Document:

EXHIBIT 10.24.1

                 FOURTH AMENDED AND RESTATED SECURITY AGREEMENT
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     THIS FOURTH AMENDED AND RESTATED  SECURITY  AGREEMENT  (this  "Agreement"),
dated as of August 31, 2006, is by CONN APPLIANCES,  INC., a Texas  corporation,
and CAI, L.P., a Texas limited  partnership  (collectively,  "Debtor"),  for the
benefit of BANK OF  AMERICA,  N.A.,  a national  banking  association  ("Secured
Party").

                                    RECITALS

     A. Secured  Party agreed to provide  Debtor with a secured and  uncommitted
import letter of credit line of up to $1,200,000 in the aggregate to accommodate
Debtor's  importation of inventory  purchases  into North America,  which import
letter of credit line was  extended,  renewed and  increased up to $1,500,000 in
June,  2004,  and further  extended,  renewed and  increased up to $3,000,000 in
July, 2005 (the "Existing Import Letter of Credit Line").

     B. In connection  with the Existing  Import  Letter of Credit Line,  Debtor
executed  a  Security  Agreement  dated as of March  20,  2003 (as  amended  and
restated by the First Amended and Restated  Security  Agreement dated as of June
17, 2004,  as amended and restated by the Second  Amended and Restated  Security
Agreement  dated as of July 11,  2005,  and as amended and restated by the Third
Amended and Restated  Security  Agreement dated as of June 14, 2006) in favor of
Secured Party,  granting to Secured Party a first priority security interest in,
and  lien  upon,  the  "Collateral"  as  described  therein  (collectively,  the
"Existing Security Agreement").

     C. Debtor and Secured  Party have agreed to increase  the  Existing  Import
Letter of Credit Line to provide for a secured and uncommitted  import letter of
credit line of up to  $10,000,000 in the aggregate (the "Import Letter of Credit
Line").

     D.  Accordingly,  Secured  Party and Debtor  hereby  amend and  restate the
Existing Security Agreement in its entirety as follows:

                                   AGREEMENTS

     NOW  THEREFORE,  for good  and  valuable  consideration,  the  receipt  and
sufficiency of which are hereby  acknowledged,  Debtor covenants and agrees with
Secured Party as follows:

     1.  Certain  Definitions.  Capitalized  terms used but not  defined in this
Agreement  have  the  meaning  given  them in the UCC  (defined  below).  If the
definition  given a term in Chapter 9 of the UCC conflicts  with the  definition
given that term in any other chapter of the UCC, the Chapter 9 definition  shall
control. As used in this Agreement:

          Agreement means this Agreement,  together with all schedules  attached
     hereto,  and all  amendments  and  modifications  to this Agreement or such
     schedules.

          Collateral is defined in Section 5 of this Agreement.

          Credit  Agreement  Event of  Default  means an "Event of  Default"  as
     defined in that certain Credit  Agreement dated as October 31, 2005,  among
     Conn  Appliances,  Inc.  and the  other  Borrowers  (as  defined  therein),
     JPMorgan Chase Bank, National Association, as Administrative Agent, Bank of
     America, as Syndication Agent,  SunTrust Bank, as Documentation Agent, J.P.
     Morgan Securities,  Inc., as Arranger, and the Lenders (as defined therein)
     party  thereto,  as amended,  restated or otherwise  modified  from time to
     time;  provided that, the defined term "Credit  Agreement Event of Default"
     includes without  limitation,  an event of default under any and all credit
     agreements  or loan  agreements  that  replace  or  refinance  such  Credit
     Agreement.

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          Debtor is defined in the preamble to this Agreement.

          Event of Default is defined in Section 11.

          Governmental  Authority means any (a) (domestic or foreign)  judicial,
     executive,  legislative, or administrative instrumentality,  or any agency,
     court,  department,  commission,  board, bureau, or other  instrumentality,
     under any federal, state, county, parish, commonwealth,  city, municipal or
     other political subdivision, and (b) private mediation or arbitration board
     or panel.

          Import Letter of Credit Line is defined in Recital A above.

          Inventory   means  any  and  all   inventory   purchased   from  every
     counterparty of Debtor with credit support provided by the Import Letter of
     Credit Line,  including without limitation,  the parties listed on attached
     Schedule 1 (as such  Schedule 1 may be amended from time to time as set out
     in Section 3 below), whether now owned or acquired in the future by Debtor,
     all proceeds of insurance  thereon,  and all identifiable  cash proceeds in
     the form of money and checks received by any Debtor with respect thereto.

          Law means all applicable statutes, laws, treaties,  ordinances, rules,
     regulations,  orders, writs, injunctions,  decrees, judgments, opinions and
     interpretations of any Governmental Authority.

          Lien means any lien, mortgage,  security interest, pledge, assignment,
     charge,  title retention agreement or encumbrance of any kind and any other
     arrangement for a creditor's  claim to be satisfied from assets or proceeds
     prior to the claims of other creditors or the owners.

          Obligation means all of Debtor's  payment and performance  obligations
     under this  Agreement and all other  documents and  agreements  executed in
     connection  with the  Import  Letter  of  Credit  Line,  including  without
     limitation,  all applications and agreements for the issuance of commercial
     letters of credit, and reasonable  attorney's fees and expenses incurred by
     Secured Party in connection therewith and herewith.

          Obligor means "obligor" as such term is defined in the UCC,  including
     without  limitation,  any person or entity obligated with respect to any of
     the  Collateral,  whether as a party to a  contract,  an account  debtor or
     otherwise.

          Rights means rights, remedies, powers, privileges and benefits.

          Secured Party is defined in the preamble to this Agreement.

          Security  Interest  means  the  security  interests  granted  and  the
     transfers, pledges, and assignments made under Section 3 of this Agreement.

          UCC means the Uniform Commercial Code, as adopted and in effect in the
     State of Texas from time to time.

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<PAGE>

     2.  Security  For Import  Letter of Credit  Line.  This  Agreement is being
executed and delivered to secure the prompt, unconditional, and complete payment
and performance of the Obligation.

     3.  Security  Interest.  Subject  to  the  terms  and  conditions  of  this
Agreement, Debtor grants to Secured Party a security interest in, and Lien upon,
all of Debtor's right,  title,  and interest in and to the Collateral and Debtor
transfers, pledges, and assigns as security to Secured Party all Debtor's right,
title, and interest in the Collateral. If the transfer, pledge, or assignment of
any specific item of the Collateral is expressly prohibited by any contract, the
Security  Interest  shall be effective to the extent  allowed by UCC ss.9.406 or
other applicable Law.  Notwithstanding  anything to the contrary herein,  Debtor
and Secured Party hereby agree that Debtor may from time to time update the list
of counterparties on Schedule 1 attached hereto by delivering a revised Schedule
1 to Secured  Party,  and,  upon the  execution  of such  revised  Schedule 1 by
Secured Party,  the then current  Schedule 1 shall  automatically be replaced in
its entirety by such revised Schedule 1.

     4. No  Assumption  or  Modification.  The  Security  Interest  is  given as
collateral security only. Secured Party does not assume, and shall not be liable
for, any of Debtor's liabilities,  duties, or obligations under or in connection
with the Collateral. Secured Party's acceptance of this Agreement, or its taking
any action in carrying out this Agreement,  does not constitute  Secured Party's
approval of the  Collateral  or Secured  Party's  assumption  of any  obligation
under, or in connection with, the Collateral.  This Agreement does not affect or
modify Debtor's obligations with respect to the Collateral.

     5. Collateral.  As used in this Agreement,  the term "Collateral" means all
of Debtor's  right,  title and interest in and to Inventory,  wherever  located,
whether now owned or  hereafter  acquired by Debtor,  together  with any and all
proceeds,  products,  additions to,  substitutions  for and accessions  thereto;
provided,  however, that under no circumstances shall the Collateral include (x)
Purchased Receivables,  Related Security,  Receivable Files, or Originator Notes
as each is defined in the Receivables  Purchase  Agreement dated as of September
1, 2002, between Conn Appliances,  Inc., CAI, L.P., and Conn Funding I, L.P., as
sellers,  and Conn Funding II, L.P., as  purchaser,  or any products or proceeds
thereof;  or (y) Transferred Assets as defined in the Agreement of Sale dated as
of January 24, 2001,  by and between Conn  Appliances,  Inc. and CAI,  L.P.,  as
sellers, and Aaron Rents, as purchaser.  Subject to the proviso in the preceding
sentence,  the  description  of Collateral  contained in this Section 5 includes
after acquired Collateral and proceeds of the Collateral.

     6. Fraudulent  Conveyance.  Notwithstanding any provision of this Agreement
to the contrary,  Debtor agrees that if, but for the application of this Section
6, the  Obligations  or any Security  Interest  would  constitute a preferential
transfer under 11 U.S.C.  ss. 547, a fraudulent  conveyance  under 11 U.S.C. ss.
548 (or any  successor  section  of that  Code) or a  fraudulent  conveyance  or
transfer  under any state  fraudulent  conveyance or fraudulent  transfer law or
similar Law in effect from time to time (each a "Fraudulent  Conveyance"),  then
the Obligations and each affected  Security  Interest will be enforceable to the
maximum extent possible without causing the Obligations or any Security Interest
to be a Fraudulent  Conveyance,  and shall be deemed to have been  automatically
amended to carry out the intent of this Section 6.

     7.  Representations  and  Warranties.  Debtor  represents  and  warrants to
Secured Party that:

         (a) Binding  Obligation.  This Agreement  creates a legal,  valid,  and
binding security  interest in, and Lien upon, the Collateral in favor of Secured
Party and enforceable  against Debtor.  The Security Interest created under this
Agreement will be duly perfected once the action  required for perfection  under
applicable  Law has been taken.  Once  perfected,  the  Security  Interest  will
constitute a first priority Lien on the Collateral. The creation of the Security
Interest does not require the consent of any third party.

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<PAGE>

         (b) Place of  Business;  Location of Records.  The location of Debtor's
chief executive  office or principal place of business is set out on Schedule 2.
Debtor's state of organization and its organizational  identification  number is
set out on Schedule 2. Debtor's books and records  concerning the Collateral are
located  at its chief  executive  office or  principal  place of  business.  All
Inventory  (other than on  consignment or in transit) are located until disposed
of in the ordinary  course of business) at one or more of the  locations set out
on Schedule 2.

