a6204766ex10_1.htm


    Exhibit
10.1

     

    
      SECOND
AMENDMENT TO LOAN AND SECURITY AGREEMENT

       

      This
SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT, dated to be effective as of
February __, 2010 (this “Amendment”) is made
among CONN’S, INC., a Delaware corporation (the “Parent”), CONN
APPLIANCES, INC., a Texas corporation (“CAI”), CONN CREDIT I,
LP, a Texas limited partnership (“CCI”), CONN CREDIT
CORPORATION, INC., a Texas corporation (“CCCI”, together with
CAI and CCI, collectively, “Borrowers”), BANK OF
AMERICA, N.A., a national banking association, individually as a Lender (“BOA”) and as the
administrative agent for the Lenders party to the Loan Agreement (as defined
below) (in such latter capacity, together with any other Person who becomes
Administrative Agent pursuant to Section 12.8 thereof,
the “Agent”)
and the banks and other financial institutions listed on the signature pages
hereof under the caption “Lenders” (together
with BOA, collectively, the “Lenders”).

       

      Background

       

      A.          
The Parent, the Borrowers, the Agent and the Lenders have entered into a Loan
and Security Agreement, dated as of August 14, 2008, (as amended, modified or
supplemented from time to time, the “Loan
Agreement”).  All capitalized terms used and not otherwise
defined in this Amendment are used as defined in the Loan
Agreement.

       

      B.            The
parties hereto wish to amend the certain terms of the Loan
Agreement.

       

      NOW
THEREFORE, in consideration of the premises and the mutual agreements,
representations and warranties herein set forth and for other good and valuable
consideration, the Parent, the Borrowers, the Agent and the Lenders hereto
hereby agree as follows:

       

      Agreement

       

      1.            
Amendment to the Loan
Agreement.

       

      (a)          
The
following Definitions are added to Section 1.1 of the Loan Agreement in
alphabetical order:

       

      Adjusted Tangible
Assets: all assets of Parent and Borrowers together with assets under the
Existing Securitization Facility, on a consolidated basis, except
(a)  patents, copyrights, trademarks, trade names, franchises,
goodwill, and other similar intangibles; (b) assets constituting intercompany
Accounts; (c) assets located and notes and receivables due from obligors
domiciled outside the United States of America or Canada; and (d) fixed assets
to the extent of any write-up in the book value thereof.

       

      Increased Reporting
Period:  any time (i) a Default or Event of Default exists, or
(ii) average Availability during any month (as reflected in the Loan Account) is
less than 20% of the amount of aggregate outstanding Revolver Loans and stated
amount of Letters of Credit.

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      Tangible Net Worth:
at any date means an amount equal to: (i) the net book value (after deducting
related depreciation, obsolescence, amortization, valuation and other proper
reserves) at which the Adjusted Tangible Assets of a Person would be shown on a
balance sheet at such date in accordance with GAAP, less (ii) the amount at
which such Person’s liabilities would be shown on such balance sheet in
accordance with GAAP (together with the outstanding obligations under the
Existing Securitization Facility and to the extent such obligations are not
included on the balance sheets, a pro forma calculation thereof), and including
as liabilities all reserves for contingencies and other potential
liabilities.

       

      Total Liabilities to
Tangible Net Worth Ratio: the ratio, determined as of the end of any
Fiscal Quarter for the Parent and its Subsidiaries, on a consolidated basis, of
(a) all items that would be included as liabilities on a balance sheet in
accordance with GAAP (together with the outstanding obligations under the
Existing Securitization Facility and to the extent such obligations are not
included on the balance sheets, a pro forma calculation thereof) as of the last
day of such Fiscal Quarter, to (b) Tangible Net Worth as of the last day of such
Fiscal Quarter.

