Document:

exv10w12

Exhibit 10.12

BLUESTEM LETTER AGREEMENT

August 20, 2010

Goldman Sachs Bank USA

6011 Connection Drive

Irving, TX 75039

Ladies and Gentlemen:

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

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

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

ARTICLE I

Negative Covenants

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

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

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

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

 

 

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

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

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

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

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

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

 

 

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

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

          1.2 Liens. Bluestem shall not, and shall not permit any Subsidiary to, create, incur,
assume or permit to exist any Lien on any property or asset now owned or hereafter acquired by it,
or assign or sell any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:

     (a) Liens created pursuant to any Bluestem Inventory Loan Document or any Senior Subordinated
Document and permitted under the related Intercreditor Agreement;

     (b) Bluestem Permitted Encumbrances;

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

     (d) Liens on fixed or capital assets acquired, constructed or improved by Bluestem or any
Subsidiary; provided that (i) such Liens secure Indebtedness permitted by Section
1.1, (ii) such Liens and the Indebtedness secured thereby are incurred prior to or within 90
days after such acquisition or the completion of such construction or improvement, (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of acquiring, constructing or
improving such fixed or capital assets, (iv) such Liens shall not apply to any other property or
assets of Bluestem or any Subsidiary and (v) any such Liens incurred in connection with the
acquisition of the St. Cloud Warehouse solely that encumber the real property and fixtures related
thereto;

     (e) any Lien existing on any property or asset prior to the acquisition thereof by Bluestem or
any Subsidiary or existing on any property or asset of any Subsidiary prior to the time such Person
becomes a Subsidiary; provided that (i) such Lien is not created in

 

 

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

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

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

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

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

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

          1.3 Fundamental Changes.

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

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

          1.4 Investments, Loans, Advances, Guarantees and Acquisitions. Bluestem shall not and
shall not permit any Subsidiary to, purchase, hold or acquire (including pursuant to any merger
with any Person that was not a wholly owned Subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or other right to
acquire any of the foregoing) of, make or permit to exist any loans or advances to, Guarantee any
obligations of, or make or permit to exist any investment or any other interest in, any other
Person, or purchase or otherwise acquire (in one transaction or a series of transactions)

 

 

any assets of any other Person constituting a business unit (whether through purchase of
assets, merger or otherwise), except:

     (a) Bluestem Permitted Investments;

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

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

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

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

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

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

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

 

 

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

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

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

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

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

          1.7 Swap Agreements. Bluestem shall not, and shall not permit any Subsidiary to, enter
into any Swap Agreement, except (a) Swap Agreements entered into by Bluestem or any Subsidiary to
hedge or mitigate risks to which Bluestem or any Subsidiary has actual exposure (other than those
in respect of Equity Interests of Bluestem or any Subsidiary), (b) Swap Agreements entered into by
Bluestem or any Subsidiary in order to effectively cap, collar or exchange interest rates (from
fixed to floating rates, from one floating rate to another floating rate or otherwise) with respect
to any interest-bearing liability or investment of Bluestem or any Subsidiary and (c) Swap
Agreements permitted under the Credit Agreement.

          1.8 Restricted Payments; Certain Payments of Indebtedness.

     (a) Bluestem shall not, and shall not permit any Subsidiary to, declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment, or incur any obligation (contingent or
otherwise) to do so, except (i) Bluestem may make, declare and pay dividends with respect to its
common stock payable solely in additional shares of its common stock, and with respect to its
preferred stock, payable solely in additional shares of such preferred stock or in shares of its
common stock, and Restricted Payments to any holders of the warrants pursuant to the terms thereof
and the related agreements outstanding on the date hereof, or make case payments in lieu of
fractional shares, (ii) Bluestem may make Restricted Payments, of up to $1,000,000 per Fiscal Year,
pursuant to and in accordance with equity incentive plans of

 

 

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

     (b) Bluestem shall not, and it shall not permit any Subsidiary to, make or agree to pay or
make, directly or indirectly, any payment or other distribution (whether in cash, securities or
other property) of or in respect of principal of or interest on any Indebtedness, or any payment or
other distribution (whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any Indebtedness, except: (i) payment of regularly scheduled interest and principal
payments as and when due in respect of any Indebtedness permitted under this Agreement (including
Indebtedness under the Bluestem 2010 Inventory Credit Agreement and the Senior Subordinated Debt)
other than payments in respect of subordinated indebtedness (other than the Senior Subordinated
Debt) prohibited by the subordination provisions thereof; (ii) other principal payments in respect
of the Bluestem 2010 Inventory Credit Agreement and any interest, fees or other obligations related
thereto or relating to any reduction in commitments thereunder; (iii) under the Credit Documents;
(iv) payments in respect of the Senior Subordinated Debt; (v) Refinancing of Indebtedness to the
extent permitted by Section 1.1; and (vi) payment of secured Indebtedness permitted under
this Bluestem Letter Agreement that becomes due as a result of the voluntary sale or transfer of
the property or assets securing such Indebtedness other than payments in respect of subordinated
indebtedness (other than the Senior Subordinated Debt) prohibited by the subordination provisions
thereof.

 

 

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

          1.10 Restrictive Agreements. Bluestem shall not and shall not permit any Subsidiary
to, directly or indirectly, enter into, incur or permit to exist any agreement or other arrangement
that prohibits, restricts or imposes any condition upon (a) the ability of Bluestem, any Subsidiary
or the Company to create, incur or permit to exist any Lien upon any of its property or assets, or
(b) the ability of any Subsidiary to pay dividends or other distributions with respect to any
shares of its capital stock or to make or repay loans or advances to Bluestem, any other Subsidiary
or to Guarantee Indebtedness of Bluestem or any other Subsidiary; provided that (i) the
foregoing shall not apply to restrictions and conditions imposed by law or by any Credit Document,
(ii) the foregoing shall not apply to restrictions and conditions existing on the Closing Date
identified on Schedule 1.10 (but shall apply to any extension or renewal of, or any
amendment or modification, in each case, which expands the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary restrictions and conditions contained
in agreements relating to the sale of a Subsidiary pending such sale, provided such restrictions
and conditions apply only to the Subsidiary that is to be sold and such sale is permitted
hereunder, (iv) clause (a) of the foregoing shall not apply to restrictions or conditions imposed
by any agreement relating to secured Indebtedness permitted by this Bluestem Letter Agreement if
such restrictions or conditions apply only to the property or assets securing such Indebtedness,
(v) clause (a) of the foregoing shall not apply to customary provisions in leases of Bluestem or
any Subsidiary and other contracts restricting the assignment thereof and (vi) the foregoing shall
not apply to restrictions and conditions of the type imposed by any Bluestem Inventory Loan
Document or any Senior Subordinated Document, in each case, as in effect as of the date hereof.

          1.11 Amendment of Material Documents.

     (a) Bluestem shall not and shall not permit any Subsidiary to, amend, modify or waive any of
its rights under (i) the Bluestem Inventory Loan Documents, (ii) the Senior Subordinated Documents,
(iii) the Related Agreements or (iv) its certificate of incorporation, by-

 

 

laws, operating, management or partnership agreement or other organizational documents, in
each case, except after reasonable prior notice to the Administrative Agent; and

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

ARTICLE II

Account Owner Termination Rights

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

ARTICLE III

Breach; Indemnity.

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

          3.2 Indemnity. Bluestem shall indemnify the Indemnitees for any and all Indemnified
Liabilities arising out of or in connection with any breach of this Bluestem Letter Agreement;
provided, Bluestem shall not have any obligation to any Indemnitee with respect to any Indemnified
Liabilities to the extent such Indemnified Liabilities arise from the gross negligence or willful
misconduct of such Indemnitee, as determined by a court of competent jurisdiction in a final
non-appealable order or judgment.

ARTICLE IV

Miscellaneous.

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

          4.2 Independence of Covenants. All covenants hereunder shall be given independent
effect so that if a particular action or condition is not permitted by any of such

 

 

covenants, the fact that it would be permitted by an exception to, or would otherwise be
within the limitations of, another covenant shall not avoid the occurrence of a breach hereunder if
such action is taken or condition exists.

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

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

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

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

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

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

          4.9 Consent to Jurisdiction.

     (a) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST HOLDINGS ARISING OUT OF OR RELATING HERETO, OR
ANY OF THE OBLIGATIONS HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE, COUNTY AND CITY OF NEW YORK. BY EXECUTING AND DELIVERING THIS HOLDINGS
LETTER AGREEMENT, HOLDINGS,

 

 

FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (i) ACCEPTS GENERALLY AND
UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (ii) WAIVES ANY DEFENSE OF
FORUM NON CONVENIENS; (iii) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY SUCH
COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, TO HOLDINGS AT ITS
ADDRESS PROVIDED HEREIN AND TO ANY PROCESS AGENT IS SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER
HOLDINGS IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND BINDING
SERVICE IN EVERY RESPECT; AND (iv) AGREES THAT AGENTS AND LENDERS RETAIN THE RIGHT TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST HOLDINGS IN THE COURTS OF ANY
OTHER JURISDICTION.

     (b) HOLDINGS HEREBY AGREES THAT PROCESS MAY BE SERVED ON IT BY CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO THE ADDRESSES PERTAINING TO IT AS SPECIFIED HEREIN OR ON CT CORPORATION SYSTEM, ATTN:
SERVICE OF PROCESS DEPT., 111 EIGHTH AVENUE, NEW YORK, NY 10011, AND HEREBY APPOINTS CT CORPORATION
SYSTEM, AS ITS AGENT TO RECEIVE SUCH SERVICE OF PROCESS. ANY AND ALL SERVICE OF PROCESS AND ANY
OTHER NOTICE IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE AGAINST HOLDINGS IF GIVEN BY
REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR BY ANY OTHER MEANS OR MAIL WHICH
REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED AS PROVIDED ABOVE. IN THE EVENT CT CORPORATION
SYSTEM SHALL NOT BE ABLE TO ACCEPT SERVICE OF PROCESS AS AFORESAID AND IF HOLDINGS SHALL NOT
MAINTAIN AN OFFICE IN NEW YORK CITY, HOLDINGS SHALL PROMPTLY APPOINT AND MAINTAIN AN AGENT
QUALIFIED TO ACT AS AN AGENT FOR SERVICE OF PROCESS WITH RESPECT TO THE COURTS SPECIFIED IN
SECTION 4.9(a), AND ACCEPTABLE TO THE ADMINISTRATIVE AGENT, AS HOLDINGS’S AUTHORIZED AGENT
TO ACCEPT AND ACKNOWLEDGE ON HOLDINGS’S BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED
IN ANY SUCH ACTION, SUIT OR PROCEEDING.

          4.10 Waiver of Jury Trial. HOLDINGS HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR ANY DEALINGS BETWEEN
IT RELATING TO THE SUBJECT MATTER HEREIN THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY COURT AND THAT
RELATE TO THE SUBJECT MATTER OF THIS HOLDINGS LETTER AGREEMENT, INCLUDING CONTRACT CLAIMS, TORT
CLAIMS, BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. HOLDINGS ACKNOWLEDGES
THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT IT HAS
ALREADY RELIED ON THIS WAIVER IN ENTERING INTO THIS HOLDINGS LETTER AGREEMENT, AND THAT IT WILL
CONTINUE TO RELY ON THIS WAIVER IN ITS RELATED FUTURE DEALINGS. HOLDINGS FURTHER

 

 

WARRANTS AND REPRESENTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL.
THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER
THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 4.10 AND EXECUTED BY
EACH OF THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS HERETO OR ANY OF THE OTHER CREDIT DOCUMENTS OR TO ANY OTHER DOCUMENTS
OR AGREEMENTS RELATING TO THE LOANS MADE UNDER THE CREDIT AGREEMENT. IN THE EVENT OF LITIGATION,
THIS HOLDINGS LETTER AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

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

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

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

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

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

	 	 	 	 	 
	 	Very truly yours,

BLUESTEM BRANDS, INC.

 	 
	 	By:  	              /s/  Mark Wagener
 	 
	 	 	Name:  	Mark Wagener 	 
	 	 	Title:  	Executive Vice President and Chief
Financial Officer 	 
	 
	 	Notice Address:

Bluestem Brands, Inc.

6509 Flying Cloud Drive

Eden Prairie, Minnesota 55344

 	 
	 	 	 
	 	 	 
	 	 	 
	 

Accepted and agreed to as of

the date first above written:

GOLDMAN SACHS BANK USA, as Administrative Agent

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

Notice Address:

Goldman Sachs Bank USA

6011 Connection Drive

Irving, TX

 

 

Schedule 1.1

Existing Indebtedness

 

 

Schedule 1.2

Existing Liens

					
	 
	 	Sch. 1.2
	 	Bluestem Letter Agreement

 

 

Schedule 1.4

Existing Investments

					
	 
	 	Sch. 1.4
	 	Bluestem Letter Agreement

 

 

Schedule 1.10

Existing Restrictions

					
	 
	 	Sch. 1.10
	 	Bluestem Letter Agreement

 

 

Appendix A

Certain Defined Terms

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

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

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

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

     (b) carriers’, warehousemen’s, mechanics’, materialmen’s, repairmen’s and other like Liens
imposed by law, arising in the ordinary course of business and securing obligations that are not
overdue by more than 30 days or where (i) the validity or amount thereof is being contested in good
faith by appropriate proceedings, (ii) Bluestem or its Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (iii) such liabilities would not
result in aggregate liabilities in excess of $2,500,000;

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

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

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

     (f) easements, zoning restrictions, rights-of-way and similar encumbrances on real property
imposed by law or arising in the ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the affected property or interfere with
the ordinary conduct of business of Bluestem or any Subsidiary; and

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

APPENDIX A-1

 

 

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

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

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

          (b) investments in commercial paper maturing within 270 days from the date of acquisition
thereof and having, at such date of acquisition, the highest credit rating obtainable from S&P or
from Moody’s;

          (c) investments in certificates of deposit, banker’s acceptances and time deposits maturing
within 180 days from the date of acquisition thereof issued or guaranteed by or placed with, and
money market deposit accounts issued or offered by, any domestic office of any commercial bank
organized under the laws of the United States of America or any State thereof which has a combined
capital and surplus and undivided profits of not less than $500,000,000;

          (d) fully collateralized repurchase agreements with a term of not more than 30 days for
securities described in clause (a) above and entered into with a financial institution satisfying
the criteria described in clause (c) above; and

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

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

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

     “Guarantee” of or by any Person (the “guarantor”) means any obligation, contingent or
otherwise, of the guarantor guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other Person (the “primary obligor”) in any manner, whether
directly or indirectly, and including any obligation of the direct or indirect, (a) to purchase or
pay (or advance or supply funds for the purchase or payment of) such Indebtedness or other
obligation or to purchase (or to advance or supply funds for the purchase of) any security for the
payment thereof, (b) to purchase or lease property, securities or services for the

APPENDIX A-2

 

 

purpose of assuring the owner of such Indebtedness or other obligation of the payment thereof,
(c) to maintain working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such Indebtedness or
other obligation or (d) as an account party in respect of any letter of credit or letter of
guaranty issued to support such Indebtedness or obligation; provided, that the term Guarantee shall
not include endorsements for collection or deposit in the ordinary course of business.

     “Indebtedness” of any Person means, without duplication, (a) all obligations of such Person
for borrowed money or with respect to deposits or advances of any kind, (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments, (c) all obligations of such
Person upon which interest charges are customarily paid, (d) all obligations of such Person under
conditional sale or other title retention agreements relating to property acquired by such Person,
(e) all obligations of such Person in respect of the deferred purchase price of property or
services (excluding current accounts payable incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness has an existing
right, contingent or otherwise, to be secured by) any Lien on property owned or acquired by such
Person, whether or not the Indebtedness secured thereby has been assumed, (g) all Guarantees by
such Person of Indebtedness of others, (h) all Capital Lease Obligations of such Person, (i) all
obligations, contingent or otherwise, of such Person as an account party in respect of letters of
credit and letters of guaranty, (j) all obligations, contingent or otherwise, of such Person in
respect of bankers’ acceptances, (k) obligations under any liquidated earn-out and (1) any other
Off-Balance Sheet Liability. The Indebtedness of any Person shall include the Indebtedness of any
other entity (including any partnership in which such Person is a general partner) to the extent
such Person is liable therefor as a result of such Person’s ownership interest in or other
relationship with such entity, except to the extent the terms of such Indebtedness provide that
such Person is not liable therefor.

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

     “Lien” means with respect to any asset, (a) any mortgage, deed of trust, lien, pledge,
hypothecation, encumbrance, charge or security interest in, on or of such asset, (b) the interest
of a vendor or a lessor under any conditional sale agreement, capital lease or title retention
agreement (or any financing lease having substantially the same economic effect as any of the

APPENDIX A-3

 

 

foregoing) relating to such asset and (c) in the case of securities, any purchase option, call
or similar right of a third party with respect to such securities.

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

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

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

     “Refinancing” means an extension, renewal or replacement.

     “Restricted Payment” shall mean any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in Bluestem or any Subsidiary,
or any payment (whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such Equity Interests in Bluestem or of any option, warrant or other right to
acquire any such Equity Interests in Bluestem.

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

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

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

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

     “Swap Agreement” means any agreement with respect to any swap, forward, future or derivative
transaction or option or similar agreement involving, or settled by reference to, one or more
rates, currencies, commodities, equity or debt instruments or securities, or economic, financial or
pricing indices or measures of economic, financial or pricing risk or value or any similar
transaction or any combination of these transactions; provided that no phantom stock or

APPENDIX A-4

 

 

similar plan providing for payments only on account of services provided by current or former
directors, officers, employees or consultants of the Bluestem Consolidated Group shall be a Swap
Agreement.

APPENDIX A-5exv10w13

Exhibit 10.13

 

SERVICING AGREEMENT

between

BLUESTEM BRANDS, INC.,

Servicer,

FINGERHUT RECEIVABLES I, LLC,

Company,

and

GOLDMAN SACHS BANK USA,

Administrative Agent and Collateral Agent

Dated as of August 20, 2010

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I

	DEFINITIONS

	 
	 	 	 	 
	Section 1.01 Definitions
	 	 	1	 
	Section 1.02 Other Definitional Provisions
	 	 	12	 
	 
	 	 	 	 
	ARTICLE II

	ADMINISTRATION AND SERVICING OF RECEIVABLES

	 
	 	 	 	 
	Section 2.01 Acceptance of Appointment and Other Matters Relating to the Servicer
	 	 	13	 
	Section 2.02 Servicing Compensation
	 	 	14	 
	Section 2.03 Collections, Allocations, Investments and Adjustments
	 	 	14	 
	Section 2.04 Reports and Records
	 	 	15	 
	Section 2.05 Annual Certificate of Servicer
	 	 	16	 
	Section 2.06 Annual Servicing Report of Independent Public Accountants; Copies of Reports Available
	 	 	16	 
	Section 2.07 Notices to the Seller
	 	 	17	 
	 
	 	 	 	 
	ARTICLE III

	REPRESENTATIONS AND WARRANTIES OF THE SERVICER

	 
	 	 	 	 
	Section 3.01 Organization and Good Standing
	 	 	18	 
	Section 3.02 Due Qualification
	 	 	18	 
	Section 3.03 Due Authorization
	 	 	18	 
	Section 3.04 Binding Obligation
	 	 	18	 
	Section 3.05 No Conflict
	 	 	18	 
	Section 3.06 No Violation
	 	 	18	 
	Section 3.07 No Proceedings
	 	 	18	 
	Section 3.08 Compliance with Requirements of Law
	 	 	18	 
	Section 3.09 All Consents
	 	 	19	 
	Section 3.10 Solvency
	 	 	19	 
	Section 3.11 Historical Financial Statements
	 	 	19	 
	Section 3.12 Three-Year Forecast
	 	 	19	 
	Section 3.13 Title to Assets
	 	 	19	 
	Section 3.14 Capital Stock and Ownership
	 	 	20	 
	Section 3.15 Material Adverse Effect
	 	 	20	 
	Section 3.16 Payment of Taxes
	 	 	20	 
	Section 3.17 No Defaults
	 	 	20	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	Section 3.18 Material Contracts
	 	 	20	 
	Section 3.19 Senior Management
	 	 	21	 
	Section 3.20 Operational Guidelines
	 	 	21	 
	 
	 	 	 	 
	ARTICLE IV

	AFFIRMATIVE COVENANTS OF THE SERVICER

	 
	 	 	 	 
	Section 4.01 Financial Covenants
	 	 	21	 
	Section 4.02 Financial Statements
	 	 	22	 
	Section 4.03 Payment Collection
	 	 	25	 
	Section 4.04 Notice of Change in Board of Directors
	 	 	25	 
	Section 4.05 Insurance
	 	 	25	 
	Section 4.06 Insurance Report
	 	 	26	 
	Section 4.07 Renewals and Rewrites of Insurance Policies
	 	 	26	 
	Section 4.08 Compliance with Requirements of Law
	 	 	26	 
	Section 4.09 Existence
	 	 	26	 
	Section 4.10 Payment of Taxes and Claims
	 	 	26	 
	Section 4.11 Further Assurances
	 	 	27	 
	Section 4.12 Other Covenants
	 	 	27	 
	Section 4.13 Other Information
	 	 	27	 
	Section 4.14 Account Owner Termination Rights
	 	 	27	 
	Section 4.15 Additional Investors
	 	 	27	 
	Section 4.16 Regulatory Compliance Changes
	 	 	28	 
	Section 4.17 Amendments to Operational Guidelines
	 	 	28	 
	Section 4.18 Additional Notice
	 	 	28	 
	 
	 	 	 	 
	ARTICLE V

	NEGATIVE COVENANTS OF THE SERVICER

	 
	 	 	 	 
	Section 5.01 Lockbox System
	 	 	28	 
	Section 5.02 No Rescission or Cancellation
	 	 	28	 
	Section 5.03 Protection of Rights
	 	 	28	 
	Section 5.04 Revolving Loan Product Agreements and Receivables Sale Agreements
	 	 	28	 
	Section 5.05 Defaulted Accounts
	 	 	29	 
	Section 5.06 Fiscal Year
	 	 	29	 

 

 

TABLE OF CONTENTS

(continued)

	 	 	 	 	 
	 	 	Page	 
	ARTICLE VI

	OTHER MATTERS RELATING TO THE SERVICER

	 
	 	 	 	 
	Section 6.01 Liability of the Servicer
	 	 	29	 
	Section 6.02 Limitation on Liability of the Servicer and Others
	 	 	29	 
	Section 6.03 Servicer Indemnification of the Company and the Administrative Agent
	 	 	29	 
	Section 6.04 Resignation of the Servicer
	 	 	30	 
	Section 6.05 Access to Documentation and Information Regarding the Receivables Accounts and Underlying Receivables
	 	 	30	 
	Section 6.06 Delegation of Duties
	 	 	31	 
	 
	 	 	 	 
	ARTICLE VII

	SERVICER DEFAULTS

	 
	 	 	 	 
	Section 7.01 Servicer Defaults
	 	 	31	 
	Section 7.02 Appointment of Successor
	 	 	34	 
	 
	 	 	 	 
	ARTICLE VIII

	MISCELLANEOUS PROVISIONS

	 
	 	 	 	 
	Section 8.01 Amendment
	 	 	35	 
	Section 8.02 Termination of Agreement
	 	 	35	 
	Section 8.03 GOVERNING LAW
	 	 	35	 
	Section 8.04 Notices
	 	 	35	 
	Section 8.05 Setoff
	 	 	36	 
	Section 8.06 Severability of Provisions
	 	 	36	 
	Section 8.07 Further Assurances
	 	 	36	 
	Section 8.08 No Waiver; Cumulative Remedies
	 	 	36	 
	Section 8.09 Counterparts
	 	 	36	 
	Section 8.10 Third-Party Beneficiaries
	 	 	36	 
	Section 8.11 Merger and Integration
	 	 	37	 
	Section 8.12 Headings
	 	 	37	 
	Section 8.13 Consent to Jurisdiction and Service of Process
	 	 	37	 
	Section 8.14 No Petition
	 	 	37	 

 

 

APPENDICES

APPENDIX A: Operational Guidelines

SCHEDULES

SCHEDULE 3.14: Capital Stock and Ownership

SCHEDULE 3.18: Material Contracts

SCHEDULE 3.19: Senior Management

SCHEDULE 4.05: Insurance Policies

SCHEDULE 4.16: Regulatory Compliance Changes

EXHIBITS

EXHIBIT A: Notice of Reinstatement

EXHIBIT B: Form of Servicing Report

EXHIBIT C: Form of Daily Settlement and Servicing Report

EXHIBIT D: Form of Annual Officer’s Certificate

EXHIBIT E: Form of Payment Date Report

EXHIBIT F: Data Tape Information

EXHIBIT G: Form of Compliance Certificate

EXHIBIT H: Form of Insurance Report

EXHIBIT I: Form of Financial Officer Certification

 

 

THIS SERVICING AGREEMENT, dated as of August 20, 2010 among BLUESTEM BRANDS, INC., a Delaware
corporation, as Servicer (the “Servicer”), FINGERHUT RECEIVABLES I, LLC (the
“Company”) and GOLDMAN SACHS BANK USA (“GS Bank”), as Administrative Agent (in such
capacity, “Administrative Agent”) and as Collateral Agent (in such capacity,
“Collateral Agent”).

