Document:

exv10w14

Exhibit 10.14

 

 

CHASE

SECOND AMENDED AND RESTATED CREDIT AGREEMENT

dated as of

August 20, 2010

among

BLUESTEM BRANDS, INC.

The Lenders Party Hereto

and

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent

 

J.P. MORGAN SECURITIES INC.,

as Sole Bookrunner and Sole Lead Arranger

 

 

CHASE BUSINESS CREDIT

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I. DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	SECTION 1.01 Defined Terms 
	 	 	1	 
	SECTION 1.02 Classification of Loans and Borrowings 
	 	 	27	 
	SECTION 1.03 Terms Generally 
	 	 	27	 
	SECTION 1.04 Accounting Terms; GAAP 
	 	 	28	 
	 
	 	 	 	 
	ARTICLE II. THE CREDITS
	 	 	28	 
	 
	 	 	 	 
	SECTION 2.01 Commitments 
	 	 	28	 
	SECTION 2.02 Loans and Borrowings 
	 	 	28	 
	SECTION 2.03 Requests for Revolving Borrowings 
	 	 	29	 
	SECTION 2.04 Protective Advances 
	 	 	30	 
	SECTION 2.05 Swingline Loans and Overadvances 
	 	 	30	 
	SECTION 2.06 Letters of Credit 
	 	 	32	 
	SECTION 2.07 Funding of Borrowings 
	 	 	36	 
	SECTION 2.08 Interest Elections 
	 	 	37	 
	SECTION 2.09 Termination of Commitments 
	 	 	38	 
	SECTION 2.10 Repayment of Loans; Evidence of Debt 
	 	 	39	 
	SECTION 2.11 Prepayment of Loans 
	 	 	40	 
	SECTION 2.12 Fees 
	 	 	41	 
	SECTION 2.13 Interest 
	 	 	42	 
	SECTION 2.14 Alternate Rate of Interest 
	 	 	43	 
	SECTION 2.15 Increased Costs 
	 	 	43	 
	SECTION 2.16 Break Funding Payments 
	 	 	44	 
	SECTION 2.17 Taxes 
	 	 	45	 
	SECTION 2.18 Payments Generally; Allocation of Proceeds; Sharing of Set-offs 
	 	 	46	 
	SECTION 2.19 Mitigation Obligations; Replacement of Lenders 
	 	 	49	 
	SECTION 2.20 Defaulting Lenders 
	 	 	50	 
	SECTION 2.21 Returned Payments 
	 	 	51	 
	 
	 	 	 	 
	ARTICLE III. REPRESENTATIONS AND WARRANTIES
	 	 	51	 
	 
	 	 	 	 
	SECTION 3.01 Organization; Powers 
	 	 	51	 
	SECTION 3.02 Authorization; Enforceability 
	 	 	52	 
	SECTION 3.03 Governmental Approvals; No Conflicts 
	 	 	52	 
	SECTION 3.04 Financial Condition; No Material Adverse Change 
	 	 	52	 
	SECTION 3.05 Properties 
	 	 	52	 
	SECTION 3.06 Litigation and Environmental Matters 
	 	 	53	 
	SECTION 3.07 Compliance with Laws and Agreements 
	 	 	53	 
	SECTION 3.08 Investment Company Status 
	 	 	53	 
	SECTION 3.09 Taxes 
	 	 	53	 
	SECTION 3.10 ERISA 
	 	 	53	 
	SECTION 3.11 Disclosure 
	 	 	54	 
	SECTION 3.12 Projected Financial Information 
	 	 	54	 
	SECTION 3.13 Material Agreements 
	 	 	54	 
	SECTION 3.14 Solvency 
	 	 	54	 
	SECTION 3.15 Insurance 
	 	 	54	 
	SECTION 3.16 Capitalization and Subsidiaries 
	 	 	54	 
	SECTION 3.17 Security Interest in Collateral 
	 	 	55	 
	SECTION 3.18 Employment Matters 
	 	 	55	 
	SECTION 3.19 Affiliate Transactions 
	 	 	55	 

 

 

	 	 	 	 	 
	 	 	Page	 
	ARTICLE IV. CONDITIONS
	 	 	55	 
	 
	 	 	 	 
	SECTION 4.01 Closing Date 
	 	 	55	 
	SECTION 4.02 Each Credit Event 
	 	 	57	 
	 
	 	 	 	 
	ARTICLE V. AFFIRMATIVE COVENANTS
	 	 	58	 
	 
	 	 	 	 
	SECTION 5.01 Financial Statements; Borrowing Base and Other Information 
	 	 	58	 
	SECTION 5.02 Notices of Material Events 
	 	 	61	 
	SECTION 5.03 Existence; Conduct of Business 
	 	 	62	 
	SECTION 5.04 Payment of Obligations 
	 	 	62	 
	SECTION 5.05 Maintenance of Properties 
	 	 	62	 
	SECTION 5.06 Books and Records; Inspection Rights 
	 	 	63	 
	SECTION 5.07 Compliance with Laws 
	 	 	63	 
	SECTION 5.08 Use of Proceeds 
	 	 	63	 
	SECTION 5.09 Insurance 
	 	 	63	 
	SECTION 5.10 Casualty and Condemnation 
	 	 	63	 
	SECTION 5.11 Appraisals 
	 	 	64	 
	SECTION 5.12 Payments from Bluestem SPV 
	 	 	64	 
	SECTION 5.13 Additional Collateral; Further Assurances 
	 	 	64	 
	 
	 	 	 	 
	ARTICLE VI. NEGATIVE COVENANTS
	 	 	65	 
	 
	 	 	 	 
	SECTION 6.01 Indebtedness 
	 	 	65	 
	SECTION 6.02 Liens 
	 	 	67	 
	SECTION 6.03 Fundamental Changes 
	 	 	68	 
	SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions 
	 	 	69	 
	SECTION 6.05 Asset Sales 
	 	 	70	 
	SECTION 6.06 Sale and Leaseback Transactions 
	 	 	71	 
	SECTION 6.07 Swap Agreements 
	 	 	72	 
	SECTION 6.08 Restricted Payments; Certain Payments of Indebtedness 
	 	 	72	 
	SECTION 6.09 Transactions with Affiliates 
	 	 	73	 
	SECTION 6.10 Restrictive Agreements 
	 	 	73	 
	SECTION 6.11 Amendment of Material Documents 
	 	 	74	 
	SECTION 6.12 Accounting Changes 
	 	 	74	 
	SECTION 6.13 Receivables Property Payments 
	 	 	74	 
	SECTION 6.14 Financial Covenants 
	 	 	74	 
	SECTION 6.15 Portfolio Covenants 
	 	 	76	 
	SECTION 6.16 IPO Proceeds 
	 	 	76	 
	 
	 	 	 	 
	ARTICLE VII. EVENTS OF DEFAULT
	 	 	77	 
	 
	 	 	 	 
	ARTICLE VIII. THE ADMINISTRATIVE AGENT
	 	 	79	 
	 
	 	 	 	 
	ARTICLE IX. MISCELLANEOUS
	 	 	82	 
	 
	 	 	 	 
	SECTION 9.01 Notices 
	 	 	82	 
	SECTION 9.02 Waivers; Amendments 
	 	 	83	 
	SECTION 9.03 Expenses; Indemnity; Damage Waiver 
	 	 	85	 
	SECTION 9.04 Successors and Assigns 
	 	 	87	 
	SECTION 9.05 Survival 
	 	 	90	 
	SECTION 9.06 Counterparts; Integration; Effectiveness 
	 	 	90	 
	SECTION 9.07 Severability 
	 	 	91	 
	SECTION 9.08 Right of Setoff 
	 	 	91	 
	SECTION 9.09 Governing Law; Jurisdiction; Consent to Service of Process 
	 	 	91	 
	SECTION 9.10 WAIVER OF JURY TRIAL 
	 	 	92	 
	SECTION 9.11 Headings 
	 	 	92	 
	SECTION 9.12 Confidentiality 
	 	 	92	 
	SECTION 9.13 Several Obligations; Nonreliance; Violation of Law 
	 	 	93	 
	SECTION 9.14 USA PATRIOT Act 
	 	 	93	 
	SECTION 9.15 Disclosure 
	 	 	93	 
	SECTION 9.16 Appointment for Perfection 
	 	 	93	 

 

 

	 	 	 	 	 
	 	 	Page	 
	SECTION 9.17 Interest Rate Limitation 
	 	 	93	 
	SECTION 9.18 Effect on Existing Credit Agreement 
	 	 	94	 
	 
	 	 	 	 
	ARTICLE X. LOAN GUARANTY
	 	 	94	 
	 
	 	 	 	 
	SECTION 10.01 Guaranty 
	 	 	94	 
	SECTION 10.02 Guaranty of Payment 
	 	 	95	 
	SECTION 10.03 No Discharge or Diminishment of Loan Guaranty 
	 	 	95	 
	SECTION 10.04 Defenses Waived 
	 	 	96	 
	SECTION 10.05 Rights of Subrogation 
	 	 	96	 
	SECTION 10.06 Reinstatement; Stay of Acceleration 
	 	 	96	 
	SECTION 10.07 Information 
	 	 	97	 
	SECTION 10.08 Termination 
	 	 	97	 
	SECTION 10.09 Taxes 
	 	 	97	 
	SECTION 10.10 Maximum Liability 
	 	 	97	 
	SECTION 10.11 Contribution 
	 	 	98	 
	SECTION 10.12 Liability Cumulative 
	 	 	98	 

SCHEDULES

Commitment Schedule

Schedule 3.05 — Properties

Schedule 3.06 — Disclosed Matters

Schedule 3.15 — Insurance

Schedule 3.16 — Capitalization and Subsidiaries

Schedule 3.19 — Affiliate Transactions

Schedule 6.01 — Existing Indebtedness

Schedule 6.02 — Existing Liens

Schedule 6.04 — Existing Investments

Schedule 6.10 — Restrictive Agreements

EXHIBITS

Exhibit A — Form of Assignment and Assumption

Exhibit B — [Intentionally Omitted]

Exhibit C — Form of Borrowing Base Certificate

Exhibit D — Form of Compliance Certificate

Exhibit E — Joinder Agreement

Exhibit F — Advance Request Form

 

 

     SECOND AMENDED AND RESTATED CREDIT AGREEMENT dated as of August 20, 2010 (as it may be amended
or modified from time to time, this “Agreement”), among BLUESTEM BRANDS, INC., the other
Loan Parties party hereto from time to time, the Lenders party hereto from time to time, and
JPMORGAN CHASE BANK, N.A., as Administrative Agent.

     The parties hereto agree as follows:

ARTICLE I.

Definitions

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

     “Account” has the meaning assigned to such term in the Security Agreement.

     “Account Control Agreement” means an agreement, in form and substance satisfactory to
the Administrative Agent, among any Loan Party, a banking institution holding such Loan Party’s
funds, and the Administrative Agent with respect to collection and control of all deposits and
balances held in an account maintained by any Loan Party with such banking institution.

     “Account Debtor” means any Person obligated on an Account.

     “Adjusted Excess Spread Ratio” has the meaning set forth in the SPV Credit Agreement
as in effect on the Closing Date, subject to amendment pursuant to Section 6.15.

     “Adjusted LIBO Rate” means the rate (adjusted for statutory reserve requirements for
Eurocurrency liabilities) for Eurodollar deposits for a period equal to one week or one, two, three
or six months (as selected by the Borrower) appearing on Reuters Screen LIBOR01 Page (or on any
other service providing comparable rate quotations) at approximately 11:00 a.m., London time, two
business days prior to the first day of the applicable interest period.

     “Adjusted One Month LIBOR Rate” means, as of any day, an interest rate per annum equal
to the sum of (i) 1.00% per annum plus (ii) the Adjusted LIBO Rate for a one month Interest Period
on such day (or if such day is not a Business Day, the immediately preceding Business Day);
provided that, for the avoidance of doubt, the Adjusted LIBO Rate for any day shall be
based on the rate appearing on the Reuters Screen LIBOR01 Page (or on any successor or substitute
page) at approximately 11:00 a.m. London time on such day (without any rounding).

     “Administrative Agent” means JPMorgan Chase Bank, N.A., in its capacity as
administrative agent for the Lenders hereunder.

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

     “Advance Request Form” means a request form substantially similar to Exhibit
F.

 

 

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

     “Aggregate Credit Exposure” means, at any time, the aggregate Credit Exposure of all
the Lenders.

     “Applicable Percentage” means, with respect to any Lender, (a) with respect to
Revolving Loans, LC Exposure, Swingline Loans or Overadvances, a percentage equal to a fraction the
numerator of which is such Lender’s Revolving Commitment and the denominator of which is the
aggregate Revolving Commitment of all Revolving Lenders (if the Revolving Commitments have
terminated or expired, the Applicable Percentages shall be determined based upon such Lender’s
share of the aggregate Revolving Exposures at that time); provided that in the case of
Section 2.20 when a Defaulting Lender shall exist, any such Defaulting Lender’s Revolving
Commitment shall be disregarded in the calculation and (b) with respect to Protective Advances or
with respect to the Aggregate Credit Exposure, a percentage based upon its share of the Aggregate
Credit Exposure and the unused Commitments; provided that in the case of Section 2.20 when
a Defaulting Lender shall exist, any such Defaulting Lender’s Commitment shall be disregarded in
the calculation.

     “Applicable
Rate” means, for any day, with respect to any CBFR Loan or
Eurodollar Revolving Loan, or with respect to the commitment fees payable hereunder, as the case
may be, the applicable rate per annum set forth below under the caption “CBFR Spread”, “Eurodollar
Spread” or “Commitment Fee Rate”, as the case may be, based upon the Borrower’s average
Availability as of the most recent determination date, provided that from the Closing Date
to the date of the first adjustment described below, the “Applicable Rate” shall be (i) 2.25% in
the case of CBFR Revolving Loans, (ii) 3.50% in the case of Eurodollar Revolving Loans and (iii)
0.50% in the case of the Commitment Fee Rate. Beginning February 1, 2011, reductions and increases
in the Applicable Rate will be made quarterly, effective five Business Days after the
Administrative Agent has received the last Borrowing Base Certificate to be delivered with respect
to the preceding Fiscal Quarter and Administrative Agent has determined which Category applies
based on average Availability during the previous Fiscal Quarter as shown in the following table:

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Average	 	CBFR	 	Eurodollar	 	Commitment
	Availability	 	Spread	 	Spread	 	Fee Rate
	Category 1
> the lesser of (i) $25MM or (ii)
50% of the Borrowing Base
	 	200 bps	 	325 bps	 	50 bps
	Category 2
£   the lesser of (i) $25MM or (ii)
50% of the Borrowing Base
	 	225 bps	 	350 bps	 	37.5 bps

 

 

     “Category 1” shall apply if, as of the date of determination, average Availability is
greater than the lesser of (i) $25,000,000 or (ii) 50% of the Borrowing Base and “Category 2” shall
apply if, as of the date of determination, average Availability is less than or equal to the lesser
of (i) $25,000,000 or (ii) 50% of the Borrowing Base. Notwithstanding the foregoing, if the
Borrower fails to deliver the Borrowing Base Certificate to the Administrative Agent at the time
required pursuant to this Agreement, then the Applicable Rates and fees shall be the highest
Applicable Rates and fees set forth in the foregoing table until five days after such Borrowing
Base Certificate is so delivered.

     “Approved Fund” has the meaning assigned to such term in Section 9.04.

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

     “Availability” means, at any time, an amount equal to (a) the lesser of the aggregate
Revolving Commitment of all Revolving Lenders and the Borrowing Base minus (b) the
Revolving Exposure of all Revolving Lenders.

     “Availability Period” means the period from and including the Closing Date to but
excluding the earlier of the Maturity Date and the date of termination of the Commitments.

     “Available Revolving Commitment” means, at any time, the aggregate Revolving
Commitments of all Lenders then in effect minus the Revolving Exposure of all Revolving
Lenders at such time.

     “Banking Services” means each and any of the following bank services provided to any
Loan Party by any Lender or any of its Affiliates: (a) credit cards for commercial customers
(including, without limitation, “commercial credit cards” and purchasing cards), (b) stored value
cards and (c) treasury management services (including, without limitation, controlled disbursement,
automated clearinghouse transactions, return items, overdrafts and interstate depository network
services).

     “Banking Services Obligations” of the Loan Parties means any and all obligations of
the Loan Parties, whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor) in connection with Banking Services.

     “Banking Services Reserves” means all Reserves which the Administrative Agent from
time to time establishes in its Permitted Discretion for Banking Services then provided or
outstanding.

     “Bluestem SPV” means Fingerhut Receivables I, LLC, a Delaware limited liability
company.

 

 

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

     “Borrower” means Bluestem Brands, Inc. a Delaware corporation.

     “Borrowing” means (a) Revolving Loans of the same Type, made, converted or continued
on the same date and, in the case of Eurodollar Loans, as to which a single Interest Period is in
effect, (b) a Swingline Loan, (c) a Protective Advance and (d) an Overadvance.

     “Borrowing Base” means, at any time, the lesser of (i) 65% of Borrower’s Eligible
Inventory (valued at the lower of cost (FIFO) or market) and (ii) the product of 85% multiplied by
the Net Orderly Liquidation Value percentage identified in the most recent inventory appraisal
ordered by the Administrative Agent multiplied by the Borrower’s Inventory (valued at the lower of
cost (FIFO) or market), in each case, less Reserves. The Administrative Agent may, in its
Permitted Discretion, reduce the advance rates set forth above, adjust Reserves or reduce one or
more of the other elements used in computing the Borrowing Base. 

     “Borrowing Base Certificate” means a certificate, signed and certified as accurate and
complete by a Financial Officer of the Borrower, in substantially the form of Exhibit C or
another form which is acceptable to the Administrative Agent in its sole discretion.

     “Borrowing Request” means a request by the Borrower for a Revolving Borrowing in
accordance with Section 2.03 as set forth on Exhibit F.

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

     “Capital Expenditures” means, without duplication, any expenditure or commitment to
expend money for any purchase or other acquisition of any asset which would be classified as a
fixed or capital asset on a consolidated balance sheet of the Borrower and its Subsidiaries
prepared in accordance with GAAP.

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

     “Capital Stock” means any and all shares, interests, participations or other
equivalents (however designated) of capital stock of a corporation, any and all equivalent
ownership interests in a Person (other than a corporation), including, without limitation,
partnership interests and membership interests, and any and all warrants, rights or options to
purchase or other arrangements or rights to acquire any of the foregoing.

 

 

     “Cash” means money, currency or a credit balance in any demand or deposit account.

     “Cash Equivalents” means, as at any date of determination, (a) marketable securities
(i) issued or directly and unconditionally guaranteed as to interest and principal by the United
States Government, or (ii) issued by any agency of the United States the obligations of which are
backed by the full faith and credit of the United States, in each case maturing within one year
after such date; (b) marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public instrumentality thereof, in
each case maturing within one year after such date and having, at the time of the acquisition
thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (c) commercial paper
maturing no more than one year from the date of creation thereof and having, at the time of the
acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from Moody’s; (d)
certificates of deposit or bankers’ acceptances maturing within one year after such date and issued
or accepted by any Lender or by any commercial bank organized under the laws of the United States
of America or any state thereof or the District of Columbia that (i) is at least “adequately
capitalized” (as defined in the regulations of its primary Federal banking regulator), and (ii) has
Tier 1 capital (as defined in such regulations) of not less than $100,000,000; and (e) shares of
any money market mutual fund that (i) has substantially all of its assets invested continuously in
the types of investments referred to in clauses (a) and (b) above, (ii) has net assets of not less
than $500,000,000, and (iii) has the highest rating obtainable from either S&P or Moody’s.

     “CB Floating Rate” means the Prime Rate; provided that the CB Floating Rate
shall never be less than the Adjusted One Month LIBOR Rate for a one month Interest Period on such
day (or if such day is not a Business Day, the immediately preceding Business Day). Any change in
the CB Floating Rate due to a change in the Prime Rate or the Adjusted One Month LIBOR Rate shall
be effective from and including the effective date of such change in the Prime Rate or the Adjusted
One Month LIBOR Rate, respectively.

     “CBFR”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are bearing interest at a rate determined by reference to
the CB Floating Rate.

     “Change in Control” means

     (A) prior to an Initial Public Offering, (i) the Control Parties and any of their Affiliates
shall cease to beneficially own and control in the aggregate at least 42.5% on a fully diluted
basis of the economic and voting interests in the Capital Stock of the Borrower, (ii) the Control
Parties and any of their Affiliates shall cease to beneficially own and control in the aggregate at
least 66 2/3% of the Series B Preferred Stock of the Borrower (or other series of Capital Stock
senior to or pari passu with the Series B Preferred Stock with voting rights substantially similar
to the voting rights of holders of the Series B Preferred Stock) or (iii) any Person or “group”
(within the meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than the Control Parties
and any of their Affiliates (a) shall have acquired beneficial ownership of 20% or more on a fully
diluted basis of the voting and/or economic interest in the Capital Stock of the Borrower or (b)
shall have obtained the power (whether or not exercised) to elect a majority of the members of the
board of directors (or similar governing body) of the Borrower; provided, however,
that, with

 

 

respect to clause (iii)(a), (y) an increase in the beneficial ownership by the Petters Group of the
voting and/or economic interest in the Capital Stock of the Borrower to more than 20% on a fully
diluted basis solely as a result of the issuance of dividends shall not constitute a “Change of
Control” hereunder and (z) the acquisition by any Person of 20% or more, on a fully diluted basis,
of the voting and/or economic interests in the Capital Stock of the Borrower solely as a result of
transfers of Capital Stock beneficially owned by the Petters Group shall not constitute a “Change
of Control” hereunder; or

     (B) following an Initial Public Offering, any Person or “group” (within the meaning of Rules
13d-3 and 13d-5 under the Exchange Act) other than the Control Parties and any of their Affiliates
(a) shall have acquired beneficial ownership of 35% or more on a fully diluted basis of the voting
and/or economic interest in the Capital Stock of the Borrower or (b) shall have obtained the power
(whether or not exercised) to elect a majority of the members of the board of directors (or similar
governing body) of the Borrower.

     “Change in Law” means (a) the adoption of any law, rule or regulation after the date
of this Agreement, (b) any change in any law, rule or regulation or in the interpretation or
application thereof by any Governmental Authority after the date of this Agreement or (c)
compliance by any Lender or the Issuing Bank (or, for purposes of Section 2.15(b), by any lending
office of such Lender or by such Lender’s or the Issuing Bank’s holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any Governmental
Authority made or issued after the date of this Agreement.

     “Chase” means JPMorgan Chase Bank, N.A., a national banking association, in its
individual capacity, and its successors.

     “Class”, when used in reference to any Loan or Borrowing, refers to whether such Loan,
or the Loans comprising such Borrowing, are Revolving Loans, Swingline Loans or Protective Advances
or Overadvances.

     “Closing Date” means August 20, 2010.

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

     “Collateral” has the meaning assigned to such term in the Security Agreement.

     “Collateral Access Agreement” has the meaning assigned to such term in the Security
Agreement.

     “Collateral Deposit Account” has the meaning assigned to such term in the Security
Agreement.

     “Collateral Documents” means, collectively, the Security Agreement and any other
documents granting a Lien upon the Collateral as security for payment of the Secured Obligations.

     “Commercial LC Exposure” means, at any time, the sum of (a) the aggregate undrawn
amount of all outstanding commercial Letters of Credit at such time plus (b) the aggregate

 

 

amount of all LC Disbursements relating to commercial Letters of Credit that have not yet been
reimbursed by or on behalf of the Borrower at such time. The Commercial LC Exposure of any
Revolving Lender at any time shall be its Applicable Percentage of the total Commercial LC Exposure
at such time.

     “Commitment” means, with respect to each Lender, the sum of such Lender’s Revolving
Commitment, together with the commitment of such Lender to acquire participations in Protective
Advances hereunder. The initial amount of each Lender’s Commitment is set forth on the
Commitment Schedule, or in the Assignment and Assumption pursuant to which such Lender
shall have assumed its Commitment, as applicable.

     “Commitment Schedule” means the Schedule attached hereto identified as such.

     “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 SPV Credit Documents or the Administrative Agent, any Lender or
arranger in connection with the 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 SPV Credit Documents, the 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 SPV 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, (viii) reasonable fees
and expenses in connection with an Initial Public Offering by the Borrower 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 Administrative Agent
and (ix) the amount of any prepayment premiums or other similar fees paid in connection with the
SPV Credit Documents or the 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
non-cash 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.

     “Consolidated Cash Interest Expense” shall mean, for any period, Consolidated Interest
Expense for such period, excluding any amount not payable in Cash.

 

 

     “Consolidated Fixed Charges” means, with reference to any period, without duplication,
Consolidated Cash Interest Expense plus any administration fees owed pursuant to the fee
letter under the SPV Credit Documents and any commitment fees owed pursuant to the SPV Credit
Agreement, plus scheduled principal payments on Indebtedness made during such period (not
including principal payments under the SPV Credit Agreement or under this Agreement), plus
the amount of any prepayment premiums or other similar fees paid in connection with the SPV Credit
Documents or the Loan Documents, plus income and franchise taxes paid in cash net of income
and franchise tax refunds (but not less than zero), plus (x) dividends or distributions
paid in cash and (y) any other restricted payments permitted under Section 6.08(a)(iii), (iv), (v)
and (vi) and paid in cash, all calculated for the Borrower and its Subsidiaries on a consolidated
basis.

     “Consolidated Interest Expense” shall mean, for any period, total interest expense
(including that portion attributable to Capital Lease Obligations) of the Servicer Consolidated
Group for such period with respect to all outstanding Indebtedness of the Servicer Consolidated
Group (including all commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers’ acceptance financing and net costs under Swap Agreements in respect of
interest rates to the extent such net costs are allocable to such period in accordance with GAAP),
calculated on a consolidated basis for the Servicer Consolidated Group for such period in
accordance with GAAP.

     “Consolidated Net Income” shall mean, for any period, the consolidated net income (or
loss) of the Servicer Consolidated Group, determined on a consolidated basis in accordance with
GAAP; provided that there shall be excluded (a) the income (or deficit) of any Person
accrued prior to the date it becomes a Subsidiary or is merged into or consolidated with any member
of the Servicer Consolidated Group, (b) the income (or deficit) of any Person (other than a
Subsidiary) in which any member of the Servicer Consolidated Group has an ownership interest,
except to the extent that any such income is actually received by the such member of the Servicer
Consolidated Group in the form of dividends or similar distributions and (c) the undistributed
earnings of any Subsidiary to the extent that the declaration or payment of dividends or similar
distributions by such Subsidiary is not at the time permitted by the terms of any contractual
obligation (other than under any Loan Document or related agreement or any SPV Credit Document or
Related Agreement (as defined in the SPV Credit Agreement)) or Requirement of Law applicable to
such Subsidiary.

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

     “Control Parties” means one or more of: (i) Bain Capital Venture Fund, L.P., BCIP
Associates III, LLC, BCIP Associates III-B, LLC and Brookside Capital Partners Fund, L.P. and (ii)
Battery Venture VI, L.P. and Battery Investment Partners VI, LLC.

     “Credit Exposure” means, as to any Lender at any time, the sum of (a) such Lender’s
Revolving Exposure at such time plus (b) an amount equal to its Applicable Percentage, if
any, of the aggregate principal amount of Protective Advances outstanding at such time.

 

 

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

     “Defaulting Lender” means any Lender, as determined by the Administrative Agent, that
has (a) failed to fund any portion of its Loans or participations in Letters of Credit or Swingline
Loans within three Business Days of the date required to be funded by it hereunder, (b) notified
the Borrower, the Administrative Agent, the Issuing Bank, the Swingline Lender or any Lender in
writing that it does not intend to comply with any of its funding obligations under this Agreement
or has made a public statement to the effect that it does not intend to comply with its funding
obligations under this Agreement and under other agreements in which it commits to extend credit,
(c) failed, within three Business Days after request by the Administrative Agent, to confirm that
it will comply with the terms of this Agreement relating to its obligations to fund prospective
Loans and participations in then outstanding Letters of Credit and Swingline Loans, (d) otherwise
failed to pay over to the Administrative Agent or any other Lender any other amount required to be
paid by it hereunder within three Business Days of the date when due, unless the subject of a good
faith dispute, or (e) (i) become or is insolvent or has a parent company that has become or is
insolvent or (ii) become the subject of a bankruptcy or insolvency proceeding, or has had a
receiver, conservator, trustee or custodian appointed for it, or has taken any action in
furtherance of, or indicating its consent to, approval of or acquiescence in any such proceeding or
appointment or has a parent company that has become the subject of a bankruptcy or insolvency
proceeding, or has had a receiver, conservator, trustee or custodian appointed for it, or has taken
any action in furtherance of, or indicating its consent to, approval of or acquiescence in any such
proceeding or appointment.

     “Determination Date” shall have the meaning attributed to such term in the Servicing
Agreement as in effect on the Closing Date, subject to amendment pursuant to Section 6.15.

     “Disclosed Matters” means the actions, suits and proceedings and the environmental
matters disclosed in Schedule 3.06.

     “Document” has the meaning assigned to such term in the Security Agreement.

     “dollars” or “$” refers to lawful money of the United States of America.

     “Eligible Inventory” means, at any time, the Inventory of the Borrower which the
Administrative Agent determines in its Permitted Discretion is eligible as the basis for the
extension of Revolving Loans, Swingline Loans and the issuance of Letters of Credit hereunder.
Without limiting the Administrative Agent’s discretion provided herein, Eligible Inventory shall
not include any Inventory:

     (a) which is not subject to a first priority perfected Lien in favor of the
Administrative Agent;

     (b) which is subject to any Lien other than (i) a Lien in favor of the
Administrative Agent and (ii) a Permitted Encumbrance or a Lien permitted under Section 6.02
that does not have priority over the Lien in favor of the Administrative Agent;

 

 

     (c) which is slow moving, obsolete, unmerchantable, defective, used, unfit for sale,
not salable at prices approximating at least the cost of such Inventory in the ordinary
course of business or unacceptable due to age, type, category and/or quantity;

     (d) with respect to which any covenant, representation, or warranty contained in
this Agreement or the Security Agreement has been breached or is not true and which does not
conform to all standards imposed by any Governmental Authority;

     (e) in which any Person other than the Borrower shall (i) have any direct or
indirect ownership, interest or title to such Inventory or (ii) be indicated on any purchase
order or invoice with respect to such Inventory as having or purporting to have a prior
perfected security interest therein;

     (f) which is not finished goods or which constitutes work-in-process, raw materials,
spare or replacement parts, subassemblies, packaging and shipping material, manufacturing
supplies, samples, prototypes, displays or display items, bill-and-hold goods, goods that
are returned or marked for return (unless Administrative Agent shall otherwise consent in
its Permitted Discretion), repossessed goods, defective or damaged goods, goods held on
consignment, or goods which are not of a type held for sale in the ordinary course of
business;

     (g) which is not located in the U.S. or is in transit with a common carrier from
vendors and suppliers, provided that, up to $4,000,000 of Inventory in transit from
vendors and suppliers may be included as eligible pursuant to this clause (g) so
long as (i) the Administrative Agent shall have received (1) a true and correct copy of the
bill of lading and other shipping documents for such Inventory, (2) evidence of satisfactory
casualty insurance naming the Administrative Agent as lenders loss payee and otherwise
covering such risks as the Administrative Agent may reasonably request and (3) if the bill
of lading is (A) non-negotiable, a duly executed Collateral Access Agreement from the
applicable customs broker for such Inventory or (B) negotiable, confirmation that the bill
is issued in the name of the Borrower and consigned to the order of the Administrative
Agent, and an acceptable agreement has been executed with the Borrower’s customs broker, in
which the customs broker agrees that it holds the negotiable bill as agent for the
Administrative Agent and has granted the Administrative Agent access to the Inventory and
(ii) the common carrier is not an Affiliate of the applicable vendor or supplier;

     (h) which is located in any location leased by the Borrower unless (i) the lessor
has delivered to the Administrative Agent a Collateral Access Agreement or (ii) a Reserve
for rent, charges, and other amounts due or to become due with respect to such facility has
been established by the Administrative Agent in its Permitted Discretion;

     (i) which is located in any third party warehouse or is in the possession of a
bailee (other than a third party processor) and is not evidenced by a Document (other than
bills of lading to the extent permitted pursuant to clause (g) above), unless (i) such
warehouseman or bailee has delivered to the Administrative Agent a Collateral Access
Agreement and such other documentation as the Administrative Agent may require or (ii)

 

 

an appropriate Reserve has been established by the Administrative Agent in its Permitted
Discretion;

     (j) which is being processed offsite at a third party location or outside processor,
or is in-transit to or from said third party location or outside processor;

     (k) which is the subject of a consignment by the Borrower as consignor;

     (l) which contains or bears any intellectual property rights licensed to the
Borrower unless the Administrative Agent is satisfied that it may sell or otherwise dispose
of such Inventory without (i) infringing the rights of such licensor, (ii) violating any
contract with such licensor, or (iii) incurring any liability with respect to payment of
royalties other than royalties incurred pursuant to sale of such Inventory under the current
licensing agreement;

     (m) which is not reflected in a current perpetual inventory report of the Borrower
(unless such Inventory is reflected in a report to the Administrative Agent as “in transit”
Inventory);

     (n) which is not the type held for sale in the ordinary course of the Borrower’s
business;

     (o) for which reclamation rights have been asserted by the seller; or

     (p) which the Administrative Agent otherwise determines is unacceptable for any
reason whatsoever, in its Permitted Discretion.

     In the event that Inventory which was previously Eligible Inventory ceases to be Eligible
Inventory hereunder, the Borrower shall notify the Administrative Agent thereof on and at the time
of submission to the Administrative Agent of the next Borrowing Base Certificate. The
Administrative Agent retains the right, from time to time, in its Permitted Discretion, to
establish additional standards of eligibility and Reserves against eligibility, adjust Reserves and
to reduce advance rates.

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

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

 

 

     “Equity Interests” 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.

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

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

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

     “Eurodollar”, when used in reference to any Loan or Borrowing, refers to whether such
Loan, or the Loans comprising such Borrowing, are bearing interest at a rate determined by
reference to the Adjusted LIBO Rate.

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

     “Excess Spread Ratio” has the meaning set forth in the SPV Credit Agreement as in
effect on the Closing Date, subject to amendment pursuant to Section 6.15.