         (c) No  Prior  Lien.  Debtor  has  not  executed  any  prior  transfer,
assignment,  pledge,  security  interest,  Lien or  hypothecation  covering  the
Collateral or any interest in the Collateral  other than a subordinated  Lien on
the Inventory  granted to the lenders under Debtor's senior credit facility with
JP Morgan Chase, as agent for such lenders.

         (d) No Defenses. No portion of the Collateral is subject to any setoff,
counterclaim, defense, allowance, or adjustment.

     8.  Additional  Collateral.  The  delivery at any time by Debtor to Secured
Party of Collateral or of additional specific descriptions of certain Collateral
will constitute a  representation  and warranty by Debtor to Secured Party under
this Agreement that the representations and warranties in Section 7 are true and
correct with respect to each item of such Collateral.

     9. Affirmative Covenants.  Debtor further covenants and agrees with Secured
Party that until the  Obligation  is  irrevocably  paid and  performed  in full,
Debtor shall:

         (a)  Relocation  of  Office  or Books  and  Records;  Change of Name or
Address; and Organizational Structure. Give Secured Party thirty (30) days prior
written notice of (i) any proposed relocation of its principal place of business
or chief executive office,  (ii) any proposed  relocation of the place where its
books and records relating to the Collateral are kept, and (iii) a change of its
name, organizational structure or taxpayer identification number.

         (b) Change in Collateral. Promptly notify Secured Party of any material
change in the Collateral or in any fact or circumstance represented or warranted
by Debtor with respect to any of the Collateral.

         (c)  Insurance.  Debtor shall obtain and  maintain  insurance  upon and
relating to the Inventory  insuring against general  liability,  personal injury
and death,  loss by fire and such other hazards,  casualties,  and contingencies
(including  but not  limited to fire,  lightning,  hail,  windstorm,  explosion,
malicious mischief,  and vandalism) as are covered by extended coverage policies
in effect  where the such  property  is located  and such other  risks as may be
reasonably specified by Secured Party from time to time, all in such amounts and
with such insurers of recognized  responsibility as are reasonably acceptable to
Secured  Party.   Upon  request,   Debtor  shall  provide   Secured  Party  with
certificates of insurance in amounts and with deductibles reasonably required by
Secured Party.  Secured Party shall have the right,  but not the obligation,  to
make  premium  payments,  at  Debtor's  expense,  to prevent  any  cancellation,
endorsement,  alteration or  reissuance,  and such payments shall be accepted by
the insurer to prevent same,  provided  that, to the extent  Secured Party makes
any  premium  payments  or pays any other  amount in respect  of such  insurance
policies,  such amount  shall  become part of the  Obligations  and shall accrue
interest at the maximum rate permitted by applicable law.

         (d) Taxes and  Assessments.  Debtor shall pay all taxes and assessments
on all of the  Collateral  when due and upon Secured  Party's  request,  provide
Secured Party with  evidence of payment of such taxes.  Secured Party shall have
the right, but not the obligation, to pay such taxes or assessments, at Debtor's
expense,  to prevent any lien or other legal process from  attaching or arising,
provided  that,  to the extent  Secured Party pays any such tax or assessment or
any other amount in respect of such tax or assessment,  such amount shall become
part of the Obligation  and shall accrue  interest at the maximum rate permitted
by applicable law.

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<PAGE>

         (e) Record of  Collateral.  Maintain at its chief  executive  office or
principal place of business a current record of all of the Collateral and permit
Secured  Party or its  representatives  to  inspect  and make  copies  from such
records,  and upon  Secured  Party's  request,  furnish  to  Secured  Party such
documents, lists, descriptions, certificates, and other information with respect
to the  identity,  status,  condition,  terms of,  parties  to, and value of the
Collateral.

         (f) Adverse Claim.  Immediately  notify Secured Party in writing of any
claim,  action,  or proceeding  challenging  the Security  Interest or affecting
title to or any loss or  casualty,  with  respect  to all or any  portion of the
Collateral or the Security  Interest and, at Secured Party's request,  appear in
and defend any such  appropriate  action or proceeding at Debtor's sole cost and
expense.

         (g) Hold Collateral In Trust. While an Event of Default exists, hold in
trust (and not commingle with its other assets) for Secured Party all Collateral
at any time  received  by it and  promptly  deliver  same to Secured  Party upon
Secured  Party's request unless Secured Party at its option gives Debtor written
permission  to retain  that  Collateral.  While an Event of Default  exists,  at
Secured  Party's  request,  the  Collateral so retained shall be marked to state
that it is assigned to Secured  Party and each  instrument  shall be endorsed to
the order of Secured  Party (but failure to so mark or endorse  shall not impair
the Security Interest).

         (h) Perform  Obligations.  Perform all of its  obligations  under or in
connection with the Collateral in accordance with customary  business  practices
and applicable Law.

         (i) Amendment.  Not amend,  alter, or modify,  or permit the amendment,
alteration or modification of, all or any portion (individually or collectively)
of the Collateral in any adverse manner  without  Secured  Party's prior written
consent.

         (j)  Impairment  of  Collateral.  Not do or permit any act which  would
adversely impair all or any portion of the Collateral.

         (k) Default  Under  Collateral.  Immediately  notify  Secured  Party in
writing of any default or event of default by Debtor or, to the best of Debtor's
knowledge,  by any other  party under or in  connection  with all or any portion
(individually  or  collectively)  of the  Collateral  and  immediately  use  its
commercial  efforts to remedy the same or  immediately  demand  that the same be
remedied.

         (l)  Further  Assurances.  From  time to  time  Debtor  shall  promptly
execute,  authorize,  authenticate  and  deliver  to  Secured  Party  all  other
assignments, certificates, supplemental documents, and financing statements, and
all other acts Secured  Party  requests in order to create,  evidence,  perfect,
continue or maintain the existence and priority of the Security  Interest and in
order to perfect the Lien on, and Security  Interest  in, all future  Collateral
including,  without limitation,  (i) amendments to Schedule 1 and/or Schedule 2,
and (ii) the authentication  and filing of such financing  statements as Secured
Party  may  require.  A  carbon,  photographic,  or other  reproduction  of this
Agreement or of any  financing  statement  covering the  Collateral  or any part
thereof  shall be  sufficient  as a  financing  statement  and may be filed as a
financing statement.

     10. Negative  Covenants.  Debtor further  covenants and agrees with Secured
Party that until the Obligation is paid and performed in full, Debtor shall not:

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<PAGE>

         (a) Use Violations.  Debtor will not use, maintain, operate, or occupy,
or allow the use, maintenance,  operation, or occupancy of the Collateral in any
manner which violates any Law.

         (b)  Alterations.  Debtor  will not  commit or permit  any waste of the
Collateral that would diminish its value in any material respect.

         (c) Prohibition on Transfer of Property.  Debtor will not sell,  trade,
transfer, assign, exchange, or otherwise dispose of any of the Collateral except
in the ordinary course of Debtor's business.

         (d) No Further Encumbrances.  Debtor will not create, place, suffer, or
permit to be created or placed or, through any act or failure to act,  acquiesce
in the placing of or allow to remain,  any mortgage,  pledge,  Lien  (statutory,
constitutional,  or contractual),  security interest, encumbrance, or charge on,
or conditional  sale or other title retention  agreement,  regardless of whether
same are expressly  subordinate  to the Liens of this  Agreement with respect to
the Collateral other than Liens incurred under Debtor's senior credit facility.

     11.  Event  of  Default;  Remedies.  Upon the  occurrence  and  during  the
continuance of any default under any  application and agreement for the issuance
of commercial  letter of credit or similar  agreement  executed and delivered in
connection  with the  Import  Letter  of  Credit  Line,  or any  breach  of this
Agreement,  or a Credit Agreement Event of Default (each an "Event of Default"),
Secured  Party has the  following  cumulative  rights  and  remedies  under this
Agreement:

         (a) Debtor's  Agent.  Secured  Party shall be deemed to be  irrevocably
appointed  as Debtor's  agent and  attorney-in-fact  with all right and power to
enforce all of Debtor's  rights and  remedies  under or in  connection  with the
Collateral.  All costs,  expenses and liabilities  incurred and payments made by
Secured  Party  as  Debtor's  agent  and  attorney-in-fact,  including,  without
limitation,  attorney's fees and expenses, shall be considered a loan by Secured
Party to Debtor which shall be repayable on demand and shall accrue  interest at
the  maximum  rate  of  interest  allowed  by  Law  and  shall  be  part  of the
indebtedness secured hereby.

         (b) Obligors.  Secured Party may notify or require each Obligor to make
payment  directly  to Secured  Party and Secured  Party may take  control of the
proceeds paid to Debtor.  Until  Secured Party elects to exercise  these Rights,
Debtor is  authorized  to collect and enforce the  Collateral  and to retain and
expend all  payments  made on the  Collateral.  After  Secured  Party  elects to
exercise these rights,  Secured Party shall have the Right in its own name or in
the name of Debtor to (i)  compromise  or extend time of payment with respect to
all or any  portion of the  Collateral  for such  amounts and upon such terms as
Secured Party may reasonably determine,  (ii) demand, collect,  receive, receipt
for, sue for,  compound,  and give acquittance for any and all amounts due or to
become due with  respect  to  Collateral,  (iii) take  control of cash and other
proceeds  of  any  Collateral,   (iv)  endorse   Debtor's  name  on  any  notes,
acceptances,  checks,  drafts,  money orders,  or other  evidences of payment on
Collateral that may come into Secured Party's possession, (v) sign Debtor's name
on any  invoice  or bill of lading  relating  to any  Collateral,  on any drafts
against Obligors or other Persons making payment with respect to Collateral,  on
assignments and  verifications of accounts or other Collateral and on notices to
Obligors  making  payment with  respect to  Collateral,  (vi) send  requests for
verification  of  obligations  to any  Obligor,  and (vii) do all other acts and
things  reasonably  necessary to carry out the intent of this Agreement.  If any
Obligor  fails to make  payment on any  Collateral  when due,  Secured  Party is
authorized, in its sole discretion,  either in its own name or in Debtor's name,
to take such action as Secured Party shall deem  appropriate  for the collection
of any  amounts  owed with  respect to  Collateral  or upon which a  delinquency
exists. Regardless of any other provision of this Agreement, Secured Party shall
not be liable  for its  failure  to  collect,  or for its  failure  to  exercise
diligence in the collection of, any amounts owed with respect to Collateral, nor
shall he be under any duty  whatsoever  to anyone  except  Debtor to account for
funds that it shall actually receive under this Agreement. A receipt if given by
Secured  Party to any Obligor shall be a full and complete  release,  discharge,
and acquittance to such Obligor,  to the extent of any amount so paid to Secured
Party.  Secured  Party may apply or set off amounts paid on  Collateral  and the
deposits against any liability of Debtor to Secured Party.

