Document:

exv10w10

Exhibit 10.10

EXECUTION VERSION

FIRST AMENDMENT AND WAIVER TO SERVICING AGREEMENT

          This FIRST AMENDMENT AND WAIVER TO SERVICING AGREEMENT, dated as of April 21, 2011 (this
“Amendment”), amends that certain Servicing Agreement, dated as of August 20, 2010 (the
“Servicing Agreement”) by and among BLUESTEM BRANDS, INC. (“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, “Administrative Agent”) and Collateral Agent, and grants certain waivers under
the Servicing Agreement and the other Credit Documents as hereafter set forth. Capitalized terms
used and not defined herein shall have the meanings ascribed thereto in the Servicing Agreement.

          WHEREAS, Bluestem, the Company and the Administrative Agent wish to amend certain provisions
of the Servicing Agreement and grant certain waivers under the Servicing Agreement and the other
Credit Documents as hereafter set forth; and

          WHEREAS, the Requisite Lenders have consented to such amendments in accordance with Section
8.01 of the Servicing Agreement and the Class Requisite Lenders of each Class have consented to
such waivers in accordance with Section 9.5 of the Credit Agreement;

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

     1. Amendments to Section 1.01. Section 1.01 of the Servicing Agreement is hereby
amended, effective as of the Closing Date, as follows:

     (a) the definition of “Consolidated Adjusted EBITDA” is deleted in its entirety and the
following is substituted in lieu thereof:

“Consolidated Adjusted EBITDA” shall mean, for any period,
Consolidated Net Income for such period plus (a) without duplication and to
the extent deducted in determining Consolidated Net Income for such period,
the sum of (i) Consolidated Interest Expense for such period, (ii) income
tax expense for such period net of tax refunds, (iii) all amounts
attributable to depreciation and amortization expense for such period, (iv)
for any period including the period in which such amounts were paid, fees or
expenses of the Administrative Agent and any Lender or arranger in
connection with the Credit Documents, or of any administrative agent,
lender, or arranger in connection with the Bluestem Inventory Loan
Documents, in each case paid on or prior to the Closing Date, (v) for any
period (other than the period specified in the following clause (vi))

 

 

including the period in which such amounts were paid, other fees or expenses
in an amount not to exceed $1,000,000 paid in connection with the Credit
Documents, the Bluestem Inventory Loan Documents or the Senior Subordinated
Documents and the transactions contemplated therein, (vi) for the period
from, and including, the Closing Date to, and including, the last day of the
first Fiscal Quarter to end after the Closing Date, other fees and expenses
in an amount not to exceed $6,500,000 paid in connection with the Credit
Documents and the transactions contemplated therein and the refinancing or
replacement of credit facilities existing prior to the Closing Date, (vii)
any other non-cash charges for such period (but excluding any non-cash
charge in respect of an item that was included in Consolidated Net Income in
a prior period and any non-cash charge that relates to the write-down or
write-off of inventory) in an amount not to exceed $2,000,000, or any
additional amounts approved by the Class Requisite Lenders of each Class,
and other non-cash charges relating to the mark-to-market valuation of (A)
the contingent financing fee arrangement entered into on May 15, 2008 and/or
(B) without duplication, derivatives or embedded derivatives in any Equity
Interest of any Person in the Servicer Consolidated Group, in each case to
the extent required under GAAP, (viii) reasonable fees and expenses in
connection with an initial public offering by Bluestem in an amount not to
exceed the lesser of (A) 12.5% of the gross proceeds thereof and (B) the
actual fees and expenses incurred in connection therewith, or any additional
amounts approved by the Class Requisite Lenders of each Class and (ix) the
amount of any prepayment premiums or other similar fees paid in connection
with the Credit Documents or the Bluestem Inventory Loan Documents, minus
(b) without duplication and to the extent included in Consolidated Net
Income, (i) any cash payments made during such period in respect of noncash
charges described in clause (a)(vii) taken in a prior period and (ii) any
extraordinary gains and any non-cash items of income for such period, all
calculated for the Servicer Consolidated Group on a consolidated basis in
accordance with GAAP, including, without limitation, any non-cash gains or
items of income relating to the mark-to-market valuation of (A) the
contingent financing fee arrangement entered into on May 15, 2008 and/or (B)
without duplication, derivatives or embedded derivatives in any Equity
Interest of any Person in the Servicer Consolidated Group, in each case to
the extent required under GAAP.

     (b) the definition of “Swap Agreement” is amended by inserting the following sentence
at the end thereof:

“For the avoidance of doubt, the contingent financing fee arrangement entered into
on May 15, 2008 and Equity Interests of any Person in the Servicer Consolidated
Group shall not constitute a Swap Agreement regardless of treatment of such
contingent financing fee arrangement or such Equity Interests, or any portion
thereof, as an embedded derivative under GAAP.”

