Document:

exv10w6

Exhibit 10.6

NONQUALIFIED STOCK OPTION AGREEMENT

FINGERHUT DIRECT MARKETING, INC.

2008 EQUITY AND INCENTIVE PLAN

(CEO DIRECT REPORTS)

          THIS AGREEMENT, made effective as of this ________ day of _________, 20__ (the “Date of
Grant”), by and between Fingerhut Direct Marketing, Inc., a Delaware corporation (the “Company”),
and [Insert Participant Name] (“Participant”).

W I T N E S S E T H:

          WHEREAS, Participant on the date hereof is an employee or officer of the Company or one of its
Affiliates; and

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

          WHEREAS, the Committee has authorized the grant of a nonqualified stock option to Participant
and has determined that, as of the effective date of this Agreement, the fair market value of the
Company’s Common Stock is $0.009 per share;

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

	1.	 	Grant of Option. The Company hereby grants to Participant on the Date of
Grant, the right and option (the “Option”) to purchase all or portions of an aggregate of
[Insert Number of Shares] (•) shares of Common Stock at a per share price of $0.009 on the
terms and conditions set forth herein, and subject to adjustment pursuant to Section 11 of the
Plan. This Option is not intended to be an incentive stock option within the meaning
of Section 422 of the Code, or any successor provision, and the regulations thereunder.
Capitalized terms not defined herein shall have the meanings set forth in the Plan.

	2.	 	Duration and Exercisability.

	 	a.	 	General. The term during which this Option may be exercised
shall terminate on a date which is ten (10) years from the Date of Grant (the
“Expiration Date”), except as otherwise provided in Paragraphs 2(b) through 2(e) and
Paragraph 6 below. This Option shall become exercisable according to the following
schedule:

 

 

	 	 	 
	Vesting Date	 	Number of Shares
	May 21, 2009

	 	F•]
	May 21, 2010

	 	F•]
	May 21, 2011

	 	F•]
	May 21, 2012

	 	F•]

Once the Option becomes exercisable to the extent of any of the aggregate number of shares
specified in Paragraph 1, Participant may continue to exercise this Option with respect to such
shares under the terms and conditions of this Agreement until the termination of the Option as
provided herein. If Participant does not purchase upon an exercise of this Option the full number
of shares which Participant is then entitled to purchase, Participant may purchase upon any
subsequent exercise prior to this Option’s termination such previously unpurchased shares in
addition to those Participant is otherwise entitled to purchase.

Notwithstanding anything herein to the contrary, in the event a Public Offering becomes effective
prior to July 31, 2010, the tranche of the Option scheduled to vest on May 21, 2012 shall become
fully exercisable on the date such Public Offering becomes effective.

	 	b.	 	Termination of Employment (other than Termination for Cause,
Disability or Death). If Participant’s Employment with the Company and its
Affiliates is terminated for any reason other than termination by the Company for
Cause, Disability, or death, this Option shall terminate on the earlier of (i) ninety
(90) days following the date of such termination of Employment, and (ii) the Expiration
Date of this Option stated in Paragraph 2(a) above. In such period following the
termination of Participant’s Employment, this Option shall be exercisable only to the
extent the Option was exercisable on the vesting date immediately preceding such
termination of Employment, but had not previously been exercised. To the extent this
Option was not exercisable upon such termination of Employment, or if Participant does
not exercise the Option within the time specified in this Paragraph 2(b), all rights of
Participant under this Option shall be forfeited.

	 	c.	 	Termination of Employment for Cause. If Participant’s
Employment with the Company and its Affiliates is terminated for Cause, the unexercised
portion of this Option shall immediately expire, and all rights of Participant under
this Option shall be forfeited.

	 	d.	 	Termination of Employment — Disability. If Participant’s
Employment with the Company and its Affiliates terminates because of Disability, this
Option shall terminate on the earlier of (i) one (1) year following the date of such
termination of Employment, and (ii) the Expiration Date of this Option stated in
Paragraph 2(a) above. In such period following the termination of Participant’s
Employment,
this Option shall be fully exercisable, whether or not any portion of the Option was
not exercisable immediately prior to such termination of Employment (but only to

 

 

	 	 	 	the
extent it had not previously been exercised). If Participant does not exercise the
Option within the time specified in this Paragraph 2(d), all rights of Participant
under this Option shall be forfeited.

	 	e.	 	Termination of Employment — Death. In the event of
Participant’s death, this Option shall terminate on the earlier of (i) one (1) year
following the date of the Participant’s death, and (ii) the Expiration Date of this
Option stated in Paragraph 2(a) above. In such period following Participant’s death,
this Option shall be fully exercisable by the person or persons to whom Participant’s
rights under this Option shall have passed by Participant’s will or by the laws of
descent and distribution (but only to the extent it had not previously been exercised).
If such person or persons do not exercise this Option within the time specified in this
Paragraph 2(e), all rights under this Option shall be forfeited.

3. Manner of Exercise.

	 	a.	 	General. The Option may be exercised only by Participant (or
other proper party in the event of death or incapacity), subject to the conditions of
the Plan and subject to such other administrative rules as the Committee may deem
advisable, by delivering within the option period written notice of exercise to the
Company at its principal office. The notice shall state the number of shares as to
which the Option is being exercised and shall be accompanied by payment in full of the
option price for all shares designated in the notice. The exercise of the Option shall
be deemed effective upon receipt of such notice by the Company and upon payment that
complies with the terms of the Plan and this Agreement. The Option may be exercised
with respect to any number or all of the shares as to which it can then be exercised
and, if partially exercised, may be so exercised as to the unexercised shares any
number of times during the option period as provided herein.

	 	b.	 	Form of Payment. The Participant’s payment of the option price
in full at the time of exercise shall be (i) in cash or cash equivalents, (ii) with the
consent of the Committee, in Shares, valued at the Fair Market Value on the date of
exercise, or (if permitted by the Committee and subject to such terms and conditions as
it may determine) by surrender of outstanding Awards under the Plan, or (iii) in
accordance with such procedures or in such other form as the Committee shall from time
to time determine (including by permitting broker’s cashless exercise procedure).

	 	c.	 	Stock Transfer Records. As soon as practicable after the
effective exercise of all or any part of the Option, Participant shall be recorded on
the stock transfer books of the Company as the owner of the shares purchased, and the
Company shall deliver to Participant one or more duly issued stock certificates
evidencing such ownership. All requisite original issue or transfer documentary stamp
taxes shall be paid by the Company.

 

 

4. Transfer Restrictions and Mechanics.

	 	a.	 	Definitions. Solely for purposes of this Paragraph 4 and
Paragraph 5(k), the following terms have the respective meanings set forth below:

	 	(i)	 	“Affiliate” shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act,
and shall include, with respect to any Investor, any managed account,
investment fund or other vehicle for which such Investor or any Affiliate or
such Investor acts as an investment advisor or portfolio manager; provided,
that with respect to Bain Capital, the term Affiliate shall be deemed to
include any Person under common management with Bain Capital.

	 	(ii)	 	“As-Converted Basis” shall mean, for purposes of
determining the number of shares of Common Stock outstanding, a basis of
calculation which takes into account (a) the number of shares of Common Stock
actually issued and outstanding at the time of such determination, and (b) the
number of shares of Common Stock that is then issuable upon the exercise or
conversion of all outstanding securities or rights convertible into or
exercisable for Common Stock, including without limitation, the Series A
Preferred Stock, Series B Preferred Stock and the Warrants and the number of
            shares of Common Stock that would be issuable upon the conversion of the Series
A Preferred Stock then issuable upon exercise of the Warrants, but excluding
stock options and any other warrants for the purchase of any shares of Common
Stock, Series A Preferred Stock or Series B Preferred Stock.

	 	(iii)	 	“Bain Capital” means Bain Capital Venture Fund 2007,
L.P.

	 	(iv)	 	“Common Stock” shall mean the Company’s common stock,
par value $0.00001 per share.

	 	(v)	 	“Investors” shall mean the Investors that are or
hereafter become a party to Investors Stockholders Agreement.

	 	(vi)	 	“Investors Stockholders Agreement” shall mean the
Stockholders Agreement dated as of May 15, 2008, among the Company and the
Investors named therein, as such agreement is amended, modified or replaced
from time to time.

	 	(vii)	 	“Option Shares” shall mean shares of Common Stock
issued or issuable to the Participant pursuant to this Agreement.

	 	(viii)	 	“Permitted Transferee” means any of the following Persons to whom or
to which a Participant Transfers any Option Shares: (a) a family member of
the Participant or a trust established for the benefit thereof; and (b) a
transferee of the Participant by will or the laws of intestate succession.

 

 

	 	(ix)	 	“Person” shall be construed broadly and shall include
without limitation an individual, a partnership, a corporation, an association,
a joint stock corporation, a limited liability corporation, a trust, a joint
venture, an unincorporated organization and a governmental authority.

	 	(x)	 	“Qualified Public Offering” means an underwritten
public offering of shares of Common Stock in which the aggregate net proceeds
to the Company equal or exceed $75 million and the public offering price per
share is not less than $0.2235 (as adjusted appropriately in the event of any
subdivision, combination, reorganization, recapitalization, reclassification,
stock dividend or similar event affecting the Common Stock) and after which the
Common Stock is listed on the New York Stock Exchange or the Nasdaq National
Market.

	 	(xi)	 	“Sale of the Company” means (i) a sale of all or
substantially all of the assets of the Company, (ii) an acquisition of the
Company by one or more persons or entities by means of any transaction or
series of related transactions (including any reorganization, merger,
consolidation) where the voting securities of the Company outstanding
immediately preceding such transaction or the voting securities issued with
respect to the voting securities of the Company outstanding immediately
preceding such transaction represent less than 50% of the voting securities of
the Company or surviving entity, as the case may be, following such
transaction, or (iii) a transaction or series of related transactions resulting
in the transfer of shares representing more than 50% of the voting securities
of the Company. A sale (or multiple related sales) of one or more subsidiaries
of the Company (whether by way of merger, consolidation, reorganization or sale
of all or substantially all assets or securities) which constitutes all or
substantially all of the consolidated assets of the Company shall be deemed a
sale of substantially all the assets of the Company for purposes of the
foregoing definition.

	 	(xii)	 	“Series A Preferred Stock” means the Series A
Convertible Preferred Stock, par value $0.00001 per share, of the Company.

	 	(xiii)	 	“Series B Preferred Stock means the Series B Convertible Preferred
Stock, par value $0.00001 per share, of the Company.

	 	(xiv)	 	“Shares” shall mean shares of Common Stock and Series
A Preferred Stock, Series B Preferred Stock and warrants for the purchase of
any shares of Common Stock, Series A Preferred Stock and Series B Preferred
Stock.

	 	(xv)	 	“Transfer” shall mean any sale, assignment,
encumbrance, hypothecation, pledge, conveyance in trust, gift, transfer by
bequest, devise or descent, or other transfer or disposition of any kind,
including, but not limited to, transfers to receivers, levying creditors,
trustees or receivers in

 

 

	 	 	 	bankruptcy proceedings or general assignees for the
benefit of creditors, whether voluntary or by operation of law, directly or
indirectly, of any Shares.

	 	b.	 	Notice of Transfer. The Participant may not Transfer any Option
Shares other than as set forth in Paragraph 4(e) hereof unless (i) the Participant
shall have received a bona-fide arm’s length offer (an “Offer”) to purchase such Option
Shares from a third party who has agreed in writing be bound by the terms of this
Agreement and who the Participant reasonably believes has the financial capacity to
fund such purchase, (ii) such Participant gives written notice (the “Notice”) to the
Company at least thirty (30) days prior to the closing of such proposed Transfer as
described below, and (iii) such Participant otherwise complies with this Paragraph 4.
Promptly after receipt of such Notice, the Company shall provide a copy thereof to the
Investors. The Notice shall describe in reasonable detail the proposed Transfer
including, without limitation, the number of Option Shares to be transferred (the
“Offered Shares”), the nature of such Transfer, the consideration to be paid, and the
name and address of each prospective purchaser or transferee.

	 	c.	 	Right of First Refusal and Co-Sale Rights. For a period of ten
(10) days following receipt of any Notice, the Company shall have the right (the
“Company Refusal Right”) upon written notice to the Participant to elect to purchase
all or any part of the Offered Shares on the same terms and conditions set forth in the
Notice, and for a period of twenty (20) days following the receipt of the Notice, each
Investor shall have, upon written notice to the Participant, either (a) the right (the
“Right of First Refusal”), subject to the Company Refusal Right, to elect to purchase
all or any part of the Offered Shares on the same terms and conditions as set forth in
the Notice or (b) the right (the “Co-Sale Right”) to elect to sell on such terms all or
any part of that number of Shares then owned by such Investor (the “Co-Sale Shares”)
equal to the product obtained by multiplying (i) the aggregate number of Offered Shares
by (ii) a fraction the numerator of which is the number of shares of Common Stock owned
by all of the Investors (on an As-Converted Basis) and the denominator of which is the
total number of shares of Common Stock owned by the Participant and all of the
Investors (on an As-Converted Basis).

	 	(i)	 	If the Company does not elect to purchase all of the
Offered Shares within the ten (10) day period specified above, the Company
shall give prompt written notice to the Investors setting forth the number of
Offered Shares not purchased by the Company (the “Remaining Shares”). The
Remaining Shares shall be allocated among the Investors who have exercised the
Right of First Refusal (the “Participating Investors”) as follows: there shall
first be allocated to each Participating Investor a number of
Remaining Shares equal to the lesser of (i) the number of Remaining Shares which the Participating Investor has elected to purchase and (ii) such
Participating Investor’s Refusal Right Pro Rata Share (as defined below) of
the Remaining Shares. The balance of the Remaining Shares

 

 

	 	 	 	 which the Participating Investors have elected to purchase shall be allocated to the
Participating Investors who have elected to purchase more than their Refusal
Right Pro Rata Share of the Remaining Shares pro rata based on the number of
Remaining Shares which each Participating Investor has elected to purchase
in excess of such Participating Investor’s Refusal Right Pro Rata Share of
the Remaining Shares. Each Participating Investor’s “Refusal Right Pro Rata
Share” shall be equal to the fraction (i) the numerator of which is the
number of shares of Common Stock owned by such Participating Investor (on an
As-Converted Basis) and (ii) the denominator of which is the total number of
shares of Common Stock owned by all of the Participating Investors (on an
As-Converted Basis).

	 	(ii)	 	Each Investor who has exercised the Co-Sale Right (a
“Co-Sale Participant”) shall be entitled to sell a number of Co-Sale Shares
equal to the lesser of (a) the number of Offered Shares which the Co-Sale
Participant has elected to sell and (b) such Co-Sale Participant’s Co-Sale Pro
Rata Share of the Offered Shares which are not purchased by the Company
pursuant to the Company Refusal Right or by the Participating Investors
pursuant to the Right of First Refusal (the “Co-Sale Remaining Shares”). Each
Participant’s “Co-Sale Pro Rata Share” shall be equal to the fraction (i) the
numerator of which is the number of shares of Common Stock owned by such
Co-Sale Participant (on an As-Converted Basis) and (ii) the denominator of
which is the total number of shares of Common Stock owned by the Participant
and all of the Investors (on As-Converted Basis).

	 	(iii)	 	Any proposed Transfer at a different price or on terms
and conditions more favorable to the transferee(s) than specified in the
Notice, or not completed within the time specified in this Paragraph 4(b), as
well as any subsequent proposed Transfer of any Shares by a Stockholder, shall
again be subject to the Company Refusal Right and the Right of First Refusal
and Co-Sale Rights of the Investors, and shall require compliance by the
Participant with the procedures described in this Paragraph 4.

	 	(iv)	 	The exercise or non-exercise of the Right of First
Refusal or the Co-Sale Rights by the Investors in respect of one or more
Transfers of Shares made by any Participant shall not adversely affect their
rights to participate in subsequent Transfers of Shares subject to this
Paragraph 4.

	 	d.	 	Transfer Mechanics.

	 	(i)	 	If (i) the Company and/or the Participating Investors
elect to purchase all of the Offered Shares subject to the Notice or (ii) the
Company and/or the Participating Investors elect to purchase less than all the
Offered Shares and the prospective purchaser identified in the Notice does not
agree to purchase any of the Offered Shares not so purchased, the

 

 

	 	 	 	following
provisions shall apply: The Company and/or Participating Investors shall effect
the purchase of the Offered Shares and/or Remaining Shares on a date specified
by the Participant by notice to the Company and/or the Participating Investors
not earlier than the later of (x) ten (10) days after such notice or (y) thirty
(30) days after the receipt of the Notice by the Investors. On the date of such
purchase, the Participant shall deliver to the Company and/or the Participating
Investors, as applicable, the certificates representing the Shares to be
purchased by the Company and/or the Participating Investors, each certificate
to be properly endorsed for transfer, in exchange for payment by the Company
and/or the Participating Investors, as applicable, of the purchase price for
the Shares.

	 	(ii)	 	If (i) the Company and the Participating Investors do
not elect to purchase any of the Offered Shares or (ii) the Company and/or the
Participating Investors elect to purchase less than all of the Offered Shares
and the prospective purchaser agrees to purchase less than all of the Offered
Shares, the following provisions shall apply: The Participant may, not later
than forty (40) days following delivery to the Company of the Notice, enter
into an agreement providing for the closing of the Transfer to the third party
purchaser(s) identified in the Notice of any Offered Shares with respect to
which neither the Company Refusal Right nor the Right of First Refusal has been
exercised, together with the closing of the purchase of any Shares to be sold
by any Co-Sale Participant, such purchase to occur within thirty (30) days of
such agreement at a price and on terms and conditions no more favorable to the
transferee(s) thereof than specified in the Notice. Simultaneously with such
purchase there shall occur the purchase of any Offered Shares with respect to
which the Company Refusal Right or the Right of First Refusal has been
exercised. On the date of such purchase, each Co-Sale Participant shall be paid
that portion of the sale proceeds to which such Co-Sale Participant is entitled
by reason of its participation in such sale and the Company and/or each
Participating Investor, as applicable, shall pay the Participant the purchase
price to be paid by such Person for the Offered Shares purchased by them. Upon
receipt of such payment, each Co-Sale Participant shall promptly deliver to the
Participant for Transfer to the prospective purchaser(s) and, if applicable,
the Participant shall deliver to the Company and/or the Participating
Investors, one or more certificates properly endorsed for transfer which
represent the Shares to be sold by each such Person pursuant to this Paragraph
4. To the extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase Shares from a Co-Sale Participant
exercising its Co-Sale Rights hereunder, such Participant shall not sell to
such prospective purchaser or purchasers any Shares unless and until,
simultaneously with such sale, such Participant shall purchase such Shares
from such Co-Sale Participant on the same terms and conditions specified in
the Notice.

 

 

	 	(iii)	 	If the consideration to be paid for the Shares by the
third party purchaser shall be other than cash, the Company or the
Participating Investors, as applicable, exercising the Company Refusal Right or
the Right of First Refusal may in lieu of such consideration pay cash equal to
the fair market value of such consideration as mutually agreed between the
Participant and the holders of a majority of the Shares as to which the Right
of First Refusal and Company Refusal Right have been exercised. If such mutual
agreement cannot be reached, the Appraisal Procedure set forth in the Company’s
Amended and Restated Certificate of Incorporation shall be followed mutatis
mutandis and the time periods in Paragraph 4(b) shall be extended by the
time needed to determine such fair value.

	 	e.	 	Exempt Transfers.

(i) The Participant may Transfer Option Shares without
complying with the provisions of Paragraph 4 if such Transfer is to any
Permitted Transferee; provided that in the event of any Transfer
made pursuant to this Paragraph 4(e), (A) the Participant shall inform the
Company of such Transfer prior to effecting it, and (B) the transferee shall
furnish the Company with a written agreement, reasonably satisfactory to the
Company, to be bound by and comply with all provisions of this Paragraph 4
as if such transferee were the Participant. Such Transferred Option Shares
shall remain Option Shares hereunder.

(ii) Notwithstanding the foregoing, the provisions of Paragraph
4 hereof shall not apply to the sale of any Shares to the public pursuant to
a registration statement filed with, and declared effective by, the
Securities and Exchange Commission under Securities Act of 1933, as amended
(the “Securities Act”).

	 	f.	 	Transfers to Competitors. Any other provision of this Agreement
to the contrary notwithstanding, other than in connection with a Sale of the Company,
prior to a Qualified Public Offering, no Transfer of Option Shares may be made by the
Participant to a competitor of the Company or any person or entity that invests in any
such competitor, as determined in good faith by the Board.

	 	g.	 	Stockholder Lockup Agreements in Connection with Initial Public
Offering. Notwithstanding anything in the Plan to the contrary, the Participant
agrees that, subject to any early release provisions that apply generally to
stockholders of the Company, the Participant will not, if reasonably requested by the
managing
underwriter, for a period of up to 180 days following the effective date of the
registration statement for an initial public offering directly or indirectly sell,
offer to sell, grant any option for the sale of, or otherwise dispose of any Common
Stock or securities convertible into Common Stock, except for (i) transactions
relating to Common Stock or other securities acquired in open market transactions
after the completion of the initial public offering, and (ii) Transfers to Permitted

 

 

	 	 	 	Transferees (each of whom shall have furnished to the Company and the managing
underwriter their written consent to be bound by this Paragraph 4 or a similar
agreement satisfactory to the Company).

	 	h.	 	Consequences of Prohibited Transfer. Any attempt by a
Participant to Transfer Option Shares in violation of the terms of this Paragraph 4
shall be void, and the Company will not effect such a Transfer nor will it treat any
alleged transferee as the holder of such Option Shares.

	 	i.	 	Legend. Each certificate representing the Option Shares subject
to the terms of this Agreement shall be endorsed with the following legend or legend(s)
containing substantially similar information (in addition to any legend required under
applicable securities laws or otherwise):

	 	 	THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT. THE SALE OR
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS
AND CONDITIONS OF AN OPTION AGREEMENT TO WHICH THE HOLDER HEREOF AND THE COMPANY ARE
PARTIES. COPIES OFSUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY.

This legend shall be removed upon termination of this Paragraph 4. The Participant consents to the
Company making a notation on its records and giving instructions to any transfer agent of the
Company’s securities and capital stock in order to implement the restrictions on transfer
established in this Paragraph 4.

	 	j.	 	The Participants agree that the Company may instruct its transfer agent
to impose transfer restrictions on Option Shares represented by certificates bearing
the legend referred to in Paragraph 4(i) above to enforce the provisions of this
Paragraph 4. The legend shall be removed upon termination of this Paragraph 4.

	 	k.	 	Drag Along Rights.

	 	(i)	 	In the event that the holders of at least 66% of the
then outstanding shares of Series B Preferred Stock (the “Proposing
Stockholders”) agree to and accept an offer from a third party or third parties
not Affiliated with any Proposing Stockholder (a “Buyer”) to consummate a
transaction or series of related transactions with such Buyer pursuant to which
Buyer would acquire all of the Shares held by such Proposing Shareholders for a
specified price payable in cash, securities or other consideration and on
specified

 

 

	 	 	 	terms and conditions, the Participant shall be required, if so
demanded by the Proposing Shareholders (a “Drag Along Notice”) to sell all of
the Participant’s Option Shares to such Buyer in such transaction(s) and to
participate in such transaction(s) (a “Drag Along Sale”).

	 	(ii)	 	The provisions of this Paragraph 4(k) shall apply
regardless of the form of consideration received in the Drag Along Sale, and
the Participant shall (i) if the Drag Along Sale is structured as a merger or
consolidation, waive any dissenters’ rights, appraisal rights or similar rights
in connection with such merger or consolidation, or (ii) if the Drag Along Sale
is structured as a sale, agree to sell all of the Participant’s Option Shares
on the terms and conditions approved by the Proposing Stockholders. The
Participant (a) shall be subject to the same terms and conditions, and (b)
shall execute such documents and take such actions as may be reasonably
required by the Company and the Proposing Shareholders.

	 	(iii)	 	Upon the consummation of the Drag Along Sale, the
Participant (i) shall receive the same form of consideration and the same
amount of consideration per share of Common Stock (on an As Converted Basis) as
every other holder of any class or series of Shares, except to the extent
otherwise approved in connection with Section 2 of the Amended and Restated
Certificate of Incorporation of the Company, as amended from time to time, and
(ii) shall be given the same option, if any, as any other holders of any other
class or series of Shares as to the form of consideration to be received.

	 	(iv)	 	Transfer Mechanics; Further Assurances.

	 	(a)	 	At least five (5) days prior to the
consummation of a Drag Along Sale (which date and the place and time of
such consummation shall be designated by the Proposing Stockholders and
provided to the Participant in the Drag Along Notice), the Participant
shall deliver for transfer to the Buyer one or more certificates,
properly endorsed for transfer in form satisfactory to the Proposing
Stockholders, which represent all of the Option Shares held by the
Participant, duly executed and free and clear of any liens. The
certificate(s) delivered by the Participant shall be transferred to the
Buyer identified in the Drag Along Notice as part of the consummation
of the Drag Along Sale. Upon receipt of the proceeds of the Drag Along
Sale, the Proposing Stockholders shall promptly
remit to the Participant that portion of such proceeds to which the
Participant is entitled by reason of the Participant’s participation
in such sale.
	 
	 	 	 	(b) In connection with a Drag Along Sale, the
Participant agrees to execute and deliver such agreements as may be
reasonably specified by the Proposing Stockholders to which such
Proposing

 

 

	 	 	 	Stockholders will also be party, on the same terms,
including, without limitation, agreements to (a) (i) made individual
representation, warranties, covenants and other agreements as to the
unencumbered title to the Participant’s Option Shares and the power,
authority and legal right to Transfer such Option Shares and to enter
into the agreements relating thereto and the absence of any adverse
claim with respect to such Option Shares (but shall not be required
to make individual representations or warranties with respect to any
of the Company’s operations, activities, financial condition or other
characteristics) and (ii) be liable without limitation as to such
individual representations, warranties, covenants and other
agreements and (b) be liable (whether by purchase price adjustment,
indemnity payments or otherwise) in respect of representations,
warranties, covenants and agreements in respect of the Company;
provided, however, that the aggregate amount of liability described
in this clause (b) in connection with any sale of Shares shall not
exceed the less of (i) the Participant’s pro rata portion of any such
liability, to be determined in accordance with the Participant’s
portion of the total number of Shares included in such Drag Along
Sale (on an As Converted Basis) or (ii) the proceeds to such
Participant in connection with such Drag Along Sale.

	 	1.	 	Term. This Paragraph 4 shall continue in full force and effect
from the date hereof through the earliest of the following dates, on which date it
shall terminate in its entirety:

	 	(i)	 	the date of the closing of a Qualified Public Offering; and

	 	(ii)	 	the date of the consummation of a Sale of the Company.

	 	 	For avoidance of doubt, this Paragraph 4 shall survive termination or expiration of this
Agreement.

5. Miscellaneous.

	 	a.	 	Employment-at-Will; Rights as Shareholder. This Agreement shall
not confer on Participant any right with respect to continuance of Employment by the
Company or any of its Affiliates, nor will it interfere in any way with the right of
the Company to terminate such Employment. Participant’s Employment
relationship with the Company and its Affiliates shall be employment-at-will, and
nothing in this Agreement shall be construed as creating an employment contract for
any specified term between Participant and the Company or any Affiliate. Participant
shall have no rights as a shareholder with respect to shares subject to this Option
until such shares have been issued to Participant upon exercise of this Option. No
adjustment shall be made for dividends (ordinary or extraordinary, whether in cash,
securities or other property), distributions or

 

 

	 	 	 	other rights for which the record
date is prior to the date such shares are issued, except as provided in Section 11
of the Plan.

	 	b.	 	Nonsolicitation. The Participant agrees that during the period
of his Employment with the Company or any of its Affiliates and for the one (1) year
period immediately following termination of such Employment for any reason, the
Participant shall not (i) directly or indirectly, engage in the recruiting, soliciting
or inducing of any nonclerical employee or employees of the Company or Affiliates to
terminate their employment with, or otherwise cease their relationship with the Company
or any of its Affiliates, or in hiring or assisting another person or entity to hire
any nonclerical employee of the Company or any of its Affiliates or any person who
within six (6) months before had been a nonclerical employee of the Company or any of
their Affiliates and were recruited or solicited for such employment or other retention
while an employee of the Company (other than any of the foregoing activities engaged in
with the prior written approval of the Company); or (ii) directly or indirectly
solicit, induce or encourage or attempt to persuade any agent, supplier or customer of
the Company or any Affiliate to terminate such agency or business relationship. The
Participant acknowledges that if (x) the Participant breaches any term or condition
contained in this Paragraph 5(b) and (y) the Company provides the Participant with
written notice of such breach, then (A) all of the Option that has not vested prior to
the date of such notice shall be automatically forfeited and (B) the Company shall have
the right to repurchase all of the Option Shares then held by the Participant at the
per share cost paid by the Participant for such Option Shares.

	 	c.	 	Securities Law Compliance. The exercise of all or any parts of
this Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such exercise
will not violate any state or federal securities or other laws. Participant may be
required by the Company, as a condition of the effectiveness of any exercise of this
Option, to agree in writing that all Common Stock to be acquired pursuant to such
exercise shall be held, until such time that such Common Stock is registered and freely
tradable under applicable state and federal securities laws, for Participant’s own
account without a view to any further distribution thereof, that the certificates for
such shares shall bear an appropriate legend to that effect and that such shares will
be not transferred or disposed of except in compliance with applicable state and
federal securities laws.

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

	 	e.	 	Withholding Taxes. In order to permit the Company to comply
with all applicable federal or state income tax laws or regulations, the Company may
take such action

 

 

	 	 	 	as it deems appropriate to insure that, if necessary, all applicable
federal and state payroll, income or other taxes are withheld from any amounts payable
by the Company to Participant. If the Company is unable to withhold such federal and
state taxes, for whatever reason, Participant hereby agrees to pay to the Company an
amount equal to the amount the Company would otherwise be required to withhold under
federal or state law. Subject to such rules as the Committee may adopt, the Committee
may, in its sole discretion, permit Participant to satisfy such withholding tax
obligations, in whole or in part (i) by delivering shares of Common Stock, or (ii) by
electing to have the Company withhold shares of Common Stock otherwise issuable to
Participant, in either case having a Fair Market Value equal to the minimum required
tax withholding, based on the minimum statutory withholding rates for federal and state
tax purposes, including payroll taxes, that are applicable to the supplemental income
resulting from the exercise of the nonqualified stock option. In no event may the
Company withhold shares having a Fair Market Value in excess of such statutory minimum
required tax withholding. Participant’s election to have shares withheld for this
purpose shall be made on or before the date the option is exercised or, if later, the
date that the amount of tax to be withheld is determined under applicable tax law. Such
election shall be approved by the Committee and otherwise comply with such rules as the
Committee may adopt to assure compliance with Rule 16b-3, or any successor provision,
as then in effect, of the General Rules and Regulations under the Securities Exchange
Act of 1934, if applicable.

	 	f.	 	Nontransferability. During the lifetime of Participant, the
Option shall be exercisable only by Participant or by the Participant’s guardian or
other legal representative, and shall not be assignable or transferable by Participant,
in whole or in part, other than by will or by the laws of descent and distribution.

	 	g.	 	2008 Equity and Incentive Plan. The Option evidenced by this
Agreement is granted pursuant to the Plan, a copy of which Plan has been made available
to Participant and is hereby incorporated into this Agreement. This Agreement is
subject to and in all respects limited and conditioned as provided in the Plan. The
Plan governs this Option and, except with respect to the lockup provisions contained in
Paragraph 4(g), in the event of any questions as to the construction of this Agreement
or in the event of a conflict between the Plan and this Agreement, the Plan shall
govern, except as the Plan otherwise provides.

	 	h.	 	Blue Sky Limitation. Notwithstanding anything in this Agreement
to the contrary, in the event the Company makes any public offering of its securities
and it is determined that it is necessary to reduce the number of issued but
unexercised stock purchase rights so as to comply with any state securities or Blue Sky
law
limitations with respect thereto, and such determination is affirmed by the Board,
unless the Board determines otherwise, (i) the exercisability of this Option and the
date on which this Option must be exercised shall be accelerated, provided that the
Company agrees to give Participant 15 days’ prior written notice of such
acceleration, and (ii) any portion of this Option or any other option granted to
Participant pursuant to the Plan which is not exercised prior to or

 

 

	 	 	 	contemporaneously with such public offering shall be canceled. Notice shall be
deemed given when delivered personally or when deposited in the United States mail,
first class postage prepaid and addressed to Participant at the address of
Participant on file with the Company.

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

	 	j.	 	Stock Legend. The Committee may require that the certificates
for any shares of Common Stock purchased by Participant (or, in the case of death,
Participant’s successors) shall bear an appropriate legend to reflect the restrictions
set forth in this Agreement; provided, however, that failure to so endorse any of such
certificates shall not render invalid or inapplicable Paragraph 4.

	 	k.	 	Scope of Agreement; Amendment. This Agreement shall bind and
inure to the benefit of the Company, its Affiliates and its successors and assigns and
Participant and any successor or successors of Participant permitted by Paragraph 2 or
Paragraph 5(f) above. Notwithstanding anything in this Agreement or the Plan to the
contrary, the Company expressly reserves the right to amend this Agreement without
Participant’s consent to the extent necessary or desirable to comply with Code Section
409A, and the regulations, notices and other guidance of general applicability issued
thereunder. Notwithstanding anything herein in this Agreement or the Plan to the
contrary, any provision of Paragraph 4 may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only by the written consent given by the Company and Investors holding
sixty-six percent (66%) of the then outstanding Series B Preferred Stock, and no
consent from the Participant shall be required unless such amendment or waiver creates
material additional obligations for the Participant under this Agreement which are
substantially different from any obligations imposed on holders of Common Stock under
the Investors Stockholders Agreement (in which case, the consent of participants under
restricted stock or option agreements who are bound by terms and conditions of similar
tenor to this Agreement who hold more than fifty percent (50%) of the total of all
restricted shares and option shares held by all such participants thereunder and
hereunder shall be required for any such amendment or waiver which does create such
material additional obligations).

6. Change of Control.

	 	a.	 	Acceleration. In the event of a Change of Control (whether or
not there is an acquiring or surviving entity) in which there is no assumption or
substitution of the Option as described in Paragraph 6(b), then the Option shall become
fully

 

 

	 	 	 	vested and exercisable on a basis that gives the Participant a reasonable
opportunity, following exercise of the Option, to participate as a stockholder in the
Change of Control. The Option (unless assumed pursuant to Paragraph 6(b) hereof), shall
terminate upon consummation of the Change of Control.

	 	b.	 	Continuation or Assumption of the Option. In the event of a
Change of Control in which there is an acquiring or surviving entity, the acquiring or
surviving entity may provide for the continuation or assumption of the Option, or for
the grant of a new award in substitution therefor, by the acquiror or survivor or an
affiliate of the acquiror or survivor, in each case on such terms and subject to such
conditions as preserve the intrinsic value of the Option. In the event the acquiring or
surviving entity provides for the continuation or assumption of the Option as set forth
in this Paragraph 6(b), the Option shall become fully vested and exercisable upon the
Participant’s termination of Employment by the acquiring or surviving entity without
Cause or by the Participant for Good Reason, in either case within eighteen (18) months
after the Change of Control. For purposes of this Agreement, “Good Reason” shall mean
(i) a material diminution in the Participant’s responsibilities or duties as in effect
immediately prior to the Change of Control, (ii) the relocation of Participant’s
principal office, without the Participant’s consent, to a location more than one
hundred (100) miles from the location of the Participant’s principal office immediately
prior to the Change of Control, or (iii) any reduction in the Participant’s base
compensation in the absence of a general reduction affecting similarly situated
employees.

	 	c.	 	Qualifying Change of Control. Notwithstanding anything herein
to the contrary, in the event of a Qualifying Change of Control as defined below, then,
without any action by the Board or any Committee of the Board, this Option shall become
immediately exercisable to the extent of 100% of the aggregate number of shares
specified herein, less any shares or securities previously purchased by Participant
pursuant to an exercise pursuant hereto. For purposes of this Paragraph 6(c), a
“Qualifying Change of Control” includes any Change of Control if (i) immediately prior
to the Change of Control, any Series A Preferred Stock of the Company, any Series B
Preferred Stock of the Company or any Conversion Shares shall remain outstanding and
(ii) in connection with such Change of Control, a majority of the sum of the shares of
then outstanding Series A Preferred Stock of the Company, Series B Preferred Stock of
the Company and Conversion Shares, taken as a whole, is Exchanged for Consideration
with a Per Share Value equal to or in excess of the Threshold Price. Solely for
purposes of determining whether a majority of the sum of the shares of then outstanding
Series A Preferred Stock, Series B Preferred Stock and Conversion Shares shall have
been Exchanged, the number of then outstanding shares of Series A Preferred Stock and
Series B Preferred Stock shall be deemed to be the total
number of Conversion Shares into which such outstanding Series A Preferred Stock and
Series B Preferred Stock is then convertible. Notwithstanding anything herein
stated, for purposes of this definition, no Qualifying Change of Control shall be
deemed to have occurred following the closing of a “Qualified Public Offering,’

 

 

	 	 	 	as
defined in the Amended and Restated Certificate of Incorporation of the Company.

	 	 	 	For purposes of the definition of “Qualifying Change of Control”, the following
terms shall have the following meanings:

	 	 	 	“Conversion Shares” shall mean any shares of Common Stock of the Company that shall
have been issued by the Company to (x) holders of Series A Preferred Stock of the
Company upon conversion of Series A Preferred Stock and (y) holders of Series B
Preferred Stock of the Company upon conversion of Series B Preferred Stock, in
either case within twelve months prior to the Change of Control and shall continue
to be held by the stockholders who converted such shares or stockholders
controlling, controlled by, or under common control with, such stockholders.

	 	 	 	“Exchanged” shall mean sold, canceled, surrendered, transferred, exchanged or
otherwise disposed of for Consideration, and shall include the receipt of
Consideration from the Company upon a liquidation of the Company, whether or not
following a disposition of all or substantially all of the Company’s assets, even if
Series A Preferred Stock, Series B Preferred Stock or Conversion Shares are not
canceled or surrendered in connection with such liquidation.

	 	 	 	“Consideration” shall include cash, securities of an entity other than the Company
or any other property.

	 	 	 	“Per Share Value” shall mean the value of the Consideration received for each share
of Series A Preferred Stock of the Company, Series B Preferred Stock of the Company
and each Conversion Share that is Exchanged. The value of all non-cash Consideration
shall be its fair value at the time it is received by holders of Series A Preferred
Stock of the Company, Series B Preferred Stock of the Company and Conversion Shares
in connection with the Change of Control, as determined in good faith by the Board.

	 	 	 	The “Threshold Price” shall be $0.31533 (such amount to be equitably adjusted, as
appropriate, by the Board upon the occurrence of any dividend on any Common Stock,
Series A Preferred Stock of the Company or Series B Preferred Stock of the Company
payable in either of such class or series of stock or in any right to acquire either
of such class or series of stock for no consideration, any subdivision of either
such class or series of stock into a greater number of shares of outstanding shares
of such stock (by stock split, reclassification or otherwise), or in the event the
outstanding shares of either such class or series of stock shall be combined or
consolidated, by reclassification or otherwise, into a
lesser number of shares of such stock or if either such class or series of stock shall be
changed into the same or a different number of shares of any other class or series of stock of the
Company whether by capital reorganization, reclassification or otherwise).

 

 

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

	 	 	 	 	 
	 	FINGERHUT DIRECT MARKETING, INC

 	 
	By:  	 	 
	 	Its” 	 
	 	 	 
	 	 	 
	 	 	 
	 	Participant 	 
	 	 	 	 

 

 

	 	 	 	 	 

NONQUALIFIED STOCK OPTION AGREEMENT

FINGERHUT DIRECT MARKETING, INC.

2008 EQUITY AND INCENTIVE PLAN

(EXECUTIVE EMPLOYEES)

          THIS AGREEMENT, made effective as of this _________ day of _________, 20__ (the “Date of
Grant”), by and between Fingerhut Direct Marketing, Inc., a Delaware corporation (the “Company”),
and [Insert Participant Name] (“Participant”).

W I T N E S S E T H:

          WHEREAS, Participant on the date hereof is an employee or officer of the Company or one of its
Affiliates; and

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

          WHEREAS, the Committee has authorized the grant of a nonqualified stock option to Participant
and has determined that, as of the effective date of this Agreement, the fair market value of the
Company’s Common Stock is $0.009 per share;

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

1. Grant of Option. The Company hereby grants to Participant on the Date of Grant,
the right and option (the “Option”) to purchase all or portions of an aggregate of [Insert Number
of Shares] (•) shares of Common Stock at a per share price of $0.009 on the terms and conditions
set forth herein, and subject to adjustment pursuant to Section 11 of the Plan. This Option is
not intended to be an incentive stock option within the meaning of Section 422 of the Code,
or any successor provision, and the regulations thereunder. Capitalized terms not defined herein
shall have the meanings set forth in the Plan.

2. Duration and Exercisability.

	 	a.	 	General. The term during which this Option may be exercised
shall terminate on a date which is ten (10) years from the Date of Grant (the
“Expiration Date”), except as otherwise provided in Paragraphs 2(b) through 2(e) and
Paragraph 6 below. This Option shall become exercisable according to the following
schedule:

	 	 	 
	Vesting Date	 	Number of Shares
	May 21, 2009

	 	F•]
	May 21, 2010

	 	F•]
	May 21, 2011

	 	F•]
	May 21, 2012

	 	F•]

 

 

	 	 	 	Once the Option becomes exercisable to the extent of any of the aggregate
number of shares specified in Paragraph 1, Participant may continue to exercise this
Option with respect to such shares under the terms and conditions of this Agreement
until the termination of the Option as provided herein. If Participant does not
purchase upon an exercise of this Option the full number of shares which Participant
is then entitled to purchase, Participant may purchase upon any subsequent exercise
prior to this Option’s termination such previously unpurchased shares in addition to
those Participant is otherwise entitled to purchase.

	 	 	 	Notwithstanding anything herein to the contrary, in the event a Public Offering
becomes effective prior to July 31, 2010, the tranche of the Option scheduled to
vest on May 21, 2012 shall become fully exercisable on the date such Public Offering
becomes effective.

	 	b.	 	Termination of Employment (other than Termination for Cause,
Disability or Death). If Participant’s Employment with the Company and its
Affiliates is terminated for any reason other than termination by the Company for
Cause, Disability, or death, this Option shall terminate on the earlier of (i) ninety
(90) days following the date of such termination of Employment, and (ii) the Expiration
Date of this Option stated in Paragraph 2(a) above. In such period following the
termination of Participant’s Employment, this Option shall be exercisable only to the
extent the Option was exercisable on the vesting date immediately preceding such
termination of Employment, but had not previously been exercised. To the extent this
Option was not exercisable upon such termination of Employment, or if Participant does
not exercise the Option within the time specified in this Paragraph 2(b), all rights of
Participant under this Option shall be forfeited.

	 	c.	 	Termination of Employment for Cause. If Participant’s
Employment with the Company and its Affiliates is terminated for Cause, the unexercised
portion of this Option shall immediately expire, and all rights of Participant under
this Option shall be forfeited.

	 	d.	 	Termination of Employment — Disability. If Participant’s
Employment with the Company and its Affiliates terminates because of Disability, this
Option shall terminate on the earlier of (i) one (1) year following the date of such
termination of Employment, and (ii) the Expiration Date of this Option stated in
Paragraph 2(a) above. In such period following the termination of Participant’s
Employment, this Option shall be fully exercisable, whether or not any portion of the
Option was not exercisable immediately prior to such termination of Employment (but
only to the extent it had not previously been exercised). If Participant does not
exercise
the Option within the time specified in this Paragraph 2(d), all rights of
Participant under this Option shall be forfeited.

	 	e.	 	Termination of Employment — Death. In the event of
Participant’s death, this Option shall terminate on the earlier of (i) one (1) year
following the date of the

 

 

	 	 	 	Participant’s death, and (ii) the Expiration Date of this
Option stated in Paragraph 2(a) above. In such period following Participant’s death,
this Option shall be fully exercisable by the person or persons to whom Participant’s
rights under this Option shall have passed by Participant’s will or by the laws of
descent and distribution (but only to the extent it had not previously been exercised).
If such person or persons do not exercise this Option within the time specified in this
Paragraph 2(e), all rights under this Option shall be forfeited.