       

      (b)          
The term
“Applicable Margin” as defined in Section 1.1 of the Loan Agreement is hereby
deleted in its entirety and the following is substituted therefor:

       

      Applicable Margin:
with respect to any Type of Revolver Loan, the margin set forth in the chart
below, as determined by the Fixed Charge Coverage Ratio for
the last Fiscal Quarter, measured on a trailing 12 month basis:

       

      
        	
                Level

                 

              	
                Fixed Charge

                Coverage Ratio

              	
                Base Rate Revolver

                Loans

              	
                LIBOR Revolver

                Loans

              
	 
      	 
      	 
      	 
      
	
                I

              	
                >
      1.75:1.00

              	
                2.25%

              	
                3.25%

              
	
                II

              	
                ≤1.75:1.00
      and ≥
      1.50:1.00

              	
                2.50%

              	
                3.50%

              
	
                III

              	
                <1.50:1.00

              	
                2.75%

              	
                3.75%

              


      

       

      Until
July 1, 2010, margins shall be determined as if Level III were
applicable.  Thereafter, the margins shall be subject to increase or
decrease upon receipt by Agent pursuant to Section 10.1.2 of the
financial statements and corresponding Compliance Certificate for the most
recently ended Fiscal Quarter, which change shall be effective on the first day
of the calendar month following receipt.  If any financial statements
and Compliance Certificate due in the preceding Fiscal Quarter have not been
received on the due dates set forth in Section 10.1.2, then the
margins shall be determined as if Level III were applicable, from such day
until the first day of the calendar month following actual receipt.

       

      (c)          
The term
“Dominion Trigger Period” as defined in Section 1.1 of the Loan Agreement is
hereby deleted in its entirety and the following is substituted
therefor:

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

       

      Dominion Trigger
Period: the period (a) commencing on the day that (i) an Event of Default
occurs, or (ii) average Availability during a month (as reflected in the Loan
Account) is less than 15% of the amount of aggregate outstanding Revolver Loans
and stated amount of Letters of Credit; or (iii) Availability is at any time
less than 10% amount of aggregate outstanding Revolver Loans and stated amount
of Letters of Credit, and (b) ending on the day (i) on which, during the
preceding 90 consecutive days, no Event of Default has existed and Availability
has at all times been greater than 10% of the amount of aggregate outstanding
Revolver Loans; provided, that this
clause (b)(i) shall only be applicable to the first commencement of such period
hereunder, and (ii) determined by Agent in its sole discretion for any
subsequent commencement of such period; provided, that with
respect to any subsequent commencement of such period in order for the period to
end the requirements in clause (b)(i) shall be satisfied.

       

      (d)          
The term
“Fixed Charges” as defined in Section 1.1 of the Loan Agreement is hereby
deleted in its entirety and the following is substituted therefor:

       

      Fixed Charges:
without double counting, the sum (together with the applicable charges incurred
under the Existing Securitization Facility) of interest expense (other than
payment-in-kind), scheduled/amortized principal payments made on Borrowed Money,
un-scheduled principal payments made on Borrowed Money (other than payments on
account of the Obligations or any other revolving Debt permitted hereunder or
amortization of Debt under the Existing Securitization Facility), book rent
expense, cash income taxes paid, and Distributions made.

       

      (e)          
The term
“Fixed Charge Coverage Ratio” as defined in Section 1.1 of the Loan Agreement is
hereby deleted in its entirety and the following is substituted
therefor:

       

      Fixed Charge Coverage
Ratio: the ratio, determined on a consolidated basis for Parent and its
Subsidiaries for the most recent four Fiscal Quarters, of (a) EBITDAR (including
the interest expense and amortization expense associated with the Existing
Securitization Facility) minus unfinanced Net
Capital Expenditures, to (b) Fixed Charges.

       

      (f)           
The term
“Leverage Ratio” as defined in Section 1.1 of the Loan Agreement is hereby
deleted in its entirety.

       

      (g)          
The term
“Unused Line Fee Percentage” as defined in Section 1.1 of the Loan Agreement is
hereby deleted in its entirety and the following is substituted
therefor:

       

      Unused Line Fee
Percentage: a percentage equal to (i) 0.75% per annum if the average
daily balance of Revolver Loans and stated amount of Letters of Credit during
the measurement quarter is less than 50% of the Revolver Commitments, and (b)
0.50% per annum if the average daily balance of Revolver Loans and stated amount
of Letters of Credit during the measurement quarter is equal to or greater than
50% of the Revolver Commitments.

