EXHIBIT 10.25
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LETTER OF CREDIT REIMBURSEMENT AGREEMENT
Dated as of September 1, 2002
among
CAI, L.P.,
CONN FUNDING II, L.P.
and
SUNTRUST BANK,
as Letter of Credit Provider
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS................................................................1
Section 1.1 Definitions........................................................1
ARTICLE II ISSUANCE OF LC; REIMBURSEMENT OBLIGATION...................................1
Section 2.1 Issuance of LC.....................................................1
Section 2.2 Disbursements......................................................2
Section 2.3 Reimbursement......................................................2
Section 2.4 Facility Fee.......................................................3
Section 2.5 No Liability of LC Provider........................................3
Section 2.6 Surrender of LC....................................................4
Section 2.7 Conditions Precedent to Issuance...................................4
Section 2.8 Increased Capital Costs............................................5
Section 2.9 Taxes..............................................................6
Section 2.10 Obligation Absolute................................................7
Section 2.11 Events of Default..................................................8
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS..................................9
Section 3.1 Representations and Warranties of the Applicant....................9
Section 3.2 Covenants of the Applicant........................................10
ARTICLE IV MISCELLANEOUS.............................................................12
Section 4.1 Payments..........................................................12
Section 4.2 Expenses..........................................................12
Section 4.3 Indemnity.........................................................12
Section 4.4 Notices...........................................................13
Section 4.5 Governing Law; Waiver of Jury Trial...............................13
Section 4.6 Waivers...........................................................13
Section 4.7 Severability......................................................14
Section 4.8 Term..............................................................14
Section 4.9 Successors and Assigns............................................14
Section 4.10 Counterparts......................................................14
Section 4.11 Further Assurances................................................14
Section 4.12 Survival of Representations and Warranties........................14
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TABLE OF CONTENTS
(continued)
Page
Section 4.13 Obligation........................................................14
Section 4.14 Headings..........................................................15
Section 4.15 No Bankruptcy Petition Against the Issuer.........................15
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LETTER OF CREDIT REIMBURSEMENT AGREEMENT
THIS LETTER OF CREDIT REIMBURSEMENT AGREEMENT, dated as of September 1,
2002 (as amended, supplemented or otherwise modified from time to time, this
"Agreement") is entered into by and among CAI, L.P. ("CAILP"), a Texas limited
partnership, CONN FUNDING II, L.P. (the "Issuer"), a Texas limited partnership
and SUNTRUST BANK, a Georgia banking corporation (the "LC Provider").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the terms and conditions of the Base Indenture, dated
as of September 1, 2002 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Base Indenture"), between the Issuer
and Wells Fargo Bank Minnesota, National Association (the "Trustee"), CAILP and
the Issuer are required to obtain a letter of credit to provide credit support
for the Servicer's obligations to deposit Collections pursuant to Article 5 of
the Base Indenture; and
WHEREAS, CAILP and the Issuer (collectively, the "Applicant") desire to
obtain, and, subject to and in accordance with the terms of this Agreement, the
LC Provider has agreed to provide, an irrevocable letter of credit, in
substantially the form of Exhibit A attached hereto (such letter of credit and
any successor letter of credit as provided in such letter of credit, herein, the
"LC"), to provide credit support for the Servicer's obligations to deposit
Collections pursuant to Article 5 of the Base Indenture;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions. As used in this Agreement and unless the context
requires a different meaning, capitalized terms not otherwise defined herein
shall have the meanings assigned to such terms in Section 1.1 of the Base
Indenture, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms of the Indenture.
ARTICLE II
ISSUANCE OF LC;
REIMBURSEMENT OBLIGATION
Section 2.1 Issuance of LC. (a) The LC Provider hereby agrees, on the terms
and subject to the conditions hereinafter set forth, to issue to the Trustee,
for the benefit of the Lender, the LC in an initial amount equal to $10,000,000
(the "LC Commitment") for a term expiring on the earlier of (i) August 31, 2003,
or (ii) the date on which there are no amounts outstanding under the Indenture
(the "LC Expiration Date").
(b) If a successor Trustee is appointed under the Indenture, promptly
following the appointment of such successor Trustee and upon receipt of an
Instruction to Transfer substantially in the form of Annex B to the LC, the LC
Provider shall deliver to such successor Trustee, in exchange for, and
contemporaneously with the surrender of, the outstanding LC held by the
predecessor Trustee, a substitute letter of credit substantially in the form of
Exhibit A hereto, having terms identical to the then outstanding LC but in favor
of such successor Trustee.