ARTICLE I

DEFINITIONS

          Section 1.01 Definitions. All defined terms used but not otherwise defined herein
shall have meanings ascribed to them in the Credit Agreement. Whenever used in this Agreement, the
following words and phrases shall have the following meanings, and the definitions of such terms
are applicable to the singular as well as the plural forms of such terms and to the masculine as
well as to the feminine and neuter genders of such terms.

     “Account Owner Termination Rights” shall have the meaning specified in Section
2.1 of the Bluestem Letter Agreement.

     “Administrative Agent” as defined in the preamble hereto.

     “Agreement” shall mean this Servicing Agreement.

     “Annual Membership Fees” shall have the meaning specified in the Receivables Account
Agreement applicable to each Receivables Account for annual membership fees or similar terms.

     “Annual Service Charges” shall have the meaning specified in the Receivables Account
Agreement applicable to each Receivables Account for annual service charges or similar terms.

     “Backup Servicer” shall mean Systems & Services Technology, Inc. (a subsidiary of NCO
Group, Inc.), or any independent third party selected by the Administrative Agent, with the consent
of the Class Requisite Lenders of each Class, in consultation with Bluestem that performs servicing
and monitoring functions with respect to the Underlying Receivables.

     “Bluestem” shall mean Bluestem Brands, Inc., a Delaware corporation.

     “Bluestem Inventory Administrative Agent” means JPMorgan Chase Bank, N.A., in its
capacity as administrative agent under the Bluestem 2010 Inventory Credit Agreement.

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

     “Capital Expenditures” shall mean, 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 the consolidated balance sheet of the Servicer Consolidated Group
prepared in accordance with GAAP.

 

 

     “Capital Lease Obligations” of any Person shall mean 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.

     “Change of Control” shall mean

     (A) prior to an initial public offering by Bluestem, (i) Bain, Battery 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 Bluestem, (ii) Bain,
Battery 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 Bluestem (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 Bain, Battery 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 Bluestem 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 Bluestem; 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 Servicer 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 Servicer 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 by Bluestem, any Person or “group” (within the
meaning of Rules 13d-3 and 13d-5 under the Exchange Act) other than Bain, Battery 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 Bluestem 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 Bluestem.

     “Collateral Agent” as defined in the preamble hereto.

     “Collection Period” means, for each calendar month, (x) the period from, and
including, the first calendar day of such month to, and including, the 15th calendar day of such
month and (y) the period from, and including, the 16th calendar day of such month to, and
including, the last day of such month; provided, that the initial Collection Period shall
commence on the Closing Date and shall end on August 31, 2010.

     “Collections” shall mean all payments by or on behalf of Receivables Obligors
(including Insurance Proceeds) (i) received in respect of the Underlying Receivables or (ii) that
constitute Recoveries, in each case, in the form of cash, checks, wire transfers, electronic
transfers, ATM

 

 

transfers or any other form of payment in accordance with a Receivables Account Agreement in
effect from time to time and all other amounts specified by this Agreement, the Credit Agreement or
the Receivables Purchase Agreement as constituting Collections.

     “Company” shall have the meaning specified in the preamble hereto.

     “Compliance Certificate” shall mean a Compliance Certificate certified by an
Authorized Officer of the Servicer substantially in the form of Exhibit G hereto.

     “Consolidated Adjusted EBITDA” shall mean, for any period, Consolidated Net Income for
such period plus (a) without duplication and to the extent deducted in determining Consolidated Net
Income for such period, the sum of (i) Consolidated Interest Expense for such period, (ii) income
tax expense for such period net of tax refunds, (iii) all amounts attributable to depreciation and
amortization expense for such period, (iv) for any period including the period in which such
amounts were paid, fees or expenses of the Administrative Agent and any Lender or arranger in
connection with the Credit Documents, or of any administrative agent, lender, or arranger in
connection with the Bluestem Inventory Loan Documents, in each case paid on or prior to the Closing
Date, (v) for any period (other than the period specified in the following clause (vi)) including
the period in which such amounts were paid, other fees or expenses in an amount not to exceed
$1,000,000 paid in connection with the Credit Documents, the Bluestem Inventory Loan Documents or
the Senior Subordinated Documents and the transactions contemplated therein, (vi) for the period
from, and including, the Closing Date to, and including, the last day of the first Fiscal Quarter
to end after the Closing Date, other fees and expenses in an amount not to exceed $6,500,000 paid
in connection with the Credit Documents and the transactions contemplated therein and the
refinancing or replacement of credit facilities existing prior to the Closing Date, (vii) any other
non-cash charges for such period (but excluding any non-cash charge in respect of an item that was
included in Consolidated Net Income in a prior period and any non-cash charge that relates to the
write-down or write-off of inventory) in an amount not to exceed $2,000,000, or any additional
amounts approved by the Class Requisite Lenders of each Class, (viii) reasonable fees and expenses
in connection with an initial public offering by Bluestem in an amount not to exceed the lesser of
(A) 12.5% of the gross proceeds thereof and (B) the actual fees and expenses incurred in connection
therewith, or any additional amounts approved by the Class Requisite Lenders of each Class and (ix)
the amount of any prepayment premiums or other similar fees paid in connection with the Credit
Documents or the Bluestem Inventory Loan Documents, minus (b) without duplication and to
the extent included in Consolidated Net Income, (i) any cash payments made during such period in
respect of 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” shall mean, for any period, without duplication,
Consolidated Cash Interest Expense for such period, plus any administration fees owed
pursuant to paragraph 2 of the Fee Letter and any commitment fees owed pursuant to Section 2.9(a)
of the Credit Agreement and the Bluestem 2010 Inventory Credit Agreement, plus scheduled
principal

 

 

payments on Indebtedness made during such period (not including principal payments under the
Credit Agreement), plus the amount of any prepayment premiums or other similar fees paid in
connection with the Credit Documents or the Bluestem Inventory 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 1.8(a)(iii), (iv), (v) and (vi) of the Bluestem Letter Agreement and paid
in cash, all calculated for the Servicer Consolidated Group 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) for such period 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 Credit Document or Related Agreement) or Requirement
of Law applicable to such Subsidiary.

     “Controlled Account Control Agreement” shall have the meaning attributed to such term
in the Security Agreement.

     “Controlled Affiliate” shall mean, as applied to any Person, any Person directly or
indirectly controlled by such Person. For the purposes of this definition, “control”
(including, with correlative meanings, the terms “controlling,” and “controlled
by”), as applied to any Person, means the possession, directly or indirectly, of the power (a)
to vote 5% or more of the Securities having ordinary voting power for the election of directors of
such Person or (b) to direct or cause the direction of the management and policies of that Person,
whether through the ownership of voting securities or by contract or otherwise.

     “Credit Adjustment” shall have the meaning specified in Section 2.03(b)(i).

     “Credit Agreement” shall mean the Credit Agreement, dated as of August 20, 2010,
between the Company, GS Bank as Administrative Agent and Collateral Agent, Joint Lead Arranger,
Joint Bookrunner, Syndication Agent and Documentation Agent, and J.P. Morgan Securities Inc. as
Joint Lead Arranger and Joint Bookrunner and the lenders party thereto.

 

 

     “Daily Settlement and Servicing Report” shall mean a report prepared by the Servicer
and delivered to the Company and the Administrative Agent on each Business Day, substantially in
the form of Exhibit C hereto.

     “Date of Processing” shall mean, with respect to any transaction or receipt of
Collections, the date on which such transaction is first recorded on the Servicer’s computer file
of revolving credit card accounts or closed-end installment loan accounts (without regard to the
effective date of such recordation).

     “Debtor Relief Laws” shall mean Title 11 of the United States Code and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization, suspension of payments, readjustment of debt, marshalling of assets,
assignment for the benefit of creditors or similar debtor relief laws of the United States, any
state thereof or any foreign country from time to time in effect, affecting the rights of creditors
generally or the rights of creditors of banks.

     “Defaulted Account” shall mean each Receivables Account with respect to which the
Servicer has charged off Underlying Receivables in such Receivables Account as uncollectible in
accordance with (i) the Operational Guidelines in effect on the date hereof or (ii) the Servicer’s
customary and usual servicing procedures for servicing credit account receivables comparable to the
Underlying Receivables. A Receivables Account shall become a Defaulted Account on the day on which
the Underlying Receivables in such Receivables Account are recorded as charged off as uncollectible
on the Servicer’s computer master file of accounts.

     “Depositary Bank” shall have the meaning attributed to such term in the Security
Agreement.

     “Determination Date” shall mean, with respect to any Interest Payment Date, the date
that is two Business Days prior to such Interest Payment Date.

     “Dollars,” “$” or “U.S. $” shall mean United States dollars.

     “Eligible Servicer” shall mean the Backup Servicer or, if the Backup Servicer is
unable to assume the duties, responsibilities and obligations of the Servicer in accordance with
Section 7.02(b) hereof, an entity which, at the time of its appointment as Servicer, (a) is
servicing a portfolio of revolving credit accounts and/or closed-end installment loan accounts, (b)
is legally qualified and has the capacity to service the Receivables Accounts, (c) has demonstrated
the ability to service professionally and competently a portfolio of similar accounts in accordance
with high standards of skill and care, (d) is qualified to use the software that is then being used
to service the Receivables Accounts or obtains the right to use such software or has its own
software which is adequate to perform the Servicer’s duties under this Agreement and (e) is
otherwise reasonably acceptable to the Administrative Agent and the Class Requisite Lenders of each
Class.

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

 

 

     “Finance Charge Collections” shall mean (i) all Collections of Finance Charge
Receivables, (ii) all Recoveries, (iii) all Contribution Amounts deposited into the Finance Charge
Collections Account and (iv) investment earnings on amounts on deposit in the Finance Charge
Collections Account, the Prepayment Account and the Spread Account.

     “Finance Charge Collections Account” shall have the meaning attributed to such term in
the Security Agreement.

     “Finance Charge Receivables” shall mean Underlying Receivables created in respect of
Periodic Finance Charges, Annual Membership Fees, Annual Service Charges, Late Fees, Return Check
Fees, SafeLine Account Protection fees and all other similar fees and charges designated by the
Servicer for each Collection Period.

     “Financial Officer Certification” shall mean, with respect to the financial statements
for which such certification is required, the certification of the chief financial officer of the
Servicer 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 their cash flows for the periods indicated, subject to changes resulting from audit
and normal year end adjustments.

     “Financial Plan” shall have the meaning specified in Section 4.02(g).

     “Fiscal Quarter” shall mean, for the Servicer and the Company, a fiscal quarter of a
Fiscal Year.

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

     “Fixed Charge Coverage Ratio” shall mean the ratio determined for the most-recently
ended four Fiscal Quarters of the Servicer of (a) Consolidated Adjusted EBITDA for such period
minus Capital Expenditures made during such period (excluding the portion thereof funded
with (i) long-term debt financing provided by third parties or (ii) for the period from the date of
the initial public offering of Bluestem to the first anniversary thereof, proceeds from such
initial public offering in an amount not to exceed $20,000,000 (provided that, such
exclusions shall not cause Capital Expenditures to be less than zero)) to (b) Consolidated Fixed
Charges for such period, all calculated for the Servicer Consolidated Group on a consolidated basis
in accordance with GAAP.

     “Governmental Authority” shall mean the United States of America, any state or other
political subdivision thereof and any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to government.

     “GS Bank” as defined in the preamble hereto.

     “Guarantee” of or by any Person (the “guarantor”) shall mean any obligation,
contingent or otherwise, of the guarantor guaranteeing or having the economic effect of
guaranteeing any Indebtedness or other obligation of any other Person (the “primary obligor”) in
any manner, whether directly or indirectly, and including any obligation of the direct or indirect,
(a) to

 

 

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

     “Historical Financial Statements” shall mean as of the Closing Date, (a) the audited
financial statements of the Servicer Consolidated Group, for its most recently ended Fiscal Year,
consisting of balance sheets and the related consolidated statements of income, stockholders’
equity and cash flows for such Fiscal Year, and (b) for the interim period from January 30, 2010 to
the Closing Date, internally prepared, unaudited financial statements of the Servicer Consolidated
Group, consisting of a balance sheet and the related consolidated statements of income,
stockholders’ equity and cash flows for the February, March, April, May and June fiscal months, in
the case of clauses (a) and (b), certified by the chief financial officer of the Servicer that they
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 their cash flows for the
periods indicated, subject, if applicable, to changes resulting from audit and normal year end
adjustments.

     “Indebtedness” of any Person shall mean, 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.

     “Insurance Consultant” shall mean Lockton Companies, LLC and any replacement insurance
consultant for the Administrative Agent selected by the Administrative Agent.

 

 

     “Insurance Proceeds” shall mean any amounts received pursuant to the payment of
benefits under any credit life insurance policies, credit disability or unemployment insurance
policies covering any Receivables Obligor with respect to Underlying Receivables under such
Receivables Obligor’s Receivables Account.

     “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.

     “Late Fees” shall have the meaning specified in the Receivables Account Agreement
applicable to each Receivables Account for late fees or similar terms.

     “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.

     “Lockbox Account” shall have the meaning attributed to such term in the Security
Agreement.

     “Lockbox Account Bank” shall have the meaning attributed to such term in the Security
Agreement.

     “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 Contract” shall mean any contract or other arrangement to which any member
of the Servicer Consolidated Group is a party (other than the Credit Documents or Related
Agreements) for which breach, nonperformance, cancellation or failure to renew would reasonably be
expected to have a Material Adverse Effect.

     “Narrative Report” shall mean, with respect to the financial statements for which such
narrative report is required, a narrative report describing the operations of the Servicer
Consolidated Group, as the case may be, in the form prepared for presentation to senior management
thereof for the applicable Fiscal Quarter or Fiscal Year and for the period from the beginning of
the then current Fiscal Year to the end of such period to which such financial statements relate
with comparison to and variances from the immediately preceding period and budget.

     “Net Liquidity” shall mean, as of 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 under the Bluestem 2010 Inventory Credit
Agreement; 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).

     “Notice of Reinstatement” shall mean a notice of reinstatement substantially in the
form of Exhibit A hereto.

     “Notices” shall have the meaning specified in Section 8.04.

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

     “Operational Guidelines” shall mean the summary of certain operational guidelines and
policies and procedures of the Servicer with respect to its servicing of the Receivables Accounts
and Underlying Receivables attached as Appendix A hereto (as updated from time to time
pursuant to Section 4.17).

     “Payment Date Report” shall have the meaning specified in Section 2.04(g).

     “Periodic Finance Charges” shall have the meaning attributed to such term in the
Receivables Account Agreement applicable to each Receivables Account for finance charges (due to
periodic rate) or any similar term.

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

     “Principal Collections” shall mean all Collections of Principal Receivables.

     “Principal Collections Account” shall have the meaning attributed to such term in the
Security Agreement.

     “Principal Receivables” shall mean all Underlying Receivables other than Finance
Charge Receivables. A Principal Receivable shall be deemed to have been created on the Date of
Processing of such Principal Receivable. In calculating the aggregate amount of Principal
Receivables on any day, the amount of Principal Receivables shall be reduced by the aggregate
amount of credit balances in the Receivables Accounts on such day.

     “Receivables Account” shall mean each consumer revolving credit account or closed-end
installment loan account established pursuant to a Receivables Account Agreement between the
applicable Receivables Account Owner and any Receivables Obligor.

     “Receivables Account Agreement” shall mean, with respect to a revolving credit account
or closed-end installment loan account, the agreements between a Receivables Account Owner and the
Receivables Obligor governing the terms and conditions of such account, including the

 

 

schedules, exhibits, annexes or appendices thereto, as such agreements may be amended,
modified or otherwise changed from time to time and as distributed (including any amendments and
revisions thereto) to holders of such account.

     “Receivables Account Owner” shall mean, with respect to any Receivables Account, the
entity which is either (i) the originator of such Receivables Account pursuant to a Receivables
Account Agreement or (ii) an entity which has acquired such Receivables Account and, in either
case, has sold the related Underlying Receivables to the Seller which has in turn sold the related
Underlying Receivables to the Company pursuant to a Receivables Purchase Agreement. Each of the
following shall be a “Receivables Account Owner”: (i) WebBank, (ii) MetaBank and (iii) any other
entity requested by the Servicer and approved by the Administrative Agent in its sole and absolute
discretion.

     “Receivables Obligor” shall mean, with respect to any Receivables Account, the Person
or Persons obligated to make payments with respect to such Receivables Account, including any
guarantor thereof, but excluding any merchant.

     “Recoveries” shall mean all amounts received with respect to Defaulted Accounts,
including without limitation any Insurance Proceeds attributable to Underlying Receivables in
Defaulted Accounts and the net proceeds of any sale or other disposition of such Underlying
Receivables.

     “Refinancing” means an extension, renewal or replacement.

     “Reinstatement Termination Date” shall have the meaning specified in Section
8.02.

     “Reinstatement Termination Event” shall have the meaning specified in Section
8.02.

     “Requirements of Law” shall mean any law, treaty, rule or regulation, or determination
of an arbitrator or Governmental Authority, whether federal, state or local (including usury laws,
the Federal Truth in Lending Act and Regulation B and Regulation Z of the Board of Governors of the
Federal Reserve System), and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such Person.

     “Restricted Payment” shall mean any dividend or other distribution (whether in cash,
securities or other property) with respect to any Equity Interests in Bluestem or any Subsidiary,
or any payment (whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or
termination of any such Equity Interests in Bluestem or of any option, warrant or other right to
acquire any such Equity Interests in Bluestem.

     “Return Check Fees” shall have the meaning specified in the Receivables Account
Agreement applicable to each Receivables Account for return check fees or similar terms.

     “SafeLine Account Protection” shall have the meaning specified in the Receivables
Account Agreement applicable to each Receivables Account for account protection charges.

     “Securities Act” shall mean the Securities Act of 1933, as amended.

 

 

     “Seller” shall mean Bluestem.

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

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

     “Service Transfer” shall have the meaning specified in Section 7.01.

     “Servicer” shall mean Bluestem, in its capacity as Servicer pursuant to this
Agreement.

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

     “Servicer Default” shall have the meaning specified in Section 7.01.

     “Servicing Fee” shall have the meaning specified in Section 2.02.

     “Servicing Report” has the meaning specified in Section 2.04(b) herein.

     “Spread Account” shall have the meaning attributed to such term in the Security
Agreement.

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

     “Successor Servicer” shall have the meaning specified in Section 7.02(a).

     “Swap Agreement” shall mean 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 any member of the Servicer Consolidated
Group shall be a Swap Agreement.

     “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 (excluding
treasury stock and subscribed but unissued capital stock), 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.

 

 

     “Termination Notice” shall have the meaning specified in Section 7.01.

     “Three-Year Forecast” shall have the meaning specified in Section 3.12.

     “UCC” shall mean the Uniform Commercial Code, as amended from time to time, as in
effect in any specified jurisdiction.

     “Underlying Receivables” shall mean all amounts payable by Receivables Obligors on any
Receivables Account from time to time, other than such amounts that have not yet been sold by a
Receivables Account Owner to the Seller pursuant to the applicable Receivables Sale Agreement,
including amounts payable for Principal Receivables and Finance Charge Receivables.

     “US Bank Account” shall have the meaning attributed to such term in the Security
Agreement.

          Section 1.02 Other Definitional Provisions.

          (a) All terms defined in this Agreement shall have the defined meanings when used in any
certificate or other document made or delivered pursuant hereto unless otherwise defined therein.

          (b) As used in this Agreement and in any certificate or other document made or delivered
pursuant hereto or thereto, accounting terms not defined in this Agreement or in any such
certificate or other document, and accounting terms partly defined in this Agreement or in any such
certificate or other document to the extent not defined, shall have the respective meanings given
to them under GAAP. To the extent that the definitions of accounting terms in this Agreement or in
any such certificate or other document are inconsistent with the meanings of such terms under GAAP,
the definitions contained in this Agreement or in any such certificate or other document shall
control.

          (c) Unless otherwise specified, references to any amount as on deposit or outstanding on any
particular date shall mean such amount at the close of business on such day.

          (d) The words “hereof,” “herein,” “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement; references to any subsection, Section, clause, Schedule or Exhibit are references to
subsections, Sections, clauses, Schedules and Exhibits in or to this Agreement unless otherwise
specified; the term “including” means “including without limitation”; 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; references to any Person include that Person’s successors and permitted assigns;
and references to any agreement refer to such agreement, as amended, supplemented or otherwise
modified from time to time in accordance with the terms thereof.

          (e) In the event that any reports are not available to any Person on the date on which such
Person is required to make a determination of whether a computational test has been

 

 

satisfied pursuant hereto, such determination shall be made using the most current available
information.

ARTICLE II

ADMINISTRATION AND SERVICING OF RECEIVABLES

          Section 2.01 Acceptance of Appointment and Other Matters Relating to the Servicer.

          (a) The Company and the Administrative Agent hereby appoint Bluestem Brands, Inc. to act as
Servicer under this Agreement, and Bluestem Brands, Inc. hereby agrees to act as the Servicer under
this Agreement until terminated in accordance with the terms hereof.

          (b) As agent for the Company and the Administrative Agent, the Servicer shall service and
administer the Underlying Receivables, shall record receipt of all Collections, shall allocate
amounts received under the Underlying Receivables and deposited in the Lockbox Account to the
Principal Collections Account and the Finance Charge Collections Account, pursuant to Section
2.03, and shall charge off as uncollectible Underlying Receivables in Defaulted Accounts, all
in accordance with its customary and usual servicing procedures for servicing revolving credit
account receivables and closed-end installment loan account receivables, in each case, comparable
to the Underlying Receivables and in accordance with the Operational Guidelines. Without limiting
the generality of the foregoing and subject to Section 7.01, the Servicer or its designee
is hereby authorized and empowered, and agrees, unless such power is revoked by the Collateral
Agent on account of the occurrence of a Servicer Default, (i) to instruct the Receivables Obligors
to deposit Collections in the US Bank Account or the Lockbox Account, (ii) to allocate Collections
to the Principal Collections Account or the Finance Charge Collections Account as set forth in
Section 2.03 hereto and (iii) to execute and deliver, on behalf of the Company, any and all
instruments of satisfaction or cancellation, or of partial or full release or discharge, and all
other comparable instruments, with respect to the Underlying Receivables and, after the delinquency
of any Underlying Receivable and to the extent permitted under and in compliance with applicable
Requirements of Law, to commence collection proceedings with respect to such Underlying Receivable.
The Company upon written request therefor shall furnish the Servicer with any documents necessary
or appropriate to enable the Servicer to carry out its servicing and administrative duties
hereunder.

          (c) The Servicer shall not be obligated to use separate servicing procedures, offices,
employees or accounts for servicing the Underlying Receivables from the procedures, offices,
employees and accounts used by the Servicer in connection with servicing other credit account
receivables.

          (d) The Servicer shall comply with and perform its servicing obligations with respect to the
applicable Receivables Accounts and Underlying Receivables in all material respects in accordance
with the Receivables Account Agreements relating to the Receivables Accounts and the Operational
Guidelines.

          (e) The Servicer shall pay out of its own funds all expenses incurred in connection with the
servicing activities hereunder including expenses related to enforcement of

 

 

the Underlying Receivables, the reasonable fees and expenses of its outside counsel and
independent accountants and all other fees and expenses, including the costs of filing UCC
continuation statements.

          Section 2.02 Servicing Compensation. As full compensation for its servicing
activities hereunder and as reimbursement for any expense incurred by it in connection therewith,
the Servicer shall be entitled to receive a servicing fee (the “Servicing Fee”) on each
Interest Payment Date, in accordance with Sections 2.13 and 2.15 of the Credit Agreement, in an
amount equal to one-twenty-fourth of the product of (a) the average daily outstanding balance of
Principal Receivables for the Collection Period related to such Interest Payment Date and (b)
3.00%.

          Section 2.03 Collections, Allocations, Investments and Adjustments.

          (a) Collections and Allocations. By 1:00 p.m. (New York City time) on the second
Business Day following the Date of Processing related to any Collections, the Servicer shall
determine if such Collections are Finance Charge Collections or Principal Collections and shall
direct the Lockbox Account Bank and the Depositary Bank, as applicable, to transfer such Principal
Collections from the Lockbox Account to the Principal Collections Account and to transfer such
Finance Charge Collections from the Lockbox Account to the Finance Charge Collections Account;
provided, however, that with respect to any payment received that does not contain
sufficient identification of the account number to which such payment relates or cannot be
processed due to an act beyond the control of the Servicer such deposit shall be made no later than
the second Business Day following the date on which such account number is identified or such
payment can be processed, as applicable. On the Business Day immediately preceding an Interest
Payment Date, the Servicer shall direct the Depositary Bank to transfer any investment earnings as
of the open of business on the related Determination Date on amounts on deposit in the Prepayment
Account or the Spread Account to the Finance Charge Collections Account.

