Document:

exv10w37

Exhibit 10.37

EXECUTION COPY

July 1, 2011

Bluestem Brands, Inc.

6509 Flying Cloud Drive

Eden Prairie, Minnesota 55344

Attn: Chief Financial Officer

Ladies and Gentlemen:

     Reference is made to that certain Securities Purchase Agreement, dated as of March 23, 2006,
as amended by that certain letter agreement dated as of June 21, 2007, that certain letter
agreement dated as of May 15, 2008, that certain letter agreement dated as of July 31, 2009 and
that certain letter agreement dated as of August 20, 2010 (as amended, supplemented or otherwise
modified from time to time, the “Purchase Agreement”), between Bluestem Brands, Inc. (formerly
known as Fingerhut Direct Marketing, Inc.), a Delaware corporation (the “Company”), and the
purchasers named on the Purchaser Schedule attached thereto (the “Purchasers”). Capitalized terms
used herein and not otherwise defined herein shall have the meanings assigned to such terms in the
Purchase Agreement.

     The Company has requested that the Purchasers amend the Purchase Agreement pursuant to the
terms and conditions set forth herein;

     Subject to the terms and conditions hereof, and effective upon the satisfaction of the
conditions set forth herein, the Purchasers are willing to agree to such request. Accordingly, and
in accordance with the provisions of paragraph 12C of the Purchase Agreement, the parties hereto
agree as follows:

     SECTION 1. Amendments to the Purchase Agreement. Upon the Effective Date, each
Purchaser and the Company agree that the Purchase Agreement shall be amended as follows:

     1.1 Amendment to clause (x) of paragraph 6C. Clause (x) of paragraph 6C is amended in
its entirety to read as follows:

     (x) investments received or loans or advances made in connection with the dispositions
of assets permitted by paragraph 6E including pursuant to installment contracts or similar
arrangements in connection with dispositions permitted under clause (xi) of paragraph 6E
(provided that the aggregate amount of such investments pursuant to installment contracts or
similar arrangements in connection with dispositions permitted under clause (xi) of
paragraph 6E shall not exceed $10,000,000 in the aggregate at any time outstanding);”

 

 

     1.2 Amendment to paragraph 6E. Paragraph 6E is hereby amended by (i) moving the “and” at the
end of clause (ix) to the end of clause (x) and (ii) adding the following new clause (xi) at the
end thereof:

     “(xi) with respect to the Company and any Subsidiary other than Bluestem SPV, sales of
inventory pursuant to installment contracts or similar arrangements with consumers and/or
employers of consumers in connection with voluntary benefit programs and payroll deduction
plans used to purchase general merchandise and services;”

     SECTION 2. Amendments to the Transaction Documents.

          (a) Upon the Effective Date, each Purchaser and the Company agree that, if US Bank shall
change any account number held at US Bank that is referenced in the Transaction Documents, such
account shall be deemed to refer to such new account number, immediately upon notice thereof to the
Subordinated Collateral Agent.

          (b) In connection with any change to the account number of any one or more accounts held at US
Bank, the Company, as grantor, hereby authorizes (i) the amendment of the related control agreement
and (ii) the filing of such amendments to financing statements, as, in each case, the Subordinated
Collateral Agent may determine are necessary or advisable to perfect (or maintain) any security
interest granted to the Subordinated Collateral Agent in such account, under any Security Document.

     SECTION 3. Representations and Warranties. The Company represents and warrants to the
Purchasers that, after giving effect hereto (a) each representation and warranty set forth in
paragraph 8 of the Purchase Agreement is true and correct as of the date of the execution and
delivery of this letter by the Company with the same effect as if made on such date (except to the
extent such representations and warranties expressly refer to an earlier date, in which case they
were true and correct as of such earlier date), (b) no Event of Default or Default exists, and (c)
neither the Company nor any of its Subsidiaries have paid or agreed to pay, nor will pay or agree
to pay, any fees or other compensation with respect to the amendments to the Servicing Agreement,
Holdings Letter Agreement, SPV Security Agreement or Credit Agreement referred to in Section 4(ii)
hereof (other than reimbursement of costs and expenses as required under such documentation).

     SECTION 4. Effectiveness. The amendments and/or consents described in Sections 1 and 2
above shall become effective upon the date (the “Effective Date”) the Required Holder(s) have
received the following documents:

     (i) a counterpart of this letter agreement duly executed by the Company; and

     (ii) fully executed copies of an amendment or consent to the Servicing
Agreement, Holdings Letter Agreement, SPV Security Agreement and an amendment to the
Credit Agreement, in form and substance satisfactory to the

 

 

Required Holder(s), and all conditions precedent to the effectiveness of such
amendments.