(c) If the Applicant wishes to extend the LC Expiration Date for purposes
of this Agreement and the LC, the Applicant shall give the LC Provider written
notice to such effect not later than the date 90 days prior to the LC Expiration
Date as then in effect. If the Applicant shall make such request, the LC
Provider shall notify the Applicant and the Trustee in writing of its decision
whether or not to so extend the LC Expiration Date, which decision shall be in
its sole and absolute discretion, not later than 30 days after the notice from
the Applicant referred to above, stating that the LC Provider has or has not
agreed to extend such LC Expiration Date for an additional period as specified
by the LC Provider and, if the LC Provider does so consent, the conditions of
such consent (including conditions relating to legal documentation). If the LC
Provider shall not so notify the Applicant and the Trustee, it shall be deemed
not to have consented to such request. If the LC Provider decides to extend the
LC Expiration Date, the LC Provider shall either (i) issue to the Trustee, in
exchange for, and upon receipt of, the then outstanding LC, a substitute letter
of credit having terms substantially the same as the then outstanding LC and
with a face amount equal to the LC Amount but expiring on the LC Expiration
Date, as so extended or (ii) deliver to the Trustee an amendment to the then
outstanding LC to reflect such extension of the LC Expiration Date.
Section 2.2 Disbursements. Upon presentation by the Trustee to the LC
Provider of a Certificate of Credit Demand (the "Credit Demand") in the form of
Annex A to the LC, and subject to the terms and conditions set forth herein and
in the LC, the LC Provider shall make a disbursement (such disbursement being
referred to herein as an "LOC Credit Disbursement") at the time, in the manner
and to the account specified in the Credit Demand, up to the lesser of (i) the
full amount of such Credit demand but in an aggregate amount not exceeding the
LC Amount (as defined in the LC) and (ii) the LC Available Amount (the "LC
Available Amount").
Section 2.3 Reimbursement. The Applicant, jointly and severally, shall pay
to the LC Provider on demand on and after each date on which the LC Provider
shall pay any LOC Credit Disbursement (i) an amount equal to such LOC Credit
Disbursement plus (ii) interest on any amount remaining unpaid by the Applicant
to the LC Provider under clause (i) of this Section 2.3, from the date of such
LOC Credit Disbursement until payment in full thereof, at a rate equal to the
Alternate Reference Rate plus 2.0%.
"Alternate Reference Rate" means, on any date, a fluctuating rate of interest
per annum equal to the higher of:
(i) the rate of interest most recently announced by LC Provider at its
principal office in Atlanta, Georgia as its prime rate (it being understood
that at any one time there shall exist only one such prime rate so
announced), which rate is not necessarily intended to be the lowest rate of
interest determined by LC Provider in connection with extensions of credit;
or
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(ii) the Federal Funds Rate most recently determined by LC Provider
plus 0.50% per annum.
"Federal Funds Rate" means, for any period, the per annum rate set forth in the
weekly statistical release designated as H.15(519), or any successor
publication, published by the Federal Reserve Board (including any such
successor, "H.15(519)") for such day opposite the caption "Federal Funds
(Effective)." If on any relevant day such rate is not yet published in
H.15(519), the rate for such day will be the rate set forth in the daily
statistical release designated as the Composite 3:30 p.m. Quotations for U.S.
Government Securities, or any successor publications, published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations") for such day under the caption "Federal Funds Effective Rate." If
on any relevant day the appropriate rate for such previous day is not yet
published in either H.15(519) or the Composite 3:30 p.m. Quotations, the rate
for such day will be the arithmetic mean as determined by LC Provider of the
rates for the last transaction in overnight Federal funds arranged prior to 9:00
a.m. (New York time) on that day by each of three leading brokers of Federal
funds transactions in New York City selected by LC Provider.
Section 2.4 Facility Fee. CAILP shall pay to the LC Provider a letter of
credit fee (the "Facility Fee"), which Facility Fee shall be due and payable in
quarterly installments in arrears (or, if an LC Event of Default has occurred,
six months in advance) on the Payment Date following the end of each calendar
quarter, with each such installment being in an amount equal to 1.85% (plus, if
an LC Event of Default has occurred, 1.0%) per annum of the weighted average LC
Amount (as defined in the LC) during such calendar quarter (computed on the
basis of a 360-day year and the actual number of days during such calendar
quarter). In addition, CAILP shall pay to the LC Provider any amounts necessary
to reimburse the LC Provider for amendment, transfer or drawing costs and
miscellaneous expenses and documentary and processing charges in accordance with
the LC Provider's standard schedule of such charges in effect at the time of
amendment, transfer or drawing, as the case may be, of the LC.