3. Manner of Exercise.

	 	a.	 	General. The Option may be exercised only by Participant (or
other proper party in the event of death or incapacity), subject to the conditions of
the Plan and subject to such other administrative rules as the Committee may deem
advisable, by delivering within the option period written notice of exercise to the
Company at its principal office. The notice shall state the number of shares as to
which the Option is being exercised and shall be accompanied by payment in full of the
option price for all shares designated in the notice. The exercise of the Option shall
be deemed effective upon receipt of such notice by the Company and upon payment that
complies with the terms of the Plan and this Agreement. The Option may be exercised
with respect to any number or all of the shares as to which it can then be exercised
and, if partially exercised, may be so exercised as to the unexercised shares any
number of times during the option period as provided herein.

	 	b.	 	Form of Payment. The Participant’s payment of the option price
in full at the time of exercise shall be (i) in cash or cash equivalents, (ii) with the
consent of the Committee, in Shares, valued at the Fair Market Value on the date of
exercise, or (if permitted by the Committee and subject to such terms and conditions as
it may determine) by surrender of outstanding Awards under the Plan, or (iii) in
accordance with such procedures or in such other form as the Committee shall from time
to time determine (including by permitting broker’s cashless exercise procedure).

	 	c.	 	Stock Transfer Records. As soon as practicable after the
effective exercise of all or any part of the Option, Participant shall be recorded on
the stock transfer books of the Company as the owner of the shares purchased, and the
Company shall deliver to Participant one or more duly issued stock certificates
evidencing such ownership. All requisite original issue or transfer documentary stamp
taxes shall be paid by the Company.

4. Transfer Restrictions and Mechanics.

	 	a.	 	Definitions. Solely for purposes of this Paragraph 4 and
Paragraph 5(k), the following terms have the respective meanings set forth below:

	 	(i)	 	“Affiliate” shall have the meaning ascribed to such
term in Rule 12b-2 of the General Rules and Regulations under the Exchange Act,
and shall

 

 

	 	 	 	include, with respect to any Investor, any managed account,
investment fund or other vehicle for which such Investor or any Affiliate or
such Investor acts as an investment advisor or portfolio manager; provided,
that with respect to Bain Capital, the term Affiliate shall be deemed to
include any Person under common management with Bain Capital.

	 	(ii)	 	“As-Converted Basis” shall mean, for purposes of
determining the number of shares of Common Stock outstanding, a basis of
calculation which takes into account (a) the number of shares of Common Stock
actually issued and outstanding at the time of such determination, and (b) the
number of shares of Common Stock that is then issuable upon the exercise or
conversion of all outstanding securities or rights convertible into or
exercisable for Common Stock, including without limitation, the Series A
Preferred Stock, Series B Preferred Stock and the Warrants and the number of
 shares of Common Stock that would be issuable upon the conversion of the Series
A Preferred Stock then issuable upon exercise of the Warrants, but excluding
stock options and any other warrants for the purchase of any shares of Common
Stock, Series A Preferred Stock or Series B Preferred Stock.

	 	(iii)	 	“Bain Capital” means Bain Capital Venture Fund 2007,
L.P.

	 	(iv)	 	“Common Stock” shall mean the Company’s common stock,
par value $0.00001 per share.

	 	(v)	 	“Investors” shall mean the Investors that are or
hereafter become a party to Investors Stockholders Agreement.

	 	(vi)	 	“Investors Stockholders Agreement” shall mean the
Stockholders Agreement dated as of May 15, 2008, among the Company and the
Investors named therein, as such agreement is amended, modified or replaced
from time to time.

	 	(vii)	 	“Option Shares” shall mean shares of Common Stock
issued or issuable to the Participant pursuant to this Agreement.

	 	(viii)	 	“Permitted Transferee” means any of the following Persons to whom or
to which a Participant Transfers any Option Shares: (a) a family member of the
Participant or a trust established for the benefit thereof; and (b) a
transferee of the Participant by will or the laws of intestate succession.

	 	(ix)	 	“Person” shall be construed broadly and shall include
without limitation an individual, a partnership, a corporation, an association,
a joint stock
corporation, a limited liability corporation, a trust, a joint venture, an
unincorporated organization and a governmental authority.

	 	(x)	 	“Qualified Public Offering” means an underwritten
public offering of shares of Common Stock in which the aggregate net proceeds
to the

 

 

	 	 	 	Company equal or exceed $75 million and the public offering price per
share is not less than $0.2235 (as adjusted appropriately in the event of any
subdivision, combination, reorganization, recapitalization, reclassification,
stock dividend or similar event affecting the Common Stock) and after which the
Common Stock is listed on the New York Stock Exchange or the Nasdaq National
Market.

	 	(xi)	 	“Sale of the Company” means (i) a sale of all or
substantially all of the assets of the Company, (ii) an acquisition of the
Company by one or more persons or entities by means of any transaction or
series of related transactions (including any reorganization, merger,
consolidation) where the voting securities of the Company outstanding
immediately preceding such transaction or the voting securities issued with
respect to the voting securities of the Company outstanding immediately
preceding such transaction represent less than 50% of the voting securities of
the Company or surviving entity, as the case may be, following such
transaction, or (iii) a transaction or series of related transactions resulting
in the transfer of shares representing more than 50% of the voting securities
of the Company. A sale (or multiple related sales) of one or more subsidiaries
of the Company (whether by way of merger, consolidation, reorganization or sale
of all or substantially all assets or securities) which constitutes all or
substantially all of the consolidated assets of the Company shall be deemed a
sale of substantially all the assets of the Company for purposes of the
foregoing definition.

	 	(xii)	 	“Series A Preferred Stock” means the Series A
Convertible Preferred Stock, par value $0.00001 per share, of the Company.

	 	(xiii)	 	“Series B Preferred Stock means the Series B Convertible Preferred
Stock, par value $0.00001 per share, of the Company.

	 	(xiv)	 	“Shares” shall mean shares of Common Stock and Series
A Preferred Stock, and warrants for the purchase of any shares of Common Stock
and Series A Preferred Stock.

	 	(xv)	 	“Transfer” shall mean any sale, assignment,
encumbrance, hypothecation, pledge, conveyance in trust, gift, transfer by
bequest, devise or descent, or other transfer or disposition of any kind,
including, but not limited to, transfers to receivers, levying creditors,
trustees or receivers in bankruptcy proceedings or general assignees for the
benefit of creditors, whether voluntary or by operation of law, directly or
indirectly, of any Shares.

	 	b.	 	Notice of Transfer. The Participant may not Transfer any Option
Shares other than as set forth in Paragraph 4(e) hereof unless (i) the Participant
shall have received a bona-fide arm’s length offer (an “Offer”) to purchase such Option
Shares from a third party who has agreed in writing be bound by the terms of this

 

 

	 	 	 	Agreement and who the Participant reasonably believes has the financial capacity to
fund such purchase, (ii) such Participant gives written notice (the “Notice”) to the
Company at least thirty (30) days prior to the closing of such proposed Transfer as
described below, and (iii) such Participant otherwise complies with this Paragraph 4.
Promptly after receipt of such Notice, the Company shall provide a copy thereof to the
Investors. The Notice shall describe in reasonable detail the proposed Transfer
including, without limitation, the number of Option Shares to be transferred (the
“Offered Shares”), the nature of such Transfer, the consideration to be paid, and the
name and address of each prospective purchaser or transferee.

	 	c.	 	Right of First Refusal and Co-Sale Rights. For a period of ten
(10) days following receipt of any Notice, the Company shall have the right (the
“Company Refusal Right”) upon written notice to the Participant to elect to purchase
all or any part of the Offered Shares on the same terms and conditions set forth in the
Notice, and for a period of twenty (20) days following the receipt of the Notice, each
Investor shall have, upon written notice to the Participant, either (a) the right (the
“Right of First Refusal”), subject to the Company Refusal Right, to elect to purchase
all or any part of the Offered Shares on the same terms and conditions as set forth in
the Notice or (b) the right (the “Co-Sale Right”) to elect to sell on such terms all or
any part of that number of Shares then owned by such Investor (the “Co-Sale Shares”)
equal to the product obtained by multiplying (i) the aggregate number of Offered Shares
by (ii) a fraction the numerator of which is the number of shares of Common Stock owned
by all of the Investors (on an As-Converted Basis) and the denominator of which is the
total number of shares of Common Stock owned by the Participant and all of the
Investors (on an As-Converted Basis).

	 	(i)	 	If the Company does not elect to purchase all of the
Offered Shares within the ten (10) day period specified above, the Company
shall give prompt written notice to the Investors setting forth the number of
Offered Shares not purchased by the Company (the “Remaining Shares”). The
Remaining Shares shall be allocated among the Investors who have exercised the
Right of First Refusal (the “Participating Investors”) as follows: there shall
first be allocated to each Participating Investor a number of Remaining Shares
equal to the lesser of (i) the number of Remaining Shares which the
Participating Investor has elected to purchase and (ii) such Participating
Investor’s Refusal Right Pro Rata Share (as defined below) of the Remaining
Shares. The balance of the Remaining Shares which the Participating Investors
have elected to purchase shall be allocated to the Participating Investors who
have elected to purchase more than their Refusal Right Pro Rata Share of the
Remaining Shares pro rata based on the number of Remaining Shares which each
Participating
Investor has elected to purchase in excess of such Participating Investor’s
Refusal Right Pro Rata Share of the Remaining Shares. Each Participating
Investor’s “Refusal Right Pro Rata Share” shall be equal to the fraction (i)
the numerator of which is the number of shares of Common

 

 

	 	 	 	Stock owned by such
Participating Investor (on an As-Converted Basis) and (ii) the denominator
of which is the total number of shares of Common Stock owned by all of the
Participating Investors (on an As-Converted Basis).

	 	(ii)	 	Each Investor who has exercised the Co-Sale Right (a
“Co-Sale Participant”) shall be entitled to sell a number of Co-Sale Shares
equal to the lesser of (a) the number of Offered Shares which the Co-Sale
Participant has elected to sell and (b) such Co-Sale Participant’s Co-Sale Pro
Rata Share of the Offered Shares which are not purchased by the Company
pursuant to the Company Refusal Right or by the Participating Investors
pursuant to the Right of First Refusal (the “Co-Sale Remaining Shares”). Each
Participant’s “Co-Sale Pro Rata Share” shall be equal to the fraction (i) the
numerator of which is the number of shares of Common Stock owned by such
Co-Sale Participant (on an As-Converted Basis) and (ii) the denominator of
which is the total number of shares of Common Stock owned by the Participant
and all of the Investors (on As-Converted Basis).

	 	(iii)	 	Any proposed Transfer at a different price or on terms
and conditions more favorable to the transferee(s) than specified in the
Notice, or not completed within the time specified in this Paragraph 4(b), as
well as any subsequent proposed Transfer of any Shares by a Stockholder, shall
again be subject to the Company Refusal Right and the Right of First Refusal
and Co-Sale Rights of the Investors, and shall require compliance by the
Participant with the procedures described in this Paragraph 4.

	 	(iv)	 	The exercise or non-exercise of the Right of First
Refusal or the Co-Sale Rights by the Investors in respect of one or more
Transfers of Shares made by any Participant shall not adversely affect their
rights to participate in subsequent Transfers of Shares subject to this
Paragraph 4.

	 	d.	 	Transfer Mechanics. If (i) the Company and/or the Participating
Investors elect to purchase all of the Offered Shares subject to the Notice or (ii) the
Company and/or the Participating Investors elect to purchase less than all the Offered
Shares and the prospective purchaser identified in the Notice does not agree to
purchase any of the Offered Shares not so purchased, the following provisions shall
apply: The Company and/or Participating Investors shall effect the purchase of the
Offered Shares and/or Remaining Shares on a date specified by the Participant by notice
to the Company and/or the Participating Investors not earlier than the later of (x) ten
(10) days after such notice or (y) thirty (30) days after the receipt of the Notice by
the Investors. On the date of such purchase, the Participant shall deliver to the
Company and/or the Participating Investors, as applicable, the
certificates representing the Shares to be purchased by the Company and/or the
Participating Investors, each certificate to be properly endorsed for transfer, in
exchange for payment by the Company and/or the Participating Investors, as
applicable, of the purchase price for the Shares.

 

 

	 	(i)	 	If (i) the Company and the Participating Investors do
not elect to purchase any of the Offered Shares or (ii) the Company and/or the
Participating Investors elect to purchase less than all of the Offered Shares
and the prospective purchaser agrees to purchase less than all of the Offered
Shares, the following provisions shall apply: The Participant may, not later
than forty (40) days following delivery to the Company of the Notice, enter
into an agreement providing for the closing of the Transfer to the third party
purchaser(s) identified in the Notice of any Offered Shares with respect to
which neither the Company Refusal Right nor the Right of First Refusal has been
exercised, together with the closing of the purchase of any Shares to be sold
by any Co-Sale Participant, such purchase to occur within thirty (30) days of
such agreement at a price and on terms and conditions no more favorable to the
transferee(s) thereof than specified in the Notice. Simultaneously with such
purchase there shall occur the purchase of any Offered Shares with respect to
which the Company Refusal Right or the Right of First Refusal has been
exercised. On the date of such purchase, each Co-Sale Participant shall be paid
that portion of the sale proceeds to which such Co-Sale Participant is entitled
by reason of its participation in such sale and the Company and/or each
Participating Investor, as applicable, shall pay the Participant the purchase
price to be paid by such Person for the Offered Shares purchased by them. Upon
receipt of such payment, each Co-Sale Participant shall promptly deliver to the
Participant for Transfer to the prospective purchaser(s) and, if applicable,
the Participant shall deliver to the Company and/or the Participating
Investors, one or more certificates properly endorsed for transfer which
represent the Shares to be sold by each such Person pursuant to this Paragraph
4. To the extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase Shares from a Co-Sale Participant
exercising its Co-Sale Rights hereunder, such Participant shall not sell to
such prospective purchaser or purchasers any Shares unless and until,
simultaneously with such sale, such Participant shall purchase such Shares from
such Co-Sale Participant on the same terms and conditions specified in the
Notice.

	 	(iii)	 	If the consideration to be paid for the Shares by the
third party purchaser shall be other than cash, the Company or the
Participating Investors, as applicable, exercising the Company Refusal Right or
the Right of First Refusal may in lieu of such consideration pay cash equal to
the fair market value of such consideration as mutually agreed between the
Participant and the holders of a majority of the Shares as to which the Right
of First Refusal and Company Refusal Right have been exercised. If
such mutual agreement cannot be reached, the Appraisal Procedure set forth
in the Company’s Amended and Restated Certificate of Incorporation shall be
followed mutatis mutandis and the time periods in Paragraph 4(b)
shall be extended by the time needed to determine such fair value.

 

 

	 	e.	 	Exempt Transfers.

	 	(i)	 	The Participant may Transfer Option Shares without
complying with the provisions of Paragraph 4 if such Transfer is to any
Permitted Transferee; provided that in the event of any Transfer made
pursuant to this Paragraph 4(e), (A) the Participant shall inform the Company
of such Transfer prior to effecting it, and (B) the transferee shall furnish
the Company with a written agreement, reasonably satisfactory to the Company,
to be bound by and comply with all provisions of this Paragraph 4 as if such
transferee were the Participant. Such Transferred Option Shares shall remain
Option Shares hereunder.

	 	(ii)	 	Notwithstanding the foregoing, the provisions of
Paragraph 4 hereof shall not apply to the sale of any Shares to the public
pursuant to a registration statement filed with, and declared effective by, the
Securities and Exchange Commission under Securities Act of 1933, as amended
(the “Securities Act”).

	 	f.	 	Transfers to Competitors. Any other provision of this Agreement
to the contrary notwithstanding, other than in connection with a Sale of the Company,
prior to a Qualified Public Offering, no Transfer of Option Shares may be made by the
Participant to a competitor of the Company or any person or entity that invests in any
such competitor, as determined in good faith by the Board.

	 	g.	 	Stockholder Lockup Agreements in Connection with Initial Public
Offering. Notwithstanding anything in the Plan to the contrary, the Participant
agrees that, subject to any early release provisions that apply generally to
stockholders of the Company, the Participant will not, if reasonably requested by the
managing underwriter, for a period of up to 180 days following the effective date of
the registration statement for an initial public offering directly or indirectly sell,
offer to sell, grant any option for the sale of, or otherwise dispose of any Common
Stock or securities convertible into Common Stock, except for (i) transactions relating
to Common Stock or other securities acquired in open market transactions after the
completion of the initial public offering, and (ii) Transfers to Permitted Transferees
(each of whom shall have furnished to the Company and the managing underwriter their
written consent to be bound by this Paragraph 4 or a similar agreement satisfactory to
the Company).

	 	h.	 	Consequences of Prohibited Transfer. Any attempt by a
Participant to Transfer Option Shares in violation of the terms of this Paragraph 4
shall be void, and the
Company will not effect such a Transfer nor will it treat any alleged transferee as
the holder of such Option Shares.

	 	i.	 	Legend. Each certificate representing the Option Shares subject
to the terms of this Agreement shall be endorsed with the following legend or legend(s)
containing substantially similar information (in addition to any legend required under
applicable securities laws or otherwise):

 

 

	 	 	 	THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT. THE SALE OR
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS
AND CONDITIONS OF AN OPTION AGREEMENT TO WHICH THE HOLDER HEREOF AND THE COMPANY ARE
PARTIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY.

	 	 	 	This legend shall be removed upon termination of this Paragraph 4. The Participant
consents to the Company making a notation on its records and giving instructions to
any transfer agent of the Company’s securities and capital stock in order to
implement the restrictions on transfer established in this Paragraph 4.

	 	j.	 	The Participants agree that the Company may instruct its transfer agent
to impose transfer restrictions on Option Shares represented by certificates bearing
the legend referred to in Paragraph 4(i) above to enforce the provisions of this
Paragraph 4. The legend shall be removed upon termination of this Paragraph 4.

	 	k.	 	Drag Along Rights.

	 	(i)	 	In the event that the holders of at least 66% of the
then outstanding shares of Series B Preferred Stock (the “Proposing
Stockholders”) agree to and accept an offer from a third party or third parties
not Affiliated with any Proposing Stockholder (a “Buyer”) to consummate a
transaction or series of related transactions with such Buyer pursuant to which
Buyer would acquire all of the Shares held by such Proposing Shareholders for a
specified price payable in cash, securities or other consideration and on
specified terms and conditions, the Participant shall be required, if so
demanded by the Proposing Shareholders (a “Drag Along Notice”) to sell all of
the Participant’s Option Shares to such Buyer in such transaction(s) and to
participate in such transaction(s) (a “Drag Along Sale”).
	 
	 	(ii)	 	The provisions of this Paragraph 4(k) shall apply
regardless of the form of consideration received in the Drag Along Sale, and
the Participant shall (i) if the Drag Along Sale is structured as a merger or
consolidation, waive any dissenters’ rights, appraisal rights or similar rights
in connection with such merger or consolidation, or (ii) if the Drag Along Sale
is structured as a sale, agree to sell all of the Participant’s Option Shares
on the terms and conditions approved by the Proposing Stockholders. The
Participant (a) shall be subject to the same terms and conditions, and (b)
shall execute

 

 

	 	 	 	such documents and take such actions as may be reasonably
required by the Company and the Proposing Shareholders.
	 
	 	(iii)	 	Upon the consummation of the Drag Along Sale, the
Participant (i) shall receive the same form of consideration and the same
amount of consideration per share of Common Stock (on an As Converted Basis) as
every other holder of any class or series of Shares, except to the extent
otherwise approved in connection with Section 2 of the Amended and Restated
Certificate of Incorporation of the Company, as amended from time to time, and
(ii) shall be given the same option, if any, as any other holders of any other
class or series of Shares as to the form of consideration to be received.

	 	(iv)	 	Transfer Mechanics; Further Assurances.

	 	(a)	 	At least five (5) days prior to the
consummation of a Drag Along Sale (which date and the place and time of
such consummation shall be designated by the Proposing Stockholders and
provided to the Participant in the Drag Along Notice), the Participant
shall deliver for transfer to the Buyer one or more certificates,
properly endorsed for transfer in form satisfactory to the Proposing
Stockholders, which represent all of the Option Shares held by the
Participant, duly executed and free and clear of any liens. The
certificate(s) delivered by the Participant shall be transferred to the
Buyer identified in the Drag Along Notice as part of the consummation
of the Drag Along Sale. Upon receipt of the proceeds of the Drag Along
Sale, the Proposing Stockholders shall promptly remit to the
Participant that portion of such proceeds to which the Participant is
entitled by reason of the Participant’s participation in such sale.

	 	(b)	 	In connection with a Drag Along Sale,
the Participant agrees to execute and deliver such agreements as may be
reasonably specified by the Proposing Stockholders to which such
Proposing Stockholders will also be party, on the same terms,
including, without limitation, agreements to (a) (i) made individual
representation, warranties, covenants and other agreements as to the
unencumbered title to the Participant’s Option Shares and the power,
authority and legal right to Transfer such Option Shares and
to enter into the agreements relating thereto and the absence of any
adverse claim with respect to such Option Shares (but shall not be
required to make individual representations or warranties with
respect to any of the Company’s operations, activities, financial
condition or other characteristics) and (ii) be liable without
limitation as to such individual representations, warranties,
covenants and other agreements and (b) be liable (whether by purchase
price adjustment, indemnity payments or otherwise) in

 

 

	 	 	 	respect of
representations, warranties, covenants and agreements in respect of
the Company; provided, however, that the aggregate amount of
liability described in this clause (b) in connection with any sale of
Shares shall not exceed the less of (i) the Participant’s pro rata
portion of any such liability, to be determined in accordance with
the Participant’s portion of the total number of Shares included in
such Drag Along Sale (on an As Converted Basis) or (ii) the proceeds
to such Participant in connection with such Drag Along Sale.

	 	l.	 	Term. This Paragraph 4 shall continue in full force and effect
from the date hereof through the earliest of the following dates, on which date it
shall terminate in its entirety:

	 	(i)	 	the date of the closing of a Qualified Public Offering;
and

	 	(ii)	 	the date of the consummation of a Sale of the Company.

	 	 	 	For avoidance of doubt, this Paragraph 4 shall survive termination or expiration of
this Agreement.

5.    Miscellaneous.

	 	a.	 	Employment-at-Will; Rights as Shareholder. This Agreement shall
not confer on Participant any right with respect to continuance of Employment by the
Company or any of its Affiliates, nor will it interfere in any way with the right of
the Company to terminate such Employment. Participant’s Employment relationship with
the Company and its Affiliates shall be employment-at-will, and nothing in this
Agreement shall be construed as creating an employment contract for any specified term
between Participant and the Company or any Affiliate. Participant shall have no rights
as a shareholder with respect to shares subject to this Option until such shares have
been issued to Participant upon exercise of this Option. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 11 of the Plan.

	 	b.	 	Nonsolicitation. The Participant agrees that during the period
of his Employment with the Company or any of its Affiliates and for the one (1) year
period immediately following termination of such Employment for any reason, the
Participant shall not (i) directly or indirectly, engage in the recruiting,
soliciting or inducing of any nonclerical employee or employees of the Company or
Affiliates to terminate their employment with, or otherwise cease their relationship
with the Company or any of its Affiliates, or in hiring or assisting another person
or entity to hire any nonclerical employee of the Company or any of its Affiliates
or any person who within six (6) months before had been a nonclerical employee of
the Company or any of their Affiliates and were

 

 

	 	 	 	recruited or solicited for such
employment or other retention while an employee of the Company (other than any of
the foregoing activities engaged in with the prior written approval of the Company);
or (ii) directly or indirectly solicit, induce or encourage or attempt to persuade
any agent, supplier or customer of the Company or any Affiliate to terminate such
agency or business relationship. The Participant acknowledges that if (x) the
Participant breaches any term or condition contained in this Paragraph 5(b) and (y)
the Company provides the Participant with written notice of such breach, then (A)
all of the Option that has not vested prior to the date of such notice shall be
automatically forfeited and (B) the Company shall have the right to repurchase all
of the Option Shares then held by the Participant at the per share cost paid by the
Participant for such Option Shares.

	 	c.	 	Securities Law Compliance. The exercise of all or any parts of
this Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such exercise
will not violate any state or federal securities or other laws. Participant may be
required by the Company, as a condition of the effectiveness of any exercise of this
Option, to agree in writing that all Common Stock to be acquired pursuant to such
exercise shall be held, until such time that such Common Stock is registered and freely
tradable under applicable state and federal securities laws, for Participant’s own
account without a view to any further distribution thereof, that the certificates for
such shares shall bear an appropriate legend to that effect and that such shares will
be not transferred or disposed of except in compliance with applicable state and
federal securities laws.

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

	 	e.	 	Withholding Taxes. In order to permit the Company to comply
with all applicable federal or state income tax laws or regulations, the Company may
take such action as it deems appropriate to insure that, if necessary, all applicable
federal and state payroll, income or other taxes are withheld from any amounts payable
by the Company to Participant. If the Company is unable to withhold such federal and
state taxes, for whatever reason, Participant hereby agrees to pay to the Company an
amount equal to the amount the Company would otherwise be required to withhold under
federal or state law. Subject to such rules as the Committee may adopt, the Committee
may, in its sole discretion, permit Participant to satisfy such
withholding tax obligations, in whole or in part (i) by delivering shares of Common
Stock, or (ii) by electing to have the Company withhold shares of Common Stock
otherwise issuable to Participant, in either case having a Fair Market Value equal
to the minimum required tax withholding, based on the minimum statutory withholding
rates for federal and state tax purposes, including payroll taxes, that are
applicable to the supplemental income resulting from the exercise of the
nonqualified stock option. In no event may the Company withhold shares having a Fair
Market Value in excess of such statutory minimum required tax

 

 

	 	 	 	withholding.
Participant’s election to have shares withheld for this purpose shall be made on or
before the date the option is exercised or, if later, the date that the amount of
tax to be withheld is determined under applicable tax law. Such election shall be
approved by the Committee and otherwise comply with such rules as the Committee may
adopt to assure compliance with Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Securities Exchange Act of
1934, if applicable.

	 	f.	 	Nontransferability. During the lifetime of Participant, the
Option shall be exercisable only by Participant or by the Participant’s guardian or
other legal representative, and shall not be assignable or transferable by Participant,
in whole or in part, other than by will or by the laws of descent and distribution.

	 	g.	 	2008 Equity and Incentive Plan. The Option evidenced by this
Agreement is granted pursuant to the Plan, a copy of which Plan has been made available
to Participant and is hereby incorporated into this Agreement. This Agreement is
subject to and in all respects limited and conditioned as provided in the Plan. The
Plan governs this Option and, except with respect to the lockup provisions contained in
Paragraph 4(g), in the event of any questions as to the construction of this Agreement
or in the event of a conflict between the Plan and this Agreement, the Plan shall
govern, except as the Plan otherwise provides.

	 	h.	 	Blue Sky Limitation. Notwithstanding anything in this Agreement
to the contrary, in the event the Company makes any public offering of its securities
and it is determined that it is necessary to reduce the number of issued but
unexercised stock purchase rights so as to comply with any state securities or Blue Sky
law limitations with respect thereto, and such determination is affirmed by the Board
of Directors, unless the Board of Directors determines otherwise, (i) the
exercisability of this Option and the date on which this Option must be exercised shall
be accelerated, provided that the Company agrees to give Participant 15 days’ prior
written notice of such acceleration, and (ii) any portion of this Option or any other
option granted to Participant pursuant to the Plan which is not exercised prior to or
contemporaneously with such public offering shall be canceled. Notice shall be deemed
given when delivered personally or when deposited in the United States mail, first
class postage prepaid and addressed to Participant at the address of Participant on
file with the Company.

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

	 	j.	 	Stock Legend. The Committee may require that the certificates
for any shares of Common Stock purchased by Participant (or, in the case of death,
Participant’s

 

 

	 	 	 	successors) shall bear an appropriate legend to reflect the restrictions
set forth in this Agreement; provided, however, that failure to so endorse any of such
certificates shall not render invalid or inapplicable Paragraph 4.

	 	k.	 	Scope of Agreement; Amendment. This Agreement shall bind and
inure to the benefit of the Company, its Affiliates and its successors and assigns and
Participant and any successor or successors of Participant permitted by Paragraph 2 or
Paragraph 5(f) above. Notwithstanding anything in this Agreement or the Plan to the
contrary, the Company expressly reserves the right to amend this Agreement without
Participant’s consent to the extent necessary or desirable to comply with Code Section
409A, and the regulations, notices and other guidance of general applicability issued
thereunder. Notwithstanding anything herein in this Agreement or the Plan to the
contrary, any provision of Paragraph 4 may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only by the written consent given by the Company and Investors holding
sixty-six percent (66%) of the then outstanding Series B Preferred Stock, and no
consent from the Participant shall be required unless such amendment or waiver creates
material additional obligations for the Participant under this Agreement which are
substantially different from any obligations imposed on holders of Common Stock under
the Investors Stockholders Agreement (in which case, the consent of participants under
restricted stock or option agreements who are bound by terms and conditions of similar
tenor to this Agreement who hold more than fifty percent (50%) of the total of all
restricted shares and option shares held by all such participants thereunder and
hereunder shall be required for any such amendment or waiver which does create such
material additional obligations).

6. Change of Control.

	 	a.	 	Acceleration. In the event of a Change of Control (whether or
not there is an acquiring or surviving entity) in which there is no assumption or
substitution of the Option as described in Paragraph 6(b), then the Option shall become
fully vested and exercisable on a basis that gives the Participant a reasonable
opportunity, following exercise of the Option, to participate as a stockholder in the
Change of Control. The Option (unless assumed pursuant to Paragraph 6(b) hereof), shall
terminate upon consummation of the Change of Control.

          b. Continuation or Assumption of the Option. In the event of a
Change of Control in which there is an acquiring or surviving entity, the acquiring
or surviving entity may provide for the continuation or assumption of the
Option, or for the grant of a new award in substitution therefor, by the acquiror or
survivor or an affiliate of the acquiror or survivor, in each case on such terms and
subject to such conditions as preserve the intrinsic value of the Option. In the
event the acquiring or surviving entity provides for the continuation or assumption
of the Option as set forth in this Paragraph 6(b), the Option shall become fully
vested and exercisable upon the Participant’s termination of Employment by the
acquiring or surviving entity without Cause or by the

 

 

	 	 	 	Participant for Good Reason,
in either case within eighteen (18) months after the Change of Control. For purposes
of this Agreement, “Good Reason” shall mean (i) a material diminution in the
Participant’s responsibilities or duties as in effect immediately prior to the
Change of Control, (ii) the relocation of Participant’s principal office, without
the Participant’s consent, to a location more than one hundred (100) miles from the
location of the Participant’s principal office immediately prior to the Change of
Control, or (iii) any reduction in the Participant’s base compensation in the
absence of a general reduction affecting similarly situated employees.

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

	 	 	 	 	 
	FINGERHUT DIRECT MARKETING, INC

 	 
	By:  	 	 
	 	Its: 	 
	 	 
	Participant 	 
	 

 

 

NONQUALIFIED STOCK OPTION AGREEMENT

FINGERHUT DIRECT MARKETING, INC.

2008 EQUITY AND INCENTIVE PLAN

(NONEXECUTIVE EMPLOYEES)

          THIS AGREEMENT, made effective as of this 8th day of August, 2008 (the “Date of Grant”), by
and between Fingerhut Direct Marketing, Inc., a Delaware corporation (the “Company”), and [Insert
Participant Name] (“Participant”).

W I T N E S S E T H:

          WHEREAS, Participant on the date hereof is an employee or officer of the Company or one of its
Affiliates; and

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

          WHEREAS, the Committee has authorized the grant of a nonqualified stock option to Participant
and has determined that, as of the effective date of this Agreement, the fair market value of the
Company’s Common Stock is $0.009 per share;

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

1. Grant of Option. The Company hereby grants to Participant on the Date of Grant, the
right and option (the “Option”) to purchase all or portions of an aggregate of [Insert Number of
Shares] (•) shares of Common Stock at a per share price of $0.009 on the terms and conditions set
forth herein, and subject to adjustment pursuant to Section 11 of the Plan. This Option is
not intended to be an incentive stock option within the meaning of Section 422 of the Code,
or any successor provision, and the regulations thereunder. Capitalized terms not defined herein
shall have the meanings set forth in the Plan.

2. Duration and Exercisability.

	 	a.	 	General. The term during which this Option may be exercised shall
terminate on a date which is ten (10) years from the Date of Grant (the “Expiration
Date”), except as otherwise provided in Paragraphs 2(b) through 2(e) below. This Option
shall become exercisable according to the following schedule:

	 	 	 
	Vesting Date	 	Number of Shares
	 
	May 21, 2009

	 	F•]
	May 21, 2010

	 	F•]
	May 21, 2011

	 	F•]
	May 21, 2012

	 	F•]

 

 

	 	 	 	Once the Option becomes exercisable to the extent of any of the aggregate
number of shares specified in Paragraph 1, Participant may continue to exercise this
Option with respect to such shares under the terms and conditions of this Agreement
until the termination of the Option as provided herein. If Participant does not
purchase upon an exercise of this Option the full number of shares which Participant
is then entitled to purchase, Participant may purchase upon any subsequent exercise
prior to this Option’s termination such previously unpurchased shares in addition to
those Participant is otherwise entitled to purchase.
	 
	 	 	 	Notwithstanding anything herein to the contrary, in the event a Public Offering
becomes effective prior to July 31, 2010, the tranche of the Option scheduled to
vest on May 21, 2012 shall become fully exercisable on the date such Public Offering
becomes effective.
	 
	 	b.	 	Termination of Employment (other than Termination for Cause, Disability or
Death). If Participant’s Employment with the Company and its Affiliates is
terminated for any reason other than termination by the Company for Cause, Disability,
or death, this Option shall terminate on the earlier of (i) ninety (90) days following
the date of such termination of Employment, and (ii) the Expiration Date of this Option
stated in Paragraph 2(a) above. In such period following the termination of
Participant’s Employment, this Option shall be exercisable only to the extent the
Option was exercisable on the vesting date immediately preceding such termination of
Employment, but had not previously been exercised. To the extent this Option was not
exercisable upon such termination of Employment, or if Participant does not exercise
the Option within the time specified in this Paragraph 2(b), all rights of Participant
under this Option shall be forfeited.
	 
	 	c.	 	Termination of Employment for Cause. If Participant’s Employment with
the Company and its Affiliates is terminated for Cause, the unexercised portion of this
Option shall immediately expire, and all rights of Participant under this Option shall
be forfeited.
	 
	 	d.	 	Termination of Employment — Disability. If Participant’s Employment
with the Company and its Affiliates terminates because of Disability, this Option shall
terminate on the earlier of (i) one (1) year following the date of such termination of
Employment, and (ii) the Expiration Date of this Option stated in Paragraph 2(a) above.
In such period following the termination of Participant’s Employment, this Option shall
be fully exercisable, whether or not any portion of the Option was not exercisable
immediately prior to such termination of Employment (but only to the extent it had not
previously been exercised). If Participant does not exercise the Option within the time
specified in this Paragraph 2(d), all rights of Participant under this Option shall be
forfeited.
	 
	 	e.	 	Termination of Employment — Death. In the event of Participant’s death,
this Option shall terminate on the earlier of (i) one (1) year following the date of
the

 

 

	 	 	 	Participant’s death, and (ii) the Expiration Date of this Option stated in Paragraph
2(a) above. In such period following Participant’s death, this Option shall be fully
exercisable by the person or persons to whom Participant’s rights under this Option
shall have passed by Participant’s will or by the laws of descent and distribution
(but only to the extent it had not previously been exercised). If such person or
persons do not exercise this Option within the time specified in this Paragraph
2(e), all rights under this Option shall be forfeited.

3. Manner of Exercise.

	 	a.	 	General. The Option may be exercised only by Participant (or other
proper party in the event of death or incapacity), subject to the conditions of the
Plan and subject to such other administrative rules as the Committee may deem
advisable, by delivering within the option period written notice of exercise to the
Company at its principal office. The notice shall state the number of shares as to
which the Option is being exercised and shall be accompanied by payment in full of the
option price for all shares designated in the notice. The exercise of the Option shall
be deemed effective upon receipt of such notice by the Company and upon payment that
complies with the terms of the Plan and this Agreement. The Option may be exercised
with respect to any number or all of the shares as to which it can then be exercised
and, if partially exercised, may be so exercised as to the unexercised shares any
number of times during the option period as provided herein.
	 
	 	b.	 	Form of Payment. The Participant’s payment of the option price in full
at the time of exercise shall be (i) in cash or cash equivalents, (ii) with the consent
of the Committee, in Shares, valued at the Fair Market Value on the date of exercise,
or (if permitted by the Committee and subject to such terms and conditions as it may
determine) by surrender of outstanding Awards under the Plan, or (iii) in accordance
with such procedures or in such other form as the Committee shall from time to time
determine (including by permitting broker’s cashless exercise procedure).
	 
	 	c.	 	Stock Transfer Records. As soon as practicable after the effective
exercise of all or any part of the Option, Participant shall be recorded on the stock
transfer books of the Company as the owner of the shares purchased, and the Company
shall deliver to Participant one or more duly issued stock certificates evidencing such
ownership. All requisite original issue or transfer documentary stamp taxes shall be
paid by the Company.

4. Transfer Restrictions and Mechanics.

	 	a.	 	Definitions. Solely for purposes of this Paragraph 4 and Paragraph
5(k), the following terms have the respective meanings set forth below:

	 	(i)	 	“Affiliate” shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, and
shall

 

 

	 	 	 	include, with respect to any Investor, any managed account, investment fund
or other vehicle for which such Investor or any Affiliate or such Investor
acts as an investment advisor or portfolio manager; provided, that with
respect to Bain Capital, the term Affiliate shall be deemed to include any
Person under common management with Bain Capital.
	 
	 	(ii)	 	“As-Converted Basis” shall mean, for purposes of determining
the number of shares of Common Stock outstanding, a basis of calculation which
takes into account (a) the number of shares of Common Stock actually issued and
outstanding at the time of such determination, and (b) the number of shares of
Common Stock that is then issuable upon the exercise or conversion of all
outstanding securities or rights convertible into or exercisable for Common
Stock, including without limitation, the Series A Preferred Stock, Series B
Preferred Stock and the Warrants and the number of shares of Common Stock that
would be issuable upon the conversion of the Series A Preferred Stock then
issuable upon exercise of the Warrants, but excluding stock options and any
other warrants for the purchase of any shares of Common Stock,
Series A Preferred Stock or Series B Preferred Stock.
	 
	 	(iii)	 	“Bain Capital” means Bain Capital Venture Fund 2007, L.P.
	 
	 	(iv)	 	“Common Stock” shall mean the Company’s common stock, par value
$0.00001 per share.
	 
	 	(v)	 	“Investors” shall mean the Investors that are or hereafter
become a party to Investors Stockholders Agreement.
	 
	 	(vi)	 	“Investors Stockholders Agreement” shall mean the Stockholders
Agreement dated as of May 15, 2008, among the Company and the Investors named
therein, as such agreement is amended, modified or replaced from time to time.
	 
	 	(vii)	 	“Option Shares” shall mean shares of Common Stock issued or
issuable to the Participant pursuant to this Agreement.
	 
	 	(viii)	 	“Permitted Transferee” means any of the following Persons to whom or to which
a Participant Transfers any Option Shares: (a) a family member of the
Participant or a trust established for the benefit thereof; and (b) a
transferee of the Participant by will or the laws of intestate succession.
	 
	 	(ix)	 	“Person” shall be construed broadly and shall include without
limitation an individual, a partnership, a corporation, an association, a joint
stock corporation, a limited liability corporation, a trust, a joint venture,
an unincorporated organization and a governmental authority.
	 
	 	(x)	 	“Qualified Public Offering” means an underwritten public
offering of shares of Common Stock in which the aggregate net proceeds to the

 

 

	 	 	 	Company equal or exceed $75 million and the public offering price per share
is not less than $0.2235 (as adjusted appropriately in the event of any
subdivision, combination, reorganization, recapitalization,
reclassification, stock dividend or similar event affecting the Common
Stock) and after which the Common Stock is listed on the New York Stock
Exchange or the Nasdaq National Market.
	 
	 	(xi)	 	“Sale of the Company” means (i) a sale of all or substantially
all of the assets of the Company, (ii) an acquisition of the Company by one or
more persons or entities by means of any transaction or series of related
transactions (including any reorganization, merger, consolidation) where the
voting securities of the Company outstanding immediately preceding such
transaction or the voting securities issued with respect to the voting
securities of the Company outstanding immediately preceding such transaction
represent less than 50% of the voting securities of the Company or surviving
entity, as the case may be, following such transaction, or (iii) a transaction
or series of related transactions resulting in the transfer of shares
representing more than 50% of the voting securities of the Company. A sale (or
multiple related sales) of one or more subsidiaries of the Company (whether by
way of merger, consolidation, reorganization or sale of all or substantially
all assets or securities) which constitutes all or substantially all of the
consolidated assets of the Company shall be deemed a sale of substantially all
the assets of the Company for purposes of the foregoing definition.
	 
	 	(xii)	 	“Series A Preferred Stock” means the Series A Convertible
Preferred Stock, par value $0.00001 per share, of the Company.
	 
	 	(xiii)	 	“Series B Preferred Stock means the Series B Convertible Preferred Stock, par
value $0.00001 per share, of the Company.
	 
	 	(xiv)	 	“Shares” shall mean shares of Common Stock and Series A
Preferred Stock, and warrants for the purchase of any shares of Common Stock
and Series A Preferred Stock.
	 
	 	(xv)	 	“Transfer” shall mean any sale, assignment, encumbrance,
hypothecation, pledge, conveyance in trust, gift, transfer by bequest, devise
or descent, or other transfer or disposition of any kind, including, but not
limited to, transfers to receivers, levying creditors, trustees or receivers in
bankruptcy proceedings or general assignees for the benefit of creditors,
whether voluntary or by operation of law, directly or indirectly, of any
Shares.

	 	b.	 	Notice of Transfer. The Participant may not Transfer any Option Shares other
than as set forth in Paragraph 4(e) hereof unless (i) the Participant shall have
received a bona-fide arm’s length offer (an “Offer”) to purchase such Option Shares
from a third party who has agreed in writing be bound by the terms of this

 

 

	 	 	 	Agreement
and who the Participant reasonably believes has the financial capacity to fund such
purchase, (ii) such Participant gives written notice (the “Notice”) to the Company
at least thirty (30) days prior to the closing of such proposed Transfer as
described below, and (iii) such Participant otherwise complies with this Paragraph
4. Promptly after receipt of such Notice, the Company shall provide a copy thereof
to the Investors. The Notice shall describe in reasonable detail the proposed
Transfer including, without limitation, the number of Option Shares to be
transferred (the “Offered Shares”), the nature of such Transfer, the consideration
to be paid, and the name and address of each prospective purchaser or transferee.

	 	c.	 	Right of First Refusal and Co-Sale Rights. For a period of ten (10)
days following receipt of any Notice, the Company shall have the right (the “Company
Refusal Right”) upon written notice to the Participant to elect to purchase all or any
part of the Offered Shares on the same terms and conditions set forth in the Notice,
and for a period of twenty (20) days following the receipt of the Notice, each Investor
shall have, upon written notice to the Participant, either (a) the right (the “Right of
First Refusal”), subject to the Company Refusal Right, to elect to purchase all or any
part of the Offered Shares on the same terms and conditions as set forth in the Notice
or (b) the right (the “Co-Sale Right”) to elect to sell on such terms all or any part
of that number of Shares then owned by such Investor (the “Co-Sale Shares”) equal to
the product obtained by multiplying (i) the aggregate number of Offered Shares by (ii)
a fraction the numerator of which is the number of shares of Common Stock owned by all
of the Investors (on an As-Converted Basis) and the denominator of which is the total
number of shares of Common Stock owned by the Participant and all of the Investors (on
an As-Converted Basis).

