Exhibit 10.2

Conformed as of August 8, 2017

SERVICING AGREEMENT

among

CONN’S RECEIVABLES WAREHOUSE, LLC,

AS ISSUER,

CONN’S RECEIVABLES WAREHOUSE TRUST,

AS RECEIVABLES TRUST

CONN APPLIANCES, INC.,

AS SERVICER,

and

WELLS FARGO BANK, NATIONAL ASSOCIATION,

AS INDENTURE TRUSTEE

 

 

DATED AS February 24, 2017

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TABLE OF CONTENTS

 

          Page  

ARTICLE I DEFINITIONS

     1  

Section 1.01

  

Defined Terms

     1  

Section 1.02

  

Other Definitional Provisions

     1  

ARTICLE II ADMINISTRATION AND SERVICING OF RECEIVABLES AND RELATED SECURITY

     2  

Section 2.01

  

Appointment of Servicer

     2  

Section 2.02

  

Duties of Servicer

     3  

Section 2.03

  

Purchase of Ineligible Receivables

     10  

Section 2.04

  

Purchase of Returned and Refinanced Receivables

     10  

Section 2.05

  

Rights After Designation of New Servicer

     11  

Section 2.06

  

Servicer Default

     13  

Section 2.07

  

Servicer Indemnification of Indemnified Parties

     15  

Section 2.08

  

Grant of License

     16  

Section 2.09

  

Servicing Compensation

     16  

Section 2.10

  

Representations and Warranties of the Servicer

     17  

Section 2.11

  

Reports and Records for the Indenture Trustee

     20  

Section 2.12

  

Reports to the Commission

     20  

Section 2.13

  

Affirmative Covenants of the Servicer

     20  

Section 2.14

  

Negative Covenants of the Servicer

     21  

Section 2.15

  

Sale of Defaulted Receivables

     22  

ARTICLE III [RESERVED]

     23  

ARTICLE IV [RESERVED]

     23  

ARTICLE V OTHER MATTERS RELATING TO THE SERVICER

     23  

Section 5.01

  

Liability of the Servicer

     23  

Section 5.02

  

Limitation on Liability of the Servicer and Others

     23  

Section 5.03

  

Servicer Not to Resign

     23  

Section 5.04

  

Waiver of Defaults

     24  

ARTICLE VI ADDITIONAL OBLIGATION OF THE SERVICER WITH RESPECT TO THE INDENTURE
TRUSTEE

     24  

Section 6.01

  

Successor Indenture Trustee

     24  

Section 6.02

  

Tax Returns

     24  

Section 6.03

  

Final Payment with Respect to the Notes

     25  

Section 6.04

  

Optional Purchase of Receivables Trust Estate

     25  

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TABLE OF CONTENTS

 

          Page  

ARTICLE VII MISCELLANEOUS PROVISIONS

     25  

Section 7.01

  

Amendment

     25  

Section 7.02

  

Protection of Right, Title and Interest to Receivables and Related Security

     26  

Section 7.03

  

Governing Law

     27  

Section 7.04

  

Notices

     27  

Section 7.05

  

Severability of Provisions

     28  

Section 7.06

  

Delegation

     28  

Section 7.07

  

Waiver of Trial by Jury

     28  

Section 7.08

  

Further Assurances

     28  

Section 7.09

  

No Waiver; Cumulative Remedies

     28  

Section 7.10

  

Counterparts

     28  

Section 7.11

  

Third-Party Beneficiaries

     29  

Section 7.12

  

Actions by Noteholders

     29  

Section 7.13

  

Rule 144A Information

     29  

Section 7.14

  

Merger and Integration

     29  

Section 7.15

  

Headings

     29  

Section 7.16

  

Rights of the Indenture Trustee

     29  

Section 7.17

  

Sales Tax Proceeds

     30  

Section 7.18

  

Limitation of Liability

     30  

Section 7.19

  

Effectiveness of Agreement

     30  

EXHIBITS

 

Exhibit A

  

Form of Monthly Servicer Report

Exhibit B

  

Form of Annual Servicer’s Certificate

SCHEDULES

 

Schedule I

  

Litigation

Schedule II

  

Definitions

 

 

ii

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SERVICING AGREEMENT dated as of February 24, 2017 (the “Agreement”) by and among
CONN’S RECEIVABLES WAREHOUSE, LLC, a Delaware limited liability company, as
issuer (the “Issuer”), CONN’S RECEIVABLES WAREHOUSE TRUST, a Delaware statutory
trust, as receivables trust (the “Receivables Trust”), CONN APPLIANCES, INC., a
Texas corporation (“Conn Appliances”), as initial Servicer, and WELLS FARGO
BANK, NATIONAL ASSOCIATION, a national banking association, as trustee under the
Indenture (defined below) (in such capacity, together with its successors and
assigns in such capacity, the “Indenture Trustee”).

WHEREAS, from time to time, the Receivables Trust will purchase from Conn
Appliances Receivables Funding, LLC (the “Depositor”) Contracts, Receivables and
other Related Security relating to such Receivables pursuant to the terms of and
subject to the conditions set forth in the Second Receivables Purchase
Agreement, dated as of February 24, 2017, between the Depositor and the
Receivables Trust.

WHEREAS, the Issuer is entering into an Indenture, dated as of February 24, 2017
(as amended, supplemented or otherwise modified from time to time, the
“Indenture”), between the Issuer and the Indenture Trustee, and each of the
other Transaction Documents to which it is a party, pursuant to which the Issuer
plans to issue Notes in order to finance its purchase of the Receivables Trust
Certificate which represents the ownership of the Receivables Trust which owns
the Contracts, Receivables and other Related Security relating to such
Receivables.

WHEREAS, the Servicer is willing to service all Receivables and other Related
Security acquired by the Issuer, pursuant to the terms and subject to the
conditions set forth in this Agreement.

NOW, THEREFORE, in consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:

ARTICLE I

DEFINITIONS

Section 1.01 Defined Terms. Capitalized terms in this Agreement and not
otherwise defined herein are defined in and shall have the respective meanings
assigned to them in Schedule II to this Agreement.

Section 1.02 Other Definitional Provisions.

(a) All terms defined in this Agreement shall have the defined meanings when
used in any certificate or other document made or delivered pursuant hereto
unless otherwise defined therein.

(b) Where the character or amount of any asset or liability or item of income or
expense is required to be determined, or any accounting computation is required
to be made, for the purpose of this Agreement, such determination or calculation
shall be made in accordance with GAAP. When used herein, the term “financial
statement” shall include the notes and schedules thereto. All accounting
determinations and computations hereunder or under any other Transaction
Documents shall be made without duplication.

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(c) [Reserved.]

(d) The words “hereof,” “herein” and “hereunder” and words of similar import
when used in this Agreement shall refer to this Agreement as a whole and not to
any particular provision of this Agreement; and Section, subsection, Schedule
and Exhibit references contained in this Agreement are references to Sections,
subsections, Schedules and Exhibits in or to this Agreement unless otherwise
specified.

ARTICLE II

ADMINISTRATION AND SERVICING

OF RECEIVABLES AND RELATED SECURITY

Section 2.01 Appointment of Servicer.

(a) The servicing, administering and collection of the Receivables shall be
conducted by such Person (the “Servicer”) so designated from time to time in
accordance with this Section 2.01. Until the Indenture Trustee gives notice to
Conn Appliances of the designation of a new Servicer pursuant to this
Section 2.01, Conn Appliances is hereby designated as, and hereby agrees to
perform the duties and obligations of, the Servicer pursuant to the terms
hereof. The Servicer may not delegate any of its rights, duties or obligations
hereunder, or designate a substitute Servicer, without the prior written consent
of the Administrative Agent and the Receivables Trust (with prior written notice
to the Indenture Trustee); provided, however, that the Servicer shall be
permitted to delegate its duties hereunder to any of its Affiliates and may use
subservicers, contractors or agents but will remain obligated and liable for the
performance of any such delegated duties as if it were performing such duties
itself.

(b) (i) After the occurrence of a Servicer Default that is forty-five (45) days
following the Initial Note Increase Date, the Indenture Trustee may, and upon
the direction of the Required Noteholders or in the case of a Servicer Default
as contemplated in clause (d) of the definition thereof, shall, in accordance
with the provisions set forth in clause (ii) below, appoint the Back-Up Servicer
(Systems & Services Technologies, Inc. (“SST”) or any other successor servicer
appointed in accordance with the terms of Section 2.01(b)(ii) below, in such
capacity, the “Successor Servicer”) pursuant to a Back-Up Servicing Agreement to
succeed to Conn Appliances as Servicer hereunder (any such transfer of Servicer
power and authority to a Successor Servicer, a “Servicing Transfer”).

 

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(ii) If (x) the Back-Up Servicer, on the date of its appointment as Successor
Servicer or at any time following such appointment, fails or is unable to
perform the duties of the Servicer hereunder or has previously resigned or
otherwise been terminated as Back-Up Servicer, or (y) any other Person
designated Successor Servicer in accordance with this Section 2.01 resigns,
fails or is unable to perform the duties of the Servicer hereunder following its
appointment as Successor Servicer, the Indenture Trustee may with the consent of
the Required Noteholders, and upon the direction of the Required Noteholders
shall, appoint as Servicer any Person to succeed the then-current Servicer on
the condition in each case that any such Person so appointed shall agree to
perform the duties and obligations of the Servicer pursuant to the terms hereof.
Until such time as the Person so appointed becomes obligated to begin acting as
Servicer hereunder, the then current Servicer will continue to perform all
servicing functions under this Agreement and the other Servicer Transaction
Documents. If the Indenture Trustee is not able to appoint a new Servicer to
succeed Conn Appliances, the Back-Up Servicer or any other Person then acting as
Servicer, within a reasonable time following the date upon which it is required
to so appoint a successor to the Servicer pursuant to this Section 2.01 (but in
any event not later than 30 days following such date), the Indenture Trustee
shall at the expense of the Issuer (as Certificateholder of the Receivables
Trust) petition a court of competent jurisdiction to appoint as the Servicer
hereunder any established financial institution having, a net worth of not less
than $25,000,000 and whose regular business includes the servicing of
receivables comparable to the Receivables which are the subject of this
Agreement. Following any appointment of a Successor Servicer pursuant to this
Section 2.01, the Indenture Trustee will provide notice thereof to the Issuer,
the Receivables Trust, the Depositor, the Administrative Agent and the
Noteholders.

(c) The Indenture Trustee shall not be responsible for any differential between
the Servicing Fee and any compensation paid to a Successor Servicer hereunder.

Section 2.02 Duties of Servicer.

(a) (i) The Servicer shall take or cause to be taken all such action as may be
reasonably necessary or advisable to collect each Receivable from time to time,
all in accordance with applicable Laws, with reasonable care and diligence, and
in accordance with the Credit and Collection Policies and otherwise in
accordance with the Servicer Transaction Documents. Each of the Receivables
Trust, the Issuer (as Certificateholder of the Receivables Trust), each
Noteholder by its acceptance of the related Notes and each of the other Secured
Parties, hereby appoints as its agent the Servicer, from time to time designated
pursuant to Section 2.01 hereof, to enforce its respective rights and interests
in and under the Contracts, Receivables and Related Security, Collections and
proceeds with respect thereto. To the extent permitted by applicable law, each
of the

 

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Receivables Trust and Conn Appliances (to the extent not then acting as Servicer
hereunder) hereby grants to any Servicer appointed hereunder all rights and
powers of the Receivables Trust and/or Conn Appliances, as the case may be,
under the Contracts and with respect to the Related Security, and hereby grants
an irrevocable power of attorney to take in the Receivables Trust’s and/or Conn
Appliances’ name and on behalf of the Receivables Trust or Conn Appliances any
and all steps necessary or desirable, in the reasonable determination of the
Servicer, in each case to collect all amounts due under any and all Receivables,
including, without limitation, to cancel any policy of insurance, make demands
for unearned premiums, commence enforcement proceedings, exercise other powers
under a Contract, execute and deliver instruments of satisfaction or
cancellation, or full or partial discharge, with respect to Receivables, endorse
the Receivables Trust’s, the Issuer’s and/or Conn Appliances’ name on checks and
other instruments representing Collections and enforce such Receivables and the
related Contracts. The Servicer shall, as soon as practicable following receipt
thereof, turn over to Conn Appliances any collections of any Indebtedness of any
Person which is not on account of a Receivable. The Servicer shall not
voluntarily make the Receivables Trust, the Issuer, the Indenture Trustee, the
Administrative Agent, any Noteholder or any of their respective agents a party
to any litigation without the prior written consent of such Person other than
any litigation adverse to such person. Without limiting the generality of the
foregoing and subject to Section 2.04, the Servicer is hereby authorized and
empowered unless such power and authority is revoked in writing by the Indenture
Trustee (as designee of the Receivables Trust) pursuant to the terms of the
Servicer Transaction Documents (A) to make deposits into the Collection Account
and the Reserve Account as set forth in this Agreement and the Indenture;
provided, however, that with respect to any Successor Servicer, nothing
contained in any Servicer Transaction Document shall impose an obligation on
such Successor Servicer to make any withdrawals or payments from the Collection
Account or Reserve Account, (B) to instruct the Indenture Trustee in writing,
substantially in the form of the Monthly Servicer Report, to make deposits or
withdrawals and payments from the Collection Account or the Reserve Account, in
accordance with such instructions as set forth in the Indenture, (C) to instruct
or notify the Indenture Trustee in writing as set forth in this Agreement and
the Indenture, (D) to make all calculations, allocations and determinations
required of the Servicer under the Indenture and as required herein or to
establish the Collection Account and Reserve Account, (E) to execute and
deliver, on behalf of the Receivables Trust for the benefit of the Issuer and
the Noteholders, any and all instruments of satisfaction or cancellation, or of
partial or full release or discharge, and all other comparable instruments, with
respect to the Receivables and the other Contracts and Related Security and,
after any delinquency in payment relating to any Receivable, to the extent
permitted under and in compliance with applicable law and regulations, to
commence enforcement proceedings with respect thereto (including cancellation of
the related insurance policy) and (F) in the case of the initial Servicer only,
to make any filings, reports, notices, applications, registrations with, and to
seek any consents or authorizations from, the Securities and Exchange Commission
and any state securities authority on behalf of the Issuer as may be necessary
or advisable to comply with any federal or state securities or reporting
requirements.

 

4

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(ii) Subject to the terms and conditions of this Section 2.02(a)(ii), the
Servicer shall maintain custody and possession of the Receivable Files on behalf
of, and as bailee for, the Receivables Trust (for the benefit of the Indenture
Trustee, the Issuer, the Noteholders and the other Secured Parties) (in such
capacity, together with its successors and assigns, the “Custodian”).

(A) Custodian agrees to maintain possession of the related Receivable Files at
its offices where they are presently maintained, at the offices of the related
subcustodians or at such other offices of Custodian as shall from time to time
be identified to Indenture Trustee by written notice. Custodian shall segregate
physical Receivable Files from other files maintained by Custodian and shall, to
the extent a Receivable File is stored in electronic format, maintain an
authoritative electronic copy of each Receivable File on a data tape or other
electronic media in a fire-resistant safe or room. The Receivables Trust hereby
appoints Conn Appliances, and Conn Appliances hereby agrees to act, as initial
Custodian hereunder. Custodian may, at the Servicer’s request, temporarily
deliver individual Receivable Files or any portion thereof to Servicer without
notice as necessary to conduct collection and other servicing activities in
accordance with the Credit and Collection Policies.

(B) As custodian and bailee, Custodian shall hold the Receivable Files (by
itself and/or through subcustodians) on behalf of the Receivables Trust (for the
benefit of the Indenture Trustee, the Issuer, the Noteholders and the other
Secured Parties) and, by agreeing to act as Custodian, is deemed to have
received notice of the security interests of the Secured Parties in the
Contracts and related Receivables. As custodian and bailee, Custodian shall
maintain accurate records pertaining to each Receivable to enable it to comply
with the terms and conditions of this Agreement, maintain a current inventory
thereof and conduct periodic physical inspections of Receivable Files held by it
under this Agreement and attend to all other details in connection with
maintaining custody of the Receivable Files.

(C) In performing its duties under this Section 2.02(a)(ii), Custodian agrees to
act with reasonable care, using that degree of skill and care that it exercises
with respect to similar contracts owned and/or serviced by it. Custodian shall
promptly report to the Receivables Trust, the Administrative Agent, and the
Indenture Trustee any material failure by it to hold the Receivable Files as
herein provided and shall promptly take appropriate action to remedy such
failure. In acting as custodian of the Receivable Files, Custodian agrees
further not to assert, and shall cause each related subcustodian not to assert
any beneficial ownership interests in the Receivables. Custodian agrees to
indemnify the Receivables Trust, Indenture Trustee, the Secured Parties and
Issuer, and their respective

 

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officers, directors, employees, partners and agents for any and all liabilities,
obligations, losses, damages, payments, costs, or expenses of any kind
whatsoever which may be imposed on or incurred by any such Person arising from
the negligence or willful misconduct of Custodian in maintaining custody of the
Receivable Files pursuant to this Section 2.02(a)(ii); provided, however, that
Custodian will not be liable to the extent that any such amount resulted from
the negligence or willful misconduct of such Person.

(D) The appointment of Custodian shall terminate upon acceptance of the
appointment of a Successor Servicer in accordance with this Agreement. The
Successor Servicer, by acceptance of its appointment, shall become the successor
Custodian. Promptly following the appointment of a successor Custodian, and in
any event within five days of such appointment, the then-existing Custodian
shall (at such Custodian’s sole cost and expense if a Servicer Default shall
have occurred or if such Custodian shall have been removed for cause) deliver
all of the Receivable Files in its possession, and all records maintained by it
with respect thereto, to such successor Custodian.

(b) (i) Servicer shall service and administer the Receivables on behalf of the
Receivables Trust (for the benefit of the Indenture Trustee, the Issuer and the
other Secured Parties) and shall have full power and authority, acting alone
and/or through subservicers, contractors or agents as provided in
Section 2.02(b)(iii), to do any and all things which it may deem reasonably
necessary or desirable in connection with such servicing and administration and
which are consistent with this Agreement and the other Servicer Transaction
Documents. Consistent with the terms of this Agreement and the other Servicer
Transaction Documents, Servicer (or any agent on Servicer’s behalf) may waive,
modify or vary any term of any Receivable or consent to the postponement of
strict compliance with any such term or in any manner, grant indulgence to any
Receivables Obligor if, as determined by the Servicer in its sole discretion,
such waiver, modification, postponement or indulgence is expected to maximize
collections on such Receivable; provided, however, that Servicer (or any agent
on Servicer’s behalf) may not permit any modification with respect to any
Receivable unless such modification is a Permitted Modification, is in
accordance with the Credit and Collection Policies and, in the case of any
extension of the final maturity date of a Receivable, such extension does not
extend beyond the Maturity Date and the total amount of extensions of such
Receivable is not in excess of twenty-four months unless such extension is as a
result of or required by applicable law or judicial order. Without limiting the
generality of the foregoing, Servicer in its own name or in the name of the
Receivables Trust is hereby authorized and empowered by the Receivables Trust
when Servicer believes it appropriate in its reasonable judgment to execute and
deliver, on behalf of the Receivables Trust, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Receivable.

 

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(ii) Servicer shall service and administer the Receivables by employing such
procedures (including collection procedures) and degree of care, in each case,
consistent with industry standards, as are customarily employed by Servicer in
servicing and administering contracts and notes owned or serviced by Servicer
comparable to the Receivables.

(iii) Servicer may perform any of its duties pursuant to this Agreement,
including those delegated to it pursuant to this Agreement, through
subservicers, contractors or agents appointed by Servicer. Such subservicers may
include Affiliates of Servicer. Notwithstanding any such delegation of a duty,
Servicer shall remain obligated and liable for the performance of such duty as
if Servicer were performing such duty.

(iv) Servicer may take such actions as are necessary to discharge its duties as
Servicer in accordance with this Agreement, including the power to execute and
deliver on behalf of the Issuer or the Receivables Trust such instruments and
documents as may be customary, necessary or desirable in connection with the
performance of Servicer’s duties under this Agreement (including consents,
waivers and discharges relating to the Receivable).

(v) Servicer shall keep separate records covering the transactions contemplated
by this Agreement including the identity and collection status of each
Receivable.

(c) Collections. (i) On or prior to the Closing Date, initial Servicer shall
have established and shall maintain thereafter the following system of
collecting and processing Collections of Receivables. Servicer shall direct the
Receivables Obligors to make payments of Receivables only (A) by check mailed to
the Post Office Box (such payments, upon receipt in such Post Office Box being
referred to herein as “Mail Payments”), (B) by cash, credit card or check
delivered in person or by phone at retail stores or other business locations of
initial Servicer (such payments, upon receipt by such stores, being referred to
herein as “In-Store Payments”), (C) by third party money wire transfer, ACH or
other bill pay service that provides for the electronic deposit of funds into an
account of the Servicer on behalf of Receivables Obligors, (D) by utilizing the
Servicer’s Webpay portal; or (E) by cash, credit card or check delivered in
person or by phone or by an agent of Conn Appliances at a service center of Conn
Appliances or, in the case of certain delinquent accounts, to employees of Conn
Appliances operating out of a service center of Conn Appliances or Servicer
(such payments, upon receipt by the service center, being referred to herein as
“Field Collections”). Notwithstanding anything to the contrary in this
Section 2.02(c), any Successor Servicer shall collect and process Collections of
Receivables in any manner that is in accordance with the servicing standard set
forth herein.

