EXHIBIT 10.18.5
AMENDMENT #5 TO DEALER AGREEMENT
REPLACEMENT PROGRAM
THIS AMENDMENT #5 (herein "Amendment") to the Dealer Agreement
("Agreement") is made this 9th day of April, 2007 with an effective date of June
1, 2006 ("Effective Date") by and among Conn Appliances, Inc., a Texas
corporation ("Conn"), CAI, L.P., a Texas limited partnership ("CAILP") having
their principal places of business at 3295 College Street, Beaumont, Texas 77701
(except as otherwise noted, Conn and CAILP collectively herein referred to as
"Dealer"), and Federal Warranty Service Corporation, an Illinois corporation
having its principal place of business at 260 Interstate North Circle, SE,
Atlanta, GA 30339 (through prior Amendment #1 replaced Voyager Service Programs,
Inc.) ("Federal").
WHEREAS, Dealer and Voyager entered into a "Dealer Agreement" stated as
effective January 1, 1998 (the "Agreement") concerning the sale by Dealer of
Service Contracts covering certain specified merchandise sold by Dealer, under
which Service Contracts Voyager was the obligor, and which Service Contracts
were administered by Dealer; and
WHEREAS, "Amendment #1" to the Agreement substituted Federal in place of Voyager
and CAILP in place of Conn as parties to the Agreement, "Amendment #2" amended
the term and termination provisions of the Agreement, "Amendment #3" amended the
Agreement's pricing provisions and provided for the transfer and release of
specified reserves held by Voyager under the Agreement and "Amendment #4"
provided mutual commitment to the future addition of the Replacement Program (as
defined in Amendment #4) and provided for the assignment of a Sales Manager to
support Dealer's Service Contract program; and
WHEREAS, The parties now desire to amend the Agreement to provide for the
implementation and launch of the Replacement Program.
NOW THEREFORE, in consideration of the mutual covenants and promises set forth
herein and in the Agreement, the parties do hereby agree as follows:
1. The parties agree that the Replacement Program is hereby added to the
Agreement and shall be included in the term "Service Contract" as used
therein. A "Replacement Program" Service Contract is one which provides for
the replacement of Covered Merchandise in the event of specified types of
failure as set forth in the applicable Service Contract form. The initial
Replacement Program Service Contract form approved by Federal for use by
Dealer is attached hereto as Exhibit A.1. Dealer shall use only the
Replacement Program Service Contract forms approved by Federal. Replacement
Program Service Contracts may be sold to cover only specific categories of
Covered Merchandise, and at specific Contract Prices, as set forth in
Schedule A.1 attached hereto. Exhibit A.1 and Schedule A.1 are hereby
attached to and made part of the Agreement.
2. Paragraph 2.2 is hereby deleted in its entirety and replaced with the
following:
"Contract Prices. Dealer shall sell Non-Replacement Program Service
Contracts on such Covered Merchandise and at such prices as are contained
in Schedule A.1 and shall sell Replacement Program Service Contracts on
such Covered Merchandise and at such prices contained in Schedule A.1
attached hereto (such retail prices for both Replacement Program and
Non-Replacement Program Service Contracts shall herein be referred to as
"Contract Prices"). Dealer shall, from time to time, establish the Contract
Prices to be charged for the Service Contracts subject to Federal's
approval and shall advise Federal in writing of such Contract Prices.
Approval of the Contract Prices shall not be unreasonably withheld or
delayed by Federal. It is understood that in the event Federal has neither
disapproved a Dealer-proposed Contract Price nor requested additional time
to review same, in writing, within ten (10) business days after Federal's
receipt thereof, approval of such Contract Price shall be deemed to be
given. Dealer shall comply with all United States (federal), Texas and
Louisiana laws and regulations applicable to the pricing of the Service
Contracts.""
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3. The definition of Federal Fees in the first sentence of 5.1 shall be
replaced with the following:
"Federal Fee" means
a) for the Non-Replacement Program Service Contracts: that amount
equal to thirty-four percent (34%) of the Contract Prices and
b) for the Replacement Program Service Contracts: that amount equal
to fifty-four percent (54%) of the Contract Prices for the first
$3,750,000 of such retail sales during any contract year, and
that amount equal to fifty percent (50%) of the Contract Prices
for retail sales in excess of $3,750,000 during any contract
year.
The Federal Fee applies to Contract Prices net of sales tax collected of
Service Contracts sold by or delivered by Dealer in connection with the
sale of covered Merchandise and any renewals thereof.
4. The reference to "paragraph 5.5" as found in paragraph 3.7 of the Agreement
is hereby amended to refer to "paragraph 5.4.
5. The attached Exhibit D, amended to reflect the differing Federal
(previously Voyager) retention rates for Replacement Program business, is
hereby attached to the Agreement and replaces in its entirety the previous
Exhibit D.