	 	(i)	 	If the Company does not elect to purchase all of the Offered
Shares within the ten (10) day period specified above, the Company shall give
prompt written notice to the Investors setting forth the number of Offered
Shares not purchased by the Company (the “Remaining Shares”). The Remaining
Shares shall be allocated among the Investors who have exercised the Right of
First Refusal (the “Participating Investors”) as follows: there shall first be
allocated to each Participating Investor a number of Remaining Shares equal to
the lesser of (i) the number of Remaining Shares which the Participating
Investor has elected to purchase and (ii) such Participating Investor’s Refusal
Right Pro Rata Share (as defined below) of the Remaining Shares. The balance of
the Remaining Shares which the Participating Investors have elected to purchase
shall be allocated to the Participating Investors who have elected to purchase
more than their Refusal Right Pro Rata Share of the Remaining Shares pro rata
based on the number of Remaining Shares which each Participating Investor has
elected to purchase in excess of such Participating Investor’s Refusal Right
Pro Rata Share of the Remaining Shares. Each Participating Investor’s “Refusal
Right Pro Rata Share” shall be equal to the fraction (i) the numerator of which
is the number of shares of Common

 

	 	 	 	Stock owned by such Participating Investor
(on an As-Converted Basis)
and (ii) the denominator of which is the total number of shares of Common
Stock owned by all of the Participating Investors (on an As-Converted
Basis).

	 	(ii)	 	Each Investor who has exercised the Co-Sale Right (a
“Co-Sale Participant”) shall be entitled to sell a number of Co-Sale Shares
equal to the lesser of (a) the number of Offered Shares which the Co-Sale
Participant has elected to sell and (b) such Co-Sale Participant’s Co-Sale Pro
Rata Share of the Offered Shares which are not purchased by the Company
pursuant to the Company Refusal Right or by the Participating Investors
pursuant to the Right of First Refusal (the “Co-Sale Remaining Shares”). Each
Participant’s “Co-Sale Pro Rata Share” shall be equal to the fraction (i) the
numerator of which is the number of shares of Common Stock owned by such
Co-Sale Participant (on an As-Converted Basis) and (ii) the denominator of
which is the total number of shares of Common Stock owned by the Participant
and all of the Investors (on As-Converted Basis).

	 	(iii)	 	Any proposed Transfer at a different price or on terms and
conditions more favorable to the transferee(s) than specified in the Notice, or
not completed within the time specified in this Paragraph 4(b), as well as any
subsequent proposed Transfer of any Shares by a Stockholder, shall again be
subject to the Company Refusal Right and the Right of First Refusal and Co-Sale
Rights of the Investors, and shall require compliance by the Participant with
the procedures described in this Paragraph 4.

	 	(iv)	 	The exercise or non-exercise of the Right of First Refusal
or the Co-Sale Rights by the Investors in respect of one or more Transfers of
Shares made by any Participant shall not adversely affect their rights to
participate in subsequent Transfers of Shares subject to this Paragraph 4.

	 	d.	 	Transfer Mechanics.

	 	(i)	 	If (i) the Company and/or the Participating Investors elect
to purchase all of the Offered Shares subject to the Notice or (ii) the Company
and/or the Participating Investors elect to purchase less than all the Offered
Shares and the prospective purchaser identified in the Notice does not agree to
purchase any of the Offered Shares not so purchased, the following provisions
shall apply: The Company and/or Participating Investors shall effect the
purchase of the Offered Shares and/or Remaining Shares on a date specified by
the Participant by notice to the Company and/or the Participating Investors not
earlier than the later of (x) ten (10) days after such notice or (y) thirty
(30) days after the receipt of the Notice by the Investors. On the date of such
purchase, the Participant shall deliver to the Company and/or the Participating
Investors, as applicable, the certificates representing the Shares to be
purchased by the

 

 

	 	 	 	Company and/or the Participating Investors, each certificate to be properly
endorsed for transfer, in exchange for payment by the Company and/or the
Participating Investors, as applicable, of the purchase price for the
Shares.

	 	(ii)	 	If (i) the Company and the Participating Investors do not
elect to purchase any of the Offered Shares or (ii) the Company and/or the
Participating Investors elect to purchase less than all of the Offered Shares
and the prospective purchaser agrees to purchase less than all of the Offered
Shares, the following provisions shall apply: The Participant may, not later
than forty (40) days following delivery to the Company of the Notice, enter
into an agreement providing for the closing of the Transfer to the third party
purchaser(s) identified in the Notice of any Offered Shares with respect to
which neither the Company Refusal Right nor the Right of First Refusal has been
exercised, together with the closing of the purchase of any Shares to be sold
by any Co-Sale Participant, such purchase to occur within thirty (30) days of
such agreement at a price and on terms and conditions no more favorable to the
transferee(s) thereof than specified in the Notice. Simultaneously with such
purchase there shall occur the purchase of any Offered Shares with respect to
which the Company Refusal Right or the Right of First Refusal has been
exercised. On the date of such purchase, each Co-Sale Participant shall be paid
that portion of the sale proceeds to which such Co-Sale Participant is entitled
by reason of its participation in such sale and the Company and/or each
Participating Investor, as applicable, shall pay the Participant the purchase
price to be paid by such Person for the Offered Shares purchased by them. Upon
receipt of such payment, each Co-Sale Participant shall promptly deliver to the
Participant for Transfer to the prospective purchaser(s) and, if applicable,
the Participant shall deliver to the Company and/or the Participating
Investors, one or more certificates properly endorsed for transfer which
represent the Shares to be sold by each such Person pursuant to this Paragraph
4. To the extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase Shares from a Co-Sale Participant
exercising its Co-Sale Rights hereunder, such Participant shall not sell to
such prospective purchaser or purchasers any Shares unless and until,
simultaneously with such sale, such Participant shall purchase such Shares from
such Co-Sale Participant on the same terms and conditions specified in the
Notice.

	 	(iii)	 	If the consideration to be paid for the Shares by the third
party purchaser shall be other than cash, the Company or the Participating
Investors, as applicable, exercising the Company Refusal Right or the Right of
First Refusal may in lieu of such consideration pay cash equal to the fair
market value of such consideration as mutually agreed between the Participant
and the holders of a majority of the Shares as to which the Right of First
Refusal and Company Refusal Right have been exercised. If

 

 

	 	 	 	such mutual agreement cannot be reached, the Appraisal Procedure set forth in the Company’s Amended
and Restated Certificate of
Incorporation shall be followed mutatis mutandis and the time
periods in Paragraph 4(b) shall be extended by the time needed to determine
such fair value.

	 	e.	 	Exempt Transfers.

	 	(i)	 	The Participant may Transfer Option Shares without complying
with the provisions of Paragraph 4 if such Transfer is to any Permitted
Transferee; provided that in the event of any Transfer made pursuant to
this Paragraph 4(e), (A) the Participant shall inform the Company of such
Transfer prior to effecting it, and (B) the transferee shall furnish the
Company with a written agreement, reasonably satisfactory to the Company, to be
bound by and comply with all provisions of this Paragraph 4 as if such
transferee were the Participant. Such Transferred Option Shares shall remain
Option Shares hereunder.

	 	f.	 	Notwithstanding the foregoing, the provisions of Paragraph 4 hereof shall
not apply to the sale of any Shares to the public pursuant to a registration statement
filed with, and declared effective by, the Securities and Exchange Commission under
Securities Act of 1933, as amended (the “Securities Act”).

	 	g.	 	Transfers to Competitors. Any other provision of this Agreement to
the contrary notwithstanding, other than in connection with a Sale of the Company,
prior to a Qualified Public Offering, no Transfer of Option Shares may be made by the
Participant to a competitor of the Company or any person or entity that invests in any
such competitor, as determined in good faith by the Board.

	 	h.	 	Stockholder Lockup Agreements in Connection with Initial Public
Offering. Notwithstanding anything in the Plan to the contrary, the Participant
agrees that, subject to any early release provisions that apply generally to
stockholders of the Company, the Participant will not, if reasonably requested by the
managing underwriter, for a period of up to 180 days following the effective date of
the registration statement for an initial public offering directly or indirectly sell,
offer to sell, grant any option for the sale of, or otherwise dispose of any Common
Stock or securities convertible into Common Stock, except for (i) transactions relating
to Common Stock or other securities acquired in open market transactions after the
completion of the initial public offering, and (ii) Transfers to Permitted Transferees
(each of whom shall have furnished to the Company and the managing underwriter their
written consent to be bound by this Paragraph 4 or a similar agreement satisfactory to
the Company).

	 	i.	 	Consequences of Prohibited Transfer. Any attempt by a Participant to
Transfer Option Shares in violation of the terms of this Paragraph 4 shall be void, and
the Company will not effect such a Transfer nor will it treat any alleged transferee as
the holder of such Option Shares.

 

 

	 	j.	 	Legend. Each certificate representing the Option Shares subject to
the terms of this Agreement shall be endorsed with the following legend or legend(s)
containing substantially similar information (in addition to any legend required under
applicable securities laws or otherwise):

	 	 	 	THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT. THE SALE OR
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS
AND CONDITIONS OF AN OPTION AGREEMENT TO WHICH THE HOLDER HEREOF AND THE COMPANY ARE
PARTIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE COMPANY.

	 	 	 	This legend shall be removed upon termination of this Paragraph 4. The Participant
consents to the Company making a notation on its records and giving instructions to
any transfer agent of the Company’s securities and capital stock in order to
implement the restrictions on transfer established in this Paragraph 4.

	 	j.	 	The Participants agree that the Company may instruct its transfer agent to
impose transfer restrictions on Option Shares represented by certificates bearing the
legend referred to in Paragraph 4(i) above to enforce the provisions of this Paragraph
4. The legend shall be removed upon termination of this Paragraph 4.

	 	k.	 	Drag Along Rights.

	 	(i)	 	In the event that the holders of at least 66% of the then
outstanding shares of Series B Preferred Stock (the “Proposing Stockholders”)
agree to and accept an offer from a third party or third parties not Affiliated
with any Proposing Stockholder (a “Buyer”) to consummate a transaction or
series of related transactions with such Buyer pursuant to which Buyer would
acquire all of the Shares held by such Proposing Shareholders for a specified
price payable in cash, securities or other consideration and on specified terms
and conditions, the Participant shall be required, if so demanded by the
Proposing Shareholders (a “Drag Along Notice”) to sell all of the Participant’s
Option Shares to such Buyer in such transaction(s) and to participate in such
transaction(s) (a “Drag Along Sale”).

	 	(ii)	 	The provisions of this Paragraph 4(k) shall apply regardless
of the form of consideration received in the Drag Along Sale, and the
Participant shall (i) if the Drag Along Sale is structured as a merger or
consolidation, waive any dissenters’ rights, appraisal rights or similar rights
in connection with

 

 

	 	 	 	such merger or consolidation, or (ii) if the Drag Along Sale is structured
as a sale, agree to sell all of the Participant’s Option Shares on the terms
and conditions approved by the Proposing Stockholders. The Participant (a)
shall be subject to the same terms and conditions, and (b) shall execute
such documents and take such actions as may be reasonably required by the
Company and the Proposing Shareholders.

	 	(iii)	 	Upon the consummation of the Drag Along Sale, the
Participant (i) shall receive the same form of consideration and the same
amount of consideration per share of Common Stock (on an As Converted Basis) as
every other holder of any class or series of Shares, except to the extent
otherwise approved in connection with Section 2 of the Amended and Restated
Certificate of Incorporation of the Company, as amended from time to time, and
(ii) shall be given the same option, if any, as any other holders of any other
class or series of Shares as to the form of consideration to be received.

	 	(iv)	 	Transfer Mechanics; Further Assurances.

	 	(a)	 	At least five (5) days prior to the
consummation of a Drag Along Sale (which date and the place and time of
such consummation shall be designated by the Proposing Stockholders and
provided to the Participant in the Drag Along Notice), the Participant
shall deliver for transfer to the Buyer one or more certificates,
properly endorsed for transfer in form satisfactory to the Proposing
Stockholders, which represent all of the Option Shares held by the
Participant, duly executed and free and clear of any liens. The
certificate(s) delivered by the Participant shall be transferred to the
Buyer identified in the Drag Along Notice as part of the consummation
of the Drag Along Sale. Upon receipt of the proceeds of the Drag Along
Sale, the Proposing Stockholders shall promptly remit to the
Participant that portion of such proceeds to which the Participant is
entitled by reason of the Participant’s participation in such sale.

	 	(b)	 	In connection with a Drag Along Sale, the
Participant agrees to execute and deliver such agreements as may be
reasonably specified by the Proposing Stockholders to which such
Proposing Stockholders will also be party, on the same terms,
including, without limitation, agreements to (a) (i) made individual
representation, warranties, covenants and other agreements as to the
unencumbered title to the Participant’s Option Shares and the power,
authority and legal right to Transfer such Option Shares and to enter
into the agreements relating thereto and the absence of any adverse
claim with respect to such Option Shares (but shall not be required to
make individual representations or warranties with respect to any of
the Company’s operations, activities, financial

 

 

	 	 	 	condition or other characteristics) and (ii) be liable without
limitation as to such individual representations, warranties,
covenants and other agreements and (b) be liable (whether by purchase
price adjustment, indemnity payments or otherwise) in respect of
representations, warranties, covenants and agreements in respect of
the Company; provided, however, that the aggregate amount of
liability described in this clause (b) in connection with any sale of
Shares shall not exceed the less of (i) the Participant’s pro rata
portion of any such liability, to be determined in accordance with
the Participant’s portion of the total number of Shares included in
such Drag Along Sale (on an As Converted Basis) or (ii) the proceeds
to such Participant in connection with such Drag Along Sale.

	 	l.	 	Term. This Paragraph 4 shall continue in full force and effect from
the date hereof through the earliest of the following dates, on which date it shall
terminate in its entirety:

	 	(i)	 	the date of the closing of a Qualified Public Offering; and

	 	(ii)	 	the date of the consummation of a Sale of the Company.

	 	 	 	For avoidance of doubt, this Paragraph 4 shall survive termination
or expiration of this Agreement.

5. Miscellaneous.

	 	a.	 	Employment-at-Will; Rights as Shareholder. This Agreement shall not
confer on Participant any right with respect to continuance of Employment by the
Company or any of its Affiliates, nor will it interfere in any way with the right of
the Company to terminate such Employment. Participant’s Employment relationship with
the Company and its Affiliates shall be employment-at-will, and nothing in this
Agreement shall be construed as creating an employment contract for any specified term
between Participant and the Company or any Affiliate. Participant shall have no rights
as a shareholder with respect to shares subject to this Option until such shares have
been issued to Participant upon exercise of this Option. No adjustment shall be made
for dividends (ordinary or extraordinary, whether in cash, securities or other
property), distributions or other rights for which the record date is prior to the date
such shares are issued, except as provided in Section 11 of the Plan.

	 	a.	 	Nonsolicitation. The Participant agrees that during the period of
his Employment with the Company or any of its Affiliates and for the one (1) year
period immediately following termination of such Employment for any reason, the
Participant shall not (i) directly or indirectly, engage in the recruiting, soliciting
or inducing of any nonclerical employee or employees of the Company or Affiliates to
terminate their employment with, or otherwise cease their

 

 

	 	 	 	relationship with the Company or any of its Affiliates, or in hiring or assisting another person or
entity to hire any nonclerical employee of the Company or any of its Affiliates or
any person who within six (6) months before had been a nonclerical employee of the
Company or any of their Affiliates and were recruited or solicited for such
employment or other retention while an employee of the Company (other than any of
the foregoing activities engaged in with the prior written approval of the Company);
or (ii) directly or indirectly solicit, induce or encourage or attempt to persuade
any agent, supplier or customer of the Company or any Affiliate to terminate such
agency or business relationship. The Participant acknowledges that if (x) the
Participant breaches any term or condition contained in this Paragraph 5(b) and (y)
the Company provides the Participant with written notice of such breach, then (A)
all of the Option that has not vested prior to the date of such notice shall be
automatically forfeited and (B) the Company shall have the right to repurchase all
of the Option Shares then held by the Participant at the per share cost paid by the
Participant for such Option Shares.

	 	b.	 	Securities Law Compliance. The exercise of all or any parts of this
Option shall only be effective at such time as counsel to the Company shall have
determined that the issuance and delivery of Common Stock pursuant to such exercise
will not violate any state or federal securities or other laws. Participant may be
required by the Company, as a condition of the effectiveness of any exercise of this
Option, to agree in writing that all Common Stock to be acquired pursuant to such
exercise shall be held, until such time that such Common Stock is registered and freely
tradable under applicable state and federal securities laws, for Participant’s own
account without a view to any further distribution thereof, that the certificates for
such shares shall bear an appropriate legend to that effect and that such shares will
be not transferred or disposed of except in compliance with applicable state and
federal securities laws.

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

	 	d.	 	Withholding Taxes. In order to permit the Company to comply with all
applicable federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to insure that, if necessary, all applicable federal and
state payroll, income or other taxes are withheld from any amounts payable by the
Company to Participant. If the Company is unable to withhold such federal and state
taxes, for whatever reason, Participant hereby agrees to pay to the Company an amount
equal to the amount the Company would otherwise be required to withhold under federal
or state law. Subject to such rules as the Committee may adopt, the Committee may, in
its sole discretion, permit Participant to satisfy such withholding tax obligations, in
whole or in part (i) by delivering shares of Common Stock, or (ii) by electing to have
the Company withhold shares of Common Stock otherwise issuable to Participant, in
either case having a Fair Market Value equal to the minimum required tax withholding,
based on the minimum statutory

 

 

	 	 	 	withholding rates for federal and state tax purposes,
including payroll taxes, that are applicable to the supplemental income resulting from the exercise of the
nonqualified stock option. In no event may the Company withhold shares having a Fair
Market Value in excess of such statutory minimum required tax withholding.
Participant’s election to have shares withheld for this purpose shall be made on or
before the date the option is exercised or, if later, the date that the amount of
tax to be withheld is determined under applicable tax law. Such election shall be
approved by the Committee and otherwise comply with such rules as the Committee may
adopt to assure compliance with Rule 16b-3, or any successor provision, as then in
effect, of the General Rules and Regulations under the Securities Exchange Act of
1934, if applicable.

	 	f.	 	Nontransferability. During the lifetime of Participant, the Option
shall be exercisable only by Participant or by the Participant’s guardian or other
legal representative, and shall not be assignable or transferable by Participant, in
whole or in part, other than by will or by the laws of descent and distribution.

	 	g.	 	2008 Equity and Incentive Plan. The Option evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement. This Agreement is subject
to and in all respects limited and conditioned as provided in the Plan. The Plan
governs this Option and, except with respect to the lockup provisions contained in
Paragraph 4(g), in the event of any questions as to the construction of this Agreement
or in the event of a conflict between the Plan and this Agreement, the Plan shall
govern, except as the Plan otherwise provides.

	 	h.	 	Blue Sky Limitation. Notwithstanding anything in this Agreement to
the contrary, in the event the Company makes any public offering of its securities and
it is determined that it is necessary to reduce the number of issued but unexercised
stock purchase rights so as to comply with any state securities or Blue Sky law
limitations with respect thereto, and such determination is affirmed by the Board of
Directors, unless the Board of Directors determines otherwise, (i) the exercisability
of this Option and the date on which this Option must be exercised shall be
accelerated, provided that the Company agrees to give Participant 15 days’ prior
written notice of such acceleration, and (ii) any portion of this Option or any other
option granted to Participant pursuant to the Plan which is not exercised prior to or
contemporaneously with such public offering shall be canceled. Notice shall be deemed
given when delivered personally or when deposited in the United States mail, first
class postage prepaid and addressed to Participant at the address of Participant on
file with the Company.

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

 

 

	 	 	 	amended, and the requirements of such other legal or accounting principles,
and will execute any documents necessary to ensure such compliance.

	 	j.	 	Stock Legend. The Committee may require that the certificates for
any shares of Common Stock purchased by Participant (or, in the case of death,
Participant’s successors) shall bear an appropriate legend to reflect the restrictions
set forth in this Agreement; provided, however, that failure to so endorse any of such
certificates shall not render invalid or inapplicable Paragraph 4.

	 	k.	 	Scope of Agreement; Amendment. This Agreement shall bind and inure
to the benefit of the Company, its Affiliates and its successors and assigns and
Participant and any successor or successors of Participant permitted by Paragraph 2 or
Paragraph 5(f) above. Notwithstanding anything in this Agreement or the Plan to the
contrary, the Company expressly reserves the right to amend this Agreement without
Participant’s consent to the extent necessary or desirable to comply with Code Section
409A, and the regulations, notices and other guidance of general applicability issued
thereunder. Notwithstanding anything herein in this Agreement or the Plan to the
contrary, any provision of Paragraph 4 may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only by the written consent given by the Company and Investors holding
sixty-six percent (66%) of the then outstanding Series B Preferred Stock, and no
consent from the Participant shall be required unless such amendment or waiver creates
material additional obligations for the Participant under this Agreement which are
substantially different from any obligations imposed on holders of Common Stock under
the Investors Stockholders Agreement (in which case, the consent of participants under
restricted stock or option agreements who are bound by terms and conditions of similar
tenor to this Agreement who hold more than fifty percent (50%) of the total of all
restricted shares and option shares held by all such participants thereunder and
hereunder shall be required for any such amendment or waiver which does create such
material additional obligations).

 

 

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

	 	 	 	 	 
	 	FINGERHUT DIRECT MARKETING, INC

 	 
	 	By:  	 	 
	 	 	Its:

 	 
	 	
 	 
	 	Participant 	 
	 	 	 

 

 

RESTRICTED STOCK AGREEMENT

FINGERHUT DIRECT MARKETING, INC.

2008 EQUITY AND INCENTIVE PLAN

(CEO)

     THIS AGREEMENT, made effective as of this _______ day of ___________, _____ (the “Grant Date”)
by and between Fingerhut Direct Marketing, Inc., a Delaware corporation (the “Company”), and
__________________ (“Participant”).

W I T N E S S E T H:

     WHEREAS, Participant on the date hereof is a key employee or officer of the Company; and

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

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

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

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

 

 

2. Vesting of Restricted Stock.

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

	 	 	 	 	 
	Vesting Date	 	Number of Shares	 	Percentage
	November 21, 2008

	 	F•]
	 	20%
	May 21, 2009

	 	F•]
	 	20%
	May 21, 2010

	 	F•]
	 	20%
	May 21, 2011

	 	F•]
	 	20%
	May 21, 2012

	 	F•]
	 	20%

	 	 	 	Notwithstanding anything herein to the contrary, in the event a Public Offering
becomes effective prior to July 31, 2010, the tranche of Shares scheduled to vest on
May 21, 2012 shall become fully vested on the date such Public Offering becomes
effective.

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

	 	c.	 	Termination of Employment — Death or Disability. If Participant’s
Employment with the Company and its Affiliates is terminated because of death or
Disability, all unvested Shares held by the Participant at the time of such termination
shall become immediately vested and the risks of forfeiture on such unvested Shares
shall immediately lapse.

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

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

4. Miscellaneous.

 

 

	 	a.	 	No Right to Employment. This Agreement shall not confer on
Participant any right with respect to continuance of Employment by the Company and its
Affiliates, nor will it interfere in any way with the right of the Company to terminate
such Employment. Nothing in this Agreement shall be construed as creating an employment
contract for any specified term between Participant and the Company or any Affiliate.

	 	b.	 	Nonsolicitation. The Participant agrees that during the period of
his Employment with the Company or any of its Affiliates and for the one (1) year
period immediately following termination of such Employment for any reason, the
Participant shall not (i) directly or indirectly, engage in the recruiting, soliciting
or inducing of any nonclerical employee or employees of the Company or Affiliates to
terminate their employment with, or otherwise cease their relationship with the Company
or any of its Affiliates, or in hiring or assisting another person or entity to hire
any nonclerical employee of the Company or any of its Affiliates or any person who
within six (6) months before had been a nonclerical employee of the Company or any of
their Affiliates and were recruited or solicited for such employment or other retention
while an employee of the Company (other than any of the foregoing activities engaged in
with the prior written approval of the Company); or (ii) directly or indirectly
solicit, induce or encourage or attempt to persuade any agent, supplier or customer of
the Company or any Affiliate to terminate such agency or business relationship. The
Participant acknowledges that if (x) the Participant breaches any term or condition
contained in this paragraph 4(b) and (y) the Company provides the Participant with
written notice of such breach, then all Shares subject to this Award shall be
automatically forfeited (whether then vested or unvested).

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

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

	 	e.	 	Withholding Taxes. In order to permit the Company to comply with all
applicable federal or state income tax laws or regulations, the Company may take such
action as it deems appropriate to insure that, if necessary, all applicable federal or
state payroll, income or other taxes are withheld from any amounts payable by

 

 

	 	 	 	the Company to Participant. If the Company is unable to withhold such federal and state
taxes, for whatever reason, Participant hereby agrees to pay to the Company an
amount equal to the amount the Company would otherwise be required to withhold under
federal or state law.

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

	 	g.	 	Blue Sky Limitation. Notwithstanding anything in this Agreement to
the contrary, in the event the Company makes any public offering of its securities and
determines, in its sole discretion, that it is necessary to reduce the number of issued
but unexercised stock purchase rights so as to comply with any state securities or Blue
Sky law limitations with respect thereto, the Board of Directors of the Company shall
accelerate the vesting of this restricted stock award, provided that the Company gives
Participant 15 days’ prior written notice of such acceleration. Notice shall be deemed
given when delivered personally or when deposited in the United States mail, first
class postage prepaid and addressed to Participant at the address of Participant on
file with the Company.
	 
	 	i.	 	Accounting Compliance. Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 11(b) of the
Plan occurs, and Participant is an “affiliate” of the Company or any Affiliate (as
defined in applicable legal and accounting principles) at the time of such transaction,
Participant will comply with all requirements of Rule 145 of the Securities Act of 1933,
as amended, and the requirements of such other legal or accounting principles, and will
execute any documents necessary to ensure such compliance.
	 
	 	j.	 	Stock Legend. The Committee may require that the certificates for any
Shares purchased by Participant (or, in the case of death, Participant’s successors)
shall bear an appropriate legend to reflect the restrictions set forth in this
Agreement; provided, however, that failure to so endorse any of such certificates shall
not render invalid or inapplicable Paragraph 3.
	 
	 	k.	 	Scope of Agreement; Amendment. This Agreement shall bind and inure to
the benefit of the Company, its Affiliates and its successors and assigns and
Participant and any successor or successors of Participant permitted by this Agreement.
Notwithstanding anything in this Agreement or the Plan to the contrary, the Company
expressly reserves the right to amend this Agreement without Participant’s consent to
the extent necessary or desirable to comply with Code Section 409A, and the regulations,
notices and other guidance of general applicability issued thereunder.

 

 

5. Change of Control. In the event of a Change of Control, the Shares shall become fully
vested and the risks of forfeiture on the Shares shall immediately lapse as of the occurrence of
such Change of Control.

 

 

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

	 	 	 	 	 
	 	FINGERHUT DIRECT MARKETING, INC.

 	 
	 	By:  	 	 
	 	 	Its:

 	 
	 	
 	 
	 	Participant 	 
	 	 	 

 

 

RESTRICTED STOCK AGREEMENT

FINGERHUT DIRECT MARKETING, INC.

2008 EQUITY AND INCENTIVE PLAN

(CEO DIRECT REPORTS)

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

W I T N E S S E T H:

     WHEREAS, Participant on the date hereof is a key employee or officer of the Company; and

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

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

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

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

 

 

2. Vesting of Restricted Stock.

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

	 	 	 
	Vesting Date	 	Number of Shares
	May 21, 2009

	 	F•]
	May 21, 2010

	 	F•]
	May 21, 2011

	 	F•]
	May 21, 2012

	 	F•]

	 	 	 	Notwithstanding anything herein to the contrary, in the event a Public Offering
becomes effective prior to July 31, 2010, the tranche of Shares scheduled to vest on
May 21, 2012 shall become fully vested on the date such Public Offering becomes
effective.

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

	 	c.	 	Termination of Employment — Death or Disability. If Participant’s
Employment with the Company and its Affiliates is terminated because of death or
Disability, all unvested Shares held by the Participant at the time of such termination
shall become immediately vested and the risks of forfeiture on such unvested Shares
shall immediately lapse.

	 	d.	 	Nontransferability. Unless and until the Shares vest as provided in
this

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

3. Transfer Restrictions and Mechanics.

	 	a.	 	Definitions. Solely for purposes of this Paragraph 3, the following
terms have the respective meanings set forth below:

	 	(i)	 	“Affiliate” shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, and
shall include, with respect to any Investor, any managed account, investment
fund or other vehicle for which such Investor or any Affiliate or such Investor
acts as an investment advisor or portfolio manager; provided, that with respect
to Bain Capital, the term Affiliate shall be deemed to include any Person under
common management with Bain Capital.

 

 

	 	(ii)	 	“As-Converted Basis” shall mean, for purposes of determining
the number of shares of Common Stock outstanding, a basis of calculation which
takes into account (a) the number of shares of Common Stock actually issued and
outstanding at the time of such determination, and (b) the number of shares of
Common Stock that is then issuable upon the exercise or conversion of all
outstanding securities or rights convertible into or exercisable for Common
Stock, including without limitation, the Series A Preferred Stock, Series B
Preferred Stock and the Warrants and the number of shares of Common Stock that
would be issuable upon the conversion of the Series A Preferred Stock then
issuable upon exercise of the Warrants, but excluding stock options and any
other warrants for the purchase of any shares of Common Stock, Series A
Preferred Stock or Series B Preferred Stock.

	 	(iii)	 	“Bain Capital” means Bain Capital Venture Fund 2007, L.P.

	 	(iv)	 	“Common Stock” shall mean the Company’s common stock, par
value $0.00001 per share.

	 	(v)	 	“Investors” shall mean the Investors that are or hereafter
become a party to Investors Stockholders Agreement.

	 	(vi)	 	“Investors Stockholders Agreement” shall mean the
Stockholders Agreement dated as of May 15, 2008, among the Company and the
Investors named therein, as such agreement is amended, modified or replaced
from time to time.

	 	(vii)	 	“Permitted Transferee” means any of the following Persons
to whom or to which a Participant Transfers any Restricted Shares: (a) a family
member of the Participant or a trust established for the benefit thereof; and
(b) a transferee of the Participant by will or the laws of intestate
succession.

	 	(viii)	 	“Person” shall be construed broadly and shall include without limitation
an individual, a partnership, a corporation, an association, a joint stock
corporation, a limited liability corporation, a trust, a joint venture, an
unincorporated organization and a governmental authority.

	 	(ix)	 	“Qualified Public Offering” means an underwritten public
offering of shares of Common Stock in which the aggregate net proceeds to the
Company equal or exceed $75 million and the public offering price per share is
not less than $0.2235 (as adjusted appropriately in the event of any
subdivision, combination, reorganization, recapitalization, reclassification,
stock dividend or similar event affecting the Common Stock) and after which the
Common Stock is listed on the New York Stock Exchange or the Nasdaq National
Market.

 

 

	 	(x)	 	“Restricted Shares” shall mean shares of Common Stock issued
to the Participant pursuant to this Agreement that have vested pursuant to
Paragraph 2 or 5 hereof.

	 	(xi)	 	“Sale of the Company” means (i) a sale of all or
substantially all of the assets of the Company, (ii) an acquisition of the
Company by one or more persons or entities by means of any transaction or
series of related transactions (including any reorganization, merger,
consolidation) where the voting securities of the Company outstanding
immediately preceding such transaction or the voting securities issued with
respect to the voting securities of the Company outstanding immediately
preceding such transaction represent less than 50% of the voting securities of
the Company or surviving entity, as the case may be, following such
transaction, or (iii) a transaction or series of related transactions resulting
in the transfer of shares representing more than 50% of the voting securities
of the Company. A sale (or multiple related sales) of one or more subsidiaries
of the Company (whether by way of merger, consolidation, reorganization or sale
of all or substantially all assets or securities) which constitutes all or
substantially all of the consolidated assets of the Company shall be deemed a
sale of substantially all the assets of the Company for purposes of the
foregoing definition.

	 	(xii)	 	“Series A Preferred Stock” means the Series A Convertible
Preferred Stock, par value $0.00001 per share, of the Company.

	 	(xiii)	 	“Series B Preferred Stock means the Series B Convertible Preferred Stock,
par value $0.00001 per share, of the Company.

	 	(xiv)	 	“Shares” shall mean shares of Common Stock and Series A
Preferred Stock, Series B Preferred Stock and warrants for the purchase of any
shares of Common Stock, Series A Preferred Stock and Series B Preferred Stock.

	 	(xv)	 	“Transfer” shall mean any sale, assignment, encumbrance,
hypothecation, pledge, conveyance in trust, gift, transfer by bequest, devise
or descent, or other transfer or disposition of any kind, including, but not
limited to, transfers to receivers, levying creditors, trustees or receivers in
bankruptcy proceedings or general assignees for the benefit of creditors,
whether voluntary or by operation of law, directly or indirectly, of any
Shares.

	 	b.	 	Notice of Transfer. The Participant may not Transfer any Restricted
Shares other than as set forth in Paragraph 3(e) hereof unless (i) the Participant
shall have received a bona-fide arm’s length offer (an “Offer”) to purchase such
Restricted Shares from a third party who has agreed in writing be bound by the terms of
this Agreement and who the Participant reasonably believes has the financial capacity
to fund such purchase, (ii) such Participant gives written notice

 

 

	 	 	 	(the “Notice”) to the Company at least thirty (30) days prior to the closing of such proposed Transfer
as described below, and (iii) such Participant otherwise complies with this
Paragraph 3. Promptly after receipt of such Notice, the Company shall provide a copy
thereof to the Investors. The Notice shall describe in reasonable detail the
proposed Transfer including, without limitation, the number of Restricted Shares to
be transferred (the “Offered Shares”), the nature of such Transfer, the
consideration to be paid, and the name and address of each prospective purchaser or
transferee.

	 	c.	 	Right of First Refusal and Co-Sale Rights. For a period of ten (10)
days following receipt of any Notice, the Company shall have the right (the “Company
Refusal Right”) upon written notice to the Participant to elect to purchase all or any
part of the Offered Shares on the same terms and conditions set forth in the Notice,
and for a period of twenty (20) days following the receipt of the Notice, each Investor
shall have, upon written notice to the Participant, either (a) the right (the “Right of
First Refusal”), subject to the Company Refusal Right, to elect to purchase all or any
part of the Offered Shares on the same terms and conditions as set forth in the Notice
or (b) the right (the “Co-Sale Right”) to elect to sell on such terms all or any part
of that number of Shares then owned by such Investor (the “Co-Sale Shares”) equal to
the product obtained by multiplying (i) the aggregate number of Offered Shares by (ii)
a fraction the numerator of which is the number of shares of Common Stock owned by all
of the Investors (on an As-Converted Basis) and the denominator of which is the total
number of shares of Common Stock owned by the Participant and all of the Investors (on
an As-Converted Basis).

	 	(i)	 	If the Company does not elect to purchase all of the Offered
Shares within the ten (10) day period specified above, the Company shall give
prompt written notice to the Investors setting forth the number of Offered
Shares not purchased by the Company (the “Remaining Shares”). The Remaining
Shares shall be allocated among the Investors who have exercised the Right of
First Refusal (the “Participating Investors”) as follows: there shall first be
allocated to each Participating Investor a number of Remaining Shares equal to
the lesser of (i) the number of Remaining Shares which the Participating
Investor has elected to purchase and (ii) such Participating Investor’s Refusal
Right Pro Rata Share (as defined below) of the Remaining Shares. The balance of
the Remaining Shares which the Participating Investors have elected to purchase
shall be allocated to the Participating Investors who have elected to purchase
more than their Refusal Right Pro Rata Share of the Remaining Shares pro rata
based on the number of Remaining Shares which each Participating Investor has
elected to purchase in excess of such Participating Investor’s Refusal Right
Pro Rata Share of the Remaining Shares. Each Participating Investor’s “Refusal
Right Pro Rata Share” shall be equal to the fraction (i) the numerator of which
is the number of shares of Common Stock owned by such Participating Investor
(on an As-Converted Basis) and (ii) the denominator of which is the total
number of shares of Common

 

 

	 	 	 	Stock owned by all of the Participating Investors (on an As-Converted
Basis).

	 	(ii)	 	Each Investor who has exercised the Co-Sale Right (a
“Co-Sale Participant”) shall be entitled to sell a number of Co-Sale Shares
equal to the lesser of (a) the number of Offered Shares which the Co-Sale
Participant has elected to sell and (b) such Co-Sale Participant’s Co-Sale Pro
Rata Share of the Offered Shares which are not purchased by the Company
pursuant to the Company Refusal Right or by the Participating Investors
pursuant to the Right of First Refusal (the “Co-Sale Remaining Shares”). Each
Participant’s “Co-Sale Pro Rata Share” shall be equal to the fraction (i) the
numerator of which is the number of shares of Common Stock owned by such
Co-Sale Participant (on an As-Converted Basis) and (ii) the denominator of
which is the total number of shares of Common Stock owned by the Participant
and all of the Investors (on As-Converted Basis).

	 	(iii)	 	Any proposed Transfer at a different price or on terms and
conditions more favorable to the transferee(s) than specified in the Notice, or
not completed within the time specified in this Paragraph 3(b), as well as any
subsequent proposed Transfer of any Shares by a Stockholder, shall again be
subject to the Company Refusal Right and the Right of First Refusal and Co-Sale
Rights of the Investors, and shall require compliance by the Participant with
the procedures described in this Paragraph 3.

	 	(iv)	 	The exercise or non-exercise of the Right of First Refusal
or the Co-Sale Rights by the Investors in respect of one or more Transfers of
Shares made by any Participant shall not adversely affect their rights to
participate in subsequent Transfers of Shares subject to this Paragraph 3.

	 	d.	 	Transfer Mechanics.

	 	(i)	 	If (i) the Company and/or the Participating Investors elect
to purchase all of the Offered Shares subject to the Notice or (ii) the Company
and/or the Participating Investors elect to purchase less than all the Offered
Shares and the prospective purchaser identified in the Notice does not agree to
purchase any of the Offered Shares not so purchased, the following provisions
shall apply: The Company and/or Participating Investors shall effect the
purchase of the Offered Shares and/or Remaining Shares on a date specified by
the Participant by notice to the Company and/or the Participating Investors not
earlier than the later of (x) ten (10) days after such notice or (y) thirty
(30) days after the receipt of the Notice by the Investors. On the date of such
purchase, the Participant shall deliver to the Company and/or the Participating
Investors, as applicable, the certificates representing the Shares to be
purchased by the Company and/or the Participating Investors, each certificate
to be properly endorsed for transfer, in exchange for payment by the Company

 

 

	 	 	 	and/or the Participating Investors, as applicable, of the purchase price for
the Shares.

	 	(ii)	 	If (i) the Company and the Participating Investors do not
elect to purchase any of the Offered Shares or (ii) the Company and/or the
Participating Investors elect to purchase less than all of the Offered Shares
and the prospective purchaser agrees to purchase less than all of the Offered
Shares, the following provisions shall apply: The Participant may, not later
than forty (40) days following delivery to the Company of the Notice, enter
into an agreement providing for the closing of the Transfer to the third party
purchaser(s) identified in the Notice of any Offered Shares with respect to
which neither the Company Refusal Right nor the Right of First Refusal has been
exercised, together with the closing of the purchase of any Shares to be sold
by any Co-Sale Participant, such purchase to occur within thirty (30) days of
such agreement at a price and on terms and conditions no more favorable to the
transferee(s) thereof than specified in the Notice. Simultaneously with such
purchase there shall occur the purchase of any Offered Shares with respect to
which the Company Refusal Right or the Right of First Refusal has been
exercised. On the date of such purchase, each Co-Sale Participant shall be paid
that portion of the sale proceeds to which such Co-Sale Participant is entitled
by reason of its participation in such sale and the Company and/or each
Participating Investor, as applicable, shall pay the Participant the purchase
price to be paid by such Person for the Offered Shares purchased by them. Upon
receipt of such payment, each Co-Sale Participant shall promptly deliver to the
Participant for Transfer to the prospective purchaser(s) and, if applicable,
the Participant shall deliver to the Company and/or the Participating
Investors, one or more certificates properly endorsed for transfer which
represent the Shares to be sold by each such Person pursuant to this Paragraph
3. To the extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase Shares from a Co-Sale Participant
exercising its Co-Sale Rights hereunder, such Participant shall not sell to
such prospective purchaser or purchasers any Shares unless and until,
simultaneously with such sale, such Participant shall purchase such Shares from
such Co-Sale Participant on the same terms and conditions specified in the
Notice.

	 	(iii)	 	If the consideration to be paid for the Shares by the third
party purchaser shall be other than cash, the Company or the Participating
Investors, as applicable, exercising the Company Refusal Right or the Right of
First Refusal may in lieu of such consideration pay cash equal to the fair
market value of such consideration as mutually agreed between the Participant
and the holders of a majority of the Shares as to which the Right of First
Refusal and Company Refusal Right have been exercised. If such mutual agreement
cannot be reached, the Appraisal Procedure set forth in the Company’s Amended
and Restated Certificate of

 

 

	 	 	 	Incorporation shall be followed mutatis
mutandis and the time periods in Paragraph 3(b) shall be extended by the
time needed to determine such fair value.

	 	e.	 	Exempt Transfers.

	 	(i)	 	The Participant may Transfer Restricted Shares without
complying with the provisions of Paragraph 3 if such Transfer is to any
Permitted Transferee; provided that in the event of any Transfer made
pursuant to this Paragraph 3(e), (A) the Participant shall inform the Company
of such Transfer prior to effecting it, and (B) the transferee shall furnish
the Company with a written agreement, reasonably satisfactory to the Company,
to be bound by and comply with all provisions of this Paragraph 3 as if such
transferee were the Participant. Such Transferred Restricted Shares shall
remain Restricted Shares hereunder.

	 	(ii)	 	Notwithstanding the foregoing, the provisions of Paragraph 3
hereof shall not apply to the sale of any Shares to the public pursuant to a
registration statement filed with, and declared effective by, the Securities
and Exchange Commission under Securities Act of 1933, as amended (the
“Securities Act”).

	 	f.	 	Transfers to Competitors. Any other provision of this Agreement to
the contrary notwithstanding, other than in connection with a Sale of the Company,
prior to a Qualified Public Offering, no Transfer of Restricted Shares may be made by
the Participant to a competitor of the Company or any person or entity that invests in
any such competitor, as determined in good faith by the Board.

	 	g.	 	Stockholder Lockup Agreements in Connection with Initial Public
Offering. Notwithstanding anything in the Plan to the contrary, the Participant
agrees that, subject to any early release provisions that apply generally to
stockholders of the Company, the Participant will not, if reasonably requested by the
managing underwriter, for a period of up to 180 days following the effective date of
the registration statement for an initial public offering directly or indirectly sell,
offer to sell, grant any option for the sale of, or otherwise dispose of any Common
Stock or securities convertible into Common Stock, except for (i) transactions relating
to Common Stock or other securities acquired in open market transactions after the
completion of the initial public offering, and (ii) Transfers to Permitted Transferees
(each of whom shall have furnished to the Company and the managing underwriter their
written consent to be bound by this Paragraph 3 or a similar agreement satisfactory to
the Company).

	 	h.	 	Consequences of Prohibited Transfer. Any attempt by a Participant to
Transfer Restricted Shares in violation of the terms of this Paragraph 3 shall be void,
and the Company will not effect such a Transfer nor will it treat any alleged
transferee as the holder of such Restricted Shares.