 

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(ii) Servicer’s right of access to the Post Office Box and the Collection
Account shall be revocable at the option of Administrative Agent (acting in its
own discretion or at the direction of the Required Noteholders and with prior
written notice to the Indenture Trustee) upon the occurrence of any Event of
Default or Servicer Default. In addition, after the occurrence of any Event of
Default or Servicer Default, Servicer agrees that it shall, upon the written
request of Administrative Agent, notify all Receivables Obligors under
Receivables to make payment thereof to (i) one or more bank accounts and/or
post-office boxes designated by Indenture Trustee and specified in such notice
or (ii) any Successor Servicer appointed hereunder. The Indenture Trustee may,
and shall at the request of the Administrative Agent (at the direction of the
Required Noteholders and with prior written notice to the Indenture Trustee), if
any Event of Default or Servicer Default has occurred, require the Servicer to
establish a lockbox account pursuant to a lockbox agreement acceptable to the
Indenture Trustee and the Administrative Agent, and with notice to Noteholders,
to direct all Receivables Obligors under Receivables to make payments to such
lockbox account.

(iii) Servicer shall remove or cause all Mail Payments to be removed from the
Post Office Box by the close of business on each Business Day. Servicer shall
process all such Mail Payments and all Field Collections on the date received by
recording the amount of the payment received from the Receivables Obligor and
the applicable account number. Subject to Section 8.03(a) of the Indenture
(including the right of Servicer thereunder to retain Collections in respect of
the Servicing Fee), no later than the close of business on the second Business
Day following the date on which Mail Payments or Field Collections are received
by Servicer, Servicer shall deposit or cause such Mail Payments and such Field
Collections to be deposited in the Collection Account. Subject to
Section 8.03(a) of the Indenture (including the right of Servicer thereunder to
retain Collections in respect of the Servicing Fee), the Originator and Servicer
shall cause all In-Store Payments to be (i) processed as soon as possible after
such payments are received by the Originator or Servicer but in no event later
than the Business Day after such receipt, and (ii) deposited in the Collection
Account no later than two Business Days following the date of receipt. Subject
to Section 8.03(a) of the Indenture (including the right of the Servicer
thereunder to retain Collections in respect of the Servicing Fee), Servicer
shall deposit all Recoveries into the Collection Account within two Business
Days after the date of its receipt of such Recoveries.

(iv) All Collections received by Servicer in respect of Receivables will,
pending remittance to the Collection Account as provided herein, be held by
Servicer in trust for the exclusive benefit of Indenture Trustee (on behalf of
the Receivables Trust) and shall not, unless otherwise permitted by the Servicer
Transaction Documents, be commingled with any other funds or property of the
Seller, Depositor or Servicer except as otherwise permitted in accordance with
Section 8.03(a)

 

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of the Indenture. Only Collections shall be deposited in the Collection Account.
The Servicer may cause to be withdrawn from the Collection Account such amounts
that have been deposited into the Collection Account in error not representing
Collections or other proceeds of the Trust Estate and any amounts that are
deposited by Servicer that relate to checks rejected by the Receivables
Obligor’s bank for insufficient funds.

(v) Except for the right of Servicer to retain Collections in respect of the
Servicing Fee in accordance with Section 8.03(a) of the Indenture, each of
Depositor, Receivables Trust, Issuer and Servicer hereby irrevocably waive any
right to set off against, or otherwise deduct from, any Collections.

(vi) The initial Servicer hereby transfers, assigns, pledges, sets over and
conveys to Indenture Trustee all of its right, title and interest, if any, in
and to the Collection Account and the other Note Accounts.

(vii) All payments or other amounts collected or received by Servicer in respect
of a Receivable shall be applied to the Receivables Principal Balance of, or
accrued and unpaid interest and fees on, such Receivable in accordance with the
terms of the related Contract.

(d) If SST is then acting as Successor Servicer, it shall cause a firm of
independent certified public accountants, which may also render other services
to SST or its affiliates, to deliver to the Issuer, the Receivables Trust and
the Indenture Trustee, within 120 days after the end of each fiscal year
thereafter, commencing in the year after SST becomes Successor Servicer, (i) an
opinion by a firm of nationally recognized independent certified public
accountants on the financial position of SST at the end of the relevant fiscal
year and the results of operations and changes in financial position of SST for
such year then ended on the basis of an examination conducted in accordance with
generally accepted auditing standards, and (ii) a report from such independent
certified public accountants to the effect that based on an examination of
certain specified documents and records relating to the servicing of SST’s loan
portfolio conducted substantially in compliance with SSAE 16 (the “Applicable
Accounting Standards”), such firm is of the opinion that such servicing has been
conducted in compliance with the Applicable Accounting Standards except for
(a) such exceptions as such firm shall believe to be immaterial and (b) such
other exceptions as shall be set forth in such statement.

(e) Notwithstanding anything to the contrary contained in this Article II, the
Servicer, if not Conn Appliances or any Affiliate of Conn Appliances, shall have
no obligation to collect, enforce or take any other action described in this
Article II with respect to any Indebtedness that is not included in the Trust
Estate other than to deliver to the Issuer the collections and documents with
respect to any such Indebtedness as described in Section 2.02(a) hereof.

 

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Section 2.03 Purchase of Ineligible Receivables.

(a) If the representation and warranty of the initial Servicer contained in
Section 2.10(d) was not true and correct with respect to any Contract and
related Receivable (other than a 2017-PV1 Ineligible Receivable) as of the
applicable Cut-Off Date (any such Receivable, an “Ineligible Receivable”), the
initial Servicer shall, at the request of the Administrative Agent, purchase
such Ineligible Receivable within ten (10) Business Days after demand thereof
from the Receivables Trust for an amount equal to the Receivables Principal
Balance of such Receivable plus accrued and unpaid interest thereon at the time
of such purchase (such amount, the “Repurchase Price”), and such amount shall be
remitted by the initial Servicer to the Collection Account and be treated by the
initial Servicer as a Collection on such Receivable for purposes of the
Transaction Documents; provided, if during such ten (10) Business Day period the
Servicer takes all necessary actions such that the Receivable is no longer an
Ineligible Receivable and reimburses the Receivables Trust for all lost
Collections resulting from the failure of such representation and warranty to be
true, then the initial Servicer shall not be required to purchase such
Receivable.

(b) The initial Servicer and the Receivables Trust agree that after payment of
the Repurchase Price for an Ineligible Receivable as provided in clause
(a) above, such Ineligible Receivable shall no longer constitute a Receivable
for purposes of the Transaction Documents.

(c) Except as expressly set forth in the Transaction Documents, the initial
Servicer shall not have any right under this Agreement, by implication or
otherwise, to purchase from the Receivables Trust any Receivables.

(d) The obligation of the initial Servicer to purchase an Ineligible Receivable
pursuant to this Section 2.03 will survive the termination of this Agreement or
the earlier resignation or removal of the initial Servicer.

Section 2.04 Purchase of Returned and Refinanced Receivables.

(a) Notwithstanding anything to the contrary herein, the initial Servicer shall
purchase any Receivable from the Receivables Trust to the extent that (i) the
Merchandise related to such Receivable is returned by a Receivables Obligor (a
“Returned Receivable”), or (ii) the Receivable is fully refinanced in connection
with the purchase after the applicable Cut-Off Date by the related Receivables
Obligor of additional Merchandise using the initial Servicer’s in-house credit
(a “Refinanced Receivable,” and, together with Returned Receivables, the
“Returned/Refinanced Receivables”).

(b) The initial Servicer shall purchase any Returned/Refinanced Receivables
pursuant to clause (a) for an amount equal to the Repurchase Price for the
applicable Returned/Refinanced Receivable.

 

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(c) The initial Servicer and the Receivables Trust agree that after payment of
the Repurchase Price for a Returned/Refinanced Receivables as provided in clause
(a) above, such Returned/Refinanced Receivable shall no longer constitute a
Receivable for purposes of the Transaction Documents.

Section 2.05 Rights After Designation of New Servicer. (a) At any time following
the designation of a Successor Servicer (other than Conn Appliances or an
Affiliate thereof) pursuant to Section 2.01 hereof:

(i) The Indenture Trustee may, at its option, or shall, at the direction of the
Required Noteholders, direct that payment of all amounts payable under any
Receivable be made directly to the Indenture Trustee or its designee.

(ii) The Receivables Trust shall, at the Indenture Trustee’s request,
(A) assemble all of the records relating to the Receivables and other Related
Security, and shall make the same available to the Indenture Trustee or its
designee at a place selected by the Indenture Trustee or its designee, and
(B) segregate all cash, checks and other instruments received by it from time to
time constituting Collections of Receivables in a manner acceptable to the
Indenture Trustee and shall, promptly upon receipt, remit all such cash, checks
and instruments, duly endorsed or with duly executed instruments of transfer, to
the Indenture Trustee or its designee.

(iii) The Receivables Trust hereby authorizes the Indenture Trustee and the
Issuer (as Certificateholder of the Receivables Trust) to take any and all steps
in the Receivables Trust’s name and on behalf of the Receivables Trust necessary
or desirable, in the reasonable determination of the Indenture Trustee, to
collect all amounts due under any and all Receivables, including, without
limitation, endorsing the Receivables Trust’s name on checks and other
instruments representing Collections and enforcing such Receivables and the
related Contracts.

(iv) Upon delivery of a Notice of Appointment (as defined in the Back-Up
Servicing Agreement) to the Back-Up Servicer, Conn Appliances shall designate
one or more employees acceptable to the Successor Servicer to assist the
Successor Servicer with respect to In-Store Payments so long as Conn Appliances
continues to accept, or the Successor Servicer permits, In-Store Payments to be
made as described herein; provided, however, such employee of Conn Appliances
shall in no event be deemed an employee, agent, custodian or nominee of the
Successor Servicer and the Successor Servicer shall have no responsibility or
liability for any negligence or willful misconduct of such employee or for such
employee’s failure to assist the Successor Servicer (including without
limitation any acts or omissions unrelated to the transactions contemplated
hereby). Upon the request of the Successor Servicer to the

 

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Indenture Trustee, 100% of the Noteholders may direct the Successor Servicer to
designate an employee of Successor Servicer to be assigned to any or all Conn
Appliances stores to oversee the collection of In-Store Payments at such stores.
Each such employee shall be placed at such store at the expense of the Issuer
(as Certificateholder of the Receivables Trust) at the monthly rate reflected in
the SST Fee Schedule.

(b) The Successor Servicer may accept and reasonably rely on all accounting and
servicing records and other documentation provided to the Successor Servicer by
or at the direction of the predecessor Servicer, including documents prepared or
maintained by the Originator, or previous servicer, or any party providing
services related to the Contracts, the Receivables and other Related Security
(collectively, “third party”). The predecessor Servicer agrees to indemnify and
hold harmless the related Successor Servicer, its respective officers, employees
and agents against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments, and any other costs, fees and expenses
that the Successor Servicer may sustain in any way related to the negligence or
willful misconduct of any third party hired by or at the direction of such
predecessor Servicer, any Affiliate of such predecessor Servicer or any of their
respective agents with respect to the Contracts, the Receivables and other
Related Security. The Successor Servicer shall have no duty, responsibility,
obligation or liability (collectively, “liability”) for the acts or omissions of
any such third party. If any error, inaccuracy or omission (collectively,
“error”) exists in any information provided to the Successor Servicer and such
errors cause or materially contribute to the Successor Servicer making or
continuing any error (collectively, “continuing errors”), the Successor Servicer
shall have no liability for such continuing errors; provided, however, that this
provision shall not protect the Successor Servicer against any liability which
would otherwise be imposed by reason of willful misconduct or negligence in
discovering or correcting any error or in the performance of its duties
contemplated herein.

In the event the Successor Servicer becomes aware of errors and/or continuing
errors that, in the opinion of the Successor Servicer, impair its ability to
perform its obligations hereunder, the Successor Servicer shall promptly notify
the other parties hereto of such errors and/or continuing errors. The Successor
Servicer may undertake to reconstruct any data or records appropriate to correct
such errors and/or continuing errors and to prevent future continuing errors.
The Successor Servicer shall be entitled to recover its costs thereby expended
from the predecessor Servicer.

Neither the Successor Servicer nor any of the directors or officers or employees
or agents of the Successor Servicer shall be under any liability to the other
parties hereto except as provided in this Agreement for any action taken or for
refraining from the taking of any action in good faith pursuant to this
Agreement; provided, however, that this provision shall not protect the
Successor Servicer or any such Person against any liability that would otherwise
be imposed by reason of willful misconduct, bad faith or negligence in the
performance of duties, by reason of reckless disregard of obligations and duties
under this Agreement or any violation of law by the Successor Servicer or such
Person, as the case may be. The Successor Servicer and any director, officer,
employee or agent of the Successor Servicer may rely in good faith on the advice
of counsel or on any document of any kind prima facie properly executed and
submitted by any Person respecting any matters arising under this Agreement.

 

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The Successor Servicer will not be responsible for delays attributable to the
predecessor Servicer’s failure to deliver information, defects in the
information supplied by such predecessor Servicer or other circumstances beyond
the reasonable control of the Successor Servicer. In addition, the Successor
Servicer (and in the case of clauses (A) and (C) below, if an officer of the
Successor Servicer has actual knowledge of errors, which in the reasonable
opinion of the Successor Servicer impair its ability to perform its services
hereunder, after reasonable inquiry), shall have no responsibility and shall not
be in default hereunder or incur any liability for any act or omission, failure,
error, malfunction or any delay in carrying out any of its duties under this
Agreement for: (A) any such failure or delay that results from the Successor
Servicer acting in accordance with information prepared or supplied by a Person
other than any Person hired by the Successor Servicer, the Successor Servicer or
the failure of any such other Person (including without limitation the
predecessor Servicer, but excluding any Person hired by the Successor Servicer)
to prepare or provide such information or other circumstances beyond the control
of the Successor Servicer; (B) any act or failure to act by any third party
(other than those hired by the Successor Servicer), including without limitation
the predecessor Servicer, the Receivables Trust, the Issuer and the Indenture
Trustee; (C) any inaccuracy or omission in a notice or communication received by
the Successor Servicer from any third parties (other than those hired by the
Successor Servicer); (D) the invalidity or unenforceability of any Contracts,
the Receivables and Related Security under applicable law; (E) the breach or
inaccuracy of any representation or warranty made with respect to the Contracts,
the Receivables and Related Security; or (F) the acts or omissions of any
predecessor or successor Servicer.

The Servicer, the Issuer and the Receivables Trust agree to reasonably cooperate
with the Successor Servicer in effecting the assumption of its responsibilities
and rights under this Agreement. The Servicer shall provide to the Successor
Servicer all necessary servicing files and records in its possession or control
relating to the Contracts, the Receivables and Related Security (as deemed
necessary by the Successor Servicer at such time on a reasonable basis) and the
initial Servicer shall use all commercially reasonable efforts to provide to the
Successor Servicer access to and transfer of records and use by the Successor
Servicer of all licenses, servicing system, software, hardware, equipment,
telephony, personnel, employees, facilities or other accommodations necessary or
desirable to collect the Contracts, in all cases, subject to the terms of the
Intercreditor Agreement, if applicable. The departing Servicer (if SST, only
upon termination for cause) shall be obligated to pay the costs associated with
the transfer of servicing files and records to the Successor Servicer. The
Receivables Trust, the Issuer, the Indenture Trustee, and the Successor Servicer
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.

Indemnification by the Servicer under this Article shall be paid solely by the
Servicer and not from the Trust Estate, and shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
indemnifying party has made any indemnity payments pursuant to this
Section 2.05(b) and the recipient thereafter collects any of such amounts from
others, the recipient shall promptly repay such amounts collected to the
indemnifying party, without interest.

Section 2.06 Servicer Default. The occurrence of any one or more of the
following events shall constitute a Servicer default (each, a “Servicer
Default”):

 

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(a) failure by the Servicer (or, for so long as Conn Appliances is the Servicer,
Conn Appliances) to make any payment, transfer or deposit under this Agreement
or any other Servicer Transaction Document or to provide the Monthly Servicer
Report to the Indenture Trustee to make such payment, transfer or deposit or any
withdrawal on or before the date occurring five (5) Business Days after the date
such payment, transfer or deposit is required to be made or given, as the case
may be, under the terms of this Agreement or any other Servicer Transaction
Document (or in the case of a payment, transfer, deposit, instruction or notice
to be made or given with respect to any Interest Period, by the related Payment
Date);

(b) any representation, warranty or statement made by the Servicer in any
Servicer Transaction Document or any certificate, report or other writing
delivered by the Servicer proves to be incorrect in any material respect as of
the time when made; provided, if inaccuracy is contained in a Monthly Servicer
Report, such inaccuracy shall be a Servicer Default solely if such inaccuracy
continues unremedied for a period of two (2) Business Days after the date on
which the Servicer has actual knowledge thereof or on which written notice
thereof, requiring the same to be remedied, shall have been given to the
Servicer;

(c) failure on the part of the Servicer (or, for so long as the Servicer is Conn
Appliances, Conn Appliances) to duly observe or perform any representation,
warranty, covenants or agreements (other than those that are Servicer Defaults
pursuant to another clause of this Section 2.06) of the Servicer set forth in
this Agreement or any other Servicer Transaction Document, which continues
unremedied for a period of thirty (30) days after the date on which the Servicer
has actual knowledge thereof or on which written notice thereof, requiring the
same to be remedied, shall have been given to the Servicer by the Indenture
Trustee, the Issuer, the Receivables Trust, or the Receivables Trust Trustee and
such representation, warranty or statement has an Adverse Effect;

(d) the Servicer shall become the subject of any bankruptcy, insolvency or
similar event, or shall voluntarily suspend payment of its obligations;

(e) for so long as Conn Appliances is the Servicer, the failure of Consolidated
Parent to maintain Consolidated Net Worth of at least the sum of $400,000,000;

(f) for so long as Conn Appliances is the Servicer, a breach by the Consolidated
Parent of any ABL Financial Covenant;

(g) at any time that Conn Appliances is Servicer, a final judgment or judgments
for the payment of money in excess of $10,000,000 (net of insurance coverage
that has denied by an insurer of the Servicer, if any exists) in the aggregate
shall have been rendered against the Issuer or Conn Appliances and the same
shall have remained unsatisfied and in effect, without stay of execution, for a
period of thirty (30) consecutive days after the period for appellate review
shall have elapsed;

 

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(h) the Sponsor or the Servicer’s corporate rating falls below B3/B-; or

(i) an Event of Default occurs.

Section 2.07 Servicer Indemnification of Indemnified Parties. (A) The Servicer
(if other than SST as Successor Servicer) will indemnify, defend and hold
harmless the Indenture Trustee, the Receivables Trust Trustee, the Issuer, the
Receivables Trust, the Back-Up Servicer, any Successor Servicer, the
Administrative Agent, and the Noteholders, and (B) SST as successor Servicer
will indemnify and hold harmless the Indenture Trustee, on behalf of the
Noteholders, and the Receivables Trust Trustee, on behalf of the holder of the
Trust Certificate, the Issuer and the Receivables Trust (in each case, together
with their respective successors and permitted assigns) and each of their
respective agents, officers, members and employees (each, a “Servicer
Indemnified Party” and, collectively, the “Servicer Indemnified Parties”), from
and against any claim, loss, liability, expense, damage or injury suffered or
sustained by reason of such Servicer’s negligence in the performance of (or
failure to perform) its duties or obligations under the Servicer Transaction
Documents or Servicer’s willful misconduct or breach by the Servicer of any of
its representations or warranties contained in this Agreement, including any
judgment, award, settlement, reasonable attorneys’ fees and other costs or
expenses reasonably incurred in connection with the defense of any actual
action, proceeding or claim; provided, however, that the Servicer shall not
indemnify any Servicer Indemnified Party for any such acts or omissions
attributable to the negligence or willful misconduct of such Servicer
Indemnified Party. Any indemnification pursuant to this Section shall be had
only from the assets of the Servicer and shall not be payable from Collections
except to the extent such Collections are retained by the Servicer in accordance
with Section 8.03 of the Indenture, or released to the Servicer in accordance
with Section 8.06 of the Indenture, in respect of the Servicing Fee. The
provisions of such indemnity shall run directly to and be enforceable by such
Servicer Indemnified Parties.

The Issuer (as Certificateholder of the Receivables Trust) will indemnify,
defend and hold harmless the Servicer and its officers, directors, employees,
representatives and agents (each, an “Issuer Indemnified Party”), from and
against and reimburse the Servicer for any and all claims, expenses,
obligations, liabilities, losses, damages, injuries (to person, property, or
natural resources), penalties, stamp or other similar taxes, actions, suits,
judgments, reasonable costs and expenses (including reasonable attorney’s and
agent’s fees and expenses) of whatever kind or nature regardless of their merit,
demanded, asserted or claimed against the Servicer directly or indirectly
relating to, or arising from, claims against the Servicer by reason of its
participation in the transactions contemplated hereby, including without
limitation all reasonable costs required to be associated with claims for
damages to persons or property, and reasonable attorneys’ and consultants’ fees
and expenses and court costs; provided, however, that the Issuer shall not
indemnify any Issuer Indemnified Party for any such acts or omissions
attributable directly or indirectly to the negligence or willful misconduct of
such Issuer Indemnified Party or, other than with respect to SST as successor
Servicer, for any breach by the Servicer of any of the Servicer Transaction
Documents. The provisions of this section shall survive the termination of this
Agreement or the earlier resignation or removal of the Servicer.

