Document:

exv10w6wvii

Exhibit 10.6(vii)

RESTRICTED STOCK AGREEMENT

FINGERHUT DIRECT MARKETING, INC.

2008 EQUITY AND INCENTIVE PLAN

(NON-EMPLOYEE INDEPENDENT DIRECTORS)

     THIS AGREEMENT, made effective as of this __________ of __________, _____ (the “Grant Date”)
by and between Fingerhut Direct Marketing, Inc., a Delaware corporation (the “Company”), and
[Insert Participant Name] (“Participant”).

W I T N E S S E T H:

     WHEREAS, Participant on the date hereof is a member of the Board; and

     WHEREAS, the Company wishes to grant a restricted stock award to Participant for shares of the
Company’s Common Stock pursuant to the Company’s 2008 Equity and Incentive Plan (the “Plan”); and

WHEREAS, the Board has authorized the grant of a restricted stock award to Participant;

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

     1. Grant of Restricted Stock Award. The Company hereby grants to Participant on the
Grant Date a restricted stock award (the “Award”) for [Insert Number of Shares] [•] shares of
Common Stock (the “Shares”) on the terms and conditions set forth herein, and subject to adjustment
pursuant to Section 11(b) of the Plan. Shares granted herein may be evidenced in such manner as the
Committee may determine. If certificates representing Shares are registered in the name of the
Participant, then the Company shall retain physical possession of the certificate until the Shares
represented by such certificate have vested in accordance with this Agreement. The Company shall
place a legend on any such certificate describing the risks of forfeiture and other transfer
restrictions set forth in this Agreement and providing for the cancellation and return of such
certificate if such Shares are forfeited as provided in Paragraph 2 below. Until such risks of
forfeiture have lapsed or the Shares subject to this Award have been forfeited pursuant to
Paragraph 2 below, Participant shall be entitled to vote the Shares and shall receive all dividends
attributable to such Shares, but Participant shall not have any other rights as a shareholder with
respect to such Shares. Capitalized terms not defined herein shall have the meanings set forth in
the Plan.

     2. Vesting of Restricted Stock.

	 	a.	 	Except as otherwise provided herein, the Shares subject to this Award shall
remain forfeitable until the vesting dates set forth below:

	 	 	 
	Vesting Date	 	Number of Shares
	 
	May 21, 2009

	 	F•]
	May 21, 2010

	 	F•]
	May 21, 2011

	 	F•]
	May 21, 2012

	 	F•]

 

 

	 	b.	 	Termination of Service — General. Except as otherwise provided in
Paragraph 2(c), if the Participant’s service as a member of the Board is terminated for
any reason, including Participant’s voluntary resignation or retirement, at any time
prior to the vesting date for the Award, the Participant shall immediately forfeit all
unvested Shares.

	 	c.	 	Termination of Service — Death or Disability. If Participant’s
service as a member of the Board is terminated because of death or Disability, all
unvested Shares held by the Participant at the time of such termination shall become
immediately vested and the risks of forfeiture on such unvested Shares shall
immediately lapse.

	 	d.	 	Nontransferability. Unless and until the Shares vest as provided in
this Agreement, such Shares may not be transferred, sold, assigned, pledged, alienated,
attached or otherwise encumbered (collectively, a “Transfer”), and any purported
Transfer will be void and unenforceable against the Company. No attempt to transfer
any unvested Shares, whether voluntary or involuntary, shall vest the purported
transferee with any interest or right in or with respect to such Shares.

3. Stockholders Agreement and Investor Rights Agreement. The Participant acknowledges
and agrees that the shares of Common Stock issued to the Participant pursuant to this Agreement
that have vested pursuant to Paragraph 2 or 5 hereof shall be subject in all respects to the
Amended and Restated Stockholders Agreement dated as of May 15, 2008, among the Company and the
investors named therein, as such agreement is amended, modified or replaced from time to time and
the Amended and Restated Investor Rights Agreement dated as of May 15, 2008, among the Company and
the investors named therein, as such agreement is amended, modified or replaced from time to time.

4. Miscellaneous.

	 	a.	 	Limitation of Rights as a Director. This Agreement shall not confer
on Participant any right with respect to continued service on the Board, nor will it
interfere in any way with any right of the Company or its stockholders to terminate
such service.

	 	b.	 	Securities Law Compliance. Participant shall not transfer or
otherwise
dispose of the Shares received pursuant to this Agreement until such time as counsel
to the Company shall have determined that such transfer or other disposition will
not violate any state or federal securities laws. Participant may be required by the
Company, as a condition of the effectiveness of this restricted stock award, to
agree in writing that all Shares subject to this Agreement shall be held, until such
time that such Shares are registered and freely tradable under applicable state and
federal securities laws, for Participant’s own account without a view to any further
distribution thereof, that the certificates for such shares shall

 

 

	 	 	 	bear an appropriate legend to that effect and that such shares will be not
transferred or disposed of except in compliance with applicable state and federal
securities laws.

	 	c.	 	Shares Reserved. The Company shall at all times during the term of
this Agreement reserve and keep available such number of shares of Common Stock as will
be sufficient to satisfy the requirements of this Agreement.

	 	d.	 	Withholding Taxes. In order to permit the Company to comply with all
applicable federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to insure that, if necessary, all applicable federal or
state payroll, income or other taxes are withheld from any amounts payable by the
Company to Participant. If the Company is unable to withhold such federal and state
taxes, for whatever reason, Participant hereby agrees to pay to the Company an amount
equal to the amount the Company would otherwise be required to withhold under federal
or state law.

	 	e.	 	2008 Equity and Incentive Plan. The Award evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement. This Agreement is subject
to and in all respects limited and conditioned as provided in the Plan. The Plan
governs this Agreement. In the event of any questions as to the construction of this
Agreement or in the event of a conflict between the Plan and this Agreement, the Plan
shall govern.

	 	f.	 	Blue Sky Limitation. Notwithstanding anything in this Agreement to
the contrary, in the event the Company makes any public offering of its securities and
determines, in its sole discretion, that it is necessary to reduce the number of issued
but unexercised stock purchase rights so as to comply with any state securities or Blue
Sky law limitations with respect thereto, the Board of Directors of the Company shall
accelerate the vesting of this restricted stock award, provided that the Company gives
Participant 15 days’ prior written notice of such acceleration. Notice shall be deemed
given when delivered personally or when deposited in the United Statesmail, first class
postage prepaid and addressed to Participant at the address of Participant on file with
the Company.