Section 2.5 No Liability of LC Provider. The Applicant assumes all risks of
acts or omissions of the Trustee and any other beneficiary or transferee of the
LC with respect to its use of the LC. Neither the LC Provider nor any of its
respective employees, officers or directors shall be liable or responsible for:
(a) the use which may be made of the LC or any acts or omissions of the Trustee
and any transferee of the LC; (b) the validity or genuineness of documents, or
of any endorsement thereon, even if such documents should prove to be in any or
all respects invalid, fraudulent or forged; (c) payment by the LC Provider
against presentation of documents which do not comply with the terms of the LC,
including failure of any document to bear any reference or adequate reference to
the LC, provided the LC Provider has received a Credit Demand from the Trustee
which appears regular on its face; or (d) any other circumstances whatsoever in
making or failing to make payment under the LC; provided, however, that the LC
Provider shall be liable to the Applicant, to the extent of any direct, as
opposed to consequential, damages suffered by the Applicant which were caused by
(i) the LC Provider's willful misconduct, bad faith or gross negligence in
determining whether documents presented under the LC comply with the terms of
the LC or (ii) the LC Provider's bad faith or gross negligence in failing to
make or willful failure to make lawful payment under the LC after the
presentation to the LC Provider by the Trustee of a certificate strictly
complying with the terms and conditions of the LC (it being understood that if
the Applicant requests the LC Provider to take any action, or fail to take any
action, described in clause (i) or (ii) of this Section 2.5, the LC Provider
shall not be liable to the Applicant therefor). In furtherance and not in
limitation of the foregoing, the LC Provider may accept documents that appear on
their face, absent manifest error, to be in order, without responsibility for
further investigation.
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Section 2.6 Surrender of LC. Provided that the LC Provider is not then in
default under the LC by reason of its having wrongfully failed to honor a demand
for payment previously made by the Trustee under the LC, the LC Provider or the
Applicant shall instruct the Trustee to surrender the LC to the LC Provider on
the earliest of (i) the LC Expiration Date, (ii) the date on which the LC
Provider honors a Credit Demand equal to the then available LC Amount, and (iii)
the date on which the LC Provider receives written notice from the Trustee that
an alternate letter of credit or other credit facility has been substituted for
the LC.
Section 2.7 Conditions Precedent to Issuance. The following constitute
conditions precedent to the effectiveness of this Agreement and the obligation
of the LC Provider to execute and to deliver to the Trustee the LC:
(a) On the date of execution and delivery of this Agreement and the
LC, all representations and warranties of the Applicant contained in this
Agreement shall be true and correct in all material respects.
(b) On the date of the execution and delivery of this Agreement and
the LC, and after giving effect to the transactions contemplated by this
Agreement and the Indenture, there shall not have occurred a Pay Out Event,
a Potential Payout Event, an Event of Default, a Default or a Servicer
Default.
(c) The LC Provider shall have received the favorable written opinions
of counsel to the Applicant covering such matters as the LC Provider may
reasonably request.
(d) The LC Provider shall have received (i) copies of each of the
organizational documents of the Applicant, each certified by the Secretary
of State of the State of the Applicant's jurisdiction, (ii) resolutions of
the Applicant's general partners' Board of Directors authorizing the
execution, delivery and performance of this Agreement and the other
Transaction Documents to which the Applicant is a party (and the
procurement of the LC), certified as of the Closing Date by an officer of
the Applicant, (iii) incumbency certificates of the Applicant's general
partners with respect to its officers, agents or other representatives
authorized to execute this Agreement and (iv) executed copies of the
Transaction Documents, together with evidence reasonably satisfactory to
the LC Provider that all conditions precedent to the obligations of the
parties thereunder have been satisfied.
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(e) The LC Provider shall be satisfied with the final terms and
conditions of the transactions contemplated hereby and by the Transaction
Documents, including, without limitation, all legal aspects thereof; and
all documentation relating to the transactions shall be in form and
substance reasonably satisfactory to the LC Provider.
(f) The LC Provider shall be satisfied with the organizational
structure and capitalization of the Applicant.
(g) On the date of the execution and delivery of this Agreement and
the LC, there shall be no action, suit, investigation, litigation or
proceeding pending against or, to the knowledge of the Applicant,
threatened against or affecting the Applicant before any court or
arbitrator or any governmental authority that (A) would be reasonably
likely to have a Material Adverse Effect with respect to the Applicant, or
(B) which in any manner draws into question the legality, validity or
enforceability of this Agreement or any other Transaction Document, the
consummation of the transactions contemplated hereby or thereby, or the
ability of any Person to comply with any of the respective terms hereunder
or thereunder.
(h) All governmental and third party consents, actions, authorizations
and approvals necessary in connection with this Agreement, the LC, the
Transaction Documents or the transactions contemplated hereby or thereby
shall have been obtained (without the imposition of any conditions that are
not, in its reasonable judgment, acceptable to the LC Provider) and shall
remain in effect; all applicable waiting periods shall have expired without
any action being taken by any competent authority; and no law or regulation
shall be applicable that restrains, prevents or imposes materially adverse
conditions upon this Agreement or the LC or the transactions contemplated
hereby or thereby.
(i) The LC Provider shall have received such other documents
(including, without limitation, an executed copy (or duplicate thereof) of
each other Transaction Document) certificates, instruments, approvals or
opinions as the LC Provider may reasonably request.
(j) The Applicant shall have paid the first installment of the
Facility Fee.
