to the Trust on behalf of the Trust.

(ii) As among the Trustees and the Administrators, the Institutional Trustee shall have the power, duty and authority to act on behalf of the Trust with respect to the following matters:

(A) the establishment of the Property Account;

(B) the receipt of the Debentures;

(C) the collection of interest, principal and any other payments made in respect of the Debentures in the Property Account;

(D) the distribution through the Paying Agent of amounts owed to the Holders in respect of the Securities;

(E) the exercise of all of the rights, powers and privileges of a holder of the Debentures;

(F) the sending of notices of default and other information regarding the Securities and the Debentures to the Holders in accordance with this Declaration;

(G) the distribution of the Trust Property in accordance with the terms of this Declaration;

(H) to the extent provided in this Declaration, 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 Connecticut;

(I) after any Event of Default (provided that such Event of Default is not by or with respect to the Institutional Trustee) the taking of any action incidental to the foregoing as the Institutional Trustee may from time to time determine is necessary or advisable to give effect to the terms of this Declaration and protect and conserve the Trust Property for the benefit of the Holders (without consideration of the effect of any such action on any particular Holder); and

such existence is necessary to protect the limited liability of the Holders of the Capital Securities or to enable the Trust to effect the purposes for which the Trust was created.

(iii) The Institutional Trustee shall have the power and authority to act on behalf of the Trust with respect to any of the duties, liabilities, powers or the authority of the Administrators set forth in Section 2.6(a)(i)(D), (E) and (F) herein but shall not have a duty to do any such act unless specifically requested to do so in writing by the Sponsor, and shall then be fully protected in acting pursuant to such written request; and in the event of a conflict between the action of the Administrators and the action of the Institutional Trustee, the action of the Institutional Trustee shall prevail.

(b) So long as this Declaration remains in effect, the Trust (or the Trustees or Administrators acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, neither the Trustees nor the Administrators may cause the Trust to (i) acquire any investments or engage in any activities not authorized by this Declaration, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Holders, except as expressly provided herein,
(iii) take any action that would reasonably be expected (x) to cause the Trust to fail or cease to qualify as a "grantor trust" for United States federal income tax purposes or (y) to require the Trust to register as an Investment Company under the Investment Company Act, (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 Institutional Trustee shall, at the sole cost and expense of the Trust, 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 Holders in their capacity as Holders.

(c) In connection with the issuance and sale of the Capital Securities, the Sponsor shall have the right and responsibility to assist the Trust with respect to, or effect on behalf of the Trust, the following (and any actions taken by the Sponsor in furtherance of the following prior to the date of this Declaration are hereby ratified and confirmed in all respects):

(i) the taking of any action necessary to obtain an exemption from the Securities Act;

(ii) the determination of the States in which to take appropriate action to qualify or register for sale all or part of the Capital Securities and the determination of any and all such acts, other than actions which must be taken by or on behalf of the Trust, and the advice to the Trustees of actions they must take on behalf of the Trust, and the preparation for execution and filing of any documents to be executed and filed by the Trust or on behalf of the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States in connection with the sale of the Capital Securities;

(iii) the negotiation of the terms of, and the execution and delivery of, the Placement Agreement providing for the sale of the Capital Securities; and

(iv) the taking of any other actions necessary or desirable to carry out any of the foregoing activities.

grantor trust for United States federal income tax purposes. The Administrators and the Holders of a Majority in liquidation amount of the Common Securities shall not take any action inconsistent with the treatment of the Debentures as indebtedness of the Debenture Issuer for United States federal income tax purposes. In this connection, the Administrators and the Holders of a Majority in liquidation amount of the Common Securities are authorized to take any action, not inconsistent with applicable laws, the Certificate of Trust or this Declaration, as amended from time to time, that each of the Administrators and the Holders of a Majority in liquidation amount of the Common Securities determines in their discretion to be necessary or desirable for such purposes.

(e) All expenses incurred by the Administrators or the Trustees pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the Trustees shall have no obligations with respect to such expenses.

(f) The assets of the Trust shall consist of the Trust Property.

(g) Legal title to all Trust Property shall be vested at all times in the Institutional Trustee (in its capacity as such) and shall be held and administered by the Institutional Trustee for the benefit of the Trust in accordance with this Declaration.

SECTION 2.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE TRUSTEES.

(a) The Trust shall not, and the Institutional Trustee shall cause the Trust not to, engage in any activity other than as required or authorized by this Declaration. In particular, the Trust shall not and the Institutional Trustee shall cause the Trust not to:

(i) invest any proceeds received by the Trust from holding the Debentures, but shall distribute all such proceeds to Holders of the Securities pursuant to the terms of this Declaration and of the Securities;

(ii) acquire any assets other than as expressly provided herein;

(iii) possess Trust Property for other than a Trust purpose;

(iv) make any loans or incur any indebtedness other than loans represented by the Debentures;

(v) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever other than as expressly provided herein;

(vi) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities;

(vii) carry on any "trade or business" as that phrase is used in the Code; or

(viii) other than as provided in this Declaration (including Annex I), (A) direct the time, method and place of exercising any trust or power conferred upon the Debenture Trustee with respect to the Debentures, (B) waive any past default that is waivable under the Indenture, (C) exercise any right to rescind or annul any declaration that the principal of all the Debentures shall be due and payable, or (D) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required unless the Trust shall have received an opinion of counsel to the effect that such modification will not cause the Trust to cease to be classified as a grantor trust for United States federal income tax purposes.

SECTION 2.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.

(a) The legal title to the Debentures shall be owned by and held of record in the name of the Institutional Trustee in trust for the benefit of the Trust and the Holders of the Securities. The right, title and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person who may hereafter be appointed as Institutional Trustee in accordance with
Section 4.4. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Debentures have been executed and delivered.

(b) The Institutional Trustee shall not transfer its right, title and interest in the Debentures to the Administrators.

(i) establish and maintain a segregated non-interest bearing trust account (the "Property Account") in the name of and under the exclusive control of the Institutional Trustee, and maintained in the Institutional Trustee's trust department, on behalf of the Holders of the Securities and, upon the receipt of payments of funds made in respect of the Debentures held by the Institutional Trustee, deposit such funds into the Property Account and make payments, or cause the Paying Agent to make payments, to the Holders of the Capital Securities and Holders of the Common Securities from the Property Account in accordance with Section 5.1. Funds in the Property Account shall be held uninvested until disbursed in accordance with this Declaration;

(ii) engage in such ministerial activities as shall be necessary or appropriate to effect the redemption of the Capital Securities and the Common Securities to the extent the Debentures are redeemed or mature; and

(iii) upon written notice of distribution issued by the Administrators in accordance with the terms of the Securities, engage in such ministerial activities as shall be necessary or appropriate to effect the distribution of the Debentures to Holders of Securities upon the occurrence of certain circumstances pursuant to the terms of the Securities.

(d) The Institutional Trustee may bring or defend, pay, collect, compromise, arbitrate, resort to legal action with respect to, or otherwise adjust claims or demands of or against, the Trust ("Legal Action") which arises out of or in connection with an Event of Default of which a Responsible Officer of the Institutional Trustee has actual knowledge or arises out of the Institutional Trustee's duties and obligations under this Declaration; provided, however, that if an Event of Default has occurred and is continuing and such event is attributable to the failure of the Debenture Issuer to pay interest or principal on the Debentures on the date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of the Capital Securities may directly institute a proceeding for enforcement of payment to such Holder of the principal of or interest on the Debentures having a principal amount equal to the aggregate liquidation amount of the Capital Securities of such Holder (a "Direct Action") on or after the respective due date specified in the Debentures. In connection with such Direct Action, the rights of the Holders of the Common Securities will be subrogated to the rights of such Holder of the Capital Securities to the extent of any payment made by the Debenture Issuer to such Holder of the Capital Securities in such Direct Action; provided, however, that no Holder of the Common Securities may exercise such right of subrogation so long as an Event of Default with respect to the Capital Securities has occurred and is continuing.

(e) The Institutional Trustee shall continue to serve as a Trustee until either:

(i) the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of the Securities pursuant to the terms of the Securities and this Declaration; or

(ii) a Successor Institutional Trustee has been appointed and has accepted that appointment in accordance with Section 4.4.

(f) The Institutional Trustee shall have the legal power to exercise all of the rights, powers and privileges of a Holder of the Debentures under the Indenture and, if an Event of Default occurs and is continuing, the Institutional Trustee may, for the benefit of Holders of the Securities, enforce its rights as holder of the Debentures subject to the rights of the Holders pursuant to this Declaration (including Annex I) and the terms of the Securities.

The Institutional Trustee must exercise the powers set forth in this
Section 2.8 in a manner that is consistent with the purposes and functions of the Trust set out in Section 2.3, and the Institutional Trustee shall not take any action that is inconsistent with the purposes and functions of the Trust set out in Section 2.3.

SECTION 2.9.CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEES AND ADMINISTRATORS.

(a) The Institutional Trustee, before the occurrence of any Event of Default and after the curing or waiving of all such Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Declaration and no implied covenants shall be read into this Declaration against the Institutional Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 6.7), the Institutional Trustee shall exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs.

(b) The duties and responsibilities of the Trustees and the Administrators shall be as provided by this Declaration. Notwithstanding the foregoing, no provision of this Declaration shall require the Trustees or Administrators to expend or risk their own funds or otherwise incur any financial liability in the performance of any of their duties hereunder, or in the exercise of any of their rights or powers if it shall have reasonable grounds to believe that repayment of such funds or adequate protection against such risk of liability is not reasonably assured to it. Whether or not therein expressly so provided, every provision of this Declaration relating to the conduct or affecting the liability of or affording protection to the Trustees or Administrators shall be subject to the provisions of this Article. Nothing in this Declaration shall be construed to relieve an Administrator or Trustee from liability for its own negligent failure to act, or its own willful misconduct. To the extent that, at law or in equity, a Trustee or an Administrator has duties and liabilities relating to the Trust or to the Holders, such Trustee or Administrator shall not be liable to the Trust or to any Holder for such Trustee's or Administrator's good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of the Administrators or the Trustees otherwise existing at law or in equity, are agreed by the Sponsor and the Holders to replace such other duties and liabilities of the Administrators or the Trustees.

(c) All payments made by the Institutional Trustee or a Paying Agent in respect of the 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 Institutional Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Holder, by its acceptance of a Security, agrees that it will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Trustees and the Administrators are not personally liable to it for any amount distributable in respect of any Security or

for any other liability in respect of any Security. This Section 2.9(c) does not limit the liability of the Trustees expressly set forth elsewhere in this Declaration.

(d) The Institutional Trustee shall not be liable for its own acts or omissions hereunder except as a result of its own negligent action, its own negligent failure to act, or its own willful misconduct, except that:

(i) the Institutional Trustee shall not be liable for any error of judgment made in good faith by an Authorized Officer of the Institutional Trustee, unless it shall be proved that the Institutional Trustee was negligent in ascertaining the pertinent facts;

(ii) the Institutional 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 Capital Securities or the Common Securities, as applicable, relating to the time, method and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under this Declaration;

(iii) the Institutional Trustee's sole duty with respect to the custody, safekeeping and physical preservation of the Debentures and the Property Account shall be to deal with such property in a similar manner as the Institutional Trustee deals with similar property for its fiduciary accounts generally, subject to the protections and limitations on liability afforded to the Institutional Trustee under this Declaration;

(iv) the Institutional Trustee shall not be liable for any interest on any money received by it except as it may otherwise agree in writing with the Sponsor; and money held by the Institutional Trustee need not be segregated from other funds held by it except in relation to the Property Account maintained by the Institutional Trustee pursuant to Section 2.8(c)(i) and except to the extent otherwise required by law; and

(v) the Institutional Trustee shall not be responsible for monitoring the compliance by the Administrators or the Sponsor with their respective duties under this Declaration, nor shall the Institutional Trustee be liable for any default or misconduct of the Administrators or the Sponsor.

SECTION 2.10. CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE. Subject to the provisions of Section 2.9:

(a) the Institutional Trustee may conclusively rely and shall fully be protected in acting or refraining from acting in good faith upon any resolution, opinion of counsel, certificate, written representation of a Holder or transferee, certificate of auditors or any other certificate, statement, instrument, opinion, report, notice, request, direction, 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 Declaration, the Institutional Trustee is required to decide between alternative courses of action, (ii) in construing any of the provisions of this Declaration, the Institutional Trustee finds the same ambiguous or inconsistent with any other provisions contained herein, or (iii) the Institutional Trustee is unsure of the application of any provision of this Declaration, then, except as to any matter as to which the Holders of Capital Securities are entitled to vote under the terms of this Declaration, the Institutional Trustee may deliver a notice to the Sponsor requesting the Sponsor's written instructions as to the course of action to be taken and the Institutional Trustee shall take

such action, or refrain from taking such action, as the Institutional Trustee shall be instructed in writing, in which event the Institutional Trustee shall have no liability except for its own negligence or willful misconduct;

(c) any direction or act of the Sponsor or the Administrators contemplated by this Declaration shall be sufficiently evidenced by an Officers' Certificate;

(d) whenever in the administration of this Declaration, the Institutional Trustee shall deem it desirable that a matter be proved or established before undertaking, suffering or omitting any action hereunder, the Institutional Trustee (unless other evidence is herein specifically prescribed) may request and conclusively rely upon an Officers' Certificate as to factual matters which, upon receipt of such request, shall be promptly delivered by the Sponsor or the Administrators;

(e) the Institutional 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;

(f) the Institutional Trustee may consult with counsel of its selection (which counsel may be counsel to the Sponsor or any of its Affiliates) 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; the Institutional Trustee shall have the right at any time to seek instructions concerning the administration of this Declaration from any court of competent jurisdiction;

(g) the Institutional Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any of the Holders pursuant to this Declaration, unless such Holders shall have offered to the Institutional Trustee security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; provided, that nothing contained in this Section 2.10(g) shall be taken to relieve the Institutional Trustee, subject to Section 2.9(b), upon the occurrence of an Event of Default, to exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs;

(h) the Institutional 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, debenture, note or other evidence of indebtedness or other paper or document, unless requested in writing to do so by one or more Holders, but the Institutional Trustee may make such further inquiry or investigation into such facts or matters as it may see fit;

(i) the Institutional 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 and the Institutional Trustee shall not be responsible for any misconduct or negligence on the part of or for the supervision of, any such agent or attorney appointed with due care by it hereunder;

(j) whenever in the administration of this Declaration the Institutional Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder the Institutional Trustee (i) may request instructions from the Holders of the Capital Securities which instructions may only be given by the Holders of the same proportion in liquidation amount of the Capital Securities as would be entitled to direct the Institutional Trustee under the terms of the Capital 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 fully protected in acting in accordance with such instructions;

(k) except as otherwise expressly provided in this Declaration, the Institutional Trustee shall not be under any obligation to take any action that is discretionary under the provisions of this Declaration;

(l) when the Institutional Trustee incurs expenses or renders services in connection with a Bankruptcy Event, such expenses (including the fees and expenses of its counsel) and the compensation for such services are intended to constitute expenses of administration under any bankruptcy law or law relating to creditors rights generally;

(m) the Institutional Trustee shall not be charged with knowledge of an Event of Default unless a Responsible Officer of the Institutional Trustee obtains actual knowledge of such event or the Institutional Trustee receives written notice of such event from any Holder, the Sponsor or the Debenture Trustee;

(n) any action taken by the Institutional Trustee or its agents hereunder shall bind the Trust and the Holders of the Securities, and the signature of the Institutional Trustee or its agents alone shall be sufficient and effective to perform any such action and no third party shall be required to inquire as to the authority of the Institutional Trustee to so act or as to its compliance with any of the terms and provisions of this Declaration, both of which shall be conclusively evidenced by the Institutional Trustee's or its agent's taking such action; and

(o) no provision of this Declaration shall be deemed to impose any duty or obligation on the Institutional 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 Institutional 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 Institutional Trustee shall be construed to be a duty.

SECTION 2.11. EXECUTION OF DOCUMENTS. Unless otherwise determined in writing by the Institutional Trustee, and except as otherwise required by the Statutory Trust Act, the Institutional Trustee, or any one or more of the Administrators, as the case may be, is authorized to execute on behalf of the Trust any documents that the Trustees or the Administrators, as the case may be, have the power and authority to execute pursuant to Section 2.6.

SECTION 2.12. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained in this Declaration and the Securities shall be taken as the statements of the Sponsor, and the Trustees do not assume any responsibility for their correctness. The Trustees make no representations as to the value or condition of the property of the Trust or any part thereof. The Trustees make no representations as to the validity or sufficiency of this Declaration, the Debentures or the Securities.

SECTION 2.13. DURATION OF TRUST. The Trust, unless earlier dissolved pursuant to the provisions of Article VII hereof, shall be in existence for 35 years from the Closing Date.

SECTION 2.14. MERGERS.

(b) The Trust may, with the consent of the Institutional Trustee and without the consent of the Holders of the Capital Securities, consolidate, amalgamate, merge with or into, or be replaced by a trust organized as such under the laws of any state; provided that:

(i) if the Trust is not the surviving entity, such successor entity (the "Successor Entity") either:

(A) expressly assumes all of the obligations of the Trust under the Securities; or

(B) substitutes for the Securities other securities having substantially the same terms as the Securities (the "Successor Securities") so that the Successor Securities rank the same as the Securities rank with respect to Distributions and payments upon Liquidation, redemption and otherwise;

(ii) the Sponsor expressly appoints a trustee of the Successor Entity that possesses the same powers and duties as the Institutional Trustee as the Holder of the Debentures;

(iii) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of such Holders' interests in the Successor Entity as a result of such merger, consolidation, amalgamation or replacement);

(iv) the Institutional Trustee receives written confirmation from Moody's Investor Services, Inc. or any other nationally recognized statistical rating organization that rates securities issued by the initial purchase of the Capital Securities that it will not reduce or withdraw the rating of any such securities because of such merger, conversion, consolidation, amalgamation or replacement;

(v) such Successor Entity has a purpose substantially identical to that of the Trust;

(vi) prior to such merger, consolidation, amalgamation or replacement, the Trust has received an opinion of a nationally recognized independent counsel to the Trust experienced in such matters to the effect that:

(A) such merger, consolidation, amalgamation or replacement does not adversely affect the rights, preferences and privileges of the Holders of the Securities (including any Successor Securities) in any material respect (other than with respect to any dilution of the Holders' interest in the Successor Entity);

(B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor the Successor Entity will be required to register as an Investment Company; and

(C) following such merger, consolidation, amalgamation or replacement, the Trust (or the Successor Entity) will continue to be classified as a grantor trust for United States federal income tax purposes;

(vii) the Sponsor guarantees the obligations of such Successor Entity under the Successor Securities at least to the extent provided by the Guarantee;

(viii) the Sponsor owns 100% of the common securities of any Successor Entity; and

(ix) prior to such merger, consolidation, amalgamation or replacement, the Institutional Trustee shall have received an Officers' Certificate of the Administrators and an opinion of counsel, each to the effect that all conditions precedent under this Section 2.14(b) to such transaction have been satisfied.

(c) Notwithstanding Section 2.14(b), the Trust shall not, except with the consent of Holders of 100% in aggregate liquidation amount of the Securities, consolidate, amalgamate, merge with or into, or be replaced by any other entity or permit any other entity to consolidate, amalgamate, merge with or into, or replace it if such consolidation, amalgamation, merger or replacement would cause the Trust or Successor Entity to be classified as other than a grantor trust for United States federal income tax purposes.

ARTICLE III

SPONSOR

SECTION 3.1.SPONSOR'S PURCHASE OF COMMON SECURITIES. On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the Trust in an amount at least equal to 3% of the capital of the Trust, at the same time as the Capital Securities are sold.

SECTION 3.2.RESPONSIBILITIES OF THE SPONSOR. In connection with the issue and sale of the Capital Securities, the Sponsor shall have the exclusive right and responsibility to engage in, or direct the Administrators to engage in, the following activities:

(a) to determine the States in which to take appropriate action to qualify or register for sale all or part of the Capital Securities and to do any and all such acts, other than actions which must be taken by the Trust, and advise the Trust of actions it must take, and prepare for execution and filing any documents to be executed and filed by the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States; and

(b) to negotiate the terms of and/or execute on behalf of the Trust, the Placement Agreement, and other related agreements providing for the sale of the Capital Securities.

SECTION 3.3.EXPENSES. In connection with the offering, sale and issuance of the Debentures to the Institutional Trustee and in connection with the sale of the Securities by the Trust, the Sponsor, in its capacity as Debenture Issuer, shall:

(a) pay all costs and expenses relating to the offering, sale and issuance of the Debentures, including compensation of the Debenture Trustee under the Indenture in accordance with the provisions of the Indenture;

(b) be responsible for and shall pay all debts and obligations (other than with respect to the Securities) and all costs and expenses of the Trust (including, but not limited to, costs and expenses relating to the organization, maintenance and dissolution of the Trust), the offering, sale and issuance of the Securities (including fees to the placement agents in connection therewith), the fees and expenses (including reasonable counsel fees and expenses) of the Institutional Trustee and the Administrators, the costs and expenses relating to the operation of the Trust, including, without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for printing and engraving and computing or accounting equipment, Paying Agents, Registrars, Transfer Agents, duplicating, travel and telephone and other telecommunications expenses and costs and expenses incurred in connection with the acquisition, financing, and disposition of Trust assets and the enforcement by the Institutional Trustee of the rights of the Holders; and

(c) to pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust.

The Sponsor's obligations under this Section 3.3 shall be for the benefit of, and shall be enforceable by, any Person to whom such debts, obligations, costs, expenses and taxes are owed (a "Creditor") whether or not such Creditor has received notice hereof. Any such Creditor may enforce the Sponsor's obligations under this Section 3.3 directly against the Sponsor and the Sponsor irrevocably waives any right or remedy to require that any such Creditor take any action against the Trust or any other Person before proceeding against the Sponsor. The Sponsor agrees to execute such additional agreements as may be necessary or desirable in order to give full effect to the provisions of this
Section 3.3.

SECTION 3.4. RIGHT TO PROCEED. The Sponsor acknowledges the rights of Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.

ARTICLE IV

TRUSTEES AND ADMINISTRATORS

SECTION 4.1. NUMBER OF TRUSTEES. The number of Trustees initially shall be one (1), and:

(a) at any time before the issuance of any Securities, the Sponsor may, by written instrument, increase or decrease the number of Trustees; and

(b) after the issuance of any Securities, the number of Trustees may be increased or decreased by vote of the Holders of a Majority in liquidation amount of the Capital Securities voting as a class at a meeting of the Holders of the Capital Securities; provided, however, that there shall always be one Trustee who shall be the Institutional Trustee.

SECTION 4.2. INSTITUTIONAL TRUSTEE; ELIGIBILITY.

(a) There shall at all times be one Trustee which shall act as Institutional Trustee which shall:

(i) not be an Affiliate of the Sponsor;

(ii) not offer or provide credit or credit enhancement to the Trust; and

(iii) be a banking corporation or trust company organized and doing business under the laws of the United States of America or any state thereof or the District of Columbia, authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, state, or District of Columbia authority. If such corporation 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 4.2(a)(iii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

(b) If at any time the Institutional Trustee shall cease to be eligible to so act under Section 4.2(a), the Institutional Trustee shall immediately resign in the manner and with the effect set forth in Section 4.4(a).

SECTION 4.3. ADMINISTRATORS. Each Administrator shall be a U.S. Person, 21 years of age or older and authorized to bind the Sponsor. The initial Administrators shall be Joseph Park and David Pickney. There shall at all times be at least one Administrator. Except where a requirement for action by a specific number of Administrators is expressly set forth in this Declaration and except with respect to any action the taking of which is the subject of a meeting of the Administrators, any action required or permitted to be taken by the Administrators may be taken by, and any power of the Administrators may be exercised by, or with the consent of, any one such Administrator.

SECTION 4.4. APPOINTMENT, REMOVAL AND RESIGNATION OF TRUSTEES AND ADMINISTRATORS.

(a) Notwithstanding anything to the contrary in this Declaration, 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 this Section 4.4.

Subject to the immediately preceding paragraph, a Relevant Trustee may resign at any time by giving written notice thereof to the Holders of the Securities and by appointing a successor Relevant Trustee. Upon the resignation of the Institutional Trustee, the Institutional Trustee shall appoint a successor by requesting from at least three Persons meeting the eligibility requirements, its expenses and charges to serve as the successor Institutional Trustee on a form provided by the Administrators, and selecting the Person who agrees to the lowest expense and charges (the "Successor Institutional Trustee"). If the instrument of acceptance by the successor Relevant Trustee required by this Section 4.4 shall not have been delivered to the Relevant Trustee within 60 days after the giving of such notice of resignation or delivery of the instrument of removal, the Relevant Trustee may petition, at the expense of the Trust, any Federal, state or District of Columbia court of competent jurisdiction for the appointment of a successor Relevant Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Relevant Trustee. The Institutional Trustee shall have no liability for the selection of such successor pursuant to this Section 4.4.

The Institutional Trustee may be removed by the act of the Holders of a Majority in liquidation amount of the Capital Securities, delivered to the Relevant Trustee (in its individual capacity and on behalf of the Trust) if an Event of Default shall have occurred and be continuing. If any Trustee shall be so removed, the Holders of Capital Securities, by act of the Holders of a Majority in liquidation amount of the Capital Securities then outstanding delivered to the Relevant Trustee, shall promptly appoint a successor Relevant Trustee or Trustees, and such successor Trustee shall comply with the applicable requirements of this Section 4.4. If no successor Relevant Trustee shall have been so appointed by the Holders of a Majority in liquidation amount of the Capital Securities and accepted appointment in the manner required by this
Section 4.4, within 30 days after delivery of an instrument of removal, any Holder who has been a Holder of the Securities for at least 6 months may, on behalf of himself and all others similarly situated, petition any Federal, state or District of Columbia court of competent jurisdiction for the appointment of a successor Relevant Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a successor Relevant Trustee or Trustees.

The Institutional Trustee shall give notice of each resignation and each removal of a Trustee and each appointment of a successor Trustee to all Holders in the manner provided in Section 13.1(d) and shall give notice to the Sponsor. Each notice shall include the name of the successor Relevant Trustee and the address of its Corporate Trust Office if it is the Institutional Trustee.

(b) In case of the appointment hereunder of a successor Relevant Trustee, the retiring Relevant Trustee and each successor Relevant Trustee with respect to the Trust Securities shall execute and deliver an amendment hereto wherein each successor Relevant Trustee shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest

in, each successor Relevant Trustee all the rights, powers, trusts and duties of the retiring Relevant Trustee with respect to the Securities and the Trust and
(ii) shall add to or change any of the provisions of this Declaration as shall be necessary to provide for or facilitate the administration of the Trust by more than one Relevant Trustee, it being understood that nothing herein or in such amendment shall constitute such Relevant Trustees co-trustees and upon the execution and delivery of such amendment the resignation or removal of the retiring Relevant Trustee shall become effective to the extent provided therein and each such successor Relevant Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Relevant Trustee; but, on request of the Trust of any successor Relevant Trustee such retiring Relevant Trustee shall duly assign, transfer and deliver to such successor Relevant Trustee all Trust Property, all proceeds thereof and money held by such retiring Relevant Trustee hereunder with respect to the Securities and the Trust.

(d) The Holders of the Capital Securities will have no right to vote to appoint, remove or replace the Administrators, which voting rights are vested exclusively in the Holder of the Common Securities.

SECTION 4.5. VACANCIES AMONG TRUSTEES. If a Trustee ceases to hold office for any reason and the number of Trustees is not reduced pursuant to Section 4.1, or if the number of Trustees is increased pursuant to Section 4.1, a vacancy shall occur. A resolution certifying the existence of such vacancy by the Trustees or, if there are more than two, a majority of the Trustees shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a Trustee appointed in accordance with Section 4.4.

SECTION 4.6. EFFECT OF VACANCIES. The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of a Trustee shall not operate to dissolve, terminate or annul the Trust or terminate this Declaration. Whenever a vacancy in the number of Trustees shall occur, until such vacancy is filled by the appointment of a Trustee in accordance with Section 4.4, the Institutional Trustee shall have all the powers granted to the Trustees and shall discharge all the duties imposed upon the Trustees by this Declaration.

SECTION 4.7. MEETINGS OF THE TRUSTEES AND THE ADMINISTRATORS. Meetings of the Trustees or the Administrators shall be held from time to time upon the call of any Trustee or Administrator, as applicable. Regular meetings of the Trustees and the Administrators, respectively, may be held in person in the United States or by telephone, at a place (if applicable) and time fixed by resolution of the Trustees or the Administrators, as applicable. Notice of any in-person meetings of the Trustees or the Administrators shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of the Trustees or the Administrators or any committee thereof shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of a Trustee or an Administrator, as the case may be, at a meeting shall constitute a waiver of notice of such meeting except where a Trustee or an Administrator, as the case may be, attends a meeting for the express purpose of objecting to the transaction of any activity on the grounds that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Trustees or the Administrators, as the case may be, may be taken at a meeting by vote of a majority of the Trustees or the Administrators present (whether in person or by telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or without a meeting by the unanimous written consent of the

Trustees or the Administrators. Meetings of the Trustees and the Administrators together shall be held from time to time upon the call of any Trustee or Administrator.

SECTION 4.8. DELEGATION OF POWER.

(a) Any Administrator may, by power of attorney consistent with applicable law, delegate to any other natural person over the age of 21 that is a U.S. Person his or her power for the purpose of executing any documents contemplated in Section 2.6; and

(b) the Administrators shall have power to delegate from time to time to such of their number the doing of such things and the execution of such instruments either in the name of the Trust or the names of the Administrators or otherwise as the Administrators 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 4.9. CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any Person into which the Institutional 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 Institutional Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Institutional Trustee shall be the successor of the Institutional 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.

ARTICLE V

DISTRIBUTIONS

SECTION 5.1. DISTRIBUTIONS. Holders shall receive Distributions in accordance with the applicable terms of the relevant Holder's Securities. Distributions shall be made on the Capital Securities and the Common Securities in accordance with the preferences set forth in their respective terms. If and to the extent that the Debenture Issuer makes a payment of Interest (or any principal on the Debentures held by the Institutional Trustee) (the amount of any such payment being a "Payment Amount"), the Institutional Trustee shall and is directed, to the extent funds are available for that purpose, to make a distribution (a "Distribution") of the Payment Amount to Holders.

ARTICLE VI

ISSUANCE OF SECURITIES

SECTION 6.1. GENERAL PROVISIONS REGARDING SECURITIES.

(a) The Administrators shall, on behalf of the Trust, issue one series of capital securities substantially in the form of Exhibit A-1 representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Capital Securities") and one series of common securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I (the "Common Securities"). The Trust shall issue no securities or other interests in the assets of the Trust other than the Capital Securities and the Common Securities. The Capital Securities rank pari passu to, and payment thereon shall be made Pro Rata with, the Common Securities except that, where an Event of Default has occurred and is continuing, the rights of Holders of the Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of the Capital Securities as set forth in Annex I.

(b) The Certificates shall be signed on behalf of the Trust by one or more Administrators. Such signature shall be the facsimile or manual signature of any Administrator. In case any Administrator of the Trust who shall have signed any of the Securities shall cease to be such Administrator before the Certificates so signed shall be delivered by the Trust, such Certificates nevertheless may be delivered as though the person who signed such Certificates had not ceased to be such Administrator, and any Certificate may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Security, shall be an Administrator of the Trust, although at the date of the execution and delivery of the Declaration any such person was not such an Administrator. A Capital Security shall not be valid until authenticated by the manual signature of an Authorized Officer of the Institutional Trustee. Such signature shall be conclusive evidence that the Capital Security has been authenticated under this Declaration. Upon written order of the Trust signed by one Administrator, the Institutional Trustee shall authenticate the Capital Securities for original issue. The Institutional Trustee may appoint an authenticating agent that is a U.S. Person acceptable to the Trust to authenticate the Capital Securities. A Common Security need not be so authenticated.

(c) The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.

(d) Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and non-assessable.

(e) Every Person, by virtue of having become a Holder in accordance with the terms of this Declaration, shall be deemed to have expressly assented and agreed to the terms of, and shall be bound by, this Declaration and the Guarantee.

SECTION 6.2. PAYING AGENT, TRANSFER AGENT AND REGISTRAR. The Trust shall maintain in Hartford, Connecticut, an office or agency where the Capital Securities may be presented for payment ("Paying Agent"), and an office or agency where Securities may be presented for registration of transfer (the "Transfer Agent"). The Trust shall keep or cause to be kept at such office or agency a register for the purpose of registering Securities, transfers and exchanges of Securities, such register to be held by a registrar (the "Registrar"). The Administrators may appoint the Paying Agent, the Registrar, the Transfer Agent and may appoint one or more additional Paying Agents or one or more co-Registrars, or one or more co-Transfer Agents in such other locations as it shall determine. The term "Paying Agent" includes any additional paying agent, the term "Registrar" includes any additional registrar or co-Registrar and the term "Transfer Agent" includes any additional transfer agent. The Administrators may change any Paying Agent without prior notice to any Holder. The Administrators shall notify the Institutional Trustee of the name and address of any Paying Agent, Transfer Agent and Registrar not a party to this Declaration. The Administrators hereby appoint the Institutional Trustee to act as Paying Agent, Transfer Agent and Registrar for the Capital Securities and the Common Securities. The Institutional Trustee or any of its Affiliates in the United States may act as Paying Agent, Transfer Agent or Registrar.

SECTION 6.3. FORM AND DATING. The Capital Securities and the Institutional Trustee's certificate of authentication thereon shall be substantially in the form of Exhibit A-1, and the Common Securities shall be substantially in the form of Exhibit A-2, each of which is hereby incorporated in and expressly made a part of this Declaration. Certificates may be typed, printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrators, as conclusively evidenced by their execution thereof. The Securities may have letters, numbers, notations or other marks of identification or designation and such legends or endorsements required by law, stock exchange rule, agreements to which the Trust is subject if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Sponsor). The Trust at the direction of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the Institutional Trustee in writing. Each Capital

Security shall be dated the date of its authentication. The terms and provisions of the Securities set forth in Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part of the terms of this Declaration and to the extent applicable, the Institutional Trustee, the Administrators and the Sponsor, by their execution and delivery of this Declaration, expressly agree to such terms and provisions and to be bound thereby. Capital Securities will be issued only in blocks having a stated liquidation amount of not less than $500,000 and any multiple of $1,000 in excess thereof.

The Capital Securities are being offered and sold by the Trust pursuant to the Placement Agreement in definitive, registered form without coupons with the Restricted Securities Legend.

SECTION 6.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

If:

(a) any mutilated Certificates should be surrendered to the Registrar, or if the Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate; and

(b) there shall be delivered to the Registrar, the Administrators and the Institutional Trustee such security or indemnity as may be required by them to keep each of them harmless;

then, in the absence of notice that such Certificate shall have been acquired by a protected purchaser, an Administrator on behalf of the Trust shall execute (and in the case of a Capital Security Certificate, the Institutional Trustee shall authenticate) and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost or stolen Certificate, a new Certificate of like denomination. In connection with the issuance of any new Certificate under this
Section 6.4, the Registrar or the Administrators 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 Certificate issued pursuant to this
Section shall constitute conclusive evidence of an ownership interest in the relevant Securities, as if originally issued, whether or not the lost, stolen or destroyed Certificate shall be found at any time.

SECTION 6.5. TEMPORARY SECURITIES. Until definitive Securities are ready for delivery, the Administrators may prepare and, in the case of the Capital Securities, the Institutional Trustee shall authenticate temporary Securities. Temporary Securities shall be substantially in the form of definitive Securities but may have variations that the Administrators consider appropriate for temporary Securities. Without unreasonable delay, the Administrators shall prepare and, in the case of the Capital Securities, the Institutional Trustee shall authenticate definitive Securities in exchange for temporary Securities.

SECTION 6.6. CANCELLATION. The Administrators at any time may deliver Securities to the Institutional Trustee for cancellation. The Registrar shall forward to the Institutional Trustee any Securities surrendered to it for registration of transfer, redemption or payment. The Institutional Trustee shall promptly cancel all Securities surrendered for registration of transfer, payment replacement or cancellation and shall dispose of such canceled Securities as the Administrators direct. The Administrators may not issue new Securities to replace Securities that have been paid or that have been delivered to the Institutional Trustee for cancellation.

SECTION 6.7. RIGHTS OF HOLDERS; WAIVERS OF PAST DEFAULTS.

(a) The legal title to the Trust Property is vested exclusively in the Institutional Trustee (in its capacity as such) in accordance with Section 2.5, and the Holders shall not have any right or title therein other than the undivided beneficial interest in the assets of the Trust conferred by their 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 Securities shall be personal property giving only the rights specifically set forth therein and in this Declaration. The Securities shall have no preemptive or similar rights.

(b) For so long as any Capital Securities remain outstanding, if upon an Indenture Event of Default, the Debenture Trustee fails or the holders of not less than 25% in principal amount of the outstanding Debentures fail to declare the principal of all of the Debentures to be immediately due and payable, the Holders of a Majority in liquidation amount of the Capital Securities then outstanding shall have the right to make such declaration by a notice in writing to the Institutional Trustee, the Sponsor and the Debenture Trustee.

At any time after a declaration of acceleration with respect to the Debentures has been made and before a judgment or decree for payment of the money due has been obtained by the Debenture Trustee as provided in the Indenture, if the Institutional Trustee fails to annul any such declaration and waive such default, the Holders of a Majority in liquidation amount of the Capital Securities, by written notice to the Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and annul such declaration and its consequences if:

(i) the Debenture Issuer has paid or deposited with the Debenture Trustee a sum sufficient to pay

(A) all overdue installments of interest on all of the Debentures,

(B) any accrued Additional Interest on all of the Debentures,

(C) the principal of (and premium, if any, on) any Debentures that have become due otherwise than by such declaration of acceleration and interest and Additional Interest thereon at the rate borne by the Debentures, and

(D) all sums paid or advanced by the Debenture Trustee under the Indenture and the reasonable compensation, expenses, disbursements and advances of the Debenture Trustee and the Institutional Trustee, their agents and counsel; and

(ii) all Events of Default with respect to the Debentures, other than the nonpayment of the principal of the Debentures that has become due solely by such acceleration, have been cured or waived as provided in
Section 5.7 of the Indenture.

The Holders of at least a majority in liquidation amount of the Capital Securities may, on behalf of the Holders of all the Capital Securities, waive any past default or Event of Default under the Indenture, except a default or Event of Default in the payment of principal or interest (unless such default or Event of Default has been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration has been deposited with the Debenture Trustee) or a default or Event of Default in respect of a covenant or provision that under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Debenture. No such rescission shall affect any subsequent default or impair any right consequent thereon.

further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such 90-day period, a new written notice of declaration of acceleration, or rescission and annulment thereof, as the case may be, that is identical to a written notice that has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 6.7.

(c) Except as otherwise provided in paragraphs (a) and (b) of this Section 6.7, the Holders of at least a majority in liquidation amount of the Capital Securities may, on behalf of the Holders of all the Capital Securities, waive any past default or Event of Default and its consequences. Upon such waiver, any such default or Event of Default shall cease to exist, and any default or Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Trust Agreement, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

ARTICLE VII

DISSOLUTION AND TERMINATION OF TRUST

SECTION 7.1.DISSOLUTION AND TERMINATION OF TRUST.

(a) The Trust shall dissolve on the first to occur of:

(i) unless earlier dissolved, on September 7, 2035, the expiration of the term of the Trust;

(ii) upon a Bankruptcy Event with respect to the Sponsor, the Trust or the Debenture Issuer;

(iii) (other than in connection with a merger, consolidation or similar transaction not prohibited by the Indenture, this Declaration or the Guarantee, as the case may be) upon the filing of a certificate of dissolution or its equivalent with respect to the Sponsor, upon the consent of Holders of a Majority in liquidation amount of the Securities voting together as a single class to file a certificate of cancellation with respect to the Trust or upon the revocation of the charter of the Sponsor and the expiration of 90 days after the date of revocation without a reinstatement thereof;

(iv) upon the distribution of the Debentures to the Holders of the Securities;

(v) upon exercise of the right of the Holder of all of the outstanding Common Securities to dissolve the Trust as provided in Annex I hereto;

(vi) upon the entry of a decree of judicial dissolution of the Holder of the Common Securities, the Sponsor, the Trust or the Debenture Issuer;

(vii) when all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities; or

(viii) before the issuance of any Securities, with the consent of all of the Trustees and the Sponsor.

(b) As soon as is practicable after the occurrence of an event referred to in Section 7.1(a), and after satisfaction of liabilities to creditors of the Trust as required by applicable law, including of the Statutory Trust Act, and subject to the terms set forth in Annex I, the Institutional Trustee shall terminate the Trust by filing a certificate of cancellation with the Secretary of State of the State of Connecticut.

ARTICLE VIII

TRANSFER OF INTERESTS

SECTION 8.1.GENERAL.

(a) Subject to Section 8.1(c), where Capital Securities are presented to the Registrar or a co-registrar with a request to register a transfer or to exchange them for an equal number of Capital Securities represented by different certificates, the Registrar shall register the transfer or make the exchange if its requirements for such transactions are met. To permit registrations of transfer and exchanges, the Trust shall issue and the Institutional Trustee shall authenticate Capital Securities at the Registrar's request.

(b) Upon issuance of the Common Securities, the Sponsor shall acquire and retain beneficial and record ownership of the Common Securities and for so long as the Securities remain outstanding, the Sponsor shall maintain 100% ownership of the Common Securities; provided, however, that any permitted successor of the Sponsor, in its capacity as Debenture Issuer, under the Indenture that is a U.S. Person may succeed to the Sponsor's ownership of the Common Securities.

(c) Capital Securities may only be transferred, in whole or in part, in accordance with the terms and conditions set forth in this Declaration and in the terms of the Securities. To the fullest extent permitted by applicable law, any transfer or purported transfer of any Security not made in accordance with this Declaration shall be null and void and will be deemed to be of no legal effect whatsoever and any such transferee shall be deemed not to be the holder of such Capital Securities for any purpose, including but not limited to the receipt of Distributions on such Capital Securities, and such transferee shall be deemed to have no interest whatsoever in such Capital Securities.

(d) The Registrar shall provide for the registration of Securities and of transfers of Securities, which will be effected without charge but only upon payment (with such indemnity as the Registrar may require) in respect of any tax or other governmental charges that may be imposed in relation to it. Upon surrender for registration of transfer of any Securities, the Registrar shall cause one or more new Securities of the same tenor to be issued in the name of the designated transferee or transferees. Every Security surrendered for registration of transfer shall be accompanied by a written instrument of transfer in form satisfactory to the Registrar duly executed by the Holder or such Holder's attorney duly authorized in writing. Each Security surrendered for registration of transfer shall be canceled by the Institutional Trustee pursuant to Section 6.6. A transferee of a Security shall be entitled to the rights and subject to the obligations of a Holder hereunder upon the receipt by such transferee of a Security. By acceptance of a Security, each transferee shall be deemed to have agreed to be bound by this Declaration.

(e) The Trust shall not be required (i) to issue, register the transfer of, or exchange any Securities during a period beginning at the opening of business 15 days before the day of any selection of Securities for redemption and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all Holders of the Securities to be redeemed, or (ii) to register the transfer or exchange of any Security so selected for redemption in whole or in part, except the unredeemed portion of any Security being redeemed in part.

SECTION 8.2. TRANSFER PROCEDURES AND RESTRICTIONS.

(a) The Capital Securities shall bear the Restricted Securities Legend, which shall not be removed unless there is delivered to the Trust such satisfactory evidence, which may include an opinion of counsel licensed to practice law in the State of Connecticut, as may be reasonably required by the Trust, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of the Securities Act. Upon provision of such satisfactory evidence, the Institutional Trustee, at the written direction of the Trust, shall authenticate and deliver Capital Securities that do not bear the legend.

(b) Except as permitted by Section 8.2(a), each Capital Security shall bear a legend (the "Restricted Securities Legend") in substantially the following form and a Capital Security shall not be transferred except in compliance with such legend, unless otherwise determined by the Sponsor, upon the advice of counsel expert in securities law, in accordance with applicable law:

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (C) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

(c) To permit registrations of transfers and exchanges, the Trust shall execute and the Institutional Trustee shall authenticate Capital Securities at the Registrar's request.

(d) Registrations of transfers or exchanges will be effected without charge, but only upon payment (with such indemnity as the Registrar or the Sponsor may require) in respect of any tax or other governmental charge that may be imposed in relation to it.

(e) All Capital Securities issued upon any registration of transfer or exchange pursuant to the terms of this Declaration shall evidence the same security and shall be entitled to the same benefits under this Declaration as the Capital Securities surrendered upon such registration of transfer or exchange.

SECTION 8.3. DEEMED SECURITY HOLDERS. The Trust, the Administrators, the Trustees, the Paying Agent, the Transfer Agent or the Registrar may treat the Person in whose name any Certificate shall be registered on the books and records of the Trust as the sole holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trust, the Administrators, the Trustees, the Paying Agent, the Transfer Agent or the Registrar shall have actual or other notice thereof

ARTICLE IX

LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS

SECTION 9.1. LIABILITY.

(a) Except as expressly set forth in this Declaration, the Guarantee and the terms of the Securities, the Sponsor shall not be:

(i) personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Securities which shall be made solely from assets of the Trust; or

(ii) required to pay to the Trust or to any Holder of the Securities any deficit upon dissolution of the Trust or otherwise.

(b) The Holder of the Common Securities shall be liable for all of the debts and obligations of the Trust (other than with respect to the Securities) to the extent not satisfied out of the Trust's assets.

(c) Pursuant to the Statutory Trust Act, the Holders of the Capital Securities 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 Connecticut.

SECTION 9.2. EXCULPATION.

(a) No Indemnified Person shall be liable, responsible or accountable in damages or otherwise to the Trust 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 on behalf of the Trust and in a manner such Indemnified Person reasonably believed to be within the scope of the authority conferred on such Indemnified Person by this Declaration 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 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 Trust and upon such information, opinions, reports or statements presented to the Trust by any Person as to matters the Indemnified Person reasonably believes are within such other Person's professional or expert competence and, if selected by such Indemnified Person, has been selected by such Indemnified Person with reasonable care by or on behalf of the Trust, 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 Securities might properly be paid.

SECTION 9.3. FIDUCIARY DUTY.

(a) To the extent that, at law or in equity, an Indemnified Person has duties (including fiduciary duties) and liabilities relating thereto to the Trust or to any other Covered Person, an Indemnified Person acting under this Declaration shall not be liable to the Trust or to any other Covered Person for its good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of an Indemnified Person otherwise existing at law or in equity, are agreed by the parties hereto to replace such other duties and liabilities of the Indemnified Person.

(b) Whenever in this Declaration an Indemnified Person is permitted or required to make a decision:

(i) in its "discretion" or under a grant of similar authority, the Indemnified Person shall be entitled to consider such interests and factors as it desires, including its own interests, and shall have no duty or obligation to give any consideration to any interest of or factors affecting the Trust or any other Person; or

(ii) in its "good faith" or under another express standard, the Indemnified Person shall act under such express standard and shall not be subject to any other or different standard imposed by this Declaration or by applicable law.

SECTION 9.4. INDEMNIFICATION.

(a) The Sponsor shall indemnify, to the full extent permitted by law, any Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the Trust) by reason of the fact that he is or was an Indemnified Person against expenses (including reasonable attorneys' fees and expenses), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

the Trust; provided, however, that no such indemnification shall be made in respect of any claim, issue or matter as to which such Indemnified Person shall have been adjudged to be liable to the Trust unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(c) To the extent that an Indemnified Person shall be successful on the merits or otherwise (including dismissal of an action without prejudice or the settlement of an action without admission of liability) in defense of any action, suit or proceeding referred to in paragraphs (a) and (b) of this Section 9.4, or in defense of any claim, issue or matter therein, he shall be indemnified, to the full extent permitted by law, against expenses (including attorneys' fees and expenses) actually and reasonably incurred by him in connection therewith.

(d) Any indemnification of an Administrator under paragraphs (a) and (b) of this Section 9.4 (unless ordered by a court) shall be made by the Sponsor only as authorized in the specific case upon a determination that indemnification of the Indemnified Person is proper in the circumstances because he has met the applicable standard of conduct set forth in paragraphs (a) and (b). Such determination shall be made (i) by the Administrators by a majority vote of a Quorum consisting of such Administrators who were not parties to such action, suit or proceeding, (ii) if such a Quorum is not obtainable, or, even if obtainable, if a Quorum of disinterested Administrators so directs, by independent legal counsel in a written opinion, or (iii) by the Common Security Holder of the Trust.

(e) To the fullest extent permitted by law, expenses (including reasonable attorneys' fees and expenses) incurred by an Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (a) and (b) of this Section 9.4 shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Sponsor as authorized in this Section 9.4. Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (i) by the Administrators by a majority vote of a Quorum of disinterested Administrators, (ii) if such a Quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Administrators so directs, by independent legal counsel in a written opinion or
(iii) by the Common Security Holder of the Trust, that, based upon the facts known to the Administrators, counsel or the Common Security Holder at the time such determination is made, such Indemnified Person acted in bad faith or in a manner that such Person did not believe to be in or not opposed to the best interests of the Trust, or, with respect to any criminal proceeding, that such Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In no event shall any advance be made in instances where the Administrators, independent legal counsel or the Common Security Holder reasonably determine that such Indemnified Person deliberately breached his duty to the Trust or its Common or Capital Security Holders.

(f) Each Trustee, at the sole cost and expense of the Sponsor, retains the right to representation by counsel of its own choosing in any action, suit or any other proceeding for which it is indemnified under paragraphs (a) and (b) of this Section 9.4, without affecting its right to indemnification hereunder or waiving any rights afforded to it under this Declaration or applicable law.

office. All rights to indemnification under this Section 9.4 shall be deemed to be provided by a contract between the Sponsor and each Indemnified Person who serves in such capacity at any time while this Section 9.4 is in effect. Any repeal or modification of this Section 9.4 shall not affect any rights or obligations then existing.

(h) The Sponsor or the Trust may purchase and maintain insurance on behalf of any Person who is or was an Indemnified Person against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Sponsor would have the power to indemnify him against such liability under the provisions of this Section 9.4.

(i) For purposes of this Section 9.4, references to "the Trust" shall include, in addition to the resulting or surviving entity, any constituent entity (including any constituent of a constituent) absorbed in a consolidation or merger, so that any Person who is or was a director, trustee, officer or employee of such constituent entity, or is or was serving at the request of such constituent entity as a director, trustee, officer, employee or agent of another entity, shall stand in the same position under the provisions of this Section 9.4 with respect to the resulting or surviving entity as he would have with respect to such constituent entity if its separate existence had continued.

(j) The indemnification and advancement of expenses provided by, or granted pursuant to, this Section 9.4 shall, unless otherwise provided when authorized or ratified, (i) continue as to a Person who has ceased to be an Indemnified Person and shall inure to the benefit of the heirs, executors and administrators of such a Person; and (ii) survive the termination or expiration of this Declaration or the earlier removal or resignation of an Indemnified Person.

SECTION 9.5. OUTSIDE BUSINESSES. Any Covered Person, the Sponsor and the Institutional 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 Securities shall have no rights by virtue of this Declaration 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. None of any Covered Person, the Sponsor or the Institutional 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 any Covered Person, the Sponsor and the Institutional 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 Covered Person and the Institutional Trustee may engage or be interested in any financial or other transaction with the Sponsor or any Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or act on any committee or body of holders of, securities or other obligations of the Sponsor or its Affiliates.

SECTION 9.6. COMPENSATION; FEE. The Sponsor agrees:

(a) to pay to the Trustees from time to time such compensation for all services rendered by them hereunder as the parties shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and

(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 Declaration (including the reasonable compensation and the expenses and disbursements of their respective agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct.

The provisions of this Section 9.6 shall survive the dissolution of the Trust and the termination of this Declaration and the removal or resignation of any Trustee.

No Trustee may claim any lien or charge on any property of the Trust as a result of any amount due pursuant to this Section 9.6.

ARTICLE X

ACCOUNTING

SECTION 10.1. FISCAL YEAR. The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such other year as is required by the Code.

SECTION 10.2. CERTAIN ACCOUNTING MATTERS.

(a) At all times during the existence of the Trust, the Administrators shall keep, or cause to be kept at the principal office of the Trust in the United States, as defined for purposes of Treasury regulations section 301.7701-7, full books of account, records and supporting documents, which shall reflect in reasonable detail each transaction of the Trust. The books of account shall be maintained, at the Sponsor's expense, in accordance with generally accepted accounting principles, consistently applied. The books of account and the records of the Trust shall be examined by and reported upon as of the end of each Fiscal Year of the Trust by a firm of independent certified public accountants selected by the Administrators.

(b) The Administrators, at the Sponsor's expense, shall cause to be prepared at the principal office of the Trust in the United States, as defined for purposes of Treasury regulations section 301.7701-7, and delivered to each of the Holders of Securities, within 90 days after the end of each Fiscal Year of the Trust, annual financial statements of the Trust, including a balance sheet of the Trust as of the end of such Fiscal Year, and the related statements of income or loss which shall be examined by and reported upon by a firm of independent certified public accountants selected by the Administrators.

(c) The Administrators shall cause to be duly prepared and delivered to each of the Holders of Securities Form 1099 or such other annual United States federal income tax information statement required by the Code, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Administrators shall endeavor to deliver all such statements within 30 days after the end of each Fiscal Year of the Trust.

(d) The Administrators, at the Sponsor's expense, shall cause to be duly prepared at the principal office of the Trust in the United States, as defined for purposes of Treasury regulations section 301.7701-7, and filed an annual United States federal income tax return on a Form 1041 or such other form required by United States federal income tax law, and any other annual income tax returns required to be filed by the Administrators on behalf of the Trust with any state or local taxing authority.

SECTION 10.3. BANKING. The Trust shall maintain in the United States, as defined for purposes of Treasury regulations section 301.7701-7, one or more bank accounts in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Debentures held by the Institutional Trustee shall be made directly to the Property Account and no other funds of the Trust shall be deposited in the Property Account. The sole signatories for such accounts (including the Property Account) shall be designated by the Institutional Trustee.