	 	g.	 	Accounting Compliance. Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 11(b) of the
Plan occurs, and Participant is an “affiliate” of the Company or any Affiliate (as
defined in applicable legal and accounting principles) at the time of such transaction,
Participant will comply with all requirements of Rule 145 of the Securities Act of
1933, as amended, and the requirements of such other legal or accounting principles,
and will execute any documents necessary to ensure such compliance.

	 	h.	 	Stock Legend. The Committee may require that the certificates for any
Shares purchased by Participant (or, in the case of death, Participant’s successors)
shall bear an appropriate legend to reflect the restrictions set forth in this
Agreement;

 

 

	 	 	 	provided, however, that failure to so endorse any of such certificates shall not
render invalid or inapplicable Paragraph 3.

	 	i.	 	Scope of Agreement; Amendment. This Agreement shall bind and inure to
the benefit of the Company, its Affiliates and its successors and assigns and
Participant and any successor or successors of Participant permitted by this Agreement.
Notwithstanding anything in this Agreement or the Plan to the contrary, the Company
expressly reserves the right to amend this Agreement without Participant’s consent to
the extent necessary or desirable to comply with Code Section 409A, and the regulations,
notices and other guidance of general applicability issued thereunder.

5. Change of Control.

	 	a.	 	Acceleration. In the event of a Change of Control (whether or not
there is an acquiring or surviving entity) in which there is no assumption or
substitution of the Shares as described in Paragraph 5(b), then the Shares shall become
fully vested and the risks of forfeiture on the Shares shall immediately lapse as of the
occurrence of such Change of Control.

	 	b.	 	Continuation or Assumption of the Shares. In the event of a Change of
Control in which there is an acquiring or surviving entity, the acquiring or surviving
entity may provide for the continuation or assumption of the Shares, or for the grant of
a new award in substitution therefor, by the acquiror or survivor or an affiliate of the
acquiror or survivor, in each case on such terms and subject to such conditions as
preserve the intrinsic value of the Shares. In the event the acquiring or surviving
entity provides for continuation or assumption of the Shares, or for the grant of a new
award in substitution therefor, pursuant to this Paragraph 5(b), the Shares (or the
grant of a new award in substitution therefore) shall become fully vested and the risks
of forfeiture on the Shares shall immediately lapse as of the occurrence of such Change
of Control if the Participant’s service on the Board is involuntarily terminated upon
such Change of Control.

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed on the day
and year first above written.

	 	 	 	 	 
	 	FINGERHUT DIRECT MARKETING, INC.

 	 
	 	By:  	 	 
	 	 	Its:

 	 
	 	
 	 
	 	[Participant]exv10w12

Exhibit 10.12

EXECUTION VERSION

BLUESTEM LETTER AGREEMENT

August 20, 2010

Goldman Sachs Bank USA

6011 Connection Drive

Irving, TX 75039

Ladies and Gentlemen:

          We refer to the Credit Agreement, dated as of August 20, 2010, between Fingerhut Receivables
I, LLC (the “Company”), the Tranche A Lenders and Tranche B Lenders from time to time
parties thereto, Goldman Sachs Bank USA (“GS Bank”), as administrative agent, collateral
agent, joint lead arranger, joint bookrunner, syndication agent and documentation agent, and J.P.
Morgan Securities Inc., as joint lead arranger and joint bookrunner (“Credit Agreement”).
Defined terms used but not defined herein or in Appendix A hereto have the meaning specified in the
Credit Agreement. This is the “Bluestem Letter Agreement” referred to in the Credit
Agreement and reflects the agreement of the parties hereto as to the matters specified herein.

          The Lenders are not willing to enter into the Credit Agreement, to make Loans thereunder or to
extend credit to the Company unless Bluestem Brands, Inc. (“Bluestem”), as the sole member
of the Company, unconditionally agrees to certain obligations set forth herein.

          Subject to the terms and conditions hereof, as an inducement to the Lenders to enter into the
Credit Agreement, to make Loans from time to time to the Company, and to extend such additional
credit, and for other good and valuable consideration, the receipt and legal sufficiency of which
are hereby acknowledged, Bluestem agrees as follows:

ARTICLE I

Negative Covenants

          1.1 Indebtedness. Bluestem will not, and shall not permit any Subsidiary or the
Company to, create, incur or suffer to exist any Indebtedness, except:

     (a) Indebtedness incurred under the Credit Documents or Related Agreements;

     (b) Indebtedness existing on the date hereof and set forth in Schedule 1.1 and
Refinancing of any such Indebtedness in accordance with Section 1.1(f) hereof;

 

 

     (c) Indebtedness of Bluestem to any Subsidiary, and Indebtedness of any Subsidiary to Bluestem
or any other Subsidiary, provided that such Indebtedness otherwise complies with the
provisions of Section 1.4;

     (d) Guarantees by Bluestem of Indebtedness of any Subsidiary (other than the Company, except
in the case of the Bluestem Guaranty) and by any Subsidiary of Indebtedness of Bluestem or any
other Subsidiary, provided that the Indebtedness so Guaranteed is permitted by this Section
1.1;

     (e) Indebtedness of Bluestem or any Subsidiary incurred to finance the acquisition,
construction or improvement of any fixed or capital assets (whether or not constituting purchase
money Indebtedness), including Capital Lease Obligations and any Indebtedness assumed in connection
with the acquisition of any such assets or secured by a Lien on any such assets prior to the
acquisition thereof, and Refinancing of any such Indebtedness in accordance with Section
1.1(f) hereof; provided that (i) such Indebtedness is incurred prior to or within 90
days after such acquisition or the completion of such construction or improvement and (ii) the
aggregate principal amount of Indebtedness permitted by this Section 1.1(e) shall not
exceed $10,000,000 at any time outstanding plus up to $25,000,000 to finance the acquisition of the
warehouse Bluestem currently leases in St. Cloud, Minnesota (the “St. Cloud Warehouse”)
(provided that any Liens incurred in connection with such acquisition shall only encumber
real property and fixtures comprising the St. Cloud Warehouse);

     (f) Indebtedness which represents a Refinancing of any of the Indebtedness described in
Sections 1.1(b), (e) and (j); provided that, (i) the principal
amount of such Indebtedness is not increased, (ii) no Loan Party that is not originally obligated
with respect to repayment of such Indebtedness is required to become obligated with respect
thereto, (iii) any Liens securing such Indebtedness are not extended to any property (other than
property of a type included as collateral under any Bluestem Inventory Loan Documents or Senior
Subordinated Documents as of the date of this Agreement) of Bluestem or any Subsidiary that is a
Loan Party, (iv) such Refinancing does not result in a shortening of the average weighted maturity
of the Indebtedness so extended, refinanced or renewed, (v) the terms of any such Refinancing are
not materially less favorable to the obligor thereunder than the original terms of such
Indebtedness and (vi) an intercreditor agreement satisfactory to the Administrative Agent shall
have been obtained with respect to such Indebtedness; provided, however, that any
Refinancing in respect of the Bluestem 2010 Inventory Credit Agreement may increase the principal
amount of such Indebtedness to $75,000,000;