     “Excluded Taxes” means, with respect to the Administrative Agent, any Lender, the
Issuing Bank or any other recipient of any payment to be made by or on account of any obligation of
the Borrower hereunder, (a) income or franchise taxes imposed on (or measured by) its net income by
the United States of America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by the United States of
America or any similar tax imposed by any other jurisdiction in which the Borrower is located, (c)
any Tax imposed as a result of a Person’s failure or inability to comply

 

 

with the requirements of Section 1471 through 1474 of the Code and any regulations promulgated
thereunder (“FATCA”) to establish an exemption from withholding thereunder, (d) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower under Section
2.19(b)), any withholding tax that is imposed on amounts payable to such Foreign Lender at the time
such Foreign Lender becomes a party to this Agreement (or designates a new lending office), except
to the extent that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.17(a) and (e) any withholding
tax that is attributable to such Person’s failure to comply with Section 2.17(f) or Section
2.17(g), as applicable.

     “Existing Credit Agreement” shall have the meaning assigned to such term in Section
9.18.

     “Fee Letter” shall mean that certain Fee Letter dated August 20, 2010 from
Administrative Agent and accepted by the Borrower as such letter may be amended, modified or
supplemented from time to time in accordance with the terms thereof.

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

     “Financial Officer” means the chief financial officer, principal accounting officer,
treasurer or controller of the Borrower.

     “Fiscal Quarter” shall mean, for the Borrower and its Subsidiaries, a fiscal quarter
of a Fiscal Year.

     “Fiscal Year” shall mean, for the Borrower and its Subsidiaries, the fiscal year
ending on the Friday nearest to the 31st of January of each calendar year.

     “Fixed Charge Coverage Ratio” means the ratio, determined as of the end of each Fiscal
Quarter of the Borrower for the most-recently ended four Fiscal Quarters, of (a) Consolidated
Adjusted EBITDA minus 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 an
Initial Public Offering to the first anniversary thereof, proceeds from such Initial Public
Offering in amount not to exceed $20,000,000 (provided that, such exclusions shall not cause
Capital Expenditures to be less than zero)) to (b) Consolidated Fixed Charges, all calculated for
the Servicer Consolidated Group on a consolidated basis in accordance with GAAP.

     “Foreign Lender” means any Lender that is organized under the laws of a jurisdiction
other than that in which the Borrower is located. For purposes of this definition, the United

 

 

States of America, each State thereof and the District of Columbia shall be deemed to
constitute a single jurisdiction.

     “Full Cash Dominion Condition” means an Event of Default has occurred and is
continuing or Availability is less than $1,000,000.

     “Funding Account” has the meaning assigned to such term in Section 4.01(h).

     “GAAP” means generally accepted accounting principles in the United States of America.

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

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

     “Guaranteed Obligations” has the meaning assigned to such term in Section 10.01.

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

     “Holdings Bad Acts Guaranty” means that certain Holdings Guaranty dated as of August
20, 2010 by and among Borrower and the SPV Collateral Agent, on behalf of the lenders under the SPV
Credit Agreement.

     “Holdings Letter Agreement” means that certain Holdings Letter Agreement dated as of
August 20, 2010 by and between Borrower and the SPV Collateral Agent.

     “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 Taxes” means Taxes other than Excluded Taxes.

     “Information Memorandum” means the Confidential Information Memorandum dated June 24,
2010 relating to the Borrower and the Transactions.

     “Initial Public Offering” means a registered public offering of Borrower’s common
stock resulting in gross proceeds of at least $75,000,000.

     “Intangible Assets” shall mean assets that are considered to be intangible assets
under GAAP, including customer lists, goodwill, computer software, copyrights, trade names,
trademarks, patents, franchises, licenses, unamortized deferred charges, unamortized debt discount
and capitalized research and developmental costs.

     “Intercreditor Agreement” means the Intercreditor Agreement of even date herewith
among the Administrative Agent, Bluestem Brands, Inc., Bluestem SPV and the SPV Collateral Agent on
behalf of SPV Secured Parties, as the same may be amended, restated or otherwise modified from time
to time.

     “Interest Election Request” means a request by the Borrower to convert or continue a
Revolving Borrowing in accordance with Section 2.08.

     “Interest Payment Date” means (a) with respect to any CBFR Loan (other than a
Swingline Loan), the first Business Day of each calendar month, upon any prepayment due to
acceleration and the Maturity Date, and (b) with respect to any Eurodollar Loan, the last day of
the Interest Period applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months’ duration, each day prior to
the last day of such Interest Period that occurs at intervals of three months’ duration after the
first day of such Interest Period, upon any prepayment due to acceleration and the Maturity Date.

 

 

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

     “Inventory” has the meaning assigned to such term in the Security Agreement.

     “Issuing Bank” means Chase, in its capacity as the issuer of Letters of Credit
hereunder, and its successors in such capacity as provided in Section 2.06(i). The Issuing Bank
may, in its discretion, arrange for one or more Letters of Credit to be issued by Affiliates of the
Issuing Bank, in which case the term “Issuing Bank” shall include any such Affiliate with respect
to Letters of Credit issued by such Affiliate.

     “Joinder Agreement” has the meaning assigned to such term in Section 5.13(a).

     “LC Collateral Account” has the meaning assigned to such term in Section 2.06(j).

     “LC Disbursement” means a payment made by the Issuing Bank pursuant to a Letter of
Credit.

     “LC Exposure” means, at any time, the sum of Commercial LC Exposure and Standby LC
Exposure. The LC Exposure of any Revolving Lender at any time shall be its Applicable Percentage
of the total LC Exposure at such time.

     “Lenders” means the Persons listed on the Commitment Schedule and any other
Person that shall have become a party hereto pursuant to an Assignment and Assumption, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and Assumption. Unless
the context otherwise requires, the term “Lenders” includes the Swingline Lender.

     “Letter of Credit” means any letter of credit issued pursuant to this 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 Documents” means this Agreement, any promissory notes issued pursuant to the
Agreement, any Letter of Credit applications, the Collateral Documents, the Loan Guaranty, the
Intercreditor Agreement, the Senior Subordinated Intercreditor Agreement, the Fee Letter and all
other agreements, instruments, documents and certificates identified in Section 4.01 executed and
delivered to, or in favor of, the Administrative Agent or any Lenders and including all other
pledges, powers of attorney, consents, assignments, contracts, notices, letter of credit agreements
and all other written matter whether heretofore, now or hereafter executed by or on behalf of any
Loan Party, or any employee of any Loan Party, and delivered to the Administrative Agent or any
Lender in connection with this Agreement or the transactions contemplated thereby. Any reference
in this Agreement or any other Loan Document to a Loan Document shall include all appendices,
exhibits or schedules thereto, and all amendments, restatements, supplements or other modifications
thereto, and shall refer to this Agreement or such Loan Document as the same may be in effect at
any and all times such reference becomes operative.

     “Loan Guarantor” means each Loan Party (other than the Borrower and the Borrower’s
foreign Subsidiaries).

     “Loan Guaranty” means Article X of this Agreement.

     “Loan Parties” means the Borrower, the Borrower’s domestic wholly owned Subsidiaries
(other than Bluestem SPV and Bluestem Fulfillment, Inc.) and any other Person who becomes a party
to this Agreement pursuant to a Joinder Agreement and their successors and assigns.

     “Loans” means the loans and advances made by the Lenders pursuant to this Agreement,
including Swingline Loans, Overadvances and Protective Advances.

     “LTM EBITDA Margin” shall mean, for any date of determination, an amount (expressed as
a percentage) calculated by dividing (i) the Consolidated Adjusted EBITDA of the Servicer
Consolidated Group for the previous twelve months by (ii) the net sales of the Servicer
Consolidated Group for the previous twelve months.

     “Material Adverse Effect” means any event, development or circumstance that has or
would reasonably be expected to have a material adverse effect on (a) the business, assets,
operations, prospects or condition, financial or otherwise, of the Borrower and its Subsidiaries
taken as a whole (provided that if the event, development or circumstance is not unique to the
Borrower, its effect on the Borrower is materially more adverse than on the other entities or
comparable lines of business), (b) the ability of any Loan Party to perform any of its obligations
under the Loan Documents to which it is a party, (c) the Collateral, or the Administrative Agent’s
Liens (on behalf of itself and the Lenders) on the Collateral or the priority of such Liens or (d)
the rights of or benefits available to the Administrative Agent, the Issuing Bank or the Lenders
thereunder.

     “Material Indebtedness” means (i) any Indebtedness under the SPV Credit Documents and
(ii) Indebtedness (other than the Loans and Letters of Credit), or obligations in respect of one or
more Swap Agreements, of any one or more of the Borrower and its Subsidiaries in an aggregate
principal amount exceeding $5,000,000. For purposes of determining Material Indebtedness, the
“obligations” of the Borrower or any Subsidiary in respect of any Swap

 

 

Agreement at any time shall be the maximum aggregate amount (giving effect to any netting
agreements) that the Borrower or such Subsidiary would be required to pay if such Swap Agreement
were terminated at such time.

     “Maturity Date” means August 20, 2013 or any earlier date on which the Commitments are
reduced to zero or otherwise terminated pursuant to the terms hereof.

     “Maximum Liability” has the meaning assigned to such term in Section 10.10.

     “Monthly Period” has the meaning set forth in the SPV Credit Agreement as in effect on
the Closing Date, subject to amendment pursuant to Section 6.15.

     “Moody’s” means Moody’s Investors Service, Inc.

     “Monthly Servicing Report” means the Monthly Servicing Report in the form attached as
Exhibit B to the Servicing Agreement.

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

     “Net Liquidity” shall mean, for any date of determination, an amount equal to the sum
of (a) unrestricted Cash and Cash Equivalents of the Servicer Consolidated Group, plus (b)
Revolving Availability, plus (c) Availability; provided, that all conditions to
funding under (b) or (c), as the case may be, have been fully satisfied (other than delivery of
prior notice of funding and post-funding notices, opinions or certificates).

     “Net Orderly Liquidation Value” means, with respect to Inventory of any Person, the
orderly liquidation value thereof as determined in a manner acceptable to the Administrative Agent
by an appraiser acceptable to the Administrative Agent, net of all costs of liquidation thereof.

     “Net Proceeds” means, with respect to any event, (a) the cash proceeds received in
respect of such event including (i) any cash received in respect of any non-cash proceeds
(including any cash payments received by way of deferred payment of principal pursuant to a note or
installment receivable or purchase price adjustment receivable or otherwise, but excluding any
interest payments), but only as and when received, (ii) in the case of a casualty, insurance
proceeds and (iii) in the case of a condemnation or similar event, condemnation awards and similar
payments, net of (b) the sum of (i) all reasonable fees and out-of-pocket expenses paid to third
parties (other than Affiliates) in connection with such event, (ii) in the case of a sale, transfer
or other disposition of an asset (including pursuant to a sale and leaseback transaction or a
casualty or a condemnation or similar proceeding), the amount of all payments required to be made
as a result of such event to repay Indebtedness (other than Loans) secured by such asset or
otherwise subject to mandatory prepayment as a result of such event and (iii) the amount of all
taxes paid (or reasonably estimated to be payable) and the amount of any reserves established to
fund contingent liabilities reasonably estimated to be payable, in each case during the year that
such event occurred or the next succeeding year and that are directly attributable to such event
(as determined reasonably and in good faith by a Financial Officer).

 

 

     “Non-Consenting Lender” has the meaning assigned to such term in Section 9.02(d).

     “Non-Paying Guarantor” has the meaning assigned to such term in Section 10.11.

     “Obligated Party” has the meaning assigned to such term in Section 10.02.

     “Obligations” means all unpaid principal of and accrued and unpaid interest on the
Loans, all LC Exposure, all accrued and unpaid fees and all expenses, reimbursements, indemnities
and other obligations of the Loan Parties to the Lenders or to any Lender, the Administrative
Agent, the Issuing Bank or any indemnified party arising under the Loan Documents.

     “Off-Balance Sheet Liability” of a Person means (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).

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

     “Overadvance” has the meaning assigned to such term in Section 2.05(b).

     “Participant” has the meaning set forth in Section 9.04.

     “Paying Guarantor” has the meaning assigned to such term in Section 10.11.

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

     “Permitted Discretion” means a determination made in good faith and in the exercise of
reasonable (from the perspective of a secured asset-based lender) business judgment.

     “Permitted Encumbrances” means:

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

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

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

 

 

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

     (e) judgment Liens in respect of judgments that do not constitute an Event of Default under
clause (k) of Article VII;

     (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 the Borrower or any Subsidiary;

     (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 6.07, provided that such Liens incurred by a
Loan Party shall only be a Permitted Encumbrance if such Swap Agreement is entered into with a
Lender or an Affiliate of a Lender.

     “Permitted Investments” means:

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

     (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.

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

 

 

     “Petters Group” means Petters Group Worldwide LLC and its Affiliates or any receiver
or trustee therefor or any successor or transferee thereof.

     “PIK Payment” means the payments in the form of additional Senior Subordinated Notes
(or the increase of the principal amount of the Senior Subordinated Notes) in lieu of cash
payments.

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

     “Prepayment Event” means:

     (a) any casualty or other insured damage to, or any taking under power of eminent domain
or by condemnation or similar proceeding of, Inventory of any Loan Party with a fair value
immediately prior to such event equal to or greater than $5,000,000; or

     (b) the incurrence by any Loan Party of any Indebtedness, other than Indebtedness
permitted under Section 6.01 or permitted by the Required Lenders pursuant to Section 9.02.

     “Prepayment Fee” means a fee payable to the Administrative Agent, for the ratable
benefit of the Lenders, in an amount equal to the portion of the aggregate Revolving Commitments
being terminated pursuant to Section 2.09(b) multiplied by 2.0% if such termination of such
Commitments occurs prior to the second anniversary of the date of this Agreement; provided, that if
such termination of such Commitments occurs in connection with, or within one year following, an
Initial Public Offering, such fee shall be reduced to 1.0%.

     “Prime Rate” means the rate of interest per annum publicly announced from time to time
by Chase or its parent as its prime rate at its offices at 270 Park Avenue in New York City; each
change in the Prime Rate shall be effective from and including the date such change is publicly
announced as being effective.

     “Principal Default Ratio” has the meaning set forth in the SPV Credit Agreement as in
effect on the Closing Date, subject to amendment pursuant to Section 6.15.

     “Principal Delinquency Ratio” has the meaning set forth in the SPV Credit Agreement as
in effect on the Closing Date, subject to amendment pursuant to Section 6.15.

     “Principal Payment Ratio” has the meaning set forth in the SPV Credit Agreement as in
effect on the Closing Date, subject to amendment pursuant to Section 6.15.

     “Projections” has the meaning assigned to such term in Section 5.01(f).

     “Protective Advance” has the meaning assigned to such term in Section 2.04.

     “Purchased Assets” has the meaning set forth in the Security Agreement.

 

 

     “Receivables Account Agreement” has the meaning set forth in the Servicing Agreement.

     “Receivables Account Owner” means any of (i) MetaBank, (ii) WebBank and (iii) any
other entity selected by the Borrower and approved pursuant to the terms of the SPV Credit
Documents and identified in a notice from the Borrower to the Administrative Agent as a Receivables
Account Owner (as defined in the SPV Credit Documents).

     “Receivables Purchase Agreement” means that certain Receivables Purchase Agreement
dated as of the date hereof among Bluestem Brands, Inc. and Bluestem SPV, as the same may be
amended, modified or supplemented from time to time, in accordance with the terms thereof.
“Receivables Property” has the meaning set forth in the Security Agreement.

     “Register” has the meaning set forth in Section 9.04.

     “Related Parties” means, with respect to any specified Person, such Person’s
Affiliates and the respective directors, officers, employees, agents and advisors of such Person
and such Person’s Affiliates.

     “Report” means reports prepared by the Administrative Agent or another Person showing
the results of appraisals, field examinations or audits pertaining to the Borrower’s assets from
information furnished by or on behalf of the Borrower, after the Administrative Agent has exercised
its rights of inspection pursuant to this Agreement, which Reports may be distributed to the
Lenders by the Administrative Agent.

     “Required Lenders” means, at any time, Lenders having Revolving Exposure and unused
Revolving Commitments representing more than 50% of the sum of the total Revolving Exposure and
unused Revolving Commitments at such time; provided that, as long as there are only two
Lenders, Required Lenders shall mean both Lenders.

     “Requirement of Law” means, as to any Person, the Certificate of Incorporation and
By-Laws or other organizational or governing documents of such Person, and any law, treaty, rule or
regulation or determination of an arbitrator or a court or other Governmental Authority, in each
case applicable to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.

     “Reserves” means any and all reserves which the Administrative Agent deems necessary,
in its Permitted Discretion, to maintain (including, without limitation, reserves for accrued and
unpaid interest on the Secured Obligations, Banking Services Reserves, reserves for rent at
locations leased by any Loan Party and for consignee’s, warehousemen’s and bailee’s charges,
reserves for Inventory shrinkage, reserves for customs charges and shipping charges related to any
Inventory in transit, reserves for Swap Obligations, reserves for contingent liabilities of any
Loan Party, reserves for uninsured losses of any Loan Party, reserves for uninsured, underinsured,
un-indemnified or under-indemnified liabilities or potential liabilities with respect to any
litigation and reserves for taxes, fees, assessments, and other governmental charges) with respect
to the Collateral or any Loan Party.

     “Restricted Payment” means any (i) dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in the Borrower 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 the Borrower or of any option, warrant
or other right to acquire any such Equity Interests in the Borrower or (ii) any payment of the Fee
(as defined in the SPV Fee Letter) or similar fee under the SPV Fee Letter.

     “Revolving Availability” has the meaning set forth in the SPV Credit Agreement as in
effect on the Closing Date.

     “Revolving Commitment” means, with respect to each Lender, the commitment, if any, of
such Lender to make Revolving Loans and to acquire participations in Letters of Credit,
Overadvances and Swingline Loans hereunder, expressed as an amount representing the maximum
possible aggregate amount of such Lender’s Revolving Exposure hereunder, as such commitment may be
(a) paid in full pursuant to Section 2.09 and (b) reduced or increased from time to time pursuant
to assignments by or to such Lender pursuant to Section 9.04. The initial amount of each Lender’s
Revolving Commitment is set forth on the Commitment Schedule, or in the Assignment and
Assumption pursuant to which such Lender shall have assumed its Revolving Commitment, as
applicable. The initial aggregate amount of the Lenders’ Revolving Commitments is $50,000,000.

     “Revolving Exposure” means, with respect to any Lender at any time, the sum of the
outstanding principal amount of such Lender’s Revolving Loans and its LC Exposure and an amount
equal to its Applicable Percentage of the aggregate principal amount of Swingline Loans at such
time, plus an amount equal to its Applicable Percentage of the aggregate principal amount
of Overadvances outstanding at such time.

     “Revolving Lender” means, as of any date of determination, a Lender with a Revolving
Commitment or, if the Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.

     “Revolving Loan” means a Loan made pursuant to Section 2.01(a).

     “S&P” means Standard & Poor’s Ratings Services, a division of The McGraw Hill
Companies, Inc.

     “Secured Obligations” means all Obligations, together with all (i) Banking Services
Obligations and (ii) Swap Obligations owing to one or more Lenders or their respective Affiliates;
provided that at or prior to the time that any transaction relating to such Swap Obligation
is executed, the Lender party thereto (other than Chase) shall have delivered written notice to the
Administrative Agent that such a transaction has been entered into and that it constitutes a
Secured Obligation entitled to the benefits of the Collateral Documents.

     “Security Agreement” means that certain Pledge and Security Agreement, dated as of the
date hereof, between the Loan Parties and the Administrative Agent, for the benefit of the
Administrative Agent and the Lenders, and any other pledge or security agreement entered into,
after the date of this Agreement by any other Loan Party (as required by this Agreement or any
other Loan Document), or any other Person, as the same may be amended, restated or otherwise
modified from time to time.

 

 

     “Senior Subordinated Debt” means the Indebtedness of Borrower to the Senior
Subordinated Purchasers in the aggregate original principal amount of $30,000,000, as evidenced by
the Senior Subordinated Notes.

     “Senior Subordinated Documents” means the Senior Subordinated Securities Purchase
Agreement and any and all agreements, documents and instruments executed and delivered thereunder
or in connection therewith, each as amended, modified, supplemented or restated in accordance with
the terms of the Senior Subordinated Intercreditor Agreement.

     “Senior Subordinated Intercreditor Agreement” means the Subordination and
Intercreditor Agreement dated as of June 21, 2007 among the Borrower, the Administrative Agent and
the Senior Subordinated Purchasers, as amended and restated on the date hereof, and as the same may
be amended, restated or otherwise modified from time to time hereafter.

     “Senior Subordinated Notes” means, collectively, those 13.00% Senior Subordinated
Secured Notes dated as of March 23, 2006 in the initial aggregate principal amount of $30,000,000
made by Borrower in favor of the Senior Subordinated Purchasers, together with any replacements
thereof, in each case as amended, modified, supplemented or restated in accordance with the terms
of the Senior Subordinated Intercreditor Agreement.

     “Senior Subordinated Purchasers” means collectively, the purchasers from time to time
listed on the Purchaser Schedule to the Senior Subordinated Securities Purchase Agreement, together
with their respective successors and assigns.

     “Senior Subordinated Securities Purchase Agreement” means that certain Securities
Purchase Agreement, dated as of March 23, 2006, among Borrower and the Senior Subordinated
Purchasers, as amended by that certain Letter Agreement, dated as of June 21, 2007, as further
amended by that certain Letter Agreement, dated May 15, 2008, as further amended by that certain
Letter Agreement, dated July 31, 2009, as further amended by that certain Letter Agreement, dated
as of the date hereof and as may be further amended, modified or supplemented in accordance with
the terms of the Senior Subordinated Intercreditor Agreement.

     “Servicer” shall have the meaning attributed to such term in the SPV Credit Agreement
as in effect on the date hereof.

     “Servicer Consolidated Group” shall have the meaning attributed to such term in the
Servicing Agreement as in effect on the date hereof.

     “Servicing Agreement” means the Servicing Agreement dated as of August 20, 2010 by and
among the Borrower, as servicer, Bluestem SPV and Goldman Sachs Bank, USA, as Administrative Agent
and Collateral Agent, as the same may be amended, restated or otherwise supplemented or replaced
from time to time.

     “Servicing Fee Rate” shall mean 3% per annum.

     “Settlement” has the meaning assigned to such term in Section 2.05(f).

     “Settlement Date” has the meaning assigned to such term in Section 2.05(f).

 

 

     “SPV Collateral Agent” means Goldman Sachs Bank USA, as collateral agent under the SPV
Security Agreement or such other collateral agent pursuant to the terms thereof.

     “SPV Credit Agreement” means that certain Credit Agreement, dated as of the date
hereof (as it may be amended, restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof), by and among Bluestem SPV, the lenders party thereto from time
to time, Goldman Sachs Bank USA, as administrative agent, Collateral Agent, joint lead arranger,
joint bookrunner and syndication agent and documentation agent including any extension, refinancing
or replacement thereof.

     “SPV Credit Documents” means the SPV Credit Agreement, the Receivables Purchase
Agreement, the Servicing Agreement, the SPV Security Agreement, the Holdings Bad Acts Guaranty,
Holdings Letter Agreement and each additional Credit Document (as defined in the SPV Credit
Agreement).

     “SPV Fee Letter” shall mean that certain Contingent Fee Letter dated May 15, 2008 from
the Borrower and accepted by Goldman Sachs & Co. et alia, as such letter may be amended, modified
or supplemented from time to time in accordance with the terms thereof.

     “SPV Secured Parties” means the SPV Collateral Agent (both for the benefit of the
other secured parties and in its individual capacity), the other Agents (including former Agents),
the Lenders, the Lender Counterparties and their respective successors and permitted assigns (each
as defined under the SPV Credit Agreement).

     “SPV Security Agreement” means that certain Security Agreement (as amended, restated,
replaced, supplemented or otherwise modified from time to time in accordance with the terms
thereof) between Bluestem SPV and the SPV Collateral Agent dated August 20, 2010.

     “St. Cloud Warehouse” shall have the meaning specified in Section 6.01(e).

     “Standby LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount
of all outstanding standby Letters of Credit at such time plus (b) the aggregate amount of all LC
Disbursements relating to standby Letters of Credit that have not yet been reimbursed by or on
behalf of the Borrower at such time. The Standby LC Exposure of any Revolving Lender at any time
shall be its Applicable Percentage of the total Standby LC Exposure at such time.

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

 

 

     “Subordinated Indebtedness” of a Person means any Indebtedness of such Person the
payment of which is subordinated to payment of the Secured Obligations to the written satisfaction
of the Administrative Agent.

     “subsidiary” means, with respect to any Person (the “parent”) at any date, any
corporation, limited liability company, partnership, association or other entity the accounts of
which would be consolidated with those of the parent in the parent’s consolidated financial
statements if such financial statements were prepared in accordance with GAAP as of such date, as
well as any other corporation, limited liability company, partnership, association or other entity
of which securities or other ownership interests representing more than 50% of the equity or more
than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the
general partnership interests are, as of such date, owned, controlled or held.

     “Subsidiary” means any direct or indirect subsidiary of the Borrower or a Loan Party,
as applicable.

     “Swap Agreement” means any agreement with respect to any swap, forward, future or
derivatives 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 Borrower or the Subsidiaries shall be a
Swap Agreement.

     “Swap Obligations” means, in reference to a Loan Party, any and all obligations of
such Loan Party, whether absolute or contingent and howsoever and whensoever created, arising,
evidenced or acquired (including all renewals, extensions and modifications thereof and
substitutions therefor), under (a) any and all Swap Agreements, and (b) any and all cancellations,
buy backs, reversals, terminations or assignments of any Swap Agreement transaction.

     “Swingline Exposure” means, at any time, the sum of the aggregate undrawn amount of
all outstanding Swingline Loans at such time. The Swingline Exposure of any Revolving Lender at
any time shall be its Applicable Percentage of the total Swingline Exposure at such time.

     “Swingline Lender” means JPMorgan Chase Bank, N.A., in its capacity as lender of
Swingline Loans hereunder.

     “Swingline Loan” means a Loan made pursuant to Section 2.05.

     “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, 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.

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

 

 

     “Total Payment Ratio” has the meaning set forth in the SPV Credit Agreement as in
effect on the Closing Date, subject to amendment pursuant to Section 6.15.

     “Transactions” means the execution, delivery and performance by the Borrower of this
Agreement, the borrowing of Loans and other credit extensions, the use of the proceeds thereof and
the issuance of Letters of Credit hereunder.

     “Type”, when used in reference to any Loan or Borrowing, refers to whether the rate of
interest on such Loan, or on the Loans comprising such Borrowing, is determined by reference to the
Adjusted LIBO Rate or the CB Floating Rate.

     “UCC” means the Uniform Commercial Code as in effect from time to time in the State of
New York or any other state the laws of which are required to be applied in connection with the
issue of perfection of security interests.

     “Underlying Receivables” has the meaning set forth in the Security Agreement.

     “Unliquidated Obligations” means, at any time, any Secured Obligations (or portion
thereof) that are contingent in nature or unliquidated at such time, including any Secured
Obligation that is: (i) an obligation to reimburse a bank for drawings not yet made under a letter
of credit issued by it; (ii) any other obligation (including any guarantee) that is contingent in
nature at such time; or (iii) an obligation to provide collateral to secure any of the foregoing
types of obligations.

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

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

     SECTION 1.03 Terms Generally. The definitions of terms herein shall apply equally to the singular
and plural forms of the terms defined. Whenever the context may require, any pronoun shall include
the corresponding masculine, feminine and neuter forms. The words “include”, “includes” and
“including” shall be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”. Unless the context
requires otherwise (a) any definition of or reference to any agreement, instrument or other
document herein shall be construed as referring to such agreement, instrument or other document as
from time to time amended, supplemented or otherwise modified (subject to any restrictions on such
amendments, supplements or modifications set forth herein), (b) any reference herein to any Person
shall be construed to include such Person’s successors and permitted assigns, (c) the words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be construed to refer to
this Agreement in its entirety and not to any particular provision hereof, (d) all references
herein to Articles, Sections,

 

 

Exhibits and Schedules shall be construed to refer to Articles and Sections of, and Exhibits and
Schedules to, this Agreement, (e) the words “asset” and “property” shall be construed to have the
same meaning and effect and to refer to any and all tangible and intangible assets and properties,
including cash, securities, accounts and contract rights and (f) references to any law or
regulation refer to that law or regulation as amended from time to time and include any successor
law or regulation.

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

ARTICLE II.

The Credits

     SECTION 2.01 Commitments. Subject to the terms and conditions set forth herein, each Lender agrees
to make Revolving Loans to the Borrower from time to time during the Availability Period in an
aggregate principal amount that will not result in (i) such Lender’s Revolving Exposure exceeding
such Lender’s Revolving Commitment or (ii) the total Revolving Exposures exceeding the lesser of
(x) the sum of the total Revolving Commitments or (y) the Borrowing Base, subject to the
Administrative Agent’s authority, in its sole discretion, to make Protective Advances and
Overadvances pursuant to the terms of Section 2.04 and 2.05. Within the foregoing limits and
subject to the terms and conditions set forth herein, the Borrower may borrow, prepay and reborrow
Revolving Loans.

     SECTION 2.02 Loans and Borrowings.

     (a) Each Loan (other than a Swingline Loan) shall be made as part of a Borrowing consisting
of Loans of the same Class and Type made by the Lenders ratably in accordance with their respective
Commitments of the applicable Class. Any Protective Advance, any Overadvance and any Swingline
Loan shall be made in accordance with the procedures set forth in Section 2.04 and 2.05.

     (b) Subject to Section 2.14, each Revolving Borrowing shall be comprised entirely of CBFR
Loans or Eurodollar Loans as the Borrower may request in accordance herewith, provided that
all Borrowings made on the Closing Date must be made as CBFR Borrowings but may be converted into
Eurodollar Borrowings in accordance with Section 2.08. Each Swingline Loan shall be a CBFR Loan.
Each Lender at its option may make any Eurodollar Loan by causing any domestic or foreign branch or
Affiliate of such Lender to make such Loan; provided that any

 

 

exercise of such option shall not affect the obligation of the Borrower to repay such Loan in
accordance with the terms of this Agreement.

     (c) At the commencement of each Interest Period for any Eurodollar Revolving Borrowing,
such Borrowing shall be in an aggregate amount that is an integral multiple of $100,000 and not
less than $500,000. At the time that each CBFR Revolving Borrowing is made, such Borrowing shall
be in an aggregate amount that is an integral multiple of $100,000 and not less than $500,000;
provided that a CBFR Revolving Borrowing may be in an aggregate amount that is equal to the
entire unused balance of the total Revolving Commitments or that is required to finance the
reimbursement of an LC Disbursement as contemplated by Section 2.06(e). Each Swingline Loan shall
be in an amount that is an integral multiple of $100,000 and not less than $500,000.

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

     SECTION 2.03 Requests for Revolving Borrowings. To request a Revolving Borrowing, the Borrower
shall notify the Administrative Agent of such request either in writing (delivered by hand,
facsimile or e-mail; provided, however, that a notification by e-mail must include a scanned,
signed Advance Request Form) in the form of Exhibit F, attached hereto, and signed by the Borrower
or by telephone (a) in the case of a Eurodollar Borrowing, not later than 10:00 a.m., Chicago time,
two Business Days before the date of the proposed Borrowing or (b) in the case of an CBFR
Borrowing, not later than noon, Chicago time, on the date of the proposed Borrowing. Each such
telephonic Borrowing Request shall be irrevocable and shall be confirmed promptly by hand delivery
or facsimile to the Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and written Borrowing
Request shall specify the following information in compliance with Section 2.01:

          (i) the aggregate amount of the requested Borrowing;

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

          (iii) whether such Borrowing is to be an CBFR Borrowing or a Eurodollar Borrowing; and

          (iv) in the case of a Eurodollar Borrowing, the initial Interest Period to be applicable
thereto, which shall be a period contemplated by the definition of the term “Interest Period.”

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

 

 

     SECTION 2.04 Protective Advances.

     (a) Subject to the limitations set forth below, the Administrative Agent is authorized by
the Borrower and the Lenders, from time to time in the Administrative Agent’s sole discretion (but
shall have absolutely no obligation to), to make Loans to the Borrower, on behalf of all Lenders,
which the Administrative Agent, in its Permitted Discretion, deems necessary or desirable (i) to
preserve or protect the Collateral, or any portion thereof, (ii) to enhance the likelihood of, or
maximize the amount of, repayment of the Loans and other Obligations, or (iii) to pay any other
amount chargeable to or required to be paid by the Borrower pursuant to the terms of this
Agreement, including payments of reimbursable expenses (including costs, fees, and expenses as
described in Section 9.03) and other sums payable under the Loan Documents (any of such Loans are
herein referred to as “Protective Advances”); provided that, the aggregate amount
of Protective Advances outstanding at any time shall not at any time exceed $4,000,000;
provided further that, the aggregate amount of outstanding Protective Advances plus the
aggregate Revolving Exposure shall not exceed the aggregate Revolving Commitments. Protective
Advances may be made even if the conditions precedent set forth in Section 4.02 have not been
satisfied. The Protective Advances shall be secured by the Liens in favor of the Administrative
Agent in and to the Collateral and shall constitute Obligations hereunder. All Protective Advances
shall be CBFR Borrowings. The Administrative Agent’s authorization to make Protective Advances may
be revoked at any time by 100% of the Lenders. Any such revocation must be in writing and shall
become effective prospectively upon the Administrative Agent’s receipt thereof. At any time that
there is sufficient Availability and the conditions precedent set forth in Section 4.02 have been
satisfied, the Administrative Agent may request the Revolving Lenders to make a Revolving Loan to
repay a Protective Advance. At any other time the Administrative Agent may require the Lenders to
fund their risk participations described in Section 2.04(b).

     (b) Upon the making of a Protective Advance by the Administrative Agent (whether before or
after the occurrence of a Default), each Lender shall be deemed, without further action by any
party hereto, to have unconditionally and irrevocably purchased from the Administrative Agent
without recourse or warranty, an undivided interest and participation in such Protective Advance in
proportion to its Applicable Percentage. From and after the date, if any, on which any Lender is
required to fund its participation in any Protective Advance purchased hereunder, the
Administrative Agent shall promptly distribute to such Lender, such Lender’s Applicable Percentage
of all payments of principal and interest and all proceeds of Collateral received by the
Administrative Agent in respect of such Protective Advance.

     SECTION 2.05 Swingline Loans and Overadvances.