SECTION 10.4. WITHHOLDING. The Institutional Trustee or any Paying Agent and the Administrators shall comply with all withholding requirements under United States federal, state and local law. The Institutional Trustee or any Paying Agent shall request, and each Holder shall provide to the Institutional Trustee or any Paying Agent, such forms or certificates as are necessary to establish an exemption from withholding with respect to the Holder, and any representations and forms as shall reasonably be requested by the Institutional Trustee or any Paying Agent to assist it in determining the extent of, and in fulfilling, its withholding obligations. The Administrators shall file required forms with applicable jurisdictions and, unless an exemption from withholding is properly established by a Holder, shall remit amounts withheld with respect to the Holder to applicable jurisdictions. To the extent that the Institutional Trustee or any Paying Agent is required to withhold and pay over any amounts to any authority with respect to distributions or allocations to any Holder, the amount withheld shall be deemed to be a Distribution in the amount of the withholding to the Holder. In the event of any claimed overwithholding, Holders shall be limited to an action against the applicable jurisdiction. If the amount required to be withheld was not withheld from actual Distributions made, the Institutional Trustee or any Paying Agent may reduce subsequent Distributions by the amount of such withholding.

ARTICLE XI

AMENDMENTS AND MEETINGS

SECTION 11.1. AMENDMENTS.

(a) Except as otherwise provided in this Declaration or by any applicable terms of the Securities, this Declaration may only be amended by a written instrument approved and executed by the Institutional Trustee.

(b) Notwithstanding any other provision of this Article XI, no amendment shall be made, and any such purported amendment shall be void and ineffective:

(i) unless the Institutional Trustee shall have first received

(A) an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and

(ii) if the result of such amendment would be to

(A) cause the Trust to cease to be classified for purposes of United States federal income taxation as a grantor trust; or

(B) cause the Trust to be deemed to be an Investment Company required to be registered under the Investment Company Act.

(c) Except as provided in Section 11.1(d), (e) or (h), no amendment shall be made, and any such purported amendment shall be void and ineffective unless the Holders of a Majority in liquidation amount of the Capital Securities shall have consented to such amendment.

(d) In addition to and notwithstanding any other provision in this Declaration, without the consent of each affected Holder, this Declaration may not be amended to (i) change the amount or timing of any Distribution on the Securities or otherwise adversely affect the amount of any Distribution required to be made in respect of the Securities as of a specified date or change any conversion or exchange provisions or (ii) restrict the right of a Holder to institute suit for the enforcement of any such payment on or after such date.

(e) Section 8.1 (b) and 8.1(c) and this Section 11.1 shall not be amended without the consent of all of the Holders of the Securities.

(f) Article III shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities.

(g) The rights of the Holders of the Capital Securities under Article IV to increase or decrease the number of, and appoint and remove, Trustees shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Capital Securities.

(h) This Declaration may be amended by the Institutional Trustee and the Holders of a Majority in the liquidation amount of the Common Securities without the consent of the Holders of the Capital Securities to:

(i) cure any ambiguity;

(ii) correct or supplement any provision in this Declaration that may be defective or inconsistent with any other provision of this Declaration;

(iii) add to the covenants, restrictions or obligations of the Sponsor; or

(iv) modify, eliminate or add to any provision of this Declaration to such extent as may be necessary to ensure that the Trust will be classified for United States federal income tax purposes at all times as a grantor trust and will not be required to register as an "investment company" under the Investment Company Act (including without limitation to conform to any change in Rule 3a-5, Rule 3a-7 or any other applicable rule under the Investment Company Act or written change in interpretation or application thereof by any legislative body, court, government agency or regulatory authority) which amendment does not have a material adverse effect on the rights, preferences or privileges of the Holders of Securities;

provided, however, that no such modification, elimination or addition referred to in clauses (i), (ii) or (iii) shall adversely affect in any material respect the powers, preferences or special rights of Holders of Capital Securities.

SECTION 11.2. MEETINGS OF THE HOLDERS OF SECURITIES; ACTION BY WRITTEN CONSENT.

(a) Meetings of the Holders of any class of Securities may be called at any time by the Administrators (or as provided in the terms of the Securities) to consider and act on any matter on which Holders of such class of Securities are entitled to act under the terms of this Declaration or the terms of the Securities. The Administrators shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 10% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Administrators one or more calls in a writing stating that the signing Holders of the Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of the Securities calling a meeting shall specify in writing the Certificates held by the Holders of the Securities exercising the right to call a meeting and only those Securities

represented by such Certificates shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met.

(b) Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of the Securities:

(i) notice of any such meeting shall be given to all the Holders of the Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such meeting. Whenever a vote, consent or approval of the Holders of the Securities is permitted or required under this Declaration, such vote, consent or approval may be given at a meeting of the Holders of the Securities. Any action that may be taken at a meeting of the Holders of the Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by the Holders of the Securities owning not less than the minimum amount of Securities in liquidation amount that would be necessary to authorize or take such action at a meeting at which all Holders of the Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of the Securities entitled to vote who have not consented in writing. The Administrators may specify that any written ballot submitted to the Holders of the Securities for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Administrators;

(ii) each Holder of a Security may authorize any Person to act for it by proxy on all matters in which a Holder of Securities is entitled to participate, including waiving notice of any meeting, or voting or participating at a meeting. No proxy shall be valid after the expiration of 11 months from the date thereof unless otherwise provided in the proxy. Every proxy shall be revocable at the pleasure of the Holder of the Securities executing it. Except as otherwise provided herein, all matters relating to the giving, voting or validity of proxies shall be governed by the General Corporation Law of the State of Connecticut relating to proxies, and judicial interpretations thereunder, as if the Trust were a Connecticut corporation and the Holders of the Securities were stockholders of a Connecticut corporation; each meeting of the Holders of the Securities shall be conducted by the Administrators or by such other Person that the Administrators may designate; and

(iii) unless the Statutory Trust Act, this Declaration, or the terms of the Securities otherwise provides, the Administrators, in their sole discretion, shall establish all other provisions relating to meetings of Holders of Securities, including notice of the time, place or purpose of any meeting at which any matter is to be voted on by any Holders of the Securities, waiver of any such notice, action by consent without a meeting, the establishment of a record date, quorum requirements, voting in person or by proxy or any other matter with respect to the exercise of any such right to vote; provided, however, that each meeting shall be conducted in the United States (as that term is defined in Treasury regulations section 301.7701-7).

ARTICLE XII

REPRESENTATIONS OF INSTITUTIONAL TRUSTEE

SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE. The Trustee that acts as initial Institutional Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Institutional Trustee's acceptance of its appointment as Institutional Trustee, that:

(a) the Institutional Trustee is a national banking association with trust powers, duly organized and validly existing under the laws of the United States of America with trust power and authority to execute and deliver, and to carry out and perform its obligations under the terms of, this Declaration;

(b) the execution, delivery and performance by the Institutional Trustee of this Declaration has been duly authorized by all necessary corporate action on the part of the Institutional Trustee. This Declaration has been duly executed and delivered by the Institutional Trustee, and it constitutes a legal, valid and binding obligation of the Institutional Trustee, enforceable against it in accordance with its terms, subject to applicable bankruptcy, reorganization, moratorium, insolvency, and other similar laws affecting creditors' rights generally and to general principles of equity (regardless of whether considered in a proceeding in equity or at law);

(c) the execution, delivery and performance of this Declaration by the Institutional Trustee does not conflict with or constitute a breach of the charter or by-laws of the Institutional Trustee; and

(d) no consent, approval or authorization of, or registration with or notice to, any state or federal banking authority is required for the execution, delivery or performance by the Institutional Trustee of this Declaration.

ARTICLE XIII

MISCELLANEOUS

SECTION 13.1. NOTICES. All notices provided for in this Declaration shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied (which telecopy shall be followed by notice delivered or mailed by first class mail) or mailed by first class mail, as follows:

(a) if given to the Trust in care of the Administrators at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Holders of the Securities):

Community Financial Statutory Trust I c/o Community Financial Group, Inc. One City Plaza, Box 1028
Cabot, AR 72023
Attention: David Pickney
Telecopy: (501) 941-2804

(b) if given to the Institutional Trustee, at the Institutional Trustee's mailing address set forth below (or such other address as the Institutional Trustee may give notice of to the Holders of the Securities):

State Street Bank and Trust Company of Connecticut, National Association
225 Asylum Street, Goodwin Square Hartford, Connecticut 06103
Attention: Vice President, Corporate Trust Department Telecopy: 860-244-1889

With a copy to:

State Street Bank and Trust Company P.O. Box 778
Boston, Massachusetts 02102-0778

Attention: Paul D. Allen, Corporate Trust Department Telecopy: (617) 662-1462

(c) if given to the Holder of the Common Securities, at the mailing address of the Sponsor set forth below (or such other address as the Holder of the Common Securities may give notice of to the Trust):

Community Financial Group, Inc. One City Plaza Box 1028
Cabot, AR 72033
Attention: David Pickney
Telecopy: (501) 941-2804]

(d) if given to any other Holder, 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 13.2. GOVERNING LAW. This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the law of the State of Connecticut and all rights and remedies shall be governed by such laws without regard to the principles of conflict of laws of the State of Connecticut or any other jurisdiction that would call for the application of the law of any jurisdiction other than the State of Connecticut; provided, however, that there shall not be applicable to the Trust, the Trustees or this Declaration any provision of the laws (statutory or common) of the State of Connecticut 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 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, or (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.

SECTION 13.3. INTENTION OF THE PARTIES. It is the intention of the parties hereto that the Trust be classified for United States federal income tax purposes as a grantor trust. The provisions of this Declaration shall be interpreted to further this intention of the parties.

SECTION 13.4. HEADINGS. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof.

SECTION 13.5. SUCCESSORS AND ASSIGNS. Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Trustees shall bind and inure to the benefit of their respective successors and assigns, whether or not so expressed.

SECTION 13.6. PARTIAL ENFORCEABILITY. If any provision of this Declaration, or the application of such provision to any Person or circumstance, shall be held invalid, the remainder of this Declaration, or the application of such provision to persons or circumstances other than those to which it is held invalid, shall not be affected thereby.

SECTION 13.7. COUNTERPARTS. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Trustees and Administrators to any of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.

Signatures appear on the following page

IN WITNESS WEREOF, the undersigned have caused these presents to be executed as of the day and year first above written.

STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION,
as Institutional Trustee

By: /s/ Illegible
    ------------------------------------
Name: Illegible
Title: Vice President

COMMUNITY FINANCIAL GROUP, INC.,
as Sponsor

By: /s/ Illegible
    ------------------------------------
Name: Illegible
Title: President

COMMUNITY FINANCIAL STATUTORY TRUST I

By: /s/ Jeo Park
    ------------------------------------
    Joe Park, Administrator


By: /s/ David Pickney
    ------------------------------------
    David Pickney, Administrator

ANNEX I

TERMS OF SECURITIES

Pursuant to Section 6.1 of the Amended and Restated Declaration of Trust, dated as of September 7, 2000 (as amended from time to time, the "Declaration"), the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities and the Common Securities are set out below (each capitalized term used but not defined herein has the meaning set forth in the Declaration):

1. Designation and Number.

(a) 3,000 Capital Securities of Community Financial Statutory Trust I (the "Trust"), with an aggregate stated liquidation amount with respect to the assets of the Trust of Three Million Dollars ($3,000,000) and a stated liquidation amount with respect to the assets of the Trust of $1,000 per Capital Security, are hereby designated for the purposes of identification only as the "Capital Securities". The Capital Security Certificates evidencing the Capital Securities shall be substantially in the form of Exhibit A-1 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice.

(b) 93 Common Securities of the Trust (the "Common Securities") will be evidenced by Common Security Certificates substantially in the form of Exhibit A-2 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice.

2. Distributions.

(a) Distributions payable on each Security will be payable at an annual rate equal to 10.60% (the "Coupon Rate") of the stated liquidation amount of $1,000 per Security, such rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Distributions in arrears for more than one semi-annual period will bear interest thereon compounded semi-annually at the Coupon Rate (to the extent permitted by law). A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full semi-annual period on the basis of a 360-day year of twelve 30-day months.

C-1

principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Debenture Issuer or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (i) and (ii) above, (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Debenture Issuer in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Debenture Issuer (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of any exchange or conversion of any class or series of the Debenture Issuer's capital stock (or any capital stock of a subsidiary of the Debenture Issuer) for any class or series of the Debenture Issuer's capital stock or of any class or series of the Debenture Issuer's indebtedness for any class or series of the Debenture Issuer's capital stock, (c) the purchase of fractional interests in shares of the Debenture Issuer's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged,
(d) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (f) payments under the Capital Securities Guarantee). Prior to the termination of any Extension Period, the Debenture Issuer may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Debenture Issuer may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates, to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date. Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds available for the payment of such distributions in the Property Account of the Trust. The Trust's funds available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer. The payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

(c) Distributions on the Securities will be payable to the Holders thereof as they appear on the books and records of the Trust on the relevant record dates. The relevant record dates shall be 15 days before the relevant Distribution Payment Date. Distributions payable on any Securities that are not punctually paid on any Distribution Payment Date, as a result of the Debenture Issuer having failed to make a payment under the Debentures, as the case may be, when due (taking into account any Extension Period), will cease to be payable to the Person in whose name such Securities are registered on the relevant record date, and such defaulted Distribution will instead be payable to the Person in whose name such Securities are registered on the special record date or other specified date determined in accordance with the Indenture. If any date on which Distributions are payable on the Securities is not a Business Day, then payment of the Distribution 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 payment date.

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(d) In the event that there is any money or other property held by or for the Trust that is not accounted for hereunder, such property shall be distributed Pro Rata (as defined herein) among the Holders of the Securities.

3. Liquidation Distribution Upon Dissolution. In the event of the voluntary or involuntary liquidation, dissolution, winding-up or termination of the Trust (each a "Liquidation") other than in connection with a redemption of the Debentures, the Holders of the Securities will be entitled to receive out of the assets of the Trust available for distribution to Holders of the Securities, after satisfaction of liabilities to creditors of the Trust (to the extent not satisfied by the Debenture Issuer), distributions equal to the lesser of (i) the aggregate of the stated liquidation amount of $ 1,000 per Security plus accrued and unpaid Distributions thereon 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 (such amount being, in either case, the "Liquidation Distribution"), unless in connection with such Liquidation, the Debentures in aggregate stated principal amount equal to the aggregate stated liquidation amount of such Securities, with an interest rate equal to the Coupon Rate of, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on, and having the same record date as, such Securities, after paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with the Statutory Trust Act, shall be distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities.

The Sponsor, as the Holder of all of the Common Securities, has the right at any time to dissolve the Trust (including, without limitation, upon the occurrence of a Special Event), subject to the receipt by the Debenture Issuer of prior approval from the Board of Governors of the Federal Reserve System (the "Federal Reserve"), if then required under applicable capital guidelines or policies of the Federal Reserve and, after satisfaction of liabilities to creditors of the Trust, cause the Debentures to be distributed to the Holders of the Securities on a Pro Rata basis in accordance with the aggregate stated liquidation amount thereof.

If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated by the Trustees of the Trust as expeditiously as such Trustees determine to be possible by distributing, after satisfaction of liabilities to creditors of the Trust, to the Holders of the Securities, the Debentures on a Pro Rata basis to the extent not satisfied by the Debenture Issuer, unless such distribution is determined by the Institutional Trustee not to be practical, in which event such Holders will be entitled to receive out of the assets of the Trust available for distribution to the Holders, after satisfaction of liabilities of creditors of the Trust to the extent not satisfied by the Debenture Issuer, an amount equal to the Liquidation Distribution. An early Liquidation of the Trust pursuant to clause (iv) of Section 7.1(a) of the Declaration shall occur if the, Institutional Trustee determines that such Liquidation is possible by distributing, after satisfaction of liabilities to creditors of Trust, to the Holders of the Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

If, upon any such Liquidation the Liquidation Distribution can be paid only in part because the Trust has insufficient assets available to pay in full the aggregate Liquidation Distribution, then the amounts payable directly by the Trust on such Capital Securities shall be paid to the Holders of the Trust Securities on a Pro Rata basis, except that if an Event of Default has occurred and is continuing, the Capital Securities shall have a preference over the Common Securities with regard to such distributions.

After the date for any distribution of the Debentures upon dissolution of the Trust (i) the Securities of the Trust will be deemed to be no longer outstanding, (ii) the Holders of the Capital Securities will receive certificates representing the Debentures to be delivered upon such distribution, and (iii) any certificates representing the Capital Securities still outstanding will be deemed to represent undivided beneficial interests in such of the Debentures as have an aggregate principal amount equal to the aggregate stated liquidation amount with an interest rate identical to the distribution rate of, and

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bearing accrued and unpaid interest equal to accrued and unpaid distributions on, the Securities until such certificates are presented to the Debenture Issuer or its agent for transfer or reissuance.

4. Redemption and Distribution.

(a) The Debentures will mature on September 7, 2030. The Debentures may be redeemed by the Debenture Issuer, in whole or in part at any time and from time to time on or after September 7, 2010, at the Redemption Price. In addition, the Debentures may be redeemed by the Debenture Issuer at the Special Redemption Price, in whole but not in part, at any time, upon the occurrence and continuation of a Special Event within 90 days following the occurrence of such Special Event at the Special Redemption Price, upon not less than 30 nor more than 60 days' notice to holders of such Debentures so long as such Special Event is continuing. In each case, the right of the Debenture Issuer to redeem the Debentures is subject to the Debenture Issuer having received prior approval from the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve. The Sponsor shall appoint a Quotation Agent, which initially shall be State Street Bank and Trust Company, for the purpose of performing the services contemplated in, or by reference in, the definition of Special Redemption Price. Any error in the calculation of the Special Redemption Price by the Quotation Agent or the Debenture Trustee may be corrected at any time by notice delivered to the Sponsor and the holders of the Capital Securities. Subject to the corrective rights set forth above, all certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions relating to the payment and calculation of the Special Redemption Price on the Debt Securities or the Capital Securities by the Debenture Trustee, the Quotation Agent or the Institutional Trustee, as the case may be, shall (in the absence of willful default, bad faith or manifest error) be final, conclusive and binding on the holders of the Debt Securities and the Capital Securities, the Trust and the Sponsor, and no liability shall attach (except as provided above) to the Debenture Trustee, the Quotation Agent or the Institutional Trustee in connection with the exercise or non-exercise by any of them of their respective powers, duties and discretion.

"Tax Event" means the receipt by the Debenture Issuer 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 (including any private letter ruling, technical advice memorandum, field service advice, regulatory procedure, notice or announcement including any notice or announcement of intent to adopt such procedures or regulations (an "Administrative Action")) or judicial decision interpreting or applying such laws or regulations, regardless of whether such Administrative Action or judicial decision is issued to or in connection with a proceeding involving the Debenture Issuer or the Trust and whether or not subject to review or appeal, which amendment, clarification, change, Administrative Action or decision is enacted, promulgated or announced, in each case on or after the date of issuance of the Debentures, there is more than an insubstantial risk that: (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Debentures; (ii) interest payable by the Debenture Issuer on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Debenture Issuer, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

"Investment Company Event" means the receipt by the Debenture Issuer 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 written change (including any announced prospective change) in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, 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 of 1940, as amended

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which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Debentures.

"Capital Treatment Event" means the receipt by the Debenture Issuer and the Trust of an opinion of counsel that, as a result of the occurrence of any amendment to, or change (including any announced prospective change) in, the laws of the United States or any political subdivision thereof or therein, or as the result of any official or administrative pronouncement or action or decision interpreting or applying such laws, rules or regulations, which amendment or change is effective or which pronouncement, action or decision is announced on or after the date of issuance of the Debentures, there is more than an insubstantial risk that the Sponsor will not be entitled to treat an amount equal to the aggregate liquidation amount of the Debentures as "Tier 1 Capital" (or the then equivalent thereof) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Sponsor; provided, however, that the inability of the Sponsor to treat all or any portion of the liquidation amount of the Debentures as Tier 1 Capital shall not constitute the basis for a Capital Treatment Event, if such inability results from the Sponsor having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve may now or hereinafter accord Tier 1 Capital treatment in excess of the amount which may qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines for the Federal Reserve; provided further, however, that the distribution of Debentures in connection with the Liquidation of the Trust shall not in and of itself constitute a Capital Treatment Event unless such Liquidation shall have occurred in connection with a Tax Event or an Investment Company Event.

"Special Event" means a Tax Event, an Investment Company Event or a Capital Treatment Event.

     Year Beginning on        Percentage
     -----------------        ----------
September 7, 2010              105.300%
September 7, 2011              104.770%
September 7, 2012              104.240%
September 7, 2013              103.710%
September 7, 2014              103.180%
September 7, 2015              102.650%
September 7, 2016              102.120%
September 7, 2017              101.590%
September 7, 2018              101.060%
September 7, 2019              100.530%
September 7, 2020 and after    100.000%

plus accrued and unpaid interest on such Debentures to the Redemption Date.

"Special Redemption Date" means a Redemption Date on which a Special Event redemption occurs.

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"Special Redemption Price" means (a) if the Special Redemption Date is before September 7, 2010, the greater of (i) 100% of the principal amount of the Debentures, plus accrued and unpaid interest on the Debentures to such Special Redemption Date, or (ii) as determined by a Quotation Agent, the sum of (A) the present value of the principal amount of the Debentures set forth in the above Redemption Price table for the September 7, 2010 Redemption Date and the present value of interest payable on the Debentures from such Special Redemption Date to September 7, 2010 (the "Remaining Life"), each discounted to the Special Redemption Date on a semi-annual basis (assuming a 360-day year consisting of twelve 30-day months at the Treasury Rate), plus (B) accrued and unpaid interest on the Debentures to such Special Redemption Date, or (b) if the Special Redemption Date is on or after September 7, 2010, the price for the Debentures set forth in the above Redemption Price table for such Special Redemption Date.

"Comparable Treasury Issue" means with respect to any Special Redemption Date the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the Remaining Life that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Remaining Life. If no United States Treasury security has a maturity which is within a period from 3 months before to 3 months after September 7, 2010, the two most closely corresponding United States Treasury securities as selected by the Quotation Agent shall be used as the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or extrapolated on a straight-line basis, rounding to the nearest month using such securities.

"Comparable Treasury Price" means (a) the average of 5 Reference Treasury Dealer Quotations for such Special Redemption Date, after excluding the highest and lowest such Reference Treasury Dealer Quotations, or (b) if the Quotation Agent obtains fewer than 5 such Reference Treasury Dealer Quotations, the average of all such Quotations.

"Primary Treasury Dealer" shall mean either a primary United States Government securities dealer or an entity of nationally recognized stock in matters pertaining to the quotation of treasury securities that is reasonably acceptable to the Sponsor and the Institutional Trustee.

"Quotation Agent" means State Street Bank and Trust Company, or its designee, and its successors; provided, however, that if the foregoing shall cease to be a Primary Treasury Dealer, the Sponsor shall substitute therefor another Primary Treasury Dealer.

"Redemption Date" shall mean the date fixed for the redemption of Capital Securities, which shall be March 7 or September 7 commencing September 7, 2010.

"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any other Primary Treasury Dealer selected by the Debenture Trustee after consultation with the Debenture Issuer.

"Reference Treasury Dealer Quotations" means, with respect to each Reference Treasury Dealer and any Special Redemption Date, the average, as determined by the Quotation Agent, of the bid and asked prices for the Comparable Treasury Issue (expressed in each case as a percentage of its principal amount) quoted in writing to the Debenture Trustee by such Reference Treasury Dealer at 5:00 p.m., New York City time, on the third Business Day preceding such Redemption Date.

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most closely corresponding to the Remaining Life shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Special Redemption Date. The Treasury Rate shall be calculated by the Quotation Agent on the third Business Day preceding the Special Redemption Date.

(b) Upon the repayment in full at maturity or redemption in whole or in part of the Debentures (other than following the distribution of the Debentures to the Holders of the Securities), the proceeds from such repayment or payment shall concurrently be applied to redeem Pro Rata at the applicable Redemption Price or Special Redemption Price, as applicable, Securities having an aggregate liquidation amount equal to the aggregate principal amount of the Debentures so repaid or redeemed; provided, however, that holders of such Securities shall be given not less than 30 nor more than 60 days' notice of such redemption (other than at the scheduled maturity of the Debentures).

(c) If fewer than all the outstanding Securities are to be so redeemed, the Common Securities and the Capital Securities will be redeemed Pro Rata and the Capital Securities to be redeemed will be redeemed Pro Rata from each Holder of Capital Securities.

(d) The Trust may not redeem fewer than all the outstanding Capital Securities unless all accrued and unpaid Distributions have been paid on all Capital Securities for all semi-annual Distribution periods terminating on or before the date of redemption.

(e) Redemption or Distribution Procedures.

(i) Notice of any redemption of or notice of distribution of the Debentures in exchange for, the Securities (a "Redemption/Distribution Notice") will be given by the Trust by mail to each Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed for redemption or exchange thereof which, in the case of a redemption, will be the date fixed for redemption of the Debentures. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this paragraph 4(e)(i), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders of such Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of such Securities at the address of each such Holder appearing on the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing thereof with respect to any Holder shall affect the validity of the redemption or exchange proceedings with respect to any other Holder.

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without interest on such Redemption Price or Special Redemption Price. If any date fixed for redemption of Securities is not a Business Day, then payment of any such Redemption Price or Special 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 fixed for redemption. If payment of the Redemption Price or Special Redemption Price in respect of any Securities is improperly withheld or refused and not paid either by the Trust or by the Debenture Issuer as guarantor pursuant to the Guarantee, Distributions on such Securities will continue to accrue at the Coupon Rate from the original redemption date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price or Special Redemption Price. In the event of any redemption of the Capital Securities issued by the Trust in part, the Trust shall not be required to
(i) issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before any selection for redemption of the Capital Securities and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all Holders of the Capital Securities to be so redeemed or (ii) register the transfer of or exchange any Capital Securities so selected for redemption, in whole or in part except for the unredeemed portion of any Capital Securities being redeemed in part.

(iii) Redemption/Distribution Notices shall be sent by the Administrators on behalf of the Trust to (A) in respect of the Capital Securities, the Holders thereof and (B) in respect of the Common Securities, the Holder thereof.

5. Voting Rights - Capital Securities.

(a) Except as provided under paragraphs 5(b) and 7 and as otherwise required by law and the Declaration, the Holders of the Capital Securities will have no voting rights. The Administrators are required to call a meeting of the Holders of the Capital Securities if directed to do so by Holders of at least 10% in liquidation amount of the Capital Securities.

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on the Debentures on the date the interest or principal is payable (or in the case of redemption, the redemption date), then a Holder of record of the Capital Securities may directly institute a proceeding for enforcement of payment on or after the respective due dates specified in the Debentures, to such Holder directly of the principal of or interest on the Debentures having an aggregate principal amount equal to the aggregate liquidation amount of the Capital Securities of such Holder. The Institutional Trustee shall notify all Holders of the Capital Securities of any default actually known to the Institutional Trustee with respect to the Debentures unless (x) such default has been cured prior to the giving of such notice or (y) the Institutional Trustee determines in good faith that the withholding of such notice is in the interest of the Holders of such Capital Securities, except where the default relates to the payment of principal of or interest on any of the Debentures. Such notice shall state that such Indenture Event of Default also constitutes an Event of Default hereunder. Except with respect to directing the time, method and place of conducting a proceeding for a remedy, the Institutional Trustee shall not take any of the actions described in clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes.

In the event the consent of the Institutional Trustee, as the holder of the Debentures is required under the Indenture with respect to any amendment, modification or termination of the Indenture, the Institutional Trustee shall request the direction of the Holders of the Securities with respect to such amendment modification or termination and shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; provided, however, that where a consent under the Indenture would require the consent of a Super-Majority, the Institutional Trustee may only give such consent at the direction of the Holders of at least the proportion in liquidation amount of such Trust Securities outstanding which the relevant Super-Majority represents of the aggregate principal amount of the Debentures outstanding. The Institutional Trustee shall not take any such action in accordance with the directions of the Holders of the Securities unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes.

A waiver of an Indenture Event of Default will constitute a waiver of the corresponding Event of Default hereunder. Any required approval or direction of Holders of the Capital Securities may be given at a separate meeting of Holders of the Capital Securities convened for such purpose, at a meeting of all of the Holders of the Securities in the Trust or pursuant to written consent. The Institutional Trustee will cause a notice of any meeting at which Holders of the Capital Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of record of the Capital Securities. Each such notice will include a statement setting forth the following information (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents. No vote or consent of the Holders of the Capital Securities will be required for the Trust to redeem and cancel Capital Securities or to distribute the Debentures in accordance with the Declaration and the terms of the Securities.

Notwithstanding that Holders of the Capital Securities are entitled to vote or consent under any of the circumstances described above, any of the Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor shall not entitle the Holder thereof to vote or consent and shall, for purposes of such vote or consent, be treated as if such Capital Securities were not outstanding.

In no event will Holders of the Capital Securities have the right to vote to appoint, remove or replace the Administrators, which voting rights are vested exclusively in the Sponsor as the Holder of all of the Common Securities of the Trust. Under certain circumstances as more fully described in the

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Declaration, Holders of Capital Securities have the right to vote to appoint, remove or replace the Institutional Trustee.

6. Voting Rights - Common Securities.

(a) Except as provided under paragraphs 6(b), 6(c) and 7 and as otherwise required by law and the Declaration, the Common Securities will have no voting rights.

(b) The Holders of the Common Securities are entitled, in accordance with Article IV of the Declaration, to vote to appoint, remove or replace any Administrators.

(c) Subject to Section 6.7 of the Declaration and only after each Event of Default (if any) with respect to the Capital Securities has been cured, waived, or otherwise eliminated and subject to the requirements of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount of the Common Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under the Declaration, including (i) directing the time, method, place of conducting any proceeding for any remedy available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture Trustee with respect to the Debentures, (ii) waive any past default and its consequences that is waivable under the Indenture, or (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable; provided, however, that, where a consent or action under the Indenture would require a Super Majority, the Institutional Trustee may only give such consent or take such action at the written direction of the Holders of at least the proportion in liquidation amount of the Common Securities which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. Notwithstanding this paragraph 6(c), the Institutional Trustee shall not revoke any action previously authorized or approved by a vote or consent of the Holders of the Capital Securities. Other than with respect to directing the time, method and place of conducting any proceeding for any remedy available to the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee shall not take any action described in (i),
(ii) or (iii) above, unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. If the Institutional Trustee fails to enforce its rights under the Declaration to the fullest extent permitted by law, any Holder of the Common Securities may institute a legal proceeding directly against any Person to enforce the Institutional Trustee's rights under the Declaration, without first instituting a legal proceeding against the Institutional Trustee or any other Person.

Any approval or direction of Holders of the Common Securities may be given at a separate meeting of Holders of the Common Securities convened for such purpose, at a meeting of all of the Holders of the Securities in the Trust or pursuant to written consent. The Administrators will cause a notice of any meeting at which Holders of the Common Securities are entitled to vote, or of any matter upon which action by written consent of such Holders is to be taken, to be mailed to each Holder of the Common Securities. Each such notice will include a statement setting forth (i) the date of such meeting or the date by which such action is to be taken, (ii) a description of any resolution proposed for adoption at such meeting on which such Holders are entitled to vote or of such matter upon which written consent is sought and (iii) instructions for the delivery of proxies or consents.

No vote or consent of the Holders of the Common Securities will be required for the Trust to redeem and cancel Common Securities or to distribute the Debentures in accordance with the Declaration and the terms of the Securities.

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7. Amendments to Declaration and Indenture.

(a) In addition to any requirements under Section 11.1 of the Declaration, if any proposed amendment to the Declaration provides for, or the Trustees, Sponsor or Administrators otherwise propose to effect, (i) any action that would adversely affect the powers, preferences or special rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the Liquidation of the Trust, other than as described in Section 7.1 of the Declaration, then the Holders of outstanding Securities, voting together 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 at least a Majority in liquidation amount of the Securities, affected thereby; provided, however, if any amendment or proposal referred to in clause
(i) above would adversely affect only the Capital Securities or only the Common Securities, then only the affected 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 a Majority in liquidation amount of such class of Securities.

(b) In the event the consent of the Institutional Trustee as the holder of the Debentures is required under the Indenture with respect to any amendment, modification or termination of the Indenture or the Debentures, the Institutional Trustee shall request the written direction of the Holders of the Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification, or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; provided, however, that where a consent under the Indenture would require a Super Majority, the Institutional Trustee may only give such consent at the direction of the Holders of at least the proportion in liquidation amount of the Securities which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding.

(c) Notwithstanding the foregoing, no amendment or modification may be made to the Declaration if such amendment or modification would (i) cause the Trust to be classified for purposes of United States federal income taxation as other than a grantor trust, (ii) reduce or otherwise adversely affect the powers of the Institutional Trustee or (iii) cause the Trust to be deemed an Investment Company which is required to be registered under the Investment Company Act.

(d) Notwithstanding any provision of the Declaration, the right of any Holder of the Capital Securities to receive payment of distributions and other payments upon redemption or otherwise, on or after their respective due dates, or to institute a suit for the enforcement of any such payment on or after such respective dates, shall not be impaired or affected without the consent of such Holder. For the protection and enforcement of the foregoing provision, each and every Holder of the Capital Securities shall be entitled to such relief as can be given either at law or equity.

8. Pro Rata. A reference in these terms of the Securities to any payment, distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder of the Securities according to the aggregate liquidation amount of the Securities held by the relevant Holder in relation to the aggregate liquidation amount of all Securities then outstanding unless, in relation to a payment, an Event of Default has occurred and is continuing, in which case any funds available to make such payment shall be paid first to each Holder of the Capital Securities Pro Rata according to the aggregate liquidation amount of the Capital Securities held by the relevant Holder relative to the aggregate liquidation amount of all Capital Securities outstanding, and only after satisfaction of all amounts owed to the Holders of the Capital Securities, to each Holder of the Common Securities Pro Rata according to the aggregate liquidation amount of the Common Securities held by the relevant Holder relative to the aggregate liquidation amount of all Common Securities outstanding.

C-11

liquidation, redemption and otherwise are subordinated to the rights of the Holders of the Capital Securities with the result that no payment of any Distribution on, or Redemption Price of, any Common Security, and no other payment on account of redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all outstanding Capital 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 Capital Securities then called for redemption, shall have been made or provided for, and all funds immediately available to the Institutional Trustee shall first be applied to the payment in full in cash of all Distributions on, or the Redemption Price of, the Capital Securities then due and payable.

10. Acceptance of Guarantee and Indenture. Each Holder of the Capital Securities and the Common Securities, by the acceptance of such Securities, agrees to the provisions of the Guarantee, including the subordination provisions therein and to the provisions of the Indenture.

11. No Preemptive Rights. The Holders of the Securities shall have no preemptive or similar rights to subscribe for any additional securities.

12. Miscellaneous. These terms constitute a part of the Declaration. The Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture to a Holder without charge on written request to the Sponsor at its principal place of business.

C-12

EXHIBIT A-1

FORM OF CAPITAL SECURITY CERTIFICATE

[FORM OF FACE OF SECURITY]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (C) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT, (D) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING RESTRICTIONS.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATE AND OTHER INFORMATION AS MAY BE REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

A-1-1

Certificate Number Number of Capital Securities

Certificate Evidencing Capital Securities of

Community Financial Statutory Trust I

(liquidation amount $1,000 per Capital Security)

Community Financial Statutory Trust I, a statutory trust created under the laws of the State of Connecticut (the "Trust"), hereby certifies that Preferred Term Securities, Ltd. (the "Holder") is the registered owner of securities of the Trust representing undivided beneficial interests in the assets of the Trust, (liquidation amount $1,000 per capital security) (the "Capital Securities"). Subject to the Declaration (as defined below), the Capital 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. The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities represented hereby are issued pursuant to, and shall in all respects be subject to, the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of September 7, 2000, among Joe Park and David Pickney as Administrators, State Street Bank and Trust Company of Connecticut, National Association, as Institutional Trustee, Community Financial Group, Inc., as Sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Trust, including the designation of the terms of the Capital Securities as set forth in Annex I to the Declaration of Trust dated September 7, 2000 as the same may be amended from time to time (the "Declaration"). Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture to the Holder without charge upon written request to the Trust at its principal place of business.

Upon receipt of this Security, the Holder is bound by the Declaration and is entitled to the benefits thereunder.

By acceptance of this Security, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Capital Securities as evidence of beneficial ownership in the Debentures.

This Capital Security is governed by, and construed in accordance with, the laws of the State of Connecticut, without regard to principles of conflict of laws.

IN WITNESS WHEREOF, the Trust has duly executed this certificate.

Community Financial Statutory Trust I

By:

Name:
Title: Administrator

Dated: September 7, 2000

A-1-2

CERTIFICATE OF AUTHENTICATION

This is one of the Capital Securities referred to in the within-mentioned Declaration.

STATE STREET BANK AND TRUST
COMPANY OF CONNECTICUT, NATIONAL
ASSOCIATION,
as the Institutional Trustee

By:
Authorized Officer

A-1-3

[FORM OF REVERSE OF SECURITY]

Distributions payable on each Capital Security will be payable at an annual rate of 10.60% (the "Coupon Rate") of the stated liquidation amount of $1,000 per Capital Security, such rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Distributions in arrears for more than a semi-annual period will bear interest thereon compounded semi-annually at the Coupon Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes interest payments (including Additional Interest and principal on the Debentures held by the Institutional Trustee) and any such compounded interest payable on the Debentures unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full semi-annual Distribution period on the basis of a 360-day year of twelve 30-day months.

Except as otherwise described below, Distributions on the Capital Securities will be cumulative, will accrue from the date of original issuance and will be payable semi-annually in arrears on March 7 and September 7 of each year, commencing on March 7, 2001. The Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures by extending the interest payment period for up to 10 consecutive semi-annual periods (each an "Extension Period") on the Debentures, subject to the conditions described below, although such interest would continue to accrue on the Debentures at an annual rate equal to the Coupon Rate compounded semi-annually to the extent permitted by law during any Extension Period. No Extension Period may end on a date other than an interest Payment Date. At the end of any such Extension Period the Sponsor shall pay all interest then accrued and unpaid on the Debt Securities (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date. Prior to the termination of any Extension Period, the Sponsor may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Sponsor may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates, to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date. Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds available for the payment of such distributions in the Property Account of the Trust. The Trust's funds available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer. The payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

The Capital Securities shall be redeemable as provided in the Declaration.

A-1-4

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:

(Insert assignee's social security or tax identification number)______

(Insert address and zip code of assignee) and irrevocably appoints

agent to transfer this Capital Security Certificate on the books of the Trust. The agent may substitute another to act for him or her.

Date:

Signature:

(Sign exactly as your name appears on the other side of this Capital Security Certificate)

Signature Guarantee:(1)

(1) Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Security registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Security registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-1-5

EXHIBIT A-2

FORM OF COMMON SECURITY CERTIFICATE

THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION.

THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH SECTION 8.1

OF THE DECLARATION.

Certificate Number Number of Common Securities

Certificate Evidencing Common Securities

Community Financial Statutory Trust I

Community Financial Statutory Trust I, a statutory trust created under the laws of the State of Connecticut (the "Trust"), hereby certifies that Community Financial Group, Inc. (the "Holder") is the registered owner of common securities of the Trust representing undivided beneficial interests in the assets of the Trust (the "Common Securities"). The designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities represented hereby are issued pursuant to, and shall in all respects be subject to, the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of September 7, 2000, among Joe Park and David Pickney, as Administrators, State Street Bank and Trust Company of Connecticut, National Association, as Institutional Trustee, Community Financial Group as Sponsor and the holders from time to time of undivided beneficial interest in the assets of the Trust including the designation of the terms of the Common Securities as set forth in Annex I to the Declaration, as the same may be amended from time to time (the "Declaration"). Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture to the Holder without charge upon written request to the Sponsor at its principal place of business.

As set forth in the Declaration, where an Event of Default has occurred and continuing, the rights of Holders of Common Securities to payment in respect of Distributions and payments upon Liquidation, redemption or otherwise are subordinated to the rights of payment of Holders of the Capital Securities.

Upon receipt of this Certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder.

By acceptance of this Certificate, the Holder agrees to treat, for United States federal income tax purposes, the Debentures as indebtedness and the Common Securities as evidence of undivided beneficial ownership in the Debentures.

This Common Security is governed by, and construed in accordance with, the laws of the State of Connecticut, without regard to principles of conflict of laws.

A-2-1

IN WITNESS WHEREOF, the Trust has executed this certificate this 7th day of September, 2000.

COMMUNITY FINANCIAL STATUTORY TRUST I

By:

Name:
Title: Administrator

A-2-2

[FORM OF REVERSE OF SECURITY]

Distributions payable on each Common Security will be identical in amount to the Distributions payable on each Capital Security, which is at an annual rate of 10.60% (the "Coupon Rate") of the stated liquidation amount of $1,000 per Capital Security, such rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Distributions in arrears for more than one period will bear interest thereon compounded at the Coupon Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes interest payments (including Additional Interest and principal on the Debentures held by the Institutional Trustee) and any such compounded interest payable on the Debentures unless otherwise stated. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. The amount of Distributions payable for any period will be computed for any full semi-annual Distribution period on 360-day year of twelve 30-day months.

Except as otherwise described below, Distributions on the Common Securities will be cumulative, will accrue from the date of original issuance and will be payable semi-annually in arrears on March 7 and September 7 of each year, commencing on March 7, 2001. The Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures by extending the interest payment period for up to 10 consecutive semi-annual periods (each an "Extension Period") on the Debentures, subject to the conditions described below, although such interest would continue to accrue on the Debentures at an annual rate equal to the Coupon Rate compounded semi-annually to the extent permitted by law during any Extension Period. No Extension Period may end on a date other than an Interest Payment Date. At the end of any such Extension Period the Sponsor shall pay all interest then accrued and unpaid on the Debt Securities (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date. Prior to the termination of any Extension Period, the Sponsor may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 10 consecutive semi-annual periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Sponsor may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates, to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date. Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds available for the payment of such distributions in the Property Account of the Trust. The Trust's funds available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer. The payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

The Common Securities shall be redeemable as provided in the Declaration.

A-2-3

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to:

(Insert assignee's social security or tax identification number)______

(Insert address and zip code of assignee) and irrevocably appoints____

_________________________________________________________________agent to transfer this Common Security Certificate on the books of the Trust. The agent may substitute another to act for him or her.

Date:

Signature:

(Sign exactly as your name appears on the other side of this Common Security Certificate)

Signature:

(Sign exactly as your name appears on the other side of this common Security Certificate)

Signature Guarantee(2)

(2) Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union, meeting the requirements of the Security registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Security registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-2-4

EXHIBIT B

SPECIMEN OF INITIAL DEBENTURE

(SEE TAB NO. 15)

B-1

EXHIBIT C

PLACEMENT AGREEMENT

(SEE TAB NO. 1)

C-1

Exhibit 4.9

GUARANTEE AGREEMENT

BY AND BETWEEN

COMMUNITY FINANCIAL GROUP, INC.

AND

STATE STREET BANK AND TRUST COMPANY
OF CONNECTICUT, NATIONAL ASSOCIATION

DATED AS OF SEPTEMBER 7, 2000

GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (the "Guarantee"), dated as of September 7, 2000, is executed and delivered by Community Financial Group, Inc., an Arkansas corporation (the "Guarantor"), and State Street Bank and Trust Company of Connecticut, National Association, a national banking association, organized under the laws of the United States of America, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of Community Financial Statutory Trust I, a Connecticut statutory trust (the "Issuer").

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of September 7, 2000, among the trustees named therein of the Issuer, Community Financial Group, Inc., as sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof those undivided beneficial interests, having an aggregate liquidation amount of up to $3,000,000, (the "Capital Securities"); and

WHEREAS, as incentive for the Holders to purchase the Capital Securities, the Guarantor desires irrevocably and unconditionally to agree, to the extent set forth in this Guarantee, to pay to the Holders of Capital 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 the Capital Securities, which purchase the Guarantor hereby agrees shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee for the benefit of the Holders.

ARTICLE I

DEFINITIONS AND INTERPRETATION

SECTION 1.1. DEFINITIONS AND INTERPRETATION. In this Guarantee, unless the context otherwise requires:

(a) capitalized terms used in this Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b) a term defined anywhere in this Guarantee has the same meaning throughout;

(c) all references to "the Guarantee" or "this Guarantee" are to this Guarantee as modified, supplemented or amended from time to time;

(d) all references in this Guarantee to "Articles" or "Sections" are to Articles or Sections of this Guarantee, unless otherwise specified;

(e) terms defined in the Declaration as at the date of execution of this Guarantee have the same meanings when used in this Guarantee, unless otherwise defined in this 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.

"Beneficiaries" means any Person to whom the Issuer is or hereafter becomes indebted or liable

"Capital Securities" has the meaning set forth in the recitals to this Guarantee.

"Common Securities" means the common securities issued by the Issuer to the Guarantor pursuant to the Declaration.

"Corporate Trust Office" means the office of the Guarantee Trustee at which the corporate trust business of the Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Guarantee Agreement is located at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103.

"Covered Person" means any Holder of Capital Securities.

"Debt Securities" means the debt securities of the Guarantor designated the 10.60% Junior Subordinated Deferrable Interest Debentures due 2030 held by the Institutional Trustee (as defined in the Declaration) of the Issuer.

"Declaration Event of Default" means an "Event of Default" as defined in the Declaration.

"Event of Default" has the meaning set forth in Section 2.4(a).

"Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the Declaration) which are required to be paid on such Capital Securities to the extent the Issuer shall have funds available therefor, (ii) the Redemption Price to the extent the Issuer has funds available therefor, with respect to any Capital Securities called for redemption by the Issuer, (iii) the Special Redemption Price to the extent the Issuer has funds available therefor, with respect to Capital Securities redeemed upon the occurrence of a Special Event, and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debt Securities to the Holders of the Capital Securities in exchange therefor as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Capital Securities to the date of payment, to the extent the Issuer shall have funds available therefor, and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the "Liquidation Distribution").

"Guarantee Trustee" means State Street Bank and Trust Company of Connecticut, National Association, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee and thereafter means each such Successor Guarantee Trustee.

"Guarantor" means Community Financial Group, Inc. and each of its successors and assigns.

"Holder" means any holder, as registered on the books and records of the Issuer, of any Capital Securities; provided, however, that, in determining whether the Holders of the requisite percentage of Capital 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 Guarantee Trustee, any Affiliate of the Guarantee Trustee, or any officers, directors, shareholders, members, partners, employees, representatives, nominees, custodians or agents of the Guarantee Trustee.

"Indenture" means the Indenture dated as of September 7, 2000, between the Guarantor and State Street Bank and Trust Company of Connecticut, National Association, not in its individual capacity but

solely as trustee, and any indenture supplemental thereto pursuant to which the Debt Securities are to be issued to the Institutional Trustee of the Issuer.

"Issuer" has the meaning set forth in the opening paragraph to this Guarantee.

"Liquidation Distribution" has the meaning set forth in the definition of "Guarantee Payments" herein.

"Majority in liquidation amount of the Capital Securities" means Holder(s) of outstanding Capital Securities, voting together as a class, but separately from the holders of Common Securities, of more than 50% of the aggregate 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 Capital Securities then outstanding.

"Obligations" means any costs, expenses or liabilities (but not including liabilities related to taxes) of the Issuer other than obligations of the Issuer to pay to holders of any Trust Securities the amounts due such holders pursuant to the terms of the Trust Securities.

"Officer's Certificate" means, with respect to any Person, a certificate signed by one Authorized Officer of such Person. Any Officer's Certificate delivered with respect to compliance with a condition or covenant provided for in this Guarantee shall include:

(a) a statement that each officer signing the Officer's Certificate has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Officer's Certificate;

(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

"Redemption Price" has the meaning set forth in the Indenture.

"Responsible Officer" means, with respect to the Guarantee Trustee, any officer within the Corporate Trust Office of the Guarantee Trustee including any Vice President, Assistant Vice President, Secretary, Assistant Secretary or any other officer of the Guarantee Trustee customarily performing functions similar to those performed by any of the above designated officers and also, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

"Special Event" has the meaning set forth in the Indenture.

"Special Redemption Price" has the meaning set forth in the Indenture.

"Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 3.1.

"Trust Securities" means the Common Securities and the Capital Securities.

ARTICLE II

POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE

SECTION 2.1. POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.

(a) This Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders of the Capital Securities, and the Guarantee Trustee shall not transfer this Guarantee to any Person except a Holder of Capital Securities exercising his or her rights pursuant to Section 4.4(b) or to a Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor 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 Guarantee Trustee.

(b) If an Event of Default actually known to a Responsible Officer of the Guarantee Trustee has occurred and is continuing, the Guarantee Trustee shall enforce this Guarantee for the benefit of the Holders of the Capital Securities.

(c) The Guarantee Trustee, before the occurrence of any Event of Default and after curing all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee, and no implied covenants shall be read into this Guarantee against the Guarantee Trustee. In case an Event of Default has occurred (that has not been cured or waived pursuant to Section 2.4) and is actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it by this 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 his or her own affairs.

(d) No provision of this Guarantee shall be construed to relieve the 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 Guarantee Trustee shall be determined solely by the express provisions of this Guarantee, and the Guarantee Trustee shall not be liable except for the performance of such duties and obligations as are specifically set forth in this Guarantee, and no implied covenants or obligations shall be read into this Guarantee against the Guarantee Trustee; and

(B) in the absence of bad faith on the part of the Guarantee Trustee, the 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 Guarantee Trustee and conforming to the requirements of this Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically

required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee;

(ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by a Responsible Officer of the Guarantee Trustee, unless it shall be proved that such Responsible Officer of the Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;

(iii) the 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 Capital Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or exercising any trust or power conferred upon the Guarantee Trustee under this Guarantee; and

(iv) no provision of this Guarantee shall require the 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 Guarantee Trustee shall have reasonable grounds for believing that the repayment of such funds is not reasonably assured to it under the terms of this Guarantee or security and indemnity, reasonably satisfactory to the Guarantee Trustee, against such risk or liability is not reasonably assured to it.

SECTION 2.2. CERTAIN RIGHTS OF GUARANTEE TRUSTEE.

(a) Subject to the provisions of Section 2.1:

(i) The Guarantee Trustee may conclusively rely, and shall be fully protected in acting or refraining from acting upon, any resolution, certificate, statement, instrument, opinion, report, notice, request, direction, 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 Guarantee shall be sufficiently evidenced by an Officer's Certificate.

(iii) Whenever, in the administration of this Guarantee, the Guarantee Trustee shall deem it desirable that a matter be proved or established before taking, suffering or omitting any action hereunder, the 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 Officer's Certificate of the Guarantor which, upon receipt of such request, shall be promptly delivered by the Guarantor.

(iv) The Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any re-recording, refiling or re-registration thereof).

(v) The Guarantee Trustee may consult with counsel of its selection, and the 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 Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee from any court of competent jurisdiction.

(vi) The Guarantee Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Guarantee at the request or direction of any Holder, unless such Holder shall have provided to the Guarantee Trustee such security and indemnity, reasonably satisfactory to the Guarantee Trustee, against the costs, expenses (including attorneys' fees and expenses and the expenses of the 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 Guarantee Trustee; provided, however, that nothing contained in this Section 2.2(a)(vi) shall relieve the Guarantee Trustee, upon the occurrence of an Event of Default, of its obligation to exercise the rights and powers vested in it by this Guarantee.

(vii) The Guarantee 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, direction, consent, order, bond, debenture, note, other evidence of indebtedness or other paper or document, but the Guarantee Trustee, in its discretion, may make such further inquiry or investigation into such facts or matters as it may see fit.

(viii) The 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 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 Guarantee Trustee or its agents hereunder shall bind the Holders of the Capital Securities, and the signature of the 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 Guarantee Trustee to so act or as to its compliance with any of the terms and provisions of this Guarantee, both of which shall be conclusively evidenced by the Guarantee Trustee's or its agent's taking such action.

(x) Whenever in the administration of this Guarantee the Guarantee Trustee shall deem it desirable to receive instructions with respect to enforcing any remedy or right or taking any other action hereunder, the Guarantee Trustee (i) may request instructions from the Holders of a Majority in liquidation amount of the Capital Securities, (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.

(xi) The Guarantee Trustee shall not be liable for any action taken, suffered, or omitted to be taken by it in good faith, without negligence, and reasonably believed by it to be authorized or within the discretion or rights or powers conferred upon it by this Guarantee.

(b) No provision of this Guarantee shall be deemed to impose any duty or obligation on the 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 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 Guarantee Trustee shall be construed to be a duty.

SECTION 2.3. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF GUARANTEE. The recitals contained in this Guarantee shall be taken as the statements of the Guarantor, and the Guarantee Trustee does not assume any responsibility for their correctness. The Guarantee Trustee makes no representation as to the validity or sufficiency of this Guarantee.

SECTION 2.4. EVENTS OF DEFAULT: WAIVER.

(a) An Event of Default under this Guarantee will occur upon the failure of the Guarantor to perform any of its payment or other obligations hereunder.

(b) The Holders of a Majority in liquidation amount of the Capital Securities may, voting or consenting as a class, on behalf of the Holders of all of the Capital Securities, waive any past Event of Default and its consequences. Upon such waiver, any such Event of Default shall cease to exist, and shall be deemed to have been cured, for every purpose of this Guarantee, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

SECTION 2.5. EVENTS OF DEFAULT: NOTICE.

(a) The Guarantee Trustee shall, within 90 days after the occurrence of an Event of Default, transmit by mail, first class postage prepaid, to the Holders of the Capital Securities and the Guarantor, notices of all Events of Default actually known to a Responsible Officer of the Guarantee Trustee, unless such defaults have been cured before the giving of such notice, provided, however, that the Guarantee Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Guarantee Trustee in good faith determines that the withholding of such notice is in the interests of the Holders of the Capital Securities.

(b) The Guarantee Trustee shall not be deemed to have knowledge of any Event of Default unless the Guarantee Trustee shall have received written notice from the Guarantor or a Holder of the Capital Securities (except in the case of a payment default), or a Responsible Officer of the Guarantee Trustee charged with the administration of this Guarantee shall have obtained actual knowledge thereof.

ARTICLE III

GUARANTEE TRUSTEE

SECTION 3.1. GUARANTEE TRUSTEE: ELIGIBILITY.