Section 2.8 Increased Capital Costs. (a) In the event that the LC Provider
shall have determined that the adoption of any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, or any change therein or in the interpretation or application thereof,
or compliance by the LC Provider with any request or directive regarding capital
adequacy (whether or not having the force of law and whether or not failure to
comply therewith would be unlawful) from any central bank or governmental agency
or body having jurisdiction, does or shall have the effect of increasing the
amount of capital required to be maintained by the LC Provider with respect to
the issuance or maintenance of the LC, then the Applicant, jointly and
severally, shall from time to time, within ten days of written notice and demand
from the LC Provider, pay to the LC Provider additional amounts sufficient to
compensate the LC Provider for the cost of such additional required capital.
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(b) If by reason of (i) any change in applicable law, regulation, rule,
decree or regulatory requirement or any change in the interpretation or
application by any judicial or regulatory authority of any law, regulation,
rule, or (ii) compliance by the LC Provider with any direction, request or
requirement (whether or not having the force of law) of any Governmental
Authority or monetary authority including, without limitation, Regulation D of
the Federal Reserve Board as from time to time in effect and any successor to
all or a portion thereof establishing reserve requirements:
(A) the LC Provider shall be subject to any tax, levy, charge or
withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its
obligations under this Agreement, whether directly or by such being
imposed on or suffered by the LC Provider (except for changes in the
rate of tax on the overall net income of the LC Provider);
(B) any reserve, deposit or similar requirement is or shall be applicable,
imposed or modified in respect of the LC; or
(C) there shall be imposed on the LC Provider any other condition
regarding the LC;
and the result of the foregoing is to directly or indirectly increase the cost
to the LC Provider of issuing or maintaining the LC, or to reduce the amount
receivable in respect thereof by the LC Provider, then and in any such case the
LC Provider may, at any time within a reasonable period after the additional
cost is incurred or the amount received is reduced, notify the Applicant and the
Applicant shall, jointly and severally, pay, within ten Business Days of demand,
such amounts as the LC Provider may reasonably deem to be necessary to
compensate the LC Provider for such additional cost or reduced receipt, together
with interest on such amount from the date demanded until payment in full
thereof at a rate equal at all times to the Alternate Reference Rate.
(c) The determination by the LC Provider of any amount due pursuant to this
Section 2.8 shall be contained in a certificate setting forth the calculation
thereof in reasonable detail, which certificate shall be delivered by the LC
Provider to the Applicant and shall, in the absence of manifest error, be final
and conclusive and binding on all of the parties hereto.
Section 2.9 Taxes. (a) All payments by the Applicant of principal of, and
interest on, LOC Credit Disbursements and all other amounts payable hereunder by
the Applicant shall be made free and clear of and without deduction for any
present or future income, excise, stamp or franchise taxes and other taxes,
fees, duties, withholdings or other charges of any nature whatsoever imposed by
any taxing authority, but excluding franchise taxes and taxes imposed on or
measured by the LC Provider's net income or receipts (such non-excluded items
being called "Taxes"). In the event that any withholding or deduction from any
payment to be made by the Applicant hereunder is required in respect of any
Taxes pursuant to any applicable law, rule or regulation, then the Applicant
will:
(i) pay directly to the relevant authority the full amount
required to be so withheld or deducted;
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(ii) promptly forward to the LC Provider an official receipt or
other documentation reasonably satisfactory to the LC Provider
evidencing such payment to such authority; and
(iii) pay to the LC Provider such additional amount or amounts as
is necessary to ensure that the net amount actually received by the LC
Provider will equal the full amount the LC Provider would have
received had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against the LC Provider with
respect to any payment received by the LC Provider hereunder, the LC Provider
may pay such Taxes and the Applicant shall promptly pay such additional amounts
(including any interest or expenses) as is necessary in order that the net
amount received by the LC Provider after the payment of such Taxes (including
any Taxes on such additional amount) shall equal the amount the LC Provider
would have received had not such Taxes been asserted.
(b) If the Applicant fails to pay any Taxes of which the Applicant has
received notice when due to the appropriate taxing authority or fails to remit
to the LC Provider the required receipts or other required documentary evidence,
the Applicant shall, jointly and severally, indemnify the LC Provider for any
incremental Taxes, interest or penalties that may become payable by the LC
Provider as a result of any such failure.