6. All other terms and conditions of the Agreement shall apply to the
Replacement Program and shall remain the same.
IN WITNESS HEREOF, the parties have signed this Amendment effective as of the
date first above written.
Conn Appliances, Inc.
By:
-------------------------------
Title:
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Federal Warranty Service Corporation CAI, L.P. (by Conn Appliances, Inc.,
General Partner)
By: By:
-------------------------------- -------------------------------
Title: Title:
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EXHIBIT A.1
REPLACEMENT PROGRAM TERMS AND CONDITIONS
REPLACEMENT PLAN
SERVICE AGREEMENT
In consideration of the amount paid on the invoice for this Replacement Plan
Service Agreement ("Agreement"), and except as hereinafter provided, should Your
covered product require replacement, Federal Warranty Service Corporation will
make the necessary replacement of the product identified on this invoice at the
owner's address as identified on the invoice. Pre-existing conditions are
included in this Agreement. This Agreement is not a contract of Insurance.
"We", "Us" and "Our" mean the company obligated under this Agreement, Federal
Warranty Service Corporation [P.O. Box 105689, Atlanta, GA 30348-5689]. "You"
and "Your" indicates the purchaser of this Agreement. " Retailer" means the
store You purchased the products covered under this Agreement from. "Covered
Product" means the consumer item(s) which You purchased concurrently with and is
covered by this Agreement. "Administrator" means CAI, LP ("Conn's").
"Replacement" mean the exchange of a defective covered product with a new,
rebuilt, or refurbished product of equal or similar features and functionality
as the original covered product. We reserve the right to select the manufacturer
and model of the replacement product. This Agreement is not a contract of
insurance.
REPLACEMENT PLAN TERMS AND CONDITIONS
(1) For the Replacement Plan , the term of this Agreement begins on the date of
purchase and continues for a period of two (2) years or until a claim is
paid, whichever occurs first.
(2) We will replace the Covered Product, at Our discretion, when required
due to a mechanical or electrical breakdown during normal usage,
including those experienced during normal wear and tear. A mechanical
or electrical breakdown caused by a direct result of a power surge is
also covered.
(3) If Your covered product requires replacement, return it to the nearest
Administrator's retail store for determination that Your covered
product is defective and requires replacement.
(4) If you do not reside in an Administrators territory, contact the
Administrator at 1-877-472-5422, Monday - Friday 10:00am to 9:00pm,
Saturday 9:00am to 9:00pm, Sunday 11:00am to 7:00pm. You will be
instructed on where to ship Your Covered Product for determination
that Your covered product is defective and requires replacement.. If
appropriate, the Administrator will issue a return authorization
number (RA#). You are then responsible for shipping and handling
charges to the Administrator at the national return center. You must
write the RA# on the outside of the package. Covered Products shipped
without the RA# will be refused. Covered Products found to be
non-defective will be returned to You. You are responsible for all
costs involved when Covered Products are found to be non-defective.
(5) The limit of liability under the replacement plan is the value of the
Covered Product at the time of purchase. This Agreement shall expire
upon replacement of the Covered Product. Coverage provided under this
Contract shall not be transferable to any replaced product, unless
otherwise required by state law. All defective products will become
Our property, should We unilaterally elect to exercise Our rights to
the property.