 

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Section 2.08 Grant of License. For the purpose of enabling the Back-Up Servicer
or any other Successor Servicer to perform the functions of servicing and
collecting the Receivables upon a Servicer Default, Conn Appliances hereby
(i) assigns, to the extent not prohibited by law or the terms of any agreement
to which Conn Appliances is a party or by which it is deemed bound (by the terms
thereof or by acceptance of a license), to the Indenture Trustee for the benefit
of the Secured Parties and shall be deemed to assign to the Indenture Trustee
for the benefit of the Secured Parties, the Back-Up Servicer or any other
Successor Servicer all rights owned or hereinafter acquired by Conn Appliances
(by license, sublicense, lease, easement or otherwise) in and to any equipment
used for servicing (or reasonable access thereto) together with a copy of any
software used in connection with the performance of its duties as Servicer and
relating to the Servicing and collecting of Receivables, (ii) agrees to use all
reasonable efforts to assist the Indenture Trustee for the benefit of the
Secured Parties, the Back-Up Servicer or any other Successor Servicer to arrange
licensing agreements with all software vendors and other applicable persons in a
manner and to the extent reasonably appropriate to effectuate the servicing of
the Receivables, (iii) agrees to deliver to the Indenture Trustee, the Back-Up
Servicer or any Successor Servicer executed copies of any landlord waivers that
may be necessary to grant to the Indenture Trustee, the Back–Up Servicer or any
other Successor Servicer access to any leased premises of Conn Appliances for
which the Indenture Trustee, the Back-Up Servicer or any other Successor
Servicer may require access to perform the collection and administrative
functions to be performed by the Indenture Trustee, the Back-Up Servicer or any
Successor Servicer under the Servicer Transaction Documents and (iv) agrees that
it will terminate its activities as Servicer hereunder in a manner which the
Indenture Trustee the Back-Up Servicer or any Successor Servicer reasonably
believes will facilitate the transition of the performance of such activities to
the Back-Up Servicer or any other designated Successor Servicer, as applicable,
and shall use commercially reasonable efforts to assist the Indenture Trustee,
the Back-Up Servicer or any Successor Servicer in such transition. The terms of
this Section 2.08 shall all be subject to the limitations on the Servicer’s
rights as set forth in the Intercreditor Agreement.

Section 2.09 Servicing Compensation. As compensation for its servicing and
custodial activities hereunder and reimbursement for its expenses (in the case
of Conn Appliances only) as set forth in the immediately following paragraph,
the Servicer shall be entitled to receive a servicing fee (the “Servicing Fee”)
as set forth below (including, with regards to SST as Successor Servicer, as set
forth on the SST Fee Schedule). The “Servicing Fee” for any Payment Date, other
than the initial Payment Date, shall be an amount equal to the product of
(i) the Servicing Fee Rate, multiplied by (ii) the aggregate Receivables
Principal Balance of all Receivables in the Receivables Trust Estate as of the
first day of the related Collection Period, multiplied by (iii) one-twelfth. The
Servicing Fee for the initial Payment Date shall be an amount equal to the
product of (i) the Servicing Fee Rate multiplied by (ii) the aggregate
Receivables Principal Balance of all Receivables in the Receivables Trust Estate
as of the Initial Cut-

 

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Off Date, multiplied by (iii) a fraction having as its numerator the number of
days from the Initial Cut-Off Date through the end of the related Collection
Period, and as its denominator, 360. The Servicing Fee shall be payable to the
Servicer solely to the extent that amounts are available for payment in
accordance with the terms of the Indenture.

The initial Servicer’s expenses include expenses incurred by the initial
Servicer in connection with its activities hereunder; provided, that the initial
Servicer in its capacity as such shall not be liable for any liabilities, costs
or expenses of the Receivables Trust, the Issuer or the Noteholders arising
under any tax law, including without limitation any federal, state or local
income or franchise taxes or any other tax imposed on or measured by income or
gross receipts (or any interest or penalties with respect thereto or arising
from a failure to comply therewith) except to the extent that such liabilities,
taxes or expenses arose as a result of the breach by the initial Servicer of its
obligations under Section 6.02 hereof. In such case, the initial Servicer shall
be required to pay such expenses for its own account and shall not be entitled
to any payment therefor other than the Servicing Fee. The payment of the
expenses of SST, as Successor Servicer, which with respect to SST are set forth
in the SST Fee Schedule attached to the Back-Up Servicing Agreement, shall be
distributed on each Payment Date on which such amounts are due and payable to
the extent of funds available therefor in accordance with Section 8.06 of the
Indenture and the SST Fee Schedule. The provisions of this Section 2.09 shall
survive the termination of this Agreement and the earlier resignation or removal
of the Servicer.

Section 2.10 Representations and Warranties of the Servicer. The Servicer hereby
represents, warrants and covenants to and for the benefit of the Receivables
Trust, the Issuer, the Indenture Trustee, the Back-Up Servicer, the Successor
Servicer, the Administrative Agent and the Noteholders as of the date of this
Agreement and, in the case of the initial Servicer, as of the Note Initial
Increase Date and, if applicable, any Note Balance Increase Date, any other date
Receivables are acquired by the Receivables Trust, and, in the case of any
Successor Servicer, as of the date of its appointment as Servicer:

(a) Organization and Good Standing, etc. Servicer has been duly organized and is
validly existing and in good standing under the laws of its state of
organization, with power and authority to own its properties and to conduct its
business as such properties are presently owned and such business are presently
conducted. Servicer is duly licensed or qualified to do business as a foreign
entity 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 an Adverse Effect.

(b) Power and Authority; Due Authorization. Servicer has (i) all necessary
power, authority and legal right to execute, deliver and perform, as applicable,
its obligations under this Agreement and each of the other Servicer Transaction
Documents, and (ii) duly authorized, by all necessary action, the execution,
delivery and performance, as applicable, of this Agreement and the other
Servicer Transaction Documents. Servicer has and in the case of the initial
Servicer only, had at all relevant times, and now has, all necessary power,
authority and legal right to perform its duties as Servicer.

 

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(c) No Violation. The consummation of the transactions contemplated by this
Agreement and the other Servicer Transaction Documents and the fulfillment of
the terms hereof will not (i) 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, (A) the organizational documents of Servicer, or (B)
(in the case of SST as successor Servicer, without investigation or inquiry) any
material indenture, loan agreement, pooling and servicing agreement, receivables
purchase and sale agreement, mortgage, deed of trust, or other agreement or
instrument to which Servicer is a party or by which any of them or any of their
respective properties is bound, (ii) in the case of the initial Servicer only,
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 and sale agreement,
mortgage, deed of trust, or other agreement or instrument, other than pursuant
to the terms of the Servicer Transaction Documents, or (iii) violate any law or
any order, rule, or regulation applicable to Servicer or of any court or of any
federal, state or foreign regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over Servicer or any of its
properties.

(d) Eligible Receivable. Solely in the case of the initial Servicer, each
Receivable in the Trust Estate (other than any 2017-PV1 Ineligible Receivable)
is an Eligible Receivable as of its Cut-Off Date.

(e) Validity and Binding Nature. This Agreement is, and the other Servicer
Transaction Documents when duly executed and delivered, as applicable, by
Servicer and the other parties thereto will be, the legal, valid and binding
obligation of Servicer enforceable in accordance with their 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.

(f) 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 Servicer of any
Servicer Transaction Document to which it is a party remains unobtained or
unfiled, except in the case of the initial Servicer for the filing of the UCC
financing statements referred to in Section 3.1(iii) of the First Receivables
Purchase Agreement and Schedule I to the Indenture.

(g) Margin Regulations. Initial Servicer is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock, and no
proceeds of any Notes, directly or indirectly, will be used for a purpose that
violates, or would be inconsistent with, Regulations T, U and X promulgated by
the Federal Reserve Board from time to time.

(h) Compliance with Applicable Laws. Servicer is in compliance with the
requirements of all applicable laws, rules, regulations, and orders of all
governmental authorities, a breach of any of which, individually or in the
aggregate, would be reasonably likely to have an Adverse Effect.

 

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(i) No Proceedings. Except as described in Schedule I or as disclosed to the
Administrative Agent on or before the Effective Date, provided that such
schedule shall only apply to the initial Servicer,

(i) there is no order, judgment, decree, injunction, stipulation or consent
order of or with any court or other government authority to which Servicer is
subject, and there is no action, suit, arbitration, regulatory proceeding or
investigation pending, or, to the actual knowledge of Servicer, threatened,
before or by any court, regulatory body, administrative agency or other tribunal
or governmental instrumentality, against Servicer that, individually or in the
aggregate, is reasonably likely to have an Adverse Effect; and

(ii) there is no action, suit, proceeding, arbitration, regulatory or
governmental investigation, pending or, to the actual knowledge of Servicer,
threatened, before or by any court, regulatory body, administrative agency, or
other tribunal or governmental instrumentality (A) asserting the invalidity of
this Agreement or any other Servicer Transaction Document, or (B) seeking to
prevent the consummation of any of the other transactions contemplated by this
Agreement or any other Servicer Transaction Document.

(j) Accuracy of Information. All information heretofore furnished by, or on
behalf of, Servicer to the Receivables Trust, the Issuer, the Indenture Trustee,
the Administrative Agent or any Noteholder in connection with any Servicer
Transaction Document, or any transaction contemplated thereby, is true and
accurate in every material respect.

In the event that there is any breach of any of the representations, warranties
or covenants of the initial Servicer contained in Sections 2.13(a) and (e) and
2.14(a) with respect to any Receivable, and such Receivable becomes a Defaulted
Receivable or the rights of the Secured Parties in, to or under such Receivable
or its proceeds are impaired or the proceeds of such Receivable are not
available to the Indenture Trustee for the benefit of the Secured Parties or the
initial Servicer has released any Merchandise securing a Receivable from the
lien created by such Receivable (except as specifically provided in the Servicer
Transaction Documents), then the initial Servicer shall be deemed to have
received on such day a collection of such Receivable in full, and the initial
Servicer shall, on the Distribution Date, deposit into the Collection Account,
subject to Section 8.03(a) of the Indenture, an amount equal to the Repurchase
Price of such Receivable, and such amount shall be allocated and applied by the
initial Servicer as a Collection allocable to the Receivables or Related
Security in accordance with the applicable section relating to allocation of
Collections in the Indenture. In the event that the initial Servicer has paid to
or for the benefit of the Noteholders or any other applicable Secured Party the
full Repurchase Price of any Receivable pursuant to this paragraph, the
Receivables Trust shall release and convey all of such Person’s right, title and
interest in and to the related Receivable to the initial Servicer, without
representation or warranty, but free and clear of all liens created by such
Person, as applicable.

 

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Section 2.11 Reports and Records for the Indenture Trustee. In addition to each
of the reports required to be prepared and delivered by the Servicer pursuant to
Section 2.02(e) hereof, the Servicer shall, after the Note Initial Increase Date
at any time the Notes are Outstanding, prepare and deliver in accordance with
this Section 2.11 each of the following reports and notices:

(a) Periodic Reports. (a) Not later than the second Business Day preceding each
Payment Date, the Servicer shall prepare and forward to the Indenture Trustee
(i) a Monthly Servicer Report in accordance with Section 8.10 of the Indenture
and substantially the form set forth on Exhibit A attached hereto as of the last
Business Day of the immediately preceding calendar month, and (ii) as soon as
reasonably practicable, from time to time, such other information in its
possession as the Receivables Trust, the Indenture Trustee, the Administrative
Agent or the Back-Up Servicer may reasonably request.

(b) Notes Reports. The initial Servicer shall prepare and deliver any reports
required to be prepared and delivered by the Servicer by the terms of any
agreements of the Issuer or the Servicer relating to the issuance or purchase of
any of the Notes.

Section 2.12 Reports to the Commission. The Issuer, the Receivables Trust and/or
Conn Appliances, if the Issuer, the Receivables Trust and/or Conn Appliances or
any Affiliate of either of them is not acting as Servicer, shall, at the expense
of the Issuer or Conn Appliances, as applicable, cooperate in any reasonable
request of the Indenture Trustee in connection with any filings required to be
filed by the Indenture Trustee with the SEC under the provisions of the
Securities Exchange Act of 1934 or pursuant to the Indenture.

Section 2.13 Affirmative Covenants of the Servicer. At all times from the Note
Initial Increase Date to the date on which the Note Balance of all Notes shall
be equal to zero, unless the Required Noteholders shall otherwise consent in
writing:

(a) Credit and Collection Policies. The Servicer will comply in all material
respects with the Credit and Collection Policies in regard to each Receivable
and the related Contract.

(b) Collections Received. Subject to Section 8.03(a) of the Indenture, the
Servicer shall set aside and deposit as soon as reasonably practicable (but in
any event no later than two (2) Business Days following its receipt thereof)
into the Collection Account all Collections received from time to time by the
Servicer.

(c) Notice of Early Amortization Event, Events of Default, Potential Pay Out
Event or Servicer Defaults. Within five (5) Business Days after the Servicer
obtains actual knowledge or receives written notice of the occurrence of each
Early Amortization Event, Event of Default or Servicer Default, the Servicer

 

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will furnish to the Indenture Trustee and the Rating Agencies (if any Rating
Agency then provides a rating on the Notes) a statement of a Responsible Officer
of the Servicer, setting forth to the extent actually known by the Servicer,
details of such Early Amortization Event, Event of Default or Servicer Default,
and the action which the Servicer, the Issuer or a Depositor proposes to take
with respect thereto.

(d) Conduct of Business. The Servicer will do all things necessary to remain
duly incorporated, validly existing and in good standing in its jurisdiction of
organization and maintain all requisite authority to conduct its business in
each jurisdiction in which its business is conducted to the extent that the
failure to maintain such would have an Adverse Effect.

(e) Compliance with Laws. The Servicer will comply in all respects with all laws
with respect to the Receivables to the extent that any non-compliance would have
an Adverse Effect.

Section 2.14 Negative Covenants of the Servicer. At all times from the date
hereof to the date on which the Note Balance of all Notes shall be equal to
zero, unless the Required Noteholders shall otherwise consent in writing:

(a) Modifications of Receivables or Contracts. The Servicer shall not extend,
amend, forgive, discharge, compromise, waive, cancel or otherwise modify the
terms of any Receivable or amend, modify or waive any term or condition of any
Contract related thereto; except in accordance with Section 2.02(b).

(b) Merger or Consolidation of, or Assumption of the Obligations of, the
Servicer. (I) The Servicer shall not consolidate with or merge into any other
corporation or convey or transfer its properties and assets substantially as an
entirety to any Person, unless:

(i) the entity formed by such consolidation or into which the Servicer is merged
or the Person which acquires by conveyance or transfer the properties and assets
of the Servicer substantially as an entirety shall be an entity organized and
existing under the laws of the United States of America or any State or the
District of Columbia and, if the Servicer is not the surviving entity, such
corporation shall expressly assume, by an agreement supplemental hereto executed
and delivered to the Indenture Trustee, and with notice to the Rating Agencies
(if any Rating Agency then provides a rating on the Notes), the performance of
every covenant and obligation of the Servicer under the Servicer Transaction
Documents; and

 

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(ii) the Servicer has delivered to the Indenture Trustee, the Administrative
Agent, the Noteholders and the Receivables an Opinion of Counsel stating that
such consolidation, merger, conveyance or transfer comply with this paragraph
(b) and that all conditions precedent herein provided for relating to such
transaction have been complied with (and if an agreement supplemental hereto has
been executed as contemplated by clause (i) above, such opinion of counsel shall
state that such supplemental agreement is a legal, valid and standing obligation
of the Servicer enforceable against the Servicer in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and similar laws
of general applicability relating to or affecting creditors’ rights and to
general equity principles).

(II) If SST is acting as Servicer, any corporation or other entity into which
SST may be merged or converted or with which it may be consolidated, or any
corporation or other entity resulting from any merger, conversion or
consolidation to which SST shall be a party, or any corporation or other entity
succeeding to the business of SST must be the successor of SST hereunder without
the execution or filing of any paper with any party hereto or any further act on
the part of any of the parties hereto except where an instrument of transfer or
assignment is required by law to effect such succession, anything herein to the
contrary notwithstanding, and SST will not merge, convert or consolidate if the
resulting entity would not be the successor of SST hereunder.

(c) No Change in Business or the Credit and Collection Policies. The Servicer
will not make any change in the character of its business or in the Credit and
Collection Policies, which change would, in either case, impair the
collectability of any Receivable or otherwise have an Adverse Effect, except to
the extent such change is required as a result of a change in applicable
Requirements of Law.

Section 2.15 Sale of Defaulted Receivables. The initial Servicer may sell, on
behalf of the Receivables Trust, Defaulted Receivables that have been Defaulted
Receivables for no less than six months, as to which the initial Servicer shall
have determined eventual payment in full is unlikely, to an unaffiliated third
party for the greatest market price available, if in its good faith judgment it
determines that the proceeds ultimately recoverable with respect to such
Receivables would be increased by such sale. Notwithstanding the foregoing, in
no event may the aggregate sales of Defaulted Receivables (by Receivables
Principal Balance of such Defaulted Receivable as of the applicable Cut-Off
Date) pursuant to this Section 2.15 exceed 10% of the Receivables Principal
Balance of all Receivables as of their applicable Cut-Off Date.

 

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ARTICLE III

[RESERVED]

ARTICLE IV

[RESERVED]

ARTICLE V

OTHER MATTERS RELATING

TO THE SERVICER

Section 5.01 Liability of the Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by it or required to be taken by it in such capacity herein and in
the other Servicer Transaction Documents.

Section 5.02 Limitation on Liability of the Servicer and Others. The directors,
officers, employees or agents who are natural persons of the Servicer shall not
be under any liability to the Issuer, the Receivables Trust, the Indenture
Trustee, the Administrative Agent, the Noteholders or any other Person hereunder
or pursuant to any document delivered hereunder for any action taken or for
refraining from the taking of any action, it being expressly understood that all
such liability is expressly waived and released as a condition of, and as
consideration for, the execution of this Agreement and any supplement hereto.
Except as provided in this Section 5.02 with respect to the Issuer, the
Receivables Trust, and the Indenture Trustee, and their respective officers,
directors, employees and agents, the Servicer shall not be under any liability
to the Issuer, the Receivables Trust, the Indenture Trustee, their respective
officers, directors, employees and agents, the Noteholders or any other Person
for any action taken or for refraining from the taking of any action in its
capacity as Servicer pursuant to this Agreement or any supplement hereto;
provided, however, that this provision shall not protect the Servicer against
any liability which would otherwise be imposed by reason of (x) willful
misconduct, bad faith or negligence in the performance of duties or by reason of
its reckless disregard of its obligations and duties hereunder or under the
Indenture or (y) breach of the express terms of any Servicer Transaction
Document. The Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Servicer shall not be under any obligation to appear in,
prosecute or defend any legal action which is not incidental to its duties to
service the Receivables or the other property in the Trust Estate in accordance
with this Agreement, the Indenture and the Note Purchase Agreement that in its
reasonable opinion may involve it in any expense or liability.

Section 5.03 Servicer Not to Resign. The Servicer shall not resign from the
obligations and duties hereby imposed on it except upon determination that
(i) the performance of its duties hereunder is no longer permissible under
applicable law and (ii) there is no reasonable action which such Servicer could
take to make the

 

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performance of its duties hereunder permissible under applicable law. Any such
determination permitting the resignation of any Servicer shall be evidenced as
to clause (i) above by an Opinion of Counsel and as to clause (ii) by an
Officer’s Certificate of the Servicer (or, if the Servicer is not Conn
Appliances or an Affiliate thereof, a certificate of a responsible officer of
such Servicer), each to such effect delivered, and satisfactory in form and
substance, to the Indenture Trustee. No such resignation shall become effective
until a Successor Servicer shall have assumed the responsibilities and
obligations of such Servicer in accordance with Section 2.01 hereof and notice
has been provided to the Rating Agencies (if any Rating Agency then provides a
rating on the Notes).

Section 5.04 Waiver of Defaults. Any default by the Servicer in the performance
of its obligations hereunder and its consequences may be waived pursuant to
Section 7.01. Upon any such waiver of a default, such default shall cease to
exist, and any default arising therefrom shall be deemed to have been remedied
for every purpose of this Agreement. No such waiver shall extend to any
subsequent or other default or impair any right consequent thereon except to the
extent expressly so waived.

ARTICLE VI

ADDITIONAL OBLIGATION OF THE

SERVICER WITH RESPECT TO THE INDENTURE TRUSTEE

Section 6.01 Successor Indenture Trustee.

