Document:

Exhibit 10.9

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                                CREDIT AGREEMENT

                                  by and among

                             CONN APPLIANCES, INC.,
                       and the other Borrowers Hereunder,

                            The Lenders Party Hereto

                                       and

                    JPMORGAN CHASE BANK, NATIONAL ASSOCIATION
                             as Administrative Agent

                                       and

                             BANK OF AMERICA, N.A.,
                              as Syndication Agent

                                 SUNTRUST BANK,
                             as Documentation Agent

                           ___________________________

                          J.P. MORGAN SECURITIES INC.,
                                   as Arranger

                                October 31, 2005

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<PAGE>

                                TABLE OF CONTENTS
                                -----------------

                                                                            Page
                                                                            ----

ARTICLE I    Certain Definitions...............................................1

     SECTION 1.01.  Defined Terms..............................................1
     SECTION 1.02.  Classification of Loans and Borrowings....................19
     SECTION 1.03.  Terms Generally...........................................19
     SECTION 1.04.  Accounting Terms; GAAP....................................20

ARTICLE II   The Credits......................................................20

     SECTION 2.01.  Intentionally Left Blank..................................20
     SECTION 2.02.  Revolving Loan Commitments................................20
     SECTION 2.03.  Loans and Borrowings......................................20
     SECTION 2.04.  Requests for Revolving Borrowings.........................21
     SECTION 2.05.  Funding of Borrowings.....................................22
     SECTION 2.06.  Interest Elections........................................22
     SECTION 2.07.  Termination, Reduction and Increase of
                    Revolving Loan Commitments................................24
     SECTION 2.08.  Repayment of Loans; Evidence of Debt......................25
     SECTION 2.09.  Prepayment of Loans.......................................25
     SECTION 2.10.  Fees......................................................26
     SECTION 2.11.  Interest..................................................26
     SECTION 2.12.  Alternate Rate of Interest................................27
     SECTION 2.13.  Increased Costs...........................................28
     SECTION 2.14.  Break Funding Payments....................................28
     SECTION 2.15.  Taxes.....................................................29
     SECTION 2.16.  Payments Generally; Pro Rata Treatment;
                    Sharing of Set-offs.......................................30
     SECTION 2.17.  Swingline Loans...........................................31

ARTICLE III  Representations and Warranties...................................32

     SECTION 3.01.  Organization; Powers......................................32
     SECTION 3.02.  Authorization; Enforceability.............................32
     SECTION 3.03.  Governmental Approvals; No Conflicts......................33
     SECTION 3.04.  Financial Condition; No Material Adverse Change...........33
     SECTION 3.05.  Properties................................................33
     SECTION 3.06.  Litigation and Environmental Matters......................34
     SECTION 3.07.  Compliance with Laws and Agreements.......................34
     SECTION 3.08.  Investment and Holding Company Status.....................35
     SECTION 3.09.  Taxes.....................................................35
     SECTION 3.10.  Public Utility Holding Company Act Not Applicable.........35
     SECTION 3.11.  Regulations G, U and X....................................35
     SECTION 3.12.  ERISA.....................................................35
     SECTION 3.13.  Disclosure................................................36
     SECTION 3.14.  Condition of Properties...................................36
     SECTION 3.15.  Capital Structure.........................................36
     SECTION 3.16.  Insurance.................................................37
     SECTION 3.17.  Solvency..................................................37
     SECTION 3.18.  Indebtedness..............................................37

                                       ii
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ARTICLE IV   Conditions.......................................................37

     SECTION 4.01.  Insurance.................................................37
     SECTION 4.02.  Payment of Expenses.......................................38
     SECTION 4.03.  Corporate Review..........................................38
     SECTION 4.04.  Required Documents and Certificates.......................38
     SECTION 4.05.  Conditions Precedent to Each Loan.........................39

ARTICLE V    Affirmative Covenants............................................40

     SECTION 5.01.  Financial Statements and Other Information................40
     SECTION 5.02.  Notices of Material Events................................41
     SECTION 5.03.  Existence; Conduct of Business............................41
     SECTION 5.04.  Payment of Obligations....................................42
     SECTION 5.05.  Maintenance of Properties; Insurance......................42
     SECTION 5.06.  Books and Records; Inspection Rights......................43
     SECTION 5.07.  Compliance with Laws......................................44
     SECTION 5.08.  Use of Proceeds...........................................44
     SECTION 5.09.  ERISA.....................................................44
     SECTION 5.10.  Security and Further Assurances...........................45
     SECTION 5.11.  Compliance with Environmental Laws........................45
     SECTION 5.12.  Landlord's Agreements.....................................46
     SECTION 5.13.  Additional Subsidiaries...................................46
     SECTION 5.14.  Patents, Trademarks and Licenses..........................47
     SECTION 5.15.  Notice of Labor Disputes..................................47
     SECTION 5.16.  Fee Properties and Leases.................................47
     SECTION 5.17.  Lease and Investment Schedule.............................48
     SECTION 5.18.  Pledge of Equity Interests................................48

ARTICLE VI   Negative Covenants...............................................48

     SECTION 6.01.  Indebtedness..............................................48
     SECTION 6.02.  Liens.....................................................49
     SECTION 6.03.  Fundamental Changes.......................................49
     SECTION 6.04.  Investments, Loans, Advances, Guarantees
                    and Acquisitions..........................................50
     SECTION 6.05.  Hedging Agreements........................................50
     SECTION 6.06.  Restricted Payments.......................................50
     SECTION 6.07.  Transactions with Affiliates..............................51
     SECTION 6.08.  Restrictive Agreements....................................51
     SECTION 6.09.  Certain Contracts.........................................51
     SECTION 6.10.  Discount or Sale of Receivables...........................52
     SECTION 6.11.  Change in Accounting Method...............................52
     SECTION 6.12.  Sales and Leasebacks......................................52
     SECTION 6.13.  Sale of Inventory.........................................52
     SECTION 6.14.  Nature of Business........................................52
     SECTION 6.15.  Hazardous Materials.......................................52
     SECTION 6.16.  Amendment of Charter Documents............................53
     SECTION 6.17.  Use of Proceeds...........................................53
     SECTION 6.18.  Debt Service Coverage Ratio...............................53
     SECTION 6.19.  Total Leverage Ratio......................................53
     SECTION 6.20.  Net Worth.................................................53
     SECTION 6.21.  Extension, Delinquencies, Charge-Offs.....................53
     SECTION 6.22.  Prepayment of Indebtedness................................54

                                      iii
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ARTICLE VII  Events of Default................................................54

ARTICLE VIII The Administrative Agent.........................................56

     SECTION 8.01.  INDEMNIFICATION...........................................58

ARTICLE IX   Miscellaneous....................................................59

     SECTION 9.01.  Notices...................................................59
     SECTION 9.02.  Waivers; Amendments.......................................60
     SECTION 9.03.  Expenses; Indemnity; Damage Waiver........................60
     SECTION 9.04.  Successors and Assigns....................................62
     SECTION 9.05.  Survival..................................................64
     SECTION 9.06.  Counterparts; Integration; Effectiveness..................64
     SECTION 9.07.  Severability..............................................64
     SECTION 9.08.  Right of Set-off..........................................65
     SECTION 9.09.  Governing Law; Jurisdiction; Consent to
                    Service of Process........................................65
     SECTION 9.10.  WAIVER OF JURY TRIAL......................................66
     SECTION 9.11.  Headings..................................................66
     SECTION 9.12.  Payments Set Aside........................................66
     SECTION 9.13.  Loan Agreement Controls...................................66
     SECTION 9.14.  FINAL AGREEMENT...........................................66
     SECTION 9.15.  Interest Rate Limitation..................................66
     SECTION 9.16.  Limitation of Liens.......................................67
     SECTION 9.17.  USA Patriot Act...........................................67
     SECTION 9.18.  Amendment and Restatement.................................67

                                       iv
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SCHEDULES:
----------

Schedule 2.02       -  Revolving Loan Commitments
Section 3.05(a)(i)  -  Fee Properties
Section 3.05(a)(ii) -  Leasehold Properties
Schedule 3.15(a)    -  Subsidiaries of CAI
Schedule 3.15(b)    -  Outstanding Shares of CAI
Schedule 3.16       -  Insurance coverage
Schedule 3.18       -  Existing Indebtedness
Schedule 6.08       -  Restrictive Agreements Permitted
Schedule 6.09       -  Certain Contracts Permitted

EXHIBITS:
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Exhibit A           -  Form of Assignment and Acceptance
Exhibit B           -  Form of Landlord's Agreement
Exhibit C           -  Form of Borrowing Request
Exhibit D           -  Form of Interest Election Request
Exhibit E-1         -  Form of Revolving Note
Exhibit E-2         -  Form of Swingline Note
Exhibit F           -  Form of Compliance Certificate

                                       v
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                                CREDIT AGREEMENT

         This CREDIT  AGREEMENT dated as of October 31, 2005 (the  "Agreement"),
is entered into by and among CONN APPLIANCES, INC., a Texas corporation ("CAI"),
and CAI CREDIT  INSURANCE  AGENCY,  INC.,  a Louisiana  corporation  ("Louisiana
Insurance  Company") (CAI and Louisiana  Insurance Company are each a "Borrower"
and  collectively the  "Borrowers"),  the financial  institutions  listed on the
signature  pages  hereof  (collectively,   the  "Lenders"  and  individually,  a
"Lender"),  JPMORGAN  CHASE  BANK,  NATIONAL  ASSOCIATION,  individually  and as
Administrative  Agent for the Lenders  hereunder (the  "Administrative  Agent"),
J.P. MORGAN  SECURITIES  INC., as arranger (the "Arranger") and BANK OF AMERICA,
N.A.,  individually  and as  Syndication  Agent for the Lenders  hereunder  (the
"Syndication Agent"), SUNTRUST BANK, individually and as Documentation Agent for
the  Lenders  hereunder  (the  "Documentation  Agent,"  and  together  with  the
Administrative Agent and the Syndication Agent, collectively, the "Agents").

         The parties hereto agree as follows:

                                   ARTICLE I
                               Certain Definitions
                               -------------------

         SECTION 1.01.  Defined Terms. As used in this Agreement,  the following
terms have the meanings specified below:

         "ABR,"  when  used in  reference  to any Loan or  Borrowing,  refers to
whether such Loan, or the Loans comprising such Borrowing,  are bearing interest
at a rate determined by reference to the Alternate Base Rate.

         "Adjusted  LIBOR" means,  with respect to any Eurodollar  Borrowing for
any Interest Period, an interest rate per annum (rounded upwards,  if necessary,
to the next 1/16 of 1%) equal to (a) LIBOR for such Interest  Period  multiplied
by (b) the Statutory Reserve Rate.

         "Administrative Questionnaire" means an Administrative Questionnaire in
a form supplied by the Administrative Agent.

         "Affiliate"  means, with respect to a specified Person,  another Person
that directly, or indirectly through one or more intermediaries,  Controls or is
Controlled by or is under common Control with the Person specified.

         "Alternate  Base Rate"  means,  for any day, (i) with respect to an ABR
Loan other than a  Swingline  Loan,  a rate per annum equal to, the Base Rate in
effect  on such day plus the Base  Rate  Margin  and (ii)  with  respect  to any
Swingline  Loan,  the  Federal  Funds  Rate in effect on such day plus the LIBOR
Margin. Any change in the Alternate Base Rate due to a change in the Prime Rate,
the Base Rate or the Federal Funds  Effective  Rate shall be effective  from and
including the effective  date of such change in the Prime Rate, the Base Rate or
the Federal Funds Effective Rate, respectively.

                                       1
<PAGE>

         "Applicable   Percentage"  means,  with  respect  to  any  Lender,  the
percentage of the total Revolving Loan Commitments  represented by such Lender's
Revolving Loan Commitment.  If the Revolving Loan Commitments have terminated or
expired, the Applicable Percentages shall be determined based upon the Revolving
Loan Commitments most recently in effect, giving effect to any assignments.

         "Applicable  Margin" means,  with respect to any ABR Loan or Eurodollar
Loan,  as the case may be, the  applicable  margin per annum set forth under the
caption "Base Rate Margin" or "LIBOR Margin" in the applicable pricing matrix.

         "Assignment and Acceptance" means an assignment and acceptance  entered
into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.

         "Availability  Period"  means the period  from and  including  the date
hereof to but excluding the earlier of the Revolving  Maturity Date and the date
of termination of the Revolving Loan Commitments.

         "Bank of America  Letters of Credit" means the letters of credit issued
by Bank of America,  N.A. to support  CAI's  purchase of inventory  from foreign
suppliers in an aggregate face amount at any one time  outstanding not exceeding
$5,000,000.

         "Base Rate" means the greater of (a) the Prime Rate, or (b) the Federal
Funds Effective Rate plus .50%.

         "Base Rate Margin" means,  with respect to any ABR Loan, the applicable
margin set forth  below  under the caption  "Base Rate  Margin,"  based upon the
ratio of (i) the sum of (x)  Consolidated  Total Debt  (exclusive of the undrawn
face  amounts of the  Collection  Account  Letters of Credit,  the undrawn  face
amounts of the Bank of America Letters of Credit and the undrawn face amounts of
the  Letters  of Credit  issued  under  this  Agreement)  plus (y)  eight  times
Consolidated Rent Expense divided by (ii) Consolidated  EBITDA plus Consolidated
Rent Expense, as determined quarterly on a rolling four quarter basis

                Ratio                                 Base Rate Margin
                -----                                 ----------------

                x => 2.75                             0.50%

                2.25 <=  x < 2.75                     0.250

                x < 2.25                              0.000%

For  purposes of the  foregoing,  each change in the Base Rate Margin  resulting
from a change in the above described ratio shall be effective  during the period
commencing on and including the date of delivery to the Administrative  Agent of
the consolidated  financial statements  indicating such change and ending on the
date immediately preceding the effective date of the next such change.

                                       2
<PAGE>

         "Board" means the Board of Governors of the Federal  Reserve  System of
the United States of America.

         "Borrowing"  means  (a)  Loans of the same  Type,  made,  converted  or
continued on the same date and, in the case of Eurodollar  Loans,  as to which a
single Interest Period is in effect and (b) a Swingline Loan.

         "Borrowing  Request"  means a request by the  Borrowers for a Revolving
Borrowing in accordance with Section 2.04.

         "Business  Day" means any day that is not a  Saturday,  Sunday or other
day on which commercial banks in Houston,  Texas or New York City are authorized
or required by law to remain closed; provided that, when used in connection with
a Eurodollar  Loan,  the term "Business Day" shall also exclude any day on which
banks are not open for  dealings  in dollar  deposits  in the  London  interbank
market.

         "CAIAIR" shall mean CAIAIR, Inc., a Delaware corporation.

         "CAILP" shall mean CAI, LP a Texas limited partnership.

         "Capital Lease Obligations" of any Person means the obligations of such
Person to pay rent or other  amounts  under  any lease of (or other  arrangement
conveying the right to use) real or personal property, or a combination thereof,
which  obligations  are required to be  classified  and accounted for as capital
leases on a balance  sheet of such  Person  under  GAAP,  and the amount of such
obligations  shall be the  capitalized  amount thereof  determined in accordance
with GAAP.

         "CCC" means Conn Credit Corporation, a Texas corporation.

         "Change in Law" means (a) the adoption of any law,  rule or  regulation
after the date of this Agreement,  (b) any change in any law, rule or regulation
or in the  interpretation or application  thereof by any Governmental  Authority
after the date of this  Agreement  or (c)  compliance  by any  Lender  (or,  for
purposes of Section  2.13(b),  by any  lending  office of such Lender or by such
Lender's  holding  company,  if any) with any  request,  guideline  or directive
(whether or not having the force of law) of any  Governmental  Authority made or
issued after the date of this Agreement.

         "Change of Control"  means the  acquisition  of ownership,  directly or
indirectly,  beneficially  or of  record,  by any  Person or group  (within  the
meaning of the  Securities  Exchange Act of 1934 and the rules of the Securities
and Exchange  Commission  thereunder as in effect on the date hereof) other than
the Control  Group,  of shares  representing  more than 33-1/3% of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
Parent.

         "Charge-Off   Ratio"  shall  mean  the  ratio  of  (a)  the   aggregate
outstanding  balance of all Charge-Off  Receivables of the  Consolidated  Group,
Conn  Funding  I LP and  Conn  Funding  II LP to (b) the  aggregate  outstanding
balance of all accounts  receivable of the Consolidated Group, Conn Funding I LP
and Conn Funding II LP.

                                       3
<PAGE>

         "Charge-Off  Receivable" means those accounts receivable (i) which have
been,  or  should  be in  accordance  with the  Credit  and  Collection  Policy,
written-off  or  discounted  any amount due  thereunder  or (ii) as to which the
account  debtor  of  which  has  become  subject  to a  bankruptcy,  insolvency,
liquidation  or  reorganization  proceeding  or  proceeding  seeking an order of
relief or appointment of a receiver for any substantial part of its property.

         "Class",  when used in  reference to any Loan or  Borrowing,  refers to
whether such Loan, or the Loans  comprising such Borrowing,  are Revolving Loans
or Swingline Loans.

         "Code" means the Internal Revenue Code of 1986, as amended from time to
time.

         "Collateral"  shall  mean  any  property  covered  by the  terms of the
Security Documents.

         "Collection  Account Letters of Credit" shall mean letters of credit as
contemplated  by the Conn  Funding  II  Indenture  issued in order to permit the
delay  in  depositing  amounts  otherwise  required  to be held in a  collection
account.

         "Commitment  Fee Rate"  means,  with  respect  to the  commitment  fees
payable hereunder,  the applicable fee rate as set forth below under the caption
"Commitment Fee," based upon the ratio of (i) the sum of (x) Consolidated  Total
Debt (exclusive of the undrawn face amounts of the Collection Account Letters of
Credit,  the undrawn face  amounts of the Bank of America  Letters of Credit and
the undrawn face amounts of the Letters of Credit  issued under this  Agreement)
plus (y) eight times  Consolidated  Rent  Expense  divided by (ii)  Consolidated
EBITDA plus Consolidated Rent Expense, as determined quarterly on a rolling four
quarter basis

                Ratio                                 Commitment Fee Rate
                -----                                 -------------------

                x => 2.75                             0.350%

                2.25 => x <  2.75                     0.275%

                1.75 => x <  2.25                     0.225%

                1.25 => x <  1.75                     0.200%

                x < 1.25                              0.175%

For purposes of the foregoing,  each change in the Commitment Fee Rate resulting
from a change in the above described ratio shall be effective  during the period
commencing on and including the date of delivery to the Administrative  Agent of
the consolidated  financial statements  indicating such change and ending on the
date immediately preceding the effective date of the next such change.

                                       4
<PAGE>

         "Conn CC LP" shall mean Conn CC, L.P., a Texas limited partnership.

         "Conn Credit LLC" shall mean Conn Credit,  L.L.C.,  a Delaware  limited
liability company.

         "Conn  Funding I LP" shall mean Conn  Funding  I, L.P. a Texas  limited
partnership.

         "Conn  Funding II LP" shall mean Conn Funding II, L.P. a Texas  limited
partnership.

         "Conn Funding II GP LLC" shall mean Conn Funding II GP, L.L.C., a Texas
limited liability company.

         "Conn Funding II Indenture"  means that certain Base Indenture dated as
of September 1, 2002  executed by and between Conn Funding II LP and Wells Fargo
Bank Minnesota,  National  Association,  as Trustee, as the same may be amended,
restated, modified or supplemented from time to time.

         "Conn  Funding LLC" shall mean Conn  Funding,  L.L.C.,  a Texas limited
liability company.

         "Consolidated  Capital  Expenditures"  shall mean, for any period as to
the Consolidated  Group, all capital  expenditures  made during such period,  as
determined  in  accordance  with GAAP  (including  the capital  portion of lease
payments  in respect of Capital  Lease  Obligations);  provided,  however,  that
"Consolidated  Capital  Expenditures"  shall not  include  expenditures  for the
repair or  replacement  of any fixed or capital  assets which were  destroyed or
damaged,  in whole or in part,  to the extent  financed  by the  proceeds  of an
insurance policy maintained by such Person.

         "Consolidated  Cash Interest  Expense" shall mean, for any period as to
the Consolidated Group, the sum of (i) the aggregate amount of interest accruing
and/or  actually paid during such period on Consolidated  Total Debt,  including
the  interest  portion of  payments  under  Capital  Lease  Obligations  and any
capitalized  interest,  plus (ii) the net amount  payable or paid by such Person
pursuant to any interest rate exchange  agreements  accruing during such period,
minus (iii) the net amount paid to such Persons  pursuant to any  interest  rate
exchange agreements accruing during such period.

         "Consolidated  EBIT" shall mean,  for any period the  Consolidated  Net
Income (plus or minus any non-recurring  charges or credits) of the Consolidated
Group,  plus (i) the aggregate  amount of all state and federal  income taxes of
such Person for such period,  plus (ii)  Consolidated  Cash Interest  Expense of
such Persons for such periods plus (or minus) (v) adjustments for  extraordinary
gains (or losses) in accordance with GAAP.

         "Consolidated  EBITDA" shall mean, for any period, the Consolidated Net
Income (plus or minus and non-recurring  charges or credits) of the Consolidated
Group,  plus (i) the aggregate  amount of all state and federal  income taxes of
such Persons for such period,  plus (ii)  Consolidated  Cash Interest Expense of
such  Person  for such  period,  plus (iii) the  aggregate  amount  deducted  in
determining  Consolidated  Net  Income  of such  Persons  for  such  period  for
depreciation,  obsolescence and  amortization of Property,  plus (or minus) (iv)
other  Non-Cash  Expense  (or  Income),  plus (or  minus)  (v)  adjustments  for
extraordinary losses (or gains) in accordance with GAAP.

                                       5
<PAGE>

         "Consolidated   Group"  shall  mean,   collectively,   Parent  and  its
Subsidiaries other than Conn Funding I LP and Conn Funding II LP.

         "Consolidated   Net  Income"  shall  mean,   for  any  period  for  the
Consolidated  Group,  the net income  minus the net losses of such  Persons,  as
determined in accordance with GAAP,  excluding unusual or extraordinary gains or
losses.

         "Consolidated  Net Worth" shall mean, as of any date, the  consolidated
net worth of the  Consolidated  Group as  reflected in such  Persons'  financial
statements most recently provided pursuant to Section 5.01(a) or (b) hereof.

         "Consolidated  Rent Expense" means for any period for the  Consolidated
Group  the  gross  property  lease  obligations  of such  Persons  for base rent
attributable to leased property (whether real or personal property).

         "Consolidated  Total  Debt"  shall  mean,  as of  any  date  as to  the
Consolidated Group, the sum of Senior Debt and Subordinated Debt.

         "Control" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through  the  ability to  exercise  voting  power,  by  contract  or  otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.

         "Control Group" means, collectively, the persons identified on Schedule
3.15(b) and those officers and directors of Parent who are designated as Section
16 officers  under the rules and  regulations  of the  Securities  and  Exchange
Commission.

         "Credit  and  Collection  Policy"  means,  collectively,   the  credit,
collection,  customer  relations and service policies of CAI and CAILP in effect
on  September   1,  2002,  a  summary  of  which  has  been   delivered  to  the
Administrative Agent, as such policies may be amended,  modified or supplemented
from time to time (any material  amendments,  modifications or supplements shall
require  the  consent  of  the  Administrative  Agent,  such  consent  not to be
unreasonably withheld or delayed).

         "Debt Service" means, for any period, the sum of (i) required principal
payments  on  Consolidated  Total Debt for such  period  (including  the capital
portion of lease  payments  made in respect of Capital Lease  Obligations)  plus
(ii) Consolidated Cash Interest Expense.

         "Default"  means any event or condition  which  constitutes an Event of
Default or which  upon  notice,  lapse of time or both  would,  unless  cured or
waived, become an Event of Default.

         "Delinquency  Ratio" means the ratio of (a) the  aggregate  outstanding
balance of all Delinquent  Receivables to (b) the aggregate  outstanding balance
of all accounts receivable of the Consolidated Group, Conn Funding I LP and Conn
Funding II LP.

                                       6
<PAGE>

         "Delinquent   Receivable"   means  any   account   receivable   of  the
Consolidated Group, Conn Funding I LP and Conn Funding II LP which is 31 days or
more past its original due date.

         "DOJ" means the United States Department of Justice.

         "Dollars"  or "$"  refers  to  lawful  money of the  United  States  of
America.

         "Environmental  Laws"  means  all  laws,  rules,  regulations,   codes,
ordinances,  orders,  decrees,  judgments,   injunctions,   notices  or  binding
agreements  issued,  promulgated or entered into by any Governmental  Authority,
relating in any way to the  environment,  preservation or reclamation of natural
resources,  the  management,  release or  threatened  release  of any  Hazardous
Material or to health and safety matters.

         "Environmental  Liability"  means,  as to any  Person,  any  liability,
contingent  or  otherwise  (including  any  liability  for  damages,   costs  of
environmental  remediation,  fines,  penalties or  indemnities),  of such Person
directly  or  indirectly  resulting  from or  based  upon (a)  violation  of any
Environmental Law, (b) the generation, use, handling,  transportation,  storage,
treatment or disposal of any Hazardous Materials,  (c) exposure to any Hazardous
Materials, (d) the release or threatened release of any Hazardous Materials into
the environment or (e) any contract,  agreement or other consensual  arrangement
pursuant to which  liability  is assumed or imposed  with  respect to any of the
foregoing.

         "ERISA" means the Employee  Retirement  Income Security Act of 1974, as
amended from time to time.

         "ERISA   Affiliate"  means  any  trade  or  business  (whether  or  not
incorporated)  that,  together  with  any Loan  Party,  is  treated  as a single
employer  under  Section  414(b) or (c) of the Code or,  solely for  purposes of
Section  302 of ERISA  and  Section  412 of the  Code,  is  treated  as a single
employer under Section 414 of the Code.

         "ERISA Event" means (a) any  "reportable  event," as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice  period is waived);  (b) the existence
with respect to any Plan of an "accumulated  funding  deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing  pursuant to Section  412(d) of the Code or Section 303(d) of ERISA of an
application  for a waiver of the minimum  funding  standard  with respect to any
Plan; (d) the incurrence by any Loan Party or any of its ERISA Affiliates of any
liability  under Title IV of ERISA with respect to the  termination of any Plan;
(e) the receipt by any Loan Party or any ERISA Affiliate from the PBGC or a plan
administrator  of any notice  relating to an intention to terminate  any Plan or
Plans or to appoint a trustee to administer  any Plan; (f) the incurrence by any
Loan Party or any of its ERISA  Affiliates of any liability  with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by any Loan Party or any ERISA  Affiliate of any notice,  or the receipt
by any  Multiemployer  Plan from any Loan  Party or any ERISA  Affiliate  of any
notice,  concerning  the imposition of Withdrawal  Liability or a  determination
that  a  Multiemployer   Plan  is,  or  is  expected  to  be,  insolvent  or  in
reorganization, within the meaning of Title IV of ERISA.

                                       7
<PAGE>

         "Eurodollar,"  when used in reference to any Loan or Borrowing,  refers
to whether  such Loan,  or the Loans  comprising  such  Borrowing,  are  bearing
interest at a rate determined by reference to LIBOR.

         "Event of  Default"  has the  meaning  assigned to such term in Article
VII.

         "Excluded Taxes" means, with respect to the  Administrative  Agent, any
Lender, or any other recipient of any payment to be made by or on account of any
obligation of any Loan Party hereunder, (a) income or franchise taxes imposed on
(or  measured  by) its net income by the  United  States of  America,  or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal  office  is  located  or,  in the case of any  Lender,  in  which  its
applicable  lending  office is located,  (b) any branch profits taxes imposed by
the  United  States  of  America  or  any  similar  tax  imposed  by  any  other
jurisdiction in which any Loan Party is located and (c) in the case of a Foreign
Lender,  any  withholding tax that is imposed on amounts payable to such Foreign
Lender at the time such Foreign  Lender  becomes a party to this  Agreement  (or
designates a new lending  office) or is  attributable  to such Foreign  Lender's
failure to comply with Section  2.15(e),  except to the extent that such Foreign
Lender (or its assignor,  if any) was entitled,  at the time of designation of a
new lending office (or assignment),  to receive additional amounts from the Loan
Parties with respect to such withholding tax pursuant to Section 2.15(a).

         "Extended   Receivable"  shall  mean  any  account  receivable  of  the
Consolidated  Group,  Conn  Funding I LP and Conn  Funding II LP as to which the
original due date has been extended.

         "Extension Ratio" shall mean the ratio of (a) the aggregate outstanding
balance of all Extended Receivables to (b) the aggregate  outstanding balance of
all accounts  receivable of the Consolidated  Group,  Conn Funding I LP and Conn
Funding II LP.

         "Federal Funds Effective Rate" means, for any day, the weighted average
(rounded  upwards,  if  necessary,  to the  next  1/100  of 1%) of the  rates on
overnight Federal funds  transactions with members of the Federal Reserve System
arranged by Federal funds brokers,  as published on the next succeeding Business
Day by the  Federal  Reserve  Bank  of New  York,  or,  if  such  rate is not so
published for any day that is a Business Day, the average (rounded  upwards,  if
necessary,  to the  next  1/100 of 1%) of the  quotations  for such day for such
transactions  received  by the  Administrative  Agent from three  Federal  funds
brokers of recognized standing selected by it.

         "Financial  Officer"  means,  as to any  Person,  the  Chief  Financial
Officer or Treasurer of such Person.