2

 

; and

     (c) the definition of “Tangible Net Worth” is deleted in its entirety and the following
is substituted in lieu thereof:

“Tangible Net Worth” shall mean, with respect to a Person, as of any
date of determination, the result of (a) such Person’s total stockholder’s
or other equity (including preferred stock, but excluding treasury stock and
subscribed but unissued capital stock, and excluding any asset or liability
resulting from the mark-to-market valuation of (A) the contingent financing
fee arrangement entered into on May 15, 2008, and/or (B) without
duplication, any derivatives or embedded derivatives in any Equity Interest
of any Person in the Servicer Consolidated Group, in each case to the extent
required under GAAP), minus (b) the sum of (i) all Intangible Assets of such
Person, (ii) all of such Person’s prepaid expenses and (iii) all amounts due
to such Person from its Affiliates.

     2. Amendments to Section 4.01(b). Section 4.01(b) of the Servicing Agreement is
hereby amended, effective as of the Closing Date, as follows:

Net Worth. The Servicer Consolidated Group shall have a Tangible Net Worth
(measured as of the last day of each Fiscal Quarter) equal to or greater than the
sum of (i) $120,000,000, plus (ii) 75% of its Consolidated Net Income (if positive)
for each full Fiscal Year after the Closing Date before any non-cash gain (loss)
(net of any income taxes) relating to the mark-to-market valuation of (A) the
contingent financing fee arrangement entered into on May 15, 2008 and/or (B) without
duplication, derivatives or embedded derivatives in any Equity Interest of any
Person in the Servicer Consolidated Group, in each case to the extent required under
GAAP, plus (iii) 85% of the gross proceeds actually received in cash by the Servicer
Consolidated Group from the proceeds of any issuance of Capital Stock by the
Servicer Consolidated Group after the Closing Date.

     3. Amendments to Exhibit G. Exhibit G to the Servicing Agreement is hereby
replaced with the Form of Compliance Certificate attached as Exhibit A hereto.

     4. Continued Effectiveness of the Servicing 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 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”, “thereto”, “thereof”, “thereunder” or words of like import referring
to the Servicing Agreement shall mean the Servicing Agreement 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.

3

 

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 or any other Credit Document, nor constitute a
waiver of any provision of the Servicing Agreement or any other Credit Document.

     5. Waiver. Subject to compliance of the Servicer with Section 6(a) below, (i) the
Class Requisite Lenders of each Class and the Administrative Agent hereby waive any Servicer
Default under the Servicing Agreement and Default or Event of Default under any other Credit
Document which may have resulted solely from the restatement or correction of any quarterly or
annual historical financial statements, or any inaccuracy of any monthly historical financial
statements, in each case as a consequence of any mark-to-market valuation of (A) the contingent
financing fee arrangement entered into on May 15, 2008, and/or (B) any derivatives or embedded
derivatives in any Equity Interest of any Person in the Servicer Consolidated Group, in each
case to the extent required under GAAP and (ii) any representation and warranty set forth in any
Credit Document or pursuant to any certificate or other document shall be deemed to have taken
into account the effect of this Amendment and any such restatement or correction of previously
delivered financial statements, compliance certificates, financial officer certifications, or
other certificates and other deliverables required to be delivered concurrently therewith.

     6. Compliance with Section 4.02. In connection with the restatement or correction
of the historical financial statements of the Servicer Consolidated Group as a consequence of
any mark-to-market valuation of (A) the contingent financing fee arrangement entered into on May
15, 2008, and/or (B) any derivatives or embedded derivatives in any Equity Interest of any
Person in the Servicer Consolidated Group, in each case to the extent required under GAAP, the
Servicer shall be deemed to have satisfied its obligations under Section 4.02(c), (d) and (e),
for the Fiscal Year ended January 28, 2011, and Section 4.02(f) of the Servicing Agreement upon
delivery of the following:

     (a) On or prior to the date hereof, the Servicer shall have delivered to the
Administrative Agent and the Lenders restated or corrected versions of (i) the consolidated
balance sheets of the Servicer Consolidated Group as at the end of each of the Fiscal Years
ended January 29, 2010 and January 28, 2011 and the related consolidated statements of
income, stockholders’ equity and cash flows of the Servicer Consolidated Group, as the case
may be, for each such Fiscal Year, setting forth in each case in comparative form the
corresponding figures of the previous Fiscal Year, subject to normal year-end audit
adjustments and the absence of footnotes all in reasonable detail, together with a Financial
Officer Certification, substantially in the form attached as Exhibit I to the
Servicing Agreement; and (ii) a duly executed and completed Compliance Certificate in
respect of the consolidated financial statements in item (i) relating to the Fiscal Year
ended January 28, 2011; and

     (b) As soon as available, and in any event within 120 days after the end of the Fiscal
Year ended January 28, 2011, the Servicer shall deliver to the Administrative Agent and the
Lenders (i) the consolidated and consolidating balance sheets of the Servicer Consolidated
Group as at the end of each of the Fiscal Years ended January 29,

4

 