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<PAGE>

         (c) UCC Rights. Secured Party may exercise any and all Rights available
to a  secured  party  under the UCC,  in  addition  to any and all other  Rights
afforded by this Agreement, at law, in equity, or otherwise,  including, without
limitation,  (i) requiring  Debtor to assemble all or part of the Collateral and
make it available to Secured  Party at a place to be designated by Secured Party
which is  reasonably  convenient to Debtor and Secured  Party,  (ii) applying by
appropriate  judicial  proceedings for appointment of a receiver for all or part
of the  Collateral,  (iii) applying to the  Obligation  then due and payable any
cash held by Secured Party, (iv) reducing any claim to judgment,  (v) exercising
the rights of offset  against the interest of Debtor in and to every account and
other property of Debtor in Secured Party's possession to the extent of the full
amount of the Obligation  then due and payable,  (vi)  foreclosing  the Security
Interest and any other liens  Secured  Party may have or otherwise  realize upon
any and all of the rights  Secured Party may have in and to the  Collateral,  or
any part  thereof,  and (vii)  bringing  suit or other  proceedings  before  any
Governmental  Authority  either for  specific  performance  of any  covenant  or
condition  contained  herein or in aid of the  exercise of any right  granted to
Secured Party hereunder.

         (d) Notice. Reasonable notification of the time and place of any public
sale of the Collateral,  or reasonable  notification of the time after which any
private sale or other  intended  disposition  of the  Collateral  is to be made,
shall be sent to Debtor and to any other  Person  entitled  to notice  under the
UCC,  provided that, if any of the Collateral  threatens to decline  speedily in
value or is of the type customarily sold on a recognized  market,  Secured Party
may  sell  or  otherwise  dispose  of  the  Collateral   without   notification,
advertisement,  or other  notice of any kind.  It is agreed  that notice sent or
given not fewer than ten (10) calendar days prior to the taking of the action to
which the notice relates is reasonable  notification and notice for the purposes
of this  subsection.  It shall not be necessary  that the  Collateral  be at the
location of the sale.

         (e) Application of Proceeds.  Secured Party shall apply the proceeds of
any sale,  casualty,  condemnation  or other  disposition  of the  Collateral as
follows:  first,  to the  payment  of all its  expenses  incurred  in  retaking,
holding,  and preparing any of the Collateral for sale(s) or other  disposition,
in arranging for such sale(s) or other  disposition,  and in actually selling or
disposing of the same (all of which is part of the Obligation);  second,  toward
repayment  of  amounts  expended  by  Secured  Party  under  Section  12 of this
Agreement;  and third,  toward payment of the balance of the  Obligations in the
order and manner as Secured Party elects.

         (f) Sale.  Secured  Party's sale of less than all the Collateral  shall
not exhaust  Secured  Party's  Rights under this  Agreement and Secured Party is
specifically  empowered to make  successive  sales until all the  Collateral  is
sold.  If the proceeds of a sale of less than all the  Collateral  shall be less
than the Obligations,  this Agreement and the Security  Interest shall remain in
full force and effect as to the unsold portion of the Collateral  just as though
no sale had been  made.  In the  event  any sale  under  this  Agreement  is not
completed or is, in Secured Party's  reasonable  opinion,  defective,  such sale
shall not exhaust  Secured Party's rights under this Agreement and Secured Party
shall have the right to cause a subsequent sale or sales to be made. Any and all
statements  of fact or other  recitals made in any bill of sale or assignment or
other  instrument  evidencing  any  foreclosure  sale under this Agreement as to
nonpayment of the Obligations,  or as to the occurrence of any Event of Default,
or as to Secured  Party's having  declared all of such  Obligation to be due and
payable,  or as to notice of time, place and terms of sale and the properties to
be sold having been duly given, or as to any other act or thing having been duly
done by Secured  Party,  shall be taken as prima facie  evidence of the truth of
the facts so stated and recited.  Secured  Party may appoint or delegate any one
or more Persons as agent to perform any act or acts necessary or incident to any
sale held by Secured Party,  including the sending of notices and the conduct of
sale, but such acts must be done in the name and on behalf of Secured Party.

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<PAGE>

         (g) Existence of Event of Default. Regarding the existence of any Event
of Default for purposes of this  Agreement,  Debtor  agrees that the Obligors on
any Collateral may rely upon written  certification from Secured Party that such
an Event of Default exists. Debtor expressly agrees that Secured Party shall not
be liable to Debtor for any claims, damages, costs, expenses or causes of action
of any nature  whatsoever  in  connection  with,  arising  out of, or related to
Secured Party's exercise of any rights, powers or remedies under this Agreement.

     12. Other Rights of Secured Party.

         (a) Performance.  In the event Debtor fails to preserve the priority of
the Security  Interest in any of the  Collateral,  or, upon the  occurrence  and
during the continuance of an Event of Default, otherwise fails to perform any of
its obligations hereunder with respect to the Collateral, then Secured Party may
(but is not  required  to)  prosecute  or defend  any suits in  relation  to the
Collateral  or take any other action which Debtor is required to take under this
Agreement  or  applicable  Law,  but has  failed  to take.  Any sum which may be
reasonably expended or paid by Secured Party under this subparagraph (including,
without  limitation,  court costs and attorneys'  fees and expenses)  shall bear
interest from the date of  expenditure  or payment at the maximum rate permitted
by applicable law until paid and, together with such interest,  shall be payable
by Debtor to  Secured  Party upon  demand and shall be part of the  indebtedness
secured hereby.

         (b)  Collateral in Secured  Party's  Possession.  If, while an Event of
Default exists,  any Collateral comes into Secured Party's  possession,  Secured
Party may use such  Collateral  for the  purpose of  preserving  it or its value
pursuant to the order of a court of  appropriate  jurisdiction  or in accordance
with any other  Rights  held by Secured  Party in  respect  of such  Collateral.
Debtor  covenants to promptly  reimburse  and pay to Secured  Party,  at Secured
Party's  request,  the  amount of all  expenses  incurred  by  Secured  Party in
connection with its custody and  preservation of such  Collateral,  and all such
expenses,  costs,  taxes,  and other  charges shall bear interest at the maximum
rate permitted by applicable Law until repaid and,  together with such interest,
shall be payable by Debtor to Secured Party upon demand and shall be part of the
indebtedness secured hereby.  However, the risk of accidental loss or damage to,
or diminution in value of, Collateral is on Debtor.  Provided that Secured Party
acts in  accordance  with  all  applicable  Law,  Secured  Party  shall  have no
liability for failure to obtain or maintain insurance,  nor to determine whether
any insurance ever in force is adequate as to amount or as to the risks insured.
With respect to Collateral  that is in the possession of Secured Party,  Secured
Party shall have no duty to fix or preserve Rights against prior parties to such
Collateral and shall never be liable for any failure to use diligence to collect
any amount  payable in respect of such  Collateral,  but shall be liable only to
account to Debtor for what it may actually collect or receive thereon.

     13. Miscellaneous.

         (a) Term.  Upon  full and final  payment  of the  indebtedness  secured
hereby  (other than as a result of Secured  Party  having  exercised  his rights
under this Agreement), this Agreement shall terminate,  provided that no Obligor
on any of the Collateral  shall be obligated to inquire as to the termination of
this  Agreement,  but shall be fully  protected  in making  payment  directly to
Secured  Party,  which  payment  shall be  promptly  paid over to  Debtor  after
termination of this Agreement.

                                       8
<PAGE>

         (b) Actions Not Releases. The Security Interest and Debtor's obligation
and  Secured  Party's  Rights  under  this  Agreement  shall  not  be  released,
diminished, impaired, or adversely affected by the occurrence of any one or more
of the following  events:  (i) the taking or accepting of any other  security or
assurance  for  any or all of the  Obligations,  (ii)  any  release,  surrender,
exchange,  subordination,  or loss of any  security  or  assurance  at any  time
existing  in  connection  with  any  or  all  of  the  Obligations,   (iii)  the
modification  of,  amendment to, or waiver of  compliance  with any terms of any
application  or  agreement  for the issuance of  commercial  letter of credit or
similar agreement executed and delivered in connection with the Import Letter of
Credit  Line,  (iv) the  insolvency,  bankruptcy,  or lack of corporate or trust
power of any  party  at any time  liable  for the  payment  of any or all of the
Obligation,  whether  now  existing or  hereafter  occurring,  (v) any  renewal,
increase,  extension,  or  rearrangement  of  the  payment  of any or all of the
Obligations,  either  with or without  notice to or  consent  of Debtor,  or any
adjustment, indulgence,  forbearance, or compromise that may be granted or given
by Secured  Party to Debtor,  (vi) any neglect,  delay,  omission,  failure,  or
refusal of Secured Party to take or prosecute any action in connection  with any
other agreement,  document,  guaranty,  or instrument  evidencing,  securing, or
assuring  the  payment  of all or any of the  Obligation,  (vii) any  failure of
Secured Party to notify Debtor of any renewal,  extension,  or assignment of the
Obligation or any part thereof,  or the release of any security  under any other
document or  instrument,  or of any other action  taken or refrained  from being
taken by Secured Party against Debtor or any new agreement between Secured Party
and Debtor, it being understood that Secured Party shall not be required to give
Debtor any notice of any kind under any circumstances whatsoever with respect to
or in connection with the Obligation,  including, without limitation,  notice of
acceptance  of this  Agreement or any  Collateral  ever  delivered to or for the
account  of  Secured  Party  under  this   Agreement,   (viii)  the  illegality,
invalidity, or unenforceability of all or any part of the Obligation against any
third  party  obligated  with  respect  thereto  by  reason of the fact that the
Obligation,  or the interest paid or payable with respect  thereto,  exceeds the
amount  permitted  by Law,  the act of  creating  the  Obligation,  or any  part
thereof,  is ultra vires, or the officers,  partners,  or trustees creating same
acted in excess of their  authority,  or for any  other  reason,  or (ix) if any
payment by any party  obligated  with  respect  thereto is held to  constitute a
preference  under  applicable  Laws or for any  other  reason  Secured  Party is
required to refund such payment or pay the amount thereof to someone else.