         "Foreign Lender" means any Lender that is organized under the laws of a
jurisdiction other than the United States of America.

         "FTC" means the Federal Trade Commission.

         "GAAP" means generally  accepted  accounting  principles in effect from
time to time in the United States of America.

                                       8
<PAGE>

         "Governmental  Authority"  means the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local,  and any agency,  authority,  instrumentality,  regulatory  body,  court,
central  bank or  other  entity  exercising  executive,  legislative,  judicial,
taxing,  regulatory  or  administrative  powers or functions of or pertaining to
government.

         "Guarantee"  of or by any Person means any  obligation,  contingent  or
otherwise,  of the  guarantor  guaranteeing  or having  the  economic  effect of
guaranteeing  any  Indebtedness  or other  obligation of any other Person in any
manner,  whether  directly or  indirectly,  and including any  obligation of the
guarantor,  direct or  indirect,  (a) to  purchase  or pay (or advance or supply
funds for the purchase or payment of) such  Indebtedness or other  obligation or
to purchase (or to advance or supply funds for the purchase of) any security for
the payment thereof,  (b) to purchase or lease property,  securities or services
for the purpose of assuring the owner of such  Indebtedness or other  obligation
of the payment thereof,  (c) to maintain working capital,  equity capital or any
other financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such  Indebtedness or other  obligation or (d)
as an account  party in  respect  of any letter of credit or letter of  guaranty
issued to  support  such  Indebtedness  or  obligation;  provided  that the term
Guarantee  shall not  include  endorsements  for  collection  or  deposit in the
ordinary course of business.

         "Guarantors"  means the parties to the Guaranty  Agreements,  including
but not  limited  to Parent and all  present  and  future  direct  and  indirect
Subsidiaries of CAI (excluding  CAIAIR,  CCC, Conn Funding I LP, Conn Funding II
LP, Conn Funding LLC, Conn Funding II GP LLC, Conn CC LP and Conn Credit LLC, so
long  as  such  Subsidiaries  of CAI  are  not  required  to be  treated  as new
Subsidiaries under Section 5.13).

         "Guaranty  Agreements" shall mean,  collectively,  Guaranty  Agreements
duly executed by all of the Guarantors on or prior to the date hereof,  together
with any  Guaranty  Supplement  hereafter  executed  and  delivered  pursuant to
Section 5.13, in each case as amended from time to time.

         "Hazardous Materials" means all explosive or radioactive  substances or
wastes  and all  hazardous  or toxic  substances,  wastes  or other  pollutants,
including  petroleum or petroleum  distillates,  asbestos or asbestos containing
materials,  polychlorinated  biphenyls,  radon gas, infectious or medical wastes
and all other  substances  or wastes of any  nature  regulated  pursuant  to any
Environmental Law.

         "Hedging  Agreement"  means any  interest  rate  protection  agreement,
foreign currency  exchange  agreement,  commodity price protection  agreement or
other interest or currency exchange rate or commodity price hedging arrangement.

         "Highest Lawful Rate" has the meaning set forth in Section 9.15.

                                       9
<PAGE>

         "Indebtedness" shall mean (without duplication), for any Person,

                  (i) all  indebtedness  of such  Person for  borrowed  money or
         arising  out of any  extension  of credit to or for the account of such
         Person or with respect to deposits or advances of any kind  (including,
         without  limitation,  extensions of credit in the form of reimbursement
         or payment  obligations  of such  Person  relating to letters of credit
         issued for the  account of such  Person) or for the  deferred  purchase
         price of property or services,  except  indebtedness  which is owing to
         trade  creditors  in the  ordinary  course of business and which is due
         within 90 days after the original invoice date;

                  (ii)  Indebtedness of the kind described in clause (i) of this
         definition  which  is  secured  by (or for  which  the  holder  of such
         Indebtedness  has any existing  right,  contingent or otherwise,  to be
         secured  by)  any  mortgage,  deed of  trust,  pledge,  lien,  security
         interest or other charge or encumbrance upon or in property (including,
         without limitation, accounts and contract rights) owned by such Person,
         whether or not such Person has assumed or become liable for the payment
         of such Indebtedness or obligations;

                  (iii) Capitalized Lease Obligations of such Person;

                  (iv) all obligations,  contingent or otherwise, of such Person
         in respect of bankers' acceptances;

                  (v) all obligations of such Person upon which interest charges
         are customarily paid;

                  (vi) all obligations of such Person under  conditional sale or
         other title retention  agreements relating to property acquired by such
         Person; and

                  (vii) all Guaranties or other  contingent  liabilities  (other
         than  endorsements  for collection in the ordinary course of business),
         direct or indirect, with respect to Indebtedness (of the kind described
         in clauses  (i) through  (vi) of this  definition)  of another  Person,
         through an agreement or otherwise, including, without limitation,

                           (A)  any   endorsement  not  for  collection  in  the
                  ordinary  course of  business  or  discount  with  recourse or
                  undertaking  substantially  equivalent  to or having  economic
                  effect   similar  to  a  Guaranty   in  respect  of  any  such
                  Indebtedness;

                           (B) any agreement  (1) to purchase,  or to advance or
                  supply  funds  for  the  payment  or  purchase  of,  any  such
                  Indebtedness,   (2)  to  purchase,  sell  or  lease  property,
                  products,   materials  or  supplies,   or   transportation  or
                  services, in order to enable such other Person to pay any such
                  Indebtedness  or to assure  the  owner  thereof  against  loss
                  regardless  of the delivery or  nondelivery  of the  property,
                  products,  materials or supplies or transportation or services
                  or (3) to make any loan, advance or capital contribution to or
                  other investment in, or to otherwise  provide funds to or for,
                  such other  Person in order to enable  such  Person to satisfy
                  any obligation (including any liability for a dividend,  stock
                  liquidation payment or expense) or to assure a minimum equity,
                  working capital or other balance sheet condition in respect of
                  any such obligation;

                                       10
<PAGE>

                           (C)  obligations  of such Person to the  counterparty
                  under foreign currency  "hedging"  contracts and interest rate
                  contracts  (including  without  limitation  liquidated damages
                  specified  therein)  arising  by reason of a default or breach
                  (however defined) by such Person thereunder, net of amounts to
                  be paid to such Person from such counterparty thereunder; and

                           (D)  obligations  under  surety,  appeal  or  customs
                  bonds.

The Indebtedness of any Person which shall include the Indebtedness of any other
entity  (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity.

         "Indemnified Taxes" means Taxes other than Excluded Taxes.

         "Interest Election Request" means a request by the Borrowers to convert
or continue a Borrowing in accordance with Section 2.06.

         "Interest  Payment  Date" means (a) with respect to any ABR Loan (other
than a  Swingline  Loan),  the  last  day of each  March,  June,  September  and
December,  or (b)  with  respect  to any  Eurodollar  Loan,  the last day of the
Interest Period applicable to the Borrowing of which such Loan is a part and, in
the case of a Eurodollar  Borrowing  with an Interest  Period of more than three
months'  duration,  each day prior to the last day of such Interest  Period that
occurs  at  intervals  of three  months'  duration  after  the first day of such
Interest  Period,  and (c) with respect to any Swingline Loan, the day that such
Loan is required to be repaid.

         "Interest Period" means, with respect to any Eurodollar Borrowing,  the
period  commencing on the date of such  Borrowing and ending on the  numerically
corresponding  day in the calendar  month that is one, two,  three or six months
thereafter,  as the  applicable  Borrower  may elect;  provided  that (i) if any
Interest  Period  would end on a day other than a Business  Day,  such  Interest
Period shall be extended to the next succeeding Business Day unless, in the case
of a Eurodollar  Borrowing only, such next succeeding Business Day would fall in
the next calendar  month,  in which case such  Interest  Period shall end on the
next  preceding  Business  Day and  (ii) any  Interest  Period  pertaining  to a
Eurodollar Borrowing that commences on the last Business Day of a calendar month
(or on a day for which  there is no  numerically  corresponding  day in the last
calendar  month of such  Interest  Period) shall end on the last Business Day of
the last calendar month of such Interest Period.  For purposes hereof,  the date
of a Borrowing  initially  shall be the date on which such Borrowing is made and
thereafter  shall  be the  effective  date  of the  most  recent  conversion  or
continuation of such Borrowing.

         "Landlord's Agreement" shall mean a Landlord's Agreement, substantially
in the form of  Exhibit  B hereto,  in form and  substance  satisfactory  to the
Administrative Agent.

                                       11
<PAGE>

         "Lenders"  means the Person listed on the signature pages hereto as the
Lenders and any other Person that shall have become a party  hereto  pursuant to
an Assignment  and  Acceptance,  or pursuant to an amendment of this  Agreement,
other than any such  Person  that  ceases to be a party  hereto  pursuant  to an
Assignment and Acceptance, or pursuant to an amendment of this Agreement. Unless
the context  otherwise  requires,  the term  "Lenders"  includes  the  Swingline
Lender.

         "Letter of Credit Agreement" means the Letter of Credit Agreement dated
November 12, 2004 executed by and among  Borrowers,  Lenders and  Administrative
Agent,  as  it  may  from  time  to  time  be  amended,  modified,  restated  or
supplemented.

         "LIBOR"  means,  with  respect  to any  Eurodollar  Borrowing  for  any
Interest Period,  the rate appearing on Page 3750 of the Telerate Service (or on
any  successor  or  substitute  page of such  Service,  or any  successor  to or
substitute  for such  Service,  providing  rate  quotations  comparable to those
currently  provided  on  such  page  of  such  Service,  as  determined  by  the
Administrative  Agent from time to time for purposes of providing  quotations of
interest rates applicable to dollar deposits in the London interbank  market) at
approximately   11:00  a.m.,  London  time,  two  Business  Days  prior  to  the
commencement  of such Interest  Period,  as the rate for dollar  deposits with a
maturity  comparable to such Interest Period. In the event that such rate is not
available  at such  time for any  reason,  then  "LIBOR"  with  respect  to such
Eurodollar  Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered  by  the  principal  London  office  of  the  Administrative   Agent  in
immediately  available  funds in the London  interbank  market at  approximately
11:00 a.m.,  London time,  two Business Days prior to the  commencement  of such
Interest Period.

         "LIBOR  Margin"  means,  with  respect  to  any  Eurodollar  Loan,  the
applicable  margin set forth below under the caption "LIBOR  Margin," based upon
the  ratio  of (i) the sum of (x)  Consolidated  Total  Debt  (exclusive  of the
undrawn face amounts of the Collection  Account  Letters of Credit,  the undrawn
face  amounts of the Bank of America  Letters  of Credit  and the  undrawn  face
amounts of the Letters of Credit  issued  under this  Agreement)  plus (y) eight
times  Consolidated  Rent  Expense  divided  by (ii)  Consolidated  EBITDA  plus
Consolidated  Rent Expense,  as  determined  quarterly on a rolling four quarter
basis

                                       12
<PAGE>

                Ratio                                 LIBOR Margin
                -----                                 ------------

                x => 2.75                             1.75%

                2.25 <=  x < 2.75                     1.50%

                1.75 <=  x < 2.25                     1.25%

                1.25 <=  x < 1.75                     1.00%

                x < 1.25                              0.75%

For purposes of the foregoing,  each change in the LIBOR Margin resulting from a
change in the  above  described  ratio  shall be  effective  during  the  period
commencing on and including the date of delivery to the Administrative  Agent of
the consolidated  financial statements  indicating such change and ending on the
date immediately preceding the effective date of the next such change.

         "Lien"  means,  with respect to any asset,  (a) any  mortgage,  deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such  asset,  (b) the  interest  of a  vendor  or a  lessor  under  any
conditional sale agreement,  capital lease or title retention  agreement (or any
financing  lease having  substantially  the same  economic  effect as any of the
foregoing)  relating  to such  asset  and (c) in the  case  of  securities,  any
purchase  option,  call or similar  right of a third party with  respect to such
securities.

         "Loans" means the loans made by the Lenders to the  Borrowers  pursuant
to this Agreement.

         "Loan  Documents"  shall mean this Agreement,  the Notes,  all Security
Documents,  any Hedging Agreement  between any member of the Consolidated  Group
and  any  Lender,  and  all  instruments,  certificates  and  agreements  now or
hereafter  executed  or  delivered  to the  Administrative  Agent or any  Lender
pursuant to any of the foregoing and the transactions  connected therewith,  and
all   amendments,    modifications,    renewals,   extensions,   increases   and
rearrangements of, and substitutions for, any of the foregoing.

         "Loan  Party" means  Parent,  CAI and each  Subsidiary  of CAI which is
required to execute a Guaranty under the terms and provisions of this Agreement.

         "Louisiana  Insurance Company" means CAI Credit Insurance Agency, Inc.,
a Louisiana corporation.

         "Material  Adverse  Effect" means a material  adverse effect on (a) the
business, assets, operations, prospects or condition, financial or otherwise, of
the  Consolidated  Group taken as a whole,  (b) the ability of any Loan Party to
perform any of its obligations under any Loan Document to which it is a party or
(c) the rights of or  benefits  available  to the  Administrative  Agent and the
Lenders under the Loan Documents.

                                       13
<PAGE>

         "Material  Indebtedness"  means Indebtedness (other than the Loans), or
obligations in respect of one or more Hedging Agreements,  of any one or more of
the Consolidated  Group in an aggregate  principal amount exceeding  $5,000,000.
For purposes of determining Material Indebtedness, the "principal amount" of the
obligations of any Person in respect of any Hedging  Agreement at any time shall
be the maximum  aggregate amount (giving effect to any netting  agreements) that
such Person would be required to pay if such Hedging  Agreement were  terminated
at such time.

         "Moody's" means Moody's Investors Service, Inc.

         "Mortgaged  Property"  shall mean all tangible assets and real property
interests subject to the Security Documents.

         "Mortgages"  means,  collectively,   Mortgages,  Pledges,  Assignments,
Security  Agreements and Financing  Statements and Deeds of Trust,  Assignments,
Security  Agreements  and  Financing  Statements  securing the  Obligations  and
covering all of the real property  owned or leased by the Loan Parties as of the
date hereof (except such leased properties on which no Lien is required pursuant
to Section 5.16),  together with any other  mortgage or deed of trust  hereafter
delivered pursuant to Section 5.16, in each case as amended from time to time.

         "Multiemployer  Plan" means a multiemployer  plan as defined in Section
4001(a)(3) of ERISA.

         "Non-Cash  Expense (or Income)" shall mean, for any period,  the amount
of non-cash  expense or income;  provided that, (i) if any cash outlay (receipt)
is made  (received)  during  such  period in  respect of such  non-cash  expense
(income),  only the amount of such non-cash  expense  (income) which exceeds the
amount of the cash outlay (receipt) may be added back to Consolidated Net Income
for purposes of  calculating  Consolidated  EBITDA,  and (ii) if any cash outlay
(receipt) is made (received) during such period in respect of a non-cash expense
(income) for a prior or future period,  the amount of such cash outlay (receipt)
shall be deducted from (added to) Consolidated Net Income for the current period
for purposes of calculating Consolidated EBITDA.

         "Note" or "Notes"  shall mean a promissory  note or  promissory  notes,
respectively, of the Borrowers, executed and delivered under this Agreement.

         "Obligations"  means, as at any date of determination  thereof, the sum
of the  following:  (i) the  aggregate  principal  amount  of Loans  outstanding
hereunder,  plus (ii) the aggregate amount of the LC Exposure (as defined in the
Letter of Credit Agreement),  plus (iii) all other liabilities,  obligations and
indebtedness under any Loan Document of Borrower or any other Loan Party.

         "Officer's  Certificate" shall mean a certificate signed in the name of
a Person, by either its Chief Executive Officer, President, one of its Financial
Officers or Secretary.

         "Originator  Notes"  shall mean (i) those two (2) certain  Originator's
Notes dated as of May 12, 2000 executed by Conn Funding I LP payable to order of
CAI and CAILP,  respectively,  delivered pursuant to the terms and provisions of
the Receivables Purchase Agreement,  and (ii) those two (2) certain Originator's
Notes dated as of September  13, 2002  executed by Conn Funding II LP payable to
order of CAI and  CAILP,  respectively,  delivered  pursuant  to the  terms  and
provisions of the Receivables  Purchase  Agreement,  as the same may be renewed,
extended, modified or rearranged from time to time.

                                       14
<PAGE>

         "Other Taxes" means any and all present or future stamp or  documentary
taxes or any other excise or property  taxes,  charges or similar levies arising
from any payment made hereunder or from the  execution,  delivery or enforcement
of, or otherwise with respect to, this Agreement.

         "Parent" means Conn's, Inc., a Delaware corporation.

         "PBGC" means the Pension Benefit Guaranty  Corporation  referred to and
defined in ERISA and any successor entity performing similar functions.

         "Permitted Encumbrances" means:

         (a) Liens  imposed  by law for taxes  that are not yet due or are being
contested in compliance with Section 5.04;

         (b) carriers', warehousemen's,  mechanics', materialmen's,  repairmen's
and other like Liens imposed by law,  arising in the ordinary course of business
and securing  obligations that are not overdue by more than 30 days or are being
contested in compliance with Section 5.04;

         (c) pledges and  deposits  made in the  ordinary  course of business in
compliance with workers'  compensation,  unemployment insurance and other social
security laws or regulations;

         (d)  deposits  to secure  the  performance  of bids,  trade  contracts,
leases,  statutory obligations,  surety and appeal bonds,  performance bonds and
other  obligations  of a like  nature,  in each case in the  ordinary  course of
business;

         (e)  easements,   zoning   restrictions,   rights-of-way   and  similar
encumbrances  on real property  imposed by law or arising in the ordinary course
of business that do not secure any monetary  obligations  and do not  materially
detract from the value of the affected  property or interfere  with the ordinary
conduct of business of any Loan Party or any of their Subsidiaries; and

         (f)  security  interest  filings by  lessors  under  personal  property
leases;

provided  that the term  "Permitted  Encumbrances"  shall not  include  any Lien
securing Indebtedness.

         "Permitted Investments" means:

         (a) direct obligations of, or obligations the principal of and interest
on which are unconditionally  guaranteed by, the United States of America (or by
any agency thereof to the extent such  obligations  are backed by the full faith
and credit of the United States of America),  in each case  maturing  within one
year from the date of acquisition thereof;

                                       15
<PAGE>

         (b)  investments in commercial  paper maturing within 270 days from the
date of acquisition thereof and having, at such date of acquisition, the highest
credit rating obtainable from S&P or from Moody's;

         (c) investments in certificates  of deposit,  banker's  acceptances and
time  deposits  maturing  within 180 days from the date of  acquisition  thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, any domestic  office of any commercial  bank organized  under the
laws of the United  States of America or any State  thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;

         (d) fully collateralized  repurchase agreements with a term of not more
than 30 days for securities  described in clause (a) above and entered into with
a financial  institution  satisfying the criteria described in clause (c) above;
and

         (e)  investments  which are  consistent  with the corporate  investment
policy of CAI from time to time in effect,  as  approved  by the  Administrative
Agent (such approval not to be unreasonably withheld).

         "Person"  means any  natural  person,  corporation,  limited  liability
company, trust, joint venture, association,  company, partnership,  Governmental
Authority or other entity.

         "Plan"  means  any  employee   pension   benefit  plan  (other  than  a
Multiemployer  Plan)  subject to the  provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA,  and in respect of which any Loan Party
or any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an  "employer"  as  defined  in  Section  3(5) of
ERISA.

         "Pledge  and  Security  Agreements"  means,  collectively,  Pledge  and
Security  Agreements securing the Obligations and covering all of the issued and
outstanding  equity  interests  in and to each of the Loan  Parties  (other than
equity  interests  in and to  Parent),  and those  certain  Pledge and  Security
Agreements  executed and  delivered  pursuant to Section  5.13,  in each case as
amended from time to time.

         "Prime  Rate" means the rate of interest per annum  publicly  announced
from time to time by JPMorgan Chase Bank, National Association as its prime rate
in effect at its  principal  office in New York City;  each  change in the Prime
Rate shall be  effective  from and  including  the date such  change is publicly
announced as being effective.

         "Receivables   Purchase   Agreement"  means  that  certain  Receivables
Purchase  Agreement dated as of September 1, 2002 between Conn Funding II LP, as
Purchaser,  Conn  Funding  I LP,  as the  Initial  Seller,  and CAI  and  CAILP,
collectively as Originator, together with any and all amendments,  restatements,
renewals and extensions thereof not in violation of Article VII(p).

                                       16
<PAGE>

         "Receivables Purchase Documents" means,  collectively,  the Receivables
Purchase  Agreement,  the Originator  Notes, the Conn Funding II Indenture,  the
Collection Account Letters of Credit and any and all documents,  instruments and
agreements executed in connection therewith.

         "Register" has the meaning set forth in Section 9.04(c).

         "Related  Parties" means,  with respect to any specified  Person,  such
Person's affiliates and the respective directors,  officers,  employees,  agents
and advisors of such Person and such Person's affiliates.

         "Required  Lenders" means, at any time, Lenders having Revolving Credit
Exposures and unused Revolving Loan Commitments representing greater than 50% of
the sum of the total  Revolving  Credit  Exposures  and  unused  Revolving  Loan
Commitments at such time.

         "Restricted Payment" means any dividend or other distribution  (whether
in cash,  securities or other  property) with respect to any shares of any class
of  capital  stock of any  member  of the  Consolidated  Group,  or any  payment
(whether in cash,  securities or other property),  including any sinking fund or
similar   deposit,   on  account  of  the  purchase,   redemption,   retirement,
acquisition,  cancellation or termination of any such shares of capital stock of
any such Person or any option, warrant or other right to acquire any such shares
of capital stock of any such Person.

         "Revolving  Credit Exposure"  means,  with respect to any Lender at any
time, the sum of the outstanding principal amount of such Lender's Loans and its
LC  Exposure  (as  defined  in the  Letter of Credit  Agreement)  and  Swingline
Exposure at such time.

         "Revolving Loan" means a Loan made pursuant to Section 2.02.

         "Revolving Loan Commitment"  shall mean each Lender's initial Revolving
Loan Commitment set forth on Schedule 2.02,  expressed as an amount representing
the  maximum  aggregate  amount  of  such  Lender's  Revolving  Credit  Exposure
hereunder,  as such  commitment may be (i) reduced from time to time pursuant to
Section  2.07 and (ii)  reduced  or  increased  from  time to time  pursuant  to
assignments by or to such Lender pursuant to Section 9.04.

         "Revolving  Maturity  Date" shall mean November 1, 2010, or any earlier
date on which (i) the  Revolving  Loan  Commitments  shall  have  terminated  in
accordance  with this  Agreement and (ii)(a) all unpaid  amounts owing under the
Revolving  Notes have been  declared  due and  payable in  accordance  with this
Agreement or (b) all unpaid  amounts owing under the Revolving  Notes shall have
been prepaid in accordance with this Agreement.

         "Revolving  Notes"  shall mean the  promissory  notes of the  Borrowers
executed and delivered under Section 2.08(a).

         "S&P" means Standard & Poor's Ratings Group.

         "SEC" means the  Securities and Exchange  Commission,  an agency of the
United States government.

                                       17
<PAGE>

         "Security Agreements" means, collectively, Security Agreements securing
the Obligations and covering all material  personal property of the Loan Parties
(other than personal  property  covered by the Pledge and Security  Agreements),
and those certain Security Agreements executed and delivered pursuant to Section
5.13, in each case as amended from time to time.

         "Security Documents" shall mean the Pledge and Security Agreements, the
Security Agreements,  the Guaranty Agreements and the Mortgages,  as they may be
amended or modified from time to time, and any and all other  agreements,  deeds
of  trust,   mortgages,   chattel  mortgages,   security  agreements,   pledges,
guaranties,  assignments of production or proceeds of production, assignments of
income,  assignments of contract  rights,  assignments of partnership  interest,
assignments  of royalty  interests,  assignments of  performance,  completion or
surety bonds,  standby agreements,  subordination  agreements,  undertakings and
other  instruments  and  financing  statements  now or  hereafter  executed  and
delivered by any Person  (other than solely by the  Administrative  Agent or any
Lender and/or any other  creditor  participating  in the Loans  evidenced by the
Notes or any collateral or security therefor) in connection with, or as security
for Obligations.

         "Senior Debt" means, as to the Consolidated  Group,  Indebtedness minus
Subordinated Debt.

         "Statutory Reserve Rate" means a fraction (expressed as a decimal), the
numerator of which is the number one and the  denominator of which is the number
one minus the  aggregate  of the  maximum  reserve  percentages  (including  any
marginal,  special,  emergency or supplemental  reserves) expressed as a decimal
established  by the  Board to which the  Administrative  Agent is  subject  with
respect to the Adjusted LIBOR, for eurocurrency  funding (currently  referred to
as  "Eurocurrency  Liabilities"  in  Regulation  D of the Board).  Such  reserve
percentages   shall  include  those  imposed  pursuant  to  such  Regulation  D.
Eurodollar  Loans shall be deemed to constitute  eurocurrency  funding and to be
subject to such reserve requirements without benefit of or credit for proration,
exemptions  or  offsets  that may be  available  from time to time to any Lender
under such Regulation D or any comparable regulation. The Statutory Reserve Rate
shall be adjusted automatically on and as of the effective date of any change in
any reserve percentage.

         "Subordinated  Debt" shall mean all  Indebtedness of CAI which has been
subordinated on terms and conditions  satisfactory to the Required  Lenders,  in
their sole  discretion,  to all of the  Obligations,  whether  now  existing  or
hereafter incurred.  Indebtedness shall not be considered as "Subordinated Debt"
unless and until the  Administrative  Agent  shall have  received  copies of the
documentation  evidencing  or  relating  to such  Indebtedness  together  with a
subordination  agreement,  in form and  substance  satisfactory  to the Required
Lenders,  duly  executed  by the  holder or  holders  of such  Indebtedness  and
evidencing the terms and conditions of the required subordination.

         "Subsidiary"  means,  with respect to any Person (the  "parent") at any
date, any corporation,  limited liability company,  partnership,  association or
other  entity the  accounts  of which  would be  consolidated  with those of the
parent in the  parent's  consolidated  financial  statements  if such  financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, limited liability company, partnership,  association or other
entity (a) of which securities or other ownership  interests  representing  more
than 50% of the equity or more than 50% of the ordinary  voting power or, in the
case of a partnership,  more than 50% of the general partnership  interests are,
as of such date,  owned,  controlled  or held,  or (b) that is, as of such date,
otherwise Controlled, by the parent or one or more subsidiaries of the parent or
by the parent and one or more subsidiaries of the parent.

                                       18
<PAGE>

         "Swingline Exposure" means, at any time, the aggregate principal amount
of all Swingline Loans  outstanding at such time. The Swingline  Exposure of any
Lender at any time shall be its  Applicable  Percentage  of the total  Swingline
Exposure at such time. The maximum  permitted  amount of Swingline  Exposure for
all of the Lenders is $8,000,000.

         "Swingline Lender" means JPMorgan Chase Bank, National Association,  in
its capacity as lender of Swingline Loans hereunder.

         "Swingline Loan" means a Loan made pursuant to Section 2.17.

         "Taxes"  means any and all present or future  taxes,  levies,  imposts,
duties,  deductions,   charges  or  withholdings  imposed  by  any  Governmental
Authority.

         "Transactions"  means the  execution,  delivery and  performance by the
Loan Parties of this  Agreement and the other Loan  Documents,  the borrowing of
Loans, and the use of the proceeds thereof.

         "Type,"  when used in  reference  to any Loan or  Borrowing,  refers to
whether  the rate of  interest  on such Loan,  or on the Loans  comprising  such
Borrowing, is determined by reference to LIBOR or the Alternate Base Rate.

         "Withdrawal  Liability"  means liability to a  Multiemployer  Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.

         "Working  Capital" means, for any period,  current assets minus current
liabilities, as defined in accordance with GAAP.

         SECTION 1.02.  Classification of Loans and Borrowings.  For purposes of
this  Agreement,  Loans may be  classified  and  referred  to by Type  (e.g.,  a
"Eurodollar  Loan").  Borrowings  also may be classified and referred to by Type
(e.g., a "Eurodollar Borrowing").

         SECTION 1.03.  Terms  Generally.  The definitions of terms herein shall
apply  equally to the singular and plural forms of the terms  defined.  Whenever
the context may require, any pronoun shall include the corresponding  masculine,
feminine and neuter forms. The words "include," "includes" and "including" shall
be deemed to be followed  by the phrase  "without  limitation."  The word "will"
shall be  construed  to have the same  meaning  and effect as the word  "shall."
Unless the context requires  otherwise (a) any definition of or reference to any
agreement,  instrument or other document  herein shall be construed as referring
to such  agreement,  instrument or other  document as from time to time amended,
supplemented  or  otherwise  modified  (subject  to  any  restrictions  on  such
amendments,  supplements or modifications  set forth herein),  (b) any reference

                                       19
<PAGE>

herein to any Person shall be construed to include such Person's  successors and
assigns,  (c) the words "herein," "hereof" and "hereunder," and words of similar
import, shall be construed to refer to this Agreement in its entirety and not to
any  particular  provision  hereof,  (d)  all  references  herein  to  Articles,
Sections,  Exhibits  and  Schedules  shall be construed to refer to Articles and
Sections of, and Exhibits and  Schedules  to, this  Agreement  and (e) the words
"asset" and  "property"  shall be  construed to have the same meaning and effect
and to refer to any and all  tangible  and  intangible  assets  and  properties,
including cash, securities, accounts and contract rights.

