Item 1.01 Entry into a Material Definitive
Agreement.
Securitization of Receivables
On July 21, 2022, affiliates of Conn’s, Inc. (the “Company”)
completed a securitization transaction (the “Securitization Transaction”), which involved the issuance and sale
in a private offering of 5.87% $275,600,000 Asset Backed Fixed Rate Notes, Class A, Series 2022-A, due December 15, 2026 (the “Class
A Notes”), 9.52% $132,090,000 Asset Backed Fixed Rate Notes, Class B, Series 2022-A, due December 15, 2026 (the “Class
B Notes” and, together with the Class A Notes, the “Purchased Notes”) and the issuance of 0.00%
$63,090,000 Asset Backed Fixed Rate Notes, Class C, Series 2022-A, due December 15, 2026 (the “Class C Notes”),
and Asset Backed Notes, Class R, Series 2022-A (the “Class R Notes” and, collectively with the Purchased Notes
and the Class C Notes, the “Series 2022-A Notes”). The Series 2022-A Notes were issued by Conn’s Receivables
Funding 2022-A, LLC, a newly formed special purpose entity that is indirectly owned by the Company (the “Issuer”).
The Series 2022-A Notes are secured by a portfolio of approximately $591,806,734.30 of customer receivables sold and contributed from
the Company’s loan portfolio indirectly to Conn’s Receivables 2022-A Trust (the “Receivables Trust”),
a newly formed Delaware statutory trust. Net proceeds from the offering (after deducting the underwriting discount payable to the Initial
Purchasers) were $402,781,192.95 and will be used to repay indebtedness under the Company’s asset-based credit facility and for
other general corporate purposes.
Fitch Ratings, Inc. (“Fitch”) has rated the
Class A Notes, the Class B Notes and the Class C Notes as follows: the Class A Notes, “BBBsf” by Fitch; the Class B Notes,
“BBsf” by Fitch and the Class C Notes, “Bsf” by Fitch. The Class R Notes are currently being retained by an affiliate
of the Company but some or all may be sold in the future.
To execute the Securitization Transaction, Conn Credit I, LP, a wholly
owned subsidiary of the Company (the “Seller”), sold or conveyed certain customer receivable contracts (the
“Contracts”) (loans made to finance customer purchases of merchandise from the Company’s subsidiaries)
to Conn Appliances Receivables Funding, LLC, an indirect wholly owned subsidiary of the Company (the “Depositor”),
pursuant to a First Receivables Purchase Agreement, dated as of July 21, 2022, by and between the Seller and the Depositor (the “First
Purchase Agreement”). The Depositor then contributed the Contracts to the Receivables Trust pursuant to a Second Receivables
Purchase Agreement, dated as of July 21, 2022, by and between the Depositor and the Receivables Trust (the “Second Purchase
Agreement”). The Receivables Trust issued a certificate to the Depositor representing a 100% interest in the Receivables
Trust (the “Receivables Trust Certificate”) and the Receivables Trust Certificate was sold by the Depositor
to the Issuer pursuant to a Purchase and Sale Agreement, dated July 21, 2022, by and between the Depositor and the Issuer (the “Purchase
and Sale Agreement”). The rights of the Issuer to and under the Receivables Trust Certificate were pledged to Computershare
Trust Company, National Association, as trustee (the “Trustee”), for the benefit of the holders of the Series
2022-A Notes and any other person to whom certain obligations of the Issuer are payable. Conn Appliances, Inc., a direct and wholly owned
subsidiary of the Company (“Conn Appliances”), is responsible for servicing the receivables transferred to the
Receivables Trust as described in more detail below.
The Series 2022-A Notes were issued by the Issuer pursuant to a Base
Indenture, dated July 21, 2022, by and between the Issuer and the Trustee (the “Base Indenture”), and a Series
2022-A Supplement to the Base Indenture, dated as of July 21, 2022, by and between the Issuer and the Trustee (the “Supplemental
Indenture” and, together with the Base Indenture, the “Indenture”). The Series 2022-A Notes mature
on December 15, 2026.
The Purchased Notes were sold initially to J.P. Morgan Securities LLC,
Deutsche Bank Securities Inc. and MUFG Securities Americas Inc. (collectively, the “Initial Purchasers”) and
then reoffered and resold only (i) to “Qualified Institutional Buyers” as defined in Rule 144A (“Rule 144A”)
under the Securities Act of 1933, as amended (the “Securities Act”) in transactions meeting the requirements
of Rule 144A or (2) solely with respect to the Class A Notes, outside the United States to non-U.S. Persons in transactions in compliance
with Regulation S under the Securities Act.