     (a) Subject to the terms and conditions set forth herein, the Swingline Lender agrees to
make Swingline Loans to the Borrower from time to time during the Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i) the aggregate
principal amount of outstanding Swingline Loans exceeding $5,000,000 or (ii) the sum of the total
Revolving Exposures exceeding the lesser of the total Revolving Commitments and Availability;
provided that the Swingline Lender shall not be required to make a Swingline Loan to
refinance an outstanding Swingline Loan. Within the foregoing limits and subject to the terms and
conditions set forth herein, the Borrower may borrow, prepay and reborrow Swingline

 

 

Loans. To request a Swingline Loan, the Borrower shall notify the Administrative Agent of such
request by telephone (confirmed by facsimile), not later than 11:00 a.m., Chicago time, on the day
of a proposed Swingline Loan. Each such notice shall be irrevocable and shall specify the
requested date (which shall be a Business Day) and amount of the requested Swingline Loan. The
Administrative Agent will promptly advise the Swingline Lender of any such notice received from the
Borrower. The Swingline Lender shall make each Swingline Loan available to the Borrower by means
of a credit to the Funding Account (or, in the case of a Swingline Loan made to finance the
reimbursement of an LC Disbursement as provided in Section 2.06(e), by remittance to the Issuing
Bank, and in the case of repayment of another Loan or fees or expenses as provided by Section
2.18(c), by remittance to the Administrative Agent to be distributed to the Lenders) by 2:00 p.m.,
Chicago time, on the requested date of such Swingline Loan.

     (b) The Swingline Lender may by written notice given to the Administrative Agent not later
than 11:00 a.m., Chicago time, on any Business Day require the Revolving Lenders to acquire
participations on such Business Day in all or a portion of the Swingline Loans outstanding. Such
notice shall specify the aggregate amount of Swingline Loans in which Revolving Lenders will
participate. Promptly upon receipt of such notice, the Administrative Agent will give notice
thereof to each Revolving Lender, specifying in such notice such Lender’s Applicable Percentage of
such Swingline Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally agrees,
upon receipt of notice as provided above, to pay to the Administrative Agent, for the account of
the Swingline Lender, such Lender’s Applicable Percentage of such Swingline Loan or Loans. Each
Revolving Lender shall comply with its obligation under this paragraph by wire transfer of
immediately available funds, in the same manner as provided in Section 2.07 with respect to Loans
made by such Lender (and Section 2.07 shall apply, mutatis mutandis, to the payment
obligations of the Lenders), and the Administrative Agent shall promptly pay to the Swingline
Lender the amounts so received by it from the Revolving Lenders. The Administrative Agent shall
notify the Borrower of any participations in any Swingline Loan acquired pursuant to this
paragraph, and thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by the Swingline Lender
from the Borrower (or other party on behalf of the Borrower) in respect of a Swingline Loan after
receipt by the Swingline Lender of the proceeds of a sale of participations therein shall be
promptly remitted to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Revolving Lenders that shall
have made their payments pursuant to this paragraph and to the Swingline Lender, as their interests
may appear; provided that any such payment so remitted shall be repaid to the Swingline Lender or
to the Administrative Agent, as applicable, if and to the extent such payment is required to be
refunded to the Borrower for any reason. The purchase of participations in a Swingline Loan
pursuant to this paragraph shall not relieve the Borrower of any default in the payment thereof.

     (c) Any provision of this Agreement to the contrary notwithstanding, at the request of the
Borrower, the Administrative Agent may in its sole discretion (but with absolutely no obligation),
make Revolving Loans to the Borrower, on behalf of the Revolving Lenders, in amounts that exceed
Availability (any such excess Revolving Loans are herein referred to collectively as
“Overadvances”); provided that, no Overadvance shall result in a Default due to
Borrower’s failure to comply with Section 2.01 for so long as such Overadvance remains outstanding
in accordance with the terms of this paragraph, but solely with respect to the amount

 

 

of such Overadvance. In addition, Overadvances may be made even if the condition precedent set
forth in Section 4.02(c) has not been satisfied. All Overadvances shall constitute CBFR
Borrowings. The authority of the Administrative Agent to make Overadvances is limited to an
aggregate amount not to exceed $4,000,000 at any time, no Overadvance may remain outstanding for
more than sixty days and no Overadvance shall cause any Revolving Lender’s Revolving Exposure to
exceed its Revolving Commitment; provided that, the Required Revolving Lenders may at any
time revoke the Administrative Agent’s authorization to make Overadvances. Any such revocation
must be in writing and shall become effective prospectively upon the Administrative Agent’s receipt
thereof.

     (d) Upon the making of a Swingline Loan or an Overadvance (whether before or after the
occurrence of a Default and regardless of whether a Settlement has been requested with respect to
such Swingline Loan or Overadvance), each Revolving Lender shall be deemed, without further action
by any party hereto, to have unconditionally and irrevocably purchased from the Swingline Lender or
the Administrative Agent, as the case may be, without recourse or warranty, an undivided interest
and participation in such Swingline Loan or Overadvance in proportion to its Applicable Percentage
of the Revolving Commitment. The Swingline Lender or the Administrative Agent may, at any time,
require the Revolving Lenders to fund their participations. From and after the date, if any, on
which any Revolving Lender is required to fund its participation in any Swingline Loan or
Overadvance purchased hereunder, the Administrative Agent shall promptly distribute to such Lender,
such Lender’s Applicable Percentage of all payments of principal and interest and all proceeds of
Collateral received by the Administrative Agent in respect of such Loan.

     (e) The Administrative Agent, on behalf of the Swingline Lender, shall request settlement
(a “Settlement”) with the Revolving Lenders on at least a weekly basis or on any date that
the Administrative Agent elects, by notifying the Revolving Lenders of such requested Settlement by
facsimile, telephone, or e-mail no later than 12:00 noon Chicago time on the date of such requested
Settlement (the “Settlement Date”). Each Revolving Lender (other than the Swingline
Lender, in the case of the Swingline Loans) shall transfer the amount of such Revolving Lender’s
Applicable Percentage of the outstanding principal amount of the applicable Loan with respect to
which Settlement is requested to the Administrative Agent, to such account of the Administrative
Agent as the Administrative Agent may designate, not later than 2:00 p.m., Chicago time, on such
Settlement Date. Settlements may occur during the existence of a Default and whether or not the
applicable conditions precedent set forth in Section 4.02 have then been satisfied. Such amounts
transferred to the Administrative Agent shall be applied against the amounts of the Swingline
Lender’s Swingline Loans and, together with Swingline Lender’s Applicable Percentage of such
Swingline Loan, shall constitute Revolving Loans of such Revolving Lenders, respectively. If any
such amount is not transferred to the Administrative Agent by any Revolving Lender on such
Settlement Date, the Swingline Lender shall be entitled to recover such amount on demand from such
Lender together with interest thereon as specified in Section 2.08.

     SECTION 2.06 Letters of Credit.

     (a) General. Subject to the terms and conditions set forth herein, the Borrower
may request the issuance of Letters of Credit for its own account, in a form reasonably acceptable
to

 

 

the Administrative Agent and the Issuing Bank, at any time and from time to time during the
Availability Period. In the event of any inconsistency between the terms and conditions of this
Agreement and the terms and conditions of any form of letter of credit application or other
agreement submitted by the Borrower to, or entered into by the Borrower with, the Issuing Bank
relating to any Letter of Credit, the terms and conditions of this Agreement shall control.

     (b) Notice of Issuance, Amendment, Renewal, Extension; Certain Conditions. To
request the issuance of a Letter of Credit (or the amendment, renewal or extension of an
outstanding Letter of Credit), the Borrower shall hand deliver or facsimile (or transmit by
electronic communication, if arrangements for doing so have been approved by the Issuing Bank) to
the Issuing Bank and the Administrative Agent (prior to 9:00 am, Chicago time, at least three
Business Days prior to the requested date of issuance, amendment, renewal or extension) a notice
requesting the issuance of a Letter of Credit, or identifying the Letter of Credit to be amended,
renewed or extended, and specifying the date of issuance, amendment, renewal or extension (which
shall be a Business Day), the date on which such Letter of Credit is to expire (which shall comply
with paragraph (c) of this Section), the amount of such Letter of Credit, the name and address of
the beneficiary thereof and such other information as shall be necessary to prepare, amend, renew
or extend such Letter of Credit. If requested by the Issuing Bank, the Borrower also shall submit
a letter of credit application on the Issuing Bank’s standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or extended only if
(and upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower shall be
deemed to represent and warrant that), after giving effect to such issuance, amendment, renewal or
extension (i) the LC Exposure shall not exceed $10,000,000 and (ii) the total Revolving Exposures
shall not exceed the lesser of the total Revolving Commitments and the Borrowing Base.

     (c) Expiration Date. Each Letter of Credit shall expire at or prior to the close
of business on the earlier of (i) the date one year after the date of the issuance of such Letter
of Credit (or, in the case of any renewal or extension thereof, one year after such renewal or
extension) and (ii) the date that is five Business Days prior to the Maturity Date.

     (d) Participations. By the issuance of a Letter of Credit (or an amendment to a
Letter of Credit increasing the amount thereof) and without any further action on the part of the
Issuing Bank or the Revolving Lenders, the Issuing Bank hereby grants to each Revolving Lender, and
each Revolving Lender hereby acquires from the Issuing Bank, a participation in such Letter of
Credit equal to such Lender’s Applicable Percentage of the aggregate amount available to be drawn
under such Letter of Credit. In consideration and in furtherance of the foregoing, each Revolving
Lender hereby absolutely and unconditionally agrees to pay to the Administrative Agent, for the
account of the Issuing Bank, such Lender’s Applicable Percentage of each LC Disbursement made by
the Issuing Bank and not reimbursed by the Borrower on the date due as provided in paragraph (e) of
this Section, or of any reimbursement payment required to be refunded to the Borrower for any
reason. Each Revolving Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is absolute and
unconditional and shall not be affected by any circumstance whatsoever, including any amendment,
renewal or extension of any Letter of Credit or the occurrence and continuance of a Default or
reduction or termination of the Commitments, and that each such payment shall be made without any
offset, abatement, withholding or reduction whatsoever.

 

 

     (e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in respect
of a Letter of Credit, the Borrower shall be deemed to have requested an CBFR Borrowing in the
amount of such LC Disbursement to reimburse such LC Disbursement, which may be funded by an CBFR
Revolving Loan or a Swingline Loan. If an Event of Default under paragraph (h) or (i) of Article
VII exists when an LC Disbursement is made, the Administrative Agent shall notify each Revolving
Lender of the applicable LC Disbursement, the payment then due from the Borrower in respect thereof
and such Lender’s Applicable Percentage thereof. Promptly following receipt of such notice, each
Revolving Lender shall purchase a risk participation in the LC Disbursement by paying to the
Administrative Agent its Applicable Percentage of the payment then due from the Borrower, in the
same manner as provided in Section 2.07 with respect to Loans made by such Lender (and Section 2.07
shall apply, mutatis mutandis, to the payment obligations of the Revolving
Lenders), and the Administrative Agent shall promptly pay to the Issuing Bank the amounts so
received by it from the Revolving Lenders. Promptly following receipt by the Administrative Agent
of any payment from the Borrower pursuant to this paragraph, the Administrative Agent shall
distribute such payment to the Issuing Bank or, to the extent that Revolving Lenders have made
payments pursuant to this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving Lender pursuant to
this paragraph to reimburse the Issuing Bank for any LC Disbursement (other than the funding of
CBFR Revolving Loans or a Swingline Loan as contemplated above) shall not constitute a Loan and
shall not relieve the Borrower of its obligation to reimburse such LC Disbursement.

     (f) Obligations Absolute. The Borrower’s obligation to reimburse LC Disbursements
as provided in paragraph (e) of this Section shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement under any and all
circumstances whatsoever and irrespective of (i) any lack of validity or enforceability of any
Letter of Credit or this Agreement, or any term or provision therein, (ii) any draft or other
document presented under a Letter of Credit proving to be forged, fraudulent or invalid in any
respect or any statement therein being untrue or inaccurate in any respect, (iii) payment by the
Issuing Bank under a Letter of Credit against presentation of a draft or other document that does
not comply with the terms of such Letter of Credit, or (iv) any other event or circumstance
whatsoever, whether or not similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide a right of setoff against,
the Borrower’s obligations hereunder. Neither the Administrative Agent, the Revolving Lenders nor
the Issuing Bank, nor any of their Related Parties, shall have any liability or responsibility by
reason of or in connection with the issuance or transfer of any Letter of Credit or any payment or
failure to make any payment thereunder (irrespective of any of the circumstances referred to in the
preceding sentence), or any error, omission, interruption, loss or delay in transmission or
delivery of any draft, notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in interpretation of
technical terms or any consequence arising from causes beyond the control of the Issuing Bank;
provided that the foregoing shall not be construed to excuse the Issuing Bank from
liability to the Borrower to the extent of any direct damages (as opposed to consequential damages,
claims in respect of which are hereby waived by the Borrower to the extent permitted by applicable
law) suffered by the Borrower that are caused by the Issuing Bank’s failure to exercise care when
determining whether drafts and other documents presented under a Letter of Credit comply with the
terms thereof. The parties hereto expressly agree that, in the absence of gross negligence or

 

 

willful misconduct on the part of the Issuing Bank (as finally determined by a court of competent
jurisdiction), the Issuing Bank shall be deemed to have exercised care in each such determination.
In furtherance of the foregoing and without limiting the generality thereof, the parties agree
that, with respect to documents presented which appear on their face to be in substantial
compliance with the terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for further
investigation, regardless of any notice or information to the contrary, or refuse to accept and
make payment upon such documents if such documents are not in strict compliance with the terms of
such Letter of Credit.

     (g) Disbursement Procedures. The Issuing Bank shall, promptly following its
receipt thereof, examine all documents purporting to represent a demand for payment under a Letter
of Credit. The Issuing Bank shall promptly notify the Administrative Agent and the Borrower by
telephone (confirmed by facsimile) of such demand for payment and whether the Issuing Bank has made
or will make an LC Disbursement thereunder; provided that any failure to give or delay in
giving such notice shall not relieve the Borrower of its obligation to reimburse the Issuing Bank
and the Revolving Lenders with respect to any such LC Disbursement.

     (h) Interim Interest. If the Issuing Bank shall make any LC Disbursement, then,
unless the Borrower shall reimburse such LC Disbursement in full on the date such LC Disbursement
is made, the unpaid amount thereof shall bear interest, for each day from and including the date
such LC Disbursement is made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to CBFR Revolving Loans; provided that,
if the Borrower fails to reimburse such LC Disbursement when due pursuant to paragraph (e) of this
Section, then Section 2.13(d) shall apply. Interest accrued pursuant to this paragraph shall be
for the account of the Issuing Bank, except that interest accrued on and after the date of payment
by any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the Issuing Bank
shall be for the account of such Lender to the extent of such payment.

     (i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at any time
by written agreement among the Borrower, the Administrative Agent, the replaced Issuing Bank and
the successor Issuing Bank. The Administrative Agent shall notify the Revolving Lenders of any
such replacement of the Issuing Bank. At the time any such replacement shall become effective, the
Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i) the successor
Issuing Bank shall have all the rights and obligations of the Issuing Bank under this Agreement
with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term
“Issuing Bank” shall be deemed to refer to such successor or to any previous Issuing Bank, or to
such successor and all previous Issuing Banks, as the context shall require. After the replacement
of an Issuing Bank hereunder, the replaced Issuing Bank shall remain a party hereto and shall
continue to have all the rights and obligations of an Issuing Bank under this Agreement with
respect to Letters of Credit issued by it prior to such replacement, but shall not be required to
issue additional Letters of Credit.

     (j) Cash Collateralization. If any Event of Default shall occur and be
continuing, on the Business Day that the Borrower receives notice from the Administrative Agent or
the

 

 

Required Lenders (or, if the maturity of the Loans has been accelerated, Revolving Lenders with LC
Exposure representing greater than 50% of the total LC Exposure) demanding the deposit of cash
collateral pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the benefit of the Revolving
Lenders (the “LC Collateral Account”), an amount in cash equal to 103% of the LC Exposure
as of such date plus accrued and unpaid interest thereon; provided that the obligation to
deposit such cash collateral shall become effective immediately, and such deposit shall become
immediately due and payable, without demand or other notice of any kind, upon the occurrence of any
Event of Default with respect to the Borrower described in clause (h) or (i) of Article VII. Such
deposit shall be held by the Administrative Agent as collateral for the payment and performance of
the Secured Obligations. The Administrative Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account and the Borrower hereby grants the
Administrative Agent a security interest in the LC Collateral Account. Other than any interest
earned on the investment of such deposits, which investments shall be made at the option and sole
discretion of the Administrative Agent and at the Borrower’s risk and expense, such deposits shall
not bear interest. Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall be applied by the Administrative Agent to reimburse the
Issuing Bank for LC Disbursements for which it has not been reimbursed and, to the extent not so
applied, shall be held for the satisfaction of the reimbursement obligations of the Borrower for
the LC Exposure at such time or, if the maturity of the Loans has been accelerated (but subject to
the consent of Revolving Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other Secured Obligations. If the Borrower is required to provide
an amount of cash collateral hereunder as a result of the occurrence of an Event of Default, such
amount (to the extent not applied as aforesaid) shall be returned to the Borrower within three
Business Days after all such Defaults have been cured or waived.

     SECTION 2.07 Funding of Borrowings.

     (a) Each Lender shall make each Loan to be made by it hereunder on the proposed date
thereof by wire transfer of immediately available funds by 1:00 p.m., Chicago time, to the account
of the Administrative Agent most recently designated by it for such purpose by notice to the
Lenders in an amount equal to such Lender’s Applicable Percentage; provided that Swingline
Loans shall be made as provided in Section 2.05. The Administrative Agent will make such Loans
available to the Borrower by promptly crediting the amounts so received, in like funds, to the
Funding Account; provided that CBFR Revolving Loans made to finance the reimbursement of
(i) an LC Disbursement as provided in Section 2.06(e) shall be remitted by the Administrative Agent
to the Issuing Bank and (ii) a Protective Advance or an Overadvance shall be retained by the
Administrative Agent.

     (b) Unless the Administrative Agent shall have received notice from a Lender prior to the
proposed date of any Borrowing that such Lender will not make available to the Administrative Agent
such Lender’s share of such Borrowing, the Administrative Agent may assume that such Lender has
made such share available on such date in accordance with paragraph (a) of this Section and may, in
reliance upon such assumption, make available to the Borrower a corresponding amount. In such
event, if a Lender has not in fact made its share of the applicable Borrowing available to the
Administrative Agent, then the applicable Lender and

 

 

the Borrower severally agree to pay to the Administrative Agent forthwith on demand such
corresponding amount with interest thereon, for each day from and including the date such amount is
made available to the Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate and a rate
determined by the Administrative Agent in accordance with banking industry rules on interbank
compensation or (ii) in the case of the Borrower, the interest rate applicable to CBFR Loans. If
such Lender pays such amount to the Administrative Agent, then such amount shall constitute such
Lender’s Loan included in such Borrowing.

     SECTION 2.08 Interest Elections.

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

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

     (c) Each Interest Election Request shall specify the following information in compliance
with Section 2.02:

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

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

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

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

 

 

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

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

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

     (f) Notwithstanding any other provision contained herein, after giving effect to any
Borrowing, or to any continuation or conversion of any Loans, there shall not be more than five (5)
different Interest Periods in effect.

     SECTION 2.09 Termination of Commitments.

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

     (b) The Borrower may at any time terminate the Commitments in whole or in part, provided
that such termination in whole will only be effective upon (i) the payment in full of all
outstanding Loans, together with accrued and unpaid interest thereon and on any Letters of Credit,
(ii) the cancellation and return of all outstanding Letters of Credit (or alternatively, with
respect to each such Letter of Credit, the furnishing to the Administrative Agent of a cash deposit
(or at the discretion of the Administrative Agent a back up standby letter of credit satisfactory
to the Administrative Agent) equal to 105% of the LC Exposure as of such date), (iii) the payment
in full of the accrued and unpaid fees, including any applicable Prepayment Fee (if any), and (iv)
the payment in full of all reimbursable expenses and other Obligations together with accrued and
unpaid interest thereon.

     (c) The Borrower shall notify the Administrative Agent of any election to terminate the
Commitments under paragraph (b) of this Section at least three Business Days prior to the effective
date of such termination, specifying such election and the effective date thereof. Promptly
following receipt of any notice, the Administrative Agent shall advise the Lenders of the contents
thereof. Each notice delivered by the Borrower pursuant to this Section shall be irrevocable;
provided that a notice of termination of the Commitments delivered by the Borrower may
state that such notice is conditioned upon the effectiveness of other credit facilities, in which
case such notice may be revoked by the Borrower (by notice to the Administrative Agent on or

 

 

prior to the specified effective date) if such condition is not satisfied. Any termination of the
Commitments shall be permanent.

     SECTION 2.10 Repayment of Loans; Evidence of Debt.

     (a) The Borrower hereby unconditionally promises to pay (i) to the Administrative Agent for
the account of each Lender the then unpaid principal amount of each Revolving Loan on the Maturity
Date, (ii) to the Administrative Agent the then unpaid amount of each Protective Advance on the
earlier of the Maturity Date and demand by the Administrative Agent, (iii) to the Swingline Lender
the then unpaid principal amount of each Swingline Loan on the earlier of the Maturity Date and the
first date after such Swingline Loan is made that is the 15th or last day of a calendar month and
is at least two Business Days after such Swingline Loan is made; provided that on each date
that a Revolving Loan is made, the Borrower shall repay all Swingline Loans then outstanding and
(iv) to the Administrative Agent the then unpaid principal amount of each Overadvance on the
earlier of the Maturity Date and the 30th day after such Overadvance is made.

     (b) At all times that a Full Cash Dominion Condition is in effect, at the election of
Administrative Agent or the direction of Required Lenders, on each Business Day, the Administrative
Agent shall apply all funds credited to the Collateral Deposit Account on such Business Day in
accordance with Section 2.18(b). So long as no Full Cash Dominion Condition is in effect, such
funds credited to the Collateral Deposit Account shall be deposited into the Borrower’s operating
account, rather than being applied pursuant to the foregoing provisions of this clause (b).

     (c) Each Lender shall maintain in accordance with its usual practice an account or accounts
evidencing the indebtedness of the Borrower to such Lender resulting from each Loan made by such
Lender, including the amounts of principal and interest payable and paid to such Lender from time
to time hereunder.

     (d) The Administrative Agent shall maintain accounts in which it shall record (i) the
amount of each Loan made hereunder, the Class and Type thereof and the Interest Period applicable
thereto, (ii) the amount of any principal or interest due and payable or to become due and payable
from the Borrower to each Lender hereunder and (iii) the amount of any sum received by the
Administrative Agent hereunder for the account of the Lenders and each Lender’s share thereof.

     (e) The entries made in the accounts maintained pursuant to paragraph (c) or (d) of this
Section shall be prima facie evidence of the existence and amounts of the
obligations recorded therein; provided that the failure of any Lender or the Administrative
Agent to maintain such accounts or any error therein shall not in any manner affect the obligation
of the Borrower to repay the Loans in accordance with the terms of this Agreement.

     (f) Any Lender may request that Loans made by it be evidenced by a promissory note. In
such event, the Borrower shall prepare, execute and deliver to such Lender a promissory note
payable to the order of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent. Thereafter, the Loans

 

 

evidenced by such promissory note and interest thereon shall at all times (including after
assignment pursuant to Section 9.04) be represented by one or more promissory notes in such form
payable to the order of the payee named therein (or, if such promissory note is a registered note,
to such payee and its registered assigns).

     SECTION 2.11 Prepayment of Loans.

     (a) The Borrower shall have the right at any time and from time to time to prepay any
Borrowing in whole or in part, subject to prior notice in accordance with paragraph (e) of this
Section.

     (b) Except for Overadvances permitted under Section 2.05, in the event and on such occasion
that the total Revolving Exposure exceeds the lesser of (A) the aggregate Revolving Commitments or
(B) the Borrowing Base, the Borrower shall prepay the Revolving Loans, LC Exposure and/or Swingline
Loans in an aggregate amount equal to such excess.

     (c) In the event and on each occasion that any Net Proceeds are received by or on behalf of
any Loan Party in respect of any Prepayment Event, the Borrower shall, immediately after such Net
Proceeds are received by any Loan Party, prepay the Obligations as set forth in Section 2.11(e)
below in an aggregate amount equal to 100% of such Net Proceeds, provided that, in the case
of any event described in clause (a) of the definition of the term “Prepayment Event”, if the
Borrower shall deliver to the Administrative Agent a certificate of a Financial Officer to the
effect that the Loan Parties intend to apply the Net Proceeds from such event (or a portion thereof
specified in such certificate), within 180 days after receipt of such Net Proceeds, to acquire or
replace Inventory and certifying that no Default has occurred and is continuing, then either (i) so
long as no Full Cash Dominion Condition is in effect, no prepayment shall be required pursuant to
this paragraph in respect of the Net Proceeds specified in such certificate or (ii) if a Full Cash
Dominion Condition is in effect, if the Net Proceeds specified in such certificate are to be
applied by the Borrower to acquire replacement Inventory, then such Net Proceeds shall be applied
by the Administrative Agent to reduce the outstanding principal balance of the Revolving Loans
(without a permanent reduction of the Revolving Commitment) and Borrower may request Revolving Loan
Borrowings, subject to the terms hereof to acquire replacement Inventory.

     (d) All such amounts pursuant to Section 2.11(c) (as to any insurance or condemnation
proceeds, to the extent they arise from casualties or losses to cash or Inventory) shall be
applied, first to prepay any Protective Advances and Overadvances that may be outstanding,
pro rata, and second to prepay the Revolving Loans (including Swingline Loans) without a
corresponding reduction in the Revolving Commitment and to cash collateralize outstanding LC
Exposure. If the precise amount of insurance or condemnation proceeds allocable to Inventory as
compared to equipment, fixtures and real property is not otherwise determined, the allocation and
application of those proceeds shall be determined by the Administrative Agent, in its Permitted
Discretion.

     (e) The Borrower shall notify the Administrative Agent (and, in the case of prepayment of
a Swingline Loan, the Swingline Lender) by telephone (confirmed by facsimile) of any prepayment
hereunder (i) in the case of prepayment of a Eurodollar Revolving

 

 

Borrowing, not later than 10:00 a.m., Chicago time, three Business Days before the date of
prepayment, (ii) in the case of prepayment of a CBFR Revolving Borrowing, not later than 10:00
a.m., Chicago time, one Business Day before the date of prepayment or (iii) in the case of
prepayment of a Swingline Loan, not later than 11:00 a.m., Chicago time, on the date of prepayment.
Each such notice shall be irrevocable and shall specify the prepayment date and the principal
amount of each Borrowing or portion thereof to be prepaid; provided that, if a notice of
prepayment is given in connection with a conditional notice of termination of the Commitments as
contemplated by Section 2.09, then such notice of prepayment may be revoked if such notice of
termination is revoked in accordance with Section 2.09. Promptly following receipt of any such
notice relating to a Revolving Borrowing, the Administrative Agent shall advise the Lenders of the
contents thereof. Each partial prepayment of any Revolving Borrowing shall be in an amount that
would be permitted in the case of an advance of a Revolving Borrowing of the same Type as provided
in Section 2.02. Each prepayment of a Revolving Borrowing shall be applied ratably to the
Revolving Loans included in the prepaid Borrowing. Prepayments shall be accompanied by accrued
interest to the extent required by Section 2.13.

     SECTION 2.12 Fees.

     (a) The Borrower agrees to pay to the Administrative Agent for the account of each Lender a
commitment fee, which shall accrue at the Applicable Rate on the average daily Available Revolving
Commitment of such Lender during the period from and including the Closing Date to but excluding
the date on which the Lenders’ Revolving Commitments terminate. Accrued commitment fees shall be
payable in arrears on the first Business Day of each calendar month and on the date on which the
Revolving Commitments terminate, commencing on the first such date to occur after the date hereof.
All commitment fees shall be computed on the basis of a year of 360 days and shall be payable for
the actual number of days elapsed.

     (b) The Borrower agrees to pay (i) to the Administrative Agent for the account of each
Revolving Lender a participation fee with respect to its participations in Letters of Credit, which
shall accrue at the same Applicable Rate used to determine the interest rate applicable to
Eurodollar Revolving Loans on the average daily amount of such Lender’s LC Exposure (excluding any
portion thereof attributable to unreimbursed LC Disbursements) during the period from and including
the Closing Date to but excluding the later of the date on which such Lender’s Revolving Commitment
terminates and the date on which such Revolving Lender ceases to have any LC Exposure, and (ii) to
the Issuing Bank a fronting fee, which shall accrue at the rate of .125% per annum on the average
daily amount of the LC Exposure (excluding any portion thereof attributable to unreimbursed LC
Disbursements) during the period from and including the Closing Date to but excluding the later of
the date of termination of the Revolving Commitments and the date on which there ceases to be any
LC Exposure, as well as the Issuing Bank’s standard fees with respect to the issuance, amendment,
renewal or extension of any Letter of Credit or processing of drawings thereunder. Participation
fees and fronting fees accrued through and including the last day of each calendar month shall be
payable on the first Business Day of each calendar month following such last day, commencing on the
first such date to occur after the Closing Date; provided that all such fees shall be
payable on the date on which the Revolving Commitments terminate and any such fees accruing after
the date on which the Commitments terminate shall be payable on demand. Any other fees payable to
the Issuing

 

 

Bank pursuant to this paragraph shall be payable within 10 days after demand. All
participation fees and fronting fees shall be computed on the basis of a year of 360 days and shall
be payable for the actual number of days elapsed.

     (c) The Borrower agrees to pay to the Administrative Agent, for its own account, fees
payable in the amounts and at the times separately agreed upon between the Borrower and the
Administrative Agent, including fees payable pursuant to the Fee Letter.

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

     SECTION 2.13 Interest.

     (a) The Loans comprising each CBFR Borrowing (including each Swingline Loan) shall bear
interest at the CB Floating Rate plus the Applicable Rate.

     (b) The Loans comprising each Eurodollar Borrowing shall bear interest at the Adjusted LIBO
Rate for the Interest Period in effect for such Borrowing plus the Applicable Rate in effect on the
date of such Borrowing.

     (c) Each Protective Advance and each Overadvance shall bear interest at the CB Floating
Rate plus the Applicable Rate for Revolving Loans plus 2%.

     (d) Notwithstanding the foregoing, during the occurrence and continuance of an Event of
Default, the Administrative Agent or the Required Lenders may, at their option, by notice to the
Borrower (which notice may be revoked at the option of the Required Lenders notwithstanding any
provision of Section 9.02 requiring the consent of “each Lender affected thereby” for reductions in
interest rates), declare that (i) all Loans shall bear interest at, and all Letter of Credit fees
shall be, 2% plus the rate otherwise applicable to such Loans or Letters of Credit as provided in
the preceding paragraphs of this Section or (ii) in the case of overdue interest, fees and any
other amounts, 2% plus the rate applicable to CBFR Loans as provided in paragraph (a) of this
Section.

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

     (f) All interest hereunder shall be computed on the basis of a year of 360 days, and shall
be payable for the actual number of days elapsed. The applicable CB Floating Rate,

 

 

Adjusted LIBO Rate shall be determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

     SECTION 2.14 Alternate Rate of Interest. If prior to the commencement of any Interest Period for a
Eurodollar Borrowing:

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

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

then the Administrative Agent shall give notice thereof to the Borrower and the Lenders by
telephone or facsimile as promptly as practicable thereafter and, until the Administrative Agent
notifies the Borrower and the Lenders that the circumstances giving rise to such notice no longer
exist, (i) any Interest Election Request that requests the conversion of any Revolving Borrowing
to, or continuation of any Revolving Borrowing as, a Eurodollar Borrowing shall be ineffective, and
(ii) if any Borrowing Request requests a Eurodollar Revolving Borrowing, such Borrowing shall be
made as a CBFR Borrowing.

     SECTION 2.15 Increased Costs.

     (a) If any Change in Law shall:

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

          (ii) impose on any Lender or the Issuing Bank or the London interbank market any other
condition affecting this Agreement or Eurodollar Loans made by such Lender or any Letter of Credit
or participation therein;

and the result of any of the foregoing shall be to increase the cost (without taking into account
taxes, which shall be governed exclusively by Section 2.17) to such Lender of making or maintaining
any Eurodollar Loan (or of maintaining its obligation to make any such Loan) or to increase the
cost (without taking into account taxes, which shall be governed exclusively by Section 2.17) to
such Lender or the Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the Issuing Bank hereunder
(whether of principal, interest or otherwise), then the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will compensate such Lender
or the Issuing Bank, as the case may be, for such additional costs incurred or reduction suffered.

 

 

     (b) If any Lender or the Issuing Bank determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return (without taking
into account taxes, which shall be governed exclusively by Section 2.17) on such Lender’s or the
Issuing Bank’s capital or on the capital of such Lender’s or the Issuing Bank’s holding company, if
any, as a consequence of this Agreement or the Loans made by, or participations in Letters of
Credit held by, such Lender, or the Letters of Credit issued by the Issuing Bank, to a level below
that which such Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company
could have achieved but for such Change in Law (taking into consideration such Lender’s or the
Issuing Bank’s policies and the policies of such Lender’s or the Issuing Bank’s holding company
with respect to capital adequacy), then from time to time the Borrower will pay to such Lender or
the Issuing Bank, as the case may be, such additional amount or amounts as will compensate such
Lender or the Issuing Bank or such Lender’s or the Issuing Bank’s holding company for any such
reduction suffered.

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

     (d) Failure or delay on the part of any Lender or the Issuing Bank to demand compensation
pursuant to this Section shall not constitute a waiver of such Lender’s or the Issuing Bank’s right
to demand such compensation; provided that the Borrower shall not be required to compensate
a Lender or the Issuing Bank pursuant to this Section for any increased costs or reductions
incurred more than 270 days prior to the date that such Lender or the Issuing Bank, as the case may
be, notifies the Borrower of the Change in Law giving rise to such increased costs or reductions
and of such Lender’s or the Issuing Bank’s intention to claim compensation therefor;
provided further that, if the Change in Law giving rise to such increased costs or
reductions is retroactive, then the 270-day period referred to above shall be extended to include
the period of retroactive effect thereof.

     SECTION 2.16 Break Funding Payments. In the event of (a) the payment of any principal of any
Eurodollar Loan other than on the last day of an Interest Period applicable thereto (including as a
result of an Event of Default), (b) the conversion of any Eurodollar Loan other than on the last
day of the Interest Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Eurodollar Loan on the date specified in any notice delivered pursuant hereto
(regardless of whether such notice may be revoked under Section 2.09(c) and is revoked in
accordance therewith), or (d) the assignment of any Eurodollar Loan other than on the last day of
the Interest Period applicable thereto as a result of a request by the Borrower pursuant to Section
2.19, then, in any such event, the Borrower shall compensate each Lender for the loss, cost and
expense attributable to such event. In the case of a Eurodollar Loan, such loss, cost or expense
to any Lender shall be deemed to include an amount determined by such Lender to be the excess, if
any, of (i) the amount of interest which would have accrued on the principal amount of such Loan
had such event not occurred, at the Adjusted LIBO Rate that would have been applicable to such
Loan, for the period from the date of such event to the last day of the then current Interest
Period therefor (or, in the case of a failure to borrow, convert or continue,

 

 

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

     SECTION 2.17 Taxes.