 

 

	 	i.	 	Legend. Each certificate representing the Restricted Shares subject
to the terms of this Agreement shall be endorsed with the following legend or legend(s)
containing substantially similar information (in addition to any legend required under
applicable securities laws or otherwise):

	 	 	 	THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT. THE SALE OR
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS
AND CONDITIONS OF A RESTRICTED STOCK AGREEMENT TO WHICH THE HOLDER HEREOF AND THE
COMPANY ARE PARTIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE COMPANY.

	 	 	 	This legend shall be removed upon termination of this Paragraph 3. The Participant
consents to the Company making a notation on its records and giving instructions to
any transfer agent of the Company’s securities and capital stock in order to
implement the restrictions on transfer established in this Paragraph 3.

	 	j.	 	The Participants agree that the Company may instruct its transfer agent to
impose transfer restrictions on Restricted Shares represented by certificates bearing
the legend referred to in Paragraph 3(i) above to enforce the provisions of this
Paragraph 3. The legend shall be removed upon termination of this Paragraph 3.

	 	k.	 	Drag Along Rights.

	 	(i)	 	In the event that the holders of at least 66% of the then
outstanding shares of Series B Preferred Stock (the “Proposing Stockholders”)
agree to and accept an offer from a third party or third parties not Affiliated
with any Proposing Stockholder (a “Buyer”) to consummate a transaction or
series of related transactions with such Buyer pursuant to which Buyer would
acquire all of the Shares held by such Proposing Shareholders for a specified
price payable in cash, securities or other consideration and on specified terms
and conditions, the Participant shall be required, if so demanded by the
Proposing Shareholders (a “Drag Along Notice”) to sell all of the Participant’s
Restricted Shares to such Buyer in such transaction(s) and to participate in
such transaction(s) (a “Drag Along Sale”).

	 	(ii)	 	The provisions of this Paragraph 3(k) shall apply regardless
of the form of consideration received in the Drag Along Sale, and the
Participant shall (i) if the Drag Along Sale is structured as a merger or
consolidation, waive any dissenters’ rights, appraisal rights or similar rights
in connection with

 

 

	 	 	 	such merger or consolidation, or (ii) if the Drag Along Sale
is structured as a sale, agree to sell all of the Participant’s Restricted
Shares on the terms and conditions approved by the Proposing Stockholders. The
Participant (a) shall be subject to the same terms and conditions, and (b)
shall execute
such documents and take such actions as may be reasonably required by the
Company and the Proposing Shareholders.

	 	(iii)	 	Upon the consummation of the Drag Along Sale, the
Participant (i) shall receive the same form of consideration and the same
amount of consideration per share of Common Stock (on an As Converted Basis) as
every other holder of any class or series of Shares, except to the extent
otherwise approved in connection with Section 2 of the Amended and Restated
Certificate of Incorporation of the Company, as amended from time to time, and
(ii) shall be given the same option, if any, as any other holders of any other
class or series of Shares as to the form of consideration to be received.

	 	(iv)	 	Transfer Mechanics; Further Assurances.

	 	(a)	 	At least five (5) days prior to the
consummation of a Drag Along Sale (which date and the place and time of
such consummation shall be designated by the Proposing Stockholders and
provided to the Participant in the Drag Along Notice), the Participant
shall deliver for transfer to the Buyer one or more certificates,
properly endorsed for transfer in form satisfactory to the Proposing
Stockholders, which represent all of the Restricted Shares held by the
Participant, duly executed and free and clear of any liens. The
certificate(s) delivered by the Participant shall be transferred to the
Buyer identified in the Drag Along Notice as part of the consummation
of the Drag Along Sale. Upon receipt of the proceeds of the Drag Along
Sale, the Proposing Stockholders shall promptly remit to the
Participant that portion of such proceeds to which the Participant is
entitled by reason of the Participant’s participation in such sale.

	 	(b)	 	In connection with a Drag Along Sale, the
Participant agrees to execute and deliver such agreements as may be
reasonably specified by the Proposing Stockholders to which such
Proposing Stockholders will also be party, on the same terms,
including, without limitation, agreements to (a) (i) made individual
representation, warranties, covenants and other agreements as to the
unencumbered title to the Participant’s Restricted Shares and the
power, authority and legal right to Transfer such Restricted Shares and
to enter into the agreements relating thereto and the absence of any
adverse claim with respect to such Restricted Shares (but shall not be
required to make individual representations or warranties with respect
to any of the Company’s

 

 

	 		 	operations, activities, financial condition or
other characteristics) and (ii) be liable without limitation as to such
individual representations, warranties, covenants and other agreements
and (b) be liable (whether by purchase price adjustment, indemnity
payments or otherwise) in respect of representations, warranties,
covenants and agreements in respect of the Company; provided,
however, that the aggregate amount of liability described in this
clause (b) in connection with any sale of Shares shall not exceed the
less of (i) the Participant’s pro rata portion of any such liability,
to be determined in accordance with the Participant’s portion of the
total number of Shares included in such Drag Along Sale (on an As
Converted Basis) or (ii) the proceeds to such Participant in
connection with such Drag Along Sale.

	 	l.	 	Term. This Paragraph 3 shall continue in full force and effect from
the date hereof through the earliest of the following dates, on which date it shall
terminate in its entirety:

	 	(i)	 	the date of the closing of a Qualified Public Offering; and

	 	(ii)	 	the date of the consummation of a Sale of the Company.

	 	m.	 	For avoidance of doubt, this Paragraph 3 shall survive termination or
expiration of this Agreement.

4. Miscellaneous.

	 	a.	 	Employment-at-Will. This Agreement shall not confer on Participant
any right with respect to continuance of Employment by the Company and its Affiliates,
nor will it interfere in any way with the right of the Company to terminate such
Employment. Participant’s Employment relationship with the Company and its Affiliates
shall be employment-at-will, and nothing in this Agreement shall be construed as
creating an employment contract for any specified term between Participant and the
Company or any Affiliate.

	 	b.	 	Nonsolicitation. The Participant agrees that during the period of
his Employment with the Company or any of its Affiliates and for the one (1) year
period immediately following termination of such Employment for any reason, the
Participant shall not (i) directly or indirectly, engage in the recruiting, soliciting
or inducing of any nonclerical employee or employees of the Company or Affiliates to
terminate their employment with, or otherwise cease their relationship with the Company
or any of its Affiliates, or in hiring or assisting another person or entity to hire
any nonclerical employee of the Company or any of its Affiliates or any person who
within six (6) months before had been a nonclerical employee of the Company or any of
their Affiliates and were recruited or solicited for such employment or other retention
while an employee of the Company (other than any of the foregoing activities engaged in
with the prior

 

 

	 	 	 	written approval of the Company); or (ii) directly or indirectly
solicit, induce or encourage or attempt to persuade any agent, supplier or customer of
the Company or any Affiliate to terminate such agency or business relationship. The
Participant acknowledges that if (x) the Participant breaches any term or condition
contained in this paragraph 4(b) and (y) the Company provides the Participant with
written notice of such
breach, then all Shares subject to this Award shall be automatically forfeited
(whether then vested or unvested).

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

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

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

	 	f.	 	2008 Equity and Incentive Plan. The Award evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement. This Agreement is subject
to and in all respects limited and conditioned as provided in the Plan. The Plan
governs this Agreement. Except with respect to the lockup provisions contained in
Paragraph 3(g), in the event of any questions as to the construction of this Agreement
or in the event of a conflict between the Plan and this Agreement, the Plan shall
govern.

	 	g.	 	Blue Sky Limitation. Notwithstanding anything in this Agreement to
the contrary, in the event the Company makes any public offering of its securities and
determines, in its sole discretion, that it is necessary to reduce the number of issued
but unexercised stock purchase rights so as to comply with any state securities or Blue
Sky law limitations with respect thereto, the Board shall accelerate the

 

 

	 	 	 	vesting of this restricted stock award, provided that the Company gives Participant 15 days’ prior
written notice of such acceleration. Notice shall be deemed given when delivered
personally or when deposited in the United States mail, first class postage prepaid and
addressed to Participant at the address of Participant on file with the Company.

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

	 	i.	 	Stock Legend. The Committee may require that the certificates for
any Shares purchased by Participant (or, in the case of death, Participant’s
successors) shall bear an appropriate legend to reflect the restrictions set forth in
this Agreement; provided, however, that failure to so endorse any of such certificates
shall not render invalid or inapplicable Paragraph 3.

	 	j.	 	Scope of Agreement; Amendment. This Agreement shall bind and inure
to the benefit of the Company, its Affiliates and its successors and assigns and
Participant and any successor or successors of Participant permitted by Paragraph 2 or
Paragraph 3 above. Notwithstanding anything in this Agreement or the Plan to the
contrary, the Company expressly reserves the right to amend this Agreement without
Participant’s consent to the extent necessary or desirable to comply with Code Section
409A, and the regulations, notices and other guidance of general applicability issued
thereunder. Notwithstanding anything herein in this Agreement or the Plan to the
contrary, any provision of Paragraph 3 may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only by the written consent given by the Company and Investors holding
sixty-six percent (66%) of the then outstanding Series B Preferred Stock, and no
consent from the Participant shall be required unless such amendment or waiver creates
material additional obligations for the Participant under this Agreement which are
substantially different from any obligations imposed on holders of Common Stock under
the Investors Stockholders Agreement (in which case, the consent of participants under
restricted stock or option agreements who are bound by terms and conditions of similar
tenor to this Agreement who hold more than fifty percent (50%) of the total of all
restricted shares and option shares held by all such participants thereunder and
hereunder shall be required for any such amendment or waiver which does create such
material additional obligations).

5. Change of Control.

	 	a.	 	Acceleration. In the event of a Change of Control (whether or not
there is an acquiring or surviving entity) in which there is no assumption or
substitution of

 

 

	 	 	 	the Shares as described in Paragraph 5(b), then the Shares shall become
fully vested and the risks of forfeiture on the Shares shall immediately lapse as of
the occurrence of such Change of Control.

	 	b.	 	Continuation or Assumption of the Shares. In the event of a Change
of Control in which there is an acquiring or surviving entity, the acquiring or
surviving entity
may provide for the continuation or assumption of the Shares, or for the grant of a
new award in substitution therefor, by the acquiror or survivor or an affiliate of
the acquiror or survivor, in each case on such terms and subject to such conditions
as preserve the intrinsic value of the Shares. In the event the acquiring or
surviving entity provides for the continuation or assumption of the Shares as set
forth in this Paragraph 5(b), the Shares shall become fully vested and the risks of
forfeiture on the Shares shall immediately lapse upon the Participant’s termination
of Employment by the acquiring or surviving entity without Cause or by the
Participant for Good Reason, in either case within eighteen (18) months after the
Change of Control. For purposes of this Agreement, “Good Reason” shall mean (i) a
material diminution in the Participant’s responsibilities or duties as in effect
immediately prior to the Change of Control, (ii) the relocation of Participant’s
principal office, without the Participant’s consent, to a location more than one
hundred (100) miles from the location of the Participant’s principal office
immediately prior to the Change of Control, or (iii) any reduction in the
Participant’s base compensation in the absence of a general reduction affecting
similarly situated employees.

	 	c.	 	Qualifying Change of Control. Notwithstanding anything herein to the
contrary, in the event of a Qualifying Change of Control as defined below, then,
without any action by the Board or any Committee of the Board, the Shares shall become
fully vested and the risks of forfeiture on the Shares shall immediately lapse. For
purposes of this Paragraph 5(c), a “Qualifying Change of Control” includes any Change
of Control if (i) immediately prior to the Change of Control, any Series A Preferred
Stock of the Company, any Series B Preferred Stock of the Company or any Conversion
Shares shall remain outstanding and (ii) in connection with such Change of Control, a
majority of the sum of the shares of then outstanding Series A Preferred Stock of the
Company, Series B Preferred Stock of the Company and Conversion Shares, taken as a
whole, is Exchanged for Consideration with a Per Share Value equal to or in excess of
the Threshold Price. Solely for purposes of determining whether a majority of the sum
of the shares of then outstanding Series A Preferred Stock, Series B Preferred Stock
and Conversion Shares shall have been Exchanged, the number of then outstanding shares
of Series A Preferred Stock and Series B Preferred Stock shall be deemed to be the
total number of Conversion Shares into which such outstanding Series A Preferred Stock
and Series B Preferred Stock is then convertible. Notwithstanding anything herein
stated, for purposes of this definition, no Qualifying Change of Control shall be
deemed to have occurred following the closing of a “Qualified Public Offering,’ as
defined in the Amended and Restated Certificate of Incorporation of the Company.

 

 

	 	 	 	For purposes of the definition of “Qualifying Change of Control”, the following
terms shall have the following meanings:

	 	 	 	“Conversion Shares” shall mean any shares of Common Stock of the Company that shall
have been issued by the Company to (x) holders of Series A Preferred Stock of the
Company upon conversion of Series A Preferred
Stock and (y) holders of Series B Preferred Stock of the Company upon conversion of
Series B Preferred Stock, in either case within twelve months prior to the Change of
Control and shall continue to be held by the stockholders who converted such shares
or stockholders controlling, controlled by, or under common control with, such
stockholders.

	 	 	 	“Exchanged” shall mean sold, canceled, surrendered, transferred, exchanged or
otherwise disposed of for Consideration, and shall include the receipt of
Consideration from the Company upon a liquidation of the Company, whether or not
following a disposition of all or substantially all of the Company’s assets, even if
Series A Preferred Stock, Series B Preferred Stock or Conversion Shares are not
canceled or surrendered in connection with such liquidation.

	 	 	 	“Consideration” shall include cash, securities of an entity other than the Company
or any other property.

	 	 	 	“Per Share Value” shall mean the value of the Consideration received for each share
of Series A Preferred Stock of the Company, Series B Preferred Stock of the Company
and each Conversion Share that is Exchanged. The value of all non-cash Consideration
shall be its fair value at the time it is received by holders of Series A Preferred
Stock of the Company, Series B Preferred Stock of the Company and Conversion Shares
in connection with the Change of Control, as determined in good faith by the Board.

	 	 	 	The “Threshold Price” shall be $0.31533 (such amount to be equitably adjusted, as
appropriate, by the Board upon the occurrence of any dividend on any Common Stock,
Series A Preferred Stock of the Company or Series B Preferred Stock of the Company
payable in either of such class or series of stock or in any right to acquire either
of such class or series of stock for no consideration, any subdivision of either
such class or series of stock into a greater number of shares of outstanding shares
of such stock (by stock

	 	 	 	split, reclassification or otherwise), or in the event the outstanding shares of
either such class or series of stock shall be combined or consolidated, by
reclassification or otherwise, into a lesser number of shares of such stock or if
either such class or series of stock shall be changed into the same or a different
number of shares of any other class or series of stock of the Company whether by
capital reorganization, reclassification or otherwise).

 

 

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

	 	 	 	 	 
	 	FINGERHUT DIRECT MARKETING, INC.

 	 
	 	By:  	 	 
	 	 	Its:

 	 
	 	
 	 
	 	[Participant] 	 
	 	 	 

 

 

RESTRICTED STOCK AGREEMENT

FINGERHUT DIRECT MARKETING, INC.

2008 EQUITY AND INCENTIVE PLAN

(EXECUTIVE EMPLOYEES)

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

W I T N E S S E T H:

     WHEREAS, Participant on the date hereof is a key employee or officer of the Company;

and

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

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

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

1. Grant of Restricted Stock Award. The Company hereby grants to Participant

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

2. Vesting of Restricted Stock.

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

 

 

	 	 	 
	Vesting Date	 	Number of Shares
	May 21, 2009

	 	F•]
	May 21, 2010

	 	F•]
	May 21, 2011

	 	F•]
	May 21, 2012

	 	F•]

	 	 	 	Notwithstanding anything herein to the contrary, in the event a Public Offering
becomes effective prior to July 31, 2010, the tranche of Shares scheduled to vest on
May 21, 2012 shall become fully vested on the date such Public Offering becomes
effective.

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

	 	c.	 	Termination of Employment — Death or Disability. If Participant’s
Employment with the Company and its Affiliates is terminated because of death or
Disability, all unvested Shares held by the Participant at the time of such termination
shall become immediately vested and the risks of forfeiture on such unvested Shares
shall immediately lapse.

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

3. Transfer Restrictions and Mechanics.

	 	a.	 	Definitions. Solely for purposes of this Paragraph 3, the following
terms have the respective meanings set forth below:

	 	(i)	 	“Affiliate” shall have the meaning ascribed to such term in
Rule 12b-2 of the General Rules and Regulations under the Exchange Act, and
shall include, with respect to any Investor, any managed account, investment
fund or other vehicle for which such Investor or any Affiliate or such Investor
acts as an investment advisor or portfolio manager; provided, that with respect
to Bain Capital, the term Affiliate shall be deemed to include any Person under
common management with Bain Capital.

	 	(ii)	 	“As-Converted Basis” shall mean, for purposes of determining
the number of shares of Common Stock outstanding, a basis of calculation which
takes
into account (a) the number of shares of Common Stock actually issued and
outstanding at the time of such determination, and (b) the number of shares
of Common Stock that is then issuable upon the exercise

 

 

	 		 	or conversion of all outstanding securities or rights convertible into or exercisable for Common
Stock, including without limitation, the Series A Preferred Stock, Series B
Preferred Stock and the Warrants and the number of shares of Common Stock
that would be issuable upon the conversion of the Series A Preferred Stock
then issuable upon exercise of the Warrants, but excluding stock options and
any other warrants for the purchase of any shares of Common Stock, Series A
Preferred Stock or Series B Preferred Stock.

	 	(iii)	 	“Bain Capital” means Bain Capital Venture Fund 2007, L.P.

	 	(iv)	 	“Common Stock” shall mean the Company’s common stock, par
value $0.00001 per share.

	 	(v)	 	“Investors” shall mean the Investors that are or hereafter
become a party to Investors Stockholders Agreement.

	 	(vi)	 	“Investors Stockholders Agreement” shall mean the
Stockholders Agreement dated as of May 15, 2008, among the Company and the
Investors named therein, as such agreement is amended, modified or replaced
from time to time.

	 	(vii)	 	“Permitted Transferee” means any of the following Persons
to whom or to which a Participant Transfers any Restricted Shares: (a) a family
member of the Participant or a trust established for the benefit thereof; and
(b) a transferee of the Participant by will or the laws of intestate
succession.

	 	(viii)	 	“Person” shall be construed broadly and shall include without limitation
an individual, a partnership, a corporation, an association, a joint stock
corporation, a limited liability corporation, a trust, a joint venture, an
unincorporated organization and a governmental authority.

	 	(ix)	 	“Qualified Public Offering” means an underwritten public
offering of shares of Common Stock in which the aggregate net proceeds to the
Company equal or exceed $75 million and the public offering price per share is
not less than $0.2235 (as adjusted appropriately in the event of any
subdivision, combination, reorganization, recapitalization, reclassification,
stock dividend or similar event affecting the Common Stock) and after which the
Common Stock is listed on the New York Stock Exchange or the Nasdaq National
Market.

	 	(x)	 	“Restricted Shares” shall mean shares of Common Stock issued
to the Participant pursuant to this Agreement that have vested pursuant to
Paragraph 2 or 5 hereof.

	 	(xi)	 	“Sale of the Company” means (i) a sale of all or
substantially all of the assets of the Company, (ii) an acquisition of the
Company by one or more persons or entities by means of any transaction or
series of related

 

 

	 	 	 	transactions (including any reorganization, merger,
consolidation) where the voting securities of the Company outstanding
immediately preceding such transaction or the voting securities issued with
respect to the voting securities of the Company outstanding immediately
preceding such transaction represent less than 50% of the voting securities of
the Company or surviving entity, as the case may be, following such
transaction, or (iii) a transaction or series of related transactions resulting
in the transfer of shares representing more than 50% of the voting securities
of the Company. A sale (or multiple related sales) of one or more subsidiaries
of the Company (whether by way of merger, consolidation, reorganization or sale
of all or substantially all assets or securities) which constitutes all or
substantially all of the consolidated assets of the Company shall be deemed a
sale of substantially all the assets of the Company for purposes of the
foregoing definition.

	 	(xii)	 	“Series A Preferred Stock” means the Series A Convertible
Preferred Stock, par value $0.00001 per share, of the Company.

	 	(xiii)	 	“Series B Preferred Stock means the Series B Convertible Preferred Stock,
par value $0.00001 per share, of the Company.

	 	(xiv)	 	“Shares” shall mean shares of Common Stock and Series A
Preferred Stock, and warrants for the purchase of any shares of Common Stock
and Series A Preferred Stock.

	 	(xv)	 	“Transfer” shall mean any sale, assignment, encumbrance,
hypothecation, pledge, conveyance in trust, gift, transfer by bequest, devise
or descent, or other transfer or disposition of any kind, including, but not
limited to, transfers to receivers, levying creditors, trustees or receivers in
bankruptcy proceedings or general assignees for the benefit of creditors,
whether voluntary or by operation of law, directly or indirectly, of any
Shares.

	 	b.	 	Notice of Transfer. The Participant may not Transfer any Restricted
Shares other than as set forth in Paragraph 3(e) hereof unless (i) the Participant
shall have received a bona-fide arm’s length offer (an “Offer”) to purchase such
Restricted Shares from a third party who has agreed in writing be bound by the terms of
this Agreement and who the Participant reasonably believes has the financial capacity
to fund such purchase, (ii) such Participant gives written notice (the “Notice”) to the
Company at least thirty (30) days prior to the closing of such proposed Transfer as
described below, and (iii) such Participant otherwise complies with this Paragraph 3.
Promptly after receipt of such Notice, the Company shall provide a copy thereof to the
Investors. The Notice shall describe in reasonable detail the proposed Transfer
including, without limitation, the number of Restricted
Shares to be transferred (the “Offered Shares”), the nature of such Transfer, the
consideration to be paid, and the name and address of each prospective purchaser or
transferee.

 

 

	 	c.	 	Right of First Refusal and Co-Sale Rights. For a period of ten (10)
days following receipt of any Notice, the Company shall have the right (the “Company
Refusal Right”) upon written notice to the Participant to elect to purchase all or any
part of the Offered Shares on the same terms and conditions set forth in the Notice,
and for a period of twenty (20) days following the receipt of the Notice, each Investor
shall have, upon written notice to the Participant, either (a) the right (the “Right of
First Refusal”), subject to the Company Refusal Right, to elect to purchase all or any
part of the Offered Shares on the same terms and conditions as set forth in the Notice
or (b) the right (the “Co-Sale Right”) to elect to sell on such terms all or any part
of that number of Shares then owned by such Investor (the “Co-Sale Shares”) equal to
the product obtained by multiplying (i) the aggregate number of Offered Shares by (ii)
a fraction the numerator of which is the number of shares of Common Stock owned by all
of the Investors (on an As-Converted Basis) and the denominator of which is the total
number of shares of Common Stock owned by the Participant and all of the Investors (on
an As-Converted Basis).

	 	(i)	 	If the Company does not elect to purchase all of the Offered
Shares within the ten (10) day period specified above, the Company shall give
prompt written notice to the Investors setting forth the number of Offered
Shares not purchased by the Company (the “Remaining Shares”). The Remaining
Shares shall be allocated among the Investors who have exercised the Right of
First Refusal (the “Participating Investors”) as follows: there shall first be
allocated to each Participating Investor a number of Remaining Shares equal to
the lesser of (i) the number of Remaining Shares which the Participating
Investor has elected to purchase and (ii) such Participating Investor’s Refusal
Right Pro Rata Share (as defined below) of the Remaining Shares. The balance of
the Remaining Shares which the Participating Investors have elected to purchase
shall be allocated to the Participating Investors who have elected to purchase
more than their Refusal Right Pro Rata Share of the Remaining Shares pro rata
based on the number of Remaining Shares which each Participating Investor has
elected to purchase in excess of such Participating Investor’s Refusal Right
Pro Rata Share of the Remaining Shares. Each Participating Investor’s “Refusal
Right Pro Rata Share” shall be equal to the fraction (i) the numerator of which
is the number of shares of Common Stock owned by such Participating Investor
(on an As-Converted Basis) and (ii) the denominator of which is the total
number of shares of Common Stock owned by all of the Participating Investors
(on an As-Converted Basis).

	 	(ii)	 	Each Investor who has exercised the Co-Sale Right (a
“Co-Sale Participant”) shall be entitled to sell a number of Co-Sale Shares
equal to the lesser of (a)
the number of Offered Shares which the Co-Sale Participant has elected to
sell and (b) such Co-Sale Participant’s Co-Sale Pro Rata Share of the
Offered Shares which are not purchased by the Company pursuant to the
Company Refusal Right or by the Participating

 

 

	 	 	 	Investors pursuant to the Right of First Refusal (the “Co-Sale Remaining Shares”). Each Participant’s
“Co-Sale Pro Rata Share” shall be equal to the fraction (i) the numerator of
which is the number of shares of Common Stock owned by such Co-Sale
Participant (on an As-Converted Basis) and (ii) the denominator of which is
the total number of shares of Common Stock owned by the Participant and all
of the Investors (on As-Converted Basis).

	 	(iii)	 	Any proposed Transfer at a different price or on terms and
conditions more favorable to the transferee(s) than specified in the Notice, or
not completed within the time specified in this Paragraph 3(b), as well as any
subsequent proposed Transfer of any Shares by a Stockholder, shall again be
subject to the Company Refusal Right and the Right of First Refusal and Co-Sale
Rights of the Investors, and shall require compliance by the Participant with
the procedures described in this Paragraph 3.

	 	(iv)	 	The exercise or non-exercise of the Right of First Refusal
or the Co-Sale Rights by the Investors in respect of one or more Transfers of
Shares made by any Participant shall not adversely affect their rights to
participate in subsequent Transfers of Shares subject to this Paragraph 3.

	 	d.	 	Transfer Mechanics.

	 	(i)	 	If (i) the Company and/or the Participating Investors elect
to purchase all of the Offered Shares subject to the Notice or (ii) the Company
and/or the Participating Investors elect to purchase less than all the Offered
Shares and the prospective purchaser identified in the Notice does not agree to
purchase any of the Offered Shares not so purchased, the following provisions
shall apply: The Company and/or Participating Investors shall effect the
purchase of the Offered Shares and/or Remaining Shares on a date specified by
the Participant by notice to the Company and/or the Participating Investors not
earlier than the later of (x) ten (10) days after such notice or (y) thirty
(30) days after the receipt of the Notice by the Investors. On the date of such
purchase, the Participant shall deliver to the Company and/or the Participating
Investors, as applicable, the certificates representing the Shares to be
purchased by the Company and/or the Participating Investors, each certificate
to be properly endorsed for transfer, in exchange for payment by the Company
and/or the Participating Investors, as applicable, of the purchase price for
the Shares.

	 	(ii)	 	If (i) the Company and the Participating Investors do not
elect to purchase any of the Offered Shares or (ii) the Company and/or the
Participating Investors elect to purchase less than all of the Offered Shares
and the prospective purchaser agrees to purchase less than all of the Offered
Shares, the following provisions shall apply: The Participant may, not later
than forty (40) days following delivery to the Company of the

 

 

	 	 	 	Notice, enter into an agreement providing for the closing of the Transfer to the third
party purchaser(s) identified in the Notice of any Offered Shares with
respect to which neither the Company Refusal Right nor the Right of First
Refusal has been exercised, together with the closing of the purchase of any
Shares to be sold by any Co-Sale Participant, such purchase to occur within
thirty (30) days of such agreement at a price and on terms and conditions no
more favorable to the transferee(s) thereof than specified in the Notice.
Simultaneously with such purchase there shall occur the purchase of any
Offered Shares with respect to which the Company Refusal Right or the Right
of First Refusal has been exercised. On the date of such purchase, each
Co-Sale Participant shall be paid that portion of the sale proceeds to which
such Co-Sale Participant is entitled by reason of its participation in such
sale and the Company and/or each Participating Investor, as applicable,
shall pay the Participant the purchase price to be paid by such Person for
the Offered Shares purchased by them. Upon receipt of such payment, each
Co-Sale Participant shall promptly deliver to the Participant for Transfer
to the prospective purchaser(s) and, if applicable, the Participant shall
deliver to the Company and/or the Participating Investors, one or more
certificates properly endorsed for transfer which represent the Shares to be
sold by each such Person pursuant to this Paragraph 3. To the extent that
any prospective purchaser or purchasers prohibits such assignment or
otherwise refuses to purchase Shares from a Co-Sale Participant exercising
its Co-Sale Rights hereunder, such Participant shall not sell to such
prospective purchaser or purchasers any Shares unless and until,
simultaneously with such sale, such Participant shall purchase such Shares
from such Co-Sale Participant on the same terms and conditions specified in
the Notice.

	 	(iii)	 	If the consideration to be paid for the Shares by the third
party purchaser shall be other than cash, the Company or the Participating
Investors, as applicable, exercising the Company Refusal Right or the Right of
First Refusal may in lieu of such consideration pay cash equal to the fair
market value of such consideration as mutually agreed between the Participant
and the holders of a majority of the Shares as to which the Right of First
Refusal and Company Refusal Right have been exercised. If such mutual agreement
cannot be reached, the Appraisal Procedure set forth in the Company’s Amended
and Restated Certificate of Incorporation shall be followed mutatis
mutandis and the time periods in Paragraph 3(b) shall be extended by the
time needed to determine such fair value.

	 	e.	 	Exempt Transfers.

	 	(i)	 	The Participant may Transfer Restricted Shares without
complying with the provisions of Paragraph 3 if such Transfer is to any
Permitted Transferee; provided that in the event of any Transfer made
pursuant to

 

 

	 	 	 	this Paragraph 3(e), (A) the Participant shall inform the Company
of such Transfer prior to effecting it, and (B) the transferee shall furnish
the Company with a written agreement, reasonably satisfactory to the Company,
to be bound by and comply with all provisions of this Paragraph 3 as if such
transferee were the Participant. Such Transferred Restricted Shares shall
remain Restricted Shares hereunder.

	 	(ii)	 	Notwithstanding the foregoing, the provisions of Paragraph 3
hereof shall not apply to the sale of any Shares to the public pursuant to a
registration statement filed with, and declared effective by, the Securities
and Exchange Commission under Securities Act of 1933, as amended (the
“Securities Act”).

	 	f.	 	Transfers to Competitors. Any other provision of this Agreement to
the contrary notwithstanding, other than in connection with a Sale of the Company,
prior to a Qualified Public Offering, no Transfer of Restricted Shares may be made by
the Participant to a competitor of the Company or any person or entity that invests in
any such competitor, as determined in good faith by the Board.

	 	g.	 	Stockholder Lockup Agreements in Connection with Initial Public
Offering. Notwithstanding anything in the Plan to the contrary, the Participant
agrees that, subject to any early release provisions that apply generally to
stockholders of the Company, the Participant will not, if reasonably requested by the
managing underwriter, for a period of up to 180 days following the effective date of
the registration statement for an initial public offering directly or indirectly sell,
offer to sell, grant any option for the sale of, or otherwise dispose of any Common
Stock or securities convertible into Common Stock, except for (i) transactions relating
to Common Stock or other securities acquired in open market transactions after the
completion of the initial public offering, and (ii) Transfers to Permitted Transferees
(each of whom shall have furnished to the Company and the managing underwriter their
written consent to be bound by this Paragraph 3 or a similar agreement satisfactory to
the Company).

	 	h.	 	Consequences of Prohibited Transfer. Any attempt by a Participant to
Transfer Restricted Shares in violation of the terms of this Paragraph 3 shall be void,
and the Company will not effect such a Transfer nor will it treat any alleged
transferee as the holder of such Restricted Shares.

	 	i.	 	Legend. Each certificate representing the Restricted Shares subject
to the terms of this Agreement shall be endorsed with the following legend or legend(s)
containing substantially similar information (in addition to any legend required under
applicable securities laws or otherwise):

	 	 	 	THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY
NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO THE

 

 

	 	 	 	SECURITIES UNDER SUCH ACT OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED OR UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A OF SUCH ACT. THE SALE OR
TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS
AND CONDITIONS OF A RESTRICTED STOCK AGREEMENT TO WHICH THE HOLDER HEREOF AND THE
COMPANY ARE PARTIES. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST
TO THE SECRETARY OF THE COMPANY.

	 	 	 	This legend shall be removed upon termination of this Paragraph 3. The Participant
consents to the Company making a notation on its records and giving instructions to
any transfer agent of the Company’s securities and capital stock in order to
implement the restrictions on transfer established in this Paragraph 3.

	 	j.	 	The Participants agree that the Company may instruct its
transfer agent to impose transfer restrictions on Restricted Shares represented
by certificates bearing the legend referred to in Paragraph 3(i) above to
enforce the provisions of this Paragraph 3. The legend shall be removed upon
termination of this Paragraph 3.

	 	k.	 	Drag Along Rights.

	 	(i)	 	In the event that the holders of at least 66% of the then
outstanding shares of Series B Preferred Stock (the “Proposing Stockholders”)
agree to and accept an offer from a third party or third parties not Affiliated
with any Proposing Stockholder (a “Buyer”) to consummate a transaction or
series of related transactions with such Buyer pursuant to which Buyer would
acquire all of the Shares held by such Proposing Shareholders for a specified
price payable in cash, securities or other consideration and on specified terms
and conditions, the Participant shall be required, if so demanded by the
Proposing Shareholders (a “Drag Along Notice”) to sell all of the Participant’s
Restricted Shares to such Buyer in such transaction(s) and to participate in
such transaction(s) (a “Drag Along Sale”).

	 	(ii)	 	The provisions of this Paragraph 3(k) shall apply regardless
of the form of consideration received in the Drag Along Sale, and the
Participant shall (i) if the Drag Along Sale is structured as a merger or
consolidation, waive any dissenters’ rights, appraisal rights or similar rights
in connection with such merger or consolidation, or (ii) if the Drag Along Sale
is structured as a sale, agree to sell all of the Participant’s Restricted
Shares on the terms and conditions approved by the Proposing Stockholders. The
Participant (a) shall be subject to the same terms and conditions, and (b)
shall execute
such documents and take such actions as may be reasonably required by the
Company and the Proposing Shareholders.

 

 

	 	(iii)	 	Upon the consummation of the Drag Along Sale, the
Participant (i) shall receive the same form of consideration and the same
amount of consideration per share of Common Stock (on an As Converted Basis) as
every other holder of any class or series of Shares, except to the extent
otherwise approved in connection with Section 2 of the Amended and Restated
Certificate of Incorporation of the Company, as amended from time to time, and
(ii) shall be given the same option, if any, as any other holders of any other
class or series of Shares as to the form of consideration to be received.

	 	(iv)	 	Transfer Mechanics; Further Assurances.

	 	(a)	 	At least five (5) days prior to the
consummation of a Drag Along Sale (which date and the place and time of
such consummation shall be designated by the Proposing Stockholders and
provided to the Participant in the Drag Along Notice), the Participant
shall deliver for transfer to the Buyer one or more certificates,
properly endorsed for transfer in form satisfactory to the Proposing
Stockholders, which represent all of the Restricted Shares held by the
Participant, duly executed and free and clear of any liens. The
certificate(s) delivered by the Participant shall be transferred to the
Buyer identified in the Drag Along Notice as part of the consummation
of the Drag Along Sale. Upon receipt of the proceeds of the Drag Along
Sale, the Proposing Stockholders shall promptly remit to the
Participant that portion of such proceeds to which the Participant is
entitled by reason of the Participant’s participation in such sale.

	 	(b)	 	In connection with a Drag Along Sale, the
Participant agrees to execute and deliver such agreements as may be
reasonably specified by the Proposing Stockholders to which such
Proposing Stockholders will also be party, on the same terms,
including, without limitation, agreements to (a) (i) made individual
representation, warranties, covenants and other agreements as to the
unencumbered title to the Participant’s Restricted Shares and the
power, authority and legal right to Transfer such Restricted Shares and
to enter into the agreements relating thereto and the absence of any
adverse claim with respect to such Restricted Shares (but shall not be
required to make individual representations or warranties with respect
to any of the Company’s operations, activities, financial condition or
other characteristics) and (ii) be liable without limitation as to such
individual representations, warranties, covenants and other agreements
and (b) be liable (whether by purchase price adjustment, indemnity
payments or otherwise) in respect of representations, warranties,
covenants and agreements in respect of the Company; provided,
however, that the aggregate amount of liability described in this

 

 

	 	 	 	clause (b) in connection with any sale of Shares shall not exceed the
less of (i) the Participant’s pro rata portion of any such liability,
to be determined in accordance with the Participant’s portion of the
total number of Shares included in such Drag Along Sale (on an As
Converted Basis) or (ii) the proceeds to such Participant in
connection with such Drag Along Sale.

	 	l.	 	Term. This Paragraph 3 shall continue in full force and effect from
the date hereof through the earliest of the following dates, on which date it shall
terminate in its entirety:

	 	(i)	 	the date of the closing of a Qualified Public Offering; and

	 	(ii)	 	the date of the consummation of a Sale of the Company.

	 	m.	 	For avoidance of doubt, this Paragraph 3 shall survive termination or
expiration of this Agreement.

4. Miscellaneous.

	 	a.	 	Employment-at-Will. This Agreement shall not confer on Participant
any right with respect to continuance of Employment by the Company and its Affiliates,
nor will it interfere in any way with the right of the Company to terminate such
Employment. Participant’s Employment relationship with the Company and its Affiliates
shall be employment-at-will, and nothing in this Agreement shall be construed as
creating an employment contract for any specified term between Participant and the
Company or any Affiliate.

	 	b.	 	Nonsolicitation. The Participant agrees that during the period of
his Employment with the Company or any of its Affiliates and for the one (1) year
period immediately following termination of such Employment for any reason, the
Participant shall not (i) directly or indirectly, engage in the recruiting, soliciting
or inducing of any nonclerical employee or employees of the Company or Affiliates to
terminate their employment with, or otherwise cease their relationship with the Company
or any of its Affiliates, or in hiring or assisting another person or entity to hire
any nonclerical employee of the Company or any of its Affiliates or any person who
within six (6) months before had been a nonclerical employee of the Company or any of
their Affiliates and were recruited or solicited for such employment or other retention
while an employee of the Company (other than any of the foregoing activities engaged in
with the prior written approval of the Company); or (ii) directly or indirectly
solicit, induce or encourage or attempt to persuade any agent, supplier or customer of
the Company or any Affiliate to terminate such agency or business relationship. The
Participant acknowledges that if (x) the Participant breaches any term or condition
contained in this paragraph 4(b) and (y) the Company provides the Participant with
written notice of such
breach, then all Shares subject to this Award shall be automatically forfeited
(whether then vested or unvested).

 

 

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

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

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

	 	f.	 	2008 Equity and Incentive Plan. The Award evidenced by this Agreement
is granted pursuant to the Plan, a copy of which Plan has been made available to
Participant and is hereby incorporated into this Agreement. This Agreement is subject
to and in all respects limited and conditioned as provided in the Plan. The Plan
governs this Agreement. Except with respect to the lockup provisions contained in
Paragraph 3(g), in the event of any questions as to the construction of this Agreement
or in the event of a conflict between the Plan and this Agreement, the Plan shall
govern.

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

	 	h.	 	Accounting Compliance. Participant agrees that, if a merger,
reorganization, liquidation or other “transaction” as defined in Section 11(b) of the
Plan occurs,

 

 

	 	 	 	and Participant is an “affiliate” of the Company or any Affiliate (as
defined in applicable legal and accounting principles) at the time of such transaction,
Participant will comply with all requirements of Rule 145 of the Securities Act of
1933, as amended, and the requirements of such other legal or accounting principles,
and will execute any documents necessary to ensure such compliance.

	 	i.	 	Stock Legend. The Committee may require that the certificates for
any Shares purchased by Participant (or, in the case of death, Participant’s
successors) shall bear an appropriate legend to reflect the restrictions set forth in
this Agreement; provided, however, that failure to so endorse any of such certificates
shall not render invalid or inapplicable Paragraph 3.

	 	j.	 	Scope of Agreement; Amendment. This Agreement shall bind and inure
to the benefit of the Company, its Affiliates and its successors and assigns and
Participant and any successor or successors of Participant permitted by Paragraph 2 or
Paragraph 3 above. Notwithstanding anything in this Agreement or the Plan to the
contrary, the Company expressly reserves the right to amend this Agreement without
Participant’s consent to the extent necessary or desirable to comply with Code Section
409A, and the regulations, notices and other guidance of general applicability issued
thereunder. Notwithstanding anything herein in this Agreement or the Plan to the
contrary, any provision of Paragraph 3 may be amended and the observance thereof may be
waived (either generally or in a particular instance and either retroactively or
prospectively), only by the written consent given by the Company and Investors holding
sixty-six percent (66%) of the then outstanding Series B Preferred Stock, and no
consent from the Participant shall be required unless such amendment or waiver creates
material additional obligations for the Participant under this Agreement which are
substantially different from any obligations imposed on holders of Common Stock under
the Investors Stockholders Agreement (in which case, the consent of participants under
restricted stock or option agreements who are bound by terms and conditions of similar
tenor to this Agreement who hold more than fifty percent (50%) of the total of all
restricted shares and option shares held by all such participants thereunder and
hereunder shall be required for any such amendment or waiver which does create such
material additional obligations).

5. Change of Control.

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

	 	 	 	     b. Continuation or Assumption of the Shares. In the event of a
Change of Control in which there is an acquiring or surviving entity, the acquiring
or surviving entity may provide for the continuation or assumption of the Shares,
or for the grant of a new award in substitution therefor, by the acquiror or

 

 

	 	 	 	survivor or an affiliate of the acquiror or survivor, in each case on such terms and
subject to such conditions as preserve the intrinsic value of the Shares. In the
event the acquiring or surviving entity provides for the continuation or assumption
of the Shares as set forth in this Paragraph 5(b), the Shares shall become fully
vested and the risks of forfeiture on the Shares shall immediately lapse upon the
Participant’s termination of Employment by the acquiring or surviving entity without
Cause or by the Participant for Good Reason, in either case within eighteen (18)
months after the Change of Control. For purposes of this Agreement, “Good Reason”
shall mean (i) a material diminution in the Participant’s responsibilities or duties
as in effect immediately prior to the Change of Control, (ii) the relocation of
Participant’s principal office, without the Participant’s consent, to a location
more than one hundred (100) miles from the location of the Participant’s principal
office immediately prior to the Change of Control, or (iii) any reduction in the
Participant’s base compensation in the absence of a general reduction affecting
similarly situated employees.

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

	 	 	 	 	 
	 	FINGERHUT DIRECT MARKETING, INC.

 	 
	 	By:  	 	 
	 	 	Its:

 	 
	 	
 	 
	 	[Participant]	 
	 	 	 

 

 

RESTRICTED STOCK AGREEMENT

FINGERHUT DIRECT MARKETING, INC.

2008 EQUITY AND INCENTIVE PLAN

(NON-EMPLOYEE INDEPENDENT DIRECTORS)

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

W I T N E S S E T H:

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

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

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

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

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

     2. Vesting of Restricted Stock.

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

	 	 	 
	Vesting Date	 	Number of Shares
	 
	May 21, 2009

	 	F•]
	May 21, 2010

	 	F•]
	May 21, 2011

	 	F•]
	May 21, 2012

	 	F•]

 

 

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

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

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

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

4. Miscellaneous.

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

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

 

 

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

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

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

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

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

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

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

 

 

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

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

5. Change of Control.

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

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

 

 

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

	 	 	 	 	 
	 	FINGERHUT DIRECT MARKETING, INC.