(a) If the Indenture Trustee resigns or is removed pursuant to the terms of the
Indenture or if a vacancy exists in the office of the Indenture Trustee for any
reason, the Servicer (or, if Conn Appliances is not the Servicer, the Issuer),
with the consent of the Administrative Agent, shall promptly appoint a successor
Indenture Trustee meeting the requirements of Section 6.11 of the Indenture, by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Indenture Trustee and one copy to the successor
Indenture Trustee.

(b) The Servicer and the Issuer agree to execute and deliver such instruments
and do such other things as may reasonably be required for fully and certainly
vesting and confirming in the successor Indenture Trustee all rights, powers,
duties and obligations under the Indenture and hereunder.

Section 6.02 Tax Returns. The initial Servicer, on behalf of Issuer, or the
Issuer shall prepare or shall cause to be prepared all tax information required
by law to be distributed to Noteholders and shall deliver such information to
the Indenture Trustee at least five days prior to the date it is required by law
to be distributed to Noteholders. Except to the extent the initial Servicer or
the Issuer breaches its obligations or covenants contained in this Section 6.02,
in no event shall the initial Servicer or the Issuer be liable for any
liabilities, costs or expenses of the Noteholders arising under any tax law,
including without limitation federal, state, local or foreign income or excise
taxes or any other tax imposed on or measured by income or gross receipts (or
any interest or penalty with respect thereto or arising from a failure to comply
therewith).

 

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Section 6.03 Final Payment with Respect to the Notes. The initial Servicer or
the Issuer shall provide any notice of final payment as specified for the Issuer
in Section 10.02 of the Indenture and in accordance with the procedures set
forth therein.

Section 6.04 Optional Purchase of Receivables Trust Estate.

(a) The Servicer will have the option to purchase (the “Optional Purchase”) the
Receivables Trust Estate and/or the Receivables Trust Certificate for an amount
equal to the Optional Purchase Price from the Issuer on any Payment Date if as
of the last day of the related Monthly Period, the Note Balance has declined to
10% or less of the Note Maximum Balance as of the such date, in accordance with
Section 8.07 of the Indenture. The Optional Purchase Price will not be less than
an amount sufficient to pay all amounts owing on the Notes in full on the final
Payment Date in accordance with the priorities set forth in Section 8.06 of the
Indenture. If the Servicer elects to exercise such option, it shall comply with
all applicable conditions set forth in Section 8.07 of the Indenture. Upon
proper exercise of such option and payment of the Optional Purchase Price, the
Receivables Trust Estate or Receivables Trust Certificate to be sold in such
Optional Purchase shall be sold to the Servicer at a price equal to the related
Optional Purchase Price. The proceeds of any such Optional Purchase shall be
applied to the Notes in accordance with the provisions for the redemption of
such Notes on such date as set forth in the Indenture.

ARTICLE VII

MISCELLANEOUS PROVISIONS

Section 7.01 Amendment.

(a) Any provision of this Agreement may be amended, supplemented, modified or
waived in writing from time to time by the Issuer, the Indenture Trustee, the
Receivables Trust and the Servicer with the consent of the Administrative Agent
and the Required Noteholders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Agreement or
modifying in any manner the rights of Noteholders; provided, however, that no
such amendment, supplement, modification or waiver shall (i) reduce in any
manner the amount of, or delay the timing of, distributions which are required
to be made on any Notes without the consent of each Holder of Notes so affected,
(ii) change the definition of or the manner of calculating the Note Balance
without the consent of each Holder of Notes, (iii) reduce the aforesaid
percentage required to consent to any such amendment, without the consent of
each Holder of Notes adversely affected, (iv) adversely affect in any material

 

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respect the interests of the Back-Up Servicer (including as Successor Servicer)
without its prior written consent or (v) adversely affect in any material
respect the interests of the Indenture Trustee without its prior written
consent. The Indenture Trustee may, but shall not be obligated to, enter into
any such amendment which adversely affects the Indenture Trustee’s rights,
duties, indemnities or immunities under this Agreement, the Indenture or
otherwise.

(b) Promptly after the execution of any such amendment, the Issuer shall furnish
notification of the substance of such amendment to the Rating Agencies (if any
Rating Agency then provides a rating on the Notes).

(c) Notwithstanding anything herein to the contrary, no amendment this Agreement
shall be effective unless, as evidenced by an officer’s certificate of the
Servicer, such amendment would not result in or cause the Receivables Trust or
the Issuer to be classified as an association or publicly traded partnership
taxable as a corporation.

(d) It shall not be necessary for the consent of Noteholders under this
Section 7.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable
requirements as the Administrative Agent may prescribe.

(e) In connection with any amendment, the Indenture Trustee shall be entitled to
receive (i) an Officer’s Certificate to the effect that the amendment complies
with all requirements of this Agreement and the Indenture and that all
conditions precedent thereto have been satisfied, and (ii) if any Noteholders
did not consent to such amendment, an Opinion of Counsel (from an external law
firm) from the Issuer to the effect that the amendment complies with all
requirements of this Agreement and the Indenture, except that such counsel shall
not be required to opine on factual matters.

(f) All reasonable fees, costs and expenses (including, without limitation,
reasonable attorneys’ fees, costs and expenses) incurred in connection with any
amendment, modification, waiver or supplement to this Agreement shall be payable
by the Issuer.

Section 7.02 Protection of Right, Title and Interest to Receivables and Related
Security.

(a) Conn Appliances or the Issuer (if Conn Appliances is not the Servicer) shall
cause this Agreement, the Indenture and the Note Purchase Agreement, all
amendments hereto and/or all financing statements and any other necessary
documents covering the Noteholders’ and the Indenture Trustee’s right, title and
interest to the Trust Estate and the Receivables Trust’s right, title and
interest to the Receivables Trust Estate to be promptly recorded, registered and

 

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filed, and at all times to be kept recorded, registered and filed, all in such
manner and in such places as may be required by law fully to preserve and
protect the Indenture Trustee’s Lien (granted pursuant to the Indenture for the
benefit of the Secured Parties) on the property comprising the Trust Estate and
the Receivables Trust’s right, title and interest to the Receivables Trust
Estate. Conn Appliances or the Issuer shall deliver to the Indenture Trustee
file-stamped copies of, or filing receipts for, any document recorded,
registered or filed as provided above, as soon as available following such
recording, registration or filing.

(b) The Servicer will give the Indenture Trustee prompt written notice of any
relocation of any office from which it services the Receivables and Related
Security or keeps records concerning such items or of its principal executive
office and, in the case of the initial Servicer, prompt written notice of
whether, as a result of such relocation, the applicable provisions of the UCC
would require the filing of any amendment of any previously filed financing
statement or of any new financing statement and shall file such financing
statements or amendments as may be necessary to continue the Indenture Trustee’s
security interest in the Trust Estate and the proceeds thereof for the benefit
of the Secured Parties. The Servicer will at all times maintain each office from
which it performs custody, collection and/or customer service obligations with
respect to the Receivables, Related Security and other property in its
possession and part of the Trust Estate and its principal executive office
within the United States of America.

Section 7.03 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS (OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW),
AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE
DETERMINED IN ACCORDANCE WITH SUCH LAWS. EACH OF THE PARTIES TO THIS SERVICING
AGREEMENT HEREBY AGREES TO THE NON-EXCLUSIVE JURISDICTION OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND ANY APPELLATE COURT
HAVING JURISDICTION TO REVIEW THE JUDGMENT THEREOF. EACH OF THE PARTIES HEREBY
WAIVES ANY OBJECTION BASED ON FORUM NON CONVENIENS AND ANY OBJECTION TO VENUE OF
ANY ACTION INSTITUTED HEREUNDER IN ANY OF THE AFOREMENTIONED COURTS AND CONSENTS
TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY
SUCH COURT.

Section 7.04 Notices. All demands, notices and communications hereunder shall be
in writing and shall be deemed to have been duly given if personally delivered
at, sent by facsimile to, sent by courier (overnight or hand-delivered) at or
mailed by registered mail, return receipt requested, to (a) in the case of the
Issuer, Conn’s Receivables Warehouse, LLC, 4055 Technology Forest Blvd., Suite
210, The Woodlands, TX, 77381, Attention: Mark Prior, Email:
mark.prior@conns.com, (b) in the case of the initial Servicer or Conn
Appliances, to 4055 Technology Forest Blvd., Suite 210, The Woodlands, TX,
77381, (c) in the case of the Indenture Trustee, to the

 

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Corporate Trust Office, and (d) in the case of the Receivables Trust, to c/o
Wilmington Trust, National Association, as Owner Trustee, Rodney Square North,
1100 North Market Street, Wilmington, Delaware 19890, Attention: Corporate Trust
Administration – Conn’s Receivables Warehouse Trust; or, as to each party, at
such other address as shall be designated by such party in a written notice to
each other party. Unless otherwise expressly provided herein, the Indenture or
the Note Purchase Agreement, any notice required or permitted to be mailed to a
Noteholder shall be given by first class mail, postage prepaid, at the address
of such Noteholder as shown in the Note Register. Any notice so mailed or
published, as the case may be, within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the
Noteholder receives such notice.

Section 7.05 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall for any reason
whatsoever be held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.

Section 7.06 Delegation. Except as provided in Section 2.01, or 2.02, the
Servicer may not delegate any of its obligations under this Agreement.

Section 7.07 Waiver of Trial by Jury. To the extent permitted by applicable law,
each of the parties hereto irrevocably waives all right of trial by jury in any
action, proceeding or counterclaim arising out of or in connection with this
Agreement or the Transaction Documents or any matter arising hereunder or
thereunder.

Section 7.08 Further Assurances. The Servicer agrees to do and perform, from
time to time, any and all acts and to execute any and all further instruments
required or reasonably requested by the Indenture Trustee more fully to effect
the purposes of this Agreement.

Section 7.09 No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Indenture Trustee, the Issuer, the Receivables
Trust, the Servicer, or the Noteholders, any right, remedy, power or privilege
hereunder, shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exhaustive of any rights, remedies, powers and privileges
provided by law.

Section 7.10 Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties on separate counterparts), each of which
shall be an original, but all of which together shall constitute one and the
same instrument.

 

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Section 7.11 Third-Party Beneficiaries. This Agreement will inure to the benefit
of and be binding upon the parties hereto, the Secured Parties and their
respective successors and permitted assigns. Except as provided in this
Section 7.11, no other Person will have any right or obligation hereunder;
provided that the Issuer shall have the right to enforce all rights of the
Receivables Trust.

Section 7.12 Actions by Noteholders.

(a) Wherever in this Agreement a provision is made that an action may be taken
or a notice, demand or instruction given by Noteholders, such action, notice or
instruction may be taken or given by any Noteholder, unless such provision
requires a specific percentage of Noteholders, as certified by such Noteholder.
Notwithstanding anything in this Agreement to the contrary, neither the Servicer
nor any Affiliate thereof shall have any right to vote with respect to any Note
except as specifically provided in the Indenture or the Note Purchase Agreement.

(b) Any request, demand, authorization, direction, notice, consent, waiver or
other act by a Noteholder shall bind such Noteholder and every subsequent holder
of such Note issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done or omitted to be done by
the Indenture Trustee or the Servicer in reliance thereon, whether or not
notation of such action is made upon such Note.

Section 7.13 Rule 144A Information. For so long as any of the Notes are
“restricted securities” within the meaning of Rule 144(a)(3) under the
Securities Act, the Issuer and the Indenture Trustee (if such information is in
the Indenture Trustee’s possession) agree to provide to any Noteholders and to
any prospective purchaser of Notes designated by such a Noteholder upon the
request of such Noteholder or prospective purchaser, any information required to
be provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act, and the Servicer agrees to
reasonably cooperate with the Issuer and the Indenture Trustee in connection
with the foregoing.

Section 7.14 Merger and Integration. Except as specifically stated otherwise
herein, this Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and all prior understandings, written or
oral, are superseded by this Agreement.

Section 7.15 Headings. The headings herein are for purposes of reference only
and shall not otherwise affect the meaning or interpretation of any provision
hereof.

Section 7.16 Rights of the Indenture Trustee. The Indenture Trustee shall be
entitled to all rights, powers, protection, privileges, indemnities and
immunities conferred on it by the terms of the Indenture as if specifically set
forth herein, and shall not be liable for any loss arising in connection with
the exercise of any such rights, powers, protections, privileges, indemnities
and immunities.

 

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Section 7.17 Sales Tax Proceeds. For the avoidance of doubt, (1) the initial
Servicer hereby notifies each of the parties hereto that the Receivables Trust,
the Depositor, the Seller and the Issuer are each “assignees” of the right to
receive the Texas bad debt deduction for all applicable defaults as per
Section 151.426(c) of the Texas Tax Code and (2) each of the initial Servicer,
the Depositor, the Seller, the Receivables Trust, the Issuer, and the retailer
of the Merchandise will cooperate to obtain the Texas bad deduction for the
assignees.

Section 7.18 Limitation of Liability. It is expressly understood and agreed by
the parties hereto that (a) this Agreement is executed and delivered by
Wilmington Trust, National Association (“WTNA”), not individually or personally
but solely as Receivables Trust Trustee of the Receivables Trust, in the
exercise of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Receivables Trust is made and intended not as personal representations,
undertakings and agreements by WTNA but is made and intended for the purpose of
binding only the Receivables Trust, (c) nothing herein contained shall be
construed as creating any liability on WTNA individually or personally, to
perform any covenant either expressed or implied contained herein of the
Receivables Trust, all such liability, if any, being expressly waived by the
parties hereto and by any Person claiming by, through or under the parties
herein, (d) WTNA has made no investigation as to the accuracy or completeness of
any representations and warranties made by the Receivables Trust in this
Agreement and (e) under no circumstances shall WTNA be personally liable for the
payment of any indebtedness or expenses of the Receivables Trust or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by the Receivables Trust under this Agreement or any
other related documents.

Section 7.19 Effectiveness of Agreement. Notwithstanding anything to the
contrary herein, this Agreement, including each grant of security interest
hereunder and the representations, warranties, covenants and other obligations
of the Seller, the Purchaser and the Receivables Trust shall become effective on
August 8, 2017.

 

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IN WITNESS WHEREOF, the Issuer, the Servicer and the Indenture Trustee have
caused this Servicing Agreement to be duly executed by their respective officers
as of the day and year first above written.

 

CONN’S RECEIVABLES WAREHOUSE, LLC,

as Issuer

By:  

/s/ Melissa Allen

Name:   Melissa Allen Title:   Director

CONN’S RECEIVABLES WAREHOUSE TRUST

as Receivables Trust

By: Wilmington Trust, National Association, not in its individual capacity but
solely as Receivables Trust Trustee By:  

/s/ Drew Davis

Name:   Drew Davis Title:   Vice President

CONN APPLIANCES, INC.,

as Servicer

By:  

/s/ Mark L. Prior

Name:   Mark L. Prior Title:   Vice President and Secretary WELLS FARGO BANK,
NATIONAL ASSOCIATION, not in its individual capacity, but solely as Indenture
Trustee By:  

/s/ Kristen L. Puttin

Name:   Kristen L. Puttin Title:   Vice President

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Exhibit A

Form of Monthly Servicer Report

FORM OF MONTHLY SERVICER REPORT

[ATTACHED]

 

2

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CONN’S RECEIVABLES WAREHOUSE

Monthly Warehouse Report

 

Monthly Period Beginning:

Monthly Period Ending:

Previous Payment Date/Close Date:

Payment Date:

30/360 Days:

 

I. OUTSTANDING RECEIVABLES BALANCE CALCULATION

 

           

{1} Beginning of period Outstanding Receivables Balance

 

           {1}                              

Monthly principal amounts

 

           

{2} Principal payments

 

        {2}                                 

{3} Outstanding Receivables that became Defaulted Receivables

 

        {3}                                 

{4} Reversal of Earned Finance Charges for Cash Option & EPNI Receivables

 

        {4}                                 

{5} Repurchased Receivables (Rep. and Warranty Breaches)

 

        {5}                                 

{6} Repurchased Receivables (Ineligibles)

 

        {6}                                 

{7} Total Change in Outstanding Receivables Balance

 

           {7}                              

{8} End of period Aggregate Receivables Principal Balance

 

           {8}                              

{9} Delinquent Receivables (60+ days)

 

           {9}                              

{10} End of Period Borrowing Base Receivables Principal Balance

 

           {10}                              

{11} Pool Factor (End of period Aggregate Receivables Principal Balance/ Cut-off
Date Aggregate Receivables Principal Balance)

 

           {11}                                           Class A              
                             

II. NOTE BALANCE CALCULATION

                              $  Note Factor                    

{12} Original Note Balance

     {12}                                                

{13} Beginning of period Note Balance

     {13}                                                

{14} Principal Distribution Allocation

     {14}                                                

{15} End of period Note Balance

     {15}                                                

{16} Total Distribution (Principal and Interest) for the Monthly Period

     {16}                                                

III. RECONCILIATION OF COLLECTION ACCOUNT

 

           

Available Funds

 

                 

{17} Total Principal Payments (including repurchased receivables + Reversal of
Earned Finance Charges for Cash Option & EPNI Receivables)

 

              {17}                                 

{18} Recoveries

 

           {18}                                    

{19} Finance Charges (less reversal of Earned Financed Charges for Cash Option
Receivables)

 

           {19}                                    

{20} Other amounts received

 

           {20}                                    

{21} Reserve Fund and Collection Account Interest

 

           {21}                                    

{22} Total Available Funds

 

           {22}                                    

Recoveries

 

                 

{23} Principal recoveries received (net of recovery expenses)

 

              {23}                                 

{24} RSA refunds received Sales

 

           {24}                                    

{25} tax refunds received Total

 

           {25}                                    

{26} Recoveries

 

           {26}                                    

Distributions

 

                 

{27} (i1a) Trustee and Note Registrar fees and expenses

 

        {27}                                       

{28} (i1b) Receivables Trust Trustee fees and expenses (i1c)

 

     {28}                                          

{29} Servicer fees and expenses

 

     {29}                                          

{30} (i1d) Back-Up Servicer fees and expenses

 

     {30}                                          

{31} (i2) Receivables Trust Trustee, Servicer, Back-up Servicer, Indenture
Trustee and other fees (cap of $200,000 per annum for expenses and indemnities,
unless the Notes have been accelerated)

 

     {31}                                          

{32} (ii) Backup Servicing Fee and Servicing Transition Costs, if any (cap of
$115,000 on all Payment Dates)

 

           {32}                                    

{33} (iii) Servicing Fee

 

           {33}                                    

{34} (ivx) Monthly Interest

 

        {34}                                       

{35} (ivy) Hedge Payment Amounts

 

     {35}                                          

{36} (v) Reserve Account, the amount needed (if any) until the balance thereof
equals the Enhanced Required Reserve Account Amount (vix1)

 

     {36}                                          

{37} Principal payment to reduce the Note Balance to the Target Class A
Principal Amount

 

     {37}                                          

{38} (vix2) Note Balance Decrease of the Notes (if any) and pay (if applicable)
any due and unpaid Breakage Fee

 

     {38}                                          

{39} (viy) Payment of any Hedge Breakage Costs where Hedge Counterparty is not
sole Defaulting Party

 

              {39}                                 

{40} (vii) Additional fee and expenses to the Receivables Trust Trustee,
Trustee, Note Registrar, Servicer, Back-up Servicer, Noteholders and
Administrative Agent to the extent not paid in (i)

 

           {40}                                    

{41} (viii) Any indemnified amounts due to the Receivables Trust Trustee,
Indenture Trustee, Servicer, Back-up Servicer, and any other Person entitled
thereto

 

           {41}                                    

{42} (ix) Payment of any Hedge Breakage Costs where Hedge Counterparty is sole
Defaulting Party

 

           {42}                                    

{43} (x) Remaining amounts to the Issuer

 

           {43}                                    

{44} Total Distribution Amount

 

           {44}                                    

 

 

3

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CONN’S RECEIVABLES WAREHOUSE

Monthly Warehouse Report

 

Monthly Period Beginning:

Monthly Period Ending:

Previous Payment Date/Close Date:

Payment Date:

30/360 Days:

 

IV. RECONCILIATION OF RESERVE FUND

               

{45} Beginning of period Reserve Fund balance Deposit

      {45}                                       

{46} to Reserve Fund (including interest) Release from

      {46}                                       

{47} Reserve Fund (including interest)

      {47}                                       

{48} End of period Reserve Fund balance

                {48}                             

{49} Reserve Fund Required Amount

          {49}                                   

{50} Amount required to purchase Eligible Interest Rate Caps sufficient to cause
clause (a) of the definition of “Cap Condition” to be satisfied Enhanced

 

        {50}                                   

{51} Required Reserve Account Amount

 

        {51}                                   

{52} Change in Reserve Fund balance from prior period

 

        {52}                                   

V. OVERCOLLATERALIZATION

 

             

Target Overcollateralization Amount

 

             

Initial Note Increase Date

 

             

{53} (i) 33.50% of the Borrowing Base Receivables Principal Balance at the end
of the Monthly Period Any Payment Date thereafter (greater of)

 

              {53}                             

{54} (i) 55.50% of the Borrowing Base Receivables Principal Balance as of the
last day of the related Collection Period and

 

        {54}                                   

{55} (ii) 8.00% of the Borrowing Base Receivables Principal Balance of all
Receivables as of the related Cut-off Date.