         (c) Waivers.  Except to the extent expressly otherwise provided in this
Agreement,  Debtor  waives  (i) any Right to  require  Secured  Party to proceed
against any other Person, to exhaust its Rights in the Collateral,  or to pursue
any  other  Right  which  Secured  Party  may have,  (ii)  with  respect  to the
Obligation,  presentment and demand for payment,  protest, notice of protest and
nonpayment,  notice of acceleration,  and notice of the intention to accelerate,
and (iii) all Rights of marshalling in respect of any and all of the Collateral.

         (d) Financing Statement. Secured Party shall be entitled at any time to
file this Agreement or a carbon,  photographic,  or other  reproduction  of this
Agreement,  as a financing statement,  but the failure of Secured Party to do so
shall not impair the validity or enforceability of this Agreement.

         (e)  Amendments.  This  Agreement  may  only be  amended  by a  writing
executed by Debtor and Secured Party.

         (f) Multiple Counterparts. This Agreement may be executed in any number
of  counterparts  with the same effect as if all signatories had signed the same
document.  All counterparts must be construed together to constitute one and the
same Agreement.

         (g) Parties Bound.  This  Agreement  shall be binding on Debtor and its
successors  and assigns and shall inure to the benefit of Secured  Party and its
successors and assigns.

         (h) Assignment.  Debtor may not,  without Secured Party's prior written
consent,  assign any Rights, duties, or obligations under this Agreement. In the
event of an assignment of all or part of the Obligation,  the Security  Interest
and other Rights and benefits under this Agreement,  to the extent applicable to
the  part  of  the  Obligations  so  assigned,   may  be  transferred  with  the
Obligations.

                                       9
<PAGE>

         (i) Notices.  Any notice or  communication  required or permitted under
this  Agreement  must be given  to the  address  specified  under  each  party's
signature  below.  Any notice or demand given  hereunder shall be deemed to have
been  given  and  received  (a) when  actually  received  by the  recipient,  if
delivered  in  person,  or (b) if  mailed to the  address  below  (whether  ever
received or not),  two business  days after  deposit in the U.S.  Mail,  postage
prepaid.

         (j) Amendment and  Restatement.  This Agreement  amends and restates in
its entirety the Existing Security  Agreement and shall not be construed to be a
novation of the Existing Security Agreement.

         (k)  Governing  Law.  THIS   AGREEMENT  MUST  BE  CONSTRUED,   AND  ITS
PERFORMANCE ENFORCED, UNDER TEXAS LAW.

                     [Signatures appear on following page.]

                                       10
<PAGE>

     EXECUTED as of the date set forth in the preamble.

                                       DEBTOR:

                                       CONN APPLIANCES, INC., a Texas
                                       corporation

                                       By:   /s/ David R. Atnip
                                          --------------------------------------
                                           David R. Atnip, Secretary/Treasurer

                                       Address:

                                       P.O. Box 2358
                                       Beaumont, TX 77704-2358
                                       Facsimile No.: (409) 832-4967
                                       Attention: Thomas J. Frank, CEO

                                       CAI, L.P., a Texas limited partnership

                                       By:   Conn Appliances, Inc., its sole
                                             general partner

                                       By:   /s/ David R. Atnip
                                          --------------------------------------
                                           David R. Atnip, Secretary/Treasurer

                                       Address:

                                       P.O. Box 2358
                                       Beaumont, TX 77704-2358
                                       Facsimile No.: (409) 832-4967
                                       Attention: David R. Atnip

                                       SECURED PARTY:

                                       BANK OF AMERICA, N.A., a Texas
                                       corporation

                                       By:   /s/ Gary L. Mingle
                                          --------------------------------------
                                           Gary L. Mingle, Senior Vice President

                                       11EXHIBIT 10.25

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

                    LETTER OF CREDIT REIMBURSEMENT AGREEMENT

                          Dated as of September 1, 2002

                                      among

                                   CAI, L.P.,
                              CONN FUNDING II, L.P.

                                       and

                                 SUNTRUST BANK,
                          as Letter of Credit Provider

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

<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS

                                                                                       Page

<S>                                                                                      <C>
ARTICLE I      DEFINITIONS................................................................1

     Section 1.1       Definitions........................................................1

ARTICLE II     ISSUANCE OF LC; REIMBURSEMENT OBLIGATION...................................1

     Section 2.1       Issuance of LC.....................................................1

     Section 2.2       Disbursements......................................................2

     Section 2.3       Reimbursement......................................................2

     Section 2.4       Facility Fee.......................................................3

     Section 2.5       No Liability of LC Provider........................................3

     Section 2.6       Surrender of LC....................................................4

     Section 2.7       Conditions Precedent to Issuance...................................4

     Section 2.8       Increased Capital Costs............................................5

     Section 2.9       Taxes..............................................................6

     Section 2.10      Obligation Absolute................................................7

     Section 2.11      Events of Default..................................................8

ARTICLE III    REPRESENTATIONS, WARRANTIES AND COVENANTS..................................9

     Section 3.1       Representations and Warranties of the Applicant....................9

     Section 3.2       Covenants of the Applicant........................................10

ARTICLE IV     MISCELLANEOUS.............................................................12

     Section 4.1       Payments..........................................................12

     Section 4.2       Expenses..........................................................12

     Section 4.3       Indemnity.........................................................12

     Section 4.4       Notices...........................................................13

     Section 4.5       Governing Law; Waiver of Jury Trial...............................13

     Section 4.6       Waivers...........................................................13

     Section 4.7       Severability......................................................14

     Section 4.8       Term..............................................................14

     Section 4.9       Successors and Assigns............................................14

     Section 4.10      Counterparts......................................................14

     Section 4.11      Further Assurances................................................14

     Section 4.12      Survival of Representations and Warranties........................14
</TABLE>

                                       i
<PAGE>

<TABLE>
<CAPTION>
                                TABLE OF CONTENTS
                                   (continued)
                                                                                       Page

<S>                                                                                      <C>
     Section 4.13      Obligation........................................................14

     Section 4.14      Headings..........................................................15

     Section 4.15      No Bankruptcy Petition Against the Issuer.........................15
</TABLE>

                                       ii
<PAGE>

                    LETTER OF CREDIT REIMBURSEMENT AGREEMENT

     THIS LETTER OF CREDIT  REIMBURSEMENT  AGREEMENT,  dated as of  September 1,
2002 (as amended,  supplemented  or otherwise  modified from time to time,  this
"Agreement") is entered into by and among CAI, L.P.  ("CAILP"),  a Texas limited
partnership,  CONN FUNDING II, L.P. (the "Issuer"),  a Texas limited partnership
and SUNTRUST BANK, a Georgia banking corporation (the "LC Provider").

                              W I T N E S S E T H:
                               - - - - - - - - - -

     WHEREAS, pursuant to the terms and conditions of the Base Indenture,  dated
as of September  1, 2002 (as  amended,  amended and  restated,  supplemented  or
otherwise modified from time to time, the "Base Indenture"),  between the Issuer
and Wells Fargo Bank Minnesota,  National Association (the "Trustee"), CAILP and
the Issuer are required to obtain a letter of credit to provide  credit  support
for the Servicer's  obligations to deposit Collections  pursuant to Article 5 of
the Base Indenture; and

     WHEREAS,  CAILP and the Issuer  (collectively,  the "Applicant")  desire to
obtain, and, subject to and in accordance with the terms of this Agreement,  the
LC  Provider  has  agreed  to  provide,  an  irrevocable  letter of  credit,  in
substantially  the form of Exhibit A attached  hereto (such letter of credit and
any successor letter of credit as provided in such letter of credit, herein, the
"LC"),  to provide  credit  support for the  Servicer's  obligations  to deposit
Collections pursuant to Article 5 of the Base Indenture;

     NOW, THEREFORE, the parties hereto agree as follows:

                                   ARTICLE I

                                   DEFINITIONS

     Section 1.1  Definitions.  As used in this Agreement and unless the context
requires a different  meaning,  capitalized  terms not otherwise  defined herein
shall  have the  meanings  assigned  to such  terms in  Section  1.1 of the Base
Indenture,  as the same may be amended,  supplemented or otherwise modified from
time to time in accordance with the terms of the Indenture.

                                   ARTICLE II

                                 ISSUANCE OF LC;
                            REIMBURSEMENT OBLIGATION

     Section 2.1 Issuance of LC. (a) The LC Provider hereby agrees, on the terms
and subject to the conditions  hereinafter  set forth,  to issue to the Trustee,
for the benefit of the Lender,  the LC in an initial amount equal to $10,000,000
(the "LC Commitment") for a term expiring on the earlier of (i) August 31, 2003,
or (ii) the date on which there are no amounts  outstanding  under the Indenture
(the "LC Expiration Date").

<PAGE>

     (b) If a  successor  Trustee is  appointed  under the  Indenture,  promptly
following  the  appointment  of such  successor  Trustee and upon  receipt of an
Instruction to Transfer  substantially  in the form of Annex B to the LC, the LC
Provider  shall  deliver  to  such  successor  Trustee,  in  exchange  for,  and
contemporaneously  with  the  surrender  of,  the  outstanding  LC  held  by the
predecessor  Trustee, a substitute letter of credit substantially in the form of
Exhibit A hereto, having terms identical to the then outstanding LC but in favor
of such successor Trustee.

     (c) If the Applicant  wishes to extend the LC Expiration  Date for purposes
of this Agreement and the LC, the Applicant  shall give the LC Provider  written
notice to such effect not later than the date 90 days prior to the LC Expiration
Date as then in  effect.  If the  Applicant  shall  make  such  request,  the LC
Provider  shall notify the  Applicant and the Trustee in writing of its decision
whether or not to so extend the LC Expiration  Date,  which decision shall be in
its sole and absolute  discretion,  not later than 30 days after the notice from
the  Applicant  referred to above,  stating  that the LC Provider has or has not
agreed to extend such LC Expiration  Date for an additional  period as specified
by the LC Provider  and, if the LC Provider does so consent,  the  conditions of
such consent (including conditions relating to legal  documentation).  If the LC
Provider  shall not so notify the Applicant and the Trustee,  it shall be deemed
not to have consented to such request.  If the LC Provider decides to extend the
LC Expiration  Date, the LC Provider  shall either (i) issue to the Trustee,  in
exchange for, and upon receipt of, the then outstanding LC, a substitute  letter
of credit having terms  substantially  the same as the then  outstanding  LC and
with a face  amount  equal to the LC Amount but  expiring  on the LC  Expiration
Date,  as so extended or (ii)  deliver to the Trustee an  amendment  to the then
outstanding LC to reflect such extension of the LC Expiration Date.