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

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

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

     (d) Each Lender and the Issuing Bank shall indemnify the Borrower and the Administrative
Agent, within 10 days after written demand therefor, against any and all Taxes and any and all
related losses, claims, liabilities, penalties, interest and reasonable expenses (including the
fees, charges and disbursements of any counsel for the Borrower or the Administrative Agent)
incurred by or asserted against the Borrower or the Administrative Agent by any Governmental
Authority as a result of the failure by such Lender or the Issuing Bank, as the case may be, to
deliver, or as a result of the inaccuracy, inadequacy or deficiency of, any documentation required
to be delivered to the Borrower or the Administrative Agent pursuant to Section 2.17(f). Each
Lender and the Issuing Bank hereby authorizes the Administrative Agent to set off and apply any and
all amounts at any time owing to such Lender or the Issuing Bank,

 

 

as the case may be, under this Agreement or any other Loan Document against any amount due to
the Administrative Agent under this Section 2.17(d).

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

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

     (g) Each Lender that is a United States Person (as such term is defined in Section
7701(a)(30) of the Code) for U.S. federal income tax purposes shall deliver to the Borrower (with a
copy to the Administrative Agent) on or prior to the to the time that it becomes a party to this
Agreement, and at such other times as required by applicable law , an original copy of Internal
Revenue Service Form W-9 (or any successor form), properly completed and duly executed by such
Lender, and such other documentation required under the Internal Revenue Code and reasonably
requested by the Borrower to establish that such Lender is exempt from United States backup
withholding Tax with respect to any payments to such Lender of principal, interest, fees or other
amounts payable under any of the Credit Documents.

     (h) If the Administrative Agent or a Lender determines, in its sole discretion, that it has
received a refund of any Taxes or Other Taxes as to which it has been indemnified by the Borrower
or with respect to which the Borrower has paid additional amounts pursuant to this Section 2.17, it
shall pay over such refund to the Borrower (but only to the extent of indemnity payments made, or
additional amounts paid, by the Borrower under this Section 2.17 with respect to the Taxes or Other
Taxes giving rise to such refund), net of all out-of-pocket expenses of the Administrative Agent or
such Lender and without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund); provided, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental Authority) to the
Administrative Agent or such Lender in the event the Administrative Agent or such Lender is
required to repay such refund to such Governmental Authority. This Section shall not be construed
to require the Administrative Agent or any Lender to make available its tax returns (or any other
information relating to its taxes which it deems confidential) to the Borrower or any other Person.

     SECTION 2.18 Payments Generally; Allocation of Proceeds; Sharing of Set-offs.

     (a) The Borrower shall make each payment required to be made by it hereunder (whether of
principal, interest, fees or reimbursement of LC Disbursements, or of amounts

 

 

payable under Section 2.15, 2.16 or 2.17, or otherwise) prior to 2:00 p.m., Chicago time, on the
date when due, in immediately available funds, without set-off or counterclaim. Any amounts
received after such time on any date may, in the discretion of the Administrative Agent, be deemed
to have been received on the next succeeding Business Day for purposes of calculating interest
thereon. All such payments shall be made to the Administrative Agent at its offices at 10 South
Dearborn Street, 22nd Floor, Chicago, Illinois, except payments to be made directly to
the Issuing Bank or Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons entitled thereto. The
Administrative Agent shall distribute any such payments received by it for the account of any other
Person to the appropriate recipient promptly following receipt thereof. If any payment hereunder
shall be due on a day that is not a Business Day, the date for payment shall be extended to the
next succeeding Business Day, and, in the case of any payment accruing interest, interest thereon
shall be payable for the period of such extension. All payments hereunder shall be made in
dollars.

     (b) Any proceeds of Collateral received by the Administrative Agent when a Full Cash
Dominion Condition is not in effect constituting either (A) a specific payment of principal,
interest, fees or other sum payable under the Loan Documents shall be applied as specified by the
Borrower or (B) a mandatory prepayment shall be applied in accordance with Section 2.11. When a
Full Cash Dominion Condition is in effect and the Administrative Agent so elects or the Required
Lenders so direct, all funds received by the Administrative Agent shall be applied ratably
first, to pay any fees, indemnities, or expense reimbursements including amounts then due
to the Administrative Agent and the Issuing Bank from the Borrower (other than in connection with
Banking Services or Swap Obligations), second, to pay any fees or expense reimbursements
then due to the Lenders from the Borrower (other than in connection with Banking Services or Swap
Obligations), third, to pay interest due in respect of the Overadvances and Protective
Advances, fourth, to pay the principal of the Overadvances and Protective Advances,
fifth, to pay interest then due and payable on the Loans (other than the Overadvances and
Protective Advances) ratably, sixth, to prepay principal on the Loans (other than the
Overadvances and Protective Advances) and unreimbursed LC Disbursements ratably, seventh,
to pay an amount to the Administrative Agent equal to one hundred five percent (105%) of the
aggregate undrawn face amount of all outstanding Letters of Credit and the aggregate amount of any
unpaid LC Disbursements, to be held as cash collateral for such Obligations, eighth, to
payment of any amounts owing with respect to Banking Services and Swap Obligations, and
ninth, to the payment of any other Secured Obligation due to the Administrative Agent or
any Lender by the Borrower. Each Lender hereby agrees to report exposures in respect of Banking
Services Obligations and Swap Obligations to the Administrative Agent not less frequently than
monthly. Notwithstanding anything to the contrary contained in this Agreement, unless so directed
by the Borrower, or unless a Default is in existence, neither the Administrative Agent nor any
Lender shall apply any payment which it receives to any Eurodollar Loan of a Class, except (a) on
the expiration date of the Interest Period applicable to any such Eurodollar Loan or (b) in the
event, and only to the extent, that there are no outstanding CBFR Loans of the same Class and, in
any such event, the Borrower shall pay the break funding payment required in accordance with
Section 2.16. The Administrative Agent and the Lenders shall have the continuing and exclusive
right to apply and reverse and reapply any and all such proceeds and payments to any portion of the
Secured Obligations.

 

 

     (c) At the election of the Administrative Agent, all payments of principal, interest, LC
Disbursements, fees, premiums, reimbursable expenses (including, without limitation, all
reimbursement for fees and expenses pursuant to Section 9.03), and other sums payable under the
Loan Documents, may be paid from the proceeds of Borrowings made hereunder whether made following a
request by the Borrower pursuant to Section 2.03 or a deemed request as provided in this Section or
may be deducted from any deposit account of the Borrower maintained with the Administrative Agent.
The Borrower hereby irrevocably authorizes (i) the Administrative Agent to make a Borrowing for the
purpose of paying each payment of principal, interest and fees as it becomes due hereunder or any
other amount due under the Loan Documents and agrees that all such amounts charged shall constitute
Loans (including Swingline Loans and Overadvances, but such a Borrowing may only constitute a
Protective Advance if it is to reimburse costs, fees and expenses as described in Section 9.03) and
that all such Borrowings shall be deemed to have been requested pursuant to Sections 2.03, 2.04,
2.05, or 2.06 as applicable and (ii) the Administrative Agent to charge any deposit account of the
Borrower maintained with the Administrative Agent for each payment of principal, interest and fees
as it becomes due hereunder or any other amount due under the Loan Documents.

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

     (e) Unless the Administrative Agent shall have received notice from the Borrower prior to
the date on which any payment is due to the Administrative Agent for the account of the Lenders or
the Issuing Bank hereunder that the Borrower will not make such payment, the Administrative Agent
may assume that the Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders or the Issuing Bank, as the case may be,
the amount due. In such event, if the Borrower has not in fact made such payment, then each of the
Lenders or the Issuing Bank, as the case may be, severally

 

 

agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such
Lender or Issuing Bank with interest thereon, for each day from and including the date such amount
is distributed to it to but excluding the date of payment to the Administrative Agent, at the
greater of the Federal Funds Effective Rate and a rate determined by the Administrative Agent in
accordance with banking industry rules on interbank compensation.

     (f) If any Lender shall fail to make any payment required to be made by it pursuant to
Section 2.05, 2.06(d) or (e), 2.07(b), 2.18(e) or 9.03(c) hereunder, then the Administrative Agent
may, in its discretion (notwithstanding any contrary provision hereof), (i) apply any amounts
thereafter received by the Administrative Agent for the account of such Lender to satisfy such
Lender’s obligations under such Sections hereunder until all such unsatisfied obligations are fully
paid and/or (ii) hold any such amounts in a segregated account as cash collateral for, and apply
any such amounts to, any future funding obligations of such Lender under such Sections hereunder;
application of amounts pursuant to (i) and (ii) above shall be made in such order as may be
determined by the Administrative Agent in its discretion.

     SECTION 2.19 Mitigation Obligations; Replacement of Lenders.

     (a) If any Lender requests compensation under Section 2.15, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.17, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign its rights and
obligations hereunder to another of its offices, branches or affiliates, if, in the judgment of
such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.15 or 2.17, as the case may be, in the future and (ii) would not subject such Lender
to any unreimbursed cost or expense and would not otherwise be disadvantageous to such Lender. The
Borrower hereby agrees to pay all reasonable costs and expenses incurred by any Lender in
connection with any such designation or assignment.

     (b) If any Lender requests compensation under Section 2.15, or if the Borrower is required
to pay any additional amount to any Lender or any Governmental Authority for the account of any
Lender pursuant to Section 2.17, or if any Lender becomes a Defaulting Lender, then the Borrower
may, at its sole expense and effort, upon notice to such Lender and the Administrative Agent,
require such Lender to assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and obligations under this
Agreement to an assignee that shall assume such obligations (which assignee may be another Lender,
if a Lender accepts such assignment); provided that (i) the Borrower shall have received
the prior written consent of the Administrative Agent (and if a Revolving Commitment is being
assigned, the Issuing Bank), which consent shall not unreasonably be withheld, (ii) such Lender
shall have received payment of an amount equal to the outstanding principal of its Loans and
participations in LC Disbursements and Swingline Loans, accrued interest thereon, accrued fees and
all other amounts payable to it hereunder, from the assignee (to the extent of such outstanding
principal and accrued interest and fees) or the Borrower (in the case of all other amounts) and
(iii) in the case of any such assignment resulting from a claim for compensation under Section 2.15
or payments required to be made pursuant to Section 2.17, such assignment will result in a
reduction in such compensation or payments. A Lender shall not be required to make any such
assignment and delegation if, prior thereto, as a

 

 

result of a waiver by such Lender or otherwise, the circumstances entitling the Borrower to
require such assignment and delegation cease to apply.

     SECTION 2.20 Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary,
if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as
such Lender is a Defaulting Lender:

     (a) fees shall cease to accrue on the unfunded portion of the Revolving Commitment of such
Defaulting Lender pursuant to Section 2.12(a);

     (b) the Commitment and Revolving Credit Exposure of such Defaulting Lender shall not be
included in determining whether all Lenders or the Required Lenders have taken or may take any
action hereunder (including any consent to any amendment or waiver pursuant to Section 9.02),
provided that any waiver, amendment or modification requiring the consent of all Lenders or each
affected Lender which affects such Defaulting Lender differently than other affected Lenders shall
require the consent of such Defaulting Lender;

     (c) if any Swingline Exposure or LC Exposure exists at the time a Lender becomes a
Defaulting Lender then:

          (i) all or any part of such Swingline Exposure and LC Exposure shall be reallocated among
the non-Defaulting Lenders in accordance with their respective Applicable Percentages but only to
the extent (x) the sum of all non-Defaulting Lenders’ Revolving Credit Exposures plus such
Defaulting Lender’s Swingline Exposure and LC Exposure does not exceed the total of all
non-Defaulting Lenders’ Revolving Commitments and (y) the conditions set forth in Section 4.02 are
satisfied at such time; and

          (ii) if the reallocation described in clause (i) above cannot, or can only partially, be
effected, the Borrower shall within one Business Day following notice by the Administrative Agent
(x) first, prepay such Swingline Exposure and (y) second, cash collateralize such
Defaulting Lender’s LC Exposure (after giving effect to any partial reallocation pursuant to clause
(i) above) in accordance with the procedures set forth in Section 2.06(j) for so long as such LC
Exposure is outstanding;

          (iii) if the Borrower cash collateralizes any portion of such Defaulting Lender’s LC
Exposure pursuant to Section 2.20(c), the Borrower shall not be required to pay any fees to such
Defaulting Lender pursuant to Section 2.12(b) with respect to such Defaulting Lender’s LC Exposure
during the period such Defaulting Lender’s LC Exposure is cash collateralized;

          (iv) if the LC Exposure of the non-Defaulting Lenders is reallocated pursuant to Section
2.20(c), then the fees payable to the Lenders pursuant to Section 2.12(a) and Section 2.12(b) shall
be adjusted in accordance with such non-Defaulting Lenders’ Applicable Percentages; or

          (v) if any Defaulting Lender’s LC Exposure is neither cash collateralized nor reallocated
pursuant to Section 2.20(c), then, without prejudice to any rights or remedies of the Issuing Bank
or any Lender hereunder, all facility fees that otherwise would have been payable

 

 

to such Defaulting Lender (solely with respect to the portion of such Defaulting Lender’s
Commitment that was utilized by such LC Exposure) and letter of credit fees payable under Section
2.12(b) with respect to such Defaulting Lender’s LC Exposure shall be payable to the Issuing Bank
until such LC Exposure is cash collateralized and/or reallocated;

     (d) The Swingline Lender shall not be required to fund any Swingline Loan and the Issuing
Bank shall not be required to issue, amend or increase any Letter of Credit, unless it is satisfied
that the related exposure will be 100% covered by the Commitments of the non-Defaulting Lenders
and/or cash collateral will be provided by the Borrower in accordance with Section 2.20(c), and
participating interests in any such newly issued or increased Letter of Credit shall be allocated
among non-Defaulting Lenders in a manner consistent with Section 2.20(c)(i) (and Defaulting Lenders
shall not participate therein); and

     (e) in the event and on the date that each of the Administrative Agent, the Borrower, the
Issuing Bank and the Swingline Lender agrees that a Defaulting Lender has adequately remedied all
matters that caused such Lender to be a Defaulting Lender, then the Swingline Exposure and LC
Exposure of the other Lenders shall be readjusted to reflect the inclusion of such Lender’s
Revolving Commitment and on such date such Lender shall purchase at par such of the Loans of the
other Lenders (other than Swingline Loans) as the Administrative Agent shall determine may be
necessary in order for such Lender to hold such Loans in accordance with its Applicable Percentage.

     SECTION 2.21 Returned Payments. If after receipt of any payment which is applied to the payment of
all or any part of the Obligations, the Administrative Agent or any Lender is for any reason
compelled to surrender such payment or proceeds to any Person because such payment or application
of proceeds is invalidated, declared fraudulent, set aside, determined to be void or voidable as a
preference, impermissible setoff, or a diversion of trust funds, or for any other reason, then the
Obligations or part thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not been received by the
Administrative Agent or such Lender. The provisions of this Section 2.21 shall be and remain
effective notwithstanding any contrary action which may have been taken by the Administrative Agent
or any Lender in reliance upon such payment or application of proceeds. The provisions of this
Section 2.21 shall survive the termination of this Agreement.

ARTICLE III.

Representations and Warranties

     Each Loan Party represents and warrants to the Lenders that:

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

 

 

     SECTION 3.02 Authorization; Enforceability. The Transactions are within each Loan Party’s
organizational powers and have been duly authorized by all necessary organizational actions and, if
required, actions by equity holders. The Loan Documents to which each Loan Party is a party have
been duly executed and delivered by such Loan Party and constitute a legal, valid and binding
obligation of such Loan Party, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights
generally and subject to general principles of equity, regardless of whether considered in a
proceeding in equity or at law.

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

     SECTION 3.04 Financial Condition; No Material Adverse Change.

     (a) The Borrower has heretofore furnished to the Lenders its consolidated balance sheet and
statements of income, stockholders equity and cash flows (i) as of and for the fiscal year ended
January 29, 2010, reported on by Deloitte & Touche, independent public accountants, and (ii) as of
and for the fiscal month and the portion of the fiscal year ended July 2, 2010, certified by its
chief financial officer. Such financial statements present fairly, in all material respects, the
financial position and results of operations and cash flows of the Borrower and its consolidated
Subsidiaries as of such dates and for such periods in accordance with GAAP, subject to year-end
audit adjustments and the absence of footnotes in the case of the statements referred to in clause
(ii) above.

     (b) No event, change or condition has occurred that has had, or could reasonably be
expected to have, a Material Adverse Effect since January 29, 2010.

     SECTION 3.05 Properties.

     (a) As of the date of this Agreement, Schedule 3.05 sets forth the address of each
parcel of real property that is owned or leased by each Loan Party. Each of such leases and
subleases is valid and enforceable in accordance with its terms and is in full force and effect,
and no default by any party to any such lease or sublease exists. Each of the Loan Parties and its
Subsidiaries has good and indefeasible title to, or valid leasehold interests in, all its real and
personal property, free of all Liens other than Permitted Encumbrances and Liens permitted by
Section 6.02.

     (b) Each Loan Party and its Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights and patents necessary to its business as currently conducted, a correct

 

 

and complete list of which, as of the date of this Agreement, is set forth on Schedule
3.05, and the use thereof by each Loan Party and its Subsidiaries does not infringe in any
material respect upon the rights of any other Person, and the Loan Parties’ rights thereto are not
subject to any licensing agreement or similar arrangement except as set forth on Schedule
3.05.

     SECTION 3.06 Litigation and Environmental Matters.

     (a) There are no actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of any Loan Party, threatened against or affecting
the Loan Parties or any of their Subsidiaries (i) as to which there is a reasonable possibility of
an adverse determination and that, if adversely determined, could reasonably be expected,
individually or in the aggregate, to result in a Material Adverse Effect (other than the Disclosed
Matters) or (ii) that involve this Agreement or the Transactions.

     (b) Except for the Disclosed Matters (i) no Loan Party nor any of its Subsidiaries has
received notice of any claim with respect to any Environmental Liability or knows of any basis for
any Environmental Liability and (ii) and except with respect to any other matters that,
individually or in the aggregate, could not reasonably be expected to result in a Material Adverse
Effect, no Loan Party nor any of its Subsidiaries (1) has failed to comply with any Environmental
Law or to obtain, maintain or comply with any permit, license or other approval required under any
Environmental Law or (2) has become subject to any Environmental Liability.

     (c) Since the date of this Agreement, there has been no change in the status of the
Disclosed Matters that, individually or in the aggregate, has resulted in, or materially increased
the likelihood of, a Material Adverse Effect.

     SECTION 3.07 Compliance with Laws and Agreements. Each Loan Party and its Subsidiaries is in
compliance with all Requirements of Law applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, including this Agreement, except
where the failure to do so, individually or in the aggregate, would not reasonably be expected to
result in a Material Adverse Effect.

     SECTION 3.08 Investment Company Status. No Loan Party nor any of its Subsidiaries is an
“investment company” as defined in, or subject to regulation under, the Investment Company Act of
1940.

     SECTION 3.09 Taxes. Each Loan Party and its Subsidiaries has timely filed or caused to be filed
all Tax returns and reports required to have been filed and has paid or caused to be paid all Taxes
required to have been paid by it, and no tax liens have been filed and no claims are being asserted
with respect to any such taxes, except (a) Taxes that are being contested in good faith by
appropriate proceedings and for which such Loan Party or such Subsidiary, as applicable, has set
aside on its books adequate reserves with respect thereto in accordance with GAAP or (b) to the
extent that the failure to do so could not be expected to result in a Material Adverse Effect.

     SECTION 3.10 ERISA. No ERISA Event has occurred or is reasonably expected to occur that, when
taken together with all other such ERISA Events for which liability is

 

 

reasonably expected to occur, could reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.11 Disclosure. The Borrower has disclosed to the Administrative Agent all agreements,
instruments and corporate or other restrictions to which it or any Subsidiary is subject, and all
other matters known to it, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.

     SECTION 3.12 Projected Financial Information. Projected financial information was prepared in good
faith based upon assumptions believed to be reasonable at the time delivered.

     SECTION 3.13 Material Agreements. No Loan Party is in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any material agreement
to which it is a party or any agreement or instrument evidencing or governing Indebtedness, except
to the extent such default would not reasonably be expected to result in a Material Adverse Effect.

     SECTION 3.14 Solvency.

     (a) Immediately after the consummation of the Transactions to occur on the Closing Date,
(i) the fair value of the assets of each Loan Party, at a fair valuation, will exceed its debts and
liabilities, subordinated, contingent or otherwise; (ii) the present fair saleable value of the
property of each Loan Party will be greater than the amount that will be required to pay the
probable liability of its debts and other liabilities, subordinated, contingent or otherwise, as
such debts and other liabilities become absolute and matured; (iii) each Loan Party will be able to
pay its debts and liabilities, subordinated, contingent or otherwise, as such debts and liabilities
become absolute and matured; and (iv) each Loan Party will not have unreasonably small capital with
which to conduct the business in which it is engaged as such business is now conducted and is
proposed to be conducted after the Closing Date.

     (b) No Loan Party intends to, or will permit any of its Subsidiaries to, and no Loan Party
believes that it or any of its Subsidiaries will, incur debts beyond its ability to pay such debts
as they mature, taking into account the timing of and amounts of cash to be received by it or any
such Subsidiary and the timing of the amounts of cash to be payable on or in respect of its
Indebtedness or the Indebtedness of any such Subsidiary.

     SECTION 3.15 Insurance. Schedule 3.15 sets forth a description of all insurance maintained
by or on behalf of the Loan Parties and the Subsidiaries as of the Closing Date. As of the Closing
Date, all premiums due and owing in respect of such insurance have been paid. The Borrower
believes that the insurance maintained by or on behalf of the Borrower and the Subsidiaries is
adequate.

     SECTION 3.16 Capitalization and Subsidiaries. Schedule 3.16 sets forth as of the Closing
Date (a) a correct and complete list of the name and relationship to the Borrower of each and all
of the Borrower’s Subsidiaries, (b) a true and complete listing of each class of each of the
Borrower’s authorized Equity Interests, of which all of such issued shares are validly issued,
outstanding, fully paid and non-assessable, and owned beneficially and of record, as of the

 

 

Closing Date, by the Persons identified on Schedule 3.16, and (c) the type of entity
of the Borrower and each of its Subsidiaries. As of the Closing Date, all of the issued and
outstanding Equity Interests owned by any Loan Party has been (to the extent such concepts are
relevant with respect to such ownership interests) duly authorized and issued and is fully paid and
non-assessable.

     SECTION 3.17 Security Interest in Collateral. The provisions of this Agreement and the other Loan
Documents create legal and valid Liens on all the Collateral in favor of the Administrative Agent,
for the benefit of the Administrative Agent and the Lenders, and such Liens constitute perfected
and continuing Liens on the Collateral, securing the Secured Obligations, enforceable against the
applicable Loan Party and all third parties, and having priority over all other Liens on the
Collateral except in the case of (a) Permitted Encumbrances or Liens permitted under Section 6.02
to the extent any such Permitted Encumbrances or Liens permitted under Section 6.02 would have
priority over the Liens in favor of the Administrative Agent pursuant to any applicable law or
agreement and (b) Liens perfected only by possession (including possession of any certificate of
title) to the extent the Administrative Agent has not obtained or does not maintain possession of
such Collateral.

     SECTION 3.18 Employment Matters. As of the Closing Date, there are no strikes, lockouts or
slowdowns against any Loan Party or any Subsidiary pending or, to the knowledge of the Borrower,
threatened. The hours worked by and payments made to employees of the Loan Parties and the
Subsidiaries have not been in material violation of the Fair Labor Standards Act or any other
applicable Federal, state, local or foreign law dealing with such matters. All payments due from
any Loan Party or any Subsidiary, or for which any claim may be made against any Loan Party or any
Subsidiary, on account of wages and employee health and welfare insurance and other benefits, have
been paid or accrued as a liability on the books of the Loan Party or such Subsidiary in all
material aspects.

     SECTION 3.19 Affiliate Transactions. Except as set forth on Schedule 3.19, as of the date of this
Agreement, there are no existing or proposed agreements, arrangements, understandings, or
transactions between any Loan Party and any of the officers, directors, Control Parties or
Affiliates (other than Subsidiaries) of any Loan Party.

ARTICLE IV.

Conditions

     SECTION 4.01 Closing Date. This Agreement shall not become effective until the date on which each
of the following conditions is satisfied (or waived in accordance with Section 9.02):

     (a) Credit Agreement and Loan Documents. The Administrative Agent (or its counsel)
shall have received (i) from each party hereto either (A) a counterpart of this Agreement signed on
behalf of such party or (B) written evidence satisfactory to the Administrative Agent (which may
include facsimile transmission of a signed signature page of this Agreement) that such party has
signed a counterpart of this Agreement and (ii) duly executed copies of the Loan Documents executed
on the Closing Date and such other certificates, documents, instruments and

 

 

agreements as the Administrative Agent shall reasonably request in connection with the transactions
contemplated by this Agreement and the other Loan Documents.

     (b) Financial Statements and Projections. The Lenders shall have received (i)
audited consolidated financial statements of the Borrower for the 2007, 2008 and 2009 fiscal years,
(ii) unaudited interim consolidated financial statements of Borrower for each fiscal month and
quarter ended after the date of the latest applicable financial statements delivered pursuant to
clause (i) of this paragraph as to which such financial statements are available, and such
financial statements shall not, in the reasonable judgment of the Administrative Agent, reflect any
material adverse change in the consolidated financial condition of the Borrower, as reflected in
the financial statements or projections contained in the Information Memorandum and (iii)
satisfactory projections through 2011, it being understood that the projections provided prior to
the Closing Date are satisfactory.

     (c) Closing Certificates; Certified Certificate of Incorporation; Good Standing
Certificates. The Administrative Agent shall have received (i) a certificate of each Loan
Party, dated the Closing Date and executed by its Secretary or Assistant Secretary, which shall (A)
certify the resolutions of its Board of Directors, members or other body authorizing the execution,
delivery and performance of the Loan Documents to which it is a party, (B) identify by name and
title and bear the signatures of the Financial Officers and any other officers of such Loan Party
authorized to sign the Loan Documents to which it is a party, and (C) contain appropriate
attachments, including the certificate or articles of incorporation or organization of each Loan
Party certified by the relevant authority of the jurisdiction of organization of such Loan Party
and a true and correct copy of its by-laws or operating, management or partnership agreement, and
(ii) a long form good standing certificate for each Loan Party from its jurisdiction of
organization.

     (d) Legal Opinions. Such opinions of counsel to the Borrowers and its
Subsidiaries, addressed to the Administrative Agent and Lenders in a form reasonably satisfactory
to the Administrative Agent all at Borrower’s expense, regarding due authorization, execution and
delivery, and enforceability of the Loan Documents.

     (e) No Default Certificate. The Administrative Agent shall have received a
certificate, signed by the chief financial officer of the Borrower, on the Closing Date (i) stating
that no Default has occurred and is continuing, and (ii) stating that the representations and
warranties contained in Article III are true and correct in all material respects as of such date.

     (f) Fees. The Lenders and the Administrative Agent shall have received all fees
required to be paid, and all expenses for which invoices have been presented (including the
reasonable fees and expenses of legal counsel), on or before the Closing Date. All such amounts
will be paid with proceeds of Loans made on the Closing Date and will be reflected in the funding
instructions given by the Borrower to the Administrative Agent on or before the Closing Date.

     (g) Lien Searches. The Administrative Agent shall have received the results of a
recent lien search in each of the jurisdictions where assets of the Loan Parties are located, and
such search shall reveal no liens on any of the assets of the Loan Parties except for liens

 

 

permitted by Section 6.02 or discharged on or prior to the Closing Date pursuant to a pay-off
letter or other documentation satisfactory to the Administrative Agent.

     (h) Funding Account. The Administrative Agent shall have received a notice setting
forth the deposit account of the Borrower (the “Funding Account”) to which the Lender is
authorized by the Borrower to transfer the proceeds of any Borrowings requested or authorized
pursuant to this Agreement.

     (i) Collateral Access and Control Agreements. The Administrative Agent shall have
received each (i) Collateral Access Agreement required to be provided pursuant to Section 4.13 of
the Security Agreement and (ii) Deposit Account Control Agreement required to be provided pursuant
to Section 4.14 of the Security Agreement.

     (j) Solvency. The Administrative Agent shall have received a solvency certificate
from a Financial Officer.

     (k) Borrowing Base Certificate. The Administrative Agent shall have received a
Borrowing Base Certificate which calculates the Borrowing Base as of the end of the Business Day
immediately preceding the Closing Date.

     (l) Closing Availability. After giving effect to all Borrowings to be made on the
Closing Date and the issuance of any Letters of Credit on the Closing Date and payment of all fees
and expenses due hereunder, and with all of the Loan Parties’ indebtedness, liabilities, and
obligations current, Availability shall not be less than $5,000,000.

     (m) The Borrower shall have received loans and commitments of at least $350,000,000 under
the SPV Credit Agreement, upon terms and conditions reasonably satisfactory to Administrative
Agent.

     (n) Liquidity. Minimum Net Liquidity for the Borrower on the Closing Date in the
amount of $25,000,000 or more.

     (o) Intercreditor Agreements. The Administrative Agent shall have entered into the
Intercreditor Agreement and the Senior Subordinated Intercreditor Agreement, in each case,
containing terms and conditions satisfactory in all respects to the Administrative Agent.

     (p) Insurance. The Administrative Agent shall have received evidence of insurance
coverage in form, scope, and substance reasonably satisfactory to the Administrative Agent and
otherwise in compliance with the terms of Section 5.09 and Section 4.12 of the Security Agreement,
it being understood that the evidence of insurance provided prior to the Closing Date is
satisfactory.

     SECTION 4.02 Each Credit Event. The obligation of each Lender to make a Loan on the occasion of
any Borrowing, and of the Issuing Bank to issue, amend, renew or extend any Letter of Credit, is
subject to the satisfaction of the following conditions:

     (a) The representations and warranties of the Borrower set forth in this Agreement shall be
true and correct in all material respects (without duplication of other materiality

 

 

qualifiers) on and as of the date of such Borrowing or the date of issuance, amendment, renewal or
extension of such Letter of Credit, as applicable.

     (b) At the time of and immediately after giving effect to such Borrowing or the issuance,
amendment, renewal or extension of such Letter of Credit, as applicable, no Event of Default shall
have occurred and be continuing.

     (c) After giving effect to any Borrowing or the issuance of any Letter of Credit,
Availability is not less than zero.

     Each Borrowing and each issuance, amendment, renewal or extension of a Letter of Credit shall
be deemed to constitute a representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a), (b) and (c) of this Section.

     Notwithstanding the failure to satisfy the conditions precedent set forth in paragraphs (a) or
(b) of this Section, unless otherwise directed by the Required Lenders, the Administrative Agent
may, but shall have no obligation to, continue to make Loans and an Issuing Bank may, but shall
have no obligation to, issue or cause to be issued any Letter of Credit for the ratable account and
risk of Lenders from time to time if the Administrative Agent believes that making such Loans or
issuing or causing to be issued any such Letter of Credit is in the best interests of the Lenders.

ARTICLE V.

Affirmative Covenants

     Until the Commitments have expired or been terminated and the principal of and interest on
each Loan and all fees payable hereunder shall have been paid in full and all Letters of Credit
shall have expired or terminated and all LC Disbursements shall have been reimbursed, each Loan
Party executing this Agreement covenants and agrees, jointly and severally with all of the other
Loan Parties, with the Lenders that:

     SECTION 5.01 Financial Statements; Borrowing Base and Other Information. The Borrower will furnish
to the Administrative Agent and each Lender:

     (a) within 120 days (or, following an Initial Public Offering, 90 days or such longer
period in which the Borrower is permitted to submit its form 10-K with the Securities and Exchange
Commission) after the end of each Fiscal Year of the Borrower, its audited consolidated balance
sheet and related statements of operations, stockholders’ equity and cash flows as of the end of
and for such year, setting forth in each case in comparative form the figures for the previous
Fiscal Year, all reported on by independent public accountants acceptable to the Required Lenders
(without a “going concern” or like qualification or exception and without any qualification or
exception as to the scope of such audit) to the effect that such consolidated financial statements
present fairly in all material respects the financial condition and results of operations of the
Borrower and its consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, accompanied by any management letter prepared by said accountants;

 

 

     (b) within 45 days after the end of each of the first three Fiscal Quarters of the
Borrower, its consolidated balance sheet and related statements of operations, stockholders’ equity
and cash flows (and at the request of the Administrative Agent in its sole discretion,
consolidating balance sheet) as of the end of and for such Fiscal Quarter and the then elapsed
portion of the Fiscal Year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of the end of) the
previous Fiscal Year, all certified by one of its Financial Officers as presenting fairly in all
material respects the financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes;

     (c) within 30 days after the end of each fiscal month of the Borrower, its consolidated
balance sheet and related statements of operations, stockholders’ equity and cash flows (and at the
request of the Administrative Agent in its sole discretion, consolidating balance sheet) as of the
end of and for such fiscal month and the then elapsed portion of the Fiscal Year, setting forth in
each case in comparative form the figures for the corresponding period or periods of (or, in the
case of the balance sheet, as of the end of) the previous Fiscal Year, all certified by one of its
Financial Officers as presenting fairly in all material respects the financial condition and
results of operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;

     (d) concurrently with any delivery of financial statements under clause (a) or (b) or (c)
above, a certificate of a Financial Officer of the Borrower in substantially the form of
Exhibit D (i) certifying, in the case of the financial statements delivered under clause
(b) or (c), as presenting fairly in all material respects the financial condition and results of
operations of the Borrower and its consolidated Subsidiaries on a consolidated basis in accordance
with GAAP consistently applied, subject to normal year-end audit adjustments and the absence of
footnotes, (ii) certifying as to whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be taken with respect thereto,
(iii) setting forth reasonably detailed calculations demonstrating compliance with Sections 6.14
and (iv) stating whether any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements accompanying such
certificate;

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

     (f) as soon as available, but in any event not more than 30 days prior to the end of each
Fiscal Year of the Borrower and not later than the last day of such Fiscal Year, a copy of the plan
and forecast (including a projected consolidated balance sheet, income statement and funds flow
statement and, at the request of the Administrative Agent in its sole discretion,

 

 

consolidating balance sheet,) of the Borrower for each fiscal month of the upcoming Fiscal Year
(the “Projections”) in form reasonably satisfactory to the Administrative Agent;

     (g) as soon as available but in any event within 10 days of the end of each fiscal month,
and at such other times as may be necessary to re-determine availability of Advances hereunder or
as may be requested by the Administrative Agent, as of the period then ended, a Borrowing Base
Certificate and supporting information in connection therewith, together with any additional
reports with respect to the Borrowing Base as the Administrative Agent may reasonably request;

     (h) as soon as available but in any event within 10 days of the end of each fiscal month or
if requested by Administrative Agent within 2 Business Days after the end of each week and at such
other times as may be requested by the Administrative Agent, as of the period then ended, all
delivered electronically in a text formatted file acceptable to the Administrative Agent;

          (i) a schedule detailing the Borrower’s Inventory, in form satisfactory to the
Administrative Agent, (1) by location (showing Inventory in transit, any Inventory located with a
third party under any consignment, bailee arrangement, or warehouse agreement), by class (raw
material, work-in-process and finished goods), by product type, and by volume on hand, which
Inventory shall be valued at the lower of cost (determined on a first-in, first-out basis) or
market and adjusted for Reserves as the Administrative Agent has previously indicated to the
Borrower are deemed by the Administrative Agent to be appropriate, (2) including a report of any
variances or other results of Inventory counts performed by the Borrower since the last Inventory
schedule (including information regarding sales or other reductions, additions, returns, credits
issued by Borrower and complaints and claims made against the Borrower), and (3) reconciled to the
Borrowing Base Certificate delivered as of such date;

          (ii) a worksheet of calculations prepared by the Borrower to determine Eligible Inventory,
such worksheets detailing the Inventory excluded from Eligible Inventory and the reason for such
exclusion;

          (iii) a reconciliation of the Borrower’s Inventory between the amounts shown in the
Borrower’s general ledger and financial statements and the reports delivered pursuant to clauses
(i) and (ii) above; and

          (iv) a reconciliation of the loan balance per the Borrower’s general ledger to the loan
balance under this Agreement;

     (i) as soon as available but in any event within 10 days of the end of each fiscal month
and at such other times as may be requested by the Administrative Agent, as of the month then
ended, a schedule and aging of the Borrower’s accounts payable, delivered electronically in a text
formatted file acceptable to the Administrative Agent;

     (j) promptly upon the Administrative Agent’s request:

          (i) copies of purchase orders, invoices, and shipping and delivery documents in connection
with any Inventory purchased by any Loan Party; and

 

 

          (ii) a schedule detailing the balance of all intercompany accounts of the Loan Parties;

     (k) as soon as possible and in any event within 30 days of filing thereof, copies of all
tax returns filed by any Loan Party with the U.S. Internal Revenue Service;

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

     (m) promptly following any request therefor, such other information regarding the
operations, business affairs and financial condition of the Borrower or any Subsidiary, or
compliance with the terms of this Agreement, as the Administrative Agent or any Lender may
reasonably request; and

     (n) within 5 Business Days after the last day of each fiscal month, a Monthly Servicing
Report for such month.