          (b) Adjustments.

          (i) If, with respect to any Date of Processing, the amount of any Principal Receivable
is adjusted downward by the Servicer without receiving Collections therefor because of a
rebate, unauthorized charge, refund or billing error, because such Principal Receivable was
created in respect of merchandise which was refused or returned by a Receivables Obligor or
because the Principal Receivable was created through a fraudulent or counterfeit charge,
then an adjustment (a “Credit Adjustment”) shall be made on such Date of Processing
to the aggregate amount of Principal Receivables in an amount equal to such Credit
Adjustment, thereby reducing the aggregate amount of Principal Receivables for such Date of
Processing.

          (ii) If (1) the Servicer directs the Lockbox Account Bank to transfer funds from the
Lockbox Account to the Principal Collections Account or the Finance Charge Collections
Account in respect of a Collection and such Collection was received by the Servicer in the
form of a check which is not honored for any reason or (2) the Servicer makes a mistake with
respect to the amount of any Collection and directs the Lockbox Account Bank to transfer an
amount that is less than or more than the actual

 

 

amount of such Collection, the Servicer shall appropriately adjust the amount that it
directs the Lockbox Account Bank to subsequently transfer to the Principal Collections
Account or the Finance Charge Collections Account, as applicable, to reflect such dishonored
check or mistake. Any Underlying Receivable in respect of which a dishonored check is
received shall be deemed not to have been paid. Notwithstanding the first two sentences of
this paragraph, adjustments made pursuant to this Section 2.03(b) shall not require
any change in any report previously delivered pursuant to Section 2.04(a).

          (c) Investments. For so long as the Company is permitted to direct the Depositary
Bank to invest amounts held in the Finance Charge Collections Account, the Prepayment Account and
the Spread Account in Permitted Investments pursuant to the Controlled Account Control Agreement,
the Servicer (on behalf of the Company) may direct the Depositary Bank with respect to the
investment of such amounts in Permitted Investments.

          Section 2.04 Reports and Records.

          (a) Daily Records. On each Business Day, the Servicer shall make or cause to be made
available at the office of the Servicer for inspection by the Company, the Administrative Agent,
any Lender and the Backup Servicer upon request a record setting forth (i) the Collections in
respect of Principal Receivables and in respect of Finance Charge Receivables on the second
preceding Date of Processing in respect of each Receivables Account and (ii) the amount of
Underlying Receivables as of the close of business on the second preceding Date of Processing in
each Receivables Account. The Servicer shall, at all times, maintain its computer files with
respect to the Receivables Accounts in such a manner so that the Eligible Underlying Receivables
with respect to each Receivables Account may be specifically identified and shall make available to
the Company, the Administrative Agent, any Lender and the Backup Servicer at the office of the
Servicer on any Business Day any computer programs necessary to make such identification.

          (b) Servicing Report. Not later than the Determination Date after the end of a
Collection Period, the Servicer shall deliver to the Company, the Administrative Agent and the
Backup Servicer a servicing report (such report, the “Servicing Report”), which shall
contain the information with respect to the Underlying Receivables as set forth in Exhibit
B hereto.

          (c) Weekly Data Tape. By 1:00 p.m. (New York City time) on the first Business Day of
each week, the Servicer shall deliver to the Backup Servicer and the Administrative Agent a data
tape for the prior week containing the information set forth in Exhibit F hereto and in a
format requested by the Backup Servicer and reasonably acceptable to the Administrative Agent.

          (d) Collection Period Data Tape. Not later than the Determination Date after the end
of a Collection Period, the Servicer shall deliver to the Backup Servicer and the Administrative
Agent a data tape for such Collection Period in a form agreed to by the Backup Servicer and the
Administrative Agent.

 

 

          (e) Daily Settlement and Servicing Report.

          (i) The Servicer shall prepare a Daily Settlement and Servicing Report on each Business
Day, and shall deliver such report to the Company and the Administrative Agent by 1:00 p.m.
(New York City time). The daily report shall include allocations and payments made or
deemed to be made for each Date of Processing since the most recent Date of Processing
covered by the prior Daily Settlement and Servicing Report, shall include activity for the
Date of Processing two Business Days prior to the date of delivery, and shall include a
Borrowing Base Certificate, as of the Date of Processing two Business Days prior to the date
of delivery and taking into account any withdrawals from or deposits into the Principal
Collections Account, the Total Utilization of Revolving Commitments and the aggregate
outstanding amount of the Tranche B Term Loans, in each case, as of the date of delivery.

          (ii) Upon discovery of any error or receipt of notice of any error in any Daily
Settlement and Servicing Report, the Servicer and the Administrative Agent shall arrange to
confer and shall agree upon any adjustments necessary to the Principal Collections Account
or to the Finance Charge Collections Account to correct any such errors.

          (f) Other Reports. The Servicer shall provide in a timely manner to the
Administrative Agent any other report, document or information reasonably requested by the
Administrative Agent or the Class Requisite Lenders of either Class.

          (g) Payment Date Report. For each Interest Payment Date, the Servicer shall compile
and provide (or cause to be compiled and provided) by 1:00 p.m. (New York time) on the related
Determination Date an accounting (such accounting, the “Payment Date Report”) to the
Company, the Administrative Agent and each Lender substantially in the form of Exhibit E
hereto. If for any reason any of the amounts specified in a Payment Date Report must be adjusted
to reflect any changes after the Determination Date but prior to the related Interest Payment Date,
the Servicer shall provide a supplement to such Payment Date Report by the close of business on the
Business Day immediately preceding such Interest Payment Date and such supplement shall be deemed
to be part of the related Payment Date Report.

          Section 2.05 Annual Certificate of Servicer. The Servicer shall deliver to the
Company and the Administrative Agent within 120 calendar days from the end of the Fiscal Year of
the Company beginning with the Fiscal Year ending on January 28, 2011 certified by an Authorized
Officer of the Servicer, an officer’s certificate substantially in the form of Exhibit D
hereto.

          Section 2.06 Annual Servicing Report of Independent Public Accountants; Copies of Reports
Available.

          (a) Within 120 calendar days from the end of the Fiscal Year of the Servicer beginning with
the Fiscal Year ending on January 28, 2011, the Servicer shall cause a firm of nationally
recognized independent registered public accountants (who may also render other services to the
Servicer) to furnish a report to the Company and the Administrative Agent to the

 

 

effect that they have performed certain procedures agreed upon with the Servicer related to
the Servicer’s material compliance with the Operational Guidelines for the twelve months ended on
the last day of the preceding Fiscal Year of the Servicer. Such report shall set forth the
agreed-upon procedures performed, any exceptions noted related to such procedures or a statement
that no exceptions were noted. Notwithstanding the above, such report may be restricted in its
distribution to those parties who are a party to the engagement letter with such firm if required
by such registered public accountants. In the event a material discrepancy is noted on such
report, the Servicer will, within 30 calendar days of such notice, resolve such material
discrepancy.

          (b) Within 120 calendar days from the end of the Fiscal Year of the Servicer beginning with
the Fiscal Year ending on January 28, 2011, the Servicer shall cause a firm of nationally
recognized independent registered public accountants (who may also render other services to the
Servicer) to furnish a report to the Company and the Administrative Agent to the effect that they
have performed certain procedures agreed upon with the Servicer to recalculate certain mathematical
calculations of certain amounts set forth in the Servicer’s Servicing Reports during the period
covered by such reports and have compared such amounts with the Servicer’s computer records that
were the source of such amounts. Such report shall set forth the agreed-upon procedures performed,
any exceptions noted related to such procedures or a statement that no exceptions were noted.
Notwithstanding the above, such report may be restricted in its distribution to those parties who
are a party to the engagement letter with such firm if required by such registered public
accountants. In the event a material discrepancy is noted on such report, the Servicer will,
within 30 calendar days of such notice, resolve such material discrepancy.

          (c) Any Lender may obtain a copy of each certificate and report provided pursuant to
Section 2.04(b), Section 2.05 or Section 2.06, by a request in writing to
the Servicer.

          Section 2.07 Notices to the Seller. In the event that the Seller is no longer acting
as Servicer but the Receivables Purchase Agreement has not been terminated in accordance with its
terms, the Administrative Agent shall use reasonable efforts to cause any Successor Servicer to
deliver or make available to the Seller each certificate and report required to be provided
thereafter pursuant to Section 2.04(a), (b) and (e), Section 2.05
and Sections 2.06(a) and (b).

ARTICLE III

REPRESENTATIONS AND WARRANTIES OF THE SERVICER

     Bluestem Brands, Inc., as Servicer, hereby makes on the Closing Date, as of the date hereof
and on each Credit Date (and on any other date specified in this Article III), unless such
representation and warranty refers to an earlier date, in which case such representation and
warranty shall be made as of such earlier date, the following representations, warranties on which
the Company and the Lenders, as applicable, shall be deemed to have relied in purchasing the
Underlying Receivables under the Receivables Purchase Agreement and making the Loans and entering
into the Credit Agreement:

 

 

          Section 3.01 Organization and Good Standing. The Servicer is an entity duly
organized, validly existing and in good standing under the laws of the jurisdiction of its
organization and has full power and authority to own its properties and conduct its credit account
servicing business as presently owned or conducted, and to execute, deliver and perform its
obligations under this Agreement.

          Section 3.02 Due Qualification. The Servicer is duly qualified to do business and is
in good standing as a foreign corporation (or is exempt from such requirements) in any jurisdiction
where such qualification is required in order to conduct its business, and has obtained all
necessary licenses and approvals in each jurisdiction in which the servicing of the Underlying
Receivables as required by this Agreement requires such qualification except where the failure to
so qualify or obtain such licenses and approvals would not reasonably be expected to have a
material adverse effect on its ability to perform its obligations as Servicer under this Agreement.

          Section 3.03 Due Authorization. The execution, delivery, and performance by the
Servicer of this Agreement and the other agreements and instruments executed or to be executed by
the Servicer as contemplated hereby have been duly authorized by the Servicer by all necessary
corporate or other appropriate action on the part of the Servicer, and this Agreement will remain,
from the time of its execution, an official record of the Servicer.

          Section 3.04 Binding Obligation. This Agreement constitutes a legal, valid and
binding obligation of the Servicer, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable Debtor Relief Laws now or hereafter in effect or by
general principles of equity (whether considered in a suit at law or in equity).

          Section 3.05 No Conflict. The execution and delivery of this Agreement by the
Servicer, and the performance of the transactions contemplated by this Agreement and the
fulfillment of the terms hereof applicable to the Servicer, will not conflict with, violate or
result in any breach in any material respect of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, any indenture, contract,
agreement, mortgage, deed of trust or other instrument to which the Servicer is a party or by which
it or its properties are bound.

          Section 3.06 No Violation. The execution, delivery and performance of this Agreement
by the Servicer, and the fulfillment of the terms and transactions hereof applicable to the
Servicer will not conflict with or violate any Requirements of Law applicable to the Servicer.

          Section 3.07 No Proceedings. There are no proceedings or investigations pending or,
to the best knowledge of the Servicer, threatened against the Servicer before any Governmental
Authority seeking to prevent the consummation of any of the transactions contemplated by this
Agreement or seeking any determination or ruling that would reasonably be expected to have a
material and adverse effect on the performance by the Servicer of its obligations under this
Agreement.

          Section 3.08 Compliance with Requirements of Law. The Servicer shall duly satisfy all
obligations on its part to be fulfilled under or in connection with each Underlying

 

 

Receivable and the related Receivables Account, if any; will maintain in effect all
qualifications required under Requirements of Law in order to service properly each Underlying
Receivable and the related Receivables Account, if any; and will comply in all respects with all
other Requirements of Law in connection with servicing each Underlying Receivable and the related
Receivables Account the failure to comply with which would reasonably be expected to have a
material adverse effect on the performance by the Servicer of its obligations under this Agreement.

          Section 3.09 All Consents. All authorizations, consents, licenses, orders or
approvals of or registrations or declarations with any Governmental Authority required to be
obtained, effected or given by the Servicer in connection with the execution and delivery of this
Agreement by the Servicer and the performance of the transactions contemplated by this Agreement by
the Servicer, have been duly obtained, effected or given and are in full force and effect.

          Section 3.10 Solvency. The Servicer is Solvent.

          Section 3.11 Historical Financial Statements. The Historical Financial Statements
were prepared in conformity with GAAP and fairly present, in all material respects, the financial
position, on a consolidated basis, of the Persons described in such financial statements as at the
respective dates thereof and the results of operations and cash flows, on a consolidated basis, of
the entities described therein for each of the periods then ended, subject to (a) any changes
resulting from restatements as may be required to comply with the Securities Act, Exchange Act and
the rules and regulations promulgated thereunder in connection with an initial public offering by
Bluestem and subject or (b) in the case of any such unaudited financial statements, changes
resulting from audit and normal year end adjustments. As of the Closing Date, no member of the
Servicer Consolidated Group has any contingent liability or liability for taxes, long term lease or
unusual forward or long term commitment that is not reflected in the Historical Financial
Statements or the notes thereto and which in any such case is material in relation to the business,
operations, properties, assets, condition (financial or otherwise) or prospects of the Servicer
Consolidated Group taken as a whole.

          Section 3.12 Three-Year Forecast. On and as of the Closing Date, the Three-Year
Forecast dated June 11, 2010 of the Servicer Consolidated Group for the period of Fiscal Year 2010
through and including Fiscal Year 2013, including monthly projections for each month during the
current Fiscal Year ending on January 28, 2011 (the “Three-Year Forecast”) delivered
pursuant to Section 4.02(a) was based on good faith estimates and assumptions made by the
management of the Servicer; provided, that actual results during the period or periods
covered by the Three-Year Forecast may differ from such Three-Year Forecast and that the
differences may be material; provided further, as of the Closing Date, management
of the Servicer believes that the Three-Year Forecast was reasonable and attainable.

          Section 3.13 Title to Assets. The Servicer had, as of the dates specified therein,
good and valid title to all of its assets reflected in the Historical Financial Statements referred
to in Section 3.11 and in the most recent financial statements delivered pursuant to
Section 4.02. Except as permitted by this Agreement or the Credit Agreement, all such
properties and assets

 

 

are free and clear of liens other than liens permitted under Section 1.2 of the Bluestem
Letter Agreement.

          Section 3.14 Capital Stock and Ownership. As of the Closing Date, the Capital Stock
of each member of the Servicer Consolidated Group has been duly authorized and validly issued and
is fully paid and non assessable. Except as set forth on Schedule 3.14 hereto, as of the
Closing Date, there is no existing option, warrant, call, right, commitment or other agreement to
which any member of the Servicer Consolidated Group is a party requiring, and there is no
membership interest or other Capital Stock of any member of the Servicer Consolidated Group
outstanding which upon conversion or exchange would require, the issuance by any member of the
Servicer Consolidated Group of any additional membership interests or other Capital Stock of any
member of the Servicer Consolidated Group convertible into, exchangeable for or evidencing the
right to subscribe for or purchase, a membership interest or other Capital Stock of any member of
the Servicer Consolidated Group. Schedule 3.14 correctly sets forth the ownership interest
of each member of the Servicer Consolidated Group in their respective Subsidiaries as of the
Closing Date.

          Section 3.15 Material Adverse Effect. Since January 29, 2010, no event, circumstance
or change has occurred that has caused or evidences, either in any case or in the aggregate, a
Material Adverse Effect with respect to the Servicer.

          Section 3.16 Payment of Taxes. Except as otherwise permitted under Section
4.10, all tax returns and reports of each member of the Servicer Consolidated Group required to
be filed by any of them have been timely filed, and all taxes shown on such tax returns to be due
and payable and all assessments, fees and other governmental charges upon each member of the
Servicer Consolidated Group and upon their respective properties, assets, income, businesses and
franchises which are due and payable have been paid when due and payable. The Servicer knows of no
proposed tax assessment against any member of the Servicer Consolidated Group that could reasonably
be expected to have a material adverse effect on the performance by the Servicer of its obligations
under this Agreement, which is not being actively contested by the Servicer or a Subsidiary in good
faith and by appropriate proceedings; provided, such reserves or other appropriate
provisions, if any, as shall be required in conformity with GAAP shall have been made or provided
therefor.

          Section 3.17 No Defaults. No member of the Servicer Consolidated Group is in default
in the performance, observance or fulfillment of any of the obligations, covenants or conditions
contained in any of its Contractual Obligations, and no condition exists which, with the giving of
notice or the lapse of time or both, would reasonably be expected to constitute such a default,
except where the consequences, direct or indirect, of such default or defaults, if any, could not
reasonably be expected to have a Material Adverse Effect with respect to the Servicer.

          Section 3.18 Material Contracts. Schedule 3.18 contains a true, correct and
complete list of all the Material Contracts in effect on the Closing Date, together with any
updates provided pursuant to Section 4.02(l). All such Material Contracts are in full
force and effect, and no defaults currently exist thereunder (other than as described in
Schedule 3.18 or in such updates).

 

 

          Section 3.19 Senior Management. Schedule 3.19 contains a true, correct and
complete list of all the members of Senior Management and their respective titles as of the Closing
Date.

          Section 3.20 Operational Guidelines. Appendix A contains a true, correct and
complete copy of the Operational Guidelines as updated pursuant to Section 4.17.

ARTICLE IV

AFFIRMATIVE COVENANTS OF THE SERVICER

     Bluestem Brands, Inc., as Servicer, covenants and agrees that so long as this Agreement is in
effect and until satisfaction of its obligations hereunder, that it shall perform, and shall cause
each of its Subsidiaries and Controlled Affiliates to perform, all covenants in this Article
IV.

          Section 4.01 Financial Covenants.

          (a) 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 the Bluestem Inventory Credit Agreement on such date of measurement.

          (b) 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.

          (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) 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

          Section 4.02 Financial Statements. Unless otherwise provided below, the Servicer
shall deliver to the Administrative Agent and the Lenders:

          (a) Closing Date Financial Statements; Three-Year Forecast. As of the Closing Date,
(i) the Three-Year Forecast, (ii) the Historical Financial Statements, (iii) a Financial Officer
Certification, and (iv) Servicing Reports for the most recent calendar month period completed five
Business Days after the last day of the preceding calendar month.

          (b) Monthly Reports. As soon as available, and in any event within 30 days after the
end of each month (beginning (i) for the Servicer Consolidated Group, with the monthly period ended
on July 2, 2010 and (ii) for the Company, with the monthly period ended on July 2, 2010), the
consolidated balance sheets of the Servicer Consolidated Group and the stand-alone balance sheets
of the Company as at the end of such month, the related consolidated and stand-alone statements of
income and the consolidated statements of stockholders’ equity and consolidated statements of cash
flows of the Servicer Consolidated Group for such month and for the period from the beginning of
the then current Fiscal Year to the end of such month, setting forth in each case in comparative
form the corresponding figures for the corresponding periods of the previous Fiscal Year and the
corresponding figures from the Financial Plans for the current Fiscal Year, subject to normal
year-end audit adjustments and the absence of footnotes, all in reasonable detail, together with a
schedule of reconciliations for any reclassifications in excess of $250,000 with respect to prior
months or periods (and, in connection therewith, copies of any restated financial statements for
any impacted month or period) and a Financial Officer Certification;

          (c) Quarterly Financial Statements. As soon as available, and in any event within 45
days after the end of each Fiscal Quarter of each Fiscal Year (including the fourth Fiscal
Quarter), the consolidated balance sheets of the Servicer Consolidated Group as at the end of such
Fiscal Quarter and the related consolidated statements of income, stockholders’ equity and cash
flows of the Servicer Consolidated Group, as the case may be, for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of such Fiscal Quarter,
setting forth in comparative form the corresponding figures for the corresponding periods of the
previous Fiscal Year and the corresponding figures from the Financial Plan for the current Fiscal
Year, subject to normal year-end audit adjustments and the absence of footnotes,

 

 

all in reasonable detail, together with a Financial Officer Certification, substantially in
the form attached as Exhibit I hereto, and a Narrative Report with respect thereto and any
other operating reports of the Servicer as may be reasonably requested by the Administrative Agent;

          (d) Annual Financial Statement. As soon as available, and in any event within 120
days after the end of each Fiscal Year, (i) the consolidated and consolidating balance sheets of
the Servicer Consolidated Group as at the end of such Fiscal Year 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 such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the previous Fiscal Year and
the corresponding figures from the Financial Plan for the Fiscal Year covered by such financial
statements, in reasonable detail, together with a Financial Officer Certification and a Narrative
Report with respect thereto (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 monthly or quarterly financials; and (z) restated monthly or quarterly
financials for any periods that are required to be restated pursuant to GAAP); and (ii) with
respect to such consolidated financial statements a report thereon of Deloitte & Touche LLP or
other independent certified public accountants of recognized national standing selected by the
Servicer, and reasonably satisfactory to the Administrative Agent (which report shall be
unqualified as to going concern and scope of audit, and shall state that such consolidated
financial statements fairly present, in all material respects, the consolidated financial position
of the Servicer Consolidated Group, as the case may be, as at the dates indicated and the results
of their operations and their cash flows for the periods indicated in conformity with GAAP applied
on a basis consistent with prior years (except as otherwise disclosed in such financial statements)
and that the examination by such accountants in connection with such consolidated financial
statements has been made in accordance with generally accepted auditing standards) together with a
written statement by such independent certified public accountants stating that in the course of
their audit, nothing has come to their attention that caused them to believe that the Servicer has
failed to comply with the terms, covenants, provisions or conditions of Section 6.5 of the Credit
Agreement or Section 4.01 of this 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;

          (e) Compliance Certificates. Together with each delivery of the relevant financial
statements of the Servicer Consolidated Group pursuant to Sections 4.02(b), 4.02(c)
and 4.02(d), the Servicer shall deliver a duly executed and completed Compliance
Certificate;

          (f) Statements of Reconciliation after Change in Accounting Principles. If, as a
result of any change in accounting principles and policies from those used in the preparation of
the Historical Financial Statements, the consolidated financial statements of the Servicer
Consolidated Group or the Company delivered pursuant to Sections 4.02(a), 4.02(b),
4.02(c) or 4.02(d) will differ in any material respect from the consolidated
financial statements that would have been delivered pursuant to such subdivisions had no such
change in accounting principles and policies been made, then, together with the first delivery of
such financial statements after such change, one or more statements of reconciliation for all such
prior financial statements in form and substance reasonably satisfactory to the Administrative
Agent;

 

 

          (g) Financial Plans. As soon as practicable and in any event no later than February
25th of each year, a consolidated plan and financial forecast for such Fiscal Year and, as soon as
practicable and in any event no later than October 15 of each year, a one-year and a three-year
consolidated plan and financial forecast including such Fiscal Year (or portion thereof)
(collectively, the “Financial Plans”), including (i) a forecasted consolidated balance
sheet and forecasted consolidated statements of income and cash flows of the Servicer Consolidated
Group for each such Fiscal Year, together with pro forma Compliance Certificates for each such
Fiscal Year and an explanation of the assumptions on which such forecasts are based, (ii)
forecasted consolidated statements of income and cash flows of the Servicer Consolidated Group for
each month of each such Fiscal Year, (iii) forecasts demonstrating projected compliance with the
requirements of Section 4.01 hereunder through the final maturity date of the Loans, and
(iv) forecasts demonstrating adequate liquidity through the final maturity date of the Loans,
together, in each case, with an explanation of the assumptions on which such forecasts are based
all in form and substance reasonably satisfactory to the Administrative Agent;

          (h) Notice of Change in Senior Management. Promptly, written notice of any change in
Senior Management of the Servicer;

          (i) Tax Returns. As soon as practicable and in any event within 30 days following the
filing thereof, copies of the federal income tax return filed by or on behalf of the Servicer;

          (j) Notice of Default. Promptly upon any Authorized Officer of the Servicer obtaining
knowledge (i) of any condition or event that constitutes a Servicer Default, Default or an Event of
Default or that notice has been given to the Servicer with respect thereto, (ii) that any Person
has given any notice to any member of the Servicer Consolidated Group or taken any other action
with respect to any event or condition set forth in Section 7.01(b), or (iii) of the
occurrence of any event or change that has caused or evidences, either by itself or in the
aggregate, a Material Adverse Effect with respect to the Servicer, an Authorized Officer of the
Servicer shall deliver a certificate to the Administrative Agent specifying the nature and period
of existence of such condition, event or change, or specifying the notice given and action taken by
any such Person and the nature of such claimed Servicer Default, Event of Default or Default, and
what action the Servicer has taken, is taking and proposes to take with respect thereto;

          (k) Notice of Litigation. Promptly upon any Authorized Officer of the Servicer
obtaining knowledge of (i) the institution of, or non frivolous threat of, any Adverse Proceeding
not previously disclosed in writing by the Servicer to the Administrative Agent, or (ii) any
material development in any Adverse Proceeding that (x) in the case of either clause (i) or (ii) if
adversely determined, could be reasonably expected to have a Material Adverse Effect with respect
to the Servicer or (y) seeks to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the transactions contemplated hereby, the Servicer shall
provide to the Administrative Agent and the Lenders written notice thereof, together with such
other information as may be reasonably available to the Servicer to enable the Lenders and their
counsel to evaluate such matters; and

 

 

          (l) Notice Regarding Material Contracts and Related Agreements. The Servicer shall
provide reasonable notice to the Administrative Agent of the termination or expiration of any
Material Contract or Related Agreement and shall provide to the Administrative Agent copies of any
material amendments to Material Contracts or Related Agreements or any new contract that
constitutes a Material Contract and shall revise Schedule 3.18 from time to time to reflect
any new Material Contracts and the termination of any Material Contract.