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(6) This Agreement excludes, (a) products not originally covered by a
manufacturer's warranty; product repairs that should be covered by the
manufacturer's warranty or are a result of a recall regardless of the
manufacturer's ability to pay for such repairs; (b) periodic checkups
and/or preventative maintenance as directed by the manufacturer except as
provided herein; any deficiencies noted on the sales receipt; (c) parts or
repairs due to normal wear and tear unless tied to a breakdown and items
normally designed to be periodically replaced by You during the life of the
covered product, including but not limited to batteries, light bulbs, etc;
(d) damage from accident, abuse, misuse, mishandling, introduction of
foreign objects into the Covered Products; (e) unauthorized modifications
or alterations to a Covered Product; (f) failure to follow the
manufacturer's instructions; (g) external causes including third party
actions, fire, theft, insects, animals, exposure to weather conditions,
earthquake, sand, dirt, hail, windstorm, flood, water, acts of god; (h)
consequential loss of any nature; (i) loss or damage caused by war,
invasion or act of foreign enemy, hostilities, rebellion, riot, civil war,
strike labor disturbance, lockout, or civil commotion; (j) incidental,
consequential or secondary damages or delay in rendering service under the
Agreement, or loss of use during the period that the Covered Product is at
an authorized service center or otherwise awaiting parts; (k) any product
used in a commercial setting or rental basis; (l) failures that occur
outside the 50 states of the United States of America; (m) nonfunctional or
aesthetic parts including but not limited to plastic parts, knobs, rollers,
baskets, scratches, peeling and dents; (n) unauthorized repairs and/or
parts; (o) cost of installations, set-up, diagnostic charges, removal of
reinstallation of the Covered Product, except as provided herein; (p)
accessories used in conjunction with a Covered Product; (q) any loss other
than a covered breakdown of the Covered Product; (r) service where no
problem can be found; (s) breakdown which are not reported within the term
of the Agreement; (t) failure as a result from rust or corrosion on any
covered product or part; (u) damage to clothing; (v) abnormal variation of
electricity or water supply; (w) water and gas lines beyond the Covered
Product; (x) damage incurred while moving the Covered Product to another
location; (y) reimbursement of food loss due to natural spoilage or caused
by misuse of the Covered Product; (z) products greater than 14 years old;
(aa) any storage media damaged by a malfunctioning part; (bb) improper
installation of components or peripherals; (cc) repair or replacement of
upgraded internal computer components when repair or replacement is
required due to incompatibility of parts or incorrect installation; (dd)
broken or cracked LCD screens in notebooks or portable computers and burned
in phosphor in CRT or any other type of display; (ee) application programs,
operating software or other software, loss of data or restorations of
programs that You were responsible for back up prior for commencement of
repair; (ff) corruption of any program, data or setup information resident
on any hard drives and internal or external removable storage devices, as a
result of the malfunctioning or damage of an operating part, or as a result
of any repairs or replacement under this Agreement; (gg) color fading of
picture for any television; (hh) plasma televisions in use at or above 6000
ft. above sea level; (ii) burned-in phosphor (including image ghosting),
pixel burnout not in accordance with the manufacturer's specifications.
(7) You have the right to cancel at any time by contacting the Administrator at
a retail store or by writing to the Administrator at 3295 College Street,
Beaumont, TX 77701. If You cancel Your Agreement within thirty (30) days of
receipt of Your Agreement, You can return to the Retailer for a full
refund. If You cancel after thirty (30) days of receipt of Your Agreement,
please contact the Administrator. You will receive a pro-rata refund based
on the time expired less a twenty-five dollar ($25) cancellation fee, or
ten percent (10%) of the purchase price (whichever is less), less the cost
of claims paid. We may not cancel this Agreement except for fraud, material
misrepresentation or non-payment by You; or if required to do so by a
regulatory authority. Notice of such cancellation will be in writing and
given at least thirty (30) days prior to cancellation. If We cancel, the
return premium is based upon one-hundred percent (100%) of the unearned
pro-rata premium.
(8) This Agreement is transferable by the original purchaser for the balance of
the original replacement plan service agreement protection period. The
Covered Product may be registered by mailing information to the
Administrator, including the agreement reference number, date of new
ownership, new owners name, complete address, and telephone number.
(9) The Agreement territory is limited to the United States of America,
including the District of Columbia. It does not include any Canadian
or U.S. Territories including Guam, Puerto Rico, or U.S. Virgin
Islands.
(10) If We pay for a loss, We may require You to assign Us Your rights of
recovery against others. We will not pay for a loss if You impair
these rights to recover. Your rights to recover from others may not be
waived.
(11) This Agreement is not renewable.
(12) The Administrator (Conn's) provides customer assistance at
www.conns.com, check the local telephone listings in your area for
your nearest Conn's store, visit any Conn's store location or by
calling 1-877-472-5422.
(13) Arbitration Provision - READ THE FOLLOWING ARBITRATION PROVISION
("PROVISION") CAREFULLY. IT LIMITS CERTAIN OF YOUR RIGHTS, INCLUDING YOUR
RIGHT TO OBTAIN RELIEF OR DAMAGES THROUGH COURT ACTION.