Section 2.10 Obligation Absolute. The obligations of the Applicant under
this Agreement and any other agreement or instrument relating to the LC shall be
irrevocable, and shall be paid strictly in accordance with the terms of this
Agreement and the Indenture and such other agreement or instrument under all
circumstances, including, without limitation, the following circumstances:
(a) any lack of validity or enforceability of this Agreement, the LC
or any other Transaction Document;
(b) any change in the time, manner or place of payment of, or in any
other terms of, all or any of the obligations of the Applicant in respect
of the LC or of the Applicant under any other amendment or waiver of or any
consent to departure from all or any of the Transaction Documents;
(c) the existence of any claim, set-off, defense or other right which
the Applicant may have at any time against the Trustee or any other
beneficiary or any transferee of the LC (or any persons or entities for
whom the Trustee, any such beneficiary or any such transferee may be
acting), or any other person or entity, whether in connection with this
Agreement, the transactions contemplated hereby or by any other Transaction
Document or any unrelated transaction;
(d) any statement or any other document presented under the LC proven
to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
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(e) payment by the LC Provider under the LC against presentation of a
draft or certificate which does not comply with the terms of the LC,
provided that the LC Provider has received a Credit Demand from the Trustee
which appears regular on its face;
(f) any exchange, release or non-perfection of any collateral, or any
release or amendment or waiver of or consent to departure from any
guarantee, for all or any of the obligations of the Applicant in respect of
the LC; or
(g) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including, without limitation, any other
circumstance that might otherwise constitute a defense available to, or a
discharge of, the Applicant or a guarantor, but excluding in any event, the
bad faith, gross negligence or willful misconduct of the LC Provider and
the defense of payment by the Applicant.
Section 2.11 Events of Default. Upon the occurrence and continuance of any
of the following events (herein referred to as a "LC Event of Default"):
(a) the Applicant shall fail to pay to the LC Provider any unpaid
principal amount due and payable by the Applicant under this Agreement in
respect of any LOC Credit Disbursement within five Business Days of the
date when such amount is due;
(b) the Applicant shall fail to pay any unpaid interest, fees or other
amounts due and payable by the Applicant under this Agreement, within five
Business Days of the date when such interest, fees or other amounts are
due;
(c) the Applicant shall fail to observe or perform any of the
covenants contained in Section 3.2 and, in the case of covenants set forth
in Section 3.2(a), such failure shall continue unremedied for the grace
period, if any, set forth in the applicable Transaction Documents, and in
the case of any other covenant set forth in Section 3.2 such failure shall
continue unremedied for thirty (30) days;
(d) any representation, warranty or certification made by the
Applicant in this Agreement or any other Transaction Document or in any
certificate delivered pursuant to this Agreement or any other Transaction
Document shall prove to have been incorrect when made which continues
unremedied for a period of 30 days after the date on which the Applicant
has knowledge or notice thereof;
(e) a final judgment or judgments for the payment of money in excess
of $250,000 in the aggregate shall have been rendered against the Issuer,
the Applicant, any Originator or Parent and the same shall have remained
unsatisfied and in effect, without stay of execution, for a period of 30
consecutive days after the period for appellate review shall have elapsed;
(f) any event of default (not cured or waived within ten (10) Business
Days) under (A) the Retailer Credit Agreement, (B) any inventory financing
agreement between any lender and the Applicant, the Parent or any Seller,
or (C) any indenture, credit or loan agreement or other agreement or
instrument of any kind pursuant to which Indebtedness of the Applicant, the
Parent or Seller in an aggregate principal amount in excess of $1,000,000
is outstanding or by which the same is evidenced, shall have occurred and
be continuing;
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(g) a Pay Out Event, Servicer Default or Event of Default under the
Transaction Documents shall have occurred and be continuing;
then, the LC Provider, may (a) to the extent demand is not otherwise made, by
notice to the Applicant and the Trustee declare the principal amounts of all
outstanding LOC Credit Disbursements to be due and payable, together with
accrued interest thereon and all other sums, payable by the Applicant hereunder
whereupon the same shall become due and payable without presentment, demand,
protest, or further notice of any kind, all of which are hereby expressly waived
by the Applicant and (b) take any other action permitted to be taken by it
hereunder, under any other Transaction Document or under applicable law or
otherwise.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 3.1 Representations and Warranties of the Applicant. In order to
induce LC Provider to enter into this Agreement and to issue the LC, the
Applicant hereby represents and warrants to the LC Provider as follows:
(a) Organization and Good Standing, etc. The Applicant has been duly
organized and is existing as a limited partnership in good standing under the
laws of the State of Texas, with power and authority to own its properties and
to conduct its business as such properties are presently owned and such business
is presently conducted. The Applicant is duly licensed or qualified to do
business as a foreign limited partnership and the Applicant is in good standing
in the jurisdiction where its principal place of business and chief executive
office are located and in each other jurisdiction in which the failure to be so
licensed or qualified would be reasonably likely to have a Material Adverse
Effect.
(b) Power and Authority; Due Authorization. The Applicant has (a) all
necessary power, authority and legal right to (i) execute, deliver and perform
its obligations under this Agreement, and (ii) to borrow on the terms and
subject to the conditions herein provided, and (b) duly authorized, by all
necessary corporate or partnership action (as applicable), the execution,
delivery and performance of this Agreement.