     (g) Indebtedness of Bluestem or any Subsidiary, owed to any person providing workers’
compensation, health, disability or other employee benefits or property, casualty or liability
insurance, pursuant to reimbursement or indemnification obligations to such person, in each case
incurred in the ordinary course of business;

     (h) Indebtedness of Bluestem or any Subsidiary, in respect of performance bonds, bid bonds,
appeal bonds, surety bonds and similar obligations, in each case provided in the ordinary course of
business;

 

 

     (i) Indebtedness of any Person that becomes a Subsidiary after the date hereof;
provided that (i) such Indebtedness exists at the time such Person becomes a Subsidiary and
is not created in contemplation of or in connection with such Person becoming a Subsidiary and (ii)
the aggregate principal amount of Indebtedness permitted by this Section 1.1 (i) shall not
exceed $2,500,000 at any time outstanding;

     (j) Indebtedness incurred under the Senior Subordinated Documents, including increases in the
outstanding principal amount of the Senior Subordinated Debt as a result of any PIK Payments, and
the Bluestem Inventory Loan Documents, in each case, without giving effect to any amendments or
other modifications to the Senior Subordinated Documents or the Bluestem Inventory Loan Documents
after the date of this Agreement which permit an increase in the maximum principal amount of
Indebtedness which may be outstanding thereunder in excess of $75,000,000, in the case of the
Bluestem Inventory Loan Documents, or in excess of $30,000,000 plus any PIK Payments
permitted under the Senior Subordinated Documents in effect as of the date hereof, in the case of
the Senior Subordinated Documents, unless such amendments or modifications shall have been
consented to by the Class Requisite Lenders of each Class, other than a Refinancing permitted under
Section 1.1(f); and

     (k) other unsecured Indebtedness of Bluestem or any Subsidiary in an aggregate principal
amount not exceeding $10,000,000 at any time outstanding; provided that the aggregate
principal amount of Indebtedness of Bluestem’s Subsidiaries permitted by this Section 1.1
(k) shall not exceed $2,500,000 at any time outstanding.

          1.2 Liens. Bluestem shall not, and shall not permit any Subsidiary 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) Liens created pursuant to any Bluestem Inventory Loan Document or any Senior Subordinated
Document and permitted under the related Intercreditor Agreement;

     (b) Bluestem Permitted Encumbrances;

     (c) any Lien on any property or asset of Bluestem or any Subsidiary existing on the date
hereof and set forth in Schedule 1.2 (or in the case of any replacement or additional
Receivables Account Owner, security interests in deposit accounts to secure obligations under
Receivables Account Agreements); provided that (i) such Lien shall not apply to any other
property or asset of Bluestem or any Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the Closing Date and Refinancing thereof that do not increase the
outstanding principal amount thereof;

     (d) Liens on fixed or capital assets acquired, constructed or improved by Bluestem or any
Subsidiary; provided that (i) such Liens secure Indebtedness permitted by Section
1.1, (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 90
days after such acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or
improving such

 

 

fixed or capital assets, (iv) such Liens shall not apply to any other property or assets of
Bluestem or any Subsidiary and (v) any such Liens incurred in connection with the acquisition of
the St. Cloud Warehouse solely that encumber the real property and fixtures related thereto;

     (e) any Lien existing on any property or asset prior to the acquisition thereof by Bluestem or
any Subsidiary or existing on any property or asset of any Subsidiary prior to the time such Person
becomes a Subsidiary; provided that (i) such Lien is not created in contemplation of or in
connection with such acquisition or such Person becoming a Subsidiary, as the case may be, (ii) such Lien shall not apply to any other property or assets of Bluestem or
any Subsidiary and (iii) such Lien shall secure only those obligations which it secures on the date
of such acquisition or the date such Person becomes a Subsidiary, and Refinancing thereof that do
not increase the outstanding principal amount thereof;

     (f) with respect to Bluestem or any Subsidiary, Liens of a collecting bank arising in the
ordinary course of business under Section 4-208 of the Uniform Commercial Code in effect in the
relevant jurisdiction covering only the items being collected upon;

     (g) Liens arising out of sale and leaseback transactions permitted by Section 1.6;

     (h) Liens granted by a Subsidiary in favor of Bluestem or another Subsidiary in respect of
Indebtedness owed by such Subsidiary;

     (i) Liens created pursuant to or permitted by any Credit Document or Collateral Document or
otherwise securing any obligations thereunder; and

     (j) Liens created pursuant to the Equity Pledge Agreement.

          1.3 Fundamental Changes.

     (a) Bluestem shall not, and shall not permit any of its Subsidiaries to, merge into or
consolidate with any other Person, or permit any other Person to merge into or consolidate with it,
or liquidate or dissolve, except that, if at the time thereof and immediately after giving effect
thereto no Event of Default under the Credit Agreement shall have occurred and be continuing
(i) any Subsidiary of Bluestem (other than the Company) may merge into Bluestem in a transaction in
which Bluestem is the surviving corporation, (ii) any Subsidiary may merge into any other
Subsidiary in a transaction in which the surviving entity is a Subsidiary and (iii) any Subsidiary
of Bluestem may liquidate or dissolve if the Bluestem determines in good faith that such
liquidation or dissolution is in the best interests of the Bluestem and is not materially
disadvantageous to the Lenders; provided that any such merger involving a Person that is not a
wholly owned Subsidiary of Bluestem immediately prior to such merger shall not be permitted unless
also permitted by Section 1.4.

     (b) Bluestem shall not, nor shall it permit its Subsidiaries to, engage to any material extent
in any business other than businesses of the type conducted by Bluestem, its Subsidiaries and the
Company on the on the date of execution of this Bluestem Letter Agreement and businesses reasonably
related thereto.