2010 and January 28, 2011 and the related consolidated (and with respect to statements
of income, consolidating) statements of income, stockholders’ equity and cash flows of the
Servicer Consolidated Group, as the case may be, for each such Fiscal Year, setting forth in
each case in comparative form the corresponding figures for the previous Fiscal Year, in
reasonable detail, together with a Financial Officer Certification (such financial
statements shall also include (x) a detailed summary of any audit adjustments; (y) a
reconciliation of any material audit adjustments or reclassifications to the previously
provided quarterly financials; and (z) restated quarterly financials for any periods that
are required to be restated pursuant to GAAP); (ii) with respect to such consolidated
financial statements a report thereon of Deloitte & Touche LLP or other independent
certified public accountants of recognized national standing selected by the Servicer, and
reasonably satisfactory to the Administrative Agent (which report shall be unqualified as to
going concern and scope of audit, and shall state that such consolidated financial
statements fairly present, in all material respects, the consolidated financial position of
the Servicer Consolidated Group, as the case may be, as at the dates indicated and the
results of their operations and their cash flows for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years (except as otherwise disclosed in
such financial statements) and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with generally accepted
auditing standards) together with a written statement by such independent certified public
accountants stating that in the course of their audit, nothing has come to their attention
that caused them to believe that the Servicer has failed to comply with the terms,
covenants, provisions or conditions of Section 6.5 of the Credit Agreement or Section 4.01
of the Servicing Agreement, in each case insofar as they relate to financial and accounting
matters, and if any such failure has come to their attention, specifying the nature and
period of existence thereof; and (iii) a duly executed and completed Compliance Certificate
in respect of the consolidated financial statements in item (i) relating to the Fiscal Year
ended January 28, 2011.

     7. 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.

     8. Consent to Amendments to the Bluestem 2010 Securities Purchase Agreement and the
Bluestem 2010 Inventory Credit Agreement. The Class Requisite Lenders of each Class and the
Administrative Agent hereby consent (to the extent required) to the execution and delivery by
Bluestem and the Company of amendments to each of the Bluestem Securities Purchase Agreement and
the Bluestem 2010 Inventory Credit Agreement 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.

     9. 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

5

 

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.

6

 

          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:
	 	/s/ Mark P. Wagener	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mark P. Wagener	 	 
	 

	 	Title:
	 	EVP, CFO	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	FINGERHUT RECEIVABLES I, LLC	 	 
	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	By:
	 	/s/ Mark P. Wagener	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Mark P. Wagener	 	 
	 

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

	 	By:
	 	/s/ Jason P. Gelberd	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:
	 	Jason P. Gelberd	 	 
	 

	 	Title:
	 	Authorized Signatory	 	 

S-1

 

EXHIBIT A

Form of Compliance Certificate

COMPLIANCE CERTIFICATE

The undersigned, a duly authorized representative of BLUESTEM BRANDS, INC., as Servicer (the
“Servicer”), pursuant to that certain Servicing Agreement, dated as of August 20, 2010, by
and among the Servicer, FINGERHUT RECEIVABLES I, LLC (the “Company”) and GOLDMAN SACHS BANK
USA, as Administrative Agent (the “Administrative Agent”) and Collateral Agent (as amended,
restated, replaced, supplemented or otherwise modified from time to time the “Servicing
Agreement”), does hereby certify that:

	 	1.	 	The undersigned is an Authorized Officer of the Servicer who is duly authorized
pursuant to the Servicing Agreement to execute and deliver this Certificate to the
Administrative Agent.
	 
	 	2.	 	The determination and calculations of the computations specified in Annex
A attached hereto (the “Computations”) and a review of the information used
in determining and calculating such Computations was conducted under my supervision.
	 
	 	3.	 	The Computations were made pursuant Section 4.01 of the Servicing Agreement and
are based on the information in the financial statements attached to the Compliance
Certificate dated as of the date hereof.
	 
	 	4.	 	I hereby certify that the results of the Computations are true, correct and
accurate in all respects.
	 
	 	5.	 	Defined terms used and not otherwise defined herein shall have the meaning
ascribed to them in the Servicing Agreement.

A-1

 

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate this ___ day of
_______________, 20___ pursuant to Section 4.02(e) of the Servicing Agreement.

	 	 	 	 	 
	 	BLUESTEM BRANDS, INC.

 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

A-2

 

Annex A

FOR THE FISCAL MONTH ENDING [     ]

	I.	 	Minimum Net Liquidity: I.(i) + I.(ii) + I.(iii)

	 	 	 	 	 	 	 

	(i)	 	Unrestricted Cash and Cash Equivalents of the Servicer Consolidated Group
	 	$	—	 
	(ii)	 	Revolving Availability
	 	$	—	 
	(iii)	 	Availability under the Bluestem 2010 Inventory Credit Agreement
	 	$	—	 
	 	 	 
	 	 	 	 
	(x)	 	Required Amount:[$25,000,000][$20,000,000]
	 	$	 	 
	 	 	 
	 	$	 	 
	 	 	 
	 	 	 	 
	(y)	 	Actual Amount:
	 	$	—	 
	 	 	 
	 	 	 	 
	(z)	 	Compliance (Yes/No):
	 	 	 	 

FOR THE FISCAL QUARTER ENDING [     ]

	II.	 	Tangible Net Worth: II.(i) — II.(ii)

	 	 	 	 	 	 	 	 	 	 	 