(c) No Violation. The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof will not (a) conflict with,
result in any breach of any of the terms and provisions of, or constitute (with
or without notice or lapse of time or both) a default under, (i) the certificate
of limited partnership or partnership agreement of the Applicant or the
certificate or articles of incorporation or organization or by-laws of the
Applicant's general partner, or (ii) any indenture, loan agreement, pooling and
servicing agreement, receivables purchase agreement, mortgage, deed of trust, or
other agreement or instrument to which the Applicant is a party or by which it
or any of its properties is bound, (b) result in or require the creation or
imposition of any Adverse Claim upon any of its properties pursuant to the terms
of any such indenture, loan agreement, pooling and servicing agreement,
receivables purchase agreement, mortgage, deed of trust, or other agreement or
instrument, or (c) violate any law or any order, rule, or regulation applicable
to the Applicant or of any court or of any federal, state or foreign regulatory
body, administrative agency, or other governmental instrumentality having
jurisdiction over the Applicant or any of its properties.
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(d) Validity and Binding Nature. This Agreement is the legal, valid and
binding obligation of the Applicant enforceable against the Applicant in
accordance with its respective terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar law
affecting creditors' rights generally and by general principles of equity.
(e) Government Approvals. No authorization or approval or other action by,
and no notice to or filing with, any governmental authority or regulatory body
required for the due execution, delivery or performance by the Applicant of this
Agreement remains unobtained or unfiled.
(f) Financial Condition. Since January 31, 2002, no event has occurred that
has had, or is reasonably likely to have, a Material Adverse Effect.
(g) Accuracy of Information. All factual written information heretofore or
contemporaneously furnished by the Applicant to LC Provider for purposes of or
in connection with this Agreement is, and all other such factual, written
information hereafter furnished by the Applicant to LC Provider pursuant to or
in connection with this Agreement will be, true and accurate in every material
respect on the date as of which such information is dated or certified. No
information contained in any report or certificate delivered pursuant to this
Agreement shall be incomplete by omitting to state a material fact or any fact
necessary to make the statements contained therein not misleading on the date as
of which such information is dated or certified.
(h) No Actions, Suits. There are no actions, suits or other proceedings
(including matters relating to environmental liability) pending or, to its
knowledge, threatened against or affecting the Applicant or any of its
respective properties, by or before any governmental authority which, if
adversely determined (individually or in the aggregate), may have a material
adverse effect on the financial condition of the Applicant.
Section 3.2 Covenants of the Applicant. So long as the LC has not expired
or any amount is owing to the LC Provider hereunder, the Applicant agrees that,
unless at any time the LC Provider shall otherwise expressly consent in writing,
it will:
(a) Transaction Documents. Comply with all covenants of the Applicant
set forth in the other Transaction Documents to which it is a party.
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(b) Reporting Requirements. Furnish, or cause to be furnished, to the
LC Provider:
(i) Audit Report. As soon as available and in any event within
ninety (90) days after the end of each Fiscal Year of Parent, a
balance sheet of Parent as of the end of such year and statements of
income and retained earnings and of source and application of funds of
Parent, along with consolidating statements, for the period commencing
at the end of the previous Fiscal Year and ending with the end of such
year, in each case setting forth comparative figures for the previous
Fiscal Year, certified without material qualification in a manner
satisfactory to the Trustee by Ernst & Young or other nationally
recognized independent public accountants acceptable to the Trustee,
together with a certificate of such accounting firm stating that in
the course of the regular audit of the business of Parent, which audit
was conducted in accordance with GAAP, such accounting firm has
obtained no knowledge that an Event of Default, Default, Pay Out Event
or Potential Pay Out Event has occurred and is continuing, or if, in
the opinion of such accounting firm, such an Event of Default,
Default, Pay Out Event or Potential Pay Out Event has occurred and is
continuing, a statement as to the nature thereof;
(ii) Quarterly Statements. As soon as available and in any event
within forty five (45) days after the end of each fiscal quarter,
quarterly balance sheets and quarterly statements of source and
application of funds and quarterly statements of income and retained
earnings of Parent, certified by the Responsible Officer of Parent
(which certification shall state that such balance sheets and
statements fairly present the financial condition and results of
operations for such fiscal quarter, subject to year-end audit
adjustments), delivery of which balance sheets and statements shall be
accompanied by a Conn Officer's Certificate to the effect that no
Event of Default, Default, Pay Out Event or Potential Pay Out Event
has occurred and is continuing
(iii) Notice of Default. Immediately, and in any event within one
(1) Business Day after the Applicant obtains knowledge of any Pay Out
Event, Potential Pay Out Event, Servicer Default, Event of Default,
Default or LC Event of Default, the Applicant shall give the LC
Provider notice thereof, together with a written statement of the
principal financial officer of the Applicant setting forth the details
thereof and any action with respect thereto taken or contemplated to
be taken by the Applicant; and
(iv) Other. Promptly, from time to time, such other information,
documents, or reports respecting the condition or operations,
financial or otherwise, of the Applicant as the LC Provider may from
time to time reasonably request in order to protect the interests of
the LC Provider or the Trustee under or as contemplated by this
Agreement or any other Transaction Document.