 

 

          1.4 Investments, Loans, Advances, Guarantees and Acquisitions. Bluestem shall not and
shall not permit any Subsidiary to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) 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 (whether through purchase of assets, merger
or otherwise), except:

     (a) Bluestem Permitted Investments;

     (b) investments in existence on the date of this Bluestem Letter Agreement and described in
Schedule 1.4;

     (c) investments by Bluestem and its Subsidiaries in Equity Interests in their respective
Subsidiaries (other than the Company) and by Bluestem in the Company pursuant to the terms of the
Credit Documents or the Related Agreements, including investments in the Company following the
initial public offering of Bluestem for the purpose of the Company making prepayments under the
Credit Agreement;

     (d) loans or advances made by Bluestem to any Subsidiaries (other than the Company) and made
by any Subsidiary (other than the Company) to Bluestem or any other Subsidiary, provided
that (i) no such loans and advances made by a Subsidiary that is a Loan Party shall be evidenced by
a promissory note and (ii) the amount of such loans and advances (together with outstanding
Guarantees permitted under the proviso to Section 1.4(e)) shall not exceed $2,500,000 in
the aggregate at any time outstanding (in each case determined without regard to any write-downs or
write-offs);

     (e) Guarantees constituting Indebtedness permitted by Section 1.1, provided that the
aggregate principal amount that is Guaranteed (together with outstanding intercompany loans
permitted under clause (ii) to the proviso to Section 1.4(d)) shall not exceed $2,500,000
in the aggregate at any time outstanding (in each case determined without regard to any write-downs
or write-offs);

     (f) loans or advances or other investments made by Bluestem or any Subsidiary (other than the
Company) to or for the benefit of its employees on an arms-length basis in the ordinary course of
business consistent with past practices (or as otherwise disclosed to the Administrative Agent
prior to the date of this Agreement) for travel and entertainment expenses, relocation costs and
similar purposes up to a maximum of $1,000,000 to any employee and up to a maximum of $3,000,000 in
the aggregate at any one time outstanding;

     (g) notes payable, or stock or other securities issued by account debtors to Bluestem or any
Subsidiary pursuant to negotiated agreements with respect to settlement of such account debtor’s
accounts in the ordinary course of business, consistent with past practices;

 

 

     (h) investments in the form of Swap Agreements permitted by Section 1.7;

     (i) investments of any Person existing at the time such Person becomes a Subsidiary of
Bluestem or consolidates or merges with Bluestem or any of the Subsidiaries (including in
connection with a permitted acquisition) so long as such investments were not made in contemplation
of such Person becoming a Subsidiary or of such merger;

     (j) investments received in connection with the dispositions of assets permitted by
Section 1.5;

     (k) investments constituting deposits described in clauses (c) and (d) of the definition of
the term “Bluestem Permitted Encumbrances”;

     (1) (i) investments in the form of contributions of Underlying Receivables, in exchange for
equity interests in the Company made pursuant to the terms of the Credit Documents, and
Contribution Amounts required to be made pursuant to the terms of the Credit Agreement, (ii) the
Bluestem Guaranty and (iii) investments by Bluestem in the Company pursuant to the terms of the
Credit Documents, including investments in the Company following an initial public offering of
Bluestem for the purpose of the Company making prepayments and related amounts under the Credit
Agreement; and

     (m) investments permitted under Section 6.4 of the Credit Agreement and acquisitions permitted
under Section 6.6 of the Credit Agreement.

          1.5 Asset Sales. Bluestem will not, and it will not permit any Subsidiary or the
Company to, sell, transfer, lease or otherwise dispose of any asset, including any Equity Interest
owned by it (provided for the avoidance of doubt that the issuance of Equity Interests by Bluestem
will not constitute a sale, transfer or disposition), nor will Bluestem permit any Subsidiary to
issue any additional Equity Interest in such Subsidiary (other than to Bluestem or another
Subsidiary in compliance with Section 1.4), except:

     (a) with respect to Bluestem and any Subsidiary other than the Company, sales, transfers and
dispositions of (i) inventory in the ordinary course of business and (ii) used, obsolete, worn out
or surplus equipment or property in the ordinary course of business;

     (b) with respect to Bluestem and any Subsidiary other than the Company, sales of Underlying
Receivables and other Purchased Assets (as defined in the Receivables Purchase Agreement) to the
Company;

     (c) with respect to Bluestem and any Subsidiary other than the Company, sales, transfers and
dispositions to Bluestem or any Subsidiary, provided that any such sales, transfers or dispositions
shall be made in compliance with Section 1.9;

 

 

     (d) with respect to Bluestem and any Subsidiary other than the Company, sales, transfers and
dispositions of accounts receivable in connection with the compromise, settlement or collection
thereof;

     (e) with respect to Bluestem and any Subsidiary other than the Company, sales, transfers and
dispositions of Bluestem Permitted Investments and other investments permitted by clauses (i) and
(k) of Section 1.4;

     (f) with respect to Bluestem and any Subsidiary other than the Company, sale and leaseback
transactions permitted by Section 1.6;

     (g) dispositions resulting from any casualty or other insured damage to, or any taking under
power of eminent domain or by condemnation or similar proceeding of, any property or asset of
Bluestem or any Subsidiary;

     (h) with respect to Bluestem and any Subsidiary other than the Company, sales, transfers and
other dispositions of assets (other than Equity Interests in a Subsidiary unless all Equity
Interests in such Subsidiary are sold and other than Equity Interests in Company) that are not
permitted by any other paragraph of this Section, provided that the aggregate fair market value of
all assets sold, transferred or otherwise disposed of in reliance upon this Section 1.5(h) shall
not exceed $2,500,000 during any fiscal year of Bluestem;

     (i) sales, transfers and other dispositions of assets acquired pursuant to Section
1.4(f); and

     (j) sales of assets permitted under Section 6.6 of the Credit Agreement;

provided that all sales, transfers, leases and other dispositions permitted hereby (other
than those permitted by paragraphs (b), (f) and (g) above) shall be made for fair value and for at
least 75% cash consideration or, in the case of clause (e), consideration in the form of other
Bluestem Permitted Investments and/or cash.

          1.6 Sale and Leaseback Transactions. Bluestem shall not, and shall not permit any
Subsidiary to, enter into any arrangement, directly or indirectly, whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property that it intends to
use for substantially the same purpose or purposes as the property sold or transferred, except for
any such sale of any fixed or capital assets by Bluestem or any Subsidiary that is made for cash
consideration in an amount not less than the fair value of such fixed or capital asset and is
consummated within 90 days after Bluestem or such Subsidiary acquires or completes the construction
of such fixed or capital asset.

          1.7 Swap Agreements. Bluestem shall not, and shall not permit any Subsidiary to, enter
into any Swap Agreement, except (a) Swap Agreements entered into by Bluestem or any Subsidiary to
hedge or mitigate risks to which Bluestem or any Subsidiary has actual exposure (other than those
in respect of Equity Interests of Bluestem or any Subsidiary), (b)

 

 

Swap Agreements entered into by Bluestem or any Subsidiary in order to effectively cap, collar or
exchange interest rates (from fixed to floating rates, from one floating rate to another floating
rate or otherwise) with respect to any interest-bearing liability or investment of Bluestem or any
Subsidiary and (c) Swap Agreements permitted under the Credit Agreement.