	(i)	 	Total stockholder’s or other equity (including preferred
stock, but excluding treasury stock and subscribed but unissued
capital stock, and excluding any asset or liability resulting
from the mark-to-market valuation of (A) the contingent financing
fee arrangement entered into on May 15, 2008, and/or (B) without
duplication, any derivatives or embedded derivatives in any
Equity Interest of any Person in the Servicer Consolidated Group,
in each case to the extent required under GAAP)	 	$	—	 
	 	 	 	 	 	 	 
	 	 	 	 
	(ii)	 	The sum of:	 	 	 	 
	 	 	(a)	 	Intangible Assets, which is the sum of	 	 	 	 
	 	 	 	 	(1)	 	Customer lists
	 	$	—	 
	 	 	 	 	(2)	 	Goodwill
	 	$	—	 
	 	 	 	 	(3)	 	Computer software
	 	$	—	 
	 	 	 	 	(4)	 	Copyrights
	 	$	—	 
	 	 	 	 	(5)	 	Trade Names
	 	$	—	 
	 	 	 	 	(6)	 	Trademarks
	 	$	—	 
	 	 	 	 	(7)	 	Patents
	 	$	—	 
	 	 	 	 	(8)	 	Franchises
	 	$	—	 
	 	 	 	 	(9)	 	Licenses
	 	$	—	 
	 	 	 	 	(10)	 	Unamortized deferred charges
	 	$	—	 
	 	 	 	 	(11)	 	Unamortized debt discount
	 	$	—	 
	 	 	 	 	(12)	 	Capitalized research and developmental costs
	 	$	—	 
	 	 	 	 	(13)	 	Other intangibles under GAAP
	 	 	 	 

A-3

 

	 	 	 	 	 	 	 	 	 	 	 	 	 

	 	 	 	 	Total Intangible Assets
	 	$	—	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	 	 	(b)	 	Prepaid expenses
	 	$	—	 	 	 	 	 
	 	 	(c)	 	Amounts due from Affiliates
	 	$	—	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	(x)	 	Required Amount: The sum of:	 	 	 	 	 	 	 	 
	 	 	(a)	 	$120,000,000
	 	$	120,000,000	 	 	 	 	 
	 	 	(b)	 	     75% of its Consolidated Net Income (if positive) for
each full Fiscal Year after the Closing Date before any
non-cash gain (loss) (net of any income taxes) relating
to the mark-to market valuation of (A) the contingent
financing fee arrangement entered into on May 15, 2008
and/or (B) without duplication, derivatives or embedded
derivatives in any Equity Interest of any Person in the
Servicer Consolidated Group, in each case to the extent
required under GAAP
	 	$	—	 	 	 	 	 
	 	 	(c)	 	     85% of the gross proceeds actually received in cash
by the Servicer Consolidated Group from the proceeds of
any issuance of Capital Stock by the Servicer
Consolidated Group after the Closing Date
	 	$	—	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	(y)	 	Actual Amount:	 	$	—	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	(z)	 	Compliance (Yes/No):	 	 	 	 	 	 	 	 

	III.	 	Consolidated Adjusted EBITDA: III. (i) — III. (ii)

	 	 	 	 	 	 	 	 	 

	(i)	 	The sum of:	 	 	 	 
	 	 	(a)	 	Consolidated Net Income for such period
	 	$	—	 
	 	 	(b)	 	Consolidated Interest Expense for such period
	 	$	—	 
	 	 	(c)	 	Income tax expense for such period net of tax refunds
	 	$	—	 
	 	 	(d)	 	All amounts attributable to depreciation and amortization expense for such period
	 	$	—	 
	 	 	(e)	 	     Fees or expenses of the Administrative Agent and
any Lender or arranger in connection with the Credit
Documents, or of any administrative agent, lender, or
arranger in connection with the Bluestem Inventory Loan
Documents, in each case paid on or prior to the Closing Date
	 	$	—	 
	 	 	(f)	 	     For any period (other than the period specified in
the following clause (g)) including the period in which
such amounts were paid, other fees or expenses in an
amount not to exceed $1,000,000 paid in connection with
the Credit Documents, the Bluestem Inventory Loan
Documents or the Senior Subordinated Documents and the
transactions contemplated therein
	 	$	—	 
	 	 	(g)	 	     For the period from, and including, the Closing
Date to, and including, the last day of the first
Fiscal Quarter to end after the Closing Date, other
fees and expenses in an amount not to exceed $6,500,000
paid in connection with the Credit Documents and the
transactions contemplated therein and the refinancing
or replacement of credit facilities existing prior to the Closing Date
	 	$	—	 

A-4

 

	 	 	 	 	 	 	 	 	 