         SECTION 1.04.  Accounting Terms;  GAAP.  Except as otherwise  expressly
provided  herein,  all  terms of an  accounting  or  financial  nature  shall be
construed  in  accordance  with GAAP,  as in effect from time to time;  provided
that,  if the  Borrowers  notify the  Administrative  Agent  that the  Borrowers
request an amendment  to any  provision  hereof to  eliminate  the effect of any
change occurring after the date hereof in GAAP or in the application  thereof on
the operation of such  provision (or if the  Administrative  Agent  notifies the
Borrowers that the Required Lenders request an amendment to any provision hereof
for such  purpose),  regardless  of whether any such  notice is given  before or
after such change in GAAP or in the  application  thereof,  then such  provision
shall be interpreted  on the basis of GAAP as in effect and applied  immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.

                                   ARTICLE II
                                   The Credits
                                   -----------

         SECTION 2.01. Intentionally Left Blank.

         SECTION  2.02.  Revolving  Loan  Commitments.  Subject to the terms and
conditions set forth herein,  each Lender agrees to make Revolving  Loans to the
Borrowers  from time to time  during  the  Availability  Period in an  aggregate
principal  amount  that will not result in (a) such  Lender's  Revolving  Credit
Exposure to all Borrowers  exceeding such Lender's  Revolving Loan Commitment or
(b)  the  sum of the  total  Revolving  Credit  Exposures  exceeding  the  total
Revolving Loan Commitments. Within the foregoing limits and subject to the terms
and conditions set forth herein,  the Borrowers may borrow,  prepay and reborrow
Revolving Loans.

         SECTION 2.03. Loans and Borrowings.

         (a) Each Loan (other than a Swingline  Loan) shall be made as part of a
Borrowing  consisting of Loans made by the Lenders  ratably in  accordance  with
their respective  Revolving Loan Commitments.  The failure of any Lender to make
any Loan  required to be made by it shall not  relieve  any other  Lender of its
obligations  hereunder;  provided that the  Revolving  Loan  Commitments  of the
Lenders are several and no Lender shall be  responsible  for any other  Lender's
failure to make Loans as required.

         (b) Subject to Section  2.12,  each  Borrowing  (other than a Swingline
Loan)  shall be  comprised  entirely  of ABR  Loans or  Eurodollar  Loans as the
applicable  Borrower may request in accordance  herewith.  Each  Swingline  Loan
shall be an ABR Loan.  Each Lender at its option may make any Eurodollar Loan by
causing any domestic or foreign  branch or affiliate of such Lender to make such
Loan;  provided that any exercise of such option shall not affect the obligation
of the  applicable  Borrower to repay such Loan in accordance  with the terms of
this Agreement.

                                       20
<PAGE>

         (c) At the  commencement  of each  Interest  Period for any  Eurodollar
Borrowing,  such Borrowing  shall be in an aggregate  amount that is an integral
multiple of  $500,000  and not less than  $1,000,000.  At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $500,000 and not less than $1,000,000;  provided that
an ABR Revolving  Borrowing  may be in an aggregate  amount that is equal to the
entire unused balance of the total  Revolving Loan  Commitments.  Each Swingline
Loan shall be in an amount that is an integral multiple of $100,000.  Borrowings
of more than one Type may be outstanding  at the same time;  provided that there
shall not at any time be more than a total of twelve (12) Eurodollar  Borrowings
outstanding.

         (d)  Notwithstanding  any  other  provision  of  this  Agreement,   the
Borrowers shall not be entitled to request,  or to elect to convert or continue,
any Borrowing if the Interest  Period  requested with respect  thereto would end
after the Revolving Maturity Date.

         SECTION 2.04. Requests for Revolving Borrowings. To request a Revolving
Borrowing, the applicable Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar  Borrowing,  not later than
11:00 a.m.,  Houston time,  three  Business Days before the date of the proposed
Borrowing,  or (b) in the case of an ABR  Revolving  Borrowing,  not later  than
11:00 a.m.,  Houston  time,  one  Business  Day before the date of the  proposed
Revolving Borrowing. Each such telephonic Borrowing Request shall be irrevocable
and  shall  be  confirmed   promptly  by  hand   delivery  or  telecopy  to  the
Administrative  Agent of a written  Borrowing  Request  in the form set forth as
Exhibit C hereto and signed by the applicable Borrower. Each such telephonic and
written Borrowing Request shall specify the following  information in compliance
with Sections 2.02 and 2.03:

                  (i) the applicable Borrower;

                  (ii)  the  aggregate   amount  of  the   requested   Revolving
         Borrowing;

                  (iii) the date of such  Borrowing,  which  shall be a Business
         Day;

                  (iv)  whether  such  Revolving  Borrowing  is  to  be  an  ABR
         Borrowing or a Eurodollar Borrowing;

                  (v)  in  the  case  of a  Eurodollar  Borrowing,  the  initial
         Interest  Period  to be  applicable  thereto,  which  shall be a period
         contemplated by the definition of the term "Interest Period"; and

                  (vi) the  location  and  number of the  Borrower's  account to
         which funds are to be disbursed.

                                       21
<PAGE>

         If no  election  as to the Type of  Borrowing  is  specified,  then the
requested Revolving  Borrowing shall be an ABR Borrowing.  If no Interest Period
is  specified  with  respect to any  requested  Eurodollar  Borrowing,  then the
applicable  Borrower  shall be deemed to have  selected an  Interest  Period one
month's duration. Promptly following receipt of a Revolving Borrowing Request in
accordance with this Section,  the Administrative Agent shall advise each Lender
of the  details  thereof and of the amount of such  Lender's  Loan to be made as
part of the requested Revolving Borrowing.

         SECTION 2.05. Funding of Borrowings.

         (a) Each Lender  shall make each Loan to be made by it hereunder on the
proposed date thereof by wire transfer of immediately  available  funds by 12:00
noon,  Houston  time, to the account of the  Administrative  Agent most recently
designated  by it for such  purpose  by notice  to the  Lenders;  provided  that
Swingline  Loans shall be made as provided in Section 2.17.  The  Administrative
Agent will make such Loans available to the Borrowers by promptly  crediting the
amounts so received,  in like funds,  to an account of the Borrowers  maintained
with the Administrative  Agent in Houston and designated by the Borrowers in the
applicable Borrowing Request.

         (b) Unless the  Administrative  Agent shall have received notice from a
Lender prior to the  proposed  date of any  Borrowing  that such Lender will not
make  available  to  the  Administrative  Agent  such  Lender's  share  of  such
Borrowing,  the  Administrative  Agent may assume that such Lender has made such
share  available on such date in accordance  with  paragraph (a) of this Section
and may, in reliance  upon such  assumption,  make  available to the Borrowers a
corresponding  amount. In such event, if a Lender has not in fact made its share
of the applicable  Borrowing  available to the  Administrative  Agent,  then the
applicable Lender and the Borrowers severally agree to pay to the Administrative
Agent forthwith on demand such corresponding  amount with interest thereon,  for
each day from and  including  the date  such  amount  is made  available  to the
Borrowers to but excluding the date of payment to the  Administrative  Agent, at
(i) in the case of such Lender,  the greater of the Federal Funds Effective Rate
and a rate  determined by the  Administrative  Agent in accordance  with banking
industry rules on interbank  compensation  or (ii) in the case of the Borrowers,
the interest rate  applicable  to ABR Loans.  If such Lender pays such amount to
the  Administrative  Agent, then such amount shall constitute such Lender's Loan
included in such Borrowing.

         SECTION 2.06. Interest Elections.

         (a) Each  Borrowing  initially  shall be of the Type  specified  in the
applicable Borrowing Request and, in the case of a Eurodollar  Borrowing,  shall
have  an  initial  Interest  Period  as  specified  in such  Borrowing  Request.
Thereafter,  the  Borrowers  may elect to convert such  Borrowing to a different
Type or to continue such Borrowing  and, in the case of a Eurodollar  Borrowing,
may elect  Interest  Periods  therefor,  all as  provided in this  Section.  The
Borrowers may elect different options with respect to different  portions of the
affected  Borrowing,  in which case each such portion shall be allocated ratably
among the Lenders holding the Loans  comprising  such  Borrowing,  and the Loans
comprising  each such portion  shall be  considered a separate  Borrowing.  This
Section shall not apply to Swingline  Borrowings,  which may not be converted or
continued.

                                       22
<PAGE>

         (b) To make an election  pursuant to this Section,  the Borrowers shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing  Request would be required  under  Section 2.03 if the Borrowers  were
requesting a Borrowing of the Type  resulting  from such  election to be made on
the effective  date of such election.  Each such  telephonic  Interest  Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form set forth on  Exhibit  D  attached  hereto  and  signed  by the  applicable
Borrower.

         (c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.03:

                  (i) the  Borrowing  to which such  Interest  Election  Request
         applies  and, if  different  options are being  elected with respect to
         different  portions  thereof,  the portions  thereof to be allocated to
         each resulting Borrowing (in which case the information to be specified
         pursuant to clauses  (iii) and (iv) below shall be  specified  for each
         resulting Borrowing);

                  (ii) the effective  date of the election made pursuant to such
         Interest Election Request, which shall be a Business Day;

                  (iii)  whether  the  resulting  Borrowing  is  to  be  an  ABR
         Borrowing or a Eurodollar Borrowing; and

                  (iv) if the resulting Borrowing is a Eurodollar Borrowing, the
         Interest  Period to be  applicable  thereto after giving effect to such
         election, which shall be a period contemplated by the definition of the
         term "Interest Period."

If any such Interest  Election Request requests a Eurodollar  Borrowing but does
not specify an Interest Period,  then the applicable Borrower shall be deemed to
have selected an Interest Period of one month's duration.

         (d) Promptly  following receipt of an Interest  Election  Request,  the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.

         (e) If the Borrowers fail to deliver a timely Interest Election Request
with  respect  to a  Eurodollar  Revolving  Borrowing  prior  to the  end of the
Interest Period  applicable  thereto,  then,  unless such Borrowing is repaid as
provided  herein,  at the end of such Interest  Period such  Borrowing  shall be
converted to an ABR Borrowing. Notwithstanding any contrary provision hereof, if
an Event of Default has occurred and is continuing and the Administrative Agent,
at the request of the Required Lenders, so notifies the Borrowers, then, so long
as an Event  of  Default  is  continuing  (i) no  outstanding  Borrowing  may be
converted to or continued as a Eurodollar Borrowing and (ii) unless repaid, each
Eurodollar  Borrowing  shall be converted to an ABR  Borrowing at the end of the
Interest Period applicable thereto.

                                       23
<PAGE>

         SECTION 2.07.  Termination,  Reduction  and Increase of Revolving  Loan
Commitments.

         (a) Unless previously terminated,  the Revolving Loan Commitments shall
terminate on the Revolving Maturity Date.

         (b) The  Borrowers  may at any  time  terminate,  or from  time to time
reduce,  the Revolving  Loan  Commitments;  provided that each  reduction of the
Revolving Loan Commitments shall be in an amount that is an integral multiple of
$250,000 and not less than $1,000,000.

         (c) The Borrowers shall notify the Administrative Agent of any election
to terminate or reduce the Revolving  Loan  Commitments  under  paragraph (b) of
this Section at least five  Business  Days prior to the  effective  date of such
termination  or  reduction,  specifying  such  election and the  effective  date
thereof.  Promptly  following receipt of any notice,  the  Administrative  Agent
shall advise the Lenders of the contents  thereof.  Each notice delivered by the
Borrowers  pursuant to this Section shall be  irrevocable.  Any  termination  or
reduction of the Revolving Loan Commitments  shall be permanent.  Each reduction
of the  Revolving  Loan  Commitments  shall be made ratably among the Lenders in
accordance with their respective Revolving Loan Commitments.

         (d) At any time prior to the expiration of the Availability Period, and
so long as no  Default  or  Event  of  Default  shall  have  occurred  which  is
continuing,  Borrowers may elect to increase the aggregate of the Revolving Loan
Commitments to an amount not exceeding  $90,000,000  minus any reductions in the
Revolving Loan Commitments pursuant to Section 2.07(b) hereof, provided that (i)
Borrowers shall give at least thirty (30) Business Days' prior written notice of
each such increase to the  Administrative  Agent and each existing Lender,  (ii)
each existing  Lender shall have the right (but not the obligation) to subscribe
to its pro rata share of the proposed increase in the Revolving Loan Commitments
by giving  written  notice of such election to Borrowers and the  Administrative
Agent  within  twenty  (20)  Business  Days after  receipt of a notice  from the
Borrowers as above  described  and only if an existing  Lender does not exercise
such election may the Borrowers elect to add a new Lender, (iii) no Lender shall
be required to  increase  its  Revolving  Loan  Commitment  unless it shall have
expressly  agreed to such  increase in writing (but  otherwise,  no notice to or
consent  by any  Lender  shall  be  required,  notwithstanding  anything  to the
contrary  set forth in Section  9.02  hereof),  (iv) the addition of new Lenders
shall be subject to the terms and  provisions  of Section 9.04 hereof as if such
new  Lenders  were  acquiring  an interest  in the Loans by  assignment  from an
existing Lenders (to the extent  applicable,  i.e. required  approvals,  minimum
amounts and the like),  (v) Borrowers  shall execute and deliver such additional
or replacement Notes and such other documentation  (including evidence of proper
authorization) as may be reasonably  requested by the Administrative  Agent, any
new Lender or any Lender which is increasing its Revolving Loan Commitment, (vi)
no Lender shall have any right to decrease its  Revolving  Loan  Commitment as a
result  of any such  increase  of the  aggregate  amount of the  Revolving  Loan
Commitments, (vii) the Administrative Agent shall have no obligation to arrange,
find or locate any Lender or new bank or financial institution to participate in
any unsubscribed  portion of any such increase in the aggregate committed amount
of the Revolving Loan Commitments,  and (viii) each such increase shall be in an
aggregate amount of at least $10,000,000. Borrowers shall be required to pay (or
to reimburse  each  applicable  Lender for) any breakage  costs  incurred by any
Lender  in  connection  with the need to  reallocate  existing  Loans  among the
Lenders  following any increase in the Revolving  Loan  Commitments  pursuant to
this provision.

                                       24
<PAGE>

         SECTION 2.08. Repayment of Loans; Evidence of Debt.

         (a) The Borrowers shall execute and deliver to the Administrative Agent
for each Lender a Revolving  Note to evidence the  Revolving  Loans made by such
Lender to the Borrowers under such Lender's aggregate Revolving Loan Commitment,
which  shall be (i) in the  principal  amount of such  Lender's  Revolving  Loan
Commitment and (ii) in  substantially  the form attached  hereto as Exhibit E-1,
with the blanks appropriately  filled. The outstanding principal balance of each
Revolving Note shall be payable on the Revolving Maturity Date.

         (b) The Borrowers shall execute and deliver to the Administrative Agent
for the Swingline  Lender a Swingline Note to evidence the Swingline  Loans made
by the Swingline  Lender to the  Borrowers,  which shall be (i) in the principal
amount equal to maximum  permitted  amount of Swingline  Exposure for all of the
Lenders and (ii) in substantially  the form attached hereto as Exhibit E-2, with
the blanks  appropriately  filled. The unpaid principal amount of each Swingline
Loan shall be payable on the earlier of the Revolving Maturity Date and the date
that is 15 calendar  days after such  Swingline  Loan is made;  provided that on
each date that a Revolving Loan is made, the Borrowers shall repay all Swingline
Loans then outstanding.

         (c) Each  Revolving  Note shall bear  interest on the unpaid  principal
amount thereof from time to time outstanding at the rate per annum determined as
specified in Section 2.11 payable on each Interest Payment Date and at maturity,
commencing  with the first  Interest  Payment  Date  following  the date of such
Revolving  Note. The Swingline Note shall bear interest on the unpaid  principal
amount thereof from time to time outstanding at the rate per annum determined as
specified in Section 2.11 payable as provided in Section 2.17 hereof.

         SECTION 2.09. Prepayment of Loans.

         (a) The  Borrowers  shall  have the  right at any time and from time to
time to prepay any  Borrowing  in whole or in part,  subject to prior  notice in
accordance  with  paragraph (d) of this Section;  provided that such  prepayment
shall be in an amount that is an integral multiple of $250,000 and not less than
$1,000,000.

         (b) The Borrowers  shall notify the  Administrative  Agent by telephone
(confirmed by telecopy) of any  prepayment  hereunder not later than 11:00 a.m.,
Houston time,  five Business Days before the date of prepayment (or, in the case
of prepayment of a Swingline  Loan,  not later than 12:00 noon,  Houston,  Texas
time,  on the date of  prepayment).  Each such notice shall be  irrevocable  and
shall specify the prepayment date and the principal  amount of each Borrowing or
portion  thereof to be prepaid.  Promptly  following  receipt of any such notice
(other than a notice relating  solely to Swingline  Loans),  the  Administrative
Agent shall advise the Lenders of the contents  thereof.  Each  prepayment  of a
Revolving  Borrowing  shall be  applied  ratably  to the Loans  included  in the
prepaid Borrowing. All prepayments shall be accompanied by accrued interest and,
if the prepayment is in respect of a Eurodollar Borrowing and is made on any day
other than the last day of the applicable  Interest Period, such prepayment must
be  accompanied  by payment of all breakage costs and funding losses as provided
for in Section 2.14.

                                       25
<PAGE>

         SECTION 2.10. Fees.

         (a) The  Borrowers  agree to pay to the  Administrative  Agent  for the
account of each Lender a facility fee,  which shall accrue at the Commitment Fee
Rate on the  daily  amount  of the  unutilized  portion  of the  Revolving  Loan
Commitment  of such Lender  during the period from and including the date hereof
to but excluding the date on which such  Revolving Loan  Commitment  terminates.
Accrued  facility  fees  shall be  payable  in arrears on the last day of April,
July,  October and  January of each year and on the date on which the  Revolving
Loan Commitments terminate, commencing on the first such date to occur after the
date hereof;  provided that any facility  fees accruing  after the date on which
the  Revolving  Loan  Commitments  terminate  shall be payable  on  demand.  All
facility  fees shall be computed on the basis of a year of 360 days and shall be
payable  for the  actual  number of days  elapsed  (including  the first day but
excluding  the last day).  For purposes of  computing  such  commitment  fees, a
Revolving  Loan  Commitment of a Lender shall be deemed to be used to the extent
of the  outstanding  Revolving  Loans and LC  Exposure  of such  Lender (and the
Swingline Exposure of such Lender shall be disregarded for such purpose,  except
in respect of the Swingline Lender,  whose Revolving Commitment shall be reduced
by the  Swingline  Exposure  for  purposes  of  calculating  fees due under this
Section 2.10(a)).

         (b) The  Borrowers  agree to pay to the Arranger an  underwriting  fee,
which  shall be payable at closing  and  payable in the amounts and at the times
separately agreed upon between the Borrowers and the Arranger.

         (c) The Borrowers agree to pay to the Administrative Agent, for its own
account,  administrative fees payable in the amounts and at the times separately
agreed upon between the Borrowers and the Administrative Agent.

         (d) All fees  payable  hereunder  shall be paid on the  dates  due,  in
immediately available funds, to the Administrative Agent (or to the Arranger, in
the case of fees payable to it) for  distribution,  in the case of facility fees
and participation fees, to the Lenders.  Fees paid shall not be refundable under
any circumstances.

         SECTION 2.11. Interest.

         (a) The Loans  comprising each ABR Borrowing  (including each Swingline
Loan) shall bear interest at the Alternate Base Rate.

         (b) The Loans comprising each Eurodollar  Borrowing shall bear interest
at the Adjusted LIBOR plus the applicable  LIBOR Margin for the Interest  Period
in effect for such Borrowing.

         (c) Notwithstanding  the foregoing,  if any principal of or interest on
any Loan or any fee or other amount  payable by the  Borrowers  hereunder is not
paid when due, whether at stated maturity, upon acceleration or otherwise,  such
overdue amount shall bear interest,  after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 3% plus the
rate otherwise  applicable to such Loan as provided in the preceding  paragraphs
of this  Section  or (ii) in the  case of any  other  amount,  3% plus  the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.

                                       26
<PAGE>

         (d)  Accrued  interest on each Loan shall be payable in arrears on each
Interest  Payment Date for such Loan and, in the case of Revolving  Loans,  upon
termination  of the  Revolving  Loan  Commitments;  provided  that (i)  interest
accrued  pursuant to paragraph  (c) of this Section  shall be payable on demand,
(ii) in the event of any repayment or prepayment of any Loan,  accrued  interest
on the  principal  amount repaid or prepaid shall be payable on the date of such
repayment  or  prepayment  and  (iii)  in the  event  of any  conversion  of any
Eurodollar  Loan  prior  to the end of the  current  Interest  Period  therefor,
accrued  interest  on such Loan shall be payable on the  effective  date of such
conversion.

         (e) All interest  hereunder shall be computed on the basis of a year of
360 days, except that, interest computed by reference to the Alternate Base Rate
at times  when the  Alternate  Base  Rate is based on the  Prime  Rate  shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed  (including the
first day but excluding the last day).  The  applicable  Alternate Base Rate and
LIBOR shall be determined by the  Administrative  Agent, and such  determination
shall be conclusive absent manifest error.

         SECTION 2.12. Alternate Rate of Interest.  If prior to the commencement
of any Interest Period for a Eurodollar Borrowing:

         (a) the Administrative  Agent determines (which  determination shall be
conclusive  absent  manifest  error) that adequate and  reasonable  means do not
exist for ascertaining LIBOR for such Interest Period; or

         (b) the  Administrative  Agent is advised by the Required  Lenders that
LIBOR for such Interest  Period will not  adequately and fairly reflect the cost
to such Lenders (or Lender) of making or  maintaining  their Loans (or its Loan)
included in such Borrowing for such Interest Period;

then the Administrative Agent shall give notice thereof to the Borrowers and the
Lenders by  telephone  or telecopy as promptly as  practicable  thereafter  and,
until the  Administrative  Agent notifies the Borrowers and the Lenders that the
circumstances  giving  rise to such  notice no longer  exist,  (i) any  Interest
Election   Request  that  requests  the  conversion  of  any  Borrowing  to,  or
continuation  of any Borrowing as, a Eurodollar  Borrowing shall be ineffective,
and  (ii)  if any  Borrowing  Request  requests  a  Eurodollar  Borrowing,  such
Borrowing shall be made as an ABR Borrowing;  provided that if the circumstances
giving rise to such notice  affect only one Type of  Borrowings,  then the other
Type of Borrowings shall be permitted.

                                       27
<PAGE>

         SECTION 2.13. Increased Costs.

         (a) If any Change in Law shall:

                  (i) impose,  modify or deem  applicable  any reserve,  special
         deposit or similar  requirement against assets of, deposits with or for
         the  account  of, or credit  extended  by, any Lender  (except any such
         reserve requirement reflected in the Adjusted LIBOR); or

                  (ii) impose on any Lender or the London  interbank  market any
         other  condition  affecting this Agreement or Eurodollar  Loans made by
         such Lender;

and the result of any of the  foregoing  shall be to  increase  the cost to such
Lender of making or  maintaining  any  Eurodollar  Loan (or of  maintaining  its
obligation  to make any such Loan) or to increase  the cost to such Lender or to
reduce the amount of any sum  received or  receivable  by such Lender  hereunder
(whether of principal,  interest or  otherwise),  then the Borrowers will pay to
such Lender such additional amount or amounts as will compensate such Lender for
such additional costs incurred or reduction suffered.

         (b) If any Lender  determines that any Change in Law regarding  capital
requirements has or would have the effect of reducing the rate of return on such
Lender's capital or on the capital of such Lender's holding company,  if any, as
a  consequence  of this  Agreement  or the Loans made by such  Lender to a level
below  that  which  such  Lender or such  Lender's  holding  company  could have
achieved but for such Change in Law (taking  into  consideration  such  Lender's
policies  and the  policies of such  Lender's  holding  company  with respect to
capital adequacy),  then from time to time the Borrowers will pay to such Lender
such  additional  amount  or  amounts  as will  compensate  such  Lender or such
Lender's holding company for any such reduction suffered.

         (c) A  certificate  of a Lender  setting  forth the  amount or  amounts
necessary to compensate such Lender or its holding company,  as the case may be,
as specified in paragraph  (a) or (b) of this Section  shall be delivered to the
Borrowers and shall be conclusive absent manifest error. The Borrowers shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.

         (d)  Failure or delay on the part of any Lender to demand  compensation
pursuant to this Section shall not constitute a waiver of such Lender's right to
demand such compensation.

         SECTION 2.14. Break Funding  Payments.  In the event of (a) the payment
of any  principal  of any  Eurodollar  Loan  other  than on the  last  day of an
Interest  Period  applicable  thereto  (including  as a  result  of an  Event of
Default),  (b) the conversion of any Eurodollar  Loan other than on the last day
of the  Interest  Period  applicable  thereto,  or (c) the  failure  to  borrow,
convert,  continue  or  prepay  any Loan on the  date  specified  in any  notice
delivered  pursuant  hereto  then,  in  any  such  event,  the  Borrowers  shall
compensate  each  Lender for the loss,  cost and  expense  attributable  to such
event.  In the case of a  Eurodollar  Loan,  such  loss,  cost or expense to any
Lender shall be deemed to include an amount  determined by such Lender to be the
excess,  if any, of (i) the amount of interest  which would have  accrued on the
principal  amount of such Loan had such event not occurred,  at LIBOR that would

                                       28
<PAGE>

have been applicable to such Loan, for the period from the date of such event to
the last day of the then current  Interest Period therefor (or, in the case of a
failure to borrow,  convert or continue, for the period that would have been the
Interest  Period for such Loan),  over (ii) the amount of  interest  which would
accrue on such principal  amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period,  for dollar
deposits of a  comparable  amount and period from other banks in the  Eurodollar
market.  A  certificate  of any Lender  setting forth any amount or amounts that
such Lender is entitled to receive  pursuant to this Section  shall be delivered
to the Borrowers and shall be conclusive  absent manifest  error.  The Borrowers
shall pay such Lender the amount shown as due on any such certificate  within 10
days after receipt thereof.

         SECTION 2.15. Taxes.

         (a) Any and all  payments  by or on  account of any  obligation  of the
Borrowers  hereunder  shall be made free and clear of and without  deduction for
any  Indemnified  Taxes or Other Taxes;  provided that if the Borrowers shall be
required to deduct any Indemnified Taxes or Other Taxes from such payments, then
(i) the sum payable  shall be  increased  as  necessary so that after making all
required deductions  (including deductions applicable to additional sums payable
under  this  Section)  the  Administrative  Agent or Lender (as the case may be)
receives  an  amount  equal  to the  sum it  would  have  received  had no  such
deductions  been made,  (ii) the Borrowers  shall make such deductions and (iii)
the Borrowers  shall pay the full amount  deducted to the relevant  Governmental
Authority in accordance with applicable law.

         (b) In  addition,  the  Borrowers  shall  pay any  Other  Taxes  to the
relevant Governmental Authority in accordance with applicable law.

         (c) The Borrowers  shall  indemnify the  Administrative  Agent and each
Lender, within ten (10) days after written demand therefor,  for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender,  as the case may be, on or with  respect to any payment by or on account
of any obligation of the Borrowers  hereunder  (including  Indemnified  Taxes or
Other Taxes imposed or asserted on or attributable to amounts payable under this
Section) and any penalties,  interest and reasonable  expenses arising therefrom
or with respect thereto,  whether or not such  Indemnified  Taxes or Other Taxes
were  correctly  or legally  imposed or  asserted by the  relevant  Governmental
Authority. A certificate as to the amount of such payment or liability delivered
to the Borrowers by a Lender or by the Administrative Agent on its own behalf or
on behalf of a Lender, shall be conclusive absent manifest error.

         (d) As soon as practicable  after any payment of  Indemnified  Taxes or
Other Taxes by the Borrowers to a Governmental  Authority,  the Borrowers  shall
deliver  to the  Administrative  Agent the  original  or a  certified  copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return  reporting such payment or other evidence of such payment  reasonably
satisfactory to the Administrative Agent.

         (e)  Any  Foreign  Lender  that is  entitled  to an  exemption  from or
reduction  of  withholding  tax under the law of the  jurisdiction  in which any
Borrower is located,  or any treaty to which such  jurisdiction is a party, with
respect to payments under this Agreement  shall deliver to the Borrowers (with a
copy to the Administrative Agent), at the time or times prescribed by applicable
law, such properly completed and executed documentation prescribed by applicable
law or reasonably  requested by the Borrowers as will permit such payments to be
made without withholding or at a reduced rate.

                                       29
<PAGE>

         SECTION  2.16.  Payments  Generally;  Pro Rata  Treatment;  Sharing  of
Set-offs.

         (a) The  Borrowers  shall make each  payment  required to be made by it
hereunder  (whether of principal,  interest or fees, or of amounts payable under
Section 2.13, 2.14 or 2.15, or otherwise) prior to 12:00 noon,  Houston time, on
the  date  when  due,  in  immediately   available  funds,  without  set-off  or
counterclaim.  Any  amounts  received  after  such time on any date may,  in the
discretion of the  Administrative  Agent, be deemed to have been received on the
next succeeding Business Day for purposes of calculating  interest thereon.  All
such payments  shall be made to the  Administrative  Agent at its offices at 712
Main Street, Houston, Texas 77002. The Administrative Agent shall distribute any
such  payments  received  by it for  the  account  of any  other  Person  to the
appropriate  recipient  promptly  following  receipt  thereof.  If  any  payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next  succeeding  Business Day, and, in the case of any
payment accruing  interest,  interest thereon shall be payable for the period of
such extension. All payments hereunder shall be made in Dollars.