(a) There shall at all times be a Guarantee Trustee which shall:

(i) not be an Affiliate of the Guarantor, and

(ii) be a corporation 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 Person authorized under such laws to exercise corporate trust powers, having a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000), and subject to supervision or examination by Federal, State, Territorial or District of Columbia authority. If such corporation 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 3.1(a)(ii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

(b) If at any time the Guarantee Trustee shall cease to be eligible to so act under Section 3.1 (a), the Guarantee Trustee shall immediately resign in the manner and with the effect set out in Section 3.2(c).

(c) If the Guarantee Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act, the Guarantee Trustee shall either eliminate such interest or resign to the extent and in the manner provided by, and subject to this Guarantee.

SECTION 3.2. APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE TRUSTEE.

(a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default.

(b) The Guarantee Trustee shall not be removed in accordance with Section 3.2(a) until a Successor Guarantee Trustee has been appointed and has accepted such appointment by written instrument executed by such Successor Guarantee Trustee and delivered to the Guarantor.

(c) The Guarantee Trustee appointed to office shall hold office until a Successor Guarantee Trustee shall have been appointed or until its removal or resignation. The Guarantee Trustee may resign from office (without need for prior or subsequent accounting) by an instrument in writing executed by the Guarantee Trustee and delivered to the Guarantor, which resignation shall not take effect until a Successor Guarantee Trustee has been appointed and has accepted such appointment by an instrument in writing executed by such Successor Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee Trustee.

(d) If no Successor Guarantee Trustee shall have been appointed and accepted appointment as provided in this Section 3.2 within 60 days after delivery of an instrument of removal or resignation, the Guarantee Trustee resigning or being removed may petition any court of competent jurisdiction for appointment of a Successor Guarantee Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Guarantee Trustee.

(e) No Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Guarantee Trustee.

(f) Upon termination of this Guarantee or removal or resignation of the Guarantee Trustee pursuant to this Section 3.2, the Guarantor shall pay to the Guarantee Trustee all amounts owing to the Guarantee Trustee under Sections 7.2 and 7.3 accrued to the date of such termination, removal or resignation.

ARTICLE IV

GUARANTEE

SECTION 4.1. GUARANTEE.

(a) The Guarantor irrevocably and unconditionally agrees to pay in full to the Holders the Guarantee Payments (without duplication of amounts theretofore paid by the Issuer), as and when due, regardless of any defense (except the defense of payment by the Issuer), right of set-off or counterclaim that the Issuer 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 Issuer to pay such amounts to the Holders.

(b) The Guarantor hereby also agrees to assume any and all Obligations of the Issuer and in the event any such Obligation is not so assumed, subject to the terms and conditions hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary the full payment, when and as due, of any and all Obligations to such Beneficiaries. 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 4.2. WAIVER OF NOTICE AND DEMAND. The Guarantor hereby waives notice of acceptance of this 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 Issuer 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 4.3. OBLIGATIONS NOT AFFECTED. The obligations, covenants, agreements and duties of the Guarantor under this 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 Issuer of any express or implied agreement, covenant, term or condition relating to the Capital Securities to be performed or observed by the Issuer;

(b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Capital Securities or the extension of time for the performance of any other obligation under, arising out of or in connection with, the Capital Securities (other than an extension of time for payment of Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debt Securities or any extension of the maturity date of the Debt Securities 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 Capital Securities, or any action on the part of the Issuer 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 Issuer or any of the assets of the Issuer;

(e) any invalidity of, or defect or deficiency in, the Capital Securities;

(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 4.3 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 4.4. RIGHTS OF HOLDERS.

being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Guarantee Trustee in good faith by its board of directors or trustees, executive committees or a trust committee of directors or trustees and/or Responsible Officers shall determine that the action or proceedings so directed would involve the Guarantee Trustee in personal liability.

(b) Any Holder of Capital Securities may institute a legal proceeding directly against the Guarantor to enforce the Guarantee Trustee's rights under this Guarantee, without first instituting a legal proceeding against the Issuer, the Guarantee Trustee or any other Person. The Guarantor waives any right or remedy to require that any such action be brought first against the Issuer, the Guarantee Trustee or any other Person before so proceeding directly against the Guarantor.

SECTION 4.5. GUARANTEE OF PAYMENT. This Guarantee creates a guarantee of payment and not of collection.

SECTION 4.6. SUBROGATION. The Guarantor shall be subrogated to all (if any) rights of the Holders of Capital Securities against the Issuer in respect of any amounts paid to such Holders by the Guarantor under this 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 Guarantee, if, after giving effect to any such payment, any amounts are due and unpaid under this 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 4.7. INDEPENDENT OBLIGATIONS. The Guarantor acknowledges that its obligations hereunder are independent of the obligations of the Issuer with respect to the Capital Securities and that the Guarantor shall be liable as principal and as debtor hereunder to make Guarantee Payments pursuant to the terms of this Guarantee notwithstanding the occurrence of any event referred to in subsections (a) through (g), inclusive, of Section 4.3 hereof.

SECTION 4.8. ENFORCEMENT BY A BENEFICIARY. A Beneficiary may enforce the obligations of the Guarantor contained in Section 4.1(b) directly against the Guarantor and the Guarantor waives any right or remedy to require that any action be brought against the Issuer or any other person or entity before proceeding against the Guarantor. The Guarantor shall be subrogated to all rights (if any) of any Beneficiary against the Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor under this Agreement; provided, however, that the Guarantor shall not (except to the extent required by mandatory provisions of law) be entitled to enforce or exercise any rights 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 Agreement, if at the time of any such payment, and after giving effect to such payment, any amounts are due and unpaid under this Agreement.

ARTICLE V

LIMITATION OF TRANSACTIONS; SUBORDINATION

with respect to the foregoing, or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Guarantor or any Affiliate that rank pari passu in all respects with or junior in interest to the Debt Securities (other than, with respect to clauses (x) and (y) above, (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Guarantor (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the occurrence of the Event of Default, Declaration Event of Default or Extension Period, as applicable, (ii) as a result of any exchange or conversion of any class or series of the Guarantor's capital stock (or any capital stock of a subsidiary of the Guarantor) for any class or series of the Guarantor's capital stock or of any class or series of the Guarantor's indebtedness for any class or series of the Guarantor's capital stock, (iii) the purchase of fractional interests in shares of the Guarantor's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged,
(iv) any declaration of a dividend in connection with any stockholder's rights plan, or the issuance of rights, stock or other property under any stockholder's rights plan, or the redemption or repurchase of rights pursuant thereto, (v) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (vi) payments under this Guarantee).

SECTION 5.2. RANKING. This Guarantee will constitute an unsecured obligation of the Guarantor and will rank subordinate and junior in right of payment to all present and future Senior Indebtedness (as defined in the Indenture) of the Guarantor. By their acceptance thereof, each Holder of Capital Securities agrees to the foregoing provisions of this Guarantee and the other terms set forth herein.

The right of the Guarantor to participate in any distribution of assets of any of its subsidiaries upon any such subsidiary's liquidation or reorganization or otherwise is subject to the prior claims of creditors of that subsidiary, except to the extent the Guarantor may itself be recognized as a creditor of that subsidiary. Accordingly, the Guarantor's obligations under this Guarantee will be effectively subordinated to all existing and future liabilities of the Guarantor's subsidiaries, and claimants should look only to the assets of the Guarantor for payments thereunder. This Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of the Guarantor, including Senior Indebtedness of the Guarantor, under any indenture that the Guarantor may enter into in the future or otherwise.

ARTICLE VI

TERMINATION

SECTION 6.1. TERMINATION. This Guarantee shall terminate as to the Capital Securities (i) upon full payment of the Redemption Price or Special Redemption Price of all Capital Securities, (ii) upon the distribution of the Debt Securities to the Holders of all of the Capital Securities or (iii) upon full payment of the amounts payable in accordance with the Declaration upon dissolution of the Issuer. This Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Capital Securities must restore payment of any sums paid under the Capital Securities or under this Guarantee.

ARTICLE VII

INDEMNIFICATION

SECTION 7.1. 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 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 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 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 Issuer or the Guarantor and upon such information, opinions, reports or statements presented to the Issuer or 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, if selected by such Indemnified Person, has been selected with reasonable care by such Indemnified Person, 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 Capital Securities might properly be paid.

SECTION 7.2. INDEMNIFICATION.

(a) The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred without negligence or willful misconduct on the part of the Indemnified Person, 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 the Indemnified Person defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of the Indemnified Person's powers or duties hereunder. The obligation to indemnify as set forth in this Section 7.2 shall survive the resignation or removal of the Guarantee Trustee and the termination of this Guarantee.

the Indemnified Person and the Guarantor and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it and/or other Indemnified Person(s) which are different from or additional to those available to the Guarantor, (iii) the Guarantor shall not have employed counsel satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after notice of the institution of such action or (iv) the Guarantor shall authorize the Indemnified Person to employ separate counsel at the expense of the Guarantor. The Guarantor will not, without the prior written consent of the Indemnified Persons, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnified Persons are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Person from all liability arising out of such claim, action, suit or proceeding.

SECTION 7.3. COMPENSATION; REIMBURSEMENT OF EXPENSES. The Guarantor agrees:

(a) to pay to the Guarantee Trustee from time to time such compensation for all services rendered by it hereunder as the parties shall agree to from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and

(b) except as otherwise expressly provided herein, to reimburse the Guarantee Trustee upon request for all reasonable expenses, disbursements and advances incurred or made by it in accordance with any provision of this Guarantee (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 its negligence or willful misconduct.

The provisions of this Section 7.3 shall survive the resignation or removal of the Guarantee Trustee and the termination of this Guarantee.

ARTICLE VIII

MISCELLANEOUS

SECTION 8.1. SUCCESSORS AND ASSIGNS. All guarantees and agreements contained in this Guarantee shall bind the successors, assigns, receivers, trustees and representatives of the Guarantor and shall inure to the benefit of the Holders of the Capital Securities then outstanding. Except in connection with any merger or consolidation of the Guarantor with or into another entity or any sale, transfer or lease of the Guarantor's assets to another entity, in each case, to the extent permitted under the Indenture, the Guarantor may not assign its rights or delegate its obligations under this Guarantee without the prior approval of the Holders of at least a Majority in liquidation amount of the Capital Securities.

SECTION 8.2. AMENDMENTS. Except with respect to any changes that do not adversely affect the rights of Holders of the Capital Securities in any material respect (in which case no consent of Holders will be required), this Guarantee may be amended only with the prior approval of the Holders of not less than a Majority in liquidation amount of the Capital Securities. The provisions of the Declaration with respect to amendments thereof apply to the giving of such approval.

SECTION 8.3. NOTICES. All notices provided for in this Guarantee shall be in writing, duly signed by the party giving such notice, and shall be delivered, telecopied or mailed by first class mail, as follows:

(a) If given to the Guarantee Trustee, at the Guarantee Trustee's mailing address set forth below (or such other address as the Guarantee Trustee may give notice of to the Holders of the Capital Securities and the Guarantor):

State Street Bank and Trust Company of Connecticut, National Association 225 Asylum Street, Goodwin Square
Hartford, Connecticut 06103
Attention: Corporate Trust Department Telecopy: (860) 244-1889

With a copy to:

State Street Bank and Trust Company P.O. Box 778
Boston, Massachusetts 02102-0778
Attention: Paul D. Allen, Corporate Trust Department Telecopy: (617) 662-1462

(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 Capital Securities and to the Guarantee Trustee):

Community Financial Group, Inc.
One City Plaza, Box 1028
Cabot, Arkansas 72023
Attention: David Pickney
Telecopy: (501) 941-2804

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 8.4. BENEFIT. This Guarantee is solely for the benefit of the Holders of the Capital Securities and, subject to Section 2.1(a), is not separately transferable from the Capital Securities.

SECTION 8.5. GOVERNING LAW. THIS GUARANTEE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

SECTION 8.6. COUNTERPARTS. This Guarantee may be executed in one or more counterparts, each of which shall be an original, but all of which taken together shall constitute one and the same instrument.

[signatures appear on the following page]

THIS GUARANTEE is executed as of the day and year first above written.

COMMUNITY FINANCIAL GROUP, INC.,
as Guarantor

By: /s/ Illegible
    ------------------------------------
Name: Illegible
Title: PRESIDENT

STATE STREET BANK AND TRUST COMPANY OF
CONNECTICUT, NATIONAL ASSOCIATION,
as Guarantee Trustee

By: /s/ Paul D. Allen
    ------------------------------------
Name: Paul D. Allen
Title: Vice President

Exhibit 4.10

HOME BANCSHARES, INC.,
AS ISSUER

INDENTURE

DATED AS OF MARCH 26, 2003

U. S. BANK NATIONAL ASSOCIATION,
AS TRUSTEE

FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURES

DUE 2033

TABLE OF CONTENTS

                                                                                        Page
                                                                                        ----
ARTICLE I. DEFINITIONS ..............................................................     1
   Section 1.1.   Definitions. ......................................................     1

ARTICLE II. DEBENTURES ..............................................................     8
   Section 2.1.   Authentication and Dating. ........................................     8
   Section 2.2.   Form of Trustee's Certificate of Authentication. ..................     9
   Section 2.3.   Form and Denomination of Debentures ...............................     9
   Section 2.4.   Execution of Debentures. ..........................................     9
   Section 2.5.   Exchange and Registration of Transfer of Debentures. ..............     9
   Section 2.6.   Mutilated, Destroyed, Lost or Stolen Debentures. ..................    11
   Section 2.7.   Temporary Debentures ..............................................    12
   Section 2.8.   Payment of Interest and Additional Interest. ......................    12
   Section 2.9.   Cancellation of Debentures Paid, etc ..............................    14
   Section 2.10.  Computation of Interest ...........................................    14
   Section 2.11.  Extension of Interest Payment Period. .............................    15
   Section 2.12.  CUSIP Numbers .....................................................    16

ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY ....................................    17
   Section 3.1.   Payment of Principal, Premium and Interest; Agreed Treatment
                  of the Debentures. ................................................    17
   Section 3.2.   Offices for Notices and Payments, etc .............................    17
   Section 3.3.   Appointments to Fill Vacancies in Trustee's Office ................    18
   Section 3.4.   Provision as to Paying Agent ......................................    18
   Section 3.5.   Certificate to Trustee ............................................    19
   Section 3.6.   Additional Sums. ..................................................    19
   Section 3.7.   Compliance with Consolidation Provisions ..........................    19
   Section 3.8.   Limitation on Dividends ...........................................    19
   Section 3.9.   Covenants as to the Trust. ........................................    20
   Section 3.10.  Additional Junior Indebtedness ....................................    20

ARTICLE IV. SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE .......    20
    Section 4.1.  Securityholders' Lists. ...........................................    20
    Section 4.2.  Preservation and Disclosure of Lists ..............................    20

ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT .....    21
   Section 5.1.   Events of Default .................................................    21
   Section 5.2.   Payment of Debentures on Default; Suit Therefor. ..................    23
   Section 5.3.   Application of Moneys Collected by Trustee ........................    24
   Section 5.4.   Proceedings by Securityholders. ...................................    25
   Section 5.5.   Proceedings by Trustee. ...........................................    25
   Section 5.6.   Remedies Cumulative and Continuing; Delay or Omission
                  Not a Waiver. .....................................................    25

   Section 5.7.   Direction of Proceedings and Waiver of Defaults by Majority
                  of Securityholders ................................................    26
   Section 5.8.   Notice of Defaults ................................................    26
   Section 5.9.   Undertaking to Pay Costs ..........................................    26

ARTICLE VI. CONCERNING THE TRUSTEE ..................................................    27
   Section 6.1.   Duties and Responsibilities of Trustee ............................    27
   Section 6.2.   Reliance on Documents, Opinions, etc. .............................    28
   Section 6.3.   No Responsibility for Recitals, etc ...............................    28
   Section 6.4.   Trustee, Authenticating Agent, Paying Agents, Transfer Agents
                  or Registrar May Own Debentures ...................................    29
   Section 6.5.   Moneys to be Held in Trust. .......................................    29
   Section 6.6.   Compensation and Expenses of Trustee ..............................    29
   Section 6.7.   Officers' Certificate as Evidence .................................    30
   Section 6.8.   Eligibility of Trustee ............................................    30
   Section 6.9.   Resignation or Removal of Trustee .................................    30
   Section 6.10.  Acceptance by Successor Trustee ...................................    31
   Section 6.11.  Succession by Merger, etc .........................................    32
   Section 6.12.  Authenticating Agents .............................................    32

ARTICLE VII. CONCERNING THE SECURITYHOLDERS .........................................    33
   Section 7.1.   Action by Securityholders. ........................................    33
   Section 7.2.   Proof of Execution by Securityholders. ............................    34
   Section 7.3.   Who Are Deemed Absolute Owners ....................................    34
   Section 7.4.   Debentures Owned by Company Deemed Not Outstanding. ...............    34
   Section 7.5.   Revocation of Consents; Future Holders Bound. .....................    34

ARTICLE VIII. SECURITYHOLDERS' MEETINGS .............................................    35
   Section 8.1.   Purposes of Meetings ..............................................    35
   Section 8.2.   Call of Meetings by Trustee .......................................    35
   Section 8.3.   Call of Meetings by Company or Securityholders. ...................    35
   Section 8.4.   Qualifications for Voting. ........................................    35
   Section 8.5.   Regulations. ......................................................    36
   Section 8.6.   Voting ............................................................    36
   Section 8.7.   Quorum; Actions. ..................................................    36

ARTICLE IX. SUPPLEMENTAL INDENTURES .................................................    37
   Section 9.1.   Supplemental Indentures without Consent of Securityholders. .......    37
   Section 9.2.   Supplemental Indentures with Consent of Securityholders ...........    38
   Section 9.3.   Effect of Supplemental Indentures. ................................    39
   Section 9.4.   Notation on Debentures ............................................    39
   Section 9.5.   Evidence of Compliance of Supplemental Indenture to be
                  Furnished to Trustee ..............................................    39

ARTICLE X. REDEMPTION OF SECURITIES .................................................    39
   Section 10.1.  Optional Redemption. ..............................................    39
   Section 10.2.  Special Event Redemption. .........................................    40
   Section 10.3.  Notice of Redemption; Selection of Debentures .....................    40
   Section 10.4.  Payment of Debentures Called for Redemption. ......................    41

ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE .......................    41
   Section 11.1.  Company May Consolidate, etc., on Certain Terms ...................    41
   Section 11.2.  Successor Entity to be Substituted ................................    41
   Section 11.3.  Opinion of Counsel to be Given to Trustee .........................    42

ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE ................................    42
   Section 12.1.  Discharge of Indenture ............................................    42
   Section 12.2.  Deposited Moneys to be Held in Trust by Trustee ...................    43
   Section 12.3.  Paying Agent to Repay Moneys Held. ................................    43
   Section 12.4.  Return of Unclaimed Moneys. .......................................    43

ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS .......    43
   Section 13.1.  Indenture and Debentures Solely Corporate Obligations .............    43

ARTICLE XIV. MISCELLANEOUS PROVISIONS ...............................................    43
   Section 14.1.  Successors ........................................................    43
   Section 14.2.  Official Acts by Successor Entity .................................    43
   Section 14.3.  Surrender of Company Powers. ......................................    44
   Section 14.4.  Addresses for Notices, etc ........................................    44
   Section 14.5.  Governing Law .....................................................    44
   Section 14.6.  Evidence of Compliance with Conditions Precedent ..................    44
   Section 14.7.  Non-Business Days .................................................    44
   Section 14.8.  Table of Contents, Headings, etc ..................................    44
   Section 14.9.  Execution in Counterparts. ........................................    45
   Section 14.10. Separability. .....................................................    45
   Section 14.11. Assignment. .......................................................    45
   Section 14.12. Acknowledgment of Rights. .........................................    45

ARTICLE XV. SUBORDINATION OF DEBENTURES .............................................    45
   Section 15.1.  Agreement to Subordinate ..........................................    45
   Section 15.2.  Default on Senior Indebtedness ....................................    46
   Section 15.3.  Liquidation, Dissolution, Bankruptcy. .............................    46
   Section 15.4.  Subrogation .......................................................    47
   Section 15.5.  Trustee to Effectuate Subordination. ..............................    48
   Section 15.6.  Notice by the Company. ............................................    48
   Section 15.7.  Rights of the Trustee; Holders of Senior Indebtedness .............    48
   Section 15.8.  Subordination May Not Be Impaired .................................    49

Exhibit A Form of Fixed/Floating Rate Junior Subordinated Deferrable Interest
          Debenture

iii

THIS INDENTURE, dated as of March 26, 2003, between Home Bancshares, Inc., an Arkansas corporation (the "Company"), and U. S. Bank National Association, a national banking association organized under the laws of the United States of America, as debenture trustee (the "Trustee").

WITNESSETH:

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2033 (the "Debentures") under this Indenture to provide, among other things, for the execution and authentication, delivery and administration thereof, and the Company has duly authorized the execution of this Indenture; and

WHEREAS, all acts and things necessary to make this Indenture a valid agreement according to its terms, have been done and performed;

NOW, THEREFORE, This Indenture Witnesseth:

In consideration of the premises, and the purchase of the Debentures by the holders thereof, the Company covenants and agrees with the Trustee for the equal and proportionate benefit of the respective holders from time to time of the Debentures as follows:

ARTICLE I.
DEFINITIONS

"Additional Interest" has the meaning set forth in Section 2.11.

"Additional Junior Indebtedness" means, without duplication and other than the Debentures, any indebtedness, liabilities or obligations of the Company, or any Subsidiary of the Company, under debt securities (or guarantees in respect of debt securities) initially issued after the date of this Indenture to any trust, or a trustee of a trust, partnership or other entity affiliated with the Company that is, directly or indirectly, a finance subsidiary (as such term is defined in Rule 3a-5 under the Investment Company Act of 1940) or other financing vehicle of the Company or any Subsidiary of the Company in connection with the issuance by that entity of preferred securities or other securities that are eligible to qualify for Tier 1 capital treatment (or its then equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company (or, if the Company is not a bank holding company, such guidelines applied to the Company as if the Company were subject to such guidelines); provided, however, that the inability of the Company to treat all or any portion of the Additional Junior Indebtedness as Tier 1 capital shall not disqualify it as Additional Junior Indebtedness if such inability results from the Company having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve now or may hereafter accord Tier 1 capital treatment (including the Debentures) in excess of the amount which may qualify for treatment as Tier 1 capital under applicable capital adequacy guidelines.

"Additional Sums" has the meaning set forth in Section 3.6.

"Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder.

"Authenticating Agent" means any agent or agents of the Trustee which at the time shall be appointed and acting pursuant to Section 6.12.

"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 or the executive committee or any other duly authorized designated officers of the Company.

"Capital Securities" means 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 and continuance of an Event of Default (as defined in the Declaration), the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities.

"Capital Securities Guarantee" means the guarantee agreement that the Company enters into with U.S. Bank National Association, as guarantee trustee, or other Persons that operates directly or indirectly for the benefit of holders of Capital Securities of the Trust.

"Capital Treatment 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 any amendment to, or change (including any announced prospective change) in, the laws, rules or regulations of the United States or any political subdivision thereof or therein, or as the result of any official or administrative pronouncement or action or decision interpreting or applying such laws, rules or regulations, which amendment or change is effective or which pronouncement, action or decision is announced on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that the Company will not, within 90 days of the date of such opinion, be entitled to treat an amount equal to the aggregate liquidation amount of the Capital Securities as "Tier 1 Capital" (or its then equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Company (or if the Company is not a bank holding company, such guidelines applied to the Company as if the Company were subject to such guidelines); provided, however, that the inability of the Company to treat all or any portion of the liquidation amount of the Capital Securities as Tier l Capital shall not constitute the basis for a Capital Treatment Event, if such inability results from the Company having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve or OTS, as applicable, may now or hereafter accord Tier 1 Capital treatment in excess of the amount which may now or hereafter qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines; provided further, however, that the distribution of Debentures in connection with the liquidation of the Trust shall not in and of itself constitute a Capital Treatment Event unless such liquidation shall have occurred in connection with a Tax Event or an Investment Company Event.

"Certificate" means a certificate signed by any one of the principal executive officer, the principal financial officer or the principal accounting officer of the Company.

"Common Securities" means undivided beneficial interests in the assets of the Trust which rank pari passu with Capital Securities issued by the Trust; provided, however, that upon the occurrence and continuance of an Event of Default (as defined in the Declaration), the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities.

"Company" means Home Bancshares, Inc., an Arkansas corporation, and, subject to the provisions of Article XI, shall include its successors and assigns.

"Comparable Treasury Issue " means with respect to any Special Redemption Date the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the Fixed Rate Period Remaining Life that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Fixed Rate Period Remaining Life. If no United States Treasury security has a maturity which is within a period from three months before to three months after March 26, 2008, the two most closely corresponding fixed, non-callable United States Treasury securities, as selected by the Quotation Agent, shall be used as the Comparable Treasury Issue, and the Treasury Rate shall be interpolated or extrapolated on a straight-line basis, rounding to the nearest month using such securities.

"Coupon Rate" has the meaning set forth in Section 2.8.

"Debenture" or "Debentures" has the meaning stated in the first recital of this Indenture.

"Debenture Register" has the meaning specified in Section 2.5.

"Declaration" means the Amended and Restated Declaration of Trust of the Trust, as amended or supplemented from time to time.

"Default" means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

"Defaulted Interest" has the meaning set forth in Section 2.8.

"Distribution Period" means the period beginning on (and including) the date of original issuance and ending on (but excluding) June 26, 2003 and each successive period beginning on (and including) June 26, 2003, and each succeeding Interest Payment Date, and ending on (but excluding) the next succeeding Interest Payment Date.

"Determination Date" has the meaning set forth in Section 2.10.

"Event of Default" means any event specified in Section 5.1, continued for the period of time, if any, and after the giving of the notice, if any, therein designated.

"Extension Period" has the meaning set forth in Section 2.11.

"Federal Reserve" means the Board of Governors of the Federal Reserve System and any successor federal agency that is primarily responsible for regulating the activities of bank holding companies.

"Fixed Rate Period Remaining Life" means, with respect to any Debenture, the period from the Special Redemption Date for such Debenture to March 26, 2008.

"Indenture" means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented, or both.

"Institutional Trustee" has the meaning set forth in the Declaration.

"Interest Payment Date" means each March 26, June 26, September 26 and December 26 during the term of this Indenture.

"Interest Rate" means for the period beginning on (and including) the date of original issuance and ending on (but excluding) March 26, 2008 the rate per annum of 6.40% and for each Distribution Period thereafter, the Coupon Rate.

"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 written change (including any announced prospective change) in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within 90 days of the date of such opinion will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Debentures.

"Liquidation Amount" means the stated amount of $1,000.00 per Trust Security.

"Maturity Date" means March 26, 2033.

"Officers' Certificate" means a certificate signed by the Chairman of the Board, the Chief Executive Officer, the Vice Chairman, the President, any Managing Director or any Vice President, and by the Treasurer, an Assistant Treasurer, the Comptroller, an Assistant Comptroller, the Secretary or an Assistant Secretary of the Company, and delivered to the Trustee. Each such certificate shall include the statements provided for in Section 14.6 if and to the extent required by the provisions of such Section.

"OTS" means the Office of Thrift Supervision and any successor federal agency that is primarily responsible for regulating the activities of savings and loan holding companies.

The term "outstanding," when used with reference to Debentures, means, subject to the provisions of Section 7.4, as of any particular time, all Debentures authenticated and delivered by the Trustee or the Authenticating Agent under this Indenture, except:

(a) Debentures theretofore canceled by the Trustee or the Authenticating Agent or delivered to the Trustee for cancellation;

(b) Debentures, or portions thereof, for the payment or redemption of which moneys in the necessary amount shall have been deposited in trust with the Trustee or with any paying agent (other than 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 Debentures, or portions thereof, are to be redeemed prior to maturity thereof, notice of such redemption shall have been given as provided in Section 10.3 or provision satisfactory to the Trustee shall have been made for giving such notice; and

(c) Debentures paid pursuant to Section 2.6 or in lieu of or in substitution for which other Debentures shall have been authenticated and delivered pursuant to the terms of Section 2.6 unless proof satisfactory to the Company and the Trustee is presented that any such Debentures are held by bona fide holders in due course.

"Predecessor Security" of any particular Debenture means every previous Debenture evidencing all or a portion of the same debt as that evidenced by such particular Debenture; and, for purposes of this definition, any Debenture authenticated and delivered under Section 2.6 in lieu of a lost, destroyed or stolen Debenture shall be deemed to evidence the same debt as the lost, destroyed or stolen Debenture.

"Primary Treasury Dealer" means either a nationally recognized primary United States Government securities dealer or an entity of recognized standing in matters pertaining to the quotation of treasury securities that is reasonably acceptable to the Company and the Trustee.

"Principal Office of the Trustee," or other similar term, means the office of the Trustee, at which at any particular time its corporate trust business shall be principally administered, which at the time of the execution of this Indenture shall be 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103.

"Quotation Agent" means U. S. Bank National Association, or its designee, and its successors; provided, however, that if the foregoing shall cease to be a Primary Treasury Dealer, the Company shall substitute therefor another Primary Treasury Dealer.

"Redemption Date" has the meaning set forth in Section 10.1.

"Redemption Price" means 100% of the principal amount of the Debentures being redeemed, plus accrued and unpaid interest (including any Additional Interest) on such Debentures to the Redemption Date.

"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any other Primary Treasury Dealer selected by the Trustee after consultation with the Company.

Office of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

"Securities Act" means the Securities Act of 1933, as amended from time to time or any successor legislation.

"Securityholder," "holder of Debentures," or other similar terms, means any Person in whose name at the time a particular Debenture is registered on the register kept by the Company or the Trustee for that purpose in accordance with the terms hereof.

"Senior Indebtedness" means, with respect to the Company, (i) the principal, premium, if any, and interest in respect of (A) indebtedness of the Company for money borrowed and (B) indebtedness evidenced by securities, debentures, notes, bonds or other similar instruments issued by the Company;
(ii) all capital lease obligations of the Company; (iii) all obligations of the Company issued or assumed as the deferred purchase price of property, all conditional sale obligations of the Company and all obligations of the Company under any title retention agreement; (iv) all obligations of the Company for the reimbursement of any letter of credit, any banker's acceptance, any security purchase facility, any repurchase agreement or similar arrangement, any interest rate swap, any other hedging arrangement, any obligation under options or any similar credit or other transaction; (v) all obligations of the type referred to in clauses (i) through (iv) above of other Persons for the payment of which the Company is responsible or liable as obligor, guarantor or otherwise; and (vi) all obligations of the type referred to in clauses (i) through (v) above of other Persons secured by any lien on any property or asset of the Company (whether or not such obligation is assumed by the Company), whether incurred on or prior to the date of this Indenture or thereafter incurred. Notwithstanding the foregoing, "Senior Indebtedness" shall not include (1) any Additional Junior Indebtedness, (2) Debentures issued pursuant to this Indenture and guarantees in respect of such Debentures, (3) trade accounts payable of the Company arising in the ordinary course of business (such trade accounts payable being pari passu in right of payment to the Debentures), or (4) obligations with respect to which
(a) in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are pari passu, junior or otherwise not superior in right of payment to the Debentures and (b) the Company, prior to the issuance thereof, has notified (and, if then required under the applicable guidelines of the regulating entity, has received approval from) the Federal Reserve (if the Company is a bank holding company) or the OTS (if the Company is a savings and loan holding company). Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the subordination provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness.

"Special Event" means any of a Capital Treatment Event, an Investment Company Event or a Tax Event.

"Special Redemption Date" has the meaning set forth in Section 10.2.

"Special Redemption Price" means (a) if the Special Event is before March 26, 2008, the greater of (i) 107.5% of the principal amount of the Debentures, plus accrued and unpaid interest (including Additional Interest) on the Debentures to the Special Redemption Date, or (ii) as determined by the Quotation Agent, the sum of (A) the present value of the principal amount of the Debentures and the present value of interest payable on the Debentures during the Fixed Rate Period Remaining Life of the Debentures, each discounted to the Special Redemption Date on a quarterly basis (assuming a 360-day year consisting of twelve 30-day months at the Treasury Rate), plus (B) accrued and unpaid interest (including Additional Interest) on the Debentures to such Special Redemption Date, or (b) if the Special Event is on or after March 26, 2008, 100% of the principal amount of the Debentures being redeemed,

plus accrued and unpaid interest (including any Additional Interest) on such Debentures to the Special Redemption Date.

"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 (including any private letter ruling, technical advice memorandum, field service advice, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations) (an "Administrative Action") or judicial decision interpreting or applying such laws or regulations, regardless of whether such Administrative Action or judicial decision is issued to or in connection with a proceeding involving the Company or the Trust and whether or not subject to review or appeal, which amendment, clarification, change, Administrative Action or decision is enacted, promulgated or announced, in each case on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that: (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Debentures; (ii) interest payable by the Company on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

"3-Month LIBOR" has the meaning set forth in Section 2.10.

"Telerate Page 3750" has the meaning set forth in Section 2.10.

"Treasury Rate" means (i) the yield, under the heading which represents the average for the week immediately prior to the date of calculation, appearing in the most recently published statistical release designated H.15 (519) or any successor publication which is published weekly by the Federal Reserve and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Fixed Rate Period Remaining Life (if no maturity is within three months before or after the Fixed Rate Period Remaining Life, yields for the two published maturities most closely corresponding to the Fixed Rate Period Remaining Life shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Special Redemption Date. The

Treasury Rate shall be calculated by the Quotation Agent on the third Business Day preceding the Special Redemption Date.

"Trust" shall mean Home BancShares Statutory Trust I, a Connecticut statutory trust, or any other similar trust created for the purpose of issuing Capital Securities in connection with the issuance of Debentures under this Indenture, of which the Company is the sponsor.

"Trust Securities" means Common Securities and Capital Securities of the Trust.

"Trustee" means U. S. Bank National Association, and, subject to the provisions of Article VI hereof, shall also include its successors and assigns as Trustee hereunder.

ARTICLE II.
DEBENTURES

SECTION 2.1. AUTHENTICATION AND DATING. Upon the execution and delivery of this Indenture, or from time to time thereafter, Debentures in an aggregate principal amount not in excess of $20,619,000.00 may be executed and delivered by the Company to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Debentures to or upon the written order of the Company, signed by its Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman, the President, one of its Managing Directors or one of its Vice Presidents without any further action by the Company hereunder. In authenticating such Debentures, and accepting the additional responsibilities under this Indenture in relation to such Debentures, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon:

(b) an Opinion of Counsel prepared in accordance with Section 14.6 which shall also state:

(1) that such Debentures, when authenticated and delivered by the Trustee and issued by the Company in each case in the manner and subject to any conditions specified in such Opinion of Counsel, will constitute valid and legally binding obligations of the Company, subject to or limited by applicable bankruptcy, insolvency, reorganization, conservatorship, receivership, moratorium and other statutory or decisional laws relating to or affecting creditors' rights or the reorganization of financial institutions (including, without limitation, preference and fraudulent conveyance or transfer laws), heretofore or hereafter enacted or in effect, affecting the rights of creditors generally; and

(2) that all laws and requirements in respect of the execution and delivery by the Company of the Debentures have been complied with and that authentication and delivery of the Debentures by the Trustee will not violate the terms of this Indenture.

The Trustee shall have the right to decline to authenticate and deliver any Debentures under this Section if the Trustee, being advised in writing by counsel, determines that such action may not lawfully be taken or if a Responsible Officer of the Trustee in good faith shall determine that such action would expose the Trustee to personal liability to existing holders.

The definitive Debentures shall be typed, printed, lithographed or engraved on steel engraved borders or may be produced in any other manner, all as determined by the officers executing such Debentures, as evidenced by their execution of such Debentures.

SECTION 2.2. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The Trustee's certificate of authentication on all Debentures shall be in substantially the following form:

This is one of the Debentures referred to in the within-mentioned Indenture.

U. S. Bank National Association, as Trustee

Authorized Signer

SECTION 2.3. FORM AND DENOMINATION OF DEBENTURES. The Debentures shall be substantially in the form of Exhibit A attached hereto. The Debentures shall be in registered, certificated form without coupons and in minimum denominations of $100,000.00 and any multiple of $1,000.00 in excess thereof. Any attempted transfer of the Debentures in a block having an aggregate principal amount of less than $100,000.00 shall be deemed to be void and of no legal effect whatsoever. Any such purported transferee shall be deemed not to be a holder of such Debentures for any purpose, including, but not limited to the receipt of payments on such Debentures, and such purported transferee shall be deemed to have no interest whatsoever in such Debentures. The Debentures shall be numbered, lettered, or otherwise distinguished in such manner or in accordance with such plans as the officers executing the same may determine with the approval of the Trustee as evidenced by the execution and authentication thereof.

SECTION 2.4. EXECUTION OF DEBENTURES. The Debentures shall be signed in the name and on behalf of the Company by the manual or facsimile signature of its Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman, President, one of its Managing Directors or one of its Executive Vice Presidents, Senior Vice Presidents or Vice Presidents. Only such Debentures as shall bear thereon a certificate of authentication substantially in the form herein before recited, executed by the Trustee or the Authenticating Agent by the manual signature of an authorized signer, shall be entitled to the benefits of this Indenture or be valid or obligatory for any purpose. Such certificate by the Trustee or the Authenticating Agent upon any Debenture executed by the Company shall be conclusive evidence that the Debenture so authenticated has been duly authenticated and delivered hereunder and that the holder is entitled to the benefits of this Indenture.

In case any officer of the Company who shall have signed any of the Debentures shall cease to be such officer before the Debentures so signed shall have been authenticated and delivered by the Trustee or the Authenticating Agent, or disposed of by the Company, such Debentures nevertheless may be authenticated and delivered or disposed of as though the Person who signed such Debentures had not ceased to be such officer of the Company; and any Debenture may be signed on behalf of the Company by such Persons as, at the actual date of the execution of such Debenture, shall be the proper officers of the Company, although at the date of the execution of this Indenture any such person was not such an officer.

Every Debenture shall be dated the date of its authentication.

SECTION 2.5. EXCHANGE AND REGISTRATION OF TRANSFER OF DEBENTURES. The Company shall cause to be kept, at the office or agency maintained for the purpose of registration of transfer and for exchange as provided in Section 3.2, a register (the "Debenture Register") for the Debentures issued hereunder in which, subject to such reasonable regulations as it may prescribe, the Company shall provide for the registration and transfer of all Debentures as in this Article II provided. The Debenture Register

shall be in written form or in any other form capable of being converted into written form within a reasonable time.

Debentures to be exchanged may be surrendered at the Principal Office of the Trustee or at any office or agency to be maintained by the Company for such purpose as provided in Section 3.2, and the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in exchange therefor the Debenture or Debentures which the Securityholder making the exchange shall be entitled to receive. Upon due presentment for registration of transfer of any Debenture at the Principal Office of the Trustee or at any office or agency of the Company maintained for such purpose as provided in Section 3.2, the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in the name of the transferee or transferees a new Debenture for a like aggregate principal amount. Registration or registration of transfer of any Debenture by the Trustee or by any agent of the Company appointed pursuant to Section 3.2, and delivery of such Debenture, shall be deemed to complete the registration or registration of transfer of such Debenture.

All Debentures presented for registration of transfer or for exchange or payment shall (if so required by the Company or the Trustee or the Authenticating Agent) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to the Company and the Trustee or the Authenticating Agent duly executed by the holder or his attorney duly authorized in writing.

No service charge shall be made for any exchange or registration of transfer of Debentures, but the Company or the Trustee may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection therewith.

The Company or the Trustee shall not be required to exchange or register a transfer of any Debenture for a period of 15 days next preceding the date of selection of Debentures for redemption.

Notwithstanding anything herein to the contrary, Debentures may not be transferred except in compliance with the restricted securities legend set forth below, unless otherwise determined by the Company, upon the advice of counsel expert in securities law, in accordance with applicable law:

THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION.

RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATIONS UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING AN AGGREGATE PRINCIPAL AMOUNT OF NOT LESS THAN $100,000.00 AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF THIS SECURITY IN A BLOCK HAVING AN AGGREGATE PRINCIPAL AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING

RESTRICTIONS.

SECTION 2.6. MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES. In case any Debenture shall become mutilated or be destroyed, lost or stolen, the Company shall execute, and upon its written request the Trustee shall authenticate and deliver, a new Debenture bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Debenture, or in lieu of and in substitution for the Debenture so destroyed, lost or stolen. In every case the applicant for a substituted Debenture shall

furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of such Debenture and of the ownership thereof.

The Trustee may authenticate any such substituted Debenture and deliver the same upon the written request or authorization of any officer of the Company. Upon the issuance of any substituted Debenture, 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 connected therewith. In case any Debenture which has matured or is about to mature or has been called for redemption in full shall become mutilated or be destroyed, lost or stolen, the Company may, instead of issuing a substitute Debenture, pay or authorize the payment of the same (without surrender thereof except in the case of a mutilated Debenture) if the applicant for such payment shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless and, in case of destruction, loss or theft, evidence satisfactory to the Company and to the Trustee of the destruction, loss or theft of such Debenture and of the ownership thereof.

Every substituted Debenture issued pursuant to the provisions of this
Section 2.6 by virtue of the fact that any such Debenture is destroyed, lost or stolen shall constitute an additional contractual obligation of the Company, whether or not the destroyed, lost or stolen Debenture shall be found at any time, and shall be entitled to all the benefits of this Indenture equally and proportionately with any and all other Debentures duly issued hereunder. All Debentures shall be held and owned upon the express condition that, to the extent permitted by applicable law, the foregoing provisions are exclusive with respect to the replacement or payment of mutilated, destroyed, lost or stolen Debentures and shall preclude any and all other rights or remedies notwithstanding any law or statute existing or hereafter enacted to the contrary with respect to the replacement or payment of negotiable instruments or other securities without their surrender.

SECTION 2.7. TEMPORARY DEBENTURES. Pending the preparation of definitive Debentures, the Company may execute and the Trustee shall authenticate and make available for delivery temporary Debentures that are typed, printed or lithographed. Temporary Debentures shall be issuable in any authorized denomination, and substantially in the form of the definitive Debentures in lieu of which they are issued but with such omissions, insertions and variations as may be appropriate for temporary Debentures, all as may be determined by the Company. Every such temporary Debenture shall be executed by the Company and be authenticated by the Trustee upon the same conditions and in substantially the same manner, and with the same effect, as the definitive Debentures. Without unreasonable delay the Company will execute and deliver to the Trustee or the Authenticating Agent definitive Debentures and thereupon any or all temporary Debentures may be surrendered in exchange therefor, at the principal corporate trust office of the Trustee or at any office or agency maintained by the Company for such purpose as provided in Section 3.2, and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in exchange for such temporary Debentures a like aggregate principal amount of such definitive Debentures. Such exchange shall be made by the Company at its own expense and without any charge therefor except that in case of any such exchange involving a registration of transfer the Company may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in relation thereto. Until so exchanged, the temporary Debentures shall in all respects be entitled to the same benefits under this Indenture as definitive Debentures authenticated and delivered hereunder.

one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment except that interest and any Additional Interest payable on the Maturity Date shall be paid to the Person to whom principal is paid.

Each Debenture shall bear interest for the period beginning on (and including) the date of original issuance and ending on (but excluding) March 26, 2008 at a rate per annum of 6.40%, and shall bear interest for each successive Distribution Period beginning on (and including) March 26, 2008, and each succeeding Interest Payment Date, and ending on (but excluding) the next succeeding Interest Payment Date at a rate per annum equal to the 3-Month LIBOR, determined as described in Section 2.10, plus 3.15% (the "Coupon Rate"), applied to the principal amount thereof, 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 (without duplication) on any overdue installment of interest (including Additional Interest) at the Interest Rate in effect for each applicable period compounded quarterly. Interest shall be payable (subject to any relevant Extension Period) quarterly in arrears on each Interest Payment Date with the first installment of interest to be paid on June 26, 2003.

Any interest on any Debenture, including Additional Interest, that is payable, but is not punctually paid or duly provided for, on any Interest Payment Date (herein called "Defaulted Interest") shall forthwith cease to be payable to the registered holder on the relevant regular record date by virtue of having been such holder; and such Defaulted Interest shall be paid by the Company to the Persons in whose names such Debentures (or their respective Predecessor Securities) are registered at the close of business on a special record date for the payment of such Defaulted Interest, which shall be fixed in the following manner: the Company shall notify the Trustee in writing at least 25 days prior to the date of the proposed payment of the amount of Defaulted Interest proposed to be paid on each such Debenture and the date of the proposed payment, and at the same time the Company shall deposit with the Trustee an amount of money equal to the aggregate amount proposed to be paid in respect of such Defaulted Interest or shall make arrangements satisfactory to the Trustee for such deposit prior to the date of the proposed payment, such money when deposited to be held in trust for the benefit of the Persons entitled to such Defaulted Interest as in this clause provided. Thereupon the Trustee shall fix a special record date for the payment of such Defaulted Interest which shall not be more than 15 nor less than 10 days prior to the date of the proposed payment and not less than 10 days after the receipt by the Trustee of the notice of the proposed payment. The Trustee shall promptly notify the Company of such special record date and, in the name and at the expense of the Company, shall cause notice of the proposed payment of such Defaulted Interest and the special record date therefor to be mailed, first class postage prepaid, to each Securityholder at its address as it appears in the Debenture Register, not less than 10 days prior to such special record date. Notice of the proposed payment of such Defaulted Interest and the special record date therefor having been mailed as aforesaid, such Defaulted Interest shall be paid to the Persons in whose names such Debentures (or their respective Predecessor Securities) are registered on such special record date and shall be no longer payable.

The Company may make payment of any Defaulted Interest on any Debentures in any other lawful manner after notice given by the Company to the Trustee of the proposed payment method; provided, however, the Trustee in its sole discretion deems such payment method to be practical.

Any interest (including Additional Interest) scheduled to become payable on an Interest Payment Date occurring during an Extension Period shall not be Defaulted Interest and shall be payable on such other date as may be specified in the terms of such Debentures.

The term "regular record date" as used in this Section shall mean the close of business on the 15th calendar day next preceding the applicable Interest Payment Date.

Subject to the foregoing provisions of this Section, each Debenture delivered under this Indenture upon registration of transfer of or in exchange for or in lieu of any other Debenture shall carry the rights to interest accrued and unpaid, and to accrue, that were carried by such other Debenture.

SECTION 2.9. CANCELLATION OF DEBENTURES PAID, ETC. All Debentures surrendered for the purpose of payment, redemption, exchange or registration of transfer, shall, if surrendered to the Company or any paying agent, be surrendered to the Trustee and promptly canceled by it, or, if surrendered to the Trustee or any Authenticating Agent, shall be promptly canceled by it, and no Debentures shall be issued in lieu thereof except as expressly permitted by any of the provisions of this Indenture. All Debentures canceled by any Authenticating Agent shall be delivered to the Trustee. The Trustee shall destroy all canceled Debentures unless the Company otherwise directs the Trustee in writing. If the Company shall acquire any of the Debentures, however, such acquisition shall not operate as a redemption or satisfaction of the indebtedness represented by such Debentures unless and until the same are surrendered to the Trustee for cancellation.

SECTION 2.10. COMPUTATION OF INTEREST. The amount of interest payable (i) for any Distribution Period commencing on or after the date of original issuance but before March 26, 2008 will be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution Period commencing on March 26, 2008 and each succeeding Distribution Period will be calculated by applying the Interest Rate to the principal amount outstanding at the commencement of the Distribution Period and multiplying each such amount by the actual number of days in the Distribution Period concerned divided by 360. In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of interest payable on such date shall 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 the date such payment was originally payable. All percentages resulting from any calculations on the Debentures will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)).

(a) "3-Month LIBOR" means the London interbank offered interest rate for three-month, U.S. dollar deposits determined by the Trustee in the following order of priority:

(1) the rate (expressed as a percentage per annum) for U.S. dollar deposits having a three-month maturity that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination Date (as defined below). "Telerate Page 3750" means the display designated as "Page 3750" on the Dow Jones Telerate Service or such other page as may replace Page 3750 on that service or such other service or services as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying London interbank offered rates for U.S. dollar deposits;

(2) if such rate cannot be identified on the related Determination Date, the Trustee will request the principal London offices of four leading banks in the London interbank market to provide such banks' offered quotations (expressed as percentages per annum) to prime banks in the London interbank market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations;

(3) if fewer than two such quotations are provided as requested in clause (2) above, the Trustee will request four major New York City banks to provide such banks' offered

quotations (expressed as percentages per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and

(4) if fewer than two such quotations are provided as requested in clause (3) above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the Distribution Period immediately preceding such current Distribution Period.

If the rate for U.S. dollar deposits having a three-month maturity that initially appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination Date is superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such Determination Date, then the corrected rate as so substituted on the applicable page will be the applicable 3-Month LIBOR for such Determination Date.

(b) The Interest Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law.

(c) "Determination Date" means the date that is two London Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in the London interbank market) preceding the particular Distribution Period for which a Coupon Rate is being determined.

(d) The Trustee shall notify the Company, the Institutional Trustee and any securities exchange or interdealer quotation system on which the Capital Securities are listed, of the Coupon Rate and the Determination Date for each Distribution Period, in each case as soon as practicable after the determination thereof but in no event later than the thirtieth (30th) day of the relevant Distribution Period. Failure to notify the Company, the Institutional Trustee or any securities exchange or interdealer quotation system, or any defect in said notice, shall not affect the obligation of the Company to make payment on the Debentures at the applicable Coupon Rate. Any error in the calculation of the Coupon Rate by the Trustee may be corrected at any time by notice delivered as above provided. Upon the request of a holder of a Debenture, the Trustee shall provide the Coupon Rate then in effect and, if determined, the Coupon Rate for the next Distribution Period.

(e) Subject to the corrective rights set forth above, all certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions relating to the payment and calculation of interest on the Debentures and distributions on the Capital Securities by the Trustee or the Institutional Trustee will (in the absence of willful default, bad faith and manifest error) be final, conclusive and binding on the Trust, the Company and all of the holders of the Debentures and the Capital Securities, and no liability shall (in the absence of willful default, bad faith or manifest error) attach to the Trustee or the Institutional Trustee in connection with the exercise or non-exercise by either of them or their respective powers, duties and discretion.

herein as "Additional Interest"). At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date; provided further, however, that during any such Extension Period, the Company shall not and shall not permit any Affiliate to (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's or such Affiliate's capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (i) or (ii) above, (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of any exchange or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (c) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders' rights plan, or the issuance of rights, stock or other property under any stockholders' rights plan, or the redemption or repurchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or
(f) payments under the Capital Securities Guarantee). Prior to the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest to the extent permitted by applicable law. The Company must give the Trustee notice of its election to begin or extend an Extension Period at least 5 Business Days prior to the regular record date (as such term is used in Section 2.8) immediately preceding the Interest Payment Date with respect to which interest on the Debentures would have been payable except for the election to begin or extend such Extension Period. The Trustee shall give notice of the Company's election to begin a new Extension Period to the Securityholders.

SECTION 2.12. CUSIP NUMBERS. The Company in issuing the Debentures may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of redemption as a convenience to Securityholders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers 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 Trustee in writing of any change in the CUSIP numbers.

ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY

SECTION 3.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST; AGREED TREATMENT OF THE DEBENTURES.

(a) The Company covenants and agrees that it will duly and punctually pay or cause to be paid the principal of and premium, if any, and interest and any Additional Interest and other payments on the Debentures at the place, at the respective times and in the manner provided in this Indenture and the Debentures. Each installment of interest on the Debentures may be paid (i) by mailing checks for such interest payable to the order of the holders of Debentures entitled thereto as they appear on the registry books of the Company if a request for a wire transfer has not been received by the Company or (ii) by wire transfer to any account with a banking institution located in the United States designated in writing by such Person to the paying agent no later than the related record date. Notwithstanding the foregoing, so long as the holder of this Debenture is the Institutional Trustee, the payment of the principal of and interest on this Debenture will be made in immediately available funds at such place and to such account as may be designated by the Institutional Trustee.

(b) The Company will treat the Debentures as indebtedness, and the amounts payable in respect of the principal amount of such Debentures as interest, for all United States federal income tax purposes. All payments in respect of such Debentures will be made free and clear of United States withholding tax to any beneficial owner thereof that has provided an Internal Revenue Service Form W8 BEN (or any substitute or successor form) establishing its non-United States status for United States federal income tax purposes.

(c) As of the date of this Indenture, the Company has no present intention to exercise its right under Section 2.11 to defer payments of interest on the Debentures by commencing an Extension Period.

(d) As of the date of this Indenture, the Company believes that the likelihood that it would exercise its right under Section 2.11 to defer payments of interest on the Debentures by commencing an Extension Period at any time during which the Debentures are outstanding is remote because of the restrictions that would be imposed on the Company's ability to declare or pay dividends or distributions on, or to redeem, purchase or make a liquidation payment with respect to, any of its outstanding equity and on the Company's ability to make any payments of principal of or interest on, or repurchase or redeem, any of its debt securities that rank pari passu in all respects with (or junior in interest to) the Debentures.

SECTION 3.2. OFFICES FOR NOTICES AND PAYMENTS, ETC. So long as any of the Debentures remain outstanding, the Company will maintain in Hartford, Connecticut, an office or agency where the Debentures may be presented for payment, an office or agency where the Debentures may be presented for registration of transfer and for exchange as in this Indenture provided and an office or agency where notices and demands to or upon the Company in respect of the Debentures or of this Indenture may be served. The Company will give to the Trustee written notice of the location of any such office or agency and of any change of location thereof. Until otherwise designated from time to time by the Company in a notice to the Trustee, or specified as contemplated by Section 2.5, such office or agency for all of the above purposes shall be the office or agency of the Trustee. In case the Company shall fail to maintain any such office or agency in Hartford, Connecticut, or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notic es may be served at the Principal Office of the Trustee.

In addition to any such office or agency, the Company may from time to time designate one or more offices or agencies outside Hartford, Connecticut, where the Debentures may be presented for

registration of transfer and for exchange in the manner provided in this Indenture, and the Company may from time to time rescind such designation, as the Company may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain any such office or agency in Hartford, Connecticut, for the purposes above mentioned. The Company will give to the Trustee prompt written notice of any such designation or rescission thereof.

SECTION 3.4. PROVISION AS TO PAYING AGENT.