 

        {55}                                   

{56} Target Overcollateralization Amount

 

              {56}                             

{57} End of period Outstanding Receivables Balance

 

        {57}                                   

{58} End of period Note Balance

 

        {58}                                   

{59} Overcollateralization amount at the end of the Monthly Period

 

        {59}                                   

{60} Overcollateralization% of Outstanding Receivables Balance at the end of the
Monthly Period Overcollateralization Deficiency

 

        {60}                                   

VI. STATISTICAL DATA

 

                 

 

                At closing           Previous Month           Current Month  

{61} Outstanding Receivables Balance

        {61}            

{62} Weighted average Interest Rate

        {62}            

{63} Weighted average Age

        {63}            

{64} Weighted average Remaining Term

        {64}            

{65} Number of Receivables

        {65}            

12mo Cash Option Receivables

                   

 

                At closing           Previous Month           Current Month  

{66} Number of 12mo Cash Option Receivable Accounts that exercised Cash Option
during current Monthly Period

        {66}            

{67} Aggregate previous Earned Finance Charges of exercised 12mo Cash Option
Receivables

        {67}            

{68} Outstanding Receivables Balance of 12mo Cash Option Receivables

        {68}            

{69} Number of 12mo Cash Option Receivables

        {69}            

{70} % of Eligible Receivables that are 12mo Cash Option Receivables as of End
of current Monthly Period

        {70}            

{71} Weighted average Age of 12mo Cash Option Receivables

        {71}            

{72} Weighted average Remaining Term of 12mo Cash Option Receivables

        {72}            

18mo Cash Option Receivables

                                      At closing           Previous Month      
    Current Month  

{73} Number of 18mo Cash Option Receivable Accounts that exercised Cash Option
during current Monthly Period

        {73}            

{74} Aggregate previous Earned Finance Charges of exercised 18mo Cash Option
Receivables

        {74}            

{75} Outstanding Receivables Balance of 18mo Cash Option Receivables

        {75}            

{76} Number of 18mo Cash Option Receivables

        {76}            

{77} % of Eligible Receivables that are 18mo Cash Option Receivables as of End
of current Monthly Period

        {77}            

{78} Weighted average Age of 18mo Cash Option Receivables

        {78}            

{79} Weighted average Remaining Term of 18mo Cash Option Receivables

        {79}            

VII. DELINQUENCY DATA

                                                  Outstanding                  
                              Receivables Balance           % Total  

{80} Current

            {80}        

{81} 31-60 days delinquent

            {81}        

{82} 61-90 days delinquent

            {82}        

{83} 91-120 days delinquent

            {83}        

{84} 121-150 days delinquent

            {84}        

{85} 151-180 days delinquent

            {85}        

{86} 181-209 days delinquent

            {86}        

{87} Total Delinquencies

            {87}                                           # of Accounts        
  Balance  

{88} Count and Balance of loans that have ever been Re-aged

            {88}        

VIII. PERFORMANCE DATA

               

Trigger Events

               

{89} Total Outstanding Receivables Balance that became Defaulted Receivables
during current Monthly Period

      {89}                                       

{90} Total Recoveries received during current Monthly Period

      {90}                                       

 

4

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CONN’S RECEIVABLES WAREHOUSE

Monthly Warehouse Report

 

Monthly Period Beginning:

Monthly Period Ending:

Previous Payment Date/Close Date:

Payment Date:

30/360 Days:

 

{91}   Aggregate Net Investor Loss Amount for Current Monthly Period    {91}   

 

  

% of Cut-off Balance

  

Level I

Trigger

Threshold

  

Level I

Trigger

Event

  

Level II

Trigger

Threshold

   Level II Trigger Event {92}   Cumulative Outstanding Receivables Balance that
became Defaulted Receivables    {92}   

 

               {93}   Cumulative Aggregate Net Investor Loss Amount    {93}   

 

         N N       N N {94}   3mo Average Annualized Net Loss    {94}   

 

              

{95}

              Current Monthly Period    {95}   

 

               {96}               Last Month    {96}   

 

               {97}  

            Two Months Prior

   {97}   

 

  

% of Cut-off Balance

  

Trigger

Threshold

  

Trigger

Event

  

Trigger

Threshold

   Trigger Event

{98}

  Delinquent Receivables (60+ days)    {98}   

 

         N N       N N

{99}

  Modification (Re-age) Receivables    {99}   

 

              

VIII. FINANCIAL COVENANTS*

ABL Financial Covenants

     

 

{100} Interest Coverage Ratio

   Current Level: Threshold Passing?   

1.00 : 1.00

     

Yes/No

{101} Leverage Ratio

   Current Level: Maximum Passing?   

4.00 : 1.00

     

Yes/No

{102} ABS Excluded Leverage Ratio

   Current Level: Maximum Passing?   

2.00 : 1.00

     

Yes/No

{103} Consolidated Net Worth

   Current Level: Threshold Passing?   

$400,000,000.00

     

Yes/No

* Calculations supporting financial covenants to be attached

CONN APPLIANCES, INC, as Servicer

 

By:

Name: Title:

 

5

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I. OUTSTANDING RECEIVABLES BALANCE CALCULATION

#### Repurchased Receivables

 

Date Repurchased

   Loan ID    Outstanding Balance    Reason For Repurchase         

Repurchases of Defaulted Receivables

 

Date Repurchased

   Loan ID    Outstanding Balance    Reason For Repurchase         

 

6

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II. PERFORMANCE TRIGGER LEVELS

 

Level I Trigger Event                    

Payment Date (months from
Cut-Off Date)

  

Cumulative Net
Loss Percentage

  

Three Month

Average Annualized Net
Loss Ratio

  

Delinquency Percentage

  

Modification (Re-age)
Percentage

1              3.1%    4.7% 2              6.5%    6.2% 3              9.4%   
7.9% 4              11.8%    10.0% 5              14.2%    12.1% 6    3.2%   
37.5%    16.3%    14.4% 7    4.7%    37.5%    15.3%    16.6% 8    6.1%    37.5%
   15.1%    18.8% 9    7.4%    37.5%    15.5%    20.9% 10    8.6%    37.5%   
16.3%    23.6% 11    9.8%    37.5%    17.7%    27.2% 12    10.9%    37.5%   
18.3%    29.4% 13    12.0%    40.0%    18.9%    31.5% 14    13.0%    40.0%   
19.6%    33.5% 15    14.0%    40.0%    20.0%    35.4% 16    14.9%    45.0%   
20.5%    37.3% 17    15.7%    45.0%    20.9%    39.2% 18    16.5%    45.0%   
21.4%    41.2% 19    17.1%    45.0%    21.9%    43.0% 20    17.8%    45.0%   
22.5%    45.0% 21    18.3%    50.0%    23.0%    47.2% 22    19.2%    50.0%   
23.6%    49.5% 23    19.7%    50.0%    24.5%    51.9% 24    20.1%    50.0%   
24.5%    51.9%

 

Level II Trigger Event

  

Payment Date (months

from Cut-Off Date)

  

Cumulative Net

Loss Percentage

  

Delinquency

Percentage

  

Modification (Re-age)

Percentage

1

      4.6%    6.7%

2

      8.0%    8.2%

3

      10.9%    9.9%

4

      13.3%    12.0%

5

      15.7%    14.1%

6

   4.7%    17.8%    16.4%

7

   6.2%    16.8%    18.6%

8

   7.6%    16.6%    20.8%

9

   8.9%    17.0%    22.9%

10

   10.1%    17.8%    25.6%

11

   11.3%    19.2%    29.2%

12

   12.4%    19.8%    31.4%

13

   13.5%    20.4%    33.5%

14

   14.5%    21.1%    35.5%

15

   15.5%    21.5%    37.4%

16

   16.4%    22.0%    39.3%

17

   17.2%    22.4%    41.2%

18

   18.0%    22.9%    43.2%

19

   18.6%    23.4%    45.0%

20

   19.3%    24.0%    47.0%

21

   19.8%    24.5%    49.2%

22

   20.7%    25.1%    51.5%

23

   21.2%    26.0%    53.9%

24

   21.6%    26.0%    53.9%

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SCHEDULE I

LITIGATION

None

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SCHEDULE II

DEFINITIONS

PART A—DEFINITIONS SCHEDULE

The rules of construction set forth in Section 1.02 of the Indenture shall be
applicable to this Agreement and to any other agreement that incorporates this
Definitions Schedule by reference.

“2016-A Issuer” shall mean Conn’s Receivables Funding 2016-A, LLC.

“2016-A Seller” shall mean the Conn’s Receivables 2016-A Trust.

“2016-A First Receivables Purchase Agreement” shall mean the First Receivables
Purchase Agreement dated as of March 17, 2016, between the Original Seller, as
seller, and the Depositor, as purchaser.

“2017-PV1 Ineligible Receivables” means the Receivables designated as such on
Schedule I to Exhibit A to the initial Bill of Sale delivered under the Second
Receivables Purchase Agreement.

“2017-B Securitization” shall mean the sale of asset-backed securities by Conn’s
Receivables Funding 2017-B, LLC.

“2017 Commitment Letter” shall mean the Commitment Letter dated August 8, 2017,
between the Primary Note Purchaser and the Issuer.

“2017 Reversion Date” shall mean the date that is forty-five (45) calendar days
after the 2017 Warehouse Funding Date.

“2017 Warehouse Funding” shall mean the sale of the Class A Notes on the 2017
Warehouse Funding Date.

“2017 Warehouse Funding Date” shall mean August 15, 2017.

“30+ Day Delinquent Receivables” shall mean, with respect to any determination
date, any Receivable with respect to which any monthly payment remains unpaid
for more than thirty (30) days after the date such monthly payment was
originally contractually due, but which Receivable is not yet a 60+ Day
Delinquent Receivable.

“60+ Day Delinquent Receivables” shall mean, with respect to any determination
date, any Receivable with respect to which any monthly payment remains unpaid
for more than sixty (60) days after the date such monthly payment was originally
contractually due.

“ABL Agreement” shall mean the Third Amended and Restated Loan and Security
Agreement dated as of October 30, 2015, among Conn’s, Inc., as parent and
guarantor (“Parent”), Conn Appliances, Inc., Conn Credit I, LP and Conn Credit
Corporation, Inc. as borrowers, the financial institutions party thereto from
time to time as lenders and Bank of America, N.A., a national banking
association, as administrative agent and collateral agent.

 

Schedule II

--------------------------------------------------------------------------------

“ABL Financial Covenants” shall mean the minimum Interest Coverage Ratio, the
maximum Leverage Ratio and the maximum ABS Excluded Leverage Ratio, in each case
as defined in the ABL Agreement, in effect on August 8, 2017; provided, upon the
occurrence of an amendment, modification or replacement of the ABL Agreement
that amends the ABL Financial Covenants, the Depositor shall promptly provide
written notice of such amendment to the Administrative Agent, and the ABL
Financial Covenants definition herein shall remain as defined immediately prior
to such amendment, modification or replacement, unless the Administrative Agent
receives prior written notice and consents to such amendment, modification or
replacement. On August 8, 2017, the ABL Financial Covenants shall be measured on
a quarterly basis as of the last day of each fiscal quarter of the Consolidated
Parent, and require (i) an Interest Coverage Ratio of at least equal 0.80 to
1.00 until October 31, 2017, and then from October 31, 2017 until January 31,
2018, 1.10 to 1.00, and then from January 31, 2018 and thereafter, 1.25 to 1.00,
(ii) a Leverage Ratio not greater than 4.00 to 1.00, and (iii) an ABS Excluded
Leverage Ratio not greater than 2.00 to 1.00. Notwithstanding the above, once
the Availability Block, as defined in the ABL Agreement, is reduced to $0, in
accordance with the terms of the ABL Agreement, the minimum Interest Coverage
Ratio requirement for the fiscal quarter in which such reduction occurs and for
all fiscal quarters thereafter shall be 2.00 to 1.00.

“ABL Lenders” shall mean the “Lenders” as defined under the ABL Agreement.

“ABS Interests” shall mean and include one or more ABS interests, as defined in
the Credit Risk Retention Rules, in the Issuer.

“Act” or “Act of Noteholder” shall have the meaning specified in
Section 11.03(a) of the Indenture.

“Additional Cut-Off Date” shall mean with respect to each Additional Receivable,
the date specified by the Issuer as the “Cut-Off Date” for such Additional
Receivable in connection with the applicable Note Balance Increase Notice.

“Additional Receivable” shall mean, each additional Receivable that is acquired
by the Issuer in accordance with a Note Balance Increase.

“Administrative Agent” shall mean Credit Suisse AG, New York Branch, in its
capacity as administrative agent under the Note Purchase agreement, together
with its successors in interest and any successor administrative agent
thereunder.

“Adverse Effect” shall mean, with respect to any event, condition or action,
that such action could reasonably be expected to, if not cured, (a) result in
the occurrence of an Event of Default; (b) materially and adversely affect
(i) the amount or timing of distributions to be made to the Noteholders pursuant
to the Servicing Agreement or the Indenture, (ii) the validity or enforceability
of any material provision of the Transaction Documents, (iii) the existence,
perfection, priority or enforceability of the Indenture Trustee’s security
interest in any portion of the Trust Estate, (iv) the ability of any party to
perform its obligations under the Transaction Documents or (v) the value,
collectability or enforceability of the Receivables and the other assets in the
Trust Estate; or (c) otherwise, in respect of any Person, materially and
adversely result in a change in the financial condition, business, assets or
operations of such Person.

 

2

--------------------------------------------------------------------------------

“Affiliate” of any specified Person shall mean any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control” when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

“Aggregate Investor Net Loss Amount” means, with respect to any Collection
Period, an amount equal to the aggregate Receivables Principal Balance of all
Receivables that became Defaulted Receivables during such Collection Period
(each respective aggregate Receivables Principal Balance being measured as of
the date the relevant Receivable became a Defaulted Receivable) minus any Deemed
Collections and Recoveries deposited into the Collection Account during such
Collection Period in respect of Receivables that have become Defaulted
Receivables before or during such Collection Period.

“Aggregate Receivables Principal Balance” shall mean, with respect to any date
of determination, an amount equal to the aggregate of the Receivables Principal
Balance of all Receivables in the Trust Estate, other than Defaulted Receivables
and Ineligible Receivables, in each case as of the last day of the most recently
ended Collection Period or, in the case of Eligible Receivables acquired by the
Issuer after the last day of such Collection Period, the Additional Cut-Off Date
for such Eligible Receivables.

“Alternative Purchaser” means each of the Persons, if any, identified from time
to time as an “Alternative Purchaser” on the signature pages of the Note
Purchase Agreement or in the applicable Assignment and Assumption Agreement and
each such Person’s successors or assigns in such capacity.

“Alternative Rate” means, on any date, a fluctuating rate of interest per annum
equal to the LIBO Rate plus 1.00%; provided, the Alternative Rate shall be the
Base Rate if a LIBO Disruption Event is in effect.

“Assignment and Assumption Agreement” shall have the meaning specified in the
Note Purchase Agreement.

“Authorized Officer” shall mean:

(a) with respect to the Receivables Trust, (i) any officer of the Receivables
Trust Trustee who is authorized to act for the Receivables Trust Trustee in
matters relating to the Receivables Trust and who is identified on the list of
Authorized Officers, containing the specimen signature of each such Person,
delivered by the Receivables Trust Trustee to the Indenture Trustee on the
Closing Date (as such list may be modified or supplemented from time to time
thereafter), and (ii) any officer of the Issuer who is authorized to act for the
Issuer in matters relating to the Receivables Trust and who is identified on the
list of Authorized Officers, containing the specimen signature of each such
Person, delivered by the Issuer to the Indenture Trustee on the Closing Date (as
such list may be modified or supplemented from time to time thereafter);

 

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(b) with respect to the Depositor, any officer of the Depositor who is
authorized to act for the Depositor and who is identified on the list of
Authorized Officers (containing the specimen signature of each such Person)
delivered by the Depositor to the Indenture Trustee on the Closing Date (as such
list may be modified or supplemented from time to time thereafter);

(c) with respect to the Issuer, any officer of the Issuer who is authorized to
act for the Issuer and who is identified on the list of Authorized Officers
(containing the specimen signature of each such Person) delivered by the Issuer
to the Indenture Trustee on the Closing Date (as such list may be modified or
supplemented from time to time thereafter);

(d) with respect to the Servicer, any officer of the Servicer who is authorized
to act for the Servicer; and

(e) with respect to the Seller, any officer of the Seller who is authorized to
act for the Seller.

“Available Funds” shall mean for any Payment Date, the sum of (a) Collections
received in the Collection Account during the Collection Period relating to such
Payment Date, (b) any Cap Payments on deposit in the Collection Account as of
such Payment Date, and (c) all amounts on deposit in the Reserve Account.

“Back-up Servicer” shall mean Systems & Services Technologies, Inc. or such
other Person that is acceptable to the Administrative Agent then acting as
“Back-up Servicer” pursuant to and in accordance with a Back-up Servicing
Agreement.

“Back-up Servicing Agreement” shall mean a Back-up Servicing Agreement, in form
and substance satisfactory to the Administrative Agent, among the Issuer, the
Receivables Trust, the Servicer, the Indenture Trustee and the Back-up Servicer,
pursuant to which the Back-up Servicer has agreed to perform the back-up
servicing duties specified therein for the benefit of the Issuer and the
Noteholders.

“Back-up Servicing Fee” shall have the meaning specified in any Back-up
Servicing Agreement.

“Base Rate” means, on any date, a fluctuating rate of interest per annum equal
to the greater of (i) the Prime Rate and (ii) the Federal Funds Rate plus 0.50%.

“Bill of Sale” shall mean the Bill of Sale, dated as of August 15, 2017, among
the Depositor, the Issuer and the Receivables Trust.

“Borrowing Base Receivables Principal Balance” shall mean, with respect to any
date of determination, an amount equal to the Aggregate Receivables Principal
Balance less Delinquent Receivables, in each case, that are not Defaulted
Receivables as of the last day of the most recently ended Collection Period or,
in the case of Eligible Receivables acquired by the Issuer after the last day of
such Collection Period, the Additional Cut-Off Date for such Eligible
Receivables.

 

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“Breakage Fee” shall mean, with respect to any Noteholder, the amounts, if any,
payable to such Noteholder under Section 2.03(c) of the Note Purchase Agreement
due to either early payment of principal on the Note or failure to pay principal
with respect to a scheduled Note Balance Decrease in accordance with
Section 2.08(b) of the Indenture.

“Business Day” shall mean any day other than (a) a Saturday or Sunday or (b) any
other day on which banking institutions in New York, New York, Salt Lake City,
Utah, Minneapolis, Minnesota or any other city in which the principal executive
offices of the Servicer or the Depositor, as the case may be, are located, are
authorized or obligated by law, executive order or governmental decree to be
closed or on which the fixed income markets in New York, New York are closed.

“Cap Condition” shall mean, as of any date, either (a) the Borrower has entered
into one or more Interest Rate Hedge Agreements with Eligible Counterparties
that are in full force and effect and such Interest Rate Hedge Agreements have a
constant or declining scheduled aggregate notional amount projected (as
reasonably determined by the Administrative Agent in consultation with the
Servicer) to cause the aggregate notional amount of such interest rate caps to
equal or exceed the Note Balance at all times until the Notes are repaid in
full; provided that such projections shall be based on the scheduled payments
due in respect of the Receivables and historical and projected loss,
delinquency, default and prepayment rates with respect thereto and such
projections shall be made using stress-factor, loss, delinquency, default and
prepayment rate assumptions reasonably acceptable to the Administrative Agent or
(b) solely in the event that the Cap LIBO Rate is less than 2.00%, the amount on
deposit in the Reserve Account is equal to or greater than the Enhanced Required
Reserve Account Amount.

“Cap LIBO Rate” shall mean, with respect to any Eligible Interest Rate Cap, the
“LIBO Rate” as defined in the Note Purchase Agreement.

“Cap Payments” shall mean, with respect to any Eligible Interest Rate Cap (or
other interest rate cap), all payments remitted to the Collection Account by an
Eligible Counterparty (or other counterparty) which represent payments made by
such Eligible Counterparty (or other counterparty) under the terms of such
Eligible Interest Rate Cap (or other interest rate cap).

“Cap Rate” shall mean a rate approved by the Administrative Agent.

“Capital Stock” shall mean any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation, any
and all equivalent ownership interests, including, without limitation, limited
and general partnership interests, in a Person (other than a corporation) and
any and all warrants, rights or options to purchase any of the foregoing.

“Certificate” shall mean the Receivables Trust Certificate.

 

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“Certificateholder” shall mean the registered holder of a Receivables Trust
Certificate as reflected in the register maintained pursuant to Section 3.3 of
the Receivables Trust Agreement, which shall initially be the Issuer.

“Certificate Register” shall have the meaning assigned to it in the Receivables
Trust Agreement.

“Certificate Registrar” shall have the meaning assigned to it in the Receivables
Trust Agreement.

“Certificate of Trust” shall mean the certificate of trust of the Receivables
Trust filed on January 20, 2017, with the Delaware Secretary of State pursuant
to the Delaware Statutory Trust Act.