         (b) If at any time insufficient  funds are received by and available to
the  Administrative  Agent to pay fully all amounts of  principal,  interest and
fees then due hereunder,  such funds shall be applied (i) first, towards payment
of interest  and fees then due  hereunder,  ratably  among the parties  entitled
thereto in  accordance  with the amounts of  interest  and fees then due to such
parties,  and (ii)  second,  towards  payment of principal  then due  hereunder,
ratably among the parties  entitled  thereto in  accordance  with the amounts of
principal then due to such parties.

         (c) If any  Lender  shall,  by  exercising  any  right  of  set-off  or
counterclaim  or  otherwise,  obtain  payment in respect of any  principal of or
interest  on any of its  Revolving  Loans  resulting  in such  Lender  receiving
payment of a greater  proportion of the aggregate  amount of its Revolving Loans
and accrued interest  thereon than the proportion  received by any other Lender,
then the Lender  receiving such greater  proportion  shall purchase (for cash at
face value) participations in the Revolving Loans of other Lenders to the extent
necessary  so that the  benefit  of all such  payments  shall be  shared  by the
Lenders  ratably in  accordance  with the  aggregate  amount of principal of and
accrued interest on their respective  Revolving Loans;  provided that (i) if any
such  participations  are purchased and all or any portion of the payment giving
rise  thereto is  recovered,  such  participations  shall be  rescinded  and the
purchase price restored to the extent of such recovery,  without  interest,  and
(ii) the  provisions  of this  paragraph  shall not be construed to apply to any
payment made by the  Borrowers  pursuant to and in  accordance  with the express
terms of this Agreement or any payment obtained by a Lender as consideration for
the assignment of or sale of a participation in any of its Loans to any assignee
or  participant,  other than to Parent or to the Borrowers or any  Subsidiary or
affiliate  thereof (as to which the provisions of this  paragraph  shall apply).
The  Borrowers  consent  to  the  foregoing  and  agree,  to the  extent  it may
effectively  do  so  under   applicable   law,  that  any  Lender   acquiring  a
participation  pursuant to the foregoing  arrangements  may exercise against the
Borrowers rights of setoff and counterclaim  with respect to such  participation
as fully as if such Lender were a direct creditor of the Borrowers in the amount
of such participation.

                                       30
<PAGE>

         (d) Unless the Administrative Agent shall have received notice from the
Borrowers  prior to the date on which any  payment is due to the  Administrative
Agent for the account of the Lenders  hereunder that the Borrowers will not make
such payment,  the Administrative  Agent may assume that the Borrowers have made
such payment on such date in accordance  herewith and may, in reliance upon such
assumption,  distribute  to the Lender,  the amount  due. In such event,  if the
Borrowers have not in fact made such payment, then each of the Lenders severally
agrees to repay to the  Administrative  Agent  forthwith on demand the amount so
distributed  to such  Lender  with  interest  thereon,  for  each  day  from and
including the date such amount is distributed to it to but excluding the date of
payment  to the  Administrative  Agent,  at the  greater  of the  Federal  Funds
Effective Rate and a rate determined by the  Administrative  Agent in accordance
with banking industry rules on interbank compensation.

         (e) If any Lender shall fail to make any payment required to be made by
it to the Administrative Agent pursuant to Section 2.05(b) or 2.16(d),  then the
Administrative  Agent  may,  in its  discretion  (notwithstanding  any  contrary
provision hereof),  apply any amounts thereafter  received by the Administrative
Agent for the account of such Lender to satisfy such Lender's  obligations under
such Sections until all such unsatisfied obligations are fully paid.

         SECTION 2.17. Swingline Loans.

         (a) Subject to the terms and conditions set forth herein, the Swingline
Lender agrees to make Swingline  Loans to the Borrowers from time to time during
the  Availability   Period,  in  an  aggregate  principal  amount  at  any  time
outstanding  that  will not  result  in (i) the  aggregate  principal  amount of
outstanding  Swingline Loans exceeding the maximum permitted amount of Swingline
Exposure  for all of the Lenders or (ii) the sum of the total  Revolving  Credit
Exposures  exceeding the total  Revolving  Loan  Commitments;  provided that the
Swingline  Lender shall not be required to make a Swingline Loan to refinance an
outstanding  Swingline Loan and provided further that the Swingline Lender shall
not, without the consent of the Required Lenders, make any Swingline Loan if any
Event of Default  exists of which the  Swingline  Lender  has actual  knowledge.
Within the foregoing  limits and subject to the terms and  conditions  set forth
herein, the Borrowers may borrow, prepay and reborrow Swingline Loans.

         (b) To  request a  Swingline  Loan,  the  Borrowers  shall  notify  the
Administrative Agent of such request by telephone  (confirmed by telecopy),  not
later than 3:00 p.m.,  Houston,  Texas time, on the day of a proposed  Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested date
(which shall be a Business Day) and amount of the requested  Swingline Loan. The
Administrative  Agent  will  promptly  advise the  Swingline  Lender of any such
notice  received  from the  Borrowers.  The  Swingline  Lender  shall  make each
Swingline  Loan  available to the  Borrowers by such means as may be  reasonably
directed by the Borrowers.

         (c)  The  Swingline   Lender  may  by  written   notice  given  to  the
Administrative  Agent not later  than 2:00 p.m.,  Houston,  Texas  time,  on any
Business Day require the  Revolving  Lenders to acquire  participations  on such
Business Day in all or a portion of the Swingline Loans outstanding. Such notice
shall specify the aggregate amount of Swingline Loans in which Revolving Lenders
will  participate.  The  Administrative  Agent will give notice  thereof to each
Revolving  Lender  by 3:00  p.m.,  Houston,  Texas  time on such  Business  Day,
specifying in such notice such Lender's Applicable  Percentage of such Swingline
Loan or Loans.  Each  Revolving  Lender hereby  absolutely  and  unconditionally
agrees,  upon receipt of notice as provided above, to pay to the  Administrative
Agent,  for the  account  of the  Swingline  Lender,  such  Lender's  Applicable
Percentage of such Swingline Loan or Loans.  Each Revolving Lender  acknowledges
and agrees that its  obligation  to acquire  participations  in Swingline  Loans
pursuant to this paragraph is absolute and  unconditional,  subject to Swingline
Lender's compliance with the provisions of Section 2.17(a) hereof, and shall not
be  affected  by any  circumstance  whatsoever,  including  the  occurrence  and

                                       31
<PAGE>

continuance  of a Default or  reduction or  termination  of the  Revolving  Loan
Commitments,  and that each  such  payment  shall be made  without  any  offset,
abatement,  withholding or reduction  whatsoever.  Each  Revolving  Lender shall
comply with its obligation  under this paragraph by wire transfer of immediately
available  funds, in the same manner as provided in Section 2.05 with respect to
Loans made by such Lender (and Section 2.05 shall apply,  mutatis  mutandis,  to
the payment obligations of the Revolving Lenders),  and the Administrative Agent
shall  promptly pay to the  Swingline  Lender the amounts so received by it from
the Revolving Lenders.  The  Administrative  Agent shall notify the Borrowers in
writing of any  participations  in any Swingline Loan acquired  pursuant to this
paragraph,  and  thereafter  payments in respect of such Swingline Loan shall be
made to the  Administrative  Agent and not to the Swingline Lender.  Any amounts
received by the Swingline Lender from the Borrowers (or other party on behalf of
the  Borrowers)  in respect of a Swingline  Loan after  receipt by the Swingline
Lender of the  proceeds of a sale of  participations  therein  shall be promptly
remitted  to  the  Administrative  Agent;  any  such  amounts  received  by  the
Administrative  Agent  shall  be  remitted  by the  Administrative  Agent to the
Swingline  Lender  and to the  Revolving  Lenders  that  shall  have made  their
payments  pursuant  to this  paragraph,  as their  interests  may  appear,  such
remittance  to be made on the day of receipt if such payment is received by 2:00
p.m., Houston,  Texas time and prior to 10:00 a.m. of the following Business Day
if such payment is received after 2:00 p.m.,  Houston,  Texas time. The purchase
of  participations  in a Swingline  Loan  pursuant to this  paragraph  shall not
relieve the Borrowers of any default in the payment thereof.

                                  ARTICLE III
                         Representations and Warranties
                         ------------------------------

         The Borrowers represent and warrant to the Lenders that:

         SECTION 3.01.  Organization;  Powers. Each Loan Party and each of their
Subsidiaries are duly organized, validly existing and in good standing under the
laws of the  jurisdiction  of its  organization,  has all  requisite  power  and
authority  to carry on its  business  as now  conducted  and,  except  where the
failure to do so,  individually  or in the  aggregate,  could not  reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good  standing  in, every  jurisdiction  where such  qualification  is
required.

         SECTION  3.02.  Authorization;  Enforceability.  The  Transactions  are
within the corporate  powers of each Loan Party and have been duly authorized by
all necessary corporate and, if required, stockholder action. Each Loan Document
to which any Loan Party is a party has been duly  executed and delivered by such
Person and  constitutes  a legal,  valid and binding  obligation of such Person,
enforceable in accordance with its terms.

                                       32
<PAGE>

         SECTION 3.03. Governmental  Approvals;  No Conflicts.  The Transactions
(a) do not require any consent or approval of,  registration  or filing with, or
any other  action  by,  any  Governmental  Authority,  except  such as have been
obtained  or made and are in full force and  effect,  (b) will not  violate  any
applicable  law or  regulation or the charter,  by-laws or other  organizational
documents  of any Loan  Party or any of their  Subsidiaries  or any order of any
Governmental  Authority,  (c) will not violate or result in a default  under any
indenture,  agreement or other instrument  binding upon any Loan Party or any of
their  Subsidiaries or its assets, or give rise to a right thereunder to require
any payment to be made by any Loan Party or any of their  Subsidiaries,  and (d)
except for Liens in favor of the Lenders created by the Loan Documents, will not
result in the creation or  imposition of any Lien on any asset of any Loan Party
or any of their Subsidiaries.

         SECTION 3.04. Financial Condition; No Material Adverse Change.

         (a) The Borrowers have heretofore furnished to the Administrative Agent
the following  financial  statements for the Consolidated  Group: a consolidated
balance sheet and statements of income,  stockholders  equity and cash flows (i)
as of and for the fiscal year ended  January 31, 2005  reported on by nationally
recognized  independent  public  accountants,  and (ii) as of and for the fiscal
quarter ended July 31, 2005,  certified by a Financial  Officer.  Such financial
statements present fairly, in all material respects,  the financial position and
results of operations and cash flows of the Consolidated  Group as of such dates
and for such  periods  in  accordance  with  GAAP,  subject  to  year-end  audit
adjustments and the absence of footnotes in the case of the statements  referred
to in clause (ii) above.

         (b) Since January 31, 2005,  there has been no material  adverse change
in the  business,  assets,  operations,  prospects  or  condition,  financial or
otherwise, of the Consolidated Group, taken as a whole.

         SECTION 3.05. Properties.

         (a) Except for Liens  permitted  by Section  6.02,  each Loan Party and
each of their  Subsidiaries has good title to, or valid leasehold  interests in,
all its real and personal  property  material to its business,  except for minor
defects in title that do not interfere  with its ability to conduct its business
as  currently  conducted  or to  utilize  such  properties  for  their  intended
purposes.  Set forth on Schedule  3.05(a)(i)  hereto is a complete  and accurate
list of all real property owned by any Loan Party or any of their  Subsidiaries,
showing  as of the date  hereof  the street  address,  county or other  relevant
jurisdiction,  state,  record  owner  and the  acquisition  cost and book  value
thereof. Each Loan Party and each of their Subsidiaries has good, marketable and
insurable fee simple title to such real  property,  free and clear of all Liens,
other than Liens  permitted by Section 6.02.  Set forth on Schedule  3.05(a)(ii)
hereto is a complete  and  accurate  list of all leases of real  property  under
which any Loan Party or any of their  Subsidiaries  is the lessee or  sublessee,
showing  as of the date  hereof  the street  address,  county or other  relevant
jurisdiction,  state,  lessor,  lessee or sublessee,  expiration date and annual
rental cost thereof. Each such lease or sublease is the legal, valid and binding
obligation of the lessor or sublessor,  as the case may be thereof,  enforceable
in accordance  with its terms.  Parent will own no material  property other than
equity interests in and to CAI and such equity interests shall not be subject to
any Lien.

                                       33
<PAGE>

         (b) Each Loan Party and each of their Subsidiaries enjoy,  peaceful and
undisturbed  possession of the portion of the real property as to which any such
Person  is a  lessee  under  all  leases  necessary  for  the  operation  of its
properties  and assets,  and all such leases are valid and subsisting and are in
full force and effect.

         (c) Each Loan Party and each of their Subsidiaries owns, or is licensed
to use, all trademarks, trade names, copyrights,  patents and other intellectual
property  material to its business,  and the use thereof by such Person does not
infringe upon the rights of any other Person,  except for any such infringements
that,  individually  or in the  aggregate,  could not  reasonably be expected to
result in a Material Adverse Effect.

         SECTION 3.06. Litigation and Environmental Matters.

         (a)  There  are no  actions,  suits or  proceedings  by or  before  any
arbitrator or Governmental Authority pending against or, to the knowledge of any
Borrower,  threatened  against  or  affecting  any  Loan  Party  or any of their
Subsidiaries  (i) as to which there is a  reasonable  possibility  of an adverse
determination and that, if adversely  determined,  could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect or (ii)
that involve any Loan Document or the Transactions. As of the date hereof, there
is no outstanding  judgment,  order or decree affecting any Loan Party or any of
their Subsidiaries before or by any administrative or Governmental Authority.

         (b) Except with respect to any other matters that could not  reasonably
be expected  to result in a Material  Adverse  Effect,  (i) all  facilities  and
property  owned or leased by any Loan  Party or any of their  Subsidiaries  have
been and continue to be, owned or leased and operated by such Person in material
compliance with all  Environmental  Laws; (ii) there has not been any Release of
Hazardous  Materials  at, on or under any  property now or  previously  owned or
leased by any Loan Party or any of their  Subsidiaries  (A) in  quantities  that
would be  required  to be  reported  under any  Environmental  Law,  or (B) that
required,  or may  reasonably be expected to require,  any such Person to expend
funds on remediation or clean-up  activities  pursuant to any Environmental Law;
(iii) each Loan Party and each of their Subsidiaries have been issued and are in
material compliance with all permits, certificates,  approvals, orders, licenses
and other authorizations  relating to environmental  matters necessary for their
respective  businesses;  (iv) there are not and in the past there have been none
of the  following  on or in any of the  assets of any Loan Party or any of their
Subsidiaries  or any  property now or  previously  owned or leased by them which
would result in any Environmental  Liability:  (A) any Hazardous Materials,  (B)
any  generation,  treatment,  recycling,  storage or disposal  of any  Hazardous
Materials,  (C) any underground storage tanks or surface  impoundments,  (D) any
asbestos-containing  material, or (E) any polychlorinated  biphenyls (PCBs); and
(v) neither any Loan Party nor any of their  Subsidiaries (A) has become subject
to any  Environmental  Liability,  (B) has  received  notice of any  claim  with
respect  to any  Environmental  Liability  or (C)  knows  of any  basis  for any
Environmental Liability.

         SECTION 3.07. Compliance with Laws and Agreements.  Each Loan Party and
each of their  Subsidiaries  is in  compliance  with all laws,  regulations  and
orders of any  Governmental  Authority  applicable to it or its property and all
indentures,  agreements and other  instruments  binding upon it or its property,
except where the failure to do so,  individually or in the aggregate,  could not
reasonably be expected to result in a Material  Adverse  Effect.  No Default has
occurred and is continuing.

                                       34
<PAGE>

         SECTION 3.08.  Investment and Holding Company Status. No Loan Party nor
any of their  Subsidiaries  is (a) an  "investment  company"  as defined  in, or
subject  to  regulation  under,  the  Investment  Company  Act of  1940 or (b) a
"holding  company" as defined  in, or subject to  regulation  under,  the Public
Utility Holding Company Act of 1935.

         SECTION 3.09. Taxes. As of the date hereof, each Loan Party and each of
their Subsidiaries have filed all tax returns required to be filed and have paid
all  taxes  shown  on  said  returns  and  all  assessments  which  are  not yet
delinquent.  No  Borrower is aware of any  pending  investigation  by any taxing
authority (except that the Federal income tax return for the Consolidated  Group
for the fiscal year ended  January 31, 2003 is currently  being  reviewed by the
Internal Revenue Service) or of any claims by any Governmental Authority for any
unpaid taxes by any Loan Party or any of their Subsidiaries.

         SECTION 3.10.  Public Utility Holding  Company Act Not  Applicable.  No
Loan Party nor any of their  Subsidiaries  thereof is a "holding  company," or a
"subsidiary  company" of a "holding  company," or an  "affiliate"  of a "holding
company," or an affiliate of a "subsidiary company" of a "holding company," or a
"public  utility,"  as such  terms are  defined in the  Public  Utility  Holding
Company Act of 1935, as amended.

         SECTION 3.11.  Regulations G, U and X. None of the proceeds of any Loan
will be used for the purpose of purchasing or carrying,  directly or indirectly,
any "margin  stock" within the meaning of Regulation U of the Board of Governors
of the Federal  Reserve System ("margin  stock"),  or to extend credit to others
for the purpose of  purchasing  or carrying any margin  stock,  or for any other
purpose which would  constitute this  transaction a "purpose  credit" within the
meaning of said  Regulation  U, as now in effect or as the same may hereafter be
in effect.  No Loan Party nor any of their  Subsidiaries will take or permit any
action  which  would  involve  the  Lenders  in a  violation  of  Regulation  G,
Regulation U, Regulation X or any other  regulation of the Board of Governors of
the Federal  Reserve  System or a violation  of the  Securities  Exchange Act of
1934, in each case as now or hereafter in effect.

         SECTION  3.12.  ERISA.  No  "reportable  event" (as  defined in Section
4043(b) of ERISA) has occurred with respect to any Plan. Each Plan complies with
all  applicable  provisions  of  ERISA,  and each  Loan  Party and each of their
Subsidiaries  have filed all reports  required by ERISA and the Code to be filed
with respect to each Plan.  The  Borrowers  have no knowledge of any event which
could  result in a liability of any Loan Party or any of their  Subsidiaries  to
the  Pension  Benefit  Guaranty  Corporation.  Each Loan Party and each of their
Subsidiaries have met all requirements with respect to funding the Plans imposed
by ERISA or the Code. Since the effective date of Title IV of ERISA,  there have
not been any, nor are there now existing any,  events or  conditions  that would
permit any Plan to be terminated under  circumstances which would cause the lien
provided under Section 4068 of ERISA to attach to any property of any Loan Party
or any of their  Subsidiaries The value of the Plans' benefits  guaranteed under
Title IV of ERISA on the date  hereof  does not exceed the value of such  Plans'
assets allocable to such benefits as of the date of this Agreement and shall not
be permitted to do so hereafter.

                                       35
<PAGE>

         SECTION 3.13.  Disclosure.  The Borrowers have disclosed to the Lenders
all  agreements,  instruments  and corporate or other  restrictions to which any
Loan Party or any of their Subsidiaries is subject,  and all other matters known
to it, that,  individually or in the aggregate,  could reasonably be expected to
result in a Material Adverse Effect. None of the reports,  financial statements,
certificates or other information furnished by or on behalf of any Loan Party or
any of  their  Subsidiaries  to  the  Administrative  Agent  or  any  Lender  in
connection with the  negotiation of this Agreement or delivered  hereunder or in
connection  herewith  (as  modified  or  supplemented  by other  information  so
furnished)  contains  any  material  misstatement  of fact or omits to state any
material  fact  necessary to make the  statements  therein,  in the light of the
circumstances  under  which  they were  made,  not  misleading.  All  estimates,
projections and pro forma financial information contained in materials hereafter
delivered to the  Administrative  Agent by or on behalf of any Loan Party or any
of their Subsidiaries will be based upon assumptions believed by such Persons to
be reasonable  as of the date of the  preparation  of the same.  Nothing in this
Section 3.13 shall be construed as a  representation,  warranty or covenant that
any of such estimates,  projections or pro forma financial  information shall in
fact be achieved.

         SECTION 3.14. Condition of Properties.

         (a) The  retail  sales  locations  of each Loan Party and each of their
Subsidiaries,  to the extent they are in operation  as of the date hereof,  have
adequate rights of access to existing and necessary public streets and roads and
to all water,  sanitary  sewer and storm drainage  facilities  necessary for the
intended use of such locations.

         (b) The inventory of each Loan Party and each of their  Subsidiaries is
in materially  merchantable  condition and of a quality and quantity usable,  or
salable, as appropriate, in the ordinary course of business. There is on hand at
each retail sales location inventory,  levels of inventory in amounts consistent
with  ordinary  business  practices  of the Loan  Parties  and each  appropriate
Subsidiary,  and at  levels  sufficient  for each  Loan  Party and each of their
Subsidiaries to operate the business in the ordinary course.

         SECTION 3.15. Capital Structure.

         (a)  Schedule  3.15(a) is a complete and correct  list,  as of the date
hereof,   of  all  Subsidiaries  of  CAI,  showing  the  jurisdiction  of  their
incorporation  or organization  and the percentage of the outstanding  shares of
each class of capital stock (or other equivalent  interest)  owned,  directly or
indirectly, by CAI. Except as disclosed in Schedule 3.15(a) and except for Liens
created by the Security Documents,  CAI owns,  directly or indirectly,  free and
clear of all Liens or restrictions on  transferability or voting, the percentage
of outstanding  shares of such Subsidiaries as shown on Schedule 3.15(a) and all
such  shares are validly  issued,  fully paid and  non-assessable.  There are no
outstanding warrants,  options,  contracts or commitments of any such Subsidiary
of any kind entitling any Person to purchase or otherwise acquire (i) any shares
of the capital stock of any such  Subsidiary or (ii) any securities  convertible
into or  exchangeable  for any shares of such capital  stock.  No securities are
outstanding which are convertible into or exchangeable for any shares of capital
stock of any such Subsidiary thereof.

                                       36
<PAGE>

         (b) Parent owns all of the outstanding  shares of each class of capital
stock (or other equivalent interest) of CAI.

         SECTION  3.16.   Insurance.   Schedule   3.16,   attached   hereto  and
incorporated herein by this reference,  is a true, correct and complete list and
description  of all policies of insurance  and  fidelity  bonds  relating to the
business  of any Loan Party or any of their  Subsidiaries  (except  for any such
policies  maintained  to provide  benefits to employees  under a benefit plan or
arrangement  described  elsewhere  herein),  all of which are in full  force and
effect.  All premiums thereon have been paid, and the Borrowers have received no
notice of  cancellation  with  respect  thereto.  There are no  material  claims
pending under any of said policies or bonds or disputes with  underwriters,  the
denial of which would have a Material  Adverse  Effect.  There are no pending or
threatened  terminations  of, or premium  increases with respect to, any of such
policies  and bonds and each Loan  Party and each of their  Subsidiaries  are in
compliance with all conditions  contained therein.  The Borrowers have no reason
to believe that such  insurance is not, or since the date of its  inception  has
not been,  adequate with respect to risks normally insured against by comparable
companies similarly situated. The Borrowers have delivered to the Administrative
Agent true, complete and correct copies of all of the above-described  insurance
policies.

         SECTION 3.17. Solvency. No Loan Party nor any of their Subsidiaries (i)
is  "insolvent",  as such term is used in the United States  Bankruptcy  Code of
1978, as amended,  and any successor  statute,  or the Texas Uniform  Fraudulent
Transfer  Act; (ii) is engaged in business or in a  transaction,  or is about to
engage in  business  or a  transaction,  for which its  capital is  unreasonably
small,  or (iii) intends to incur,  or believes it will incur,  debts beyond its
ability to pay as they mature.

         SECTION  3.18.  Indebtedness.  Attached  hereto as  Schedule  3.18 is a
complete  list,  as of  the  date  hereof,  of  all  agreements  or  instruments
evidencing Indebtedness of each Loan Party and each of their Subsidiaries (other
than the Loan  Documents),  showing as of the date hereof the  principal  amount
outstanding thereunder,  the maturity date thereof and the amortization schedule
thereunder.

                                   ARTICLE IV
                                   Conditions
                                   ----------

         SECTION 4.01.  Insurance.  The Administrative Agent shall have received
all such  information  as the  Administrative  Agent  shall  reasonably  request
concerning  the  insurance  maintained  by each  Loan  Party  and  each of their
Subsidiaries described in Section 3.16 hereof, including, without limitation, as
to those  policies  identified on Schedule  3.16 as to which the  Administrative
Agent is  required  to be loss  payee or  additional  insured,  certificates  of
insurance naming the Administrative  Agent as loss payee or additional  insured,
as the case may be, and the  Administrative  Agent shall have approved the types
and amounts of such insurance and the issuers thereof.

                                       37
<PAGE>

         SECTION 4.02. Payment of Expenses.  The Borrowers shall have reimbursed
the Administrative Agent for all reasonable fees and expenses in connection with
the preparation of this Agreement and all documentation contemplated hereby, the
satisfaction  of the condition set forth herein,  the filing and  recordation of
the Security Documents, and the consummation of the Transactions.

         SECTION 4.03.  Corporate Review.  The  Administrative  Agent shall have
made   satisfactory   completion   of  all   corporate,   ownership,   solvency,
organizational,   capital   structure,   environmental,   employee  benefit  and
retirement  savings and  collateral  audits of each Loan Party and each of their
Subsidiaries by the  Administrative  Agent as deemed necessary or prudent by the
Administrative Agent.

         SECTION 4.04.  Required Documents and Certificates.  The Administrative
Agent (or its counsel) shall have  received,  in addition to the items listed in
Sections  4.01 through  4.03,  the  following,  in each case in form,  scope and
substance satisfactory to the Lenders:

                  (i) a counterpart of this  Agreement  signed on behalf of such
         party or written  evidence  satisfactory  to the  Administrative  Agent
         (which may include telecopy  transmission of a signed signature page of
         this  Agreement)  that such  party  has  signed a  counterpart  of this
         Agreement, duly executed by the Borrowers;

                  (ii) the Notes duly executed by the Borrowers;

                  (iii) an Officer's  Certificate of each  applicable Loan Party
         dated substantially  concurrently herewith certifying,  inter alia, (A)
         true and correct copies of the Articles of Incorporation and Bylaws (or
         equivalent  corporate  documents),  as amended  and in effect,  of such
         party, (B) corporate resolutions duly adopted by the Board of Directors
         of such party  authorizing  the  transactions  contemplated by the Loan
         Documents  and  (C)  the  incumbency  and  specimen  signatures  of the
         officers of such party executing documents on its behalf;

                  (iv) a  certificate  from the  Secretary  of State  and  other
         appropriate  public  officials in each  jurisdiction  in which the Loan
         Parties are  organized or  incorporated,  as the case may be, as to the
         continued existence and good standing of such party;

                  (v) a certificate from the appropriate public official of each
         jurisdiction  in which the Loan Parties are authorized and qualified to
         do  business  as to the due  qualification  and good  standing  of such
         party;

                  (vi)  a   favorable   written   opinion   (addressed   to  the
         Administrative   Agent  and  the   Lenders   and  dated   substantially
         concurrently  herewith)  of Sydney K.  Boone,  Jr.,  Corporate  General
         Counsel for the Loan Parties,  covering such other matters  relating to
         the Loan Parties,  this Agreement or the  Transactions  as the Required
         Lenders shall  reasonably  request.  The Borrowers  hereby request such
         counsel to deliver such opinion;

                  (vii) the Security Agreements;

                                       38
<PAGE>

                  (viii) the  Mortgages,  covering all real estate  interests of
         the Loan Parties, including but not limited to fee simple interests and
         leasehold interests, to the extent required under Section 5.16;

                  (ix) the Pledge and Security Agreements;

                  (x)  certificates  representing  the  stock  of  CAI  and  its
         Subsidiaries,  pledged  in  accordance  with the  Pledge  and  Security
         Agreements,  accompanied  by duly executed  instruments  of transfer or
         assignment  in  blank,  in  form  and  substance  satisfactory  to  the
         Administrative Agent;

                  (xi) the Guaranty Agreements;

                  (xii) copies of all other requisite filing documents necessary
         to perfect the Liens  granted  pursuant to the Security  Documents  and
         duly  executed  releases or  assignments  of Liens and UCC-3  financing
         statements in recordable  form, and in form and substance  satisfactory
         to the Lenders,  covering all of the collateral, as may be necessary to
         reflect  that the Liens  granted  to the  Administrative  Agent for the
         benefit of the Lenders are first and prior Liens,  except for the Liens
         permitted under Section 6.02 herein;

                  (xiii) duly  executed  Landlord  Agreements as to any property
         consisting of or located in property leased by any Loan Party,  subject
         to the provisions of Section 5.16, and

                  (xiv)  certified  copies of Requests for Information of Copies
         (Form UCC-11), or equivalent  reports,  listing all effective financing
         statements which name any Loan Party (under its present name, any trade
         names and any previous  names) as debtor and which are filed,  together
         with copies of all such financing statements.

In addition,  all legal matters incident to the transactions herein contemplated
shall be satisfactory to counsel for the Administrative Agent and the Lenders.