     Notwithstanding the foregoing, after an Initial Public Offering, the obligations in Sections
5.01(a) or (b) may be satisfied with respect to financial information by furnishing the Borrower’s
Form 10-K or 10-Q, as applicable, to the extent filed with the Securities and Exchange Commission.
Documents required to be delivered pursuant to Sections 5.01(a) or (b) may be delivered
electronically and if so delivered, shall be deemed to have been delivered on the date on which the
Borrower posts such documents, or provides a link thereto, on the Borrower’s website on the
Internet; provided that the Borrower shall notify (which may be by facsimile or electronic mail)
the Administrative Agent of the posting of any such documents.

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

     (a) the occurrence of any Default;

     (b) receipt of any notice of any governmental investigation or any litigation or proceeding
commenced or threatened against any Loan Party that (i) seeks damages in excess of $2,500,000 (ii)
seeks injunctive relief to enjoin Borrower from conducting any material part of its business, (iii)
is asserted or instituted against any Plan, its fiduciaries or its assets, (iv) alleges criminal
misconduct by any Loan Party, (v) alleges the violation of any law regarding, or seeks remedies in
connection with, any Environmental Laws, (vi) contests any tax, fee, assessment, or other
governmental charge in excess of $2,500,000 (vii) involves any product recall which involves any
material amount of products sold;

     (c) any Lien (other than Permitted Encumbrances or Liens permitted under Section 6.02) or
claim made or asserted against any of the Collateral;

     (d) any loss, damage, or destruction to the Collateral in the amount of $2,500,000 or more,
whether or not covered by insurance;

 

 

     (e) any and all default notices received under or with respect to any leased location or
public warehouse where Collateral is located (which shall be delivered within two Business Days
after receipt thereof);

     (f) [Intentionally Omitted];

     (g) the fact that a Loan Party has entered into a Swap Agreement or an amendment to a Swap
Agreement with a Person other than a Lender or the Administrative Agent, together with copies of
all agreements evidencing such Swap Agreement or amendments thereto (which shall be delivered
within two Business Days);

     (h) the occurrence of any ERISA Event that, alone or together with any other ERISA Events
that have occurred, could reasonably be expected to result in liability of the Borrower and its
Subsidiaries in an aggregate amount exceeding $2,500,000; and

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

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

     SECTION 5.03 Existence; Conduct of Business. Each Loan Party will, and will cause each Subsidiary
to, (a) do or cause to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, qualifications, licenses, permits, franchises,
governmental authorizations, intellectual property rights, licenses and permits material to the
conduct of its business, and maintain all requisite authority to conduct its business in each
jurisdiction in which its business is conducted; provided that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under Section 6.03 and (b)
carry on and conduct its business in substantially the same manner and in substantially the same
fields of enterprise as it is presently conducted; provided, however, the Borrower may
liquidate, wind down or dissolve Bluestem Fulfillment, Inc.

     SECTION 5.04 Payment of Obligations. Each Loan Party will, and will cause each Subsidiary to, pay
or discharge all Material Indebtedness and all other material liabilities and obligations,
including Taxes, before the same shall become delinquent or in default, except where (a) the
validity or amount thereof is being contested in good faith by appropriate proceedings, (b) such
Loan Party or such Subsidiary has set aside on its books adequate reserves with respect thereto in
accordance with GAAP and (c) such liabilities would not result in aggregate liabilities in excess
of $2,500,000 and none of the Collateral becomes subject to forfeiture or loss as a result of the
contest.

     SECTION 5.05 Maintenance of Properties. Each Loan Party will, and will cause each Subsidiary to,
keep and maintain all property material to the conduct of its business in good working order and
condition, ordinary wear and tear excepted.

 

 

     SECTION 5.06 Books and Records; Inspection Rights. Each Loan Party will, and will cause each
Subsidiary to, (i) keep proper books of record and account in which full, true and correct entries
are made of all dealings and transactions in relation to its business and activities and (ii)
permit any representatives designated by the Administrative Agent or any Lender (including
employees of the Administrative Agent, any Lender or any consultants, accountants, lawyers and
appraisers retained by the Administrative Agent), upon reasonable prior notice, to visit and
inspect its properties, to examine and make extracts from its books and records, and to discuss its
affairs, finances and condition with its officers and independent accountants, all at such
reasonable times and as often as reasonably requested. After the occurrence and during the
continuance of any Event of Default, each Loan Party shall use commercially reasonable efforts to
provide the Administrative Agent and each Lender with access to its suppliers. The Loan Parties
acknowledge that the Administrative Agent, after exercising its rights of inspection, may prepare
and distribute to the Lenders certain Reports pertaining to the Loan Parties’ assets for internal
use by the Administrative Agent and the Lenders.

     SECTION 5.07 Compliance with Laws. Each Loan Party will, and will cause each Subsidiary to, comply
with all Requirements of Law applicable to it or its property, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in a Material Adverse
Effect.

     SECTION 5.08 Use of Proceeds. The proceeds of the Loans will be used only (i) to finance the
working capital needs of the Borrower and its Subsidiaries in the ordinary course of business and
(ii) to refinance certain existing Indebtedness. No part of the proceeds of any Loan and no Letter
of Credit will be used, whether directly or indirectly, for any purpose that entails a violation of
any of the Regulations of the Board, including Regulations T, U and X.

     SECTION 5.09 Insurance. Each Loan Party will, and will cause each Subsidiary to, maintain with
financially sound and reputable carriers having a financial strength rating by A.M. Best Company of
at least A- VII for the issuer of insurance covering theft or casualty losses with respect to
Inventory and of at least A- VII for the issuer of any other insurance policy (a) insurance in such
amounts (with no greater risk retention) and against such risks (including loss or damage by fire
and loss in transit; theft, burglary, pilferage, larceny, embezzlement, and other criminal
activities; business interruption; and general liability) and such other hazards, as is customarily
maintained by companies of established repute engaged in the same or similar businesses operating
in the same or similar locations and (b) all insurance required pursuant to the Collateral
Documents. The Borrower will furnish to the Lenders, upon request of the Administrative Agent,
information in reasonable detail as to the insurance so maintained.

     SECTION 5.10 Casualty and Condemnation. The Borrower (a) will furnish to the Administrative Agent
and the Lenders prompt written notice of any casualty or other insured damage to any material
portion of the Collateral or the commencement of any action or proceeding for the taking of any
material portion of the Collateral or interest therein under power of eminent domain or by
condemnation or similar proceeding and (b) will ensure that the Net Proceeds of any such event
(whether in the form of insurance proceeds, condemnation awards or otherwise) are collected and
applied in accordance with the applicable provisions of this Agreement and the Collateral Documents

 

 

     SECTION 5.11 Appraisals.

     (a) On a semi-annual basis at the discretion of the Administrative Agent, the Borrower and
the Subsidiaries will provide the Administrative Agent with appraisals or updates thereof of their
Inventory, from an appraiser selected and engaged by the Administrative Agent (in consultation with
the Borrower), and prepared on a basis satisfactory to the Administrative Agent, such appraisals
and updates to include, without limitation, information required by applicable law and regulations
at the sole expense of the Loan Parties; provided, that if an Event of Default has occurred and is
continuing, there shall be no limitation on the number or frequency of appraisals;

     (b) Field examinations will be conducted on an ongoing basis and at regular intervals at
the discretion of the Administrative Agent to ensure the adequacy of Collateral reflected in the
Borrowing Base and related reporting and control systems at the sole expense of the Loan Parties;
provided that field examinations shall not occur more than once per Fiscal Quarter;
provided, further, that if an Event of Default has occurred and is continuing, there shall
be no limitation on the number or frequency of field examinations.

     SECTION 5.12 Payments from Bluestem SPV. The Borrower shall require all payments from Bluestem SPV
and all payments to otherwise pay for Purchased Assets to be directly deposited into the Collateral
Deposit Account.

     SECTION 5.13 Additional Collateral; Further Assurances.

     (a) Subject to applicable law, the Borrower and each Subsidiary that is a Loan Party shall
cause each of its domestic Subsidiaries formed or acquired after the date of this Agreement in
accordance with the terms of this Agreement to become a Loan Party, excluding Bluestem SPV and
Bluestem Fulfillment, Inc., by executing the Joinder Agreement set forth as Exhibit E
hereto (the “Joinder Agreement”). Upon execution and delivery thereof, each such Person (i)
shall automatically become a Loan Guarantor hereunder and thereupon shall have all of the rights,
benefits, duties, and obligations in such capacity under the Loan Documents and (ii) will grant
Liens to the Administrative Agent, for the benefit of the Administrative Agent and the Lenders, in
any property of such Loan Party which constitutes Collateral.

     (b) The Borrower and each Subsidiary that is a Loan Party will cause (i) 100% of the issued
and outstanding Equity Interests of each of its domestic Subsidiaries excluding Equity Interests in
Bluestem SPV and Bluestem Fulfillment, Inc. and (ii) 65% of the issued and outstanding Equity
Interests entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) or such
greater percentage that, due to a change in applicable law after the date hereof, (1) could not
reasonably be expected to cause the undistributed earnings of such foreign Subsidiary as determined
for U.S. federal income tax purposes to be treated as a deemed dividend to such foreign
Subsidiary’s U.S. parent and (2) could not reasonably be expected to cause any material adverse tax
consequences and 100% of the issued and outstanding Equity Interests not entitled to vote (within
the meaning of Treas. Reg. Section 1.956-2(c)(2) in each foreign Subsidiary directly owned by the
Borrower or any domestic Subsidiary to be subject at all times to a first priority, perfected Lien
in favor of the Administrative Agent pursuant to the terms and conditions of the Loan Documents or
other security documents as the Administrative

 

 

Agent shall reasonably request. The Equity Interests in Bluestem SPV shall be subject to at
all times to a second priority, perfected Lien in favor of the Administrative Agent pursuant to the
terms and conditions of the Loan Documents or other security documents as the Administrative Agent
shall reasonably request.

     (c) Without limiting the foregoing, each Loan Party will, and will cause each Subsidiary
to, execute and deliver, or cause to be executed and delivered, to the Administrative Agent such
documents, agreements and instruments, and will take or cause to be taken such further actions
(including the filing and recording of financing statements, fixture filings, mortgages, deeds of
trust and other documents and such other actions or deliveries of the type required by Section
4.01, as applicable), which may be required by law or which the Administrative Agent may, from time
to time, reasonably request to carry out the terms and conditions of this Agreement and the other
Loan Documents and to ensure perfection and priority of the Liens created or intended to be created
by the Collateral Documents, all at the expense of the Loan Parties.

ARTICLE VI.

Negative Covenants

     Until the Commitments have expired or terminated and the principal of and interest on each
Loan and all fees, expenses and other amounts payable under any Loan Document have been paid in
full and all Letters of Credit have expired or terminated and all LC Disbursements shall have been
reimbursed, the Loan Parties covenant and agree, jointly and severally, with the Lenders that:

     SECTION 6.01 Indebtedness. No Loan Party will, nor will it permit any Subsidiary to, create, incur
or suffer to exist any Indebtedness, except:

     (a) the Secured Obligations;

     (b) Indebtedness existing on the Closing Date and set forth in Schedule 6.01 and
extensions, renewals and replacements of any such Indebtedness in accordance with clause (f)
hereof;

     (c) Indebtedness of the Borrower to any Subsidiary and Indebtedness of any Subsidiary to
the Borrower or any other Subsidiary, provided that (i) Indebtedness of any Subsidiary
that is not a Loan Party to the Borrower or any Subsidiary that is a Loan Party shall be subject to
Section 6.04 and (ii) Indebtedness of the Borrower to any Subsidiary and Indebtedness of any
Subsidiary that is a Loan Party to any Subsidiary that is not a Loan Party shall be subordinated
to the Secured Obligations on terms reasonably satisfactory to the Administrative Agent;

     (d) Guarantees by the Borrower of Indebtedness of any Subsidiary and by any Subsidiary of
Indebtedness of the Borrower or any other Subsidiary, provided that (i) the Indebtedness so
Guaranteed is permitted by this Section 6.01, (ii) Guarantees by the Borrower or any Subsidiary
that is a Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall be subject to
Section 6.04 and (iii) Guarantees permitted under this clause (d) shall be

 

 

subordinated to the Secured Obligations of the applicable Subsidiary on the same terms as the
Indebtedness so Guaranteed is subordinated to the Secured Obligations;

     (e) Indebtedness of the Borrower 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 extensions, renewals and replacements of any such Indebtedness in
accordance with clause (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 clause (e) shall not exceed
$10,000,000 at any time outstanding plus up to $25,000,000 to finance the acquisition of the
warehouse the Borrower 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 an extension, refinancing, or renewal of any of the
Indebtedness described in clauses (b), (e) and (j); provided that, (i) the
principal amount or interest rate of such Indebtedness is not increased, (ii) any Liens securing
such Indebtedness are not extended to any additional property of any Loan Party, (iii) no Loan
Party that is not originally obligated with respect to repayment of such Indebtedness is required
to become obligated with respect thereto, (iv) such extension, refinancing or renewal does not
result in a shortening of the average weighted maturity of the Indebtedness so extended, refinanced
or renewed, (v) the other terms of any such extension, refinancing, or renewal are not materially
less favorable to the obligor thereunder than the original terms of such Indebtedness and (vi) if
the Indebtedness that is refinanced, renewed, or extended was subordinated in right of payment to
the Secured Obligations, then the terms and conditions of the refinancing, renewal, or extension
Indebtedness must include subordination terms and conditions that are at least as favorable to the
Administrative Agent and the Lenders as those that were applicable to the refinanced, renewed, or
extended Indebtedness or be subject to an intercreditor agreement satisfactory to the
Administrative Agent shall have been obtained with respect to such Indebtedness;

     (g) Indebtedness 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 the Borrower 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 clause (i) shall not exceed
$2,500,000 at any time outstanding;

 

 

     (j) the Senior Subordinated Debt, plus increases in the outstanding principal amount
thereof as a result of any PIK Payments;

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

     (l) any Indebtedness in respect of the SPV Credit Documents in a principal amount not to
exceed $450,000,000 (excluding capitalized interest, fees and expenses and other Obligations (as
defined in the SPV Credit Documents) relating thereto.

     SECTION 6.02 Liens. No Loan Party will, nor will it 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 Loan Document;

     (b) Permitted Encumbrances;

     (c) any Lien on any property or asset of the Borrower or any Subsidiary existing on the
Closing Date and set forth in Schedule 6.02 (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 the Borrower or Subsidiary and (ii) such Lien shall secure only those
obligations which it secures on the Closing Date and extensions, renewals and replacements thereof
that do not increase the outstanding principal amount thereof;

     (d) Liens on fixed or capital assets acquired, constructed or improved by the Borrower or
any Subsidiary; provided that (i) such security interests secure Indebtedness permitted by
clause (e) of Section 6.01, (ii) such security interests 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 security interests
shall not apply to any other property or assets of the Borrower or Subsidiary and (v) any such
Liens incurred in connection with the acquisition of the St. Cloud Warehouse solely that encumber
the real property fixtures related thereto;

     (e) any Lien existing on any property or asset (other than Accounts and Inventory) prior to
the acquisition thereof by the Borrower or any Subsidiary or existing on any property or asset
(other than Accounts and Inventory) of any Person that becomes a Loan Party after the date hereof
prior to the time such Person becomes a Loan Party; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition or such Person becoming a Loan
Party, as the case may be, (ii) such Lien shall not apply to any other property or assets of the
Loan Party 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 Loan Party, as the case may be and

 

 

extensions, renewals and replacements thereof that do not increase the outstanding principal amount
thereof;

     (f) 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 6.06;

     (h) Liens granted by a Subsidiary that is not a Loan Party in favor of the Borrower or
another Subsidiary in respect of Indebtedness owed by such Subsidiary;

     (i) Liens on Receivables and other Purchased Assets transferred by a Loan Party to, and any
property and assets of, Bluestem SPV and pledges of Bluestem SPV Stock (as defined in the
Intercreditor Agreement);

     (j) Liens securing obligations in respect of the Senior Subordinated Debt; provided that
any such Liens in the Collateral are subordinated to the Liens securing the Obligations pursuant to
the Senior Subordinated Intercreditor Agreement; and

     (k) Liens on the Equity Interests of Bluestem SPV to the extent such Liens solely secure
the obligations of the Borrower under the Holdings Bad Acts Guaranty and the Holdings Letter
Agreement.

Notwithstanding the foregoing, none of the Liens permitted pursuant to this Section 6.02 may at any
time attach to any Loan Party’s Inventory, other than those permitted under clauses (a), (b), (e),
and (g) of the definition of Permitted Encumbrance and clauses (a) and (j) above.

     SECTION 6.03 Fundamental Changes.

     (a) No Loan Party will, nor will it permit any Subsidiary 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 shall have occurred and be continuing (i) any Subsidiary of the
Borrower may merge into the Borrower in a transaction in which the Borrower is the surviving
corporation, (ii) any Loan Party (other than the Borrower) may merge into any other Loan Party in a
transaction in which the surviving entity is a Loan Party, (iii) any Subsidiary that is not a Loan
Party may merge with and into any other Subsidiary and (iv) any Subsidiary that is not a Loan
Party may liquidate or dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower and is not materially disadvantageous to the
Lenders; provided that any such merger involving a Person that is not a wholly owned
Subsidiary immediately prior to such merger shall not be permitted unless also permitted by Section
6.04.

     (b) No Loan Party will, nor will it permit any of its Subsidiaries to, engage to any
material extent in any business other than businesses of the type conducted by the Borrower and its
Subsidiaries on the date of execution of this Agreement and businesses reasonably related thereto.

 

 

     SECTION 6.04 Investments, Loans, Advances, Guarantees and Acquisitions. No Loan Party will,
nor will it permit any Subsidiary to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a Loan Party and 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) Permitted Investments, subject, in the case of a Loan Party, to control agreements in
favor of the Administrative Agent for the benefit of the Lenders or otherwise subject to a
perfected security interest in favor of the Administrative Agent for the benefit of the Lenders
unless prohibited under the SPV Credit Documents as in effect on the Closing Date;

     (b) investments in existence on the Closing Date and described in Schedule 6.04;

     (c) investments by the Borrower and the Subsidiaries in Equity Interests in their
respective Subsidiaries, provided that (A) any such Equity Interests held by a Loan Party
shall be pledged pursuant to the Security Agreement (subject to the limitations applicable to
Bluestem SPV, Bluestem Fulfillment, Inc. and common stock of a foreign Subsidiary referred to in
Section 5.13(b)) and (B) the aggregate amount of investments by Loan Parties in Subsidiaries that
are not Loan Parties (other than Bluestem SPV to the extent otherwise permitted hereunder)
(together with outstanding intercompany loans permitted under clause (B) to the proviso to Section
6.04(d) and outstanding Guarantees permitted under the proviso to Section 6.04(e)) shall not exceed
$2,500,000 at any time outstanding (in each case determined without regard to any write-downs or
write-offs);

     (d) loans or advances made by the Borrower to any Subsidiary and made by any Subsidiary to
the Borrower or any other Subsidiary, provided that (A) any such loans and advances made by
a Loan Party shall not be evidenced by a promissory note and (B) the amount of such loans and
advances made by Loan Parties to Subsidiaries that are not Loan Parties (other than Bluestem SPV to
the extent otherwise permitted hereunder) (together with outstanding investments permitted under
clause (B) to the proviso to Section 6.04(c) and outstanding Guarantees permitted under the proviso
to Section 6.04(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 6.01, provided that
the aggregate principal amount of Indebtedness of Subsidiaries that are not Loan Parties that is
Guaranteed by any Loan Party shall (together with outstanding investments permitted under clause
(B) to the proviso to Section 6.04(c) and outstanding intercompany loans permitted under clause (B)
to the proviso to Section 6.04(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 a Loan Party 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) subject to Sections 4.2(a) and 4.4 of the Security Agreement, notes payable, or stock
or other securities issued by Account Debtors to a Loan Party 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 6.07;

     (i) investments of any Person existing at the time such Person becomes a Subsidiary of the
Borrower or consolidates or merges with the Borrower 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
6.05;

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

     (l) (i) investments in the form of contributions of Receivables Property, in exchange for
equity interests in the SPV made pursuant to the terms of the SPV Credit Documents, and
Contribution Amounts (as defined in the SPV Credit Agreement) required to be made pursuant to the
terms of the SPV Credit Agreement, (ii) the Holdings Bad Acts Guaranty, (iii) investments by the
Borrower in Bluestem SPV pursuant to the terms of the SPV Credit Documents, including investments
in Bluestem SPV following an Initial Public Offering for the purpose of Bluestem SPV making
prepayments and related amounts under the SPV Credit Agreement and (iv) as long as no Default or
Event of Default has occurred and is continuing or would be caused thereby, investments in Bluestem
SPV, to the extent that such investments are required to be made pursuant to the terms of the SPV
Credit Documents, provided, that the restrictions in this clause (iv) shall in no event prohibit
investments permitted under Section 6.04(l)(i), (ii) or (iii); and

     (m) investments by Bluestem SPV permitted under Section 6.4 of the SPV Credit Agreement as
in effect on the Closing Date and acquisitions permitted under Section 6.6 of the SPV Credit
Agreement as in effect on the Closing Date.

     SECTION 6.05 Asset Sales. No Loan Party will, nor will it permit any Subsidiary 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 the Borrower will not
constitute a sale, transfer or disposition), nor will the Borrower permit any Subsidiary to issue
any additional Equity Interest in such Subsidiary, as the case may be (other than to the Borrower
or another Subsidiary in compliance with Section 6.04), except:

 

 

     (a) 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) sales of Receivables Property and other Purchased Assets to Bluestem SPV;

     (c) sales, transfers and dispositions to the Borrower or any Subsidiary, provided
that any such sales, transfers or dispositions involving a Subsidiary that is not a Loan Party
shall be made in compliance with Section 6.09;

     (d) sales, transfers and dispositions of accounts receivable in connection with the
compromise, settlement or collection thereof;

     (e) sales, transfers and dispositions of Permitted Investments and other investments
permitted by clauses (i) and (k) of Section 6.04;

     (f) sale and leaseback transactions permitted by Section 6.06;

     (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
the Borrower or any Subsidiary;

     (h) sales, transfers and other dispositions of assets (other than Equity Interests in a
Subsidiary unless all Equity Interests in such Subsidiary are sold) 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 paragraph (h) shall not
exceed $2,500,000 during any Fiscal Year of the Borrower;

     (i) as long as no Default or Event of Default has occurred and is continuing or would be
caused thereby, sales, transfers, leases or other dispositions, to the extent that such sales,
transfers, leases or other dispositions are permitted to be made pursuant to the terms of the SPV
Credit Documents as in effect on the date hereof; and

     (j) sales, transfers and other dispositions of assets acquired pursuant to Section
6.04(f).

provided that all sales, transfers, leases and other dispositions permitted hereby (other
than those permitted by paragraphs (b), (e), (f), (g) and (i) 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 Permitted Investments and/or cash.

     SECTION 6.06 Sale and Leaseback Transactions. No Loan Party will, nor will it 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 the Borrower 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 the Borrower or such Subsidiary acquires or completes the
construction of such fixed or capital asset.

     SECTION 6.07 Swap Agreements. No Loan Party will enter into any Swap Agreement, except (a) Swap
Agreements entered into to hedge or mitigate risks to which such Loan Party has actual exposure
(other than those in respect of Equity Interests of the Borrower or any of its Subsidiaries), and
(b) Swap Agreements entered into 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 the Borrower.

     SECTION 6.08 Restricted Payments; Certain Payments of Indebtedness.

     (a) No Loan Party will, nor will it 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) the Borrower may make, declare and pay dividends with respect to
its common stock payable in additional shares of its common stock, and, with respect to its
preferred stock, payable in additional shares of such preferred stock or in shares of its common
stock or make cash payments in lieu of fractional shares, (ii) the Borrower may make Restricted
Payments, of up to $1,000,000 per Fiscal Year, pursuant to and in accordance with equity incentive
plans of the Borrower and its Subsidiaries, (iii) so long as there exists no Event of Default, the
Borrower may pay cash dividends on its Series A Preferred Stock or Series B Preferred Stock with
proceeds of an Initial Public Offering upon the conversion of such preferred stock to common stock,
pursuant to Section 4.2.1 of the Borrower’s certificate of incorporation, (iv) following an Initial
Public Offering by the Borrower, the Borrower 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 the Borrower so long as after giving effect to
any such payment, Borrower has Net Liquidity of at least $40,000,000, (v) following an Initial
Public Offering by the Borrower, the Borrower may effect repurchases, redemptions or other pro rata
Restricted Payments on any series of its capital stock in an aggregate amount in any Fiscal Year of
the Borrower 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 so
long as after giving effect to any such payment, Borrower has Net Liquidity of at least
$40,000,000, (vi) following an Initial Public Offering by the Borrower, the Borrower and its
Subsidiaries may make Restricted Payments consisting of the repurchase or other acquisition of
shares of, or options to purchase shares of, capital stock of the Borrower or any of its
Subsidiaries from employees, former employees, directors or former directors of the Borrower 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
the Borrower (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 Servicer Consolidated Group
as of the end of the fiscal quarter most recently ended prior to the date of any such Restricted
Payment) so long as after giving effect to any such payment, Borrower has Net Liquidity of at least
$40,000,000 and (vii) Subsidiaries may declare and pay dividends ratably with respect to their
Equity Interests in accordance with the applicable Organizational Documents;

 

 

     (b) No Loan Party will, nor will it 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 Indebtedness created under the Loan Documents;

          (ii) payment of regularly scheduled interest and principal payments as and when due in
respect of any Indebtedness, other than payments in respect of the Subordinated Indebtedness
prohibited by the subordination provisions thereof;

          (iii) payments (A) in respect of the Senior Subordinated Debt to the extent permitted
pursuant to the Senior Subordinated Intercreditor Agreement and payments thereof with the proceeds
of an Initial Public Offering, (B) by Bluestem SPV in respect of the SPV Credit Documents or (C) by
the Borrower under the Holdings Bad Acts Guaranty.

          (iv) refinancings of Indebtedness to the extent permitted by Section 6.01; and

          (v) payment of secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness.

     SECTION 6.09 Transactions with Affiliates. No Loan Party will, 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) transactions that (i) are in the ordinary course of business and (ii) are at prices and
on terms and conditions not less favorable to the Borrower or such Subsidiary than could be
obtained on an arm’s-length basis from unrelated third parties, (b) transactions between or among
the Borrower and any Subsidiary that is a Loan Party not involving any other Affiliate, (c) any
investment permitted by Sections 6.04(c), 6.04(d), 6.04(e) or 6.04(l), (d) any Indebtedness
permitted under Section 6.01(a), 6.01(c), 6.01(d), 6.01(j) or 6.01(l), (e) any Restricted Payment
permitted by Section 6.08, (f) loans or advances to employees permitted under Section 6.04, (g) the
payment of reasonable fees to directors of the Borrower or any Subsidiary who are not employees of
the Borrower or any Subsidiary approved by the Borrower’s board of directors, and compensation and
employee benefit arrangements paid to, and indemnities provided for the benefit of, directors,
officers or employees of the Borrower or its Subsidiaries in the ordinary course of business,
including without limitation those paid pursuant to matters described in Schedule 3.19, (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 the Borrower’s board of directors, (i) transactions involving the transfer of
Receivables Property and other Purchased Assets to and by Bluestem SPV in connection with the SPV
Credit Documents and other transactions permitted thereunder.

     SECTION 6.10 Restrictive Agreements. No Loan Party will, nor will it 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 such Loan
Party or any of its Subsidiaries 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 the
Borrower or any other Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Subsidiary; provided that (i) the foregoing shall not apply to restrictions and conditions imposed
by law or by any Loan Document, (ii) the foregoing shall not apply to restrictions and conditions
existing on the Closing Date identified on Schedule 6.10 (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 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 the Borrower 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 Senior Subordinated Document or
any SPV Credit Document, in each case, as in effect as of the date hereof.

     SECTION 6.11 Amendment of Material Documents. No Loan Party will, nor will it permit any
Subsidiary to, amend, modify or waive any of the provisions of (a) the Senior Subordinated
Documents, except to the extent permitted under the Senior Subordinated Intercreditor Agreement,
(b) subject to Section 6.15, the SPV Credit Documents in a manner which would adversely affect the
interests of the Borrower, Administrative Agent or Lenders in any material respect and following
notice to Administrative Agent or (c) its certificate of incorporation, by-laws, operating,
management or partnership agreement or other organizational documents, to the extent any such
amendment, modification or waiver would be adverse to the Lenders in any material respect.

     SECTION 6.12 Accounting Changes. No Loan Party shall suffer or permit any of its Subsidiaries to
make any significant change in accounting treatment or reporting practices, except as required by
GAAP, or change the Fiscal Year or method for determining Fiscal Quarters of any Loan Party or any
of its Subsidiaries.

     SECTION 6.13 Receivables Property Payments. The Borrower shall not make any payments to purchase
Receivables Property from any Receivables Account Owner or any successor thereto, except from an
account subject to a springing Account Control Agreement in favor of the Administrative Agent.

     SECTION 6.14 Financial Covenants.

     (a) Fixed Charge Coverage Ratio. The Fixed Charge Coverage Ratio for the Servicer
Consolidated Group (measured as of the last day of each Fiscal Quarter) shall be:

 

 

	 	 	 
	Relevant period	 	Fixed Charge Coverage Ratio
	Closing Date through and including the
Fiscal Quarter ending on or about October
31, 2011

	 	Equal to or greater than 1.00x
	 
	 	 
	Following the Fiscal Quarter ending on or
about October 31, 2011, through and
including the Fiscal Quarter ending on or
about October 31, 2012

	 	Equal to or greater than 1.05x
	 
	 	 
	Following the Fiscal Quarter ending on or
about October 31, 2012

	 	Equal to or greater than 1.10x

     (b) Minimum Consolidated Adjusted EBITDA. The Borrower shall not permit
Consolidated Adjusted EBITDA for any Fiscal Year set forth below to be less than the amount set
forth below for such Fiscal Year:

	 	 	 	 	 
	Fiscal Year	 	Amount
	2010
	 	$	47,500,000	 
	2011
	 	$	52,250,000	 
	2012 and each fiscal year thereafter
	 	$	57,000,000	 

     (c) Minimum LTM EBITDA Margin. The LTM EBITDA Margin for the Servicer Consolidated
Group shall be equal to or greater than 8.5% (measured as of the last day of each Fiscal Quarter).

     (d) Minimum Net Liquidity. The Servicer Consolidated Group’s Net Liquidity shall
be equal to or greater than (i) for each fiscal month of the Servicer other than the December and
January fiscal months, $25,000,000 (measured as of the last day of each such fiscal month of the
Servicer) and (ii) for the December and January fiscal months of the Servicer, $20,000,000
(measured as of the last day of each such fiscal month of the Servicer), in each case, after giving
effect to any payments under this Agreement or the SPV Credit Agreement on such date of
measurement.

     (e) 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, 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.

 

 

     SECTION 6.15 Portfolio Covenants. So long as the SPV Credit Agreement is in effect, the Borrower
shall not violate the following performance measurements, in each case to be determined on a
monthly basis as of the last calendar day of any calendar month following the Closing Date and
calculated on the first Determination Date occurring after such last calendar day of such calendar
month (and based on the information for the preceding calendar month or months, as applicable, set
forth in any Monthly Servicing Report related to such Determination Date):

     (a) The average Principal Payment Ratio for the preceding three-month period shall be
greater than 5.00%.

     (b) The average Principal Default Ratio for the preceding three-month period shall be less
than (1) for any three-month period ending on any date from April 1 to and including August 31 of
the applicable calendar year, 24.00% and (2) otherwise, 28.00%.