Notwithstanding the foregoing, after an initial public offering by Bluestem, the obligations in
Sections 4.02(c) and (d) and Section 4.13 may be satisfied with respect to
financial information (including any Narrative Report) by furnishing to the Administrative Agent
Bluestem’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 4.02(c) and (d)
and Section 4.13 may be delivered electronically and if so delivered, shall be deemed to
have been delivered on the date on which Bluestem posts such documents, or provides a link thereto,
on Bluestem’s website on the Internet; provided that Bluestem shall notify (which may be by
facsimile or electronic mail) the Administrative Agent of the posting of any such documents.

In accordance with the Credit Agreement, the Company’s financial position, assets, liabilities, net
worth and operating results may be included in the consolidated financial statements of Bluestem,
provided that such consolidated financial statements contain a footnote indicating that the Company
is a separate legal entity and that the Company’s assets and liabilities are neither available to
pay the debts of Bluestem nor constitute obligations of Bluestem.

          Section 4.03 Payment Collection. The Servicer has directed, and will at all times
hereafter direct, all of the Receivable Obligors to forward all payments on account of Underlying
Receivables directly to the Lockbox Account or the US Bank Account. The Servicer agrees to use all
reasonable efforts to cause each Receivable Obligor to make all payments with respect to Underlying
Receivables directly to the Lockbox Account or the US Bank Account. The Servicer shall promptly
(but in any event within two Business Days of receipt) deposit all payments received by it on
account of Underlying Receivables, whether in the form of cash, checks, notes, drafts, bills of
exchange, money orders or otherwise, in the Lockbox Account or the US Bank Account in precisely the
form in which they are received (but with any endorsements of the Servicer necessary for deposit or
collection), and until they are so deposited to hold such payments in trust for and as the property
of the Administrative Agent.

          Section 4.04 Notice of Change in Board of Directors. With reasonable promptness, the
Servicer shall provide the Company and the Administrative Agent written notice of any change in the
board of directors (or similar governing body) of the Servicer.

          Section 4.05 Insurance. The Servicer shall maintain or cause to be maintained, with
financially sound and reputable insurers, the insurance coverage described in Schedule 4.05
hereto, and such other insurance coverage as may customarily be carried or maintained under similar
circumstances by persons of established reputation engaged in similar businesses, in each case in
such amounts (giving effect to self insurance), with such deductibles, covering such risks and
otherwise on such terms and conditions as shall be customary for such persons.

 

 

          Section 4.06 Insurance Report. As soon as practicable and in any event by the last
day of each Fiscal Year, the Servicer will provide to the Administrative Agent a report in a form
substantially similar to Exhibit H hereto outlining all material insurance coverage
maintained as of the date of such report by the Servicer Consolidated Group and all material
insurance coverage to be maintained by each member of the Servicer Consolidated Group in the
immediately succeeding Fiscal Year.

          Section 4.07 Renewals and Rewrites of Insurance Policies. With respect to each
insurance policy specified in Schedule 4.05 hereto and any report delivered pursuant
Section 4.06, within 10 Business Days after the renewal or rewrite of any such insurance
policy and any replacement policy, the Servicer shall cause its insurance broker to provide to the
Insurance Consultant a standard certificate of insurance evidencing such renewal or rewrite, which
certificate shall include evidence that the Company has been added as a named insured under such
policies. If an insurance policy that is renewed or rewritten is not evidenced by a standard
certificate of insurance, the Servicer shall cause its insurance agent to provide to the Insurance
Consultant other documentation, acceptable to the Insurance Consultant, evidencing such renewal or
rewrite.

          Section 4.08 Compliance with Requirements of Law. The Servicer shall duly satisfy all
obligations on its part to be fulfilled under or in connection with each Underlying Receivable and
the related Receivables Account, if any; will maintain in effect all qualifications required under
Requirements of Law in order to service properly each Underlying Receivable and the related
Receivables Account, if any; and will comply in all respects with all other Requirements of Law in
connection with servicing each Underlying Receivable and the related Receivables Account the
failure to comply with which would reasonably be expected to have a material adverse effect on the
performance by the Servicer of its obligations under this Agreement.

          Section 4.09 Existence. Except as otherwise permitted under the Credit Documents, the
Servicer shall, and will cause each of its Subsidiaries to, at all times preserve and keep in full
force and effect its existence and all rights and franchises, licenses and permits material to its
business; provided that no member of the Servicer Consolidated Group shall be required to
preserve any such existence, right or franchise, licenses and permits if such Person’s board of
directors (or similar governing body) shall determine that the preservation thereof is no longer
desirable in the conduct of the business of such Person, and that the loss thereof is not
disadvantageous in any material respect to such Person or to the Lenders.

          Section 4.10 Payment of Taxes and Claims. The Servicer will, and will cause each of
its Subsidiaries to, pay all Taxes imposed upon it or any of its properties or assets or in respect
of any of its income, businesses or franchises before any penalty or fine accrues thereon, and all
claims (including claims for labor, services, materials and supplies) for sums that have become due
and payable and that by law have or may become a Lien upon any of its properties or assets, prior
to the time when any penalty or fine shall be incurred with respect thereto; provided that,
no such Tax or claim need be paid if (i) the validity or amount thereof is being contested in good
faith by appropriate proceedings, (ii) Bluestem or its Subsidiary has set aside on its books
adequate reserves with respect thereto in accordance with GAAP and (iii) such liabilities would not
result in aggregate liabilities in excess of $2,500,000 and none of the

 

 

Collateral becomes subject to forfeiture or loss as a result of the contest. The Servicer
will not, nor will it permit any of its Subsidiaries to, file or consent to the filing of any
consolidated income tax return with any Person (other than any other member of the Servicer
Consolidated Group).

          Section 4.11 Further Assurances. At any time or from time to time upon the request of
the Administrative Agent or the Class Requisite Lenders of any Class, the Servicer will, at its
expense, promptly execute, acknowledge and deliver such further documents and do such other acts
and things as the Administrative Agent or the Class Requisite Lenders of any Class may reasonably
request in order to effect fully the purposes of this Agreement, including providing the
Administrative Agent with any information reasonably requested by it or the Class Requisite Lenders
of any Class in order to comply with Requirements of Law.

          Section 4.12 Other Covenants. In the event that any member of the Servicer
Consolidated Group has entered into or shall enter into or amend an existing purchase agreement,
warehouse facility, credit facility, indenture, note, financing agreement or other similar
arrangement or instrument with any Person which by its terms provides more favorable treatment to
the lenders or holders thereunder with respect to any financial covenants covering the same or
similar subject matter as the financial covenants set forth above in Section 4.01, the
Servicer shall provide prompt notice of such financial covenants to the Administrative Agent and
the Administrative Agent, in its sole and absolute discretion, may modify the financial covenants
set forth in Section 4.01 to match such financial covenants.

          Section 4.13 Other Information. The Servicer will provide or cause to be provided (a)
promptly upon their becoming available, copies of (i) all financial statements, reports, notices
and proxy statements sent or made available generally by the Servicer to its security holders
acting in such capacity or by any Subsidiary of the Servicer to its security holders other than
itself or another of its Subsidiaries, (ii) to the extent applicable, all regular and periodic
reports and all registration statements and prospectuses, if any, filed by any member of the
Servicer Consolidated Group with any securities exchange or with the Securities and Exchange
Commission or any governmental or private regulatory authority and (iii) all press releases and
other statements made available generally by any member of the Servicer Consolidated Group to the
public concerning material developments in the business of any member of the Servicer Consolidated
Group, and (b) such other information and data with respect to the Servicer Consolidated Group as
from time to time may be reasonably requested by the Administrative Agent.

          Section 4.14 Account Owner Termination Rights. The Servicer shall provide prompt
written notice to the Administrative Agent upon the occurrence of any event or condition that could
give rise to an Account Owner Termination Right.

          Section 4.15 Additional Investors. The Servicer shall cause any Person who becomes a
Sponsor after the Closing Date other than through purchase of Capital Stock issued in connection
with an initial public offering by the Servicer to execute an indemnity agreement in form and
substance similar to the Sponsor Indemnity Agreement and otherwise acceptable to the Administrative
Agent in its sole and absolute discretion.

 

 

          Section 4.16 Regulatory Compliance Changes. Within the time periods specified
therein, the Servicer shall have made each of the changes specified in Schedule 4.16 to the
Receivables Account Agreements, Bluestem’s underwriting policies and/or other applicable documents,
as applicable.

          Section 4.17 Amendments to Operational Guidelines. Promptly after the Servicer makes
any amendment, modification or other revision to the Operational Guidelines, the Servicer shall
deliver to the Administrative Agent a copy of such amended Operational Guidelines and upon such
delivery thereof, Appendix A shall automatically be deemed to be updated to reflect such amended
Operational Guidelines.

          Section 4.18 Additional Notice. The Servicer shall give prompt written notice to the
Administrative Agent if (a) the Servicer has become an Affiliate of any Receivables Account Owner,
(b) the Servicer does not account for the transfer of Underlying Receivables under the applicable
Receivables Sale Agreement as a sale for tax and accounting purposes or (c) an Authorized Officer
receives notice or has actual knowledge that any Receivables Account Owner does not account for the
transfer of Underlying Receivables under the applicable Receivables Sale Agreement as a sale for
tax and accounting purposes.

ARTICLE V

NEGATIVE COVENANTS OF THE SERVICER

     Bluestem Brands, Inc., as Servicer, covenants and agrees that so long as this Agreement is in
effect and until satisfaction of its obligations hereunder, that it shall perform all covenants in
this Article V.

          Section 5.01 Lockbox System. Except as permitted under the Credit Documents, the
Servicer shall not, in a manner adverse to the Lenders, Administrative Agent or the Collateral
Agent, (A) change the general instructions given to Receivable Obligors in respect of payments on
account of Underlying Receivables to be deposited in the Lockbox Account or the US Bank Account or
(B) change any instructions given to any bank or financial institution which in any manner
redirects the proceeds of any Collections in the Lockbox System to any account which is not the
Lockbox Account, US Bank Account, the Principal Collections Account or the Finance Charge
Collections Account.

          Section 5.02 No Rescission or Cancellation. The Servicer shall not permit any
rescission or cancellation of any Underlying Receivable except in accordance with the Operational
Guidelines or as ordered by a court of competent jurisdiction or other Governmental Authority.

          Section 5.03 Protection of Rights. The Servicer shall take no action which, nor omit
to take any action the omission of which, would impair the rights of the Company in any Underlying
Receivable or the related Receivables Account, if any, nor shall it reschedule, revise or defer
payments due on any Underlying Receivable except in the ordinary course of its business and in
accordance with the Operational Guidelines.

          Section 5.04 Revolving Loan Product Agreements and Receivables Sale Agreements.

 

 

          (a) Without the consent of the Administrative Agent, the Servicer shall not, and shall not
permit any of its Affiliates, to, directly or indirectly, enter into any revolving loan product
agreement, receivables sale agreement or any similar agreement with respect to revolving credit
card accounts or closed-end installment loan accounts with any Person other than the WebBank
Receivables Purchase Agreements, the MetaBank Receivables Purchase Agreements or any revolving loan
product agreement and/or receivables sale agreement entered into pursuant to a Backup Originator
Agreement.

          (b) Without the consent of the Administrative Agent (such consent not to be unreasonably
withheld), the Servicer shall not agree to any amendments to the WebBank Receivables Purchase
Agreements or the MetaBank Receivables Purchase Agreements.

          Section 5.05 Defaulted Accounts. Other than as permitted under the Receivables
Purchase Agreement, the Servicer shall not sell, assign, convey or otherwise transfer Underlying
Receivables related to any Defaulted Account or an interest therein to any of its Subsidiaries or
Affiliates without the prior written consent of the Administrative Agent.

          Section 5.06 Fiscal Year. The Servicer shall not, nor shall it permit any of its
Subsidiaries to, change its Fiscal Year-end from the Friday nearest to the 31st of January of each
calendar year.

ARTICLE VI

OTHER MATTERS RELATING TO THE SERVICER

          Section 6.01 Liability of the Servicer. The Servicer shall be liable under this
Article VI only to the extent of the obligations specifically undertaken by the Servicer in its
capacity as Servicer.

          Section 6.02 Limitation on Liability of the Servicer and Others. Except as provided
in Section 6.03, neither the Servicer nor any of its directors, officers, employees or
agents shall be under any liability to the Company, the Administrative Agent, any Lender or any
other Person for any action taken or for refraining from the taking of any action in good faith in
its capacity as Servicer pursuant to this Agreement; provided, however, that this
provision shall not protect the Servicer or any such Person against any liability which would
otherwise be imposed by reason of willful misfeasance, bad faith or gross negligence in the
performance of its duties or by reason of reckless disregard of its obligations and its duties
hereunder. The Servicer and any director, officer, employee or agent of the Servicer may rely in
good faith on any document of any kind prima facie properly executed and submitted by any Person
(other than the Servicer) respecting any matters arising hereunder. The Servicer shall not be
under any obligation to appear in, prosecute or defend any legal action which is not incidental to
its duties as Servicer in accordance with this Agreement and which in its reasonable judgment may
involve it in any expense or liability.

          Section 6.03 Servicer Indemnification of the Company and the Administrative Agent.
The Servicer shall indemnify and hold harmless each of the Company, the Administrative Agent and
each Lender and their respective directors, officers, employees and agents from and against any and
all loss, liability, claim, expense, damage or injury suffered or

 

 

sustained (a) by reason of any acts or omissions of the Servicer, acting in its capacity as
Servicer, with respect to a breach of this Agreement or any other Credit Document or (b) due to the
occurrence of a Servicer Default (other than a breach of Section 4.01) but only to the
extent such Servicer Default resulted from or was caused by a breach by Servicer of its obligations
hereunder, including, in either case, any judgment, award, settlement, reasonable attorneys’ fees
and other costs or expenses incurred in connection with the defense of any action, proceeding or
claim and any transition expenses incurred in connection with the appointment of a Successor
Servicer (collectively, the “Servicer Indemnified Liabilities”); provided,
however, that the Servicer shall not indemnify the Company, the Administrative Agent or any
Lender, as the case may be, (w) if such acts, omissions or alleged acts or omissions constitute or
are caused by fraud, gross negligence, or willful misconduct of the Company, the Administrative
Agent or any Lender, as the case may be, (x) for losses, liabilities, costs or expenses due to the
failure to pay or defaults by any Receivables Obligor, (y) for any amounts owed by the Company
pursuant to the Credit Agreement as result of an Event of Default thereunder (unless such amounts
are otherwise Servicer Indemnified Liabilities) and (z) for any liabilities, costs or expenses
arising under any tax law, including any federal, state, local or foreign income or franchise taxes
or any other tax imposed on or measured by income (or any interest or penalties with respect
thereto or arising from a failure to comply therewith) required to be paid by the Company, the
Administrative Agent or any Lender in connection herewith to any taxing authority. The Servicer’s
obligations under this Section 6.03 shall survive the termination of this Agreement. The
Company, the Administrative Agent or any Lender, as applicable, shall notify the Servicer promptly
of any claim for which it may seek indemnity. Failure by the Company, the Administrative Agent or
any Lender, as applicable, to so notify the Servicer shall not relieve the Servicer of its
obligations hereunder unless such loss, liability or expense could have been avoided with such
prompt notification and then only to the extent of such loss, expense or liability which could not
have been so avoided.

          Section 6.04 Resignation of the Servicer. The Servicer shall not resign from the
obligations and duties hereby imposed on it except (a) upon a determination that (i) the
performance of its duties hereunder is no longer permissible under applicable law and (ii) there is
no action which the Servicer could reasonably take to make the performance of its duties hereunder
permissible under applicable law or (b) upon execution by the Backup Servicer or any other
Successor Servicer of a successor servicing agreement. No resignation shall become effective until
a Successor Servicer shall have assumed the responsibilities and obligations of the Servicer in
accordance with Section 7.02 hereof. If within 120 days of the date of the determination
that the Servicer may no longer act as Servicer under clause (a) above, the Backup Servicer has not
assumed the obligations of the Servicer, the Servicer may petition a court of competent
jurisdiction to appoint any established institution qualifying as an Eligible Servicer as the
Successor Servicer hereunder.

          Section 6.05 Access to Documentation and Information Regarding the Receivables Accounts
and Underlying Receivables. The Servicer shall provide to the Company, the Administrative
Agent or the Backup Servicer, as applicable, access to the documentation regarding the Receivables
Accounts, the Underlying Receivables and any other information in the possession of the Servicer in
connection therewith, such access being afforded without charge but only (a) upon reasonable
request, (b) during normal business hours, (c) subject to the Servicer’s normal security and
confidentiality procedures and (d) at the Servicer’s principal

 

 

office or at the Servicer’s office in the continental United States where the documentation
regarding the Receivables Accounts and Underlying Receivables are normally kept. Nothing in this
Section shall derogate from the obligation of the Company, the Administrative Agent, any Lender,
the Backup Servicer and the Servicer to observe any applicable law prohibiting disclosure of
information regarding the Receivables Obligors, and the failure of the Servicer to provide access
as provided in this Section as a result of such obligation shall not constitute a breach of this
Section.

          Section 6.06 Delegation of Duties. In the ordinary course of business, upon 30 days
prior written notice to the Company, the Backup Servicer and the Administrative Agent, the Servicer
may at any time delegate its duties hereunder with respect to the Receivables Accounts and the
Underlying Receivables to any Person that agrees to conduct such duties substantially in accordance
with the applicable Operational Guidelines and this Agreement. Such delegation shall not relieve
the Servicer of its liability and responsibility with respect to such duties, and shall not
constitute a resignation within the meaning of Section 6.04.

ARTICLE VII

SERVICER DEFAULTS

          Section 7.01 Servicer Defaults. If any one of the following events (a “Servicer
Default”) shall occur and be continuing:

          (a) any failure by the Servicer to make any payment, transfer or deposit before the date
occurring one Business Day after the date such payment, transfer or deposit is required to be made,
as the case may be, under the terms of this Agreement; provided, that if the Servicer is
making such payment on behalf of the Company, such failure shall be limited to the funds available
to the Servicer to make such payment; or

          (b) (i) failure of the Servicer to pay when due any principal of or interest on or any other
amount payable in respect of one or more items of Indebtedness (other than Indebtedness of the
Company) having an aggregate principal amount in excess of $2,500,000 beyond the grace period, if
any, provided therefor; or (ii) a breach or default by the Servicer with respect to any other
material term of (1) one or more items of the Indebtedness referred to in clause (i) above, or (2)
any loan agreement, mortgage, indenture or other agreement relating to such item(s) of
Indebtedness, in each case beyond the grace period, if any, provided therefor, if the effect of
such breach or default is to cause, or to permit the holder or holders of that Indebtedness (or a
trustee on behalf of such holder or holders) to cause, that Indebtedness to become or be declared
due and payable (or subject to a compulsory repurchase or redeemable) prior to its stated maturity
or the stated maturity of any underlying obligation, as the case may be; or

          (c) to the extent not covered elsewhere in this Section 7.01, failure on the part of the
Servicer duly to observe or perform in any respect any other covenants or agreements of the
Servicer set forth in this Agreement and which failure continues unremedied for a period of 30 days
after the date on which the Servicer had actual knowledge of such failure or on which notice of
such failure, requiring the same to be remedied, shall have been given to the Servicer by the
Company, the Administrative Agent or any Lender; or

 

 

          (d) (i) failure by the Servicer to perform or comply with any term or condition contained in
Sections 2.05, 2.06, 4.01, 4.02 and Article V (other than
Sections 5.02 and 5.03) or (ii) failure by the Servicer to perform or comply with
any term or condition contained in Sections 5.02 and 5.03, where such failure
affects a material amount (measured by Dollars owed) of Underlying Receivables or material number
of Receivables Accounts; or

          (e) the Servicer shall assign or delegate its duties under this Agreement, except as permitted
by Sections 6.06 and 7.02; or

          (f) any representation, warranty or certification made by the Servicer in this Agreement or in
any certificate delivered pursuant to this Agreement shall prove to have been incorrect in any
respect when made, which has a material adverse effect on the rights of the Company or the ability
of the Servicer to perform its duties hereunder, and in each case, such material adverse effect and
its consequences are not remedied within a period of 30 days after the date on which the Servicer
had actual knowledge of such failure or on which notice thereof was given to the Servicer by the
Company, the Administrative Agent or any Lender; or

          (g) an Event of Default shall have occurred and be continuing under the Credit Agreement;

          (h) an event of default or termination event shall have occurred and be continuing under any
Material Contract and such event of default or termination event has not been cured or such
Material Contract has not been reinstated or replaced before the later of (i) 30 days after such
event of default or termination event and (ii) the expiration of the applicable grace period or
cure period, as applicable, for such event of default or termination event specified in such
Material Contract; or

          (i) (i) failure by the Servicer to perform or comply with any term or condition contained in
Sections 2.04(a), (b) or (e) and such failure continues unremedied for a
period of one Business Day or (ii) failure by the Servicer to perform or comply with any term or
condition contained in Sections 2.04(c) or (d) and such failure continues
unremedied for a period of two Business Days; or

          (j) a Change of Control shall occur; or

          (k) any money judgment, writ or warrant of attachment or similar process involving (i) in any
individual case an amount in excess of $1,000,000 or (ii) in the aggregate at any time an amount in
excess of $2,500,000 in either case 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) shall be entered or
filed against any member of the Servicer Consolidated Group or any of their respective assets and
shall remain undischarged, unvacated, unbonded or unstayed for a period of sixty days (or in any
event later than five days prior to the date of any proposed sale thereunder in connection with any
enforcement proceedings commenced by a creditor upon such judgment, writ, warrant, attachment or
similar process);

 

 

          (l) the Servicer shall consent to the appointment of a bankruptcy trustee, or conservator, or
receiver or liquidator in any bankruptcy proceeding or other insolvency, readjustment of debt,
marshalling of assets and liabilities or similar proceedings of or relating to the Servicer or of
or relating to all or substantially all its property, or a decree, or order of a court, or agency
or supervisory authority having jurisdiction in the premises for the appointment of a bankruptcy
trustee, or a conservator, or receiver or liquidator in any bankruptcy, insolvency, readjustment of
debt, marshalling of assets and liabilities or similar proceedings, or the winding-up or
liquidation of its affairs, shall have been entered against the Servicer and such decree or order
shall have remained undischarged or unstayed for a period of 30 days; or the Servicer shall admit
in writing its inability to pay its debts generally as they become due, file a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization statute, make any assignment
for the benefit of its creditors or voluntarily suspend payment of its obligations; or

          (m) at any time, the termination of three or more members of Senior Management, and the
failure to replace such members with Persons acceptable to the Administrative Agent within 90 days
of the termination of the third such member of Senior Management (such that no more than two such
positions are vacant at the end of the 90-day cure period); provided that if any terminated
member of Senior Management is replaced on a temporary basis with a Person acceptable to the
Administrative Agent within such 90-day period, the Servicer shall have an additional 90 days from
the date of such temporary replacement to fill such position, so long as the temporary replacement
remains in such position for such additional 90-day period,

THEN, in the event of any Servicer Default, so long as the Servicer Default shall not have been
remedied within the time period applicable thereto, the Company, at the direction of the
Administrative Agent, by notice to the Servicer (a “Termination Notice”), shall terminate
all but not less than all of the rights and obligations of the Servicer as Servicer under this
Agreement; provided that notwithstanding anything to the contrary in this Agreement or any
other Credit Document, neither the termination of this Agreement pursuant to Section
8.02(a), nor any event, condition, action or failure to act, in each case resulting
therefrom, shall constitute or give rise to a Servicer Default or a Default or an Event of Default.
The Administrative Agent shall provide the Backup Servicer with a copy of any Termination Notice
delivered hereunder.

