Exhibit 99.2
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LETTER OF CREDIT AGREEMENT
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THIS AGREEMENT (this "Agreement") is made as of November 12, 2004, by CONN
APPLIANCES, INC., a Texas corporation ("CAI") and CAI CREDIT INSURANCE AGENCY,
INC., a Louisiana corporation (collectively, herein called "Borrowers"), the
financial institutions listed on the signature pages hereof (collectively, the
"Lenders" and individually, a "Lender")and JPMORGAN CHASE BANK ("Agent"), in its
capacity as administrative agent for the Lenders under that certain Credit
Agreement (as amended, supplemented and restated, the "Credit Agreement") dated
April 23, 2003 among Borrower, Agent and the Lenders, as amended. Any
capitalized term defined in the Credit Agreement which is used in this Agreement
shall, unless otherwise defined herein, have the meaning ascribed to it in the
Credit Agreement. For convenience, Borrower, Agent and the Lenders desire to
gather the provisions of the Credit Agreement relating solely to the issuance of
Letters of Credit into a separate agreement.
AGREEMENTS:
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NOW, THEREFORE, in consideration of the execution and delivery of the Note,
and for other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties agree as follows:
1. Definitions.
Capitalized words and phrases used in this Agreement have the meanings
provided below. Unless otherwise stated, references to sections are to sections
in this Agreement.
Issuer shall mean JPMorgan Chase Bank, in its capacity as the issuer of
Letters of Credit hereunder, and its successors in such capacity as provided in
Section 2(i). The Issuer may, in its discretion, and with the consent of CAI
(such consent not to be unreasonably withheld) arrange for one or more Letters
of Credit to be issued by Affiliates of the Issuer, in which case the term
"Issuer" shall include any such Affiliate with respect to Letters of Credit
issued by such Affiliate.
Letter of Credit shall mean any letter of credit issued pursuant to this
Agreement.
LC Disbursement shall mean a payment made by the Issuer pursuant to a
Letter of Credit.
LC Exposure shall mean, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its pro rata share of the total LC Exposure at such time.
2. Letters of Credit.
(a) General. Subject to the terms and conditions set forth herein, the
Borrowers may request the issuance of Letters of Credit for their own account in
support of the obligations of the Borrowers or the obligations of their
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Affiliates, in a form reasonably acceptable to the Agent and the Issuer, at any
time and from time to time during the Availability Period. In the event of any
inconsistency between the terms and conditions of this Agreement and the terms
and conditions of any form of letter of credit application or other agreement
submitted by the Borrowers to, or entered into by the Borrowers with, the Issuer
relating to any Letter of Credit, the terms and conditions of this Agreement
shall control. For purposes of calculating commitment fees due and payable under
the Credit Agreement, the Revolving Commitments of the Lenders shall be deemed
to be utilized by the undrawn face amounts of the Letters of Credit issued
hereunder.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions.
To request the issuance of a Letter of Credit (or the amendment, renewal or
extension of an outstanding Letter of Credit), the Borrowers shall hand deliver
or telecopy (or transmit by electronic communication, if arrangements for doing
so have been approved by the Issuer) to the Issuer and the Agent (at least five
Business Days in advance of the requested date of issuance, amendment, renewal
or extension) a notice requesting the issuance of a Letter of Credit, or
identifying the Letter of Credit to be amended, renewed or extended, and
specifying the date of issuance, amendment, renewal or extension (which shall be
a Business Day), the date on which such Letter of Credit is to expire (which
shall comply with paragraph (c) of this Section), the amount of such Letter of
Credit, the name and address of the beneficiary thereof and such other
information as shall be necessary to prepare, amend, renew or extend such Letter
of Credit. If requested by the Issuer, the Borrowers also shall submit a letter
of credit application on the Issuer's standard form in connection with any
request for a Letter of Credit. A Letter of Credit shall be issued, amended,
renewed or extended only if (and upon issuance, amendment, renewal or extension
of each Letter of Credit the Borrowers shall be deemed to represent and warrant
that), after giving effect to such issuance, amendment, renewal or extension (i)
the LC Exposure shall not exceed $5,000,000 and (ii) the total Revolving Credit
Exposures shall not exceed the lesser of (x) the total Revolving Loan
Commitments or (y) the then current Borrowing Base.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to the
close of business on the earlier of (i) the date one year after the date of the
issuance of such Letter of Credit (or, in the case of any renewal or extension
thereof, one year after such renewal or extension) and (ii) the date that is
five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an amendment
to a Letter of Credit increasing the amount thereof) and without any further
action on the part of the Issuer or the Lenders, the Issuer hereby grants to
each Lender, and each Lender hereby acquires from the Issuer, a participation in
such Letter of Credit equal to such Lender's pro rata share of the aggregate
amount available to be drawn under such Letter of Credit. In consideration and