As used in this Provision, "You" and "Your" mean the person or persons
named in this Agreement, and all of his/her heirs, survivors, assigns and
representatives. And, "We" and "Us" shall mean the Obligor identified above
and shall be deemed to include all of its agents, affiliates, successors
and assigns, and any retailer or distributor of its products, and all of
the dealers, licensees, and employees of any of the foregoing entities
Any and all claims, disputes, or controversies of any nature whatsoever
(whether in contract, tort or otherwise, including statutory, common law,
fraud (whether by misrepresentation or by omission) or other intentional
tort, property, or equitable claims) arising out of, relating to, or in
connection with (1) this [Service Agreement] or any prior Agreement, and
the purchase thereof; and (2) the validity, scope, interpretation, or
enforceability of this Provision or of the entire Agreement ("Claim"),
shall be resolved by binding arbitration before a single arbitrator. All
arbitrations shall be administered by the American Arbitration Association
("AAA") in accordance with its Expedited Procedures of the Commercial
Arbitration Rules of the AAA in effect at the time the Claim is filed. The
terms of this Provision shall control any inconsistency between the AAA's
Rules and this Provision. You may obtain a copy of the AAA's Rules by
calling (800) 778-7879. Upon written request We will advance to You either
all or part of the fees of the AAA and of the arbitrator. The arbitrator
will decide whether You or We will be responsible for these fees. The
arbitrator shall apply relevant substantive law and applicable statute of
limitations and shall provide written, reasoned findings of fact and
conclusions of law. The arbitration shall be held at a location selected by
Us within the state in which You purchased this Agreement. This Provision
is part of a transaction involving interstate commerce and shall be
governed by the Federal Arbitration Act, 9 U.S.C. ss. 1 et seq. If any
portion of this Arbitration Provision is deemed invalid or unenforceable,
it shall not invalidate the remaining portions of the Arbitration
Provision. This Arbitration Provision shall inure to the benefit of and be
binding on You and Us and its Provision shall continue in full force and
effect subsequent to and notwithstanding the expiration of termination of
this Agreement.
You agree that any arbitration proceeding will only consider Your Claims.
Claims by, or on behalf of, other individuals will not be arbitrated in any
proceeding that is considering Your Claims.
You and We Understand and agree that because of this arbitration PROVISION
neither you nor us will have the right to go to court except as provided
above or to have a jury trial or to participate as any member of a class of
claimants pertaining to any claim.
THIS SERVICE AGREEMENT PROVIDES NO BENEFITS DURING THE TERM OF THE
MANUFACTURER'S WARRANTY. THE TERM OF THIS SERVICE AGREEMENT AND THE
COVERAGE DESCRIBED HEREIN COMMENCE IMMEDIATELY UPON EXPIRATION OF THE
MANUFACTURER'S WARRANTY.
(14) State Disclosures - These special state disclosures apply if Your Agreement
was delivered to You in one of the following states and supersedes any
other provision herein to the contrary.
Louisiana residents: The Arbitration Provision is deleted in its entirety.
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Texas residents: A ten percent (10%) penalty per month shall be applied to
refunds not paid or credited within thirty (30) days of receipt of returned
service Agreement. The obligations under this Agreement are insured by a
policy of insurance issued by American Bankers Insurance Company of
Florida, 11222 Quail Roost Drive, Miami, FL 33157. In the event any covered
service is not paid within 60 days after proof of loss has been filed, or
is a refund or credit is not paid before the 46th day after the date which
the Agreement is returned, you may apply directly to American Bankers
Insurance Company of Florida. If yOU have complaints or questions regarding
this Agreement, yOU may contact the Texas Department of Licensing and
Regulation at the following address and telephone number: Texas Department
of Licensing and Regulation, Post Office Box 12157, Austin, Texas 78711;
512-463-6599 or 800-803-9202.
To learn more about how Federal Warranty Service Corporation, an
Assurant Solutions company, uses your information, please visit our website
at www.assurantsolutions.com.
EXHIBIT D
This Exhibit D is attached, as of the date of execution of Amendment #5, to that
certain Dealer Agreement by and between Voyager Service Programs, Inc. and Conn
Appliances, Inc., effective January 1, 1998, and replaces any previous version.
EXPERIENCE REFUND COMPUTATION
Step 1. In accordance with Paragraph 5.5, Federal shall calculate an Experience
Refund which shall be on a cumulative inception to date basis as follows:
a. From the net written Federal Fees, the unearned Federal Fees as of the
end of the applicable Calculation Period shall be subtracted. The
amount of the "unearned Federal Fees" shall be calculated using the
pro rata method, over the term of each individual Service Contract
beginning in the tenth month following the sale of such Service
Contract. The resulting number is the earned Federal Fees.
b. From the earned Federal Fees premium taxes and the Dealer
Administrative Compensation associated with the earned Federal Fees
shall be subtracted. Federal shall also subtract and retain: i)
Federal's retention of 4% of the Contract Price for Non-Replacement
Service Contracts, and ii) Federal's retention of 8% of the Contract
Price for Replacement Plan Service Programs for the first $3,750,000
of such retail sales during any contract year, and iii) Federal's
retention of 4% of the Contract Price for Replacement Plan Service
Programs for retail sales in excess of $3,750,000 during any contract
year, if any.
From the amount calculated in (b), the paid Service Contract Losses,
claims-related expenses and ending claims reserves shall be subtracted.
Step. 2. From the sum determined under Step 1, subtract any Experience Refunds
previously paid for prior Calculation Periods.
The positive or negative amount calculated in accordance with these steps is the
"Experience Refund" for the applicable Calculation Period to in Subparagraph
5.5.
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