     (c) The average Principal Delinquency Ratio for the preceding three-month period shall be
less than 14.50%.

     (d) The Principal Delinquency Ratio for the preceding Monthly Period shall be less than
16.00%.

     (e) The Total Payment Ratio for the preceding Monthly Period shall be greater than 6.50%.

     (f) The average Excess Spread Ratio for the preceding three-month period shall be greater
than 8.00%.

     (g) The average Adjusted Excess Spread Ratio for the preceding three-month period shall be
greater than —4.00% (negative four percent).

     So long as the SPV Credit Agreement is in effect, if the covenants set forth in Section 6.5 of
the SPV Credit Agreement which correspond to the covenants in this Section 6.15 or any definitions
or other constituent elements thereof are amended or waived under the SPV Credit Agreement, the
provisions of this Section 6.15 shall be amended accordingly, automatically and without further
action by the parties hereto.

     SECTION 6.16 IPO Proceeds. The Borrower may use the net proceeds of an Initial Public Offering for
general corporate purposes not otherwise prohibited hereby and for (i) Capital Expenditures which
are excluded from the calculation of Fixed Charge Coverage Ratio pursuant to clause (a)(ii) of the
definition thereof, (ii) to repay in whole or in part in cash the principal amount of the Senior
Subordinated Debt, other than at maturity, and (iii) to repay in whole or in part the term loan
portion of the loans outstanding under the SPV Credit Agreement, other than in accordance with the
Holdings Bad Acts Guaranty (clauses (i)-(iii) being referred to as the “Specified Uses”).
Notwithstanding any provision contained herein to the contrary, the aggregate amount expended by
the Borrower on the Specified Uses will not exceed the net proceeds of the Initial Public
Offering.

 

 

ARTICLE VII.

Events of Default

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

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

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

     (c) any representation or warranty made or deemed made by or on behalf of any Loan Party or
any Subsidiary in or in connection with this Agreement or any other Loan Document or any amendment
or modification thereof or waiver thereunder, or in any report, certificate, financial statement or
other document furnished pursuant to or in connection with this Agreement or any Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to have been materially
incorrect when made or deemed made;

     (d) any Loan Party shall fail to observe or perform any covenant, condition or agreement
contained in Section 5.02(a), 5.03 (with respect to a Loan Party’s existence) or 5.08 or in Article
VI;

     (e) any Loan Party shall fail to observe or perform any covenant, condition or agreement
contained in this Agreement (other than those which constitute a default under another Section of
this Article), and such failure shall continue unremedied for a period of (i) 5 Business Days after
the earlier of knowledge of such breach or notice thereof from the Administrative Agent (which
notice will be given at the request of any Lender) if such breach relates to terms or provisions of
Section 5.01, 5.02 (other than Section 5.02(a)), 5.03 through 5.07, 5.09 or 5.10 of this Agreement
or (ii) 20 days after the earlier of knowledge of such breach or notice thereof from the
Administrative Agent (which notice will be given at the request of any Lender) if such breach
relates to terms or provisions of any other Section of this Agreement;

     (f) any Loan Party or any Subsidiary shall fail to make any payment (whether of principal
or interest and regardless of amount) in respect of any Material Indebtedness, when and as the same
shall become due and payable, which failure continues beyond any period of grace therein provided;

     (g) any event or condition occurs that results in any Material Indebtedness becoming due
prior to its scheduled maturity or that enables or permits (with or without the giving of notice,
but without any further lapse of time) the holder or holders of any Material Indebtedness or any
trustee or agent on its or their behalf to cause any Material Indebtedness to become due, or to
require the prepayment, repurchase, redemption or defeasance thereof, prior to its scheduled
maturity; provided that this clause (g) shall not apply to secured Indebtedness that
becomes due as a result of the voluntary sale or transfer of the property or assets securing such
Indebtedness;

 

 

     (h) an involuntary proceeding shall be commenced or an involuntary petition shall be
filed seeking (i) liquidation, reorganization or other relief in respect of a Loan Party or any
Subsidiary of any Loan Party or its debts, or of a substantial part of its assets, under any
Federal, state or foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for any Loan Party or any Subsidiary of any Loan Party or for a substantial part
of its assets, and, in any such case, such proceeding or petition shall continue undismissed for 60
days or an order or decree approving or ordering any of the foregoing shall be entered;

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

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

     (k) one or more judgments for the payment of money in an aggregate amount in excess of
$2,500,000 shall be rendered against any Loan Party, any Subsidiary of any Loan Party or any
combination thereof to the extent not (1) paid, (2) covered by a third-party indemnity agreement as
to which such third party is solvent (after giving effect to the payment of such indemnification)
and has accepted liability, or (3) adequately covered by insurance (as to which a solvent and
unaffiliated insurance company has not denied coverage) and the same shall remain undischarged for
a period of 30 consecutive days during which execution shall not be effectively stayed, or any
action shall be legally taken by a judgment creditor to attach or levy upon any assets of any Loan
Party or any Subsidiary of any Loan Party to enforce any such judgment or any Loan Party or any
Subsidiary of any Loan Party shall fail within 30 days to discharge one or more non-monetary
judgments or orders which, individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect, which judgments or orders, in any such case, are not stayed on appeal or
otherwise being appropriately contested in good faith by proper proceedings diligently pursued;

     (l) an ERISA Event shall have occurred that, in the opinion of the Required Lenders, when
taken together with all other ERISA Events that have occurred, could reasonably be expected to
result in liability of the Borrower and its Subsidiaries in an aggregate amount exceeding
$2,500,000 in any year;

     (m) a Change in Control shall occur;

 

 

     (n) the occurrence of any “default”, as defined in any Loan Document (other than this
Agreement) or the breach of any of the terms or provisions of any Loan Document (other than this
Agreement), which default or breach continues beyond any period of grace therein provided;

     (o) the Loan Guaranty shall fail to remain in full force or effect or any action shall be
taken to discontinue or to assert the invalidity or unenforceability of the Loan Guaranty, or any
Loan Guarantor shall fail to comply with any of the terms or provisions of the Loan Guaranty to
which it is a party, or any Loan Guarantor shall deny that it has any further liability under the
Loan Guaranty to which it is a party, or shall give notice to such effect;

     (p) any Collateral Document shall for any reason fail to create a valid and perfected first
priority security interest in any Collateral purported to be covered thereby, except as permitted
by the terms of any Collateral Document or the Intercreditor Agreement, or any Collateral Document
shall fail to remain in full force or effect or any action shall be taken to discontinue or to
assert the invalidity or unenforceability of any Collateral Document, or any Loan Party shall fail
to comply with any of the terms or provisions of any Collateral Document; or

     (q) any material provision of any Loan Document for any reason ceases to be valid, binding and
enforceable in accordance with its terms (or any Loan Party shall challenge the enforceability of
any Loan Document or shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has ceased to be or otherwise is not
valid, binding and enforceable in accordance with its terms).

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

 

 

ARTICLE VIII.

The Administrative Agent

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

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

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

     The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for
relying upon, any notice, request, certificate, consent, statement, instrument, document or other
writing believed by it to be genuine and to have been signed or sent by the proper Person. The
Administrative Agent also may rely upon any statement made to it orally or by telephone and
believed by it to be made by the proper Person, and shall not incur any liability for relying

 

 

thereon. The Administrative Agent may consult with legal counsel (who may be counsel for the
Borrower), independent accountants and other experts selected by it, and shall not be liable for
any action taken or not taken by it in accordance with the advice of any such counsel, accountants
or experts.

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

     Subject to the appointment and acceptance of a successor Administrative Agent as provided in
this paragraph, the Administrative Agent may resign at any time by notifying the Lenders, the
Issuing Bank and the Borrower. Upon any such resignation, the Required Lenders shall have the
right, in consultation with the Borrower, to appoint a successor. If no successor shall have been
so appointed by the Required Lenders and shall have accepted such appointment within 30 days after
the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative
Agent may, on behalf of the Lenders and the Issuing Bank, appoint a successor Administrative Agent
which shall be a commercial bank or an Affiliate of any such commercial bank. Upon the acceptance
of its appointment as Administrative Agent hereunder by a successor, such successor shall succeed
to and become vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Administrative Agent shall
be the same as those payable to its predecessor unless otherwise agreed between the Borrower and
such successor. After the Administrative Agent’s resignation hereunder, the provisions of this
Article, Section 2.17(d) and Section 9.03 shall continue in effect for the benefit of such retiring
Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions
taken or omitted to be taken by any of them while it was acting as Administrative Agent.

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

     Each Lender hereby agrees that (a) it has requested a copy of each Report prepared by or on
behalf of the Administrative Agent; (b) the Administrative Agent (i) makes no representation or
warranty, express or implied, as to the completeness or accuracy of any Report or any of the
information contained therein or any inaccuracy or omission contained in or relating to a Report
and (ii) shall not be liable for any information contained in any Report; (c) the Reports are not

 

 

comprehensive audits or examinations, and that any Person performing any field examination
will inspect only specific information regarding the Loan Parties and will rely significantly upon
the Loan Parties’ books and records, as well as on representations of the Loan Parties’ personnel
and that the Administrative Agent undertakes no obligation to update, correct or supplement the
Reports; (d) it will keep all Reports confidential and strictly for its internal use, not share the
Report with or any other Person except as otherwise permitted pursuant to this Agreement; and (e)
without limiting the generality of any other indemnification provision contained in this Agreement,
it will pay and protect, and indemnify, defend, and hold the Administrative Agent and any such
other Person preparing a Report harmless from and against, the claims, actions, proceedings,
damages, costs, expenses, and other amounts (including reasonable attorney fees) incurred by any of
them as the direct or indirect result of any third parties who might obtain all or part of any
Report through the indemnifying Lender.

     If any Lenders are designated as the Syndication Agent or the Documentation Agent such
Syndication or Documentation Agent shall not have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all Lenders as such.

ARTICLE IX.

Miscellaneous

     SECTION 9.01 Notices.

     (a) Except in the case of notices and other communications expressly permitted to be given by
telephone (and subject to paragraph (b) below), all notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by
certified or registered mail or sent by facsimile, as follows:

          (i) if to any Loan Party, to the Borrower at:

Bluestem Brands, Inc.

6509 Flying Cloud Drive

Eden Prairie, MN 55344

Attention: Chief Financial Officer

Facsimile No: 952-656-4117

          With a separate copy to the attention of General Counsel at the same address.

          (ii) if to the Administrative Agent, the Issuing Bank or the
Swingline Lender, to JPMorgan Chase Bank, N.A. at:

Chase Business Credit

10 South Dearborn

22nd Floor

Chicago, IL 60603

Attention: Bradford Kuhn

Facsimile No: 312-732-7593

 

 

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

All such notices and other communications (i) sent by hand or overnight courier service, or mailed
by certified or registered mail, shall be deemed to have been given when received or (ii) sent by
facsimile shall be deemed to have been given when sent, provided that if not given during
normal business hours for the recipient, shall be deemed to have been given at the opening of
business on the next Business Day for the recipient.

     (b) Notices and other communications to the Lenders hereunder may be delivered or furnished by
electronic communications (including e-mail and internet or intranet websites) pursuant to
procedures approved by the Administrative Agent; provided that the foregoing shall not
apply to notices pursuant to Article II unless otherwise agreed by the Administrative Agent and the
applicable Lender. The Administrative Agent or the Borrower (on behalf of the Loan Parties) may,
in its discretion, agree to accept notices and other communications to it hereunder by electronic
communications pursuant to procedures approved by it; provided that approval of such
procedures may be limited to particular notices or communications. All such notices and other
communications (i) sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt requested” function,
as available, return e-mail or other written acknowledgement), provided that if not given
during the normal business hours of the recipient, such notice or communication shall be deemed to
have been given at the opening of business on the next Business Day for the recipient, and (ii)
posted to an internet or intranet website shall be deemed received upon the deemed receipt by the
intended recipient at its e-mail address as described in the foregoing clause (b)(i) of
notification that such notice or communication is available and identifying the website address
therefor.

     (c) Any party hereto may change its address or facsimile number for notices and other
communications hereunder by notice to the other parties hereto.

     SECTION 9.02 Waivers; Amendments.

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

 

 

     (b) Except as provided in Section 6.15, neither this Agreement nor any other Loan Document nor
any provision hereof or thereof may be waived, amended or modified except (i) in the case of this
Agreement, pursuant to an agreement or agreements in writing entered into by the Borrower and the
Required Lenders or, (ii) in the case of any other Loan Document, pursuant to an agreement or
agreements in writing entered into by the Administrative Agent and the Loan Party or Loan Parties
that are parties thereto, with the consent of the Required Lenders; provided that no such
agreement shall (i) increase the Commitment of any Lender without the written consent of such
Lender (provided that the Administrative Agent may make Protective Advances as set forth in Section
2.04), (ii) reduce or forgive the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce or forgive any interest or fees payable hereunder, without the
written consent of each Lender directly affected thereby, (iii) postpone any scheduled date of
payment of the principal amount of any Loan or LC Disbursement, or any date for the payment of any
interest, fees or other Obligations payable hereunder, or reduce the amount of, waive or excuse any
such payment, or postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender directly affected thereby, (iv) change Section 2.18(b) or (d) in a manner
that would alter the manner in which payments are shared, without the written consent of each
Lender, (v) increase the advance rates set forth in the definition of Borrowing Base, add new
categories of eligible assets or modify that portion of Section 2.01 which limits the amount that
can be borrowed, without the written consent of each Revolving Lender, (vi) change any of the
provisions of this Section or the definition of “Required Lenders” or any other provision of any
Loan Document specifying the number or percentage of Lenders (or Lenders of any Class) required to
waive, amend or modify any rights thereunder or make any determination or grant any consent
thereunder, without the written consent of each Lender, (vii) change Section 2.20, without the
consent of each Lender (other than any Defaulting Lender), (viii) release any Loan Guarantor from
its obligation under its Loan Guaranty (except as otherwise permitted herein or in the other Loan
Documents), without the written consent of each Lender, or (ix) except as provided in clauses (d)
and (e) of this Section or in any Collateral Document, release all or substantially all of the
Collateral, without the written consent of each Lender; provided further that no such
agreement shall amend, modify or otherwise affect the rights or duties of the Administrative Agent,
the Issuing Bank or the Swingline Lender hereunder without the prior written consent of the
Administrative Agent, the Issuing Bank or the Swingline Lender, as the case may be (it being
understood that any change to Section 2.20 shall require the consent of the Administrative Agent,
the Swingline Lender and the Issuing Bank). The Administrative Agent may also amend the
Commitment Schedule to reflect assignments entered into pursuant to Section 9.04

     (c) The Lenders hereby irrevocably authorize the Administrative Agent, at its option and in
its sole discretion, to release any Liens granted to the Administrative Agent by the Loan Parties
on any Collateral (i) upon the termination of all Commitments, payment and satisfaction in full in
cash of all Secured Obligations (other than Unliquidated Obligations), and the cash
collateralization of all Unliquidated Obligations in a manner satisfactory to each affected Lender,
(ii) constituting property being sold or disposed of if the Loan Party disposing of such property
certifies to the Administrative Agent that the sale or disposition is made in compliance with the
terms of this Agreement (and the Administrative Agent may rely conclusively on any such certificate, without further inquiry), and to the extent that the property being sold or
disposed of constitutes 100% of the Equity Interest of a Subsidiary, the Administrative Agent is
authorized to release any Loan Guaranty provided by such Subsidiary, (iii) constituting property
leased to a

 

 

Loan Party under a lease which has expired or been terminated in a transaction
permitted under this Agreement, or (iv) as required to effect any sale or other disposition of such
Collateral in connection with any exercise of remedies of the Administrative Agent and the Lenders
pursuant to Article VII. Except as provided in the preceding sentence, the Administrative Agent
will not release any Liens on Collateral without the prior written authorization of the Required
Lenders; provided that, the Administrative Agent may in its discretion, release its Liens
on Collateral valued in the aggregate not in excess of $2,500,000 during any calendar year without
the prior written authorization of the Required Lenders. Any such release shall not in any manner
discharge, affect, or impair the Obligations or any Liens (other than those expressly being
released) upon (or obligations of the Loan Parties in respect of) all interests retained by the
Loan Parties, including the proceeds of any sale, all of which shall continue to constitute part of
the Collateral.

     (d) If, in connection with any proposed amendment, waiver or consent requiring the consent of
“each Lender” or “each Lender affected thereby,” the consent of the Required Lenders is obtained,
but the consent of other necessary Lenders is not obtained (any such Lender whose consent is
necessary but not obtained being referred to herein as a “Non-Consenting Lender”), then the
Borrower may elect to replace a Non-Consenting Lender as a Lender party to this Agreement,
provided that, concurrently with such replacement, (i) another bank or other entity which
is reasonably satisfactory to the Borrower and the Administrative Agent shall agree, as of such
date, to purchase for cash the Loans and other Obligations due to the Non-Consenting Lender
pursuant to an Assignment and Assumption and to become a Lender for all purposes under this
Agreement and to assume all obligations of the Non-Consenting Lender to be terminated as of such
date and to comply with the requirements of clause (b) of Section 9.04, and (ii) the Borrower shall
pay to such Non-Consenting Lender in same day funds on the day of such replacement (1) all
interest, fees and other amounts then accrued but unpaid to such Non-Consenting Lender by the
Borrower hereunder to and including the date of termination, including without limitation payments
due to such Non-Consenting Lender under Sections 2.15 and 2.17, and (2) an amount, if any, equal to
the payment which would have been due to such Lender on the day of such replacement under Section
2.16 had the Loans of such Non-Consenting Lender been prepaid on such date rather than sold to the
replacement Lender.

     SECTION 9.03 Expenses; Indemnity; Damage Waiver.

     (a) The Borrower shall pay (i) all reasonable out-of-pocket expenses incurred by the
Administrative Agent and its Affiliates, including the reasonable fees, charges and disbursements
of counsel, advisors and other professionals for the Administrative Agent, in connection with the
syndication and distribution (including, without limitation, via the internet or through a service
such as Intralinks) of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers of the provisions
of the Loan Documents (whether or not the transactions contemplated hereby or thereby shall be
consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Bank in
connection with the issuance, amendment, renewal or extension of any Letter of Credit or any
demand for payment thereunder and (iii) all out-of-pocket expenses incurred by the Administrative
Agent, the Issuing Bank or any Lender, including the fees, charges and disbursements of any counsel
for the Administrative Agent, the Issuing Bank or any Lender, in connection with the enforcement,
collection or protection of its rights in connection with the

 

 

Loan Documents, including its rights under this Section, or in connection with the Loans made or Letters of Credit issued hereunder,
including all such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit. Expenses being reimbursed by the
Borrower under this Section include, without limiting the generality of the foregoing, costs and
expenses incurred in connection with:

          (i) appraisals and insurance reviews;

          (ii) subject to Section 5.11, field examinations, field reviews and the preparation of
Reports based on the fees charged by a third party retained by the Administrative Agent or the
internally allocated fees (at a rate of $1,000 per day (plus out-of-pocket expenses) for each
Person employed by the Administrative Agent with respect to each field examination, together with
the reasonable fees and expenses associated with collateral monitoring services), Collateral
reviews and appraisals, all to the extent provided in Section 5.11;

          (iii) background checks regarding senior management and/or key investors, as deemed necessary
or appropriate in the sole discretion of the Administrative Agent;

          (iv) taxes, fees and other charges for (A) lien searches and (B) filing financing statements
and continuations, and other actions to perfect, protect, and continue the Administrative Agent’s
Liens;

          (v) sums paid or incurred to take any action required of any Loan Party under the Loan
Documents that such Loan Party fails to pay or take; and

          (vi) forwarding loan proceeds, collecting checks and other items of payment, and establishing
and maintaining the accounts and lock boxes, and costs and expenses of preserving and protecting
the Collateral.

All of the foregoing costs and expenses may be charged to the Borrower as Revolving Loans or to
another deposit account, all as described in Section 2.18(c).

     (b) The Borrower shall indemnify the Administrative Agent, the Issuing Bank and each Lender,
and each Related Party of any of the foregoing Persons (each such Person being called an
“Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims,
damages, penalties, liabilities and related expenses, including the fees, charges and disbursements
of any counsel for any Indemnitee, incurred by or asserted against any Indemnitee arising out of,
in connection with, or as a result of (i) the execution or delivery of the Loan Documents or any
agreement or instrument contemplated thereby, the performance by the parties hereto of their
respective obligations thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the proceeds therefrom
(including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit
if the documents presented in connection with such demand do not
strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence
or release of Hazardous Materials on or from any property owned or operated by the Borrower or any
of its Subsidiaries, or any Environmental Liability related in any way to the Borrower or any of
its Subsidiaries or (iv) any actual or prospective claim, litigation, investigation or proceeding
relating to any of the foregoing, whether based on contract, tort or any other theory and

 

 

regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall
not, as to any Indemnitee, be available to the extent that such losses, claims, damages, penalties,
liabilities or related expenses are determined by a court of competent jurisdiction by final and
nonappealable judgment to have resulted from the gross negligence or willful misconduct of such
Indemnitee.

     (c) To the extent that the Borrower fails to pay any amount required to be paid by it to the
Administrative Agent, the Issuing Bank or the Swingline Lender under paragraph (a) or (b) of this
Section, each Lender severally agrees to pay to the Administrative Agent, the Issuing Bank or the
Swingline Lender, as the case may be, such Lender’s Applicable Percentage (determined as of the
time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid
amount; provided that the unreimbursed expense or indemnified loss, claim, damage, penalty,
liability or related expense, as the case may be, was incurred by or asserted against the
Administrative Agent, the Issuing Bank or the Swingline Lender in its capacity as such.

     (d) To the extent permitted by applicable law, no Loan Party shall assert, and each hereby
waives, any claim against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages) arising out of, in
connection with, or as a result of, this Agreement or any agreement or instrument contemplated
hereby, the Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.

     (e) All amounts due under this Section shall be payable promptly after written demand
therefor.

     SECTION 9.04 Successors and Assigns.

     (a) The provisions of this Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns permitted hereby (including any
Affiliate of the Issuing Bank that issues any Letter of Credit), except that (i) the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder without the prior
written consent of each Lender (and any attempted assignment or transfer by the Borrower without
such consent shall be null and void) and (ii) no Lender may assign or otherwise transfer its rights
or obligations hereunder except in accordance with this Section. Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than the parties hereto,
their respective successors and assigns permitted hereby (including any Affiliate of the Issuing
Bank that issues any Letter of Credit), Participants (to the extent provided in paragraph (c) of
this Section) and, to the extent expressly contemplated hereby, the Related Parties of each of the
Administrative Agent, the Issuing Bank and the Lenders) any legal or equitable right, remedy or
claim under or by reason of this Agreement.

     (b) (i) Subject to the conditions set forth in paragraph (b)(ii) below, any Lender may assign
to one or more assignees all or a portion of its rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans at the time owing to it) with the prior
written consent (such consent not to be unreasonably withheld) of:

 

 

     (1) the Borrower, provided that no consent of the Borrower shall be required
for an assignment to a Lender, an Affiliate of a Lender, an Approved Fund or, if an Event of
Default has occurred and is continuing, any other assignee;

     (2) the Administrative Agent; and

     (3) the Issuing Bank.

     (ii) Assignments shall be subject to the following additional conditions:

     (1) except in the case of an assignment to a Lender or an Affiliate of a Lender or an
assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans of
any Class, the amount of the Commitment or Loans of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Assumption with respect to
such assignment is delivered to the Administrative Agent) shall not be less than $12,000,000
unless each of the Borrower and the Administrative Agent otherwise consent, provided
that no such consent of the Borrower shall be required if an Event of Default has occurred
and is continuing;

     (2) each partial assignment shall be made as an assignment of a proportionate part of
all the assigning Lender’s rights and obligations under this Agreement;

     (3) the parties to each assignment shall execute and deliver to the Administrative
Agent an Assignment and Assumption, together with a processing and recordation fee of
$3,500;

     (4) the assignee, if it shall not be a Lender, shall deliver to the Administrative
Agent an Administrative Questionnaire in which the assignee designates one or more Credit
Contacts (as defined in such Administrative Questionnaire) to whom all syndicate-level
information (which may contain material non-public information about the Borrower, the Loan
Parties and their Related Parties or their respective securities) will be made available and
who may receive such information in accordance with the assignee’s compliance procedures and
applicable laws, including Federal and state securities laws; and

     (5) each Lender may disclose information to prospective Participants or assignees.

     For the purposes of this Section 9.04(b), the term “Approved Fund” has the following
meaning:

     “Approved Fund” means any Person (other than a natural person) that is engaged in
making, purchasing, holding or investing in bank loans and similar extensions of credit in the
ordinary course of its business and that is administered or managed by (a) a Lender, (b) an
Affiliate of a Lender or (c) an entity or an Affiliate of an entity that administers or manages a
Lender.

 

 

          (iii) Subject to acceptance and recording thereof pursuant to paragraph (b)(iv) of this
Section, from and after the effective date specified in each Assignment and Assumption the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned by such Assignment
and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption,
be released from its obligations under this Agreement (and, in the case of an Assignment and
Assumption covering all of the assigning Lender’s rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the benefits of
Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by a Lender of rights or
obligations under this Agreement that does not comply with this Section 9.04 shall be treated for
purposes of this Agreement as a sale by such Lender of a participation in such rights and
obligations in accordance with paragraph (c) of this Section.

          (iv) The Administrative Agent, acting for this purpose as an agent of the Borrower, shall
maintain at one of its offices a copy of each Assignment and Assumption delivered to it and a
register for the recordation of the names and addresses of the Lenders, and the Commitment of, and
principal amount of and interest on the Loans and LC Disbursements owing to, each Lender pursuant
to the terms hereof from time to time (the “Register”). The entries in the Register shall
be conclusive, and the Borrower, the Administrative Agent, the Issuing Bank and the Lenders shall
treat each Person whose name is recorded in the Register pursuant to the terms hereof as a Lender
hereunder for all purposes, notwithstanding notice to the contrary. The Register shall be
available for inspection by the Borrower, the Issuing Bank and any Lender, at any reasonable time
and from time to time upon reasonable prior notice.

          (v) Upon its receipt of a duly completed Assignment and Assumption executed by an assigning
Lender and an assignee, the assignee’s completed Administrative Questionnaire (unless the assignee
shall already be a Lender hereunder), the processing and recordation fee referred to in paragraph
(b) of this Section and any written consent to such assignment required by paragraph (b) of this
Section, the Administrative Agent shall accept such Assignment and Assumption and record the
information contained therein in the Register; provided that if either the assigning Lender
or the assignee shall have failed to make any payment required to be made by it pursuant to Section
2.05, 2.06(d) or (e), 2.07(b), 2.18(d) or 9.03(c), the Administrative Agent shall have no
obligation to accept such Assignment and Assumption and record the information therein in the
Register unless and until such payment shall have been made in full, together with all accrued
interest thereon. No assignment shall be effective for purposes of this Agreement unless it has
been recorded in the Register as provided in this paragraph.

     (c) (i) Any Lender may, without the consent of the Borrower, the Administrative Agent, the
Issuing Bank or the Swingline Lender, sell participations to one or more banks or other entities (a
“Participant”) in all or a portion of such Lender’s rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to it);
provided that (A) such Lender’s obligations under this Agreement shall remain unchanged,
(B) such Lender shall remain solely responsible to the other parties hereto for the performance of
such obligations and (C) the Borrower, the Administrative Agent, the Issuing Bank and the other
Lenders shall continue to deal solely and directly with such Lender in connection with such
Lender’s rights and obligations under this Agreement. Any agreement or instrument pursuant to

 

 

which a Lender sells such a participation shall provide that such Lender shall retain the sole
right to enforce this Agreement and to approve any amendment, modification or waiver of any
provision of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any amendment, modification
or waiver described in the first proviso to Section 9.02(b) that affects such Participant. Subject
to paragraph (c)(ii) of this Section, the Borrower agrees that each Participant shall be entitled
to the benefits of Sections 2.15, 2.16 and 2.17 to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to paragraph (b) of this Section. To the extent
permitted by law, each Participant also shall be entitled to the benefits of Section 9.08 as though
it were a Lender, provided such Participant agrees to be subject to Section 2.18(c) as though it
were a Lender.

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

     (d) Any Lender may at any time pledge or assign a security interest in all or any portion of
its rights under this Agreement to secure obligations of such Lender, including without limitation
any pledge or assignment to secure obligations to a Federal Reserve Bank, and this Section shall
not apply to any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of its obligations
hereunder or substitute any such pledgee or assignee for such Lender as a party hereto.

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

     SECTION 9.06 Counterparts; Integration; Effectiveness. This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each of which shall
constitute an original, but all of which when taken together shall constitute a single

 

 

contract. This Agreement, the other Loan Documents and any separate letter agreements with respect to fees
payable to the Administrative Agent constitute the entire contract among the parties relating to
the subject matter hereof and supersede any and all previous agreements and understandings, oral or
written, relating to the subject matter hereof. Except as provided in Section 4.01, this Agreement
shall become effective when it shall have been executed by the Administrative Agent and when the
Administrative Agent shall have received counterparts hereof which, when taken together, bear the
signatures of each of the other parties hereto, and thereafter shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns. Delivery of an
executed counterpart of a signature page of this Agreement by facsimile shall be effective as
delivery of a manually executed counterpart of this Agreement.

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

     SECTION 9.08 Right of Setoff. If an Event of Default shall have occurred and be continuing, each
Lender and each of its Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other obligations at any time owing by
such Lender or Affiliate to or for the credit or the account of the Borrower or any Loan Guarantor
against any of and all the Secured Obligations held by such Lender, irrespective of whether or not
such Lender shall have made any demand under the Loan Documents and although such obligations may
be unmatured. The applicable Lender shall notify the Borrower and the Administrative Agent of such
set-off or application, provided that any failure to give or any delay in giving such
notice shall not affect the validity of any such set-off or application under this Section. The
rights of each Lender under this Section are in addition to other rights and remedies (including
other rights of setoff) which such Lender may have.

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

     (a) The Loan Documents (other than those containing a contrary express choice of law
provision) shall be governed by and construed in accordance with the laws of the State of New York.

     (b) Each Loan Party hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any U.S. Federal or New York State court sitting in
New York, New York in any action or proceeding arising out of or relating to any Loan Documents, or
for recognition or enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or proceeding may be heard
and determined in such New York State or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other
manner provided by law. Nothing in this Agreement or any other Loan Document shall affect any
right that the Administrative Agent, the Issuing Bank or any Lender

 

 

may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document against any Loan Party
or its properties in the courts of any jurisdiction.

     (c) Each Loan Party hereby irrevocably and unconditionally waives, to the fullest extent it
may legally and effectively do so, any objection which it may now or hereafter have to the laying
of venue of any suit, action or proceeding arising out of or relating to this Agreement or any
other Loan Document in any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an
inconvenient forum to the maintenance of such action or proceeding in any such court.

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

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

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

     SECTION 9.12 Confidentiality. Each of the Administrative Agent, the Issuing Bank and the Lenders
agrees to maintain the confidentiality of the Information (as defined below), except that
Information may be disclosed (a) to its and its Affiliates’ directors, officers, employees and
agents, including accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to the extent requested by
any regulatory authority, (c) to the extent required by Requirement of Law or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in connection with the
exercise of any remedies hereunder or any suit, action or proceeding relating to this Agreement or
any other Loan Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section, to (i) any
assignee of or Participant in, or any prospective assignee of or Participant in, any of its rights
or obligations under this Agreement or (ii) any actual or prospective counterparty (or its
advisors) to any swap or derivative transaction relating to the

 

 

Loan Parties and their obligations,
(g) with the consent of the Borrower, (h) to holders of Equity Interests in the Borrower, or (i) to
the extent such Information (A) becomes publicly available other than as a result of a breach of
this Section or (B) becomes available to the Administrative Agent, the Issuing Bank or any Lender
on a non-confidential basis from a source other than the Borrower. For the purposes of this
Section, “Information” means all information received from the Borrower relating to the
Borrower or its business, other than any such information that is available to the Administrative
Agent, the Issuing Bank or any Lender on a non-confidential basis prior to disclosure by the
Borrower; provided that, in the case of information received from the Borrower after the
date hereof, such information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has exercised the same
degree of care to maintain the confidentiality of such Information as such Person would accord to
its own confidential information.

     SECTION 9.13 Several Obligations; Nonreliance; Violation of Law. The respective obligations of the
Lenders hereunder are several and not joint and the failure of any Lender to make any Loan or
perform any of its obligations hereunder shall not relieve any other Lender from any of its
obligations hereunder. Each Lender hereby represents that it is not relying on or looking to any
margin stock for the repayment of the Borrowings provided for herein. Anything contained in this
Agreement to the contrary notwithstanding, neither the Issuing Bank nor any Lender shall be
obligated to extend credit to the Borrower in violation of any Requirement of Law.

     SECTION 9.14 USA PATRIOT Act. Each Lender that is subject to the requirements of the USA Patriot Act (Title III of Pub.
L. 107-56 (signed into law October 26, 2001)) (the “Act”) hereby notifies the Borrower that
pursuant to the requirements of the Act, it is required to obtain, verify and record information
that identifies the Borrower, which information includes the name and address of the Borrower and
other information that will allow such Lender to identify the Borrower in accordance with the Act.

     SECTION 9.15 Disclosure. Each Loan Party and each Lender hereby acknowledges and agrees that the
Administrative Agent and/or its Affiliates from time to time may hold investments in, make other
loans to or have other relationships with any of the Loan Parties and their respective Affiliates.

     SECTION 9.16 Appointment for Perfection. Each Lender hereby appoints each other Lender as its
agent for the purpose of perfecting Liens, for the benefit of the Administrative Agent and the
Lenders, in assets which, in accordance with Article 9 of the UCC or any other applicable law can
be perfected only by possession. Should any Lender (other than the Administrative Agent) obtain
possession of any such Collateral, such Lender shall notify the Administrative Agent thereof, and,
promptly upon the Administrative Agent’s request therefor shall deliver such Collateral to the
Administrative Agent or otherwise deal with such Collateral in accordance with the Administrative
Agent’s instructions.

     SECTION 9.17 Interest Rate Limitation. Notwithstanding anything herein to the contrary, if at any
time the interest rate applicable to any Loan, together with all fees, charges and other amounts
which are treated as interest on such Loan under applicable law (collectively

 

 

the “Charges”), shall exceed the maximum lawful rate (the “Maximum Rate”) which may be
contracted for, charged, taken, received or reserved by the Lender holding such Loan in accordance
with applicable law, the rate of interest payable in respect of such Loan hereunder, together with
all Charges payable in respect thereof, shall be limited to the Maximum Rate and, to the extent
lawful, the interest and Charges that would have been payable in respect of such Loan but were not
payable as a result of the operation of this Section shall be cumulated and the interest and
Charges payable to such Lender in respect of other Loans or periods shall be increased (but not
above the Maximum Rate therefor) until such cumulated amount, together with interest thereon at the
Federal Funds Effective Rate to the date of repayment, shall have been received by such Lender.