in furtherance of the foregoing, each Lender hereby absolutely and
unconditionally agrees to pay to the Agent, for the account of the Issuer, such
Lender's pro rata share of each LC Disbursement made by the Issuer and not
reimbursed by the Borrowers on the date due as provided in paragraph (e) of this
Section, or of any reimbursement payment required to be refunded to the
Borrowers for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
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(e) Reimbursement. If the Issuer shall make any LC Disbursement in respect
of a Letter of Credit, the Borrowers shall reimburse such LC Disbursement by
paying to the Agent an amount equal to such LC Disbursement not later than 2:00
p.m., Houston, Texas time, on the date that such LC Disbursement is made, if the
Borrowers shall have received notice of such LC Disbursement prior to 10:00
a.m., Houston, Texas time, on such date, or, if such notice has not been
received by the Borrowers prior to such time on such date, then not later than
2:00 p.m., Houston, Texas time, on (i) the Business Day that the Borrowers
receive such notice, if such notice is received prior to 10:00 a.m., Houston,
Texas time, on the day of receipt, or (ii) the Business Day immediately
following the day that the Borrowers receive such notice, if such notice is not
received prior to such time on the day of receipt; provided that the Borrowers
may, subject to the conditions to borrowing set forth herein, request in
accordance with this Agreement that such payment be financed with an ABR
Borrowing in an equivalent amount and, to the extent so financed, the Borrowers'
obligation to make such payment shall be discharged and replaced by the
resulting ABR Borrowing. If the Borrowers fail to make such payment when due,
the Agent shall notify each Lender of the applicable LC Disbursement, the
payment then due from the Borrowers in respect thereof and such Lender's pro
rata share thereof. Promptly following receipt of such notice, each Lender shall
pay to the Agent its pro rata share of the payment then due from the Borrowers,
in the same manner as provided in Section 2.05 of the Credit Agreement with
respect to Loans made by such Lender (and Section 2.05 of the Credit Agreement
shall apply, mutatis mutandis, to the payment obligations of the Lenders), and
the Agent shall promptly pay to the Issuer the amounts so received by it from
the Lenders. Promptly following receipt by the Agent of any payment from the
Borrowers pursuant to this paragraph, the Agent shall distribute such payment to
the Issuer or, to the extent that Lenders have made payments pursuant to this
paragraph to reimburse the Issuer, then to such Lenders and the Issuer as their
interests may appear. Any payment made by a Lender pursuant to this paragraph to
reimburse the Issuer for any LC Disbursement (other than the funding of ABR
Loans as contemplated above) shall not constitute a Loan and shall not relieve
the Borrowers of their obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrowers' obligation to reimburse LC
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a Letter of Credit proving to be forged,
fraudulent or invalid in any respect or any statement therein being untrue or
inaccurate in any respect, (iii) payment by the Issuer under a Letter of Credit
against presentation of a draft or other document that does not comply with the
terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for
the provisions of this Section, constitute a legal or equitable discharge of, or
provide a right of setoff against, the Borrowers' obligations hereunder. Neither
the Agent, the Lenders nor the Issuer, nor any of their Related Parties, shall
have any liability or responsibility by reason of or in connection with the
issuance or transfer of any Letter of Credit or any payment or failure to make
any payment thereunder (irrespective of any of the circumstances referred to in
the preceding sentence), or any error, omission, interruption, loss or delay in
transmission or delivery of any draft, notice or other communication under or
relating to any Letter of Credit (including any document required to make a
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drawing thereunder), any error in interpretation of technical terms or any
consequence arising from causes beyond the control of the Issuer; provided that
the foregoing shall not be construed to excuse the Issuer from liability to the
Borrowers to the extent of any direct damages (as opposed to consequential
damages, claims in respect of which are hereby waived by the Borrowers to the
extent permitted by applicable law) suffered by the Borrowers that are caused by
the Issuer's failure to exercise care when determining whether drafts and other
documents presented under a Letter of Credit comply with the terms thereof. The
parties hereto expressly agree that, in the absence of gross negligence or
willful misconduct on the part of the Issuer (as finally determined by a court
of competent jurisdiction), the Issuer shall be deemed to have exercised care in
each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the Issuer may, in its sole discretion, either
accept and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or
refuse to accept and make payment upon such documents if such documents are not
in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuer shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuer shall promptly notify the Agent and
the Borrowers by telephone (confirmed by telecopy) of such demand for payment
and whether the Issuer has made or will make an LC Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
relieve the Borrowers of their obligation to reimburse the Issuer and the
Lenders with respect to any such LC Disbursement.