         SECTION 4.05. Conditions Precedent to Each Loan. The obligation of each
Lender  to  make a Loan on the  occasion  of any  Borrowing  is  subject  to the
satisfaction of the following conditions:

         (a) The representations and warranties of the Loan Parties set forth in
the  Loan  Documents  shall be true  and  correct  on and as of the date of such
Borrowing.

         (b)  At the  time  of and  immediately  after  giving  effect  to  such
Borrowing, no Default shall have occurred and be continuing and there shall have
occurred no event which would be  reasonably  likely to have a Material  Adverse
Effect.

Each Borrowing  shall be deemed to constitute a  representation  and warranty by
the Borrowers on the date thereof as to the matters  specified in paragraphs (a)
and (b) of this Section.

                                       39
<PAGE>

                                   ARTICLE V
                              Affirmative Covenants
                              ---------------------

         Until the Revolving Loan  Commitments  have expired or been  terminated
and the  principal of and  interest on each Loan and all fees payable  hereunder
shall have been paid in full, the Borrowers  covenant and agree with the Lenders
that:

         SECTION 5.01. Financial Statements and Other Information. The Borrowers
will furnish to the Administrative Agent and each Lender:

         (a) within 90 days  after the end of each  fiscal  year of Parent,  the
audited  consolidated  balance  sheets and  related  statements  of  operations,
stockholders'  equity and cash flows of the Consolidated  Group as of the end of
and for such year,  setting forth in each case in  comparative  form the figures
for the previous fiscal year, all reported on by Ernst & Young,  L.L.P. or other
independent public accountants of recognized national standing (without a "going
concern" or like  qualification  or exception and without any  qualification  or
exception  as to the scope of such audit) to the effect  that such  consolidated
financial  statements  present  fairly in all material  respects  the  financial
condition and results of operations of the Consolidated  Group on a consolidated
basis in accordance with GAAP consistently  applied (which may be in the form of
SEC 10K);

         (b)  within 45 days  after the end of each of the  first  three  fiscal
quarters of Parent,  the consolidated  balance sheets and related  statements of
operations,  stockholders' equity and cash flows of the Consolidated Group as of
the end of and for such  fiscal  quarter  and the then  elapsed  portion  of the
fiscal year,  setting forth in each case in comparative form the figures for the
corresponding  period or periods of (or, in the case of the balance sheet, as of
the end of) the previous  fiscal  year,  all  certified by one of its  Financial
Officers as presenting fairly in all material  respects the financial  condition
and results of operations of the Consolidated  Group on a consolidated  basis in
accordance  with GAAP  consistently  applied,  subject to normal  year-end audit
adjustments and the absence of footnotes (which may be in the form of SEC 10Q);

         (c) concurrently with any delivery of financial statements under clause
(a) or (b) above,  a certificate  of a Financial  Officer of CAI, in the form of
Exhibit F hereto,  (i) certifying as to whether a Default has occurred and, if a
Default has  occurred,  specifying  the details  thereof and any action taken or
proposed  to be taken  with  respect  thereto,  (ii)  setting  forth  reasonably
detailed calculations  demonstrating  compliance with Sections 6.18 through 6.22
and (iii) stating whether any change in GAAP or in the  application  thereof has
occurred  since the date of the  audited  financial  statements  referred  to in
Section 3.04 and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;

         (d) concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting  firm that reported on such financial
statements  stating whether they obtained  knowledge  during the course of their
examination of such financial  statements of any Default (which  certificate may
be limited to the extent required by accounting rules or guidelines);

                                       40
<PAGE>

         (e)  promptly  upon  receipt  thereof,  a copy of each other  report or
"management  letter" submitted to any Loan Party or any of their Subsidiaries by
their independent  accountants in connection with any annual, interim or special
audit made by them;

         (f) promptly after the same become  publicly  available,  copies of all
periodic and other reports,  proxy  statements and other  materials filed by any
Loan  Party  or any of  their  Subsidiaries  with the  Securities  and  Exchange
Commission,  or  any  Governmental  Authority  succeeding  to  any or all of the
functions of said Commission,  or with any national securities exchange,  as the
case may be; and

         (g) promptly  following any request  therefor,  such other  information
regarding the operations,  business affairs and financial  condition of any Loan
Party or any of their  Subsidiaries,  or  compliance  with the terms of any Loan
Document,  including but not limited to financial projection and budgets, as the
Administrative Agent or any Lender may reasonably request.

         SECTION 5.02. Notices of Material Events. The Borrowers will furnish to
the  Administrative  Agent  and each  Lender  immediate  written  notice  of the
following:

         (a) the occurrence of any Default;

         (b) the filing or commencement of any action,  suit or proceeding by or
before any arbitrator or  Governmental  Authority  against or affecting any Loan
Party or any Affiliate thereof that, if adversely  determined,  could reasonably
be expected to result in a Material Adverse Effect;

         (c) the occurrence of any ERISA Event that,  alone or together with any
other ERISA Events that have occurred, could reasonably be expected to result in
liability of any Loan Party or any of their  Subsidiaries in an aggregate amount
exceeding $500,000;

         (d) any other  development  that  results  in, or could  reasonably  be
expected to result in, a Material Adverse Effect; and

         (e) copies of all notices of default, notices, amendments,  waivers and
other  documents  delivered  or  received  by any  Loan  Party  or any of  their
Subsidiaries pursuant to the terms of any Receivables Purchase Document.

         Each notice  delivered  under this Section  shall be  accompanied  by a
statement of a Financial Officer or other executive officer of CAI setting forth
the  details of the event or  development  requiring  such notice and any action
taken or proposed to be taken with respect thereto.

         SECTION 5.03. Existence;  Conduct of Business.  Each Borrower will, and
will cause the other Loan Parties and each of their Subsidiaries to, do or cause
to be done all things  necessary to  preserve,  renew and keep in full force and
effect its legal  existence and the rights,  licenses,  permits,  privileges and
franchises material to the conduct of its business;  provided that the foregoing
shall  not  prohibit  any  merger,  consolidation,  liquidation  or  dissolution
permitted under Section 6.03.

                                       41
<PAGE>

         SECTION 5.04. Payment of Obligations.

         (a) Each Borrower  will, and will cause the other Loan Parties and each
of their  Subsidiaries  to, pay its  obligations  before  the same shall  become
delinquent or in default, including, without limitation, all taxes, assessments,
and  governmental  charges or levies imposed upon any Loan Party or any of their
Subsidiaries  or upon the  income of any  property  of any Loan  Party or any of
their  Subsidiaries  as well as all  material  claims  of any  kind  (including,
without limitation,  claims for labor,  materials,  supplies,  and rent), except
where (a) the  validity or amount  thereof is being  contested  in good faith by
appropriate  proceedings,  (b) the applicable  Person has set aside on its books
adequate  reserves  with  respect  thereto in  accordance  with GAAP and (c) the
failure to make payment pending such contest could not reasonably be expected to
result in a Material Adverse Effect or result in a Lien against its property.

         (b) Each Borrower  will, and will cause the other Loan Parties and each
of their  Subsidiaries  to,  promptly pay all income,  franchise and other taxes
owing by the  applicable  Person and any stamp taxes or other taxes which may be
required to be paid with  respect to the Notes,  the  Security  Documents or any
other Loan  Documents.  In the event of the enactment after this date of any law
of any  Governmental  Authority  applicable to the  Administrative  Agent or the
Lenders, the Mortgaged Property or the Loan Documents,  deducting from the value
of property for the purpose of taxation any lien or security  interest  thereon,
or imposing upon the Administrative Agent or any Lender the payment of the whole
or any part of the taxes or assessments or charges or Liens required by the Loan
Documents to be paid by any Loan Party, or changing in any way the laws relating
to the taxation of deeds of trust or mortgages or security  agreements  or debts
secured by deeds of trust or mortgages or security agreements or the interest of
the mortgagee or secured party in the property covered thereby, or the manner of
collection  of  such  taxes,  so as to  affect  the  Security  Documents  or the
indebtedness  secured thereby or any Administrative  Agent or any Lender,  then,
and in any such event each  Borrower  will,  upon  demand by the  Administrative
Agent,  pay  such  taxes,  assessments,  charges  or  Liens,  or  reimburse  the
Administrative  Agent  or the  Lenders  therefor  to  the  extent  permitted  by
applicable law.

         SECTION 5.05. Maintenance of Properties; Insurance.

         (a) Each Borrower  will, and will cause the other Loan Parties and each
of their  Subsidiaries  to, (i) keep and  maintain  its property in good working
order and condition,  ordinary wear and tear excepted,  and (ii) maintain,  with
financially sound and reputable insurance  companies,  insurance in such amounts
and against such risks as are customarily maintained by companies engaged in the
same or  similar  businesses  operating  in the same or similar  locations,  and
furnish to the  Administrative  Agent,  together with each delivery of financial
statements  under Section  5.01(a),  an Officer's  Certificate  containing  full
information as to the insurance carried.

         (b) With respect to Mortgaged Property constituting real property, each
Borrower  will  maintain  and  cause the other  Loan  Parties  and each of their
Subsidiaries to maintain the following  insurance:  (1) all-risk  insurance with
respect to all such  insurable  Mortgaged  Property,  against  loss or damage by
fire,  lightning,  windstorm,  explosion,  hail, tornado and such hazards as are
presently included in so-called "all-risk" coverage,  in an amount not less than
the  amount  in  effect  on the  date of this  Agreement  and  disclosed  to the
Administrative  Agent in  writing;  (2) if and to the extent any portion of such
Mortgaged  Property is in a special flood hazard area, a flood insurance  policy
in an amount  equal to the lesser of the  principal  face amount of the Notes or
the maximum  amount of flood  insurance  available;  and (3) statutory  worker's
compensation  insurance  with  respect  to any work on or about  such  Mortgaged
Property.  All insurance  policies shall require not less than thirty (30) days'
prior written notice to the  Administrative  Agent of any cancellation or change

                                       42
<PAGE>

of coverage. All insurance policies maintained, or caused to be maintained, with
respect to such Mortgaged Property, except for public liability insurance, shall
provide that each such policy  shall be primary  without  right of  contribution
from any other  insurance  that may be carried by any Loan Party or any of their
Subsidiaries or the Lenders and that all of the provisions  thereof,  except the
limits  of  liability,  shall  operate  in the same  manner  as if there  were a
separate policy covering each insured.  If any insurer which has issued a policy
of title, hazard, liability or other insurance required pursuant to this Section
or any other Loan Document to which any Loan Party or any of their  Subsidiaries
is a party becomes  insolvent or the subject of any bankruptcy,  receivership or
similar proceeding or if in the reasonable opinion the financial  responsibility
of such insurer is or becomes  inadequate,  the Borrowers  shall, or shall cause
the  applicable  Person to, in each  instance  promptly  upon the request of the
Administrative  Agent and at  Borrowers'  expense,  obtain  and  deliver  to the
Administrative  Agent a like policy (or, if and to the extent  permitted  by the
Administrative  Agent,  a certificate of insurance)  issued by another  insurer,
which  insurer and policy meet the  requirements  of this  Section or such other
Loan  Document,  as the case may be.  Without  limiting  the  discretion  of the
Administrative  Agent  with  respect  to  required   endorsements  to  insurance
policies,  all such  policies for loss of or damage to such  Mortgaged  Property
shall  contain a standard  mortgage  clause  (without  contribution)  naming the
Administrative   Agent  as  mortgagee   with  loss   proceeds   payable  to  the
Administrative  Agent  notwithstanding (i) any act, failure to act or negligence
of or violation of any warranty,  declaration or condition contained in any such
policy  by any  named  insured;  (ii) the  occupation  or use of such  Mortgaged
Property for purposes  more  hazardous  than  permitted by the terms of any such
policy;  (iii) any foreclosure or other action by the Administrative Agent under
the  Loan  Documents;  or (iv) any  change  in  title  to or  ownership  of such
Mortgaged  Property  or any  portion  thereof,  such  proceeds  to be  held  for
application  as provided in the Loan  Documents.  The  originals of each initial
insurance policy (or to the extent permitted by the Administrative Agent, a copy
of the original  policy and a satisfactory  certificate  of insurance)  shall be
delivered  to the  Administrative  Agent  at  the  time  of  execution  of  this
Agreement,  with premiums fully paid, and each renewal or substitute  policy (or
certificate) shall be delivered to the Administrative  Agent with premiums fully
paid, at least ten (10) days before the  termination  of the policy it renews or
replaces.  Each Borrower shall pay, and cause the other Loan Parties and each of
their  Subsidiaries to pay, all premiums on policies required  hereunder as they
become due and payable and promptly deliver to the Administrative Agent evidence
satisfactory to the Administrative  Agent of the timely payment thereof.  If any
loss  occurs at any time when any Loan  Party or any of their  Subsidiaries  has
failed  to  perform  the  covenants  and  agreements  in  this  paragraph,   the
Administrative  Agent  shall  nevertheless  be  entitled  to the  benefit of all
insurance  covering the loss and held by or for the  applicable  Person,  to the
same extent as if it had been made  payable to the  Administrative  Agent or the
Administrative Agent.

                                       43
<PAGE>

         SECTION 5.06. Books and Records; Inspection Rights. Each Borrower will,
and will cause the other Loan  Parties and each of their  Subsidiaries  to, keep
proper books of record and account in which full,  true and correct  entries are
made  of  all  dealings  and  transactions  in  relation  to  its  business  and
activities.  Each Borrower  will, and will cause the other Loan Parties and each
of  their  Subsidiaries  to,  permit  any  representatives   designated  by  the
Administrative  Agent or any Lender,  upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records,
and to discuss  its  affairs,  finances  and  condition  with its  officers  and
independent accountants, all at such reasonable times and as often as reasonably
requested.

         SECTION 5.07.  Compliance with Laws. Each Borrower will, and will cause
the other Loan Parties and each of their  Subsidiaries to, comply with all laws,
rules,  regulations and orders of any Governmental Authority applicable to it or
its property.

         SECTION 5.08. Use of Proceeds. The proceeds of the Revolving Loans will
be used only for  general  corporate  purposes,  including  working  capital and
capital expenditures.  No part of the proceeds of any Loan will be used, whether
directly or  indirectly,  for any purpose that entails a violation of any of the
Regulations of the Board, including Regulations G, U and X.

         SECTION 5.09.  ERISA. Each Borrower will, and will cause the other Loan
Parties and each of their Subsidiaries to, at all times:

         (a) Make contributions to each Plan in a timely manner and in an amount
sufficient to comply with the minimum funding standards requirements of ERISA;

         (b) Immediately upon acquiring  knowledge of any "reportable  event" or
of any  "prohibited  transaction"  (as such  terms are  defined  in the Code) in
connection  with any Plan,  furnish  the  Administrative  Agent with a statement
executed by the  president or chief  financial  officer of CAI setting forth the
details thereof and the action which the Borrowers  propose to take with respect
thereto and, when known,  any action taken by the Internal  Revenue Service with
respect thereto;

         (c) Notify the  Administrative  Agent promptly upon receipt by any Loan
Party or any of their  Subsidiaries  of any  notice  of the  institution  of any
proceeding or other action which may result in the  termination  of any Plan and
furnish to the Administrative Agent copies of such notice;

         (d) Acquire and  maintain in amounts  satisfactory  to the Lenders from
either the Pension Benefit Guaranty  Corporation or authorized private insurers,
when available,  the contingent  employer  liability coverage insurance required
under ERISA;

         (e) Furnish the  Administrative  Agent with copies of the annual report
for each Plan filed with the Internal Revenue Service not later than thirty (30)
days after such report has been filed; and

         (f)  Furnish  the  Administrative  Agent with copies of any request for
waiver  of the  funding  standards  or  extension  of the  amortization  periods
required  by Sections  303 and 304 of ERISA or Section 412 of the Code  promptly
after the request is submitted to the Secretary of the Treasury,  the Department
of Labor or the Internal Revenue Service, as the case may be.

                                       44
<PAGE>

         SECTION 5.10. Security and Further Assurances. Whenever and as often as
the Administrative  Agent may reasonably  request,  each Borrower will, and will
cause the  other  Loan  Parties  and each of their  Subsidiaries  to, at its own
expense,  promptly execute and deliver all such further instruments  (including,
without   limiting  the  generality  of  the  foregoing,   additional   security
agreements,   and  financing   statements)   and  do  such  other  acts  as  the
Administrative Agent may request for the purpose of protecting or perfecting any
Lien  created or granted or  intended  to be created or granted in the  Security
Documents or in order to insure that any such Lien is of first priority, subject
only to Liens permitted by Section 6.02 hereof, or in order to police or protect
any  Collateral  or  otherwise  to carry out more  effectually  the purposes and
intent of the Loan Documents.  Without limiting the generality of the foregoing,
Borrowers will, as soon as practicable  after the date hereof,  cause to be duly
recorded, published, registered and filed all Security Documents, in such manner
and in such places as is required by law to  establish,  perfect,  preserve  and
protect the rights and first priority security  interests of the parties thereto
and their respective successors and assigns in all of the Collateral, subject to
Liens permitted under Section 6.02. Borrowers will pay all taxes, fees and other
charges  then  due  in  connection  with  the  execution,  delivery,  recording,
publishing,  registration  and filing of such  documents or  instruments in such
places.

         SECTION 5.11.  Compliance with Environmental  Laws. Each Borrower will,
and will cause the other Loan Parties and each of their  Subsidiaries to, at all
times:

         (a) use and operate all of their  respective  facilities and properties
in material  compliance with all Environmental Laws, keep all necessary permits,
approvals, orders,  certificates,  licenses and other authorizations relating to
environmental  matters in effect and remain in  material  compliance  therewith,
handle all  Hazardous  Materials  in  material  compliance  with all  applicable
Environmental Laws and dispose of all Hazardous  Materials generated by any such
Person or at any property owned or leased by them at facilities or with carriers
that  maintain  valid  permits,  approvals,  certificates,   licenses  or  other
authorizations for such disposal under applicable Environmental Laws;

         (b) promptly  notify the  Administrative  Agent and provide copies upon
receipt of all written claims, complaints,  notices or inquiries relating to the
environmental  condition of the  facilities and properties of any such Person or
their respective compliance with Environmental Laws; and

         (c) promptly upon request by  Administrative  Agent,  permit any Person
designated  by the  Administrative  Agent,  at the  Borrowers'  expense and upon
reasonable  notice, to visit such Person and any of their respective  properties
and  discuss  their  respective   environmental  affairs  with  their  principal
officers,  all at such times as the Administrative Agent may reasonably request,
and without limiting the generality of the foregoing,  permit any Person,  agent
or  environmental   consultant  designated  by  the  Administrative  Agent  upon
reasonable  notice,  and at the  Borrowers'  expense,  to (i) have access to and
examine and inspect any of the properties, books and records of such Person, and
(ii) conduct environmental  assessments in respect of such properties,  in scope
and substance satisfactory to Administrative Agent.

                                       45
<PAGE>

         SECTION 5.12. Landlord's  Agreements.  Each Borrower will use its best,
good faith, efforts to, and will cause the other Loan Parties to use their best,
good faith,  efforts to, at Borrowers'  expense,  deliver to the  Administrative
Agent a Landlord's  Agreement  with respect to each leased retail store location
at which any equipment or inventory of any such Person is stored or maintained.

         SECTION 5.13. Additional Subsidiaries. Within thirty (30) Business Days
any Loan Party or any of their Subsidiaries creates, acquires or otherwise forms
a Subsidiary, Borrowers shall:

         (a)  execute  and  deliver,  or  cause  the  Person  owning  all of the
outstanding  equity interests of such Subsidiary to execute and deliver,  to the
Administrative  Agent on  behalf  of the  Lenders  an  agreement,  substantially
similar to the Pledge and  Security  Agreements,  with such  changes as shall be
necessary in the circumstances,  pursuant to which all of the outstanding equity
interests of such  Subsidiary  shall be pledged to the  Administrative  Agent on
behalf of the Lenders,  together  with any  certificates  representing  all such
equity interests so pledged and for each such certificate a stock power executed
in blank;

         (b) cause such Subsidiary to execute and deliver to the  Administrative
Agent on behalf of the Lenders (i) the  Supplement  to the  Guaranty  Agreement;
(ii) an agreement  substantially  similar to the Security  Agreement and (iii) a
Mortgage as to all real property interests owned or leased by such Subsidiary;

         (c) cause such Subsidiary to execute and deliver to the  Administrative
Agent on behalf of the Lenders appropriate Financing Statements,  each with such
changes as shall be necessary in the circumstances,  covering such Collateral of
such  Subsidiary  of the  general  types  and  values  covered  by the  Security
Documents executed on or prior to the date hereof;

         (d) deliver or cause to be  delivered  to the  Administrative  Agent on
behalf of the Lenders all agreements,  documents, instruments and other writings
described in Section 4.04, with respect to such Subsidiary;

         (e) cause such  Subsidiary  to deliver to the  Administrative  Agent on
behalf  of the  Lenders a  Landlord's  Agreement  with  respect  to each  leased
location  located at which any inventory of such Person is stored or maintained;
and

         (f) deliver or cause to be  delivered  to the  Administrative  Agent on
behalf of the Lenders all such information regarding the condition (financial or
otherwise),  business and  operations of such  Subsidiary as the  Administrative
Agent or any Lender through the Administrative Agent may reasonably request.

Notwithstanding anything to the contrary set forth in this Section, none of Conn
Funding I LP, Conn Funding II LP, Conn Funding LLC, Conn Funding II GP LLC, Conn
CC LP, Conn Credit LLC, CCC or CAIAIR shall be treated as a new Subsidiary under
this  Section  (other  than for  purposes  of the pledge of limited  partnership
interests in and to Conn Funding II LP, and, if any material assets are owned by
Conn Funding I LP, limited partnership  interests in Conn Funding I LP, pursuant
to Section  5.13(a)  above) or be required  to execute or deliver any  documents
under this Section so long as the sole property  owned by such entities shall be
(i) in the case of CCC, a general partnership  interest in and to Conn CC LP and

                                       46
<PAGE>

limited liability company  membership  interests in and to Conn Credit LLC, (ii)
in the case of Conn Credit LLC, a limited partnership interest in and to Conn CC
LP and a limited partnership interest in Conn Funding I LP, (iii) in the case of
Conn CC LP,  contracts  with  Conn  Funding  I LP  regarding  the  servicing  of
receivables  purchased  by Conn  Funding I LP, (iv) in the case of Conn  Funding
LLC, a general partnership interest in and to Conn Funding I LP, (v) in the case
of Conn Funding II GP LLC, a general partnership interest in and to Conn Funding
II LP, (vi) in the case of Conn  Funding II, LP, the Trust  Estate (as such term
is defined in the Conn Funding II Indenture) and (vii) in the case of CAIAIR,  a
leasehold  interest  in and to an  aircraft  subject  to a lease  as of the date
hereof.  If any of such  entities  shall own  property  other than the  property
described in the preceding sentence,  then such entity shall be treated as a new
Subsidiary  for  purposes of this  Section 5.13 and shall be required to execute
and deliver the documentation required by this Section.

         SECTION 5.14.  Patents,  Trademarks and Licenses.  Each Borrower shall,
and shall  cause the  other  Loan  Parties  and each of their  Subsidiaries  to,
maintain all assets, licenses, patents, copyrights,  trademarks,  service marks,
trade  names,  permits  and  other  governmental  approvals  and  authorizations
necessary to conduct its business.

         SECTION 5.15. Notice of Labor Disputes.  Each Borrower shall notify the
Administrative  Agent in writing  upon  learning of (i) any  material  strike or
walkouts or (ii) any  material  labor  dispute to which any Loan Party or any of
their  Subsidiaries  becomes a party,  and the  expiration or termination of any
labor contract to which any Loan Party or any of their  Subsidiaries  is a party
or by which  any Loan  Party  or any of  their  Subsidiaries  is bound or of any
negotiations with respect thereto.

         SECTION  5.16.  Fee  Properties   and  Leases.   Concurrent   with  the
acquisition  of any fee  property of which the net book value  exceeds  $250,000
(other than a fee property which is acquired  using  financing  permitted  under
Section  6.01(d)  hereof,  for so long as such fee property is subject to a Lien
permitted  under Section  6.02(c)  hereof) or the execution of any lease of real
property  for a term of five  years  or more  (excluding  any  optional  renewal
terms),  each Borrower  will,  and will cause the other Loan Parties and each of
their  Subsidiaries to, execute,  acknowledge and deliver to the  Administrative
Agent a deed of trust or  mortgage,  as the case may be,  in form and  substance
satisfactory to the Administrative Agent, covering (i) such fee property or (ii)
all of such Person's rights and interests as lessee,  in, to and under such real
estate lease,  together with evidence  satisfactory to the Administrative  Agent
and its counsel, in form and substance satisfactory to the Administrative Agent,
that such deed of trust or mortgage creates a valid, first and prior Lien on the
fee  estate  or the  leasehold  estate,  as the  case  may be,  in  favor of the
Administrative  Agent subject only to Liens permitted under Section 6.02 hereof.
To the extent that any  applicable  landlord or lessor fails or refuses to grant
its consent to such a  leasehold  mortgage  or lien  notwithstanding  good faith
efforts by Borrower to obtain such  consent,  Borrower  shall not be required to
execute and deliver such deed of trust or mortgage;  provided,  however, that at
least fifty percent  (50%) of the  leasehold  estates owned or held by Borrowers
from time to time must be subject to a deed of trust or mortgage in favor of the
Administrative Agent.

                                       47
<PAGE>

         SECTION  5.17.  Lease  and  Investment  Schedule.  Each  Borrower  will
deliver, and will cause the other Loan Parties and each of their Subsidiaries to
deliver, to the Administrative Agent,

         (a) together with each delivery of financial  statements  under Section
5.01(a),  a current,  complete  schedule of all  agreements to rent or lease any
real  property,  or any  personal  property  with  rental  payments in excess of
$250,000  over the term of the  lease,  to which any Loan  Party or any of their
Subsidiaries  is a party lessee,  showing the total  amounts  payable under each
such agreement,  the amounts and due dates of payments thereunder and containing
a description of the rented or leased  property,  and all other  information the
Lenders may request, all in a form satisfactory to the Lenders;

         (b) together with each delivery of financial  statements  under Section
5.01(a) a current,  complete schedule listing all Persons (except  Subsidiaries)
whose equity or debt any Loan Party or any of their  Subsidiaries owns or holds,
containing  all  information  required  by, and in a form  satisfactory  to, the
Lenders; and

         (c)  notices  of  any  default  by any  Loan  Party  or  any  of  their
Subsidiaries with respect to the leases described in Section 5.17(a).

         SECTION 5.18. Pledge of Equity Interests.  CAI shall at all times cause
all  equity  interests  in and to CAI and all  equity  interests  in and to each
Subsidiary of CAI to be pledged to the  Administrative  Agent for the benefit of
Lenders pursuant to a Pledge and Security Agreement,  whereby the Administrative
Agent shall have a first priority perfected Lien thereon.

                                   ARTICLE VI
                               Negative Covenants
                               ------------------

         Until the Revolving Loan Commitments have expired or terminated and the
principal of and interest on each Loan and all fees payable  hereunder have been
paid in full, each Borrower covenants and agrees with the Lenders that:

         SECTION 6.01. Indebtedness. Each Borrower will not, and will not permit
any Loan Party or any of their Subsidiaries to, create,  incur, assume or permit
to exist any Indebtedness, except:

         (a) Indebtedness evidenced by the Loan Documents;

         (b)  endorsements  in the  ordinary  course of business  of  negotiable
instruments in the course of collection;

         (c)  Indebtedness  that  is  evidenced  by  the  Originator  Notes  and
obligations under the Receivables Purchase Documents;

         (d)  Indebtedness  of CAI incurred in  connection  with the purchase of
land and the construction of new retail stores and distribution  centers,  in an
aggregate principal amount at any time not to exceed $50,000,000;

                                       48
<PAGE>

         (e)  contingent  Indebtedness  in  respect  of the  Collection  Account
Letters  of  Credit  provided  that the  aggregate  amounts  of such  contingent
Indebtedness may not exceed $20,000,000;

         (f) other unsecured  Indebtedness in aggregate  principal amount at any
time not to exceed $10,000,000

         (g)  other  Indebtedness  of the  Consolidated  Group  incurred  in the
ordinary  course of business to finance the  acquisition  of assets  (including,
without limitation,  indebtedness of the Consolidated Group incurred on ordinary
trade terms  which is owing to vendors,  suppliers,  or such  Persons  providing
inventory  for use by the  Consolidated  Group in the  ordinary  course of their
business)  in  an  aggregate   principal  amount  at  any  time  not  to  exceed
$25,000,000;

         (h) contingent  unsecured  Indebtedness in respect of letters of credit
issued to support workman's  compensation  insurance maintained by the Borrowers
or their  Subsidiaries;  provided that the aggregate  amounts of such contingent
Indebtedness may not exceed $5,000,000 at any time.

         SECTION  6.02.  Liens.  Each Borrower will not, and will not permit any
Loan Party or any of their Subsidiaries to, create,  incur,  assume or permit to
exist any Lien on any property or asset now owned or  hereafter  acquired by it,
or assign or sell any income or  revenues  (including  accounts  receivable)  or
rights in respect of any thereof, except:

         (a) Permitted Encumbrances;

         (b) Liens in favor of the Administrative  Agent, for the benefit of the
Lenders, created by the Security Documents;

         (c) Liens  securing  the  Indebtedness  described  in Section  6.01(d),
provided  that such Liens do not cover any  property  other than the  applicable
retails store or distribution  center which is purchased or constructed with the
proceeds of such Indebtedness;

         (d) Liens  securing  the  Indebtedness  described  in Section  6.01(g),
provided  that such Liens do not cover any  property  other than the  applicable
assets  which  are  acquired  with  the  proceeds  of  such   Indebtedness  (and
identifiable  cash  proceeds  thereof  which are not  commingled  with any other
property of the Consolidated Group);

         (e) Liens on property of Conn Funding I LP and Conn Funding II LP.