          1.8 Restricted Payments; Certain Payments of Indebtedness.

     (a) Bluestem shall not, and shall not permit any Subsidiary to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except (i) Bluestem may make, declare and pay dividends with respect to its
common stock payable solely in additional shares of its common stock, and with respect to its
preferred stock, payable solely in additional shares of such preferred stock or in shares of its
common stock, and Restricted Payments to any holders of the warrants pursuant to the terms thereof
and the related agreements outstanding on the date hereof, or make case payments in lieu of
fractional shares, (ii) Bluestem may make Restricted Payments, of up to $1,000,000 per Fiscal Year,
pursuant to and in accordance with equity incentive plans of Bluestem and its Subsidiaries, (iii)
Bluestem may pay cash dividends on its Series A Preferred Stock or Series B Preferred Stock with
proceeds of an initial public offering of its common stock upon the conversion of such preferred
stock to common stock, pursuant to Section 4.2.1 of Bluestem’ certificate of incorporation in
effect on the date hereof, (iv) following an initial public offering by Bluestem, Bluestem may pay
cash dividends with respect to its capital stock in an aggregate amount in any Fiscal Year of
Bluestem not to exceed 10% of Consolidated Net Income for the immediately preceding fiscal year of
Bluestem, (v) following an initial public offering by Bluestem, Bluestem may effect repurchases,
redemptions or other Restricted Payments other than the payment of cash dividends with respect to
its capital stock in an aggregate amount in any Fiscal Year of Bluestem not to exceed 3% of
Tangible Net Worth of the Servicer Consolidated Group as of the end of the Fiscal Quarter most
recently ended prior to the date of any such Restricted Payment, (vi) following an initial public
offering by Bluestem, Bluestem and its Subsidiaries (other than the Company) may make Restricted
Payments consisting of the repurchase or other acquisition of shares of, or options to purchase
shares of, capital stock of Bluestem or any of its Subsidiaries from employees, former employees,
directors or former directors of Bluestem or any Subsidiary (or their permitted transferees), in
each case pursuant to stock option plans, stock plans, employment agreements or other employee
benefit plans approved by the board of directors of Bluestem (provided that the aggregate
amount of such Restricted Payments in any Fiscal Year of Bluestem shall not exceed 3% of the
Tangible Net Worth of the Bluestem Consolidated Group as of the end of the fiscal quarter most
recently ended prior to the date of any such Restricted Payment) and (vii) Subsidiaries may declare
and pay dividends ratably with respect to their Equity Interests in accordance with the applicable
Organizational Documents; provided that with respect to Restricted Payments made pursuant
to clauses (iii) through (vi) above, (A) no Event of Default or a Default shall have occurred and
be continuing at the time of such Restricted Payment and (B) Bluestem shall be in compliance with the covenants in Section 4.01 of the Servicing Agreement as of the date of such Restricted
Payment and immediately after giving effect thereto.

     (b) Bluestem shall not, and it shall not permit any Subsidiary to, make or agree to pay or
make, directly or indirectly, any payment or other distribution (whether in cash, securities or

 

 

other property) of or in respect of principal of or interest on any Indebtedness, or any payment or
other distribution (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 Indebtedness, except: (i) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness permitted under this Agreement (including
Indebtedness under the Bluestem 2010 Inventory Credit Agreement and the Senior Subordinated Debt)
other than payments in respect of subordinated indebtedness (other than the Senior Subordinated
Debt) prohibited by the subordination provisions thereof; (ii) other principal payments in respect
of the Bluestem 2010 Inventory Credit Agreement and any interest, fees or other obligations related
thereto or relating to any reduction in commitments thereunder; (iii) under the Credit Documents;
(iv) payments in respect of the Senior Subordinated Debt; (v) Refinancing of Indebtedness to the
extent permitted by Section 1.1; and (vi) payment of secured Indebtedness permitted under
this Bluestem Letter Agreement that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness other than payments in respect of subordinated
indebtedness (other than the Senior Subordinated Debt) prohibited by the subordination provisions
thereof.

          1.9 Transactions with Affiliates. Bluestem shall not, nor will it permit any
Subsidiary 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: (a) with respect to Bluestem and any Subsidiary, transactions that
(i) are in the ordinary course of business and (ii) are at prices and on terms and conditions not
less favorable to Bluestem or such Subsidiary than could be obtained on, an arm’s-length basis from
unrelated third parties; (b) any investment permitted by Sections 1.4(c), (d) or
(e), (c) any Indebtedness permitted under Section 1.1(a), (c), (d)
or (j); (d) any Restricted Payment permitted by Section 1.8; (e) loans or advances
to employees permitted under Section 1.4(f); (f) the payment of reasonable fees to
directors of Bluestem or any Subsidiary who are not employees of Bluestem or any Subsidiary
approved by Bluestem’s board of directors, and compensation and employee benefit arrangements paid
to, and indemnities provided for the benefit of, directors, officers or employees of Bluestem or
its Subsidiaries in the ordinary course of business; (g) transactions contemplated by the
Receivables Purchase Agreement; (h) any issuances of securities or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment agreements, stock
options and stock ownership plans approved by Bluestem’ board of directors; and (i) transactions
permitted under Section 6.9 of the Credit Agreement.

          1.10 Restrictive Agreements. Bluestem shall not and shall not permit any Subsidiary
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 Bluestem, any Subsidiary
or the Company to create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with respect to any
shares of its capital stock or to make or repay loans or advances to Bluestem, any other Subsidiary
or to Guarantee Indebtedness of Bluestem or any other Subsidiary; provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by any Credit Document,
(ii) the foregoing shall not apply to restrictions and conditions existing on the Closing Date
identified on Schedule 1.10 (but shall apply to any extension or renewal of, or any

 

 

amendment or modification, in each case, which expands 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 the 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 Bluestem Letter Agreement if
such restrictions or conditions apply only to the property or assets securing such Indebtedness,
(v) clause (a) of the foregoing shall not apply to customary provisions in leases of Bluestem or
any Subsidiary and other contracts restricting the assignment thereof and (vi) the foregoing shall
not apply to restrictions and conditions of the type imposed by any Bluestem Inventory Loan
Document or any Senior Subordinated Document, in each case, as in effect as of the date hereof.