	 	 	(h)	 	     Any other non-cash charges for such period (but
excluding any non-cash charge in respect of an item
that was included in Consolidated Net Income in a prior
period and any non-cash charge that relates to the
write-down or write-off of inventory) in an amount not
to exceed $2,000,000, or any additional amounts
approved by the Class Requisite Lenders of each Class,
and other non-cash charges relating to the
mark-to-market valuation of (A) the contingent
financing fee arrangement entered into on May 15, 2008
and/or (B) without duplication, derivatives or embedded
derivatives in any Equity Interest of any Person in the
Servicer Consolidated Group, in each case to the extent required under GAAP
	 	$	—	 
	 	 	(i)	 	     Reasonable fees and expenses in connection with an
initial public offering by Bluestem in an amount not to
exceed the lesser of (A) 12.5% of the gross proceeds
thereof and (B) the actual fees and expenses incurred
in connection therewith, or any additional amounts
approved by the Class Requisite Lenders of each Class
	 	$	—	 
	 	 	(j)	 	     any prepayment premiums or other similar fees paid
in connection with the Credit Documents or the Bluestem
Inventory Loan Documents
	 	$	—	 
	(ii)	 	The sum of:	 	 	 	 
	 	 	(k)	 	Any cash payments made during such period in
respect of non-cash charges described in clause (h)
above taken in a prior period
	 	$	—	 
	 	 	(l)	 	     Any extraordinary gains and any non-cash items of
income for such period, all calculated for the Servicer
Consolidated Group on a consolidated basis in
accordance with GAAP, including, without limitation,
any non-cash gains or items of income relating to the
mark-to-market valuation of (A) the contingent
financing fee arrangement entered into on May 15, 2008
and/or (B) without duplication, derivatives or embedded
derivatives in any Equity Interest of any Person in the
Servicer Consolidated Group, in each case to the extent required under GAAP
	 	$	—	 
	 	 	 	 	 
	 	 	 	 
	Total LTM Consolidated Adjusted EBITDA	 	$	—	 

	IV.	 	Minimum LTM EBITDA Margin: IV.(i) / IV.(ii)

	 	 	 	 	 	 	 

	(i)	 	Consolidated Adjusted EBITDA of
the Servicer Consolidated Group for the previous twelve months
	 	$	—	 
	 	 	 
	 	 	 	 
	(ii)	 	Net sales of the Servicer
Consolidated Group for the previous twelve months
	 	$	—	 
	 	 	 
	 	 	 	 
	(x)	 	Required Amount:
	 	 	8.5	%
	 	 	 
	 	 	 	 
	(y)	 	Actual Amount:
	 	 	[   ]	%
	 	 	 
	 	 	 	 
	(z)	 	Compliance (Yes/No):
	 	 	 	 

A-5

 

	V.	 	Consolidated Fixed Charges: V.(i) + V.(ii) + V.(iii) + V. (iv) + V. (v)

	 	 	 	 	 	 	 

	(i)	 	Consolidated Cash Interest Expense
	 	$	—	 
	(ii)	 	     Fees and charges owed with respect
to paragraph 2 of the Fee Letter, Section
2.9(a) of the Credit Agreement and the
Bluestem 2010 Inventory Credit Agreement
(other than any facility fees payable on the Closing Date)
	 	$	—	 
	(iii)	 	Scheduled principal payments on
Indebtedness made during such period (not
including principal payments under the Credit Agreement)
	 	$	—	 
	(iv)	 	income and franchise taxes paid in
cash net of income and franchise tax refunds (but not less than zero)
	 	$	—	 
	(v)	 	dividends or distributions paid in cash
	 	$	—	 
	Total Fixed Charges	 	$	—	 

	VI.	 	Fixed Charge Coverage Ratio: VI.(i) / VI. (ii)

	 	 	 	 	 	 	 	 	 	 	 	 	 

	(i)	 	The difference of:	 	 	 	 	 	 	 	 
	 	 	(a)	 	Consolidated Adjusted EBITDA
	 	$	—	 	 	 	 	 
	 	 	(b)	 	     Capital Expenditures (excluding
the portion thereof funded with (i)
long-term debt financing provided by
third parties or (ii) for the period
from the date of the initial public
offering of Bluestem Brands, Inc. to
the first anniversary thereof,
proceeds from such initial public
offering in an amount not to exceed
$20,000,000 (provided that, such
exclusions shall not cause Capital
Expenditures to be less than zero))
	 	$	—	 	 	 	 	 
	 	 	Net Consolidated Adjusted EBITDA	 	$	—	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	(ii)	 	Consolidated Fixed Charges, all
calculated for the Servicer Consolidated
Group on a consolidated basis in accordance with GAAP	 	$	—	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	(x)	 	Required Amount:	 	 	[1.00][1.05][1.10]x	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	(y)	 	Actual Amount:	 	 	[   ]x	 	 	 	 	 
	 	 	 	 	 
	 	 	 	 	 	 	 	 
	(z)	 	Compliance (Yes/No):	 	 	 	 	 	 	 	 

A-6exv10w11

Exhibit 10.11

GUARANTY

dated as of August 20, 2010

     Reference is made to that certain Credit Agreement, dated as of August 20, 2010 (as may be
amended, supplemented or otherwise modified from time to time in accordance with the terms thereof,
the “Credit Agreement”) by and among Fingerhut Receivables I, LLC (the “Company”),
the Lenders party thereto from time to time, Goldman Sachs Bank USA (“GS Bank”), as
administrative agent (in such capacity, together with its successors in such capacity, the
“Administrative Agent”), collateral agent, joint lead arranger, joint bookrunner,
syndication agent and documentation agent, and J.P. Morgan Securities Inc. (“JPMSI”), as
joint lead arranger and joint bookrunner. Capitalized terms used but not defined herein shall have
the meanings assigned to such terms in the Credit Agreement.