         SECTION 6.03. Fundamental Changes. Each Borrower will not, and will not
permit any Loan Party or any of their Subsidiaries to, merge into or consolidate
with any other Person,  or permit any other Person to merge into or  consolidate
with it, or sell, transfer, lease or otherwise dispose of (in one transaction or
in a series of transactions)  all or any substantial part of its assets,  or any
stock or Indebtedness of any of their  Subsidiaries  (in each case,  whether now
owned or hereafter  acquired),  or permit any  Subsidiary to issue or dispose of
any of its stock, or take any action  (directly or indirectly)  which would have
the effect of causing any Subsidiary to cease to be a  wholly-owned  Subsidiary,
or  liquidate  or  dissolve;  provided  the  foregoing  shall not  prohibit  the
transactions contemplated by the Receivables Purchase Documents. Notwithstanding
anything herein to the contrary,  any Subsidiary which is wholly-owned (directly
or  indirectly) by CAI may liquidate or dissolve if CAI determines in good faith
that such  liquidation or dissolution is in the best interests of CAI and is not
materially  disadvantageous to the Lenders. The Borrowers shall promptly deliver
written  notice  to  the  Administrative  Agent  of  each  such  liquidation  or
dissolution.

                                       49
<PAGE>

         SECTION   6.04.   Investments,    Loans,   Advances,   Guarantees   and
Acquisitions.  Each Borrower will not, and will not permit any Loan Party or any
of their Subsidiaries to, purchase,  hold or acquire (including  pursuant to any
merger with any Person any capital  stock,  evidences of  indebtedness  or other
securities  (including any option,  warrant or other right to acquire any of the
foregoing)  of, make or permit to exist any loans or advances to,  guarantee any
obligations  of, or make or permit to exist any investment or any other interest
in, any other Person,  or purchase or otherwise acquire (in one transaction or a
series of transactions)  any assets of any other Person  constituting a business
unit, or become a general partner of any other Person, except:

         (a) Permitted Investments;

         (b) investments by Parent in the capital stock of CAI;

         (c) loans or advances permitted under Section 6.01 hereof;

         (d) Guarantees by the Borrowers or their Subsidiaries,  in an aggregate
amount not to exceed  $15,000,000 at any one time  outstanding,  of Indebtedness
incurred  in  connection  with the  acquisition  and  development  of sites (and
construction of improvements  thereon) which are subject to leases in favor of a
Borrower or a  Subsidiary  of a Borrower  (such  Guarantees  to be  permitted in
addition to and  cumulative of the other  Indebtedness  permitted  under Section
6.01 hereof); and

         (e) investments in the form of membership or partnership interests,  as
applicable,  in Conn Funding LLC, Conn Funding I LP, Conn Funding II LP and Conn
Funding II GP LLC.

         SECTION 6.05. Hedging Agreements.  Each Borrower will not, and will not
permit any Loan Party or any of their  Subsidiaries  to,  enter into any Hedging
Agreement,  other than Hedging  Agreements entered into by any Loan Party or any
of their  Subsidiaries  in the ordinary  course of business to hedge or mitigate
risks to which any Loan  Party or any of their  Subsidiaries  is  exposed in the
conduct of its business or the management of its liabilities.

         SECTION 6.06. Restricted Payments. Each Borrower will not, and will not
permit any of their  Subsidiaries  to, declare or make, or agree to pay or make,
directly or indirectly, any Restricted Payment; provided,  however, that so long
as no  Default or Event of  Default  has  occurred,  is  continuing  or would be
created thereby,  CAI may make Restricted Payments in an aggregate amount not to
exceed  $25,000,000  from and after January 31, 2005.  Notwithstanding  anything
herein to the  contrary,  any  Subsidiary  which is  wholly-owned  (directly  or
indirectly)  by CAI may  declare and pay  dividends  to the owners of its equity
interests.

                                       50
<PAGE>

         SECTION 6.07. Transactions with Affiliates. Each Borrower will not, and
will not permit any Loan Party or any of their  Subsidiaries  to, sell, lease or
otherwise  transfer any  property or assets to, or purchase,  lease or otherwise
acquire  any  property  or  assets  from,  or  otherwise  engage  in  any  other
transactions  with,  any of its  Affiliates,  except in the  ordinary  course of
business at prices and on terms and conditions not less favorable to such Person
than could be obtained on an arm's-length basis from unrelated third parties.

         SECTION 6.08. Restrictive Agreements.  Each Borrower will not, and will
not  permit  any  Loan  Party  or any of  their  Subsidiaries  to,  directly  or
indirectly,  enter  into,  incur or  permit  to  exist  any  agreement  or other
arrangement  that  prohibits,  restricts or imposes any  condition  upon (a) the
ability  of any Loan  Party or any of their  Subsidiaries  to  create,  incur or
permit to exist any Lien upon any of its property or assets,  or (b) the ability
of any Subsidiary of CAI to pay dividends or other distributions with respect to
any shares of its capital  stock or to make or repay loans or advances to CAI or
any other  Subsidiary  of CAI or to Guarantee  Indebtedness  of CAI or any other
Subsidiary  of  CAI;  provided  that  (i)  the  foregoing  shall  not  apply  to
restrictions  and  conditions  imposed  by law or by this  Agreement,  (ii)  the
foregoing  shall not apply to restrictions  and conditions  existing on the date
hereof  identified on Schedule 6.08 (but shall apply to any extension or renewal
of,  or  any  amendment  or  modification  expanding  the  scope  of,  any  such
restriction  or  condition),  (iii) the  foregoing  shall not apply to customary
restrictions  and conditions  contained in agreements  relating to the sale of a
Subsidiary  pending such sale,  provided such  restrictions and conditions apply
only to such Subsidiary that is to be sold and such sale is permitted hereunder,
(iv) clause (a) of the foregoing  shall not apply to  restrictions or conditions
imposed by any  agreement  relating to secured  Indebtedness  permitted  by this
Agreement  if such  restrictions  or  conditions  apply only to the  property or
assets securing such  Indebtedness and (v) clause (a) of the foregoing shall not
apply to customary  provisions  in leases and other  contracts  restricting  the
assignment thereof.

         SECTION 6.09. Certain Contracts. Except as identified in Schedule 6.09,
each  Borrower  will not,  and will not  permit  any Loan  Party or any of their
Subsidiaries to, enter into or be a party to:

         (a) any contracts  providing for the making by any Loan Party or any of
their Subsidiaries of loans, advances or capital contributions to any Person, or
for the  purchase of any  property  from any Person,  in each case  primarily in
order to enable such Person to maintain  any balance  sheet  condition or to pay
debts, dividends or expenses, or

         (b) any  contract  for the  purchase  of  materials,  supplies or other
property or services if such  contract (or any related  document)  requires that
payment  by any  Loan  Party or any of their  Subsidiaries  for such  materials,
supplies or other  property or services  shall be made  regardless of whether or
not delivery of such  materials,  supplies or other property or services is ever
made or tendered, or

         (c) any  contract  to rent or lease (as  lessee)  any real or  personal
property if such contract (or any related document) provides that the obligation
to make payments  thereunder is absolute and unconditional  under conditions not
customarily  found in commercial leases then in general use or requires that the
lessee  purchase or otherwise  acquire  securities or  obligations of the lessor
(provided  that this  subsection  (c) shall not be construed to prevent any Loan
Party or any of their  Subsidiaries  from being a party to or complying with any
provision of any lease to which any of them is a party on the date hereof).

                                       51
<PAGE>

         SECTION 6.10. Discount or Sale of Receivables.  Each Borrower will not,
and will not  permit any Loan Party or any of their  Subsidiaries  to,  discount
(except  discounts  given in the ordinary  course of business in connection with
credit card and programs and vendor promotional  activity and in connection with
the  settlement  of  claims  against  manufacturers  in the  ordinary  course of
business) or sell with  recourse,  or sell for less than the face value thereof,
any  of its  notes  receivable,  receivables  under  leases  or  other  accounts
receivable,  except for any sale of  receivables by CAI or CAILP or any of their
Subsidiaries to Conn Funding I LP or Conn Funding II LP, or by Conn Funding I LP
to Conn Funding II LP, under the Receivables Purchase Agreement.

         SECTION 6.11. Change in Accounting Method.  Each Borrower will not, and
will not permit any Loan Party or any of their  Subsidiaries to, make any change
in the method of computing  depreciation  for either tax or book purposes or any
other material change in accounting  method without the Required  Lenders' prior
written  approval,  except for any changes  required by GAAP or applicable  law.
Each  Borrower  will not,  and will not  permit  any Loan  Party or any of their
Subsidiaries to, change its fiscal year.

         SECTION  6.12.  Sales and  Leasebacks.  Except  for sale and  leaseback
transactions entered into after July 1, 2005 which provide for lease payments in
an aggregate amount not to exceed $15,000,000,  each Borrower will not, and will
not  permit  any Loan  Party or any of their  Subsidiaries  to,  become  liable,
directly or indirectly,  with respect to any lease or property whether now owned
or  hereafter  acquired (i) which such Person has sold or  transferred  or is to
sell or  transfer to any other  Person or (ii) which such Person  intends to use
for  substantially  the same purposes as any other property which has been or is
to be sold or transferred by such Person to any other Person in connection  with
such lease.

         SECTION 6.13.  Sale of Inventory.  Each Borrower will not, and will not
permit any Loan Party or any of their  Subsidiaries  to, make any sale, lease or
other disposition of inventory except in the ordinary course of business.

         SECTION 6.14. Nature of Business.  Each Borrower will not, and will not
permit any Loan  Party or any of their  Subsidiaries  to,  engage in any line of
business other than the business as presently conducted or related thereto.

         SECTION 6.15. Hazardous Materials. Each Borrower will not, and will not
permit  any Loan Party or any of their  Subsidiaries  to (a) cause or permit any
Hazardous  Materials  to be treated,  stored,  or disposed of in a manner  which
could reasonably be expected to result, singularly or in the aggregate, (i) in a
Material  Adverse Effect or (ii) in costs,  liabilities or expenses  relating to
remediation under or violations of Environmental Laws in excess of $500,000; (b)
cause or  permit  any  part of any  property  of any Loan  Party or any of their
Subsidiaries  to be used as a  manufacturing,  treatment,  storage  or  disposal
facility for Hazardous Materials, where such action could reasonably be expected
to result,  singularly or in the aggregate,  (i) in a Material Adverse Effect or
(ii) in  costs,  liabilities  or  expenses  relating  to  remediation  under  or
violations of Environmental  Laws in excess of $500,000;  or (c) cause or suffer
any Liens to be recorded  against any property of any Loan Party or any of their
Subsidiaries  as a  consequence  of, or in any way  related  to,  the  presence,
remediation,  or disposal of Hazardous Materials in or about any property of any
Loan Party or any of their Subsidiaries,  including any so-called state, federal
or local "superfund" lien relating to such matters.

                                       52
<PAGE>

         SECTION 6.16.  Amendment of Charter  Documents.  Each Borrower will not
effect  any  material  amendment  to or  material  modification  of its  charter
documents  or  by-laws,  and will  not  permit  any  Loan  Party or any of their
Subsidiaries  to effect any material  amendment to or material  modification  of
their charter documents or by-laws.

         SECTION 6.17.  Use of Proceeds.  The Borrowers will not use, nor permit
the use of, all or any  portion of any Loan for any  purpose  not  permitted  by
Section 5.09 hereof.

         SECTION 6.18.  Debt Service  Coverage  Ratio.  The  Borrowers  will not
permit the ratio of (i) Consolidated EBITDA plus Consolidated Rent Expense minus
Consolidated  Capital  Expenditures  divided by (ii)  Consolidated Cash Interest
Expense  (exclusive  of any fees paid in respect of the undrawn  face amounts of
the Collection  Account Letters of Credit) plus  Consolidated  Rent Expense,  as
determined as of the last day of each fiscal quarter for the twelve-month period
ending on such day, to be less than 2.00 to 1.00.

         SECTION 6.19.  Total Leverage Ratio.  The Borrowers will not permit the
ratio of (i) the sum of (x)  Consolidated  Total Debt  (exclusive of the undrawn
face  amounts of the  Collection  Account  Letters of Credit,  the undrawn  face
amounts of the Bank of America Letters of Credit and the undrawn face amounts of
the  Letters  of Credit  issued  under  this  Agreement)  plus (y)  eight  times
Consolidated Rent Expense divided by (ii) Consolidated  EBITDA plus Consolidated
Rent Expense,  as  determined as of the last day of each fiscal  quarter for the
twelve-month period ending on such day, to be greater than 3.00 to 1.00.

         SECTION 6.20. Net Worth.  The Borrowers  will not permit,  at any time,
Consolidated Net Worth to be less than the sum of (i) $109,541,000 plus (ii) 75%
of positive Net Income  generated  after January 31, 2005 plus (iii) 100% of any
capital  stock  or  other   ownership  or  profit  interest  or  any  securities
convertible  into or exchangeable for capital stock or other ownership or profit
interest or any  warrants,  rights or options to acquire the same,  issued after
January  31,  2005.  Any gains  attributable  to the  effects of  Statements  of
Financial Accounting Standards Nos. 125/140 and/or 133, or their successors, and
any losses attributable thereto,  shall be excluded in determining  Consolidated
Net Worth for purposes of this Section.

         SECTION 6.21. Extension, Delinquencies, Charge-Offs.

         (a) The Borrowers  will not permit the  Charge-Off  Ratio to be greater
than .06 to 1.00,  determined as of the last day of each month  averaged for the
three-month period ended on such date.

         (b) The  Borrowers  will not permit the  Extension  Ratio to be greater
than .05 to 1.00,  determined as of the last day of each month  averaged for the
three-month period ended on such date.

                                       53
<PAGE>

         (c) The Borrowers will not permit the  Delinquency  Ratio to be greater
than .13 to 1.00,  determined as of the last day of each month  averaged for the
three-month period ended on such date.

         SECTION 6.22.  Prepayment of Indebtedness.  Each Borrower will not, and
will not permit  any Loan Party or any of their  Subsidiaries  to,  directly  or
indirectly,  prepay (by acceleration or otherwise) any Indebtedness  (other than
to the Agents and the  Lenders),  or  repurchase,  redeem,  retire or  otherwise
acquire any  Indebtedness  of any Loan Party or any of their  Subsidiaries  if a
Default or Event of Default  exists  prior to or after  giving  effect  thereto,
provided however,  in no event shall any Loan Party or any of their Subsidiaries
take  any  such  action  with  respect  to the  Subordinated  Debt  prior to the
repayment in full of the Obligations.

                                  ARTICLE VII
                                Events of Default
                                -----------------

         If any of the following events ("Events of Default") shall occur:

         (a) the  Borrower  shall fail to pay any  principal  of any Loan or any
reimbursement  obligation in respect of any LC Disbursement when and as the same
shall become due and payable, whether at the due date thereof or at a date fixed
for prepayment thereof or otherwise;

         (b) any Loan Party shall fail to pay any fee or any other amount (other
than an amount referred to in clause (a) of this Article) payable under any Loan
Document,  when and as the same shall become due and  payable,  and such failure
shall continue unremedied for a period of three Business Days;

         (c) any  representation or warranty made or deemed made by or on behalf
of any Loan Party or any  Subsidiary  thereof in or in connection  with any Loan
Document or in any report,  certificate,  financial  statement or other document
furnished to the Administrative Agent or any Lender pursuant to or in connection
with any Loan  Document,  shall  prove to have been  incorrect  in any  material
respect when made or deemed made;

         (d) (i) any  Borrower  shall fail to observe or perform  any  covenant,
condition  or  agreement  contained  in Article VI; or (ii) any Loan Party shall
fail to observe or perform any covenant, condition or agreement contained in any
Guaranty Agreement to which it is a party; or (iii) any Loan Party shall fail to
observe or perform any negative  covenant,  condition or agreement  contained in
any other Loan Document to which it is a party and such violation shall not have
been remedied within five (5) days after the occurrence thereof;

         (e) any Loan Party  shall fail to  observe or perform  any  affirmative
covenant,  condition or agreement  contained in this Agreement (other than those
specified  in clause  (a),  (b) or (d) of this  Article)  or in any  other  Loan
Document to which it is a party, and such failure shall continue  unremedied for
a period of 30 days after the occurrence thereof;

         (f) (i) a Change of Control  shall occur or (ii) Parent  shall cease to
own all of the issued and outstanding  equity  interests in and to CAI, free and
clear of any Liens;

                                       54
<PAGE>

         (g) any Loan Party or any of their  Subsidiaries shall fail to make any
payment  (whether of principal or interest and  regardless of amount) in respect
of any Material Indebtedness,  when and as the same shall become due and payable
and such non-payment continues after the applicable grace period;

         (h)  any  event  or  condition  occurs  that  results  in any  Material
Indebtedness of any Loan Party or any of their  Subsidiaries  becoming due prior
to its scheduled maturity or that enables or permits (with or without the giving
of notice, the lapse of time or both) the holder or holders of any such Material
Indebtedness  or any  trustee or agent on its or their  behalf to cause any such
Material  Indebtedness to become due, or to require the prepayment,  repurchase,
redemption or defeasance thereof,  prior to its scheduled maturity,  unless such
event or condition is waived by the non-defaulting party thereto;

         (i) an  involuntary  proceeding  shall be commenced  or an  involuntary
petition shall be filed seeking (i) liquidation,  reorganization or other relief
in  respect of any Loan Party or any  Subsidiary  thereof or its debts,  or of a
substantial part of its assets, under any Federal,  state or foreign bankruptcy,
insolvency,  receivership  or similar law now or hereafter in effect or (ii) the
appointment  of a receiver,  trustee,  custodian,  sequestrator,  conservator or
similar  official  for  such  Loan  Party  or any  Subsidiary  thereof  or for a
substantial  part of its  assets,  and,  in any such case,  such  proceeding  or
petition shall continue  undismissed for 30 days or an order or decree approving
or ordering any of the foregoing shall be entered;

         (j) any Loan  Party or any  Subsidiary  thereof  shall (i)  voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other  relief  under any Federal,  state or foreign  bankruptcy,  insolvency,
receivership  or similar law now or  hereafter  in effect,  (ii)  consent to the
institution  of, or fail to  contest  in a timely and  appropriate  manner,  any
proceeding or petition described in clause (i) of this Article,  (iii) apply for
or consent to the appointment of a receiver, trustee,  custodian,  sequestrator,
conservator or similar official for any Loan Party or any Subsidiary  thereof or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations  of a petition filed against it in any such  proceeding,  (v) make a
general  assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;

         (k) any Loan Party or any Subsidiary thereof shall become unable, admit
in writing or fail generally to pay its debts as they become due;

         (l) one or more  judgments  for the  payment  of money in an  aggregate
amount in excess of $500,000 shall be rendered  against any Loan Party or any of
their  Subsidiaries  or any  combination  thereof  and  the  same  shall  remain
undischarged  for a period of 30 consecutive  days during which  execution shall
not be  effectively  stayed,  or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of such Person(s) to enforce any such
judgment;

         (m) an ERISA  Event  shall have  occurred  that,  in the opinion of the
Required  Lenders,  when taken  together  with all other ERISA  Events that have
occurred,  could reasonably be expected to result in liability of any Loan Party
or any of their  Subsidiaries in an aggregate  amount  exceeding (i) $500,000 in
any year or (ii) $1,000,000 for all periods;

                                       55
<PAGE>

         (n) except pursuant to the express terms of any Loan Document, any Loan
Document shall, at any time after its execution and delivery and for any reason,
cease to be in full force and effect or be declared to be null and void,  or any
Lien granted  pursuant to any Loan  Document  shall cease to be perfected and of
first  priority  due to any  action or in action of any Loan Party  (except  for
Liens  permitted by Section 6.02 hereof and subject to the permitted  parameters
set forth in the last  sentence  of Section  5.16  hereof),  or the  validity or
enforceability  thereof shall be contested by any Loan Party,  or any Loan Party
shall deny that it has any or any further  liability  or  obligations  under any
Loan Document to which it is a party;

         (o) except as otherwise expressly permitted by the Loan Documents,  any
Loan Party sells, encumbers or abandons any material portion of the Property now
or hereafter subject to any of the Security Documents;  or any levy, seizure, or
attachment is made thereof or thereon;  or any material portion of such Property
is lost, stolen, substantially damaged or destroyed;

         (p) (i) except for  violations  or  defaults  that have been  waived or
consented  to, any party  thereto  shall  violate  any  covenant,  agreement  or
condition contained in any Receivables Purchase Document or any default or event
of default occurs and is continuing under any Receivables  Purchase  Document or
(ii) any party thereto shall amend, modify or supplement any provision set forth
in any  Receivables  Purchase  Document in any manner which could  reasonably be
expected to have a material  adverse affect on Lenders without the prior written
consent of the Required Lenders;

then, and in every such event (other than an event  described in clause (i), (j)
or (k) of this Article),  and at any time  thereafter  during the continuance of
such event,  the  Administrative  Agent may,  and at the request of the Required
Lenders shall, by notice to the Borrowers,  take either or both of the following
actions,  at the same or different  times:  (i)  terminate  the  Revolving  Loan
Commitments,  and thereupon  the  Revolving  Loan  Commitments  shall  terminate
immediately,  and (ii) declare the Loans then  outstanding to be due and payable
in whole (or in part,  in which case any principal not so declared to be due and
payable may  thereafter  be declared to be due and  payable),  and thereupon the
principal of the Loans so declared to be due and payable,  together with accrued
interest  thereon and all fees and other  obligations  of each Borrower  accrued
hereunder,  shall  become  due and  payable  immediately,  without  presentment,
demand,  protest or other notice of any kind,  all of which are hereby waived by
each Borrower;  and in case of any event  described in clause (i), (j) or (k) of
this Article,  the Revolving Loan Commitments shall automatically  terminate and
the  principal of the Loans then  outstanding,  together  with accrued  interest
thereon and all fees and other obligations of the Borrowers  accrued  hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by each Borrower.

                                  ARTICLE VIII
                            The Administrative Agent
                            ------------------------

         Each of the Lenders  hereby  irrevocably  appoints  the  Administrative
Agent as its agent and authorizes the Administrative  Agent to take such actions
on its behalf and to exercise such powers as are delegated to the Administrative
Agent by the  terms  hereof,  together  with  such  actions  and  powers  as are
reasonably incidental thereto.

                                       56
<PAGE>

         The bank serving as the  Administrative  Agent hereunder shall have the
same rights and powers in its  capacity as a Lender as any other  Lender and may
exercise the same as though it were not the Administrative  Agent, and such bank
and its Affiliates may accept deposits from, lend money to and generally  engage
in any kind of business with the Borrowers or any Subsidiary or other  affiliate
thereof as if it were not the Administrative Agent hereunder.

         The  Administrative  Agent  shall not have any  duties  or  obligations
except those expressly set forth herein.  Without limiting the generality of the
foregoing, (a) the Administrative Agent shall not be subject to any fiduciary or
other  implied  duties,  regardless  of whether a Default  has  occurred  and is
continuing,  (b) the  Administrative  Agent  shall not have any duty to take any
discretionary action or exercise any discretionary  powers, except discretionary
rights and powers expressly contemplated hereby that the Administrative Agent is
required to exercise in writing by the Required Lenders (or such other number or
percentage  of the  Lenders as shall be  necessary  under the  circumstances  as
provided in Section  9.02),  and (c) except as expressly set forth  herein,  the
Administrative  Agent  shall  not have any duty to  disclose,  and  shall not be
liable for the failure to disclose, any information relating to the Loan Parties
or any of their  Subsidiaries  that is  communicated  to or obtained by the bank
serving as  Administrative  Agent or any of its Affiliates in any capacity.  The
Administrative Agent shall not be liable for any action taken or not taken by it
with the consent or at the request of the Required Lenders (or such other number
or percentage of the Lenders as shall be necessary  under the  circumstances  as
provided  in  Section  9.02) or in the  absence of its own gross  negligence  or
willful  misconduct.  The  Administrative  Agent  shall  be  deemed  not to have
knowledge of any Default unless and until written notice thereof is given to the
Administrative  Agent by the Borrowers or a Lender, and the Administrative Agent
shall not be  responsible  for or have any duty to ascertain or inquire into (i)
any statement,  warranty or  representation  made in or in connection  with this
Agreement,  (ii) the  contents  of any  certificate,  report  or other  document
delivered  hereunder  or  in  connection  herewith,  (iii)  the  performance  or
observance of any of the covenants,  agreements or other terms or conditions set
forth herein, (iv) the validity, enforceability, effectiveness or genuineness of
this  Agreement  or any other  agreement,  instrument  or  document,  or (v) the
satisfaction of any condition set forth in Article IV or elsewhere herein, other
than to confirm  receipt of items  expressly  required  to be  delivered  to the
Administrative Agent.

         The Administrative  Agent shall be entitled to rely upon, and shall not
incur any liability for relying upon, any notice, request, certificate, consent,
statement,  instrument,  document or other writing  believed by it to be genuine
and to have been signed or sent by the proper Person. The  Administrative  Agent
also may rely upon any statement  made to it orally or by telephone and believed
by it to be made by the proper  Person,  and shall not incur any  liability  for
relying thereon.  The  Administrative  Agent may consult with legal counsel (who
may be counsel for the  Borrowers),  independent  accountants  and other experts
selected by it, and shall not be liable for any action  taken or not taken by it
in accordance with the advice of any such counsel, accountants or experts.

         The  Administrative  Agent  may  perform  any and all  its  duties  and
exercise  its  rights  and  powers  by or  through  any one or  more  sub-agents
appointed by the  Administrative  Agent. The  Administrative  Agent and any such
sub-agent  may perform any and all its duties and exercise its rights and powers
through their  respective  Related  Parties.  The exculpatory  provisions of the
preceding  paragraphs  shall  apply to any  such  sub-agent  and to the  Related
Parties of the Administrative  Agent and any such sub-agent,  and shall apply to
their  respective  activities in connection  with the  syndication of the credit
facilities provided for herein as well as activities as Administrative Agent.

                                       57
<PAGE>

         Subject to the appointment and acceptance of a successor Administrative
Agent as provided in this paragraph,  the Administrative Agent may resign at any
time by notifying the Lenders and the Borrowers. Upon any such resignation,  the
Required  Lenders shall have the right, in consultation  with the Borrowers,  to
appoint  a  successor.  If no  successor  shall  have been so  appointed  by the
Required Lenders and shall have accepted such  appointment  within 30 days after
the  retiring  Administrative  Agent gives notice of its  resignation,  then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent which shall be a bank with an office in Houston,  Texas, or
an  affiliate  of any such  bank.  Upon the  acceptance  of its  appointment  as
Administrative  Agent hereunder by a successor,  such successor shall succeed to
and become  vested with all the  rights,  powers,  privileges  and duties of the
retiring  Administrative  Agent, and the retiring  Administrative Agent shall be
discharged  from its duties and obligations  hereunder.  The fees payable by the
Borrowers to a successor Administrative Agent shall be the same as those payable
to its  predecessor  unless  otherwise  agreed  between the  Borrowers  and such
successor.   After  the  Administrative  Agent's  resignation   hereunder,   the
provisions  of this  Article and Section  9.03 shall  continue in effect for the
benefit  of  such  retiring  Administrative  Agent,  its  sub-agents  and  their
respective  Related  Parties in respect  of any  actions  taken or omitted to be
taken by any of them while it was acting as Administrative Agent.