(1) that it will hold all sums held by it as such agent for the payment of the principal of and premium, if any, or interest, if any, on the Debentures (whether such sums have been paid to it by the Company or by any other obligor on the Debentures) in trust for the benefit of the holders of the Debentures;

(2) that it will give the Trustee prompt written notice of any failure by the Company (or by any other obligor on the Debentures) to make any payment of the principal of and premium, if any, or interest, if any, on the Debentures when the same shall be due and payable; and

(3) that it will, at any time during the continuance of any Event of Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent.

(b) If the Company shall act as its own paying agent, it will, on or before each due date of the principal of and premium, if any, or interest or other payments, if any, on the Debentures, set aside, segregate and hold in trust for the benefit of the holders of the Debentures a sum sufficient to pay such principal, premium, interest or other payments so becoming due and will notify the Trustee in writing of any failure to take such action and of any failure by the Company (or by any other obligor under the Debentures) to make any payment of the principal of and premium, if any, or interest or other payments, if any, on the Debentures when the same shall become due and payable.

Whenever the Company shall have one or more paying agents for the Debentures, it will, on or prior to each due date of the principal of and premium, if any, or interest, if any, on the Debentures, deposit with a paying agent a sum sufficient to pay the principal, premium, interest or other payments so becoming due, such sum to be held in trust for the benefit of the Persons entitled thereto and (unless such paying agent is the Trustee) the Company shall promptly notify the Trustee in writing of its action or failure to act.

(c) Anything in this Section 3.4 to the contrary notwithstanding, the Company may, at any time, for the purpose of obtaining a satisfaction and discharge with respect to the Debentures, or for any other reason, pay, or direct any paying agent to pay to the Trustee all sums held in trust by the Company or any such paying agent, such sums to be held by the Trustee upon the trusts herein contained.

(d) Anything in this Section 3.4 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 3.4 is subject to Sections 12.3 and 12.4.

SECTION 3.5. CERTIFICATE TO TRUSTEE. The Company will deliver to the Trustee on or before 120 days after the end of each fiscal year, so long as Debentures are outstanding hereunder, a Certificate stating that in the course of the performance by the signers of their duties as officers of the Company they would normally have knowledge of any default during such fiscal year by the Company in the performance of any covenants contained herein, stating whether or not they have knowledge of any such default and, if so, specifying each such default of which the signers have knowledge and the nature and status thereof.

SECTION 3.6. ADDITIONAL SUMS. If and for so long as the Trust is the holder of all Debentures and the Trust is required to pay any additional taxes (including withholding taxes), duties, assessments or other governmental charges as a result of a Tax Event, the Company will pay such additional amounts ("Additional Sums") on the Debentures as shall be required so that the net amounts received and retained by the Trust after paying taxes (including withholding taxes), duties, assessments or other governmental charges will be equal to the amounts the Trust would have received if no such taxes, duties, assessments or other governmental charges had been imposed. Whenever in this Indenture or the Debentures there is a reference in any context to the payment of principal of or interest on the Debentures, such mention shall be deemed to include mention of payments of the Additional Sums provided for in this paragraph to the extent that, in such context, Additional Sums are, were or would be payable in respect thereof pursuant to the provisions of this paragraph and express mention of the payment of Additional Sums (if applicable) in any provisions hereof shall not be construed as excluding Additional Sums in those provisions hereof where such express mention is not made; provided, however, that the deferral of the payment of interest during an Extension Period pursuant to Section 2.11 shall not defer the payment of any Additional Sums that may be due and payable.

SECTION 3.7. COMPLIANCE WITH CONSOLIDATION PROVISIONS. The Company will not, while any of the 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 Person unless the provisions of Article XI hereof are complied with.

SECTION 3.8. LIMITATION ON DIVIDENDS. If Debentures are initially issued to the Trust or a trustee of such Trust in connection with the issuance of Trust Securities by the Trust (regardless of whether Debentures continue to be held by such Trust) and (i) there shall have occurred and be continuing an Event of Default, (ii) the Company shall be in default with respect to its payment of any obligations under the Capital Securities Guarantee, or (iii) the Company shall have given notice of its election to defer payments of interest on the Debentures by extending the interest payment period as provided herein and such period, or any extension thereof, shall be continuing, then the Company shall not, and shall not allow any Affiliate of the Company to, (x) 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 its Affiliates' capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (x) and (y) above, (1) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, if any, (2) as a result of any exchange or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (3) the

purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (4) any declaration of a dividend in connection with any stockholders' rights plan, or the issuance of rights, stock or other property under any stockholders' rights plan, or the redemption or repurchase of rights pursuant thereto, (5) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (6) payments under the Capital Securities Guarantee).

SECTION 3.9. COVENANTS AS TO THE TRUST. For so long as the Trust Securities remain outstanding, the Company shall maintain 100% ownership of the Common Securities; provided, however, that any permitted successor of the Company under this Indenture may succeed to the Company's ownership of such Common Securities. The Company, as owner of the Common Securities, shall, except in connection with a distribution of Debentures to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, cause the Trust (a) to remain a statutory trust, (b) to otherwise continue to be classified as a grantor trust for United States federal income tax purposes, and
(c) to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Debentures.

SECTION 3.10. ADDITIONAL JUNIOR INDEBTEDNESS. The Company shall not, and it shall not cause or permit any Subsidiary of the Company to, incur, issue or be obligated on any Additional Junior Indebtedness, either directly or indirectly, by way of guarantee, suretyship or otherwise, other than Additional Junior Indebtedness (i) that, by its terms, is expressly stated to be either junior and subordinate or pari passu in all respects to the Debentures, and (ii) of which the Company has notified (and, if then required under the applicable guidelines of the regulating entity, has received approval from) the Federal Reserve, if the Company is a bank holding company, or the OTS, if the Company is a savings and loan holding company.

ARTICLE IV.
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE

SECTION 4.1. SECURITYHOLDERS' LISTS. The Company covenants and agrees that it will furnish or caused to be furnished to the Trustee:

(a) on each regular record date for the Debentures, a list, in such form as the Trustee may reasonably require, of the names and addresses of the Securityholders of the Debentures as of such record date; and

except that no such lists need be furnished under this Section 4.1 so long as the Trustee is in possession thereof by reason of its acting as Debenture registrar.

SECTION 4.2. PRESERVATION AND DISCLOSURE OF LISTS.

(if so acting) hereunder. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished.

(b) In case three or more holders of Debentures (hereinafter referred to as "applicants") apply in writing to the Trustee and furnish to the Trustee reasonable proof that each such applicant has owned a Debenture for a period of at least 6 months preceding the date of such application, and such application states that the applicants desire to communicate with other holders of Debentures with respect to their rights under this Indenture or under such Debentures and is accompanied by a copy of the form of proxy or other communication which such applicants propose to transmit, then the Trustee shall within 5 Business Days after the receipt of such application, at its election, either:

(1) afford such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection
(a) of this Section 4.2, or

(2) inform such applicants as to the approximate number of holders of Debentures whose names and addresses appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2, and as to the approximate cost of mailing to such Securityholders the form of proxy or other communication, if any, specified in such application.

If the Trustee shall elect not to afford such applicants access to such information, the Trustee shall, upon the written request of such applicants, mail to each Securityholder whose name and address appear in the information preserved at the time by the Trustee in accordance with the provisions of subsection (a) of this Section 4.2 a copy of the form of proxy or other communication which is specified in such request with reasonable promptness after a tender to the Trustee of the material to be mailed and of payment, or provision for the payment, of the reasonable expenses of mailing, unless within five days after such tender, the Trustee shall mail to such applicants and file with the Securities and Exchange Commission, if permitted or required by applicable law, together with a copy of the material to be mailed, a written statement to the effect that, in the opinion of the Trustee, such mailing would be contrary to the best interests of the holders of all Debentures, as the case may be, or would be in violation of applicable law. Such written statement shall specify the basis of such opinion. If said Commission, as permitted or required by applicable law, after opportunity for a hearing upon the objections specified in the written statement so filed, shall enter an order refusing to sustain any of such objections or if, after the entry of an order sustaining one or more of such objections, said Commission shall find, after notice and opportunity for hearing, that all the objections so sustained have been met and shall enter an order so declaring, the Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

(c) Each and every holder of Debentures, by receiving and holding the same, agrees with Company and the Trustee that neither the Company nor the Trustee nor any paying agent shall be held accountable by reason of the disclosure of any such information as to the names and addresses of the holders of Debentures in accordance with the provisions of subsection (b) of this Section 4.2, regardless of the source from which such information was derived, and that the Trustee shall not be held accountable by reason of mailing any material pursuant to a request made under said subsection (b).

ARTICLE V.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN EVENT OF DEFAULT

SECTION 5.1. EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events (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 Company defaults in the payment of any interest upon any Debenture when it becomes due and payable, and fails to cure 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; or

(b) the Company defaults in the payment of all or any part of the principal of (or premium, if any, on) any Debentures as and when the same shall become due and payable either at maturity, upon redemption, by declaration of acceleration or otherwise; or

(c) the Company defaults in the performance of, or breaches, any of its covenants or agreements in this Indenture or in the terms of the Debentures established as contemplated in this Indenture (other than a covenant or agreement a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach for a period of 60 days after there has been given, by registered or certified mail, to the Company by the Trustee or to the Company and the Trustee by the holders of at least 25% in aggregate principal amount of the outstanding Debentures, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

(f) the Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up its business or otherwise terminated its existence except in connection with (i) the distribution of the Debentures to holders of such Trust Securities in liquidation of their interests in the Trust, (ii) the redemption of all of the outstanding Trust Securities or (iii) certain mergers, consolidations or amalgamations, each as permitted by the Declaration.

If an Event of Default occurs and is continuing with respect to the Debentures, then, and in each and every such case, unless the principal of the 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 Debentures then outstanding hereunder, by notice in writing to the Company (and to the Trustee if given by Securityholders), may declare the entire principal of the Debentures and the interest accrued thereon, if any, to be due and payable immediately, and upon any such declaration the same shall become immediately due and payable.

(i) the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Debentures and the principal of and premium, if any, on the Debentures which shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and Additional Interest) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other amounts due to the Trustee pursuant to Section 6.6, if any, and (ii) all Events of Default under this Indenture, other than the non-payment of the principal of or premium, if any, on Debentures which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein -- then and in every such case the holders of a majority in aggregate principal amount of the Debentures then outstanding, by written notice to the Company and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

In case the Trustee shall have proceeded to enforce any right 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, the Trustee and the holders of the Debentures shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the holders of the Debentures shall continue as though no such proceeding had been taken.

SECTION 5.2. PAYMENT OF DEBENTURES ON DEFAULT; SUIT THEREFOR. The Company covenants that upon the occurrence of an Event of Default pursuant to Section 5.1(a) or Section 5.1(b) then, upon demand of the Trustee, the Company will pay to the Trustee, for the benefit of the holders of the Debentures the whole amount that then shall have become due and payable on all Debentures for principal and premium, if any, or interest, or both, as the case may be, with Additional Interest accrued on the Debentures (to the extent that payment of such interest is enforceable under applicable law and, if the Debentures are held by the Trust or a trustee of such Trust, without duplication of any other amounts paid by the Trust or a trustee in respect thereof); and, in addition thereto, such further amount as shall be sufficient to cover the costs and expenses of collection, including a reasonable compensation to the Trustee, its agents, attorneys and counsel, and any other amounts due to the Trustee under
Section 6.6. In case the Company shall fail forthwith to pay such amounts upon such demand, the Trustee, in its own name and as trustee of an express trust, shall be entitled and empowered to institute any actions 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 any other obligor on such Debentures and collect in the manner provided by law out of the property of the Company or any other obligor on such Debentures wherever situated the moneys adjudged or decreed to be payable.

In case there shall be pending proceedings for the bankruptcy or for the reorganization of the Company or any other obligor on the Debentures under Bankruptcy Law, or in case a receiver or trustee shall have been appointed for the property of the Company or such other obligor, or in the case of any other similar judicial proceedings relative to the Company or other obligor upon the Debentures, or to the creditors or property of the Company or such other obligor, the Trustee, irrespective of whether the principal of the Debentures shall then be due and payable as therein expressed or by declaration of acceleration or otherwise and irrespective of whether the Trustee shall have made any demand pursuant to the provisions of this Section 5.2, shall be entitled and empowered, by intervention in such proceedings or otherwise,

(i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Debentures,

(ii) in case of any judicial proceedings, to file such proofs of claim and other papers or documents as may be necessary or advisable in order to have the claims of the Trustee (including any claim for reasonable compensation to the Trustee and each predecessor Trustee, and their respective agents, attorneys and counsel, and for reimbursement of all other amounts due to the Trustee under Section 6.6), and of the Securityholders allowed in such judicial proceedings relative to the Company or any other obligor on the Debentures, or to the creditors or property of the Company or such other obligor, unless prohibited by applicable law and regulations, to vote on behalf of the holders of the Debentures in any election of a trustee or a standby trustee in arrangement, reorganization, liquidation or other bankruptcy or insolvency proceedings or Person performing similar functions in comparable proceedings,

(iii) to collect and receive any moneys or other property payable or deliverable on any such claims, and

(iv) to distribute the same after the deduction of its charges and expenses.

Nothing herein contained shall be construed 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 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.

All rights of action and of asserting claims under this Indenture, or under any of the Debentures, may be enforced by the Trustee without the possession of any of the 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 be for the ratable benefit of the holders of the Debentures.

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 Debentures, and it shall not be necessary to make any holders of the Debentures parties to any such proceedings.

SECTION 5.3. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys collected by the Trustee pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Debentures in respect of which moneys have been collected, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid:

First: To the payment of costs and expenses incurred by, and reasonable fees of, the Trustee, its agents, attorneys and counsel, and of all other amounts due to the Trustee under Section 6.6;

Second: To the payment of all Senior Indebtedness of the Company if and to the extent required by Article XV;

Third: To the payment of the amounts then due and unpaid upon Debentures for principal (and premium, if any), and interest on the Debentures, in respect of which or for the benefit of which money has been collected, ratably, without preference or priority of any kind, according to the amounts due on such Debentures (including Additional Interest); and

Fourth: The balance, if any, to the Company.

SECTION 5.4. PROCEEDINGS BY SECURITYHOLDERS. No holder of any Debenture shall have any right to institute any suit, action or proceeding for any remedy hereunder, unless such holder previously shall have given to the Trustee written notice of an Event of Default with respect to the Debentures and unless the holders of not less than 25% in aggregate principal amount of the Debentures then outstanding shall have given the Trustee a written request to institute such action, suit or proceeding and shall have offered to the Trustee such reasonable indemnity as it may require against the costs, expenses and liabilities to be incurred thereby, and the Trustee for 60 days after its receipt of such notice, request and offer of indemnity shall have failed to institute any such action, suit or proceeding.

Notwithstanding any other provisions in this Indenture, however, the right of any holder of any Debenture to receive payment of the principal of, premium, if any, and interest, on such Debenture when due, or to institute suit for the enforcement of any such payment, shall not be impaired or affected without the consent of such holder and by accepting a Debenture hereunder it is expressly understood, intended and covenanted by the taker and holder of every Debenture with every other such taker and holder and the Trustee, that no one or more holders of Debentures shall have any right in any manner whatsoever by virtue or by availing itself of any provision of this Indenture to affect, disturb or prejudice the rights of the holders of any other Debentures, or to obtain or seek to obtain priority over or preference to any other such holder, 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 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 5.6. REMEDIES CUMULATIVE AND CONTINUING; DELAY OR OMISSION NOT A WAIVER. Except as otherwise provided in Section 2.6, all powers and remedies given by this Article V 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 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 the Debentures, and no delay or omission of the Trustee or of any holder of any of the Debentures to exercise any right, remedy or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right, remedy or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 5.4, every power and remedy given by this Article V or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee (in accordance with its duties under Section 6.1) or by the Securityholders.

SECTION 5.7. DIRECTION OF PROCEEDINGS AND WAIVER OF DEFAULTS BY MAJORITY OF SECURITYHOLDERS. The holders of a majority in aggregate principal amount of the Debentures affected (voting as one class) at the time outstanding 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 with respect to such Debentures; provided, however, that (subject to the provisions of Section 6.1) the Trustee shall have the right to decline to follow any such direction if the Trustee shall determine that the action so directed would be unjustly prejudicial to the holders not taking part in such direction or if the Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if a Responsible Officer of the Trustee shall determine that the action or proceedings so directed would involve the Trustee in personal liability.

The holders of a majority in aggregate principal amount of the Debentures at the time outstanding may on behalf of the holders of all of the Debentures waive (or modify any previously granted waiver of) any past default or Event of Default, and its consequences, except a default (a) in the payment of principal of, premium, if any, or interest on any of the Debentures, (b) in respect of covenants or provisions hereof which cannot be modified or amended without the consent of the holder of each Debenture affected, or (c) in respect of the covenants contained in Section 3.9; provided, however, that if the Debentures are held by the Trust or a trustee of such 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 Debenture is required, such waiver shall not be effective until each holder 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 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 Event of Default or impair any right consequent thereon. Whenever any default or Event of Default hereunder shall have been waived as permitted by this Section, said default or Event of Default shall for all purposes of the Debentures and this Indenture be deemed to have been cured and to be not continuing.

SECTION 5.8. NOTICE OF DEFAULTS. The Trustee shall, within 90 days after the actual knowledge by a Responsible Officer of the Trustee of the occurrence of a default with respect to the Debentures, mail to all Securityholders, as the names and addresses of such holders appear upon the Debenture Register, notice of all defaults with respect to the Debentures known to the Trustee, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of this Section 5.8 being hereby defined to be the events specified in clauses (a), (b), (c), (d), (e) and (f) of Section 5.1, not including periods of grace, if any, provided for therein); provided, however, that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the Debentures, the Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders.

SECTION 5.9. UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and each holder of any Debenture by his 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 and expenses, 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; provided, however, that the provisions of this Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Debentures outstanding, or to any suit instituted by any

Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debenture against the Company on or after the same shall have become due and payable.

ARTICLE VI.
CONCERNING THE TRUSTEE

SECTION 6.1. DUTIES AND RESPONSIBILITIES OF TRUSTEE. With respect to the holders of Debentures issued hereunder, the Trustee, prior to the occurrence of an Event of Default with respect to the Debentures and after the curing or waiving of all Events of Default which may have occurred, with respect to the Debentures, undertakes to perform 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 with respect to the Debentures has occurred (which 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.

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, except that:

(a) prior to the occurrence of an Event of Default with respect to Debentures and after the curing or waiving of all Events of Default which may have occurred

(1) the duties and obligations of the Trustee with respect to Debentures 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 with respect to the Debentures as are specifically set forth in this Indenture, and no implied covenants or obligations shall be read into this Indenture against the Trustee, and

SECTION 6.2. RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as otherwise provided in Section 6.1:

(e) the Trustee shall not be liable for any action taken or omitted 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; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default with respect to the Debentures (that has not been cured or waived) to exercise with respect to Debentures 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;

(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, debenture, coupon or other paper or document, unless requested in writing to do so by the holders of not less than a majority in aggregate principal amount of the outstanding Debentures affected thereby; 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 expense or liability as a condition to so proceeding;

(h) with the exceptions of defaults under Sections 5.1(a) or 5.1(b), the Trustee shall not be charged with knowledge of any Default or Event of Default with respect to the Debentures unless a written notice of such Default or Event of Default shall have been given to the Trustee by the Company or any other obligor on the Debentures or by any holder of the Debentures.

SECTION 6.3. NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained herein and in the Debentures (except in the certificate of authentication of the Trustee or the Authenticating Agent) shall be

taken as the statements of the Company, and the Trustee and the Authenticating Agent assume no responsibility for the correctness of the same. The Trustee and the Authenticating Agent make no representations as to the validity or sufficiency of this Indenture or of the Debentures. The Trustee and the Authenticating Agent shall not be accountable for the use or application by the Company of any Debentures or the proceeds of any Debentures authenticated and delivered by the Trustee or the Authenticating Agent in conformity with the provisions of this Indenture.

SECTION 6.4. TRUSTEE, AUTHENTICATING AGENT, PAYING AGENTS, TRANSFER AGENTS OR REGISTRAR MAY OWN DEBENTURES. The Trustee or any Authenticating Agent or any paying agent or any transfer agent or any Debenture registrar, in its individual or any other capacity, may become the owner or pledgee of Debentures with the same rights it would have if it were not Trustee, Authenticating Agent, paying agent, transfer agent or Debenture registrar.

SECTION 6.5. MONEYS TO BE HELD IN TRUST. Subject to the provisions of
Section 12.4, all moneys received by the Trustee or any paying agent shall, until used or applied as herein provided, be held in trust for the purpose for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee and any paying agent shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such moneys shall be paid from time to time upon the written order of the Company, signed by the Chairman of the Board of Directors, the Chief Executive Officer, the President, a Managing Director, a Vice President, the Treasurer or an Assistant Treasurer of the Company.

SECTION 6.6. COMPENSATION AND EXPENSES OF TRUSTEE. The Company covenants and agrees to 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 negligence or willful misconduct. For purposes of clarification, this Section 6.6 does not contemplate the payment by the Company of acceptance or annual administration fees owing to the Trustee pursuant to the services to be provided by the Trustee under this Indenture or the fees and expenses of the Trustee's counsel in connection with the closing of the transactions contemplated by this Indenture. The Company also covenants to indemnify each of the Trustee or any predecessor Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Trustee) incurred without negligence or willful misconduct on the part of the 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 claim of liability. The obligations of the Company under this Section 6.6 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 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 particular Debentures.

The provisions of this Section shall survive the resignation or removal of the Trustee and the defeasance or other termination of this Indenture.

Notwithstanding anything in this Indenture or any 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 Debentures or otherwise advance funds to or on behalf of the Company.

SECTION 6.7. OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise provided in Sections 6.1 and 6.2, 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 omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct 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 negligence or willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof.

SECTION 6.8. ELIGIBILITY OF TRUSTEE. The Trustee hereunder shall at all times be a corporation 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 authorized under such laws to exercise corporate trust powers, having (or whose obligations under this Indenture are guaranteed by an affiliate having) a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000.00) and subject to supervision or examination by federal, state, territorial, or District of Columbia authority. If such corporation 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 6.8 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent records of condition so published.

The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee.

If the Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act of 1939, the Trustee shall either eliminate such interest or resign, to the extent and in the manner described by this Indenture.

SECTION 6.9. RESIGNATION OR REMOVAL OF TRUSTEE

(a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign by giving written notice of such resignation to the Company and by mailing notice thereof, at the Company's expense, to the holders of the Debentures at their addresses as they shall appear on the Debenture Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee or trustees by written instrument, in duplicate, executed by order of its 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 to the affected Securityholders, 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 a Debenture or Debentures for at least six months may, subject to the provisions of Section 5.9, on behalf of himself and all others similarly situated, 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 of the following shall occur --

(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.8 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or

(3) the Trustee shall become incapable of acting, or shall be adjudged as bankrupt or insolvent, or a receiver of the Trustee or of its property shall be appointed, 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 5.9, any Securityholder who has been a bona fide holder of a Debenture or Debentures for at least 6 months may, on behalf of himself and all others similarly situated, 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 successor Trustee.

(c) Upon prior written notice to the Company and the Trustee, the holders of a majority in aggregate principal amount of the Debentures at the time outstanding may at any time remove the Trustee and nominate a successor Trustee, which shall be deemed appointed as successor Trustee unless within 10 Business Days after such nomination the Company objects thereto, in which case, or in the case of a failure by such holders to nominate a successor Trustee, the Trustee so removed or any Securityholder, upon the terms and conditions and otherwise as in subsection (a) of this Section 6.9 provided, may petition any court of competent jurisdiction for an appointment of a successor.

SECTION 6.10. ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor Trustee appointed as provided in Section 6.9 shall execute, acknowledge and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment hereunder, 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, duties and obligations with respect to the Debentures of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor Trustee, the Trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 6.6, execute and deliver an instrument transferring to such successor Trustee all the rights and powers of the Trustee so ceasing to act and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee thereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers. 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 it pursuant to the provisions of Section 6.6.

If a successor Trustee is appointed, the Company, the retiring Trustee and the successor Trustee shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debentures as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the Trust hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee.

No successor Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Trustee shall be eligible under the provisions of Section 6.8.

In no event shall a retiring Trustee be liable for the acts or omissions of any successor Trustee hereunder.

Upon acceptance of appointment by a successor Trustee as provided in this
Section 6.10, the Company shall mail notice of the succession of such Trustee hereunder to the holders of Debentures at their addresses as they shall appear on the Debenture Register. If the Company fails to mail such notice within 10 Business Days after the acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Company.

In case at the time such successor to the Trustee shall succeed to the trusts created by this Indenture any of the Debentures shall have been authenticated but not delivered, any such successor to the Trustee may adopt the certificate of authentication of any predecessor Trustee, and deliver such Debentures so authenticated; and in case at that time any of the Debentures shall not have been authenticated, any successor to the Trustee may authenticate such Debentures either in the name of any predecessor hereunder or in the name of the successor Trustee; and in all such cases such certificates shall have the full force which it is anywhere in the Debentures or in this Indenture provided that the certificate of the Trustee shall have; provided, however, that the right to adopt the certificate of authentication of any predecessor Trustee or authenticate Debentures in the name of any predecessor Trustee shall apply only to its successor or successors by merger, conversion or consolidation.

SECTION 6.12. AUTHENTICATING AGENTS. There may be one or more Authenticating Agents appointed by the Trustee upon the request of the Company with power to act on its behalf and subject to its direction in the authentication and delivery of Debentures issued upon exchange or registration of transfer thereof as fully to all intents and purposes as though any such Authenticating Agent had been expressly authorized to authenticate and deliver Debentures; provided, however, that the Trustee shall have no liability to the Company for any acts or omissions of the Authenticating Agent with respect to the authentication and delivery of Debentures. Any such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States or of any state or territory thereof or of the District of Columbia authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of at least $50,000,000.00 and being subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of

this Section 6.12 the combined capital and surplus of such corporation 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, it shall resign immediately in the manner and with the effect herein specified in this Section.

Any Authenticating Agent may at any time resign by giving written notice of resignation to the Trustee and to the Company. The Trustee may at any time terminate the agency of any Authenticating Agent with respect to the Debentures by giving written notice of termination to such Authenticating Agent and to the Company. Upon receiving such a notice of resignation or upon such a termination, or in case at any time any Authenticating Agent shall cease to be eligible under this Section 6.12, the Trustee may, and upon the request of the Company shall, promptly appoint a successor Authenticating Agent eligible under this Section 6.12, shall give written notice of such appointment to the Company and shall mail notice of such appointment to all holders of Debentures as the names and addresses of such holders appear on the Debenture Register. Any successor Authenticating Agent upon acceptance of its appointment hereunder shall become vested with all rights, powers, duties and responsibilities with respect to the Debentures of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein.

ARTICLE VII.
CONCERNING THE SECURITYHOLDERS

SECTION 7.1. ACTION BY SECURITYHOLDERS. Whenever in this Indenture it is provided that the holders of a specified percentage in aggregate principal amount of the 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 specified percentage have joined therein may be evidenced (a) by any instrument or any number of instruments of similar tenor executed by such Securityholders in person or by agent or proxy appointed in writing, or (b) by the record of such holders of Debentures voting in favor thereof at any meeting of such Securityholders duly called and held in accordance with the provisions of Article VIII, or (c) by a combination of such instrument or instruments and any such record of such a meeting of such Securityholders or (d) by any other method the Trustee deems satisfactory.

for the purposes of determining whether Securityholders of the requisite proportion of outstanding Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, and for that purpose the outstanding Debentures shall be computed as of the record date; provided, however, that no such authorization, 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 6 months after the record date.

SECTION 7.2. PROOF OF EXECUTION BY SECURITYHOLDERS. Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of the execution of any instrument by a Securityholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Debentures shall be proved by the Debenture Register or by a certificate of the Debenture registrar. The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary.

The record of any Securityholders' meeting shall be proved in the manner provided in Section 8.6.

SECTION 7.3. WHO ARE DEEMED ABSOLUTE OWNERS. Prior to due presentment for registration of transfer of any Debenture, the Company, the Trustee, any Authenticating Agent, any paying agent, any transfer agent and any Debenture registrar may deem the Person in whose name such Debenture shall be registered upon the Debenture Register to be, and may treat him as, the absolute owner of such Debenture (whether or not such Debenture shall be overdue) for the purpose of receiving payment of or on account of the principal of, premium, if any, and interest on such Debenture and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any transfer agent nor any Debenture registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being or upon his order shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debenture.

SECTION 7.4. DEBENTURES OWNED BY COMPANY DEEMED NOT OUTSTANDING. In determining whether the holders of the requisite aggregate principal amount of Debentures have concurred in any direction, consent or waiver under this Indenture, Debentures which are owned by the Company or any other obligor on the Debentures or by any Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any other obligor on the Debentures shall be disregarded and deemed not to be outstanding for the purpose of any such determination; provided, however, that for the purposes of determining whether the Trustee shall be protected in relying on any such direction, consent or waiver, only Debentures which a Responsible Officer of the Trustee actually knows are so owned shall be so disregarded. Debentures so owned which have been pledged in good faith may be regarded as outstanding for the purposes of this Section 7.4 if the pledgee shall establish to the satisfaction of the Trustee the pledgee's right to vote such Debentures and that the pledgee is not the Company or any such other obligor or Person directly or indirectly controlling or controlled by or under direct or indirect common control with the Company or any such other obligor. In the 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.

substitution therefor) the serial number of which is shown by the evidence to be included in the Debentures the holders of which have consented to such action may, by filing written notice with the Trustee at the Principal Office of the Trustee and upon proof of holding as provided in Section 7.2, revoke such action so far as concerns such Debenture (or so far as concerns the principal amount represented by any exchanged or substituted Debenture). Except as aforesaid any such action taken by the holder of any Debenture shall be conclusive and binding upon such holder and upon all future holders and owners of such Debenture, and of any Debenture issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon such Debenture or any Debenture issued in exchange or substitution therefor.

ARTICLE VIII.
SECURITYHOLDERS' MEETINGS

SECTION 8.1. PURPOSES OF MEETINGS. A meeting of Securityholders may be called at any time and from time to time pursuant to the provisions of this Article VIII for any of the following purposes:

(b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article VI;

(c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 9.2; or

(d) to take any other action authorized to be taken by or on behalf of the holders of any specified aggregate principal amount of such Debentures under any other provision of this Indenture or under applicable law.

SECTION 8.2. CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 8.1, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders of Debentures affected at their addresses as they shall appear on the Debentures Register and, if the Company is not a holder of Debentures, to the Company. Such notice shall be mailed not less than 20 nor more than 180 days prior to the date fixed for the meeting.

SECTION 8.3. CALL OF MEETINGS BY COMPANY OR SECURITYHOLDERS. In case at any time the Company pursuant to a Board Resolution, or the holders of at least 10% in aggregate principal amount of the Debentures, as the case may be, then outstanding, shall have requested the Trustee to call a meeting of Securityholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place for such meeting and may call such meeting to take any action authorized in
Section 8.1, by mailing notice thereof as provided in Section 8.2.

Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

SECTION 8.5. REGULATIONS. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Debentures and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.

Subject to the provisions of Section 7.4, at any meeting each holder of Debentures with respect to which such meeting is being held or proxy therefor shall be entitled to one vote for each $1,000.00 principal amount of Debentures held or represented by him; provided, however, that no vote shall be cast or counted at any meeting in respect of any Debenture challenged as not outstanding and ruled by the chairman of the meeting to be not outstanding. The chairman of the meeting shall have no right to vote other than by virtue of Debentures held by him or instruments in writing as aforesaid duly designating him as the Person to vote on behalf of other Securityholders. Any meeting of Securityholders duly called pursuant to the provisions of Section 8.2 or 8.3 may be adjourned from time to time by a majority of those present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

SECTION 8.6. VOTING. The vote upon any resolution submitted to any meeting of holders of Debentures with respect to which such meeting is being held shall be by written ballots on which shall be subscribed the signatures of such holders or of their representatives by proxy and the serial number or numbers of the Debentures held or represented by them. The permanent chairman of the meeting shall appoint two inspectors of votes who shall count all votes cast at the meeting for or against any resolution and who shall make and file with the secretary of the meeting their verified written reports in triplicate of all votes cast at the meeting. A record in duplicate of the proceedings of each meeting of Securityholders shall be prepared by the secretary of the meeting and there shall be attached to said record the original reports of the inspectors of votes on any vote by ballot taken thereat and affidavits by one or more Persons having knowledge of the facts setting forth a copy of the notice of the meeting and showing that said notice was mailed as provided in Section 8.2. The record shall show the serial numbers of the Debentures voting in favor of or against any resolution. The record shall be signed and verified by the affidavits of the permanent chairman and secretary of the meeting and one of the duplicates shall be delivered to the Company and the other to the Trustee to be preserved by the Trustee, the latter to have attached thereto the ballots voted at the meeting.

Any record so signed and verified shall be conclusive evidence of the matters therein stated.

meeting, the meeting shall, if convened at the request of Securityholders, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.2, except that such notice need be given only once not less than 5 days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Debentures then outstanding which shall constitute a quorum.

Except as limited by the provisos in the first paragraph of Section 9.2, any resolution presented to a meeting or adjourned meeting duly reconvened at which a quorum is present as aforesaid may be adopted by the affirmative vote of the holders of a majority in principal amount of the Debentures then outstanding; provided, however, that, except as limited by the provisos in the first paragraph of Section 9.2, any resolution with respect to any consent, waiver, request, demand, notice, authorization, direction or other action which this Indenture expressly provides may be given by the holders of not less than a specified percentage in principal amount of the Debentures then outstanding may be adopted at a meeting or an adjourned meeting duly reconvened and at which a quorum is present as aforesaid only by the affirmative vote of the holders of a not less than such specified percentage in principal amount of the Debentures then outstanding.

Any resolution passed or decision taken at any meeting of holders of Debentures duly held in accordance with this Section shall be binding on all the Securityholders, whether or not present or represented at the meeting.

ARTICLE IX.
SUPPLEMENTAL INDENTURES

(b) to add to the covenants of the Company such further covenants, restrictions or conditions for the protection of the holders of Debentures as the Board of Directors shall consider to be for the protection of the holders of such Debentures, and to make the occurrence, or the occurrence and continuance, of a default in any of such additional covenants, restrictions or conditions a default or an Event of Default permitting the enforcement of all or any of the several remedies provided in this Indenture as herein set forth; provided, however, that in respect of any such additional covenant restriction or condition such supplemental indenture may provide for a particular period of grace after default (which period may be shorter or longer than that allowed in the case of other defaults) or may provide for an immediate enforcement upon such default or may limit the remedies available to the Trustee upon such default;

questions arising under this Indenture; provided that any such action shall not materially adversely affect the interests of the holders of the Debentures;

(d) to add to, delete from, or revise the terms of Debentures, including, without limitation, any terms relating to the issuance, exchange, registration or transfer of Debentures, including to provide for transfer procedures and restrictions substantially similar to those applicable to the Capital Securities as required by Section 2.5 (for purposes of assuring that no registration of Debentures is required under the Securities Act); provided, however, that any such action shall not adversely affect the interests of the holders of the Debentures then outstanding (it being understood, for purposes of this proviso, that transfer restrictions on Debentures substantially similar to those that were applicable to Capital Securities shall not be deemed to materially adversely affect the holders of the Debentures);

(e) to evidence and provide for the acceptance of appointment hereunder by a successor Trustee with respect to the Debentures and to add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the trusts hereunder by more than one Trustee;

(f) to make any change (other than as elsewhere provided in this paragraph) that does not adversely affect the rights of any Securityholder in any material respect; or

(g) to provide for the issuance of and establish the form and terms and conditions of the Debentures, to establish the form of any certifications required to be furnished pursuant to the terms of this Indenture or the Debentures, or to add to the rights of the holders of Debentures.

Any supplemental indenture authorized by the provisions of this Section 9.1 may be executed by the Company and the Trustee without the consent of the holders of any of the Debentures at the time outstanding, notwithstanding any of the provisions of Section 9.2.

SECTION 9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With the consent (evidenced as provided in Section 7.1) of the holders of not less than a majority in aggregate principal amount of the Debentures at the time outstanding affected by such supplemental indenture (voting as a class), the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto 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 the rights of the holders of the Debentures; provided, however, that no such supplemental indenture shall without the consent of the holders of each Debenture then outstanding and affected thereby (i) change the fixed maturity of any Debenture, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof or any interest or premium thereon payable in any coin or currency other than that provided in the Debentures, or impair or affect the right of any Securityholder to institute suit for payment thereof or impair the right of repayment, if any, at the option of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders of which are required to consent to any such supplemental indenture; provided further, however, that if the Debentures are held by a trust or a trustee of such trust, such supplemental indenture shall not be effective until the holders of a majority in Liquidation Amount of Trust Securities shall have consented to such supplemental indenture; provided further, however, that if the consent of the

Securityholder of each outstanding Debenture is required, such supplemental indenture shall not be effective until each holder of the Trust Securities shall have consented to such supplemental indenture.

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, prepared by the Company, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Debenture 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.

SECTION 9.3. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Debentures shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

SECTION 9.4. NOTATION ON DEBENTURES. Debentures authenticated and delivered after the execution of any supplemental indenture pursuant to the provisions of this Article IX may bear a notation as to any matter provided for in such supplemental indenture. If the Company or the Trustee shall so determine, new Debentures so modified as to conform, in the opinion of the Board of Directors of the Company, to any modification of this Indenture contained in any such supplemental indenture may be prepared and executed by the Company, authenticated by the Trustee or the Authenticating Agent and delivered in exchange for the Debentures then outstanding.

ARTICLE X.
REDEMPTION OF SECURITIES

the Company is a savings and loan holding company, from the OTS, if then required under applicable capital guidelines or policies of the OTS) to redeem the Debentures, in whole or in part, but in all cases in a principal amount with integral multiples of $1,000.00, on any March 26, June 26, September 26 or December 26 on or after March 26, 2008 (the "Redemption Date"), at the Redemption Price.

SECTION 10.2. SPECIAL EVENT REDEMPTION. If a Special Event shall occur and be continuing, the Company shall have the right (subject to the receipt by the Company of prior approval (i) if the Company is a bank holding company, from the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve or (ii) if the Company is a savings and loan holding company, from the OTS, if then required under applicable capital guidelines or policies of the OTS) to redeem the Debentures in whole, but not in part, at any Interest Payment Date, within 120 days following the occurrence of such Special Event (the "Special Redemption Date") at the Special Redemption Price. If the Special Event redemption occurs prior to March 26, 2008, the Company shall appoint a Quotation Agent, which initially shall be U.S. Bank, National Association or its designee, for the purpose of performing the services contemplated in, or by reference in, the definition of Special Redemption Price. Any error in the calculation of the Special Redemption Price by the Quotation Agent or the Trustee may be corrected at any time by notice delivered to the Company and the holders of the Debentures. Subject to the corrective rights set forth above, all certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions relating to the payment and calculation of the Special Redemption Price on the Debentures by the Trustee or the Quotation Agent, as the case may be, shall (in the absence of willful default, bad faith or manifest error) be final, conclusive and binding on the holders of the Debentures and the Company, and no liability shall attach (except as provided above) to the Trustee or the Quotation Agent in connection with the exercise or non-exercise by any of them of their respective powers, duties and discretion.

SECTION 10.3. NOTICE OF REDEMPTION; SELECTION OF DEBENTURES. In case the Company shall desire to exercise the right to redeem all, or, as the case may be, any part of the Debentures, it shall cause to be mailed a notice of such redemption at least 30 and not more than 60 days prior to the Redemption Date or the Special Redemption Date to the holders of Debentures so to be redeemed as a whole or in part at their last addresses as the same appear on the Debenture Register. Such mailing shall be by first class mail. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Debenture designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debenture.

Each such notice of redemption shall specify the CUSIP number, if any, of the Debentures to be redeemed, the Redemption Date or the Special Redemption Date, as applicable, the Redemption Price or the Special Redemption Price, as applicable, at which Debentures are to be redeemed, the place or places of payment, that payment will be made upon presentation and surrender of such Debentures, that interest accrued to the date fixed for redemption will be paid as specified in said notice, and that on and after said date interest thereon or on the portions thereof to be redeemed will cease to accrue. If less than all the Debentures are to be redeemed the notice of redemption shall specify the numbers of the Debentures to be redeemed. In case the Debentures are to be redeemed in part only, the notice of redemption shall state the portion of the principal amount thereof to be redeemed and shall state that on and after the date fixed for redemption, upon surrender of such Debenture, a new Debenture or Debentures in principal amount equal to the unredeemed portion thereof will be issued.

the Debentures so called for redemption at the appropriate Redemption Price or Special Redemption Price.

If all, or less than all, the Debentures are to be redeemed, the Company will give the Trustee notice not less than 45 nor more than 60 days, respectively, prior to the Redemption Date or Special Redemption Date, as applicable, as to the aggregate principal amount of Debentures to be redeemed and the Trustee shall select, in such manner as in its sole discretion it shall deem appropriate and fair, the Debentures or portions thereof (in integral multiples of $1,000.00) to be redeemed.

SECTION 10.4. PAYMENT OF DEBENTURES CALLED FOR REDEMPTION. If notice of redemption has been given as provided in Section 10.3, the Debentures or portions of Debentures with respect to which such notice has been given shall become due and payable on the Redemption Date or Special Redemption Date, as applicable, and at the place or places stated in such notice at the applicable Redemption Price or Special Redemption Price and on and after said date (unless the Company shall default in the payment of such Debentures at the Redemption Price or Special Redemption Price, as applicable) interest on the Debentures or portions of Debentures so called for redemption shall cease to accrue. On presentation and surrender of such Debentures at a place of payment specified in said notice, such Debentures or the specified portions thereof shall be paid and redeemed by the Company at the applicable Redemption Price or Special Redemption Price.

Upon presentation of any Debenture redeemed in part only, the Company shall execute and the Trustee shall authenticate and make available for delivery to the holder thereof, at the expense of the Company, a new Debenture or Debentures of authorized denominations, in principal amount equal to the unredeemed portion of the Debenture so presented.

ARTICLE XI.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

SECTION 11.1. COMPANY MAY CONSOLIDATE, ETC., ON CERTAIN TERMS. Nothing contained in this Indenture or in the Debentures shall prevent any consolidation or merger of the Company with or into any other Person (whether or not affiliated with the Company) or successive consolidations or mergers in which the Company or its successor or successors shall be a party or parties, or shall prevent any sale, conveyance, transfer or other disposition of the property or capital stock of the Company or its successor or successors as an entirety, or substantially as an entirety, to any other Person (whether or not affiliated with the Company, or its successor or successors) authorized to acquire and operate the same; provided, however, that the Company hereby covenants and agrees that, upon any such consolidation, merger (where the Company is not the surviving corporation), sale, conveyance, transfer or other disposition, the due and punctual payment of the principal of (and premium, if any) and interest on all of the Debentures in accordance with their terms, according to their tenor, and the due and punctual performance and observance of all the covenants and conditions of this Indenture to be kept or performed by the Company, shall be expressly assumed by supplemental indenture satisfactory in form to the Trustee executed and delivered to the Trustee by the entity formed by such consolidation, or into which the Company shall have been merged, or by the entity which shall have acquired such property or capital stock.

the Debentures. Such successor entity thereupon may cause to be signed, and may issue in its own name, any or all of the Debentures issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee or the Authenticating Agent; and, upon the order of such successor entity instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate and deliver any Debentures which previously shall have been signed and delivered by the officers of the Company, to the Trustee or the Authenticating Agent for authentication, and any Debentures which such successor entity thereafter shall cause to be signed and delivered to the Trustee or the Authenticating Agent for that purpose. All the Debentures so issued shall in all respects have the same legal rank and benefit under this Indenture as the Debentures theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Debentures had been issued at the date of the execution hereof.

ARTICLE XII.
SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 12.1. DISCHARGE OF INDENTURE. When

(a) the Company shall deliver to the Trustee for cancellation all Debentures theretofore authenticated (other than any Debentures which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.6) and not theretofore canceled, or

(b) all the Debentures not theretofore canceled or delivered to the Trustee for cancellation shall have become due and payable, or are by their terms to become due and payable within 1 year or are to be called for redemption within 1 year under arrangements satisfactory to the Trustee for the giving of notice of redemption, and the Company shall deposit with the Trustee, in trust, funds, which shall be immediately due and payable, sufficient to pay at maturity or upon redemption all of the Debentures (other than any Debentures which shall have been destroyed, lost or stolen and which shall have been replaced or paid as provided in Section 2.6) not theretofore canceled or delivered to the Trustee for cancellation, including principal and premium, if any, and interest due or to become due to such date of maturity or redemption date, as the case may be, but excluding, however, the amount of any moneys for the payment of principal of, and premium, if any, or interest on the Debentures (1) theretofore repaid to the Company in accordance with the provisions of Section 12.4, or
(2) paid to any state or to the District of Columbia pursuant to its unclaimed property or similar laws,

and if in the case of either clause (a) or clause (b) the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect except for the provisions of Sections 2.5, 2.6, 2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall survive until such Debentures shall mature and be paid. Thereafter, Sections 6.6 and 12.4 shall survive, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. The Company agrees to reimburse the

Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Debentures.

SECTION 12.2. DEPOSITED MONEYS TO BE HELD IN TRUST BY TRUSTEE. Subject to the provisions of Section 12.4, all moneys deposited with the Trustee pursuant to Section 12.1 shall be held in trust in a non-interest bearing account and applied by it to the payment, either directly or through any paying agent (including the Company if acting as its own paying agent), to the holders of the particular Debentures for the payment of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal, and premium, if any, and interest.

SECTION 12.3. PAYING AGENT TO REPAY MONEYS HELD. Upon the satisfaction and discharge of this Indenture all moneys then held by any paying agent of the Debentures (other than the Trustee) shall, upon demand of the Company, be repaid to it or paid to the Trustee, and thereupon such paying agent shall be released from all further liability with respect to such moneys.

SECTION 12.4. RETURN OF UNCLAIMED MONEYS. Any moneys deposited with or paid to the Trustee or any paying agent for payment of the principal of, and premium, if any, or interest on Debentures and not applied but remaining unclaimed by the holders of Debentures for 2 years after the date upon which the principal of, and premium, if any, or interest on such Debentures, as the case may be, shall have become due and payable, shall, subject to applicable escheatment laws, be repaid to the Company by the Trustee or such paying agent on written demand; and the holder of any of the Debentures shall thereafter look only to the Company for any payment which such holder may be entitled to collect, and all liability of the Trustee or such paying agent with respect to such moneys shall thereupon cease.

ARTICLE XIII.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND DIRECTORS

SECTION 13.1. INDENTURE AND DEBENTURES SOLELY CORPORATE OBLIGATIONS. No recourse for the payment of the principal of or premium, if any, or interest on any Debenture, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in this Indenture or in any supplemental indenture, or in any such Debenture, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, officer or director, as such, past, present or future, of the Company or of any successor Person of the Company, either directly or through the Company or any successor Person of the Company, 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 all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of this Indenture and the issue of the Debentures.

ARTICLE XIV.
MISCELLANEOUS PROVISIONS

SECTION 14.1. SUCCESSORS. All the covenants, stipulations, promises and agreements of the Company in this Indenture shall bind its successors and assigns whether so expressed or not.

SECTION 14.4. ADDRESSES FOR NOTICES, ETC. Any notice, consent, direction, request, authorization, waiver or demand which by any provision of this Indenture is required or permitted to be given, made, furnished or served by the Trustee or by the Securityholders on or to the Company may be given or served in writing by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company, with the Trustee for the purpose) to the Company, 719 Harkrider Street, 3rd Floor, Conway, Arkansas 72032, Attention: Randy Mayor. Any notice, consent, direction, request, authorization, waiver or demand by any Securityholder or the Company 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 office of the Trustee, addressed to the Trustee, 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103 Attention: Vice President, Corporate Trust Services Division, with a copy to the Trustee, 1 Federal Street - 3rd Floor, Boston, Massachusetts 02110, Attention: Paul D. Allen, Corporate Trust Services Division. Any notice, consent, direction, request, authorization, waiver or demand on or to any Securityholder shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the address set forth in the Debenture Register.

SECTION 14.5. GOVERNING LAW. This Indenture and each Debenture shall be deemed to be a contract made under the law of the State of New York, and for all purposes shall be governed by and construed in accordance with the law of said State, without regard to conflict of laws principles thereof.

SECTION 14.7. NON-BUSINESS DAYS. In any case where the date of payment of interest on or principal of the Debentures will be a day that is not a Business Day, the payment of such interest on or principal of the Debentures need not be made on such date but may be made on the next succeeding Business Day, 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 original date of payment, and no interest shall accrue for the period from and after such date.

SECTION 14.8. TABLE OF CONTENTS, HEADINGS, ETC. The table of contents and the titles and headings of the articles and sections of this Indenture have been inserted for convenience of reference

only, are not to be considered a part hereof, and shall in no way modify or restrict any of the terms or provisions hereof.

SECTION 14.10. SEPARABILITY. In case any one or more of the provisions contained in this Indenture or in the 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 such Debentures, but this Indenture and such Debentures shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein or therein.

SECTION 14.12. ACKNOWLEDGMENT OF RIGHTS. The Company agrees that, with respect to any Debentures held by the Trust or the Institutional Trustee of the Trust, if the Institutional Trustee of the Trust fails to enforce its rights under this Indenture as the holder of Debentures held as the assets of such Trust after the holders of a majority in Liquidation Amount of the Capital Securities of such Trust have so directed such Institutional Trustee, a holder of record of such Capital Securities may, to the fullest extent permitted by law, institute legal proceedings directly against the Company to enforce such Institutional Trustee's rights under this Indenture without first instituting any legal proceedings against such trustee or any other Person. 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 premium, if any) or principal on the Debentures on the date such interest (or premium, if any) or principal is otherwise payable (or in the case of redemption, on the redemption date), the Company agrees that a holder of record of Capital Securities of the Trust may directly institute a proceeding against the Company for enforcement of payment to such holder directly of the principal of (or premium, if any) or interest on the Debentures having an aggregate principal amount equal to the aggregate Liquidation Amount of the Capital Securities of such holder on or after the respective due date specified in the Debentures.

ARTICLE XV.
SUBORDINATION OF DEBENTURES

SECTION 15.1. AGREEMENT TO SUBORDINATE. The Company covenants and agrees, and each holder of Debentures by such Securityholder's acceptance thereof likewise covenants and agrees, that all Debentures shall be issued subject to the provisions of this Article XV; and each holder of a Debenture, 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 premium, if any, and interest on all Debentures 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 Indebtedness of the Company, whether outstanding at the date of this Indenture or thereafter incurred.

No provision of this Article XV shall prevent the occurrence of any default or Event of Default hereunder.

SECTION 15.2. DEFAULT ON SENIOR INDEBTEDNESS. 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 Indebtedness of the Company following any grace period, or in the event that the maturity of any Senior Indebtedness of the Company has been accelerated because of a default and such acceleration has not been rescinded or canceled and such Senior Indebtedness has not been paid in full, then, in either case, no payment shall be made by the Company with respect to the principal (including redemption) of, or premium, if any, or interest on the Debentures.

SECTION 15.3. 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 Indebtedness 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 (and premium, if any) or interest on the Debentures. 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 Securityholders or the Trustee would be entitled to receive from the Company, except for the provisions of this Article XV, 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 Securityholders or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness 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 Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness 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 Indebtedness, before any payment or distribution is made to the Securityholders or to the Trustee.

For purposes of this Article XV, 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 XV with respect to the Debentures to the payment of all Senior Indebtedness, that may at the time be outstanding, provided that (i) such Senior Indebtedness is assumed by the new corporation, if any, resulting from any such reorganization or readjustment, and
(ii) the rights of the holders of such Senior Indebtedness 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 XI of this Indenture shall not be deemed a dissolution, winding-up, liquidation or reorganization for the purposes of this Section if such other corporation shall, as a part of such consolidation, merger, conveyance or transfer, comply with the conditions stated in Article XI of this Indenture. Nothing in Section 15.2 or in this Section shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6 of this Indenture.

SECTION 15.4. SUBROGATION. Subject to the payment in full of all Senior Indebtedness, the Securityholders shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company, applicable to such Senior Indebtedness until the principal of (and premium, if any) and interest on the Debentures shall be paid in full. For the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Securityholders or the Trustee would be entitled except for the provisions of this Article XV, and no payment over pursuant to the provisions of this Article XV to or for the benefit of the holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness of the Company, and the holders of the Debentures be deemed to be a payment or distribution by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article XV are and are intended solely for the purposes of defining the relative rights of the holders of the Securities, on the one hand, and the holders of such Senior Indebtedness, on the other hand.

Nothing contained in this Article XV or elsewhere in this Indenture or in the Debentures is intended to or shall impair, as between the Company, its creditors other than the holders of Senior Indebtedness, and the holders of the Debentures, the obligation of the Company, which is absolute and unconditional, to pay to the holders of the Debentures the principal of (and premium, if any) and interest on the 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 Debentures and creditors of the Company, other than the holders of Senior Indebtedness, nor shall anything herein or therein prevent the Trustee or the holder of any Debenture from exercising all remedies otherwise permitted by applicable law upon default under this Indenture, subject to the rights, if any, under this Article XV of the holders of such Senior Indebtedness in respect of cash, property or securities of the Company, received upon the exercise of any such remedy.

SECTION 15.6. NOTICE BY THE COMPANY. The Company shall give prompt written notice to a Responsible Officer of the Trustee at the Principal Office of the Trustee of any fact known to the Company that would prohibit the making of any payment of monies to or by the Trustee in respect of the Debentures pursuant to the provisions of this Article XV. Notwithstanding the provisions of this Article XV 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 monies to or by the Trustee in respect of the Debentures pursuant to the provisions of this Article XV, unless and until a Responsible Officer of the Trustee at the Principal Office of the Trustee shall have received written notice thereof from the Company or a holder or holders of Senior Indebtedness or from any trustee therefor; and before the receipt of any such written notice, the Trustee, subject to the provisions of Article VI of this Indenture, 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 provided for in this Section at least 2 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 premium, if any) or interest on any 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 they were received, and shall not be affected by any notice to the contrary that may be received by it within 2 Business Days prior to such date.

Nothing in this Article XV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.

Without in any way limiting the generality of the foregoing paragraph, the holders of Senior Indebtedness may, at any time and from time to time, without the consent of or notice to the Trustee or the Securityholders, without incurring responsibility to the Securityholders and without impairing or releasing the subordination provided in this Article XV or the obligations hereunder of the holders of the Debentures to the holders of such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company, and any other Person.