          1.11 Amendment of Material Documents.

     (a) Bluestem shall not and shall not permit any Subsidiary to, amend, modify or waive any of
its rights under (i) the Bluestem Inventory Loan Documents, (ii) the Senior Subordinated Documents,
(iii) the Related Agreements or (iv) its certificate of incorporation, bylaws, operating,
management or partnership agreement or other organizational documents, in each case, except after
reasonable prior notice to the Administrative Agent; and

     (b) Bluestem shall not permit the Company to amend, modify or waive any of its rights under
Material Contracts or the Company’s Organizational Documents except as permitted under Section
6.7 of the Credit Agreement.

ARTICLE II

Account Owner Termination Rights

          2.1 Bluestem shall not, and shall cause it Subsidiaries not to, exercise any right, or provide
written notice of intent, to (a) terminate a Product Agreement or a Receivables Sale Agreement
(other than to the extent replaced with a Product Agreement or a Receivables Sale Agreement in
accordance with the terms of the Servicing Agreement) or (b) replace or otherwise terminate a
Receivables Account Owner, in accordance with the applicable Product Agreement or the applicable
Receivables Sale Agreement (other than to the extent replaced by another Receivables Account Owner
in accordance with the terms of the Servicing Agreement) (such rights, together with the rights in
clause (a), the “Account Owner Termination Rights”) without the prior written consent of
the Administrative Agent and the Class Requisite Lenders of each Class (which consent may be given
or withheld in their sole and absolute discretion).

ARTICLE III

Breach; Indemnity.

          3.1 Breach. Breach by Bluestem of its obligations hereunder shall constitute an
immediate Event of Default under the Credit Agreement.

          3.2 Indemnity. Bluestem shall indemnify the Indemnitees for any and all Indemnified
Liabilities arising out of or in connection with any breach of this Bluestem Letter

 

 

Agreement; provided, Bluestem shall not have any obligation to any Indemnitee with respect to any
Indemnified Liabilities to the extent such Indemnified Liabilities arise from the gross negligence
or willful misconduct of such Indemnitee, as determined by a court of competent jurisdiction in a
final non-appealable order or judgment.

ARTICLE IV

Miscellaneous.

          4.1 Amendments. This Bluestem Letter Agreement may be amended only by an instrument in
writing executed by the party or an authorized representative of the party against whom such
amendment is sought to be enforced; provided, that no such amendment may be effected
without the consent of the Requisite Lenders; provided further, that no such amendment
shall change any provision of this Bluestem Letter Agreement in a manner that by its terms
materially and adversely affects the rights of one Class differently than the other Class, without
the consent of the Class Requisite Lenders of such other Class. The Administrative Agent shall
provide notice to the Lenders of any amendment prior to the effectiveness thereof.

          4.2 Independence of Covenants. All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within the limitations
of, another covenant shall not avoid the occurrence of a breach hereunder if such action is taken
or condition exists.

          4.3 Parties Bound; Assignment. This Bluestem Letter Agreement shall be binding upon
and inure to the benefit of the parties hereto and the Lenders and their respective successors,
assigns and legal representatives; provided, however, that Bluestem may not, without the prior
written consent of the Administrative Agent, assign any of its rights, powers, duties or
obligations.

          4.4 No Waiver; Remedies Cumulative. No failure or delay on the part of the
Administrative Agent in the exercise of any power, right or privilege hereunder shall impair such
power, right or privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege preclude other or
further exercise thereof or of any other power, right or privilege. The rights, powers and remedies
given to the Administrative Agent hereby are cumulative and shall be in addition to and independent
of all rights, powers and remedies existing by virtue of any statute or rule of law or in any of
the other Credit Documents. Any forbearance or failure to exercise, and any delay in exercising,
any right, power or remedy hereunder shall not impair any such right, power or remedy or be
construed to be a waiver thereof, nor shall it preclude the further exercise of any such right,
power or remedy.

          4.5 Severability. In case any provision or obligation hereunder shall be invalid,
illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the
remaining provisions or obligations, or of such provision or obligation in any other jurisdiction,
shall not in any way be affected or impaired thereby.

 

 

          4.6 Headings. Section headings are for convenience of reference only and shall in no
way affect the interpretation of this Bluestem Letter Agreement.

          4.7 Introductory Paragraphs. The introductory paragraphs hereof are a part hereof,
form a basis for this Bluestem Letter Agreement and shall be considered prima facie evidence of the
facts and documents referred to therein.

          4.8 Governing Law. THIS HOLDINGS LETTER AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES (OTHER THAN
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW) THEREOF.

          4.9 Consent to Jurisdiction.

     (a) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST HOLDINGS ARISING OUT OF OR RELATING HERETO, OR
ANY OF THE OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS HOLDINGS
LETTER AGREEMENT, HOLDINGS, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (i)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (ii)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (iii) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
TO HOLDINGS AT ITS ADDRESS PROVIDED HEREIN AND TO ANY PROCESS AGENT IS SUFFICIENT TO CONFER
PERSONAL JURISDICTION OVER HOLDINGS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE
CONSTITUTES EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (iv) AGREES THAT AGENTS AND LENDERS
RETAIN THE RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS
AGAINST HOLDINGS IN THE COURTS OF ANY OTHER JURISDICTION.

     (b) HOLDINGS HEREBY AGREES THAT PROCESS MAY BE SERVED ON IT BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE ADDRESSES PERTAINING TO IT AS SPECIFIED HEREIN OR ON CT CORPORATION SYSTEM, ATTN:
SERVICE OF PROCESS DEPT., 111 EIGHTH AVENUE, NEW YORK, NY 10011, AND HEREBY APPOINTS CT CORPORATION
SYSTEM, AS ITS AGENT TO RECEIVE SUCH SERVICE OF PROCESS. ANY AND ALL SERVICE OF PROCESS AND ANY
OTHER NOTICE IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST HOLDINGS IF GIVEN BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER MEANS OR MAIL WHICH
REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED AS PROVIDED ABOVE. IN THE EVENT CT CORPORATION
SYSTEM SHALL NOT BE ABLE TO ACCEPT SERVICE OF PROCESS AS AFORESAID AND IF HOLDINGS SHALL NOT
MAINTAIN

 

 

AN OFFICE IN NEW YORK CITY, HOLDINGS SHALL PROMPTLY APPOINT AND MAINTAIN AN AGENT QUALIFIED TO ACT
AS AN AGENT FOR SERVICE OF PROCESS WITH RESPECT TO THE COURTS SPECIFIED IN SECTION 4.9(a),
AND ACCEPTABLE TO THE ADMINISTRATIVE AGENT, AS HOLDINGS’S AUTHORIZED AGENT TO ACCEPT AND
ACKNOWLEDGE ON HOLDINGS’S BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH
ACTION, SUIT OR PROCEEDING.