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(c) Financial Covenants. Parent shall maintain a consolidated net
worth of at least $30,000,000.
ARTICLE IV
MISCELLANEOUS
Section 4.1 Payments. (a) Unless otherwise specified herein, all payments
to the LC Provider hereunder shall be made in lawful currency of the United
States and in immediately available funds prior to 1:00 p.m. (Atlanta, Georgia
time) on the date such payment is due by wire transfer to SunTrust Capital
Markets, Inc. (on behalf of the LC Provider), ABA No. 061000104, Account No.
8801898605, Reference: Conn Funding II, L.P., Attn.: STCM Accounting Department,
or to such other office or account maintained by the LC Provider as the LC
Provider may direct.
(b) Whenever any payment under this Agreement shall be stated to be due on
a day which is not a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in computing interest, commissions or fees, if any, in connection with
such payment.
Section 4.2 Expenses. The Applicant agrees to pay all costs and expenses
incurred by the LC Provider (including, without limitation, reasonable
attorneys' fees and expenses), if any, in connection with the preparation,
execution and delivery, enforcement, amendment or waiver of the obligations of
the Applicant under this Agreement or any other Transaction Document or any
other agreement furnished pursuant hereto or in connection herewith or in
connection with any negotiations arising out of any LC Event of Default or any
events or circumstances that may give rise to an LC Event of Default and with
respect to presenting claims in or otherwise participating in any bankruptcy,
insolvency or other similar proceeding involving creditors' rights generally and
any ancillary proceedings. In addition, the Applicant shall pay any and all
stamp and other taxes and fees payable or determined to be payable in connection
with the execution, delivery, filing and recording of this Agreement or the LC
and any such other documents, and agrees to hold the LC Provider harmless from
and against any and all liabilities with respect to or resulting from any delay
in paying or omission to pay such taxes and fees.
Section 4.3 Indemnity. The Applicant agrees to indemnify and hold harmless
the LC Provider and, in their capacities as such, officers, directors,
shareholders, affiliates, controlling persons, employees, agents and servants of
the LC Provider, from and against any and all claims, damages, losses,
liabilities, costs or expenses whatsoever which the LC Provider may incur or
which may be claimed against the LC Provider by any person whatsoever (including
fees and expenses of counsel) in each case arising out of or by reason of or in
connection with, or in connection with the preparation of a defense of, any
investigation, litigation or proceeding arising out of, relating to or in
connection with the execution and delivery of, or payment of any amount payable
by the Applicant under, the LC or this Agreement or any other Transaction
Document or any acts or omissions of the Applicant in connection herewith or
therewith, or any transactions contemplated hereby or thereby (whether or not
consummated), or any inaccuracies or alleged inaccuracies in any material
respect or any untrue statement or alleged untrue statement of the Applicant
contained or incorporated by reference in each Transaction Document, except to
the extent that such claim, damage, loss, liability, cost or expense is caused
by the willful misconduct, bad faith or gross negligence of the LC Provider.
12
Section 4.4 Notices. All notices, requests and other communications to any
party hereunder shall be in writing (including bank wire, facsimile transmission
or similar writing) and addressed, delivered or transmitted to such party at its
address or facsimile number set forth on the signature page hereof, or at such
other address or facsimile number, as the case may be, as such party may
hereafter specify for the purpose by notice to the other party. Any notice, if
mailed and properly addressed with postage prepaid or if properly addressed and
sent by prepaid courier service shall be deemed given when received; any notice,
if transmitted by telecopier, shall be deemed given when transmitted upon
receipt of electronic confirmation of transmission. Each such notice, request or
communication shall be effective when received at the address or facsimile
number specified on the signature page hereof (or such other address or
facsimile number specified pursuant to this Section 4.4).
Section 4.5 Governing Law; Waiver of Jury Trial. THIS AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER MAY NOT BE CHANGED ORALLY BUT
ONLY BY AN INSTRUMENT IN WRITING SIGNED BY EACH PARTY HERETO AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARDS TO THE CONFLICT OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).
EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, ABSOLUTELY AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LC PROVIDER OR
THE APPLICANT IN CONNECTION HEREWITH OR THEREWITH. THE APPLICANT ACKNOWLEDGES
AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER TRANSACTION DOCUMENT TO WHICH
IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LC
PROVIDER ENTERING INTO THIS AGREEMENT AND EACH SUCH TRANSACTION DOCUMENT TO
WHICH IT IS A PARTY.
Section 4.6 Waivers. Neither any failure nor any delay on the part of the
LC Provider in exercising any right, power or privilege hereunder or under the
LC or any other Transaction Document shall operate as a waiver thereof, nor
shall a single or partial exercise thereof preclude any other or further
exercise or the exercise of any other right, power or privilege. No provision of
this Agreement shall be waived, amended or supplemented except by a written
instrument executed by the parties hereto. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
13
Section 4.7 Severability. Any provisions of this Agreement which are
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 4.8 Term. This Agreement shall remain in full force and effect
until the reimbursement of all LOC Credit Disbursements by the Applicant and the
payment by the Applicant of all other amounts payable hereunder, notwithstanding
the earlier termination of the LC.