Signatures appear on the following page

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by their respective officers thereunto duly authorized, as of the day and year first above written.

HOME BANCSHARES, INC.

By /s/ Randy Mayor
   -------------------------------------
Name: Randy Mayor
Title: Treasurer

U.S. BANK NATIONAL ASSOCIATION,
as Trustee

By /s/ Paul D. Allen
   -------------------------------------
Name: Paul D. Allen
Title: Vice President

EXHIBIT A

FORM OF FIXED/FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE

[FORM OF FACE OF SECURITY]

THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATIONS UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

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SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING

RESTRICTIONS.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE INDENTURE TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

Fixed/Floating Rate Junior Subordinated Deferrable Interest Debenture

Home Bancshares, Inc.

March 26, 2003

Home Bancshares, Inc., an Arkansas corporation (the "Company" which term includes any successor Person under the Indenture hereinafter referred to), for value received promises to pay to U.S. Bank National Association, not in its individual capacity but solely as Institutional Trustee for Home BancShares Statutory Trust I (the "Holder") or registered assigns, the principal sum of twenty million six hundred nineteen thousand dollars ($20,619,000.00) on March 26, 2033, and to pay interest on said principal sum from March 26, 2003, 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 26, June 26, September 26 and December 26 of each year commencing on June 26, 2003, at an annual rate equal to 6.40% beginning on (and including) the date of original issuance and ending on (but excluding) March 26, 2008 and at an annual rate for each successive Distribution Period beginning on (and including) March 26, 2008, and each succeeding Interest Payment Date, and ending on (but excluding) the next succeeding Interest Payment Date, equal to 3-Month LIBOR, determined as described below, plus 3.15% (the "Coupon Rate"), applied to the principal amount hereof, until the principal hereof is paid or duly provided for or made available for payment, 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 (including Additional Interest) at the Interest Rate in effect for each applicable period, compounded quarterly, from the dates such amounts are due until they are paid or made available for payment. The amount of interest payable (i) for any Distribution

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Period commencing on or after the date of original issuance but before March 26, 2008 will be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution Period commencing on or after March 26, 2008 and each succeeding Distribution Period will be computed on the basis of the actual number of days in the Distribution Period concerned divided by 360. In the event that any date on which interest is payable on this Debenture is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), 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 the payment was originally payable. 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 Debenture (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment, which shall be fifteen days prior to the day on which the relevant Interest Payment Date occurs. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such regular record date and may be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date.

"3-Month LIBOR" as used herein, means the London interbank offered interest rate for three-month U.S. dollar deposits determined by the Trustee in the following order of priority: (i) the rate (expressed as a percentage per annum) for U.S. dollar deposits having a three-month maturity that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination Date ("Telerate Page 3750" means the display designated as "Page 3750" on the Dow Jones Telerate Service or such other page as may replace Page 3750 on that service or such other service or services as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying London interbank offered rates for U.S. dollar deposits); (ii) if such rate cannot be identified on the related Determination Date, the Trustee will request the principal London offices of four leading banks in the London interbank market to provide such banks' offered quotations (expressed as percentages per annum) to prime banks in the London interbank market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (iii) if fewer than two such quotations are provided as requested in clause (ii) above, the Trustee will request four major New York City banks to provide such banks' offered quotations (expressed as percentages per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and (iv) if fewer than two such quotations are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the Distribution Period immediately preceding such current Distribution Period. If the rate for U.S. dollar deposits having a three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such Determination Date, then the corrected rate as so substituted on the applicable page will be the applicable 3-Month LIBOR for such Determination Date. As used herein, "Determination Date" means the date that is two London Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in the London interbank market) preceding the commencement of the relevant Distribution Period.

The Interest Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law.

All percentages resulting from any calculations on the Debentures will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage

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point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)).

The principal of and interest on this Debenture shall be payable at the office or agency of the Trustee (or other paying agent appointed by the Company) 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 by check mailed to the registered holder at such address as shall appear in the Debenture Register if a request for a wire transfer by such holder has not been received by the Company or by wire transfer to an account appropriately designated by the holder hereof. Notwithstanding the foregoing, so long as the holder of this Debenture is the Institutional Trustee, the payment of the principal of and interest on this Debenture will be made in immediately available funds at such place and to such account as may be designated by the Trustee.

So long as no Event of Default has occurred and is continuing, the Company shall have the right, from time to time, and without causing an Event of Default, to defer payments of interest on the Debentures by extending the interest payment period on the Debentures at any time and from time to time during the term of the Debentures, for up to 20 consecutive quarterly periods (each such extended interest payment period, an "Extension Period"), during which Extension Period no interest (including Additional Interest) shall be due and payable (except any Additional Sums that may be due and payable). No Extension Period may end on a date other than an Interest Payment Date. During an Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest will accrue at an annual rate equal to the Interest Rate in effect for such Extension Period, compounded quarterly from the date such interest would have been payable were it not for the Extension Period, to the extent permitted by law (such interest referred to herein as "Additional Interest"). At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date; provided further, however, that during any such Extension Period, the Company shall not and shall not permit any Affiliate to engage in any of the activities or transactions described on the reverse side hereof and in the Indenture. Prior to the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. The Company must give the Trustee notice of its election to begin or extend an Extension Period at least 5 Business Days prior to the regular record date (as such term is used in Section 2.8 of the Indenture) immediately preceding the Interest Payment Date with respect to which interest on the Debentures would have been payable except for the election to begin or extend such Extension Period.

The indebtedness evidenced by this 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 Indebtedness, and this Debenture is issued subject to the provisions of the Indenture with respect thereto. Each holder of this 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

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holder of Senior Indebtedness, whether now outstanding or hereafter incurred, and waives reliance by each such holder upon said provisions.

This Debenture shall not be entitled to any benefit under the Indenture hereinafter referred to, 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 Debenture are continued on the reverse side hereof and such provisions shall for all purposes have the same effect as though fully set forth at this place.

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IN WITNESS WHEREOF, the Company has duly executed this certificate.

HOME BANCSHARES, INC.

Name:
Title:

CERTIFICATE OF AUTHENTICATION

This is one of the Debentures referred to in the within-mentioned Indenture.

U. S. Bank National Association, as Trustee

By:

Authorized Officer

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[FORM OF REVERSE OF DEBENTURE]

This Debenture is one of the fixed/floating rate junior subordinated deferrable interest debentures of the Company, all issued or to be issued under and pursuant to the Indenture dated as of March 26, 2003 (the "Indenture"), duly executed and delivered between the Company and 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 Debentures. The Debentures are limited in aggregate principal amount as specified in the Indenture.

Upon the occurrence and continuation of a Special Event prior to March 26, 2008, the Company shall have the right to redeem the Debentures in whole, but not in part, at any Interest Payment Date, within 120 days following the occurrence of such Special Event, at the Special Redemption Price.

In addition, the Company shall have the right to redeem the Debentures, in whole or in part, but in all cases in a principal amount with integral multiples of $1,000.00, on any Interest Payment Date on or after March 26, 2008, at the Redemption Price.

Prior to 10:00 a.m. New York City time on the Redemption Date or Special Redemption Date, as applicable, the Company will deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date or the Special Redemption Date, as applicable, all the Debentures so called for redemption at the appropriate Redemption Price or Special Redemption Price.

Notwithstanding the foregoing, any redemption of Debentures by the Company shall be subject to the receipt of any and all required regulatory approvals.

In case an Event of Default shall have occurred and be continuing, upon demand of the Trustee, the principal of all of the Debentures shall become due and payable in the manner, with the effect and subject to the conditions provided in the Indenture.

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 Debentures at the time outstanding, to execute supplemental indentures 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 the rights of the holders of the Debentures; provided, however, that no such supplemental indenture shall without the consent of the holders of each Debenture then outstanding and affected thereby (i) change the fixed maturity of any Debenture, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof or any interest or premium thereon payable in any coin or currency other than that provided in the Debentures, or impair or affect the right of any Securityholder to institute suit for payment thereof or impair the right of repayment, if any, at the option of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders of which are required to consent to any such supplemental indenture.

The Indenture also contains provisions permitting the holders of a majority in aggregate principal amount of the Debentures at the time outstanding on behalf of the holders of all of the Debentures to

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waive (or modify any previously granted waiver of) any past default or Event of Default, and its consequences, except a default (a) in the payment of principal of, premium, if any, or interest on any of the Debentures, (b) in respect of covenants or provisions hereof or of the Indenture which cannot be modified or amended without the consent of the holder of each Debenture affected, or (c) in respect of the covenants contained in Section 3.9 of the Indenture; provided, however, that if the Debentures are held by the Trust or a trustee of such 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 Debenture is required, such waiver shall not be effective until each holder 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 the Indenture and the Company, the Trustee and the holders of the 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 Event of Default or impair any right consequent thereon. Whenever any default or Event of Default hereunder shall have been waived as permitted by the Indenture, said default or Event of Default shall for all purposes of the Debentures and the Indenture be deemed to have been cured and to be not continuing.

No reference herein to the Indenture and no provision of this 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 premium, if any, and interest, including Additional Interest, on this Debenture at the time and place and at the rate and in the money herein prescribed.

The Company has agreed that if Debentures are initially issued to the Trust or a trustee of such Trust in connection with the issuance of Trust Securities by the Trust (regardless of whether Debentures continue to be held by such Trust) and (i) there shall have occurred and be continuing an Event of Default,
(ii) the Company shall be in default with respect to its payment of any obligations under the Capital Securities Guarantee, or (iii) the Company shall have given notice of its election to defer payments of interest on the Debentures by extending the interest payment period as provided herein and such Extension Period, or any extension thereof, shall be continuing, then the Company shall not, and shall not allow any Affiliate of the Company to, (x) 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 its Affiliates' capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (x) and (y) above, (1) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, if any, (2) as a result of any exchange or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (3) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (4) any declaration of a dividend in connection with any stockholders' rights plan, or the issuance of rights, stock or other property under any stockholders' rights plan, or the redemption or repurchase of rights pursuant thereto, (5) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any

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cash payments in lieu of fractional shares issued in connection therewith, or
(6) payments under the Capital Securities Guarantee).

The Debentures are issuable only in registered, certificated form without coupons and in minimum denominations of $100,000.00 and any multiple of $1,000.00 in excess thereof. As provided in the Indenture and subject to the transfer restrictions and limitations as may be contained herein and therein from time to time, this Debenture is transferable by the holder hereof on the Debenture Register of the Company. Upon due presentment for registration of transfer of any Debenture at the Principal Office of the Trustee or at any office or agency of the Company maintained for such purpose as provided in
Section 3.2 of the Indenture, the Company shall execute, the Company or the Trustee shall register and the Trustee or the Authenticating Agent shall authenticate and make available for delivery in the name of the transferee or transferees a new Debenture for a like aggregate principal amount. All Debentures presented for registration of transfer or for exchange or payment shall (if so required by the Company or the Trustee or the Authenticating Agent) be duly endorsed by, or be accompanied by a written instrument or instruments of transfer in form satisfactory to, the Company and the Trustee or the Authenticating Agent duly executed by the holder or his attorney duly authorized in writing. No service charge shall be made for any exchange or registration of transfer of Debentures, but the Company or the Trustee may require payment of a sum sufficient to cover any tax, fee or other governmental charge that may be imposed in connection therewith.

Prior to due presentment for registration of transfer of any Debenture, the Company, the Trustee, any Authenticating Agent, any paying agent, any transfer agent and any Debenture registrar may deem the Person in whose name such Debenture shall be registered upon the Debenture Register to be, and may treat him as, the absolute owner of such Debenture (whether or not such Debenture shall be overdue) for the purpose of receiving payment of or on account of the principal of, premium, if any, and interest on such Debenture and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any transfer agent nor any Debenture registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being or upon his order shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debenture.

No recourse for the payment of the principal of or premium, if any, or interest on any Debenture, or for any claim based thereon or otherwise in respect thereof, and no recourse under or upon any obligation, covenant or agreement of the Company in the Indenture or in any supplemental indenture, or in any such Debenture, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, employee, officer or director, as such, past, present or future, of the Company or of any successor Person of the Company, either directly or through the Company or any successor Person of the Company, 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 all such liability is hereby expressly waived and released as a condition of, and as a consideration for, the execution of the Indenture and the issue of the Debentures.

Capitalized terms used and not defined in this Debenture shall have the meanings assigned in the Indenture dated as of the date of original issuance of this Debenture between the Trustee and the Company.

THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.

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EXHIBIT 4.11

AMENDED AND RESTATED DECLARATION OF TRUST

BY AND AMONG

U. S. BANK NATIONAL ASSOCIATION,
AS INSTITUTIONAL TRUSTEE,

HOME BANCSHARES, INC.,
AS SPONSOR,

AND

JOHN W. ALLISON, C. RANDALL SIMS AND RANDY MAYOR,
AS ADMINISTRATORS,

DATED AS OF MARCH 26, 2003

TABLE OF CONTENTS

                                                                               Page
                                                                               ----
ARTICLE I INTERPRETATION AND DEFINITIONS ...................................     1
   Section 1.1.    Definitions .............................................     1

ARTICLE II ORGANIZATION ....................................................     7
   Section 2.1.    Name ....................................................     7
   Section 2.2.    Office ..................................................     7
   Section 2.3.    Purpose .................................................     7
   Section 2.4.    Authority ...............................................     8
   Section 2.5.    Title to Property of the Trust ..........................     8
   Section 2.6.    Powers and Duties of the Institutional Trustee
                   and the Administrators ..................................     8
   Section 2.7.    Prohibition of Actions by the Trust and the
                   Institutional Trustee ...................................    11
   Section 2.8.    Powers and Duties of the Institutional Trustee ..........    12
   Section 2.9.    Certain Duties and Responsibilities of the
                   Institutional Trustee and Administrators ................    13
   Section 2.10.   Certain Rights of Institutional Trustee .................    14
   Section 2.11.   Execution of Documents ..................................    16
   Section 2.12.   Not Responsible for Recitals or Issuance of Securities...    17
   Section 2.13.   Duration of Trust .......................................    17
   Section 2.14.   Mergers .................................................    17

ARTICLE III SPONSOR ........................................................    18
   Section 3.1.    Sponsor's Purchase of Common Securities .................    18
   Section 3.2.    Responsibilities of the Sponsor .........................    18
   Section 3.3.    Expenses ................................................    19
   Section 3.4.    Right to Proceed ........................................    19

ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS ........................    19
   Section 4.1.    Institutional Trustee; Eligibility ......................    19
   Section 4.2.    Administrators ..........................................    20
   Section 4.3.    Appointment, Removal and Resignation of Institutional
                   Trustee and Administrators ..............................    20
   Section 4.4.    Institutional Trustee Vacancies .........................    21
   Section 4.5.    Effect of Vacancies .....................................    21
   Section 4.6.    Meetings of the Institutional Trustee and
                   the Administrators ......................................    21
   Section 4.7.    Delegation of Power .....................................    22
   Section 4.8.    Conversion, Consolidation or Succession to Business .....    22

ARTICLE V DISTRIBUTIONS ....................................................    22
   Section 5.1.    Distributions ...........................................    22

ARTICLE VI ISSUANCE OF SECURITIES ..........................................    23
   Section 6.1.    General Provisions Regarding Securities .................    23
   Section 6.2.    Paving Agent, Transfer Agent and Registrar ..............    23
   Section 6.3.    Form and Dating .........................................    24
   Section 6.4.    Mutilated, Destroyed, Lost or Stolen Certificates .......    24
   Section 6.5.    Temporary Securities ....................................    24
   Section 6.6.    Cancellation ............................................    25

   Section 6.7.    Rights of Holders, Waivers of Past Defaults .............    25

ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST ...........................    26
   Section 7.1.    Dissolution and Termination of Trust ....................    26

ARTICLE VIII TRANSFER OF INTERESTS .........................................    27
   Section 8.1.    General .................................................    27
   Section 8.2.    Transfer Procedures and Restrictions ....................    28
   Section 8.3.    Deemed Security Holders .................................    30

ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
   INSTITUTIONAL TRUSTEE OR OTHERS .........................................    30
   Section 9.1.    Liability ...............................................    30
   Section 9.2.    Exculpation .............................................    31
   Section 9.3.    Fiduciary Duty ..........................................    31
   Section 9.4.    Indemnification .........................................    31
   Section 9.5.    Outside Businesses ......................................    33
   Section 9.6.    Compensation; Fee .......................................    34

ARTICLE X ACCOUNTING .......................................................    34
   Section 10.1.   Fiscal Year .............................................    34
   Section 10.2.   Certain Accounting Matters ..............................    34
   Section 10.3.   Banking .................................................    35
   Section 10.4.   Withholding .............................................    35

ARTICLE XI AMENDMENTS AND MEETINGS .........................................    35
   Section 11.1.   Amendments ..............................................    35
   Section 11.2.   Meetings of the Holders of Securities; Action by
                   Written Consent .........................................    36

ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE .......................    38
   Section 12.1.   Representations and Warranties of Institutional
                   Trustee .................................................    38

ARTICLE XIII MISCELLANEOUS .................................................    38
   Section 13.1.   Notices .................................................    38
   Section 13.2.   Governing Law ...........................................    39
   Section 13.3.   Intention of the Parties ................................    39
   Section 13.4.   Headings ................................................    40
   Section 13.5.   Successors and Assigns ..................................    40
   Section 13.6.   Partial Enforceability ..................................    40
   Section 13.7.   Counterparts ............................................    40

Annex I ...............................   Terms of Securities
Exhibit A-l & A-2 .....................   Forms of Capital Security Certificates
Exhibit A-3 ...........................   Form of Common Security Certificate
Exhibit B .............................   Specimen of Initial Debenture
Exhibit C .............................   Placement Agreement

AMENDED AND RESTATED

DECLARATION OF TRUST

HOME BANCSHARES STATUTORY TRUST I

MARCH 26, 2003

AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and effective as of March 26, 2003, by the Institutional Trustee (as defined herein), the Administrators (as defined herein), the Sponsor (as defined herein) and by the holders, from time to time, of undivided beneficial interests in the Trust (as defined herein) to be issued pursuant to this Declaration;

WHEREAS, the Institutional Trustee, the Administrators and the Sponsor established Home BancShares Statutory Trust I (the "Trust") a statutory trust under the Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated as of March 13, 2003 (the "Original Declaration"), and a Certificate of Trust filed with the Secretary of State of the State of Connecticut on March 13, 2003, for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in certain debentures of the Debenture Issuer (as defined herein);

WHEREAS, as of the date hereof, no interests in the Trust have been issued; and

WHEREAS, the Institutional Trustee, the Administrators and the Sponsor, by this Declaration, amend and restate each and every term and provision of the Original Declaration;

NOW, THEREFORE, it being the intention of the parties hereto to continue the Trust as a statutory trust under the Statutory Trust Act and that this Declaration constitutes the governing instrument of such statutory trust, the Institutional Trustee declares that all assets contributed to the Trust will be held in trust for the benefit of the holders, from time to time, of the securities representing undivided beneficial interests in the assets of the Trust issued hereunder, subject to the provisions of this Declaration. The parties hereto hereby agree as follows:

ARTICLE I

INTERPRETATION AND DEFINITIONS

SECTION 1.1. DEFINITIONS. Unless the context otherwise requires:

(a) Capitalized terms used in this Declaration but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b) a term defined anywhere in this Declaration has the same meaning throughout;

(c) all references to "the Declaration" or "this Declaration" are to this Declaration as modified, supplemented or amended from time to time;

(d) all references in this Declaration to Articles and Sections and Annexes and Exhibits are to Articles and Sections of and Annexes and Exhibits to this Declaration unless otherwise specified; and

(e) a reference to the singular includes the plural and vice versa.

"Additional Interest" has the meaning set forth in the Indenture.

"Administrative Action" has the meaning set forth in paragraph 4(a) of Annex I.

"Administrators" means each of John W. Allison, C. Randall Sims and Randy Mayor, solely in such Person's capacity as Administrator of the Trust created and continued hereunder and not in such Person's individual capacity, or such Administrator's successor in interest in such capacity, or any successor appointed as herein provided.

"Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder.

"Authorized Officer" of a Person means any Person that is authorized to bind such Person.

"Bankruptcy Event" means, with respect to any Person:

"Capital Securities" has the meaning set forth in paragraph l(a) of Annex I.

"Capital Security Certificate" means a definitive Certificate in fully registered form representing a Capital Security substantially in the form of Exhibits A-l and A-2.

"Capital Treatment Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Certificate" means any certificate evidencing Securities.

"Closing Date" has the meaning set forth in the Placement Agreement.

"Code" means the Internal Revenue Code of 1986, as amended from time to time, or any successor legislation.

"Common Securities" has the meaning set forth in paragraph l(b) of Annex I.

"Common Security Certificate" means a definitive Certificate in fully registered form representing a Common Security substantially in the form of Exhibit A-3.

"Company Indemnified Person" means (a) any Administrator; (b)any Affiliate of any Administrator; (c) any officers, directors, shareholders, members, partners, employees, representatives or agents of any Administrator; or (d) any officer, employee or agent of the Trust or its Affiliates.

"Comparable Treasury Issue" has the meaning set forth in paragraph 4(a) of Annex I.

"Comparable Treasury Price" has the meaning set forth in paragraph 4(a) of Annex I.

"Coupon Rate" has the meaning set forth in paragraph 2(a) of Annex I.

"Creditor" has the meaning set forth in Section 3.3.

"Debenture Issuer" means Home BancShares, Inc., an Arkansas corporation, in its capacity as issuer of the Debentures under the Indenture.

"Debenture Trustee" means U.S. Bank National Association, as trustee under the Indenture until a successor is appointed thereunder, and thereafter means such successor trustee.

"Debentures" means the Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2033 to be issued by the Debenture Issuer under the Indenture.

"Defaulted Interest" has the meaning set forth in the Indenture.

"Determination Date" has the meaning set forth in paragraph 4(a) of Annex I.

"Direct Action" has the meaning set forth in Section 2.8(d).

"Distribution" means a distribution payable to Holders of Securities in accordance with Section 5.1.

"Distribution Payment Date" has the meaning set forth in paragraph 2(b) of Annex I.

"Distribution Period" means the period beginning on (and including) the date of original issuance and ending on (but excluding) June 26, 2003 and each successive period beginning on (and including) June 26, 2003, and each succeeding Distribution Payment Date, and ending on (but excluding) the next succeeding Distribution Payment Date.

"Distribution Rate" means, for the period beginning on (and including) the date of original issuance and ending on (but excluding) March 26, 2008, the rate per annum of 6.40%, and for the period beginning on (and including) March 26, 2008 and thereafter, the Coupon Rate.

"Event of Default" means any one of the following events (whatever the reason for such event and whether it shall he 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 an Indenture Event of Default; or

(b) default by the Trust in the payment of any Redemption Price or Special Redemption Price of any Security when it becomes due and payable; or

(c) default in the performance, or breach, in any material respect, of any covenant or warranty of the Institutional Trustee in this Declaration (other than those specified in clause (a) or (b) above) and continuation of such default or breach for a period of 60 days after there has been given, by registered or certified mail to the Institutional Trustee and to the Sponsor by the Holders of at least 25% in aggregate liquidation amount of the outstanding Capital Securities, a written notice specifying such default or breach and requiring it to be remedied and stating that such notice is a "Notice of Default" hereunder; or

(d) the occurrence of a Bankruptcy Event with respect to the Institutional Trustee if a successor Institutional Trustee has not been appointed within 90 days thereof.

"Extension Period" has the meaning set forth in paragraph 2(b) of Annex I.

"Federal Reserve" has the meaning set forth in paragraph 3 of Annex I.

"Fiscal Year" has the meaning set forth in Section 10.1.

"Fixed Rate Period Remaining Life" has the meaning set forth in paragraph 4(a) of Annex I.

"Guarantee" means the guarantee agreement to be dated as of the Closing Date, of the Sponsor in respect of the Capital Securities.

"Holder" means a Person in whose name a Certificate representing a Security is registered, such Person being a beneficial owner within the meaning of the Statutory Trust Act.

"Indemnified Person" means a Company Indemnified Person or a Fiduciary Indemnified Person.

"Indenture Event of Default" means an "Event of Default" as defined in the Indenture.

"Institutional Trustee" means the Trustee meeting the eligibility requirements set forth in Section 4.1.

"Interest" means any interest due on the Debentures including any Additional Interest and Defaulted Interest.

"Investment Company" means an investment company as defined in the Investment Company Act.

"Investment Company Act" means the Investment Company Act of 1940, as amended from time to time, or any successor legislation.

"Investment Company Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Liquidation" has the meaning set forth in paragraph 3 of Annex I.

"Liquidation Distribution" has the meaning set forth in paragraph 3 of Annex I.

"Maturity Date" has the meaning set forth in paragraph 4(a) of Annex I.

(a) a statement that each officer signing the Certificate has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by each officer in rendering the Certificate;

(d) a statement as to whether, in the opinion of each such officer, such condition or covenant has been complied with.

"OTS" has the meaning set forth in paragraph 3 of Annex I.

"Paying Agent" has the meaning specified in Section 6.2.

"Placement Agreement" means the Placement Agreement relating to the offering and sale of Capital Securities in the form of Exhibit C.

"Primary Treasury Dealer" has the meaning set forth in paragraph 4(a) of Annex I.

"Property Account" has the meaning set forth in Section 2.8(c).

"Pro Rata" has the meaning set forth in paragraph 8 of Annex I.

"Quorum" means a majority of the Administrators or, if there are only two Administrators, both of them.

"Quotation Agent" has the meaning set forth in paragraph 4(a) of Annex I.

"Redemption Date" has the meaning set forth in paragraph 4(a) of Annex I.

"Redemption/Distribution Notice" has the meaning set forth in paragraph 4(e) of Annex I.

"Redemption Price" has the meaning set forth in paragraph 4(a) of Annex I.

"Registrar" has the meaning set forth in Section 6.2.

"Reference Treasury Dealer" has the meaning set forth in paragraph 4(a) of Annex I.

"Reference Treasury Dealer Quotations" has the meaning set forth in paragraph 4(a) of Annex I.

"Restricted Securities Legend" has the meaning set forth in Section 8.2(b).

"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.

"Rule 3a-7" means Rule 3a-7 under the Investment Company Act.

"Securities" means the Common Securities and the Capital Securities.

"Securities Act" means the Securities Act of 1933, as amended from time to time, or any successor legislation.

"Special Event" has the meaning set forth in paragraph 4(a) of Annex I.

"Special Redemption Date" has the meaning set forth in paragraph 4(a) of Annex I.

"Special Redemption Price" has the meaning set forth in paragraph 4(a) of Annex I.

"Sponsor" means Home BancShares, Inc., an Arkansas corporation, or any successor entity in a merger, consolidation or amalgamation, in its capacity as sponsor of the Trust.

"Statutory Trust Act" means Chapter 615 of Title 34 of the Connecticut General Statutes, Sections 500, et seq. as may be amended from time to time.

"Successor Entity" has the meaning set forth in Section 2.14(b).

"Successor Institutional Trustee" has the meaning set forth in Section 4.3(a).

"Successor Securities" has the meaning set forth in Section 2.14(b).

"Super Majority" has the meaning set forth in paragraph 5(b) of Annex I.

"Tax Event" has the meaning set forth in paragraph 4(a) of Annex I.

"10% in liquidation amount of the Securities" means Holder(s) of outstanding Securities voting together as a single class or, as the context may require, Holders of outstanding Capital Securities or Holders of outstanding Common Securities voting separately as a class, who are the record owners of 10% or more of the aggregate 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 outstanding Securities of the relevant class.

"3-Month LIBOR" has the meaning set forth in paragraph 4(a) of Annex I.

"Transfer Agent" has the meaning set forth in Section 6.2.

"Treasury Rate" has the meaning set forth in paragraph 4(a) of Annex I.

"U.S. Person" means a United States Person as defined in Section 7701(a)(30) of the Code.

ARTICLE II

ORGANIZATION

SECTION 2.1. NAME. The Trust is named "Home BancShares Statutory Trust I," as such name may be modified from time to time by the Administrators following written notice to the Holders of the Securities. The Trust's activities may be conducted under the name of the Trust or any other name deemed advisable by the Administrators.

SECTION 2.2. OFFICE. The address of the principal office of the Trust is c/o U. S. Bank National Association, 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103. On at least 10 Business Days written notice to the Holders of the Securities, the Administrators may designate another principal office, which shall be in a state of the United States or in the District of Columbia.

SECTION 2.3. PURPOSE. The exclusive purposes and functions of the Trust are
(a) to issue and sell the Securities representing undivided beneficial interests in the assets of the Trust, (b) to invest the gross proceeds from such sale to acquire the Debentures, (c) to facilitate direct investment in the assets of the Trust through issuance of the Common Securities and the Capital Securities and
(d) except as otherwise limited herein, to engage in only those other activities necessary or incidental thereto. The Trust shall not borrow money, issue debt or reinvest proceeds derived from investments, pledge any of its assets, or otherwise undertake (or permit to be undertaken) any activity that would cause the Trust not to be classified for United States federal income tax purposes as a grantor trust.

SECTION 2.4. AUTHORITY. Except as specifically provided in this Declaration, the Institutional Trustee shall have exclusive and complete authority to carry out the purposes of the Trust. An action taken by the Institutional Trustee in accordance with its powers shall constitute the act of and serve to bind the Trust. In dealing with the Institutional Trustee acting on behalf of the Trust, no Person shall be required to inquire into the authority of the Institutional Trustee to bind the Trust. Persons dealing with the Trust are entitled to rely conclusively on the power and authority of the Institutional Trustee as set forth in this Declaration. The Administrators shall have only those ministerial duties set forth herein with respect to accomplishing the purposes of the Trust and are not intended to be trustees or fiduciaries with respect to the Trust or the Holders. The Institutional Trustee shall have the right, but shall not be obligated except as provided in Section 2.6, to perform those duties assigned to the Administrators.

SECTION 2.5. TITLE TO PROPERTY OF THE TRUST. Except as provided in Section 2.8 with respect to the Debentures and the Property Account or as otherwise provided in this Declaration, legal title to all assets of the Trust shall be vested in the Trust. The Holders shall not have legal title to any part of the assets of the Trust, but shall have an undivided beneficial interest in the assets of the Trust.

SECTION 2.6. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE AND THE ADMINISTRATORS.

(a) The Institutional Trustee and the Administrators shall conduct the affairs of the Trust in accordance with the terms of this Declaration. Subject to the limitations set forth in paragraph (b) of this Section, and in accordance with the following provisions (i) and (ii), the Institutional Trustee and the Administrators shall have the authority to enter into all transactions and agreements determined by the Institutional Trustee to be appropriate in exercising the authority, express or implied, otherwise granted to the Institutional Trustee or the Administrators, as the case may be, under this Declaration, and to perform all acts in furtherance thereof, including without limitation, the following:

(i) Each Administrator shall have the power and authority to act on behalf of the Trust with respect to the following matters:

(A) the issuance and sale of the Securities;

(D) the sending of notices (other than notices of default), and other information regarding the Securities and the Debentures to the Holders in accordance with this Declaration;

(E) the consent to the appointment of a Paying Agent, Transfer Agent and Registrar in accordance with this Declaration, which consent shall not be unreasonably withheld or delayed;

(F) execution and delivery of the Securities in accordance with this Declaration;

(G) execution and delivery of closing certificates pursuant to the Placement Agreement and the application for a taxpayer identification number;

(H) unless otherwise determined by the Holders of a Majority in liquidation amount of the Securities or as otherwise required by the Statutory Trust Act, to execute on behalf of the Trust (either acting alone or together with any or all of the Administrators) any documents that the Administrators have the power to execute pursuant to this Declaration;

(K) to duly prepare and file all applicable tax returns and tax information reports that are required to be filed with respect to the Trust on behalf of the Trust.

(ii) As among the Institutional Trustee and the Administrators, the Institutional Trustee shall have the power, duty and authority to act on behalf of the Trust with respect to the following matters:

(A) the establishment of the Property Account;

(B) the receipt of the Debentures;

(C) the collection of interest, principal and any other payments made in respect of the Debentures in the Property Account;

(D) the distribution through the Paying Agent of amounts owed to the Holders in respect of the Securities;

(E) the exercise of all of the rights, powers and privileges of a holder of the Debentures;

(F) the sending of notices of default and other information regarding the Securities and the Debentures to the Holders in accordance with this Declaration;

(G) the distribution of the Trust Property in accordance with the terms of this Declaration;

(J) to take all action that may be necessary for the preservation and the continuation of the Trust's valid existence, rights, franchises and privileges as a statutory trust under the laws of the State of Connecticut and of each other jurisdiction in which such existence is necessary to protect the limited liability of the Holders of the Capital Securities or to enable the Trust to effect the purposes for which the Trust was created.

(b) So long as this Declaration remains in effect, the Trust (or the Institutional Trustee or Administrators acting on behalf of the Trust) shall not undertake any business, activities or transaction except as expressly provided herein or contemplated hereby. In particular, neither the Institutional Trustee nor the Administrators may cause the Trust to (i) acquire any investments or engage in any activities not authorized by this Declaration, (ii) sell, assign, transfer, exchange, mortgage, pledge, set-off or otherwise dispose of any of the Trust Property or interests therein, including to Holders, except as expressly provided herein, (iii) take any action that would reasonably be expected (x) to cause the Trust to fail or cease to qualify as a "grantor trust" for United States federal income tax purposes or (y) to require the trust to register as an Investment Company under the Investment Company Act, (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 Institutional Trustee shall, at the sole cost and expense of the Trust, 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 Holders in their capacity as Holders.

(i) the taking of any action necessary to obtain an exemption from the Securities Act;

(ii) the determination of the States in which to take appropriate action to qualify or register for sale all or part of the Capital Securities and the determination of any and all such acts, other than actions which must be taken by or on behalf of the Trust, and the advice to the Administrators of actions they must take on behalf of the Trust, and the preparation for execution and filing of any documents to be executed and filed by the Trust or on behalf of the Trust, as the Sponsor deems necessary or advisable in order to comply with the applicable laws of any such States in connection with the sale of the Capital Securities;

(iii) the negotiation of the terms of, and the execution and delivery of, the Placement Agreement providing for the sale of the Capital Securities; and

(iv) 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 Administrators and the Holders of a Majority in liquidation amount of the Common Securities are authorized and directed to conduct the affairs of the Trust and to operate the Trust so that the Trust will not (i) be deemed to be an Investment Company required to be registered under the Investment Company Act, and (ii) fail to be classified as a "grantor trust" for United States federal income tax purposes. The Administrators and the Holders of a Majority in liquidation amount of the Common Securities shall not take any action inconsistent with the treatment of the Debentures as indebtedness of the Debenture Issuer for United States federal income tax purposes. In this connection, the Administrators and the Holders of a Majority in liquidation amount of the Common Securities are authorized to take any action, not inconsistent with applicable laws, the Certificate of Trust or this Declaration, as amended from time to time, that each of the Administrators and the Holders of a Majority in liquidation amount of the Common Securities determines in their discretion to be necessary or desirable for such purposes.

(e) All expenses incurred by the Administrators or the Institutional Trustee pursuant to this Section 2.6 shall be reimbursed by the Sponsor, and the Institutional Trustee and the Administrators shall have no obligations with respect to such expenses.

(f) The assets of the Trust shall consist of the Trust Property.

(g) Legal title to all Trust Property shall be vested at all times in the Institutional Trustee (in its capacity as such) and shall be held and administered by the Institutional Trustee and the Administrators for the benefit of the Trust in accordance with this Declaration.

(h) If the Institutional Trustee or any Holder has instituted any proceeding to enforce any right or remedy under this Declaration and such proceeding has been discontinued or abandoned for any reason, or has been determined adversely to the Institutional Trustee or to such Holder, then and in every such case the Sponsor, the Institutional Trustee and the Holders shall, subject to any determination in such proceeding, be restored severally and respectively to their former positions hereunder, and thereafter all rights and remedies of the Institutional Trustee and the Holders shall continue as though no such proceeding had been instituted.

SECTION 2.7. PROHIBITION OF ACTIONS BY THE TRUST AND THE INSTITUTIONAL TRUSTEE.

(ii) acquire any assets other than as expressly provided herein;

(iii) possess Trust Property for other than a Trust purpose;

(iv) make any loans or incur any indebtedness other than loans represented by the Debentures;

(v) possess any power or otherwise act in such a way as to vary the Trust assets or the terms of the Securities in any way whatsoever other than as expressly provided herein;

(vi) issue any securities or other evidences of beneficial ownership of, or beneficial interest in, the Trust other than the Securities;

(vii) carry on any "trade or business" as that phrase is used in the Code; or

(viii) other than as provided in this Declaration (including Annex I), (A) direct the time, method and place of exercising any trust or power conferred upon the Debenture Trustee with respect to the Debentures, (B) waive any past default that is waivable under the Indenture, (C) exercise any right to rescind or annul any declaration that the principal of all the Debentures shall be due and payable, or (D) consent to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required unless the Trust shall have received a written opinion of counsel to the effect that such modification will not cause the Trust to cease to be classified as a "grantor trust" for United States federal income tax purposes.

SECTION 2.8. POWERS AND DUTIES OF THE INSTITUTIONAL TRUSTEE.

(a) The legal title to the Debentures shall be owned by and held of record in the name of the Institutional Trustee in trust for the benefit of the Trust and the Holders of the Securities. The right, title and interest of the Institutional Trustee to the Debentures shall vest automatically in each Person who may hereafter be appointed as Institutional Trustee in accordance with
Section 4.3. Such vesting and cessation of title shall be effective whether or not conveyancing documents with regard to the Debentures have been executed and delivered.

(b) The Institutional Trustee shall not transfer its right, title and interest in the Debentures to the Administrators.

date such interest or principal is otherwise payable (or in the case of redemption, on the redemption date), then a Holder of the Capital Securities may directly institute a proceeding for enforcement of payment to such Holder of the principal of or interest on the Debentures having a principal amount equal to the aggregate liquidation amount of the Capital Securities of such Holder (a "Direct Action") on or after the respective due date specified in the Debentures. In connection with such Direct Action, the rights of the Holders of the Common Securities will be subrogated to the rights of such Holder of the Capital Securities to the extent of any payment made by the Debenture Issuer to such Holder of the Capital Securities in such Direct Action; provided, however, that no Holder of the Common Securities may exercise such right of subrogation so long as an Event of Default with respect to the Capital Securities has occurred and is continuing.

(e) The Institutional Trustee shall continue to serve as a Trustee until either;

(i) the Trust has been completely liquidated and the proceeds of the liquidation distributed to the Holders of the Securities pursuant to the terms of the Securities and this Declaration; or

(ii) a Successor Institutional Trustee has been appointed and has accepted that appointment in accordance with Section 4.3.

SECTION 2.9. CERTAIN DUTIES AND RESPONSIBILITIES OF THE INSTITUTIONAL TRUSTEE AND ADMINISTRATORS.

misconduct. To the extent that, at law or in equity, the Institutional Trustee or an Administrator has duties and liabilities relating to the Trust or to the Holders, the Institutional Trustee or such Administrator shall not be liable to the Trust or to any Holder for the Institutional Trustee's or such Administrator's good faith reliance on the provisions of this Declaration. The provisions of this Declaration, to the extent that they restrict the duties and liabilities of the Administrators or the Institutional Trustee otherwise existing at law or in equity, are agreed by the Sponsor and the Holders to replace such other duties and liabilities of the Administrators or the Institutional Trustee.

(c) All payments made by the Institutional Trustee or a Paying Agent in respect of the 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 Institutional Trustee or a Paying Agent to make payments in accordance with the terms hereof. Each Holder, by its acceptance of a Security, agrees that it will look solely to the revenue and proceeds from the Trust Property to the extent legally available for distribution to it as herein provided and that the Institutional Trustee and the Administrators are not personally liable to it for any amount distributable in respect of any Security or for any other liability in respect of any Security. This Section 2.9(c) does not limit the liability of the Institutional Trustee expressly set forth elsewhere in this Declaration.

SECTION 2.10. CERTAIN RIGHTS OF INSTITUTIONAL TRUSTEE. Subject to the provisions of Section 2,9:

(c) any direction or act of the Sponsor or the Administrators contemplated by this Declaration shall be sufficiently evidenced by an Officers' Certificate;

(g) the Institutional Trustee shall be under no obligation to exercise any of the rights or powers vested in it by this Declaration at the request or direction of any of the Holders pursuant to this Declaration, unless such Holders shall have offered to the Institutional Trustee security or indemnity reasonably satisfactory to it against the costs, expenses and liabilities which might be incurred by it in compliance with such request or direction; provided, that nothing contained in this Section 2.10(g) shall be taken to relieve the Institutional Trustee, subject to Section 2.9(b), upon the occurrence of an Event of Default (that has not been cured or waived pursuant to Section 6.7), to exercise such of the rights and powers vested in it by this Declaration, and use the same degree of care and skill in their exercise, as a prudent person would exercise or use under the circumstances in the conduct of his or her own affairs;

document, unless requested in writing to do so by one or more Holders, but the Institutional Trustee may make such further inquiry or investigation into such facts or matters as it may see fit;

SECTION 2.11. EXECUTION OF DOCUMENTS. Unless otherwise determined in writing by the Institutional Trustee, and except as otherwise required by the Statutory Trust Act, the Institutional Trustee, or any one or more of the Administrators, as the case may be, is authorized to execute on behalf of the Trust any documents that the Institutional Trustee or the Administrators, as the case may be, have the power and authority to execute pursuant to Section 2.6.

SECTION 2.12. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES. The recitals contained in this Declaration and the Securities shall be taken as the statements of the Sponsor, and the Institutional Trustee does not assume any responsibility for their correctness. The Institutional Trustee makes no representations as to the value or condition of the property of the Trust or any part thereof. The Institutional Trustee makes no representations as to the validity or sufficiency of this Declaration, the Debentures or the Securities.

SECTION 2.13. DURATION OF TRUST. The Trust, unless earlier dissolved pursuant to the provisions of Article VII hereof, shall be in existence for 35 years from the Closing Date.

SECTION 2.14. MERGERS.

(a) The Trust may not consolidate, amalgamate, merge with or into, or be replaced by, or convey, transfer or lease its properties and assets substantially as an entirety to any corporation or other body, except as described in Section 2.14(b) and (c) and except in connection with the liquidation of the Trust and the distribution of the Debentures to Holders of Securities pursuant to Section 7.1(a)(iv) of the Declaration or Section 4 of Annex I.

(i) if the Trust is not the surviving entity, such successor entity (the "Successor Entity") either:

(A) expressly assumes all of the obligations of the Trust under the Securities; or

(ii) the Sponsor expressly appoints a trustee of the Successor Entity that possesses substantially the same powers and duties as the Institutional Trustee as the Holder of the Debentures;

(iv) the Institutional Trustee receives written confirmation from Moody's Investor Services, Inc. and any other nationally recognized statistical rating organization that rates securities issued by the initial purchaser of the Capital Securities that it will not reduce or withdraw the rating of any such securities because of such merger, conversion, consolidation, amalgamation or replacement;

(v) such Successor Entity has a purpose substantially identical to that of the Trust;

(B) following such merger, consolidation, amalgamation or replacement, neither the Trust nor the Successor Entity will be required to register as an Investment Company; and

(C) following such merger, consolidation, amalgamation or replacement, the Trust (or the Successor Entity) will continue to be classified as a "grantor trust" for United States federal income tax purposes;

(vii) the Sponsor guarantees the obligations of such Successor Entity under the Successor Securities at least to the extent provided by the Guarantee;

(viii) the Sponsor owns 100% of the common securities of any Successor Entity; and

ARTICLE III

SPONSOR

SECTION 3.1. SPONSOR'S PURCHASE OF COMMON SECURITIES. On the Closing Date, the Sponsor will purchase all of the Common Securities issued by the Trust in an amount at least equal to 3% of the capital of the Trust, at the same time as the Capital Securities are sold.

SECTION 3.2. RESPONSIBILITIES OF THE SPONSOR. In connection with the issue and sale of the Capital Securities, the Sponsor shall have the exclusive right and responsibility to engage in, or direct the Administrators to engage in, the following activities:

(b) to negotiate the terms of and/or execute on behalf of the Trust, the Placement Agreement and other related agreements providing for the sale of the Capital Securities.

SECTION 3.3. EXPENSES. In connection with the offering, sale and issuance of the Debentures to the Trust and in connection with the sale of the Securities by the Trust, the Sponsor, in its capacity as Debenture Issuer, shall:

(a) pay all reasonable costs and expenses owing to the Debenture Trustee pursuant to Section 6.6 of the Indenture;

(b) be responsible for and shall pay all debts and obligations (other than with respect to the Securities) and all costs and expenses of the Trust, the offering, sale and issuance of the Securities (including fees to the placement agents in connection therewith), the costs and expenses (including reasonable counsel fees and expenses) of the Institutional Trustee and the Administrators, the costs and expenses relating to the operation of the Trust, including, without limitation, costs and expenses of accountants, attorneys, statistical or bookkeeping services, expenses for, printing and engraving and computing or accounting equipment, Paying Agents, Registrars, Transfer Agents, duplicating, travel and telephone and other telecommunications expenses and costs and expenses incurred in connection with the acquisition, financing, and disposition of Trust assets and the enforcement by the Institutional Trustee of the rights of the Holders (for purposes of clarification, this Section 3.3(b) does not contemplate the payment by the Sponsor of acceptance or annual administration fees owing to the Institutional Trustee pursuant to the services to be provided by the Institutional Trustee under this Declaration or the fees and expenses of the Institutional Trustee's counsel in connection with the closing of the transactions contemplated by this Declaration); and

(c) pay any and all taxes (other than United States withholding taxes attributable to the Trust or its assets) and all liabilities, costs and expenses with respect to such taxes of the Trust.

SECTION 3.4. RIGHT TO PROCEED. The Sponsor acknowledges the rights of Holders to institute a Direct Action as set forth in Section 2.8(d) hereto.

ARTICLE IV

INSTITUTIONAL TRUSTEE AND ADMINISTRATORS

SECTION 4.1. INSTITUTIONAL TRUSTEE; ELIGIBILITY.

(a) There shall at all times be one Institutional Trustee which shall:

(i) not be an Affiliate of the Sponsor;

(ii) not offer or provide credit or credit enhancement to the Trust; and

examination by Federal, state, or District of Columbia authority. If such corporation 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 4.1(a)(iii), the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent report of condition so published.

(b) If at any time the Institutional Trustee shall cease to be eligible to so act under Section 4.1(a), the Institutional Trustee shall immediately resign in the manner and with the effect set forth in Section 4.3(a).

(c) If the Institutional Trustee has or shall acquire any "conflicting interest" within the meaning of Section 310(b) of the Trust Indenture Act of 1939, as amended, the Institutional Trustee shall either eliminate such interest or resign, to the extent and in the manner provided by, and subject to this Declaration.

(d) The initial Institutional Trustee shall be U.S. Bank National Association.

SECTION 4.2. ADMINISTRATORS. Each Administrator shall be a U.S. Person, 21 years of age or older and authorized to bind the Sponsor. The initial Administrators shall be John W. Allison, C. Randall Sims and Randy Mayor. There shall at all times be at least one Administrator. Except where a requirement for action by a specific number of Administrators is expressly set forth in this Declaration and except with respect to any action the taking of which is the subject of a meeting of the Administrators, any action required or permitted to be taken by the Administrators may be taken by, and any power of the Administrators may be exercised by, or with the consent of, any one such Administrator.

SECTION 4.3. APPOINTMENT, Removal and Resignation of Institutional Trustee and Administrators.

(a) Notwithstanding anything to the contrary in this Declaration, no resignation or removal of the Institutional Trustee and no appointment of a Successor Institutional Trustee pursuant to this Article shall become effective until the acceptance of appointment by the Successor Institutional Trustee in accordance with the applicable requirements of this Section 4.3.

Subject to the immediately preceding paragraph, the Institutional Trustee may resign at any time by giving written notice thereof to the Holders of the Securities and by appointing a Successor Institutional Trustee. Upon the resignation of the Institutional Trustee, the Institutional Trustee shall appoint a successor by requesting from at least three Persons meeting the eligibility requirements, its expenses and charges to serve as the successor Institutional Trustee on a form provided by the Administrators, and selecting the Person who agrees to the lowest expense and charges (the "Successor Institutional Trustee"*. If the instrument of acceptance by the Successor Institutional Trustee required by this Section 4.3 shall not have been delivered to the Institutional Trustee within 60 days after the giving of such notice of resignation or delivery of the instrument of removal, the Institutional Trustee may petition, at the expense of the Trust, any Federal, state or District of Columbia court of competent jurisdiction for the appointment of a Successor Institutional Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Institutional Trustee. The Institutional Trustee shall have no liability for the selection of such successor pursuant to this Section 4.3.

promptly appoint a Successor Institutional Trustee, and such Successor Institutional Trustee shall comply with the applicable requirements of this
Section 4.3. If no Successor Institutional Trustee shall have been so appointed by the Holders of a Majority in liquidation amount of the Capital Securities and accepted appointment in the manner required by this Section 4.3, within 30 days after delivery of an instrument of removal, any Holder who has been a Holder of the Securities for at least 6 months may, on behalf of himself and all others similarly situated, petition any Federal, state or District of Columbia court of competent jurisdiction for the appointment of the Successor Institutional Trustee. Such court may thereupon, after prescribing such notice, if any, as it may deem proper, appoint a Successor Institutional Trustee.

The Institutional Trustee shall give notice of its resignation and removal and each appointment of a Successor Institutional Trustee to all Holders in the manner provided in Section 13.1(d) and shall give notice to the Sponsor. Each notice shall include the name of the Successor Institutional Trustee and the address of its Corporate Trust Office.

(b) In case of the appointment hereunder of A Successor Institutional Trustee, the retiring Institutional Trustee and the Successor Institutional Trustee shall execute and deliver an amendment hereto wherein the Successor Institutional Trustee shall accept such appointment and which (i) shall contain such provisions as shall be necessary or desirable to transfer and confirm to, and to vest in, the Successor Institutional Trustee all the rights, powers, trusts and duties of the retiring Institutional Trustee with respect to the Securities and the Trust and (ii) shall add to or change any of the provisions of this Declaration as shall be necessary to provide for or facilitate the administration of the Trust by more than one Institutional Trustee, it being understood that nothing herein or in such amendment shall constitute such Institutional Trustees co-trustees and upon the execution and delivery of such amendment the resignation or removal of the retiring Institutional Trustee shall become effective to the extent provided therein and each Successor Institutional Trustee, without any further act, deed or conveyance, shall become vested with all the rights, powers, trusts and duties of the retiring Institutional Trustee; but, on request of the Trust or any Successor Institutional Trustee such retiring Institutional Trustee shall duly assign, transfer and deliver to such Successor Institutional Trustee all Trust Property, all proceeds thereof and money held by such retiring Institutional Trustee hereunder with respect to the Securities and the Trust.

SECTION 4.4. INSTITUTIONAL TRUSTEE VACANCIES. If the Institutional Trustee ceases to hold office for any reason a vacancy shall occur. A resolution certifying the existence of such vacancy by the Institutional Trustee shall be conclusive evidence of the existence of such vacancy. The vacancy shall be filled with a trustee appointed in accordance with Section 4.3.

SECTION 4.5. EFFECT OF VACANCIES. The death, resignation, retirement, removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to perform the duties of the Institutional Trustee shall not operate to dissolve, terminate or annul the Trust or terminate this Declaration.

Trustee with the Administrators or meetings of the Administrators shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 48 hours before such meeting. Notice of any telephonic meetings of the Institutional Trustee with the Administrators or meetings of the Administrators or any committee thereof shall be hand delivered or otherwise delivered in writing (including by facsimile, with a hard copy by overnight courier) not less than 24 hours before a meeting. Notices shall contain a brief statement of the time, place and anticipated purposes of the meeting. The presence (whether in person or by telephone) of the Institutional Trustee or an Administrator, as the case may be, at a meeting shall constitute a waiver of notice of such meeting except where the Institutional Trustee or an Administrator, as the case may be, attends a meeting for the express purpose of objecting to the transaction of any activity on the grounds that the meeting has not been lawfully called or convened. Unless provided otherwise in this Declaration, any action of the Institutional Trustee or the Administrators, as the case may be, may be taken at a meeting by vote of the Institutional Trustee or a majority vote of the Administrators present (whether in person or by telephone) and eligible to vote with respect to such matter, provided that a Quorum is present, or without a meeting by the unanimous written consent of the Institutional Trustee or the Administrators. Meetings of the Institutional Trustee and the Administrators together shall be held from time to time upon the call of the Institutional Trustee or an Administrator.

SECTION 4.7. DELEGATION OF POWER.

SECTION 4.8. CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS. Any Person into which the Institutional 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 Institutional Trustee shall be a party, or any Person succeeding to all or substantially all the corporate trust business of the Institutional Trustee shall be the successor of the Institutional 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.

ARTICLE V

DISTRIBUTIONS

SECTION 5.1. DISTRIBUTIONS. Holders shall receive Distributions in accordance with the applicable terms of the relevant Holder's Securities. Distributions shall be made on the Capital Securities and the Common Securities in accordance with the preferences set forth in their respective terms. If and to the extent that the Debenture Issuer makes a payment of Interest or any principal on the Debentures held by the Institutional Trustee, the Institutional Trustee shall and is directed, to the extent funds are available for that purpose, to make a distribution (a "Distribution") of such amounts to Holders.

ARTICLE VI

ISSUANCE OF SECURITIES

SECTION 6.1. GENERAL PROVISIONS REGARDING SECURITIES.

(a) The Administrators shall, on behalf of the Trust, issue one series of capital securities substantially in the form of Exhibits A-l and A-2 representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I and one series of common securities representing undivided beneficial interests in the assets of the Trust having such terms as are set forth in Annex I. The Trust shall issue no securities or other interests in the assets of the Trust other than the Capital Securities and the Common Securities. The Capital Securities rank pari passu to, and payment thereon shall be made Pro Rata with, the Common Securities except that, where an Event of Default has occurred and is continuing, the rights of Holders of the Common Securities to payment in respect of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights to payment of the Holders of the Capital Securities as set forth in Annex I.