     4.10 Waiver of Jury Trial. HOLDINGS HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR ANY DEALINGS BETWEEN
IT RELATING TO THE SUBJECT MATTER HEREIN THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS HOLDINGS LETTER AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. HOLDINGS ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT IT HAS
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS HOLDINGS LETTER AGREEMENT, AND THAT IT WILL
CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. HOLDINGS FURTHER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A
MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 4.10 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THE LOANS MADE UNDER THE CREDIT AGREEMENT. IN THE EVENT OF LITIGATION,
THIS HOLDINGS LETTER AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

     4.11 Entirety. This Bluestem Letter Agreement embodies the final, entire agreement of
Bluestem and the Administrative Agent with respect to Bluestem’ undertaking specified herein and
supersedes any and all prior commitments, agreements, representations and understandings, whether
written or oral, relating to the subject matter hereof. This Bluestem Letter Agreement is intended
by Bluestem and the Administrative Agent as a final and complete expression of the terms of the
undertaking, and no course of dealing between Bluestem and the Administrative Agent, no course of
performance, no trade practices and no evidence of prior contemporaneous or subsequent oral
agreements or discussions or other extrinsic evidence of any nature shall be used to contradict,
vary, supplement or modify any term of this Bluestem Letter Agreement. There are no oral agreements
between Bluestem and the Administrative Agent.

 

 

     4.12 Counterparts. This Bluestem Letter Agreement may be executed in any number of
counterparts, each of which when executed shall be an original, and all of which, when taken
together, shall constitute a single instrument. Delivery of an executed counterpart of a signature
page of this Bluestem Letter Agreement by facsimile transmission or electronic transmission by
portable document format shall be effective as delivery of a manually executed counterpart hereof.

     4.13 Termination. This Bluestem Letter Agreement shall terminate upon the termination
of the Commitments and the indefeasible payment in full of all Obligations (other than continent
indemnification obligations of the Company to the Secured Parties) under the Credit Agreement;
provided, that this Bluestem Letter Agreement shall be reinstated if at any time any payment of any
such Obligation is rescinded or must otherwise be restored by Administrative Agent upon the
bankruptcy or reorganization of the Company.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

     If the foregoing correctly sets forth our agreement, please indicate your acceptance of the
terms hereof by signing below.

	 	 	 	 	 	 	 

	 	 	Very truly yours,	 	 
	 
	 	 	 	 	 	 
	 	 	BLUESTEM BRANDS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark Wagener
 

	 	 
	 	 	Name: Mark Wagener	 	 
	 	 	Title: Executive Vice President and Chief
Financial Officer	 	 
	 
	 	 	 	 	 	 
	 	 	Notice Address:	 	 
	 	 	Bluestem Brands, Inc.	 	 
	 	 	6509 Flying Cloud Drive	 	 
	 	 	Eden Prairie, Minnesota 55344	 	 

 

 

	 	 	 	 	 

	Accepted and agreed to as of	 	 
	the date first above written:	 	 
	 
	 	 	 	 
	GOLDMAN SACHS BANK USA,	 	 
	as Administrative Agent	 	 
	 
	 	 	 	 
	By:

	 	/s/ Jason P. Gelberd
 

	 	 
	Name: Jason P. Gelberd	 	 
	Title: Authorized Signatory	 	 
	 
	 	 	 	 
	Notice Address:	 	 
	Goldman Sachs Bank USA	 	 
	6011 Connection Drive	 	 
	Irving, TX 75039	 	 

 

 

Schedule 1.1

Existing Indebtedness

None.

 

 

Schedule 1.2

Existing Liens

MetaBank: Bluestem’s grant to MetaBank of a security interest in the MetaBank-controlled
non-interest bearing deposit account (the “Reserve Account”) and the funds therein or proceeds
thereof.

WebBank: Bluestem’s grant to WebBank of a security interest in a segregated deposit account
that shall hold only the funds provided by Bluestem to WebBank as collateral (the “Collateral
Account”) and the funds therein or proceeds thereof.

 

 

Schedule 1.4

Existing Investments

None, other than “loans/advances” to customers in the form of revolving credit accounts or
closed-end installment loan accounts.

 

 

Schedule 1.10

Existing Restrictions

1. Program Agreement dated August 20, 2010, by and between MetaBank and Bluestem Brands, Inc.

2. Receivables Sale Agreement dated August 20, 2010, by and between MetaBank and Bluestem Brands,
Inc.

3. Revolving Loan Product Program Agreement dated August 20, 2010, by and between WebBank and
Bluestem Brands, Inc.

4. Receivables Sale Agreement dated August 20, 2010, by and between WebBank and Bluestem Brands,
Inc.

5. Amended and Restated Limited Liability Company Agreement of Fingerhut Receivables I, LLC, dated
August 20, 2010.

6. Fourth Amended and Restated Certificate of Incorporation, as amended through August 20, 2010.

7. Amended and Restated Investor Rights Agreement, dated as of May 15, 2008, among Fingerhut Direct
Marketing, Inc. and other investors.

8. Amended and Restated Stockholders Agreement, dated as of May 15, 2008, among the Fingerhut Direct
Marketing, Inc. and certain investors and stockholders.

9. Executive Summary/Overview; Executive Life and Disability Benefits for Brian Smith,
CEO/President; Prepared by Jeffrey A. Azen; approved by Board on April 25, 2007.

10. Independent Director -Total Compensation Summary.

11. Amended and Restated 2005 Non-Employee Directors Equity Compensation Plan.

12. 2003 Equity Incentive Plan.

13. 2007 Incentive Plan.

14. 2007 Vision of Quality Growth Special Incentive Program.

15. Bluestem Brands, Inc. makes periodic purchases of services from related parties. In fiscal 2009
the total amount of purchases was approximately $0.1 million.

 

 

16. Marketing Partner Agreement dated June 26, 2007, by and between Fingerhut Direct Marketing,
Inc. and Dotomi, Inc. for delivery of online banner ads to certain Fingerhut customers and
prospects.

17. Licensing Agreement dated November 1, 2003, by and between Fingerhut Direct Marketing, Inc. and
Petters Group Worldwide, LLC for use of the trademarks MASTER CRAFT and MASTER CRAFT PRO.