     SECTION 9.18 Effect on Existing Credit Agreement. This Agreement is intended to amend and restate
the provisions of the Amended and Restated Credit Agreement dated as of May 15, 2008 among the
parties hereto (as amended by that certain Amendment No. 1 to Amended and Restated Credit Agreement
and Amended and Restated Pledge and Security Agreement, dated as of July 31, 2009, and that certain
Amendment No. 2 to Amended and Restated Credit Agreement, dated as of April 1, 2010, the “Existing
Credit Agreement”) and, except as expressly modified herein, (x) all of the terms and provisions
of the Existing Credit Agreement shall continue to apply for the period prior to the Closing
Date, including any determinations of payment dates, interest rates, Events of Default or any
amount that may be payable to Agent or the Lenders, (y) the Obligations under the Existing Credit
Agreement shall from and after the Closing Date continue to be owing and be subject to the terms of
this Agreement and (z) this Agreement shall not be deemed to evidence or result in a novation or
repayment of the Revolving Loans under the Existing Credit Agreement and reborrowing hereunder, but
Obligations under the Existing Credit Agreement and Liens securing payment and performance thereof
shall in all respects be continuing as Obligations under this Agreement and Liens securing payment
and performance thereof. All references in the other Loan Documents and the Loan Documents
executed in connection with the Existing Credit Agreement to (i) the Existing Credit Agreement or
the “Credit Agreement” shall be deemed to include references to this Agreement and (ii) the
“Lenders” or a “Lender” or to the “Administrative Agent” shall mean such terms as defined in this
Agreement. All Obligations of the Borrower under the Existing Credit Agreement shall be governed
by this Agreement from and after the Closing Date. The Loan Documents delivered in connection with
this Agreement shall supersede the corresponding Loan Documents delivered in connection with the
Existing Credit Agreement. The Loan Documents executed in connection with the Existing Credit
Agreement that are not superseded by corresponding Loan Documents executed and delivered in
connection with this Agreement shall remain in full force and effect. All references to the
Existing Credit Agreement in the Loan Documents executed in connection with the Existing Credit
Agreement that are not expressly superseded by deliveries of such new Loan Documents shall be
deemed to refer to this Agreement.

ARTICLE X.

Loan Guaranty

     SECTION 10.01 Guaranty. Each Loan Guarantor (other than those that have delivered a separate
Guaranty) hereby agrees that it is jointly and severally liable for, and absolutely and
unconditionally guarantees to the Lenders, the prompt payment when due,

 

 

whether at stated maturity, upon acceleration or otherwise, and at all times thereafter, of the Secured Obligations and all
costs and expenses including, without limitation, all court costs and attorneys’ and paralegals’
fees (including allocated costs of in-house counsel and paralegals) and expenses paid or incurred
by the Administrative Agent, the Issuing Bank and the Lenders in endeavoring to collect all or any
part of the Secured Obligations from, or in prosecuting any action against, the Borrower, any Loan
Guarantor or any other guarantor of all or any part of the Secured Obligations (such costs and
expenses, together with the Secured Obligations, collectively the “Guaranteed
Obligations”). Each Loan Guarantor further agrees that the Guaranteed Obligations may be
extended or renewed in whole or in part without notice to or further assent from it, and that it
remains bound upon its guarantee notwithstanding any such extension or renewal. All terms of this
Loan Guaranty apply to and may be enforced by or on behalf of any domestic or foreign branch or
Affiliate of any Lender that extended any portion of the Guaranteed Obligations.

     SECTION 10.02 Guaranty of Payment. This Loan Guaranty is a guaranty of payment and not of collection. Each Loan Guarantor
waives any right to require the Administrative Agent, the Issuing Bank or any Lender to sue the
Borrower, any Loan Guarantor, any other guarantor, or any other person obligated for all or any
part of the Guaranteed Obligations (each, an “Obligated Party”), or otherwise to enforce
its payment against any collateral securing all or any part of the Guaranteed Obligations.

     SECTION 10.03 No Discharge or Diminishment of Loan Guaranty.

     (a) Except as otherwise provided for herein, the obligations of each Loan Guarantor hereunder
are unconditional and absolute and not subject to any reduction, limitation, impairment or
termination for any reason (other than the indefeasible payment in full in cash of the Guaranteed
Obligations), including: (i) any claim of waiver, release, extension, renewal, settlement,
surrender, alteration, or compromise of any of the Guaranteed Obligations, by operation of law or
otherwise; (ii) any change in the corporate existence, structure or ownership of the Borrower or
any other guarantor of or other person liable for any of the Guaranteed Obligations; (iii) any
insolvency, bankruptcy, reorganization or other similar proceeding affecting any Obligated Party,
or their assets or any resulting release or discharge of any obligation of any Obligated Party; or
(iv) the existence of any claim, setoff or other rights which any Loan Guarantor may have at any
time against any Obligated Party, the Administrative Agent, the Issuing Bank, any Lender, or any
other person, whether in connection herewith or in any unrelated transactions.

     (b) The obligations of each Loan Guarantor hereunder are not subject to any defense or setoff,
counterclaim, recoupment, or termination whatsoever by reason of the invalidity, illegality, or
unenforceability of any of the Guaranteed Obligations or otherwise, or any provision of applicable
law or regulation purporting to prohibit payment by any Obligated Party, of the Guaranteed
Obligations or any part thereof.

     (c) Further, the obligations of any Loan Guarantor hereunder are not discharged or impaired or
otherwise affected by: (i) the failure of the Administrative Agent, the Issuing Bank or any Lender
to assert any claim or demand or to enforce any remedy with respect to all or any part of the
Guaranteed Obligations; (ii) any waiver or modification of or supplement to any

 

 

provision of any
agreement relating to the Guaranteed Obligations; (iii) any release, non-perfection, or invalidity
of any indirect or direct security for the obligations of the Borrower for all or any part of the
Guaranteed Obligations or any obligations of any other guarantor of or other person liable for any
of the Guaranteed Obligations; (iv) any action or failure to act by the Administrative Agent, the
Issuing Bank or any Lender with respect to any collateral securing any part of the Guaranteed
Obligations; or (v) any default, failure or delay, willful or otherwise, in the payment or
performance of any of the Guaranteed Obligations, or any other circumstance, act, omission or delay
that might in any manner or to any extent vary the risk of such Loan Guarantor or that would
otherwise operate as a discharge of any Loan Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of the Guaranteed Obligations).

     SECTION 10.04 Defenses Waived. To the fullest extent permitted by applicable law, each Loan Guarantor hereby waives any
defense based on or arising out of any defense of the Borrower or any Loan Guarantor or the
unenforceability of all or any part of the Guaranteed Obligations from any cause, or the cessation
from any cause of the liability of the Borrower or any Loan Guarantor, other than the indefeasible
payment in full in cash of the Guaranteed Obligations. Without limiting the generality of the
foregoing, each Loan Guarantor irrevocably waives acceptance hereof, presentment, demand, protest
and, to the fullest extent permitted by law, any notice not provided for herein, as well as any
requirement that at any time any action be taken by any person against any Obligated Party, or any
other person. Each Loan Guarantor confirms that it is not a surety under any state law and shall
not raise any such law as a defense to its obligations hereunder. The Administrative Agent may, at
its election, foreclose on any Collateral held by it by one or more judicial or nonjudicial sales,
accept an assignment of any such Collateral in lieu of foreclosure or otherwise act or fail to act
with respect to any collateral securing all or a part of the Guaranteed Obligations, compromise or
adjust any part of the Guaranteed Obligations, make any other accommodation with any Obligated
Party or exercise any other right or remedy available to it against any Obligated Party, without
affecting or impairing in any way the liability of such Loan Guarantor under this Loan Guaranty
except to the extent the Guaranteed Obligations have been fully and indefeasibly paid in cash. To
the fullest extent permitted by applicable law, each Loan Guarantor waives any defense arising out
of any such election even though that election may operate, pursuant to applicable law, to impair
or extinguish any right of reimbursement or subrogation or other right or remedy of any Loan
Guarantor against any Obligated Party or any security.

     SECTION 10.05 Rights of Subrogation. No Loan Guarantor will assert any right, claim or cause of
action, including, without limitation, a claim of subrogation, contribution or indemnification that
it has against any Obligated Party, or any collateral, until the Loan Parties and the Loan
Guarantors have fully performed all their obligations to the Administrative Agent, the Issuing Bank
and the Lenders.

     SECTION 10.06 Reinstatement; Stay of Acceleration. If at any time any payment of any portion of the
Guaranteed Obligations is rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, or reorganization of the Borrower or otherwise, each Loan Guarantor’s obligations under
this Loan Guaranty with respect to that payment shall be reinstated at such time as though the
payment had not been made and whether or not the Administrative Agent, the Issuing Bank and the
Lenders are in possession of this Loan Guaranty. If acceleration of the time for payment of any of
the Guaranteed Obligations is stayed upon the

 

 

insolvency, bankruptcy or reorganization of the
Borrower, all such amounts otherwise subject to acceleration under the terms of any agreement
relating to the Guaranteed Obligations shall nonetheless be payable by the Loan Guarantors
forthwith on demand by the Lender.

     SECTION 10.07 Information. Each Loan Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower’s financial condition and assets, and of all other circumstances
bearing upon the risk of nonpayment of the Guaranteed Obligations and the nature, scope and extent of the risks
that each Loan Guarantor assumes and incurs under this Loan Guaranty, and agrees that neither the
Administrative Agent, the Issuing Bank nor any Lender shall have any duty to advise any Loan
Guarantor of information known to it regarding those circumstances or risks.

     SECTION 10.08 Termination. The Lenders may continue to make loans or extend credit to the Borrower
based on this Loan Guaranty until five days after it receives written notice of termination from
any Loan Guarantor. Notwithstanding receipt of any such notice, each Loan Guarantor will continue
to be liable to the Lenders for any Guaranteed Obligations created, assumed or committed to prior
to the fifth day after receipt of the notice, and all subsequent renewals, extensions,
modifications and amendments with respect to, or substitutions for, all or any part of those
Guaranteed Obligations.

     SECTION 10.09 Taxes. All payments of the Guaranteed Obligations will be made by each Loan Guarantor
free and clear of and without deduction for any Indemnified Taxes or Other Taxes; provided
that if any Loan Guarantor shall be required to deduct any Indemnified Taxes or Other Taxes from
such payments, then (i) the sum payable shall be increased as necessary so that after making all
required deductions (including deductions applicable to additional sums payable under this Section)
the Administrative Agent, Lender or Issuing Bank (as the case may be) receives an amount equal to
the sum it would have received had no such deductions been made, (ii) such Loan Guarantor shall
make such deductions and (iii) such Loan Guarantor shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.

     SECTION 10.10 Maximum Liability. The provisions of this Loan Guaranty are severable, and in any
action or proceeding involving any state corporate law, or any state, federal or foreign
bankruptcy, insolvency, reorganization or other law affecting the rights of creditors generally, if
the obligations of any Loan Guarantor under this Loan Guaranty would otherwise be held or
determined to be avoidable, invalid or unenforceable on account of the amount of such Loan
Guarantor’s liability under this Loan Guaranty, then, notwithstanding any other provision of this
Loan Guaranty to the contrary, the amount of such liability shall, without any further action by
the Loan Guarantors or the Lenders, be automatically limited and reduced to the highest amount that
is valid and enforceable as determined in such action or proceeding (such highest amount determined
hereunder being the relevant Loan Guarantor’s “Maximum Liability”). This Section with
respect to the Maximum Liability of each Loan Guarantor is intended solely to preserve the rights
of the Lenders to the maximum extent not subject to avoidance under applicable law, and no Loan
Guarantor nor any other person or entity shall have any right or claim under this Section with
respect to such Maximum Liability, except to the extent necessary so that the obligations of any
Loan Guarantor hereunder shall not be rendered voidable under applicable law. Each Loan Guarantor
agrees that the Guaranteed Obligations may

 

 

at any time and from time to time exceed the Maximum
Liability of each Loan Guarantor without impairing this Loan Guaranty or affecting the rights and
remedies of the Lenders hereunder, provided that, nothing in this sentence shall be construed to increase any Loan Guarantor’s obligations hereunder beyond its
Maximum Liability.

     SECTION 10.11 Contribution. In the event any Loan Guarantor (a “Paying Guarantor”) shall
make any payment or payments under this Loan Guaranty or shall suffer any loss as a result of any
realization upon any collateral granted by it to secure its obligations under this Loan Guaranty,
each other Loan Guarantor (each a “Non-Paying Guarantor”) shall contribute to such Paying
Guarantor an amount equal to such Non-Paying Guarantor’s “Applicable Percentage” of such payment or
payments made, or losses suffered, by such Paying Guarantor. For purposes of this Article X, each
Non-Paying Guarantor’s “Applicable Percentage” with respect to any such payment or loss by
a Paying Guarantor shall be determined as of the date on which such payment or loss was made by
reference to the ratio of (i) such Non-Paying Guarantor’s Maximum Liability as of such date
(without giving effect to any right to receive, or obligation to make, any contribution hereunder)
or, if such Non-Paying Guarantor’s Maximum Liability has not been determined, the aggregate amount
of all monies received by such Non-Paying Guarantor from the Borrower after the date hereof
(whether by loan, capital infusion or by other means) to (ii) the aggregate Maximum Liability of
all Loan Guarantors hereunder (including such Paying Guarantor) as of such date (without giving
effect to any right to receive, or obligation to make, any contribution hereunder), or to the
extent that a Maximum Liability has not been determined for any Loan Guarantor, the aggregate
amount of all monies received by such Loan Guarantors from the Borrower after the date hereof
(whether by loan, capital infusion or by other means). Nothing in this provision shall affect any
Loan Guarantor’s several liability for the entire amount of the Guaranteed Obligations (up to such
Loan Guarantor’s Maximum Liability). Each of the Loan Guarantors covenants and agrees that its
right to receive any contribution under this Loan Guaranty from a Non-Paying Guarantor shall be
subordinate and junior in right of payment to the payment in full in cash of the Guaranteed
Obligations. This provision is for the benefit of both the Administrative Agent, the Issuing Bank,
the Lenders and the Loan Guarantors and may be enforced by any one, or more, or all of them in
accordance with the terms hereof.

     SECTION 10.12 Liability Cumulative. The liability of each Loan Party as a Loan Guarantor under this
Article X is in addition to and shall be cumulative with all liabilities of each Loan Party to the
Administrative Agent, the Issuing Bank and the Lenders under this Agreement and the other Loan
Documents to which such Loan Party is a party or in respect of any obligations or liabilities of
the other Loan Parties, without any limitation as to amount, unless the instrument or agreement
evidencing or creating such other liability specifically provides to the contrary.

 

 

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

	 	 	 	 	 
	 	BLUESTEM BRANDS, INC.

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

Chief Financial Officer 	 
	 

[Signature Page to the Second Amended and Restated Credit Agreement]

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., individually, as

Administrative Agent, Issuing Bank and Swingline Lender

 	 
	 	By  	/s/ Bradford R. Kuln
 	 
	 	 	Name:  	Bradford R. Kuln 	 
	 	 	Title:  	Duly Authorized Signatory 	 
	 

[Signature Page to the Second Amended and Restated Credit Agreement]

 

 

COMMITMENT SCHEDULE

	 	 	 	 	 
	Lender	 	Revolving Commitment	 
	JPMorgan Chase Bank, N.A.
	 	$	25,000,000	 
	U.S. Bank National Association
	 	$	25,000,000	 
	Total
	 	$	50,000,000	 

Exh. A-1

 

EXHIBIT A

ASSIGNMENT AND ASSUMPTION

     This Assignment and Assumption (the “Assignment and Assumption”) is dated as of the
Closing Date set forth below and is entered into by and between [Insert name of Assignor] (the
“Assignor”) and [Insert name of Assignee] (the “Assignee”). Capitalized terms used
but not defined herein shall have the meanings given to them in the Credit Agreement identified
below (as amended, the “Credit Agreement”), receipt of a copy of which is hereby
acknowledged by the Assignee. The Standard Terms and Conditions set forth in Annex 1 attached
hereto are hereby agreed to and incorporated herein by reference and made a part of this Assignment
and Assumption as if set forth herein in full.

     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Closing Date inserted by the Administrative Agent as contemplated below (i) all of the Assignor’s
rights and obligations in its capacity as a Lender under the Credit Agreement and any other
documents or instruments delivered pursuant thereto to the extent related to the amount and
percentage interest identified below of all of such outstanding rights and obligations of the
Assignor under the respective facilities identified below (including any letters of credit,
guarantees, and swingline loans included in such facilities) and (ii) to the extent permitted to be
assigned under applicable law, all claims, suits, causes of action and any other right of the
Assignor (in its capacity as a Lender) against any Person, whether known or unknown, arising under
or in connection with the Credit Agreement, any other documents or instruments delivered pursuant
thereto or the loan transactions governed thereby or in any way based on or related to any of the
foregoing, including contract claims, tort claims, malpractice claims, statutory claims and all
other claims at law or in equity related to the rights and obligations sold and assigned pursuant
to clause (i) above (the rights and obligations sold and assigned pursuant to clauses (i) and (ii)
above being referred to herein collectively as the “Assigned Interest”). Such sale and
assignment is without recourse to the Assignor and, except as expressly provided in this Assignment
and Assumption, without representation or warranty by the Assignor.

	 	 	 	 	 

	1.

	 	Assignor:
	 	____________________
	 
	 	 	 	 
	2.

	 	Assignee:
	 	____________________

[and is an Affiliate/Approved Fund of [identify Lender]1]
	 
	 	 	 	 
	3.

	 	Borrower(s):
	 	Bluestem Brands, Inc.
	 
	 	 	 	 
	4.

	 	Administrative Agent:
	 	JP Morgan Chase Bank, N.A., as the administrative agent under the Credit Agreement
	 
	 	 	 	 
	5.

	 	Credit Agreement:
	 	[The $50,000,000 Credit Agreement dated as of [_______], 2010 among Bluestem Brands, Inc., the
Lenders parties thereto, JP Morgan Chase Bank, N.A., as Administrative Agent, and the other
agents parties thereto]

 

			
	1	 	Select as applicable.

Exh. A-2

 

	 	 	 	 	 

	 
	 	 	 	 
	6.

	 	Assigned Interest:
	 	 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Aggregate Amount of	 	 	Amount of	 	 	 	 
	 	 	Commitment/Loans	 	 	Commitment/Loans	 	 	Percentage Assigned	 
	Facility Assigned2	 	for all Lenders	 	 	Assigned	 	 	of Commitment/Loans	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 
	 
	 	$	 	 	 	$	 	 	 	 	%	 

Closing Date: _____________ ___, 20___ [TO BE INSERTED BY ADMINISTRATIVE AGENT AND WHICH SHALL BE
THE CLOSING DATE OF RECORDATION OF TRANSFER IN THE REGISTER THEREFOR.]

The Assignee agrees to deliver to the Administrative Agent a completed Administrative Questionnaire
in which the Assignee designates one or more Credit Contacts to whom all syndicate-level
information (which may contain material non-public information about the Borrower, the Loan Parties
and their Related Parties or their respective securities) will be made available and who may
receive such information in accordance with the Assignee’s compliance procedures and applicable
laws, including Federal and state securities laws.

The terms set forth in this Assignment and Assumption are hereby agreed to:

	 	 	 	 	 
	 	ASSIGNOR

[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 	ASSIGNEE

[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

 

			
	2	 	Fill in the appropriate terminology for the
types of facilities under the Credit Agreement that are being assigned under
this Assignment (e.g. “Revolving Commitment,” “Revolving Loan,” etc.)

Exh. A-3

 

	 	 	 	 	 
	[Consented to and]3 Accepted:

J.P. MORGAN CHASE BANK, N.A., as

   Administrative Agent

 	 	 
	By  	 	 	 
	 	Title: 	 	 	 	 
	 	 
	[Consented to:]4

[NAME OF RELEVANT PARTY]

 	 	 
	By  	 	 	 
	 	Title: 	 	 
	 	 	 	 

 

			
	3	 	To be added only if the consent of the
Administrative Agent is required by the terms of the Credit Agreement.
	 
	4	 	To be added only if the consent of the
Borrower and/or other parties (e.g. Swingline Lender, Issuing Bank) is required
by the terms of the Credit Agreement.

Exh. A-4

 

ANNEX 1

[__________________]

STANDARD TERMS AND CONDITIONS FOR

ASSIGNMENT AND ASSUMPTION

     1. Representations and Warranties.

     1.1 Assignor. The Assignor (a) represents and warrants that (i) it is the legal and
beneficial owner of the Assigned Interest, (ii) the Assigned Interest is free and clear of any
lien, encumbrance or other adverse claim and (iii) it has full power and authority, and has taken
all action necessary, to execute and deliver this Assignment and Assumption and to consummate the
transactions contemplated hereby; and (b) assumes no responsibility with respect to (i) any
statements, warranties or representations made in or in connection with the Credit Agreement or any
other Loan Document, (ii) the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any collateral thereunder, (iii) the financial
condition of the Borrower, any of its Subsidiaries or Affiliates or any other Person obligated in
respect of any Loan Document or (iv) the performance or observance by the Borrower, any of its
Subsidiaries or Affiliates or any other Person of any of their respective obligations under any
Loan Document.

     1.2. Assignee. The Assignee (a) represents and warrants that (i) it has full power
and authority, and has taken all action necessary, to execute and deliver this Assignment and
Assumption and to consummate the transactions contemplated hereby and to become a Lender under the
Credit Agreement, (ii) it satisfies the requirements, if any, specified in the Credit Agreement
that are required to be satisfied by it in order to acquire the Assigned Interest and become a
Lender, (iii) from and after the Closing Date, it shall be bound by the provisions of the Credit
Agreement as a Lender thereunder and, to the extent of the Assigned Interest, shall have the
obligations of a Lender thereunder, (iv) it has received a copy of the Credit Agreement, together
with copies of the most recent financial statements delivered pursuant to Section ___ thereof, as
applicable, and such other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into this Assignment and Assumption and to purchase the
Assigned Interest on the basis of which it has made such analysis and decision independently and
without reliance on the Administrative Agent or any other Lender, and (v) if it is a Foreign
Lender, attached to the Assignment and Assumption is any documentation required to be delivered by
it pursuant to the terms of the Credit Agreement, duly completed and executed by the Assignee; and
(b) agrees that (i) it will, independently and without reliance on the Administrative Agent, the
Assignor or any other Lender, and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or not taking action
under the Loan Documents, and (ii) it will perform in accordance with their terms all of the
obligations which by the terms of the Loan Documents are required to be performed by it as a
Lender.

     2. Payments. From and after the Closing Date, the Administrative Agent shall make all
payments in respect of the Assigned Interest (including payments of principal, interest, fees

Exh. A-1

 

and other amounts) to the Assignor for amounts which have accrued to but excluding the Closing
Date and to the Assignee for amounts which have accrued from and after the Closing Date.

3. General Provisions. This Assignment and Assumption shall be binding upon, and inure to
the benefit of, the parties hereto and their respective successors and assigns. This Assignment
and Assumption may be executed in any number of counterparts, which together shall constitute one
instrument. Delivery of an executed counterpart of a signature page of this Assignment and
Assumption by facsimile shall be effective as delivery of a manually executed counterpart of this
Assignment and Assumption. This Assignment and Assumption shall be governed by, and construed in
accordance with, the law of the State of New York.

Exh. A-2

 

EXHIBIT C

BORROWING BASE CERTIFICATE

	 	 	 

	 

	 	Rpt#
	Obligor Number:

	 	Date:
	Loan Number:

	 	Period Covered:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	COLLATERAL CATEGORY

Description	 	A/R	 	 	Inventory	 	 	Total Eligible Collateral	 	 	0.00	 
	1
Beginning Balance ( Previous report — Line 8)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	2 Additions to Collateral (Gross Sales or Purchases)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	3 Other
Additions (Add back any non-A/R cash in line 3)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	4 Deductions to Collateral (Cash Received)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	5 Deductions to Collateral (Discounts, other)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	6 Deductions to Collateral (Credit Memos, all)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	7 Other non-cash credits to A/R
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	8 Total Ending Collateral Balance
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	9 Less Ineligible — Inventory Slow-moving (_% of Collateral Balance)
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	10 Less Ineligible — Returns Inventory (No Restock)
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	11 Less Ineligible — Shipping Carton Inventory
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	12 Less Ineligible — Premium Inventory
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	13 Less Ineligible — Dropship Inventory
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	14 Less Ineligible — Inventory Rebate Deferral
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	15 Less Ineligible — Inventory Rebate Deferral — AP Discount
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	16 Less Ineligible — Quarantine Inventory
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	17 Less Ineligible — Liquidate Inventory
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	18 Less Ineligible — Inventory Partial Shipment
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	19 Total
Ineligibles Inventory
	 	 	 	 	 	$	0.00	 	 	 	 	 	 	 	 	 
	20 Total Eligible Collateral
	 	 	 	 	 	 	0 00	 	 	 	 	 	 	 	 	 
	21 Advance Rate Percentage
	 	 	 	 	 	 	0.65	 	 	 	 	 	 	 	 	 
	22 Net Available — Borrowing Base Value
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	23 Reserves (Other) Gift Cards
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	24 Total Borrowing Base Value
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	25 Revolver Line
	 	 	 	 	 	 	50,000,000.00	 	 	Total Revolver Line
	 	 	50,000,000.00	 
	26
Maximum Borrowing Limit (Lesser of 24 or 25 )*
	 	 	 	 	 	$	0.00	 	 	Total Available
	 	 	0.00	 
	27 Suppressed Availability
	 	 	 	 	 	 	0	 	 	 	 	 	 	 	 	 
	LOAN STATUS
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	28 Previous Loan Balance (Previous Report Line 26-Limit)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	29 Less: A. Net Collections (Same as line 4)
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	B
Adjustments / Other                    
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	30 Add: A Request for Funds
	 	 	 	 	 	 	0.00	 	 	 	 	 	 	 	 	 
	B Adjustments/Other                    
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	31 New Loan Balance
	 	 	 	 	 	 	 	 	 	Total New Loan Balance:	 	 	0.00	 
	32 Letters of Credit/Bankers Acceptance Outstanding
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 
	33 Availability Not Borrowed (Lines 26 less 31 & 32)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 

Pursuant
to, and in accordance with, the terms and provisions of that certain Loan and
Security Agreement (“Agreement”), between JPM Chase
(“Secured Party”) and
Fingerhut Direct Marketing, Inc. (“Borrower”), Borrower is
executing and delivering to Secured Party
this Collateral Report accompanied by supporting data (collectively referred to as (“Report”).
Borrower warrants and represents to Secured Party that this Report is true, correct, and based on
information contained in Borrower’s own financial accounting
records. Borrower, by the execution of
this Report, hereby ratifies, confirms and affirms all of the terms,
conditions and provisions of the
Agreement, and further certifies on
this
                    

day of
                    
,                      , that the Borrower is in compliance with said
Agreement.

	 	 	 

	BORROWER NAME:

	 	AUTHORIZED SIGNATURE:
	 
	 	 
	Bluestem Brands, Inc.
	 	 

Exh. C-1

 

EXHIBIT D

COMPLIANCE CERTIFICATE

	 	 	 

	To:

	 	The Lenders parties to the
	 

	 	Credit Agreement Described Below

     This Compliance Certificate is furnished pursuant to that certain Credit Agreement dated as of
[     ], 2010 (as amended, restated or otherwise modified, renewed or extended
from time to time, the “Agreement”) among Bluestem Brands, Inc. (the “Borrower”), the other Loan
Parties, if any, the Lenders party thereto and JPMorgan Chase Bank, N.A., as Administrative Agent
for the Lenders and as the Issuing Bank. Unless otherwise defined herein, capitalized terms used
in this Compliance Certificate have the meanings ascribed thereto in the Agreement.

     THE UNDERSIGNED HEREBY CERTIFIES THAT:

     1. I am the duly elected                      of the Borrower;

     2. I have reviewed the terms of the Agreement and I have made, or have caused to be made under
my supervision, a detailed review of the transactions and conditions of the Borrower and its
Subsidiaries during the accounting period covered by the attached financial statements [for
quarterly or monthly financial statements add: and such financial statements present fairly in all
material respects the financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP consistently applied,
subject to normal year-end audit adjustments and the absence of footnotes];

     3. The examinations described in paragraph 2 did not disclose, except as set forth below, and
I have no knowledge of (i) the existence of any condition or event which constitutes an Event of
Default during or at the end of the accounting period covered by the attached financial statements
or as of the date of this Certificate or (ii) any change in GAAP or in the application thereof that
has occurred since the date of the audited financial statements referred to in Section 3.04 of the
Agreement;

     4. I hereby certify that no Loan Party has changed (i) its name, (ii) its chief executive
office, (iii) principal place of business, (iv) the type of entity it is or (v) its state of
incorporation or organization without having given the Administrative Agent the notice required by
Section 4.10 of the Security Agreement;

     5. Schedule I attached hereto sets forth financial data and computations evidencing
the Borrower’s compliance with certain covenants of the Agreement, all of which data and
computations are true, complete and correct; and

     6. Schedule II attached hereto sets forth the computations necessary to determine the
Applicable Rate commencing on the Business Day this certificate is delivered.

     Described below are the exceptions, if any, to paragraph 3 by listing, in detail, the (i)
nature of the condition or event, the period during which it has existed and the action which the
Borrower has taken, is taking, or proposes to take with respect to each such condition or event or

Exh. D-1

 

(i) the change in GAAP or the application thereof and the effect of such change on the
attached financial statements:

 

 

 

     The foregoing certifications, together with the computations set forth in Schedule I and
Schedule II attached hereto and the financial statements delivered with this Certificate in support
hereof, are made and delivered this      day of                     ,      .

	 	 	 	 	 
	 	 	 
	 	By:  	

 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Exh. D-2

 

SCHEDULE I

Compliance as of _________, ____ with

Provisions of __ and ___ of

the Agreement

Exh. D-3

 

SCHEDULE II

Borrower’s Applicable Rate Calculation

Exh. D-4

 

EXHIBIT E

JOINDER AGREEMENT

     THIS JOINDER AGREEMENT (this “Agreement”), dated as of __________, ____, 200_, is entered into
between ______________________, a _________________ (the “New Subsidiary”) and JPMORGAN CHASE BANK,
N.A., in its capacity as administrative agent (the “Administrative Agent”) under that certain
Credit Agreement, dated as of ___________, __, 2010 among Bluestem Brands, Inc. (the “Borrower”),
the other Loan Parties party thereto, if any, the Lenders party thereto and the Administrative
Agent (as the same may be amended, restated or otherwise modified from time to time, the “Credit
Agreement”). All capitalized terms used herein and not otherwise defined shall have the meanings
set forth in the Credit Agreement.

     The New Subsidiary and the Administrative Agent, for the benefit of the Lenders, hereby agree
as follows:

     1. The New Subsidiary hereby acknowledges, agrees and confirms that, by its execution of this
Agreement, the New Subsidiary will be deemed to be a Loan Party under the Credit Agreement and a
“Loan Guarantor” for all purposes of the Credit Agreement and shall have all of the obligations of
a Loan Party and a Loan Guarantor thereunder as if it had executed the Credit Agreement. The New
Subsidiary hereby ratifies, as of the date hereof, and agrees to be bound by, all of the terms,
provisions and conditions contained in the Credit Agreement, including without limitation (a) all
of the representations and warranties of the Loan Parties set forth in Article III of the Credit
Agreement, *[and]* (b) all of the covenants set forth in Articles V and VI of the Credit Agreement
*[and (c) all of the guaranty obligations set forth in Article X of the Credit Agreement. Without
limiting the generality of the foregoing terms of this paragraph 1, the New Subsidiary, subject to
the limitations set forth in Section 10.10 of the Credit Agreement, hereby guarantees, jointly and
severally with the other Loan Guarantors, to the Administrative Agent and the Lenders, as provided
in Article X of the Credit Agreement, the prompt payment and performance of the Guaranteed
Obligations in full when due (whether at stated maturity, as a mandatory prepayment, by
acceleration or otherwise) strictly in accordance with the terms thereof and agrees that if any of
the Guaranteed Obligations are not paid or performed in full when due (whether at stated maturity,
as a mandatory prepayment, by acceleration or otherwise), the New Subsidiary will, jointly and
severally together with the other Loan Guarantors, promptly pay and perform the same, without any
demand or notice whatsoever, and that in the case of any extension of time of payment or renewal of
any of the Guaranteed Obligations, the same will be promptly paid in full when due (whether at
extended maturity, as a mandatory prepayment, by acceleration or otherwise) in accordance with the
terms of such extension or renewal.]* *[The New Subsidiary has delivered to the Administrative
Agent an executed Loan Guaranty.]*

     2. If required, the New Subsidiary is, simultaneously with the execution of this Agreement,
executing and delivering such Collateral Documents (and such other documents and instruments) as
requested by the Administrative Agent in accordance with the Credit Agreement.

Exh. D-1

 

     3. The address of the New Subsidiary for purposes of Section 9.01 of the Credit Agreement is
as follows:

     4. The New Subsidiary hereby waives acceptance by the Administrative Agent and the Lenders of
the guaranty by the New Subsidiary upon the execution of this Agreement by the New Subsidiary.

     5. This Agreement may be executed in any number of counterparts, each of which when so
executed and delivered shall be an original, but all of which shall constitute one and the same
instrument.

     6. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.

     IN WITNESS WHEREOF, the New Subsidiary has caused this Agreement to be duly executed by its
authorized officer, and the Administrative Agent, for the benefit of the Lenders, has caused the
same to be accepted by its authorized officer, as of the day and year first above written.

	 	 	 	 	 
	 	[NEW SUBSIDIARY]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	Acknowledged and accepted:

JPMORGAN CHASE BANK, N.A., as 

Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Exh. D-2

 

EXHIBIT F

BLUESTEM BRANDS, INC.

			
	 	 	 
	Borrowing Request
	 	______________, 20___

JPMorgan Chase Bank, N.A.

120 S. LaSalle Street

Chicago, IL 60603

Attention: ___________- Operations

Ladies and Gentlemen:

This Borrowing Request is furnished pursuant to Section 2.03 of that certain Credit Agreement dated
as of _____ ___, 2010 (as amended, modified, renewed or extended from time to time, the
“Agreement”) among Bluestem Brands, Inc. (the “Borrower”), the other Loan Parties, if any, the
lenders party thereto and JPMorgan Chase Bank, N.A. (“Chase”) as Agent for the Lenders and as LC
Issuer. Unless otherwise defined herein, capitalized terms used in this Borrowing Request have the
meanings ascribed thereto in the Agreement. The Borrower represents that, as of this date, the
conditions precedent set forth in Section 4.02 are satisfied.