Section 4.9 Successors and Assigns. This Agreement shall be binding upon
the LC Provider and its successors and assigns and the Applicant and its
successors and assigns; provided, however, that the Applicant may not transfer
or assign any of its obligations, rights, or interests hereunder without the
prior written consent of the LC Provider; provided, further, that the LC
Provider may at any time grant participations to any other Person, in all or
part of its obligations under the LC and its rights under this Agreement. The LC
Provider hereby acknowledges and agrees that any such disposition will not alter
or affect the LC Provider's direct obligations to the Trustee, and that the
Applicant shall not have any obligations to have any communication or
relationship with any participant in order to enforce such obligations of the LC
Provider hereunder and under the LC.
Section 4.10 Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on the same or separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute one and the same agreement.
Section 4.11 Further Assurances. The Applicant agrees to do such further
acts and things and to execute and deliver to the LC Provider such additional
assignments, agreements, powers and instruments as are reasonably required by
the LC Provider to carry into effect the purposes of this Agreement or to better
assure and confirm unto the LC Provider its rights, powers and remedies
hereunder.
Section 4.12 Survival of Representations and Warranties. All
representations and warranties contained herein or made in writing by the
Applicant in connection herewith shall survive the execution and delivery of
this Agreement, regardless of any investigation made by the LC Provider or on
its behalf and shall continue so long as and until such time as all obligations
hereunder and under the other Transaction Documents shall have been paid in
full. The obligations of the Applicant under Sections 4.1, 4.2 and 4.3 shall in
each case survive any termination of this Agreement, the payment in full of all
obligations hereunder or under any other Transaction Document and the
termination of the LC.
Section 4.13 Obligation. The LC Provider and the Applicant each understands
and agrees that the LC is irrevocable and the obligations of the LC Provider as
issuer thereof shall be unaffected by any default hereunder, including, without
limitation any failure to pay the Facility Fee. Neither the failure of the
Applicant (or any person or organization acting on its behalf) or the Trustee to
take any action (whether required hereunder or otherwise), nor any action taken
by the Applicant shall be asserted by the LC Provider as a defense to payment
under the LC (except for the failure of any documents presented thereunder to
comply with the terms of the LC) or as the basis of a right of setoff by the LC
Provider against its obligations to make any such payment.
14
Section 4.14 Headings. Section headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Section 4.15 No Bankruptcy Petition Against the Issuer. The LC Provider by
entering into this Agreement hereby covenants and agrees that, prior to the date
which is one year and one day after the payment in full of the latest maturing
Note and the termination of the Indenture, it will not institute against, or
join with any other Person in instituting against, the Issuer any bankruptcy,
reorganization, arrangement, insolvency or liquidation proceedings, or other
proceedings, under any United States Federal or state bankruptcy or similar law
in connection with any obligation relating to the Notes, the Indenture or any of
the Transaction Documents. In the event that the LC Provider takes action in
violation of this Section 4.15, the Issuer shall file an answer with the
bankruptcy court contesting the filing of such a petition by the LC Provider
against the Issuer or the commencement of such action and raising the defense
that the LC Provider has agreed in writing not to take such action and should be
estopped and precluded therefrom and such other defenses, if any, as its counsel
advises that it may assert. The provisions of this Section 4.15 shall survive
the termination of this Agreement. Nothing contained herein shall preclude
participation by the LC Provider in the assertion or defense of its claims in
any such proceeding involving the Issuer.
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IN WITNESS WHEREOF, the Applicant and the LC Provider have caused this
Agreement to be duly executed by their duly authorized officers, as of the day
and year first above written.
CAI, L.P.
By: Conn Appliances, Inc., its general
partner
By: /s/ Thomas J. Frank
--------------------------------------
Name: Thomas J. Frank
-------------------------------
Title: CEO and Chairman of the Board
-------------------------------
CAI, L.P.
3295 College Street
Beaumont, Texas 77701
Attention: David Atnip
Facsimile: (409) 839-4609
CONN FUNDING II, L.P.
By: Conn Funding II GP, L.L.C., its
general partner
By: /s/ David R. Atnip
--------------------------------------
Name: David R. Atnip
-------------------------------
Title: Secretary / Treasurer
-------------------------------
Conn Funding II, L.P.
3295 College Street
Beaumont, Texas 77701
Attention: David Atnip
Facsimile: (409) 839-4609
Annex C-1
SUNTRUST BANK
By: /s/ R. Lee McCrary, Jr.
--------------------------------------
Name: R. Lee McCrary, Jr.
-------------------------------
Title: Vice-President
-------------------------------
SunTrust Bank
25 Park Place
Atlanta, GA 30303-3706
Attention: Lee McCrary
Facsimile: (404) 588-8129
2