     Section  2.2  Disbursements.  Upon  presentation  by the  Trustee to the LC
Provider of a Certificate of Credit Demand (the "Credit  Demand") in the form of
Annex A to the LC, and subject to the terms and  conditions set forth herein and
in the LC, the LC Provider shall make a disbursement  (such  disbursement  being
referred to herein as an "LOC Credit  Disbursement")  at the time, in the manner
and to the account  specified in the Credit Demand,  up to the lesser of (i) the
full amount of such Credit  demand but in an aggregate  amount not exceeding the
LC Amount  (as  defined  in the LC) and (ii) the LC  Available  Amount  (the "LC
Available Amount").

     Section 2.3 Reimbursement.  The Applicant, jointly and severally, shall pay
to the LC  Provider  on demand on and after  each date on which the LC  Provider
shall pay any LOC  Credit  Disbursement  (i) an amount  equal to such LOC Credit
Disbursement  plus (ii) interest on any amount remaining unpaid by the Applicant
to the LC Provider  under clause (i) of this Section 2.3,  from the date of such
LOC Credit  Disbursement  until payment in full thereof,  at a rate equal to the
Alternate Reference Rate plus 2.0%.

"Alternate Reference Rate" means, on any date, a fluctuating rate of interest
per annum equal to the higher of:

          (i) the rate of interest most recently announced by LC Provider at its
     principal office in Atlanta, Georgia as its prime rate (it being understood
     that at any one  time  there  shall  exist  only  one  such  prime  rate so
     announced), which rate is not necessarily intended to be the lowest rate of
     interest determined by LC Provider in connection with extensions of credit;
     or

                                       2
<PAGE>

          (ii) the Federal  Funds Rate most  recently  determined by LC Provider
     plus 0.50% per annum.

"Federal Funds Rate" means, for any period,  the per annum rate set forth in the
weekly   statistical   release   designated  as  H.15(519),   or  any  successor
publication,  published  by  the  Federal  Reserve  Board  (including  any  such
successor,  "H.15(519)")  for such  day  opposite  the  caption  "Federal  Funds
(Effective)."  If on any  relevant  day  such  rate  is  not  yet  published  in
H.15(519),  the rate for  such  day  will be the  rate  set  forth in the  daily
statistical  release  designated as the Composite 3:30 p.m.  Quotations for U.S.
Government Securities,  or any successor publications,  published by the Federal
Reserve Bank of New York (including any such successor, the "Composite 3:30 p.m.
Quotations")  for such day under the caption  "Federal Funds Effective Rate." If
on any  relevant  day the  appropriate  rate  for such  previous  day is not yet
published in either  H.15(519) or the Composite 3:30 p.m.  Quotations,  the rate
for such day will be the  arithmetic  mean as  determined  by LC Provider of the
rates for the last transaction in overnight Federal funds arranged prior to 9:00
a.m.  (New York  time) on that day by each of three  leading  brokers of Federal
funds transactions in New York City selected by LC Provider.

     Section 2.4  Facility  Fee.  CAILP shall pay to the LC Provider a letter of
credit fee (the "Facility Fee"),  which Facility Fee shall be due and payable in
quarterly  installments  in arrears (or, if an LC Event of Default has occurred,
six months in advance) on the Payment Date  following  the end of each  calendar
quarter,  with each such installment being in an amount equal to 1.85% (plus, if
an LC Event of Default has occurred,  1.0%) per annum of the weighted average LC
Amount (as  defined in the LC) during such  calendar  quarter  (computed  on the
basis of a 360-day  year and the  actual  number of days  during  such  calendar
quarter). In addition,  CAILP shall pay to the LC Provider any amounts necessary
to  reimburse  the LC Provider  for  amendment,  transfer  or drawing  costs and
miscellaneous expenses and documentary and processing charges in accordance with
the LC  Provider's  standard  schedule of such  charges in effect at the time of
amendment, transfer or drawing, as the case may be, of the LC.

     Section 2.5 No Liability of LC Provider. The Applicant assumes all risks of
acts or omissions of the Trustee and any other  beneficiary or transferee of the
LC with  respect to its use of the LC.  Neither the LC  Provider  nor any of its
respective employees,  officers or directors shall be liable or responsible for:
(a) the use which may be made of the LC or any acts or  omissions of the Trustee
and any transferee of the LC; (b) the validity or  genuineness of documents,  or
of any endorsement thereon,  even if such documents should prove to be in any or
all  respects  invalid,  fraudulent  or forged;  (c)  payment by the LC Provider
against  presentation of documents which do not comply with the terms of the LC,
including failure of any document to bear any reference or adequate reference to
the LC,  provided the LC Provider has received a Credit  Demand from the Trustee
which appears regular on its face; or (d) any other circumstances  whatsoever in
making or failing to make payment under the LC; provided,  however,  that the LC
Provider  shall be liable to the  Applicant,  to the  extent of any  direct,  as
opposed to consequential, damages suffered by the Applicant which were caused by
(i) the LC  Provider's  willful  misconduct,  bad faith or gross  negligence  in
determining  whether  documents  presented under the LC comply with the terms of
the LC or (ii) the LC  Provider's  bad faith or gross  negligence  in failing to
make  or  willful  failure  to  make  lawful  payment  under  the LC  after  the
presentation  to the  LC  Provider  by the  Trustee  of a  certificate  strictly
complying with the terms and conditions of the LC (it being  understood  that if
the Applicant  requests the LC Provider to take any action,  or fail to take any
action,  described  in clause (i) or (ii) of this  Section  2.5, the LC Provider
shall  not be liable  to the  Applicant  therefor).  In  furtherance  and not in
limitation of the foregoing, the LC Provider may accept documents that appear on
their face, absent manifest error, to be in order,  without  responsibility  for
further investigation.

                                       3
<PAGE>

     Section 2.6  Surrender of LC.  Provided that the LC Provider is not then in
default under the LC by reason of its having wrongfully failed to honor a demand
for payment  previously made by the Trustee under the LC, the LC Provider or the
Applicant  shall  instruct the Trustee to surrender the LC to the LC Provider on
the  earliest  of (i) the LC  Expiration  Date,  (ii) the  date on which  the LC
Provider honors a Credit Demand equal to the then available LC Amount, and (iii)
the date on which the LC Provider  receives written notice from the Trustee that
an alternate  letter of credit or other credit facility has been substituted for
the LC.

     Section 2.7  Conditions  Precedent to Issuance.  The  following  constitute
conditions  precedent to the  effectiveness of this Agreement and the obligation
of the LC Provider to execute and to deliver to the Trustee the LC:

          (a) On the date of execution  and delivery of this  Agreement  and the
     LC, all  representations  and warranties of the Applicant contained in this
     Agreement shall be true and correct in all material respects.

          (b) On the date of the  execution  and delivery of this  Agreement and
     the LC, and after giving effect to the  transactions  contemplated  by this
     Agreement and the Indenture, there shall not have occurred a Pay Out Event,
     a Potential  Payout  Event,  an Event of  Default,  a Default or a Servicer
     Default.

          (c) The LC Provider shall have received the favorable written opinions
     of counsel to the  Applicant  covering  such matters as the LC Provider may
     reasonably request.

          (d) The LC  Provider  shall  have  received  (i) copies of each of the
     organizational documents of the Applicant,  each certified by the Secretary
     of State of the State of the Applicant's jurisdiction,  (ii) resolutions of
     the  Applicant's  general  partners'  Board of  Directors  authorizing  the
     execution,  delivery  and  performance  of this  Agreement  and  the  other
     Transaction   Documents  to  which  the  Applicant  is  a  party  (and  the
     procurement  of the LC),  certified as of the Closing Date by an officer of
     the Applicant,  (iii)  incumbency  certificates of the Applicant's  general
     partners  with  respect to its  officers,  agents or other  representatives
     authorized  to  execute  this  Agreement  and (iv)  executed  copies of the
     Transaction  Documents,  together with evidence reasonably  satisfactory to
     the LC Provider that all  conditions  precedent to the  obligations  of the
     parties thereunder have been satisfied.

                                       4
<PAGE>

          (e) The LC  Provider  shall be  satisfied  with the  final  terms  and
     conditions of the transactions  contemplated  hereby and by the Transaction
     Documents,  including,  without limitation,  all legal aspects thereof; and
     all  documentation  relating  to the  transactions  shall  be in  form  and
     substance reasonably satisfactory to the LC Provider.

          (f)  The LC  Provider  shall  be  satisfied  with  the  organizational
     structure and capitalization of the Applicant.

          (g) On the date of the  execution  and delivery of this  Agreement and
     the LC,  there  shall be no  action,  suit,  investigation,  litigation  or
     proceeding   pending  against  or,  to  the  knowledge  of  the  Applicant,
     threatened   against  or  affecting  the  Applicant  before  any  court  or
     arbitrator  or any  governmental  authority  that (A)  would be  reasonably
     likely to have a Material Adverse Effect with respect to the Applicant,  or
     (B) which in any manner  draws into  question  the  legality,  validity  or
     enforceability  of this Agreement or any other  Transaction  Document,  the
     consummation of the  transactions  contemplated  hereby or thereby,  or the
     ability of any Person to comply with any of the respective  terms hereunder
     or thereunder.

          (h) All governmental and third party consents, actions, authorizations
     and approvals  necessary in  connection  with this  Agreement,  the LC, the
     Transaction  Documents or the transactions  contemplated  hereby or thereby
     shall have been obtained (without the imposition of any conditions that are
     not, in its reasonable  judgment,  acceptable to the LC Provider) and shall
     remain in effect; all applicable waiting periods shall have expired without
     any action being taken by any competent authority; and no law or regulation
     shall be applicable that restrains,  prevents or imposes materially adverse
     conditions upon this Agreement or the LC or the  transactions  contemplated
     hereby or thereby.