1. The Borrower hereby notifies Chase of its request of the following Borrowing:

     (1) The Borrowing shall be a ___ CBFR Borrowing or ___ Eurodollar Borrowing

     (2) Borrowing Date of the Borrowing (must be a Business Day): ____________________

     (3) Aggregate Amount of the Borrowing: $__________________

     (4) If a Eurodollar Borrowing, the duration of Interest Period:

	 	 	 	 	 
	 
	 	Seven Days __________	 	 
	 
	 	One Month        __________	 	Three Months      __________
	 
	 	Two Months       __________	 	Six Months        __________

	 	 	 	 	 
	 	BLUESTEM BRANDS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

Do not write below. For bank purposes only

	 	 	 	 	 	 	 	 	 

	__Customer’s signature(s) verified	 	__Call-back performed	 	 
	 
	 	 	 	 	 	 	 	 
	Holds

	 	By:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	__CFC Used
	 	 	 	 	 	 	 	 
	__Hold Placed/Pre-Approved	 	Phone Number:	 	 	 
	 

	 	 	 	 	 	 	 	 
	__Same-day Credit/Pre-Approved
	 	Spoke to:	 	 
	 

	 	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 	 	 
	 	 	 	 	 	 	 
	 

	 	Time:	 	 	 	 	 	 
	 	 	 	 	 	 	 

	 	 	 	 	 	 	 

	RECEIVED
BY (Print Name/Phone(Request
Only))

	INITIALS
	 	PROCESSED BY (Print name)
	 	INITIALS
	AUTHORIZED APPROVAL (Print Name)

	 	 	 	AUTHORIZED SIGNATURE	 	 
	AUTHORIZED APPROVAL (Print Name)

	 	 	 	AUTHORIZED SIGNATURE	 	 

 

 

Schedule 3.05

Properties

Owned Real Property. None

Leased Real Property.

	 	1.	 	Warehouse. That certain property lease pursuant to the Building Lease dated as
of November 26, 2003 by and between FAC Acquisition, LLC and Fingerhut Direct Marketing,
Inc. (now known as Bluestem Brands, Inc.), and related to the property located at 6250
Ridgewood Road, St. Cloud, MN; and the Assignment and Assumption of Lease date June 14,
2006 between FAC Acquisition, LLC, as Assignor, and Welsh Fingerhut MN, LLC, as Assignee,
recorded in the office of the Country Recorder of Stearns County, MN on June 20, 2006 s
Document #1197732.
	 
	 	2.	 	Returns Center. That certain property lease pursuant to the Commercial Lease
dated February 1, 2008 by and between Albo, LLC and Fingerhut Direct Marketing, Inc. (now
known as Bluestem Brands, Inc.), and related to the property located at 20 McLeland Road,
St. Cloud, MN.
	 
	 	3.	 	Data Center. That certain Time Warner Telecom Co-Location Equipment Area
Agreement effective as of July 15, 2005 by and between Time Warner Telecom, Inc. and
Fingerhut Direct Marketing, Inc. (now known as Bluestem Brands, Inc.), related to the
property located at 5480 Feltl Road, Minnetonka, MN.
	 
	 	4.	 	Secondary Data Center. That certain Time Warner Telecom Co-Location Equipment
Area Agreement effective as of June 15, 2007 by and between Time Warner Telecom, Inc. and
Fingerhut Direct Marketing, Inc. (now known as Bluestem Brands, Inc.), related to the
property located at 511 11th Street South, Minneapolis, MN.
	 
	 	5.	 	Corporate Headquarters. That certain property leased pursuant to the Standard
Office Lease Agreement dated as of October 24, 2007 by and between Superior Eden Prairie
Holdings LLC, as Landlord, and Fingerhut Direct Marketing, Inc. (now known as Bluestem
Brands, Inc.), as Tenant related to property located at 6509 Flying Cloud Drive, MN.
	 
	 	6.	 	Call Center. That certain property lease pursuant to the Lease dated February
1, 2005 by and between Sundance III, LLC and Fingerhut Direct Marketing, Inc. (now known as
Bluestem Brands, Inc.), related to the property located at 11 McLeland Road, St. Cloud, MN.

Registered Intellectual Property.

See attachment “A” — current Registered Trademarks

See attachment “B” — current Patents

See attachment “C” — current Domain Names

See attachment “D” — current Copyrights

 

 

Attachment A

To

Schedule 3.05 Registered Intellectual Properties

Current Registered Trademarks/Service Marks

FINGERHUT DIRECT MARKETING INC. (NOW KNOWN AS BLUESTEM BRANDS, INC.) US TRADE/SERVICE MARKS

	 	 	 	 	 	 	 	 	 
	Mark	 	Image	 	 	Reg No.	 
	ACCESS TO BETTER LIVING
	 	 	 	 	 	 	3,020,977	 

     

	 	 	 	 	 	 	 	 	 

	AHORA SI PUEDES
	 	 	 	 	 	 	 	 
	BACKYARD LIVING
	 	 	 	 	 	 	2,274,991	 
	BLUESTEM BRANDS, INC.
	 	 	 	 	 	 	 	 
	BLUESTEM BRANDS, INC. (Stylized in Color)
	 	 	 	 	 	 	 	 

     

	 	 	 	 	 	 	 	 	 

	BLUESTEM BRANDS, INC. (Stylized)
	 	 	 	 	 	 	 	 
	CAREFREE LIVING
	 	 	 	 	 	 	1,505,333	 
	CAREFREE LIVING
	 	 	 	 	 	 	3,664,918	 
	CHEF’S MARK
	 	 	 	 	 	 	2,489,361	 
	CHEF’S MARK
	 	 	 	 	 	 	2,645,988	 

	 	 	 	 	 	 	 	 	 

	CHEF’S MARK PREFERRED QUALITY and Design
	 	 	 	 	 	 	2,659,758	 

	 	 	 	 	 	 	 	 	 

	CHEF’S MARK PREFERRED QUALITY and Design
	 	 	 	 	 	 	2,497,159	 

 

 

	 	 	 	 	 	 	 	 	 
	Mark	 	Image	 	 	Reg No.	 
	COUNTRY BEAR
	 	 	 	 	 	 	3,399,460	 
	DECORATE MORE! ENTERTAIN MORE! GIVE MORE!
	 	 	 	 	 	 	3,521,668	 

	 	 	 	 	 

	DESIGN (Gettington bag logo — color)
	 	 	 	 

	 	 	 	 	 

	DESIGN (Goodie Bag — Blue)
	 	 	 	 
	 
	DESIGN (Goodie Bag — Gold)
	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	Mark	 	Image	 	 	Reg No.	 
	DESIGN (Goodie Bag — Pink)
	 	 	 	 	 	 	 	 

	 	 	 	 	 

	DESIGN (Goodie Bag Medallion — Gold)
	 	 	 	 

	 	 	 	 	 

	DESIGN (Goodie Bag Medallion)
	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	Mark	 	Image	 	 	Reg No.	 
	 

	DESIGN (Goodie Bag)
	 	 	 	 	 	 	 	 
	 
	DIGITAL ZONE
	 	 	 	 	 	 	2,398,630	 
	DIGITAL ZONE
	 	 	 	 	 	 	3,731,914	 
	DIGITAL ZONE
	 	 	 	 	 	 	 	 
	FALL BIG BOOK
	 	 	 	 	 	 	2,655,853	 
	FINGERHUT
	 	 	 	 	 	 	884685	 
	FINGERHUT
	 	 	 	 	 	 	999,881	 
	FINGERHUT
	 	 	 	 	 	 	973,080	 
	FINGERHUT
	 	 	 	 	 	 	3,279,350	 
	FINGERHUT FINDS
	 	 	 	 	 	 	3,463,673	 
	FINGERHUT FRESH START
	 	 	 	 	 	 	 	 
	FINGERHUT HOME
	 	 	 	 	 	 	2,523,477	 

	 	 	 	 	 	 	 	 	 

	GATE ONE and Design
	 	 	 	 	 	 	1,724,645	 

	 	 	 	 	 	 	 	 	 

	GATE ONE LUGGAGE and Design
	 	 	 	 	 	 	1,722,969	 
	 
	GETTINGTON
	 	 	 	 	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	Mark	 	Image	 	 	Reg No.	 
	GETTINGTON and Design (Black/White — Horizontal)
	 	 	 	 	 	 	 	 
	GETTINGTON and Design (Black/White — Vertical)
	 	 	 	 	 	 	 	 
	GETTINGTON and Design (Color — Horizontal)
	 	 	 	 	 	 	 	 
	GETTINGTON and Design (Color — Vertical)
	 	 	 	 	 	 	 	 
	GETTINGTON.COM
	 	 	 	 	 	 	 	 
	GOOD DEALS, GREAT BUYS
	 	 	 	 	 	 	2,503,225	 
	GOODIE BAG
	 	 	 	 	 	 	 	 
	HOLIDAY BIG BOOK
	 	 	 	 	 	 	2,386,204	 
	HOME DEALS
	 	 	 	 	 	 	2,967,344	 
	LIFE MAX
	 	 	 	 	 	 	2,099,973	 

	 	 	 	 	 

	M Design
	 	 	 	 

	 	 	 	 	 

	M Design
	 	 	 	 
	M Design
	 	 	 	 

 

 

	 	 	 	 	 	 	 	 	 
	Mark	 	 	Image	 	 	Reg No.	 

	 	 	 	 	 	 	 	 	 

	M Design
	 	 	 	 	 	 	 	 
	 
	MASTER CRAFT
	 	 	 	 	 	 	2,196,111	 
	MASTER CRAFT
	 	 	 	 	 	 	3,066,211	 
	MASTER CRAFT
	 	 	 	 	 	 	2,900,086	 
	MASTER CRAFT PRO
	 	 	 	 	 	 	2,443,038	 
	MASTER CRAFT PRO
	 	 	 	 	 	 	2,900,087	 
	MCLELAND DESIGN
	 	 	 	 	 	 	 	 
	MORE4LIFE
	 	 	 	 	 	 	3,716,729	 
	NOW YOU CAN
	 	 	 	 	 	 	 	 
	OUTDOOR SPIRIT
	 	 	 	 	 	 	2,476,139	 
	OUTDOOR SPIRIT
	 	 	 	 	 	 	2,444,758	 
	OUTDOOR SPIRIT
	 	 	 	 	 	 	2,366,241	 
	OUTDOOR SPIRIT
	 	 	 	 	 	 	2,358,444	 
	ROOMS FOR LIVING
	 	 	 	 	 	 	1,693,689	 
	SAFELINE
	 	 	 	 	 	 	3,608,860	 
	SPRING BIG BOOK
	 	 	 	 	 	 	2,476,310	 
	ST. CROIX COLORS
	 	 	 	 	 	 	2,579,749	 
	SUMMER BIG BOOK
	 	 	 	 	 	 	 	 
	SUMMER BIG BOOK
	 	 	 	 	 	 	3,732,769	 
	SUPER CHEF
	 	 	 	 	 	 	1,933,548	 
	TESTMARK
	 	 	 	 	 	 	 	 
	TESTMARK
	 	 	 	 	 	 	3,765,982	 
	TESTMARK
	 	 	 	 	 	 	 	 
	TESTMARK
	 	 	 	 	 	 	3,786,170	 
	WINTER BIG BOOK
	 	 	 	 	 	 	3,595,788	 

Licensed Trademarks

Master Craft

Master Craft Pro

 

 

Attachment B

To

Schedule 3.05 Registered Intellectual Property

Patents

None.

 

 

Attachment C

To

Schedule 3.05 Registered Intellectual Property

Current Domain Names

Domain name

andysauction.com

andysgarage.com

andysgaragesale.org

birthdayhut.com

blue-stem.biz

blue-stem.com

blue-stem.net

blue-stembrand.biz

blue-stembrand.com

blue-stembrand.net

blue-stembrands.biz

blue-stembrands.com

blue-stembrands.net

blue-stemcompanies.biz

blue-stemcompanies.com

blue-stemcompanies.net

blue-stemcompany.biz

blue-stemcompany.com

blue-stemcompany.net

blue-stemmarket.biz

blue-stemmarket.com

blue-stemmarket.net

blue-stemmarketing.biz

blue-stemmarketing.com

blue-stemmarketing.net

bluestem-brand.biz

bluestem-brand.com

bluestem-brand.net

bluestem-brands.biz

bluestem-brands.com

bluestem-brands.net

bluestem-companies.biz

bluestem-companies.com

bluestem-companies.net

bluestem-company.biz

bluestem-company.com

bluestem-company.net

bluestem-market.biz

bluestem-market.com

bluestem-market.net

 

 

bluestem-marketing.biz

bluestem-marketing.com

bluestem-marketing.net

bluestembrand.biz

bluestembrand.com

bluestembrand.net

bluestembrands.biz

bluestembrands.com

bluestembrands.net

bluestembrandsfulfillment.biz

bluestembrandsfulfillment.com

bluestembrandsfulfillment.net

bluestembrandsfulfillmentinc.biz

bluestembrandsfulfillmentinc.com

bluestembrandsfulfillmentinc.net

bluestembrandsinc.biz

bluestembrandsinc.com

bluestembrandsinc.net

bluestemcompanies.biz

bluestemcompanies.com

bluestemcompanies.net

bluestemcompany.biz

bluestemcompany.com

bluestemcompany.net

bluestemmarket.biz

bluestemmarket.com

bluestemmarket.net

bluestemmarketing.biz

bluestemmarketing.net

espanolfingerhut.com

fhutdirect.com

fhutdirect.net

fhutdirect.org

fhutfill.com

fhutfill.net

fhutfill.org

fingerhut.biz

fingerhut.com

fingerhut.net

fingerhut.org

fingerhutdirect.com

fingerhutenespanol.com

fingerhutespanol.com

fingerhutfunding.com

fingerhutreceivables.com

geddingten.com

 

 

gedington.com

getingten.com

getingtin.com

getington.com

getingtons.com

getshopping.com

gettengton.com

gettigton.com

gettingaton.com

gettingten.com

gettingtin.com

gettingtn.com

gettington.biz

gettington.com

gettington.info

gettington.net

gettington.org

gettingtonblog.com

gettingtononline.com

gettingtons.com

gettinton.com

gettngton.com

getttington.com

gittingten.com

gittingtin.com

gittington.com

givington.com

ibzig.com

mygettington.com

payvatar.com

pgcore.com

pricepermonth.biz

pricepermonth.com

pricepermonth.net

yellowzipper.com

zazama.com

blue-stem.us

blue-stembrand.us

blue-stembrands.us

blue-stemcompanies.us

blue-stemcompany.us

blue-stemmarket.us

blue-stemmarketing.us

bluesteam.us

bluestem-brand.us

bluestem-brands.us

bluestem-companies.us

bluestem-company.us

bluestem-market.us

 

 

bluestem-marketing.us

bluestembrand.us

bluestembrands.us

bluestembrandsfulfillment.us

bluestembrandsfulfillmentinc.us

bluestembrandsinc.us

bluestemcompanies.us

bluestemcompany.us

bluestemmarket.us

bluestemmarketing.us

gettington.us

gettington.mobi

goodiebag.mobi

gettington.tv

 

 

Attachment D

To

Schedule 3.05 Registered Intellectual Property

Current Copyrights

	 	 	 
	Copyright Title	 	Registration Number
	Br-r-r bear

	 	VA-294-209
	Cameo floral: [no.] 87582
	 	VA-275-850
	Baroque floral: [no.] 87338.
	 	VA-275-849
	Rose Garden: [no.] 32466/32469
	 	VA-275-848
	Unicorn with rainbow
	 	VA-275-847
	Pastelle
	 	VA-275-846
	Choloe: [no.[ 90304]
	 	VA-275-845
	Rainbow clouds
	 	VA-275-844

 

 

Schedule 3.06

Disclosed Matters

None.

 

 

Schedule 3.15

Insurance

Bluestem Brands, Inc.

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Insurance Coverage	 	Carrier	 	Policy Term	 	Limits	 	Deductible
	General Liability

	 	One Beacon Insurance
	 	10/1/09-10/1/10
	 	$	1,000,000/$2,000,000	 	 	$	1,000	 
	Commercial Automobile

	 	One Beacon Insurance
	 	10/1/09-10/1/10
	 	$	1,000,000	 	 	$500 — Liability

$1000 — Phys.
Damage

	Workers Compensation
& Employers’
Liability

	 	Employers Insurance
Company of Wausau
	 	10/1/09-10/1/10
	 	Statutory — WC
	 	$	0	 
	Foreign Package

	 	Ace Insurance Group
	 	10/1/09-10/1/10
	 	$	1,000,000	 	 	$	0	 
	Umbrella Liability

	 	Liberty Mutual
	 	10/1/09-10/1/10
	 	$	25,000,000	 	 	$	10,000	 
	Jewelers Block

	 	Travelers Property
Casualty Company of
America
	 	10/1/09-10/1/10
	 	$	2,500,000	 	 	$	25,000	 
	Commercial Property

	 	Zurich
	 	3/23/10-10/1/11
	 	$	175,000,000	 	 	$	50,000	 
	Ocean Cargo

	 	St. Paul Fire &
Marine Company
	 	10/1/09-10/1/10
	 	$	3,000,000	 	 	$	25,000	 
	Professional Liability

	 	National Union Fire
Insurance Co.
	 	10/1/09-10/1/10
	 	$	3,000,000	 	 	$	10,000	 
	D&O Liability

	 	National Union Fire
Insurance Co.
	 	10/1/09-10/1/10
	 	$	15,000,000	 	 	Non-Indemnity- $0;
 Indemnity — $100,000

	Excess D&O Side A DIC

	 	Indian Harbor
Insurance Co.
	 	10/1/09-10/1/10
	 	$	5,000,000	 	 	$	0	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Insurance Coverage	 	Carrier	 	Policy Term	 	Limits	 	Deductible
	Fiduciary Liability

	 	National Union Fire
Insurance Co.
	 	10/1/09-10/1/10
	 	$	3,000,000	 	 	$	2,500	 
	Crime

	 	National Union Fire
Insurance Co.
	 	10/1/09-10/1/10
	 	$	500,000	 	 	$	10,000	 
	Cyber Liability

	 	Ace American
Insurance Co.
	 	10/1/09-10/1/10
	 	$	10,000,000	 	 	$	250,000	 

 

 

Schedule 3.16

Capitalization and Subsidiaries

	 	 	 	 	 
	 	 	 	 	Ownership of Subsidiary by
	 	 	 	 	any Loan Party
	 	 	Jurisdiction of	 	(Name of Loan Party and
	Name	 	Organization	 	percentage owned)
	Bluestem Brands, Inc.

	 	DE
	 	N/A
	Bluestem Fulfillment, Inc.

	 	DE
	 	100% — Bluestem Brands, Inc.
	Fingerhut Receivables I, LLC

	 	DE
	 	100% — Bluestem Brands, Inc.

Classes of Equity Interests of the Borrower and beneficial ownership

	 	 	 	 	 	 	 
	Class	 	Authorized	 	Issued and Outstanding
	common

	 	 	2,592,550,586	 	 	see capitalization table
	Series A Convertible Preferred
Stock

	 	 	791,738,012	 	 	see capitalization table
	Series B Convertible Preferred
Stock

	 	 	750,839,038	 	 	see capitalization table

Beneficial Ownership: see attached capitalization table.

Type of entity:

     Bluestem Brands, Inc. is a Delaware corporation.

     Bluestem Fulfillment, Inc. is a Delaware corporation.

     Fingerhut Receivables I, LLC is a Delaware limited liability company.

 

 

Capitalization Table

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Series A Convertible	 	 	Series B Convertible	 	 	 	 	 	 	% Ownership of	 	 	Common & Warrant	 	 	Total Shares,	 	 	% Ownership	 
	 	 	Preferred Stock	 	 	Preferred Stock	 	 	Common Stock	 	 	Shares	 	 	Holders	 	 	Options and	 	 	of Total Shares,	 
	Name	 	Shares	 	 	Shares	 	 	Shares	 	 	Outstanding	 	 	Shares	 	 	Warrants	 	 	Options & Warrants	 
	Bain Capital Venture Fund, L.P.
	 	 	83,218,962	 	 	 	145,218,255	 	 	 	—	 	 	 	12.51	%	 	 	—	 	 	 	228,437,217	 	 	 	10.50	%
	Brookside Capital Partners Fund, L.P.
	 	 	100,079,802	 	 	 	167,807,760	 	 	 	—	 	 	 	14.67	%	 	 	—	 	 	 	267,887,562	 	 	 	12.31	%
	BCIP Associates, LLC
	 	 	15,860,046	 	 	 	20,911,429	 	 	 	—	 	 	 	2.01	%	 	 	—	 	 	 	36,771,475	 	 	 	1.69	%
	RGIP, LLC
	 	 	1,000,797	 	 	 	1,678,076	 	 	 	—	 	 	 	0.15	%	 	 	—	 	 	 	2,678,873	 	 	 	0.12	%
	Battery Ventures L.P.
	 	 	199,683,914	 	 	 	335,615,518	 	 	 	—	 	 	 	29.32	%	 	 	—	 	 	 	535,299,432	 	 	 	24.60	%
	Kermit Stofer
	 	 	475,692	 	 	 	—	 	 	 	—	 	 	 	0.03	%	 	 	—	 	 	 	475,692	 	 	 	0.02	%
	Brian Smith
	 	 	3,695,254	 	 	 	6,712,310	 	 	 	74,888,000	 	 	 	4.67	%	 	 	—	 	 	 	85,295,564	 	 	 	3.92	%
	Other Management & Employees
	 	 	—	 	 	 	1,342,462	 	 	 	172,309,391	 	 	 	9.51	%	 	 	45,426,974	 	 	 	219,078,827	 	 	 	10.07	%
	Petters Group Worldwide, LLC
	 	 	338,731,641	 	 	 	—	 	 	 	53,687,483	 	 	 	21.49	%	 	 	—	 	 	 	392,419,124	 	 	 	18.03	%
	RTB Holdings, LLC
	 	 	—	 	 	 	—	 	 	 	1,321,552	 	 	 	0.07	%	 	 	—	 	 	 	1,321,552	 	 	 	0.06	%
	Non-Employee Directors
	 	 	2,682,801	 	 	 	4,430,124	 	 	 	6,625,000	 	 	 	0.75	%	 	 	1,900,000	 	 	 	15,637,925	 	 	 	0.72	%
	T. Deikel
	 	 	—	 	 	 	—	 	 	 	16,103,658	 	 	 	0.88	%	 	 	—	 	 	 	16,103,658	 	 	 	0.74	%
	Prudential
	 	 	—	 	 	 	67,123,104	 	 	 	—	 	 	 	3.68	%	 	 	41,742,458	 	 	 	108,865,562	 	 	 	5.00	%
	CIGPF I
	 	 	4,566,645	 	 	 	—	 	 	 	—	 	 	 	0.25	%	 	 	33,116,154	 	 	 	37,682,799	 	 	 	1.73	%
	Warrant Holders (various)
	 	 	—	 	 	 	—	 	 	 	—	 	 	 	0.00	%	 	 	227,938,194	 	 	 	227,938,194	 	 	 	10.48	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Outstanding
	 	 	749,995,554	 	 	 	750,839,038	 	 	 	324,935,084	 	 	 	100.00	%	 	 	350,123,780	 	 	 	2,175,893,456	 	 	 	100.00	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Available for Grant
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	6,169,954	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Total Outstanding and Available for
Grant (“Fully Diluted”)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	2,182,063,410	 	 	 	100.00	%
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 

 

 

Schedule 3.19

Affiliate Transactions

	1.	 	Fourth Amended and Restated Certificate of Incorporation, as amended through August 20, 2010.
	 
	2.	 	Amended and Restated Investor Rights Agreement, dated as of May 15, 2008, among Fingerhut
Direct Marketing, Inc. and other investors.
	 
	3.	 	Amended and Restated Stockholders Agreement, dated as of May 15, 2008, among the Fingerhut
Direct Marketing, Inc. and certain investors and stockholders.
	 
	4.	 	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.
	 
	5.	 	Independent Director — Total Compensation Summary.
	 
	6.	 	Amended and Restated 2005 Non-Employee Directors Equity Compensation Plan.
	 
	7.	 	2003 Equity Incentive Plan.
	 
	8.	 	2007 Incentive Plan.
	 
	9.	 	2007 Vision of Quality Growth Special Incentive Program.
	 
	10.	 	Bluestem Brands, Inc. makes periodic purchases of services from related parties. In fiscal
2009 the total amount of purchases was approximately $0.1 million.
	 
	11.	 	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.
	 
	12.	 	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.
	 
	13.	 	Common Stock Purchase Warrant, dated February 18, 2004, issued to Piper Jaffray & Co.
	 
	14.	 	Common Stock Purchase Warrant, dated February 24, 2004, issued to CIGPF I Corp.
	 
	15.	 	Common Stock Purchase Warrant, dated November 1, 2004, issued to CIGPF I Corp.
	 
	16.	 	Common Stock Purchase Warrant, dated February 18, 2004, issued to Cherry Tree Companies.

 

 

	17.	 	Common Stock Purchase Warrant, dated February 18, 2004, issued to Gorman Charitable Trust.
	 
	18.	 	Common Stock Purchase Warrant, dated May 15, 2008, issued to Goldman Sachs Specialty Lending
Group, L.P.
	 
	19.	 	Common Stock Purchase Warrant, dated May 15, 2008, issued to Fortress Credit Corp.
	 
	20.	 	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.
	 
	21.	 	Senior Subordinated Documents.
	 
	22.	 	SPV Credit Documents.
	 
	23.	 	Fingerhut Direct Marketing, Inc. (now known as Bluestem Brands, Inc.) 2008 Equity and
Incentive Plan.
	 
	24.	 	2010 Bluestem Brands, Inc. Incentive Plan.
	 
	25.	 	2010 Executive Supplemental Incentive Plan.

 

 

Schedule 6.01

Existing Indebtedness

None.

 

 

Schedule 6.02

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 6.04

Existing Investments

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

 

 

Schedule 6.10

Restrictive Agreements

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

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

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

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

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

See agreements listed on Schedule 3.19.exv10w15

Exhibit 10.15

LIMITED WAIVER AND AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT

          This LIMITED WAIVER AND AMENDMENT NO. 1 TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this
“Amendment”) dated as of April 21, 2011 is by and among BLUESTEM BRANDS, INC. (the “Borrower”),
each of the Lenders party to the Credit Agreement (as defined below) as of the date hereof, and
JPMORGAN CHASE BANK, N.A., as administrative agent for the Lenders (“Administrative Agent”).

R E C I T A L S:

          WHEREAS, Administrative Agent, Lenders and Borrower are parties to that certain Second Amended
and Restated Credit Agreement dated as of August 20, 2010 (as amended, supplemented, restated or
otherwise modified from time to time, the “Credit Agreement”); capitalized terms used and not
defined herein shall have the meanings assigned to them in the Credit Agreement, as amended hereby;
and

          WHEREAS, the Borrower has requested that the Lenders (i) amend the Credit Agreement pursuant
to the terms and conditions set forth herein and (ii) waive any Default or Event of Default under
the Credit Agreement or any other Loan 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 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, including any financial covenant set forth in Section
6.14 of the Credit Agreement, and including in connection with any representation and warranty
relating thereto set forth in any Credit Document or pursuant to any certificate or other document,
each of which 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 (the “Specified Defaults”);

          NOW, THEREFORE, in consideration of the premises contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:

Section 1. Limited Waiver. Subject to the satisfaction of the conditions precedent set
forth in Section 3 hereof, (i) JPMorgan Chase Bank, N.A., individually, in its capacity as
Administrative Agent and a Lender under the Existing Credit Agreement, and the other Lenders party
hereto hereby waive the Specified Defaults and (ii) any representation and warranty set forth in
any Loan 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.

 

 

Section 2. Amendments to Credit Agreement. Immediately upon the satisfaction of each of
the applicable conditions precedent set forth in Section 3 of this Amendment, the following
amendments to the Credit Agreement shall become effective as of August 20, 2010:

          (a) The following defined terms located in Section 1.01 of the Credit Agreement are
hereby amended and restated in their entirety as follows:

          “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 SPV Credit Documents or the Administrative
Agent, any Lender or arranger in connection with the 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 SPV Credit Documents, the 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 SPV 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 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 the Borrower 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 Administrative Agent and (ix)
the amount of any prepayment premiums or other similar fees paid in connection with
the SPV Credit Documents or the 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 non-cash 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

2

 

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.

          “Swap Agreement” means any agreement with respect to any swap, forward,
future or derivatives 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 Borrower or the
Subsidiaries shall be a Swap Agreement. 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.

          “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.

(b) Amendments to Section 6.14(e). Section 6.14(e) of the Credit Agreement is hereby
amended and restated in its entirety as follows:

(e) 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.

Section 3. Conditions Precedent to Effectiveness of Amendment. This Amendment shall be
effective on the date on which (i) this Amendment shall have been duly executed and delivered

3

 

by the parties hereto and (ii) Administrative Agent shall have received fully executed copies of
the amendments to the Servicing Agreement and the Senior Subordinated Securities Purchase
Agreement, in each case, corresponding in relevant part to this Amendment and in form and substance
reasonably satisfactory to Administrative Agent.

Section 4. Compliance with Section 5.01. 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 Borrower shall
be deemed to have satisfied its obligations under Section 5.01(a), (b) and (d) of the Credit
Agreement, including in respect of the Fiscal Year ended January 28, 2011, upon delivery of the
following:

          (a) On or prior to the date hereof, the Borrower 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 certificate signed by a Financial Officer certifying that such financial statements
fairly present, in all material respects, the financial condition of the Servicer Consolidated
Group as at the dates indicated and the results of their operations and cash flows for the periods
indicated; 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 Borrower 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, 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 certificate signed by a Financial
Officer certifying that such financial statements fairly present, in all material respects, the
financial condition of the Servicer Consolidated Group as at the dates indicated and the results of
their operations and cash flows for the periods indicated (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
Borrower, 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

4

 

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 6.14 of the Credit
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.

Section 5. Representations, Warranties and Covenants. In order to induce Administrative
Agent and Lenders to enter into this Amendment, Borrower represents, warrants and covenants to
Administrative Agent and Lenders, upon the effectiveness of this Amendment, which representations,
warranties and covenants shall survive the execution and delivery of this Amendment, that:

          (a) No Default; etc. No Event of Default and no event or condition which, merely with
notice or the passage of time or both, would constitute an Event of Default, has occurred and is
continuing after giving effect to this Amendment or would result from the execution or delivery of
this Amendment or the consummation of the transactions contemplated hereby.

          (b) Power and Authority; Authorization. Borrower has the corporate power and
authority to execute and deliver this Amendment and to carry out the terms and provisions of the
Credit Agreement, as amended by this Amendment, and the execution and delivery by Borrower of this
Amendment, and the performance by Borrower of its obligations hereunder and under the Loan
Documents have been duly authorized by all requisite corporate action by Borrower.

          (c) Execution and Delivery. Borrower has duly executed and delivered this Amendment.

          (d) Enforceability. This Amendment and the Credit Agreement, as amended by this
Amendment, constitute the legal, valid and binding obligations of Borrower, enforceable against
Borrower in accordance with its terms, except as enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’
right generally, and by general principles of equity, regardless of whether considered in a
proceeding in equity or at law.

          (e) Representations and Warranties. All of the representations and warranties
contained in the Credit Agreement and in the other Loan Documents (other than those which speak
expressly only as of a different date) are true and correct in all material respects as of the date
hereof after giving effect to this Amendment and the transactions contemplated hereby.

5

 

Section 6. Consent to Amendments to the Senior Subordinated Securities Purchase Agreement and
the Servicing Agreement. By their execution of this Amendment, the Lenders and the
Administrative Agent hereby consent (to the extent required) to the execution and delivery by the
Borrower of amendments to each of the Senior Subordinated Securities Purchase Agreement and the
Servicing Agreement which are substantially similar to the Amendments set forth herein, and this
Amendment shall constitute proper notice under the Loan Documents (to the extent required) with
respect to such amendments.

Section 7. Miscellaneous.

          (a) Effect; Ratification. Borrower acknowledges that all of the reasonable legal
expenses incurred by Administrative Agent in connection herewith shall be reimbursable under
Section 9.03 of the Credit Agreement. The amendments and waiver set forth herein are effective
solely for the purposes set forth herein and shall be limited precisely as written, and shall not
be deemed to (i) be a consent to any amendment, waiver or modification of any other term or
condition of the Credit Agreement, as amended hereby, or of any other Loan Document or (ii)
prejudice any right or rights that Administrative Agent or any Lender may now have or may have in
the future under or in connection with the Credit Agreement or any other Loan Document. Each
reference in the Credit Agreement to “this Agreement”, “herein”, “hereof” and words of like import
and each reference in the other Loan Documents to the “Credit Agreement” shall mean the Credit
Agreement as amended hereby. This Amendment shall be construed in connection with and as part of
the Credit Agreement and all terms, conditions, representations, warranties, covenants and
agreements set forth in the Credit Agreement and each other Loan Document, except as herein
amended, are hereby ratified and confirmed and shall remain in full force and effect.

          (b) Counterparts. This Amendment may be executed via facsimile 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 an original, but all of which counterparts together shall
constitute one and the same instrument.

          (c) Severability. In case any provision in or obligation under this Amendment 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.

          (d) Loan Document. This Amendment shall constitute a Loan Document.

          (e) Reaffirmation of Guaranties. Borrower hereby reaffirms its Secured Obligations
and Guaranteed Obligations.

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

[Signature Page Follows]

6

 

          IN WITNESS WHEREOF, the parties hereto have caused this Limited Waiver and Amendment No. 1 to
Second Amended and Restated Credit Agreement to be duly executed by their respective authorized
officers as of the date first above written.

	 	 	 	 	 
	 	BLUESTEM BRANDS, INC.
 	 
	 	By:  	/s/ Mark P. Wagener 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

 

 

	 	 	 	 	 
	 	JPMORGAN CHASE BANK, N.A., individually,

as Administrative Agent, and Lender
 	 
	 	By:  	/s/ Bradford R. Kuhn 	 
	 	Name:  	 	 
	 	Title:  	 	 
	 

 

 

	 	 	 	 	 
	 	U.S. BANK NATIONAL ASSOCIATION,
as a Lender
 	 
	 	By:  	/s/ Elizabeth J. Limpert 	 
	 	Name:  	 	 
	 	Title:

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