 	 
	 	By:  	 	 
	 	 	Its:

 	 
	 	
 	 
	 	[Participant]exv10w9

Exhibit 10.9

CREDIT AGREEMENT

dated as of August 20, 2010

among

FINGERHUT RECEIVABLES I, LLC,

TRANCHE A LENDERS PARTIES HERETO,

TRANCHE B LENDERS PARTIES HERETO,

GOLDMAN SACHS BANK USA,

as Administrative Agent, Collateral Agent, Joint Lead Arranger, Joint Bookrunner and

Syndication Agent and Documentation Agent

and

J.P. MORGAN SECURITIES INC.,

as Joint Lead Arranger and Joint Bookrunner

 

$365,000,000 Secured Credit Facility

 

 

 

	 	 	 	 	 

	SECTION 1. DEFINITIONS AND INTERPRETATION
	 	 	1	 
	 
	 	 	 	 
	1.1. Definitions
	 	 	1	 
	1.2. Accounting Terms
	 	 	31	 
	1.3.
Interpretation, etc.
	 	 	31	 
	 
	 	 	 	 
	SECTION 2. LOANS
	 	 	32	 
	2.1. Term Loans
	 	 	32	 
	2.2. Revolving Loans
	 	 	32	 
	2.3. Pro Rata Shares; Availability of Funds
	 	 	34	 
	2.4. Use of Proceeds
	 	 	35	 
	2.5. Evidence of Debt; Register; Lenders’ Books and Records; Notes
	 	 	36	 
	2.6. Interest on Loans
	 	 	36	 
	2.7. Continuation
	 	 	37	 
	2.8. Default Interest
	 	 	37	 
	2.9. Fees
	 	 	37	 
	2.10. Voluntary Prepayments/Commitment Reductions
	 	 	38	 
	2.11. Mandatory Prepayments/Commitment Reductions
	 	 	40	 
	2.12. Application of Prepayments and Commitment Reductions
	 	 	42	 
	2.13. Payments during Event of Default
	 	 	43	 
	2.14. Controlled Accounts and Amounts
	 	 	44	 
	2.15. Application of Collections
	 	 	45	 
	2.16. General Provisions Regarding Payments
	 	 	47	 
	2.17. Ratable Sharing
	 	 	48	 
	2.18. Making or Maintaining LIBOR Rate Loans
	 	 	49	 
	2.19. Increased Costs; Capital Adequacy
	 	 	51	 
	2.20. Taxes;
Withholding, etc.
	 	 	52	 
	2.21. Obligation to Mitigate
	 	 	54	 
	2.22. Defaulting Lenders
	 	 	55	 
	2.23. Removal or Replacement of a Lender
	 	 	56	 
	2.24. Determination of Borrowing Base; Eligible Underlying Receivables
	 	 	57	 
	2.25. Subordination
	 	 	59	 
	 
	 	 	 	 
	SECTION 3. CONDITIONS PRECEDENT
	 	 	61	 
	3.1. Closing Date
	 	 	61	 

 

 

	 	 	 	 	 

	3.2. Conditions to Each Credit Extension
	 	 	65	 
	 
	 	 	 	 
	SECTION 4. REPRESENTATIONS AND WARRANTIES
	 	 	66	 
	4.1. Organization; Requisite Power and Authority; Qualification; Other Names
	 	 	66	 
	4.2. Capital Stock and Ownership
	 	 	66	 
	4.3. Due Authorization
	 	 	67	 
	4.4. No Conflict
	 	 	67	 
	4.5. Governmental Consents
	 	 	67	 
	4.6. Binding Obligation
	 	 	67	 
	4.7. Underlying Receivables
	 	 	67	 
	4.8. No Material Adverse Effect
	 	 	68	 
	4.9. Adverse
Proceedings, etc.
	 	 	68	 
	4.10. Payment of Taxes
	 	 	68	 
	4.11. Title to Assets
	 	 	68	 
	4.12. No Indebtedness
	 	 	68	 
	4.13. No Defaults
	 	 	68	 
	4.14. Governmental Regulation
	 	 	68	 
	4.15. Margin Stock
	 	 	69	 
	4.16. Plans
	 	 	69	 
	4.17. Certain Fees
	 	 	69	 
	4.18. Solvency and Fraudulent Conveyance
	 	 	69	 
	4.19. Related Agreements
	 	 	69	 
	4.20.
Compliance with Statutes, etc.
	 	 	69	 
	4.21. Disclosure
	 	 	70	 
	4.22. Patriot Act
	 	 	70	 
	 
	 	 	 	 
	SECTION 5. AFFIRMATIVE COVENANTS
	 	 	70	 
	5.1. Reports
	 	 	70	 
	5.2. Existence
	 	 	72	 
	5.3. Payment of Taxes and Claims
	 	 	72	 
	5.4. Audits of Underlying Receivables
	 	 	72	 
	5.5. Lenders Meetings
	 	 	73	 
	5.6. Compliance with Laws
	 	 	73	 
	5.7. WebBank Backup Originator Agreement
	 	 	73	 

 

 

	 	 	 	 	 

	5.8. Further Assurances
	 	 	73	 
	5.9. Separateness
	 	 	73	 
	5.10. Cash Management Systems
	 	 	76	 
	5.11. Spread Account
	 	 	77	 
	5.12. Account Owner True Sale Opinion
	 	 	79	 
	 
	 	 	 	 
	SECTION 6. NEGATIVE COVENANTS
	 	 	79	 
	6.1. Indebtedness
	 	 	79	 
	6.2. Liens
	 	 	79	 
	6.3. No Further Negative Pledges
	 	 	80	 
	6.4. Investments
	 	 	80	 
	6.5. Collateral Performance Covenants
	 	 	80	 
	6.6. Fundamental Changes; Disposition of Assets; Acquisitions
	 	 	81	 
	6.7. Material Contracts and Organizational Documents
	 	 	81	 
	6.8. Sales and Lease-Backs
	 	 	81	 
	6.9. Transactions with Shareholders and Affiliates
	 	 	81	 
	6.10. Conduct of Business
	 	 	81	 
	6.11. Fiscal Year
	 	 	81	 
	6.12. Accounts
	 	 	82	 
	6.13. Prepayments of Certain Indebtedness
	 	 	82	 
	6.14. Servicing Agreement and Backup Servicing Agreement
	 	 	82	 
	6.15. Independent Manager
	 	 	82	 
	 
	 	 	 	 
	SECTION 7. EVENTS OF DEFAULT
	 	 	83	 
	7.1. Events of Default
	 	 	83	 
	7.2. Disposition of Collateral
	 	 	86	 
	 
	 	 	 	 
	SECTION 8. AGENTS
	 	 	87	 
	8.1. Appointment of Agents
	 	 	87	 
	8.2. Powers and Duties
	 	 	87	 
	8.3. General Immunity
	 	 	87	 
	8.4. Agents Entitled to Act as Lender
	 	 	88	 
	8.5. Lenders’ Representations, Warranties and Acknowledgment
	 	 	88	 
	8.6. Right to Indemnity
	 	 	89	 
	8.7. Successor Administrative Agent and Collateral Agent
	 	 	90	 

 

 

	 	 	 	 	 

	8.8. Collateral Documents and Guaranty
	 	 	91	 
	 
	 	 	 	 
	SECTION 9. MISCELLANEOUS
	 	 	91	 
	9.1. Notices
	 	 	91	 
	9.2. Expenses
	 	 	92	 
	9.3. Indemnity
	 	 	92	 
	9.4. Set-Off
	 	 	93	 
	9.5. Amendments and Waivers
	 	 	94	 
	9.6. Successors and Assigns; Participations
	 	 	96	 
	9.7. Non-Public Information
	 	 	99	 
	9.8. Independence of Covenants
	 	 	100	 
	9.9. Survival of Representations, Warranties and Agreements
	 	 	100	 
	9.10. No Waiver; Remedies Cumulative
	 	 	100	 
	9.11. Marshalling; Payments Set Aside
	 	 	100	 
	9.12. Severability
	 	 	101	 
	9.13. Obligations Several; Independent Nature of Lenders’ Rights
	 	 	101	 
	9.14. Headings
	 	 	101	 
	9.15. APPLICABLE LAW
	 	 	101	 
	9.16. CONSENT TO JURISDICTION
	 	 	101	 
	9.17. WAIVER OF JURY TRIAL
	 	 	102	 
	9.18. Confidentiality
	 	 	103	 
	9.19. Usury Savings Clause
	 	 	103	 
	9.20. Counterparts
	 	 	104	 
	9.21. Effectiveness
	 	 	104	 
	9.22. Patriot Act
	 	 	104	 
	9.23. Prior Agreements
	 	 	104	 
	9.24. Third Party Beneficiaries
	 	 	104	 
	9.25. Provisions Specific to Noncommitted Conduit Lenders
	 	 	104	 
	9.26. Provisions Specific to Committed Conduit Lenders
	 	 	105	 
	9.27. Agreement Not to Petition
	 	 	106	 

 

 

	 	 	 	 	 	 	 

	APPENDICES:

	 	 	A-1	 	 	Revolving Commitments
	 

	 	 	A-2	 	 	Term Loan Commitments
	 

	 	 	B	 	 	Notice Addresses
	 

	 	 	C	 	 	Fiscal Quarter
	 
	 	 	 	 	 	 
	EXHIBITS:

	 	 	A-1	 	 	Form of Funding Notice
	 

	 	 	A-2	 	 	Form of Principal Collections Notice
	 

	 	 	B-1	 	 	Form of Tranche A Revolving Loan Note
	 

	 	 	B-2	 	 	Form of Tranche B Term Loan Note
	 

	 	 	C	 	 	Form of Assignment Agreement
	 

	 	 	D	 	 	Form of Certificate Regarding Non-bank Status
	 

	 	 	E-1	 	 	Form of Closing Date Certificate
	 

	 	 	E-2	 	 	Form of Solvency Certificate
	 

	 	 	F	 	 	Form of Security Agreement
	 

	 	 	G	 	 	Form of Bluestem Guaranty
	 

	 	 	H	 	 	Form of Sponsor Indemnity Agreement
	 

	 	 	I	 	 	Form of Servicing Agreement
	 

	 	 	J	 	 	Form of Backup Servicing Agreement
	 

	 	 	K	 	 	Form of Bluestem Letter Agreement
	 
	 	 	 	 	 	 
	SCHEDULES:

	 	 	1.1	 	 	Eligibility Criteria
	 

	 	 	3.1	(c)	 	Organizational and Capital Structure of Bluestem and its
Subsidiaries
	 

	 	 	3.1	(t)	 	Regulatory Compliance Changes
	 

	 	 	4.5	 	 	Required Consents

 

 

CREDIT AGREEMENT

     This CREDIT AGREEMENT, dated as of August 20, 2010, is entered into by and among FINGERHUT
RECEIVABLES I, LLC, a Delaware limited liability company (the “Company”), the Tranche A Lenders
party hereto from time to time, the Tranche B Lenders party hereto from time to time, GOLDMAN SACHS
BANK USA (“GS Bank”), as Administrative Agent (in such capacity, “Administrative Agent”),
Collateral Agent (in such capacity, “Collateral Agent”), Joint Lead Arranger and Joint Bookrunner,
J.P. MORGAN SECURITIES INC. (“JPMSI”), as Joint Lead Arranger and Joint Bookrunner, GS BANK, as
Syndication Agent (in such capacity, “Syndication Agent”), and GS BANK, as Documentation Agent (in
such capacity, “Documentation Agent”).

RECITALS:

     WHEREAS, the Lenders have agreed to extend a credit facility to the Company, consisting of up
to $290,000,000 aggregate principal amount of Revolving Commitments and $75,000,000 aggregate
principal amount of Term Loan Commitments, the proceeds of which will be used to repay the Existing
Indebtedness, to fund the Spread Account, to acquire Underlying Receivables, and to pay fees and
expenses related to the foregoing; and

     WHEREAS, the Company has agreed to secure all of its Obligations by granting to the Collateral
Agent, for the benefit of Secured Parties, a First Priority Lien on all of the Collateral;

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

SECTION 1. DEFINITIONS AND INTERPRETATION

     1.1. Definitions. The following terms used herein, including in the preamble, recitals,
exhibits and schedules hereto, shall have the following meanings:

     “Account Bank” means Bank of America, N.A.

     “Account Owner True Sale Opinion” means an opinion of legal counsel, in form and substance
reasonably satisfactory to (x) the Administrative Agent, for so long as GS Bank is the
Administrative Agent, and (y) thereafter, the Class Requisite Lenders of each Class and addressed
to the Administrative Agent and the Lenders, substantially to the effect that the transfer of the
Underlying Receivables under the related Receivables Sale Agreement would be treated as a true
sale.

     “Act” as defined in Section 4.22.

     “Adjusted Excess Spread Ratio” means, with respect to any Monthly Period, the Adjusted
Portfolio Yield, minus the Principal Default Ratio, minus the Receivables Base Rate.

     “Adjusted LIBOR Rate” means, for any Interest Rate Reset Date with respect to an Interest
Period for a LIBOR Rate Loan, the rate per annum obtained by dividing (and rounding

 

 

upward to the next whole multiple of 1/100 of 1%) (a) (x) the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the rate determined by the Administrative Agent to be the offered
rate which appears on the page of the Reuters Screen which displays an average British Bankers
Association Interest Settlement Rate (such page currently being Reuters Screen LIBOR01 Page) for
deposits (for delivery on the first day of such period) for a one-month period in Dollars,
determined as of approximately 11:00 a.m. (London, England time) on such Interest Rate Reset Date,
or (y) in the event the rate referenced in the preceding clause (x) does not appear on such page or
service or if such page or service shall cease to be available, the rate per annum (rounded to the
nearest 1/100 of 1%) equal to the rate determined by the Administrative Agent to be the offered
rate on such other page or other service which displays an average British Bankers Association
Interest Settlement Rate for deposits (for delivery on the first day of such period) for a
one-month period in Dollars, determined as of approximately 11:00 a.m. (London, England time) on
such Interest Rate Reset Date, or (z) in the event the rates referenced in the preceding clauses
(x) and (y) are not available, the rate per annum (rounded to the nearest 1/100 of 1%) equal to the
offered quotation rate to first class banks in the London interbank market by GS Bank or any other
Lender selected by the Administrative Agent for deposits (for delivery on the first day of the
relevant period) in Dollars of amounts in same day funds comparable to the principal amount of the
applicable Tranche A Revolving Loan of GS Bank or any other Lender selected by the Administrative
Agent, for which the Adjusted LIBOR Rate is then being determined with maturities equal to a
one-month period as of approximately 11:00 a.m. (London, England time) on such Interest Rate Reset
Date, by (b) an amount equal to (i) one, minus (ii) the Applicable Reserve Requirement.

     “Adjusted Portfolio Yield” means, with respect to any Monthly Period, a fraction (a) the
numerator of which is equal to 12 multiplied by the aggregate amount of Eligible Finance Charge
Collections for such Monthly Period and (b) the denominator of which is the aggregate amount of
Eligible Principal Receivables outstanding as of the last day of the preceding Monthly Period.

     “Administrative Agent” as defined in the preamble hereto.

     “Adverse Proceeding” means any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration (whether or not purportedly on behalf of the
Company) at law or in equity, or before or by any Governmental Authority, domestic or foreign,
whether pending or, to the knowledge of the Company, threatened against or affecting the Company or
any property of the Company.

     “Affected Lender” as defined in Section 2.18(b).

     “Affected Loans” as defined in Section 2.18(b).

     “Affiliate” means, as applied to any Person, any other Person directly or indirectly
controlling (including any member of Senior Management), controlled by, or under common control
with, that Person. For the purposes of this definition, “control” (including, with correlative
meanings, the terms “controlling,” “controlled by” and “under common control with”), 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.

     “Agent Fees” means, with respect to an Interest Payment Date, any fees owed to any Agent
pursuant to the Fee Letter.

     “Agents” means each of the Syndication Agent, the Administrative Agent, the Collateral Agent
and the Documentation Agent.

     “Aggregate Amounts Due” as defined in Section 2.17.

     “Agreement” means this Credit Agreement.

     “Applicable Margin” means (a) with respect to Tranche A Revolving Loans that are LIBOR Rate
Loans, a percentage, per annum, equal to 4.25%; (b) with respect to Tranche A Revolving Loans that
are CP Rate Loans, a percentage, per annum, equal to 4.25%; and (c) with respect to Tranche A
Revolving Loans that are Base Rate Loans, a percentage, per annum, equal to 3.25%.

     “Applicable Reserve Requirement” means, at any time, for any LIBOR Rate Loan, the maximum
rate, expressed as a decimal, at which reserves (including, without limitation, any basic,
marginal, special, supplemental, emergency or other reserves) are required to be maintained with
respect thereto against “Eurocurrency liabilities” (as such term is defined in Regulation D) under
regulations issued from time to time by the Board of Governors of the Federal Reserve System or
other applicable banking regulator. Without limiting the effect of the foregoing, the Applicable
Reserve Requirement shall reflect any other reserves required to be maintained by such member banks
with respect to (a) any category of liabilities which includes deposits by reference to which the
applicable Adjusted LIBOR Rate or any other interest rate of a Tranche A Revolving Loan is to be
determined or (b) any category of extensions of credit or other assets which include LIBOR Rate
Loans. A LIBOR Rate Loan shall be deemed to constitute Eurocurrency liabilities and as such shall
be deemed subject to reserve requirements without benefits of credit for proration, exceptions or
offsets that may be available from time to time to the applicable Lender. The rate of interest on
LIBOR Rate Loans shall be adjusted automatically on and as of the effective date of any change in
the Applicable Reserve Requirement.

     “Asset Sale” means a sale, lease or sub-lease (as lessor or sublessor), sale and leaseback,
assignment, conveyance, transfer, license or other disposition to, or any exchange of property
with, any Person, in one transaction or a series of transactions, of all or any part of the
Company’s businesses, assets or properties of any kind, whether real, personal, or mixed and
whether tangible or intangible, whether now owned or hereafter acquired. For purposes of
clarification, “Asset Sale” shall include (a) the sale or other disposition for value of any
contracts or (b) the early termination or modification of any contract resulting in the receipt by
the Company of a cash payment or other consideration in exchange for such event (other than
payments in the ordinary course for accrued and unpaid amounts due through the date of termination
or modification), or (c) any sale of merchant accounts (or any rights thereto

 

 

(including, without limitation, any rights to any residual payment stream with respect
thereto)) by the Company.

     “Assignment Agreement” means an Assignment and Assumption Agreement substantially in the form
of Exhibit C.

     “Authorized Officer” means, as applied to any Person, any individual holding the position of
chairman of the board (if an officer), chief executive officer, president or one of its vice
presidents (or the equivalent thereof), and such Person’s chief financial officer or treasurer;
provided that with respect to the Company, an “Authorized Officer” shall include any
officer or manager authorized under the Organizational Documents of the Company or otherwise to
bind the Company.

     “Backup Originator Agreement” means the MetaBank Backup Originator Agreement and/or the
WebBank Backup Originator Agreement, as the context may require.

     “Backup Servicer” means Systems & Services Technologies, Inc. (a subsidiary of NCO Group,
Inc.), or any independent third party selected by the Administrative Agent and the Class Requisite
Lenders of each Class and, provided no Event of Default is then continuing, approved by the Company
(such approval not to be unreasonably withheld, conditioned or delayed), to perform servicing and
monitoring functions with respect to the Underlying Receivables.

     “Backup Servicing Agreement” means that certain Backup Servicing Agreement, dated as of August
20, 2010, by and among Backup Servicer, the Servicer and the Administrative Agent, substantially in
the form of Exhibit J.

     “Backup Servicing Fees” shall have the meaning attributed to such term in the Backup Servicing
Agreement.

     “Bain” means, collectively, Bain Capital Venture Fund, L.P., BCIP Associates III, LLC, BCIP
Associates III-B, LLC and Brookside Capital Partners Fund, L.P.

     “Bankruptcy Code” means Title 11 of the United States Code entitled “Bankruptcy,” as now and
hereafter in effect, or any successor statute.

     “Base Rate” means, for any day, a rate per annum equal to the greater of (i) the Prime Rate in
effect on such day, and (ii) the Federal Funds Effective Rate in effect on such day plus 1/2 of 1%.
Any change in the Base Rate due to a change in the Prime Rate or the Federal Funds Effective Rate
shall be effective on the effective day of such change in the Prime Rate or the Federal Funds
Effective Rate, respectively.

     “Base Rate Loan” means a Tranche A Revolving Loan bearing interest at a rate determined by
reference to the Base Rate.

     “Battery” means, collectively, Battery Venture VI, L.P. and Battery Investment Partners VI,
LLC.

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

 

 

     “Bluestem 2010 Inventory Credit Agreement” means (i) prior to a Refinancing, that certain
Amended and Restated Credit Agreement dated as of August 20, 2010, by and among Bluestem, JP Morgan
Chase Bank, N.A. and the lenders party thereto and (ii) thereafter, any credit agreement entered
into by Bluestem in connection with such Refinancing.

     “Bluestem 2010 Inventory Intercreditor Agreement” means that certain Intercreditor Agreement
dated as of August 20, 2010, by and among the Collateral Agent, JPMorgan Chase Bank, N.A., as
administrative agent for the financial institutions party to the Bluestem 2010 Inventory Credit
Agreement, the Company and Bluestem.

     “Bluestem 2010 Inventory Security Agreement” means (i) prior to a Refinancing, that certain
Amended and Restated Pledge and Security Agreement, dated as of August 20, 2010 by and between
Bluestem and JPMorgan Chase Bank, N.A. and (ii) thereafter, any security or pledge agreement
related to the Bluestem 2010 Inventory Credit Agreement.

     “Bluestem 2010 Securities Purchase Agreement Amendment” means that certain Letter Agreement
dated as of August 20, 2010, by and among Bluestem, Prudential Capital Partners II, L.P.,
Prudential Capital Partners Management Fund II, L.P. and Prudential Capital Partners (Parallel
Fund) II, L.P., as purchasers.

     “Bluestem Credit Party” means each Credit Party other than a Sponsor.

     “Bluestem Guaranty” means that certain Guaranty dated as of August 20, 2010 by and among
Bluestem and the Administrative Agent, on behalf of the Lenders, substantially in the form of
Exhibit G.

     “Bluestem Letter Agreement” means that certain Letter Agreement, dated as of August 20, 2010,
by and between Bluestem and the Administrative Agent, substantially in the form of Exhibit K.

     “Bluestem Securities Intercreditor Agreement” means that certain Intercreditor Agreement dated
as of August 20, 2010 by and among the Collateral Agent, Prudential Capital Partners, as collateral
agent for the purchasers party to the Bluestem Securities Purchase Agreement, the Company, and
Bluestem.

     “Bluestem Securities Purchase Agreement” means (i) prior to a Refinancing, that certain
Securities Purchase Agreement, dated as of March 23, 2006, by and among Bluestem and the purchasers
from time to time listed on the Purchaser Schedule thereto, as amended by that certain Letter
Agreement, dated as of June 21, 2007, as further amended by that certain Letter Agreement, dated as
of May 15, 2008, as further amended by the Bluestem Securities Purchase and Security Agreement
Amendment and as further amended by the Bluestem 2010 Securities Purchase Agreement Amendment and
(ii) thereafter, any securities purchase agreement or other debt facility entered into by Bluestem
in connection with such Refinancing.

     “Bluestem Securities Purchase and Security Agreement Amendment” means that certain Letter
Agreement dated as of July 31, 2009, by and among Bluestem, Prudential Capital Partners II, L.P.,
Prudential Capital Partners Management Fund II, L.P. and Prudential Capital Partners (Parallel
Fund) II, L.P., as purchasers.

 

 

     “Bluestem Securities Security Agreement” means (i) prior to a Refinancing, that certain Third
Amended and Restated Pledge and Security Agreement, dated as of August 20, 2010, by and between
Bluestem and Prudential Capital Partners II, L.P. and (ii) thereafter, any security or pledge
agreement related to the Bluestem Securities Purchase Agreement.

     “Borrowing Base” means, subject to Section 2.24(a), as of any date of determination, an amount
equal to:

(a) the aggregate Principal Receivables that are Eligible Underlying Receivables;
plus

     (b) the aggregate amount then on deposit in the Principal Collections Account; minus

     (c) any Reserves required to be established by the Company from time to time pursuant to the
terms hereof.

     “Borrowing Base Deficiency” means a Tranche A Borrowing Base Deficiency and/or a Tranche B
Borrowing Base Deficiency, as the context may require.

     “Business Day” means (a) any day excluding Saturday, Sunday and any day which is a legal
holiday under the laws of the State of New York or the State of Texas or is a day on which banking
institutions located in either such state are authorized or required by law or other governmental
action to close, and (b) with respect to all notices, determinations, fundings and payments in
connection with the Adjusted LIBOR Rate or any LIBOR Rate Loans, the term “Business Day” shall mean
any day which is a Business Day described in clause (a) and which is also a day for trading by and
between banks in Dollar deposits in the London interbank market.

     “Capital Lease” means, as applied to any Person, any lease of any property (whether real,
personal or mixed) by that Person (a) as lessee that, in conformity with GAAP, is or should be
accounted for as a capital lease on the balance sheet of that Person or (b) as lessee which is a
transaction of a type commonly known as a “synthetic lease” (i.e., a transaction that is treated as
an operating lease for accounting purposes but with respect to which payments of rent are intended
to be treated as payments of principal and interest on a loan for Federal income tax purposes).

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

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

     “Cash Equivalents” means, as at any date of determination, (a) marketable securities (i)
issued or directly and unconditionally guaranteed as to interest and principal by the United States
Government, or (ii) issued by any agency of the United States the obligations of which are backed
by the full faith and credit of the United States, in each case maturing within one year

 

 

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

     “Certificate Regarding Non-Bank Status” means a certificate substantially in the form of
Exhibit D.

     “Change of Control” means, at any time, Bluestem shall cease to beneficially own and control
100% on a fully diluted basis of the economic and voting interest in the Capital Stock of the
Company.

     “Class” means each of the following class of Lenders: (a) Lenders having Revolving Exposure
and (b) Lenders having Term Loan Exposure.

     “Class Requisite Lenders” means, with respect to any Class, the Requisite Lenders of such
Class.

     “Closing Date” means the date on which the initial Loans are made.

     “Closing Date Certificate” means a Closing Date Certificate substantially in the form of
Exhibit E-1.

     “Closing Date Material Adverse Change” means a material adverse change in or effect on (i) the
business operations, assets, condition (financial or otherwise), liabilities (actual or contingent)
or prospects of Bluestem or the Company, since January 29, 2010; (ii) the ability of the Company to
fully and timely perform its material Obligations under any of the Credit Documents to which it is
a party, or the legality, validity, binding effect, or enforceability against the Company of any
such Credit Documents; or (iii) the ability of Bluestem to fully and timely perform its material
obligations under the Credit Documents to which it is a party, or the legality, validity, binding
effect, or enforceability against Bluestem of any such Credit Documents.

     “Collateral” means, collectively, all of the real, personal and mixed property in which Liens
are purported to be granted pursuant to the Collateral Documents as security for the Obligations.

     “Collateral Agent” as defined in the preamble hereto.

 

 

     “Collateral Documents” means the Security Agreement, the Control Agreements and all other
instruments, documents and agreements delivered by any Credit Party pursuant to this Agreement or
any of the other Credit Documents in order to grant to the Collateral Agent, for the benefit of
Secured Parties, a Lien on any real, personal or mixed property of that Credit Party, as the case
may be, as security for the Obligations.

     “Collection Action” means (a) to demand, sue for, take or receive from or on behalf of any
Credit Party, by set-off or in any other manner, the whole or any part of any moneys which may now
or hereafter be owing by the Company with respect to the Subordinate Debt, provided,
however, that the Subordinate Creditors may take and receive all payments permitted to be
made pursuant to the provisions set forth in Section 2.25 of this Agreement; (b) to initiate or
participate with others in any suit, action or proceeding against a Credit Party or the Collateral
to (i) enforce payment of or to collect the whole or any part of the Subordinate Debt or (ii)
commence judicial enforcement of any of the rights and remedies with respect to any of the
Subordinate Debt or any of the Collateral; (c) to accelerate any Subordinate Debt; or (d) to take
any action in respect of the Subordinate Debt to realize upon any of the Collateral or other
property or assets of a Credit Party or to exercise any other right or remedy with respect thereto;
provided, that, none of the following actions shall be included in the definition of “Collection
Action”: (1) the giving and delivery of notices, inquiries and/or requests related to any Default
or Event of Default and permitted to be given or delivered by the Tranche B Lender under the Credit
Documents, (2) the exercise of rights and remedies available to unsecured creditors not in
violation of this Agreement other than initiating or joining in an involuntary case or proceeding
under the Bankruptcy Code with respect to the Company, or (3)(i) any suit, action or proceeding
initiated or maintained by a Subordinate Creditor solely to the extent necessary to (A) prevent the
expiration of any applicable statue of limitations or similar permanent restriction on claims, (B)
preserve its rights in the Collateral or (C) protect its rights under Sections 2.25 and 7.2 hereof
or (ii) the filing of any responsive or defensive pleadings in opposition to claims or proceedings
made by any person objecting to or seeking disallowance of the claims or rights of the Subordinate
Creditors; provided, that such Subordinated Creditor has provided notice of such suit,
action, proceeding or pleading to the Administrative Agent.

     “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 end on August 31, 2010.

     “Collections” shall have the meaning attributed to such term in the Servicing Agreement.

     “Commercial Paper Notes” means short-term promissory notes issued or to be issued by a
Noncommitted Conduit Lender to fund its investments in financial assets, including the Tranche A
Revolving Loans.

     “Committed Conduit Lender” means Riverside Funding LLC.

     “Commitment Reduction Premium” as defined in Section 2.10(d).

 

 

     “Company” as defined in the preamble hereto.

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

     “Conduit Lender” means a Committed Conduit Lender and/or a Noncommitted Conduit Lender, as the
context may require.

     “Contractual Obligation” means, as applied to any Person, any provision of any Security issued
by that Person or of any indenture, mortgage, deed of trust, contract, undertaking, agreement or
other instrument to which that Person is a party or by which it or any of its properties is bound
or to which it or any of its properties is subject.

     “Contribution Amount” means, with respect to any Eligible Underlying Receivable, an amount
equal to 8% of the applicable Eligible Principal Receivable. For the avoidance of doubt, there
shall be no Contribution Amounts with respect to Eligible Underlying Receivables existing on the
Closing Date.

     “Control Agreements” means, collectively, the Lockbox Account Control Agreement, the US Bank
Account Control Agreement and the Controlled Account Control Agreement.

     “Controlled Account” as defined in Section 2.14(a).

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

     “Controlling Class” means the Class Requisite Lenders with respect to the Revolving Exposure,
for so long as the Revolving Exposure is greater than $0, and thereafter the Class Requisite
Lenders with respect to the Term Loan Exposure.

     “Corporate Services Provider” as defined in Section 6.15(a).

     “CP Rate” means for each day during an Interest Period the per annum rate equivalent to the
sum of (a) the weighted average of the per annum rates paid or payable by the Noncommitted Conduit
Lender as interest or discount on or otherwise in respect of the Commercial Paper Notes issued by
the Noncommitted Conduit Lender that are allocated, in whole or in part, by the Noncommitted
Conduit Lender (or its administrator or agent) on such day to fund or maintain the related CP Rate
Loans, (b) the commissions and charges charged by placement agents and commercial paper dealers
with respect to, and other costs associated with the issuance of, Commercial Paper Notes issued by
the Noncommitted Conduit Lender that are allocated, in whole or in part, by the Noncommitted
Conduit Lender (or its administrator or agent) to fund or maintain the related CP Rate Loans, and
(c) without duplication other interest and costs allocated by the Noncommitted Conduit Lender (or
its administrator or agent) to fund or maintain the Tranche A Revolving Loans (or the portion
thereof) funded by the Noncommitted Conduit Lender in small or odd lot amounts that are not funded
with Commercial Paper Notes.

     “CP Rate Loan” means a Tranche A Revolving Loan bearing interest at a rate determined by
reference to the CP Rate.

 

 

     “Credit Date” means the date of a Credit Extension.

     “Credit Document” means any of (a) this Agreement, the Notes, if any, the Collateral
Documents, the Fee Letter, the Bluestem Letter Agreement, the Bluestem Guaranty, the Sponsor
Indemnity Agreements and the Equity Pledge Agreement and (b) all other documents, instruments or
agreements executed and delivered by a Credit Party for the benefit of any Agent or any Lender in
connection herewith.

     “Credit Extension” means the making of a Loan.

     “Credit Party” means Company, Bluestem, and each Sponsor that is party to a Sponsor Indemnity
Agreement.

     “Credit Score” means the applicable credit score, updated at least every six months, for each
individual Receivables Obligor, as determined by Equifax, Inc. or a comparable credit bureau.

     “Daily Settlement and Servicing Report” shall have the meaning attributed to such term in the
Servicing Agreement.

     “Debtor Relief Laws” means the Bankruptcy 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 or any foreign country from
time to time in effect, affecting the rights of creditors generally or the rights of creditors of
banks.

     “Default” means a condition or event that, after notice or lapse of time or both, would
constitute an Event of Default.

     “Default Excess” means, with respect to any Defaulting Lender of a Tranche, the excess, if
any, of such Defaulting Lender’s Pro Rata Share of the aggregate outstanding principal amount of
the applicable Loans of all applicable Lenders, in each case, of such Tranche (calculated as if all
applicable Defaulting Lenders (other than such Defaulting Lender) of such Tranche had funded all of
their respective Defaulted Loans of such Tranche) over the aggregate outstanding principal amount
of all of such Defaulting Lender’s applicable Loans of such Tranche.

     “Default Interest” means, with respect to an Interest Payment Date that occurs while an Event
of Default has occurred and is continuing, that portion of the accrued interest then due and
payable on the Loans attributable to the 3% increase, in the case of Tranche A Revolving Loans, and
the 4% increase, in the case of the Tranche B Term Loans, in the rate at which the applicable Loans
bear interest required under Section 2.8.

     “Default Period” means, with respect to any Defaulting Lender, the period commencing on the
date of (x) the applicable Funding Default or (y) a violation of Section 8.5(c), as applicable, and
ending on the earliest of the following dates: (a) the date on which all Revolving Commitments are
cancelled or terminated and/or the Obligations are declared or become immediately due and payable,
(b) the date on which (i) the Default Excess, if any, with respect to

 

 

such Defaulting Lender shall have been reduced to zero (whether by the funding by such
Defaulting Lender of any Defaulted Loans of such Defaulting Lender or by the non-pro rata
application of any voluntary or mandatory prepayments of the Loans in accordance with the terms of
Section 2.12 or Section 2.13 or by a combination thereof), and (ii) such Defaulting Lender shall
have delivered to the Company and the Administrative Agent a written reaffirmation of its intention
to honor its obligations hereunder with respect to its Revolving Commitments, (c) the date on which
the Company, the Administrative Agent and the Class Requisite Lenders of each Class waive all
Funding Defaults of such Defaulting Lender in writing, if applicable, and (d) the date on which the
Class Requisite Lenders of each Class shall have waived all violations of Section 8.5(c) by such
Defaulting Lender in writing, if applicable.

     “Default Rate” means the interest rate provided in Section 2.8.

     “Defaulted Account” shall have the meaning attributed to such term in the Servicing Agreement.

     “Defaulted Loan” as defined in Section 2.22.

     “Defaulting Lender” as defined in Section 2.22.

     “Determination Date” shall have the meaning attributed to such term in the Servicing
Agreement.

     “Documentation Agent” as defined in the preamble hereto.

     “Dollars” and the sign “$” mean the lawful money of the United States of America.

     “Eligibility Criteria” means the criteria specified in Schedule 1.1 hereto, subject to any
changes made in accordance with Section 2.24(a).

     “Eligible Assignee” means (i) any Lender with Revolving Exposure or Term Loan Exposure or any
Affiliate (other than a natural person) of a Lender with Revolving Exposure or Term Loan Exposure,
(ii) a commercial bank organized under the laws of the United States, or any state thereof, and
having net worth in excess of $100,000,000, (iii) a commercial bank organized under the laws of any
other country which is a member of the Organization for Economic Cooperation and Development or a
political subdivision of any such country and which has net worth in excess of $100,000,000,
provided that such bank is acting through a branch or agency located in the United States,
or (iv) a finance company, insurance company, or other financial institution or fund that is
engaged in making, purchasing, or otherwise investing in commercial loans in the ordinary course of
its business and having (together with its Affiliates) net worth in excess of $100,000,000;
provided, that (A) neither (x) Bluestem nor any Affiliate of Bluestem nor (y) the Sponsors
nor any Affiliate of the Sponsors shall, in any event, be an Eligible Assignee and (B) until the
date of an initial public offering by Bluestem, no Person owning or controlling any trade debt or
Indebtedness of any Bluestem Credit Party other than the Obligations, any Capital Stock of Bluestem
or, in the case of JPMSI and its Affiliates, any Indebtedness of Bluestem under the Bluestem 2010
Inventory Credit Agreement (in each case, unless approved by the Administrative Agent) shall, in
any event, be an Eligible Assignee.

 

 

Notwithstanding the foregoing, a Conduit Lender whose Liquidity Bank or related Tranche A
Lender, as applicable, is an “Eligible Assignee” shall be considered an “Eligible Assignee”.

     “Eligible Finance Charge Collections” means Finance Charge Collections with respect to
Eligible Underlying Receivables and Recoveries on non-Eligible Underlying Receivables.

     “Eligible Principal Collections” means Principal Collections with respect to Eligible
Underlying Receivables.

     “Eligible Principal Receivable” means a Principal Receivable with respect to an Eligible
Underlying Receivable.

     “Eligible Underlying Receivable” means (a) an Underlying Receivable with respect to which the
Eligibility Criteria are satisfied as of the applicable date of determination, (b) an Underlying
Receivable that is otherwise deemed an Eligible Underlying Receivable in accordance with Section
2.24(b) hereof and (c) for purposes of any calculation required to be made on or following the
Closing Date, an Underlying Receivable that was created prior to the Closing Date and that
satisfied the eligibility criteria under the Prior Credit Agreement as of the Closing Date.

     “Employee Benefit Plan” means any “employee benefit plan” as defined in Section 3(3) of ERISA
which is or was sponsored, maintained or contributed to, or required to be contributed, by or on
behalf of, Bluestem, any of its Subsidiaries or any of their respective ERISA Affiliates.

     “Equity Pledge Agreement” means that certain Equity Pledge Agreement dated as of August 20,
2010, by and between Bluestem and the Collateral Agent.

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

     “ERISA Affiliate” means, as applied to any Person, (a) any corporation which is a member of a
controlled group of corporations within the meaning of Section 414(b) of the Internal Revenue Code
of which that Person is a member; (b) any trade or business (whether or not incorporated) which is
a member of a group of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (c) any member of an
affiliated service group within the meaning of Section 414(m) or (o) of the Internal Revenue Code
of which that Person, any corporation described in clause (a) above or any trade or business
described in clause (b) above is a member. Any former ERISA Affiliate of Bluestem or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Bluestem or any such Subsidiary
within the meaning of this definition with respect to the period such entity was an ERISA Affiliate
of Bluestem or such Subsidiary and with respect to liabilities arising after such period for which
Bluestem or such Subsidiary could be liable under the Internal Revenue Code or ERISA.

     “ERISA Event” means (a) any “reportable event”, as defined in Section 4043 of ERISA or the
regulations issued thereunder with respect to a Pension Plan (other than an event for which the
30-day notice period is waived); (b) with respect to any Pension Plan, the failure to satisfy

 

 

the “minimum funding standard” (within the meaning of Section 412 of the Code or Section 302
of ERISA), whether or not waived; (c) the filing pursuant to Section 412(c) of the Code or Section
302(c) of ERISA of an application for a waiver of the minimum funding standard with respect to any
Pension Plan; (d) the incurrence by the Company or any of its ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Pension Plan; (e) the receipt by the
Company or any ERISA Affiliate from the PBGC or a plan administrator of any notice relating to an
intention to terminate any Pension Plan or to appoint a trustee to administer any Pension Plan; (f)
the incurrence by the Company or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Pension Plan or Multiemployer Plan; or (g) the receipt by
the Company or any ERISA Affiliate of any notice, or the receipt by any Multiemployer Plan from the
Company or any ERISA Affiliate of any notice, concerning the imposition of withdrawal liability
with respect to a Multiemployer Plan or a determination that a Multiemployer Plan is, or is
expected to be, insolvent or in reorganization, within the meaning of Title IV of ERISA.

     “Event of Default” means any of the conditions or events set forth in Section 7.1.

     “Excess Spread Account Amounts” means amounts, if any, in the Spread Account in excess of the
Required Spread Account Amount on any date of determination.

     “Excess Spread Ratio” means, with respect to any Monthly Period, the Portfolio Yield, minus
the Principal Default Ratio, minus the Receivables Base Rate.

     “Excess Spread Ratio Event” as defined in Section 5.11(c).

     “Excess Spread Ratio Threshold” as set forth in the table included in Section 5.11(c).

     “Exchange Act” means the Securities Exchange Act of 1934, as amended from time to time, and
any successor statute.

     “Existing Indebtedness” means Indebtedness and other obligations outstanding under the Prior
Credit Agreement.

     “Federal Funds Effective Rate” means for any day, the rate per annum (expressed, as a decimal,
rounded upwards, if necessary, to the next higher 1/100 of 1%) equal to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal Reserve System arranged
by Federal funds brokers on such day, as published by the Federal Reserve Bank of New York on the
next succeeding Business Day; provided, (a) if such day is not a Business Day, the Federal
Funds Effective Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day, and (b) if no such rate is so
published on such next succeeding Business Day, the Federal Funds Effective Rate for such day shall
be the average rate charged to GS Bank or any other Lender selected by the Administrative Agent on
such day on such transactions as determined by the Administrative Agent.

     “Fee Letter” means the letter agreement dated August 20, 2010 between the Company and the
Lenders.

 

 

     “Final Date of Determination” as defined in Section 2.24(b)(i).

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

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

     “Finance Charge Receivables” shall have the meaning attributed to such term in the Servicing
Agreement.

     “First Priority” means, with respect to any Lien purported to be created in any Collateral
pursuant to any Collateral Document, that such Lien is the only Lien to which such Collateral is
subject (other than Liens permitted under clauses (ii) and (iii) of Section 6.2).

     “Fiscal Quarter” means, with respect to a particular Fiscal Year, a fiscal quarter
corresponding to such Fiscal Year as set forth on Appendix C.

     “Fiscal Year” means for the Company, any consecutive twelve-month period commencing on the
date following the last day of the previous Fiscal Year and ending on the Friday closest to January
31 of the following calendar year.

     “Fixed Rate” means a rate per annum equal to 14.75%.

     “Funding Default” as defined in Section 2.22.

     “Funding Notice” means a notice substantially in the form of Exhibit A-1.

     “Funding Source” means, with respect to any Conduit Lender, any financing conduit or
intermediate special purpose entities from which, directly or indirectly, such Conduit Lender
receives funds to finance such Conduit Lender’s making or maintaining its Loans hereunder.

     “GAAP” means, subject to the limitations on the application thereof set forth in Section 1.2,
United States generally accepted accounting principles in effect as of the date of determination
thereof.

     “Governmental Authority” means any federal, state, municipal, national or other government,
governmental department, commission, board, bureau, court, agency or instrumentality or political
subdivision thereof or any entity or officer exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to any government or any court, in each
case whether associated with a state of the United States, the United States, or a foreign entity
or government.

     “Governmental Authorization” means any permit, license, authorization, plan, directive,
consent order or consent decree of or from any Governmental Authority.

     “GS Bank” as defined in the preamble hereto.

 

 

     “Guarantor” means Bluestem.

     “Highest Lawful Rate” means the maximum lawful interest rate, if any, that at any time or from
time to time may be contracted for, charged, or received under the laws applicable to any Lender
which are presently in effect or, to the extent allowed by law, under such applicable laws which
may hereafter be in effect and which allow a higher maximum nonusurious interest rate than
applicable laws now allow.

     “Historical Financial Statements” shall have the meaning attributed to such term in the
Servicing Agreement.

     “Increased-Cost Lenders” as defined in Section 2.23.