“Change of Control” shall mean Sponsor ceases to own, directly or indirectly,
100% of the issued and outstanding Capital Stock of the Servicer or the Issuer,
in each case free and clear of all adverse claims other than claims under the
ABL Agreement (or, with respect to the Servicer, other than liens to secure any
debt that refinanced the ABL Agreement).

“Class A Fee Rate” means, with respect to any date of determination, (a) prior
to the occurrence of an Event of Default, 4.00%, and (b) on and after the
occurrence of an Event of Default, 9.00%.

“Class A Notes” shall have the meaning specified in the Note Purchase Agreement.

“Closing Date” shall mean February 24, 2017.

“Collection Account” shall have the meaning specified in Section 8.02(a)(i) of
the Indenture.

“Collection Period” shall mean, with respect to each Payment Date, the preceding
calendar month; provided, however, that the initial Collection Period will
commence on the day immediately following the Initial Cut-Off Date.

“Collections” shall mean, with respect to any Receivable, all cash collections
and other cash proceeds of such Receivable made by or on behalf of Receivables
Obligors, including, without limitation, all principal, Finance Charges and
Recoveries, if any, and cash proceeds of Related Security with respect to such
Receivable (including any insurance and RSA proceeds and returned premiums but
excluding refunds and rebates of earned premium with respect to the cancellation
of credit insurance and RSAs and unearned commissions with respect to RSAs
related to Defaulted Receivables) and any Deemed Collections in each case,
received after the Cut-Off Date; provided, however, that, if not otherwise
specified, the term “Collections” shall refer to the Collections on all the
Receivables collectively together with any Investment Earnings and any other
funds received with respect to the Trust Estate.

“Commercial Paper Notes” means, with respect to a Conduit, the promissory notes
issued by or on behalf of such Conduit in the commercial paper market which are
allocated by such Conduit as its funding for its purchasing or maintaining its
portion of the Note Balance under the Note Purchase Agreement.

 

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“Commitment Letter” shall have the meaning specified in Section 2.04(e) of the
Note Purchase Agreement.

“Commitment Letter Delivery Date” shall mean the date on which the Commitment
Letter is delivered to the Issuer, the Administrative Agent, the Indenture
Trustee and the Servicer in accordance with Section 2.04(e) of the Note Purchase
Agreement.

“Conduit” shall mean each of the Persons, if any, identified from time to time
as a “Conduit” on the signature pages of the Note Purchase agreement or
identified as a “Conduit” in the Assignment and Assumption Agreement pursuant to
which it has taken an assignment of Notes in accordance with the Note Purchase
Agreement and each such Person’s successors or permitted assigns in such
capacity.

“Conn Appliances” shall mean Conn Appliances, Inc., a Texas corporation.

“Consolidated Net Worth” shall mean at any date, with respect to any Person, the
consolidated stockholders’ equity of such Person and its consolidated
Subsidiaries, minus (to the extent reflected in determining such consolidated
stockholders’ equity) all intangible assets (in each case, as determined in
accordance with GAAP, applied on a basis consistent with the most recent audited
financial statements of such Person before the Note Initial Increase Date or, if
applicable, Note Balance Increase Date).

“Consolidated Parent” shall mean, initially, Conn’s, Inc., a Delaware
corporation, and any successor Conn’s, Inc. as the indirect or direct parent of
Conn Appliances, the financial statements of which are for financial reporting
purposes consolidated with Conn Appliances in accordance with GAAP, or if there
is none, Conn Appliances.

“Contract” shall mean any Installment Contract (which “Installment Contract” has
been acquired (or purported to be acquired) by the Depositor from the 2016-A
Seller pursuant to the First Receivables Purchase Agreement and subsequently
acquired by the Receivables Trust from the Depositor pursuant to the terms of
the Second Receivables Purchase Agreement).

“Corporate Trust Office” shall have the meaning (a) when used in respect of the
Receivables Trust Trustee, the address of the Receivables Trust Trustee
specified in the Receivables Trust Agreement and (b) when used in respect of the
Indenture Trustee, the address of the Indenture Trustee specified in
Section 3.02 of the Indenture.

“CP Cost” means, for any day with respect to any Conduit, an amount equal to the
weighted average on such day of the rates at which all Commercial Paper Notes
issued by or on behalf of such Conduit to fund or maintain its portion of the
Note Balance were sold, which rates shall include all dealer commissions and
other costs of issuing such Commercial Paper Notes, whether any such commercial
paper notes were specifically issued to fund such portion or are allocated, in
whole or in part, to such funding.

 

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“Credit and Collection Policy” shall mean the Servicer’s credit and collection
policy or policies relating to Contracts and Receivables existing on the Closing
Date and referred to and in accordance with the Servicing Agreement, as the same
is amended, supplemented or otherwise modified and in effect from time to time
in compliance with Section 2.14(c) of the Servicing Agreement; provided,
however, if the Servicer is any Person other than the initial Servicer, “Credit
and Collection Policies” shall refer to the collection policies of such Servicer
as they relate to receivables of a similar nature to the Receivables.

“Credit Risk Retention Rules” shall mean the final rules contained in Regulation
RR, 17 C.F.R. §246.1, et seq., implementing the credit risk retention
requirements of Section 15G of the Exchange Act.

“Cumulative Net Loss Percentage” shall mean, for any Monthly Determination Date,
the quotient (expressed as a percentage) of (I) the result of (x) the aggregate
Receivables Principal Balance of all Receivables (excluding Ineligible
Receivables) that became Defaulted Receivables since the related Cut-off Date,
plus (y) the aggregate amount by which the Receivables Principal Balance of any
Receivables (other than Defaulted Receivables and Ineligible Receivables) were
reduced due to being charged-off in accordance with the Credit and Collection
Policy since the related Cut-off Date, minus (z) recoveries in respect of
Defaulted Receivables (that were not previously Ineligible Receivables) paid as
Collections since the related Cut-off Date divided by (II) the Aggregate
Receivables Principal Balance of all Receivables in the Trust Estate as of the
related Cut-off Date.

“Custodian” shall have the meaning specified in Section 2.02(a)(ii) of the
Servicing Agreement.

“Cut-Off Date” shall mean, with respect to any Receivables, the Initial Cut-Off
Date or the related Additional Cut-Off Date, as applicable.

“Debtor Relief Laws” shall mean (i) the United States Bankruptcy Code and
(ii) all other applicable liquidation, conservatorship, bankruptcy, moratorium,
arrangement, receivership, insolvency, reorganization, suspension of payments,
adjustment of debt, marshalling of assets or similar debtor relief laws of the
United States, any state or any foreign country from time to time in effect
affecting the rights of creditors generally.

“Deemed Collections” means, in connection with any Receivable, all amounts
payable (without duplication) with respect to such Receivable, by (i) the Seller
to the Depositor pursuant to Section 2.5 the 2016-A First Receivables Purchase
Agreement, (ii) the Depositor pursuant to Section 2.4 of the Second Receivables
Purchase Agreement and/or (iii) the initial Servicer pursuant to Section 2.15 of
the Servicing Agreement.

“Defaulted Receivable” shall mean a Receivable (i) as to which, at the end of
any Collection Period, any scheduled payment, or part thereof, remains unpaid
for 210 days or more past the due date for such payment determined by reference
to the contractual payment terms, as amended, of such Receivable, such amendment
in accordance with the Credit and Collection Policies or (ii) which, consistent
with the Credit and Collection Policies, would be written off the Issuer’s, the
Seller’s or the Servicer’s books as uncollectible.

 

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“Definitive Notes” shall mean, the Notes issued in fully registered,
certificated form issued to the owners thereof or their nominee.

“Delaware Secretary of State” shall mean the Office of the Secretary of State of
the State of Delaware.

“Delaware Statutory Trust Act” shall mean Chapter 38 of Title 12 of the Delaware
Code, 12 Del. Code § 3801 et seq., as the same may be amended from time to time.

“Delinquency Percentage” shall mean, on any Monthly Determination Date, a
fraction, expressed as a percentage, the numerator of which is the aggregate
Receivables Principal Balance of the Receivables (excluding Ineligible
Receivables) that are Delinquent Receivables, as of the last day of the related
Collection Period and the denominator of which is the Aggregate Receivables
Principal Balance as of the last day of the related Collection Period.

“Delinquent Receivable” shall mean a 60+ Day Delinquent Receivable.

“Demand” shall have the meaning specified in Section 6.15(a) of the Indenture.

“Depositor” shall mean Conn Appliances Receivables Funding, LLC, a Delaware
limited liability company, and its successors and permitted assigns.

“Depositor LLC Agreement” shall mean the Limited Liability Company Agreement of
Conn Appliances Receivables Funding, LLC, as amended or otherwise modified from
time to time.

“Dollars”, “$” or “U.S. $” shall mean (a) United States dollars or
(b) denominated in United States dollars.

“Effective Date” shall mean August 8, 2017.

“Eligible Counterparty” shall mean an entity that on the date of entering into
any Interest Rate Hedge Agreement is (1) an Affiliate of the Administrative
Agent or (2) (i) an interest rate swap provider that has been approved in
writing by the Administrative Agent, acting at the direction of the Required
Noteholders (ii) has (1) a long term senior unsecured debt rating of not less
than “A+” by S&P and not less than “A1” by Moody’s, and (2) a short term senior
unsecured debt rating of not less than “A-1” by S&P and not less than “P-1” by
Moody’s; and (ii) in the Hedging Agreement to which it is a party, (x) consents
to the assignment of the Borrower’s rights under such Hedging Agreement to the
Administrative Agent and (y) agrees that in the event that Moody’s or S&P, as
applicable, shall reduce or withdraw its long term or short term senior
unsecured debt rating described in clause (b)(i)(y) above, within thirty
(30) Business Days of such downgrade or withdrawal, it shall transfer its rights
and obligations under each Hedging Agreement to another entity that meets the
requirements provided in clauses (b)(i) and (ii) hereof and which has entered
into a Hedging Agreement with the Borrower on or prior to the date of such
transfer; provided, if a Rating Agency is rating the Notes, any requirements of
such Rating Agency for such Eligible Counterparty shall also be incorporated
herein.

 

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“Eligible Deposit Account” shall mean either (a) a segregated securities account
or deposit account with an Eligible Institution or (b) a segregated trust
account with the corporate trust department of a depository institution
organized under the laws of the United States or any one of the states thereof,
including the District of Columbia (or any domestic branch of a foreign bank),
and acting as a trustee for funds deposited in such account, so long as any of
the unsecured, unguaranteed senior debt securities of such depository
institution shall have a credit rating from each of Moody’s and Standard &
Poor’s in one of its generic credit rating categories that signifies “BBB” /
“Baa2” or higher.

“Eligible Horizontal Residual Interest” shall mean an eligible horizontal
residual interest, as defined in the Credit Risk Retention Rules, in the Issuer.

“Eligible Institution” shall mean a depository institution organized under the
laws of the United States of America or any one of the states thereof, including
the District of Columbia (or any domestic branch of a foreign bank), which at
all times has (a)(i) a long-term unsecured debt rating of “Baa1” or better by
Moody’s and (ii) a certificate of deposit rating of “P-2” by Moody’s and (b),
either (x) a long-term unsecured debt rating of “BBB+” by Standard & Poor’s or
(y) a certificate of deposit rating of “A-2” by Standard & Poor’s. If so
qualified, the Indenture Trustee or the Administrator may be considered an
Eligible Institution for the purposes of this definition.

“Eligible Interest Rate Cap” shall mean, as of any date of determination, any
interest rate cap purchased by the Issuer from an Eligible Counterparty that
(i) has a strike rate equal to the Cap Rate, (ii) references the Cap LIBO Rate,
(iii) requires that such Eligible Counterparty make Cap Payments on each Payment
Date (to the extent that the Cap LIBO Rate exceeds the Cap Rate on the
immediately prior Monthly Determination Date), (iv) requires that such Eligible
Counterparty make all Cap Payments directly to the Collection Account, (v) is
substantially in the form has been approved in writing by the Administrative
Agent, such approval not to be unreasonably withheld, conditioned or delayed and
(vi) for which each party is in compliance with its obligations under such
interest rate cap in all material respects.

“Eligible Investments” shall mean book-entry securities, negotiable instruments
or securities represented by instruments in bearer or registered form which have
maturities of no later than the Business Day immediately prior to the next
succeeding Payment Date (unless payable on demand, in which case such securities
or instruments may mature on such next succeeding Payment Date) and which
evidence:

(a) direct obligations of, and obligations fully guaranteed as to timely payment
by, the United States of America;

(b) demand deposits, time deposits or certificates of deposit (having original
maturities of no more than 365 days) of depository institutions or trust
companies incorporated under the laws of the United States of America or any
state thereof (or domestic branches of foreign banks) and subject to supervision
and examination by federal or state banking or depository institution
authorities; provided that at the time of the Issuer’s investment or contractual
commitment to invest therein, the short-term debt rating of such depository
institution or trust company will be rated “A-2” or higher by Standard & Poor’s
or the equivalent thereof by the Rating Agency (if any Rating Agency then
provides a rating on the Notes);

 

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(c) commercial paper (having remaining maturities of no more than 30 days)
having, at the time of the Issuer’s investment or contractual commitment to
invest therein, a rating not lower than “A-2” by Standard & Poor’s or the
equivalent thereof by the Rating Agency (if any Rating Agency then provides a
rating on the Notes);

(d) investments in money market funds rated “AA-mg” or higher by Standard &
Poor’s or the equivalent thereof by the Rating Agency or otherwise approved in
writing by the Rating Agency (if any Rating Agency then provides a rating on the
Notes) including proprietary money market funds offered or managed by Wells
Fargo Bank, N.A. or an Affiliate thereof;

(e) demand deposits, time deposits and certificates of deposit which are fully
insured by the Federal Deposit Insurance Corporation;

(f) notes or bankers’ acceptances (having original maturities of no more than
365 days) issued by any depository institution or trust company referred to in
(b) above;

(g) time deposits, other than as referred to in clause (e) above, with a Person
(i) the commercial paper of which is rated “A-2” or higher by Standard & Poor’s
or the equivalent thereof by the Rating Agency or (ii) that has a long-term
unsecured debt rating of “BBB+” or higher by Standard & Poor’s or the equivalent
thereof by the Rating Agency (if any Rating Agency then provides a rating on the
Notes); or

(h) any other investments approved in writing by the Administrative Agent.

Eligible Investments may be purchased by or through the Indenture Trustee or any
of its Affiliates.

“Eligible Receivable” shall mean a Receivable:

(a) that was originated in compliance with all applicable Requirements of Law
and which complies with all applicable Requirements of Law;

(b) with respect to which all consents, licenses, approvals or authorizations
of, or registrations or declarations with, any Governmental Authority required
to be obtained, effected or given by the Seller in connection with the creation
or the execution, delivery and performance of such Receivable, have been duly
obtained, effected or given and are in full force and effect;

(c) as to which, upon acquisition under the Second Receivables Purchase
Agreement, the Receivables Trust is the sole owner thereof and has good and
marketable title thereto free and clear of all Liens, other than the Liens under
the Transaction Documents;

(d) that is the legal, valid and binding payment obligation of the Receivables
Obligor thereon enforceable against such Receivables Obligor in accordance with
its terms and is not subject to any right of rescission, setoff, deduction,
counterclaim or defense (including the defense of usury) or to any repurchase
obligation or return right;

 

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(e) the related Installment Contract of which constitutes an “account” or
“chattel paper,” in each case, under and as defined in Article 9 of the UCC of
all applicable jurisdictions;

(f) that was established in accordance with the Credit and Collection Policies
in the regular and ordinary course of the business of the Seller;

(g) if for a liquid amount (as stated in the Records relating thereto) that is
denominated and payable in Dollars, is only payable in the United States of
America and each Receivables Obligor in respect of which resided in the United
States of America at the time of the origination of such Receivable;

(h) as of the related Cut-off Date, is not a Receivable (i) that is a Defaulted
Receivable or (ii) as to which, on the related purchase date, all of the
original Receivables Obligors obligated thereon are deceased;

(i) as of the related Cut-off Date, is not a Delinquent Receivable;

(j) the terms of which have not been modified or waived except as permitted
under the Credit and Collection Policies or the Transaction Documents;

(k) that was originated in connection with a sale of Merchandise by Conn
Appliances, Inc. or one of its Affiliates in the ordinary course of business;

(l) that has no Receivables Obligor thereon that is a Governmental Authority;

(m) the original terms of which provide for repayment in full of the amount
financed or the Receivables Balance thereof in equal monthly installments over a
maximum term not to exceed 38 months;

(n) the assignment of which to the Receivables Trust does not contravene or
conflict with any Requirement of Law or any contractual or other restriction,
limitation or encumbrance, and the sale or assignment of which does not require
the consent of the Receivables Obligor thereof;

(o) which was originated under the “No Promotion Program”, the “12-Month Cash
Option Program”, the “18-Month Cash Option Program”, the “18-Month Equal Pay No
Interest” or the “24-Month Equal Pay No Interest” of Conn Appliances, Inc. and
its Affiliates;

(p) which, as of the related Cut-off Date, would not cause the aggregate
Receivables Principal Balance of Receivables of any single Receivables Obligor
to exceed the lesser of (x) 1.0% of Aggregate Receivables Principal Balance as
of the last day of the immediately preceding Collection Period and (y) 1,500,000
Swiss francs; and

(q) for which the first payment thereon has not (or did not) remained unpaid for
more than 45 days after the date on which such payment was due.

 

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“Eligible Servicer” shall mean the Indenture Trustee, Conn Appliances, Inc., the
Back-up Servicer or an entity which, at the time of its appointment as Servicer,
(i) (a) is either (x) the surviving Person of a merger or consolidation with, or
the transferee of all or substantially all of the assets of, Conn Appliances,
Inc. in a transaction otherwise complying with Section 6.02 of the Servicing
Agreement or (y) an Affiliate of Conn Appliances, Inc., (b) is servicing a
portfolio of personal receivables, (c) is legally qualified and has the capacity
(in each case, either directly or through one or more subservicers) to service
and administer the Receivables in accordance with the Servicing Agreement, and
(d) is qualified to use the software that is then being used to service the
Receivables or obtains the right to use or has its own software which is
adequate to perform its duties under the Servicing Agreement or (ii) (a) is
servicing a portfolio of personal receivables, (b) is legally qualified and has
the capacity (in each case, either directly or through one or more subservicers)
to service and administer Receivables in accordance with the Servicing
Agreement, (c) has demonstrated the ability to service professionally and
competently a portfolio of receivables which are similar to the Receivables in
accordance with high standards of skill and care and (d) is qualified to use the
software that is then being used to service the Receivables or obtains the right
to use or has its own software which is adequate to perform its duties under the
Servicing Agreement.

“Enhanced Required Reserve Account Amount” shall mean the sum of (a) the
Required Reserve Account Amount and (b) on any date that is 30 days following
the 2017 Reversion Date, the amount, in the reasonable determination of the
Administrative Agent, required to purchase Eligible Interest Rate Caps
sufficient to cause clause (a) of the definition of “Cap Condition” to be
satisfied.

“ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended.

“Escrow Letter” shall mean the letter agreement dated August 8, 2017 among Conn
Appliances, Inc., the Depositor, the 2016-A Issuer, the Issuer, the
Administrative Agent and Wells Fargo Bank, National Association, as indenture
trustee.

“Escrowed Amount” shall mean the Redemption Financing Deposit as defined in the
Escrow Letter, during such time as it is deposited in the “Collection Account”
as defined in the Escrow Letter.

“Event of Default” shall have the meaning specified in Section 5.02 of the
Indenture.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

“Extension” shall mean an Extension of the Maturity Date in accordance with
Section 2.05 of the Note Purchase Agreement.

“Extension Date” shall mean, with respect to any Extension, the first day of
such Extension.

“Facility Turbo Date” shall mean payment date occurring in the 18th month
following the Closing Date or as otherwise agreed by the Administrative Agent
and the Depositor.

“FATCA” shall have the meaning specified in the Note Purchase Agreement.

 

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“Federal Funds Rate” means, for any period, a fluctuating interest rate per
annum equal, for each day (or if such day is not a Business Day, for the
immediately preceding Business Day) during such period, to the rate determined
by the Administrative Agent on such day (or if such day is not a Business Day,
for the immediately preceding Business Day) for Federal Funds as published in
H.15(519) under the heading “Federal Funds (Effective)” or, if not published by
3:00 p.m., New York City time on such day (or if such day is not a Business Day,
on the immediately preceding Business Day), the rate on such day as published in
Composite Quotations under the heading “Federal Funds/Effective Rate.” In the
event that such rate is not published in either H.15(519) or Composite
Quotations by 3:00 p.m. New York City time, on such day (or if such day is not a
Business Day, for the immediately preceding Business Day) the Federal Funds Rate
will be the arithmetic mean of the rates as of 9:00 a.m., New York City time on
such day for the last transaction in overnight Dollar federal funds arranged by
three leading brokers of federal funds transactions in the City of New York
selected by the Issuer.

“Fee Letter” shall have the meaning specified in the Note Purchase Agreement.

“Field Collections” shall have the meaning specified in Section 2.02(c) of the
Servicing Agreement.

“Finance Charges” shall mean any finance, interest, late, servicing or similar
charges or fees owing by a Receivables Obligor pursuant to the Contracts (other
than with respect to Defaulted Receivables).