          1. GUARANTY.

     To induce the Lenders to enter into the transactions contemplated under the Credit Agreement
with the Company upon the terms and subject to the conditions in the Credit Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Bluestem Brands, Inc., a Delaware corporation (the “Guarantor”), hereby
agrees, upon the occurrence of any Trigger Event (as defined below), to be absolutely and
unconditionally liable in the amount of, and to indemnify, reimburse, and hold each Lender and each
Agent harmless from, all liabilities, losses, damages, costs and expenses of whatever kind or
nature, known or unknown, foreseen or unforeseen, contingent or otherwise suffered or incurred by
any Lender or any Agent (including any reasonable attorneys’ fees and expenses of enforcing this
Guaranty), and any material damage or material diminution in value of any of the Collateral
(collectively, “Liabilities”) resulting from or arising in connection with any one or more
of the following “Trigger Events” resulting from the action or inaction on the part of the
Guarantor, any member of Senior Management of the Guarantor or senior management of the Company or
any Affiliate of the Guarantor (each, a “Related Person”):

	 	A.	 	FRAUD: Fraud committed by the Guarantor or any Related Person relating
to the business, property or assets of the Company (including, without limitation, any
claim of fraudulent conveyance);
	 
	 	B.	 	THEFT OR MISAPPROPRIATION OF FUNDS: Theft, or misappropriation of
funds by the Guarantor or any Related Person (including, without limitation, dividends,
distributions or payments being made in contravention of the provisions of the Credit
Documents);
	 
	 	C.	 	CRIMES: Conviction (whether by verdict, pleading or similar final
resolution) of any felonies or crimes by the Guarantor or any Related Person or any
willful violation of any laws or legal requirements by the Guarantor or any Related
Person;
	 
	 	D.	 	HINDERENCE: Any intentional act by the Guarantor or any Related Person
which prevents, delays or hinders the Collateral Agent’s perfection of its interests,
on behalf of the Lenders, in the Collateral or otherwise results in any material damage
or diminution in value of any of the Collateral;

 

 

	 	E.	 	UNPERMITTED DISPOSITION: Any voluntary sale, encumbrance or
disposition of any Collateral or any part thereof or interest therein not expressly
permitted by the Credit Documents;
	 
	 	F.	 	BANKRUPTCY: The Company shall file, initiate or consent to the filing
of a voluntary petition under any Debtor Relief Laws or the appointment of a trustee,
receiver, conservator or liquidator for all or any part of its properties and assets;
or the Guarantor or any Related Person shall collude with any Person in connection with
the filing of an involuntary petition against the Company under any Debtor Relief Laws;
	 
	 	G.	 	CONSOLIDATION IN OTHER CASE: The Guarantor or any Related Person
consents to, initiates or institutes or makes any claim or proceeding that seeks or is
intended to result in consolidating or otherwise causing the Company or any of its
respective properties or assets to become subject to any other Person’s case, action or
proceeding under the insolvency laws of any state or jurisdiction, or the Collateral,
or any portion thereof or interest therein, to be included in any other Person’s
bankrupt estate or otherwise subject to the claims of creditors of any other Person,
the property of any bankruptcy estate or subject to any proceeding under any insolvency
laws of any state or other jurisdiction;
	 
	 	H.	 	VOLUNTARY DISSOLUTION: The Guarantor or any Related Person voluntarily
seeks, causes or takes any action to effect a dissolution or liquidation of the
Company;
	 
	 	I.	 	CHANGE OF CONTROL; LIEN: The Guarantor or any Related Person seeks,
causes or takes any action to (i) effect any Change of Control of the Company except as
otherwise expressly permitted under the Credit Documents; or (ii) create, incur, assume
or permit any Lien on the Capital Stock of the Company, except as otherwise expressly
permitted under the Equity Pledge Agreement, the Bluestem 2010 Inventory Security
Agreement or the Bluestem Securities Security Agreement; or
	 
	 	J.	 	FAILURE TO COOPERATE: The Guarantor or any Related Person shall fail
to cooperate with the Administrative Agent, the Collateral Agent or any Lender in
connection with such Person’s exercise of rights after any Event of Default has
occurred and is continuing under the Credit Agreement;

provided, that with respect to the Trigger Event described in Sections 1(B) and
1(C), acts of any Affiliate of Guarantor (other than Subsidiaries of the Guarantor) which
are unrelated to or have no effect on the Company, the Guarantor or the Collateral shall not
constitute a Trigger Event or result in any Liabilities.