Payments on the Class R Notes are subordinate to all payments of principal
and interest on the Class A Notes, the Class B Notes and the Class C Notes and all payments to Conn Appliances, as servicer (the “Servicer”),
all third party service providers and the reserve account. Credit enhancement will be provided by excess cashflow, overcollateralization,
a reserve account and in the case of the Class A Notes, subordination of the Class B Notes and the Class C Notes, and, in the case of
the Class B Notes, subordination of the Class C Notes.
The Purchased Notes are subject to redemption by 100% of the holders
of the Class R Notes, at their option, in accordance with the terms specified in the Indenture, on any business day, as of the last day
of the previous monthly period, the balance of outstanding receivables under the Contracts has declined to 15% or less of the balance
of outstanding receivables under the Contracts as of June 30, 2022 (the “Optional Redemption”). The Servicer
will have the option to purchase (the “Optional Purchase”) the Contracts and certain other assets of the Receivables
Trust for an amount equal to the fair market value of such assets from the Issuer on any business day if, as of the last day of the previous
monthly period, the balance of outstanding receivables under the Contracts has declined to 10% or less of the balance of outstanding receivables
under the Contracts as of June 30, 2022. The price paid for the Optional Purchase will not be less than an amount sufficient to pay accrued
and unpaid interest then due on the Series 2022-A Notes and the aggregate unpaid principal, if any, of all of the outstanding Series 2022-A
Notes plus other contractual fees and expenses of the Servicer, the Trustee and certain other service providers in connection with the
Securitization Transaction and the Issuer.
After payment in full of all amounts due and owing with respect to
the Class A Notes, the Class B Notes and the Class C Notes are subject to prepayment on any business day then or thereafter, in whole
but not in part, at the option of 100% of the holders of the Class R Notes (the “Optional Prepayment”). The
amount necessary to effect such Optional Prepayment will be, after giving effect to all distributions on such payment date, (a) (i) for
the Class B Notes, equal to 100.25% of the outstanding principal amount, if any, of the Class B Notes and (ii) for the Class C Notes,
equal to 100.50% of the outstanding principal amount if any, of the Class C Notes, plus (b) accrued and unpaid interest on the Class B
Notes and Class C Notes through the day preceding the payment date on which the prepayment occurs, plus (c) any other amounts due and
owing by the Issuer to other parties pursuant to the Securization Transaction documents; provided, that, the amount to be paid to the
holders of the Class B Notes and the holders of the Class C Notes in connection with the exercise of the Optional Prepayment will be equal
to the sum of the foregoing (a) and (b).
If certain events of default were to occur under the Indenture, the
Trustee may, and at the direction of the required noteholders, shall cause the principal amount of all of the Purchased Notes outstanding
to be immediately due and payable at par, together with interest thereon. Events of default under the Indenture include, but are not limited
to, events such as failure to make required payments on the Series 2022-A Notes or specified bankruptcy-related events. If an event of
default related to specified bankruptcy-related events were to occur under the Indenture, all unpaid principal of and accrued interest,
if applicable, on all the Purchased Notes outstanding shall become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any noteholder.
The Servicer is responsible for servicing the receivables transferred
to the Receivables Trust pursuant to a Servicing Agreement, dated as of July 21, 2022 (the “Servicing Agreement”)
by and among the Issuer, the Receivables Trust, the Servicer and the Trustee. Under the Servicing Agreement, the Servicer will receive
a monthly service fee equal to 4.75% (annualized) based on the outstanding balance of Contracts and certain other assets of the Receivables
Trust. If Servicer defaults on its obligations under the Servicing Agreement, it may, and under certain circumstances will, be terminated
and replaced as servicer.
The foregoing descriptions of the Base Indenture, the Supplemental
Indenture, the First Purchase Agreement, the Second Purchase Agreement, the Purchase and Sale Agreement and Servicing Agreement do not
purport to be complete and are qualified in their entirety by reference to such documents, which are filed as Exhibits 4.1, 4.2, 10.1,
10.2, 10.3 and 10.4, respectively, to this Current Report on Form 8-K and incorporated by reference herein.