     After receipt by the Servicer of a Termination Notice or the occurrence of a Reinstatement
Termination Event pursuant to Section 8.02, and on the date that a Successor Servicer is
appointed by the Administrative Agent pursuant to Section 7.02, all authority and power of
the Servicer under this Agreement shall pass to and be vested in the Successor Servicer (a
“Service Transfer”). The Company is hereby authorized and empowered (upon the failure of
the Servicer to cooperate) to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, all documents and other instruments upon the failure of the Servicer to execute or
deliver such documents or instruments, and to do and accomplish all other acts or things necessary
or appropriate to effect the purposes of such Service Transfer. The Servicer agrees to cooperate
with the Company and any Successor Servicer in effecting the termination of the responsibilities
and rights of the Servicer to conduct servicing hereunder, including the transfer to such Successor
Servicer of all authority of the Servicer to service the Receivables Accounts and the Underlying
Receivables provided for under this Agreement, including all authority over all Collections which
shall have been deposited in the Lockbox Account and the US Bank

 

 

Account, or which shall thereafter be received with respect to the Underlying Receivables.
The Servicer shall promptly and in any event within 5 Business Days after appointment of a
Successor Servicer transfer its electronic records relating to the Receivables Accounts and the
Underlying Receivables to the Successor Servicer in such electronic form as the Successor Servicer
may reasonably request and shall promptly transfer to the Successor Servicer all other records,
correspondence and documents necessary for the continued servicing of the Underlying Receivables in
the manner and at such times as the Successor Servicer shall reasonably request. If the Successor
Servicer is not the Backup Servicer, to the extent that compliance with this Section shall require
the Servicer to disclose to such Successor Servicer information of any kind which the Servicer
deems to be confidential, such Successor Servicer shall be required to enter into such customary
licensing and confidentiality agreements as the Servicer shall deem reasonably necessary to protect
its interests.

          Section 7.02 Appointment of Successor.

          (a) After the receipt by the Servicer of a Termination Notice pursuant to Section 7.01
or the occurrence of a Reinstatement Termination Event pursuant to Section 8.02, the
Servicer shall continue to perform all servicing functions under this Agreement until the effective
date of the appointment of the Backup Servicer or, if the Backup Servicer cannot assume the
responsibilities and obligations of the Servicer for any reason, an Eligible Servicer as Successor
Servicer. The Company, at the direction of the Administrative Agent, shall, as promptly as
possible after the delivery of a Termination Notice or the occurrence of a Reinstatement
Termination Event, appoint the Backup Servicer or, if the Backup Servicer cannot assume the
responsibilities and obligations of the Servicer for any reason, an Eligible Servicer, selected by
the Administrative Agent, in either case, as a successor servicer (any Person so appointed, the
“Successor Servicer”), and such Successor Servicer shall accept its appointment by
execution of a successor servicing agreement substantially in the form of the Successor Servicing
Agreement. Notwithstanding the foregoing, if a Successor Servicer has not been appointed within 120
days of the delivery to the Servicer of the Termination Notice or the occurrence of a Reinstatement
Termination Event, the Servicer may petition a court of competent jurisdiction to appoint any
established institution qualifying as an Eligible Servicer as the Successor Servicer hereunder.

          (b) Upon its appointment as Successor Servicer under the successor servicing agreement, the
Successor Servicer shall be subject to all the responsibilities, duties and liabilities relating
thereto placed on the Successor Servicer by the terms and provisions of the applicable successor
servicing agreement entered into between the Company and the Successor Servicer; provided,
however, that in no case shall such Successor Servicer have (i) any liability with respect
to any claim of a third party based on any alleged action or inaction of the terminated Servicer
with respect to any obligation which was required to be performed by the terminated Servicer prior
to the date that such Successor Servicer executed the successor servicing agreement or (ii) any
liability or obligation with respect to any Servicer indemnification obligations of any prior
servicer including the original Servicer.

 

 

ARTICLE VIII

MISCELLANEOUS PROVISIONS

          Section 8.01 Amendment. This Agreement may be amended from time to time by the
Servicer, the Company and the Administrative Agent and the Collateral Agent, by a written
instrument signed by each of them; provided, that no such amendment may be effected without
the consent of the Requisite Lenders; provided further, that no such amendment
shall change any provision of this Agreement in a manner that by its terms materially and adversely
affects the rights of one Class differently than the other Class, without the consent of the Class
Requisite Lenders of such other Class. The Administrative Agent shall provide notice to the
Lenders of any amendment prior to the effectiveness thereof.

          Section 8.02 Termination of Agreement. Except with respect to the duties and
obligations described in Section 6.03 and Article VIII and as specified in the
immediately following sentence, this Agreement and the respective rights, obligations and
responsibilities of Bluestem (including in its capacity as the Servicer), the Administrative Agent,
the Collateral Agent and the Company under this Agreement shall automatically terminate on the
earliest of (a) the last day of each Monthly Period unless the Administrative Agent shall have
delivered a Notice of Reinstatement prior thereto (such date, the “Reinstatement Termination
Date”), (b) the date the Credit Agreement is terminated and (c) the date that a Successor
Servicer executes a successor servicing agreement. If this Agreement terminates pursuant to clause
(a) of the preceding sentence (a “Reinstatement Termination Event”), the Administrative
Agent shall appoint a successor in accordance with (x) the last paragraph of Section 7.01
and (y) Section 7.02, and each of the Company and the Servicer shall comply with their
respective obligations under such sections of this Agreement.

          Section 8.03 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW PROVISIONS (OTHER THAN
SECTIONS 5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW), AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

          Section 8.04 Notices. All demands, notices, instructions, directions and
communications (collectively, “Notices”) under this Agreement shall be in writing and shall
be deemed to have been duly given if personally delivered, mailed by registered mail, return
receipt requested, or sent by facsimile transmission to:

          (a) in the case of the Company, to Fingerhut Receivables I, LLC, 6509 Flying Cloud Drive,
Suite 101, Eden Prairie, Minnesota, 55344, Attn: Treasurer, Fax No. (952) 674-2225;

          (b) in the case of the Servicer, to Bluestem Brands, Inc., 6509 Flying Cloud Drive, Eden
Prairie, MN 55344, Attn: Treasurer, Fax No. (952) 656-4113;

          (c) in the case of the Administrative Agent or the Collateral Agent to Goldman Sachs Bank USA,
6011 Connection Drive, Irving, TX 75039, Attn: Bluestem Account

 

 

Manager, Fax No.: 972-368-5099, with a copy to Goldman Sachs Bank USA, 6011 Connection Drive,
Irving, TX 75039, Attn: GSSLG In-House Counsel, Fax No.: 972-368-5099;

          (d) in the case of the Backup Servicer to Systems & Services Technologies, Inc., 4315 Pickett
Road, St. Joseph, Missouri 64503, Attn: Jonathan Pike, Fax No. (816) 671-2038 with a copy to NCO
Group, Inc., 507 Prudential Drive, Horsham, Pennsylvania 19044, Attn: Joshua Gindin, EVP/General
Counsel;

or, as to each party, at such other address or facsimile number as shall be designated by such
party in a written notice to each other party; provided that (i) for purposes of
Sections 2.04(b) and (c) any reports or other information required to be delivered
thereunder shall be delivered by any means agreed to by the parties hereto and (ii) any Notice of
Reinstatement may be delivered via email.

          Section 8.05 Setoff. The Servicer agrees that it shall have no right of setoff or
banker’s lien against, and no right to otherwise deduct from, any funds held in the Collateral
Agent Accounts for any amount owed to it by the Company, the Administrative Agent, the Collateral
Agent or any Lender except as otherwise set forth in the Credit Documents.

          Section 8.06 Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall for any reason whatsoever be held invalid,
then such invalid covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement and shall in no way affect
the validity or enforceability of the remaining covenants, agreements, provisions or terms of this
Agreement.

          Section 8.07 Further Assurances. The Servicer agrees to do and perform, from time to
time, any and all acts and to execute any and all further instruments required or reasonably
requested by the Company more fully to effect the purposes of this Agreement, including the
execution of any financing statements, continuation statements or amendments thereto relating to
the Underlying Receivables for filing under the provisions of the UCC of any applicable
jurisdiction.

          Section 8.08 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Company or the Servicer, any right, remedy, power or privilege under
this Agreement shall operate as a waiver thereof; nor shall any single or partial exercise of any
right, remedy, power or privilege under this Agreement preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The rights, remedies,
powers and privileges provided under this Agreement are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.

          Section 8.09 Counterparts. This Agreement may be executed in two or more counterparts
(and by different parties on separate counterparts), each of which shall be an original, but all of
which together shall constitute one and the same instrument.

          Section 8.10 Third-Party Beneficiaries. Except as provided in Section 6.03
and as otherwise expressly provided in this Agreement, no other Person will have any right or
obligation hereunder.

 

 

          Section 8.11 Merger and Integration. Except as specifically stated otherwise herein,
this Agreement sets forth the entire understanding of the parties relating to the subject matter
hereof, and all prior understandings, written or oral, are superseded by this Agreement. This
Agreement may not be modified, amended, waived or supplemented except as provided herein.

          Section 8.12 Headings. The headings herein are for purposes of reference only and
shall not otherwise affect the meaning or interpretation of any provision hereof.

          Section 8.13 Consent to Jurisdiction and Service of Process. ALL JUDICIAL PROCEEDINGS
BROUGHT AGAINST BLUESTEM ARISING OUT OF OR RELATING HERETO, OR ANY OF THE OBLIGATIONS OF BLUESTEM
HEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE STATE,
COUNTY AND CITY OF NEW YORK. BLUESTEM HEREBY AGREES THAT PROCESS MAY BE SERVED ON IT BY CERTIFIED
MAIL, RETURN RECEIPT REQUESTED, TO THE ADDRESSES PERTAINING TO IT AS SPECIFIED IN SECTION 8.04 OR
ON CT CORPORATION SYSTEM, ATTN: SERVICE OF PROCESS DEPT., 111 EIGHTH AVENUE, NEW YORK, NY 10011,
AND HEREBY APPOINTS CT CORPORATION SYSTEM, AS ITS AGENT TO RECEIVE SUCH SERVICE OF PROCESS. ANY
AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE
EFFECTIVE AGAINST BLUESTEM IF GIVEN BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED, OR
BY ANY OTHER MEANS OR MAIL WHICH REQUIRES A SIGNED RECEIPT, POSTAGE PREPAID, MAILED AS PROVIDED
ABOVE. IN THE EVENT CT CORPORATION SYSTEM SHALL NOT BE ABLE TO ACCEPT SERVICE OF PROCESS AS
AFORESAID AND IF BLUESTEM SHALL NOT MAINTAIN AN OFFICE IN NEW YORK CITY, BLUESTEM SHALL PROMPTLY
APPOINT AND MAINTAIN AN AGENT THAT MAINTAINS AN OFFICE IN NEW YORK CITY AND IS QUALIFIED TO ACT AS
AN AGENT FOR SERVICE OF PROCESS, AND ACCEPTABLE TO THE ADMINISTRATIVE AGENT, AS BLUESTEM’S
AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON BLUESTEM’S BEHALF SERVICE OF ANY AND ALL PROCESS
WHICH MAY BE SERVED IN ANY SUCH ACTION, SUIT OR PROCEEDING.

          Section 8.14 No Petition. Notwithstanding any prior termination of this Agreement,
the Servicer, prior to the date which is one year and one day after the repayment of the last Loan
under the Credit Agreement, shall not acquiesce, petition or otherwise invoke or cause the Company
to invoke the process of any Governmental Authority for the purpose of commencing or sustaining a
case against the Company under any federal or state bankruptcy, insolvency or similar law or
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator or other similar
official of the Company or any substantial part of its property or ordering the winding-up or
liquidation of the affairs of the Company.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by
their respective 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 	 
	 
	 	FINGERHUT RECEIVABLES I, LLC

 	 
	 	By:  	/s/  Mark Wagener
 	 
	 	 	Name:  	Mark Wagener 	 
	 	 	Title:  	President and Chief Financial Officer 	 
	 
	 	GOLDMAN SACHS BANK USA,

as Administrative Agent and Collateral Agent

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

Sch. 3.14-1

 

	 	 	 	 	 

SCHEDULE 3.14

Capital Stock and Ownership

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:

	 	1.	 	Bluestem Brands, Inc. is a Delaware corporation.
	 
	 	2.	 	Bluestem Fulfillment, Inc. is a Delaware corporation.
	 
	 	3.	 	Fingerhut Receivables I, LLC is a Delaware limited liability company.

Sch. 3.14-2

 

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	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	   

Sch. 3.14-3

 

SCHEDULE 3.18

Material Contracts

CoreCard. That certain Software License Agreement dated June 12, 2003 by and between
CoreCard Software, Inc. and Fingerhut Direct Marketing, Inc. (now known as Bluestem Brands, Inc.)

Sch. 3.19 

 

SCHEDULE 3.19

Senior Management

	 	 	 

	Bluestem Brands, Inc.

	 	 
	 
	 	 
	Chief Executive Officer

	 	Brian Smith
	Chief Financial Officer

	 	Mark Wagener
	Chief Credit Officer

	 	Saby Sengupta
	Chief Marketing Officer

	 	Chidam Chidambaram
	Chief Operations Officer

	 	Ray Frigo

Sch. 3.19 

 

SCHEDULE
4.05

Insurance
Policies

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

Sch. 4.05 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Insurance Coverage	 	Carrier	 	Policy Term	 	 	Limits	 	Deductible
	 

	 	Insurance Co.
	 	10/1/10
	 	 	 	 	 	 	 	 	 
	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	 

Sch. 4.05 

 

SCHEDULE 4.16

Regulatory Compliance Changes

	1.	 	Changes to be implemented by August 31, 2010:

	 	a.	 	Update tables in the summary account disclosures/terms to eliminate references to
“non-variable rate” in the APR box and to “terms may vary” in the grace period box.
	 
	 	b.	 	Update consents for electronic disclosures to include an option to withdraw, and
disclosing the process to be used for updating account information.
	 
	 	c.	 	Update triggering terms (e.g., “No Annual Fee”, “No Over Limit Fees”, etc.) to be
accompanied by additional disclosures referring consumers to the appropriate detailed
terms.
	 
	 	d.	 	Revise Fingerhut periodic statement to replace reference to “cost” with
“savings”, where appropriate.
	 
	 	e.	 	Add notation on periodic statements with address for notice of billing errors,
and that telephoning will not preserve billing rights.
	 
	 	f.	 	Change balance computation method noted in the Fingerhut script for telephone
applications (from “Average Daily Balance, including new balances” to “Average Daily
Balance, including new purchases”).

	2.	 	Changes to be implemented by December 31, 2010: Complete analysis of possible state law
compliance issues for the Gettington program and, based on results of the analysis, develop an
appropriate remediation plan for affected Gettington program materials.

Sch. 4.16 

 

EXHIBIT A

Notice of Reinstatement

GOLDMAN SACHS BANK USA

6011 Connection Dr.

Irving, TX 75039

________ __, 20__

Bluestem Brands, Inc.

6509 Flying Cloud Drive

Eden Prairie, MN 55344

Attn: Treasurer, Fax No. (952) 656-4113

Fingerhut Receivables I, LLC

6509 Flying Cloud Drive, Suite 101

Eden Prairie, Minnesota, 55344

Attn: Treasurer, Fax No. (952) 656-4113

          Re:      Extension of Term of Servicing Agreement.

Ladies and Gentlemen:

          Reference is made to the Servicing Agreement, dated as of August 20, 2010, by and among
BLUESTEM BRANDS, INC., as Servicer (the “Servicer”), FINGERHUT RECEIVABLES I, LLC (the
“Company”) and GOLDMAN SACHS BANK USA, as Administrative Agent (the “Administrative
Agent”) and Collateral Agent (as amended, restated, replaced, supplemented or otherwise
modified from time to time the “Servicing Agreement”). Any capitalized term used but not
defined herein shall have the meaning assigned to such term in the Servicing Agreement.

          Pursuant to Section 8.02 of the Servicing Agreement, the Administrative Agent hereby notifies
the Company and the Servicer of the Administrative Agent’s election to extend the term of the
Servicing Agreement as of the date hereof until the last day of the Monthly Period that immediately
succeeds the current Monthly Period.

[SIGNATURE PAGE FOLLOWS]

A-1

 

	 	 	 	 	 
	 	Very truly yours, 

GOLDMAN SACHS BANK USA

as Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

A-2

 

EXHIBIT B

[Form of Servicing Report]

See attached.

B-1

 

EXHIBIT C

[Form of Daily Settlement and Servicing Report]

See attached.

C-1

 

EXHIBIT D

ANNUAL OFFICER’S CERTIFICATE

[DATE]

The undersigned, a duly authorized representative of BLUESTEM BRANDS, INC., as Servicer (the
“Servicer”), pursuant to that certain Servicing Agreement, dated as of August 20, 2010, by
and among the Servicer, FINGERHUT RECEIVABLES I, LLC (the “Company”) and GOLDMAN SACHS BANK
USA, as Administrative Agent (the “Administrative Agent”) and Collateral Agent (as amended,
restated, replaced, supplemented or otherwise modified from time to time the “Servicing
Agreement”), (defined terms used and not otherwise defined herein shall have the meaning
ascribed to them in the Servicing Agreement)), does hereby certify that:

	 	1.	 	The Servicer is, as of the date hereof, the Servicer under the Servicing
Agreement.

	 	2.	 	The undersigned is an Authorized Officer of the Servicer who is duly
authorized pursuant to the Servicing Agreement to execute and deliver this Certificate
to the Company and the Administrative Agent.

	 	3.	 	A review of the activities of the Servicer during the year ended on or
about January 31, 201_ and of its performance under the Servicing Agreement was
conducted under my supervision.

	 	4.	 	Based on such review, the Servicer has, to the best of my knowledge,
performed in all material respects its obligations under the Servicing Agreement
throughout such year and no default in the performance of such obligations has occurred
or is continuing except as set forth in paragraph 5 below.

	 	5.	 	The following is a description of each default in the performance of the
Servicer’s obligations under the provisions of the Servicing Agreement known to me to
have been made by the Servicer during the year ended January 31, 201__ which sets forth
in detail (i) the nature of each such default, (ii) the action taken by the Servicer,
if any, to remedy each such default and (iii) the current status of each such default:
[If applicable, insert “NONE.”]

D-1

 

IN WITNESS WHEREOF, the undersigned has duly executed this Certificate as of the date first written
above pursuant to Section 2.05 of the Servicing Agreement.

	 	 	 	 	 
	 	BLUESTEM BRANDS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

D-2

 

	 	 	 	 	 

EXHIBIT E

Form of Payment Date Report

Payment Date Report

Fingerhut Receivables I, LLC

	 	 	 	 	 	 	 	 	 	 	 

	I.

	 	APPLICABLE DATES	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Interest Payment Date:	 	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 

	 	 
	 

	 	Determination Date:	 	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 

	 	Collection Period:	 	 	 	 	 	 	 	 
	 

	 	 	 	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	 	 	Pursuant to
(a) Section 2.04(g) of the Servicing Agreement, dated as of
August 20, 2010 (the “Servicing Agreement”), among
Bluestem Brands, Inc. as Servicer (“Bluestem”),
Fingerhut Receivables I, LLC (“LLC”) and Goldman
Sachs Bank USA (“GS Bank”), as
Administrative Agent (the “Administrative Agent”) and Collateral Agent and (b) Section 2.15 of the Credit Agreement, dated as of
August 20, 2010, among LLC, the Administrative Agent and the Lenders party thereto from time to time, Bluestem is required to prepare
certain information each Collection Period regarding the current distributions to the Lenders and other Persons specified in Section
2.15 of the Credit Agreement and the performance of the Underlying Receivables during the Collection Period. The undersigned, a duly
authorized representative of Bluestem, does hereby certify in this report:

	 	 	 

	i.

	 	Capitalized terms used in this report have their respective meanings set forth in the Servicing Agreement and, if note defined
therein, the Credit Agreement. References herein to certain sections and subsections are references to their respective sections and
subsections of the respective agreements.
	 
	 	 
	ii.

	 	This Report is being delivered pursuant to Section 2.04(g) of the Servicing Agreement.
	 
	 	 
	iii.

	 	Bluestem is the Servicer under the Servicing Agreement. The undersigned is an Authorized Officer of the Servicer.
	 
	 	 
	iv.

	 	The date of this report is on, or prior to, the Interest Payment Date specified above.
	 
	 	 
	v.

	 	No Event of Default has occurred under the Credit Agreement.
	 
	 	 
	vi.

	 	As of the date hereof, to the best knowledge of the undersigned, the Servicer has performed in all material respects all of its
obligations under the Servicing Agreement and the Credit Agreement through the Collection Period preceding such Interest Payment Date
(or, if there has been a default in the performance of any such obligation, set forth in detail (i) the nature of such default, (ii)
the action taken by the Servicer, if any, to remedy such default and (iii) the current status of each such default, if applicable).

E-1

 

	I.	 	INSTRUCTION TO MAKE WITHDRAWALS

	 	 	 	 	 	 	 	 	 
	Allocation to Lenders:	 	 	 	 
	 	 	 	 	 
	 	 	[   ]	%
	 	 	 	 	 
	 	 	 
	 	 	 	 	 
	 	 	[   ]	%
	 	 	 	 	 
	 	 	 
	 	 	 	 	[LENDERS]
	 	 	[   ]	%
	 	 	 	 	 
	 	 	 
	 	 	 	 	Total Allocation
	 	 	100.0	%
	 	 	 	 	 
	 	 	 
	 	 	 	 	 
	 	 	 	 
	Application of Finance Charge Collections:	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	1	)	 	Servicing Fee due to Servicer
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	2	)	 	Backup Servicer Fees due Backup Servicer and Successor
Servicing Fees due Successor Servicer
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	3	)	 	Costs and fees due to Agent
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	4	)	 	Costs, fees and accrued but unpaid interest due the Tranche A Lenders and any fixed
payments due per any Interest Rate Agreements other than an interest rate cap.
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	5	)	 	Costs, fees and accrued but unpaid interest due the Tranche B Lenders
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	6	)	 	Prepayment of the Tranche A Revolving Loans in an amount necessary to (A) cure any
Tranche A Borrowing Base Deficiency and (B) cure any Tranche B Borrowing Base
Deficiency
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	7	)	 	Prepayment of the Tranche B Term Loans in an amount
necessary to cure any Tranche B Borrowing Base Deficiency
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	8	)	 	Costs and fees due Agent not paid per item 3 above
	 	 	0.00	 
	 	 	 	 	 
	 	 	 
	 	9	)	 	Senior Termination Payments due any Lender Counterparty
not paid per item 4 above.
	 	 	0.00	 
	 	 	 	 	 
	 	 	 
	 	10	)	 	Fund the excess of the Required Spread Account Amount over the amounts
then on deposit in the
Spread Account
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	11	)	 	Remaining funds to be deposited in the Company Account
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	 	 	 	 
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	 	 	 	 
	 	 	 	 
	Application of Principal Collections:	 	 	 	 
	 	 	 	 	 
	 	 	 	 
	 	1	)	 	To pay any amounts owed
but unpaid under the
preceding clauses (1) to
(11)
	 	$	0.00	 
	 	 	 	 	 
	 	 	 
	 	2	)	 	Repayment of the
outstanding principal
balance of the Tranche A
Revolving Loans
	 	$	0.00	 

E-2

 

	II.	 	WIRE TRANSFER INSTRUCTIONS

Bluestem Brands, Inc.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Bank Name	 	 	ABA	 	 	Account No.	 	 	Amount	 	 	 	 	 
	FROM:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 
	TO:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 

Systems & Services Technology, Inc.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Bank Name	 	 	ABA	 	 	Account No.	 	 	Amount	 	 	 	 	 
	FROM:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 
	TO:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 

Goldman Sachs Bank USA

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Bank Name	 	 	ABA	 	 	Account No.	 	 	Amount	 	 	 	 	 
	FROM:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 
	TO:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 

Fingerhut Receivables I, LLC (Company Account)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Bank Name	 	 	ABA	 	 	Account No.	 	 	Amount	 	 	 	 	 
	FROM:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 
	TO:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 

Fingerhut Receivables I, LLC (Spread Account)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Bank Name	 	 	ABA	 	 	Account No.	 	 	Amount	 	 	 	 	 
	FROM:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 
	TO:
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.00	 

E-3

 

IN WITNESS WHEREOF, the undersigned has duly executed this Payment Date Report.

          BLUESTEM BRANDS, INC.