       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      (h)          
Section
8.1 of the Loan Agreement is hereby deleted in its entirety and the following is
substituted therefor:

       

      8.1           Collateral
Reports.  By the 20th day of each month and at such other times
as Agent may request, Borrowers shall deliver to Agent (and Agent shall promptly
deliver same to Lenders) (i) a Borrowing Base Certificate prepared as of the
close of business of the previous month (provided, that
Borrowing Base Certificates shall be delivered weekly during a Increased
Reporting Period; further provided, that the
calculation of contracts not qualifying as Eligible Contracts, the CAI
Availability Reserve and CCI Availability Reserve shall be provided by Borrower
on a monthly basis at all times), (ii) an aggregate list of the Borrowers’
Contracts, aged in 30 days contractual delinquency intervals and separately
identifying the revolving Contracts; (iii) a calculation of the Past Due
Percent, the Cash Recovery Percent, Collateral Adjustment Percentage, the
Charge-Off Percent; the Eligible Contracts, the Eligible Inventory, the Eligible
Credit Card Accounts; (iv) an Inventory turn report of the Borrowers’
Inventory; (v) a listing of each Borrower’s Inventory by location, specifying
the amount of Inventory at each location; (vi) the summary balances of the
Borrowers’ “primary portfolio” and “secondary portfolio” (as such portfolios are
described in the Parent’s SEC filings) and delinquent balances of each such
portfolio; (vii) such other reports as to the Collateral of the Borrower as the
Agent shall reasonably request from time to time, together with a reconciliation
to the general ledger; and (viii) a certificate of an officer of the
Borrower Agent certifying as to the accuracy and completeness of the
foregoing.  All calculations of Availability in any Borrowing Base
Certificate shall originally be made by Borrowers and certified by a Senior
Officer, provided that Agent may from time to time review and adjust any such
calculation (a) to reflect its reasonable estimate of declines in value of any
Collateral, due to collections received in the Dominion Account or otherwise;
(b) to adjust advance rates to reflect changes in dilution, quality, mix and
other factors affecting Collateral; and (c) to the extent the calculation is not
made in accordance with this Agreement or does not accurately reflect the CAI
Availability Reserve or CCI Availability Reserve.

       

      (i)           
Section
10.1.1(b) of the Loan Agreement is hereby deleted in its entirety and the
following is substituted therefor:

       

      (b)           Reimburse
Agent for all charges, costs and expenses of Agent in connection with (i)
examinations of any Obligor’s books and records or any other financial or
Collateral matters as Agent deems appropriate, up to 2 times per Loan Year; and
(ii) appraisals of Inventory up to 2 times per Loan Year; provided, however, that if an
examination or appraisal is initiated during an Increased Reporting Period, all
charges, costs and expenses therefor shall be reimbursed by Borrowers without
regard to such limits.  Subject to and without limiting the foregoing,
Parent and Borrowers specifically agree to pay Agent’s then standard charges for
each day that an employee of Agent or its Affiliates is engaged in any
examination activities, and shall pay the standard charges of Agent’s internal
appraisal group.  This Section shall not be construed to limit Agent’s
right to conduct examinations or to obtain appraisals at any time in its
discretion, nor to use third parties for such purposes.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

       

      (j)           
Section
10.3.1 of the Loan Agreement is hereby deleted in its entirety and the following
is substituted therefor:

       

      10.3.1      Minimum Fixed Charge
Coverage Ratio.  Maintain Fixed Charge Coverage
Ratio  measured quarterly on the last day of  each Fiscal
Quarter on a trailing twelve month basis (i) for the Fiscal Quarter ending
January 31, 2010 and April 30, 2010, at least equal to 1.10:1.00, and (ii)
thereafter at a ratio at least equal to 1.30:1.00.

       

      (k)          
Section
10.3.2 of the Loan Agreement is hereby deleted in its entirety and the following
is substituted therefor:

       

      10.3.2     
Maximum Total
Liabilities to Tangible Net Worth Ratio.  Maintain Total
Liabilities to Tangible Net Worth Ratio not greater than the ratio set forth
below for each Fiscal Quarter, measured as of the last day of each Fiscal
Quarter:

       

      
        	
                Period

              	
                Ratio

              
	 	 
	
                Fiscal
      Quarter ending on or between

                January
      31, 2010 and April 30, 2010

              	
                2.00:1.00

              
	
                Fiscal
      Quarters ending on or between

                July
      31, 2010 and January 31, 2011

              	
                1.75:1.00

              
	