     “Indebtedness,” as applied to any Person, means, without duplication, (a) all indebtedness for
borrowed money; (b) that portion of obligations with respect to Capital Leases that is properly
classified as a liability on a balance sheet in conformity with GAAP; (c) notes payable and drafts
accepted representing extensions of credit whether or not representing obligations for borrowed
money; (d) any obligation owed for all or any part of the deferred purchase price of property or
services (excluding any such obligations incurred under ERISA), which purchase price is (i) due
more than six months from the date of incurrence of the obligation in respect thereof or (ii)
evidenced by a note or similar written instrument; (e) all indebtedness secured by any Lien on any
property or asset owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit of that Person; (f)
the face amount of any letter of credit issued for the account of that Person or as to which that
Person is otherwise liable for reimbursement of drawings; (g) the direct or indirect guaranty,
endorsement (otherwise than for collection or deposit in the ordinary course of business),
co-making, discounting with recourse or sale with recourse by such Person of the obligation of
another; (h) any obligation of such Person the primary purpose or intent of which is to provide
assurance to an obligee that the obligation of the obligor thereof will be paid or discharged, or
any agreement relating thereto will be complied with, or the holders thereof will be protected (in
whole or in part) against loss in respect thereof; (i) any liability of such Person for an
obligation of another through any agreement (contingent or otherwise) (A) to purchase, repurchase
or otherwise acquire such obligation or any security therefor, or to provide funds for the payment
or discharge of such obligation (whether in the form of loans, advances, stock purchases, capital
contributions or otherwise) or (B) to maintain the solvency or any balance sheet item, level of
income or financial condition of another if, in the case of any agreement described under
subclauses (A) or (B) of this clause (i), the primary purpose or intent thereof is as described in
clause (h) above; and (j) all obligations of such Person in respect of any exchange traded or over
the counter derivative transaction, including, without limitation, any Interest Rate Agreement,
whether entered into for hedging or speculative purposes; provided, in no event shall
obligations under any Interest Rate Agreement be deemed “Indebtedness” for any purpose under
Sections 4.12, 5.9(g) or 6.1.

     “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 9.3),
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 Agreement or the other Credit Documents or the transactions contemplated hereby or thereby
(including the Lenders’ agreement to make Credit Extensions or the use or intended use of the
proceeds thereof, or any enforcement of any of the Credit Documents (including any sale of,
collection from, or other realization upon any of the Collateral or the enforcement of the Bluestem
Guaranty or the Sponsor Indemnity Agreements)).

     “Indemnitee” as defined in Section 9.3(a).

     “Indemnitee Agent Party” as defined in Section 8.6.

     “Initial Required Spread Account Percentage” means 0%.

     “Intercreditor Agreements” shall mean the Bluestem 2010 Inventory Intercreditor Agreement and
the Bluestem Securities Intercreditor Agreement.

     “Interest and Fees Payable” with respect to any determination of the Receivables Base Rate,
means, collectively, (i) (a) any costs and/or fees accruing to the Agents, (b) Backup Servicing
Fees accruing to Backup Servicer in accordance with the Backup Servicing Agreement, and (c)
Successor Servicing Fees accruing in accordance with the Successor Servicing Agreement, in each
case during the applicable Monthly Period, (ii) any costs, fees or swap payments paid to the Lender
Counterparties prior to or pro rata with any interest or principal on the Loans during the
applicable Monthly Period and (iii) costs, fees and interest accruing on the Loans or otherwise to
Lenders during the applicable Monthly Period.

     “Interest Payment Date” means the fifth Business Day after the end of a Collection Period.

     “Interest Period” means, (a) with regard to the first period, the period commencing on (and
including) the related Credit Date to but excluding the next succeeding Interest Payment Date; and
(b) thereafter, the period commencing on such next succeeding Interest Payment Date to but
excluding the Interest Payment Date in the following calendar month; provided, no Interest
Period with respect to any portion of the Loans shall extend beyond the Revolving Commitment
Termination Date or the Term Loan Maturity Date, as applicable.

     “Interest Rate Agreement” means any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate hedging agreement or other similar agreement or
arrangement, which (a) has been entered into by the Company for the purpose of hedging the interest
rate exposure associated with the Company’s operations and not for speculative purposes, (b) has a
Lender or an Affiliate thereof as a counterparty, (c) other than in the case of an interest rate
cap under which the only payment by the Company is a fixed amount payable on or about the date of
execution thereof, is approved by the Administrative Agent and

 

 

the Class Requisite Lenders of each Class (in each case, such consent not to be unreasonably
withheld) and (d) has been collaterally assigned to the Collateral Agent pursuant to an instrument
satisfactory to the Collateral Agent.

     “Interest Rate Reset Date” means, with respect to any Interest Period, the date that is two
Business Days prior to the first day of such Interest Period.

     “Internal Revenue Code” means the Internal Revenue Code of 1986, as amended to the date hereof
and from time to time hereafter, and any successor statute.

     “Investment” means (a) any direct or indirect purchase or other acquisition by the Company of,
or of a beneficial interest in, any of the Securities of any other Person; (b) any direct or
indirect redemption, retirement, purchase or other acquisition for value, from any Person, of any
Capital Stock of such Person; and (c) any direct or indirect loan, advance (other than advances to
employees for moving, entertainment and travel expenses, drawing accounts and similar expenditures
in the ordinary course of business) or capital contributions by the Company to any other Person,
including all indebtedness and accounts receivable from that other Person that are not current
assets or did not arise from sales to that other Person in the ordinary course of business. The
amount of any Investment shall be the original cost of such Investment plus the cost of all
additions thereto, without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.

     “Joint Arrangers” means GS Bank and JPMSI, in their capacity as joint arrangers hereunder.

     “Joint Bookrunners” means GS Bank and JPMSI, in their capacity as joint bookrunners hereunder.

     “Lender” means each Tranche A Lender and each Tranche B Lender.

     “Lender Counterparty” means a Person that is a counterparty to an Interest Rate Agreement.

     “LIBOR Rate Loan” means a Tranche A Revolving Loan bearing interest at a rate determined by
reference to the Adjusted LIBOR Rate.

     “LIBOR Unavailability” as defined in Section 2.18(a).

     “Lien” means (a) any lien, mortgage, pledge, assignment, security interest, charge or
encumbrance of any kind (including any agreement to give any of the foregoing, any conditional sale
or other title retention agreement, and any lease in the nature thereof) and any option, trust or
other preferential arrangement having the practical effect of any of the foregoing and (b) in the
case of Securities, any purchase option, call or similar right of a third party with respect to
such Securities.

     “Liquidity Agreement” means any liquidity or credit support agreement between a Conduit Lender
and one or more Liquidity Banks which relates to this Agreement (including any agreement to
purchase an assignment of or participation in Loans).

 

 

     “Liquidity Bank” means, with respect to a Conduit Lender, the various financial institutions
that are, or may become, parties to such Conduit Lender’s Liquidity Agreement, as purchasers or
lenders thereunder.

     “Loan” means a Tranche A Revolving Loan and/or a Tranche B Term Loan.

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

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

     “Lockbox System” as defined in Section 5.10(a)(i).

     “Mandatory Prepayment Proceeds Amount” as defined in Section 2.11(i).

     “Margin Stock” as defined in Regulation U of the Board of Governors of the Federal Reserve
System as in effect from time to time.

     “Material Adverse Effect” means, a material adverse effect on (a) the business operations,
assets, condition (financial or otherwise), liabilities (actual or contingent) or prospects of the
Company, (b) the ability of a Credit Party to fully and timely perform its obligations under the
Credit Documents (including, without limitation, the Obligations of the Company); (c) the legality,
validity, binding effect, or enforceability against a Credit Party of any Credit Document to which
it is a party; or (d) the rights, remedies and benefits available to, or conferred upon, any Agent,
any Lender or any Secured Party under any Credit Document.

     “Material Contract” means any contract or other arrangement to which the Company is a party
(other than the Credit Documents or Related Agreements) for which breach, nonperformance,
cancellation or failure to renew could reasonably be expected to have a Material Adverse Effect.

     “MetaBank” means MetaBank, FSB, a federal savings bank having its principal location in South
Dakota.

     “MetaBank Backup Originator Agreement” means that certain backup originator agreement, dated
of the date hereof, by and between Bluestem and MetaBank.

     “MetaBank Product Agreement” means that certain Amended and Restated Revolving Loan Product
Program Agreement dated as of August 20, 2010 by and between MetaBank and Bluestem.

     “MetaBank Receivables Purchase Agreements” means the MetaBank Receivables Sale Agreement and
the MetaBank Product Agreement.

     “MetaBank Receivables Sale Agreement” means that certain Amended and Restated Receivables Sale
Agreement dated as of August 20, 2010 by and between MetaBank and Bluestem.

 

 

     “Monthly Period” shall mean, with respect to any date of determination, the period from and
including the first day of the preceding calendar month to and including the last day of such
calendar month.

     “Moody’s” means Moody’s Investor Services, Inc., and any successor thereto.

     “Multiemployer Plan” means any Employee Benefit Plan that is a “multiemployer plan” as defined
in Section 3(37) of ERISA.

     “NAIC” means The National Association of Insurance Commissioners, and any successor thereto.

     “Net Asset Sale Proceeds” means, with respect to any Asset Sale other than with respect to a
Permitted Charge-Off Receivable, an amount equal to: (a) Cash payments received by the Company from
such Asset Sale, minus (b) any bona fide direct costs incurred in connection with such
Asset Sale to the extent paid or payable to non-Affiliates, including (i) income or gains taxes
payable or estimated to be payable by the seller as a result of any gain recognized in connection
with such Asset Sale during the tax period the sale occurs, (ii) payment of the outstanding
principal amount of, premium or penalty, if any, and interest on any Indebtedness (other than the
Loans) that is secured by a Lien on the stock or assets in question and that is required to be
repaid under the terms thereof as a result of such Asset Sale, (iii) a reasonable reserve for any
indemnification payments (fixed or contingent) attributable to seller’s indemnities and
representations and warranties to purchaser in respect of such Asset Sale undertaken by the Company
in connection with such Asset Sale; provided that upon release of any such reserve, the
amount released shall be considered Net Asset Sale Proceeds and (iv) reasonable fees and
out-of-pocket expenses incurred in connection therewith.

     “Net Insurance Proceeds” means an amount equal to: (a) any Cash payments or proceeds received
by the Company under any casualty, business interruption or “key man” insurance policies in respect
of any covered loss thereunder, minus (b) any actual and reasonable costs incurred by the
Company in connection with the adjustment or settlement of any claims of the Company in respect
thereof.

     “Noncommitted Conduit Lender” means, with respect to Royal Bank of Scotland plc, in its
capacity as a Tranche A Lender, Windmill Funding Corporation.

     “Non-Consenting Lender” as defined in Section 2.23.

     “Non-Public Information” means, after the initial public offering of Bluestem, information
which has not been disseminated in a manner making it available to investors generally, within the
meaning of Regulation FD.

     “Non-US Lender” as defined in Section 2.20(c).

     “Note” means a Tranche A Revolving Loan Note and/or a Tranche B Term Loan Note.

     “Obligations” means all obligations of every nature of the Company from time to time owed to
the Agents (including former Agents), the Lenders or any of them and Lender

 

 

Counterparties, under any Credit Document or Interest Rate Agreement (including, without
limitation, with respect to an Interest Rate Agreement, obligations owed thereunder to any person
who was a Lender or an Affiliate of a Lender at the time such Interest Rate Agreement was entered
into), whether for principal, interest (including interest which, but for the filing of a petition
in bankruptcy with respect to the Company, would have accrued on any Obligation, whether or not a
claim is allowed against the Company for such interest in the related bankruptcy proceeding),
payments for early termination of Interest Rate Agreements, fees, expenses, indemnification or
otherwise.

     “Organizational Documents” means (a) with respect to any corporation, its certificate or
articles of incorporation or organization, as amended, and its by-laws, as amended, (b) with
respect to any limited partnership, its certificate of limited partnership, as amended, and its
partnership agreement, as amended, (c) with respect to any general partnership, its partnership
agreement, as amended, and (d) with respect to any limited liability company, its articles of
organization, as amended, and its operating agreement, as amended. In the event any term or
condition of this Agreement or any other Credit Document requires any Organizational Document to be
certified by a secretary of state or similar governmental official, the reference to any such
“Organizational Document” shall only be to a document of a type customarily certified by such
governmental official.

     “Payment Date Report” means a Payment Date Report in the form attached as Exhibit E to the
Servicing Agreement.

     “PBGC” means the Pension Benefit Guaranty Corporation or any successor thereto.

     “Pension Plan” means any Employee Benefit Plan, other than a Multiemployer Plan, which is
subject to Section 412 of the Internal Revenue Code or Section 302 of ERISA.

     “Permitted Charge-Off Receivable” means an Underlying Receivable that the Company has
charged-off in accordance with the charge-off policy of the Company in effect as of the date hereof
and amended from time to time in accordance with the Servicing Agreement.

     “Permitted Investments” means the following, subject to qualifications hereinafter set forth:

(i) obligations of, or obligations guaranteed as to principal and interest by, the U.S.
government or any agency or instrumentality thereof, when such obligations are backed by the
full faith and credit of the United States of America;

(ii) federal funds, unsecured certificates of deposit, time deposits, banker’s acceptances,
and repurchase agreements having maturities of not more than 365 days of any bank, the
short-term debt obligations of which are rated A-1+ (or the equivalent) by each of the
Rating Agencies and, if it has a term in excess of three months, the long-term debt
obligations of which are rated AAA (or the equivalent) by each of Moody’s and S&P;

(iii) deposits that are fully insured by the Federal Deposit Insurance Corp. (FDIC);

 

 

(iv) investments in money market funds which invest substantially all their assets in
securities of the types described in clauses (i) through (iii) above; and

(v) such other investments to which the Administrative Agent consents.

Notwithstanding the foregoing, “Permitted Investments” (i) shall exclude any security with the
S&P’s “r” symbol (or any other Rating Agency’s corresponding symbol) attached to the rating
(indicating high volatility or dramatic fluctuations in their expected returns because of market
risk), as well as any mortgage-backed securities and any security of the type commonly known as
“strips”; (ii) shall not have maturities in excess of one year; (iii) shall be limited to those
instruments that have a predetermined fixed dollar of principal due at maturity that cannot vary or
change; and (iv) shall exclude any investment where the right to receive principal and interest
derived from the underlying investment provides a yield to maturity in excess of 120% of the yield
to maturity at par of such underlying investment. Interest may either be fixed or variable, and
any variable interest must be tied to a single interest rate index plus a single fixed spread (if
any), and move proportionately with that index. No investment shall be made which requires a
payment above par for an obligation if the obligation may be prepaid at the option of the issuer
thereof prior to its maturity. All investments shall mature or be redeemable upon the option of
the holder thereof on or prior to the earlier of (x) three months from the date of their purchase
or (y) the Business Day preceding the day before the date such amounts are required to be applied
hereunder.

     “Permitted Liens” means:

(i) Liens imposed by law for taxes, assessments or other governmental charges payable by the
Company that are not yet due or are being contested in compliance with Section 5.3;

(ii) Liens in respect of judgments payable by the Company that do not constitute an Event of
Default under Section 7.1(i);

(iii) Liens arising in favor of the applicable financial institution under the Lockbox
Account Control Agreement, the US Bank Account Control Agreement or the Controlled Account
Control Agreement; and

(iv) Liens arising in favor of a Lender Counterparty under the Security Agreement with
respect to an Interest Rate Agreement permitted under this Agreement.

     “Person” means and includes natural persons, corporations, limited partnerships, general
partnerships, limited liability companies, limited liability partnerships, joint stock companies,
joint ventures, associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and Governmental Authorities.

     “Platform” as defined in Section 9.7(a).

     “Portfolio Covenants” means, as of any date of determination, the Principal Payment Ratio, the
Principal Default Ratio, the Principal Delinquency Ratio, the Excess Spread Ratio and/or the
Adjusted Excess Spread Ratio, as the context may require.

 

 

     “Portfolio Covenant Levels” means, as of any date of determination, the average Principal
Payment Ratio for the preceding three-month period, the average Principal Default Ratio for the
preceding three-month period, the average Principal Delinquency Ratio for the preceding three-month
period, the average Excess Spread Ratio for the preceding three-month period and/or the average
Adjusted Excess Spread Ratio for the preceding three-month period, as the context may require.

     “Portfolio Yield” means, with respect to any Monthly Period, a fraction (a) the numerator of
which is equal to 12 multiplied by the aggregate amount of Eligible Finance Charge Collections and
Contribution Amounts for such Monthly Period and (b) the denominator of which is the aggregate
amount of Eligible Principal Receivables outstanding as of the last day of the preceding Monthly
Period.

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

     “Prepayment Premium” as defined in Section 2.10(d).

     “Prime Rate” means the rate of interest quoted in The Wall Street Journal, Money Rates Section
as the Prime Rate (currently defined as the base rate on corporate loans posted by at least 75% of
the nation’s 30 largest banks), as in effect from time to time. The Prime Rate is a reference rate
and does not necessarily represent the lowest or best rate actually charged to any customer. Any
Agent or any other Lender may make commercial loans or other loans at rates of interest at, above
or below the Prime Rate.

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

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

     “Principal Collections Notice” means a notice substantially in the form of Exhibit A-2, which
may be part of the Daily Settlement and Servicing Report.

     “Principal Default Ratio” means, with respect to any Monthly Period, a fraction (a) the
numerator of which is equal to 12 multiplied by the aggregate amount of Eligible Principal
Receivables with respect to accounts that became Defaulted Accounts during such Monthly Period and
(b) the denominator of which is the aggregate amount of Eligible Principal Receivables outstanding
as of the last day of the preceding Monthly Period.

     “Principal Delinquency Ratio” means, with respect to any Monthly Period, the percentage
equivalent of a fraction, (a) the numerator of which is equal to the aggregate amount of Eligible
Principal Receivables in Receivables Accounts that are two or more cycles delinquent as of the end
of such Monthly Period and (b) the denominator of which is the aggregate amount of Eligible
Principal Receivables outstanding as of the end of such Monthly Period.

     “Principal Delinquency Ratio Event” as defined in Section 5.11(d).

 

 

     “Principal Delinquency Ratio Threshold” as set forth in the table included in Section 5.11(d).

     “Principal Office” means, for the Administrative Agent, Goldman Sachs Bank USA, 6011
Connection Dr., Irving, TX 75039 (or such other location in the United States of America as the
Administrative Agent may from time to time designate in writing to the Company and each Lender).

     “Principal Payment Ratio” means, with respect to any Monthly Period, the percentage equivalent
of a fraction (a) the numerator of which is equal to the aggregate amount of Eligible Principal
Collections (excluding Recoveries with respect to Defaulted Accounts) for such Monthly Period and
(b) the denominator of which is the aggregate amount of Eligible Principal Receivables outstanding
as of the last day of the preceding Monthly Period.

     “Principal Receivables” shall have the meaning attributed to such term in the Servicing
Agreement.

     “Prior Credit Agreement” means that certain amended and restated revolving credit facility,
dated as of July 31, 2009, between the Company, Goldman Sachs Specialty Lending Group, L.P., as the
administrative agent, collateral agent, lead arranger, syndication agent, documentation agent and a
lead lender, Fortress Credit Corp., as a lead lender, and various lenders party thereto, as amended
to the date hereof.

     “Pro Rata Share” means with respect to all payments, computations and other matters relating
to (a) the Revolving Commitments or Tranche A Revolving Loans of any Lender, the percentage
obtained by dividing (i) the Revolving Exposure of that Lender, by (ii) the aggregate Revolving
Exposure of all Tranche A Lenders or (b) the Tranche B Terms Loans of any Lender, the percentage
obtained by dividing (i) the Term Loan Exposure of that Lender, by (ii) the aggregate Term Loan
Exposure of all Lenders.

     “Product Agreement” means (i) with respect to MetaBank, the MetaBank Product Agreement, (ii)
with respect to WebBank, the WebBank Product Agreement, and (iii) with respect to any other
Receivables Account Owner, the product program agreement (or similar agreement) by and between such
Receivables Account Owner and Bluestem.

     “Product Agreement Default” means occurrence of an event described in (i) Section 17(c) of the
MetaBank Product Agreement, (ii) Section 12(b), (c) or (d) of the WebBank Product Agreement, or
(iii) any equivalent provision in any other Product Agreement.

     “Protective Advances” as defined in Section 2.2(c).

     “Public Lenders” means Lenders that elect not to receive material non-public information with
respect to the Company or Bluestem or its securities after the initial public offering by Bluestem
and who are engaged in investment or other market-related activities with respect to Bluestem
and/or such securities.

     “Rating Agencies” means each of Moody’s and S&P.

 

 

     “Receivables Account” shall have the meaning assigned to such term in the Servicing Agreement.

     “Receivables Account Agreement” shall have the meaning assigned to such term in the Servicing
Agreement.

     “Receivables Account Owner” shall have the meaning assigned to such term in the Servicing
Agreement.

     “Receivables Base Rate” means, with respect to any Monthly Period, a fraction, (a) the
numerator of which is equal to 12 multiplied by the sum of (x) the aggregate amount paid to the
Servicer with respect to Eligible Underlying Receivables in accordance with Section 2.02 of the
Servicing Agreement and (y) Interest and Fees Payable and (b) the denominator of which is the
aggregate amount of Eligible Principal Receivables outstanding as of the last day of the preceding
Monthly Period.

     “Receivables Obligor” shall have the meaning attributed to such term in the Servicing
Agreement.

     “Receivables Purchase Agreement” means that certain Receivables Purchase Agreement dated as of
August 20, 2010, by and between Bluestem and the Company.

     “Receivables Purchase Agreement Default” means the occurrence of a “Default Event” as that
term is defined in the Receivables Purchase Agreement.

     “Receivables Sale Agreement” means (i) with respect to MetaBank, the MetaBank Receivables Sale
Agreement, (ii) with respect to WebBank, the WebBank Receivables Sale Agreement, and (iii) with
respect to any other Receivables Account Owner, the receivables sale agreement (or similar
agreement) by and between such Receivables Account Owner and Bluestem.

     “Recoveries” shall have the meaning attributed to such term in the Servicing Agreement.

     “Refinancing” means an extension, renewal or replacement of Indebtedness permitted under
Section 1.09(f) of the Bluestem Letter Agreement.

     “Register” as defined in Section 2.5(b).

     “Regulation D” means Regulation D of the Board of Governors of the Federal Reserve System, as
in effect from time to time.

     “Regulation FD” means Regulation FD as promulgated by the U.S. Securities and Exchange
Commission under the Securities Act and Exchange Act.

     “Related Agreements” means, collectively, the Receivables Sale Agreements, the Receivables
Purchase Agreement, the MetaBank Backup Originator Agreement, the Servicing Agreement, the Backup
Servicing Agreement, the Product Agreements, the Intercreditor Agreements, the Bluestem 2010
Inventory Credit Agreement, the Bluestem 2010 Inventory

 

 

Security Agreement, the Bluestem Securities Purchase Agreement, the Bluestem Securities
Security Agreement, any Interest Rate Agreements and, after the date on which it is executed, the
WebBank Backup Originator Agreement.

     “Related Fund” means, with respect to any Lender that is an investment fund, any other
investment fund that invests in commercial loans and that is managed or advised by the same
investment advisor as such Lender or by an Affiliate of such investment advisor.

     “Replacement Lender” as defined in Section 2.23.

     “Required Spread Account Amount” means, as of any date of determination, an amount equal to
the product of (i) the Required Spread Amount Percentage as of such date multiplied by (ii)
the sum of the Total Utilization of Revolving Commitments and the aggregate outstanding principal
amount of the Tranche B Term Loans, in each case, as of such date (after giving effect to any
borrowings hereunder on such date).

     “Required Spread Account Percentage” means, as of any date of determination, the sum of (i)
the Initial Required Spread Account Percentage plus (ii) each applicable Spread Account Increase
Percentage as of such date.

     “Requisite Lenders” means, as of any date of determination (i) with respect to a Class,
Lenders representing 66 2/3% or more of the aggregate Revolving Exposure or Term Loan Exposure, as
applicable, of that Class and (ii) with respect to all Classes, Lenders representing 66 2/3% or
more of the aggregate Revolving Exposure and Term Loan Exposure.

     “Reserves” means reserves against the Borrowing Base in such amounts, and with respect to such
matters, as the Administrative Agent or the Requisite Lenders in its or their reasonable discretion
shall deem necessary or appropriate, including to offset against any Underlying Receivables
incorrectly identified as Eligible Underlying Receivables.

     “Revolving Availability” means, as of any date of determination, the difference of (i) the
lesser of (a) the Revolving Commitments then in effect and (b) the product of the Borrowing Base
and the Tranche A Advance Rate minus (ii) the Total Utilization of Revolving Commitments.

     “Revolving Commitment” means the commitment of a Tranche A Lender to make or otherwise fund
any Tranche A Revolving Loan and “Revolving Commitments” means such commitments of all Tranche A
Lenders in the aggregate. The amount of each Tranche A Lender’s Revolving Commitment, if any, is
set forth on Appendix A-1 or in the applicable Assignment Agreement, subject to any adjustment or
reduction pursuant to the terms and conditions hereof. The aggregate amount of the Revolving
Commitments as of the Closing Date is $290 million.

     “Revolving Commitment Period” means the period from the Closing Date to but excluding the
Revolving Commitment Termination Date.

     “Revolving Commitment Termination Date” means the earliest to occur of (a) August 20, 2013,
(b) the date the Revolving Commitments are permanently reduced to zero pursuant to

 

 

Section 2.10(c) or 2.11; and (c) the date of the termination of the Revolving Commitments
pursuant to Section 7.1.

     “Revolving Exposure” means, with respect to any Tranche A Lender as of any date of
determination, (a) prior to the Revolving Commitment Termination Date, that Tranche A Lender’s
Revolving Commitment and (b) after the Revolving Commitment Termination Date, the aggregate
outstanding principal amount of the Tranche A Revolving Loans of that Lender.

     “S&P” means Standard & Poor’s Ratings Services, a Standard & Poor’s Financial Services LLC
business, and any successor thereto.

     “Secured Parties” has the meaning assigned to that term in the Security Agreement.

     “Securities” means any stock, shares, partnership interests, limited liability company
interests, voting trust certificates, certificates of interest or participation in any
profit-sharing agreement or arrangement, options, warrants, bonds, debentures, notes, or other
evidences of indebtedness, secured or unsecured, convertible, subordinated or otherwise, or in
general any instruments commonly known as “securities” or any certificates of interest, shares or
participations in temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.

     “Securities Act” means the Securities Act of 1933, as amended from time to time, and any
successor statute.

     “Security Agreement” means the Security Agreement to be executed by the Company in favor of
the Collateral Agent on behalf of the Secured Parties substantially in the form of Exhibit F.

     “Senior Creditor” means any holder of a Tranche A Revolving Loan or any other Person to whom
the Company has obligations in respect of the Senior Debt.

     “Senior Debt” means all Obligations in respect of the Tranche A Lenders.

     “Senior Management” means, with respect to Bluestem, the chief executive officer, the chief
financial officer, the chief credit officer, the chief marketing officer and the chief operations
officer.

     “Senior Termination Payment” means, with respect to an Interest Rate Agreement, any early
termination payment owed to the Lender Counterparty in connection with an event of default or
termination event where the Lender Counterparty was not the “Defaulting Party” or the sole
“Affected Party” (as such terms are defined in such Interest Rate Agreement).

     “Servicer” means, initially, Bluestem, subject to removal pursuant to the terms of the
Servicing Agreement, and thereafter shall mean the Backup Servicer or any other successor servicer
appointed pursuant to the Servicing Agreement.

     “Servicer Default” shall have the meaning assigned to such term in the Servicing Agreement.

 

 

     “Servicing Agreement” means that certain Servicing Agreement dated as of August 20, 2010 by
and among the Company, the Servicer, the Administrative Agent and the Collateral Agent,
substantially in the form of Exhibit I.

     “Servicing Fee” has the meaning assigned to such term in the Servicing Agreement.

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

     “Solvency Certificate” means a Solvency Certificate of the chief financial officer of Bluestem
or the Company, as the case may be, substantially in the form of Exhibit E-2.

     “Solvent” means, with respect the Company or Bluestem, that as of the date of determination,
both (a) (i) the sum of such entity’s debt (including contingent liabilities) does not exceed the
present fair saleable value of such entity’s present assets; (ii) such entity’s capital is not
unreasonably small in relation to its business as contemplated on the Closing Date and reflected in
the Three-Year Forecast; and (iii) such entity has not incurred and does not intend to incur, or
believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such
debts as they become due (whether at maturity or otherwise); and (b) such entity is “solvent”
within the meaning given that term and similar terms under applicable laws relating to fraudulent
transfers and conveyances. For purposes of this definition, the amount of any contingent liability
at any time shall be computed as the amount that, in light of all of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to become an actual or
matured liability (irrespective of whether such contingent liabilities meet the criteria for
accrual under Statement of Financial Accounting Standard No. 5).

     “Sponsors” means, collectively, (i) Bain and Battery, and (ii) prior to an initial public
offering by Bluestem, any other Person (other than the Petters Group (as defined in the Servicing
Agreement)) that shall acquire more than 10% of the Capital Stock of Bluestem.

     “Sponsor Indemnity Agreements” means those certain Indemnity Agreements by and among each of
Bain and Battery and the Administrative Agent dated as of August 20, 2010 and any Indemnity
Agreement of each other Sponsor required to be party thereto pursuant to Section 4.15 of the
Servicing Agreement and the Administrative Agent, in each case substantially in the form of Exhibit
H.

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

     “Spread Account Increase Event” means the occurrence of an Excess Spread Ratio Event, a
Principal Delinquency Ratio Event or a Total Payment Ratio Event.

     “Spread Account Increase Percentage” means, with respect to any Excess Spread Ratio Threshold,
Principal Delinquency Ratio Threshold or Total Payment Ratio Threshold, the Spread Account Increase
Percentage corresponding thereto as set forth in Sections 5.11(c), (d) and (e), respectively.

 

 

     “Subordinate Creditor” means any holder of a Tranche B Term Loan or any other Person to whom
the Company has obligations in respect of the Subordinate Debt.

     “Subordinate Debt” means all Obligations in respect of the Tranche B Lenders.

     “Subordinated Termination Payment” means, with respect to an Interest Rate Agreement, any
early termination payment owed to the Lender Counterparty in connection with an event of default or
termination event where the Lender Counterparty was the “Defaulting Party” or sole “Affected Party”
(as such terms are defined in such Interest Rate Agreement).

     “Subsidiary” means, with respect to any Person, any corporation, partnership, limited
liability company, association, joint venture or other business entity of which more than 50% of
the total voting power of shares of stock or other ownership interests entitled (without regard to
the occurrence of any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions) having the power to
direct or cause the direction of the management and policies thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other Subsidiaries of that
Person or a combination thereof; provided, in determining the percentage of ownership
interests of any Person controlled by another Person, no ownership interest in the nature of a
“qualifying share” of the former Person shall be deemed to be outstanding.

     “Successor Servicer” shall have the meaning attributed to such term in the Servicing
Agreement.

     “Successor Servicing Agreement” shall have the meaning attributed to such term in the Backup
Servicing Agreement.

     “Successor Servicing Fees” means the “Successor Servicing Fees” to be defined in, and payable
in accordance with, the Successor Servicing Agreement.

     “Support Provider” means, with respect to any Conduit Lender, any Liquidity Provider and any
other Person extending credit, or having a commitment to extend credit to or for the account of, or
to make purchases from, such Conduit Lender or its Funding Source or issuing a letter of credit,
surety bond, swap agreement or other instrument to support any obligations arising under or in
connection with the commercial paper, variable funding or medium term note program of such Conduit
Lender or its Funding Source or any collateral agent under a security agreement to which such
Conduit Lender is a party.

     “Syndication Agent” as defined in the preamble hereto.

     “Tax” means any present or future tax, levy, impost, duty, assessment, charge, fee or
deduction or withholding in respect thereof of any similar nature and whatever called, imposed by a
Governmental Authority, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided, “Tax on the overall net income” of a Person shall be construed as a
reference to a Tax imposed by the jurisdiction in which that Person is organized or in which that
Person’s applicable principal office (and/or, in the case of a Lender, its lending office) is
located or in which that Person (and/or, in the case of a Lender, its lending office) is deemed to
be doing business on all or part of the net income, profits or gains (whether worldwide, or only

 

 

insofar as such income, profits or gains are considered to arise in or to relate to a
particular jurisdiction, or otherwise) of that Person (and/or, in the case of a Lender, its
applicable lending office).

     “Term Loan Commitment” means the commitment of a Tranche B Lender to make or otherwise fund
any Tranche B Term Loan on the Closing Date and “Term Loan Commitments” means such commitments of
all Tranche B Lenders in the aggregate. The amount of each Tranche B Lender’s Term Loan
Commitment, if any, is set forth on Appendix A-2. The aggregate amount of the Term Loan
Commitments as of the Closing Date is $75 million.

     “Term Loan Exposure” means, with respect to any Tranche B Lender, as of any date of
determination, the outstanding principal amount of the Tranche B Term Loans of such Lender.

     “Term Loan Maturity Date” means the earlier of (i) August 20, 2013, and (ii) the date that all
Tranche B Term Loans shall become due and payable in full hereunder, whether by acceleration or
otherwise.

     “Terminated Lender” as defined in Section 2.23.

     “Three-Year Forecast” shall have the meaning attributed to such term in the Servicing
Agreement.

     “Total Payment Ratio” shall mean, with respect to any Monthly Period, the percentage
equivalent of a fraction, (a) the numerator of which is equal to the aggregate amount of Eligible
Principal Collections, Eligible Finance Charge Collections and Contribution Amounts for such
Monthly Period and (b) the denominator of which is the aggregate amount of Eligible Underlying
Receivables (including both Eligible Principal Receivables and Eligible Finance Charge Receivables)
as of the last day of the preceding Monthly Period.

     “Total Payment Ratio Event” as defined in Section 5.11(e).

     “Total Payment Ratio Threshold” as set forth in the table included in Section 5.11(e).

     “Total Utilization of Revolving Commitments” means, as of any date of determination, the
aggregate principal amount of all outstanding Tranche A Revolving Loans.

     “Trade Announcements” as defined in Section 9.18.

     “Tranche” means, respectively, (i) the Revolving Commitments to fund Tranche A Revolving Loans
and the Tranche A Revolving Loans and (ii) Tranche B Term Loans.

     “Tranche A Advance Rate” means 54%.

     “Tranche A Borrowing Base Deficiency” means, as of any date of determination, the amount (if
any) by which the Total Utilization of Revolving Commitments exceeds the lesser of (a) the
Revolving Commitments then in effect and (b) the product of the Borrowing Base and the Tranche A
Advance Rate.

 

 

     “Tranche A Lender” means (i) each Committed Conduit Lender, for so long as it holds any
Revolving Commitments or Tranche A Revolving Loans, and (ii) each lender listed on the signature
pages hereto as a “Tranche A Lender”, and any other Person that becomes a party hereto as a
“Tranche A Lender” pursuant to an Assignment Agreement.

     “Tranche A Revolving Loan” as defined in Section 2.2(a).

     “Tranche A Revolving Loan Note” means a promissory note substantially in the form of Exhibit
B-1.

     “Tranche B Advance Rate” means, from the Closing Date to February 20, 2013, 68% and thereafter
the aforementioned percentage successively reduced by 100 basis points each month on the first day
of each such month.

     “Tranche B Borrowing Base Deficiency” means, as of any date of determination, the amount (if
any) by which the outstanding principal amount of the Tranche B Term Loans exceeds (a) the product
of the Borrowing Base and the Tranche B Advance Rate minus (b) the Total Utilization of
Revolving Commitments.

     “Tranche B Lender” means each lender listed on the signature page hereto as a “Tranche B
Lender”, and any other Person that becomes a party hereto as a “Tranche B Lender” pursuant to an
Assignment Agreement.

     “Tranche B Term Loan” as defined in Section 2.1(a).

     “Tranche B Term Loan Note” means a promissory note substantially in the form of Exhibit B-2.

     “Transaction Costs” means the fees, costs and expenses payable by Bluestem or the Company on
or before the Closing Date in connection with the transactions contemplated by the Credit Documents
and the Related Agreements, to the extent approved in writing by the Administrative Agent.

     “UCC” means the Uniform Commercial Code (or any similar or equivalent legislation) as in
effect in any applicable jurisdiction.

     “Underlying Receivable” shall have the meaning attributed to such term in the Servicing
Agreement.

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

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

     “Voluntary Prepayment Proceeds Amount” as defined in Section 2.4.

 

 

     “WebBank” means WebBank, a Utah chartered industrial bank having its principal location in
Salt Lake City, Utah.

     “WebBank Backup Originator Agreement” means a backup originator agreement, by and between
Bluestem and WebBank.

     “WebBank Product Agreement” means that certain Amended and Restated Revolving Loan Product
Program Agreement dated as of August 20, 2010 by and between WebBank and Bluestem.

     “WebBank Receivables Purchase Agreements” means the WebBank Receivables Sale Agreement and the
WebBank Product Agreement.

     “WebBank Receivables Sale Agreement” means that certain Amended and Restated Receivables Sale
Agreement dated as of August 20, 2010 by and between WebBank and Bluestem.

     1.2. Accounting Terms. Except as otherwise expressly provided herein, all accounting terms
not otherwise defined herein shall have the meanings assigned to them in conformity with GAAP.
Financial statements and other information required to be delivered by Bluestem and the Company to
Lenders shall be prepared in accordance with GAAP as in effect at the time of such preparation and
consistent with past practice.

     1.3. Interpretation, etc. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference. References herein to
any Section, Appendix, Schedule or Exhibit shall be to a Section, an Appendix, a Schedule or an
Exhibit, as the case may be, hereof unless otherwise specifically provided. The use herein of the
word “include” or “including,” when following any statement, term or matter, shall not be construed
to limit such statement, term or matter to the specific items or matters set forth immediately
following such word or to similar items or matters, whether or not no limiting language (such as
“without limitation” or “but not limited to” or words of similar import) is used with reference
thereto, but rather shall be deemed to refer to all other items or matters that fall within the
broadest possible scope of such statement, term or matter. 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. Unless the context requires
otherwise or otherwise specified in any applicable Credit Document, (a) reference to any Person
include that Person’s successors and assignees, (b) any definition of or reference to any Credit
Document, agreement, instrument or other document herein shall be construed as referring to such
agreement, instrument or other document as from time to time amended, supplemented or otherwise
modified in accordance with the terms thereof (subject to any restrictions on such amendments,
supplements, or modifications set forth herein or therein), and (c) any reference to any law or
regulation herein shall refer to such law or regulation as amended, modified or supplemented from
time to time.

 

 

SECTION 2. LOANS

     2.1. Term Loans

          (a) Term Loan Commitments.

          (i) Subject to the terms and conditions hereof, each Tranche B Lender severally agrees
to make, on the Closing Date, a term loan (each such term loan, a “Tranche B Term Loan”, and
collectively, the “Tranche B Term Loans”) to the Company in an amount equal to such Lender’s
Term Loan Commitment.

          (ii) The Company may make only one borrowing under each of the Term Loan Commitments
which shall be on the Closing Date. Any amount borrowed under this Section 2.1(a) and
subsequently repaid or prepaid may not be reborrowed. The entire outstanding principal
amount of the Tranche B Term Loans shall be paid in full no later than the Term Loan
Maturity Date. Each Tranche B Lender’s Term Loan Commitment shall terminate immediately and
without further action on the Closing Date after giving effect to the funding of such
Tranche B Lender’s Term Loan Commitment on such date.

     (b) Borrowing Mechanics for Term Loans.

          (i) The Company shall deliver to the Administrative Agent a fully executed Funding
Notice no later than 1:00 p.m. (New York City time) two Business Days in advance of the
Closing Date with respect to Tranche B Term Loans. Promptly upon receipt by the
Administrative Agent of such Funding Notice, the Administrative Agent shall notify each
Tranche B Lender of the proposed borrowing.

          (ii) Each Tranche B Lender shall make its Tranche B Term Loan available to the
Administrative Agent not later than 12:00 p.m. (New York City time) on the Closing Date, by
wire transfer of same day funds in Dollars, at the Administrative Agent’s Principal Office.
Upon satisfaction or waiver of the conditions precedent specified herein, the Administrative
Agent shall make the proceeds of the Tranche B Term Loans available to the Company on the
Closing Date by causing an amount of same day funds in Dollars equal to the proceeds of all
such Tranche B Term Loans received by the Administrative Agent from the Tranche B Lenders to
be credited to the account of the Company at the Administrative Agent’s Principal Office or
to such other account as may be designated in writing to the Administrative Agent by the
Company.

     2.2. Revolving Loans.

          (a) Revolving Commitments.

          (i) During the Revolving Commitment Period, subject to the terms and conditions hereof,
each Tranche A Lender severally agrees from time to time to make loans to the Company (each
a “Tranche A Revolving Loan” and collectively, the “Tranche A Revolving Loans”) in an
aggregate principal amount up to but not exceeding such Tranche A Lender’s Revolving
Commitment; provided, that after giving

 

 

effect to the making of any Tranche A Revolving Loans in no event shall (x) the Total
Utilization of Revolving Commitments exceed the lesser of (1) the Revolving Commitments then
in effect and (2) the product of the Borrowing Base and the Tranche A Advance Rate and (y)
the making of such Loans result in or increase a Tranche B Borrowing Base Deficiency.

          (ii) Each Tranche A Lender’s Revolving Commitment shall expire on the Revolving
Commitment Termination Date and all Tranche A Revolving Loans and all other amounts owed
hereunder with respect to the Revolving Commitments (or portion thereof, as applicable)
shall be paid in full no later than such date. Amounts borrowed pursuant to this Section
2.2(a) may be repaid and reborrowed during the Revolving Commitment Period.

          (b) Borrowing Mechanics for Tranche A Revolving Loans.

          (i) Whenever the Company desires that Lenders make Tranche A Revolving Loans, the
Company shall deliver to the Administrative Agent a fully executed Funding Notice no later
than 1:00 p.m. (New York City time) at least two Business Days in advance of the proposed
Credit Date. Each such Funding Notice shall be (1) delivered reflecting sufficient
Revolving Availability for the requested Tranche A Revolving Loans and (2) in an aggregate
minimum amount of $500,000 and integral multiples of $100,000 in excess of that amount.
Except as otherwise provided herein, a Funding Notice for a Tranche A Revolving Loan that is
a LIBOR Rate Loan shall be irrevocable on and after the related Interest Rate Reset Date,
and the Company shall be bound to make a borrowing in accordance therewith.

          (ii) Notice of receipt of each Funding Notice in respect of Tranche A Revolving Loans,
together with the amount of each Tranche A Lender’s Pro Rata Share thereof, if any, and the
applicable interest rate, shall be provided by the Administrative Agent to each applicable
Tranche A Lender by telefacsimile with reasonable promptness, but (provided the
Administrative Agent shall have received such notice by 1:00 p.m. (New York City time)) not
later than 2:00 p.m. (New York City time) on the same day as the Administrative Agent’s
receipt of such Funding Notice from the Company.

          (iii) Each Tranche A Lender shall make the aggregate amount of its Tranche A Revolving
Loan available to the Administrative Agent not later than 12:00 p.m. (New York City time) on
the applicable Credit Date by wire transfer of same day funds in Dollars, at the
Administrative Agent’s Principal Office. Except as provided herein, upon satisfaction or
waiver of the conditions precedent specified herein, the Administrative Agent shall make the
proceeds of such Tranche A Revolving Loans available to the Company on the applicable Credit
Date by causing an amount of same day funds in Dollars equal to the proceeds of all such
Tranche A Revolving Loans received by the Administrative Agent from the Tranche A Lenders to
be credited to the account of the Company at the Administrative Agent’s Principal Office or
such other account as may be designated in writing to the Administrative Agent by the
Company.

 

 

          (iv) Unless otherwise permitted by the Administrative Agent in its sole and absolute
discretion, there shall be no more than two Credit Dates per calendar week.