          2. AGREEMENT TO COOPERATE.

     In addition, after any Event of Default has occurred and is continuing under the Credit
Agreement, if the Administrative Agent or the Collateral Agent comes into possession of any or all
of the Collateral (or any proceeds thereof), at the Administrative Agent’s or the Collateral
Agent’s option, and for so long as all or any part of the Obligations shall remain outstanding, the
Guarantor shall, promptly, and in any event within five Business Days, following written notice

 

 

from any Agent, use commercially reasonable efforts to assist the Administrative Agent or the
Collateral Agent, as the case may be, in disposing of and collecting amounts owed under such
Collateral. The Administrative Agent or the Collateral Agent, as the case may be, shall have the
right to terminate any such disposal or collection activities undertaken by the Guarantor as
described above at any time, on three Business Days’ written notice, with or without cause. The
Guarantor shall not have any authority to bind the Administrative Agent or the Collateral Agent,
except as the Administrative Agent or the Collateral Agent may agree in writing.

          3. SUBORDINATION.

     In the event that Guarantor shall advance or become obligated to pay any sums under this
Guaranty in connection with the Liabilities from or arising in connection with any one or more
Trigger Event or in the event that for any reason whatsoever the Company is now, or shall hereafter
become, indebted to Guarantor, Guarantor agrees that (i) the amount of all such sums and such
indebtedness, and all other obligations of the Company owing to the Guarantor, and all interest
thereon shall at all times be subordinate as to lien, the time of payment and in all other respects
to the indefeasible payment in full in cash of all Obligations (other than contingent
indemnification obligations) of the Company under the Credit Documents, and (ii) Guarantor shall
not be entitled to enforce or receive payment thereof on account of any subrogation rights, any
rights of reimbursement, contribution or indemnity or any rights or recourse or otherwise until all
such Obligations have been indefeasibly paid in full in cash. Nothing herein contained is intended
or shall be construed to give Guarantor any right of subrogation in or under the Credit Documents
or any right to participate in any way therein, or in the right, title or interest of any Secured
Party in or to any Collateral, notwithstanding any payments made by Guarantor under this Guaranty,
until the indefeasible payment in full in cash of all Obligations of the Company under the Credit
Documents (other than contingent indemnification obligations). If any amount shall be paid to
Guarantor on account of such subrogation rights at any time when any such Obligations shall not
have been fully paid, such amount shall be deemed to have been paid to the Guarantor for the
benefit of, and held in trust for the benefit of, the Secured Parties and shall be paid over to the
Administrative Agent for the benefit of the Secured Parties.

          4. GUARANTY ABSOLUTE. 

     (a) The obligations of the Guarantor hereunder are absolute and irrevocable and, upon the
occurrence of any Trigger Event, unconditional and primary, irrespective of the validity or
enforceability of any Credit Document, shall not be subject to any counterclaim, setoff, deduction
or defense based upon any claim the Guarantor may have against the Company or any other Person, and
shall remain in full force and effect without regard to, and shall not be released, discharged or
in any way affected by, any circumstance or condition whatsoever, including, without limitation:
(i) any amendment to, modification of, supplement to or restatement of any Credit Document or any
assignment or transfer of any interest therein, or any furnishing, acceptance or release of any
security for the Obligations; (ii) any waiver, consent, extension, indulgence or other action or
inaction under or in respect of any Credit Document; (iii) any bankruptcy, insolvency, arrangement,
reorganization, readjustment, composition, liquidation or similar proceeding with respect to the
Company or its property; (iv) any merger, amalgamation or consolidation of the Guarantor or of the
Company into or with any other Person or any sale, lease or transfer of any or all of the assets of
the Guarantor or of the Company to any

 

 

Person; (v) any failure on the part of the Company for any reason to comply with or perform
any of the terms of any other agreement with the Guarantor; (vi) any failure on the part of the
Secured Parties to obtain, maintain, register or otherwise perfect any security; or (vii) any other
event or circumstance (other than the failure of a Trigger Event to occur) which might otherwise
constitute a legal or equitable discharge or defense of a guarantor (whether or not similar to the
foregoing). The Guarantor waives any right to receive notice of any of the foregoing.

     (b) The Guarantor unconditionally waives to the fullest extent permitted by law, (i) notice of
acceptance hereof, of any action taken or omitted in reliance hereon and of any default by the
Company under the Credit Documents, (ii) all notices which may be required by statute, rule of law
or otherwise to preserve any of the rights of any Agent or Lender against the Guarantor, notice to
the Company or to the Guarantor of default or protest for nonpayment or dishonor and the filing of
claims with a court in the event of the bankruptcy of the Company, (iii) any right to require any
Agent or Lender to enforce, assert or exercise any right, power or remedy conferred in any Credit
Document, (iv) any requirement for diligence on the part of any Agent or Lender and (v) any other
act or omission or thing or delay in doing any other act or thing which might in any manner or to
any extent vary the risk of the Guarantor or otherwise operate as a discharge of or lessen the
obligations of the Guarantor hereunder.

     (c) Without affecting the Guarantor’s obligations hereunder, the Agents and Lenders, without
notice or demand to the Guarantor, may from time to time: (i) renew, compromise, extend,
accelerate or otherwise change the time for payment of, all or any part of the Credit Documents or
the Obligations; (ii) change any of the representations, covenants, events of default or any other
terms or conditions of or pertaining to the Credit Documents or the Obligations; (iii) take and
hold security for the payment of the Obligations, for the performance of this Guaranty Agreement or
otherwise and exchange, enforce, waive, subordinate and release any such security; (iv) apply any
such security and direct the order or manner of sale thereof as the Agents and the Lenders in their
sole discretion may determine; (v) obtain additional or substitute endorsers or guarantors; (vi)
exercise or refrain from exercising any rights against the Company and others; and (vii) apply any
sums, by whomsoever paid or however realized, to the payment of the Obligations. The Agents shall
have no obligation to proceed against any additional or substitute endorsers or guarantors or to
pursue or exhaust any security provided by the Company, the Guarantor or any other Person or to
pursue any other remedy available to the holders.