          Servicing Officer:

	 	 	 	 	 
	 	 	 
	 	
 	 
	 	[DATE] 	 
	 	 	 

E-4

 

	 	 	 	 	 

EXHIBIT F

Data Tape Information

Account Data Layout:

	 	 	 	 	 	 	 	 	 	 	 
	Field	 	Type	 	Length	 	Description	 	Header Record Name
	Account Number

	 	varchar
	 	 	19	 	 	10-digit Bluestem customer number
	 	AccountNumber
	Account ID

	 	int
	 	 	4	 	 	Unique AR system ID
	 	AcctId
	Credit Card Number

	 	varchar
	 	 	19	 	 	16-digit credit card number
	 	CardNumber
	SSN

	 	varchar
	 	 	9	 	 	 	 	SSN
	First Name

	 	varchar
	 	 	40	 	 	 	 	FirstName
	Middle Name

	 	varchar
	 	 	40	 	 	 	 	MiddleName
	Last Name

	 	varchar
	 	 	40	 	 	 	 	LastName
	Primary Address Line 1

	 	varchar
	 	 	40	 	 	 	 	PrimaryAddressLine1
	Primary Address Line 2

	 	varchar
	 	 	40	 	 	 	 	PrimaryAddressLine2
	Primary City

	 	varchar
	 	 	40	 	 	 	 	PrimaryCity
	Primary State

	 	varchar
	 	 	5	 	 	 	 	PrimaryState
	Primary Zip Code

	 	varchar
	 	 	5	 	 	 	 	PrimaryZipCode
	Primary Carrier Route

	 	varchar
	 	 	2	 	 	 	 	PrimaryCarrierRoute
	Primary Carrier Route 2

	 	varchar
	 	 	2	 	 	 	 	PrimaryCarrierRoute2
	Statement Address Line 1

	 	varchar
	 	 	40	 	 	Valued only if different from primary address
	 	StatementAddressLine1
	Statement Address Line 2

	 	varchar
	 	 	40	 	 	Valued only if different from primary address
	 	StatementAddressLine2
	Statement City

	 	varchar
	 	 	40	 	 	Valued only if different from primary address
	 	StatementCity
	Statement State

	 	varchar
	 	 	5	 	 	Valued only if different from primary address
	 	StatementState
	Statement Zip Code

	 	varchar
	 	 	10	 	 	Valued only if different from primary address
	 	StatementZipCode
	Statement Carrier Route

	 	varchar
	 	 	2	 	 	Valued only if different from primary address
	 	StatementCarrierRoute
	Statement Carrier Route 2

	 	varchar
	 	 	2	 	 	Valued only if different from primary address
	 	StatementCarrierRoute2
	Home Phone Number

	 	varchar
	 	 	19	 	 	 	 	HomePhone
	 

	 	 	 	 	 	 	 	0 — not set	 	 
	Home Phone Number Bad Indicator

	 	int
	 	 	4	 	 	1 — bad phone number
	 	HomePhoneBadInd
	Work Phone Number

	 	varchar
	 	 	19	 	 	 	 	WorkNumber
	Work Phone Number Bad Indicator

	 	int
	 	 	4	 	 	0 — not set 

1 — bad phone number
	 	WorkPhoneBadInd

F-1

 

	 	 	 	 	 	 	 	 	 	 	 
	Field	 	Type	 	Length	 	Description	 	Header Record Name
	Mobile Phone Number

	 	varchar
	 	 	19	 	 	 	 	MobileNumber
	 

	 	 	 	 	 	 	 	0 — not set	 	 
	Mobile Phone Number Bad Indicator

	 	int
	 	 	4	 	 	1 — bad phone number
	 	MobilePhoneBadInd
	ANI Phone Number

	 	varchar
	 	 	19	 	 	 	 	ANINumber
	 

	 	 	 	 	 	 	 	0 — not set	 	 
	ANI Phone Number Bad Indicator

	 	int
	 	 	4	 	 	1 — bad phone number
	 	ANIPhoneBadInd
	Other Phone Number

	 	varchar
	 	 	19	 	 	 	 	OtherPhoneNumber
	 

	 	 	 	 	 	 	 	0 — not set	 	 
	Other Phone Number Bad Indicator

	 	int
	 	 	4	 	 	1 — bad phone number
	 	OtherPhoneBadInd
	Alternate Phone Number

	 	varchar
	 	 	19	 	 	 	 	AlternatePhoneNumber
	 

	 	 	 	 	 	 	 	0 — not set	 	 
	Alternate Phone Number Bad Indicator

	 	int
	 	 	4	 	 	1 — bad phone number
	 	AlternatePhoneBadInd
	Credit File Phone Number

	 	varchar
	 	 	19	 	 	 	 	CreditFilePhoneNumber
	 

	 	 	 	 	 	 	 	0 — not set	 	 
	Credit File Phone Number Bad Indicator

	 	int
	 	 	4	 	 	1 — bad phone number
	 	CreditFilePhoneBadInd
	Email Address

	 	varchar
	 	 	100	 	 	 	 	Email
	Systematic Status Code

	 	int
	 	 	4	 	 	see Status Code Cross-Reference
	 	SystemStatus
	Manual Status Code

	 	int
	 	 	4	 	 	see Status Code Cross-Reference
	 	ManualStatus
	Credit Limit

	 	money
	 	 	8	 	 	Current Credit Limit
	 	CreditLimit
	Credit Score

	 	varchar
	 	 	5	 	 	Credit Score
	 	FICOScore
	 

	 	 	 	 	 	 	 	BC96 = EQ Beacon 96	 	 
	 

	 	 	 	 	 	 	 	TU95 = TU Classic 95	 	 
	Credit Score Model

	 	varchar
	 	 	30	 	 	PIN2 — Pinnacle
	 	FICOModel
	Credit Score Date

	 	char
	 	 	10	 	 	Date of credit score
	 	FICOScoreDate
	Fixed Interest Rate

	 	real
	 	 	4	 	 	interest rate if assigned to a fixed interest plan
	 	FixedInterestRate
	Prime Interest Rate

	 	real
	 	 	4	 	 	prime rate if assigned to a variable interest plan
	 	PrimeInterestRate
	Margin Rate

	 	real
	 	 	4	 	 	margin rate if assigne to a variable interest plan
	 	MarginRate
	 

	 	 	 	 	 	 	 	1 = paper statement produced	 	 
	Statement Flag

	 	varchar
	 	 	5	 	 	2 = paper statement not produced
	 	StatementFlag
	Cycle ID

	 	varchar
	 	 	5	 	 	Billing Cycle — 1,3,5,7,9,11,13,15,17,19,22,24,25,26,28
	 	BillingCycle
	Days in cycle

	 	int
	 	 	4	 	 	# of days into current billing cycle
	 	DaysSinceLastCycle
	Next Statement Date

	 	varchar
	 	 	10	 	 	Date of the next billing statement
	 	NextStatementDate
	Last Statement Date

	 	varchar
	 	 	10	 	 	Date last statement produced
	 	LastStatementDate
	Statement Balance

	 	money
	 	 	8	 	 	Balance as of last statement
	 	StatementBalance
	Current Balance

	 	money
	 	 	8	 	 	Total balance
	 	CurrentBalance
	Non-deferred Balance

	 	money
	 	 	8	 	 	Balance used to determine minimum payment due
	 	NonDeferred

F-2

 

	 	 	 	 	 	 	 	 	 	 	 
	Field	 	Type	 	Length	 	Description	 	Header Record Name
	 Deferred Balance

	 	money
	 	 	8	 	 	Balance deferred — no minimum
due requested until end of deferral
	 	Deferred
	Current Charge Off Balance

	 	money
	 	 	8	 	 	Balance charged-off — no payment due requested
	 	ChargeOffBalance
	Dispute Amount

	 	money
	 	 	8	 	 	Amount of balance in dispute
	 	DisputeAmount
	Dispute Count

	 	int
	 	 	4	 	 	Number of disputes on account
	 	DisputeCount
	Outstanding Authorization Amount

	 	money
	 	 	8	 	 	Pending authorization $ amount
	 	OutStandingAuthAmount
	Outstanding Authorization Count

	 	int
	 	 	4	 	 	Number of pending authorizations
	 	OutStandingAuthCount
	Statement Minimum Payment Due

	 	money
	 	 	8	 	 	Minimum payment as of last statement
	 	StatementMinimumDue
	Fixed Payment Amount

	 	money
	 	 	8	 	 	Payment amount if customer is on a fixed payment plan
	 	FixedPaymentAmount
	Payment Due Date

	 	varchar
	 	 	10	 	 	Payment due date from last statement
	 	PaymentDueDate
	Last Payment Date

	 	varchar
	 	 	10	 	 	Date last payment was received
	 	LastPaymentDate
	Last Payment Amount

	 	money
	 	 	8	 	 	Amount of last payment received
	 	LastPaymentAmount
	Last Purchase Date

	 	varchar
	 	 	10	 	 	Date last purchase was posted
	 	LastPurchaseDate
	Last Purchase Amount

	 	money
	 	 	8	 	 	Amount of last posted purchase
	 	LastPurchaseAmount
	Days Delinquent

	 	int
	 	 	4	 	 	Number of days delinquent
	 	DaysDelinquent
	Total Due Amount

	 	money
	 	 	8	 	 	Current Payment Due
	 	CurrentPaymentDue
	Current Due Amount

	 	money
	 	 	8	 	 	Amount due from current cycle
	 	CurrentDueAmount
	Past Due Amount

	 	money
	 	 	8	 	 	Amount due from previous cycle
	 	PastDueAmount
	One Cycle Past Due Amount

	 	money
	 	 	8	 	 	Amount due from 2 cycles prior to current cycle
	 	OneCyclePastDueAmount
	Two Cycle Past Due Amount

	 	money
	 	 	8	 	 	Amount due from 3 cycles prior to current cycle
	 	TwoCyclesPastDueAmount
	Three Cycle Past Due Amount

	 	money
	 	 	8	 	 	Amount due from 4 cycles prior to current cycle
	 	ThreeCyclesPastDueAmount
	Four Cycle Past Due Amount

	 	money
	 	 	8	 	 	Amount due from 5 cycles prior to current cycle
	 	FourCyclesPastDueAmount
	Five Cycle Past Due Amount

	 	money
	 	 	8	 	 	Amount due from 6 cycles prior to current cycle
	 	FiveCyclesPastDueAmount
	Six Cycle Past Due Amount

	 	money
	 	 	8	 	 	Amount due from 7 cycles prior to current cycle
	 	SixCyclesPastDueAmount
	Seven Cycle Past Due Amount

	 	money
	 	 	8	 	 	Amount due from 8 or more cycles prior to current cycle
	 	SevenCyclesPastDueAmount
	Total Past Due Amount

	 	money
	 	 	8	 	 	Total amount past due (past due amount + all cycle past due amounts)
	 	TotalPastDueAmount
	 

	 	 	 	 	 	 	 	Current cycle due:	 	 
	 

	 	 	 	 	 	 	 	0, 1 — current	 	 
	 

	 	 	 	 	 	 	 	2 — past due	 	 
	 

	 	 	 	 	 	 	 	3 — one cycle past due	 	 
	 

	 	 	 	 	 	 	 	4 — two cycles past due	 	 
	 

	 	 	 	 	 	 	 	5 — three cycles past due	 	 
	 

	 	 	 	 	 	 	 	6 — four cycles past due	 	 
	 

	 	 	 	 	 	 	 	7 — five cycles past due	 	 
	Cycle Due

	 	int
	 	 	4	 	 	8 — six or more cycles past due
	 	CycleDue

F-3

 

	 	 	 	 	 	 	 	 	 	 	 
	Field	 	Type	 	Length	 	 	Description	 	Header Record Name
	 
	 	 	 	 	 	 	 	0 - not in collections	 	 
	Account in Collections
	 	int	 	 	4	 	 	1 - in colllections	 	AccountInCollections
	 
	 	 	 	 	 	 	 	0 - none	 	 
	 
	 	 	 	 	 	 	 	1 - status forced	 	 
	 
	 	 	 	 	 	 	 	2 - status: high	 	 
	 
	 	 	 	 	 	 	 	3 - status: low	 	 
	 
	 	 	 	 	 	 	 	4 - excessive use	 	 
	 
	 	 	 	 	 	 	 	5 - delinquent	 	 
	 
	 	 	 	 	 	 	 	6 - first payment default	 	 
	 
	 	 	 	 	 	 	 	7 - charged off	 	 
	 
	 	 	 	 	 	 	 	8 - overlimit	 	 
	Reason Account in Collections
	 	int	 	 	4	 	 	9 - delinquent and overlimit	 	ReasonAccountInCollections
	Entered Collections Date
	 	varchar	 	 	10	 	 	Date account entered collections	 	EnteredCollectionsDate
	Removed from Collections Date
	 	varchar	 	 	10	 	 	Date account removed from collections	 	RemovedFromCollectionsDate
	Date Last Delinquent
	 	varchar	 	 	10	 	 	Date account was last delinquent	 	DateLastDelinquent
	Date of Original Payment Due
	 	varchar	 	 	10	 	 	Date of original payment due (if delinquent)	 	DateOfOriginalPaymentDue
	Active Promise Date
	 	varchar	 	 	10	 	 	Date of an active Promise to Pay	 	ActivePromiseDate
	Agency Name
	 	varchar	 	 	50	 	 	Name of agency account is placed with for collections	 	CollectionsAgency
	Last Reage Date
	 	varchar	 	 	10	 	 	Date account last reaged	 	LastReageDate
	Number of Times Reaged
	 	int	 	 	4	 	 	Number of times account has been reaged	 	NumberOfTimesReaged
	 
	 	 	 	 	 	 	 	0 - none	 	 
	 
	 	 	 	 	 	 	 	1 - suppress letters	 	 
	 
	 	 	 	 	 	 	 	2 - suppress phone	 	 
	 
	 	 	 	 	 	 	 	3 - suppress all collection activity	 	 
	Generated Dun Suppress Flag
	 	int	 	 	4	 	 	4 - Insurance claim OR disaster	 	GeneratedDunSuppressFlag
	 
	 	 	 	 	 	 	 	0 - none	 	 
	 
	 	 	 	 	 	 	 	1 - suppress letters	 	 
	 
	 	 	 	 	 	 	 	2 - suppress phone	 	 
	Manual Dun Suppress Flag
	 	int	 	 	4	 	 	3 - suppress all collection activity	 	ManualDunSupressFlag
	Dun Suppress Date
	 	varchar	 	 	10	 	 	Date dun suppress set on account	 	DunSuppressDate
	Unpaid Interest
	 	money	 	 	8	 	 	 	 	InterestBilledNotPaid
	Unpaid Late Fees
	 	money	 	 	8	 	 	 	 	LateFeesBilledNotPaid
	Unpaid Debt Waiver Fees
	 	money	 	 	8	 	 	 	 	InsuranceFeesBilledNotPaid
	Unpaid Collections Fees
	 	money	 	 	8	 	 	 	 	CollectionFeesBilledNotPaid
	Unpaid Membership Fees
	 	money	 	 	8	 	 	 	 	MembershipFeesBilledNotPaid
	Unpaid Overlimit Fees
	 	money	 	 	8	 	 	 	 	OverLimitFeesBilledNotPaid
	Unpaid Recovery Fees
	 	money	 	 	8	 	 	 	 	RecoveryFeesBilledNotPaid

F-4

 

	 	 	 	 	 	 	 	 	 	 	 
	Field	 	Type	 	Length	 	 	Description	 	Header Record Name
	Unpaid Service Fees
	 	money	 	 	8	 	 	 	 	ServiceFeesBilledNotPaid
	Unpaid Principal
	 	money	 	 	8	 	 	 	 	Principal
	Unpaid NSF Fees
	 	money	 	 	8	 	 	 	 	NSFFeesBilledNotPaid
	Behavior Score
	 	varchar	 	 	5	 	 	Most recent Behavior Score	 	Behavior2Score
	Behavior Score Model
	 	varchar	 	 	30	 	 	Model Code of most recent Behavior Score	 	Behavior2Model
	Behavior Score Date
	 	varchar	 	 	10	 	 	Effective date of most recent Behavior Score	 	Behavior2ScoreDate
	Account Opened Date
	 	varchar	 	 	10	 	 	 	 	AccountOpenDate
	FICO score at account origination
	 	varchar	 	 	5	 	 	 	 	OriginationFICOScore
	First Pay Default Score
	 	varchar	 	 	5	 	 	 	 	FPDScore
	First Pay Default Model
	 	varchar	 	 	30	 	 	 	 	FPDModel
	First Pay Default Date
	 	varchar	 	 	10	 	 	 	 	FPDScoreDate
	AR12 Score
	 	varchar	 	 	5	 	 	 	 	AR12Score
	AR12 Model
	 	varchar	 	 	30	 	 	 	 	AR12Model
	AR12 Date
	 	varchar	 	 	10	 	 	 	 	AR12ScoreDate
	Deferred Expiration Date
	 	varchar	 	 	10	 	 	Maximum expiration date for deferred balance	 	 
	Accrued Deferred Finance Charge
	 	money	 	 	8	 	 	finance charge currently accrued against deferred balance	 	 
	Past Due count
	 	int	 	 	4	 	 	Number of times past due	 	 
	One Cycle Past Due count
	 	int	 	 	4	 	 	Number of times one cycle past due	 	 
	Two Cycle Past Due count
	 	int	 	 	4	 	 	Number of times two cycles past due	 	 
	Three Cycle Past Due count
	 	int	 	 	4	 	 	Number of times three cycles past due	 	 
	Four Cycle Past Due count
	 	int	 	 	4	 	 	Number of times four cycles past due	 	 
	Five Cycle Past Due count
	 	int	 	 	4	 	 	Number of times five cycles past due	 	 
	Six Cycle Past Due count
	 	int	 	 	4	 	 	Number of times six cycles past due	 	 
	Seven Cycle Past Due count
	 	int	 	 	4	 	 	Number of times seven cycles past due	 	 
	 
	 	 	 	 	 	 	 	A, B, D, N, Z — Legacy	 	 
	 
	 	 	 	 	 	 	 	C - Unsolicitated	 	 
	 
	 	 	 	 	 	 	 	F - PreScreened	 	 
	 
	 	 	 	 	 	 	 	G - Gettington PreScreened	 	 
	 
	 	 	 	 	 	 	 	H - No Hit/ No Score	 	 
	 
	 	 	 	 	 	 	 	J, K, L - Fresh Start Direct Offer	 	 
	 
	 	 	 	 	 	 	 	M, S, T - Fresh Start Counter Offer	 	 
	Customer Segment
	 	char	 	 	1	 	 	R - Catalog Requests	 	CustomerSegment
	Net LTD Payments
	 	int	 	 	4	 	 	Count of Net life to date payments received	 	NetLTDPayments
	 
	 	 	 	 	 	 	 	1000 - Fingerhut Regular	 	 
	 
	 	 	 	 	 	 	 	3000- Fingerhut Fresh Start	 	 
	Institution Id
	 	int	 	int	 	 	1001 - Gettington	 	institutionid
	User Charge Off Status
	 	char	 	 	2	 	 	0 - Not Charged-off	 	UserChargeOffStatus

F-5

 

	 	 	 	 	 	 	 	 	 	 	 
	Field	 	Type	 	Length	 	 	Description	 	Header Record Name
	 
	 	 	 	 	 	 	 	1 - Pending Manual Initial Charge-off	 	 
	 
	 	 	 	 	 	 	 	2 - Hold Initial Charge-off	 	 
	 
	 	 	 	 	 	 	 	3 - Started Initial Charge-off	 	 
	 
	 	 	 	 	 	 	 	4 - Started Final Charge-off	 	 
	Pool Identifier
	 	int	 	 	4	 	 	Pool account assigned to	 	PoolIdentifier
	Date Moved Into Pool
	 	varchar	 	 	30	 	 	Date account moved Into pool	 	DateMovedIntoPool
	Brand Description
	 	varchar	 	 	10	 	 	Fingerhut, Gettington	 	BrandDescription

Transaction File Layout:

	 	 	 	 	 
	 	 	 	 	Debit/Credit
	Tran Code	 	Source	 	A/R
	001

	 	Conversion Sale
	 	Debit
	011

	 	System generated sale
	 	Debit
	012

	 	Manual sale
	 	Debit
	013

	 	3rd Party Revenue Holsted
	 	Debit
	014

	 	3rd Party Revenue Flower Club
	 	Debit
	015

	 	3rd Party Revenue Tranzact
	 	Debit
	016

	 	3rd Party Revenue Trilegent
	 	Debit
	017

	 	3rd Party Revenue New Benefits
	 	Debit
	018

	 	3rd Party Revenue CPP — Annual Fee
	 	Debit
	019

	 	3rd Party Revenue CPP — Monthly Fee
	 	Debit
	020

	 	Palm Beach Sale
	 	Debit
	021

	 	3rd Party Revenue GE — Annual Fee
	 	Debit
	022

	 	3rd Party Revenue GE — Monthly Fee
	 	Debit
	023

	 	3rd Party Revenue Affinion — Annual Fee
	 	Debit
	025

	 	3rd Party Revenue Affinion — Monthly Fee
	 	Debit
	026

	 	3rd Party Revenue Art Select
	 	Debit
	027

	 	3rd Party Revenue AIG — Monthly Fee
	 	Debit
	028

	 	3rd Party Revenue Aegon — Monthly Fee
	 	Debit
	029

	 	3rd Party Revenue — Synapse
	 	Debit
	030

	 	Sale reversal
	 	Credit
	031

	 	3rd Party Revenue — Encore
	 	Debit
	032

	 	3rd Party Revenue — Cosmetique
	 	Debit

F-6

 

	 	 	 	 	 
	 	 	 	 	Debit/Credit
	Tran Code	 	Source	 	A/R
	033

	 	3rd Party Revenue — Ortega
	 	Debit
	 
	 	 	 	 
	050

	 	Conversion Return
	 	Credit
	051

	 	System generated return
	 	Credit
	052

	 	Manual return
	 	Credit
	053

	 	3rd Party Return Hosted
	 	Credit
	054

	 	3rd Party Return Flower Club
	 	Credit
	055

	 	3rd Party Return Tranzact
	 	Credit
	056

	 	3rd Party Return Trilegent
	 	Credit
	057

	 	3rd Party Return New Benefits
	 	Credit
	058

	 	3rd Party Return CPP — Annual Fee
	 	Credit
	059

	 	3rd Party Return CPP — Monthly Fee
	 	Credit
	060

	 	Palm Beach Return
	 	Credit
	061

	 	3rd Party Return GE — Annual Fee
	 	Credit
	062

	 	3rd Party Return GE — Monthly Fee
	 	Credit
	063

	 	3rd Party Return Affinion — Annual Fee
	 	Credit
	064

	 	3rd Party Return Affinion — Monthly Fee
	 	Credit
	065

	 	3rd Party Return Art Select
	 	Credit
	066

	 	3rd Party Return AIG — Monthly Fee
	 	Credit
	067

	 	3rd Party Return AEGON — Monthly Fee
	 	Credit
	069

	 	3rd Party Return Synapse
	 	Credit
	070

	 	Return Reversal
	 	Debit
	071

	 	3rd Party Return Encore
	 	Credit
	072

	 	3rd Party Return Cosmetique
	 	Credit
	072

	 	3rd Party Return Ortega
	 	Credit
	 
	 	 	 	 
	100

	 	Conversion Payment
	 	Credit
	101

	 	Remitco — Stmt Stub
	 	Credit
	102

	 	Remitco — Dunning Stub
	 	Credit
	103

	 	St Cloud
	 	Credit
	104

	 	Payment Telecheck
	 	Credit
	105

	 	CCCS Gross Amount
	 	Credit
	107

	 	Agency Payment Gross
	 	Credit

F-7

 

	 	 	 	 	 
	 	 	 	 	Debit/Credit
	Tran Code	 	Source	 	A/R
	109

	 	Missing Payment
	 	Credit
	110

	 	Payment — Misc
	 	Credit
	111

	 	Payment Correction (Debit)
	 	Debit
	112

	 	Payment Correction (Credit)
	 	Credit
	113

	 	Reversal of NSF Check — Rvs NSF Fee
	 	Credit
	114

	 	Reversal of Account Closed — Rvs NSF
	 	Credit
	115

	 	Reversal of Stop Payment — Rvs NSF Fee
	 	Credit
	116

	 	Reversal of Other NSF Check — Rvs NSF Fee
	 	Credit
	117

	 	Reversal of NSF Check Only
	 	Credit
	118

	 	Reversal of Account Closed Only
	 	Credit
	119

	 	Reversal of Stop Payment Only
	 	Credit
	120

	 	Reversal of Other NSF Check Only
	 	Credit
	121

	 	Refund Issue — Systematically
	 	Credit
	122

	 	Refund Issue — Manually
	 	Credit
	123

	 	Payment electronic (Moneygram)
	 	Credit
	124

	 	Payment — Telecheck Manual
	 	Credit
	125

	 	Payment — 3rd Party Credit Card
	 	Credit
	126

	 	Payment — Manual Remitco
	 	Credit
	127

	 	Payment — 3rd Party Credit Card EEP
	 	Credit
	128

	 	Payment — Home Banking
	 	Credit
	129

	 	Payment ORCC
	 	Credit
	130

	 	Payment — Agentless ACH
	 	Credit
	131

	 	Payment — Agentless Credit Card
	 	Credit
	132

	 	Payment 3rd Part Credit Card ORCC
	 	Credit
	133

	 	Payment Checkfree
	 	Credit
	134

	 	Payment Virtual Agent
	 	Credit
	 
	 	 	 	 
	161

	 	Remitco — NSF Check
	 	Debit
	162

	 	Remitco — Account Closed
	 	Debit
	163

	 	Remitco — Stop Payment
	 	Debit
	164

	 	St Cloud — NSF Check — Chrg NSF Fee
	 	Debit
	165

	 	St Cloud — Account Closed — Chrg NSF Fee
	 	Debit
	166

	 	St Cloud — Stop Payment — Chrg NSF Fee
	 	Debit

F-8

 