         SECTION 8.01. INDEMNIFICATION. NOTWITHSTANDING ANYTHING TO THE CONTRARY
HEREIN CONTAINED,  THE ADMINISTRATIVE  AGENT SHALL BE FULLY JUSTIFIED IN FAILING
OR REFUSING TO TAKE ANY ACTION HEREUNDER UNLESS IT SHALL FIRST BE INDEMNIFIED TO
ITS  SATISFACTION BY THE LENDERS AGAINST ANY AND ALL  LIABILITIES,  OBLIGATIONS,
LOSSES,  DAMAGES,  PENALTIES,  ACTIONS,  JUDGMENTS,  SUITS, COSTS, EXPENSES, AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY OR  ASSERTED  AGAINST  THE  ADMINISTRATIVE  AGENT IN ANY WAY  RELATING  TO OR
ARISING OUT OF ITS TAKING OR CONTINUING TO TAKE ANY ACTION OR ITS  REFRAINING TO
TAKE ANY ACTION.  EACH LENDER AGREES TO INDEMNIFY THE  ADMINISTRATIVE  AGENT (TO
THE EXTENT NOT REIMBURSED BY THE BORROWERS OR ANY SUBSIDIARY), ACCORDING TO SUCH
LENDER'S  REVOLVING LOAN COMMITMENTS,  FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS,  LOSSES,  DAMAGES,  PENALTIES,  ACTIONS,  JUDGMENTS,  SUITS, COSTS,
EXPENSES,  AND  DISBURSEMENTS  OF ANY KIND OR  NATURE  WHATSOEVER  WHICH  MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY
RELATING TO OR ARISING OUT OF ANY LOAN  DOCUMENT OR ANY ACTION  TAKEN OR OMITTED
BY THE  ADMINISTRATIVE  AGENT UNDER ANY LOAN  DOCUMENT;  PROVIDED THAT NO LENDER
SHALL BE  LIABLE  FOR ANY  PORTION  OF SUCH  LIABILITIES,  OBLIGATIONS,  LOSSES,

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DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES, OR DISBURSEMENTS
RESULTING  FROM THE GROSS  NEGLIGENCE  OR WILFUL  MISCONDUCT OF THE PERSON BEING
INDEMNIFIED;  AND PROVIDED  FURTHER  THAT IT IS THE  INTENTION OF EACH LENDER TO
INDEMNIFY   THE   ADMINISTRATIVE   AGENT   AGAINST  THE   CONSEQUENCES   OF  THE
ADMINISTRATIVE  AGENT'S OWN NEGLIGENCE,  WHETHER SUCH NEGLIGENCE BE SOLE, JOINT,
CONCURRENT,  ACTIVE OR PASSIVE. WITHOUT LIMITATION OF THE FOREGOING, EACH LENDER
AGREES TO REIMBURSE THE  ADMINISTRATIVE  AGENT  PROMPTLY UPON DEMAND FOR ITS PRO
RATA  PERCENTAGE  OF ANY  OUT-OF-POCKET  EXPENSES  (INCLUDING  ATTORNEYS'  FEES)
INCURRED  BY THE  ADMINISTRATIVE  AGENT  IN  CONNECTION  WITH  THE  PREPARATION,
ADMINISTRATION,  OR  ENFORCEMENT  OF, OR LEGAL  ADVICE IN  RESPECT  OF RIGHTS OR
RESPONSIBILITIES UNDER, ANY LOAN DOCUMENT, TO THE EXTENT THAT THE ADMINISTRATIVE
AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWERS.

         Each  Lender  acknowledges  that  it  has,  independently  and  without
reliance  upon the  Administrative  Agent or any other  Lender and based on such
documents  and  information  as it has deemed  appropriate,  made its own credit
analysis  and  decision  to  enter  into  this   Agreement.   Each  Lender  also
acknowledges  that  it  will,   independently  and  without  reliance  upon  the
Administrative  Agent  or any  other  Lender  and  based on such  documents  and
information as it shall from time to time deem appropriate, continue to make its
own decisions in taking or not taking action under or based upon this Agreement,
any related agreement or any document furnished hereunder or thereunder.

                                   ARTICLE IX
                                  Miscellaneous
                                  -------------

         SECTION  9.01.  Notices.  Except  in the  case  of  notices  and  other
communications  expressly  permitted to be given by  telephone,  all notices and
other  communications  provided  for  herein  shall be in  writing  and shall be
delivered  by  hand  or  overnight  courier  service,  mailed  by  certified  or
registered mail or sent by telecopy, as follows:

         (a) if to the Borrowers, to Conn Appliances,  Inc., Attention of Thomas
J. Frank (Telecopy No. (409)  832-4967),  with copies to Office of the Treasurer
and Office of the Corporate General Counsel (Facsimile Number 409-212-9521);

         (b) if to the  Administrative  Agent  or to the  Swingline  Lender,  to
JPMorgan Chase Bank, National Association, Attention of Michael Arnett (Telecopy
No. (713) 216-8686);

         (c) if to any other Lender,  to it at its address (or telecopy  number)
set forth in its Administrative Questionnaire.

Any party hereto may change its address or telecopy number for notices and other
communications  hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.

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<PAGE>

         SECTION 9.02. Waivers; Amendments.

         (a) No  failure or delay by the  Administrative  Agent or any Lender in
exercising any right or power hereunder  shall operate as a waiver thereof,  nor
shall  any  single  or  partial  exercise  of any such  right or  power,  or any
abandonment  or  discontinuance  of steps  to  enforce  such a right  or  power,
preclude  any other or further  exercise  thereof or the  exercise  of any other
right or power.  The rights and remedies of the  Administrative  Agent,  and the
Lenders hereunder are cumulative and are not exclusive of any rights or remedies
that they would  otherwise have. No waiver of any provision of this Agreement or
consent  to any  departure  by the  Borrowers  therefrom  shall in any  event be
effective  unless the same shall be permitted by paragraph  (b) of this Section,
and then such waiver or consent shall be effective only in the specific instance
and for the purpose for which  given.  Without  limiting the  generality  of the
foregoing,  the  making  of a Loan  shall  not be  construed  as a waiver of any
Default,  regardless of whether the Administrative  Agent or any Lender may have
had notice or knowledge of such Default at the time.

         (b) Neither  this  Agreement  nor any  provision  hereof may be waived,
amended or modified  except  pursuant to an agreement or  agreements  in writing
entered into by the Borrowers  and the Required  Lenders or by the Borrowers and
the Administrative Agent with the consent of the Required Lenders; provided that
no such agreement shall (i) increase the Revolving Loan Commitment of any Lender
without the written consent of such Lender,  (ii) reduce the principal amount of
any Loan or reduce the rate of  interest  thereon,  or reduce  any fees  payable
hereunder,  without the written consent of each Lender affected  thereby,  (iii)
postpone the scheduled  date of payment of the principal  amount of any Loan, or
any interest thereon,  or any fees payable  hereunder,  or reduce the amount of,
waive or excuse any such payment,  or postpone the scheduled  date of expiration
of any Revolving  Loan  Commitment,  without the written  consent of each Lender
affected thereby,  (iv) change Section 2.16 in a manner that would alter the pro
rata sharing of payments required  thereby,  without the written consent of each
Lender,  (v) except in  connection  with a sale,  transfer or other  disposition
permitted  hereby,  release any  Collateral,  (vi) release of Guarantor from its
obligations,  or (vii)  change  any of the  provisions  of this  Section  or the
definition of "Required  Lenders" or any other provision  hereof  specifying the
number or  percentage of Lenders  required to waive,  amend or modify any rights
hereunder or make any determination or grant any consent hereunder,  without the
written  consent of each Lender;  provided  further that no such agreement shall
amend,  modify or  otherwise  affect the rights or duties of the  Administrative
Agent  or  the  Swingline  Lender  without  the  prior  written  consent  of the
Administrative Agent or Swingline Lender, as the case may be.

         SECTION 9.03. Expenses; Indemnity; Damage Waiver.

         (a) The Borrowers shall pay (i) all out-of-pocket  expenses incurred by
the  Administrative  Agent and its  affiliates,  including the reasonable  fees,
charges and disbursements of counsel for the Administrative Agent, in connection
with  the  syndication  of  the  credit  facilities  provided  for  herein,  the
preparation and  administration  of this Agreement or any other Loan Document or
any  amendments,  modifications  or waivers of the provisions  hereof or thereof
(whether  or not the  transactions  contemplated  hereby  or  thereby  shall  be
consummated),  (ii) all out-of-pocket  expenses  incurred by the  Administrative

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<PAGE>

Agent or any  Lender,  including  the fees,  charges  and  disbursements  of any
counsel for the  Administrative  Agent or any  Lender,  in  connection  with the
enforcement or protection of its rights in connection with this Agreement or any
other Loan Document,  including its rights under this Section,  or in connection
with the Loans made,  including all such out-of-pocket  expenses incurred during
any workout, restructuring or negotiations in respect of such Loans.

         (b) The Borrowers shall indemnify the  Administrative  Agent,  and each
Lender, and each related party of any of the foregoing persons (each such person
being called an "Indemnitee")  against,  and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the fees, charges and disbursements of any counsel for any Indemnitee,  incurred
by or asserted against any indemnitee  arising out of, in connection with, or as
a result of:

                  (i)  the  execution  or  delivery  of  this  agreement  or any
         agreement or instrument  contemplated  hereby,  the  performance by the
         parties  hereto  of  their  respective  obligations  hereunder  or  the
         consummation of the transactions or any other transactions contemplated
         hereby,

                  (ii) any Loan or the use of the proceeds therefrom,

                  (iii) any actual or alleged  presence or release of  Hazardous
         Materials on or from any property owned or operated by the Borrowers or
         any of their  Subsidiaries,  or any Environmental  Liability related in
         any way to the Borrowers or any of their Subsidiaries,

                  (iv) any transaction,  act, omission, event or circumstance in
         any way  connected  with the  Mortgaged  Property or with the  Security
         Documents,  including  but not limited to any bodily injury or death or
         property  damage  occurring  in or  upon  or in  the  vicinity  of  the
         Mortgaged  Property  through any cause  whatsoever any act performed or
         omitted to be performed hereunder,  any breach by any Loan Party of any
         representation, warranty, covenant, agreement or condition contained in
         the Security  Documents,  any default as defined herein,  and any claim
         under or with respect to any Lease (as defined in the Mortgages).

                  (v) any actual or prospective claim, litigation, investigation
         or  proceeding  relating  to any of the  foregoing,  whether  based  on
         contract,  tort or any other  theory  and  regardless  of  whether  any
         Indemnitee is a party thereto;  provided that such indemnity shall not,
         as to any  Indemnitee,  be  available  to the extent that such  losses,
         claims,  damages,  liabilities or related  expenses are determined by a
         court of competent  jurisdiction by final and nonappealable judgment to
         have  resulted from the gross  negligence or wilful  misconduct of such
         Indemnitee.

         (c) To the extent that any Borrower fails to pay any amount required to
be paid by it to the  Administrative  Agent,  under paragraph (a) or (b) of this
Section,  each Lender severally agrees to pay to the  Administrative  Agent such
Lender's per rata  percentage of such unpaid  amount in accordance  with Section
8.01.

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<PAGE>

         (d) To the extent  permitted by applicable law, the Borrowers shall not
assert,  and hereby waive,  any claim against any  Indemnitee,  on any theory of
liability, for special, indirect,  consequential or punitive damages (as opposed
to direct or actual damages)  arising out of, in connection with, or as a result
of, this  Agreement or any  agreement or  instrument  contemplated  hereby,  the
Transactions, any Loan or the use of the proceeds thereof.

         (e) All amounts due under this Section  shall be payable not later than
15 days after written demand therefor.

         SECTION 9.04. Successors and Assigns.

         (a) The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties  hereto and their  respective  successors and assigns
permitted hereby,  except that no Borrower may assign or otherwise  transfer any
of its rights or obligations hereunder without the prior written consent of each
Lender (and any attempted  assignment  or transfer by any Borrower  without such
consent  shall  be null and  void).  Nothing  in this  Agreement,  expressed  or
implied,  shall be construed  to confer upon any Person  (other than the parties
hereto,  their  respective  successors and assigns  permitted hereby and, to the
extent  expressly  contemplated  hereby,  the  Related  Parties  of  each of the
Administrative  Agent and the Lenders) any legal or equitable  right,  remedy or
claim under or by reason of this Agreement.

         (b) Any Lender may assign to one or more  assignees all or a portion of
its rights and obligations  under this Agreement  (including all or a portion of
its Revolving Loan  Commitment and the Loans at the time owing to it);  provided
that (i) except in the case of an  assignment  to a Lender or an  affiliate of a
Lender,  (x) the  selling  Lender  must  consult  with  the  Borrowers  prior to
effectuating  any  such  assignment  and  must  provide  the  Borrowers  with  a
reasonable  opportunity  to designate a purchaser  reasonably  acceptable to the
selling  Lender and (y) each of the Borrowers and the  Administrative  Agent and
the Swingline  Lender must give their prior written  consent to such  assignment
(which consent shall not be unreasonably  withheld),  (ii) except in the case of
an  assignment  to a Lender or an affiliate of a Lender or an  assignment of the
entire remaining amount of the assigning Lender's Revolving Loan Commitment, the
amount of the Revolving Loan Commitment of the assigning  Lender subject to each
such  assignment  (determined as of the date the Assignment and Acceptance  with
respect to such assignment is delivered to the  Administrative  Agent) shall not
be less than  $5,000,000  unless  the  Borrowers  and the  Administrative  Agent
otherwise consent,  (iii) each partial assignment shall be made as an assignment
of a  proportionate  part of all the assigning  Lender's  rights and obligations
under this  Agreement,  (iv) the parties to each  assignment  shall  execute and
deliver to the Administrative Agent an Assignment and Acceptance,  together with
(except in the case of an  assignment to a Lender or an affiliate of a Lender) a
processing and recordation fee of $3,500, and (v) the assignee,  if it shall not
be a  Lender,  shall  deliver  to the  Administrative  Agent  an  Administrative
Questionnaire; and provided further that any consultation with or consent of the
Borrowers  otherwise  required under this paragraph  shall not be required if an
Event of Default has  occurred  and is  continuing.  Subject to  acceptance  and
recording thereof pursuant to paragraph (d) of this Section,  from and after the
effective  date  specified  in  each  Assignment  and  Acceptance  the  assignee
thereunder  shall be a party hereto and, to the extent of the interest  assigned

                                       62
<PAGE>

by such Assignment and  Acceptance,  have the rights and obligations of a Lender
under this Agreement,  and the assigning Lender  thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations  under  this  Agreement  (and,  in the  case  of an  Assignment  and
Acceptance  covering all of the assigning  Lender's rights and obligations under
this Agreement,  such Lender shall cease to be a party hereto but shall continue
to be entitled  to the  benefits of Sections  2.15,  2.16,  2.17 and 9.03).  Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this  paragraph  shall be treated for purposes of this
Agreement  as a sale by such  Lender  of a  participation  in  such  rights  and
obligations in accordance with paragraph (e) of this Section.

         (c) The  Administrative  Agent,  acting for this purpose as an agent of
the Borrowers,  shall maintain at one of its offices in Houston, Texas a copy of
each  Assignment  and  Acceptance  delivered  to  it  and  a  register  for  the
recordation  of the names and addresses of the Lenders,  and the Revolving  Loan
Commitment of, and principal  amount of the Loans owing to, each Lender pursuant
to the terms  hereof  from time to time (the  "Register").  The  entries  in the
Register shall be conclusive,  and the Borrowers,  the Administrative Agent, and
the  Lenders  may treat each  Person  whose  name is  recorded  in the  Register
pursuant  to the terms  hereof as a Lender  hereunder  for all  purposes of this
Agreement,  notwithstanding  notice  to the  contrary.  The  Register  shall  be
available for  inspection by the  Borrowers,  and any Lender,  at any reasonable
time and from time to time upon reasonable prior notice.

         (d) Upon its  receipt of a duly  completed  Assignment  and  Acceptance
executed  by an  assigning  Lender and an  assignee,  the  assignee's  completed
Administrative  Questionnaire  (unless the  assignee  shall  already be a Lender
hereunder),  the processing and  recordation fee referred to in paragraph (b) of
this Section and any written  consent to such  assignment  required by paragraph
(b) of this Section,  the Administrative  Agent shall accept such Assignment and
Acceptance  and record the  information  contained  therein in the Register.  No
assignment  shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.

         (e) Any  Lender  may,  without  the  consent  of the  Borrowers  or the
Administrative Agent, sell participations to one or more banks or other entities
(a  "Participant")  in all or a portion of such Lender's  rights and obligations
under  this  Agreement  (including  all  or a  portion  of  its  Revolving  Loan
Commitment  and the  Loans  owing  to  it);  provided  that  (i)  such  Lender's
obligations under this Agreement shall remain unchanged,  (ii) such Lender shall
remain solely  responsible  to the other parties  hereto for the  performance of
such  obligations and (iii) the Borrowers,  the  Administrative  Agent,  and the
other  Lenders  shall  continue to deal solely and directly  with such Lender in
connection with such Lender's rights and obligations  under this Agreement.  Any
agreement or  instrument  pursuant to which a Lender sells such a  participation
shall  provide  that such  Lender  shall  retain the sole right to enforce  this
Agreement and to approve any amendment,  modification or waiver of any provision
of this  Agreement;  provided that such agreement or instrument may provide that
such Lender  will not,  without  the  consent of the  Participant,  agree to any
amendment,  modification  or waiver  described  in the first  proviso to Section
9.02(b) that affects such Participant. Subject to paragraph (f) of this Section,
the Borrowers agree that each  Participant  shall be entitled to the benefits of
Sections  2.15,  2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by  assignment  pursuant to paragraph (b) of this Section.
To the extent  permitted by law, each  Participant also shall be entitled to the
benefits of Section 9.08 as though it were a Lender,  provided such  Participant
agrees to be subject to Section 2.18(c) as though it were a Lender.

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<PAGE>

         (f) A Participant  shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the  applicable  Lender would have been entitled
to receive with respect to the participation  sold to such  Participant,  unless
the sale of the  participation  to such  Participant is made with the Borrowers'
prior written consent. A Participant that would be a Foreign Lender if it were a
Lender  shall not be  entitled  to the  benefits  of  Section  2.17  unless  the
Borrowers are notified of the  participation  sold to such  Participant and such
Participant  agrees,  for the benefit of the  Borrowers,  to comply with Section
2.17(e) as though it were a Lender.

         (g) Any Lender may at any time pledge or assign a security  interest in
all or any portion of its rights under this  Agreement to secure  obligations of
such Lender,  including  any pledge or  assignment  to secure  obligations  to a
Federal  Reserve  Bank,  and this Section  shall not apply to any such pledge or
assignment of a security interest; provided that no such pledge or assignment of
a security interest shall release a Lender from any of its obligations hereunder
or substitute any such pledgee or assignee for such Lender as a party hereto.

         SECTION 9.05. Survival. All covenants, agreements,  representations and
warranties  made  by the  Borrowers  herein  and in the  certificates  or  other
instruments  delivered in connection with or pursuant to this Agreement shall be
considered  to have been  relied  upon by the  other  parties  hereto  and shall
survive the execution and delivery of this Agreement and the making of any Loans
regardless  of any  investigation  made by any such other party or on its behalf
and  notwithstanding  that the  Administrative  Agent or any Lender may have had
notice or knowledge of any Default or  incorrect  representation  or warranty at
the time any credit is extended hereunder,  and shall continue in full force and
effect as long as the  principal  of or any accrued  interest on any Loan or any
fee or any other amount payable under this  Agreement is outstanding  and unpaid
and so long as the Revolving  Loan  Commitments  have not expired or terminated.
The  provisions  of Sections  2.15,  2.16,  2.17 and 9.03 and Article VIII shall
survive and remain in full force and effect  regardless of the  consummation  of
the  transactions  contemplated  hereby,  the  repayment  of the Loans,  and the
Revolving Loan Commitments or the termination of this Agreement or any provision
hereof.

         SECTION 9.06. Counterparts;  Integration; Effectiveness. This Agreement
may be executed in  counterparts  (and by different  parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken  together  shall  constitute a single  contract.  This  Agreement  and any
separate letter  agreements  with respect to fees payable to the  Administrative
Agent  constitute the entire contract among the parties  relating to the subject
matter hereof and supersede any and all previous  agreements and understandings,
oral or written,  relating to the subject  matter hereof.  This Agreement  shall
become  effective when it shall have been executed by the  Administrative  Agent
and when the Administrative Agent shall have received counterparts hereof which,
when taken  together,  bear the signatures of each of the other parties  hereto,
and  thereafter  shall be binding  upon and inure to the  benefit of the parties
hereto and their  respective  successors  and  assigns.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be effective
as delivery of a manually executed counterpart of this Agreement.

         SECTION 9.07. Severability.  Any provision of this Agreement held to be
invalid,  illegal  or  unenforceable  in  any  jurisdiction  shall,  as to  such
jurisdiction,  be  ineffective to the extent of such  invalidity,  illegality or
unenforceability without affecting the validity,  legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a  particular  jurisdiction  shall not  invalidate  such  provision in any other
jurisdiction.

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<PAGE>

         SECTION  9.08.  Right of  Set-off.  If an Event of  Default  shall have
occurred and be  continuing,  each Lender and each of its  affiliates  is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all  deposits  (general  or  special,  time or
demand, provisional or final) at any time held and other obligations at any time
owing by such  Lender or  affiliate  to or for the credit or the  account of any
Borrower  against  any of and  all  the  obligations  of  the  Borrowers  now or
hereafter  existing under this Agreement  held by such Lender,  irrespective  of
whether or not such Lender shall have made any demand under this  Agreement  and
although such obligations may be unmatured. The rights of each Lender under this
Section are in addition to other rights and remedies  (including other rights of
set-off) which such Lender may have.

         SECTION  9.09.  Governing  Law;  Jurisdiction;  Consent  to  Service of
Process.

         (a) THIS AGREEMENT  SHALL BE CONSTRUED IN ACCORDANCE  WITH AND GOVERNED
BY THE LAW OF THE STATE OF TEXAS.

         (b) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY  SUBMITS,  FOR
ITSELF AND ITS PROPERTY, TO THE NONEXCLUSIVE  JURISDICTION OF THE DISTRICT COURT
OF THE STATE OF TEXAS SITTING IN HARRIS COUNTY AND OF THE UNITED STATES DISTRICT
COURT OF THE  SOUTHERN  DISTRICT  OF TEXAS,  AND ANY  APPELLATE  COURT  FROM ANY
THEREOF,  IN ANY  ACTION  OR  PROCEEDING  ARISING  OUT OF OR  RELATING  TO  THIS
AGREEMENT,  OR FOR  RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT,  AND EACH OF THE
PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY  AGREES THAT ALL CLAIMS IN
RESPECT OF ANY SUCH ACTION OR  PROCEEDING  MAY BE HEARD AND  DETERMINED IN TEXAS
OR, TO THE EXTENT  PERMITTED BY LAW, IN SUCH FEDERAL COURT.  EACH OF THE PARTIES
HERETO AGREES THAT A FINAL  JUDGMENT IN ANY SUCH ACTION OR  PROCEEDING  SHALL BE
CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR
IN ANY OTHER MANNER PROVIDED BY LAW.  NOTHING IN THIS AGREEMENT SHALL AFFECT ANY
RIGHT THAT THE  ADMINISTRATIVE  AGENT, OR ANY LENDER MAY OTHERWISE HAVE TO BRING
ANY ACTION OR PROCEEDING  RELATING TO THIS AGREEMENT AGAINST ANY BORROWER OR ITS
PROPERTIES IN THE COURTS OF ANY JURISDICTION.

         (c) EACH BORROWER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE
FULLEST EXTENT IT MAY LEGALLY AND  EFFECTIVELY DO SO, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER  HAVE TO THE LAYING OF VENUE OF ANY SUIT,  ACTION OR PROCEEDING
ARISING  OUT OF OR  RELATING  TO THIS  AGREEMENT  IN ANY  COURT  REFERRED  TO IN
PARAGRAPH (B) OF THIS  SECTION.  EACH OF THE PARTIES  HERETO HEREBY  IRREVOCABLY
WAIVES,  TO THE FULLEST EXTENT  PERMITTED BY LAW, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT.

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<PAGE>

         (d) Each party to this  Agreement  irrevocably  consents  to service of
process in the manner  provided  for  notices in Section  9.01.  Nothing in this
Agreement  will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.

         SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY  IN ANY  LEGAL  PROCEEDING  DIRECTLY  OR  INDIRECTLY  ARISING  OUT OF OR
RELATING TO THIS  AGREEMENT OR THE  TRANSACTIONS  CONTEMPLATED  HEREBY  (WHETHER
BASED ON CONTRACT,  TORT OR ANY OTHER  THEORY).  EACH PARTY HERETO (A) CERTIFIES
THAT NO  REPRESENTATIVE,  AGENT OR ATTORNEY OF ANY OTHER PARTY HAS  REPRESENTED,
EXPRESSLY  OR  OTHERWISE,  THAT SUCH  OTHER  PARTY  WOULD  NOT,  IN THE EVENT OF
LITIGATION,  SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)  ACKNOWLEDGES  THAT IT
AND THE OTHER PARTIES  HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.

         SECTION 9.11.  Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement  and  shall  not  affect  the   construction  of,  or  be  taken  into
consideration in interpreting, this Agreement.

         SECTION 9.12. Payments Set Aside. To the extent that any Borrower makes
a  payment  or  payments  to  the  Administrative  Agent  or any  Lender  or the
Administrative  Agent or any Lender enforces any security  interest or exercises
its right of  set-off,  and such  payment or  payments  or the  proceeds of such
enforcement  or  set-off  or any  part  thereof  are  subsequently  invalidated,
declared to be  fraudulent  or  preferential,  set aside  and/or  required to be
repaid to a  trustee,  receiver  or any other  Person  under any  debtor  law or
equitable  cause,  then, to the extent of such recovery,  the obligation or part
thereof  originally  intended  to be  satisfied,  and all  rights  and  remedies
therefor,  shall be revived  and shall  continue  in full force and effect as if
such payment had not been made or such enforcement or set-off had not occurred.

         SECTION 9.13.  Loan Agreement  Controls.  If there are any conflicts or
inconsistencies  among this Agreement and any of the other Loan  Documents,  the
provisions of this Agreement shall prevail and control.

         SECTION 9.14. FINAL AGREEMENT.  THIS WRITTEN  AGREEMENT  REPRESENTS THE
FINAL  AGREEMENT  BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS,  OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.

                                       66
<PAGE>

         SECTION 9.15. Interest Rate Limitation. Notwithstanding anything herein
to the  contrary,  if at any time the  interest  rate  applicable  to any  Loan,
together with all fees,  charges and other amounts which are treated as interest
on such Loan under applicable law  (collectively,  the "Charges"),  shall exceed
the maximum lawful rate (the "Highest Lawful Rate") which may be contracted for,
charged,  taken,  received  or  reserved  by the  Lender  holding  such  Loan in
accordance with applicable law, the rate of interest  payable in respect of such
Loan hereunder,  together with all Charges payable in respect thereof,  shall be
limited to the Highest Lawful Rate and, to the extent  lawful,  the interest and
Charges  that  would  have been  payable  in  respect  of such Loan but were not
payable as a result of the  operation of this Section shall be cumulated and the
interest and Charges payable to such Lender in respect of other Loans or periods
shall be increased (but not above the Highest  Lawful Rate therefor)  until such
cumulated amount,  together with interest thereon at the Federal Funds Effective
Rate to the date of repayment, shall have been received by such Lender.

         SECTION 9.16. Limitation of Liens. Notwithstanding anything in any Loan
Document to the contrary,  The Administrative Agent and the Lenders hereby agree
that  under  no  circumstances  shall  the  Collateral  include  (i)  "Purchased
Receivables" (as defined in the Receivables Purchase Agreement) or (ii) "Related
Security"  or  "Receivable  Files"  (each  as  defined  in the Conn  Funding  II
Indenture), or products or proceeds of any of the foregoing.

         SECTION  9.17.  USA  Patriot  Act.  Each  Lender that is subject to the
requirements  of the USA Patriot Act (Title III of Pub. L. 107-56  (signed  into
law October 26, 2001)) (the "Act") hereby  notifies the Borrowers  that pursuant
to the  requirements  of the Act, it is  required  to obtain,  verify and record
information that identifies the Borrowers,  which information includes the names
and addresses of the Borrowers and other information that will allow such Lender
to identify the Borrowers in accordance with the Act.

         SECTION 9.18.  Amendment and  Restatement.  This  Agreement  amends and
restates in its entirety  that certain  Credit  Agreement  dated as of April 24,
2003 by and among CAI and certain related entities, as Borrowers, JPMorgan Chase
Bank, National Association, as Administrative Agent, and the other lenders named
therein.

                                       67
<PAGE>

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

                                           CONN APPLIANCES, INC.

                                           By:    /s/ William C. Nylin, Jr.
                                                  ----------------------------
                                           Name:  William C. Nylin, Jr.
                                                  ----------------------------
                                           Title: President
                                                  ----------------------------

                                           CAI CREDIT INSURANCE AGENCY, INC.

                                           By:    /s/ David R. Atnip
                                                  ----------------------------
                                           Name:  David R. Atnip
                                                  ----------------------------
                                           Title: President
                                                  ----------------------------

                                       68
<PAGE>

         The  undersigned  Guarantors  hereby join in this Agreement to evidence
their consent to execution by Borrower of this  Agreement,  to confirm that each
Loan Document now or previously  executed by the  undersigned  applies and shall
continue  to apply to this  Agreement,  and to  acknowledge  that  without  such
consent and confirmation, Lenders would not execute this Agreement.

                                 CAI HOLDING CO., a Delaware corporation,
                                 CONN APPLIANCES, L.L.C., a Delaware
                                 limited liability company, CAI CREDIT, L.L.C.,
                                 a Delaware limited liability company,

                                 By:    /s/ Victoria Garrett
                                        ----------------------------------------
                                 Name:  Victoria Garrett
                                        ----------------------------------------
                                 Title: President and Secretary
                                        ----------------------------------------

                                 CAI L.P., a Texas limited partnership

                                 By:  Conn Appliances, Inc., its
                                      General Partner

                                      By:    /s/ William C. Nylin, Jr.
                                             -----------------------------------
                                      Name:  William C. Nylin, Jr.
                                             -----------------------------------
                                      Title: President
                                             -----------------------------------

                                 CAI CREDIT INSURANCE AGENCY L.P., a
                                 Louisiana limited partnership

                                 By:  CAI Credit Insurance Agency, Inc., its
                                      General Partner

                                      By:    /s/ David R. Atnip
                                             -----------------------------------
                                      Name:  David R. Atnip
                                             -----------------------------------
                                      Title: President
                                             -----------------------------------

                                       69
<PAGE>

         The  undersigned  Guarantor  hereby joins in this Agreement to evidence
its consent to  execution  by Borrower of this  Agreement,  to confirm that each
Loan Document now or previously  executed by the  undersigned  applies and shall
continue  to apply to this  Agreement,  and to  acknowledge  that  without  such
consent and confirmation, Lenders would not execute this Agreement.