          5. REPRESENTATIONS AND WARRANTIES. 

(a) The Guarantor is a corporation, duly organized, validly existing and in good standing under the
laws of the State of Delaware, and is duly qualified as a foreign corporation and is in good
standing in each jurisdiction in which such qualification is required by law, other than those
jurisdictions as to which the failure to be so qualified or in good standing could not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect.

(b) The Guarantor has the corporate power and authority to execute and deliver this Guaranty and to
perform its obligations hereunder.

 

 

(c) The Guaranty has been duly authorized by all necessary corporate action on the part of the
Guarantor, and this Guaranty constitutes a legal, valid and binding obligation of the Guarantor
enforceable against the Guarantor in accordance with its terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors’ rights generally and general principles of equity
(regardless of whether such enforceability is considered in a proceeding in equity or at law).

(d) The execution, delivery and performance by the Guarantor of this Guaranty Agreement will not
(i) contravene, result in any breach of, or constitute a default under, or result in the creation
of any Lien in respect of any property of the Guarantor or any of its Subsidiaries under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease, organizational
documents, or any other agreement or instrument to which the Guarantor or any of its Subsidiaries
is bound or by which the Guarantor or any of its Subsidiaries or any of their respective properties
may be bound or affected, (ii) conflict with or result in a breach of any of the terms, conditions
or provisions of any order, judgment, decree, or ruling of any court, arbitrator or Governmental
Authority applicable to the Guarantor or (iii) violate any provision of any statute or other rule
or regulation of any Governmental Authority applicable to the Guarantor.

(e) No consent, approval or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution, delivery or performance by the
Guarantor of this Guaranty.

          6. TERMINATION.

     This Guaranty shall terminate one year and one day following the termination of the Revolving
Commitments and the indefeasible payment in full in cash of all Obligations of the Company to the
Lenders under the Credit Documents (other than contingent indemnification obligations);
provided, however, that upon the termination of the Revolving Commitments and the
indefeasible payment in full in cash of all Obligations of the Company under the Credit Documents
(other than contingent indemnification obligations), Sections 1(D), 1(E), 1(H) and 1(I) hereunder
shall immediately terminate.

          7. AMENDMENTS.

     No amendment or waiver of any provision of this Guaranty nor consent to any departure herefrom
by the Guarantor shall in any event be effective unless the same shall be in writing and signed by
the Administrative Agent and the Collateral Agent (and, in the case of an amendment, by the
Guarantor), and then such waiver or consent shall be effective only in the specific instance and
for the specific purpose for which given.

          8. SUCCESSORS AND ASSIGNS.

     This Guaranty shall inure to the benefit of the Lenders and their successors and assigns under
the Credit Agreement; provided that none of the parties hereto may delegate its obligations
or assign its rights hereunder without consent of the other parties hereto.

 

 

          9. MISCELLANEOUS.

     The headings in this Guaranty are for purposes of reference only and shall not limit or define
the meaning hereof. This Guaranty may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute one instrument. In the event that any
provision of this Guaranty shall prove to be invalid or unenforceable, such provision shall be
deemed to be severable from the other provisions of this Guaranty which shall remain binding on all
parties hereto.

          10. GOVERNING LAW AND JURISDICTION.

     (a) Governing Law. THIS GUARANTY 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.

     (b) Consent to Jurisdiction. ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE GUARANTOR
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 GUARANTY, THE GUARANTOR, 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 THE GUARANTOR AT ITS ADDRESS PROVIDED IN THE SERVICING AGREEMENT AND
TO ANY PROCESS AGENT IDENTIFIED IN THE CREDIT AGREEMENT IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE GUARANTOR 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 THE
GUARANTOR IN THE COURTS OF ANY OTHER JURISDICTION.

[Remainder of page intentionally left blank.]

 

 

     IN WITNESS WHEREOF, the Guarantor duly executed and delivered this Guaranty as of this 20 day
of August, 2010.

	 	 	 	 	 
	 	BLUESTEM BRANDS, INC.,

as Guarantor

 	 
	 	By:  	/s/ Mark Wagener
 	 
	 	 	Name:  	Mark Wagener 	 
	 	 	Title:  	Executive Vice President and

Chief Financial Officer 	 
	 

Accepted and confirmed as of

the date first written above.

	 	 	 	 	 
	 	GOLDMAN SACHS BANK USA,

as Administrative Agent and Collateral Agent

 	 
	 	By:  	/s/ Jason P. Gelberd
 	 
	 	 	Name:  	Jason P. Gelberd 	 
	 	 	Title:  	Authorized Signatory

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00188-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00188-of-00352.parquet"}]]