(b) The Certificates shall be signed on behalf of the Trust by one or more Administrators. Such signature shall be the facsimile or manual signature of any Administrator. In case any Administrator of the Trust who shall have signed any of the Securities shall cease to be such Administrator before the Certificates so signed shall be delivered by the Trust, such Certificates nevertheless may be delivered as though the person who signed such Certificates had not ceased to be such Administrator, and any Certificate may be signed on behalf of the Trust by such persons who, at the actual date of execution of such Security, shall be an Administrator of the Trust, although at the date of the execution and delivery of the Declaration any such person was not such an Administrator. A Capital Security shall not be valid until authenticated by the facsimile or manual signature of an Authorized Officer of the Institutional Trustee. Such signature shall be conclusive evidence that the Capital Security has been authenticated under this Declaration. Upon written order of the Trust signed by one Administrator, the Institutional Trustee shall authenticate the Capital Securities for original issue. The Institutional Trustee may appoint an authenticating agent that is a U.S. Person acceptable to the Trust to authenticate the Capital Securities. A Common Security need not be so authenticated.

(c) The consideration received by the Trust for the issuance of the Securities shall constitute a contribution to the capital of the Trust and shall not constitute a loan to the Trust.

(d) Upon issuance of the Securities as provided in this Declaration, the Securities so issued shall be deemed to be validly issued, fully paid and, except as provided in Section 9.1(b) with respect to the Common Securities, non-assessable.

co-Registrar and the term "Transfer Agent" includes any additional transfer agent. The Administrators may change any Paying Agent, Transfer Agent or Registrar at any time without prior notice to any Holder. The Administrators shall notify the Institutional Trustee of the name and address of any Paying Agent, Transfer Agent and Registrar not a party to this Declaration. The Administrators hereby initially appoint the Institutional Trustee to act as Paying Agent, Transfer Agent and Registrar for the Capital Securities and the Common Securities. The Institutional Trustee or any of its Affiliates in the United States may act as Paying Agent, Transfer Agent or Registrar.

SECTION 6.3. FORM AND DATING. The Capital Securities and the Institutional Trustee's certificate of authentication thereon shall be substantially in the form of Exhibits A-1 and A-2, and the Common Securities shall be substantially in the form of Exhibit A-3, each of which is hereby incorporated in and expressly made a part of this Declaration. Certificates may be typed, printed, lithographed or engraved or may be produced in any other manner as is reasonably acceptable to the Administrators, as conclusively evidenced by their execution thereof. The Securities may have letters, numbers, notations or other marks of identification or designation and such legends or endorsements required by law, stock exchange rule, agreements to which the Trust is subject if any, or usage (provided that any such notation, legend or endorsement is in a form acceptable to the Sponsor). The Trust at the direction of the Sponsor shall furnish any such legend not contained in Exhibits A-1 and A-2 to the Institutional Trustee in writing. Each Capital Security shall be dated on or before the date of its authentication. The terms and provisions of the Securities set forth in Annex I and the forms of Securities set forth in Exhibits A-1, A-2 and A-3 are part of the terms of this Declaration and to the extent applicable, the Institutional Trustee, the Administrators and the Sponsor, by their execution and delivery of this Declaration, expressly agree to such terms and provisions and to be bound thereby. Capital Securities will be issued only in blocks having a stated liquidation amount of not less than $100,000.00 and any multiple of $1,000.00 in excess thereof.

The Capital Securities are being offered and sold by the Trust pursuant to the Placement Agreement in definitive, registered form without coupons and with the Restricted Securities Legend.

SECTION 6.4. MUTILATED, DESTROYED, LOST OR STOLEN CERTIFICATES.

If:

(a) any mutilated Certificates should be surrendered to the Registrar, or if the Registrar shall receive evidence to its satisfaction of the destruction, loss or theft of any Certificate; and

(b) there shall be delivered to the Registrar, the Administrators and the Institutional Trustee such security or indemnity as may be required by them to keep each of them harmless;

Securities but may have variations that the Administrators consider appropriate for temporary Securities. Without unreasonable delay, the Administrators shall prepare and, in the case of the Capital Securities, the Institutional Trustee shall authenticate, definitive Securities in exchange for temporary Securities.

SECTION 6.6. CANCELLATION. The Administrators at any time may deliver Securities to the Institutional Trustee for cancellation. The Registrar shall forward to the Institutional Trustee any Securities surrendered to it for registration of transfer, redemption or payment. The Institutional Trustee shall promptly cancel all Securities surrendered for registration of transfer, payment, replacement or cancellation and shall dispose of such canceled Securities as the Administrators direct. The Administrators may not issue new Securities to replace Securities that have been paid or that have been delivered to the Institutional Trustee for cancellation.

SECTION 6.7. RIGHTS OF HOLDERS; WAIVERS OF PAST DEFAULTS.

At any time after a declaration of acceleration with respect to the Debentures has been made and before a judgment or decree for payment of the money due has been obtained by the Debenture Trustee as provided in the Indenture, if the Institutional Trustee, subject to the provisions hereof, fails to annul any such declaration and waive such default, the Holders of a Majority in liquidation amount of the Capital Securities, by written notice to the Institutional Trustee, the Sponsor and the Debenture Trustee, may rescind and annul such declaration and its consequences if:

(i) the Debenture Issuer has paid or deposited with the Debenture Trustee a sum sufficient to pay

(A) all overdue installments of interest on all of the Debentures,

(B) any accrued Additional Interest on all of the Debentures,

The Holders of at least a Majority in liquidation amount of the Capital Securities may, on behalf of the Holders of all the Capital Securities, waive any past default under the Indenture or any Indenture Event of Default, except a default or Indenture Event of Default in the payment of principal or interest on the Debentures (unless such default or Indenture Event of Default has been cured and a sum sufficient to pay all matured installments of interest and principal due otherwise than by acceleration has been deposited with the Debenture Trustee) or a default under the Indenture or an Indenture Event of Default in respect of a covenant or provision that under the Indenture cannot be modified or amended without the consent of the holder of each outstanding Debenture. No such rescission shall affect any subsequent default or impair any right consequent thereon.

Upon receipt by the Institutional Trustee of written notice declaring such an acceleration, or rescission and annulment thereof, by Holders of any part of the Capital Securities, a record date shall be established for determining Holders of outstanding Capital Securities entitled to join in such notice, which record date shall be at the close of business on the day the Institutional Trustee receives such notice. The Holders on such record date, or their duly designated proxies, and only such Persons, shall be entitled to join in such notice, whether or not such Holders remain Holders after such record date; provided, that unless such declaration of acceleration, or rescission and annulment, as the case may be, shall have become effective by virtue of the requisite percentage having joined in such notice prior to the day that is 90 days after such record date, such notice of declaration of acceleration, or rescission and annulment, as the case may be, shall automatically and without further action by any Holder be canceled and of no further effect. Nothing in this paragraph shall prevent a Holder, or a proxy of a Holder, from giving, after expiration of such 90-day period, a new written notice of declaration of acceleration, or rescission and annulment thereof, as the case may be, that is identical to a written notice that has been canceled pursuant to the proviso to the preceding sentence, in which event a new record date shall be established pursuant to the provisions of this Section 6.7.

(c) Except as otherwise provided in paragraphs (a) and (b) of this Section 6.7, the Holders of at least a Majority in liquidation amount of the Capital Securities may, on behalf of the Holders of all the Capital Securities, waive any past default or Event of Default and its consequences. Upon such waiver, any such default or Event of Default shall cease to exist, and any default or Event of Default arising therefrom shall be deemed to have been cured, for every purpose of this Declaration, but no such waiver shall extend to any subsequent or other default or Event of Default or impair any right consequent thereon.

ARTICLE VII

DISSOLUTION AND TERMINATION OF TRUST

SECTION 7.1. DISSOLUTION AND TERMINATION OF TRUST.

(a) The Trust shall dissolve on the first to occur of:

(i) unless earlier dissolved, on March 26, 2038, the expiration of the term of the Trust;

(ii) upon a Bankruptcy Event with respect to the Sponsor, the Trust or the Debenture Issuer;

(iii) upon the filing of a certificate of dissolution or its equivalent with respect to the Sponsor (other than in connection with a merger, consolidation or similar transaction not prohibited by the Indenture, this Declaration or the Guarantee, as the case may be) or upon the revocation of the charter of the Sponsor and the expiration of 90 days after the date of revocation without a reinstatement thereof;

(iv) upon the distribution of the Debentures to the Holders of the Securities, upon exercise of the right of the Holder of all of the outstanding Common Securities to dissolve the Trust as provided in Annex I hereto;

(v) upon the entry of a decree of judicial dissolution of the Holder of the Common Securities, the Sponsor, the Trust or the Debenture Issuer;

(vi) when all of the Securities shall have been called for redemption and the amounts necessary for redemption thereof shall have been paid to the Holders in accordance with the terms of the Securities; or

(vii) before the issuance of any Securities, with the consent of the Institutional Trustee and the Sponsor.

ARTICLE VIII

TRANSFER OF INTERESTS

SECTION 8.1. GENERAL.

including but not limited to the receipt of Distributions on such Capital Securities, and such transferee shall be deemed to have no interest whatsoever in such Capital Securities.

SECTION 8.2. TRANSFER PROCEDURES AND RESTRICTIONS.

(a) The Capital Securities shall bear the Restricted Securities Legend, which shall not be removed unless there is delivered to the Trust such satisfactory evidence, which may include an opinion of counsel satisfactory to the Trustee, as may be reasonably required by the Trust, that neither the legend nor the restrictions on transfer set forth therein are required to ensure that transfers thereof comply with the provisions of the Securities Act. Upon provision of such satisfactory evidence, the Institutional Trustee, at the written direction of the Trust, shall authenticate and deliver Capital Securities that do not bear the legend.

OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATION S UNDER THE SECURITIES ACT, (E)TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF ALSO AGREES, REPRESENTS AND WARRANTS THAT IT IS NOT AN EMPLOYEE BENEFIT, INDIVIDUAL RETIREMENT ACCOUNT OR OTHER PLAN OR ARRANGEMENT SUBJECT TO TITLE I OF THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED ("ERISA"), OR
SECTION 4975 OF THE INTERNAL REVENUE CODE OF 1986, AS AMENDED (THE "CODE") (EACH A "PLAN"), OR AN ENTITY WHOSE UNDERLYING ASSETS INCLUDE "PLAN ASSETS" BY REASON OF ANY PLAN'S INVESTMENT IN THE ENTITY, AND NO PERSON INVESTING "PLAN ASSETS" OF ANY PLAN MAY ACQUIRE OR HOLD THE SECURITIES OR ANY INTEREST THEREIN, UNLESS SUCH PURCHASER OR HOLDER IS ELIGIBLE FOR EXEMPTIVE RELIEF AVAILABLE UNDER U.S. DEPARTMENT OF LABOR PROHIBITED TRANSACTION CLASS EXEMPTION 96-23, 95-60, 91-38, 90-1 OR 84-14 OR ANOTHER APPLICABLE EXEMPTION OR ITS PURCHASE AND HOLDING OF THIS SECURITY IS NOT PROHIBITED BY
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE WITH RESPECT TO SUCH PURCHASE OR HOLDING. ANY PURCHASER OR HOLDER OF THE SECURITIES OR ANY INTEREST THEREIN WILL BE DEEMED TO HAVE REPRESENTED BY ITS PURCHASE AND HOLDING THEREOF THAT EITHER (i) IT IS NOT AN EMPLOYEE BENEFIT PLAN WITHIN THE MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR
(ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER
SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS
HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN

$100,000.00 (100 SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE
FOREGOING RESTRICTIONS.

(c) To permit registrations of transfers and exchanges, the Trust shall execute and the Institutional Trustee shall authenticate Capital Securities at the Registrar's request.

SECTION 8.3. DEEMED SECURITY HOLDERS. The Trust, the Administrators, the Institutional Trustee, the Paying Agent, the Transfer Agent or the Registrar may treat the Person in whose name any Certificate shall be registered on the books and records of the Trust as the sole holder of such Certificate and of the Securities represented by such Certificate for purposes of receiving Distributions and for all other purposes whatsoever and, accordingly, shall not be bound to recognize any equitable or other claim to or interest in such Certificate or in the Securities represented by such Certificate on the part of any Person, whether or not the Trust, the Administrators, the Institutional Trustee, the Paying Agent, the Transfer Agent or the Registrar shall have actual or other notice thereof.

ARTICLE IX

LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, INSTITUTIONAL TRUSTEE OR OTHERS

SECTION 9.1. LIABILITY.

(a) Except as expressly set forth in this Declaration, the Guarantee and the terms of the Securities, the Sponsor shall not be:

(i) personally liable for the return of any portion of the capital contributions (or any return thereon) of the Holders of the Securities which shall be made solely from assets of the Trust; or

(ii) required to pay to the Trust or to any Holder of the Securities any deficit upon dissolution of the Trust or otherwise.

SECTION 9.2. EXCULPATION.

SECTION 9.3. FIDUCIARY DUTY.

(b) Whenever in this Declaration an Indemnified Person is permitted or required to make a decision:

SECTION 9.4. INDEMNIFICATION.

unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the Indemnified Person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the Trust, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his conduct was unlawful.

(b) The Sponsor shall indemnify, to the full extent permitted by law, any Indemnified Person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the Trust to procure a judgment in its favor arising out of or in connection with the acceptance or administration of this Declaration by reason of the fact that he is or was an Indemnified Person against expenses (including reasonable attorneys' fees and expenses) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted in good faith and in a manner he reasonably believed to be in or not opposed to the best interests of the Trust; provided, however, that no such indemnification shall be made in respect of any claim, issue or matter as to which such Indemnified Person shall have been adjudged to be liable to the Trust unless and only to the extent that the court in which such action or suit was brought shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably entitled to indemnity for such expenses which such court shall deem proper.

(e) To the fullest extent permitted by law, expenses (including reasonable attorneys' fees and expenses) incurred by an Indemnified Person in defending a civil, criminal, administrative or investigative action, suit or proceeding referred to in paragraphs (a) and (b) of this Section 9.4 shall be paid by the Sponsor in advance of the final disposition of such action, suit or proceeding upon receipt of an undertaking by or on behalf of such Indemnified Person to repay such amount if it shall ultimately be determined that he is not entitled to be indemnified by the Sponsor as authorized in this Section 9.4. Notwithstanding the foregoing, no advance shall be made by the Sponsor if a determination is reasonably and promptly made (i)by the Administrators by a majority vote of a Quorum of disinterested Administrators, (ii) if such a Quorum is not obtainable, or, even if obtainable, if a quorum of disinterested Administrators so directs, by independent legal counsel in a written opinion or
(iii) by the Common Security Holder of the Trust, that, based upon the facts known to the Administrators, counsel or the Common Security Holder at the time such determination is made, such Indemnified Person acted in bad faith or in a manner that such Indemnified Person did not believe to be in the best interests of the Trust, or, with respect to any criminal proceeding, that such Indemnified Person believed or had reasonable cause to believe his conduct was unlawful. In no event shall any advance be made in instances where the Administrators, independent legal counsel or the Common Security Holder reasonably determine that

such Indemnified Person deliberately breached his duty to the Trust or its Common or Capital Security Holders.

(f) The Institutional Trustee, at the sole cost and expense of the Sponsor, retains the right to representation by counsel of its own choosing in any action, suit or any other proceeding for which it is indemnified under paragraphs (a) and (b) of this Section 9.4, without affecting its right to indemnification hereunder or waiving any rights afforded to it under this Declaration or applicable law.

(g) The indemnification and advancement of expenses provided by, or granted pursuant to, the other paragraphs of this Section 9.4 shall not be deemed exclusive of any other rights to which those seeking indemnification and advancement of expenses may be entitled under any agreement, vote of stockholders or disinterested directors of the Sponsor or Capital Security Holders of the Trust or otherwise, both as to action in his official capacity and as to action in another capacity while holding such office. All rights to indemnification under this Section 9.4 shall be deemed to be provided by a contract between the Sponsor and each Indemnified Person who serves in such capacity at any time while this Section 9.4 is in effect. Any repeal or modification of this Section 9.4 shall not affect any rights or obligations then existing.

SECTION 9.6. COMPENSATION: FEE. The Sponsor agrees:

(a) to pay to the Institutional Trustee from time to time such compensation for all services rendered by it hereunder as the parties shall agree from time to time (which compensation shall not be limited by any provision of law in regard to the compensation of a trustee of an express trust); and

(b) except as otherwise expressly provided herein, to reimburse the Institutional Trustee upon request for all reasonable expenses, disbursements and advances incurred or made by the Institutional Trustee in accordance with any provision of this Declaration (including the reasonable compensation and the expenses and disbursements of their respective agents and counsel), except any such expense, disbursement or advance as may be attributable to its negligence, bad faith or willful misconduct.

The provisions of this Section 9.6 shall survive the dissolution of the Trust and the termination of this Declaration and the removal or resignation of the Institutional Trustee.

No Institutional Trustee may claim any lien or charge on any property of the Trust as a result of any amount due pursuant to this Section 9.6.

ARTICLE X

ACCOUNTING

SECTION 10.1. FISCAL YEAR. The fiscal year ("Fiscal Year") of the Trust shall be the calendar year, or such other year as is required by the Code.

SECTION 10.2. CERTAIN ACCOUNTING MATTERS.

(a) At all times during the existence of the Trust, the Administrators shall keep, or cause to be kept at the principal office of the Trust in the United States, as defined for purposes of Treasury Regulations section 301.7701-7, full books of account, records and supporting documents, which shall reflect in reasonable detail each transaction of the Trust. The books of account shall be maintained, at the Sponsor's expense, in accordance with generally accepted accounting principles, consistently applied. The books of account and the records of the Trust shall be examined by and reported upon (either separately or as part of the Sponsor's regularly prepared consolidated financial report) as of the end of each Fiscal Year of the Trust by a firm of independent certified public accountants selected by the Administrators.

(b) The Administrators shall cause to be duly prepared and delivered to each of the Holders of Securities Form 1099 or such other annual United States federal income tax information statement required by the Code, containing such information with regard to the Securities held by each Holder as is required by the Code and the Treasury Regulations. Notwithstanding any right under the Code to deliver any such statement at a later date, the Administrators shall endeavor to deliver all such statements within 3 0 days after the end of each Fiscal Year of the Trust.

(c) The Administrators, at the Sponsor's expense, shall cause to be duly prepared at the principal office of the Sponsor in the United States, as 'United States' is defined in Section 7701(a)(9) of the Code (or at the principal office of the Trust if the Sponsor has no such principal office in the United States), and filed an annual United States federal income tax return on a Form 1041 or such other form required by United States federal income tax law, and any other annual income tax returns required to be filed by the Administrators on behalf of the Trust with any state or local taxing authority.

SECTION 10.3. BANKING. The Trust shall maintain in the United States, as defined for purposes of Treasury Regulations section 301.7701-7, one or more bank accounts in the name and for the sole benefit of the Trust; provided, however, that all payments of funds in respect of the Debentures held by the Institutional Trustee shall be made directly to the Property Account and no other funds of the Trust shall be deposited in the Property Account. The sole signatories for such accounts (including the Property Account) shall be designated by the Institutional Trustee.

ARTICLE XI

AMENDMENTS AND MEETINGS

SECTION 11.1. AMENDMENTS.

(b) Notwithstanding any other provision of this Article XI, an amendment may be made, and any such purported amendment shall be valid and effective only if:

(i) the Institutional Trustee shall have first received

(A) an Officers' Certificate from each of the Trust and the Sponsor that such amendment is permitted by, and conforms to, the terms of this Declaration (including the terms of the Securities); and

(ii) the result of such amendment would not be to

(A) cause the Trust to cease to be classified for purposes of United States federal income taxation as a grantor trust; or

(B) cause the Trust to be deemed to be an Investment Company required to be registered under the Investment Company Act.

(c) Except as provided in Section 11.1(d), (e) or (h), no amendment shall be made, and any such purported amendment shall be void and ineffective, unless the Holders of a Majority in liquidation amount of the Capital Securities shall have consented to such amendment.

(e) Sections 9.1(b) and 9.1(c) and this Section 11.1 shall not be amended without the consent of all of the Holders of the Securities.

(f) Article III shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Common Securities.

(g) The rights of the Holders of the Capital Securities under Article IV to appoint and remove the Institutional Trustee shall not be amended without the consent of the Holders of a Majority in liquidation amount of the Capital Securities.

(h) This Declaration may be amended by the Institutional Trustee and the Holders of a Majority in liquidation amount of the Common Securities without the consent of the Holders of the Capital Securities to:

(i) cure any ambiguity;

(ii) correct or supplement any provision in this Declaration that may be defective or inconsistent with any other provision of this Declaration;

(iii) add to the covenants, restrictions or obligations of the Sponsor; or

(iv) modify, eliminate or add to any provision of this Declaration to such extent as may be necessary to ensure that the Trust will be classified for United States federal income tax purposes at all times as a grantor trust and will not be required to register as an Investment Company (including without limitation to conform to any change in Rule 3a-5, Rule 3a-7 or any other applicable rule under the Investment Company Act or written change in interpretation or application thereof by any legislative body, court, government agency or regulatory authority) which amendment does not have a material adverse effect on the rights, preferences or privileges of the Holders of Securities;

provided, however, that no such modification, elimination or addition referred to in clauses (i), (ii), (iii) or (iv) shall adversely affect in any material respect the powers, preferences or special rights of Holders of Capital Securities.

SECTION 11.2. MEETINGS OF THE HOLDERS OF SECURITIES: ACTION BY WRITTEN CONSENT.

(a) Meetings of the Holders of any class of Securities may be called at any time by the Administrators (or as provided in the terms of the Securities) to consider and act on any matter on which

Holders of such class of Securities are entitled to act under the terms of this Declaration or the terms of the Securities. The Administrators shall call a meeting of the Holders of such class if directed to do so by the Holders of at least 10% in liquidation amount of such class of Securities. Such direction shall be given by delivering to the Administrators one or more calls in a writing stating that the signing Holders of the Securities wish to call a meeting and indicating the general or specific purpose for which the meeting is to be called. Any Holders of the Securities calling a meeting shall specify in writing the Certificates held by the Holders of the Securities exercising the right to call a meeting and only those Securities represented by such Certificates shall be counted for purposes of determining whether the required percentage set forth in the second sentence of this paragraph has been met.

(b) Except to the extent otherwise provided in the terms of the Securities, the following provisions shall apply to meetings of Holders of the Securities:

(i) notice of any such meeting shall be given to all the Holders of the Securities having a right to vote thereat at least 7 days and not more than 60 days before the date of such' meeting. Whenever a vote, consent or approval of the Holders of the Securities is permitted or required under this Declaration, such vote, consent or approval may be given at a meeting of the Holders of the Securities. Any action that may be taken at a meeting of the Holders of the Securities may be taken without a meeting if a consent in writing setting forth the action so taken is signed by the Holders of the Securities owning not less than the minimum amount of Securities in liquidation amount that would be necessary to authorize or take such action at a meeting at which all Holders of the Securities having a right to vote thereon were present and voting. Prompt notice of the taking of action without a meeting shall be given to the Holders of the Securities entitled to vote who have not consented in writing. The Administrators may specify that any written ballot submitted to the Holders of the Securities for the purpose of taking any action without a meeting shall be returned to the Trust within the time specified by the Administrators;

ARTICLE XII

REPRESENTATIONS OF INSTITUTIONAL TRUSTEE

SECTION 12.1. REPRESENTATIONS AND WARRANTIES OF INSTITUTIONAL TRUSTEE. The initial Institutional Trustee represents and warrants to the Trust and to the Sponsor at the date of this Declaration, and each Successor Institutional Trustee represents and warrants to the Trust and the Sponsor at the time of the Successor Institutional Trustee's acceptance of its appointment as Institutional Trustee, that:

(c) the execution, delivery and performance of this Declaration by the Institutional Trustee does not conflict with or constitute a breach of the charter or by-laws of the Institutional Trustee; and

ARTICLE XIII

MISCELLANEOUS

(a) if given to the Trust, in care of the Administrators at the Trust's mailing address set forth below (or such other address as the Trust may give notice of to the Holders of the Securities):

Home BancShares Statutory Trust I c/o Home BancShares, Inc.
719 Harkrider Street, 3rd Floor Conway, Arkansas 72032
Attention: Randy Mayor
Telecopy: 501-328-4637

U.S. Bank National Association 225 Asylum Street, Goodwin Square Hartford, Connecticut 06103
Attention: Vice President, Corporate Trust Services Division Telecopy: 860-244-1889

With a copy to:

U.S. Bank National Association 1 Federal Street - 3rd Floor
Boston, Massachusetts 02110
Attention: Paul D. Allen, Corporate Trust Services Division Telecopy: 617-603-6665

Home BancShares, Inc.
719 Harkrider Street, 3rd Floor Conway, Arkansas 72032
Attention: Randy Mayor
Telecopy: 501-328-4637

(d) if given to any other Holder, at the address set forth on the books and records of the Trust.

SECTION 13.2. GOVERNING LAW. This Declaration and the rights of the parties hereunder shall be governed by and interpreted in accordance with the law of the State of Connecticut and all rights and remedies shall be governed by such laws without regard to the principles of conflict of laws of the State of Connecticut or any other jurisdiction that would call for the application of the law of any jurisdiction other than the State of Connecticut; provided, however, that there shall not be applicable to the Trust, the Institutional Trustee or this Declaration any provision of the laws (statutory or common) of the State of Connecticut 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 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, or (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.

SECTION 13.4. HEADINGS. Headings contained in this Declaration are inserted for convenience of reference only and do not affect the interpretation of this Declaration or any provision hereof.

SECTION 13.5. SUCCESSORS AND ASSIGNS. Whenever in this Declaration any of the parties hereto is named or referred to, the successors and assigns of such party shall be deemed to be included, and all covenants and agreements in this Declaration by the Sponsor and the Institutional Trustee shall bind and inure to the benefit of their respective successors and assigns, whether or not so expressed.

SECTION 13.7. COUNTERPARTS. This Declaration may contain more than one counterpart of the signature page and this Declaration may be executed by the affixing of the signature of each of the Institutional Trustee and Administrators to any of such counterpart signature pages. All of such counterpart signature pages shall be read as though one, and they shall have the same force and effect as though all of the signers had signed a single signature page.

Signatures appear on the following page

IN WITNESS WHEREOF, the undersigned have caused these presents to be executed as of the day and year first above written.

U. S. BANK NATIONAL ASSOCIATION,
as Institutional Trustee

By: /s/ Paul D. Allen
    ------------------------------------
Name: Paul D. Allen
Title: Vice President

HOME BANCSHARES, INC., as Sponsor

By: /s/ Randy Mayor
    ------------------------------------
Name: Randy Mayor
Title: Treasurer

HOME BANCSHARES STATUTORY TRUST I

By: /s/ Randy Mayor
    ------------------------------------
    Administrator


By: /s/ C. Randall Sims
    ------------------------------------
    Administrator


By: /s/ John W. Allison
    ------------------------------------
    Administrator

ANNEX I

TERMS OF SECURITIES

Pursuant to Section 6.1 of the Amended and Restated Declaration of Trust, dated as of March 26, 2003 (as amended from time to time, the "Declaration"), the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities and the Common Securities are set out below (each capitalized term used but not defined herein has the meaning set forth in the Declaration):

1. Designation and Number.

(a) 20,000 Fixed/Floating Rate Capital Securities of Home BancShares Statutory Trust I (the "Trust"), with an aggregate stated liquidation amount with respect to the assets of the Trust of twenty million dollars ($20,000,000.00) and a stated liquidation amount with respect to the assets of the Trust of $1,000.00 per Capital Security, are hereby designated for the purposes of identification only as the "Capital Securities". The Capital Security Certificates evidencing the Capital Securities shall be substantially in the form of Exhibit A-l and Exhibit A-2 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice.

(b) 619 Fixed/Floating Rate Common Securities of the Trust (the "Common Securities") will be evidenced by Common Security Certificates substantially in the form of Exhibit A-3 to the Declaration, with such changes and additions thereto or deletions therefrom as may be required by ordinary usage, custom or practice.

2. Distributions.

(a) Distributions will be payable on each Security for the period beginning on (and including) the date of original issuance and ending on (but excluding) March 26, 2008 at a rate per annum of 6.40% and shall bear interest for each successive Distribution Period beginning on (and including) March 26, 2008, and each succeeding Distribution Payment Date, and ending on (but excluding) the next succeeding Distribution Payment Date at a rate per annum equal to the 3-Month LIBOR, determined as described below, plus 3.15% (the "Coupon Rate"), applied to the stated liquidation amount thereof, such rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Distributions in arrears will bear interest thereon compounded quarterly at the applicable Distribution Rate (to the extent permitted by law). Distributions, as used herein, include cash distributions and any such compounded distributions unless otherwise noted. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. In the event that any date on which a Distribution is payable on the Securities is not a Business Day, then payment of the Distribution payable on such date shall 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 the date such payment was originally payable. The amount of the Distribution payable (i) for any Distribution Period commencing on or after the date of original issuance but before March 26,2008 will be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution Period commencing on March 26, 2008 and each succeeding Distribution Period will be calculated by applying the Distribution Rate to the stated liquidation amount outstanding at the commencement of the Distribution Period and multiplying each such amount by the actual number of days in the Distribution Period concerned divided by 360. All percentages resulting from any calculations on the Capital Securities will be rounded, if necessary, to the nearest one hundred-thousandth of a

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percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)).

(b) Distributions on the Securities will be cumulative, will accrue from the date of original issuance, and will be payable, subject to extension of distribution payment periods as described herein, quarterly in arrears on March 26, June 26, September 26 and December 26 of each year, commencing on June 26, 2003 (each a "Distribution Payment Date"), when, as and if available for payment. The Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures, so long as no Indenture Event of Default has occurred and is continuing, by deferring the payment of interest on the Debentures for up to 20 consecutive quarterly periods (each an "Extension Period") at any time and from time to time, subject to the conditions described below, during which Extension Period no interest shall be due and payable. During any Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest will accrue at an annual rate equal to the Distribution Rate in effect for each such Extension Period, compounded quarterly from the date such interest would have been payable were it not for the Extension Period, to the extent permitted by law (such interest referred to herein as "Additional Interest"). No Extension Period may end on a date other than a Distribution Payment Date. At the end of any such Extension Period, the Debenture Issuer shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date and provided further, however, that during any such Extension Period, the Debenture Issuer and its Affiliates shall 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 Debenture Issuer's or its Affiliates' capital stock (other than payments of dividends or distributions to the Debenture Issuer) or make any guarantee payments with respect to the foregoing, or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Debenture Issuer or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (i) and (ii) above, (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Debenture Issuer in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Debenture Issuer (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of any exchange or conversion of any class or series of the Debenture Issuer's capital stock (or any capital stock of a subsidiary of the Debenture Issuer) for any class or series of the Debenture Issuer's capital stock or of any class or series of the Debenture Issuer's indebtedness for any class or series of the Debenture Issuer's capital stock,
(c) the purchase of fractional interests in shares of the Debenture Issuer's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders' rights plan, or the issuance of rights, stock or other property under any stockholders' rights plan, or the redemption or repurchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (f) payments under the Capital Securities Guarantee). Prior to the termination of any Extension Period, the Debenture Issuer may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Debenture Issuer may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each

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installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. During any Extension Period, Distributions on the Securities shall be deferred for a period equal to the Extension Period. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date. Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds available for the payment of such distributions in the Property Account of the Trust. The Trust's funds available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer. The payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

3. Liquidation Distribution Upon Dissolution. In the event of the voluntary or involuntary liquidation, dissolution, winding-up or termination of the Trust (each a "Liquidation") other than in connection with a redemption of the Debentures, the Holders of the Securities will be entitled to receive out of the assets of the Trust available for distribution to Holders of the Securities, after satisfaction of liabilities to creditors of the Trust (to the extent not satisfied by the Debenture Issuer), distributions equal to the aggregate of the stated liquidation amount of $1,000.00 per Security plus accrued and unpaid Distributions thereon to the date of payment (such amount being the "Liquidation Distribution"), unless in connection with such Liquidation, the Debentures in an aggregate stated principal amount equal to the aggregate stated liquidation amount of such Securities, with an interest rate equal to the Distribution Rate of, and bearing accrued and unpaid interest in an amount equal to the accrued and unpaid Distributions on, and having the same record date as, such Securities, after paying or making reasonable provision to pay all claims and obligations of the Trust in accordance with the Statutory Trust Act, shall be distributed on a Pro Rata basis to the Holders of the Securities in exchange for such Securities.

The Sponsor, as the Holder of all of the Common Securities, has the right at any time to dissolve the Trust (including, without limitation, upon the occurrence of a Special Event), subject to the receipt by the Debenture Issuer of prior approval from the Board of Governors of the Federal Reserve System and any successor federal agency that is primarily responsible for regulating the activities of the Sponsor (the "Federal Reserve"), if the Sponsor is a bank holding company, or from the Office of Thrift Supervision and any successor federal agency that is primarily responsible for regulating the activities of Sponsor, (the "OTS") if the Sponsor is a savings and loan holding company, in either case if then required under

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applicable capital guidelines or policies of the Federal Reserve or OTS, as applicable, and, after satisfaction of liabilities to creditors of the Trust, cause the Debentures to be distributed to the Holders of the Securities on a Pro Rata basis in accordance with the aggregate stated liquidation amount thereof.

If a Liquidation of the Trust occurs as described in clause (i), (ii),
(iii) or (v) in Section 7.1(a) of the Declaration, the Trust shall be liquidated by the Institutional Trustee as expeditiously as it determines to be possible by distributing, after satisfaction of liabilities to creditors of the Trust, to the Holders of the Securities, the Debentures on a Pro Rata basis to the extent not satisfied by the Debenture Issuer, unless such distribution is determined by the Institutional Trustee not to be practical, in which event such Holders will be entitled to receive out of the assets of the Trust available for distribution to the Holders, after satisfaction of liabilities of creditors of the Trust to the extent not satisfied by the Debenture Issuer, an amount equal to the Liquidation Distribution. An early Liquidation of the Trust pursuant to clause
(iv) of Section 7.1(a) of the Declaration shall occur if the Institutional Trustee determines that such Liquidation is possible by distributing, after satisfaction of liabilities to creditors of the Trust, to the Holders of the Securities on a Pro Rata basis, the Debentures, and such distribution occurs.

After the date for any distribution of the Debentures upon dissolution of the Trust (i) the Securities of the Trust will be deemed to be no longer outstanding, (ii) upon surrender of a Holder's Securities certificate, such Holder of the Securities will receive a certificate representing the Debentures to be delivered upon such distribution, (iii) any certificates representing the Securities still outstanding will be deemed to represent undivided beneficial interests in such of the Debentures as have an aggregate principal amount equal to the aggregate stated liquidation amount with an interest rate identical to the Distribution Rate of, and bearing accrued and unpaid interest equal to accrued and unpaid distributions on, the Securities until such certificates are presented to the Debenture Issuer or its agent for transfer or reissuance (and until such certificates are so surrendered, no payments of interest or principal shall be made to Holders of Securities in respect of any payments due and payable under the Debentures; provided, however that such failure to pay shall not be deemed to be an Event of Default and shall not entitle the Holder to the benefits of the Guarantee), and (iv) all rights of Holders of Securities under the Declaration shall cease, except the right of such Holders to receive Debentures upon surrender of certificates representing such Securities.

4. Redemption and Distribution.

(a) The Debentures will mature on March 26, 2033. The Debentures may be redeemed by the Debenture Issuer, in whole or in part, at any Distribution Payment Date on or after March 26, 2008, at the Redemption Price. In addition, the Debentures may be redeemed by the Debenture Issuer at the Special Redemption Price, in whole but not in part, at any Distribution Payment Date, upon the occurrence and continuation of a Special Event within 120 days following the occurrence of such Special Event at the Special Redemption Price, upon not less than 30 nor more than 60 days' notice to holders of such Debentures so long as such Special Event is continuing. In each case, the right of the Debenture Issuer to redeem the Debentures is subject to the Debenture Issuer having received prior approval from the Federal Reserve (if the Debenture Issuer is a bank holding company) or prior approval from the OTS (if the Debenture Issuer is a savings and loan holding company), in each case if then required under applicable capital guidelines or policies of the applicable federal agency. The Sponsor shall appoint a Quotation Agent, which initially shall be U. S. Bank National Association, for the purpose

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of performing the services contemplated in or by reference in, the definition of Special Redemption Price. Any error in the calculation of the Special Redemption Price by the Quotation Agent or the Debenture Trustee may be corrected at any time by notice delivered to the Sponsor and the holders of the Capital Securities. Subject to the corrective rights set forth above, all certificates, communications, opinions, determinations, calculations, quotations and decisions given, expressed, made or obtained for the purposes of the provisions relating to the payment and calculation of the Special Redemption Price on the Debentures or the Capital Securities by the Debenture Trustee, the Quotation Agent or the Institutional Trustee, as the case may be, shall (in the absence of willful default, bad faith or manifest error) be final, conclusive and binding on the holders of the Debentures and the Capital Securities, the Trust and the Sponsor, and no liability shall attach (except as provided above) to the Debenture Trustee, the Quotation Agent or the Institutional Trustee in connection with the exercise or non-exercise by any of them of their respective powers, duties and discretion.

"3-Month LIBOR" means the London interbank offered interest rate for three-month, U.S. dollar deposits determined by the Debenture Trustee in the following order of priority:

(2) if such rate cannot be identified on the related Determination Date, the Debenture Trustee will request the principal London offices of four leading banks in the London interbank market to provide such banks' offered quotations (expressed as percentages per annum) to prime banks in the London interbank market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations;

(3) if fewer than two such quotations are provided as requested in clause (2) above, the Debenture Trustee will request four major New York City banks to provide such banks' offered quotations (expressed as percentages per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and

The Coupon Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law.

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to, or change (including any announced prospective change) in, the laws, rules or regulations of the United States or any political subdivision thereof or therein, or as the result of any official or administrative pronouncement or action or decision interpreting or applying such laws, rules or regulations, which amendment or change is effective or which pronouncement, action or decision is announced on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that the Sponsor will not, within 90 days of the date of such opinion, be entitled to treat an amount equal to the aggregate liquidation amount of the Capital Securities as "Tier 1 Capital" (or its then equivalent) for purposes of the capital adequacy guidelines of the Federal Reserve, as then in effect and applicable to the Sponsor (or if the Sponsor is not a bank holding company, such guidelines applied to the Sponsor as if the Sponsor were subject to such guidelines); provided, however, that the inability of the Sponsor to treat all or any portion of the liquidation amount of the Capital Securities as Tier 1 Capital shall not constitute the basis for a Capital Treatment Event, if such inability results from the Sponsor having cumulative preferred stock, minority interests in consolidated subsidiaries, or any other class of security or interest which the Federal Reserve or OTS, as applicable, may now or hereafter accord Tier 1 Capital treatment in excess of the amount which may now or hereafter qualify for treatment as Tier 1 Capital under applicable capital adequacy guidelines; provided further, however, that the distribution of Debentures in connection with the Liquidation of the Trust shall not in and of itself constitute a Capital Treatment Event unless such Liquidation shall have occurred in connection with a Tax Event or an Investment Company Event.

"Comparable Treasury Issue" means with respect to any Special Redemption Date the United States Treasury security selected by the Quotation Agent as having a maturity comparable to the Fixed Rate Period Remaining Life that would be utilized, at the time of selection and in accordance with customary financial practice, in pricing new issues of corporate debt securities of comparable maturity to the Fixed Rate Period Remaining Life. If no United States Treasury security has a maturity which is within a period from 3 months before to 3 months after March 26, 2008, the two most closely corresponding United States Treasury securities as selected by the Quotation Agent shall be used as the Comparable Treasury Issue, and the Treasury Rate shall be interpolated and extrapolated on a straight-line basis, rounding to the nearest month using such securities.

"Determination Date" means the date that is two London Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in the London interbank market) preceding the particular Distribution Period for which a Coupon Rate is being determined.

"Fixed Rate Period Remaining Life" means, with respect to any Debenture, the period from the Special Redemption Date for such Debenture to March 26, 2008.

"Investment Company Event" means the receipt by the Debenture Issuer 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 written change (including any announced prospective change) in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within 90 days of the date of such opinion, will be considered an Investment Company that is required to be registered under the Investment Company Act which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Debentures.

"Maturity Date" means March 26, 2033.

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"Primary Treasury Dealer" shall mean either a primary United States Government securities dealer or an entity of nationally recognized standing in matters pertaining to the quotation of treasury securities that is reasonably acceptable to the Sponsor and the Institutional Trustee.

"Quotation Agent" means U. S. Bank National Association, or its designee, and its successors; provided, however, that if the foregoing shall cease to be a Primary Treasury Dealer, the Sponsor shall substitute therefor another Primary Treasury Dealer.

"Redemption Date" shall mean the date fixed for the redemption of Capital Securities, which shall be any March 26, June 26, September 26 or December 26 commencing March 26, 2008.

"Redemption Price" means 100% of the principal amount of the Debentures being redeemed, plus accrued and unpaid Interest on such Debentures to the Redemption Date.

"Reference Treasury Dealer" means (i) the Quotation Agent and (ii) any other Primary Treasury. Dealer selected by the Debenture Trustee after consultation with the Debenture Issuer.

"Special Event" means a Tax Event, an Investment Company Event or a Capital Treatment Event.

"Special Redemption Date" means a date on which a Special Event redemption occurs, which shall be any March 26, June 26, September 26 or December 26.

"Special Redemption Price" means (a) if the Special Event is before March 26, 2008, the greater of (i) 107.5% of the principal amount of the Debentures, plus accrued and unpaid Interest on the Debentures to the Special Redemption Date, or (ii) as determined by the Quotation Agent, the sum of (A) the present value of the principal amount of the Debentures and the present value of Interest payable on the Debentures during the Fixed Rate Period Remaining Life of the Debentures, each discounted to the Special Redemption Date on a quarterly basis (assuming a 360-day year consisting of twelve 30-day months at the Treasury Rate), plus (B) accrued and unpaid Interest on the Debentures to such Special Redemption Date, or (b) if the Special Event is on or after March 26, 2008, 100% of the principal amount of the Debentures being redeemed, plus accrued and unpaid Interest on such Debentures to the Special Redemption Date.

"Tax Event" means the receipt by the Debenture Issuer 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 (including any private letter ruling, technical advice memorandum, field service advice, regulatory procedure, notice or announcement including any notice or announcement of intent to adopt such procedures or regulations) (an "Administrative Action") or judicial decision interpreting or applying such laws or regulations, regardless of whether such Administrative Action or judicial decision is issued to or in connection with a proceeding involving the Debenture Issuer or the Trust and whether or not subject to review or appeal, which amendment, clarification, change, Administrative Action or decision is enacted, promulgated or announced, in each case on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that: (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or

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accrued on the Debentures; (ii) interest payable by the Debenture Issuer on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Debenture Issuer, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

"Treasury Rate" means (i) the yield, under the heading which represents the average for the week immediately prior to the date of calculation, appearing in the most recently published statistical release designated H.15 (519) or any successor publication which is published weekly by the Federal Reserve and which establishes yields on actively traded United States Treasury securities adjusted to constant maturity under the caption "Treasury Constant Maturities," for the maturity corresponding to the Fixed Rate Period Remaining Life (if no maturity is within three months before or after the Fixed Rate Period Remaining Life, yields for the two published maturities most closely corresponding to the Fixed Rate Period Remaining Life shall be determined and the Treasury Rate shall be interpolated or extrapolated from such yields on a straight-line basis, rounding to the nearest month) or (ii) if such release (or any successor release) is not published during the week preceding the calculation date or does not contain such yields, the rate per annum equal to the semi-annual equivalent yield to maturity of the Comparable Treasury Issue, calculated using a price for the Comparable Treasury Issue (expressed as a percentage of its principal amount) equal to the Comparable Treasury Price for such Special Redemption Date. The Treasury Rate shall be calculated by the Quotation Agent on the third Business Day preceding the Special Redemption Date.

(d) The Trust may not redeem fewer than all the outstanding Capital Securities unless all accrued and unpaid Distributions have been paid on all Capital Securities for all quarterly Distribution periods terminating on or before the date of redemption.

(e) Redemption or Distribution Procedures.

(i) Notice of any redemption of, or notice of distribution of the Debentures in exchange for, the Securities (a "Redemption/Distribution Notice"") will be given by the Trust by mail to each Holder of Securities to be redeemed or exchanged not fewer than 30 nor more than 60 days before the date fixed for redemption or exchange thereof which, in the case of a redemption, will be the date fixed for redemption of the Debentures. For purposes of the calculation of the date of redemption or exchange and the dates on which notices are given pursuant to this paragraph 4(e)(i), a Redemption/Distribution Notice shall be deemed to be given on the day such notice is first mailed by first-class mail, postage prepaid, to Holders of such Securities. Each Redemption/Distribution Notice shall be addressed to the Holders of such Securities at the address of each such Holder appearing on the books and records of the Trust. No defect in the Redemption/Distribution Notice or in the mailing thereof with respect to any Holder

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shall affect the validity of the redemption or exchange proceedings with respect to any other Holder.

(ii) If the Securities are to be redeemed and the Trust gives a Redemption/ Distribution Notice, which notice may only be issued if the Debentures are redeemed as set out in this paragraph 4 (which notice will be irrevocable), then, provided that the Institutional Trustee has a sufficient amount of cash in connection with the related redemption or maturity of the Debentures, the Institutional Trustee will pay the relevant Redemption Price or Special Redemption Price, as applicable, to the Holders of such Securities by check mailed to the address of each such Holder appearing on the books and records of the Trust on the Redemption Date. If a Redemption/Distribution Notice shall have been given and funds deposited as required then immediately prior to the close of business on the date of such deposit Distributions will cease to accrue on the Securities so called for redemption and all rights of Holders of such Securities so called for redemption will cease, except the right of the Holders of such Securities to receive the applicable Redemption Price or Special Redemption Price specified in paragraph 4(a), but without interest on such Redemption Price or Special Redemption Price. If any date fixed for redemption of Securities is not a Business Day, then payment of any such Redemption Price or Special 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 fixed for redemption. If payment of the Redemption Price or Special Redemption Price in respect of any Securities is improperly withheld or refused and not paid either by the Trust or by the Debenture Issuer as guarantor pursuant to the Guarantee, Distributions on such Securities will continue to accrue at the Distribution Rate from the original Redemption Date to the actual date of payment, in which case the actual payment date will be considered the date fixed for redemption for purposes of calculating the Redemption Price or Special Redemption Price. In the event of any redemption of the Capital Securities issued by the Trust in part, the Trust shall not be required to (i) issue, register the transfer of or exchange any Security during a period beginning at the opening of business 15 days before any selection for redemption of the Capital Securities and ending at the close of business on the earliest date on which the relevant notice of redemption is deemed to have been given to all Holders of the Capital Securities to be so redeemed or (ii) register the transfer of or exchange any Capital Securities so selected for redemption, in whole or in part, except for the unredeemed portion of any Capital Securities being redeemed in part.

(iv) Subject to the foregoing and applicable law (including, without limitation, United States federal securities laws), and provided that the acquiror is not the Holder of the Common Securities or the obligor under the Indenture, the Sponsor or any of its subsidiaries may at any time and from time to time purchase outstanding Capital Securities by tender, in the open market or by private agreement.

5. Voting Rights - Capital Securities.

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(b) Subject to the requirements of obtaining a tax opinion by the Institutional Trustee in certain circumstances set forth in the last sentence of this paragraph, the Holders of a Majority in liquidation amount of the Capital Securities, voting separately as a class, have the right to direct the time, method, and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under the Declaration, including the right to direct the Institutional Trustee, as holder of the Debentures, to (i) exercise the remedies available under the Indenture as the holder of the Debentures, (ii) waive any past default that is waivable under the Indenture, (iii) exercise any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable or (iv) consent on behalf of all the Holders of the Capital Securities to any amendment, modification or termination of the Indenture or the Debentures where such consent shall be required; provided, however, that, where a consent or action under the Indenture would require the consent or act of the holders of greater than a simple majority in aggregate principal amount of Debentures (a "Super Majority") affected thereby, the Institutional Trustee may only give such consent or take such action at the written direction of the Holders of at least the proportion in liquidation amount of the Capital Securities outstanding which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. If the Institutional Trustee fails to enforce its rights under the Debentures after the Holders of a Majority in liquidation amount of such Capital Securities have so directed the Institutional Trustee, to the fullest extent permitted by law, a Holder of the Capital Securities may institute a legal proceeding directly against the Debenture Issuer to enforce the Institutional Trustee's rights under the Debentures without first instituting any legal proceeding against the Institutional 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 Debenture Issuer to pay interest or principal on the Debentures on the date the interest or principal is payable (or in the case of redemption, the Redemption Date or the Special Redemption Date, as applicable), then a Holder of record of the Capital Securities may directly institute a proceeding for enforcement of payment, on or after the respective due dates specified in the Debentures, to such Holder directly of the principal of or interest on the Debentures having an aggregate principal amount equal to the aggregate liquidation amount of the Capital Securities of such Holder. The Institutional Trustee shall notify all Holders of the Capital Securities of any default actually known to the Institutional Trustee with respect to the Debentures unless (x) such default has been cured prior to the giving of such notice or (y) the Institutional Trustee determines in good faith that the withholding of such notice is in the interest of the Holders of such Capital Securities, except where the default relates to the payment of principal of or interest on any of the Debentures. Such notice shall state that such Indenture Event of Default also constitutes an Event of Default hereunder. Except with respect to directing the time, method and place of conducting a proceeding for a remedy, the Institutional Trustee shall not take any of the actions described in clauses (i), (ii) or (iii) above unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes.

In the event the consent of the Institutional Trustee, as the holder of the Debentures, is required under the Indenture with respect to any amendment, modification or termination of the Indenture, the Institutional Trustee shall request the direction of the Holders of the Securities with respect to such amendment, modification or termination and shall vote with respect to such amendment, modification or termination as directed by a Majority in liquidation amount of the Securities voting together as a single class; provided, however, that where a consent under the Indenture would require the consent of a Super-Majority, the Institutional Trustee may only give such consent at the direction of the Holders of at least the proportion in liquidation amount of the Securities outstanding which the relevant Super-Majority represents of the aggregate principal amount of the Debentures outstanding. The Institutional Trustee shall not take any such action in accordance with the directions of the Holders of the Securities unless the Institutional Trustee has obtained an opinion of tax counsel to the effect that, as a result of such action, the Trust will not be classified as other than a grantor trust for United States federal income tax purposes.

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6. Voting Rights - Common Securities.

(a) Except as provided under paragraphs 6(b), 6(c) and 7 and as otherwise required by law and the Declaration, the Common Securities will have no voting rights.

(b) The Holders of the Common Securities are entitled, in accordance with Article IV of the Declaration, to vote to appoint, remove or replace any Administrators.

(c) Subject to Section 6.7 of the Declaration and only after each Event of Default (if any) with respect to the Capital Securities has been cured, waived, or otherwise eliminated and subject to the requirements of the second to last sentence of this paragraph, the Holders of a Majority in liquidation amount of the Common Securities, voting separately as a class, may direct the time, method, and place of conducting any proceeding for any remedy available to the Institutional Trustee, or exercising any trust or power conferred upon the Institutional Trustee under the Declaration, including (i) directing the time, method, place of conducting any proceeding for any remedy available to the Debenture Trustee, or exercising any trust or power conferred on the Debenture Trustee with respect to the Debentures, (ii) waiving any past default and its consequences that is waivable under the Indenture, or (iii) exercising any right to rescind or annul a declaration that the principal of all the Debentures shall be due and payable; provided, however, that, where a consent or action under the Indenture would require a Super Majority, the Institutional Trustee may only give such consent or take such action at the written direction of the Holders of at least the proportion in liquidation amount of the Common Securities which the relevant Super Majority represents of the aggregate principal amount of the Debentures outstanding. Notwithstanding this paragraph 6(c), the Institutional Trustee shall not revoke any action previously authorized or approved by a vote or consent of the Holders of the Capital Securities. Other than with respect to directing the time, method and place of conducting any proceeding for any remedy available to the Institutional Trustee or the Debenture Trustee as set forth above, the Institutional Trustee shall not take any action described in (i),
(ii) or (iii) above, unless the Institutional Trustee has obtained an opinion

I-11

of tax counsel to the effect that for the purposes of United States federal income tax the Trust will not be classified as other than a grantor trust on account of such action. If the Institutional Trustee fails to enforce its rights under the Declaration to the fullest extent permitted by law, any Holder of the Common Securities may institute a legal proceeding directly against any Person to enforce the Institutional Trustee's rights under the Declaration, without first instituting a legal proceeding against the Institutional Trustee or any other Person.

7. Amendments to Declaration and Indenture.

(a) In addition to any requirements under Section 11.1 of the Declaration, if any proposed amendment to the Declaration provides for, or the Institutional Trustee, Sponsor or Administrators otherwise propose to effect,
(i) any action that would adversely affect the powers, preferences or special rights of the Securities, whether by way of amendment to the Declaration or otherwise, or (ii) the Liquidation of the Trust, other than as described in
Section 7.1 of the Declaration, then the Holders of outstanding Securities, voting together 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 at least a Majority in liquidation amount of the Securities, affected thereby; provided, however, if any amendment or proposal referred to in clause (i) above would adversely affect only the Capital Securities or only the Common Securities, then only the affected 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 a Majority in liquidation amount of such class of Securities.

I-12

9. Ranking. The Capital Securities rank pari passu with and payment thereon shall be made Pro Rata with the Common Securities except that, where an Event of Default has occurred and is continuing, the rights of Holders of the Common Securities to receive payment of Distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of the Holders of the Capital Securities with the result that no payment of any Distribution on, or Redemption Price (or Special Redemption Price) of, any Common Security, and no other payment on account of redemption, liquidation or other acquisition of Common Securities, shall be made unless payment in full in cash of all accumulated and unpaid Distributions on all outstanding Capital Securities for all distribution periods terminating on or prior thereto, or in the case of payment of the Redemption Price (or Special Redemption Price) the full amount of such Redemption Price (or Special Redemption Price) on all outstanding Capital Securities then called for redemption, shall have been made or provided for, and all funds immediately available to the Institutional Trustee shall first be applied to the payment in full in cash of all Distributions on, or the Redemption Price (or Special Redemption Price) of, the Capital Securities then due and payable.

11. No Preemptive Rights. The Holders of the Securities shall have no preemptive or similar rights to subscribe for any additional securities.