                Fiscal
      Quarter ending April 30, 2011 and

                each
      Fiscal Quarter thereafter

              	
                1.50:1.00

              


      

       

      2.            
CCI Availability
Reserve.  Pursuant to subsection (g) of the definition of CCI
Availability Reserve, the following reserve shall be implemented commencing upon
the effectiveness of this Amendment.  At any time, measured as of the
first day of each month, the Revolving Collateral Adjustment Percent exceeds
15%, an additional Availability Reserve shall be implemented which shall be in
an amount equal to 1% for each whole percentage or fraction that the Revolving
Collateral Adjustment Percent exceeds 15%.   “Revolving
Collateral Adjustment Percent” means the Collateral Adjustment Percentage
relating only to the portfolio of revolving Contracts as reported to Agent
pursuant to Section
8.1.  For the avoidance of doubt, the adjustments to the
advance rates based on the Collateral Adjustment Percentage shall continue as
currently stated in the Loan Agreement.

       

      3.            
Representations and Warranties; No
Default.  Each of the Parent and the Borrowers, hereby
represents and warrants as of the effectiveness of this Amendment
that:

       

      (i)       
no
Default or Event of Default exists; and

       

      (ii)      
its
representations and warranties set forth in Section 9 of the Loan Agreement (as
amended hereby) are true and correct as of the date hereof, as though made on
and as of such date (except to the extent such representations and warranties
relate solely to an earlier date and then as of such earlier date).

       

      
        
          
          

        

        
          5

          
            

          

        

        
          
          

        

      

       

      4.           
Effectiveness; Binding Effect;
Ratification.  This Amendment shall become effective, as of the
date first set forth above upon receipt by the Agent of (i) the fees set forth
in the Amendment Fee Letter dated February 4, 2010 from Agent to the Borrowers,
and (ii) executed counterparts hereof from the Borrowers and each of
the  Lenders whose consent is necessary to amend the Loan Agreement as
set forth in this Amendment, and thereafter this Amendment shall be binding on
the Agent, Borrowers and Lenders and their respective successors and
assigns.

       

      (a)         
On and
after the execution and delivery hereof, this Amendment shall be a part of the
Loan Agreement and each reference in the Loan Agreement to “this Loan Agreement”
or “hereof”, “hereunder” or words of like import, and each reference in any
other Loan Document to the Loan Agreement shall mean and be a reference to such
Loan Agreement as amended hereby.

       

      (b)         
Except as
expressly amended hereby, the Loan Agreement shall remain in full force and
effect and is hereby ratified and confirmed by the parties hereto.

       

      5.           
Miscellaneous.  (a)  THIS
AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
CALIFORNIA, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS.  EACH
OF THE PARTIES TO THIS AMENDMENT AGREES TO THE NON-EXCLUSIVE JURISDICTION OF ANY
FEDERAL OR STATE COURT SITTING IN OR WITH JURISDICTION OVER LOS ANGELES COUNTY,
CALIFORNIA IN ANY PROCEEDING OR DISPUTE RELATING IN ANY WAY TO THIS AMENDMENT OR
ANY LOAN DOCUMENT AND AGREES THAT ANY SUCH PROCEEDING SHALL BE BROUGHT BY IT
SOLELY IN ANY SUCH COURT.  EACH OF THE PARTIES HERETO 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.

       

      (b)         
All
reasonable costs and expenses incurred by the Agent in connection with this
Amendment (including reasonable attorneys’ costs) shall be paid by the
Borrowers.

       

      (c)         
Headings
used herein are for convenience of reference only and shall not affect the
meaning of this Amendment.

       

      (d)          This
Amendment may be executed in any number of counterparts, and by the parties
hereto on separate counterparts, each of which shall be an original and all of
which taken together shall constitute one and the same agreement.

       

      [Signature
Page Follows]

       

       

       

      
        
          
          

        

        
          6

          
            

          

        

        
          
          

        

      

       

      IN
WITNESS WHEREOF, the parties have caused this Amendment to be executed by their
respective officers thereunto duly authorized, as of the date first above
written.