     SECTION 5. Reference to and Effect on Purchase Agreement. Upon the effectiveness of
this letter agreement, each reference in the Purchase Agreement or any other document, instrument
or agreement to the “Purchase Agreement” shall mean and be a reference to the Purchase Agreement as
modified by this letter agreement. Except as specifically set forth in Section 1 hereof, the
Purchase Agreement shall remain in full force and effect and is hereby ratified and confirmed in
all respects. Except as specifically stated in Sections 1 and 2 of this letter, the execution,
delivery and effectiveness of this letter shall not (a) amend the Purchase Agreement or any
Subordinated Note, (b) operate as a waiver of any other Default or Event of Default or as a waiver
of any right, power or remedy of any holder of the Subordinated Notes, or (c) constitute a waiver
of, or consent to any departure from, any provision of the Subordinated Note Agreement or any
Subordinated Note at any time. The execution, delivery and effectiveness of this letter shall not
be construed as a course of dealing or other implication that any holder of the Subordinated Notes
has agreed to or is prepared to grant any consents or agree to any waiver to the Purchase Agreement
in the future, whether or not under similar circumstances.

     SECTION 6. Expenses. The Company hereby confirms its obligations under the Purchase
Agreement, whether or not the transactions hereby contemplated are consummated, to pay, promptly
after request by the Purchasers, all reasonable out-of-pocket costs and expenses, including
attorneys’ fees and expenses, incurred by the Purchasers in connection with this letter agreement
or the transactions contemplated hereby, in enforcing any rights under this letter agreement, or in
responding to any subpoena or other legal process or informal investigative demand issued in
connection with this letter agreement or the transactions contemplated hereby. The obligations of
the Company under this Section 6 shall survive transfer by the Purchasers of any Subordinated Note
and payment of any Subordinated Note.

     SECTION 7. Consent to Amendments or Consents to the Credit Agreement and the Servicing
Agreement, Holdings Letter Agreement and SPV Security Agreement. By their execution of this
letter agreement, the Purchasers hereby consent (to the extent required) to the execution and
delivery by the Company of amendments to each of the Credit Agreement and the Servicing Agreement,
Holdings Letter Agreement and SPV Security Agreement, which are substantially similar to the
amendments set forth herein, and this letter agreement shall constitute proper notice under the
Transaction Documents (to the extent required) with respect to such amendments.

     SECTION 8. Governing Law. THIS LETTER AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS, WITHOUT REGARD TO PRINCIPLES OF
CONFLICT OF LAWS OF SUCH STATE WHICH WOULD OTHERWISE CAUSE THIS LETTER AGREEMENT TO BE CONSTRUED OR
ENFORCED OTHER THAN IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS.

 

 

     SECTION 9. Counterparts; Section Titles. This letter agreement may be executed via
facsimile or electronic transmission in any number of counterparts and by different parties hereto
in separate counterparts, each of which when so executed and delivered shall be deemed to be an
original and all of which taken together shall constitute but one and the same instrument. The
section titles contained in this letter agreement are and shall be without substance, meaning or
content of any kind whatsoever and are not a part of the agreement between the parties hereto.

	 	 	 	 	 
	 	Very truly yours,

PRUDENTIAL CAPITAL PARTNERS II, L.P.

 	 
	 	By:  	 Stetson Street Partners, L.P.,
 	 
	 	 	 	 
	 	 	 	 
	 	 	 
	 	By:  	                    /s/ David Quackenbush
 	 
	 	 	Vice President 	 
	 	 	 	 
	 
	 	PRUDENTIAL CAPITAL PARTNERS

MANAGEMENT FUND II, L.P.

 	 
	 	By:  	 Mulberry Street Holdings, LLC,
 	 
	 	 	its general partner 	 
	 	 	 	 
	 	 	 
	 	By:  	                Prudential Investment Management, Inc.,
 	 
	 	 	its managing member 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	                /s/ David Quackenbush
 	 
	 	 	Vice President 	 
	 	 	 	 
	 
	 	PRUDENTIAL CAPITAL PARTNERS

(PARALLEL FUND) II, L.P.

 	 
	 	By:  	 Stetson Street Partners, L.P.,
 	 
	 	 	its general partner 	 
	 	 	 	 
	 
	 	 	 
	 	By:  	                                            /s/ David Quackenbush
 	 
	 	 	Vice President 	 
	 	 	 	 
	 

	 	 	 	 	 

	AGREED AND ACCEPTED	 	 
	 
	 	 	 	 
	BLUESTEM BRANDS, INC.	 	 
	 