	 	 	 	 	 
	 	 	 	 	Debit/Credit
	Tran Code	 	Source	 	A/R
	167

	 	Other NSF Check — Chrg NSF Fee
	 	Debit
	168

	 	St Cloud — NSF Check — No NSF Fee
	 	Debit
	169

	 	St Cloud — Account Closed — No NSF Fee
	 	Debit
	170

	 	St Cloud — Stop Payment — No NSF Fee
	 	Debit
	171

	 	Other NSF Check — No NSF Fee
	 	Debit
	172

	 	Reversal — Missing Payment
	 	Debit
	173

	 	Reversal — Remitco Payment
	 	Debit
	174

	 	Reversal — St Cloud Payment
	 	Debit
	175

	 	Reversal — Telecheck
	 	Debit
	176

	 	Reversal — CCCS Payment Gross
	 	Debit
	178

	 	Reversal — Agency Payment Gross
	 	Debit
	180

	 	Reversal — Refund check voided
	 	Debit
	181

	 	Payment Adjustment — Debit
	 	Debit
	183

	 	Reversal — electronic payment (MoneyGram)
	 	Debit
	184

	 	Reversal — Telecheck Manual
	 	Debit
	185

	 	Reversal — 3rd Party Credit Card
	 	Debit
	186

	 	Pmt Correction Debit — Agentless Pmt
	 	Debit
	187

	 	Reversal — 3rd Party Credit Card (EEP)
	 	Debit
	188

	 	Pmt Reversal — Home Banking
	 	Debit
	189

	 	Pmt Reversal ORCC
	 	Debit
	190

	 	Pmt Reversal — Agentless ACH
	 	Debit
	191

	 	Pmt Reversal — Agentless Credit Card
	 	Debit
	192

	 	Pmt Reversal — 3rd Party CC ORCC
	 	Debit
	193

	 	Pmt Reversal — Checkfree
	 	Debit
	192

	 	Pmt Reversal — Virtual Agent
	 	Debit
	 
	 	 	 	 
	300

	 	Conversion Cr Adj
	 	Credit
	301

	 	Merchandise Not Received
	 	Credit
	302

	 	Shipping and Handling Allowance
	 	Credit
	303

	 	Postage Allowance
	 	Credit
	304

	 	Goodwill Allowance
	 	Credit
	305

	 	Discount Coupon
	 	Credit

F-9

 

	 	 	 	 	 
	 	 	 	 	Debit/Credit
	Tran Code	 	Source	 	A/R
	306

	 	Gift Certifcate
	 	Credit
	307

	 	Allowance 3rd party Holsted
	 	Credit
	308

	 	Other Allowance
	 	Credit
	309

	 	Late fee allowance
	 	Credit
	310

	 	Finance Charge Allowance
	 	Credit
	311

	 	NSF Fee Allowance
	 	Credit
	312

	 	Small Balance Writeoff
	 	Credit
	313

	 	Small Balance Writeup
	 	Debit
	314

	 	Safeline Fee Refund
	 	Credit
	315

	 	Debt Waiver Allowance (2)
	 	Credit
	316

	 	Dispute resolved — Balance Waived
	 	Credit
	317

	 	Dispute Resolved — Finance Charge Waived
	 	Credit
	318

	 	Dispute Resolved — Late Charge Waived
	 	Credit
	319

	 	Credit — Other Allowance
	 	Credit
	320

	 	Allowance 3rd party Flower Club
	 	Credit
	321

	 	Allowance 3rd Party Tranzact
	 	Credit
	322

	 	Allowance 3rd Party Trilegent
	 	Credit
	323

	 	Allowance 3rd Party New Benefits
	 	Credit
	324

	 	Allowance — Return PPD
	 	Credit
	325

	 	Allowance 3rd Party CPP Annual Fee
	 	Credit
	326

	 	Allowance 3rd Party CPP Monthly Fee
	 	Credit
	327

	 	Allowance Palm Beach Jewelry
	 	Credit
	328

	 	Allowance 3rd Party GE Annual Fee
	 	Credit
	329

	 	Allowance 3rd Party GE Monthly Fee
	 	Credit
	330

	 	Allowance 3rd Party Affinion Annual Fee
	 	Credit
	331

	 	Allowance 3rd Party Affinion Monthly Fee
	 	Credit
	332

	 	Allowance 3rd Party Art Select
	 	Credit
	333

	 	Allowance 3rd Party AIG Monthly Fee
	 	Credit
	334

	 	Allowance 3rd Party AEGON Monthly Fee
	 	Credit
	335

	 	Allowance 3rd Party Synapse
	 	Credit
	336

	 	Allowance 3rd Party Encore
	 	Credit
	337

	 	Allowance 3rd Party Cosmetique
	 	Credit
	338

	 	Allowance Conversion Fee
	 	Credit
	339

	 	Allowance Ortega
	 	Credit

F-10

 

	 	 	 	 	 
	 	 	 	 	Debit/Credit
	Tran Code	 	Source	 	A/R
	340

	 	Allowance Safeline Fees
	 	Credit
	 
	 	 	 	 
	350

	 	Conversion Debit Adj
	 	Debit
	351

	 	Reversal Merchandise Not Received
	 	Debit
	352

	 	Reversal ‘Shipping & Handling Allow
	 	Debit
	353

	 	Reversal Postage Allowance
	 	Debit
	354

	 	Reversal Goodwill Allowance
	 	Debit
	355

	 	Reversal Discount Coupon
	 	Debit
	356

	 	Reversal Gift Certifcate
	 	Debit
	357

	 	Reversal Allow 3rd Party (1)
	 	Debit
	358

	 	Reversal Other Allowance
	 	Debit
	359

	 	Reversal Late fee allowance
	 	Debit
	360

	 	Reversal Finance Charge Allowance
	 	Debit
	361

	 	Reversal NSF Fee Allowance
	 	Debit
	362

	 	Reversal Small Balance Writeoff
	 	Debit
	363

	 	Reversal Small Balance Writeup
	 	Credit
	364

	 	Safeline Fee Refund Reversal
	 	Debit
	365

	 	Reversal Debt Waiver Allowance (2)
	 	Debit
	366

	 	Rev Dispute Resolved — Balance Waived
	 	Debit
	367

	 	Rev Dispute Resolved — FC Waived
	 	Debit
	368

	 	Rev Dispute Resolved — Late Charge Waived
	 	Debit
	369

	 	Reversal Credit — Other Allowance
	 	Debit
	370

	 	Reversal Allow 3rd Party Flower Club
	 	Debit
	371

	 	Reversal Allow 3rd Party Tranzact
	 	Debit
	372

	 	Reversal Allow 3rd Party Trilegiant
	 	Debit
	373

	 	Reversal Allow 3rd Party New Benefits
	 	Debit
	374

	 	Rvs Allowance — Return PPD
	 	Debit
	375

	 	Reversal Allow 3rd Party CPP Annual Fee
	 	Debit
	376

	 	Reversal Allow 3rd Party CPP Monthly Fee
	 	Debit
	377

	 	Reversal Allow Palm Beach Jewelry
	 	Debit
	378

	 	Reversal Allow GE Annual Fee
	 	Debit
	379

	 	Reversal Allow GE Monthly Fee
	 	Debit
	380

	 	Reversal Allow Affinion Annual Fee
	 	Debit

F-11

 

	 	 	 	 	 
	 	 	 	 	Debit/Credit
	Tran Code	 	Source	 	A/R
	381

	 	Reversal Allow Affinion Monthly Fee
	 	Debit
	382

	 	Reversal Allow Art Select
	 	Debit
	383

	 	Reversal Allow AIG Monthly Fee
	 	Debit
	384

	 	Reversal Allow AEGON Monthly Fee
	 	Debit
	385

	 	Reversal Allow Synapse
	 	Debit
	386

	 	Reversal Allow Encore
	 	Debit
	387

	 	Reversal Allow Cosmetique
	 	Debit
	388

	 	Reversal Allow Conversion Fees
	 	Debit
	389

	 	Reversal Allow Ortega
	 	Debit
	389

	 	Reversal Safeline Fees
	 	Debit
	 
	 	 	 	 
	200

	 	Conversion — Finance Charge
	 	Debit
	201

	 	Finance Charge Billed
	 	Debit
	202

	 	Deferred Finance Charge Billed
	 	Debit
	203

	 	Finance Charge Reversal
	 	Credit
	204

	 	Deferred Finance Charge Reversal
	 	Credit
	210

	 	Conversion — Late Fee
	 	Debit
	211

	 	Late Fee Billed
	 	Debit
	212

	 	Late Fee Reversal
	 	Credit
	221

	 	NSF Fee
	 	Debit
	222

	 	NSF Reversal
	 	Credit
	223

	 	Telecheck Processing Fee
	 	Debit
	224

	 	Telecheck Processing Fee Reversal
	 	Credit
	225

	 	PPD Return Postage Fee
	 	Debit
	226

	 	PPD Return Postage Fee Reversal
	 	Credit
	227

	 	3rd Party CC Processing Fee
	 	Debit
	228

	 	3rd Party CC Processing Fee Reversal
	 	Credit
	229

	 	Conversion Fee — Systematic
	 	Debit
	230

	 	Conversion Fee — Manual
	 	Debit
	231

	 	Minimum Interest Fee
	 	Debit
	232

	 	Minimum Interest Fee Reversal
	 	Credit

F-12

 

	 	 	 	 	 
	 	 	 	 	Debit/Credit
	Tran Code	 	Source	 	A/R
	501

	 	SafeLine Fee
	 	Debit
	502

	 	SafeLine Fee Plus
	 	Debit
	511

	 	SafeLine Balance Waived
	 	Credit
	512

	 	SafeLine Fee Plus Balance Waived (2)
	 	Credit
	513

	 	Reverse SafeLine Balance Waived
	 	Debit
	514

	 	Disability Balance Waived
	 	Credit
	515

	 	Reverse Disability Balance Waived
	 	Debit
	516

	 	Unemployment Balance Waived
	 	Credit
	517

	 	Reverse Unemployment Balance Waived
	 	Debit
	516

	 	Hospitalization Balance Waived
	 	Credit
	517

	 	Reverse Hospitalization Balance Waived
	 	Debit
	 
	 	 	 	 
	5100

	 	Writeoffs
	 	Credit
	5200

	 	Writeoff Reversal
	 	Debit
	 
	 	 	 	 
	601

	 	Debit Balance Adjustment
	 	Debit
	602

	 	Credit Balance Adjustment
	 	Credit
	 
	 	 	 	 
	603

	 	Credit Plan Rollover Adj Debit
	 	Debit
	604

	 	Credit Plan Rollover Adj Credit
	 	Credit
	 
	 	 	 	 
	620

	 	Down Pmt Debit Card
	 	Credit
	621

	 	Reversal Down Pmt Debit Card
	 	Debit
	622

	 	Down Pmt ACH
	 	Credit
	623

	 	Reversal Down Pmt ACH
	 	Debit
	624

	 	Down Pmt Check Card
	 	Credit
	625

	 	Reversal Down Pmt Check
	 	Debit
	626

	 	Down Pmt Money Order
	 	Credit
	627

	 	Reversal Down Pmt Money Order
	 	Debit
	628

	 	Down Pmt Other
	 	Credit
	629

	 	Reversal Down Pmt Other
	 	Debit

F-13

 

	 	 	 
	Transactions not	 	 
	effecting AR:	 	 
	106

	 	CCCS Donation Amount
	108

	 	Agency Payment Commission
	177

	 	Reversal — CCCS Commission
	179

	 	Reversal — Agency Commission
	401

	 	Merchandise Writeoff
	402

	 	Late Fee Writeoff
	403

	 	Finance Charge Writeoff
	404

	 	NSF Fee Writeoff
	405

	 	SafeLine Writeoff
	406

	 	Misc Writeoff
	9163

	 	Other Fee Writeoffs
	421

	 	Reversal Mdse Writeoff
	422

	 	Reversal Late Fee Writeoff
	423

	 	Reversal FC Writeoff
	424

	 	Reversal NSF Fee Writeoff
	425

	 	Reversal SafeLine Writeoff
	426

	 	Reversal Misc Writeoff
	024

	 	Skip a Payment (no cash received)

F-14

 

EXHIBIT G

Form of Compliance Certificate

COMPLIANCE CERTIFICATE

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

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

G-1

 

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

	 	 	 	 	 
	 	BLUESTEM BRANDS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

G-2

 

	 	 	 	 	 

Annex A

FOR THE FISCAL MONTH ENDING [      ]

	 	 	 	 	 

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

FOR THE FISCAL QUARTER ENDING [ ]

	 	 	 	 	 

	II. Tangible Net Worth: II.(i) — II.(ii)
	 	 	 	 
	 
	 	 	 	 
	(i) Total stockholder’s or other equity (excluding treasury
stock and subscribed but unissued capital stock)
	 	$	—	 
	 
	 	 	 	 
	(ii) The sum of:
	 	 	 	 
	(a) Intangible Assets, which is the sum of
	 	 	 	 
	(1) Customer lists
	 	$	—	 
	(2) Goodwill
	 	$	—	 
	(3) Computer software
	 	$	—	 
	(4) Copyrights
	 	$	—	 
	(5) Trade Names
	 	$	—	 
	(6) Trademarks
	 	$	—	 
	(7) Patents
	 	$	—	 
	(8) Franchises
	 	$	—	 
	(9) Licenses
	 	$	—	 
	(10) Unamortized deferred charges
	 	$	—	 
	(11) Unamortized debt discount
	 	$	—	 
	(12) Capitalized research and developmental
costs
	 	$	—	 
	(13) Other intangibles under GAAP
	 	 	 	 
	Total Intangible Assets
	 	$	—	 
	 
	 	 	 	 
	(b) Prepaid expenses
	 	$	—	 
	(c) Amounts due from Affiliates
	 	$	—	 
	 
	 	 	 	 
	(x) Required Amount: The sum of:
	 	 	 	 
	(a) $120,000,000
	 	$	120,000,000	 

G-3

 

	 	 	 	 	 

	(b) 75% of its Consolidated Net Income (if positive) for
each full Fiscal Year after the Closing Date
	 	$	—	 
	(c) 85% of the gross proceeds actually received in cash
by the Servicer Consolidated Group from the proceeds of
any issuance of Capital Stock by the Servicer
Consolidated Group after the Closing Date
	 	$	—	 
	 
	 	 	 	 
	(y) Actual Amount:
	 	$	—	 
	 
	 	 	 	 
	(z) Compliance (Yes/No):
	 	 	 	 
	 
	III. Consolidated Adjusted EBITDA: III. (i) — III. (ii)
	 	 	 	 
	 
	 	 	 	 
	(i) The sum of:
	 	 	 	 
	(a) Consolidated Net Income for such period
	 	$	—	 
	(b) Consolidated Interest Expense for such period
	 	$	—	 
	(c) Income tax expense for such period net of tax
refunds
	 	$	—	 
	(d) All amounts attributable to depreciation and
amortization expense for such period
	 	$	—	 
	(e) Fees or expenses of the Administrative Agent and
any Lender or arranger in connection with the Credit
Documents, or of any administrative agent, lender, or
arranger in connection with the Bluestem Inventory Loan
Documents, in each case paid on or prior to the Closing
Date
	 	$	—	 
	(f) For any period (other than the period specified in
the following clause (g)) including the period in which
such amounts were paid, other fees or expenses in an
amount not to exceed $1,000,000 paid in connection with
the Credit Documents, the Bluestem Inventory Loan
Documents or the Senior Subordinated Documents and the
transactions contemplated therein
	 	$	—	 
	(g) For the period from, and including, the Closing
Date to, and including, the last day of the first
Fiscal Quarter to end after the Closing Date, other
fees and expenses in an amount not to exceed $6,500,000
paid in connection with the Credit Documents and the
transactions contemplated therein and the refinancing
or replacement of credit facilities existing prior to
the Closing Date
	 	$	—	 
	(h) Any other non-cash charges for such period (but
excluding any non-cash charge in respect of an item
that was included in Consolidated Net Income in a prior
period and any non-cash charge that relates to the
write-down or write-off of inventory) in an amount not
to exceed $2,000,000, or any additional amounts
approved by the Class Requisite Lenders of each Class
	 	$	—	 
	(i) Reasonable fees and expenses in connection with an
initial public offering by Bluestem in an amount not to
exceed the lesser of (A) 12.5% of the gross proceeds
thereof and (B) the actual fees and expenses incurred
in connection therewith, or any additional amounts
approved by the Class Requisite Lenders of each Class
	 	$	—	 
	(j) any prepayment premiums or other similar fees paid
in connection with the Credit Documents or the Bluestem
Inventory Loan Documents
	 	$	—	 

G-4

 

	 	 	 	 	 

	(ii) The sum of:
	 	 	 	 
	(k) Any cash payments made during such period in
respect of non-cash charges described in clause (h)
above taken in a prior period
	 	$	—	 
	(l) Any extraordinary gains and any non-cash items of
income for such period, all calculated for the Servicer
Consolidated Group on a consolidated basis in
accordance with GAAP
	 	$	—	 
	 
	 	 	 	 
	Total LTM Consolidated Adjusted EBITDA
	 	$	—	 
	 
	IV. Minimum LTM EBITDA Margin: IV.(i) / IV.(ii)
	 	 	 	 
	 
	 	 	 	 
	(i) Consolidated Adjusted EBITDA of
the Servicer Consolidated Group for the
previous twelve months
	 	$	—	 
	 
	 	 	 	 
	(ii) Net sales of the Servicer
Consolidated Group for the previous
twelve months
	 	$	—	 
	 
	 	 	 	 
	(x) Required Amount:
	 	 	8.5	%
	 
	 	 	 	 
	(y) Actual Amount:
	 	 	[   ]	%
	 
	 	 	 	 
	(z) Compliance (Yes/No):
	 	 	 	 
	 
	 	 	 	 
	V. Consolidated Fixed Charges: V.(i) + V.(ii) + V.(iii) + V. (iv) + V. (v)
	 	 	 	 
	 
	 	 	 	 
	(i) Consolidated Cash Interest
Expense
	 	$	—	 
	(ii) Fees and charges owed with respect
to paragraph 2 of the Fee Letter, Section
2.9(a) of the Credit Agreement and the
Bluestem 2010 Inventory Credit Agreement
(other than any facility fees payable on
the Closing Date)
	 	$	—	 
	(iii) Scheduled principal payments on
Indebtedness made during such period (not
including principal payments under the
Credit Agreement)
	 	$	—	 
	(iv) income and franchise taxes paid in
cash net of income and franchise tax
refunds (but not less than zero)
	 	$	—	 
	(v) dividends or distributions paid in
cash
	 	$	—	 
	Total Fixed Charges
	 	$	—	 
	 
	 	 	 	 
	VI. Fixed Charge Coverage Ratio: VI.(i) / VI. (ii)
	 	 	 	 
	 
	 	 	 	 
	(i)The difference of:
	 	 	 	 
	(a) Consolidated Adjusted EBITDA
	 	$	—	 
	(b) Capital Expenditures in an
amount not to exceed $20,000,000
(excluding the portion thereof
funded with (i) long-term debt
financing provided by third parties
or (ii) for the period from the date
of the initial public offering of
Bluestem Brands, Inc. to the first
anniversary thereof, proceeds from
such initial public offering
(provided that, such exclusions
shall not cause Capital Expenditures
to be less than zero))
	 	$	—	 

G-5

 

	 	 	 	 	 

	Net Consolidated Adjusted EBITDA
	 	$	—	 
	 
	 	 	 	 
	(ii) Consolidated Fixed Charges, all
calculated for the Servicer Consolidated
Group on a consolidated basis in
accordance with GAAP
	 	$	—	 
	 
	 	 	 	 
	(x) Required Amount:
	 	 	[1.00][1.05][1.10]x	 
	 
	 	 	 	 
	(y) Actual Amount:
	 	 	[   ]x	 
	 
	 	 	 	 
	(z) Compliance (Yes/No):
	 	 	 	 

G-6

 

EXHIBIT H

Form of Insurance Report

Bluestem Brands, Inc.

Prepared By: [       ]

Dated: [       ]

Material Insurance Coverage as of the date hereof.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Insurance Coverage	 	 	Broker	 	 	Carrier	 	 	Policy Term	 	 	Limits	 	 	Deductible	 	 	Other	 

Material Insurance Coverage to be maintained in the immediately succeeding Fiscal Year of the
Servicer.

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Insurance Coverage	 	 	Broker	 	 	Carrier	 	 	Policy Term	 	 	Limits	 	 	Deductible	 	 	Other	 

H-1

 

EXHIBIT I

Form of Financial Officer Certification

FINANCIAL OFFICER CERTIFICATION

THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

	 	1.	 	I am the Chief Financial Officer of Bluestem Brands, Inc. (the
“Servicer”) and Fingerhut Receivables I, LLC (the “Company”).
	 
	 	2.	 	I have reviewed the terms of that certain Servicing Agreement, dated as of
August 20, 2010, by and among the Servicer, the Company and Goldman Sachs Bank USA, as
Administrative Agent (the “Administrative Agent”) and Collateral Agent (as
amended, restated, replaced, supplemented or otherwise modified from time to time the
“Servicing Agreement”), and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions and condition of either
the Servicer and its Subsidiaries or the Company, as the case may be, during the
accounting period covered by the attached financial statements.
	 
	 	3.	 	The examination described in paragraph 2 above did not disclose, and I
have no knowledge of, the existence of any condition or event which constitutes a
Servicer Default, Event of Default or Default during or at the end of the accounting
period covered by the attached financial statements or as of the date of this
Certificate, except as set forth in a separate attachment, if any, to this Certificate,
describing in detail, the nature of the condition or event, the period during which it
has existed and the action which either the Servicer or its Subsidiaries or Company, as
the case may be, has taken, is taking or proposes to take with respect to each such
condition or event.
	 
	 	4.	 	The financial statements attached hereto fairly present, in all material
respects, the financial condition of either the Servicer and its Subsidiaries or the
Company, as the case may be, as at the dates indicated and the results of their
operations and their cash flows for the periods indicated, subject to changes resulting
from audit and normal year-end adjustments.
	 
	 	5.	 	Defined terms used and not otherwise defined herein shall have the meaning
ascribed to them in the Servicing Agreement.

I-1

 

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

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	Chief Financial Officer 	 

I-2

 

	 	 	 	 	 

APPENDIX A

[Attached separately.]

 

 

Bluestem Brands, Inc.

Operational Guidelines

	 	•	 	Collections Policies
	 
	 	•	 	Consumer Credit Compliance
	 
	 	•	 	Credit Policies = See Exhibit “B” to WebBank and Meta Bank Program Agreements

	 	 	Collections Policies:

1.1 Philosophy

The principle objective of the Collections Department is to encourage delinquent account
holders to remit their past due payments. The strategy for achieving this goal is to make
payment easy for the customer while invoking increasingly severe action as the customer’s
delinquency worsens.

Management develops procedures and oversees efforts of both the in-house staff and outside
vendors of direct collections with the goal of controlling delinquency at minimal operating
expense to maintain an acceptable level and rate of write-off dollars.

Each customer must be treated individually, with attention paid to the unique circumstances
and conditions of the delinquency. Collectors must deal with customers in both a
professional and efficient manner, to produce the desired delinquency and write-off levels
while maintaining customer goodwill. Central to achieving this balance is a progressive
application of skill and effort as an account ages to later states of delinquency and/or as
the risk of credit loss increases.

1.2. Regulatory Oversight

1.2.1 Collections Practices

Although Fingerhut’s internal collections department operates under the definition of a
“first-party” creditor, customer contact activities by internal collections and recovery
units as well as contracted external third-party vendors are conducted within the
regulations of the Fair Debt Collections Practices Act as administered by the Federal Trade
Commission.

1.2.2 Data Security and Privacy

Both internal and external collections vendor operations and practices are conducted within
the regulations of the Graham-Leach-Bliley Act

1.2.3 Account Management Policy

Fingerhut Direct Marketing is not a financial institution, but voluntarily complies with the
Uniform Retail Credit Classification and Account Management Policy as promulgated by the
FFIEC (Federal Financial Institutions Examination Council) as related to practices such as
account aging, delinquency and charge-off status.

2. Aging and Delinquency

2.1 Delinquency

An account is considered delinquent whenever a qualifying payment (meeting the requirements
in the paragraph below) has not been received by the payment due date as indicated on the
periodic billing statement. An account will remain delinquent as long as it continues to
have an amount past due

 

 

A received payment to be considered a “qualifying payment” for purposes of preventing
advancing delinquent age:

     a. excludes credits such as returns, or allowances and adjustments not
related to
dispute resolution;

     b. a $2.00 payment variance is allowed.