       

      
        
          	 	
                  PARENT:

                	 
	 	 
      	 
      	 
	 	
                  CONN’S,
      INC.,

                	 
	 	
                  a
      Delaware corporation

                	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                  By:

                	
                  /s/
      Michael J. Poppe

                	 
	 	
                  Name:

                	
                  Michael
      J. Poppe

                	 
	 	
                  Title:

                	
                  Chief
      Financial Officer

                	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                  BORROWERS:

                	 
	 	 
      	 
      	 
	 	
                  CONN
      APPLIANCES, INC.,

                	 
	 	
                  a
      Texas corporation

                	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                  By:

                	
                  /s/
      Michael J. Poppe

                	 
	 	
                  Name:

                	
                  Michael
      J. Poppe

                	 
	 	
                  Title:

                	
                  Chief
      Financial Officer

                	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                  CONN
      CREDIT I, LP,

                	 
	 	
                  a
      Texas limited partnership

                	 
	 	 
      	 
      	 
	 	
                  By:

                	
                  Conn
      Credit Corporation, Inc.,

                	 
	 	 
      	
                  a
      Texas corporation,

                	 
	 	 
      	
                  its
      sole general partner

                	 
	 	 	 	 
	 	 
      	 
      	 
	 	
                  By:

                	
                  /s/
      Michael J. Poppe

                	 
	 	
                  Name:

                	
                  Michael
      J. Poppe

                	 
	 	
                  Title:

                	
                  Chief
      Financial Officer

                	 


        

         

         

         

      

      
        
          
          

        

        
          S-1

          
            

          

        

        
          
          

        

      

       

      
        
          	 	
                  CONN
      CREDIT CORPORATION, INC.,

                	 
	 	
                  a
      Texas corporation

                	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                  By:

                	
                  /s/
      Michael J. Poppe

                	 
	 	
                  Name:

                	
                  Michael
      J. Poppe

                	 
	 	
                  Title:

                	
                  Chief
      Financial Officer

                	 


        



       

       

       

      
        
          
          

        

        
          S-2

          
            

          

        

        
          
          

        

      

    

     

    
      
        	 	
                AGENT
      AND LENDERS:

              	 
	 	 
      	 
      	 
	 	
                BANK
      OF AMERICA, N.A.,

              	 
	 	
                as
      Agent and Lender

              	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                By:

              	
                /s/
      John Tolle

              	 
	 	
                Name:

              	
                John
      Tolle

              	 
	 	
                Title:

              	
                Vice
      President

              	 


      

    

     

     

     

     

     

    
      
        
        

      

      
        S-3

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                JPMORGAN
      CHASE BANK, NATIONAL

                ASSOCIATION

              	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                By:

              	
                /s/
      T. C. Wilde

              	 
	 	
                Name:

              	
                T.
      C. Wilde

              	 
	 	
                Title:

              	
                Vice
      President

              	 


      

    

     

     

     

     

     

    
      
        
        

      

      
        S-4

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                CAPITAL
      ONE, N.A.

              	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                By:

              	
                /s/
      Lori S. Mitchell

              	 
	 	
                Name:

              	
                Lori
      S. Mitchell

              	 
	 	
                Title:

              	
                Executive
      Vice President

              	 


      

    

     

     

     

     

     

    
      
        
        

      

      
        S-5

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                UNION
      BANK OF CALIFORNIA, N.A.

              	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                By:

              	
                /s/
      Peter Ehlinger

              	 
	 	
                Name:

              	
                Peter
      Ehlinger

              	 
	 	
                Title:

              	
                Vice
      President

              	 


      

    

     

     

     

     

     

    
      
        
        

      

      
        S-6

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                COMPASS
      BANK, successor in interest to

                GUARANTY
      BANK

              	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                By:

              	
                /s/
      Stuart Murray

              	 
	 	
                Name:

              	
                Stuart
      Murray

              	 
	 	
                Title:

              	
                Sr.
      Vice President

              	 


      

    

     

     

     

     

     

    
      
        
        

      

      
        S-7

        
          

        

      

      
        
        

      

    

     

    
      
        	 	
                FIRST
      TENNESSEE BANK NATIONAL

                ASSOCIATION

              	 
	 	 
      	 
      	 
	 	 
      	 
      	 
	 	
                By:

              	
                /s/
      R. Keith Kirby

              	 
	 	
                Name:

              	
                R.
      Keith Kirby

              	 
	 	
                Title:

              	
                Vice
      President

              	 


      

    

     

     

     

     

     

     

    S-8