	 	 	 	 
	By:

	 	/s/ Mark P. Wagener
 

Title:  Executive Vice President & CFOexv10w38

Exhibit 10.38

EXECUTION COPY

SECOND AMENDMENT TO SERVICING AGREEMENT

FIRST AMENDMENT TO BLUESTEM LETTER AGREEMENT

FIRST AMENDMENT TO SECURITY AGREEMENT

          This SECOND AMENDMENT TO SERVICING AGREEMENT, FIRST AMENDMENT TO BLUESTEM LETTER AGREEMENT AND
FIRST AMENDMENT TO SECURITY AGREEMENT, dated as of July 1, 2011 (this “Amendment”), amends
or otherwise modifies (i) that certain Servicing Agreement, dated as of August 20, 2010 (as
amended, supplemented or otherwise modified prior to the date hereof, the “Servicing
Agreement”) by and among BLUESTEM BRANDS, INC., a Delaware corporation (“Bluestem”), as
Servicer, FINGERHUT RECEIVABLES I, LLC, a Delaware limited liability company (the
“Company”) and GOLDMAN SACHS BANK USA (“GS Bank”), as administrative agent (in such
capacity, the “Administrative Agent”) and collateral agent (in such capacity, the “Collateral
Agent”), (ii) that certain Bluestem Letter Agreement, dated as of August 20, 2010 (as amended,
supplemented or otherwise modified prior to the date hereof, the “Letter Agreement”), by
and among Bluestem and the Administrative Agent and (iii) that certain Security Agreement, dated as
of August 20, 2010 (as amended, supplemented or otherwise modified prior to the date hereof, the
“Security Agreement”), by and among the Company and the Collateral Agent, each as hereafter
set forth. Capitalized terms used and not defined herein shall have the meanings ascribed thereto
in the Servicing Agreement, the Letter Agreement or the Security Agreement, as applicable.

          WHEREAS, Bluestem, the Company and the Administrative Agent wish to amend or otherwise modify
certain provisions of the Servicing Agreement, the Letter Agreement and the Security Agreement as
hereafter set forth; and

          WHEREAS, the Requisite Lenders have consented to such amendments in accordance with Section
8.01 of the Servicing Agreement, Section 4.1 of the Letter Agreement and Section 9.5 of that
certain Credit Agreement, dated as of August 20, 2010 (as amended, supplemented or otherwise
modified prior to the date hereof, the “Credit Agreement”), by and among the Company, the
Administrative Agent, the lenders party thereto and J.P. Morgan Securities Inc., as joint lead
arranger and joint bookrunner.

          NOW, THEREFORE, Bluestem, the Company and the Administrative Agent hereby agree as follows:

     1. Amendments to the Letter Agreement. The Letter Agreement is hereby amended as
follows:

          (a) Section 1.4(j) is hereby amended and restated in its entirety as follows:

	 	 	 	“(j) investments received or loans or advances made in connection with the
dispositions of assets permitted by Section 1.5, including pursuant to
installment contracts or similar arrangements in connection with dispositions
permitted under

 

 

	 	 	 	Section 1.5(k) (provided that the aggregate amount of such investments pursuant to
installment contracts or similar arrangements in connection with dispositions
permitted under Section 1.5(k) shall not exceed $10,000,000 in the aggregate at any
time outstanding);”

     (b) Section 1.5 is hereby amended by (i) deleting “and” at the end of clause (i)
thereof and moving it to the end of clause (j), (ii) adding the following new clause (k) at
the end thereof:

	 	 	 	“(k) with respect to Bluestem and any Subsidiary other than the Company, sales of
inventory pursuant to installment contracts or similar arrangements with consumers
and/or employers of consumers in connection with voluntary benefit programs and
payroll deduction plans used to purchase general merchandise and services;”
	 
	 	 	 	and (iii) replacing the parenthetical in the proviso at the end thereof in its
entirety to read “(other than those permitted by paragraphs (b), (f), (g) and (k)
above)”.

     2. Amendment to the Security Agreement.

          (a) The definition of “Controlled Account” is hereby amended by adding the following sentence
at the end thereof: “In the event the Depositary Bank changes any of the account numbers referenced
in this Security Agreement, such account numbers shall be automatically deemed to be updated to
such new account numbers immediately upon notice thereof to the Administrative Agent.”

          (b) The definition of “US Bank Account” is hereby amended by adding the phrase “; provided
that in the event that US Bank shall change the foregoing account number, US Bank Account shall be
automatically deemed to refer to such new account number immediately upon notice thereof to the
Administrative Agent” at the end thereof.

          (c) In connection with any change to the account number of any one or more Controlled Accounts
or the US Bank Account, as provided in Sections 4.1 and 4.3 of the Security Agreement, the Company,
as grantor, hereby authorizes (i) the amendment of the Controlled Account Control Agreement and/or
the US Bank Account Control Agreement and (ii) the filing of such amendments to financing
statements, as, in each case, the Collateral Agent may determine are necessary or advisable to
perfect (or maintain) the security interest granted to the Collateral Agent in the Controlled
Accounts and/or the US Bank Account, as the case may be, under the Security Agreement.