(h) Interim Interest. If the Issuer shall make any LC Disbursement, then,
unless the Borrowers shall reimburse such LC Disbursement in full on the date
such LC Disbursement is made, the unpaid amount thereof shall bear interest, for
each day from and including the date such LC Disbursement is made to but
excluding the date that the Borrowers reimburse such LC Disbursement, at the
rate per annum then applicable to ABR Loans; provided that, if the Borrowers
fail to reimburse such LC Disbursement when due pursuant to paragraph (e) of
this Section, then Section 2.11(c) of the Credit Agreement shall apply. Interest
accrued pursuant to this paragraph shall be for the account of the Issuer,
except that interest accrued on and after the date of payment by any Lender
pursuant to paragraph (e) of this Section to reimburse the Issuer shall be for
the account of such Lender to the extent of such payment.
(i) Replacement of the Issuer. The Issuer may be replaced at any time by
written agreement among the Borrowers, the Agent, the replaced Issuer and the
successor Issuer. The Agent shall notify the Lenders of any such replacement of
the Issuer. At the time any such replacement shall become effective, the
Borrowers shall pay all unpaid fees accrued for the account of the replaced
Issuer pursuant to this Agreement. From and after the effective date of any such
replacement, (i) the successor Issuer shall have all the rights and obligations
of the Issuer under this Agreement with respect to Letters of Credit to be
issued thereafter and (ii) references herein to the term "Issuer" shall be
deemed to refer to such successor or to any previous Issuer, or to such
successor and all previous Issuers, as the context shall require. After the
replacement of an Issuer hereunder, the replaced Issuer shall remain a party
hereto and shall continue to have all the rights and obligations of an Issuer
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under this Agreement with respect to Letters of Credit issued by it prior to
such replacement, but shall not be required to issue additional Letters of
Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrowers receive notice from the Agent
or the Required Lenders (or, if the maturity of the Loans has been accelerated,
Lenders with LC Exposure representing greater than 66 2/3% of the total LC
Exposure) demanding the deposit of cash collateral pursuant to this paragraph,
the Borrowers shall deposit in an account with the Agent, in the name of the
Agent and for the benefit of the Lenders, an amount in cash equal to the LC
Exposure as of such date plus any accrued and unpaid interest thereon; provided
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable, without
demand or other notice of any kind, upon the occurrence of any Event of Default
with respect to the Borrowers described in clauses (i), (j) or (k) of Article
VII of the Credit Agreement. Each such deposit shall be held by the Agent as
collateral for the payment and performance of the obligations of the Borrowers
under this Agreement. The Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall be
made at the option and sole discretion of the Agent and at the Borrowers' risk
and expense, such deposits shall not bear interest. Interest or profits, if any,
on such investments shall accumulate in such account. Moneys in such account
shall be applied by the Agent to reimburse the Issuer for LC Disbursements for
which it has not been reimbursed and, to the extent not so applied, shall be
held for the satisfaction of the reimbursement obligations of the Borrowers for
the LC Exposure at such time or, if the maturity of the Loans has been
accelerated (but subject to the consent of Lenders with LC Exposure representing
greater than 66 2/3% of the total LC Exposure), be applied to satisfy other
obligations of the Borrowers under this Agreement. If the Borrowers are required
to provide an amount of cash collateral hereunder as a result of the occurrence
of an Event of Default, such amount (to the extent not applied as aforesaid)
shall be returned to the Borrowers within three Business Days after all Events
of Default have been cured or waived.