18. Common Stock Purchase Warrant, dated February 18, 2004, issued to Piper Jaffray & Co.

19. Common Stock Purchase Warrant, dated February 24, 2004, issued to CIGPF I Corp.

20. Common Stock Purchase Warrant, dated November 1, 2004, issued to CIGPF I Corp.

21. Common Stock Purchase Warrant, dated February 18, 2004, issued to Cherry Tree Companies.

22. Common Stock Purchase Warrant, dated February 18, 2004, issued to Gorman Charitable Trust.

23. Common Stock Purchase Warrant, dated May 15, 2008, issued to Goldman Sachs Specialty Lending
Group, L.P.

24. Common Stock Purchase Warrant, dated May 15, 2008, issued to Fortress Credit Corp.

25. Stock Purchase Agreement, dated May 15, 2008, by and among Fingerhut Direct Marketing, Inc.,
Bain Capital Venture Fund 2007, L.P., Battery Ventures VI, L.P., Prudential Capital Partners II,
L.P., and the other purchasers listed therein.

26. Senior Subordinated Documents.

27. SPY Credit Documents.

28. Bluestem Inventory Loan Documents.

29. Fingerhut Direct Marketing, Inc. (now known as Bluestem Brands, Inc.) 2008 Equity and Incentive
Plan.

30. 2010 Bluestem Brands, Inc. Incentive Plan.

31. 2010 Executive Supplemental Incentive Plan.

 

 

Appendix A

Certain Defined Terms

     “Bluestem Consolidated Group” shall mean Bluestem and its Subsidiaries.

     “Bluestem Inventory Loan Documents” means the “Loan Documents” as defined in the Bluestem 2010
Inventory Credit Agreement, as amended in accordance with the Bluestem 20 I 0 Inventory
Intercreditor Agreement.

     “Bluestem Permitted Encumbrances” means, with respect to Bluestem and any Subsidiary:

     (a) Liens imposed by law for taxes that are not yet due or where (i) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (ii) Bluestem or its
Subsidiary has set aside on its books adequate reserves with respect thereto in accordance with
GAAP and (iii) such liabilities would not result in aggregate liabilities in excess of $2,500,000;

     (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 where (i) the validity or amount thereof is being contested in good
faith by appropriate proceedings, (ii) Bluestem or its Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (iii) such liabilities would not
result in aggregate liabilities in excess of $2,500,000;

     (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) judgment Liens in respect of judgments; provided that such judgments individually or in
the aggregate are not in excess of $2,500,000 and do not remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed on appeal or otherwise
appropriately contested in good faith by proper proceedings diligently pursued;

     (f) 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 Bluestem or any Subsidiary; and

     (g) unperfected Liens and reclamation rights of inventory suppliers; and

 

 

     (h) Liens arising in favor of the applicable counterparty under any Swap Agreement to the
extent such Swap Agreement is permitted under Section 1.7.

     “Bluestem Permitted Investments” means, with respect to Bluestem and any Subsidiary:

     (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;

     (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) money market funds that (i) comply with the criteria set forth in Securities and Exchange
Commission Rule 2a-7 under the Investment Company Act of 1940, (ii) are rated AAA by S&P and Aaa by
Moody’s and (iii) have portfolio assets of at least $5,000,000,000.

     “Capital Lease Obligations” means, with respect to any Person, 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.

     “Equity Interest” means shares of capital stock, partnership interests, membership interests
in a limited liability company, beneficial interests in a trust or other equity ownership interests
in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or
acquire any such equity interest.

     “Guarantee” of or by any Person (the “guarantor”) 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 (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the 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.

     “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of property or
services (excluding current accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all
obligations, contingent or otherwise, of such Person as an account party in respect of letters of
credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances, (k) obligations under any liquidated earn-out and (l) any other
Off-Balance Sheet Liability. The Indebtedness of any Person 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, except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor.

     “Indemnified Liabilities” means, collectively, any and all liabilities, obligations, losses,
damages, penalties, claims, costs, expenses and disbursements of any kind or nature whatsoever
(including the reasonable, documented, out-of-pocket fees and disbursements of counsel for
Indemnitees in connection with any investigative, administrative or judicial proceeding commenced
or threatened by any Person, whether or not any such Indemnitee shall be designated as a party or a
potential party thereto, and any reasonable, documented, out-of-pocket fees or expenses incurred by
Indemnitees in enforcing the indemnification provisions of Section 3.2) (collectively,
“Liabilities”), whether direct, indirect or consequential and whether based on any federal, state
or foreign laws, statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations, on common law or equitable cause or on contract or otherwise, that
may be imposed on, incurred by, or asserted against any such Indemnitee, in any manner relating to
or arising out of this Bluestem Letter Agreement or the transactions contemplated hereby or
thereby; provided that Indemnified Liabilities shall not include any Liabilities arising solely as
a result of a breach of this Bluestem Letter Agreement causing an Event of Default under the Credit
Agreement.

 

 

     “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.

     “Loan Party” has the meaning specified in the Bluestem 2010 Inventory Credit Agreement as in
effect on the date hereof.

     “Off-Balance Sheet Liability” means, with respect to any Person, (a) any repurchase obligation
or liability of such Person with respect to accounts or notes receivable sold by such Person, (b)
any indebtedness, liability or obligation under any so-called “synthetic lease” transaction entered
into by such Person or (c) any indebtedness, liability or obligation arising with respect to any
other transaction which is the functional equivalent of or takes the place of borrowing but which
does not constitute a liability on the balance sheets of such Person (other than operating leases).

     “PIK Payment” means, with respect to the Senior Subordinated Debt, payments in the form of
additional notes (or the increase of the principal amount of the related notes) in lieu of cash
payments.

     “Refinancing” means an extension, renewal or replacement.

     “Restricted Payment” shall mean any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in Bluestem or any Subsidiary,
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 Equity Interests in Bluestem or of any option, warrant or other right to
acquire any such Equity Interests in Bluestem.

     “Senior Subordinated Debt” means the Indebtedness of Bluestem in the aggregate original
principal amount of $30,000,000, as evidenced by the 13.00% Senior Subordinated Secured Notes dated
as of March 23, 2006 in the aggregate principal amount of $30,000,000 made by Bluestem, together
with any replacements thereof, in each case as amended, modified, supplemented or restated in
accordance with the terms of the Bluestem Securities Purchase Agreement.

     “Senior Subordinated Documents” means the Bluestem Securities Purchase Agreement and any and
all agreements, documents and instruments executed and delivered thereunder or in connection
therewith.

     “St. Cloud Warehouse” has the meaning specified in Section 1.1Ce).

     “Subsidiary” means any direct or indirect wholly-owned subsidiary of Bluestem or a Bluestem
Credit Party, as applicable, other than the Company.

 

 

     “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference to, one or more
rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom stock or similar
plan providing for payments only on account of services provided by current or former directors,
officers, employees or consultants of the Bluestem Consolidated Group shall be a Swap Agreement.

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