                                           CONN'S, INC, a Delaware corporation

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

                                       70
<PAGE>

                                           JPMORGAN CHASE BANK, NATIONAL
                                           ASSOCIATION, individually and as
                                           Administrative Agent and
                                           Swingline Lender

                                           By:    /s/Michael Arnett
                                                  ------------------------------
                                           Name:  Michael Arnett
                                                  ------------------------------
                                           Title: Vice President
                                                  ------------------------------

                                       71
<PAGE>

                                           BANK OF AMERICA, N.A., individually
                                           and as Syndication Agent

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

                                       72
<PAGE>

                                           SUNTRUST BANK, individually and
                                           as Documentation Agent

                                           By:    /s/ Katherine L. Base
                                                  ------------------------------
                                           Name:  Katherine L. Base
                                                  ------------------------------
                                           Title: Vice President
                                                  ------------------------------

                                       73
<PAGE>

                                           HIBERNIA NATIONAL BANK

                                           By:    /s/ Bill C. Darling
                                                  ------------------------------
                                           Name:  Bill C. Darling
                                                  ------------------------------
                                           Title: Vice President
                                                  ------------------------------

                                       74
<PAGE>

                                           GUARANTY BANK

                                           By:    /s/ Eric Luttrell
                                                  ------------------------------
                                           Name:  Eric Luttrell
                                                  ------------------------------
                                           Title: Vice President
                                                  ------------------------------

                                       75
<PAGE>

                                                                     Exhibit E-1
                                                                     -----------
                                 REVOLVING NOTE

$___________________                                         ____________, 200__

         FOR VALUE RECEIVED,  the undersigned  (collectively,  the "Borrowers"),
HEREBY PROMISE TO PAY to the order of ____________________________________  (the
"Lender") the principal sum of _____________ Dollars  ($__________________),  or
the aggregate  principal  amount of Revolving  Loans made to each of the several
Borrowers  pursuant to this  Revolving  Note and  outstanding as of the maturity
hereof, whichever is lesser, in accordance with the terms and provisions of that
certain  Credit  Agreement  dated as of  October  31,  2005,  by and  among  the
Borrowers,  the Lender,  and  JPMorgan  Chase  Bank,  National  Association,  as
Administrative  Agent (the  "Agent") for itself and the other banks or financial
institutions (collectively,  the "Lenders") that may hereafter become a party to
the hereinafter defined Credit Agreement (such agreement,  together with any and
all amendments and modifications  thereof,  being hereinafter referred to as the
"Credit  Agreement";  capitalized  terms used herein and not  otherwise  defined
herein shall have the meanings ascribed to such terms in the Credit Agreement).

         The obligations of the Borrowers hereunder shall be joint and several.

         The outstanding  principal  balance of this Revolving Note shall be due
and payable as provided in the Credit  Agreement.  Each Borrower promises to pay
interest on the unpaid principal balance of this Revolving Note from the date of
any Revolving Loan evidenced by this Revolving Note until the principal  balance
hereof  is paid in full.  Interest  shall  accrue on the  outstanding  principal
balance of this Revolving Note from and including the date of any Revolving Loan
evidenced by this  Revolving  Note to but not including the Maturity Date at the
rate or  rates,  and shall be due and  payable  on the  dates,  set forth in the
Credit  Agreement.  Any  amount  not paid  when due with  respect  to  principal
(whether at stated maturity,  by acceleration or otherwise),  costs or expenses,
or, to the extent  permitted by applicable  law,  interest,  shall bear interest
from  the  date  when  due to and  excluding  the date the same is paid in full,
payable on demand,  at the rate  provided  for in Section  2.11(c) of the Credit
Agreement.

         Payments of principal and interest, and all amounts due with respect to
costs  and  expenses,  shall be made in  lawful  money of the  United  States of
America  in  immediately   available  funds,   without  deduction,   set-off  or
counterclaim  to the Agent for the  account  of the  Lender not later than 10:00
a.m.  (Houston  time) on the  dates on which  such  payments  shall  become  due
pursuant to the terms and provisions set forth in the Credit Agreement.

         If any payment of  principal or interest on this  Revolving  Note shall
become due on a Saturday,  Sunday,  or public holiday on which the Lender is not
open for business,  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 in connection with such payment.

                                       76
<PAGE>

         In addition to all  principal  and accrued  interest on this  Revolving
Note, each Borrower agrees to pay (a) all reasonable costs and expenses incurred
by all owners and holders of this  Revolving  Note in collecting  this Revolving
Note through any probate, reorganization, bankruptcy or any other proceeding and
(b) reasonable  attorneys' fees when and if this Revolving Note is placed in the
hands of an attorney for collection after default.

         All agreements between the Borrowers,  the Lenders or the Agent whether
now  existing  or  hereafter  arising and  whether  written or oral,  are hereby
expressly  limited so that in no  contingency  or event  whatsoever,  whether by
reason of demand  being  made on this  Revolving  Note or  otherwise,  shall the
amount  paid,  or agreed to be paid,  to the  Lenders  or the Agent for the use,
forbearance,  or detention of the money to be loaned under the Credit  Agreement
and  evidenced  by this  Revolving  Note or  otherwise  or for  the  payment  or
performance  of any covenant or  obligation  contained in the Credit  Agreement,
this  Revolving  Note or in any other Loan  Document  exceed the Highest  Lawful
Rate.  If,  as a result  of any  circumstances  whatsoever,  fulfillment  of any
provision  hereof or of any of such documents,  at the time  performance of such
provision  shall be due,  shall  involve  transcending  the  limit  of  validity
prescribed by  applicable  usury law,  then,  ipso facto,  the  obligation to be
fulfilled shall be reduced to the limit of such validity,  and if, from any such
circumstance,  the Lender shall ever receive interest or anything which might be
deemed interest under applicable law which would exceed the Highest Lawful Rate,
such amount which would be excessive  interest shall be applied to the reduction
of the principal  amount owing on account of this  Revolving Note or the amounts
owing on other  obligations  of the Borrowers to the Lenders and the Agent under
any Loan  Document  and not to the  payment of  interest,  or if such  excessive
interest  exceeds the unpaid  principal  balance of this  Revolving Note and the
amounts owing on other  obligations of the Borrowers to the Lenders or the Agent
under any Loan  Documents,  as the case may be, such excess shall be refunded to
the Borrowers.  In determining whether or not the interest paid or payable under
any specific  contingencies  exceeds the Highest  Lawful Rate,  each  applicable
Borrower and the Lender shall, to the maximum extent  permitted under applicable
law, (a)  characterize any  nonprincipal  payment as an expense,  fee or premium
rather than as  interest;  (b)  exclude  voluntary  prepayments  and the effects
thereof; and (c) amortize,  prorate,  allocate and spread,  during the period of
the full stated term of this Revolving Note, all interest at any time contracted
for, charged, received or reserved in connection with the indebtedness evidenced
by this Revolving Note.

         This  Revolving  Note  is one of the  Notes  provided  for  in,  and is
entitled to the benefits of the Credit Agreement,  which Credit Agreement, among
other things,  contains  provisions for acceleration of the maturity hereof upon
the happening of certain stated events,  for prepayments on account of principal
hereof prior to the maturity  hereof upon the terms and  conditions and with the
effect therein specified,  and provisions to the effect that no provision of the
Credit  Agreement or this Revolving Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate. The  obligations of
the Borrowers  hereunder are secured by the Security  Documents  executed by the
respective  Borrowers and the other Loan  Parties.  It is  contemplated  that by
reason of prepayments or repayments hereon prior to the Maturity Date, there may
be times  when no  indebtedness  is owing  hereunder  prior  to such  date,  but
notwithstanding  such  occurrences,  this  Revolving Note shall remain valid and
shall be in full force and effect as to  Revolving  Loans made  pursuant  to the
Credit Agreement subsequent to each such occurrence.

                                       77
<PAGE>

         Except as otherwise  specifically provided for in the Credit Agreement,
each Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand,  presentment for payment, notice of dishonor or default, protest,
notice of protest,  notice of intent to accelerate,  notice of acceleration  and
diligence in collecting and bringing of suit against any party hereto, and agree
to all renewals,  extensions or partial payments hereon, with or without notice,
before or after maturity.

         THIS  REVOLVING  NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.

         IN WITNESS WHEREOF,  each Borrower has caused this Revolving Note to be
executed and delivered by its officer thereunto duly authorized  effective as of
the date first above written.

                                           CONN APPLIANCES, INC.

                                           By:
                                                  ------------------------------
                                           Name:
                                                  ------------------------------
                                           Title:
                                                  ------------------------------

                                           CAI CREDIT INSURANCE AGENCY, INC.

                                           By:
                                                  ------------------------------
                                           Name:
                                                  ------------------------------
                                           Title:
                                                  ------------------------------

                                       78
<PAGE>

                                                                     Exhibit E-2
                                                                     -----------
                                 SWINGLINE NOTE
                                 --------------

$8,000,000                   ____________, 200__

         FOR VALUE RECEIVED,  the undersigned  (collectively,  the "Borrowers"),
HEREBY PROMISE TO PAY to the order of JPMORGAN CHASE BANK, NATIONAL  ASSOCIATION
(the "Lender") the principal sum of Eight Million Dollars  ($8,000,000),  or the
aggregate  principal  amount  of  Swingline  Loans  made to each of the  several
Borrowers  pursuant to this  Swingline  Note and  outstanding as of the maturity
hereof, whichever is lesser, in accordance with the terms and provisions of that
certain  Credit  Agreement  dated as of  October  31,  2005,  by and  among  the
Borrowers,  the Lender,  and  JPMorgan  Chase  Bank,  National  Association,  as
Administrative  Agent (the  "Agent") for itself and the other banks or financial
institutions (collectively,  the "Lenders") that may hereafter become a party to
the hereinafter defined Credit Agreement (such agreement,  together with any and
all amendments and modifications  thereof,  being hereinafter referred to as the
"Credit  Agreement";  capitalized  terms used herein and not  otherwise  defined
herein shall have the meanings ascribed to such terms in the Credit Agreement).

         The obligations of the Borrowers hereunder shall be joint and several.

         The outstanding  principal  balance of this Swingline Note shall be due
and payable as provided in the Credit  Agreement.  Each Borrower promises to pay
interest on the unpaid principal balance of this Swingline Note from the date of
any Swingline Loan evidenced by this Swingline Note until the principal  balance
hereof  is paid in full.  Interest  shall  accrue on the  outstanding  principal
balance of this Swingline Note from and including the date of any Swingline Loan
evidenced by this  Swingline  Note to but not including the Maturity Date at the
rate or  rates,  and shall be due and  payable  on the  dates,  set forth in the
Credit  Agreement.  Any  amount  not paid  when due with  respect  to  principal
(whether at stated maturity,  by acceleration or otherwise),  costs or expenses,
or, to the extent  permitted by applicable  law,  interest,  shall bear interest
from  the  date  when  due to and  excluding  the date the same is paid in full,
payable on demand,  at the rate  provided  for in Section  2.11(c) of the Credit
Agreement.

         Payments of principal and interest, and all amounts due with respect to
costs  and  expenses,  shall be made in  lawful  money of the  United  States of
America  in  immediately   available  funds,   without  deduction,   set-off  or
counterclaim  to the Agent for the  account  of the  Lender not later than 10:00
a.m.  (Houston  time) on the  dates on which  such  payments  shall  become  due
pursuant to the terms and provisions set forth in the Credit Agreement.

         If any payment of  principal or interest on this  Swingline  Note shall
become due on a Saturday,  Sunday,  or public holiday on which the Lender is not
open for business,  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 in connection with such payment.

                                       79
<PAGE>

         In addition to all  principal  and accrued  interest on this  Swingline
Note, each Borrower agrees to pay (a) all reasonable costs and expenses incurred
by all owners and holders of this  Swingline  Note in collecting  this Swingline
Note through any probate, reorganization, bankruptcy or any other proceeding and
(b) reasonable  attorneys' fees when and if this Swingline Note is placed in the
hands of an attorney for collection after default.

         All agreements between the Borrowers,  the Lenders or the Agent whether
now  existing  or  hereafter  arising and  whether  written or oral,  are hereby
expressly  limited so that in no  contingency  or event  whatsoever,  whether by
reason of demand  being  made on this  Swingline  Note or  otherwise,  shall the
amount  paid,  or agreed to be paid,  to the  Lenders  or the Agent for the use,
forbearance,  or detention of the money to be loaned under the Credit  Agreement
and  evidenced  by this  Swingline  Note or  otherwise  or for  the  payment  or
performance  of any covenant or  obligation  contained in the Credit  Agreement,
this  Swingline  Note or in any other Loan  Document  exceed the Highest  Lawful
Rate.  If,  as a result  of any  circumstances  whatsoever,  fulfillment  of any
provision  hereof or of any of such documents,  at the time  performance of such
provision  shall be due,  shall  involve  transcending  the  limit  of  validity
prescribed by  applicable  usury law,  then,  ipso facto,  the  obligation to be
fulfilled shall be reduced to the limit of such validity,  and if, from any such
circumstance,  the Lender shall ever receive interest or anything which might be
deemed interest under applicable law which would exceed the Highest Lawful Rate,
such amount which would be excessive  interest shall be applied to the reduction
of the principal  amount owing on account of this  Swingline Note or the amounts
owing on other  obligations  of the Borrowers to the Lenders and the Agent under
any Loan  Document  and not to the  payment of  interest,  or if such  excessive
interest  exceeds the unpaid  principal  balance of this  Swingline Note and the
amounts owing on other  obligations of the Borrowers to the Lenders or the Agent
under any Loan  Documents,  as the case may be, such excess shall be refunded to
the Borrowers.  In determining whether or not the interest paid or payable under
any specific  contingencies  exceeds the Highest  Lawful Rate,  each  applicable
Borrower and the Lender shall, to the maximum extent  permitted under applicable
law, (a)  characterize any  nonprincipal  payment as an expense,  fee or premium
rather than as  interest;  (b)  exclude  voluntary  prepayments  and the effects
thereof; and (c) amortize,  prorate,  allocate and spread,  during the period of
the full stated term of this Swingline Note, all interest at any time contracted
for, charged, received or reserved in connection with the indebtedness evidenced
by this Swingline Note.

         This  Swingline  Note  is one of the  Notes  provided  for  in,  and is
entitled to the benefits of the Credit Agreement,  which Credit Agreement, among
other things,  contains  provisions for acceleration of the maturity hereof upon
the happening of certain stated events,  for prepayments on account of principal
hereof prior to the maturity  hereof upon the terms and  conditions and with the
effect therein specified,  and provisions to the effect that no provision of the
Credit  Agreement or this Swingline Note shall require the payment or permit the
collection of interest in excess of the Highest Lawful Rate. The  obligations of
the Borrowers  hereunder are secured by the Security  Documents  executed by the
respective  Borrowers and the other Loan  Parties.  It is  contemplated  that by
reason of prepayments or repayments hereon prior to the Maturity Date, there may
be times  when no  indebtedness  is owing  hereunder  prior  to such  date,  but
notwithstanding  such  occurrences,  this  Swingline Note shall remain valid and
shall be in full force and effect as to  Swingline  Loans made  pursuant  to the
Credit Agreement subsequent to each such occurrence.

                                       80
<PAGE>

         Except as otherwise  specifically provided for in the Credit Agreement,
each Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand,  presentment for payment, notice of dishonor or default, protest,
notice of protest,  notice of intent to accelerate,  notice of acceleration  and
diligence in collecting and bringing of suit against any party hereto, and agree
to all renewals,  extensions or partial payments hereon, with or without notice,
before or after maturity.

         THIS  SWINGLINE  NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS AND APPLICABLE FEDERAL LAW.

         IN WITNESS WHEREOF,  each Borrower has caused this Swingline Note to be
executed and delivered by its officer thereunto duly authorized  effective as of
the date first above written.

                                           CONN APPLIANCES, INC.

                                           By:
                                                  ------------------------------
                                           Name:
                                                  ------------------------------
                                           Title:
                                                  ------------------------------

                                           CAI CREDIT INSURANCE AGENCY, INC.

                                           By:
                                                  ------------------------------
                                           Name:
                                                  ------------------------------
                                           Title:
                                                  ------------------------------

                                       81SECOND AMENDMENT TO SERVICING AGREEMENT

     THIS SECOND AMENDMENT TO SERVICING AGREEMENT, dated as of November 28, 2005
(this "Amendment"), is among:

     (i)  CONN FUNDING II, L.P., as the Issuer (the "Issuer");

     (ii) CAI, L.P., as the Servicer (the "Servicer"); and

     (iii) WELLS FARGO BANK, NATIONAL ASSOCIATION  (successor by merger to Wells
          Fargo Bank  Minnesota,  National  Association),  as the  Trustee  (the
          "Trustee").

                                   BACKGROUND

     A.   Reference  is  made  to  (i)  the  Servicing  Agreement,  dated  as of
September 1, 2002,  among the Issuer,  the Servicer and the Trustee (as amended,
restated,  supplemented  or  otherwise  modified  through the date  hereof,  the
"Agreement"),  (ii) the Base Indenture,  dated as of September 1, 2002,  between
the  Issuer and the  Trustee  (the "Base  Indenture"),  (iii) the Series  2002-A
Supplement,  dated as of September  1, 2002,  between the Issuer and the Trustee
(the "2002-A  Supplement")  and (iv) the Series 2002-B  Supplement,  dated as of
September 1, 2002, between the Issuer and the Trustee (the "2002-B  Supplement")
(each of the Base Indenture, the 2002-A Supplement and the 2002-B Supplement, as
amended,  restated,  supplemented or otherwise modified through the date hereof,
and  collectively,  the  "Indenture").  Capitalized  terms  used  herein but not
otherwise  defined herein have the meanings assigned thereto in the Agreement or
the Indenture.

     B.   As a result of (i) the  displacement of the employees from the offices
of the Servicer caused by Hurricane Rita and the aftermath of such hurricane and
displacement  and (ii) the  unavailability  of the  auditors of the  Servicer to
deliver certain reports within the time required under Section 2.02(e)(i) of the
Agreement,  the  Issuer,  the  Servicer,  and the  Trustee  desire  to amend the
Agreement as hereinafter set forth.

     C.   Pursuant to Section 7.01(b) of the Agreement,  this Amendment requires
the consent of the Required Persons of each outstanding Series.

     D.   The Issuer and the Required  Persons under the 2002-A  Supplement have
determined that this Amendment is not material within the meaning of Section 7.3
of the Note  Purchase  Agreement,  dated as of September  13, 2002,  as amended,
restated,  supplemented or otherwise modified through the date hereof, among the
Issuer,  Conn Appliances,  Inc., the Servicer,  Three Pillars Funding LLC (f/k/a
Three  Pillars  Funding   Corporation)  and  SunTrust   Capital  Markets,   Inc.
("SunTrust").

     NOW,  THEREFORE,  for good and  valuable  consideration,  the  receipt  and
adequacy of which are hereby acknowledged, the parties hereto agree as follows:

<PAGE>

     SECTION 1.  Amendment  to the  Agreement.  The first  sentence  of  Section
2.02(e)(i)  of the  Agreement  is hereby  amended  by  inserting  the  following
parenthetical immediately following the date "July 31" therein:

           (but solely with respect to 2005, on or before December 15)

     SECTION  2.  Conditions  to  Effectiveness.  This  Amendment  shall  become
effective as of the date hereof upon the  execution  and delivery to the Trustee
of this  Amendment  by each of the parties  hereto,  SunTrust  and the  Required
Persons of each outstanding Series (whether by facsimile or otherwise).

     SECTION 3. Representations and Warranties.  Each of the Issuer and Servicer
represents and warrants upon and as of the effectiveness of this Amendment that:

     (a)  no event or  condition  has  occurred  and is  continuing  which would
constitute a Servicer Default or would constitute a Servicer Default but for the
requirement that notice be given or time elapsed or both; and

     (b)  after  giving  effect  to  this  Amendment,  its  representations  and
warranties  set forth in the  Agreement and the other  Transaction  Documents to
which it is a party are true and correct as of the date  hereof,  as though made
on and as of such date (except to the extent such representations and warranties
relate  solely to an earlier  date and then as of such earlier  date),  and such
representations  and  warranties  shall continue to be true and correct (to such
extent) after giving effect to the transactions contemplated hereby.

     SECTION 4.  Effect  of  Amendment;  Ratification.  Except  as  specifically
amended hereby,  the Agreement is hereby ratified and confirmed in all respects,
and all of its  provisions  shall  remain in full force and  effect.  After this
Amendment  becomes  effective,  all references in the Agreement (or in any other
Transaction Document) to "the Servicing Agreement", "this Agreement",  "hereof",
"herein",  or words of similar effect,  in each case referring to the Agreement,
shall be deemed to be  references  to the  Agreement  as  amended  hereby.  This
Amendment  shall  not be deemed to  expressly  or  impliedly  waive,  amend,  or
supplement any provision of the Agreement other than as  specifically  set forth
herein.

     SECTION 5.  Counterparts.  This  Amendment may be executed in any number of
counterparts  and by  different  parties  on  separate  counterparts,  and  each
counterpart shall be deemed to be an original,  and all such counterparts  shall
together constitute but one and the same agreement.

     SECTION 6.  Governing  Law.  This  Amendment  shall  be  governed  by,  and
construed in accordance with, the internal laws of the State of New York without
regard to any  otherwise  applicable  conflict  of laws  principles  (other than
Section 5-1401 of the New York General Obligations Law).

     SECTION 7. Successors and Assigns. This Amendment shall be binding upon and
shall inure to the benefit of the parties hereto and their respective successors
and assigns.

                                       2

<PAGE>

     SECTION 8. Section  Headings.  The various  headings of this  Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or the Agreement or any provision hereof or thereof.

         [REMAINDER OF PAGE INTENTIONALLY BLANK; SIGNATURE PAGES FOLLOW]

                                       3

<PAGE>

     IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first written above.

                                CONN FUNDING II, L.P., as Issuer

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

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

                                CAI, L.P., as Servicer

                                By:      Conn Appliances, Inc.,
                                         its general partner

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

<PAGE>

                                WELLS FARGO BANK, NATIONAL
                                ASSOCIATION, not in its individual
                                capacity, but solely as Trustee

                                By:/s/ Marianna Stershic
                                   ---------------------------------------------
                                Name: Marianna Stershic
                                Title: Vice President

<PAGE>

                                ACCEPTED AND AGREED:

                                SUNTRUST CAPITAL MARKETS, INC.

                                By:/s/ Michael Maza
                                   ---------------------------------------------
                                Name: Michael Maza
                                Title: Managing Director

<PAGE>

                                ACCEPTED AND AGREED:

                                THREE PILLARS FUNDING LLC, as a Series
                                2002-A Noteholder

                                By:/s/ Doris J. Hearn
                                   ---------------------------------------------
                                Title: Vice President

<PAGE>

                                ACCEPTED AND AGREED:

                                SunAmerica Life Insurance Company,
                                ----------------------------------
                                as a Series 2002-B, Class A Noteholder

                                By: AIG Global Investment Corp.,
                                    Invest adviser

                                By:/s/ Thomas Denkler
                                   ---------------------------------------------
                                Title: Managing Director

                                outstanding principal amount of
                                Note:$25,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                AIG SunAmerica Life Assurance Company
                                -------------------------------------
                                (f/k/a & d/b/a Anchor National Life Insurance
                                ---------------------------------------------
                                Company),
                                ---------
                                as a Series 2002-B, Class A Noteholder

                                By: AIG Global Investment Corp.,
                                     Invest adviser

                                By:/s/ Thomas Denkler
                                   ---------------------------------------------
                                Title: Managing Director

                                outstanding principal amount of
                                Note:$20,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                First SunAmerica Life Insurance Company,
                                ----------------------------------------
                                as a Series 2002-B, Class A Noteholder

                                By: AIG Global Investment Corp.,
                                     Invest adviser

                                By:/s/ Thomas Denkler
                                   ---------------------------------------------
                                Title: Managing Director

                                outstanding principal amount of
                                Note:$20,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                ING Life Insurance and Annuity Company,
                                ---------------------------------------
                                as a Series 2002-B, Class A Noteholder

                                By ING Investment Management LLC,
                                As Agent

                                By: /s/Chris Lyons
                                   ---------------------------------------------
                                Title: Senior Vice President

                                outstanding principal amount of
                                Note:$11,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                ING USA Annuity and Life Insurance Company,
                                -------------------------------------------
                                as a Series 2002-B, Class A Noteholder

                                By: ING Investment Management LLC,
                                As Agent

                                By: /s/ Chris Lyons
                                   ---------------------------------------------
                                Title: Senior Vice President

                                outstanding principal amount of
                                Note:$17,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                New York Life Insurance Company,
                                --------------------------------
                                as a Series 2002-B, Class A Noteholder

                                By:/s/ Kathleen P. Haas
                                   ---------------------------------------------
                                Title: Investment Vice President

                                outstanding principal amount of
                                Note:$2,857,143

<PAGE>

                                ACCEPTED AND AGREED:

                                New York Life Insurance and Annuity Corporation
                                -----------------------------------------------
                                By: New York Life Investment Management LLC,
                                --------------------------------------------
                                        Its investment manager,
                                -------------------------------
                                as a Series 2002-B, Class A Noteholder

                                By:/s/ Kathleen P. Haas
                                   ---------------------------------------------
                                Title: Director

                                outstanding principal amount of
                                Note:$7,142,857

<PAGE>

                                ACCEPTED AND AGREED:

                                LaSalle Bank, N.A. as Trustee for
                                ------------------------------------------------
                                ACA ABS 220-1, Ltd.                            ,
                                ------------------------------------------------
                                as a Series 2002-B, Class B Noteholder

                                By:/s/Michael Oliver
                                   ---------------------------------------------
                                Title: Assistant Vice President

                                outstanding principal amount of
                                Note:$3,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                SunAmerica Life Insurance Company,
                                ----------------------------------
                                as a Series 2002-B, Class B Noteholder

                                By: AIG Global Investment Corp.,
                                     Invest adviser

                                By:/s/ Thomas Denkler
                                   ---------------------------------------------
                                Title: Managing Director

                                outstanding principal amount of
                                Note:$10,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                ING Life Insurance and Annuity Company,
                                ---------------------------------------
                                as a Series 2002-B, Class B Noteholder

                                By: ING Investment Management LLC,
                                As Agent

                                By: /s/Chris Lyons
                                   ---------------------------------------------
                                Title: Senior Vice President

                                outstanding principal amount of
                                Note:$5,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                ING USA Annuity and Life Insurance Company,
                                -------------------------------------------
                                as a Series 2002-B, Class B Noteholder

                                By: ING Investment Management LLC,
                                As Agent

                                By: /s/Chris Lyons
                                   ---------------------------------------------
                                Title: Senior Vice President

                                outstanding principal amount of
                                Note:$7,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                United of Omaha Life Insurance Company,
                                ---------------------------------------
                                as a Series 2002-B, Class B Noteholder

                                By:/s/ Donna D. Ennis
                                   ---------------------------------------------
                                Title: Vice President

                                outstanding principal amount of
                                Note:$18,000,000

<PAGE>

                                ACCEPTED AND AGREED:

                                Companion Life Insurance Company,
                                ---------------------------------
                                as a Series 2002-B, Class B Noteholder

                                By:/s/ Donna D. Ennis
                                   ---------------------------------------------
                                Title: Vice President

                                outstanding principal amount of
                                Note:$2,778,000

<PAGE>

                                ACCEPTED AND AGREED:

                                New York Life Insurance Company,
                                --------------------------------
                                as a Series 2002-B, Class B Noteholder

                                By:/s/ Kathleen P. Haas
                                   ---------------------------------------------
                                Title: Investment Vice President

                                outstanding principal amount of
                                Note:$2,571,429

<PAGE>

                                ACCEPTED AND AGREED:

                                New York Life Insurance and Annuity Corporation
                                ------------------------------------------------
                                By: New York Life Investment Management, LLC,
                                ------------------------------------------------
                                         Its investment manager,
                                --------------------------------
                                as a Series 2002-B, Class B Noteholder

                                By:/s/ Kathleen P. Haas
                                   ---------------------------------------------
                                Title: Director

                                outstanding principal amount of
                                Note:$6,428,571

<PAGE>

                                ACCEPTED AND AGREED:

                                New York Life Insurance Company,
                                --------------------------------
                                as a Series 2002-B, Class C Noteholder

                                By:/s/ Kathleen P. Haas
                                   ---------------------------------------------
                                Title: Investment Vice President

                                outstanding principal amount of
                                Note:$571,428

<PAGE>

                                ACCEPTED AND AGREED:

                                New York Life Insurance and Annuity Corporation
                                ------------------------------------------------
                                By: New York Life Investment Management, LLC,
                                ------------------------------------------------
                                         Its investment manager,
                                --------------------------------
                                as a Series 2002-B, Class C Noteholder

                                By:/s/ Kathleen P. Haas
                                   ---------------------------------------------
                                Title: Director

                                outstanding principal amount of
                                Note:$1,428,572

<PAGE>

                                ACCEPTED AND AGREED:

                                NYLIM Stratford CDO 2001-1
                                --------------------------
                                By: New York Life Investment Management LLC,
                                --------------------------------------------
                                In its capacity as Collateral Manager
                                -------------------------------------
                                as a Series 2002-B, Class C Noteholder

                                By:/s/ Edward Fitzgerald
                                   ---------------------------------------------
                                Title: Managing Director

                                outstanding principal amount of
                                Note:$4,000,000

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