(k) Fees. The Borrowers agree to pay to the Agent for the account of each
Lender a participation fee with respect to its participations in Letters of
Credit, which shall accrue at (x) with respect to standby Letters of Credit, the
same LIBO Rate Margin used to determine the interest rate applicable to
Eurodollar Loans on the average daily amount of such Lender's LC Exposure and
(y) with respect to commercial Letters of Credit, 0.25% per annum (in each case,
excluding any portion thereof attributable to unreimbursed LC Disbursements)
during the period from and including the date hereof to but excluding the later
of the date on which such Lender's Revolving Loan Commitment terminates and the
date on which such Lender ceases to have any LC Exposure (provided, however,
that in no event shall such participation fees for any single Letter of Credit
be less than $500), as well as the Issuer's standard fees with respect to the
amendment, renewal or extension of any Letter of Credit or processing of
drawings thereunder. Participation fees accrued through and including the last
day of March, June, September and December of each year shall be payable on the
third Business Day following such last day, commencing on the first such date to
occur after the date hereof; provided that all such fees shall be payable on the
date on which the Revolving Loan Commitments terminate and any such fees
accruing after the date on which the Revolving Loan Commitments terminate shall
be payable on demand. Any other fees payable to the Issuer pursuant to this
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paragraph shall be payable within 10 days after demand. All participation fees
shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed (including the first day but excluding the
last day).
3. Credit Agreement Incorporated. To the full extent applicable, the
Issuer shall be entitled to all of the rights and benefits accorded to the
Lenders under the Credit Agreement, including without limitation under the terms
and provisions of Sections 2.13, 2.15, 2.16(d), 4.05, 9.02, 9.03, 9.04, and 9.05
of the Credit Agreement (and the applicable terms and provisions of the Credit
Agreement are hereby incorporated into this Agreement by this reference, mutatis
mutandis).
4. Assignments by Lenders. Any assignment by any Lender of all or a
portion of its rights and obligations under the Credit Agreement (including all
or a portion of its Revolving Loan Commitment and the Loans at the time owing to
it) shall require the prior written consent of the Issuer (such consent not to
be unreasonably withheld).
5. Joint and Several Obligations. The obligations under this Agreement
of the entities comprising "Borrowers" shall be joint and several.
6. This Agreement Constitutes a "Loan Document". This Agreement shall
constitute a Loan Document under the Credit Agreement for all purposes.
EXECUTED as of the date set forth above.
CONN APPLIANCES, INC.,
a Texas corporation
By: /s/ Thomas J. Frank
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Name: Thomas J. Frank
Title: CEO and Chairman of the Board
CAI CREDIT INSURANCE AGENCY, INC.,
a Louisiana corporation
By: /s/ David R. Atnip
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Name: David R. Atnip
Title: President
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JPMORGAN CHASE BANK,
as the Agent and as a Lender
By: /s/ Robert L. Mendoza
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Name: Robert L. Mendoza
Title: Vice President
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BANK OF AMERICA, N.A.
By: /s/ Gary L. Mingle
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Name: Gary L. Mingle
Title: Senior Vice President
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SUNTRUST BANK
By: /s/ Heidi M. Khambatta
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Name: Heidi M. Khambatta
Title: Director
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HIBERNIA NATIONAL BANK
By: /s/ Bill C. Darling
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Name: Bill C. Darling
Title: Vice President
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GUARANTY BANK
By: /s/ D. Scott Wiginton
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Name: D. Scott Wiginton
Title: Senior Vice President
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The undersigned Guarantors hereby acknowledge and agree that the Loan
Documents executed by the undersigned shall apply to all liabilities and
obligations of the Borrowers under this Agreement.
CAI HOLDING CO., a Delaware corporation,
CONN APPLIANCES, L.L.C., a Delaware limited
liability company, CAI CREDIT, L.L.C., a
Delaware limited liability company,
By: /s/ Victoria L. Garrett
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Name: Victoria L. Garrett
Title: President and Secretary
CAI L.P., a Texas limited partnership
By: Conn Appliances, Inc., its General Partner
By: /s/ David R. Atnip
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Name: David R. Atnip
Title: Secretary - Treasurer
CAI CREDIT INSURANCE AGENCY L.P., a
Louisiana limited partnership
By: CAI Credit Insurance Agency, Inc., its
General Partner
By: /s/ David R. Atnip
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Name: David R. Atnip
Title: President
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CONN'S, INC, a Delaware corporation
By: /s/ Thomas J. Frank
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Name: Thomas J. Frank
Title: CEO and Chairman of the Board
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