               2.2 “Curing” and “re-aging”

An account is considered “cured” when there is no past due amount. Curing a delinquency
may be the result of full payment of all past due amounts, or in specific situations, by
“re-aging”.

Re-aging will be limited to accounts that have been active at least nine months1
and reach a delinquency level of 66 or more days and are blocked from additional
extensions of credit above the current balance. To be eligible for re-age, an account must
subsequently have three consecutive monthly payments (as per original installment terms, or
as agreed upon under reduced pay plan — CCCS/Hardship policy) or the equivalent within 90
days. An account not in a “work-out” program (a reduced pay plan such as CCCS or Hardship
status classification) will not be re-aged more than once within any 12-month period and no
more than twice within any five-year period. Accounts in work-out programs will be limited
to no more than one additional re-age within a five year period, incremental to the re-age
maximum for non work-out program accounts. After entering a work-out program, accounts will
be blocked from any additional credit authorization by the CCCS/Hardship classification
status.

In addition to systematically triggered re-ages, manual re-ages may be applied to cure
delinquency in circumstances of dispute resolution or other situations requiring a
correction of the delinquency status. The reason for doing a manual re-age will be
documented with standardized annotations to the account record.

2.3 Late Fees

Unless other arrangements are made with the customer, a late fee will be assessed and added
to the customer’s balance when the minimum payment due has not been received by the
statement closing date following the payment due date. Late fees are billed on accounts less
than 90 days delinquent.

1 Systematic Auto-Reage function is to be enhanced under pending project
to enable restriction of eligibility by time in months that account has been active.

3. Bankruptcy

All collection efforts cease when a customer states they are filing for bankruptcy
protection and are represented by an attorney or when a bankruptcy filing notice is
received.

Once verification is received, the account is appropriately coded and processed as a
bankruptcy. Notices are generally provided using outside electronic reporting services such
as Lexis-Nexis or Pacer. However, if an electronic notice is not received, verification can
be through: (i) receipt of Notice of the Meeting of Creditors; (ii) a copy of the Petition
for Relief filed with the court; or (iii) confirmation of filing with an independent
3rd party or pro se.

 

 

Pursuit of recovery dollars on a bankrupt account is dependent on the write-off balance,
customer assets, etc., as well as the dollar magnitude of recent purchase activity.
Verified bankrupt accounts are charged off in the fiscal month that is 60 days after the
receipt of the notice, or when the account reaches 185 days delinquent, whichever comes
first. Accounts less than 6 days delinquent are not charged off

 

 

4. Collections Processes and Activities

4.1 Queuing

The queuing of delinquent accounts for telephone contact generally is based on the severity
of the delinquency, and amount of receivable at risk. Such queuing allows the application
of different collection strategies and dialogues determined to be most effective in
collecting the amount past due.

Within an established queue, further segmentation by time on file, account balance, billing
cycle, or statistical risk assessment may be employed.

Any telephone contact with a customer whose account is delinquent is pursued in a dignified
and professional manner.

4.2 Dunning

The Collections Department uses statement messages, computer generated letter duns, and
e-mails as a means to contact delinquent accounts. All dunning statement messages,
collection letters and e-mails must be approved by legal counsel and the Vice President of
Collections. The severity of the delinquency is reflected in the intensity of the message,
letter, or e-mail.

4.3 Settlements

Settlement policy herein relates only to accounts that have not charged-off.

To “settle” an account is to accept a dollar payment smaller than the total balance
outstanding — i.e., not the total delinquent balance and hence to consider the account as
having been paid in full.

Allowances for late fees and finance charge are not, per se, considered settlement waivers.

Accounts may be targeted for settlement opportunities when they reach certain delinquency
levels as specified under management-approved criteria. Using industry-accepted valuation
tools, settlements will be structured to generate positive net present value. (The terms
“management-approved criteria” and “industry-accepted valuation tools” refer to quantitative
measures such as probability of charge-off and expected value based on statistical modeling
as well as selected risk segments based on balance, past due amount and other parameters.)

 

 

(4.3 Settlements contd.)

Balances below $200

For accounts with balances below $200 that meet management-approved criteria, collectors may
approve settlement waivers up to 50% of the balance, but not exceeding the sum of
life-to-date finance charge and late fees.

Balances $200+

For accounts with balances at or above $200 that meet management-approved criteria,
supervisors may approve settlement waivers up 50% of the balance with a maximum waiver of
$150, not to exceed the sum of life-to-date finance charge and late fees.

Waivers exceeding $150

For settlement waivers exceeding $150, or waivers greater than the sum of life-to-date
finance charges and late fees, manager approval is required.

A 1099C form will be issued for account holders completing a settlement agreement where the
amount waived exceeds $599.99.

A ‘31-Settlment Account’ status code will used to identify all accounts with completed
settlements.

4.4 Terminating Collection Efforts

Collection activity continues on delinquent accounts until such time as the effort is
eitherunnecessary, waived, or deemed ineffective. In particular, collection efforts
terminate or get suspended under the following circumstances:

	 	•	 	when an account becomes current;
	 
	 	•	 	when notification has been received that the account-holder has filed for
bankruptcy and there is no asset discharge (see section #3. Bankruptcy);
	 
	 	•	 	when there is an open dispute on the outstanding account balance;,
	 
	 	•	 	when the account holder has retained an attorney regarding their account or
indicated to Cease and Desist collection efforts and they reside in CA (verbal
notice) or LA (written notice);
	 
	 	•	 	when the account is in Consumer Credit Counseling;,
	 
	 	•	 	when the customer is deceased or under legal age.

 

 

4.5 Bad Debt Write-off

Accounts charge off for contractual delinquency at 180 days delinquent if there has not been
a qualifying payment of at least the greater of $10 or 2.5% of the current balance within
the previous 30 days and there is not an active Promise to Pay. At any point past 180 days
delinquent that those conditions cease to be true the account will
charge off.
Bankruptcy and deceased customer accounts are charged off in the fiscal month that is 60
days after the receipt of the notice, or when the account reaches 185 days delinquent,
whichever comes first. Accounts that are less than 6 days
delinquent are not charged off.
Accounts determined to be fraudulent (confirmed as fraud) are charged off no later than 90
days after the confirmation date or when they reach 185 days delinquent, whichever comes
first. Accounts that are less than 6 days delinquent are not charged off.

4.6 Skip Tracing

The Collections Department engages in skip tracing, with the extent of the effort dependent
on the account’s balance and delinquency. Such efforts might include accessing the National
Change of Address file, credit bureau report information, skip tracing services provided by
outside vendors, or other methods deemed to be cost effective and in compliance with any
legal restrictions.

4.7 Champion-Challenger Testing

It is the policy of Fingerhut to engage continuously in the comparative testing of the
performance of collections services vendors as well as collections strategies and techniques
developed and implemented by the Collections Department management.
Generally, the most relevant measured characteristics are bad debt and productivity. Such
gains in bad debt reduction and productivity will be measured against both the operational
and marketing income expense (loss in subsequent sales revenue) incurred to produce these
gains.

5. Collections Transactions

5.1 Consumer Credit Counseling Services (CCCS)

Fingerhut reviews all payment schedules proposed by CCCS representatives. Payment proposals
will be in accordance with guidelines issued by the Collections Department.

(see Reduced pay
plan — CCCS guidelines in appendix A)

Provided the customer adheres to the agreement, Fingerhut ceases efforts to contact the
customer, and discontinues assessment of late fees. Additionally, the interest rate will be
reduced accordingly.

5.2 Hardship Requirements

When a customer does not have access to CCCS or chooses not to use its services, Fingerhut
considers its own hardship arrangement for repayment. At a minimum, the Collections
representative must have reliable contact with the customer, the customer must have
expressed a renewed commitment to make payments, In addition, the customer must give
Fingerhut information describing when the hardship occurred and what caused it, expected
duration of the hardship, monthly income, source of income, and information regarding the
customer’s employer name, city and state.

To the degree possible, such “alternate pay plans” will be temporary, spanning only the time
period necessary for the customer to recover from the hardship.

(see Reduced pay plan — CCCS guidelines in appendix A)

Provided the customer adheres to the agreement, Fingerhut (or its vendors) will have its
representatives cease efforts to contact the customer, and will cease the assessment of late

 

 

fee charges. A reduced interest rate may apply during the term of the Reduced Payment Plan.

5.3 Disputes

During a collections contact, a customer may dispute all or a portion of the balance. If
the customer disputes all or a portion of the balance all collection activity ceases. In
either instance, Customer Service will resolve the dispute. If the dispute is resolved in
the customer’s favor the account will be adjusted accordingly and appropriate collection
activity will follow if there is a remaining delinquent balance. If the dispute is resolved
in Fingerhut’s favor, then appropriate collection activity will follow depending on the
stage of delinquency.

6. Collections Strategies

6.1 Portfolio Segmentation

Portfolio segmentation will be evolutionary and limited by practical considerations such as
automated systems capabilities, overall population size and feasibility of multiple
strategies. Behavior score plays a vital role in targeting accounts for collection actions
based on balance, payment behavior, FICO, and numerous other characteristics used in the
modeling process.

6.2 Dunning and Bad Debt Charge-off

Appendix B includes example schedules that describe the timing of “dun events” (i.e., phone
calls, and letters) based on days delinquent status of the account. Dunning
schedules/events are subject to change as our collection and risk management tools evolve.
Any changes will focus on maximizing collection effectiveness and efficiency. While the
grids in Appendix B are representative of a few of our basic strategies, they are not all
inclusive of the various strategies we employ.

In states requiring such disclosures, a “right to cure default” notice will be issued
generally not less than 30 days prior to the scheduled date of bad debt write-off.

Appendix A
— Reduced Pay Plan — CCCS policy

Reduced Payment Plan Options (after completing documentation of hardship)

	 	1.	 	Customer Requested Reduced Payment Plan or Collections-Initiated Reduced Payment Plan

          Account Retention approach — for accounts less than 90 days delinquent

	 	i.	 	Negotiate reduced payment with a minimum of
the greater of 2.5% or $10
	 
	 	ii.	 	Ask for immediate payment of the new
payment due amount (e.g., payment via ORCC ACH, Clear Commerce)
	 
	 	iii.	 	Maintain delinquency, unless customer
misses reduced payment
	 
	 	iv.	 	Account is blocked from authorization but
not closed using Account Status Code 26-Hardship Retention. This
automatically waives future late fees.
	 
	 	v.	 	Set APR to 14.9%

	 	b.	 	Closed Account approach — for accounts 90+ days delinquent.

 

 

	 	i.	 	Negotiate reduced payment with a minimum of
the greater of 2.5% or $10
	 
	 	ii.	 	Ask for immediate payment of the new
payment due amount (e.g., payment via ORCC ACH, Clear Commerce)
	 
	 	iii.	 	Close account using Account Status of 27-
Hardship Closed. This automatically waives future late fees.
	 
	 	iv.	 	Re-age account after the equivalent of
three consecutive payments are made. Account remains closed
	 
	 	v.	 	Set the APR to 9.9%. In extreme
circumstances, the APR may be set to 0.0%.

	2.	 	CCCS (Counseling Agency)

	 	a.	 	Account Retention approach — Reduced Payment — Customer willing
to make larger payments in order not to have a closed account while receiving
an APR reduction

	 	i.	 	Maintain delinquency
	 
	 	ii.	 	Account is blocked from authorization but
not closed using Account Status Code 20 — CCCS Account. This
automatically waives future late fees.
	 
	 	iii.	 	Change credit limit to $0
	 
	 	iv.	 	Set APR to 14.9%

 

 

Appendix A — Reduced Pay Plan — CCCS policy — continued

	 	b.	 	Account Retention approach (for those who enrolled and don’t
really need debt management)

	 	i.	 	Negotiate reduced payment with a minimum of
the greater of 2.5% or $10
	 
	 	ii.	 	Maintain delinquency, unless reduced
payment is missed
	 
	 	iii.	 	Account is blocked from authorization but
not closed using Account Status Code 20 — CCCS Account. This
automatically waives future late fees.
	 
	 	iv.	 	Change credit limit to $0
	 
	 	v.	 	Set APR to 14.9%

	 	c.	 	Closed Account approach — for accounts 90+ days delinquent.

	 	i.	 	Negotiate reduced payment with a minimum of
the greater of 2.5% or $10
	 
	 	ii.	 	Set the APR to 9.9%
	 
	 	iii.	 	Close account using Account Status Code
24-CCCS Closed. This automatically waives future late fees.
	 
	 	iv.	 	Re-age account after the equivalent of
three consecutive payments are made. Account remains closed.

 

 

Appendix B — Examples of Dunning Strategies

Example of “Good Phone” Dunning Grid

Good Phone Dunning Grid

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Dun Type	 	 	 	 	 	 
	 	 	 	 	Letter	 	1=Phn	 	Current	 	Last Digit of	 	 
	Dun	 	Days	 	Interval	 	2=Letter	 	Script	 	Account	 	 
	Event	 	Delinquent	 	Days	 	3=Chg-off	 	Code	 	Number	 	Notes
	01A
	 	1-4	 	 	 	1	 	PC010	 	0-9	 	 
	02
	 	5	 	0	 	2	 	LC010	 	0-9	 	 
	01B
	 	6-17	 	 	 	1	 	PC010	 	0-9	 	 
	03A
	 	18-21	 	 	 	1	 	PC020	 	0-9	 	 
	04
	 	22	 	17	 	2 	 	LC020	 	0-9	 	 
	03B
	 	23-35	 	 	 	1	 	PC020	 	0-9	 	 
	05A
	 	36-39	 	 	 	1	 	PC030	 	0-9	 	 
	06
	 	40	 	18	 	2 	 	LC030	 	0-9	 	 
	05B
	 	41-51	 	 	 	1	 	PC030	 	0-9	 	 
	07A
	 	52-55	 	 	 	1	 	PC040	 	0-9	 	 
	08
	 	56	 	16	 	2 	 	LC040	 	0-9	 	 
	07B
	 	57-66	 	 	 	1	 	PC040	 	0-9	 	 
	09
	 	67-69	 	 	 	1	 	PC050	 	0-9	 	 
	10
	 	70	 	14	 	2 	 	LC099*	 	0-9	 	 
	11
	 	70	 	14	 	2 	 	LC055	 	0-9	 	 
	12A
	 	71-84	 	 	 	1	 	PC060	 	0-9	 	 
	12B
	 	85-104	 	 	 	1	 	PC060	 	0-9	 	 
	12C
	 	87	 	17	 	2 	 	LC065	 	2-9	 	Test 1
	13
	 	105-119	 	 	 	1	 	PC070	 	0-9	 	 
	13A
	 	117	 	30	 	2 	 	LC075	 	2-9	 	Test 1
	14
	 	120-139	 	 	 	1	 	PC075	 	0-9	 	 
	15
	 	140-159	 	 	 	1	 	PC080	 	0-9	 	 
	15A
	 	145	 	28	 	2	 	DL070	 	2-9	 	Test 1
	16
	 	160-179	 	 	 	1	 	PC090	 	0-9	 	 
	16A
	 	165	 	20	 	2	 	LC080	 	2-9	 	Test 1
	17
	 	180-184	 	 	 	3	 	PC099	 	0-9	 	 
	18
	 	185	 	20	 	2	 	LC085	 	2-9	 	Test 5
	18A
	 	185-999	 	 	 	3	 	PC099	 	0-9	 	 

 

			
	*	 	LC099 — Right To Cure letter required in CO, SC and KS

 

 

Example of “Bad Phone” Dunning Grid

Bad Phone / No Phone / Skip Dunning Grid

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Dun Type	 	 	 	 	 	 
	 	 	 	 	Letter	 	1=Phn	 	 	 	Last Digit of	 	 
	Dun	 	Days	 	Interval	 	2=Letter	 	Current	 	Account	 	 
	Event	 	Delinquent	 	Days	 	3=Chg-off	 	Script Code	 	Number	 	Notes
	01
	 	1	 	0	 	2	 	LC010	 	0-9	 	 
	01SK
	 	2-15	 	 	 	1	 	PC010	 	0-9	 	 
	02
	 	16	 	16	 	2	 	LC020	 	0-9	 	 
	02SK
	 	17-30	 	 	 	1	 	PC020	 	0-9	 	 
	03
	 	31	 	15	 	2	 	LC030	 	0-9	 	 
	03SK
	 	32-45	 	 	 	1	 	PC030	 	0-9	 	 
	04
	 	46	 	15	 	2	 	LC040	 	0-9	 	 
	04SK
	 	47-60	 	 	 	1	 	PC040	 	0-9	 	 
	05
	 	61	 	15	 	2	 	LC050	 	0-9	 	 
	05SK
	 	62-75	 	 	 	1	 	PC050	 	0-9	 	 
	06
	 	76	 	15	 	2	 	LC055	 	0-9	 	 
	06SK
	 	77-89	 	 	 	1	 	PC055	 	0-9	 	 
	07
	 	90	 	14	 	2	 	*LC099	 	0-9	 	 
	07SK
	 	91-104	 	 	 	1	 	PC050	 	0-9	 	 
	08
	 	90	 	14	 	2	 	LC065	 	0-9	 	 
	09
	 	105	 	15	 	2	 	LC050	 	0,1	 	 
	09A
	 	105	 	15	 	2	 	LC060	 	2-9	 	Test 1
	09SK
	 	106-119	 	 	 	1	 	PC060	 	0-9	 	 
	10
	 	120	 	15	 	2	 	LC055	 	0,1	 	 
	10A
	 	120	 	15	 	2	 	LC065	 	2-9	 	Test 1
	10SK
	 	121-134	 	 	 	1	 	PC070	 	0-9	 	 
	11
	 	135	 	15	 	2	 	LC050	 	0,1	 	 
	11A
	 	135	 	15	 	2	 	LC070	 	2-9	 	Test 1
	11SK
	 	136-149	 	 	 	1	 	PC070	 	0-9	 	 
	12
	 	150	 	15	 	2	 	LC055	 	0,1	 	 
	12A
	 	150	 	15	 	2	 	LC075	 	2-9	 	Test 1
	12SK
	 	151-164	 	 	 	1	 	PC080	 	0-9	 	 
	13
	 	165	 	15	 	2	 	LC080	 	0,1	 	 
	13A
	 	165	 	15	 	2	 	LC080	 	2-9	 	Test 1
	13SK
	 	166-179	 	 	 	1	 	PC080	 	0-9	 	 
	14
	 	180	 	 	 	3	 	PC999	 	0-9	 	 
	14SK
	 	181-184	 	 	 	3	 	PC999	 	0-9	 	 
	15
	 	185	 	20	 	2	 	LC085	 	2-9	 	Test 5
	15SK
	 	185-999	 	 	 	3	 	PC999	 	0-9	 	 

 

			
	*	 	LC099 right to cure letter required in CO, SC and KS

 

 

Example of Focused Dunning Strategy Grid for NCA Accounts

Focused
Strategy — Series 00003

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Dun Type	 	 	 	 	 	 	 	Last Digit
	 	 	 	 	 	 	1=Phn	 	 	 	 	 	 	 	of
	Dun	 	Days	 	Ltr Int	 	2=Letter	 	Script	 	Alt	 	 	 	Account
	Event	 	Delq	 	Days	 	3=Chg-off	 	ID	 	Letter	 	Notes	 	Number
	01
	 	1	 	0	 	2	 	LC020	 	 	 	 	 	3-9
	02
	 	4-12	 	 	 	1	 	PC010	 	None	 	 	 	3-9
	03
	 	13	 	12	 	2	 	LC040	 	 	 	 	 	3-9
	03A
	 	14-24	 	 	 	1	 	PC020	 	None	 	 	 	3-9
	04
	 	25	 	12	 	2	 	LC030	 	 	 	 	 	3-9
	04A
	 	26-37	 	 	 	1	 	PC020	 	None	 	 	 	3-9
	05
	 	38	 	13	 	2	 	LC040	 	 	 	 	 	3-9
	05A
	 	39-48	 	 	 	1	 	PC030	 	None	 	 	 	3-9
	06
	 	49	 	11	 	2	 	LC050	 	 	 	 	 	3-9
	06A
	 	50-59	 	 	 	1	 	PC040	 	None	 	 	 	3-9
	07
	 	60	 	11	 	2	 	LC055	 	 	 	 	 	3-9
	07A
	 	61-71	 	 	 	1	 	PC050	 	None	 	 	 	3-9
	08
	 	72	 	12	 	2	 	LC060	 	 	 	 	 	3-9
	08A
	 	73-89	 	 	 	1	 	PC060	 	None	 	 	 	3-9
	09
	 	90	 	18	 	2	 	LC099*	 	 	 	 	 	3-9
	10
	 	90	 	18	 	2	 	LC065	 	 	 	 	 	3-9
	10A
	 	91-104	 	 	 	1	 	PC060	 	None	 	 	 	3-9
	11
	 	105	 	15	 	2	 	LC070	 	 	 	 	 	3-9
	11A
	 	106-119	 	 	 	1	 	PC070	 	None	 	 	 	3-9
	12
	 	120	 	15	 	2	 	LC075	 	 	 	 	 	3-9
	12A
	 	121-134	 	 	 	1	 	PC075	 	None	 	 	 	3-9
	13
	 	135	 	15	 	2	 	LC070	 	 	 	 	 	3-9
	13A
	 	136-149	 	 	 	1	 	PC075	 	None	 	 	 	3-9
	14
	 	150	 	15	 	2	 	LC075	 	 	 	 	 	3-9
	14A
	 	151-164	 	 	 	1	 	PC080	 	None	 	 	 	3-9
	15
	 	165	 	15	 	2	 	LC080	 	 	 	 	 	3-9
	15A
	 	166-179	 	 	 	1	 	PC090	 	None	 	 	 	3-9
	15B
	 	180-184	 	 	 	1	 	PC099	 	None	 	Charge-Off	 	3-9
	16
	 	185	 	20	 	2	 	LC085	 	 	 	 	 	3-9
	17
	 	186-999	 	 	 	1	 	PC099	 	None	 	Charge-Off	 	3-9

 

			
	*	 	LC099 — Right To Cure letter required in CO, SC and KS

 

 

     Consumer Credit Compliance Program:

	•	 	Program

	 	•	 	The Bluestem Consumer Credit Compliance Program (“CCCP”) is a company-wide program
that documents policies and procedures, and monitors practices, to evidence compliance
with applicable consumer credit laws and regulations.

	•	 	Governance

	 	•	 	Steering Committee comprised of the General Counsel, Credit Compliance Manager,
Vice President of Collections/Account Services, Vice President of Credit Policy and
Forecasting, and Manager of Credit Operations.
	 
	 	•	 	Steering Committee approves Consumer Credit Compliance Policies. All policies
(new and revised) are drafted by the Credit Compliance Manager and then routed through
the Steering Committee for approval prior to implementation.
	 
	 	•	 	Operating team units, chaired by applicable Steering Committee member, create/edit
procedures and monitors. The applicable Steering Committee member and Credit Compliance
Manager approve all procedures and monitors.

CCCP Policies and Procedures

Overview of Laws and Regulations Governing the Program (subject to addition, deletion
or change from time to time based on changes in laws/regulations)

	•	 	Reg Z/Truth in Lending Act
	 
	•	 	Reg B/Equal Credit Opportunity Act
	 
	•	 	Fair and Accurate Credit Transactions Act of 2003/FACTA
	 
	•	 	Fair Credit Reporting Act
	 
	•	 	Bank Secrecy Act
	 
	•	 	Right to Financial Privacy
	 
	•	 	Servicemembers’ Civil Relief Act/SCRA
	 
	•	 	Fair Debt Collection Practices Act
	 
	•	 	Gramm-Leach-Bliley Privacy Act
	 
	•	 	USA PATRIOT Act of 2001
	 
	•	 	FTC Unfair and Deceptive Practices Rule

Procedure Development

	•	 	Work types within each functional area included in the
CCCP are reviewed annually to determine applicability of one
or more of the governing laws or regulations.
	 
	•	 	In the event new procedures are necessary, they are
created by the appropriate operating team unit.
	 
	•	 	Existing procedures are reviewed by the appropriate
operating team unit to ensure they are current and accurate.
	 
	•	 	All new procedures and any revisions to existing
procedures are routed in accordance with CCCP governance
requirements.

CCCP Monitoring

 

 

	•	 	Monitors

	 	•	 	Each customer facing functional area is responsible for monitoring a statistically
valid sample of work types, by regulation, to ensure compliance with the applicable
rules.

	•	 	Defects

	 	•	 	Defect remedy process is in place to provide coaching to reps as necessary, as
well as to ensure that accounts not handled in accordance with approved procedures are
corrected.

	•	 	Reviews

	 	•	 	Monitors are reviewed by the Credit Compliance Manager on a monthly basis.

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