I-13

EXHIBIT A-1

FORM OF CAPITAL SECURITY CERTIFICATE

[FORM OF FACE OF SECURITY]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATIONS UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

A-1-1

MEANING OF SECTION 3(3) OF ERISA, OR A PLAN TO WHICH SECTION 4975 OF THE CODE IS APPLICABLE, A TRUSTEE OR OTHER PERSON ACTING ON BEHALF OF AN EMPLOYEE BENEFIT PLAN OR PLAN, OR ANY OTHER PERSON OR ENTITY USING THE ASSETS OF ANY EMPLOYEE BENEFIT PLAN OR PLAN TO FINANCE SUCH PURCHASE, OR (ii) SUCH PURCHASE WILL NOT RESULT IN A PROHIBITED TRANSACTION UNDER SECTION 406 OF ERISA OR SECTION 4975 OF THE CODE FOR WHICH THERE IS NO APPLICABLE STATUTORY OR ADMINISTRATIVE EXEMPTION.

THIS SECURITY WILL BE ISSUED AND MAY BE TRANSFERRED ONLY IN BLOCKS HAVING A LIQUIDATION AMOUNT OF NOT LESS THAN $100,000.00 (100 SECURITIES) AND MULTIPLES OF $1,000.00 IN EXCESS THEREOF. ANY ATTEMPTED TRANSFER OF SECURITIES IN A BLOCK HAVING A LIQUIDATION AMOUNT OF LESS THAN $100,000.00 SHALL BE DEEMED TO BE VOID AND OF NO LEGAL EFFECT WHATSOEVER.

THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING

RESTRICTIONS.

IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS MAY BE REQUIRED BY THE DECLARATION TO CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING RESTRICTIONS.

Certificate Number P-1 17,640 Capital Securities

March 26, 2003

Certificate Evidencing Fixed/Floating Rate Capital Securities of Home BancShares Statutory Trust I

(liquidation amount $1,000.00 per Capital Security)

Home BancShares Statutory Trust I, a statutory trust created under the laws of the State of Connecticut (the "Trust"), hereby certifies that Hare & Co. (the "Holder"), as the nominee of The Bank of New York, indenture trustee under the Indenture dated as of March 26, 2003 among Preferred Term Securities IX, Ltd., Preferred Term Securities IX, Inc. and The Bank of New York, is the registered owner of capital securities of the Trust representing undivided beneficial interests in the assets of the Trust, (liquidation amount $1,000.00 per capital security) (the "Capital Securities"). Subject to the Declaration (as defined below), the Capital 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. The Capital Securities represented hereby are issued pursuant to, and the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities shall in all respects be subject to, the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of March 26, 2003, among John W. Allison, C. Randall Sims and Randy Mayor, as Administrators, U. S. Bank National Association, as Institutional Trustee, Home BancShares, Inc., as Sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Trust, including the designation of the terms of the Capital Securities as set forth in Annex I to such amended and restated declaration as the same may be amended from time to time (the "Declaration"). Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture to the Holder without charge upon written request to the Sponsor at its principal place of business.

A-1-2

Upon receipt of this Security, the Holder is bound by the Declaration and is entitled to the benefits thereunder.

This Capital Security is governed by, and construed in accordance with, the laws of the State of Connecticut, without regard to principles of conflict of laws.

Signatures appear on following page

A-1-3

IN WITNESS WHEREOF, the Trust has duly executed this certificate.

HOME BANCSHARES STATUTORY TRUST I

By:

Name:
Title: Administrator

CERTIFICATE OF AUTHENTICATION

This is one of the Capital Securities referred to in the within-mentioned Declaration.

U. S. BANK NATIONAL ASSOCIATION,
as the Institutional Trustee

By:
Authorized Officer

A-1-4

[FORM OF REVERSE OF CAPITAL SECURITY]

Distributions payable on each Capital Security will be payable at an annual rate equal to 6.40% beginning on (and including) the date of original issuance and ending on (but excluding) March 26, 2008 and at an annual rate for each successive Distribution Period beginning on (and including) March 26, 2008, and each succeeding Distribution Payment Date, and ending on (but excluding) the next succeeding Distribution Payment Date, equal to 3-Month LIBOR, determined as described below, plus 3.15% (the "Coupon Rate"), applied to the stated liquidation amount of $1,000.00 per Capital Security, such rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Distributions in arrears will bear interest thereon compounded quarterly at the Distribution Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes cash distributions and any such compounded distributions unless otherwise noted. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. As used herein, "Determination Date" means the date that is two London Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in the London interbank market) preceding the commencement of the relevant Distribution Period. In the event that any date on which a Distribution is payable on this Capital Security is not a Business Day, then a payment of the Distribution 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 the date the payment was originally payable. The amount of the Distribution payable (i) for any Distribution Period commencing on or after the date of original issuance but before March 26, 2008 will be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution Period commencing on March 26, 2008 and each succeeding Distribution Period will be calculated by applying the Distribution Rate to the stated liquidation amount outstanding at the commencement of the Distribution Period and multiplying each such amount by the actual number of days in the Distribution Period concerned divided by 360.

"3-Month LIBOR" as used herein, means the London interbank offered interest rate for three-month U.S. dollar deposits determined by the Debenture Trustee in the following order of priority: (i) the rate (expressed as a percentage per annum) for U.S. dollar deposits having a three-month maturity that appears on Telerate Page 3750 as of 11:00 a.m. (London time) on the related Determination Date ("Telerate Page 3750" means the display designated as "Page 3750" on the Dow Jones Telerate Service or such other page as may replace Page 3750 on that service or such other service or services as may be nominated by the British Bankers' Association as the information vendor for the purpose of displaying London interbank offered rates for U.S. dollar deposits); (ii) if such rate cannot be identified on the related Determination Date, the Debenture Trustee will request the principal London offices of four leading banks in the London interbank market to provide such banks' offered quotations (expressed as percentages per annum) to prime banks in the London interbank market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; (iii) if fewer than two such quotations are provided as requested in clause (ii) above, the Debenture Trustee will request four major New York City banks to provide such banks' offered quotations (expressed as percentages per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and (iv) if fewer than two such quotations are provided as requested in clause (iii) above, 3-Month LIBOR will be a 3-Month LIBOR determined with respect to the Distribution Period immediately preceding such current Distribution Period. If the rate for U.S. dollar deposits having a three-month maturity that initially appears on Telerate Page 3750 as of 11:00
a.m. (London time) on the related Determination Date is superseded on the Telerate Page 3750 by a corrected rate by 12:00 noon (London time) on such Determination Date, then the corrected rate as so substituted on the applicable page will be the applicable 3-Month LIBOR for such Determination Date.

A-1-5

The Coupon Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law.

All percentages resulting from any calculations on the Capital Securities will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)).

Except as otherwise described below, Distributions on the Capital Securities will be cumulative, will accrue from the date of original issuance and will be payable quarterly in arrears on March 26, June 26, September 26 and December 26 of each year, commencing on June 26, 2003. The Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures, so long as no Indenture Event of Default has occurred and is continuing, by extending the interest payment period for up to 20 consecutive quarterly periods (each an "Extension Period") at any time and from time to time on the Debentures, subject to the conditions described below, during which Extension Period no interest shall be due and payable. During any Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest will accrue at an annual rate equal to the Distribution Rate in effect for each such Extension Period, compounded quarterly from the date such interest would have been payable were it not for the Extension Period, to the extent permitted by law (such interest referred to herein as "Additional Interest"). No Extension Period may end on a date other than a Distribution Payment Date. At the end of any such Extension Period, the Debenture Issuer shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date. Prior to the termination of any Extension Period, the Debenture Issuer may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Debenture Issuer may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. During any Extension Period, Distributions on the Capital Securities shall be deferred for a period equal to the Extension Period. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates, to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date. Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds available for the payment of such distributions in the Property Account of the Trust. The Trust's funds available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer. The payment of Distributions out of moneys held by the Trust is guaranteed by the Guarantor pursuant to the Guarantee.

The Capital Securities shall be redeemable as provided in the Declaration.

A-1-6

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee) and irrevocably appoints

agent to transfer this Capital Security Certificate on the books of the Trust. The agent may substitute another to act for him or her.

Date:

Signature:

(Sign exactly as your name appears on the other side of this Capital Security Certificate)

Signature Guarantee:(1)

A-1-7

EXHIBIT A-2

FORM OF CAPITAL SECURITY CERTIFICATE

[FORM OF FACE OF SECURITY]

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE SPONSOR OR THE TRUST, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATIONS UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE SPONSOR'S AND THE TRUST'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM IN ACCORDANCE WITH THE DECLARATION OF TRUST, A COPY OF WHICH MAY BE OBTAINED FROM THE SPONSOR OR THE TRUST. HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.

A-2-1

THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING

RESTRICTIONS.

Certificate Number P-l 2,360 Capital Securities

March 26, 2003

Certificate Evidencing Fixed/Floating Rate Capital Securities of Home BancShares Statutory Trust I

(liquidation amount $1,000.00 per Capital Security)

Home BancShares Statutory Trust I, a statutory trust created under the laws of the State of Connecticut (the "Trust"), hereby certifies that First Tennessee Bank National Association is the registered owner of capital securities of the Trust representing undivided beneficial interests in the assets of the Trust, (liquidation amount $1,000.00 per capital security) (the "Capital Securities"). Subject to the Declaration (as defined below), the Capital 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. The Capital Securities represented hereby are issued pursuant to, and the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Capital Securities shall in all respects be subject to, the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of March 26, 2003, among John W. Allison, C. Randall Sims and Randy Mayor, as Administrators, U. S. Bank National Association, as Institutional Trustee, Home BancShares, Inc., as Sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Trust, including the designation of the terms of the Capital Securities as set forth in Annex I to such amended and restated declaration as the same may be amended from time to time (the "Declaration"). Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Guarantee, and the Indenture to the Holder without charge upon written request to the Sponsor at its principal place of business.

A-2-2

Upon receipt of this Security, the Holder is bound by the Declaration and is entitled to the benefits thereunder.

This Capital Security is governed by, and construed in accordance with, the laws of the State of Connecticut, without regard to principles of conflict of laws.

Signatures appear on following page

A-2-3

IN WITNESS WHEREOF, the Trust has duly executed this certificate.

HOME BANCSHARES STATUTORY TRUST I

By:

Name:
Title: Administrator

CERTIFICATE OF AUTHENTICATION

This is one of the Capital Securities referred to in the within-mentioned Declaration.

U. S. BANK NATIONAL ASSOCIATION,
as the Institutional Trustee

By:
Authorized Officer

A-2-4

[FORM OF REVERSE OF CAPITAL SECURITY]

A-2-5

The Coupon Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law.

The Capital Securities shall be redeemable as provided in the Declaration.

A-2-6

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security Certificate to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee) and irrevocably appoints

agent to transfer this Capital Security Certificate on the books of the Trust. The agent may substitute another to act for him or her.

Date:

Signature:

(Sign exactly as your name appears on the other side of this Capital Security Certificate)

Signature Guarantee:(2)

(2) Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union meeting the requirements of the Security registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Security registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-2-7

EXHIBIT A-3

FORM OF COMMON SECURITY CERTIFICATE

THIS CERTIFICATE IS NOT TRANSFERABLE EXCEPT IN COMPLIANCE WITH SECTION 8.1

OF THE DECLARATION.

Certificate Number C-l 619 Common Securities

March 26, 2003

Certificate Evidencing Fixed/Floating Rate Common Securities of Home BancShares Statutory Trust I

Home BancShares Statutory Trust I, a statutory trust created under the laws of the State of Connecticut (the "Trust"), hereby certifies that Home BancShares, Inc. (the "Holder") is the registered owner of common securities of the Trust representing undivided beneficial interests in the assets of the Trust (the "Common Securities"). The Common Securities represented hereby are issued pursuant to, and the designation, rights, privileges, restrictions, preferences and other terms and provisions of the Common Securities shall in all respects be subject to, the provisions of the Amended and Restated Declaration of Trust of the Trust dated as of March 26, 2003, among John W. Allison, C. Randall Sims and Randy Mayor, as Administrators, U. S. Bank National Association, as Institutional Trustee, Home BancShares, Inc., as Sponsor, and the holders from time to time of undivided beneficial interest in the assets of the Trust including the designation of the terms of the Common Securities as set forth in Annex I to such amended and restated declaration, as the same may be amended from time to time (the "Declaration"). Capitalized terms used herein but not defined shall have the meaning given them in the Declaration. The Holder is entitled to the benefits of the Guarantee to the extent provided therein. The Sponsor will provide a copy of the Declaration, the Guarantee and the Indenture to the Holder without charge upon written request to the Sponsor at its principal place of business.

As set forth in the Declaration, when an Event of Default has occurred and is continuing, the rights of Holders of Common Securities to payment in respect of Distributions and payments upon Liquidation, redemption or otherwise are subordinated to the rights of payment of Holders of the Capital Securities.

Upon receipt of this Certificate, the Holder is bound by the Declaration and is entitled to the benefits thereunder.

This Common Security is governed by, and construed in accordance with, the laws of the State of Connecticut, without regard to principles of conflict of laws.

A-3-1

IN WITNESS WHEREOF, the Trust has duly executed this certificate.

HOME BANCSHARES STATUTORY TRUST I

By:

Name:
Title: Administrator

A-3-2

[FORM OF REVERSE OF COMMON SECURITY]

Distributions payable on each Common Security will be payable at an annual rate equal to 6.40% beginning on (and including) the date of original issuance and ending on (but excluding) March 26, 2008 and at an annual rate for each successive Distribution Period beginning on (and including) March 26, 2008, and each succeeding Distribution Payment Date, and ending on (but excluding) the next succeeding Distribution Payment Date, equal to 3-Month LIBOR, determined as described below, plus 3.15% (the "Coupon Rate"), applied to the stated liquidation amount of $1,000.00 per Common Security, such rate being the rate of interest payable on the Debentures to be held by the Institutional Trustee. Distributions in arrears will bear interest thereon compounded quarterly at the Distribution Rate (to the extent permitted by applicable law). The term "Distributions" as used herein includes cash distributions and any such compounded distributions unless otherwise noted. A Distribution is payable only to the extent that payments are made in respect of the Debentures held by the Institutional Trustee and to the extent the Institutional Trustee has funds available therefor. As used herein, "Determination Date" means the date that is two London Banking Days (i.e., a business day in which dealings in deposits in U.S. dollars are transacted in the London interbank market) preceding the commencement of the relevant Distribution Period. In the event that any date on which a Distribution is payable on this Common Security is not a Business Day, then a payment of the Distribution 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 the date the payment was originally payable. The amount of the Distribution payable (i) for any Distribution Period commencing on or after the date of original issuance but before March 26, 2008 will be computed on the basis of a 360-day year of twelve 30-day months, and (ii) for the Distribution Period commencing on March 26, 2008 and each succeeding Distribution Period will be calculated by applying the Distribution Rate to the stated liquidation amount outstanding at the commencement of the Distribution Period and multiplying each such amount by the actual number of days in the Distribution Period concerned divided by 360.

A-3-3

The Coupon Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law.

All percentages resulting from any calculations on the Common Securities will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)).

Except as otherwise described below, Distributions on the Common Securities will be cumulative, will accrue from the date of original issuance and will be payable quarterly in arrears on March 26, June 26, September 26 and December 26 of each year, commencing on June 26, 2003. The Debenture Issuer has the right under the Indenture to defer payments of interest on the Debentures, so long as no Indenture Event of Default has occurred and is continuing, by extending the interest payment period for up to 20 consecutive quarterly periods (each an "Extension Period") at any time and from time to time on the Debentures, subject to the conditions described below, during which Extension Period no interest shall be due and payable. During any Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest will accrue at an annual rate equal to the Distribution Rate in effect for each such Extension Period, compounded quarterly from the date such interest would have been payable were it not for the Extension Period, to the extent permitted by law (such interest referred to herein as "Additional Interest"). No Extension Period may end on a date other than a Distribution Payment Date. At the end of any such Extension Period, the Debenture Issuer shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date. Prior to the termination of any Extension Period, the Debenture Issuer may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Debenture Issuer may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. During any Extension Period, Distributions on the Common Securities shall be deferred for a period equal to the Extension Period. If Distributions are deferred, the Distributions due shall be paid on the date that the related Extension Period terminates, to Holders of the Securities as they appear on the books and records of the Trust on the record date immediately preceding such date. Distributions on the Securities must be paid on the dates payable (after giving effect to any Extension Period) to the extent that the Trust has funds available for the payment of such distributions in the Property Account of the Trust. The Trust's funds available for Distribution to the Holders of the Securities will be limited to payments received from the Debenture Issuer.

The Common Securities shall be redeemable as provided in the Declaration.

A-3-4

ASSIGNMENT

FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security Certificate to:

(Insert assignee's social security or tax identification number)

(Insert address and zip code of assignee) and irrevocably appoints

agent to transfer this Common Security Certificate on the books of the Trust.

The agent may substitute another to act
for him or her.

Date:

Signature:

(Sign exactly as your name appears on the other side of this Common Security Certificate)

Signature:

(Sign exactly as your name appears on the other side of this Common Security Certificate)

Signature Guarantee(3)

(3) Signature must be guaranteed by an "eligible guarantor institution" that is a bank, stockbroker, savings and loan association or credit union, meeting the requirements of the Security registrar, which requirements include membership or participation in the Securities Transfer Agents Medallion Program ("STAMP") or such other "signature guarantee program" as may be determined by the Security registrar in addition to, or in substitution for, STAMP, all in accordance with the Securities Exchange Act of 1934, as amended.

A-3-5

EXHIBIT B

SPECIMEN OF INITIAL DEBENTURE

(See Tab No. 16)

B-1

EXHIBIT C

PLACEMENT AGREEMENT

(See Tab No. 1)

C-l

EXHIBIT 4.12

GUARANTEE AGREEMENT

BY AND BETWEEN

HOME BANCSHARES, INC.

AND

U.S. BANK NATIONAL ASSOCIATION

DATED AS OF MARCH 26, 2003

GUARANTEE AGREEMENT

This GUARANTEE AGREEMENT (this "Guarantee"), dated as of March 26, 2003, is executed and delivered by Home BancShares, Inc., an Arkansas corporation (the "Guarantor"), and U.S. Bank National Association, a national banking association, organized under the laws of the United States of America, as trustee (the "Guarantee Trustee"), for the benefit of the Holders (as defined herein) from time to time of the Capital Securities (as defined herein) of Home BancShares Statutory Trust I, a Connecticut statutory trust (the "Issuer").

WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the "Declaration"), dated as of the date hereof among U.S. Bank National Association, not in its individual capacity but solely as institutional trustee, the administrators of the Issuer named therein, the Guarantor, as sponsor, and the holders from time to time of undivided beneficial interests in the assets of the Issuer, the Issuer is issuing on the date hereof those undivided beneficial interests, having an aggregate liquidation amount of $20,000,000.00 (the "Capital Securities"); and

ARTICLE I

DEFINITIONS AND INTERPRETATION

Section 1.1. Definitions and Interpretation. In this Guarantee, unless the context otherwise requires:

(a) capitalized terms used in this Guarantee but not defined in the preamble above have the respective meanings assigned to them in this Section 1.1;

(b) a term defined anywhere in this Guarantee has the same meaning throughout;

(c) all references to "the Guarantee" or "this Guarantee" are to this Guarantee as modified, supplemented or amended from time to time;

(d) all references in this Guarantee to "Articles" or "Sections" are to Articles or Sections of this Guarantee, unless otherwise specified;

(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.

"Beneficiaries" means any Person to whom the Issuer is or hereafter becomes indebted or liable.

"Capital Securities" has the meaning set forth in the recitals to this Guarantee.

"Common Securities" means the common securities issued by the Issuer to the Guarantor pursuant to the Declaration.

"Corporate Trust Office" means the office of the Guarantee Trustee at which the corporate trust business of the Guarantee Trustee shall, at any particular time, be principally administered, which office at the date of execution of this Guarantee is located at 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103.

"Covered Person" means any Holder of Capital Securities.

"Debentures" means the debt securities of the Guarantor designated the Fixed/Floating Rate Junior Subordinated Deferrable Interest Debentures due 2033 held by the Institutional Trustee (as defined in the Declaration) of the Issuer.

"Declaration Event of Default" means an "Event of Default" as defined in the Declaration.

"Event of Default" has the meaning set forth in Section 2.4(a).

"Guarantee Payments" means the following payments or distributions, without duplication, with respect to the Capital Securities, to the extent not paid or made by the Issuer: (i) any accrued and unpaid Distributions (as defined in the Declaration) which are required to be paid on such Capital Securities to the extent the Issuer shall have funds available therefor, (ii) the Redemption Price to the extent the Issuer has funds available therefor, with respect to any Capital Securities called for redemption by the Issuer, (iii) the Special Redemption Price to the extent the Issuer has funds available therefor, with respect to Capital Securities redeemed upon the occurrence of a Special Event, and (iv) upon a voluntary or involuntary liquidation, dissolution, winding-up or termination of the Issuer (other than in connection with the distribution of Debentures to the Holders of the Capital Securities in exchange therefor as provided in the Declaration), the lesser of (a) the aggregate of the liquidation amount and all accrued and unpaid Distributions on the Capital Securities to the date of payment, to the extent the Issuer shall have funds available therefor, and (b) the amount of assets of the Issuer remaining available for distribution to Holders in liquidation of the Issuer (in either case, the "Liquidation Distribution").

"Guarantee Trustee" means U.S. Bank National Association, until a Successor Guarantee Trustee has been appointed and has accepted such appointment pursuant to the terms of this Guarantee and thereafter means each such Successor Guarantee Trustee.

"Guarantor" means Home BancShares, Inc. and each of its successors and assigns.

"Indenture" means the Indenture dated as of the date hereof between the Guarantor and U.S. Bank National Association, not in its individual capacity but solely as trustee, and any indenture supplemental thereto pursuant to which the Debentures are to be issued to the institutional trustee of the Issuer.

"Issuer" has the meaning set forth in the opening paragraph to this Guarantee.

"Liquidation Distribution" has the meaning set forth in the definition of "Guarantee Payments" herein.

(a) a statement that the officer signing the Officer's Certificate has read the covenant or condition and the definitions relating thereto;

(b) a brief statement of the nature and scope of the examination or investigation undertaken by the officer in rendering the Officer's Certificate;

(c) a statement that the 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

(d) a statement as to whether, in the opinion of the officer, such condition or covenant has been complied with.

"Redemption Price" has the meaning set forth in the Indenture.

"Special Event" has the meaning set forth in the Indenture.

"Special Redemption Price" has the meaning set forth in the Indenture.

"Successor Guarantee Trustee" means a successor Guarantee Trustee possessing the qualifications to act as Guarantee Trustee under Section 3.1.

"Trust Securities" means the Common Securities and the Capital Securities.

ARTICLE II

POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE

SECTION 2.1. POWERS AND DUTIES OF THE GUARANTEE TRUSTEE.

(a) This Guarantee shall be held by the Guarantee Trustee for the benefit of the Holders of the Capital Securities, and the Guarantee Trustee shall not transfer this Guarantee to any Person except a Holder of Capital Securities exercising his or her rights pursuant to Section 4.4(b) or to A Successor Guarantee Trustee on acceptance by such Successor Guarantee Trustee of its appointment to act as Successor Guarantee Trustee. The right, title and interest of the Guarantee Trustee shall automatically vest in any Successor 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 Guarantee Trustee.

(c) The Guarantee Trustee, before the occurrence of any Event of Default and after curing all Events of Default that may have occurred, shall undertake to perform only such duties as are specifically set forth in this Guarantee, and no implied covenants shall be read into this Guarantee against the Guarantee Trustee. In case an Event of Default has occurred (that has not been waived pursuant to Section 2.4) and is actually known to a Responsible Officer of the Guarantee Trustee, the Guarantee Trustee shall exercise such of the rights and powers vested in it by this 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 his or her own affairs.

(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:

to the Guarantee Trustee and conforming to the requirements of this Guarantee; but in the case of any such certificates or opinions that by any provision hereof are specifically required to be furnished to the Guarantee Trustee, the Guarantee Trustee shall be under a duty to examine the same to determine whether or not they conform to the requirements of this Guarantee;

(ii) the Guarantee Trustee shall not be liable for any error of judgment made in good faith by A Responsible Officer of the Guarantee Trustee, unless it shall be proved that such Responsible Officer of the Guarantee Trustee or the Guarantee Trustee was negligent in ascertaining the pertinent facts upon which such judgment was made;

(iii) the 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 written direction of the Holders of not less than a Majority in liquidation amount of the Capital Securities relating to the time, method and place of conducting any proceeding for any remedy available to the Guarantee Trustee, or relating to the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee; and

SECTION 2.2. CERTAIN RIGHTS OF GUARANTEE TRUSTEE.

(a) Subject to the provisions of Section 2.1:

(ii) Any direction or act of the Guarantor contemplated by this Guarantee shall be sufficiently evidenced by an Officer's Certificate.

(iv) The Guarantee Trustee shall have no duty to see to any recording, filing or registration of any instrument (or any re-recording, refiling or re-registration thereof).

(v) The Guarantee Trustee may consult with counsel of its selection, and the advice or opinion of such counsel with respect to legal matters shall be fall 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 Guarantee Trustee shall have the right at any time to seek instructions concerning the administration of this Guarantee from any court of competent jurisdiction.

SECTION 2.4. EVENTS OF DEFAULT; WAIVER.

(a) An Event of Default under this Guarantee will occur upon the failure of the Guarantor to perform any of its payment or other obligations hereunder.

SECTION 2.5. EVENTS OF DEFAULT; NOTICE.

ARTICLE III

GUARANTEE TRUSTEE

SECTION 3.1. GUARANTEE TRUSTEE; ELIGIBILITY.

(a) There shall at all times be a Guarantee Trustee which shall:

(i) not be an Affiliate of the Guarantor, and

SECTION 3.2. APPOINTMENT, REMOVAL AND RESIGNATION OF GUARANTEE TRUSTEE.

(a) Subject to Section 3.2(b), the Guarantee Trustee may be appointed or removed without cause at any time by the Guarantor except during an Event of Default.

(e) No Guarantee Trustee shall be liable for the acts or omissions to act of any Successor Guarantee Trustee.

ARTICLE IV

GUARANTEE

SECTION 4.1. GUARANTEE.

(b) The Guarantor hereby also agrees to assume any and all Obligations of the Issuer and in the event any such Obligation is not so assumed, subject to the terms and conditions hereof, the Guarantor hereby irrevocably and unconditionally guarantees to each Beneficiary the full payment, when and as due, of any and all Obligations to such Beneficiaries. This Guarantee 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.

(b) the extension of time for the payment by the Issuer of all or any portion of the Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or any other sums payable under the terms of the Capital Securities or the extension of time for the performance of any other obligation under, arising out of or in connection with, the Capital Securities (other than an extension of time for payment of Distributions, Redemption Price, Special Redemption Price, Liquidation Distribution or other sum payable that results from the extension of any interest payment period on the Debentures or any extension of the maturity date of the Debentures permitted by the Indenture);

(e) any invalidity of, or defect or deficiency in, the Capital Securities;

(f) the settlement or compromise of any obligation guaranteed hereby or hereby incurred; or

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 4.4. RIGHTS OF HOLDERS.

(a) The Holders of a Majority in liquidation amount of the Capital Securities have the right to direct the time, method and place of conducting any proceeding for any remedy available to the- Guarantee Trustee in respect of this Guarantee or to direct the exercise of any trust or power conferred upon the Guarantee Trustee under this Guarantee; provided, however, that (subject to
Section 2.1) the Guarantee Trustee shall have the right to decline to follow any such direction if the Guarantee Trustee being advised by counsel determines that the action or proceeding so directed may not lawfully be taken or if the Guarantee Trustee in good faith by its board of directors or trustees, executive committees or a trust committee of directors or trustees and/or Responsible Officers shall determine that the action or proceedings so directed would involve the Guarantee Trustee in personal liability.

SECTION 4.5. GUARANTEE OF PAYMENT. This Guarantee creates a guarantee of payment and not of collection.

before proceeding against the Guarantor. The Guarantor shall be subrogated to all rights (if any) of any Beneficiary against the Issuer in respect of any amounts paid to the Beneficiaries by the Guarantor under this 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 rights 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 Guarantee, if at the time of any such payment, and after giving effect to such payment, any amounts are due and unpaid under this Guarantee.

ARTICLE V

LIMITATION OF TRANSACTIONS; SUBORDINATION

SECTION 5.1. LIMITATION OF TRANSACTIONS. So long as any Capital Securities remain outstanding, if (a) there shall have occurred and be continuing an Event of Default or a Declaration Event of Default or (b) the Guarantor shall have selected an Extension Period as provided in the Declaration and such period, or any extension thereof, shall have commenced and be continuing, then the Guarantor shall not and shall not permit any Affiliate to (x) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Guarantor's or such Affiliate's capital stock (other than payments of dividends or distributions to the Guarantor) or make any guarantee payments with respect to the foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Guarantor or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (x) and (y) above, (i) repurchases, redemptions or other acquisitions of shares of capital stock of the Guarantor in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Guarantor (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the occurrence of the Event of Default, Declaration Event of Default or Extension Period, as applicable, (ii) as a result of any exchange or conversion of any class or series of the Guarantor's capital stock (or any capital stock of a subsidiary of the Guarantor) for any class or series of the Guarantor's capital stock or of any class or series of the Guarantor's indebtedness for any class or series of the Guarantor's capital stock, (iii) the purchase of fractional interests in shares of the Guarantor's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (iv) any declaration of a dividend in connection with any stockholders' rights plan, or the issuance of rights, stock or other property under any stockholders' rights plan, or the redemption or repurchase of rights pursuant thereto, (v) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (vi) payments under this Guarantee).

subordinated to all existing and future liabilities of the Guarantor's subsidiaries, and claimants should look only to the assets of the Guarantor for payments hereunder. This Guarantee does not limit the incurrence or issuance of other secured or unsecured debt of the Guarantor, including Senior Indebtedness of the Guarantor, under any indenture that the Guarantor may enter into in the future or otherwise.

ARTICLE VI

TERMINATION

SECTION 6.1. TERMINATION. This Guarantee shall terminate as to the Capital Securities (i) upon full payment of the Redemption Price or Special Redemption Price of all Capital Securities then outstanding, (ii) upon the distribution of all of the Debentures to the Holders of all of the Capital Securities or (iii) upon full payment of the amounts payable in accordance with the Declaration upon dissolution of the Issuer. This Guarantee will continue to be effective or will be reinstated, as the case may be, if at any time any Holder of Capital Securities must restore payment of any sums paid under the Capital Securities or under this Guarantee.

ARTICLE VII

INDEMNIFICATION

SECTION 7.1. EXCULPATION.

(b) An Indemnified Person shall be fully protected in relying in good faith upon the records of the Issuer or the Guarantor and upon such information, opinions, reports or statements presented to the Issuer or 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, if selected by such Indemnified Person, has been selected with reasonable care by such Indemnified Person, 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 Capital Securities might properly be paid.

SECTION 7.2. INDEMNIFICATION.

(a) The Guarantor agrees to indemnify each Indemnified Person for, and to hold each Indemnified Person harmless against, any and all loss, liability, damage, claim or expense incurred without negligence or willful misconduct on the part of the Indemnified Person, arising out of or in connection with the acceptance or administration of the trust or trusts hereunder, including, but not limited to, the costs and expenses (including reasonable legal fees and expenses) of the Indemnified Person defending itself against, or investigating, any claim or liability in connection with the exercise or performance of any of the Indemnified Person's powers or duties hereunder. The obligation to indemnify as set forth in this Section 7.2 shall survive the resignation or removal of the Guarantee Trustee and the termination of this Guarantee.

(b) Promptly after receipt by an Indemnified Person under this Section 7.2 of notice of the commencement of any action, such Indemnified Person will, if a claim in respect thereof is to be made against the Guarantor under this Section 7.2, notify the Guarantor in writing of the commencement thereof; but the failure so to notify the Guarantor (i) will not relieve the Guarantor from liability under paragraph (a) above unless and to the extent that the Guarantor did not otherwise learn of such action and such failure results in the forfeiture by the Guarantor of substantial rights and defenses and (ii) will not, in any event, relieve the Guarantor from any obligations to any Indemnified Person other than the indemnification obligation provided in paragraph (a) above. The Guarantor shall be entitled to appoint counsel of the Guarantor's choice at the Guarantor's expense to represent the Indemnified Person in any action for which indemnification is sought (in which case the Guarantor shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the Indemnified Person or Persons except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the Indemnified Person. Notwithstanding the Guarantor's election to appoint counsel to represent the Guarantor in an action, the Indemnified Person shall have the right to employ separate counsel (including local counsel), and the Guarantor shall bear the reasonable fees, costs and expenses of such separate counsel if
(i) the use of counsel chosen by the Guarantor to represent the Indemnified Person would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the Indemnified Person and the Guarantor and the Indemnified Person shall have reasonably concluded that there may be legal defenses available to it and/or other Indemnified Person(s) which are different from or additional to those available to the Guarantor, (iii) the Guarantor shall not have employed counsel satisfactory to the Indemnified Person to represent the Indemnified Person within a reasonable time after notice of the institution of such action or (iv) the Guarantor shall authorize the Indemnified Person to employ separate counsel at the expense of the Guarantor. The Guarantor will not, without the prior written consent of the Indemnified Persons, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the Indemnified Persons are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each Indemnified Person from all liability arising out of such claim, action, suit or proceeding.

SECTION 7.3. COMPENSATION; REIMBURSEMENT OF EXPENSES. The Guarantor agrees:

For purposes of clarification, this Section 7.3 does not contemplate the payment by the Guarantor of acceptance or annual administration fees owing to the Guarantee Trustee for services to be provided by the Guarantee Trustee under this Guarantee or the fees and expenses of the Guarantee Trustee's counsel in connection with the closing of the transactions contemplated by this Guarantee. The provisions of this Section 7.3 shall survive the resignation or removal of the Guarantee Trustee and the termination of this Guarantee.

ARTICLE VIII

MISCELLANEOUS

U.S. Bank National Association
225 Asylum Street, Goodwin Square
Hartford, Connecticut 06103
Attention: Corporate Trust Services Division Telecopy: 860-244-1889

With a copy to:

U.S. Bank National Association
1 Federal Street - 3rd Floor
Boston, Massachusetts 02110
Attention: Paul D. Allen, Corporate Trust Services Division Telecopy: 617-603-6665

Home BancShares, Inc.
719 Harkrider Street, 3rd Floor Conway, Arkansas 72032
Attention: Randy Mayor
Telecopy: 501-328-4637

SECTION 8.4. BENEFIT. This Guarantee is solely for the benefit of the Beneficiaries and, subject to Section 2.1(a), is not separately transferable from the Capital Securities.

SECTION 8.7 SEPARABILITY. In case one or more Of the provisions contained in this Guarantee 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 Guarantee, but this Guarantee shall be construed as if such invalid or illegal or unenforceable provision had never been contained herein.

Signatures appear on the following page

THIS GUARANTEE is executed as of the day and year first above written.

HOME BANCSHARES, INC., as Guarantor

By: Randy Mayor

Name: Randy Mayor Title: Treasurer

U.S. BANK NATIONAL ASSOCIATION,
as a Guarantee Trustee

By: Paul D. Allen

Name: Paul D. Allen Title: Vice President

EXHIBIT 4.13

MARINE BANCORP., INC.,
AS ISSUER

INDENTURE

DATED AS OF MARCH 26, 2003

U. S. BANK NATIONAL ASSOCIATION,
AS TRUSTEE

FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES

DUE 2033

TABLE OF CONTENTS

                                                                            Page
                                                                            ----
ARTICLE I. DEFINITIONS ..................................................     1
Section 1.1.   Definitions. .............................................     1

ARTICLE II. DEBENTURES ..................................................     7
Section 2.1.   Authentication and Dating. ...............................     7
Section 2.2.   Form of Trustee's Certificate of Authentication. .........     8
Section 2.3.   Form and Denomination of Debentures ......................     8
Section 2.4.   Execution of Debentures. .................................     8
Section 2.5.   Exchange and Registration of Transfer of Debentures. .....     8
Section 2.6.   Mutilated, Destroyed, Lost or Stolen Debentures. .........    10
Section 2.7.   Temporary Debentures .....................................    11
Section 2.8.   Payment of Interest and Additional Interest. .............    12
Section 2.9.   Cancellation of Debentures Paid, etc .....................    13
Section 2.10.  Computation of Interest                                       13
Section 2.11.  Extension of Interest Payment Period. ....................    14
Section 2.12.  CUSIP Numbers ............................................    15

ARTICLE III. PARTICULAR COVENANTS OF THE COMPANY ........................    16
Section 3.1.   Payment of Principal, Premium and Interest; Agreed
               Treatment of the Debentures. .............................    16
Section 3.2.   Offices for Notices and Payments, etc ....................    16
Section 3.3.   Appointments to Fill Vacancies in Trustee's Office .......    17
Section 3.4.   Provision as to Paying Agent .............................    17
Section 3.5.   Certificate to Trustee ...................................    18
Section 3.6.   Additional Sums. .........................................    18
Section 3.7.   Compliance with Consolidation Provisions .................    18
Section 3.8.   Limitation on Dividends ..................................    18
Section 3.9.   Covenants as to the Trust. ...............................    19
Section 3.10.  Additional Junior Indebtedness ...........................    19

ARTICLE IV. SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND
            THE TRUSTEE .................................................    19
Section 4.1.   Securityholders' Lists. ..................................    19
Section 4.2.   Preservation and Disclosure of Lists .....................    20

ARTICLE V. REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS UPON AN
           EVENT OF DEFAULT .............................................    21
Section 5.1.   Events of Default ........................................    21
Section 5.2.   Payment of Debentures on Default; Suit Therefor. .........    22
Section 5.3.   Application of Moneys Collected by Trustee ...............    24
Section 5.4.   Proceedings by Securityholders. ..........................    24
Section 5.5.   Proceedings by Trustee. ..................................    24
Section 5.6.   Remedies Cumulative and Continuing; Delay or Omission
               Not a Waiver. ............................................    25

Section 5.7.   Direction of Proceedings and Waiver of Defaults by
               Majority of Securityholders ..............................    25
Section 5.8.   Notice of Defaults .......................................    25
Section 5.9.   Undertaking to Pay Costs .................................    26

ARTICLE VI. CONCERNING THE TRUSTEE ......................................    26
Section 6.1.   Duties and Responsibilities of Trustee ...................    26
Section 6.2.   Reliance on Documents, Opinions, etc. ....................    27
Section 6.3.   No Responsibility for Recitals, etc ......................    28
Section 6.4.   Trustee, Authenticating Agent, Paying Agents, Transfer
               Agents or Registrar May Own Debentures ...................    28
Section 6.5.   Moneys to be Held in Trust. ..............................    28
Section 6.6.   Compensation and Expenses of Trustee .....................    28
Section 6.7.   Officers' Certificate as Evidence ........................    29
Section 6.8.   Eligibility of Trustee ...................................    29
Section 6.9.   Resignation or Removal of Trustee ........................    30
Section 6.10.  Acceptance by Successor Trustee ..........................    31
Section 6.11.  Succession by Merger, etc ................................    31
Section 6.12.  Authenticating Agents ....................................    32

ARTICLE VII. CONCERNING THE SECURITYHOLDERS .............................    33
Section 7.1.   Action by Securityholders. ...............................    33
Section 7.2.   Proof of Execution by Securityholders. ...................    33
Section 7.3.   Who Are Deemed Absolute Owners ...........................    33
Section 7.4.   Debentures Owned by Company Deemed Not Outstanding. ......    34
Section 7.5.   Revocation of Consents; Future Holders Bound. ............    34

ARTICLE VIII. SECURITYHOLDERS' MEETINGS .................................    34
Section 8.1.   Purposes of Meetings .....................................    34
Section 8.2.   Call of Meetings by Trustee ..............................    35
Section 8.3.   Call of Meetings by Company or Securityholders. ..........    35
Section 8.4.   Qualifications for Voting. ...............................    35
Section 8.5.   Regulations. .............................................    35
Section 8.6.   Voting ...................................................    36
Section 8.7.   Quorum; Actions. .........................................    36

ARTICLE IX. SUPPLEMENTAL INDENTURES .....................................    37
Section 9.1.   Supplemental Indentures without Consent of
               Securityholders. .........................................    37
Section 9.2.   Supplemental Indentures with Consent of Securityholders ..    38
Section 9.3.   Effect of Supplemental Indentures. .......................    39
Section 9.4.   Notation on Debentures ...................................    39
Section 9.5.   Evidence of Compliance of Supplemental Indenture to be
               Furnished to Trustee .....................................    39

ARTICLE X. REDEMPTION OF SECURITIES .....................................    39
Section 10.1.  Optional Redemption. .....................................    39
Section 10.2.  Special Event Redemption. ................................    39
Section 10.3.  Notice of Redemption; Selection of Debentures ............    39
Section 10.4.  Payment of Debentures Called for Redemption. .............    40

ARTICLE XI. CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE ...........    40
Section 11.1.  Company May Consolidate, etc., on Certain Terms ..........    41
Section 11.2.  Successor Entity to be Substituted .......................    41
Section 11.3.  Opinion of Counsel to be Given to Trustee ................    41

ARTICLE XII. SATISFACTION AND DISCHARGE OF INDENTURE ....................    41
Section 12.1.  Discharge of Indenture ...................................    41
Section 12.2.  Deposited Moneys to be Held in Trust by Trustee ..........    42
Section 12.3.  Paying Agent to Repay Moneys Held. .......................    42
Section 12.4.  Return of Unclaimed Moneys. ..............................    42

ARTICLE XIII. IMMUNITY OF INCORPORATORS, STOCKHOLDERS, OFFICERS AND
              DIRECTORS .................................................    43
Section 13.1.  Indenture and Debentures Solely Corporate Obligations ....    43

ARTICLE XIV. MISCELLANEOUS PROVISIONS ...................................    43
Section 14.1.  Successors ...............................................    43
Section 14.2.  Official Acts by Successor Entity ........................    43
Section 14.3.  Surrender of Company Powers. .............................    43
Section 14.4.  Addresses for Notices, etc ...............................    43
Section 14.5.  Governing Law ............................................    44
Section 14.6.  Evidence of Compliance with Conditions Precedent .........    44
Section 14.7.  Non-Business Days ........................................    44
Section 14.8.  Table of Contents, Headings, etc .........................    44
Section 14.9.  Execution in Counterparts. ...............................    44
Section 14.10. Separability. ............................................    44
Section 14.11. Assignment. ..............................................    44
Section 14.12. Acknowledgment of Rights. ................................    45

ARTICLE XV. SUBORDINATION OF DEBENTURES .................................    45
Section 15.1.  Agreement to Subordinate .................................    45
Section 15.2.  Default on Senior Indebtedness ...........................    45
Section 15.3.  Liquidation, Dissolution, Bankruptcy. ....................    46
Section 15.4.  Subrogation. .............................................    47
Section 15.5.  Trustee to Effectuate Subordination. .....................    47
Section 15.6.  Notice by the Company. ...................................    47
Section 15.7.  Rights of the Trustee; Holders of Senior Indebtedness ....    48
Section 15.8.  Subordination May Not Be Impaired ........................    48

Exhibit A Form of Floating Rate Junior Subordinated Deferrable Interest Debenture

iii

THIS INDENTURE, dated as of March 26, 2003, between Marine Bancorp., Inc., a Florida corporation (the "Company"), and U. S. Bank National Association, a national banking association organized under the laws of the United States of America, as debenture trustee (the "Trustee").

WITNESSETH:

WHEREAS, for its lawful corporate purposes, the Company has duly authorized the issuance of its Floating Rate Junior Subordinated Deferrable Interest Debentures due 2033 (the "Debentures") under this Indenture to provide, among other things, for the execution and authentication, delivery and administration thereof, and the Company has duly authorized the execution of this Indenture; and

WHEREAS, all acts and things necessary to make this Indenture a valid agreement according to its terms, have been done and performed;

NOW, THEREFORE, This Indenture Witnesseth:

ARTICLE I.
DEFINITIONS

"Additional Interest" has the meaning set forth in Section 2.11.

"Additional Sums" has the meaning set forth in Section 3.6.

"Affiliate" has the same meaning as given to that term in Rule 405 of the Securities Act or any successor rule thereunder.

"Authenticating Agent" means any agent or agents of the Trustee which at the time shall be appointed and acting pursuant to Section 6.12.

"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 or the executive committee or any other duly authorized designated officers of the Company.

"Capital Securities Guarantee" means the guarantee agreement that the Company enters into with U. S. Bank National Association, as guarantee trustee, or other Persons that operates directly or indirectly for the benefit of holders of Capital Securities of the Trust.

liquidation of the Trust shall not in and of itself constitute a Capital Treatment Event unless such liquidation shall have occurred in connection with a Tax Event or an Investment Company Event.

"Certificate" means a certificate signed by any one of the principal executive officer, the principal financial officer or the principal accounting officer of the Company.

"Common Securities" means undivided beneficial interests in the assets of the Trust which rank pari passu with Capital Securities issued by the Trust; provided, however, that upon the occurrence and continuance of an Event of Default (as defined in the Declaration), the rights of holders of such Common Securities to payment in respect of distributions and payments upon liquidation, redemption and otherwise are subordinated to the rights of holders of such Capital Securities.

"Company" means Marine Bancorp., Inc., a Florida corporation, and, subject to the provisions of Article XI, shall include its successors and assigns.

"Coupon Rate" has the meaning set forth in Section 2.8.

"Debenture" or "Debentures" has the meaning stated in the first recital of this Indenture.

"Debenture Register" has the meaning specified in Section 2.5.

"Declaration" means the Amended and Restated Declaration of Trust of the Trust, as amended or supplemented from time to time.

"Default" means any event, act or condition that with notice or lapse of time, or both, would constitute an Event of Default.

"Defaulted Interest" has the meaning set forth in Section 2.8.

"Distribution Period" has the meaning set forth in Section 2.8.

"Determination Date" has the meaning set forth in Section 2.10.

"Event of Default" means any event specified in Section 5.1, continued for the period of time, if any, and after the giving of the notice, if any, therein designated.

"Extension Period" has the meaning set forth in Section 2.11.

"Federal Reserve " means the Board of Governors of the Federal Reserve System and any successor federal agency that is primarily responsible for regulating the activities of bank holding companies.

"Indenture" means this instrument as originally executed or, if amended or supplemented as herein provided, as so amended or supplemented, or both.

"Institutional Trustee" has the meaning set forth in the Declaration.

"Interest Payment Date" means each March 26, June 26, September 26 and December 26 during the term of this Indenture.

"Interest Rate" means for the period beginning on (and including) the date of original issuance and ending on (but excluding) June 26, 2003 the rate per annum of 4.41063% and for each Distribution Period thereafter, the Coupon Rate.

"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 written change (including any announced prospective change) in interpretation or application of law or regulation by any legislative body, court, governmental agency or regulatory authority, there is more than an insubstantial risk that the Trust is or, within 90 days of the date of such opinion will be considered an "investment company" that is required to be registered under the Investment Company Act of 1940, as amended which change or prospective change becomes effective or would become effective, as the case may be, on or after the date of the issuance of the Debentures.

"Liquidation Amount" means the stated amount of $1,000.00 per Trust Security.

"Maturity Date" means March 26, 2033.

"OTS" means the Office of Thrift Supervision and any successor federal agency that is primarily responsible for regulating the activities of savings and loan holding companies.

(a) Debentures theretofore canceled by the Trustee or the Authenticating Agent or delivered to the Trustee for cancellation;

"Redemption Date" has the meaning set forth in Section 10.1.

"Redemption Price" means 100% of the principal amount of the Debentures being redeemed, plus accrued and unpaid interest (including any Additional Interest) on such Debentures to the Redemption Date.

"Responsible Officer" means, with respect to the Trustee, any officer within the Principal Office of the Trustee, including any vice-president, any assistant vice-president, any secretary, any assistant secretary, the treasurer, any assistant treasurer, any trust officer or other officer of the Principal Trust Office of the Trustee customarily performing functions similar to those performed by any of the above designated officers and also means, with respect to a particular corporate trust matter, any other officer to whom such matter is referred because of that officer's knowledge of and familiarity with the particular subject.

"Securities Act" means the Securities Act of 1933, as amended from time to time or any successor legislation.

of business (such trade accounts payable being pari passu in right of payment to the Debentures), or (4) obligations with respect to which (a) in the instrument creating or evidencing the same or pursuant to which the same is outstanding, it is provided that such obligations are pari passu, junior or otherwise not superior in right of payment to the Debentures and (b) the Company, prior to the issuance thereof, has notified (and, if then required under the applicable guidelines of the regulating entity, has received approval from) the Federal Reserve (if the Company is a bank holding company) or the OTS (if the Company is a savings and loan holding company). Senior Indebtedness shall continue to be Senior Indebtedness and be entitled to the subordination provisions irrespective of any amendment, modification or waiver of any term of such Senior Indebtedness.

"Special Event" means any of a Capital Treatment Event, an Investment Company Event or a Tax Event.

"Special Redemption Date" has the meaning set forth in Section 10.2.

"Special Redemption Price" means (i) 107.5% of the principal amount of the Debentures being redeemed on a Special Redemption Date that occurs before March 26, 2008 and (ii) 100% of the principal amount of the Debentures being redeemed on a Special Redemption Date that occurs on March 26, 2008 or after, plus, in each case, accrued and unpaid interest (including any Additional Interest) on such Debentures to the Special Redemption Date.

"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 (including any private letter ruling, technical advice memorandum, field service advice, regulatory procedure, notice or announcement, including any notice or announcement of intent to adopt such procedures or regulations) (an "Administrative Action") or judicial decision interpreting or applying such laws or regulations, regardless of whether such Administrative Action or judicial decision is issued to or in connection with a proceeding involving the Company or the Trust and whether or not subject to review or appeal, which amendment, clarification, change, Administrative Action or decision is enacted, promulgated or announced, in each case on or after the date of original issuance of the Debentures, there is more than an insubstantial risk that: (i) the Trust is, or will be within 90 days of the date of such opinion, subject to United States federal income tax with respect to income received or accrued on the Debentures; (ii) interest payable by the Company on the Debentures is not, or within 90 days of the date of such opinion, will not be, deductible by the Company, in whole or in part, for United States federal income tax purposes; or (iii) the Trust is, or will be within 90 days of the date of such opinion, subject to more than a de minimis amount of other taxes, duties or other governmental charges.

"3-Month LIBOR" has the meaning set forth in Section 2.10.

"Telerate Page 3750" has the meaning set forth in Section 2.10.

"Trust" shall mean Marine (FL) Statutory Trust I, a Connecticut statutory trust, or any other similar trust created for the purpose of issuing Capital Securities in connection with the issuance of Debentures under this Indenture, of which the Company is the sponsor.

"Trust Securities" means Common Securities and Capital Securities of the Trust.

"Trustee" means U. S. Bank National Association, and, subject to the provisions of Article VI hereof, shall also include its successors and assigns as Trustee hereunder.

ARTICLE II.
DEBENTURES

SECTION 2.1. AUTHENTICATION AND DATING. Upon the execution and delivery of this Indenture, or from time to time thereafter, Debentures in an aggregate principal amount not in excess of $5,155,000.00 may be executed and delivered by the Company to the Trustee for authentication, and the Trustee shall thereupon authenticate and make available for delivery said Debentures to or upon the written order of the Company, signed by its Chairman of the Board of Directors, Chief Executive Officer, Vice Chairman, the President, one of its Managing Directors or one of its Vice Presidents without any further action by the Company hereunder. In authenticating such Debentures, and accepting the additional responsibilities under this Indenture in relation to such Debentures, the Trustee shall be entitled to receive, and (subject to Section 6.1) shall be fully protected in relying upon:

(b) an Opinion of Counsel prepared in accordance with Section 14.6 which shall also state:

SECTION 2.2. FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION. The Trustee's certificate of authentication on all Debentures shall be in substantially the following form:

This is one of the Debentures referred to in the within-mentioned Indenture.

U.S. Bank National Association, as
Trustee

By
Authorized Signer

Every Debenture shall be dated the date of its authentication.

registration and transfer of all Debentures as in this Article II provided. The Debenture Register shall be in written form or in any other form capable of being converted into written form within a reasonable time.

The Company or the Trustee shall not be required to exchange or register a transfer of any Debenture for a period of 15 days next preceding the date of selection of Debentures for redemption.

THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION.

IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATIONS UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING

RESTRICTIONS.

SECTION 2.6. MUTILATED, DESTROYED, LOST OR STOLEN DEBENTURES. In case any Debenture shall become mutilated or be destroyed, lost or stolen, the Company shall execute, and upon its written request

the Trustee shall authenticate and deliver, a new Debenture bearing a number not contemporaneously outstanding, in exchange and substitution for the mutilated Debenture, or in lieu of and in substitution for the Debenture so destroyed, lost or stolen. In every case the applicant for a substituted Debenture shall furnish to the Company and the Trustee such security or indemnity as may be required by them to save each of them harmless, and, in every case of destruction, loss or theft, the applicant shall also furnish to the Company and the Trustee evidence to their satisfaction of the destruction, loss or theft of such Debenture and of the ownership thereof.

SECTION 2.8. PAYMENT OF INTEREST AND ADDITIONAL INTEREST. Interest at the Interest Rate and any Additional Interest on any Debenture that is payable, and is punctually paid or duly provided for, on any Interest Payment Date for Debentures shall be paid to the Person in whose name said Debenture (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment except that interest and any Additional Interest payable on the Maturity Date shall be paid to the Person to whom principal is paid.

Each Debenture shall bear interest for the period beginning on (and including) the date of original issuance and ending on (but excluding) June 26, 2003 at a rate per annum of 4.41063%, and shall bear interest for each successive period beginning on (and including) June 26, 2003, and each succeeding Interest Payment Date, and ending on (but excluding) the next succeeding Interest Payment Date (each, a "Distribution Period") at a rate per annum equal to the 3-Month LIBOR, determined as described in Section 2.10, plus 3.15% (the "Coupon Rate"); provided, however, that prior to March 26, 2008, the Coupon Rate shall not exceed 11.75%, applied to the principal amount thereof, 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 (without duplication) on any overdue installment of interest (including Additional Interest) at the Interest Rate in effect for each applicable period compounded quarterly. Interest shall be payable (subject to any relevant Extension Period) quarterly in arrears on each Interest Payment Date with the first installment of interest to be paid on June 26, 2003.