          (i)  The  LC  Provider  shall  have  received  such  other   documents
     (including,  without limitation, an executed copy (or duplicate thereof) of
     each other Transaction Document)  certificates,  instruments,  approvals or
     opinions as the LC Provider may reasonably request.

          (j) The  Applicant  shall  have  paid  the  first  installment  of the
     Facility Fee.

     Section 2.8 Increased  Capital Costs. (a) In the event that the LC Provider
shall have determined  that the adoption of any law,  treaty,  governmental  (or
quasi-governmental)  rule,  regulation,  guideline  or order  regarding  capital
adequacy, or any change therein or in the interpretation or application thereof,
or compliance by the LC Provider with any request or directive regarding capital
adequacy  (whether  or not having the force of law and whether or not failure to
comply therewith would be unlawful) from any central bank or governmental agency
or body having  jurisdiction,  does or shall have the effect of  increasing  the
amount of capital  required to be  maintained by the LC Provider with respect to
the  issuance  or  maintenance  of the  LC,  then  the  Applicant,  jointly  and
severally, shall from time to time, within ten days of written notice and demand
from the LC Provider,  pay to the LC Provider  additional  amounts sufficient to
compensate the LC Provider for the cost of such additional required capital.

                                       5
<PAGE>

     (b) If by reason of (i) any change in  applicable  law,  regulation,  rule,
decree  or  regulatory  requirement  or  any  change  in the  interpretation  or
application  by any judicial or  regulatory  authority  of any law,  regulation,
rule,  or (ii)  compliance  by the LC Provider  with any  direction,  request or
requirement  (whether  or not  having  the  force  of law)  of any  Governmental
Authority or monetary authority including,  without limitation,  Regulation D of
the Federal  Reserve  Board as from time to time in effect and any  successor to
all or a portion thereof establishing reserve requirements:

     (A)  the  LC  Provider  shall  be  subject  to any  tax,  levy,  charge  or
          withholding  of any  nature  or to  any  variation  thereof  or to any
          penalty  with  respect  to  the  maintenance  or  fulfillment  of  its
          obligations  under this Agreement,  whether  directly or by such being
          imposed on or suffered  by the LC Provider  (except for changes in the
          rate of tax on the overall net income of the LC Provider);

     (B)  any reserve, deposit or similar requirement is or shall be applicable,
          imposed or modified in respect of the LC; or

     (C)  there  shall  be  imposed  on  the LC  Provider  any  other  condition
          regarding the LC;

and the result of the foregoing is to directly or  indirectly  increase the cost
to the LC  Provider  of issuing or  maintaining  the LC, or to reduce the amount
receivable in respect thereof by the LC Provider,  then and in any such case the
LC Provider  may, at any time within a reasonable  period  after the  additional
cost is incurred or the amount received is reduced, notify the Applicant and the
Applicant shall, jointly and severally, pay, within ten Business Days of demand,
such  amounts  as the  LC  Provider  may  reasonably  deem  to be  necessary  to
compensate the LC Provider for such additional cost or reduced receipt, together
with  interest  on such  amount  from the date  demanded  until  payment in full
thereof at a rate equal at all times to the Alternate Reference Rate.

     (c) The determination by the LC Provider of any amount due pursuant to this
Section 2.8 shall be contained in a certificate  setting  forth the  calculation
thereof in reasonable  detail,  which  certificate  shall be delivered by the LC
Provider to the Applicant and shall,  in the absence of manifest error, be final
and conclusive and binding on all of the parties hereto.

     Section 2.9 Taxes.  (a) All payments by the  Applicant of principal of, and
interest on, LOC Credit Disbursements and all other amounts payable hereunder by
the  Applicant  shall be made free and clear of and  without  deduction  for any
present or future  income,  excise,  stamp or  franchise  taxes and other taxes,
fees, duties,  withholdings or other charges of any nature whatsoever imposed by
any taxing  authority,  but  excluding  franchise  taxes and taxes imposed on or
measured by the LC Provider's  net income or receipts (such  non-excluded  items
being called  "Taxes").  In the event that any withholding or deduction from any
payment to be made by the  Applicant  hereunder  is  required  in respect of any
Taxes  pursuant to any applicable  law, rule or  regulation,  then the Applicant
will:

               (i) pay  directly  to the  relevant  authority  the  full  amount
          required to be so withheld or deducted;

                                       6
<PAGE>

               (ii) promptly  forward to the LC Provider an official  receipt or
          other  documentation   reasonably  satisfactory  to  the  LC  Provider
          evidencing such payment to such authority; and

               (iii) pay to the LC Provider such additional amount or amounts as
          is necessary to ensure that the net amount actually received by the LC
          Provider  will  equal  the full  amount  the LC  Provider  would  have
          received had no such withholding or deduction been required.

Moreover,  if any Taxes are  directly  asserted  against  the LC  Provider  with
respect to any payment  received by the LC Provider  hereunder,  the LC Provider
may pay such Taxes and the Applicant shall promptly pay such additional  amounts
(including  any  interest or  expenses)  as is  necessary  in order that the net
amount  received by the LC Provider  after the payment of such Taxes  (including
any Taxes on such  additional  amount)  shall  equal the amount the LC  Provider
would have received had not such Taxes been asserted.

     (b) If the  Applicant  fails to pay any  Taxes of which the  Applicant  has
received notice when due to the appropriate  taxing  authority or fails to remit
to the LC Provider the required receipts or other required documentary evidence,
the Applicant  shall,  jointly and severally,  indemnify the LC Provider for any
incremental  Taxes,  interest  or  penalties  that may become  payable by the LC
Provider as a result of any such failure.

     Section 2.10  Obligation  Absolute.  The obligations of the Applicant under
this Agreement and any other agreement or instrument relating to the LC shall be
irrevocable,  and shall be paid  strictly in  accordance  with the terms of this
Agreement  and the Indenture  and such other  agreement or instrument  under all
circumstances, including, without limitation, the following circumstances:

          (a) any lack of validity or enforceability  of this Agreement,  the LC
     or any other Transaction Document;

          (b) any change in the time,  manner or place of payment  of, or in any
     other terms of, all or any of the  obligations  of the Applicant in respect
     of the LC or of the Applicant under any other amendment or waiver of or any
     consent to departure from all or any of the Transaction Documents;

          (c) the existence of any claim, set-off,  defense or other right which
     the  Applicant  may have at any  time  against  the  Trustee  or any  other
     beneficiary  or any  transferee  of the LC (or any persons or entities  for
     whom the  Trustee,  any such  beneficiary  or any  such  transferee  may be
     acting),  or any other person or entity,  whether in  connection  with this
     Agreement, the transactions contemplated hereby or by any other Transaction
     Document or any unrelated transaction;

          (d) any statement or any other document  presented under the LC proven
     to be forged,  fraudulent,  invalid or  insufficient  in any respect or any
     statement therein being untrue or inaccurate in any respect;

                                       7
<PAGE>

          (e) payment by the LC Provider under the LC against  presentation of a
     draft or  certificate  which  does  not  comply  with the  terms of the LC,
     provided that the LC Provider has received a Credit Demand from the Trustee
     which appears regular on its face;

          (f) any exchange,  release or non-perfection of any collateral, or any
     release  or  amendment  or  waiver  of or  consent  to  departure  from any
     guarantee, for all or any of the obligations of the Applicant in respect of
     the LC; or

          (g) any other  circumstance  or happening  whatsoever,  whether or not
     similar to any of the foregoing,  including,  without limitation, any other
     circumstance  that might otherwise  constitute a defense available to, or a
     discharge of, the Applicant or a guarantor, but excluding in any event, the
     bad faith,  gross  negligence or willful  misconduct of the LC Provider and
     the defense of payment by the Applicant.

     Section 2.11 Events of Default.  Upon the occurrence and continuance of any
of the following events (herein referred to as a "LC Event of Default"):

          (a) the  Applicant  shall  fail to pay to the LC  Provider  any unpaid
     principal  amount due and payable by the Applicant  under this Agreement in
     respect of any LOC Credit  Disbursement  within five  Business  Days of the
     date when such amount is due;

          (b) the Applicant shall fail to pay any unpaid interest, fees or other
     amounts due and payable by the Applicant under this Agreement,  within five
     Business  Days of the date when such  interest,  fees or other  amounts are
     due;

          (c)  the  Applicant  shall  fail  to  observe  or  perform  any of the
     covenants  contained in Section 3.2 and, in the case of covenants set forth
     in Section  3.2(a),  such failure shall  continue  unremedied for the grace
     period, if any, set forth in the applicable Transaction  Documents,  and in
     the case of any other  covenant set forth in Section 3.2 such failure shall
     continue unremedied for thirty (30) days;

          (d)  any  representation,   warranty  or  certification  made  by  the
     Applicant  in this  Agreement or any other  Transaction  Document or in any
     certificate  delivered  pursuant to this Agreement or any other Transaction
     Document  shall  prove to have been  incorrect  when made  which  continues
     unremedied  for a period of 30 days  after the date on which the  Applicant
     has knowledge or notice thereof;

          (e) a final  judgment or judgments  for the payment of money in excess
     of $250,000 in the aggregate  shall have been rendered  against the Issuer,
     the  Applicant,  any  Originator or Parent and the same shall have remained
     unsatisfied  and in effect,  without stay of execution,  for a period of 30
     consecutive days after the period for appellate review shall have elapsed;

          (f) any event of default (not cured or waived within ten (10) Business
     Days) under (A) the Retailer Credit Agreement,  (B) any inventory financing
     agreement  between any lender and the Applicant,  the Parent or any Seller,
     or (C) any  indenture,  credit  or loan  agreement  or other  agreement  or
     instrument of any kind pursuant to which Indebtedness of the Applicant, the
     Parent or Seller in an aggregate  principal  amount in excess of $1,000,000
     is outstanding  or by which the same is evidenced,  shall have occurred and
     be continuing;

                                       8
<PAGE>

          (g) a Pay Out Event,  Servicer  Default or Event of Default  under the
     Transaction Documents shall have occurred and be continuing;

then,  the LC Provider,  may (a) to the extent demand is not otherwise  made, by
notice to the  Applicant and the Trustee  declare the  principal  amounts of all
outstanding  LOC  Credit  Disbursements  to be due and  payable,  together  with
accrued interest thereon and all other sums, payable by the Applicant  hereunder
whereupon  the same shall become due and payable  without  presentment,  demand,
protest, or further notice of any kind, all of which are hereby expressly waived
by the  Applicant  and (b) take any  other  action  permitted  to be taken by it
hereunder,  under any other  Transaction  Document  or under  applicable  law or
otherwise.