          (v) Any Tranche A Lender may, in its sole and absolute discretion, fund all or any
portion of its Tranche A Revolving Loans through its Noncommitted Conduit Lender. Subject
to the terms and conditions set forth in this Agreement, a Tranche A Lender shall in all
cases, in accordance with the terms hereof, fund that portion of its Tranche A Revolving
Loans not funded by its Noncommitted Conduit Lender. Each Noncommitted Conduit Lender
(acting through an administrator or other agent) may fund that portion of the Tranche A
Revolving Loan funded by it as a CP Rate Loan or as a LIBOR Rate Loan, and shall promptly
notify the Administrative Agent of any such determination.

          (c) Protective Advances. Subject to the limitations set forth below and in the
proviso to Section 2.2(a)(i), and whether or not an Event of Default or a Default shall have
occurred and be continuing, the Administrative Agent is authorized by Company and the Lenders, from
time to time in the Administrative Agent’s sole discretion (but the Administrative Agent shall have
absolutely no obligation to), to make Tranche A Revolving Loans to Company on behalf of the
Lenders, which the Administrative Agent, in its sole discretion, deems necessary or desirable (i)
to preserve or protect the Collateral, or any portion thereof, (ii) to enhance the likelihood of,
or maximize the amount of, repayment of the Loans and other Obligations, or (iii) to pay any other
amount chargeable to or required to be paid by Company pursuant to the terms of this Agreement and
the other Credit Documents, including, without limitation, payments of principal, interest, fees
and reimbursable expenses, in the event that any amounts are still owing after application of the
amounts in the Finance Charge Collections Account and the Spread Account pursuant to Sections 2.13
or 2.15(b) (any of such Tranche A Revolving Loans are herein referred to as “Protective Advances”);
provided, that the Administrative Agent may not make a Protective Advance if, after giving
effect to such Protective Advance, (1) there would be more than $10 million in Protective Advances
outstanding or (2) a Borrowing Base Deficiency would be created or increased. Protective Advances
may be made even if the conditions precedent set forth in Section 3 have not been satisfied. The
Protective Advances shall be secured by the Collateral and shall constitute Obligations. All
Protective Advances shall be Base Rate Loans. Company shall pay the unpaid principal amount and
all unpaid and accrued interest of each Protective Advance on the earlier of the Revolving
Commitment Termination Date and within one Business Day following demand for payment by the
Administrative Agent.

     2.3. Pro Rata Shares; Availability of Funds.

          (a) Pro Rata Shares. All Loans shall be made, and all participations purchased, by
Lenders simultaneously and proportionately to their respective Pro Rata Shares, it being understood
that no Lender shall be responsible for any default by any other Lender in such other Lender’s
obligation to make a Loan requested hereunder or purchase a participation required hereby nor shall
any Revolving Commitment or Term Loan Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in such other Lender’s obligation to make a Loan requested
hereunder or purchase a participation required hereby.

 

 

          (b) Availability of Funds. Unless the Administrative Agent shall have been notified
by any Lender prior to the applicable Credit Date that such Lender does not intend to make
available to the Administrative Agent the amount of such Lender’s Loan requested on such Credit
Date, the Administrative Agent may assume that such Lender has made such amount available to the
Administrative Agent on such Credit Date and the Administrative Agent may, in its sole discretion,
but shall not be obligated to, make available to the Company a corresponding amount on such Credit
Date. If such corresponding amount is not in fact made available to the Administrative Agent by
such Lender, the Administrative Agent shall be entitled to recover such corresponding amount on
demand from such Lender together with interest thereon, for each day from such Credit Date until
the date such amount is paid to the Administrative Agent, at the customary rate set by the
Administrative Agent for the correction of errors among banks for three Business Days and
thereafter at (i) in the case where such failure to fund relates to a Tranche A Revolving Loan, the
Base Rate or (ii) in the case where such failure to fund relates to a Tranche B Term Loan, the
Fixed Rate. If such Lender does not pay such corresponding amount forthwith upon the
Administrative Agent’s demand therefor, the Administrative Agent shall promptly notify the Company
and the Company shall pay such corresponding amount to the Administrative Agent together with
interest thereon within one Business Day of demand for payment by the Administrative Agent, for
each day from such Credit Date until the date such amount is paid to the Administrative Agent, at
(i) in the case where such failure to fund relates to a Tranche A Revolving Loan, the Base Rate or
(ii) in the case where such failure to fund relates to a Tranche B Term Loan, the Fixed Rate.
Nothing in this Section 2.3(b) shall be deemed to relieve any Lender from its obligation to fulfill
its Revolving Commitments and/or Term Loan Commitments hereunder or to prejudice any rights that
the Company may have against any Lender as a result of any default by such Lender hereunder.

     2.4. Use of Proceeds. The proceeds of the Tranche B Term Loans and the Tranche A Revolving
Loans, if any, made on the Closing Date shall be applied by the Company to (i) repay Existing
Indebtedness, (ii) finance the acquisition of Underlying Receivables from Bluestem pursuant to the
Receivables Purchase Agreement, (iii) fund the Spread Account and (iv) pay Transaction Costs. The
proceeds of the Tranche A Revolving Loans made after the Closing Date shall be applied by the
Company to (u) finance the acquisition of Underlying Receivables from Bluestem pursuant to the
Receivables Purchase Agreement, (v) fund any Required Spread Account Amount in connection with the
funding of the Tranche A Revolving Loans, (w) pay distributions on its Capital Stock to Bluestem,
(x) pay ongoing operating expenses of the Company, (y) from the date of the initial public offering
by Bluestem to the earlier of (I) three months after such date and (II) the Business Day
immediately following the first anniversary of the Closing Date, make a voluntary prepayment of the
Tranche B Term Loans pursuant to Section 2.10(b) or (z) deposit such proceeds into the Prepayment
Account (the aggregate amount of all such proceeds, the “Voluntary Payment Proceeds Amount”) for
the purpose of making a voluntary prepayment of the Tranche B Term Loans pursuant to Section
2.10(b). No portion of the proceeds of any Credit Extension shall be used in any manner that
causes such Credit Extension or the application of such proceeds to violate Regulation T,
Regulation U or Regulation X of the Board of Governors of the Federal Reserve System or any other
regulation thereof or to violate the Exchange Act.

 

 

     2.5. Evidence of Debt; Register; Lenders’ Books and Records; Notes.

          (a) Lenders’ Evidence of Debt. Each Lender shall maintain on its internal records an
account or accounts evidencing the Obligations to such Lender, including the amounts of the Loans
made by it and each repayment and prepayment in respect thereof. Any such recordation shall be
conclusive and binding on the Company, absent manifest error; provided, that the failure to
make any such recordation, or any error in such recordation, shall not affect any Lender’s
Revolving Commitments or the Company’s Obligations in respect of any applicable Loans; and
provided further, in the event of any inconsistency between the Register and any
Lender’s records, the recordations in the Register shall govern.

          (b) Register. The Administrative Agent shall maintain at its Principal Office a
register for the recordation of the names and addresses of Lenders and the Revolving Commitments
and Loans of each Lender from time to time (the “Register”). The Register shall be available for
inspection by the Company or any Lender at any reasonable time and from time to time upon
reasonable prior notice. The Administrative Agent shall record in the Register the Revolving
Commitments and the Loans, and each repayment or prepayment in respect of the principal amount of
the Loans, and any such recordation shall be conclusive and binding on the Company and each Lender,
absent manifest error; provided that failure to make any such recordation, or any error in
such recordation, shall not affect any Lender’s Revolving Commitments or the Company’s Obligations
in respect of any Loan. The Company hereby designates the entity serving as the Administrative
Agent to serve as the Company’s agent solely for purposes of maintaining the Register as provided
in this Section 2.5, and the Company hereby agrees that, to the extent such entity serves in such
capacity, the entity serving as the Administrative Agent and its officers, directors, employees,
agents and affiliates shall constitute Indemnitees.

          (c) Notes. If so requested by any Lender by written notice to the Company (with a
copy to the Administrative Agent) at least two Business Days prior to the Closing Date, or at any
time after the Closing Date, the Company shall execute and deliver to such Lender (and/or, if
applicable and if so specified in such notice, to any Person who is an assignee of such Lender
pursuant to Section 9.6) on the Closing Date (or, if such notice is delivered after the date that
is two Business Days prior to the Closing Date, promptly after the Company’s receipt of such
notice) Note or Notes to evidence such Lender’s Tranche A Revolving Loans or Tranche B Term Loans.

     2.6. Interest on Loans.

          (a) Except as otherwise set forth herein, each Loan shall bear interest on the unpaid
principal amount thereof from the date made through repayment (whether by acceleration or
otherwise) thereof as follows: (i) if a Base Rate Loan, at the Base Rate plus the Applicable
Margin; (ii) if a LIBOR Rate Loan, at the Adjusted LIBOR Rate plus the Applicable Margin; (iii) in
the case of Loans funded through a Noncommitted Conduit Lender, if a CP Rate Loan, at the CP Rate
plus the Applicable Margin, or (iv) if a Tranche B Term Loan, at the Fixed Rate.

          (b) Interest payable pursuant to Section 2.6(a) shall be computed on the basis of a 360-day
year, in each case, for the actual number of days elapsed in the period during which

 

 

it accrues. In computing interest on any Loan, the date of the making of such Loan or the
first day of an Interest Period applicable to such Loan shall be included, and the date of payment
of such Loan or the expiration date of an Interest Period applicable to such Loan shall be
excluded; provided that if a Loan is repaid on the same day on which it is made, one day’s
interest shall be paid on that Loan.

          (c) Interest on each Loan shall be payable in arrears on (i) each Interest Payment Date; (ii)
with respect to any prepayment in whole or in part of such Loan, whether voluntary or mandatory,
the Interest Payment Date immediately following such prepayment in an amount equal to the interest
accrued on the amount so prepaid to the date of prepayment; and (iii) at maturity.

     2.7. Continuation. Subject to Section 2.18 in the case of LIBOR Rate Loans and so long as no
Default or Event of Default shall have occurred and be continuing, upon the expiration of any
Interest Period applicable to any LIBOR Rate Loan or CP Rate Loan, such LIBOR Rate Loan or CP Rate
Loan, as applicable, shall automatically continue for an additional Interest Period.

     2.8. Default Interest. Upon the occurrence and during the continuance of an Event of
Default, the principal amount of all Loans outstanding and, to the extent permitted by applicable
law, any interest payments on the Loans or any fees or other amounts owed hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding under the Bankruptcy
Code or other applicable Debtor Relief Laws) payable in accordance with the provisions of Section
2.13 or 2.15, as the case may be, at a rate that is 3%, in the case of the Tranche A Revolving
Loans, and 4%, in the case of the Tranche B Term Loans, per annum in excess of the interest rate
otherwise payable hereunder with respect to the applicable Loans until no Event of Default is then
continuing; provided, in the case of LIBOR Rate Loans and CP Rate Loans, if an Event of
Default is continuing upon the expiration of the Interest Period in effect at the time any such
increase in interest rate becomes effective, such LIBOR Rate Loans and CP Rate Loans shall
thereupon become Base Rate Loans and shall thereafter bear interest payable in accordance with the
provisions of Sections 2.13 or 2.15, as the case may be, at a rate which is 3% per annum in excess
of the interest rate otherwise payable hereunder for Base Rate Loans until no Event of Default is
then continuing. Payment or acceptance of the increased rates of interest provided for in this
Section 2.8 is not a permitted alternative to timely payment and shall not constitute a waiver of
any Event of Default or otherwise prejudice or limit any rights or remedies of the Administrative
Agent or any Lender.

     2.9. Fees.

          (a) The Company agrees to pay to the Tranche A Lenders fees equal to (1) the average of the
daily difference between (a) the Revolving Commitments and (b) the aggregate Total Utilization of
Revolving Commitments multiplied by (2) (x) 0.50% per annum, in the event that the average Total
Utilization of Revolving Commitments for the relevant period is less than or equal to 50% of the
Revolving Commitments then in effect or (y) 0.3750% per annum, in the event that the average Total
Utilization of Revolving Commitments for the relevant period is greater than 50% of the Revolving
Commitments then in effect.

 

 

               All fees referred to in this Section 2.9(a) shall be paid to the Administrative Agent as set
forth in Section 2.16(a) and upon receipt, the Administrative Agent shall promptly distribute to
each Tranche A Lender its Pro Rata Share thereof.

          (b) All fees referred to in Section 2.9(a) shall be calculated on the basis of a 360-day year
and the actual number of days elapsed and shall be payable twice monthly in arrears on each
Interest Payment Date during the Revolving Commitment Period, commencing on the first such date to
occur after the Closing Date, and on the Revolving Commitment Termination Date.

          (c) In addition to any of the foregoing fees, the Company agrees to pay to Agents and the
Lenders such other fees in the amounts and at the times separately agreed upon in the Fee Letter.

     2.10. Voluntary Prepayments/Commitment Reductions.

          (a) Voluntary Prepayments.

          (i) Any time and from time to time, the Company may prepay any Loans on any Business
Day in whole or in part in an aggregate minimum amount of $500,000 and integral multiples of
$100,000 in excess of that amount; provided that the Company may not prepay in whole
or in part any Tranche B Term Loans (x) prior to the first anniversary of the Closing Date
or (y) if a Default or Event of Default shall have occurred and be continuing and there are
any Tranche A Revolving Loans outstanding.

          (ii) Except as otherwise provided in Section 2.15(a)(ii), all such prepayments shall be
made upon not less than two Business Days’ prior written or telephonic notice in each case
given to the Administrative Agent by 1:00 p.m. (New York City time) on the date required
and, if given by telephone, promptly confirmed in writing to the Administrative Agent (and
the Administrative Agent will promptly transmit such telephonic or original notice of
prepayment by telefacsimile or telephone to each Lender). Upon the giving of any such
notice, the principal amount of the Loans specified in such notice shall become due and
payable on the prepayment date specified therein. Any such voluntary prepayment shall be
applied to repay outstanding Loans to the full extent thereof.

          (b) Prepayment Following an Initial Public Offering. Subject to the proviso in
Section 2.10(a)(i), at any one time from the date of the initial public offering by Bluestem to the
later of (x) the date that is one year after such initial public offering and (y) the Business Day
immediately following the first anniversary of the Closing Date, the Company may prepay in whole or
in part the Tranche B Term Loans in an aggregate minimum amount of $500,000 and integral multiples
of $100,000 in excess of that amount; provided, that (1) no Event of Default or a Default
shall have occurred and be continuing at the time of such prepayment and (2) Bluestem and the
Company, as applicable, shall be in compliance with the covenants in Section 6.5 of this Agreement
and Section 4.01 of the Servicing Agreement calculated as of the date of such prepayment and after
giving effect thereto.

 

 

          (c) Voluntary Commitment Reductions.

          (i) The Company may, upon not less than three Business Days’ prior written or
telephonic notice confirmed in writing to the Administrative Agent (which original written
or telephonic notice the Administrative Agent will promptly transmit by telefacsimile or
telephone to each applicable Lender), from and after the first anniversary of the Closing
Date, at any time and from time to time, terminate in whole or permanently reduce in part
the Revolving Commitments in an amount up to the amount by which the Revolving Commitments
exceed the Total Utilization of Revolving Commitments at the time of such proposed
termination or reduction; provided, that any such partial reduction of the Revolving
Commitments shall be in an aggregate minimum amount of $5,000,000 and integral multiples of
$1,000,000 in excess of that amount.

          (ii) The Company’s notice to the Administrative Agent shall designate the date (which
shall be a Business Day) of such termination or reduction and the amount of any partial
reduction, and such termination or reduction of the Revolving Commitments shall be effective
on the date specified in the Company’s notice and shall reduce the Revolving Commitment of
each Lender proportionately to its Pro Rata Share thereof.

          (d) Call Protection.

          (i) If the Company prepays all or any part of the principal balance of any Tranche B
Term Loan (including any prepayment pursuant to Sections 2.11(a) through 2.11(e)), the
Company shall pay to the Administrative Agent, for the benefit of all Tranche B Lenders
entitled to a portion of such prepayment, a prepayment premium (the “Prepayment Premium”) on
the amount so prepaid as follows:

	 	 	 	 	 
	Relevant period (number of	 	 
	calendar months elapsed	 	Prepayment Premium as a percentage
	since the Closing Date)	 	of the amount so prepaid
	From month 13 through month 24

	 	(x) in the event of or following an
initial public offering of Bluestem, 2%
and (y) otherwise, 3%

	 
	 	 	 	 
	After month 24

	 	 	0	%

               (ii) If the Company reduces (including any reduction pursuant to Sections 2.11(a)
through 2.11(f)) or terminates the Revolving Commitments as provided in Section 2.10(c), the
Company shall pay to the Administrative Agent, for the benefit of all Lenders a commitment
reduction premium (the “Commitment Reduction Premium”) on the amount so reduced as follows:

 

 

	 	 	 	 	 
	Relevant period (number of	 	 
	calendar months elapsed	 	Commitment Reduction Premium as a
	since the Closing Date)	 	percentage of the amount so reduced
	From month 13 through month 24

	 	(x) in the event of or following an
initial public offering of Bluestem, 2%
and (y) otherwise, 3%

	 
	 	 	 	 
	After month 24

	 	 	0	%

     2.11. Mandatory Prepayments/Commitment Reductions.

          (a) Asset Sales. Without in any way limiting the Company’s obligations under Section
6.6, no later than the first Business Day following the date of receipt by the Company of any Net
Asset Sale Proceeds, subject to Section 2.11(i), the Company shall prepay the Loans in an aggregate
amount equal to such Net Asset Sale Proceeds and the Revolving Commitments shall be permanently
reduced, in each case, as set forth in Section 2.12, and the Company shall pay the applicable
Commitment Reduction Premium and/or Prepayment Premium.

          (b) Insurance Proceeds. No later than the first Business Day following the date of
receipt by the Company, or the Administrative Agent as loss payee, of any Net Insurance Proceeds,
subject to Section 2.11(i), the Company shall prepay the Loans in an aggregate amount equal to such
Net Insurance Proceeds and the Revolving Commitments shall be permanently reduced, in each case, as
set forth in Section 2.12, and the Company shall pay the applicable Commitment Reduction Premium
and/or Prepayment Premium.

          (c) Issuance of Equity Securities. On the date of receipt by the Company of any Cash
proceeds from the issuance of any Capital Stock of the Company other than (i) issuances of Capital
Stock of the Company to Bluestem or (ii) for purposes approved in writing by the Administrative
Agent, subject to Section 2.11(i), the Company shall prepay the Loans in an aggregate amount equal
to 100% of such proceeds, net of underwriting discounts and commissions and other reasonable costs
and expenses associated therewith, including reasonable legal fees and expenses, and the Revolving
Commitments shall be permanently reduced, in each case, as set forth in Section 2.12, and the
Company shall pay the applicable Commitment Reduction Premium and/or Prepayment Premium.

          (d) Issuance of Debt. Without in any way limiting the Company’s obligations under
Section 6.1, on the date of receipt by the Company of any Cash proceeds from the incurrence of any
Indebtedness of the Company (other than with respect to any Indebtedness permitted to be incurred
pursuant to Section 6.1), subject to Section 2.11(i), the Company shall prepay the Loans in an
aggregate amount equal to 100% of such proceeds, net of underwriting discounts and commissions and
other reasonable costs and expenses associated therewith, in each case, paid to non-Affiliates,
including reasonable legal fees and expenses and the Revolving Commitments shall be permanently
reduced, in each case, as set forth in Section 2.12, and the Company shall pay the applicable
Commitment Reduction Premium and/or Prepayment Premium.

 

 

          (e) Tax Refunds. On the date of receipt by the Company of any tax refunds in excess
of $50,000 in the aggregate in any Fiscal Year, the Company shall prepay the Loans in the amount of
such tax refunds in excess of $50,000 and the Revolving Commitments shall be reduced, in each case,
as set forth in Section 2.12, and the Company shall pay the applicable Commitment Reduction Premium
and/or Prepayment Premium.

          (f) Prepayment of Tranche B Term Loan. Except in the case of prepayment of the
Tranche B Term Loans pursuant to Section 2.10(b), if (x) the Company prepays all or any part of the
principal balance of any Tranche B Term Loan pursuant to Section 2.10 or 2.11(g) or (y) any Tranche
B Term Loan is prepaid in accordance with Section 2.12(a) at a time when the Revolving Commitments
immediately prior to such prepayment (after giving effect to any commitment reduction in accordance
with Section 2.12(b)(i)) are greater than zero, the Revolving Commitment of each Tranche A Lender
shall be reduced by an amount equal to the product of:

          (i) the Revolving Commitment of such Tranche A Revolving Lender immediately prior to
such prepayment multiplied by

          (ii) the aggregate principal amount of the Tranche B Term Loans being prepaid
divided by (A) if such prepayment occurs prior to a prepayment of the Tranche B Term
Loans pursuant to Section 2.10(b), the aggregate Term Loan Commitments on the Closing Date
or (B) if such prepayment occurs after a prepayment of the Tranche B Term Loans pursuant to
Section 2.10(b), an amount equal to the aggregate Term Loan Commitments on the Closing Date
minus the aggregate outstanding principal amount of the Tranche B Term Loans prepaid
pursuant to Section 2.10(b).

In addition, the Company shall pay the applicable Commitment Reduction Premium and, if such
reduction in the Revolving Commitments results in a Tranche A Borrowing Base Deficiency, the
Company shall prepay the Tranche A Revolving Loans in accordance with clause (g) below.

          (g) Borrowing Base Deficiency. The Company shall prepay the Tranche A Revolving Loans
and/or Tranche B Term Loans, within one Business Day of the earlier of (i) an Authorized Officer of
the Company becoming aware that a Borrowing Base Deficiency with respect to any Tranche exists and
(ii) receipt by the Company of notice from the Administrative Agent that a Borrowing Base
Deficiency with respect to any Tranche exists, in each case in an amount equal to such Borrowing
Base Deficiency, which shall be applied to, first, repay (x) in the case of a Tranche A Borrowing
Base Deficiency, the Tranche A Revolving Loans in an amount sufficient to cure such deficiency and,
second, to repay (y) in the case of a Tranche B Borrowing Base Deficiency, first, the Tranche A
Revolving Loans until such Loans have been paid in full or such deficiency has been cured and,
then, the Tranche B Term Loans in an aggregate amount sufficient to cure such deficiency;
provided, however, upon the written request of the Company, with respect to each
Tranche the applicable Class Requisite Lenders in their sole discretion may extend the time for
such prepayment, provided that (x) such extension is not for more than 30 calendar days (or
if the 30th day is not a Business Day, the next succeeding Business Day) and (y) the
aggregate amount of the applicable Borrowing Base Deficiency so extended at any time does not
exceed $5,000,000.

 

 

          (h) Prepayment Certificate. Concurrently with any prepayment of the Loans and/or
reduction of the Revolving Commitments pursuant to Sections 2.11(a) through 2.11(f), the Company
shall deliver to the Administrative Agent a certificate of an Authorized Officer demonstrating the
calculation of the amount of the applicable net proceeds (if applicable) and compensation owing to
Lenders under Section 2.10(d). In the event that the Company shall subsequently determine that the
actual amount received exceeded the amount set forth in such certificate, the Company shall
promptly make an additional prepayment of the Loans in an amount equal to such excess, and the
Revolving Commitments shall be permanently reduced, in each case, as set forth in Section 2.12, and
the Company shall concurrently therewith deliver to the Administrative Agent a certificate of an
Authorized Officer demonstrating the derivation of such excess.

          (i) Prepayment Account.

          (i) In the event that at any time prior to the first anniversary of the Closing Date,
the Company is required to make a mandatory payment pursuant to Sections 2.11(a) through
2.11(e), the proceeds of such mandatory payment shall be deposited in the Prepayment Account
(the aggregate amount of all such proceeds, the “Mandatory Prepayment Proceeds Amount”). On
the first anniversary of the Closing Date, the Administrative Agent shall withdraw from the
Prepayment Account an amount equal to the Mandatory Prepayment Proceeds Amount and apply all
such proceeds to the outstanding principal balance of the Loans in an aggregate amount equal
to such proceeds and the Revolving Commitments shall be permanently reduced, in each case,
as set forth in Section 2.12, and the Company shall pay the applicable Commitment Reduction
Premium and/or Prepayment Premium.

          (ii) If the Company decides to make a voluntary prepayment of the Tranche B Term Loans
pursuant to Section 2.10(b), it may instruct the Administrative Agent to, and, if so
instructed, the Administrative Agent shall, withdraw from the Prepayment Account on the date
of such prepayment an amount equal to the Voluntary Prepayment Proceeds Amount and apply
such amount to such prepayment.

     2.12. Application of Prepayments and Commitment Reductions.

          (a) Application of Prepayments. Any prepayment of any Loans pursuant to Sections
2.11(a) through (e), (h) and (i) shall be applied, first, to repay outstanding Tranche A Revolving
Loans until reduced to zero and, second, to repay outstanding Tranche B Term Loans.

          (b) Commitment Reduction.

          (i) In connection with any prepayment of Tranche A Loans pursuant to Sections 2.11(a)
through (e), (h) and (i), the aggregate Revolving Commitments shall be permanently reduced
in an amount equal to the aggregate amount of outstanding Tranche A Revolving Loans prepaid
in connection therewith.

          (ii) Except in the case of prepayment of the Tranche B Term Loans pursuant to Section
2.10(b), if any Tranche B Term Loan is prepaid in accordance with Section 2.12(a) at a time
when the Revolving Commitments immediately prior to such

 

 

prepayment (after giving effect to any commitment reduction in accordance with Section
2.12(b)(i)) are greater than zero, the Revolving Commitment of each Tranche A Lender will be
permanently reduced in accordance with Section 2.11(f) above.

     2.13. Payments during Event of Default. Notwithstanding anything herein to the contrary other
than Section 2.22, upon the occurrence and during the continuance of an Event of Default on each
Interest Payment Date, (x) all payments made hereunder and under the other Credit Documents
(including in respect of proceeds from any Collateral) and (y) all amounts in the Controlled
Accounts and any income and gains from investment of funds in any Controlled Account that accrued
during the immediately preceding Collection Period shall be applied by the Collateral Agent in
accordance with the Payment Date Report prepared by the Administrative Agent as follows:

          (a) First, to Servicer, any accrued and unpaid Servicing Fees due to Servicer in accordance
with the Servicing Agreement,

          (b) Second, pro rata (x) to Servicer for remittance to the Backup Servicer, any accrued and
unpaid Backup Servicing Fees due to Backup Servicer in accordance with the Backup Servicing
Agreement and (y) to any Successor Servicer, any accrued and unpaid Successor Servicing Fees due in
accordance with the Successor Servicing Agreement,

          (c) Third, to the Administrative Agent to pay any third-party costs or Agent Fees due to the
Agents,

          (d) Fourth, pro rata (x) to the Administrative Agent for the ratable benefit of the Tranche A
Lenders to pay costs and fees then due and payable hereunder and accrued interest on the Tranche A
Revolving Loans (excluding Default Interest) and (y) to each Lender Counterparty any fixed payments
then due and payable under the related Interest Rate Agreement, other than with respect to an
interest rate cap under which the only payment by the Company is a fixed amount payable on or about
the date of execution thereof, and any Senior Termination Payments then due and payable up to an
amount, which when taken together with all Senior Termination Payments paid with respect to all
Interest Rate Agreements prior to such Interest Payment Date, does not exceed $5,000,000;

          (e) Fifth, to the Administrative Agent for the ratable benefit of the Tranche A Lenders to pay
the outstanding principal balance on the Tranche A Revolving Loans until paid in full,

          (f) Sixth, to the Administrative Agent for the ratable benefit of the Tranche B Lenders to pay
costs and accrued interest on the Tranche B Term Loans (excluding Default Interest),

          (g) Seventh, to the Administrative Agent for the ratable benefit of the Tranche A Lenders to
pay any Default Interest on the Tranche A Revolving Loans;

          (h) Eighth, to the Administrative Agent for the ratable benefit of the Tranche B Lenders to
pay the outstanding principal balance on the Tranche B Term Loans until paid in full;

 

 

          (i) Ninth, to the Administrative Agent for the ratable benefit of the Tranche B Lenders to pay
any Default Interest on the Tranche B Term Loans;

          (j) Tenth, to the Administrative Agent to pay any costs or fees due to the Agents and not
otherwise paid in clause (c) above;

          (k) Eleventh, to each Lender Counterparty any Senior Termination Payments then due and payable
and not otherwise paid in clause (d) above, any Subordinated Termination Payments then due and
payable and any fixed or upfront payment then due and payable with respect to an interest rate cap
under which the only payment by the Company is a fixed amount payable on or about the date of
execution thereof; and

          (l) Twelfth, to the Company.

     2.14. Controlled Accounts and Amounts.

          (a) On or prior to the date hereof, the Company shall cause to be established and maintained,
(i) deposit accounts in the name of the Collateral Agent designated as the Principal Collections
Account, the Finance Charge Collections Account, the Spread Account, and the Prepayment Account in
each case bearing a designation clearly indicating that the funds and other property credited
thereto are held in the name of the Collateral Agent for the benefit of the Secured Parties and
subject to the Controlled Account Control Agreement (each, together with the Company Account, a
“Controlled Account” and collectively, the “Controlled Accounts”), and (ii) deposit accounts in the
name of the Company designated as the Lockbox Account and the US Bank Account as to which the
Collateral Agent has control over such account for the benefit of the Secured Parties within the
meaning of Section 9-104(a)(2) of the UCC pursuant to the Lockbox Account Control Agreement or the
US Bank Account Control Agreement, as applicable.

          (b) On or prior to the date hereof, the Company shall cause to be established and maintained a
deposit account in the name of the Company designated as the Company Account as to which the
Collateral Agent has control over such account for the benefit of the Secured Parties within the
meaning of Section 9-104(a)(2) of the UCC pursuant to the Controlled Account Control Agreement.

          (c) So long as no Event of Default has occurred and shall be continuing, Company or the
Servicer shall be permitted to direct the investment of the funds from time to time held in the
Controlled Accounts (other than the Principal Collections Account) in Permitted Investments and to
sell or liquidate such Permitted Investments and reinvest proceeds from such sale or liquidation in
other Permitted Investments (but none of the Collateral Agent, the Administrative Agent, or the
Lenders shall have liability whatsoever in respect of any failure by the Account Bank to do so),
with all such proceeds and reinvestments to be held in the applicable Controlled Account;
provided, however, that the maturity of the Permitted Investments on deposit in the
Controlled Accounts shall be no later than the Business Day immediately preceding the date on which
such funds are required to be withdrawn therefrom pursuant to this Agreement; and, provided
further, that the Company shall remit into the applicable Controlled Account an amount
equal to any losses realized on Permitted Investments contained therein. No

 

 

Permitted Investment shall be liquidated at a loss at the direction of Company except to the
extent necessary to make a required payment as described herein. All income and gains from the
investment of funds in the Controlled Accounts shall be retained in the respective Controlled
Account from which they were derived, until each Interest Payment Date, at which time such income
and gains shall be applied in accordance with Section 2.13 or Section 2.15(b), as the case may be.
As between Company and the Collateral Agent, Company shall treat all income, gains and losses from
the investment of amounts in the Controlled Accounts as its income or loss for federal, state and
local income tax purposes.

          (d) The Company (i) shall instruct Servicer to instruct the Receivables Obligors to deposit
all Collections to the US Bank Account or the Lockbox Account, (ii) within one Business Day of
receipt of any Collection in the US Bank Account, shall cause the Servicer to remit such
collections to the Lockbox Account and (iii) within two Business Days of receipt or remittance of
Collections in the Lockbox Account, shall cause Servicer to remit from the Lockbox Account all
Principal Collections to the Principal Collections Account and all Finance Charge Collections to
the Finance Charge Collections Account as provided in the Servicing Agreement.

          (e) The Company shall instruct Bluestem to deposit the Contribution Amount with respect to an
Eligible Underlying Receivable in the Finance Charge Collections Account (i) upon the sale of such
Underlying Receivable to the Company, if such Underlying Receivable is an Eligible Underlying
Receivable at such time, or (ii) on the second Business Day after the date on which a previously
sold Underlying Receivable becomes an Eligible Underlying Receivable.

     2.15. Application of Collections.

          (a) Principal Collections. So long as no Event of Default has occurred and is
continuing:

          (i) upon the Company’s delivery of (A) a Principal Collections Notice and (B) a Daily
Settlement and Servicing Report satisfactory to the Administrative Agent by 1:00 p.m. (New
York City time) on any designated Business Day, the Collateral Agent shall instruct the
Account Bank to transfer the requested Principal Collections from the Principal Collections
Account to the Company Account by 4:00 p.m. (New York City time) on the Business Day
designated in the Principal Collections Notice, which amounts shall be solely applied by the
Company to purchase new Underlying Receivables under the Receivables Purchase Agreement or
to fund any unfunded Required Spread Account Amounts; provided, that funds from the
Principal Collections Account may not be applied to purchase new Underlying Receivables if,
after giving effect to the withdrawal of such funds from the Principal Collections Account
and to such application, there would exist a Borrowing Base Deficiency;

          (ii) the Company may request the Collateral Agent to release all or a portion of the
Principal Collections in the Principal Collections Account (not otherwise used pursuant to
clause (i) above) to pay the outstanding principal balance on the Tranche A Revolving Loans
upon two Business Days’ notice, subject to (A) the satisfaction of the

 

 

requirements in Section 2.10(a)(i) and (B) the Company’s delivery of a Daily Settlement
and Servicing Report satisfactory to the Administrative Agent by 1:00 p.m. (New York
City time) on the date of such notice, and such amounts shall be applied on such Business
Day to repay the outstanding Tranche A Revolving Loans; and

          (iii) on each Interest Payment Date, all amounts on deposit in the Principal
Collections Account as of 8:30 a.m. New York City time on the last day of the immediately
preceding Collection Period shall be applied (A) first, to pay any amounts not otherwise
funded pursuant to Section 2.15(b)(i) through (x) on such Interest Payment Date and (B)
second, to repay the outstanding Tranche A Revolving Loans; provided that on any
Interest Payment Date the Company may retain up to $1,000,000 on deposit in the Principal
Collections Account.

          (b) Finance Charge Collections Account and Spread Account. So long as no Event of
Default has occurred and is continuing (after giving effect to the application of funds in
accordance herewith on the relevant date), on each Interest Payment Date, all funds relating to the
immediately prior Collection Period in the Finance Charge Collections Account, together with any
Excess Spread Account Amounts and any income and gains from the investment of funds in any
Controlled Account that accrued during the applicable Collection Period, shall be applied by the
Collateral Agent in accordance with the Payment Date Report prepared by the Servicer as follows:

          (i) First, to Servicer, any accrued and unpaid Servicing Fees due to Servicer in
accordance with the Servicing Agreement,

          (ii) Second, pro rata (x) to Servicer for remittance to the Backup Servicer, any
accrued and unpaid Backup Servicing Fees due to Backup Servicer in accordance with the
Backup Servicing Agreement and (y) to any Successor Servicer, any accrued and unpaid
Successor Servicing Fees due in accordance with the Successor Servicing Agreement,

          (iii) Third, to the Administrative Agent to pay any third-party costs or Agent Fees due
to the Agents,

          (iv) Fourth, pro rata (x) to the Administrative Agent for the ratable benefit of the
Tranche A Lenders to pay costs and fees then due and payable hereunder and accrued interest
on the Tranche A Revolving Loans and (y) to each Lender Counterparty any fixed payments then
due and payable under the related Interest Rate Agreement, other than with respect to an
interest rate cap under which the only payment by the Company is a fixed amount payable on
or about the date of execution thereof, and any Senior Termination Payments then due and
payable up to an amount, which when taken together with all Senior Termination Payments paid
with respect to all Interest Rate Agreements prior to such Interest Payment Date, does not
exceed $5,000,000;

          (v) Fifth, to the Administrative Agent for the ratable benefit of the Tranche B Lenders
to pay costs and accrued interest on the Tranche B Term Loans,

 

 

          (vi) Sixth, to the Administrative Agent for the ratable benefit of the Tranche A
Lenders to prepay the Tranche A Revolving Loans in an amount necessary to
(A) first, cure any Tranche A Borrowing Base Deficiency and (B) second, cure any
Tranche B Borrowing Base Deficiency,

          (vii) Seventh, to the Administrative Agent for the ratable benefit of the Tranche B
Lenders to prepay Tranche B Term Loans in an amount necessary to cure any Tranche B
Borrowing Base Deficiency,

          (viii) Eighth, to the Administrative Agent to pay any costs and fees due to the Agents
and not otherwise paid in clause (iii) above;

          (ix) Ninth, to each Lender Counterparty any Senior Termination Payments then due and
payable and not otherwise paid in clause (iv) above, any Subordinated Termination Payments
then due and payable and any fixed or upfront payment then due and payable with respect to
an interest rate cap under which the only payment by the Company is a fixed amount payable
on or about the date of execution thereof; and

          (x) Tenth, to the Administrative Agent to be deposited in the Spread Account to fund
the excess of the Required Spread Account Amount over the amounts then on deposit in the
Spread Account; and

          (xi) Eleventh, to the Company Account.

          (c) The Company Account. So long as no Event of Default has occurred and is
continuing, the Company may withdraw amounts on deposit in the Company Account (i) to pay any
Obligations, including principal and interest in respect of the Loans, any Protective Advance, any
Commitment Reduction Premiums, Prepayment Premium and any Borrowing Base Deficiency, in each case
in accordance with terms hereof, (ii) to purchase new Underlying Receivables under the Receivables
Purchase Agreement, (iii) to pay distributions on its Capital Stock to Bluestem, (iv) to fund the
Spread Account and (v) to pay for ongoing operating expenses of the Company and other activities
permitted under this Agreement. Upon the occurrence and during the continuance of an Event of
Default, the Company shall be prohibited from making withdrawals from the Company Account, and all
amounts in such account shall be applied in accordance with Section 2.13. The Collateral Agent
agrees not to deliver a notice of exclusive control under any Control Agreement unless an Event of
Default has occurred and is continuing.

     2.16. General Provisions Regarding Payments.

          (a) All payments by the Company of principal, interest, fees and other Obligations shall be
made in Dollars in immediately available funds, without defense, recoupment, setoff or
counterclaim, free of any restriction or condition, and delivered to the Administrative Agent, for
the account of Lenders, not later than 2:00 p.m. (New York City time) on the date due at 6011
Connection Drive, Irving, TX 75039 or via wire transfer of immediately available funds to account
number 000230435874 maintained by the Administrative Agent with JPMorgan Chase Bank (ABA No.
021000021) in New York City (or at such other location or

 

 

bank account within the City and State of New York as may be designated by the Administrative
Agent from time to time); funds received by the Administrative Agent after that time on such
due date shall be deemed to have been paid by the Company on the next Business Day.

          (b) All payments in respect of the principal amount of any Loan (other than voluntary or
mandatory prepayments of any Loan as provided in Section 2.6(c)) shall be accompanied by payment of
accrued interest on the principal amount being repaid or prepaid.

          (c) The Administrative Agent shall promptly distribute to each Lender at such address or via
wire transfer as such Lender shall indicate in writing, such Lender’s applicable Pro Rata Share of
all payments and prepayments of principal and interest due hereunder, together with all other
amounts due with respect thereto, including, without limitation, all fees payable with respect
thereto, to the extent received by the Administrative Agent.

          (d) Notwithstanding the foregoing provisions hereof, if any Affected Lender makes Base Rate
Loans in lieu of its Pro Rata Share of any LIBOR Rate Loans, the Administrative Agent shall give
effect thereto in apportioning payments received thereafter.

          (e) Subject to the proviso set forth in the definition of “Interest Period,” whenever any
payment to be made hereunder shall be stated to be due on a day that is not a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of time shall be
included in the computation of the payment of interest hereunder or of the commitment fees
hereunder.

          (f) Unless otherwise specified herein, all Loans with respect to a Tranche shall be repaid or
prepaid on a pro rata basis and all Revolving Commitments shall be reduced on a pro rata basis.

          (g) The Administrative Agent shall give prompt telephonic notice to the Company and each
Lender (confirmed in writing) if any payment is not made in conformity with this Section 2.16.
Interest shall continue to accrue on any principal as to which a non-conforming payment is made
until such funds become available funds (but in no event less than the period from the date of such
payment to the next succeeding applicable Business Day) at the Default Rate determined pursuant to
Section 2.8 (if applicable) from the date such amount was due and payable until the date such
amount is paid in full.

     2.17. Ratable Sharing. Except as provided in Sections 2.22 or 2.25, Lenders hereby agree
among themselves that, except as otherwise provided in the Collateral Documents with respect to
amounts realized from the exercise of rights with respect to Liens on the Collateral, if any of
them shall, whether by voluntary payment (other than a voluntary prepayment of Loans made and
applied in accordance with the terms hereof), through the exercise of any right of set-off or
banker’s lien, by counterclaim or cross action or by the enforcement of any right under the Credit
Documents or otherwise, or as adequate protection of a deposit treated as cash collateral under the
Bankruptcy Code, receive payment or reduction of a proportion of the aggregate amount of principal,
interest, fees and other amounts then due and owing to such Lender hereunder or under the other
Credit Documents (collectively, the “Aggregate Amounts Due” to such Lender) which is greater than
the proportion received by any other Lender in

 

 

respect of the Aggregate Amounts Due to such other Lender, then the Lender receiving such
proportionately greater payment shall (a) notify the Administrative Agent and each other
Lender of the receipt of such payment and (b) apply a portion of such payment to purchase
participations (which it shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment) in the Aggregate
Amounts Due to the other Lenders so that all such recoveries of Aggregate Amounts Due shall be
shared by all Lenders in proportion to the Aggregate Amounts Due to them; provided, if all
or part of such proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of the Company or otherwise, those
purchases shall be rescinded and the purchase prices paid for such participations shall be returned
to such purchasing Lender ratably to the extent of such recovery, but without interest. The
Company expressly consents to the foregoing arrangement and agrees that any holder of a
participation so purchased may exercise any and all rights of banker’s lien, set-off or
counterclaim with respect to any and all monies owing by the Company to that holder with respect
thereto as fully as if that holder were owed the amount of the participation held by that holder.

     2.18. Making or Maintaining LIBOR Rate Loans.

          (a) Inability to Determine Applicable Interest Rate. In the event that the
Administrative Agent shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto), on any Interest Rate Reset Date with respect to any LIBOR Rate
Loans, that by reason of circumstances affecting the London interbank market adequate and fair
means do not exist for ascertaining the interest rate applicable to such LIBOR Rate Loans on the
basis provided for in the definition of Adjusted LIBOR Rate (“LIBOR Unavailability”), the
Administrative Agent shall on such date give notice (by telefacsimile or by telephone confirmed in
writing) to the Company and each Tranche A Lender of such determination, whereupon (i) no Tranche A
Revolving Loans may be made as LIBOR Rate Loans until such time as the Administrative Agent
notifies the Company and the Tranche A Lenders that the circumstances giving rise to such notice no
longer exist, (ii) any Funding Notice given by the Company with respect to Tranche A Revolving
Loans in respect of which such determination was made shall be deemed to be rescinded by the
Company, (iii) all then-existing Tranche A Revolving Loans shall convert automatically to Base Rate
Loans at the end of the then-applicable Interest Period if such circumstances still exist at such
time and (iv) any subsequent borrowings of Tranche A Revolving Loans shall be made as Base Rate
Loans until such circumstances no longer exist. At such time as the Administrative Agent shall
notify the Company and the Tranche A Lenders that any period of LIBOR Unavailability has ended, on
the Interest Payment Date next following such determination, unless the Company elects to maintain
such Base Rate Loans, all Base Rate Loans carried by the Tranche A Lenders as a consequence of this
Section 2.18(a) shall automatically convert to LIBOR Rate Loans having an initial Interest Period
commencing on such Interest Payment Date.