“First Receivables Purchase Agreement” shall mean the assignment of assets,
dated as of August 15, 2017, among the 2016-A Seller, as seller, Conn’s
Receivables Funding 2016-A, LLC, as issuer, and the Depositor, as purchaser.

“Force Majeure Event” shall mean an event that occurs as a result of an act of
God, an act of the public enemy, acts of declared or undeclared war (including
acts of terrorism), public disorder, rebellion, sabotage, epidemics, landslides,
lightning, fire, hurricane, earthquakes, floods or similar causes.

“Governmental Authority” shall mean any federal, state, municipal, national,
local or other governmental department, court, commission, board, bureau,
agency, intermediary, carrier or instrumentality or political subdivision
thereof, or any entity or officer exercising executive, legislative, judicial,
quasi-judicial, regulatory or administrative functions of or pertaining to any
government or any court, in each case, whether of the United States or a state,
territory or possession thereof, a foreign sovereign entity or country or
jurisdiction or the District of Columbia.

“Grant” shall mean to grant, bargain, sell, warrant, alienate, remise, demise,
release, convey, assign, transfer, mortgage, pledge, grant a security interest
in, create a right of set-off against, deposit, set over and confirm. A Grant of
any item of the Trust Estate shall include all rights, powers and options (but
none of the obligations) of the granting party thereunder, including without
limitation the immediate and continuing right to claim for, collect, receive and
give receipt for principal and interest payments in respect of such item of the
Trust Estate, and all other monies payable thereunder, to give and receive
notices and other communications, to make waivers or other agreements, to
exercise all rights and options, to bring any suit in equity, action at law or
other judicial or administrative proceeding in the name of the granting party or
otherwise, and generally to do and receive anything that the granting party may
be entitled to do or receive thereunder or with respect thereto.

 

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“Hedge Breakage Costs” shall mean any amounts payable to the Interest Rate Hedge
Counterparty upon the termination of an Interest Rate Hedge Agreement.

“Indemnified Parties” shall have the meaning set forth in Section 2.06 of the
Note Purchase Agreement, Section 2.07 of the Servicing Agreement or Section 20
of the Receivables Trust Agreement, as applicable.

“Indenture” shall mean the Indenture, dated as of the Closing Date, among the
Issuer, the Indenture Trustee, the Receivables Trust and the Servicer.

“Indenture Trustee” shall mean Wells Fargo Bank, N.A., in its capacity as
indenture trustee under the Indenture, its successors in interest and any
successor indenture trustee under the Indenture.

“Independent” shall mean, when used with respect to any specified Person, that
the Person (a) is in fact independent of the Issuer, any other obligor upon the
Notes, the Depositor, and any Affiliate of any of the foregoing Persons,
(b) does not have any direct financial interest or any material indirect
financial interest in the Issuer, any such other obligor, the Depositor or any
Affiliate of any of the foregoing Persons and (c) is not connected with the
Issuer, any such other obligor, the Depositor or any Affiliate of any of the
foregoing Persons as an officer, employee, promoter, underwriter, trustee,
partner, director or person performing similar functions.

“Independent Manager” shall have the meaning specified in the Depositor LLC
Agreement.

“Ineligible Receivable” shall mean any Receivable other than an Eligible
Receivable, and shall include any 2017-PV1 Ineligible Receivables.

“Initial Cut-Off Date” shall mean the date specified by the Issuer in connection
with the Note Initial Increase. With respect to the 2017 Warehouse Funding, the
Initial Cut-Off Date shall be July 31, 2017.

“Initiation Date” means, with respect to any Receivable, the date upon which
such Receivable was originated by the Seller.

“Initial Pool Criteria” On the Note Initial Increase Date and any Note Balance
Increase Date, the Receivables shall satisfy the following criteria (with all
percentages based on the aggregate Receivables Principal Balances of the
applicable category of Receivables as a percentage of the Borrowing Base
Receivables Principal Balance on the measurement date), as such criteria may be
modified upon mutual written agreement of the Administrative Agent and the
Issuer prior to the 2017 Warehouse Funding Date. For the avoidance of doubt, all
calculations of the Initial Pool Criteria shall only include Eligible
Receivables.

 

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1) Maximum weighted average original term of the Receivables shall be 36 months.

 

2) Minimum weighted average non-zero FICO score of the Receivables Obligors
shall be 600.

 

3) Minimum weighted average contract interest rate of the Receivables shall be
21.25%.

 

4) Maximum percentage of Receivables with Receivables Obligors acquiring
Merchandise in Texas shall be 72.00%.

 

5) Maximum percentage of Receivables from 12-Month No-Interest Program” or the
“18-Month Cash Option Program” shall be 45.00%.

 

6) Maximum percentage of Receivables from “18-Month Cash Option Program” shall
be 10.00%.

 

7) FICO score requirements with respect to Receivables Obligors:

 

  a. Maximum percentage of Receivables with Receivables Obligors without FICO
scores shall be 6.50%;

 

  b. Maximum percentage of Receivables with Receivables Obligors with FICO
scores less than or equal 500 including no FICO scores shall be 6.50%;

 

  c. Maximum percentage of Receivables with Receivables Obligors with FICO
scores less than or equal 550 including no FICO scores shall be 15.00%;

 

  d. Maximum percentage of Receivables with Receivables Obligors with FICO
scores less than or equal 600 including no FICO scores, shall be 54.00%; and

 

  e. Maximum percentage of Receivables with Receivables Obligors with FICO
scores less than or equal 650 including no FICO scores shall be 91.00%.

 

8) Maximum percentage of Receivables that have been outstanding on books of
Issuer/Affiliates for less than or equal to 360 days shall be 55.00%.

 

9) Maximum percentage of Receivables with modified / re-aged contracts shall be
35.55%.

 

10) Product Type:

 

  a. Minimum Receivables from sales of Furniture/Bedding (as categorized on the
Servicer’s product level loan data tape) shall be 34.00%; and

 

  b. Maximum Receivables from sales of Home Electronics (as categorized on the
Servicer’s product level loan data tape) shall be 28.00%.; and

 

  c. Maximum Receivables from sales of Home Office (as categorized on the
Servicer’s product level loan data tape) shall be 13.00%.

 

11) Maximum percentage of 30+ Day Delinquent Receivables shall be 6.55%.

“Insolvency Event” with respect to any Person, shall occur if (i) such Person
shall file a petition or commence a Proceeding (A) to take advantage of any
Debtor Relief Law or (B) for the appointment of a trustee, conservator,
receiver, liquidator, or similar official for or relating to such Person or all
or substantially all of its property, or for the winding up or liquidation of
its affairs, (ii) such Person shall consent or fail to object to any such
petition filed or Proceeding commenced against or with respect to it or all or
substantially all of its

 

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property, or any such petition or Proceeding shall not have been dismissed or
stayed within sixty (60) days of its filing or commencement, or a court, agency,
or other supervisory authority with jurisdiction shall have decreed or ordered
relief with respect to any such petition or Proceeding, (iii) such Person shall
admit in writing its inability to pay its debts generally as they become due,
(iv) such Person shall make an assignment for the benefit of its creditors,
(v) such Person shall voluntarily suspend payment of its obligations, or
(vi) such Person shall take any action in furtherance of any of the foregoing.

“Installment Contract” shall mean any consumer finance agreement originally
entered into between the Originator and a Receivables Obligor in connection with
a sale of Merchandise and all amounts due thereunder from time to time.

“Installment Contract Receivable” shall mean any indebtedness of a Receivables
Obligor arising under an Installment Contract.

“Institutional Accredited Investor” shall mean an institutional “accredited
investor” (as such term is defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act).

“In-Store Payments” shall have the meaning specified in Section 2.2(c) of the
Servicing Agreement.

“Intercreditor Agreement” shall mean the Fourth Amended and Restated
Intercreditor Agreement, dated as of April 19, 2017, by and among Bank of
America, N.A., the Receivables Trust, Conn’s Receivables 2015-A Trust, Conn’s
Receivables 2016-A Trust, Conn’s Receivables 2016-B Trust, Conn’s Receivables
2017-A Trust, Conn Appliances, Inc., Conn Credit Corporation, Inc. and Conn
Credit I, L.P., and acknowledged by Systems and Services Technology, Inc., as
such agreement may be amended, modified, waived, supplemented or restated from
time to time.

“Interest Collections” shall mean, with respect to any period, the aggregate
amount of Collections in respect of interest during such period on all
Receivables.

“Interest Period” shall mean, with respect to any Payment Date, the Collection
Period preceding the Collection Period within which such Payment Date falls (or,
(i) in the case of the first Payment Date, the period from and including the
Closing Date to but excluding the first day of the calendar month following the
calendar month within which the Closing Date falls and (ii) in the case of the
final Payment Date, the period beginning on and including the calendar month
preceding the calendar month within which such final Payment Date and ending on
but excluding such final Payment Date).

“Interest Rate Hedge Agreement” shall mean all ISDA Master Agreements and all
interest rate cap agreements, confirmations and other interest rate agreements
entered into by the Issuer in connection with an Eligible Interest Rate Cap (or
other interest rate cap or swap).

“Interest Rate Hedge Counterparty” shall mean, with respect to any Interest Rate
Hedge Agreement, the counterparty to the Issuer under such Interest Rate Hedge
Agreement.

 

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“Internal Revenue Code” shall mean the Internal Revenue Code of 1986, as
amended.

“Investment Company Act” shall mean the Investment Company Act of 1940, as
amended.

“Investment Earnings” shall mean all interest and earnings (net of losses and
investment expenses) accrued on funds on deposit in the Note Accounts.

“ISDA Master Agreement” shall mean an ISDA Master Agreement (including the
Schedule thereto and the Credit Support Annex to said Schedule).

“Issuer” shall mean Conn’s Receivables Warehouse, LLC, a limited liability
company organized and existing under the laws of the State of Delaware, and its
successors and permitted assigns.

“Issuer Obligations” means (i) all principal and interest, at any time and from
time to time, owing by the Issuer on the Notes (including any Note held by the
Seller, the Depositor, the Originator, the Parent or any Affiliate of any of the
foregoing) and (ii) all costs, fees, expenses, indemnity and other amounts owing
or payable by, or obligations of, the Issuer to any Person (other than the
Seller, the Depositor, the Originator or Conn’s Inc.) under the Indenture or the
other Transaction Documents.

“Issuer Order” shall mean a written order or request signed in the name of the
Issuer by an Authorized Officer and delivered to the Indenture Trustee.

“Level II Trigger Event” shall mean, with respect to any Payment Date, the
Cumulative Net Loss Percentage, the Delinquency Percentage, or the Modification
(Re-Age) Percentage exceeds the percentage for such Payment Date set forth in
the table below:

 

Payment Date

(months from Initial

Cut-Off Date)

 

Cumulative Net

Loss Percentage

 

Delinquency
Percentage

 

Modification (Re-age)

Percentage

1   3.0%   8.0%   40.0% 2   4.2%   12.0%   45.0% 3   4.4%   16.0%   45.0% 4  
4.6%   20.0%   50.0% 5   4.9%   24.0%   50.0% 6   5.8%   24.5%   55.0% 7   8.3%
  25.0%   60.0% 8   10.5%   26.0%   60.0% 9   12.7%   26.0%   60.0% 10   14.5%  
26.5%   60.0% 11   16.1%   27.0%   60.0% 12   17.5%   27.5%   60.0%

 

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“LIBO Business Day” means any day other than a Saturday, Sunday or other day on
which banks are required or authorized to close in London or New York City and
on which dealings in Dollars are carried on in the London interbank market.

“LIBO Disruption Event” means the occurrence of any of the following events on
any day: (a) any Purchaser reasonably determines that it would be contrary to
law or to the directive of any central bank or applicable regulation to fund at
the LIBO Rate in respect of its interest in the Notes on such day, (b) a
determination by any Purchaser, in its reasonable judgment, that the rate at
which deposits of Dollars are being offered to such Purchaser in the London
interbank market does not accurately and fairly reflect the cost to such
Purchaser of funding its interest in the Notes for such Interest Period, or
(c) the inability of any Purchaser, by reason of circumstances affecting the
London interbank market generally, to obtain Dollars in such market to fund its
interest in the Notes for such Interest Period; provided, however, that if any
of the foregoing events affects one or more, but not all, of the Purchasers
holding an interest in the Notes, then a LIBO Disruption Event shall exist only
with respect to the affected Purchasers.

“LIBO Rate” means, for any day with respect to any Purchaser, the rate per annum
(rounded upward to the nearest 1/100th of 1%) determined by the Administrative
Agent two (2) LIBO Business Days prior to the first day of the related Interest
Period equal to the offered rate that appears as of approximately 11:00 a.m.
(London time) on such day (or if such day is not a LIBO Business Day, on the
nearest preceding LIBO Business Day) on the page of the Reuters Screen that
displays an average ICE Benchmark Administration Interest Settlement Rate for
deposits in U.S. Dollars with a three-month maturity beginning and for delivery
on the second following LIBO Business Day.

“Lien” shall mean, with respect to any property, any mortgage, deed of trust,
pledge, hypothecation, assignment, deposit arrangement, equity interest,
encumbrance, lien (statutory or other), preference, participation interest,
priority, security interest or other security agreement or preferential
arrangement of any kind or nature whatsoever relating to that property,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing.

“Majority-Owned Affiliate” shall mean a majority-owned affiliate, as defined in
the Credit Risk Retention Rules, of the Sponsor.

“Mail Payments” shall have the meaning specified in Section 2.02(c) of the
Servicing Agreement.

“Maturity Date” shall have the meaning specified in the Note Purchase Agreement.

“Merchandise” shall mean (i) home appliances, electronic goods, computers,
furniture, mattresses, lawn and garden equipment and other goods and merchandise
of the type sold by the Originator from time to time in the ordinary course of
business, which in each case constitute

 

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“consumer goods” under and as defined in Article 9 of the UCC of all applicable
jurisdictions, (ii) RSAs and services in respect of any goods or merchandise
referred to in clause (i) above, and (iii) credit insurance (including life,
disability, property and involuntary unemployment) in respect of any goods or
merchandise referred to in clause (i) above or any Receivables Obligor’s payment
obligations in respect of a Receivable.

“Modification (Re-age) Percentage” shall mean, on any Monthly Determination
Date, a fraction, expressed as a percentage, the numerator of which is the
aggregate Receivables Principal Balance of the Receivables that have been
subject to a modification or extension as of the last day of the related
Collection Period, excluding Ineligible Receivables, and the denominator of
which is the Aggregate Receivables Principal Balance as of the last day of the
related Collection Period.

“Monthly Annualized Net Loss Percentage” shall mean, for any Monthly
Determination Date, the product of (i) the quotient (expressed as a percentage)
of (I) the result of (x) the aggregate Receivables Principal Balance of all
Receivables, excluding Ineligible Receivables, that became Defaulted Receivables
during the related Collection Period, plus (y) the aggregate amount by which the
Receivables Principal Balance of any Receivables (other than Defaulted
Receivables and Ineligible Receivables) were reduced due to being charged-off in
accordance with the Credit and Collection Policy during the related Collection
Period, minus (z) recoveries in respect of Defaulted Receivables (that were not
previously Ineligible Receivables) that are available to be paid as Collections
during the related Collection Period divided by (II) the Aggregate Receivables
Principal Balance of all Receivables in the Trust Estate immediately prior to
the commencement of such Collection Period times (ii) twelve (12).

“Monthly Determination Date” shall mean the last day of the calendar month
immediately preceding the applicable Payment Date.

“Monthly Interest” shall mean, for any Payment Date, the aggregate Yield on the
Note Balance and Escrowed Amount for the related Interest Period computed in
accordance with Section 2.03 of the Note Purchase Agreement.

“Monthly Servicer Report” shall mean, with respect to each Payment Date, the
certificate of the Servicer delivered pursuant to Section 8.10(a) of the
Indenture with respect to such Payment Date.

“Note” shall mean any one of the Class A Notes executed by the Receivables Trust
Trustee on behalf of the Issuer and authenticated by the Indenture Trustee,
substantially in the form attached as Exhibit A to the Indenture.

“Note Accounts” shall mean the Collection Account and the Reserve Account.

“Note Balance” shall initially on the Note Initial Increase Date equal the Note
Balance resulting from the Note Initial Increase, and thereafter shall be
reduced by all payments to the Noteholders in respect of the principal of the
Notes that have not been rescinded and increased by the amount of all Note
Balance Increases.

 

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“Note Balance Decrease” shall have the meaning specified in Section 2.08(b) of
the Indenture.

“Note Balance Increase” shall have the meaning specified in Section 2.08(a) of
the Indenture.

“Note Balance Increase Date” shall mean the date identified as such in the Note
Balance Increase Notice.

“Note Balance Increase Notice” shall have the meaning specified in
Section 2.08(a) of the Indenture.

“Note Increase Purchasers” shall have the meaning specified in Section 2.08(a)
of the Indenture.

“Note Initial Increase” shall have the meaning specified in Section 2.08(a) of
the Indenture.

“Note Initial Increase Date” shall mean the date identified as such in the Note
Initial Increase Notice.

“Note Initial Increase Notice” shall mean the notice given by the Issuer
requesting a Note Initial Increase request pursuant to Section 2.08 of the
Indenture.

“Note Maximum Balance” shall mean $100,000,000, as such amount may be reduced
pursuant to Section 2.08(b) of the Indenture.

“Note Purchase Agreement” shall mean that certain Note Purchase Agreement dated
as of the Closing Date, among the Issuer, the Depositor, the Servicer, Credit
Suisse AG, Cayman Islands Branch, as Primary Note Purchaser, the Conduits from
time to time party thereto, and Credit Suisse AG, New York Branch, as
Administrative Agent.

“Note Register” shall have the meaning specified in Section 2.04(a) of the
Indenture.

“Note Registrar” shall have the meaning specified in Section 2.04(a) of the
Indenture.

“Noteholder” or “Holder” shall mean the Person in whose name a Note is
registered in the Note Register.

“NYUCC” shall mean the Uniform Commercial Code as in effect in the State of New
York.

“Officer’s Certificate” shall mean, except to the extent otherwise specified, a
certificate signed by an Authorized Officer of the Issuer, the Depositor, the
Servicer, or the Seller, as applicable.

 

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“Opinion of Counsel” shall mean a written opinion of counsel, who may be counsel
for, or an employee of, the Person providing the opinion and who shall be
reasonably acceptable to the Person to whom the opinion is to be provided;
provided, however, that any Tax Opinion or other opinion relating to U.S.
federal income tax matters shall be an opinion of nationally recognized tax
counsel.

“Optional Purchase” shall have the meaning specified in Section 6.04(a) of the
Servicing Agreement.

“Optional Purchase Price” shall have the meaning specified in Section 8.07 of
the Indenture.

“Original Seller” shall mean Conn Credit I, L.P.

“Originator” shall mean Conn Appliances, Inc.

“Outstanding” shall mean, as of any date of determination, any of the Notes
subject to the 2017 Commitment Letter, unless paid in full, and all Notes
previously authenticated and delivered under the Indenture except,

(1) Notes previously cancelled by the Indenture Trustee or delivered to the
Indenture Trustee for cancellation;

(2) Notes for whose payment or redemption money in the necessary amount has been
previously deposited with the Indenture Trustee for the Holders of such Notes;
provided, that if such Notes are to be redeemed, any required notice of such
redemption pursuant to the Indenture or provision for such notice satisfactory
to the Indenture Trustee has been made; and

(3) Notes that have been paid under Section 2.05 of the Indenture or in exchange
for or in lieu of which other Notes have been authenticated and delivered under
the Indenture, other than any such Notes for which there shall have been
presented to the Indenture Trustee proof satisfactory to it that such Notes are
held by a protected purchaser;

provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Notes have given any request, demand,
authorization, direction, notice, consent or waiver under the Indenture, Notes
owned by the Issuer, any other obligor upon the Notes, the Depositor, the
Servicer, the Seller or any Affiliate of the foregoing, shall be disregarded and
considered not to be Outstanding, except that, in determining whether the
Indenture Trustee shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Notes that a
Responsible Officer of the Indenture Trustee, as the case may be, has actual
knowledge of being so owned shall be so disregarded. Notes so owned that have
been pledged in good faith may be regarded as Outstanding if the pledgee
establishes to the satisfaction of the Indenture Trustee the pledgee’s right so
to act for such Notes and that the pledgee is not the Issuer, any other obligor
upon the Notes, the Depositor, the Servicer, the Seller or any Affiliate of the
foregoing. In making any such determination, the Indenture Trustee may
conclusively and exclusively rely on the representations of the pledgee and
shall not be required to undertake any independent investigation.

 

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“Overcollateralization Amount” shall mean, the excess of the Borrowing Base
Receivables Principal Balance over the Note Balance.

“Owner” shall mean each Purchaser and each other Person that has purchased or
otherwise advanced funds against, or has entered into a commitment to purchase
or otherwise advance funds against, a Note or an interest therein, including,
without limitation, each Liquidity Provider.