     3. Consent to Servicing Agreement: For the avoidance of doubt, including in
connection with Section 5.04(a), the Administrative Agent hereby consents to Bluestem and one or
more of its Subsidiaries (other than the Company) entering into installment sales contracts or
similar arrangements with consumers and/or employers of consumers, and related agreements with such
employers and with brokers or other agents, in connection with voluntary benefit programs and
payroll deduction plans used to purchase general merchandise and services

 

 

(collectively, “Bluestem Payroll Deduction Sales Programs”). For the avoidance of
doubt, amounts payable to Bluestem or such Subsidiary under any Bluestem Payroll Deduction Sales
Program shall not constitute “Underlying Receivables” or “Receivables Accounts”.

     4. Continued Effectiveness of the Servicing Agreement, the Letter Agreement, the Security
Agreement and Other Credit Documents. Each party hereto hereby (i) acknowledges and consents
to this Amendment and (ii) confirms and agrees that the Servicing Agreement, the Letter Agreement,
the Security Agreement and each other Credit Document to which it is a party is, and shall continue
to be, in full force and effect and is hereby ratified and confirmed in all respects except that on
and after the date hereof all references in any such Credit Document to “the Servicing Agreement”,
“Letter Agreement”, “Security Agreement”, “thereto”, “thereof”, “thereunder” or words of like
import referring to the Servicing Agreement, Letter Agreement or Security Agreement, as applicable,
shall mean the Servicing Agreement, Letter Agreement or Security Agreement, each as amended by this
Amendment. This Amendment does not and shall not affect any of the obligations of any Credit Party,
other than as expressly provided herein, including, without limitation, the Company’s obligation to
repay the Loans in accordance with the terms of the Credit Agreement, or the obligations of any
other Credit Party under any Credit Document to which it is a party, all of which obligations shall
remain in full force and effect. Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment shall not operate as a waiver of any right, power or remedy of the
Administrative Agent or any Lender under the Servicing Agreement, the Letter Agreement, the
Security Agreement or any other Credit Document, nor constitute a waiver of any provision of the
Servicing Agreement, the Letter Agreement, the Security Agreement or any other Credit Document.

     5. No Default. Bluestem and the Company each hereby represents and warrants that as
of the date hereof, after giving effect to this Amendment, there is no Servicer Default under the
Servicing Agreement and no Default or Event of Default under any other Credit Document.

     6. Consent to Amendments to the Bluestem Securities Purchase Agreement, Bluestem
Securities Security Agreement, the Bluestem 2010 Inventory Credit Agreement and the Bluestem 2010
Inventory Security Agreement. The Administrative Agent, on behalf of the Requisite Lenders,
hereby consents (to the extent required) to the execution and delivery by Bluestem and the Company
of amendments to each of the Bluestem Securities Purchase Agreement, Bluestem Securities Security
Agreement, the Bluestem 2010 Inventory Credit Agreement, the Bluestem 2010 Inventory Security
Agreement and any related Loan Documents (as defined in the Bluestem 2010 Inventory Credit
Agreement or Bluestem Securities Purchase Agreement, as applicable), which are substantially
similar to the Amendments set forth herein, and this Amendment shall constitute proper notice under
the Credit Documents (to the extent required) with respect to such amendments.

     7. Miscellaneous.

     (a) This Amendment may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which shall be deemed to be an original

 

 

but all of which taken together shall constitute one and the same agreement. Delivery of an
executed counterpart of this Amendment by facsimile or electronic mail shall be equally effective
as delivery of an original executed counterpart of this Amendment.

     (b) Section and paragraph headings herein are included for convenience of reference only and
shall not constitute a part of this Amendment for any other purpose.

     (c) This Amendment shall be governed by, and construed in accordance with, the laws of the
State of New York.

     (d) Any provision of this Amendment that is prohibited or unenforceable in any jurisdiction
shall, as to such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining portions hereof or affecting the validity or
enforceability of such provision in any other jurisdiction.

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

	 	 	 	 	 	 	 

	 	 	BLUESTEM BRANDS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Mark P. Wagener
 

Mark P. Wagener
	 	 
	 

	 	Title:
	 	Executive Vice President & CFO	 	 
	 
	 	 	 	 	 	 
	 	 	FINGERHUT RECEIVABLES I, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Mark P. Wagener
 

Mark P. Wagener
	 	 
	 

	 	Title:
	 	President	 	 
	 
	 	 	 	 	 	 
	 	 	GOLDMAN SACHS BANK USA,	 	 
	 	 	as Administrative Agent and Collateral Agent	 	 
	 
	 	 	 	 	 	 
	 

	 	By:

Name:
	 	/s/ Jason P. Gelberd
 

Jason P. Gelberd
	 	 
	 

	 	Title:
	 	Authorized Signatory

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