The term "regular record date" as used in this Section shall mean the close of business on the 15th calendar day next preceding the applicable Interest Payment Date.

SECTION 2.10. COMPUTATION OF INTEREST. The amount of interest payable for the Distribution Period commencing on June 26, 2003 and each succeeding Distribution Period will be calculated by applying the Interest Rate to the principal amount outstanding at the commencement of the Distribution Period and multiplying each such amount by the actual number of days in the Distribution Period concerned divided by 360. In the event that any date on which interest is payable on the Debentures is not a Business Day, then payment of interest payable on such date shall 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 the date such payment was originally payable. All percentages resulting from any calculations on the Debentures will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)).

(a) "3-Month LIBOR" means the London interbank offered interest rate for three-month, U.S. dollar deposits determined by the Trustee in the following order of priority:

the London interbank market for U.S. dollar deposits having a three-month maturity as of 11:00 a.m. (London time) on such Determination Date. If at least two quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations;

(3) if fewer than two such quotations are provided as requested in clause (2) above, the Trustee will request four major New York City banks to provide such banks' offered quotations (expressed as percentages per annum) to leading European banks for loans in U.S. dollars as of 11:00 a.m. (London time) on such Determination Date. If at least two such quotations are provided, 3-Month LIBOR will be the arithmetic mean of such quotations; and

(b) The Interest Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law.

20 consecutive quarterly periods (each such extended interest payment period, an "Extension Period"), during which Extension Period no interest (including Additional Interest) shall be due and payable (except any Additional Sums that may be due and payable). No Extension Period may end on a date other than an Interest Payment Date. During an Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest will accrue at an annual rate equal to the Interest Rate in effect for such Extension Period, compounded quarterly from the date such interest would have been payable were it not for the Extension Period, to the extent permitted by law (such interest referred to herein as "Additional Interest"). At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date; provided further, however, that during any such Extension Period, the Company shall not and shall not permit any Affiliate to (i) declare or pay any dividends or distributions on, or redeem, purchase, acquire, or make a liquidation payment with respect to, any of the Company's or such Affiliate's capital stock (other than payments of dividends or distributions to the Company) or make any guarantee payments with respect to the foregoing or (ii) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (i) or (ii) above, (a) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, (b) as a result of any exchange or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (c) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (d) any declaration of a dividend in connection with any stockholders' rights plan, or the issuance of rights, stock or other property under any stockholders' rights plan, or the redemption or repurchase of rights pursuant thereto, (e) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or
(f) payments under the Capital Securities Guarantee). Prior to the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest to the extent permitted by applicable law. The Company must give the Trustee notice of its election to begin or extend an Extension Period at least 5 Business Days prior to the regular record date (as such term is used in Section 2.8) immediately preceding the Interest Payment Date with respect to which interest on the Debentures would have been payable except for the election to begin or extend such Extension Period. The Trustee shall give notice of the Company's election to begin a new Extension Period to the Securityholders.

SECTION 2.12. CUSIP NUMBERS. The Company in issuing the Debentures may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee shall use CUSIP numbers in notices of

redemption as a convenience to Securityholders; provided, however, that any such notice may state that no representation is made as to the correctness of such numbers 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 Trustee in writing of any change in the CUSIP numbers.

ARTICLE III.
PARTICULAR COVENANTS OF THE COMPANY

SECTION 3.1. PAYMENT OF PRINCIPAL, PREMIUM AND INTEREST; AGREED TREATMENT OF THE DEBENTURES.

(c) As of the date of this Indenture, the Company has no present intention to exercise its right under Section 2.11 to defer payments of interest on the Debentures by commencing an Extension Period.

notice to the Trustee, or specified as contemplated by Section 2.5, such office or agency for all of the above purposes shall be the office or agency of the Trustee. In case the Company shall fail to maintain any such office or agency in Hartford, Connecticut, or shall fail to give such notice of the location or of any change in the location thereof, presentations and demands may be made and notices may be served at the Principal Office of the Trustee.

In addition to any such office or agency, the Company may from time to time designate one or more offices or agencies outside Hartford, Connecticut, where the Debentures may be presented for registration of transfer and for exchange in the manner provided in this Indenture, and the Company may from time to time rescind such designation, as the Company may deem desirable or expedient; provided, however, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain any such office or agency in Hartford, Connecticut, for the purposes above mentioned. The Company will give to the Trustee prompt written notice of any such designation or rescission thereof.

SECTION 3.4. PROVISION AS TO PAYING AGENT.

(3) that it will, at any time during the continuance of any Event of Default, upon the written request of the Trustee, forthwith pay to the Trustee all sums so held in trust by such paying agent.

paying agent is the Trustee) the Company shall promptly notify the Trustee in writing of its action or failure to act.

(d) Anything in this Section 3.4 to the contrary notwithstanding, the agreement to hold sums in trust as provided in this Section 3.4 is subject to Sections 12.3 and 12.4.

any guarantee payments with respect to the foregoing or (y) make any payment of principal of or interest or premium, if any, on or repay, repurchase or redeem any debt securities of the Company or any Affiliate that rank pari passu in all respects with or junior in interest to the Debentures (other than, with respect to clauses (x) and (y) above, (1) repurchases, redemptions or other acquisitions of shares of capital stock of the Company in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of one or more employees, officers, directors or consultants, in connection with a dividend reinvestment or stockholder stock purchase plan or in connection with the issuance of capital stock of the Company (or securities convertible into or exercisable for such capital stock) as consideration in an acquisition transaction entered into prior to the applicable Extension Period, if any, (2) as a result of any exchange or conversion of any class or series of the Company's capital stock (or any capital stock of a subsidiary of the Company) for any class or series of the Company's capital stock or of any class or series of the Company's indebtedness for any class or series of the Company's capital stock, (3) the purchase of fractional interests in shares of the Company's capital stock pursuant to the conversion or exchange provisions of such capital stock or the security being converted or exchanged, (4) any declaration of a dividend in connection with any stockholders' rights plan, or the issuance of rights, stock or other property under any stockholders' rights plan, or the redemption or repurchase of rights pursuant thereto, (5) any dividend in the form of stock, warrants, options or other rights where the dividend stock or the stock issuable upon exercise of such warrants, options or other rights is the same stock as that on which the dividend is being paid or ranks pari passu with or junior to such stock and any cash payments in lieu of fractional shares issued in connection therewith, or (6) payments under the Capital Securities Guarantee).

SECTION 3.9. COVENANTS AS TO THE TRUST. For so long as the Trust Securities remain outstanding, the Company shall maintain 100% ownership of the Common Securities; provided, however, that any permitted successor of the Company under this Indenture may succeed to the Company's ownership of such Common Securities. The Company, as owner of the Common Securities, shall, except in connection with a distribution of Debentures to the holders of Trust Securities in liquidation of the Trust, the redemption of all of the Trust Securities or certain mergers, consolidations or amalgamations, each as permitted by the Declaration, cause the Trust (a) to remain a statutory trust, (b) to otherwise continue to be classified as a grantor trust for United States federal income tax purposes, and
(c) to cause each holder of Trust Securities to be treated as owning an undivided beneficial interest in the Debentures.

ARTICLE IV.
SECURITYHOLDERS' LISTS AND REPORTS
BY THE COMPANY AND THE TRUSTEE

SECTION 4.1. SECURITYHOLDERS' LISTS. The Company covenants and agrees that it will furnish or caused to be furnished to the Trustee:

except that no such lists need be furnished under this Section 4.1 so long as the Trustee is in possession thereof by reason of its acting as Debenture registrar.

SECTION 4.2. PRESERVATION AND DISCLOSURE OF LISTS.

(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 of Debentures (1) contained in the most recent list furnished to it as provided in
Section 4.1 or (2) received by it in the capacity of Debentures registrar (if so acting) hereunder. The Trustee may destroy any list furnished to it as provided in Section 4.1 upon receipt of a new list so furnished.

(1) afford such applicants access to the information preserved at the time by the Trustee in accordance with the provisions of subsection
(a) of this Section 4.2, or

Trustee shall mail copies of such material to all such Securityholders with reasonable promptness after the entry of such order and the renewal of such tender; otherwise the Trustee shall be relieved of any obligation or duty to such applicants respecting their application.

ARTICLE V.
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
UPON AN EVENT OF DEFAULT

SECTION 5.1. EVENTS OF DEFAULT. "Event of Default," wherever used herein, means any one of the following events (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):

(f) the Trust shall have voluntarily or involuntarily liquidated, dissolved, wound-up its business or otherwise terminated its existence except in connection with (i) the distribution of the Debentures to holders of such Trust Securities in liquidation of their interests in the Trust, (ii) the redemption of all of the outstanding Trust Securities or (iii) certain mergers, consolidations or amalgamations, each as permitted by the Declaration.

The foregoing provisions, however, are subject to the condition that if, at any time after the principal of the 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, (i) the Company shall pay or shall deposit with the Trustee a sum sufficient to pay all matured installments of interest upon all the Debentures and the principal of and premium, if any, on the Debentures which shall have become due otherwise than by acceleration (with interest upon such principal and premium, if any, and Additional Interest) and such amount as shall be sufficient to cover reasonable compensation to the Trustee and each predecessor Trustee, their respective agents, attorneys and counsel, and all other amounts due to the Trustee pursuant to Section 6.6, if any, and (ii) all Events of Default under this Indenture, other than the non-payment of the principal of or premium, if any, on Debentures which shall have become due by acceleration, shall have been cured, waived or otherwise remedied as provided herein -- then and in every such case the holders of a majority in aggregate principal amount of the Debentures then outstanding, by written notice to the Company and to the Trustee, may waive all defaults and rescind and annul such declaration and its consequences, but no such waiver or rescission and annulment shall extend to or shall affect any subsequent default or shall impair any right consequent thereon.

In case the Trustee shall have proceeded to enforce any right 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, the Trustee and the holders of the Debentures shall be restored respectively to their several positions and rights hereunder, and all rights, remedies and powers of the Company, the Trustee and the holders of the Debentures shall continue as though no such proceeding had been taken.

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 any other obligor on such Debentures and collect in the manner provided by law out of the property of the Company or any other obligor on such Debentures wherever situated the moneys adjudged or decreed to be payable.

(i) to file and prove a claim or claims for the whole amount of principal and interest owing and unpaid in respect of the Debentures,

(iii) to collect and receive any moneys or other property payable or deliverable on any such claims, and

(iv) to distribute the same after the deduction of its charges and expenses.

Nothing herein contained shall be construed 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 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.

shall be brought in its own name as trustee of an express trust, and any recovery of judgment shall be for the ratable benefit of the holders of the Debentures.

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 Debentures, and it shall not be necessary to make any holders of the Debentures parties to any such proceedings.

SECTION 5.3. APPLICATION OF MONEYS COLLECTED BY TRUSTEE. Any moneys collected by the Trustee pursuant to this Article V shall be applied in the following order, at the date or dates fixed by the Trustee for the distribution of such moneys, upon presentation of the several Debentures in respect of which moneys have been collected, and stamping thereon the payment, if only partially paid, and upon surrender thereof if fully paid:

First: To the payment of costs and expenses incurred by, and reasonable fees of, the Trustee, its agents, attorneys and counsel, and of all other amounts due to the Trustee under Section 6.6;

Second: To the payment of all Senior Indebtedness of the Company if and to the extent required by Article XV;

Fourth: The balance, if any, to the Company.

judicial proceedings as the Trustee shall deem most effectual to protect and enforce any of such rights, either by suit in equity or by action at law or by proceeding 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.

SECTION 5.6. REMEDIES CUMULATIVE AND CONTINUING; DELAY OR OMISSION NOT A WAIVER. Except as otherwise provided in Section 2.6, all powers and remedies given by this Article V 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 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 the Debentures, and no delay or omission of the Trustee or of any holder of any of the Debentures to exercise any right, remedy or power accruing upon any Event of Default occurring and continuing as aforesaid shall impair any such right, remedy or power, or shall be construed to be a waiver of any such default or an acquiescence therein; and, subject to the provisions of Section 5.4, every power and remedy given by this Article V or by law to the Trustee or to the Securityholders may be exercised from time to time, and as often as shall be deemed expedient, by the Trustee (in accordance with its duties under Section 6.1) or by the Securityholders.

all Securityholders, as the names and addresses of such holders appear upon the Debenture Register, notice of all defaults with respect to the Debentures known to the Trustee, unless such defaults shall have been cured before the giving of such notice (the term "defaults" for the purpose of this Section 5.8 being hereby defined to be the events specified in clauses (a), (b), (c), (d), (e) and
(f) of Section 5.1, not including periods of grace, if any, provided for therein); provided, however, that, except in the case of default in the payment of the principal of, premium, if any, or interest on any of the Debentures, the Trustee shall be protected in withholding such notice if and so long as a Responsible Officer of the Trustee in good faith determines that the withholding of such notice is in the interests of the Securityholders.

SECTION 5.9. UNDERTAKING TO PAY COSTS. All parties to this Indenture agree, and each holder of any Debenture by his 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 and expenses, 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; provided, however, that the provisions of this
Section 5.9 shall not apply to any suit instituted by the Trustee, to any suit instituted by any Securityholder, or group of Securityholders, holding in the aggregate more than 10% in principal amount of the Debentures outstanding, or to any suit instituted by any Securityholder for the enforcement of the payment of the principal of (or premium, if any) or interest on any Debenture against the Company on or after the same shall have become due and payable.

ARTICLE VI.
CONCERNING THE TRUSTEE

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, except that:

(a) prior to the occurrence of an Event of Default with respect to Debentures and after the curing or waiving of all Events of Default which may have occurred

requirements of this Indenture; but, in the case of any such certificates or opinions which 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 whether or not they conform to the requirements of this Indenture;

SECTION 6.2. RELIANCE ON DOCUMENTS, OPINIONS, ETC. Except as otherwise provided in Section 6.1:

(e) the Trustee shall not be liable for any action taken or omitted 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; nothing contained herein shall, however, relieve the Trustee of the obligation, upon the occurrence of an Event of Default with respect to the Debentures (that has not been cured or waived) to exercise with respect to Debentures 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;

(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, debenture, coupon or other paper or document, unless requested in writing to do so by the holders of not less than a majority in aggregate principal amount of the outstanding Debentures affected thereby; 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 expense or liability as a condition to so proceeding;

SECTION 6.3. NO RESPONSIBILITY FOR RECITALS, ETC. The recitals contained herein and in the Debentures (except in the certificate of authentication of the Trustee or the Authenticating Agent) shall be taken as the statements of the Company, and the Trustee and the Authenticating Agent assume no responsibility for the correctness of the same. The Trustee and the Authenticating Agent make no representations as to the validity or sufficiency of this Indenture or of the Debentures. The Trustee and the Authenticating Agent shall not be accountable for the use or application by the Company of any Debentures or the proceeds of any Debentures authenticated and delivered by the Trustee or the Authenticating Agent in conformity with the provisions of this Indenture.

SECTION 6.5. MONEYS TO BE HELD IN TRUST. Subject to the provisions of
Section 12.4, all moneys received by the Trustee or any paying agent shall, until used or applied as herein provided, be held in trust for the purpose for which they were received, but need not be segregated from other funds except to the extent required by law. The Trustee and any paying agent shall be under no liability for interest on any money received by it hereunder except as otherwise agreed in writing with the Company. So long as no Event of Default shall have occurred and be continuing, all interest allowed on any such moneys shall be paid from time to time upon the written order of the Company, signed by the Chairman of the Board of Directors, the Chief Executive Officer, the President, a Managing Director, a Vice President, the Treasurer or an Assistant Treasurer of the Company.

negligence or willful misconduct. For purposes of clarification, this Section 6.6 does not contemplate the payment by the Company of acceptance or annual administration fees owing to the Trustee pursuant to the services to be provided by the Trustee under this Indenture or the fees and expenses of the Trustee's counsel in connection with the closing of the transactions contemplated by this Indenture. The Company also covenants to indemnify each of the Trustee or any predecessor Trustee (and its officers, agents, directors and employees) for, and to hold it harmless against, any and all loss, damage, claim, liability or expense including taxes (other than taxes based on the income of the Trustee) incurred without negligence or willful misconduct on the part of the 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 claim of liability. The obligations of the Company under this
Section 6.6 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 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 particular Debentures.

The provisions of this Section shall survive the resignation or removal of the Trustee and the defeasance or other termination of this Indenture.

SECTION 6.7. OFFICERS' CERTIFICATE AS EVIDENCE. Except as otherwise provided in Sections 6.1 and 6.2, 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 omitting any action hereunder, such matter (unless other evidence in respect thereof be herein specifically prescribed) may, in the absence of negligence or willful misconduct 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 negligence or willful misconduct on the part of the Trustee, shall be full warrant to the Trustee for any action taken or omitted by it under the provisions of this Indenture upon the faith thereof.

SECTION 6.8. ELIGIBILITY OF TRUSTEE. The Trustee hereunder shall at all times be a corporation 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 authorized under such laws to exercise corporate trust powers, having (or whose obligations under this Indenture are guaranteed by an affiliate having) a combined capital and surplus of at least 50 million U.S. dollars ($50,000,000.00) and subject to supervision or examination by federal, state, territorial, or District of Columbia authority. If such corporation 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 6.8 the combined capital and surplus of such corporation shall be deemed to be its combined capital and surplus as set forth in its most recent records of condition so published.

The Company may not, nor may any Person directly or indirectly controlling, controlled by, or under common control with the Company, serve as Trustee.

SECTION 6.9. RESIGNATION OR REMOVAL OF TRUSTEE

(a) The Trustee, or any trustee or trustees hereafter appointed, may at any time resign by giving written notice of such resignation to the Company and by mailing notice thereof, at the Company's expense, to the holders of the Debentures at their addresses as they shall appear on the Debenture Register. Upon receiving such notice of resignation, the Company shall promptly appoint a successor trustee or trustees by written instrument, in duplicate, executed by order of its 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 to the affected Securityholders, 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 a Debenture or Debentures for at least six months may, subject to the provisions of Section 5.9, on behalf of himself and all others similarly situated, 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 of the following shall occur --

(2) the Trustee shall cease to be eligible in accordance with the provisions of Section 6.8 and shall fail to resign after written request therefor by the Company or by any such Securityholder, or

Business Days after such nomination the Company objects thereto, in which case, or in the case of a failure by such holders to nominate a successor Trustee, the Trustee so removed or any Securityholder, upon the terms and conditions and otherwise as in subsection (a) of this Section 6.9 provided, may petition any court of competent jurisdiction for an appointment of a successor.

SECTION 6.10. ACCEPTANCE BY SUCCESSOR TRUSTEE. Any successor Trustee appointed as provided in Section 6.9 shall execute, acknowledge and deliver to the Company and to its predecessor Trustee an instrument accepting such appointment hereunder, 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, duties and obligations with respect to the Debentures of its predecessor hereunder, with like effect as if originally named as Trustee herein; but, nevertheless, on the written request of the Company or of the successor Trustee, the Trustee ceasing to act shall, upon payment of any amounts then due it pursuant to the provisions of Section 6.6, execute and deliver an instrument transferring to such successor Trustee all the rights and powers of the Trustee so ceasing to act and shall duly assign, transfer and deliver to such successor Trustee all property and money held by such retiring Trustee thereunder. Upon request of any such successor Trustee, the Company shall execute any and all instruments in writing for more fully and certainly vesting in and confirming to such successor Trustee all such rights and powers. 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 it pursuant to the provisions of Section 6.6.

If a successor Trustee is appointed, the Company, the retiring Trustee and the successor Trustee shall execute and deliver an indenture supplemental hereto which shall contain such provisions as shall be deemed necessary or desirable to confirm that all the rights, powers, trusts and duties of the retiring Trustee with respect to the Debentures as to which the predecessor Trustee is not retiring shall continue to be vested in the predecessor Trustee, and shall add to or change any of the provisions of this Indenture as shall be necessary to provide for or facilitate the administration of the Trust hereunder by more than one Trustee, it being understood that nothing herein or in such supplemental indenture shall constitute such Trustees co-trustees of the same trust and that each such Trustee shall be Trustee of a trust or trusts hereunder separate and apart from any trust or trusts hereunder administered by any other such Trustee.

No successor Trustee shall accept appointment as provided in this Section unless at the time of such acceptance such successor Trustee shall be eligible under the provisions of Section 6.8.

In no event shall a retiring Trustee be liable for the acts or omissions of any successor Trustee hereunder.

Upon acceptance of appointment by a successor Trustee as provided in this
Section 6.10, the Company shall mail notice of the succession of such Trustee hereunder to the holders of Debentures at their addresses as they shall appear on the Debenture Register. If the Company fails to mail such notice within 10 Business Days after the acceptance of appointment by the successor Trustee, the successor Trustee shall cause such notice to be mailed at the expense of the Company.

hereunder without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided such corporation shall be otherwise eligible and qualified under this Article.

SECTION 6.12. AUTHENTICATING AGENTS. There may be one or more Authenticating Agents appointed by the Trustee upon the request of the Company with power to act on its behalf and subject to its direction in the authentication and delivery of Debentures issued upon exchange or registration of transfer thereof as fully to all intents and purposes as though any such Authenticating Agent had been expressly authorized to authenticate and deliver Debentures; provided, however, that the Trustee shall have no liability to the Company for any acts or omissions of the Authenticating Agent with respect to the authentication and delivery of Debentures. Any such Authenticating Agent shall at all times be a corporation organized and doing business under the laws of the United States or of any state or territory thereof or of the District of Columbia authorized under such laws to act as Authenticating Agent, having a combined capital and surplus of at least $50,000,000.00 and being subject to supervision or examination by federal, state, territorial or District of Columbia authority. If such corporation publishes reports of condition at least annually pursuant to law or the requirements of such authority, then for the purposes of this Section 6.12 the combined capital and surplus of such corporation 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, it shall resign immediately in the manner and with the effect herein specified in this Section.

respect to the Debentures of its predecessor hereunder, with like effect as if originally named as Authenticating Agent herein.

ARTICLE VII.
CONCERNING THE SECURITYHOLDERS

If the Company shall solicit from the Securityholders any request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, the Company may, at its option, as evidenced by an Officers' Certificate, fix in advance a record date for such Debentures for the determination of Securityholders entitled to give such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, 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 or revocation of the same 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 Debentures have authorized or agreed or consented to such request, demand, authorization, direction, notice, consent, waiver or other action or revocation of the same, and for that purpose the outstanding Debentures shall be computed as of the record date; provided, however, that no such authorization, 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 6 months after the record date.

SECTION 7.2. PROOF OF EXECUTION BY SECURITYHOLDERS. Subject to the provisions of Section 6.1, 6.2 and 8.5, proof of the execution of any instrument by a Securityholder or his agent or proxy shall be sufficient if made in accordance with such reasonable rules and regulations as may be prescribed by the Trustee or in such manner as shall be satisfactory to the Trustee. The ownership of Debentures shall be proved by the Debenture Register or by a certificate of the Debenture registrar. The Trustee may require such additional proof of any matter referred to in this Section as it shall deem necessary.

The record of any Securityholders' meeting shall be proved in the manner provided in Section 8.6.

of the principal of, premium, if any, and interest on such Debenture and for all other purposes; and neither the Company nor the Trustee nor any Authenticating Agent nor any paying agent nor any transfer agent nor any Debenture registrar shall be affected by any notice to the contrary. All such payments so made to any holder for the time being or upon his order shall be valid, and, to the extent of the sum or sums so paid, effectual to satisfy and discharge the liability for moneys payable upon any such Debenture.

SECTION 7.5. REVOCATION OF CONSENTS; FUTURE HOLDERS BOUND. At any time prior to (but not after) the evidencing to the Trustee, as provided in Section 7.1, of the taking of any action by the holders of the percentage in aggregate principal amount of the Debentures specified in this Indenture in connection with such action, any holder (in cases where no record date has been set pursuant to Section 7.1) or any holder as of an applicable record date (in cases where a record date has been set pursuant to Section 7.1) of a Debenture (or any Debenture issued in whole or in part in exchange or substitution therefor) the serial number of which is shown by the evidence to be included in the Debentures the holders of which have consented to such action may, by filing written notice with the Trustee at the Principal Office of the Trustee and upon proof of holding as provided in Section 7.2, revoke such action so far as concerns such Debenture (or so far as concerns the principal amount represented by any exchanged or substituted Debenture). Except as aforesaid any such action taken by the holder of any Debenture shall be conclusive and binding upon such holder and upon all future holders and owners of such Debenture, and of any Debenture issued in exchange or substitution therefor or on registration of transfer thereof, irrespective of whether or not any notation in regard thereto is made upon such Debenture or any Debenture issued in exchange or substitution therefor.

ARTICLE VIII.
SECURITYHOLDERS' MEETINGS

SECTION 8.1. PURPOSES OF MEETINGS. A meeting of Securityholders may be called at any time and from time to time pursuant to the provisions of this Article VIII for any of the following purposes:

(b) to remove the Trustee and nominate a successor trustee pursuant to the provisions of Article VI;

(c) to consent to the execution of an indenture or indentures supplemental hereto pursuant to the provisions of Section 9.2; or

SECTION 8.2. CALL OF MEETINGS BY TRUSTEE. The Trustee may at any time call a meeting of Securityholders to take any action specified in Section 8.1, to be held at such time and at such place as the Trustee shall determine. Notice of every meeting of the Securityholders, setting forth the time and the place of such meeting and in general terms the action proposed to be taken at such meeting, shall be mailed to holders of Debentures affected at their addresses as they shall appear on the Debentures Register and, if the Company is not a holder of Debentures, to the Company. Such notice shall be mailed not less than 20 nor more than 180 days prior to the date fixed for the meeting.

SECTION 8.3. CALL OF MEETINGS BY COMPANY OR SECURITYHOLDERS. In case at any time the Company pursuant to a Board Resolution, or the holders of at least 10% in aggregate principal amount of the Debentures, as the case may be, then outstanding, shall have requested the Trustee to call a meeting of Securityholders, by written request setting forth in reasonable detail the action proposed to be taken at the meeting, and the Trustee shall not have mailed the notice of such meeting within 20 days after receipt of such request, then the Company or such Securityholders may determine the time and the place for such meeting and may call such meeting to take any action authorized in
Section 8.1, by mailing notice thereof as provided in Section 8.2.

SECTION 8.4. QUALIFICATIONS FOR VOTING. To be entitled to vote at any meeting of Securityholders a Person shall (a) be a holder of one or more Debentures with respect to which the meeting is being held or (b) a Person appointed by an instrument in writing as proxy by a holder of one or more such Debentures. The only Persons who shall be entitled to be present or to speak at any meeting of Securityholders shall be the Persons entitled to vote at such meeting and their counsel and any representatives of the Trustee and its counsel and any representatives of the Company and its counsel.

SECTION 8.5. REGULATIONS. Notwithstanding any other provisions of this Indenture, the Trustee may make such reasonable regulations as it may deem advisable for any meeting of Securityholders, in regard to proof of the holding of Debentures and of the appointment of proxies, and in regard to the appointment and duties of inspectors of votes, the submission and examination of proxies, certificates and other evidence of the right to vote, and such other matters concerning the conduct of the meeting as it shall think fit.

pursuant to the provisions of Section 8.2 or 8.3 may be adjourned from time to time by a majority of those present, whether or not constituting a quorum, and the meeting may be held as so adjourned without further notice.

Any record so signed and verified shall be conclusive evidence of the matters therein stated.

SECTION 8.7. QUORUM; ACTIONS. The Persons entitled to vote a majority in principal amount of the Debentures then outstanding shall constitute a quorum for a meeting of Securityholders; provided, however, that if any action is to be taken at such meeting with respect to a consent, waiver, request, demand, notice, authorization, direction or other action which may be given by the holders of not less than a specified percentage in principal amount of the Debentures then outstanding, the Persons holding or representing such specified percentage in principal amount of the Debentures then outstanding will constitute a quorum. In the absence of a quorum within 30 minutes of the time appointed for any such meeting, the meeting shall, if convened at the request of Securityholders, be dissolved. In any other case the meeting may be adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such meeting. In the absence of a quorum at any such adjourned meeting, such adjourned meeting may be further adjourned for a period of not less than 10 days as determined by the permanent chairman of the meeting prior to the adjournment of such adjourned meeting. Notice of the reconvening of any adjourned meeting shall be given as provided in Section 8.2, except that such notice need be given only once not less than 5 days prior to the date on which the meeting is scheduled to be reconvened. Notice of the reconvening of an adjourned meeting shall state expressly the percentage, as provided above, of the principal amount of the Debentures then outstanding which shall constitute a quorum.

ARTICLE IX.
SUPPLEMENTAL INDENTURES

(c) to cure any ambiguity or to correct or supplement any provision contained herein or in any supplemental indenture which may be defective or inconsistent with any other provision contained herein or in any supplemental indenture, or to make such other provisions in regard to matters or questions arising under this Indenture; provided that any such action shall not materially adversely affect the interests of the holders of the Debentures;

(f) to make any change (other than as elsewhere provided in this paragraph) that does not adversely affect the rights of any Securityholder in any material respect; or

SECTION 9.2. SUPPLEMENTAL INDENTURES WITH CONSENT OF SECURITYHOLDERS. With the consent (evidenced as provided in Section 7.1) of the holders of not less than a majority in aggregate principal amount of the Debentures at the time outstanding affected by such supplemental indenture (voting as a class), the Company, when authorized by a Board Resolution, and the Trustee may from time to time and at any time enter into an indenture or indentures supplemental hereto 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 the rights of the holders of the Debentures; provided, however, that no such supplemental indenture shall without the consent of the holders of each Debenture then outstanding and affected thereby (i) change the fixed maturity of any Debenture, or reduce the principal amount thereof or any premium thereon, or reduce the rate or extend the time of payment of interest thereon, or reduce any amount payable on redemption thereof or make the principal thereof or any interest or premium thereon payable in any coin or currency other than that provided in the Debentures, or impair or affect the right of any Securityholder to institute suit for payment thereof or impair the right of repayment, if any, at the option of the holder, or (ii) reduce the aforesaid percentage of Debentures the holders of which are required to consent to any such supplemental indenture; provided further, however, that if the Debentures are held by a trust or a trustee of such trust, such supplemental indenture shall not be effective until the holders of a majority in Liquidation Amount of Trust Securities shall have consented to such supplemental indenture; provided further, however, that if the consent of the Securityholder of each outstanding Debenture is required, such supplemental indenture shall not be effective until each holder of the Trust Securities shall have consented to such supplemental indenture.

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, prepared by the Company, setting forth in general terms the substance of such supplemental indenture, to the Securityholders as their names and addresses appear upon the Debenture 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.

SECTION 9.3. EFFECT OF SUPPLEMENTAL INDENTURES. Upon the execution of any supplemental indenture pursuant to the provisions of this Article IX, this Indenture shall be and be deemed to be modified and amended in accordance therewith and the respective rights, limitations of rights, obligations, duties and immunities under this Indenture of the Trustee, the Company and the holders of Debentures shall thereafter be determined, exercised and enforced hereunder subject in all respects to such modifications and amendments and all the terms and conditions of any such supplemental indenture shall be and be deemed to be part of the terms and conditions of this Indenture for any and all purposes.

ARTICLE X.
REDEMPTION OF SECURITIES

SECTION 10.1. OPTIONAL REDEMPTION. The Company shall have the right (subject to the receipt by the Company of prior approval (i) if the Company is a bank holding company, from the Federal Reserve, if then required under applicable capital guidelines or policies of the Federal Reserve or (ii) if the Company is a savings and loan holding company, from the OTS, if then required under applicable capital guidelines or policies of the OTS) to redeem the Debentures, in whole or in part, but in all cases in a principal amount with integral multiples of $1,000.00, on any March 26, June 26, September 26 or December 26 on or after March 26, 2008 (the "Redemption Date"), at the Redemption Price.

Date or the Special Redemption Date to the holders of Debentures so to be redeemed as a whole or in part at their last addresses as the same appear on the Debenture Register. Such mailing shall be by first class mail. The notice if mailed in the manner herein provided shall be conclusively presumed to have been duly given, whether or not the holder receives such notice. In any case, failure to give such notice by mail or any defect in the notice to the holder of any Debenture designated for redemption as a whole or in part shall not affect the validity of the proceedings for the redemption of any other Debenture.

Prior to 10:00 a.m. New York City time on the Redemption Date or Special Redemption Date, as applicable, the Company will deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date or the Special Redemption Date, as applicable, all the Debentures so called for redemption at the appropriate Redemption Price or Special Redemption Price.

ARTICLE XI.
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE

SECTION 11.2. SUCCESSOR ENTITY TO BE SUBSTITUTED. In case of any such consolidation, merger, sale, conveyance, transfer or other disposition and upon the assumption by the successor entity, by supplemental indenture, executed and delivered to the Trustee and satisfactory in form to the Trustee, of the due and punctual payment of the principal of and premium, if any, and interest on all of the Debentures and the due and punctual performance and observance of all of the covenants and conditions of this Indenture to be performed or observed by the Company, such successor entity shall succeed to and be substituted for the Company, with the same effect as if it had been named herein as the Company, and thereupon the predecessor entity shall be relieved of any further liability or obligation hereunder or upon the Debentures. Such successor entity thereupon may cause to be signed, and may issue in its own name, any or all of the Debentures issuable hereunder which theretofore shall not have been signed by the Company and delivered to the Trustee or the Authenticating Agent; and, upon the order of such successor entity instead of the Company and subject to all the terms, conditions and limitations in this Indenture prescribed, the Trustee or the Authenticating Agent shall authenticate and deliver any Debentures which previously shall have been signed and delivered by the officers of the Company, to the Trustee or the Authenticating Agent for authentication, and any Debentures which such successor entity thereafter shall cause to be signed and delivered to the Trustee or the Authenticating Agent for that purpose. All the Debentures so issued shall in all respects have the same legal rank and benefit under this Indenture as the Debentures theretofore or thereafter issued in accordance with the terms of this Indenture as though all of such Debentures had been issued at the date of the execution hereof.

ARTICLE XII.
SATISFACTION AND DISCHARGE OF INDENTURE

SECTION 12.1. DISCHARGE OF INDENTURE. When

(a) the Company shall deliver to the Trustee for cancellation all Debentures theretofore authenticated (other than any Debentures which shall have been destroyed, lost or stolen

and which shall have been replaced or paid as provided in Section 2.6) and not theretofore canceled, or

and if in the case of either clause (a) or clause (b) the Company shall also pay or cause to be paid all other sums payable hereunder by the Company, then this Indenture shall cease to be of further effect except for the provisions of Sections 2.5, 2.6, 2.8, 3.1, 3.2, 3.4, 6.6, 6.8, 6.9 and 12.4 hereof shall survive until such Debentures shall mature and be paid. Thereafter, Sections 6.6 and 12.4 shall survive, and the Trustee, on demand of the Company accompanied by an Officers' Certificate and an Opinion of Counsel, each stating that all conditions precedent herein provided for relating to the satisfaction and discharge of this Indenture have been complied with, and at the cost and expense of the Company, shall execute proper instruments acknowledging satisfaction of and discharging this Indenture. The Company agrees to reimburse the Trustee for any costs or expenses thereafter reasonably and properly incurred by the Trustee in connection with this Indenture or the Debentures.

SECTION 12.2. DEPOSITED MONEYS TO BE HELD IN TRUST BY TRUSTEE. Subject to the provisions of Section 12.4, all moneys deposited with the Trustee pursuant to Section 12.1 shall be held in trust in a non-interest bearing account and applied by it to the payment, either directly or through any paying agent (including the Company if acting as its own paying agent), to the holders of the particular Debentures for the payment of which such moneys have been deposited with the Trustee, of all sums due and to become due thereon for principal, and premium, if any, and interest.

SECTION 12.4. RETURN OF UNCLAIMED MONEYS. Any moneys deposited with or paid to the Trustee or any paying agent for payment of the principal of, and premium, if any, or interest on Debentures and not applied but remaining unclaimed by the holders of Debentures for 2 years after the date upon which the principal of, and premium, if any, or interest on such Debentures, as the case may be, shall have become due and payable, shall, subject to applicable escheatment laws, be repaid to the Company by the Trustee or such paying agent on written demand; and the holder of any of the Debentures shall thereafter look only to the Company for any payment which such holder may be entitled to collect, and all liability of the Trustee or such paying agent with respect to such moneys shall thereupon cease.

ARTICLE XIII.
IMMUNITY OF INCORPORATORS, STOCKHOLDERS,
OFFICERS AND DIRECTORS

ARTICLE XIV.
MISCELLANEOUS PROVISIONS

SECTION 14.1. SUCCESSORS. All the covenants, stipulations, promises and agreements of the Company in this Indenture shall bind its successors and assigns whether so expressed or not.

SECTION 14.4. ADDRESSES FOR NOTICES, ETC. Any notice, consent, direction, request, authorization, waiver or demand which by any provision of this Indenture is required or permitted to be given, made, furnished or served by the Trustee or by the Securityholders on or to the Company may be given or served in writing by being deposited postage prepaid by registered or certified mail in a post office letter box addressed (until another address is filed by the Company, with the Trustee for the purpose) to the Company, 11290 Overseas Highway, Marathon, Florida 33050, Attention: William S. Daniels. Any notice, consent, direction, request, authorization, waiver or demand by any Securityholder or the Company 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 office of the Trustee, addressed to the Trustee, 225 Asylum Street, Goodwin Square, Hartford, Connecticut 06103 Attention: Vice President, Corporate Trust Services Division, with a copy to the Trustee, 1 Federal Street - 3rd Floor, Boston, Massachusetts 02110, Attention: Paul D. Allen, Corporate Trust Services Division. Any notice, consent, direction, request, authorization, waiver or demand on or to any Securityholder shall be deemed to have been sufficiently given or made, for all purposes, if given or made in writing at the address set forth in the Debenture Register.

ARTICLE XV.
SUBORDINATION OF DEBENTURES

No provision of this Article XV shall prevent the occurrence of any default or Event of Default hereunder.

SECTION 15.2. DEFAULT ON SENIOR INDEBTEDNESS. 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 Indebtedness of the Company following any grace period, or in the event that the maturity of any Senior Indebtedness of the Company has been accelerated because of a default and such acceleration has not been rescinded or canceled and such Senior Indebtedness has not been paid in full, then, in either case, no payment shall be made by the Company with respect to the principal (including redemption) of, or premium, if any, or interest on the Debentures.

SECTION 15.3. 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 Indebtedness 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 (and premium, if any) or interest on the Debentures. 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 Securityholders or the Trustee would be entitled to receive from the Company, except for the provisions of this Article XV, 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 Securityholders or by the Trustee under this Indenture if received by them or it, directly to the holders of Senior Indebtedness (pro rata to such holders on the basis of the respective amounts of Senior Indebtedness 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 Indebtedness may have been issued, as their respective interests may appear, to the extent necessary to pay such Senior Indebtedness 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 Indebtedness, before any payment or distribution is made to the Securityholders or to the Trustee.

SECTION 15.4. SUBROGATION. Subject to the payment in full of all Senior Indebtedness, the Securityholders shall be subrogated to the rights of the holders of such Senior Indebtedness to receive payments or distributions of cash, property or securities of the Company, applicable to such Senior Indebtedness until the principal of (and premium, if any) and interest on the Debentures shall be paid in full. For the purposes of such subrogation, no payments or distributions to the holders of such Senior Indebtedness of any cash, property or securities to which the Securityholders or the Trustee would be entitled except for the provisions of this Article XV, and no payment over pursuant to the provisions of this Article XV to or for the benefit of the holders of such Senior Indebtedness by Securityholders or the Trustee, shall, as between the Company, its creditors other than holders of Senior Indebtedness of the Company, and the holders of the Debentures be deemed to be a payment or distribution by the Company to or on account of such Senior Indebtedness. It is understood that the provisions of this Article XV are and are intended solely for the purposes of defining the relative rights of the holders of the Securities, on the one hand, and the holders of such Senior Indebtedness, on the other hand.

the receipt of any such written notice, the Trustee, subject to the provisions of Article VI of this Indenture, 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 provided for in this Section at least 2 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 premium, if any) or interest on any 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 they were received, and shall not be affected by any notice to the contrary that may be received by it within 2 Business Days prior to such date.

Nothing in this Article XV shall apply to claims of, or payments to, the Trustee under or pursuant to Section 6.6.

releasing the subordination provided in this Article XV or the obligations hereunder of the holders of the Debentures to the holders of such Senior Indebtedness, do any one or more of the following: (i) change the manner, place or terms of payment or extend the time of payment of, or renew or alter, such Senior Indebtedness, or otherwise amend or supplement in any manner such Senior Indebtedness or any instrument evidencing the same or any agreement under which such Senior Indebtedness is outstanding; (ii) sell, exchange, release or otherwise deal with any property pledged, mortgaged or otherwise securing such Senior Indebtedness; (iii) release any Person liable in any manner for the collection of such Senior Indebtedness; and (iv) exercise or refrain from exercising any rights against the Company, and any other Person.

Signatures appear on the following page

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be duly executed by this respective officers thereunto duly authorized, as of the day and year first above written.

MARINE BANCORP., INC.

By /s/ Illegible
   -------------------------------------
Name: Illegible
Title: PRESIDENT

U.S. BANK NATIONAL ASSOCIATION, as
Trustee

By /s/ Paul D. Allen
   -------------------------------------
Name: Paul D. Allen
Title: Vice President

EXHIBIT A

FORM OF FLOATING RATE JUNIOR SUBORDINATED DEFERRABLE INTEREST
DEBENTURE

[FORM OF FACE OF SECURITY]

THIS SECURITY IS NOT A SAVINGS ACCOUNT OR DEPOSIT AND IT IS NOT INSURED BY THE UNITED STATES OR ANY AGENCY OR FUND OF THE UNITED STATES, INCLUDING THE FEDERAL DEPOSIT INSURANCE CORPORATION.

THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), ANY STATE SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A IN ACCORDANCE WITH RULE 144A, (D) TO A NON-U.S. PERSON IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 (AS APPLICABLE) OF REGULATIONS UNDER THE SECURITIES ACT, (E) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (F) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO IT IN ACCORDANCE WITH THE INDENTURE, A COPY OF WHICH MAY BE OBTAINED FROM THE COMPANY.

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THE HOLDER OF THIS SECURITY AGREES THAT IT WILL COMPLY WITH THE FOREGOING

RESTRICTIONS.

Floating Rate Junior Subordinated Deferrable Interest Debenture

Marine Bancorp., Inc.

March 26, 2003

Marine Bancorp., Inc., a Florida corporation (the "Company" which term includes any successor Person under the Indenture hereinafter referred to), for value received promises to pay to U. S. Bank National Association, not in its individual capacity but solely as Institutional Trustee for Marine (FL) Statutory Trust I (the "Holder") or registered assigns, the principal sum of five million one hundred fifty-five thousand dollars ($5,155,000.00) on March 26, 2033, and to pay interest on said principal sum from March 26, 2003, 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 26, June 26, September 26 and December 26 of each year commencing on June 26, 2003, at an annual rate equal to 4.41063% beginning on (and including) the date of original issuance and ending on (but excluding) June 26, 2003 and at an annual rate for each successive period beginning on (and including) June 26, 2003, and each succeeding Interest Payment Date, and ending on (but excluding) the next succeeding Interest Payment Date (each a "Distribution Period"), equal to 3-Month LIBOR, determined as described below, plus 3.15% (the "Coupon Rate"); provided, however, that prior to March 26, 2008, the Coupon Rate shall not exceed 11.75%, applied to the principal amount hereof, until the principal hereof is paid or duly provided for or made available for payment, 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 (including Additional Interest) at the Interest Rate in effect for each applicable period, compounded quarterly, from the dates such amounts are due

A-1-2

until they are paid or made available for payment. The amount of interest payable for any period will be computed on the basis of the actual number of days in the Distribution Period concerned divided by 360. In the event that any date on which interest is payable on this Debenture is not a Business Day, then a payment of the interest payable on such date will be made on the next succeeding day which is a Business Day (and without any interest or other payment in respect of any such delay), 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 the payment was originally payable. 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 Debenture (or one or more Predecessor Securities) is registered at the close of business on the regular record date for such interest installment, which shall be fifteen days prior to the day on which the relevant Interest Payment Date occurs. Any such interest installment not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such regular record date and may be paid to the Person in whose name this Debenture (or one or more Predecessor Securities) is registered at the close of business on a special record date.

The Interest Rate for any Distribution Period will at no time be higher than the maximum rate then permitted by New York law as the same may be modified by United States law.

All percentages resulting from any calculations on the Debentures will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point, with five one-millionths of a percentage point rounded upward (e.g., 9.876545% (or .09876545) being rounded to 9.87655% (or .0987655), and all

A-1-3

dollar amounts used in or resulting from such calculation will be rounded to the nearest cent (with one-half cent being rounded upward)).

So long as no Event of Default has occurred and is continuing, the Company shall have the right, from time to time, and without causing an Event of Default, to defer payments of interest on the Debentures by extending the interest payment period on the Debentures at any time and from time to time during the term of the Debentures, for up to 20 consecutive quarterly periods (each such extended interest payment period, an "Extension Period"), during which Extension Period no interest (including Additional Interest) shall be due and payable (except any Additional Sums that may be due and payable). No Extension Period may end on a date other than an Interest Payment Date. During an Extension Period, interest will continue to accrue on the Debentures, and interest on such accrued interest will accrue at an annual rate equal to the Interest Rate in effect for such Extension Period, compounded quarterly from the date such interest would have been payable were it not for the Extension Period, to the extent permitted by law (such interest referred to herein as "Additional Interest"). At the end of any such Extension Period the Company shall pay all interest then accrued and unpaid on the Debentures (together with Additional Interest thereon); provided, however, that no Extension Period may extend beyond the Maturity Date; provided further, however, that during any such Extension Period, the Company shall not and shall not permit any Affiliate to engage in any of the activities or transactions described on the reverse side hereof and in the Indenture. Prior to the termination of any Extension Period, the Company may further extend such period, provided that such period together with all such previous and further consecutive extensions thereof shall not exceed 20 consecutive quarterly periods, or extend beyond the Maturity Date. Upon the termination of any Extension Period and upon the payment of all accrued and unpaid interest and Additional Interest, the Company may commence a new Extension Period, subject to the foregoing requirements. No interest or Additional Interest shall be due and payable during an Extension Period, except at the end thereof, but each installment of interest that would otherwise have been due and payable during such Extension Period shall bear Additional Interest. The Company must give the Trustee notice of its election to begin or extend an Extension Period at least 5 Business Days prior to the regular record date (as such term is used in Section 2.8 of the Indenture) immediately preceding the Interest Payment Date with respect to which interest on the Debentures would have been payable except for the election to begin or extend such Extension Period.

A-1-4

The provisions of this Debenture are continued on the reverse side hereof and such provisions shall for all purposes have the same effect as though fully set forth at this place.

A-1-5

IN WITNESS WHEREOF, the Company has duly executed this certificate.

MARINE BANCORP., INC.

Name:
Title:

CERTIFICATE OF AUTHENTICATION

This is one of the Debentures referred to in the within-mentioned Indenture.

U. S. Bank National Association, as Trustee

By:

Authorized Officer

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[FORM OF REVERSE OF DEBENTURE]

This Debenture is one of the floating rate junior subordinated deferrable interest debentures of the Company, all issued or to be issued under and pursuant to the Indenture dated as of March 26, 2003 (the "Indenture"), duly executed and delivered between the Company and 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 Debentures. The Debentures are limited in aggregate principal amount as specified in the Indenture.

Prior to 10:00 a.m. New York City time on the Redemption Date or Special Redemption Date, as applicable, the Company will deposit with the Trustee or with one or more paying agents an amount of money sufficient to redeem on the Redemption Date or the Special Redemption Date, as applicable, all the Debentures so called for redemption at the appropriate Redemption Price or Special Redemption Price.

Notwithstanding the foregoing, any redemption of Debentures by the Company shall be subject to the receipt of any and all required regulatory approvals.

A-1-7

A-1-8

cash payments in lieu of fractional shares issued in connection herewith, or (6) payments under the Capital Securities Guarantee).

THE INDENTURE AND THE DEBENTURES SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAW PRINCIPLES THEREOF.

A-1-9

Exhibit 4.14

AMENDED AND RESTATED DECLARATION
OF TRUST

BY AND AMONG

U. S. BANK NATIONAL ASSOCIATION,
AS INSTITUTIONAL TRUSTEE,

MARINE BANCORP., INC.,
AS SPONSOR,

AND

WILLIAM S. DANIELS AND HUNTER PADGETT,
AS ADMINISTRATORS,

DATED AS OF MARCH 26, 2003

TABLE OF CONTENTS

                                                                                            Page
                                                                                            ----
ARTICLE I INTERPRETATION AND DEFINITIONS ..................................................   1
   Section 1.1.    Definitions. ...........................................................   1

ARTICLE II ORGANIZATION ...................................................................   7
   Section 2.1.    Name ...................................................................   7
   Section 2.2.    Office. ................................................................   7
   Section 2.3.    Purpose ................................................................   7
   Section 2.4.    Authority. .............................................................   7
   Section 2.5.    Title to Property of the Trust. ........................................   7
   Section 2.6.    Powers and Duties of the Institutional Trustee and the Administrators ..   8
   Section 2.7.    Prohibition of Actions by the Trust and the Institutional Trustee ......  11
   Section 2.8.    Powers and Duties of the Institutional Trustee. ........................  12
   Section 2.9.    Certain Duties and Responsibilities of the Institutional Trustee and
                   Administrators .........................................................  13
   Section 2.10.   Certain Rights of Institutional Trustee ................................  14
   Section 2.11.   Execution of Documents. ................................................  16
   Section 2.12.   Not Responsible for Recitals or Issuance of Securities .................  16
   Section 2.13.   Duration of Trust. .....................................................  16
   Section 2.14.   Mergers. ...............................................................  16

ARTICLE III SPONSOR .......................................................................  18
   Section 3.1.    Sponsor's Purchase of Common Securities ................................  18
   Section 3.2.    Responsibilities of the Sponsor. .......................................  18
   Section 3.3.    Expenses ...............................................................  18
   Section 3.4.    Right to Proceed .......................................................  19

ARTICLE IV INSTITUTIONAL TRUSTEE AND ADMINISTRATORS .......................................  19
   Section 4.1.    Institutional Trustee; Eligibility. ....................................  19
   Section 4.2.    Administrators .........................................................  19
   Section 4.3.    Appointment, Removal and Resignation of Institutional Trustee and
                   Administrators .........................................................  20
   Section 4.4.    Institutional Trustee Vacancies ........................................  21
   Section 4.5.    Effect of Vacancies ....................................................  21
   Section 4.6.    Meetings of the Institutional Trustee and the Administrators ...........  21
   Section 4.7.    Delegation of Power. ...................................................  22
   Section 4.8.    Conversion, Consolidation or Succession to Business. ...................  22

ARTICLE V DISTRIBUTIONS ...................................................................  22
   Section 5.1.    Distributions ..........................................................  22

ARTICLE VI ISSUANCE OF SECURITIES .........................................................  22
   Section 6.1.    General Provisions Regarding Securities. ...............................  22
   Section 6.2.    Paying Agent, Transfer Agent and Registrar .............................  23
   Section 6.3.    Form and Dating ........................................................  23
   Section 6.4.    Mutilated, Destroyed, Lost or Stolen Certificates ......................  24
   Section 6.5.    Temporary Securities. ..................................................  24
   Section 6.6.    Cancellation. ..........................................................  24

   Section 6.7.    Rights of Holders; Waivers of Past Defaults. ...........................  24

ARTICLE VII DISSOLUTION AND TERMINATION OF TRUST ..........................................  26
   Section 7.1.    Dissolution and Termination of Trust ...................................  26

ARTICLE VIII TRANSFER OF INTERESTS ........................................................  27
   Section 8.1.    General. ...............................................................  27
   Section 8.2.    Transfer Procedures and Restrictions. ..................................  28
   Section 8.3.    Deemed Security Holders ................................................  29

ARTICLE IX LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES,
           INSTITUTIONAL TRUSTEE OR OTHERS ................................................  30
   Section 9.1.    Liability. .............................................................  30
   Section 9.2.    Exculpation. ...........................................................  30
   Section 9.3.    Fiduciary Duty. ........................................................  31
   Section 9.4.    Indemnification. .......................................................  31
   Section 9.5.    Outside Businesses. ....................................................  33
   Section 9.6.    Compensation; Fee. .....................................................  33

ARTICLE X ACCOUNTING ......................................................................  34
   Section 10.1.   Fiscal Year ............................................................  34
   Section 10.2.   Certain Accounting Matters .............................................  34
   Section 10.3.   Banking. ...............................................................  34
   Section 10.4.   Withholding. ...........................................................  34

ARTICLE XI AMENDMENTS AND MEETINGS ........................................................  35
   Section 11.1.   Amendments. ............................................................  35
   Section 11.2.   Meetings of the Holders of Securities; Action by Written Consent. ......  36

ARTICLE XII REPRESENTATIONS OF INSTITUTIONAL TRUSTEE ......................................  37
   Section 12.1.   Representations and Warranties of Institutional Trustee ................  37

ARTICLE XIII MISCELLANEOUS ................................................................  38
   Section 13.1.   Notices ................................................................  38
   Section 13.2.   Governing Law ..........................................................  39
   Section 13.3.   Intention of the Parties ...............................................  39
   Section 13.4.   Headings ...............................................................  39
   Section 13.5.   Successors and Assigns .................................................  39
   Section 13.6.   Partial Enforceability. ................................................  39
   Section 13.7.   Counterparts ...........................................................  39

Annex I ......   Terms of Securities
Exhibit A-1 ..   Form of Capital Security Certificate
Exhibit A-2 ..   Form of Common Security Certificate
Exhibit B ....   Specimen of Initial Debenture
Exhibit C ....   Placement Agreement

AMENDED AND RESTATED

DECLARATION OF TRUST

MARINE (FL) STATUTORY TRUST I

MARCH 26, 2003

WHEREAS, the Institutional Trustee, the Administrators and the Sponsor established Marine (FL) Statutory Trust I (the "Trust"), a statutory trust under the Statutory Trust Act (as defined herein) pursuant to a Declaration of Trust dated as of March 17, 2003 (the "Original Declaration"), and a Certificate of Trust filed with the Secretary of State of the State of Connecticut on March 17, 2003, for the sole purpose of issuing and selling certain securities representing undivided beneficial interests in the assets of the Trust and investing the proceeds thereof in certain debentures of the Debenture Issuer (as defined herein);