“Owner Daily Yield” means with respect to each Owner on any day, an amount equal
to the product of (i) the portion of the Note Balance and Escrowed Amount funded
by such Owner, (ii) the sum of the Reference Rate with respect to such Owner as
of such day and the Class A Fee Rate and (ii) a fraction, the numerator of which
is one and the denominator of which is 360 (or, if the Reference Rate with
respect to such Owner is based on the Prime Rate, in each case for such day, 365
(or 366 during a leap year)).

“Payment Date” shall mean the 15th day of each calendar month, or if such 15th
day is not a Business Day, the next succeeding Business Day, commencing with the
calendar month following the calendar month in which the Note Initial Increase
Date occurs.

“Percentage Interest” shall mean the ownership interest in the Receivables
Trust.

“Periodic Filing” shall mean any filing or submission that the Receivables Trust
is required to make with any federal, state or local authority or regulatory
agency.

“Permitted ABS Transaction” shall have the meaning assigned to it in the ABL
Agreement.

“Permitted Assignee” shall mean any Person who, if it were to purchase
Receivables in connection with a sale under Sections 5.05 and 5.17 of the
Indenture, would not cause the Issuer to be taxable as a publicly traded
partnership for federal income tax purposes.

“Permitted Lien” shall mean (i) Liens for taxes not delinquent or for taxes
being contested in good faith and by appropriate proceedings, and with respect
to which adequate reserves have been established, and are being maintained, in
accordance with generally accepted accounting principles promulgated or adopted
by the Financial Accounting Standards Board and its predecessors and successors
from time to time, (ii) mechanics’, materialmen’s, landlords’, warehousemen’s,
garagemen’s and carriers’ Liens, and other like Liens imposed by law, securing
obligations arising in the ordinary course of business, (iii) motor vehicle
accident liens and towing and storage liens and (iv) any Lien created by the
Indenture for the benefit of the Indenture Trustee on behalf of the Noteholders.

“Permitted Modification” shall mean any change to or modification (for the
avoidance of doubt, any modification made solely as required by applicable law
shall be deemed to be a “Permitted Modification”) of the terms of a Receivable,
including the timing or amount of payments on the Receivable, so long as one of
the following conditions has been satisfied:

 

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  a. any change or modification, individually and collectively with any other
change or modification proposed to be made with respect to the Receivable, is
ministerial in nature;

 

  b. any change or modification is (i) granted to an Obligor in accordance with
the Servicer’s Credit and Collection Policy and (ii) such change or modification
(including when taken together with any other prior change or modification) does
not result in a Significant Modification;

 

  c. any change or modification where (i) the Obligor is in payment default or
(ii) in the judgment of the Servicer, in accordance with the Servicer’s Credit
and Collection Policy, it is reasonably foreseeable that the Obligor will
default (it being understood that the Servicer may proactively contact any
Obligor whom the Servicer believes may be at higher risk of a payment default
under the related Receivable); or

 

  d. any extension, deferral, amendment, modification, alteration or adjustment,
including a “payment holiday” or “skip-a-pay” extension granted to an Obligor
that is made in accordance with the Servicer’s Credit and Collection Policy.

“Person” shall mean any legal person, including any individual, corporation,
limited liability company, partnership, joint venture, association, joint-stock
company, trust, unincorporated organization, governmental entity or other entity
of any nature.

“Post Office Box” shall mean, collectively, post office box 815867 in Dallas,
Texas 75234, and, upon notice to Receivables Trustee and the Administrative
Agent, each other post office box opened and maintained by the Receivables Trust
or the Servicer for the receipt of Collections from Obligors and governed by a
Post Office Box Agreement reflecting that such post office box is in the name of
the Receivables Trust, as any such post office boxes may be closed from time to
time by the Servicer with prior written notice to the Receivables Trustee and
the Administrative Agent (provided that (i) there shall at all times be at least
one post office box open to receive Collections, (ii) the Servicer takes
customary and prudent procedures to notify Obligors to make payments to such
post office box and (iii) the closing or opening of any post office box is
consistent with the servicing standard set forth in Section 2.02(b)(ii)).

“Post Office Box Agreement” shall mean an agreement by and among the Servicer
and the United States Postal Service, which is a standard post office box
agreement, specifying the rights of the parties in the Post Office Box.

“Principal Collections” shall mean, with respect to any period, an amount equal
to the (i) Collections for such period, minus (ii) Interest Collections for such
period.

“Primary Note Purchaser” shall mean Credit Suisse AG, Cayman Islands Branch.

“Prime Rate” means the rate designated by Credit Suisse AG, New York Branch from
time to time as its prime rate in the United States, such rate to change as and
when such designated rate changes. The Prime Rate is not intended to be the
lowest rate of interest charged by Credit Suisse AG, New York Branch in
connection with the extensions of credit to debtors.

 

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“Proceeding” shall mean any suit in equity, action at law or other judicial or
administrative proceeding.

“Purchaser” means each Conduit, the Primary Note Purchaser and any other
Alternative Purchaser.

“QIB” shall mean a “qualified institutional buyer” as defined in Rule 144A.

“Rating Agency” shall mean at any time any statistical rating agency then
engaged by the Issuer, the Administrator on its behalf or the Administrative
Agent (with the consent of the Issuer or the Administrator on its behalf) to
issue a rating in respect of the Notes, it being understood that if a
statistical rating agency has been so engaged at any time the termination of
such engagement or the replacement of such statistical rating agency with a
different statistical rating agency shall require the prior written consent of
the Required Noteholders.

“Rating Agency Notice Requirement” shall mean, with respect to any action, that
the Rating Agency shall have received ten (10) days’ written notice thereof and
shall not have notified the Depositor, the Servicer, the Receivables Trust
Trustee and the Indenture Trustee in writing (including by means of a press
release) within such 10-day period that such action will result in a reduction
or withdrawal of the then existing rating of the Notes. Subject to Section 11.08
of the Note Purchase Agreement, any reference to a Rating Agency Notice
Requirement shall apply solely if any Rating Agency then provides a rating on
the Notes.

“Receivable” shall mean the indebtedness of any Receivables Obligor under a
Contract (which “Receivable” has been acquired (or purported to be acquired) by
the Receivables Trust from the Depositor pursuant to the terms of the Second
Receivables Purchase Agreement), whether constituting an account, chattel paper,
an instrument, a general intangible, payment intangible, promissory note or
otherwise, and shall include (i) the right to payment of such indebtedness and
any interest or finance charges and other obligations of such Receivables
Obligor with respect thereto (including, without limitation, the principal
amount of such indebtedness, periodic finance charges, late fees and returned
check fees), and (ii) all proceeds of, and payments or Collections on, under or
in respect of any of the foregoing. Notwithstanding the foregoing, upon release
from the Trust Estate, pursuant to the Indenture, a removed Receivable shall no
longer constitute a Receivable. If an Installment Contract is modified for
credit reasons, the indebtedness under the new Installment Contract shall, for
purposes of the Transaction Documents, constitute the same Receivable as existed
under the original Installment Contract. If an Installment Contract is
refinanced in connection with the purchase of additional Merchandise, the
original Receivable shall be deemed collected and cease to be a Receivable for
purposes of the Transaction Documents upon payment in accordance with the
Servicing Agreement with respect thereto. Any Additional Receivable acquired
pursuant to a Note Balance Increase in accordance with the Transaction Documents
shall, on and after the Note Balance Increase Date, be a “Receivable” (with a
Cut-Off Date of the Additional Cut-off Date related thereto) for all purposes
hereunder and under the Transaction Documents.

 

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“Receivable File” means with respect to a Receivable, (i) the Installment
Contract related to such Receivable, (ii) each UCC financing statement related
thereto, if any, and (iii) the application, if any, of the related Receivables
Obligor to obtain the financing extended by such Receivable; provided that such
Receivable File may be converted to microfilm or other electronic media within
six months after the Initiation Date for the related Receivable.

“Receivables Obligor” shall mean, with respect to any Receivable, the Person or
Persons obligated to make payments with respect to such Receivable, including
any guarantor thereof.

“Receivables Principal Balance” shall mean as of any determination date with
respect to any Receivable, the outstanding principal balance of such Receivable
as reflected on the books and records of the Servicer in accordance with the
Credit and Collection Policy. The Receivables Principal Balance of any
Receivable a portion of which has been charged-off in accordance with the Credit
and Collection Policy shall be reduced by the portion so charged-off.

“Receivables Schedule” shall mean a complete schedule prepared by the Servicer
identifying all Receivables owned by the Receivables Trust, as such schedule is
updated or supplemented from time to time. The Receivables Schedule may take the
form of a computer file or a tangible medium that is commercially reasonable.
The Receivables Schedule shall identify each Receivable by receivable number,
and Receivables Principal Balance as of the applicable Cut-Off Date and the most
recent Record Date.

“Receivables Trust” shall mean Conn’s Receivables Warehouse Trust, a Delaware
statutory trust.

“Receivables Trust Agreement” shall mean the trust agreement, dated as of
January 20, 2017, as amended and restated as of February 24, 2017, between the
Depositor and the Receivables Trust Trustee, as such agreement may be amended,
supplemented or otherwise modified and in effect from time to time.

“Receivables Trust Certificate” shall mean the certificate issued by the
Receivables Trust pursuant to the Receivables Trust Agreement, representing a
100% beneficial interest in the Receivables Trust.

“Receivables Trust Estate” means with respect to the Receivables Trust,
(i) those certain Contracts that have been conveyed, sold and/or assigned by the
Depositor to the Receivables Trust, (ii) the Receivables related to such
Contracts; (iii) all Collections received in respect of the Receivables after
the applicable Cut-Off Date; (iv) all Related Security; (v) the Receivables
Trust’s rights, powers and benefits but none of its obligations under the
Transaction Documents to which it is a party and (vi) all present and future
claims, demands, causes and choses in action and all payments on or under, and
all proceeds of every kind and nature whatsoever in respect of, any or all of
the foregoing.

“Receivables Trust Trustee” shall mean Wilmington Trust, National Association,
not in its individual capacity but solely as trustee of the Receivables Trust.

 

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“Records” shall mean all Contracts and other documents, books, records and other
information (including, without limitation, computer programs, tapes, disks,
punch cards, data processing software and related property and rights)
maintained with respect to Receivables and the related Receivables Obligors.

“Record Date” shall mean, with respect to any Payment Date or any other action,
the last Business Day of the month immediately preceding the month of such
Payment Date or other action; provided, that the first Record Date shall be the
Note Initial Increase Date.

“Recoveries” shall mean, with respect to any period, all Collections (net of
expenses) received during such period in respect of a Receivable after it became
a Defaulted Receivable.

“Redeeming Party” shall have the meaning specified in Section 8.07(d) of the
Indenture.

“Reference Rate” means, with respect to any Owner and any date of determination
(a) with respect to any Owner that is a Conduit and the portion of the Note
Balance funded by or for the benefit of such Conduit on such day through the
issuance of Commercial Paper Notes, such Purchaser’s CP Cost, and (b) with
respect to any Owner (i) that is a Conduit and the portion of the Note Balance
funded by or for the benefit of such Conduit on such day other than through the
issuance of Commercial Purchaser Notes or (ii) that is an Alternative Purchaser,
the Alternative Rate.

“Refinanced Receivable” shall have the meaning specified in Section 2.04(a) of
the Servicing Agreement.

“Registered Noteholder” shall mean the Holder of a Definitive Note.

“Regular Trustee” shall have the meaning specified in the preamble to the Trust
Agreement.

“Related Security” shall mean, with respect to any Receivable, all guaranties,
indemnities, insurance (including any insurance and repair service agreement
proceeds and returned premiums) and other agreements (including the related
Receivable File) or arrangement and other collateral of whatever character from
time to time supporting or securing payment of such Receivable or otherwise
relating to such Receivable (including any returned sales taxes).

“Reported Collection Period” shall mean any Collection Period at any time on or
after the Monthly Determination Date immediately following the end of such
Collection Period.

“Repurchase Price” shall have the meaning set forth in Section 2.03(a) of the
Servicing Agreement.

“Required Noteholders” shall mean, at any time, the Holder or Holders of in
excess of 50% of the Note Balance or, if the Note Balance is zero, the
Administrative Agent.

 

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“Required Reserve Account Amount” shall mean, with respect to any date of
determination, an amount equal to the product of (i) 1.00% and (ii) the
Borrowing Base Receivables Principal Balance for all Receivables as of the
related Cut-off Date.

“Requirements of Law” shall mean, for any Person, (a) any certificate of
incorporation, certificate of formation, articles of association, bylaws,
limited liability company agreement, or other organizational or governing
documents of that Person and (b) any law, treaty, statute, regulation, or rule,
or any determination by a Governmental Authority or arbitrator, that is
applicable to or binding on that Person or to which that Person is subject. This
term includes usury laws, the Truth in Lending Act, and Regulation Z and
Regulation B of the Board of Governors of the Federal Reserve System.

“Reserve Account” shall have the meaning specified in Section 8.02(a)(i) of the
Indenture.

“Responsible Officer” shall mean, with respect to the Indenture Trustee or the
Receivables Trust Trustee, any officer within the Corporate Trust Office of the
Indenture Trustee or the Receivables Trust Trustee, as applicable, as the case
may be, including any Vice President, Assistant Vice President, Assistant
Treasurer, Assistant Secretary, or any other officer of the Indenture Trustee or
the Receivables Trust Trustee, as applicable, customarily performing functions
similar to those performed by any of the above designated officers, and also,
with respect to a particular matter, any other officer to whom such matter is
referred because of such officer’s knowledge of and familiarity with the
particular subject, in each case having direct responsibility for the
administration of the Indenture and the other Transaction Documents on behalf of
the Indenture Trustee or the Receivables Trust Agreement on behalf of the
Receivables Trust Trustee, as applicable.

“Retained Interest” shall have the meaning specified in Section 6.13 of the Note
Purchase Agreement.

“Returned/Refinanced Receivables” shall have the meaning specified in
Section 2.04(a) of the Servicing Agreement.

“Returned Receivable” shall have the meaning specified in Section 2.04(a) of the
Servicing Agreement.

“RSA” shall mean a repair service agreement for Merchandise purchased by a
Receivables Obligor provided by a third party or by Conn Appliances, Inc.

“Rule 144A” shall mean Rule 144A under the Securities Act.

“S&P” and “Standard & Poor’s” shall mean Standard & Poor’s Ratings Services, a
Standard & Poor’s Financial Services LLC business, or any successor.

“SEC” shall mean the United States Securities and Exchange Commission.

“Second Receivables Purchase Agreement” shall mean the Second Receivables
Purchase Agreement, dated as of the Closing Date, among the Depositor, the
Issuer, the Seller, as original seller, and the Receivables Trust, as such
agreement may be amended, supplemented or otherwise modified and in effect from
time to time.

 

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“Secured Parties” shall have the meaning specified in the Granting Clause of the
Indenture.

“Securities Act” shall mean the Securities Act of 1933, as amended.

“Seller” shall mean Conn Credit I, L.P.

“Servicer” shall mean (i) initially Conn Appliances, Inc. in its capacity as
Servicer pursuant to the Servicing Agreement and any Person that becomes the
successor thereto pursuant to Section 2.01 of the Servicing Agreement or any
assignee thereof pursuant to Section 2.01 of the Servicing Agreement, and
(ii) after any Servicing Transfer Date, the Successor Servicer.

“Servicer Default” shall have the meaning specified in Section 2.06 of the
Servicing Agreement.

“Servicer Transaction Documents” shall mean the Indenture, the Note Purchase
Agreement, the Servicing Agreement, the Back-up Servicing Agreement (if any) and
the Intercreditor Agreement, as applicable.

“Servicing Agreement” shall mean the Servicing Agreement, dated as of the
Closing Date, among the Depositor, the Servicer and the Issuer.

“Servicing Centralization Period” shall have the meaning specified in the
Back-up Servicing Agreement.

“Servicing Fee” shall have the meaning specified in Section 2.09 of the
Servicing Agreement.

“Servicing Fee Rate” shall mean a rate equal to 4.75% per annum.

“Servicing Transfer” shall have the meaning specified in Section 2.01(b) of the
Servicing Agreement.

“Servicing Transfer Date” shall mean the date on which a Successor Servicer has
assumed all of the duties and obligations of the Servicer under the Servicing
Agreement (other than in the case of any Back-up Servicer, any such duty or
obligation that it is not required to assume under the terms of any applicable
Back-up Servicing Agreement, if any) after the resignation or termination of the
Servicer.

“Servicing Transition Costs” shall have the meaning specified in the Back-up
Servicing Agreement.

“Servicing Transition Period” shall have the meaning specified in the Back-up
Servicing Agreement.

 

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“Significant Modification” shall mean any of the following changes (taking
changes that occurred prior to acquisition of the Receivables by the Receivables
Trust into account) to a Receivable:

 

  a. lowering the principal amount of a Receivable if the reduction lowers the
yield of the Receivable by more than the greater of (x) 25 basis points or (y)
5 percent of the annual yield of the unmodified Receivable;

 

  b. making any change in interest rate of a Receivable or other payments which
results in the change in the annual yield of more than the greater of (x) 25
basis points or (y) 5 percent of the annual yield of the unmodified Receivable;
and

 

  c. deferral of any payment on the Receivable beyond the due date for that
payment that would result in a deferral of payments for a period of more than 18
months.

“Similar Law” shall have the meaning specified in Section 2.04(c)(v) of the
Indenture.

“Sold Assets” shall mean, with respect to any Receivable, the other property
transferred in connection with such Receivable pursuant to Section 2.1(a) of the
Second Receivables Purchase Agreement.

“Sponsor” shall mean Conn Appliances, Inc. in its capacity as sponsor of the
transactions contemplated by the Transaction Documents.

“SST” means Systems & Services Technologies, Inc.

“Standard & Poor’s” and “S&P” shall mean Standard & Poor’s Rating Services, a
Standard & Poor’s Financial Services LLC business, and its successors.

“State” shall mean any of the fifty (50) states in the United States of America
or the District of Columbia.

“Subsidiary” of a Person means any other Person more than 50% of the outstanding
voting interests of which shall at any time be owned or controlled, directly or
indirectly, by such Person or by one or more other Subsidiaries of such Person
or any similar business organization which is so owned or controlled.

“Successor Servicer” shall mean the successor servicer appointed in accordance
with Section 8.02 of the Servicing Agreement.

“Target Class A Principal Amount” shall mean with respect to any Payment Date,
$0.

“Target Overcollaterization Amount” shall mean (a) on the Initial Note Increase
Date, an amount equal to the product of (i) 31.25% and (ii) the Borrowing Base
Receivables Principal Balance on the related Cut-off Date.

 

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“Tax Opinion” shall mean, with respect to any action, an Opinion of Counsel to
the effect that, for U.S. federal income tax purposes, (a) such action will not
adversely affect the tax characterization as debt of any Note with respect to
which an Opinion of Counsel was delivered at the time of its original issuance
as to the characterization of such Note as debt for U.S. federal income tax
purposes, (b) such action will not cause or constitute an event in which gain or
loss would be recognized by any Noteholder, and (c) such action will not cause
the Issuer to be deemed to be an association (or publicly traded partnership)
taxable as a corporation.

“Termination Notice” shall have the meaning specified in Section 8.01 of the
Servicing Agreement.

“Three Month Average Annualized Net Loss Ratio” shall mean with respect to any
Monthly Determination Date, the average of the Monthly Annualized Net Loss
Percentage for such Monthly Determination Date and the two immediately preceding
Monthly Determination Dates.

“Transaction Documents” shall mean, collectively, the Indenture, the Notes, the
Servicing Agreement, the Back-Up Servicing Agreement (if any), the First
Receivables Purchase Agreement, the Second Receivables Purchase Agreement, the
Escrow Letter, the Receivables Trust Agreement, the Intercreditor Agreement, the
Note Purchase Agreement, the Fee Letter and any agreements of the Issuer
relating to the issuance or the purchase of any of the Notes.

“Trust Estate” shall have the meaning set forth in the Granting Clause of the
Indenture.

“UCC” shall mean the Uniform Commercial Code of the applicable jurisdiction.

“United States Bankruptcy Code” shall mean Title 11 of the United States Code,
11. U.S.C. §§ 101 et seq., as amended.

“Unmatured Event of Default” shall mean an event or circumstance that with the
giving of notice of lapse of time or both would constitute an Event of Default.

“Unmatured Servicer Default” shall mean an event or circumstance that with the
giving of notice of lapse of time or both would constitute a Servicer Default.

“Volcker Rule” shall mean the common rule entitled “Proprietary Trading and
Certain Interests and Relationships with Covered Funds” published in 79 Fed.
Reg. 21 at 5779-5804.

“Voting Stock” shall mean in relation to a Person, shares of Capital Stock
entitled to vote generally in the election of directors to the board of
directors or equivalent governing body of such Person.

“Yield” means, for each Interest Period (or portion thereof), the sum of the
aggregate Owner Daily Yields for all Owners with respect to each day during such
Interest Period (or such portion thereof); provided, however, that (x) no
provision of the Note Purchase Agreement shall require the payment or permit the
collection of Yield in excess of the maximum permitted by applicable law, and
(y) Yield shall not be considered paid by any distribution if at any time such
distribution is returned or must be rescinded for any reason. Without limiting
the generality of the foregoing, Yield shall include interest that accrues after
the commencement of an Insolvency Event with respect to the Issuer.

 

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