                                  ARTICLE III

                    REPRESENTATIONS, WARRANTIES AND COVENANTS

     Section 3.1  Representations  and Warranties of the Applicant.  In order to
induce LC  Provider  to enter  into  this  Agreement  and to issue  the LC,  the
Applicant hereby represents and warrants to the LC Provider as follows:

     (a)  Organization  and Good  Standing,  etc.  The  Applicant  has been duly
organized and is existing as a limited  partnership  in good standing  under the
laws of the State of Texas,  with power and authority to own its  properties and
to conduct its business as such properties are presently owned and such business
is  presently  conducted.  The  Applicant  is duly  licensed or  qualified to do
business as a foreign limited  partnership and the Applicant is in good standing
in the  jurisdiction  where its principal  place of business and chief executive
office are located and in each other  jurisdiction in which the failure to be so
licensed or  qualified  would be  reasonably  likely to have a Material  Adverse
Effect.

     (b) Power and  Authority;  Due  Authorization.  The  Applicant  has (a) all
necessary power,  authority and legal right to (i) execute,  deliver and perform
its  obligations  under  this  Agreement,  and (ii) to  borrow  on the terms and
subject to the  conditions  herein  provided,  and (b) duly  authorized,  by all
necessary  corporate  or  partnership  action (as  applicable),  the  execution,
delivery and performance of this Agreement.

     (c) No Violation. The consummation of the transactions contemplated by this
Agreement and the  fulfillment  of the terms hereof will not (a) conflict  with,
result in any breach of any of the terms and provisions of, or constitute  (with
or without notice or lapse of time or both) a default under, (i) the certificate
of  limited  partnership  or  partnership  agreement  of  the  Applicant  or the
certificate  or  articles of  incorporation  or  organization  or by-laws of the
Applicant's general partner, or (ii) any indenture, loan agreement,  pooling and
servicing agreement, receivables purchase agreement, mortgage, deed of trust, or
other  agreement or  instrument to which the Applicant is a party or by which it
or any of its  properties  is bound,  (b) result in or require  the  creation or
imposition of any Adverse Claim upon any of its properties pursuant to the terms
of  any  such  indenture,  loan  agreement,  pooling  and  servicing  agreement,
receivables purchase agreement,  mortgage,  deed of trust, or other agreement or
instrument,  or (c) violate any law or any order, rule, or regulation applicable
to the Applicant or of any court or of any federal,  state or foreign regulatory
body,  administrative  agency,  or  other  governmental  instrumentality  having
jurisdiction over the Applicant or any of its properties.

                                       9
<PAGE>

     (d) Validity and Binding  Nature.  This  Agreement is the legal,  valid and
binding  obligation  of the  Applicant  enforceable  against  the  Applicant  in
accordance with its respective terms, except as enforceability may be limited by
applicable  bankruptcy,  insolvency,  reorganization,  moratorium or similar law
affecting creditors' rights generally and by general principles of equity.

     (e) Government Approvals.  No authorization or approval or other action by,
and no notice to or filing with, any  governmental  authority or regulatory body
required for the due execution, delivery or performance by the Applicant of this
Agreement remains unobtained or unfiled.

     (f) Financial Condition. Since January 31, 2002, no event has occurred that
has had, or is reasonably likely to have, a Material Adverse Effect.

     (g) Accuracy of Information.  All factual written information heretofore or
contemporaneously  furnished by the  Applicant to LC Provider for purposes of or
in  connection  with this  Agreement  is,  and all other such  factual,  written
information  hereafter  furnished by the Applicant to LC Provider pursuant to or
in connection  with this  Agreement will be, true and accurate in every material
respect  on the date as of which  such  information  is dated or  certified.  No
information  contained in any report or certificate  delivered  pursuant to this
Agreement  shall be  incomplete by omitting to state a material fact or any fact
necessary to make the statements contained therein not misleading on the date as
of which such information is dated or certified.

     (h) No Actions,  Suits.  There are no actions,  suits or other  proceedings
(including  matters  relating  to  environmental  liability)  pending or, to its
knowledge,  threatened  against  or  affecting  the  Applicant  or  any  of  its
respective  properties,  by or  before  any  governmental  authority  which,  if
adversely  determined  (individually  or in the aggregate),  may have a material
adverse effect on the financial condition of the Applicant.

     Section 3.2 Covenants of the  Applicant.  So long as the LC has not expired
or any amount is owing to the LC Provider hereunder,  the Applicant agrees that,
unless at any time the LC Provider shall otherwise expressly consent in writing,
it will:

          (a) Transaction Documents.  Comply with all covenants of the Applicant
     set forth in the other Transaction Documents to which it is a party.

                                       10
<PAGE>

          (b) Reporting Requirements.  Furnish, or cause to be furnished, to the
     LC Provider:

               (i) Audit  Report.  As soon as available  and in any event within
          ninety  (90)  days  after the end of each  Fiscal  Year of  Parent,  a
          balance  sheet of Parent as of the end of such year and  statements of
          income and retained earnings and of source and application of funds of
          Parent, along with consolidating statements, for the period commencing
          at the end of the previous Fiscal Year and ending with the end of such
          year, in each case setting forth comparative  figures for the previous
          Fiscal Year,  certified  without  material  qualification  in a manner
          satisfactory  to the  Trustee  by Ernst & Young  or  other  nationally
          recognized  independent public accountants  acceptable to the Trustee,
          together with a certificate  of such  accounting  firm stating that in
          the course of the regular audit of the business of Parent, which audit
          was  conducted  in  accordance  with GAAP,  such  accounting  firm has
          obtained no knowledge that an Event of Default, Default, Pay Out Event
          or Potential Pay Out Event has occurred and is  continuing,  or if, in
          the  opinion  of such  accounting  firm,  such an  Event  of  Default,
          Default,  Pay Out Event or Potential Pay Out Event has occurred and is
          continuing, a statement as to the nature thereof;

               (ii) Quarterly Statements.  As soon as available and in any event
          within  forty  five (45) days  after the end of each  fiscal  quarter,
          quarterly  balance  sheets  and  quarterly  statements  of source  and
          application  of funds and quarterly  statements of income and retained
          earnings of Parent,  certified  by the  Responsible  Officer of Parent
          (which   certification  shall  state  that  such  balance  sheets  and
          statements  fairly  present  the  financial  condition  and results of
          operations  for  such  fiscal  quarter,   subject  to  year-end  audit
          adjustments), delivery of which balance sheets and statements shall be
          accompanied  by a Conn  Officer's  Certificate  to the effect  that no
          Event of Default,  Default,  Pay Out Event or Potential  Pay Out Event
          has occurred and is continuing

               (iii) Notice of Default. Immediately, and in any event within one
          (1) Business Day after the Applicant  obtains knowledge of any Pay Out
          Event,  Potential Pay Out Event,  Servicer Default,  Event of Default,
          Default  or LC Event  of  Default,  the  Applicant  shall  give the LC
          Provider  notice  thereof,  together  with a written  statement of the
          principal financial officer of the Applicant setting forth the details
          thereof and any action with respect  thereto taken or  contemplated to
          be taken by the Applicant; and

               (iv) Other. Promptly,  from time to time, such other information,
          documents,   or  reports   respecting  the  condition  or  operations,
          financial or  otherwise,  of the Applicant as the LC Provider may from
          time to time  reasonably  request in order to protect the interests of
          the LC  Provider  or the  Trustee  under  or as  contemplated  by this
          Agreement or any other Transaction Document.

                                       11
<PAGE>

          (c) Financial  Covenants.  Parent shall  maintain a  consolidated  net
     worth of at least $30,000,000.

                                   ARTICLE IV

                                  MISCELLANEOUS

     Section 4.1 Payments.  (a) Unless otherwise  specified herein, all payments
to the LC  Provider  hereunder  shall be made in lawful  currency  of the United
States and in immediately  available funds prior to 1:00 p.m. (Atlanta,  Georgia
time) on the date such  payment  is due by wire  transfer  to  SunTrust  Capital
Markets,  Inc. (on behalf of the LC Provider),  ABA No.  061000104,  Account No.
8801898605, Reference: Conn Funding II, L.P., Attn.: STCM Accounting Department,
or to such  other  office or account  maintained  by the LC  Provider  as the LC
Provider may direct.

     (b) Whenever any payment under this Agreement  shall be stated to be due on
a day  which  is not a  Business  Day,  such  payment  shall be made on the next
succeeding  Business  Day,  and such  extension  of time  shall in such  case be
included in computing interest,  commissions or fees, if any, in connection with
such payment.

     Section 4.2 Expenses.  The  Applicant  agrees to pay all costs and expenses
incurred  by  the  LC  Provider  (including,   without  limitation,   reasonable
attorneys'  fees and  expenses),  if any, in  connection  with the  preparation,
execution and delivery,  enforcement,  amendment or waiver of the obligations of
the  Applicant  under this  Agreement or any other  Transaction  Document or any
other  agreement  furnished  pursuant  hereto or in  connection  herewith  or in
connection with any  negotiations  arising out of any LC Event of Default or any
events or  circumstances  that may give rise to an LC Event of Default  and with
respect to presenting  claims in or otherwise  participating  in any bankruptcy,
insolvency or other similar proceeding involving creditors' rights generally and
any ancillary  proceedings.  In addition,  the  Applicant  shall pay any and all
stamp and other taxes and fees payable or determined to be payable in connection
with the execution,  delivery,  filing and recording of this Agreement or the LC
and any such other documents,  and agrees to hold the LC Provider  harmless from
and against any and all liabilities  with respect to or resulting from any delay
in paying or omission to pay such taxes and fees.

     Section 4.3 Indemnity.  The Applicant agrees to indemnify and hold harmless
the  LC  Provider  and,  in  their  capacities  as  such,  officers,  directors,
shareholders, affiliates, controlling persons, employees, agents and servants of
the LC  Provider,  from  and  against  any  and  all  claims,  damages,  losses,
liabilities,  costs or expenses  whatsoever  which the LC Provider  may incur or
which may be claimed against the LC Provider by any person whatsoever (including
fees and  expenses of counsel) in each case arising out of or by reason of or in
connection  with, or in  connection  with the  preparation  of a defense of, any
investigation,  litigation  or  proceeding  arising  out of,  relating  to or in
connection  with the execution and delivery of, or payment of any amount payable
by the  Applicant  under,  the LC or this  Agreement  or any  other  Transaction
Document or any acts or omissions of the  Applicant  in  connection  herewith or
therewith,  or any transactions  contemplated  hereby or thereby (whether or not
consummated),  or any  inaccuracies  or  alleged  inaccuracies  in any  material
respect or any untrue  statement or alleged  untrue  statement of the  Applicant
contained or incorporated by reference in each Transaction  Document,  except to
the extent that such claim, damage, loss,  liability,  cost or expense is caused
by the willful misconduct, bad faith or gross negligence of the LC Provider.

                                       12
<PAGE>

     Section 4.4 Notices. All notices,  requests and other communications to any
party hereunder shall be in writing (including bank wire, facsimile transmission
or similar writing) and addressed, delivered or transmitted to such party at its
address or facsimile  number set forth on the signature page hereof,  or at such
other  address  or  facsimile  number,  as the case may be,  as such  party  may
hereafter  specify for the purpose by notice to the other party. Any notice,  if
mailed and properly  addressed with postage prepaid or if properly addressed and
sent by prepaid courier service shall be deemed given when received; any notice,
if  transmitted  by  telecopier,  shall be deemed  given when  transmitted  upon
receipt of electronic confirmation of transmission. Each such notice, request or
communication  shall be  effective  when  received at the  address or  facsimile
number  specified  on the  signature  page  hereof  (or such  other  address  or
facsimile number specified pursuant to this Section 4.4).

     Section 4.5 Governing  Law;  Waiver of Jury Trial.  THIS  AGREEMENT AND THE
RIGHTS AND  OBLIGATIONS  OF THE PARTIES  HEREUNDER MAY NOT BE CHANGED ORALLY BUT
ONLY BY AN  INSTRUMENT  IN  WRITING  SIGNED BY EACH  PARTY  HERETO  AND SHALL BE
CONSTRUED IN  ACCORDANCE  WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK
WITHOUT REGARDS TO THE CONFLICT OF LAWS  PRINCIPLES  THEREOF (OTHER THAN SECTION
5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     EACH  PARTY  HERETO   HEREBY   KNOWINGLY,   VOLUNTARILY,   ABSOLUTELY   AND
INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION  BASED HEREON,  OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING,  STATEMENTS  (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LC PROVIDER OR
THE APPLICANT IN CONNECTION  HEREWITH OR THEREWITH.  THE APPLICANT  ACKNOWLEDGES
AND AGREES  THAT IT HAS  RECEIVED  FULL AND  SUFFICIENT  CONSIDERATION  FOR THIS
PROVISION (AND EACH OTHER PROVISION OF EACH OTHER TRANSACTION  DOCUMENT TO WHICH
IT IS A PARTY)  AND THAT THIS  PROVISION  IS A  MATERIAL  INDUCEMENT  FOR THE LC
PROVIDER  ENTERING  INTO THIS  AGREEMENT AND EACH SUCH  TRANSACTION  DOCUMENT TO
WHICH IT IS A PARTY.

     Section 4.6  Waivers.  Neither any failure nor any delay on the part of the
LC Provider in exercising any right,  power or privilege  hereunder or under the
LC or any other  Transaction  Document  shall operate as a waiver  thereof,  nor
shall a single  or  partial  exercise  thereof  preclude  any  other or  further
exercise or the exercise of any other right, power or privilege. No provision of
this  Agreement  shall be waived,  amended or  supplemented  except by a written
instrument  executed by the parties  hereto.  The remedies  herein  provided are
cumulative and not exclusive of any remedies provided by law.

                                       13
<PAGE>

     Section  4.7  Severability.  Any  provisions  of this  Agreement  which are
prohibited or unenforceable in any jurisdiction  shall, as to such jurisdiction,
be ineffective to the extent of such  prohibition  or  unenforceability  without
invalidating  the  remaining  provisions  hereof  and any  such  prohibition  or
unenforceability   in  any   jurisdiction   shall  not   invalidate   or  render
unenforceable such provision in any other jurisdiction.

     Section  4.8 Term.  This  Agreement  shall  remain in full force and effect
until the reimbursement of all LOC Credit Disbursements by the Applicant and the
payment by the Applicant of all other amounts payable hereunder, notwithstanding
the earlier termination of the LC.

     Section 4.9  Successors and Assigns.  This Agreement  shall be binding upon
the LC  Provider  and its  successors  and  assigns  and the  Applicant  and its
successors and assigns;  provided,  however, that the Applicant may not transfer
or assign any of its obligations,  rights,  or interests  hereunder  without the
prior  written  consent  of the LC  Provider;  provided,  further,  that  the LC
Provider may at any time grant  participations  to any other  Person,  in all or
part of its obligations under the LC and its rights under this Agreement. The LC
Provider hereby acknowledges and agrees that any such disposition will not alter
or affect the LC  Provider's  direct  obligations  to the Trustee,  and that the
Applicant  shall  not  have  any  obligations  to  have  any   communication  or
relationship with any participant in order to enforce such obligations of the LC
Provider hereunder and under the LC.

     Section 4.10 Counterparts.  This Agreement may be executed in any number of
counterparts,  and by the  different  parties  hereto  on the  same or  separate
counterparts,  each of which counterparts, when so executed and delivered, shall
be deemed to be an original and all of which counterparts, taken together, shall
constitute one and the same agreement.

     Section 4.11 Further  Assurances.  The Applicant  agrees to do such further
acts and things and to execute and deliver to the LC  Provider  such  additional
assignments,  agreements,  powers and instruments as are reasonably  required by
the LC Provider to carry into effect the purposes of this Agreement or to better
assure  and  confirm  unto the LC  Provider  its  rights,  powers  and  remedies
hereunder.

     Section   4.12   Survival   of   Representations   and   Warranties.    All
representations  and  warranties  contained  herein  or made in  writing  by the
Applicant in  connection  herewith  shall  survive the execution and delivery of
this Agreement,  regardless of any  investigation  made by the LC Provider or on
its behalf and shall continue so long as and until such time as all  obligations
hereunder  and under the other  Transaction  Documents  shall  have been paid in
full. The  obligations of the Applicant under Sections 4.1, 4.2 and 4.3 shall in
each case survive any termination of this Agreement,  the payment in full of all
obligations   hereunder  or  under  any  other  Transaction   Document  and  the
termination of the LC.

     Section 4.13 Obligation. The LC Provider and the Applicant each understands
and agrees that the LC is irrevocable  and the obligations of the LC Provider as
issuer thereof shall be unaffected by any default hereunder,  including, without
limitation  any  failure to pay the  Facility  Fee.  Neither  the failure of the
Applicant (or any person or organization acting on its behalf) or the Trustee to
take any action (whether required hereunder or otherwise),  nor any action taken
by the  Applicant  shall be  asserted by the LC Provider as a defense to payment
under the LC (except for the failure of any  documents  presented  thereunder to
comply  with the terms of the LC) or as the basis of a right of setoff by the LC
Provider against its obligations to make any such payment.

                                       14
<PAGE>

     Section 4.14  Headings.  Section  headings in this  Agreement  are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.

     Section 4.15 No Bankruptcy  Petition Against the Issuer. The LC Provider by
entering into this Agreement hereby covenants and agrees that, prior to the date
which is one year and one day after the  payment in full of the latest  maturing
Note and the  termination of the Indenture,  it will not institute  against,  or
join with any other Person in instituting  against,  the Issuer any  bankruptcy,
reorganization,  arrangement,  insolvency or liquidation  proceedings,  or other
proceedings,  under any United States Federal or state bankruptcy or similar law
in connection with any obligation relating to the Notes, the Indenture or any of
the  Transaction  Documents.  In the event that the LC Provider  takes action in
violation  of this  Section  4.15,  the  Issuer  shall  file an answer  with the
bankruptcy  court  contesting  the filing of such a petition  by the LC Provider
against  the Issuer or the  commencement  of such action and raising the defense
that the LC Provider has agreed in writing not to take such action and should be
estopped and precluded therefrom and such other defenses, if any, as its counsel
advises that it may assert.  The  provisions  of this Section 4.15 shall survive
the  termination  of this  Agreement.  Nothing  contained  herein shall preclude
participation  by the LC Provider in the  assertion  or defense of its claims in
any such proceeding involving the Issuer.

                                       15
<PAGE>

     IN WITNESS  WHEREOF,  the  Applicant  and the LC Provider  have caused this
Agreement to be duly executed by their duly authorized  officers,  as of the day
and year first above written.

                                       CAI, L.P.

                                       By: Conn Appliances, Inc., its general
                                           partner

                                       By:       /s/ Thomas J. Frank
                                          --------------------------------------
                                       Name:     Thomas J. Frank
                                                 -------------------------------
                                       Title:    CEO and Chairman of the Board
                                                 -------------------------------

                                       CAI, L.P.
                                       3295 College Street
                                       Beaumont, Texas  77701
                                       Attention: David Atnip
                                       Facsimile:  (409) 839-4609

                                       CONN FUNDING II, L.P.

                                       By: Conn Funding II GP, L.L.C., its
                                           general partner

                                       By:       /s/ David R. Atnip
                                          --------------------------------------
                                       Name:     David R. Atnip
                                                 -------------------------------
                                       Title:    Secretary / Treasurer
                                                 -------------------------------

                                       Conn Funding II, L.P.
                                       3295 College Street
                                       Beaumont, Texas  77701
                                       Attention: David Atnip
                                       Facsimile:  (409) 839-4609

                                   Annex C-1
<PAGE>

                                       SUNTRUST BANK

                                       By:       /s/ R. Lee McCrary, Jr.
                                          --------------------------------------
                                       Name:     R. Lee McCrary, Jr.
                                                 -------------------------------
                                       Title:    Vice-President
                                                 -------------------------------

                                       SunTrust Bank
                                       25 Park Place
                                       Atlanta, GA 30303-3706
                                       Attention:  Lee McCrary
                                       Facsimile:  (404) 588-8129

                                       2

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