          (b) Illegality or Impracticability of LIBOR Rate Loans. In the event that on any date
any Tranche A Lender shall have determined (which determination shall be final and conclusive and
binding upon all parties hereto but shall be made only after consultation with the Company and the
Administrative Agent) that the making or maintaining of its LIBOR Rate Loans (i) has become
unlawful as a result of compliance by such Lender in good faith with any

 

 

law, treaty, governmental rule, regulation, guideline or order (or would conflict with any such
treaty, governmental rule, regulation, guideline or order not having the force of law even
though the failure to comply therewith would not be unlawful), or (ii) has become impracticable, as
a result of contingencies occurring after the date hereof which materially and adversely affect the
London interbank market or the position of such Lender in that market, then, and in any such event,
such Lender shall be an “Affected Lender” and it shall on that day give notice (by telefacsimile or
by telephone confirmed in writing) to the Company and the Administrative Agent of such
determination (which notice the Administrative Agent shall promptly transmit to each other Lender).
Thereafter (1) the obligation of the Affected Lender to make Tranche A Revolving Loans as LIBOR
Rate Loans shall be suspended until such notice shall be withdrawn by the Affected Lender, (2) to
the extent such determination by the Affected Lender relates to a LIBOR Rate Loan then being
requested by the Company pursuant to a Funding Notice, the Affected Lender shall make such Tranche
A Revolving Loan (or continue such Tranche A Revolving Loan) as a Base Rate Loan, (3) the Affected
Lender’s obligation to maintain its outstanding LIBOR Rate Loans (the “Affected Loans”) shall be
terminated at the earlier to occur of the expiration of the Interest Period then in effect with
respect to the Affected Loans or when required by law, and (4) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination. Notwithstanding the
foregoing, to the extent a determination by an Affected Lender as described above relates to a
LIBOR Rate Loan then being requested by the Company pursuant to a Funding Notice, the Company shall
have the option, notwithstanding anything to the contrary in Section 2.2(b)(ii), to rescind such
Funding Notice as to all Tranche A Lenders by giving notice (by telefacsimile or by telephone
confirmed in writing) to the Administrative Agent of such rescission on the date on which the
Affected Lender gives notice of its determination as described above (which notice of rescission
the Administrative Agent shall promptly transmit to each other Lender). Except as provided in the
immediately preceding sentence, nothing in this Section 2.18(b) shall affect the obligation of any
Lender other than an Affected Lender to make or maintain Tranche A Revolving Loans as LIBOR Rate
Loans in accordance with the terms hereof.

          (c) Compensation for Breakage or Non-Commencement of Interest Periods. The Company
shall compensate each Tranche A Lender, upon written request by such Lender (which request shall
set forth the basis for requesting such amounts), for all reasonable losses, expenses and
liabilities (including any interest paid or calculated to be due and payable by such Lender to
lenders of funds borrowed by it to make or carry its LIBOR Rate Loans and any loss, expense or
liability sustained by such Lender in connection with the liquidation or re-employment of such
funds but excluding loss of anticipated profits) which such Lender would sustain: (i) if for any
reason (other than a default by such Lender) a borrowing of any LIBOR Rate Loan does not occur on a
date specified therefor in a Funding Notice or a telephonic request for borrowing; (ii) if any
prepayment or other principal payment of any of its LIBOR Rate Loans occurs on any day other than
an Interest Payment Date (whether voluntary, mandatory, automatic, by reason of acceleration, or
otherwise); or (iii) if any prepayment of any of its LIBOR Rate Loans is not made on any date
specified in a notice of prepayment given by the Company.

          (d) Booking of LIBOR Rate Loans. Any Tranche A Lender may make, carry or transfer
LIBOR Rate Loans at, to, or for the account of any of its branch offices or the office of an
Affiliate of such Lender.

 

 

     2.19. Increased Costs; Capital Adequacy.

          (a) Compensation For Increased Costs and Taxes. Subject to the provisions of Section
2.20 (which shall be controlling with respect to the matters covered thereby), in the event that
any Lender shall determine (which determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) that any law, treaty or governmental rule,
regulation or order, or any change therein or in the interpretation, administration or application
thereof (including the introduction of any new law, treaty or governmental rule, regulation or
order), or any determination of a court or governmental authority, in each case that becomes
effective after the date hereof, or compliance by such Lender with any guideline, request or
directive issued or made after the date hereof by any central bank, accounting authority or other
governmental or quasi-governmental authority (whether or not having the force of law): (i) subjects
such Lender (or its applicable lending office) to any additional Tax (other than any Tax on the
overall net income of such Lender) with respect to this Agreement or any of the other Credit
Documents or any of its obligations hereunder or thereunder or any payments to such Lender (or its
applicable lending office) of principal, interest, fees or any other amount payable hereunder; (ii)
imposes, modifies or holds applicable any reserve (including any marginal, emergency, supplemental,
special or other reserve), special deposit, compulsory loan, FDIC insurance, risk based assessment
or similar requirement against assets held by, or deposits or other liabilities in or for the
account of, or advances or loans by, or other credit extended by, or any other acquisition of funds
by, any office of such Lender (other than any such reserve or other requirements with respect to
LIBOR Rate Loans that are reflected in the definition of Adjusted LIBOR Rate); or (iii) imposes any
other condition (other than with respect to a Tax matter) on or affecting such Lender (or its
applicable lending office) or its obligations hereunder or, in the case of a Tranche A Lender, the
London interbank market; and the result of any of the foregoing is to increase the cost to such
Lender of agreeing to make, making or maintaining Loans hereunder or to reduce any amount received
or receivable by such Lender (or its applicable lending office) with respect thereto; then, in any
such case, the Company shall promptly pay to such Lender, upon receipt of the statement referred to
in the next sentence, such additional amount or amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased cost or reduction
in amounts received or receivable hereunder. Such Lender shall deliver to the Company (with a copy
to the Administrative Agent) a written statement, setting forth in reasonable detail the basis for
calculating the additional amounts owed to such Lender under this Section 2.19(a), which statement
shall be conclusive and binding upon all parties hereto absent manifest error; provided,
that no Lender shall be entitled to compensation under this Section 2.19(a) for amounts incurred or
reductions suffered more than 270 days prior to the date of delivery of such written statement.

          (b) Capital Adequacy Adjustment. In the event that any Lender shall have determined
that the adoption, effectiveness, phase-in or applicability after the Closing Date of any law, rule
or regulation (or any provision thereof) regarding capital adequacy, or any change therein or in
the interpretation or administration thereof by any Governmental Authority, central bank,
accounting authority or comparable agency charged with the interpretation or administration
thereof, or compliance by any Lender (or its applicable lending office) with any guideline, request
or directive regarding capital adequacy (whether or not having the force of law) of any such
Governmental Authority, central bank, accounting authority or comparable

 

 

agency, has or would have the effect of reducing the rate of return on the capital of such
Lender or any corporation controlling such Lender as a consequence of, or with reference to, such
Lender’s Loans or Revolving Commitments or participations therein or other obligations hereunder
with respect to the Loans to a level below that which such Lender or such controlling corporation
could have achieved but for such adoption, effectiveness, phase-in, applicability, change or
compliance (taking into consideration the policies of such Lender or such controlling corporation
with regard to capital adequacy), then from time to time, within five Business Days after receipt
by the Company from such Lender of the statement referred to in the next sentence, the Company
shall pay to such Lender such additional amount or amounts as will compensate such Lender or such
controlling corporation on an after-tax basis for such reduction. Such Lender shall deliver to the
Company (with a copy to the Administrative Agent) a written statement, setting forth in reasonable
detail the basis for calculating the additional amounts owed to such Lender under this Section
2.19(b), which statement shall be conclusive and binding upon all parties hereto absent manifest
error; provided, that no Lender shall be entitled to compensation under this Section
2.19(b) for amounts incurred or reductions suffered more than 270 days prior to the date of
delivery of such written statement.

     2.20. Taxes; Withholding, etc.

          (a) Payments to Be Free and Clear. All sums payable by the Company hereunder and
under the other Credit Documents shall (except to the extent required by law) be paid free and
clear of, and without any deduction or withholding on account of, any Tax (other than (i) a Tax on
the overall net income of any Lender, (ii) any Tax imposed as a result of a Lender’s or
Administrative Agent’s failure or inability to comply with the requirements of Section 1471 through
1474 of the Code and any regulations promulgated thereunder to establish an exemption from
withholding thereunder, or (iii) any Tax arising as a result of any Lender’s failure to comply with
the requirements of Section 2.19(c)) imposed, levied, collected, withheld or assessed by or within
the United States of America or any political subdivision in or of the United States of America or
any other jurisdiction from or to which a payment is made by or on behalf of the Company or by any
federation or organization of which the United States of America or any such jurisdiction is a
member at the time of payment.

          (b) Withholding of Taxes. If a Bluestem Credit Party or any other Person is required
by law to make any deduction or withholding on account of any such Tax from any sum paid or payable
by any Bluestem Credit Party in respect of any payment of principal, interest, fees or other
amounts paid or payable by the Company to the Administrative Agent or any Lender under any of the
Credit Documents: (i) the Company shall notify the Administrative Agent as soon as practicable of
any such requirement or any change in any such requirement as soon as the Company becomes aware of
it; (ii) the Company shall pay to the applicable Governmental Authority any such Tax before the
date on which penalties attach thereto, such payment to be made (if the liability to pay is imposed
on any Bluestem Credit Party) for its own account or (if that liability is imposed on the
Administrative Agent or such Lender, as the case may be) on behalf of and in the name of the
Administrative Agent or such Lender; (iii) the sum payable by any Bluestem Credit Party in respect
of which the relevant deduction, withholding or payment is required shall be increased to the
extent necessary to ensure that, after the making of that deduction, withholding or payment, the
Administrative Agent or such Lender, as the case may be, receives on the due date a net sum equal
to what it would have received had no such

 

 

deduction, withholding or payment been required or made; and (iv) within 30 days (or as soon
as practicable thereafter) after paying any sum from which it is required by law to make any
deduction or withholding, and within 30 days (or as soon as practicable thereafter) after the due
date of payment of any Tax which it is required by clause (ii) above to pay, the Company shall use
commercially reasonable efforts to deliver to the Administrative Agent evidence satisfactory to the
other affected parties of such deduction, withholding or payment and of the remittance thereof to
the relevant taxing or other authority; provided that, no such additional amount shall be
required to be paid to any Lender under clause (iii) above (and in the case of any payment required
under clause (ii) above, such payment shall be treated as a payment under the Credit Documents to
the Administrative Agent or Lender(s) as the case may be) except to the extent that (1) any change
after (x) the date hereof (in the case of each Lender listed on the signature pages hereof on the
Closing Date), (y) the effective date of the Assignment Agreement pursuant to which such Lender
became a Lender (in the case of each other Lender), or (z) the date any Lender designates a new
lending office (other than pursuant to Section 2.21 or otherwise at the request of a Credit Party)
in any such requirement for a deduction, withholding or payment as is mentioned therein shall
result in an increase in the rate of such deduction, withholding or payment from that in effect at
the date hereof or at the date of such Assignment Agreement, or at the date of such designation of
a new lending office, as the case may be, in respect of payments to such Lender; and (2) in the
case of a Lender’s designation of a new lending office, such Lender was otherwise entitled, at the
time of designation of a new lending office, to receive additional amounts under this Section
2.20(b).

          (c) Evidence of Exemption From U.S. Withholding Tax. Each Lender that is not a United
States Person (as such term is defined in Section 7701(a)(30) of the Internal Revenue Code) for
U.S. federal income tax purposes (a “Non US Lender”) shall deliver to the Administrative Agent for
transmission to the Company, on or prior to the Closing Date (in the case of each Lender listed on
the signature pages hereof on the Closing Date) or on or prior to the date of the Assignment
Agreement pursuant to which it becomes a Lender (in the case of each other Lender), and at such
other times as may be necessary in the determination of the Company or the Administrative Agent
(each in the reasonable exercise of its discretion), (i) two original copies of Internal Revenue
Service Form W 8BEN or W 8ECI (or any successor forms), properly completed and duly executed by
such Lender, and such other documentation required under the Internal Revenue Code and reasonably
requested by the Company to establish that such Lender is not subject to deduction or withholding
of United States federal income tax with respect to any payments to such Lender of principal,
interest, fees or other amounts payable under any of the Credit Documents, or (ii) if such Lender
is not a “bank” or other Person described in Section 881(c)(3) of the Internal Revenue Code and
cannot deliver Internal Revenue Service Form W 8ECI pursuant to clause (i) above, a Certificate
Regarding Non Bank Status together with two original copies of Internal Revenue Service Form W-8BEN
(or any successor form), properly completed and duly executed by such Lender, and such other
documentation required under the Internal Revenue Code and reasonably requested by the Company to
establish that such Lender is not subject to deduction or withholding of United States federal
income tax with respect to any payments to such Lender of interest payable under any of the Credit
Documents. Each Lender that is a United States Person (as such term is defined in Section
7701(a)(30) of the Internal Revenue Code) for U.S. federal income tax purposes (a “US Lender”)
shall deliver to the Administrative Agent for transmission to the Company, on or prior to the
Closing Date (in the case of each Lender listed on the signature pages hereof on the Closing

 

 

Date) or on or prior to the date of the Assignment Agreement pursuant to which it becomes a
Lender (in the case of each other Lender), and at such other times as may be necessary in the
determination of the Company or the Administrative Agent (each in the reasonable exercise of its
discretion), (i) two original copies of Internal Revenue Service Form W-9 (or any successor forms),
properly completed and duly executed by such Lender, and such other documentation required under
the Internal Revenue Code and reasonably requested by the Company to establish that such Lender is
exempt from United States backup withholding Tax with respect to any payments to such Lender of
principal, interest, fees or other amounts payable under any of the Credit Documents. Each Lender
required to deliver any forms, certificates or other evidence with respect to United States federal
income tax withholding matters pursuant to this Section 2.19(c) hereby agrees, from time to time
after the initial delivery by such Lender of such forms, certificates or other evidence, whenever a
lapse in time or change in circumstances renders such forms, certificates or other evidence
obsolete or inaccurate in any material respect, that such Lender shall promptly deliver to the
Administrative Agent for transmission to the Company two new original copies of Internal Revenue
Service Form W-9, W 8BEN or W 8ECI, or a Certificate Regarding Non Bank Status and two original
copies of Internal Revenue Service Form W 8BEN (or any successor form), as the case may be,
properly completed and duly executed by such Lender, and such other documentation required under
the Internal Revenue Code and reasonably requested by the Company to confirm or establish that such
Lender is not subject to deduction or withholding of United States federal income tax with respect
to payments to such Lender under the Credit Documents, or notify the Administrative Agent and the
Company of its inability to deliver any such forms, certificates or other evidence. The Company
shall not be required to pay any additional amount to any Non US Lender under Section 2.19(b)(iii)
if such Lender shall have failed (1) to deliver the applicable forms, certificates or other
evidence referred to in this Section 2.19(c), or (2) to notify the Administrative Agent and the
Company of its inability to deliver any such forms, certificates or other evidence, as the case may
be; provided that, if such Lender shall have satisfied the requirements of this Section
2.19(c) on the Closing Date or on the date of the Assignment Agreement pursuant to which it became
a Lender, as applicable, nothing in this last sentence of Section 2.19(c) shall relieve the Company
of its obligation to pay any additional amounts pursuant to this Section 2.19 in the event that, as
a result of any change in any applicable law, treaty or governmental rule, regulation or order, or
any change in the interpretation, administration or application thereof, such Lender is no longer
properly entitled to deliver forms, certificates or other evidence at a subsequent date
establishing the fact that such Lender is not subject to withholding as described herein.

     2.21. Obligation to Mitigate.

          (a) Each Lender agrees that, as promptly as practicable after the officer of such Lender
responsible for administering its Loans becomes aware of the occurrence of an event or the
existence of a condition that would cause such Lender to become an Affected Lender or that would
entitle such Lender to receive payments under Section 2.18, 2.19 or 2.20, it will, to the extent
not inconsistent with the internal policies of such Lender and any applicable legal or regulatory
restrictions, use reasonable efforts to (a) make, issue, fund or maintain its Credit Extensions,
including any Affected Loans, through another office of such Lender, or (b) take such other
measures as such Lender may deem reasonable, if as a result thereof the circumstances which would
cause such Lender to be an Affected Lender would cease to exist or the additional amounts which
would otherwise be required to be paid to such Lender pursuant to

 

 

Section 2.18, 2.19 or 2.20 would be materially reduced and if, as determined by such Lender in
its sole discretion, the making, issuing, funding or maintaining of such Revolving Commitments or
Loans through such other office or in accordance with such other measures, as the case may be,
would not otherwise adversely affect such Revolving Commitments or Loans or the interests of such
Lender; provided, such Lender will not be obligated to utilize such other office pursuant
to this Section 2.21 unless the Company agrees to pay all reasonable, documented, out-of-pocket
incremental expenses incurred by such Lender as a result of utilizing such other office as
described above. A certificate as to the amount of any such expenses payable by the Company
pursuant to this Section 2.21 (setting forth in reasonable detail the basis for requesting such
amount) submitted by such Lender to the Company (with a copy to the Administrative Agent) shall be
conclusive absent manifest error.

          (b) If the Administrative Agent or any Lender determines, in its sole discretion, that it has
received a refund of any Taxes as to which it has been indemnified by the Company or with respect
to which the Company has paid additional amounts pursuant to Section 2.20, it shall pay to the
Company an amount equal to such refund, as determined by the Administrative Agent or the Lender in
its sole discretion (but only to the extent of indemnity payments made, or additional amounts paid,
by the Company under Section 2.20 with respect to the Taxes giving rise to such refund), net of all
out-of-pocket expenses incurred by the Administrative Agent or such Lender, as the case may be, and
without interest (other than any interest paid by the relevant Governmental Authority with respect
to such refund), provided that the Company, upon the request of the Administrative Agent or
such Lender, agrees to repay the amount paid over to the Company (plus any penalties, interest or
other charges imposed by the relevant governmental authority) to the Administrative Agent or such
Lender in the event the Administrative Agent or such Lender is required to repay such refund to
such governmental authority. This subsection shall not be construed to require the Administrative
Agent or such Lender to make available its tax returns (or any other information relating to its
taxes that it deems confidential) to the Company or any other Person.

     2.22. Defaulting Lenders. Anything contained herein to the contrary notwithstanding, in the
event that any Lender violates any provision of Section 8.5(c), or defaults (in each case, a
“Defaulting Lender”) in its obligation to fund (a “Funding Default”) any Loan (in each case, a
“Defaulted Loan”), then (a) during any Default Period with respect to such Defaulting Lender, such
Defaulting Lender shall be deemed not to be a “Lender” for purposes of voting on any matters
(including the granting of any consents or waivers) with respect to any of the Credit Documents
(other than with respect to Section 9.5(b)); (b) to the extent permitted by applicable law, until
such time as the Default Excess, if any, with respect to such Defaulting Lender shall have been
reduced to zero, (i) any voluntary prepayment of the Loans shall, if the Administrative Agent so
directs at the time of making such voluntary prepayment, be applied to the Loans of other Lenders
as if such Defaulting Lender had no Loans outstanding and the Revolving Exposure and/or Term Loan
Exposure of such Defaulting Lender were zero, and (ii) any mandatory prepayment of the Loans shall,
if the Administrative Agent so directs at the time of making such mandatory prepayment, be applied
to the Loans of other Lenders (but not to the Loans of such Defaulting Lender) as if such
Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender, it being understood and
agreed that the Company shall be entitled to retain any portion of any mandatory prepayment of the
Loans that is not paid to such Defaulting Lender solely as a result of the operation of the
provisions of this clause (b); (c) such Defaulting

 

 

Lender’s Revolving Commitment and outstanding Tranche A Revolving Loans shall be excluded for
purposes of calculating the Revolving Commitment fee payable to the Tranche A Lenders in respect of
any day during any Default Period with respect to such Defaulting Lender, and such Defaulting
Lender shall not be entitled to receive any Revolving Commitment fee pursuant to Section 2.9 with
respect to such Defaulting Lender’s Revolving Commitment in respect of any Default Period with
respect to such Defaulting Lender; (d) for purposes of Section 2.10(c) only, the applicable Total
Utilization of Revolving Commitments as at any date of determination shall be calculated as if such
Defaulting Lender had funded all Defaulted Loans of such Defaulting Lender and (e) any amount
payable to such Defaulting Lender under any Credit Document (whether on account of principal,
interest, fees or otherwise), in lieu of being distributed to such Defaulting Lender, shall be
retained by the Administrative Agent and applied in the following order of priority: (i) first, to
the funding of any Loan in respect of which such Defaulting Lender has failed to fund its portion
thereof as required by this Agreement and (ii) second, held as cash collateral for future funding
obligations of the Defaulting Lender under this Agreement. No Revolving Commitment or Term Loan
Commitment of any Lender shall be increased or otherwise affected, and, except as otherwise
expressly provided in this Section 2.22, performance by the Company of its obligations hereunder
and the other Credit Documents shall not be excused or otherwise modified as a result of any
Funding Default or the operation of this Section 2.22. The rights and remedies against a
Defaulting Lender under this Section 2.22 are in addition to other rights and remedies which the
Company may have against such Defaulting Lender with respect to any Funding Default and which the
Administrative Agent or any Lender may have against such Defaulting Lender with respect to any
Funding Default or violation of Section 8.5(c).

     2.23. Removal or Replacement of a Lender. Anything contained herein to the contrary
notwithstanding, in the event that: (a) (i) any Lender (an “Increased-Cost Lender”) shall give
notice to the Company that such Lender is an Affected Lender or that such Lender is entitled to
receive payments under Section 2.18, 2.19 or 2.20, (ii) the circumstances which have caused such
Lender to be an Affected Lender or which entitle such Lender to receive such payments shall remain
in effect, and (iii) such Lender shall fail to withdraw such notice within five Business Days after
the Company’s request for such withdrawal; or (b) (i) any Lender shall become a Defaulting Lender,
(ii) the Default Period for such Defaulting Lender shall remain in effect, and (iii) such
Defaulting Lender shall fail to cure the default as a result of which it has become a Defaulting
Lender within five Business Days after the Company’s request that it cure such default; or (c) in
connection with any proposed amendment, modification, termination, waiver or consent with respect
to any of the provisions hereof as contemplated by Section 9.5(b), the consent of the
Administrative Agent and the Requisite Lenders shall have been obtained but the consent of one or
more of such other Lenders (each a “Non-Consenting Lender”) whose consent is required shall not
have been obtained; then, with respect to each such Increased-Cost Lender, Defaulting Lender or
Non-Consenting Lender (the “Terminated Lender”), the Administrative Agent (y) shall, if requested
by the Company in writing, which notice shall identify a Replacement Lender (as defined below) and
(z) may (in the case of an Increased-Cost Lender, only after receiving written request from the
Company to remove such Increased-Cost Lender), in each case, by giving written notice to the
Company and any Terminated Lender of the Company’s or the Administrative Agent’s election to do so,
instruct such Terminated Lender (and such Terminated Lender hereby irrevocably agrees) to assign
its outstanding Loans and its Revolving Commitments, if any, in full to one or more Eligible
Assignees designated by the

 

 

Company or the Administrative Agent, as the case may be (each a “Replacement Lender”) in
accordance with, and subject to the provisions of, Section 9.6 and Terminated Lender shall pay any
fees payable thereunder in connection with such assignment; provided, that (1) on the date
of such assignment, the Replacement Lender shall pay to Terminated Lender an amount equal to the
principal of, and all accrued interest on, all outstanding Loans of the Terminated Lender; (2) on
the date of such assignment, the Company shall pay any amounts payable to such Terminated Lender
(other than a Defaulting Lender) pursuant to Section 2.10 or 2.20; and (3) in the event such
Terminated Lender is a Non-Consenting Lender, each Replacement Lender shall consent, at the time of
such assignment, to each matter in respect of which such Terminated Lender was a Non-Consenting
Lender. Upon the prepayment of all amounts owing to any Terminated Lender and the termination of
such Terminated Lender’s Revolving Commitments, if any, such Terminated Lender shall no longer
constitute a “Lender” for purposes hereof; provided, any rights of such Terminated Lender
to indemnification hereunder shall survive as to such Terminated Lender.

     2.24. Determination of Borrowing Base; Eligible Underlying Receivables.

          (a) Determination of Borrowing Base.

          (i) The Borrowing Base at any time shall be determined by reference to the most recent
Daily Settlement and Servicing Report delivered to the Administrative Agent with such
reasonable adjustments as the Administrative Agent may deem appropriate (subject to the
following clauses (ii) and (iii)) to assure that the Borrowing Base is calculated in
accordance with the terms of this Agreement.

          (ii) Subject to the relevant terms and provisions set forth in this Agreement,
including, without limitation, Section 9.5, the Administrative Agent (A) shall be entitled
at all times to or (B) upon a request from the Company, may, in each case, with the consent
of the Class Requisite Lenders of each Class, make reasonable changes to the standards of
eligibility under this Agreement (including with respect to the Eligibility Criteria), upon
10 Business Days’ written notice to the Company setting forth such changes, which period may
be extended by an additional five Business Days at the sole discretion of the Administrative
Agent; provided, that the Administrative Agent may make immaterial changes to the
standards of eligibility under this Section 2.24(a)(ii) (including with respect to the
Eligibility Criteria) without the consent of any Lender.

          (iii) Subject to the relevant terms and provisions set forth in this Agreement,
including without limitation, Section 9.5, the Administrative Agent, acting on its own or
upon instructions from the Requisite Lenders, shall be entitled at all times to make
reasonable changes to the Reserves upon delivery of written notice to the Company setting
forth such changes.

          (iv) Notwithstanding any provision herein to the contrary, the Administrative Agent
shall at all times when one or more Interest Rate Agreements is in effect impose a Reserve
equal to $5,000,000, plus the aggregate accrued and unpaid fixed rate payments under such
Interest Rate Agreements.

 

 

          (b) Designation of Eligible Underlying Receivables.

          (i) The Company may from time to time elect, in its sole discretion, to designate any
Underlying Receivables, which have not been previously designated as such, but at the time
of such election meet the Eligibility Criteria, as Eligible Underlying Receivables, and each
such Underlying Receivable shall be deemed an Eligible Underlying Receivable as of such date
of designation by the Company (the “Final Date of Determination”).

          (ii) Subject to clause (iii) below, an Eligible Underlying Receivable shall be deemed
to be an Eligible Underlying Receivable at all times following the Final Date of
Determination applicable thereto, notwithstanding a change to the Eligibility Criteria
following the applicable Final Date of Determination. Notwithstanding the foregoing, in the
event that, following such Final Date of Determination, any Eligible Underlying Receivable
shall fail to satisfy one or more of the Eligibility Criteria that were in effect on the
applicable Final Date of Determination, solely for purposes of calculating the Borrowing
Base, such Underlying Receivable shall cease to be an Eligible Underlying Receivable for so
long as such Underlying Receivable fails to satisfy such criteria for purposes of this
Agreement.

          (iii) Upon receipt of notice of any change in the Eligibility Criteria provided in
accordance with Section 2.24(a), Company may elect (A) to re-evaluate all or any of the
Eligible Underlying Receivables against the revised Eligibility Criteria, and (B) to
redesignate all or any such Underlying Receivables that do not meet such criteria, so that
such Underlying Receivables are no longer deemed to be Eligible Underlying Receivables.

          (c) Concentration Limits. Any Underlying Receivables that otherwise satisfy the
Eligibility Criteria shall not become or, if applicable, shall cease to be Eligible Underlying
Receivables if:

          (i) the inclusion of such Underlying Receivables in the Eligible Underlying Receivables
would result in the aggregate principal amount of Eligible Underlying Receivables originated
from the “Gettington” brand program to constitute more than 10% of the aggregate principal
amount of all Eligible Underlying Receivables;

          (ii) the inclusion of such Underlying Receivables in the Eligible Underlying
Receivables would result in more than 50% of the aggregate principal amount of the Eligible
Underlying Receivables to be payable by Receivables Obligors who have a Credit Score of 600
or less;

          (iii) the inclusion of such Underlying Receivables in the Eligible Underlying
Receivables would result in more than 37.5% of the aggregate principal amount of the
Eligible Underlying Receivables to be payable by Receivables Obligors who have a Credit
Score of 575 or less;

          (iv) the inclusion of such Underlying Receivables in the Eligible Underlying
Receivables would result in more than 22.5% of the aggregate principal

 

 

amount of the Eligible Underlying Receivables to be payable by Receivables Obligors who
have a Credit Score of 550 or less;

          (v) the inclusion of such Underlying Receivables in the Eligible Underlying Receivables
would result in more than 25% of all Eligible Underlying Receivables arising from
Receivables Accounts having a credit limit greater than $1,500; or

          (vi) the inclusion of such Underlying Receivables in the Eligible Underlying
Receivables would result in deferred balances constituting 25% or more of the aggregate
principal amount of all Eligible Underlying Receivables.

     2.25. Subordination.

          (a) Subordination of Subordinate Debt to Senior Debt. The Company covenants and
agrees, and the Subordinate Creditors by their respective acceptances of the Subordinate Debt
(whether on the date hereof or upon transfer or assignment) likewise covenant and agree, that the
payment of any and all of the Subordinate Debt and the rights of the Subordinate Creditors in and
to the Collateral shall be subordinate and subject in right of payment, to the extent and in the
manner set forth in the Collateral Documents and herein, including in Section 2.13 hereof, to the
prior payment in full in cash of the Senior Debt (or provision for such payment shall be made in a
manner satisfactory to the Tranche A Lenders in their sole discretion). Each holder of Senior
Debt, whether now outstanding or hereafter created, incurred, assumed or guaranteed, shall be
deemed to have acquired Senior Debt in reliance upon the provisions contained in this Agreement.

          (b) Payment Subordination. The Company shall not make, and the Subordinate Creditors
shall not receive, any payment of principal, interest or any other amounts due with respect to any
Subordinate Debt until all principal, interest (including default interest and post-petition
interest whether or not allowed in any bankruptcy or insolvency proceeding) and other amounts
payable to the Senior Debt shall have been indefeasibly paid in full in cash (or provision for such
payment shall be made in a manner satisfactory to the Tranche A Lenders in their sole discretion),
except that the Company may pay, and the Subordinate Creditors may receive payments of principal,
interest and/or other amount due and payable pursuant to (i) Sections 2.6, 2.8, 2.9, 2.10, 2.11,
2.15(b), Section 2.15(c) and 2.22, in each case, subject to the provisions of Section 2.15(b), as
applicable, for so long as no Event of Default shall have occurred and be continuing, and (ii)
otherwise, Section 2.13, Section 2.22 and, subject to Section 2.13, Section 2.8.

          (c) Restriction on Action by the Subordinate Creditors. Without limiting the rights
of the Subordinate Creditors set forth in Section 7.2, until the Senior Debt is indefeasibly paid
in full in cash, the Subordinate Creditors shall not, without the prior written consent of the
Class Requisite Lenders with respect to the Revolving Exposure (in their sole and absolute
discretion), take any Collection Action with respect to the Subordinate Debt; provided,
that the Subordinate Creditors may (i) file proofs of claim in any insolvency or bankruptcy
proceeding, and (ii) file any necessary responsive or defensive pleadings in opposition of any
motion or other pleadings made by any Person objecting to or otherwise seeking the disallowance of
the claims

 

 

of the Subordinate Creditors on the Collateral, subject to the limitations contained in this
Section 2.25 and only if consistent with the terms and the limitations on the Subordinate Creditors
imposed under this Section 2.25. Notwithstanding the foregoing, the Subordinate Creditors may
accelerate the Subordinate Debt upon the acceleration of the Senior Debt (but not foreclose on any
Collateral); provided that, if such acceleration of the Senior Debt is rescinded, then the
acceleration by the Subordinate Creditors shall likewise be rescinded. For the avoidance of doubt,
the Lenders acknowledge that upon the occurrence of any Event of Default described in Sections
7.1(g), 7.1(h) or 7.1(j), the Subordinate Debt will automatically become immediately due and
payable without any action by the Subordinate Creditors.

          (d) Incorrect Payments. If any payment or distribution on account of the Subordinate
Debt not permitted to be made by the Company or received by the Subordinate Creditors under this
Agreement or any other Credit Document is received by the Subordinate Creditors before all Senior
Debt is indefeasibly paid in full in cash, such payment or distribution shall not be commingled
with any asset of the Subordinate Creditors, shall be held in trust by the Subordinate Creditors
for the benefit of the Senior Creditors and shall be promptly paid over to the Administrative Agent
for the benefit of the Senior Creditors.

          (e) Sale, Assignment, Transfer, Etc. The subordination effected herein shall survive
any sale, assignment, pledge, disposition or other transfer of all or any portion of the
Subordinate Debt, and the terms of this Agreement shall be binding upon the successors and assigns
of the Subordinate Creditors.

          (f) No Contest. Each Subordinate Creditor agrees that it will not at any time contest
the validity, perfection, priority or enforceability of the Senior Debt, and each Senior Creditor
agrees that it will not at any time contest the validity, perfection, priority or enforceability of
the Subordinate Debt.

          (g) Plan of Reorganization. In the case that the Company becomes a debtor under the
Bankruptcy Code, the Subordinate Creditors may vote on, file any responsive or defensive pleadings
in opposition of, or file objections in connection with, any plan of reorganization proposed in the
Company’s bankruptcy proceeding; provided, that the Subordinate Creditors will not vote
against (and will be deemed to have voted for), file responsive or defensive pleadings in
opposition of, or file objections in connection with, any plan of reorganization which is proposed
in the Company’s bankruptcy proceeding and is proposed, accepted, or supported, by the Class
Requisite Lenders with respect to the Tranche A Revolving Loans unless such plan of reorganization
would have a material adverse impact on the rights of the Subordinate Creditors (including, without
limitation, the situation in which the Subordinate Creditors would be more favorably treated in a
liquidation than under such plan of reorganization).

SECTION 3. CONDITIONS PRECEDENT

     3.1. Closing Date. The obligation of each Lender to make a Credit Extension on the Closing
Date is subject to the satisfaction, or waiver in accordance with Section 9.5, of the following
conditions on or before the Closing Date:

 

 

          (a) Credit Documents. The Administrative Agent shall have received copies of each
Credit Document to be executed on the Closing Date originally executed and delivered by each
applicable Credit Party.

          (b) Organizational Documents; Incumbency. The Administrative Agent shall have
received copies of (i) each Organizational Document executed and delivered by the Company and
Bluestem, as applicable, and, to the extent applicable, certified as of a recent date by the
appropriate governmental official, each dated the Closing Date or a recent date prior thereto; (ii)
signature and incumbency certificates of the officers of such Person executing the Credit Documents
to which it is a party; (iii) resolutions of the board of directors, board of managers or similar
governing body of the Company and Bluestem approving and authorizing the execution, delivery and
performance of this Agreement and the other Credit Documents and the Related Agreements, to which
it is a party or by which it or its assets may be bound as of the Closing Date, certified as of the
Closing Date by its secretary or an assistant secretary as being in full force and effect without
modification or amendment; (iv) a good standing certificate from the applicable Governmental
Authority of the Company’s and Bluestem’ jurisdiction of incorporation, organization or formation
and in each jurisdiction in which it is qualified as a foreign corporation or other entity to do
business, each dated a recent date prior to the Closing Date; and (v) such other documents as the
Administrative Agent may reasonably request.

          (c) Organizational and Capital Structure. The organizational structure and capital
structure of Bluestem and its Subsidiaries, shall be as set forth on Schedule 3.1(c).

          (d) Consummation of Transactions Contemplated by Related Agreements. The
Administrative Agent shall have received a fully executed or conformed copy of each Related
Agreement and any documents executed in connection therewith. Each Related Agreement shall be in
full force and effect, shall include terms and provisions reasonably satisfactory to the
Administrative Agent and no provision thereof shall have been modified or waived in any respect
determined by the Administrative Agent to be material, in each case without the consent of the
Administrative Agent.

          (e) Existing Indebtedness. On the Closing Date, Bluestem and its Subsidiaries shall
have (i) caused the Existing Indebtedness to be repaid in full, (ii) terminated any commitments to
lend or make other extensions of credit in respect of the Existing Indebtedness, and (iii)
delivered to the Administrative Agent all documents or instruments necessary to release all Liens
securing Existing Indebtedness or other obligations of Bluestem and its Subsidiaries thereunder
being repaid on the Closing Date.

          (f) Transaction Costs. On or prior to the Closing Date, the Company shall have
delivered to the Administrative Agent the Company’s reasonable best estimate of the Transaction
Costs (other than fees payable to any Agent).

          (g) Governmental Authorizations and Consents. Each Credit Party shall have obtained
all Governmental Authorizations and all consents of other Persons, in each case that are necessary
or advisable in connection with the transactions contemplated by the Credit Documents and the
Related Agreements and each of the foregoing shall be in full force and effect and in form and
substance reasonably satisfactory to the Administrative Agent. All

 

 

applicable waiting periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose adverse conditions on the
transactions contemplated by the Credit Documents or the Related Agreements or the financing
thereof and no action, request for stay, petition for review or rehearing, reconsideration, or
appeal with respect to any of the foregoing shall be pending, and the time for any applicable
agency to take action to set aside its consent on its own motion shall have expired.

          (h) Collateral. In order to create in favor of the Collateral Agent, for the benefit
of Secured Parties, a valid, perfected First Priority Lien in the Collateral and in the Capital
Stock of the Company, the Collateral Agent shall have received:

          (i) evidence satisfactory to the Collateral Agent of the compliance by each of Company
and Bluestem of their obligations under the Security Agreement and the other Collateral
Documents and the compliance by Bluestem with its obligations under the Equity Pledge
Agreement (including, without limitation, their obligations to authorize or execute, as the
case may be, and deliver UCC financing statements, originals of securities, instruments and
chattel paper and any agreements governing deposit accounts as provided therein);

          (ii) the results of a recent search of all effective UCC financing statements (or
equivalent filings) made with respect to any personal or mixed property of the Company,
Bluestem, WebBank and MetaBank, together with copies of all such filings disclosed by such
search;

          (iii) UCC termination statements (or similar documents) duly executed by all applicable
Persons for filing in all applicable jurisdictions as may be necessary to terminate any
effective UCC financing statements (or equivalent filings) disclosed in such search with
respect to the Collateral; and

          (iv) evidence that the Company, Bluestem, WebBank and MetaBank shall have taken or
caused to be taken any other action, executed and delivered or caused to be executed and
delivered any other agreement, document and instrument and made or caused to be made any
other filing and recording (other than as set forth herein) reasonably required by the
Collateral Agent.

          (i) Financial Statements; Three-Year Forecast. The Administrative Agent shall have
received from Bluestem (i) the Historical Financial Statements, (ii) Servicing Reports for the most
recent calendar month completed five Business Days after the last day of the preceding calendar
month, which does not disclose a material adverse change, as determined by the Administrative Agent
in its sole and absolute discretion, from the forecasted results for such month contained in the
Three-Year Forecast, (iii) a pro-forma consolidated balance sheet dated as of July 2, 2010,
prepared in accordance with GAAP and reflecting the consummation of the transactions contemplated
by the Credit Documents and the Related Agreements and (iv) a current Daily Settlement and
Servicing Report (as defined in, and calculated under, the Prior Credit Agreement and the related
servicing agreement) for each Business Day from August 2, 2010 to the Business Day prior to the
Closing Date, which report does not disclose a material adverse change, as determined by the
Administrative Agent in its sole and absolute discretion,

 

 

from the projected results for the corresponding period in the Three-Year Forecast; and (v)
the Three-Year Forecast.

          (j) Evidence of Insurance. The Collateral Agent shall have received a certificate
from Bluestem’ insurance broker, or other evidence satisfactory to it that all insurance required
to be maintained under the Servicing Agreement is in full force and effect, and the Administrative
Agent shall have completed its review of the insurance coverage for Bluestem and the Company and
the results of such review shall be satisfactory to each Lender.

          (k) Opinions of Counsel to Credit Parties. The Administrative Agent and its
respective counsel shall have received originally executed copies of the favorable written opinions
of Skadden, Arps, Slate, Meagher & Flom LLP, counsel for Bluestem and the Company, Richards, Layton
& Finger, P.A., special counsel for Bluestem and the Company, and as to such matters as the
Administrative Agent may reasonably request, dated as of the Closing Date and otherwise in form and
substance reasonably satisfactory to the Administrative Agent (and Bluestem and the Company hereby
instruct counsel for Bluestem and the Company to deliver such opinions to the Agents).

          (l) Fees. The Company shall have paid to the Syndication Agent, the Administrative
Agent and the Documentation Agent, the fees payable on the Closing Date referred to in Section
2.9(c).

          (m) Solvency Certificate. On the Closing Date, the Administrative Agent shall have
received Solvency Certificates from the Company and Bluestem dated as of the Closing Date and
addressed to the Administrative Agent and Lenders, substantially in the form of Exhibit E-2,
attesting that before and after giving effect to the consummation of the transactions contemplated
by the Credit Documents and the Related Agreements, including the payment in full of Existing
Indebtedness, each of the Company and Bluestem, as the case may be, is Solvent.

          (n) Closing Date Certificate. Each of Bluestem and the Company shall have delivered
to the Administrative Agent an originally executed Closing Date Certificate, together with all
attachments thereto.

          (o) No Litigation. There shall not exist any action, suit, investigation, litigation
or proceeding or other legal or regulatory developments, pending or threatened in any court or
before any arbitrator or Governmental Authority that, in the reasonable opinion of the
Administrative Agent, singly or in the aggregate, materially impairs the transactions contemplated
by Related Agreements, the payment in full of Existing Indebtedness, or any of the other
transactions contemplated by the Credit Documents, or that could have a Material Adverse Effect.

          (p) No Closing Date Material Adverse Change. A Closing Date Material Adverse Change
shall not have occurred.

          (q) No New Information. None of the Lenders shall have become aware, since January
29, 2010, of any new information or other matters not previously disclosed to such Lender relating
to the Collateral, the Company, Bluestem or its Subsidiaries or the transactions contemplated
herein which the Administrative Agent, in its reasonable judgment, deems

 

 

inconsistent in a material and adverse manner with the information or other matters previously
disclosed to the Lenders relating to the Collateral, the Company, Bluestem or its Subsidiaries.

          (r) Receivables Account Owner Matters.

          (i) Organizational Documents. Administrative Agent shall have received copies
of (i) resolutions of the board of directors, board of managers or similar governing body of
each of WebBank and MetaBank approving and authorizing the execution, delivery and
performance of the WebBank Receivables Purchase Agreements or the MetaBank Receivables
Purchase Agreements, as applicable, certified as of the date hereof by each of its secretary
or an assistant secretary as being in full force and effect without modification or
amendment, (ii) a good standing certificate from the applicable Governmental Authority of
each of WebBank’s and MetaBank’s jurisdiction of incorporation, organization or formation,
dated a recent date prior to the date hereof and (iii) such other documents as the
Administrative Agent may reasonably request; and

          (ii) Opinions. The Administrative Agent and its counsel shall have received
originally executed copies of the favorable written opinions of counsel for WebBank and
MetaBank in form and substance reasonably satisfactory to the Administrative Agent.

          (s) Service of Process. On the Closing Date, the Administrative Agent shall have
received evidence that each of Bluestem and the Company has appointed an agent in New York City for
the purpose of service of process in New York City and such agent shall agree in writing to give
the Administrative Agent notice of any resignation of such service agent or other termination of
the agency relationship.

          (t) Regulatory Compliance Changes. Bluestem shall have certified to the
Administrative Agent that each of the changes specified in Schedule 3.1(t) to the Receivables
Account Agreements, Bluestem underwriting policies and/or other applicable documents, as
applicable, shall have been made by Bluestem.

          (u) Amendments to Bluestem Organizational Documents. The Lenders shall have received
evidence reasonably satisfactory to them that the certificate of incorporation of Bluestem has been
amended such that the optional redemption of the preferred stock of Bluestem contemplated
thereunder may not occur prior to February 28, 2014.

          (v) Borrowing Base Confirmation. In connection with the initial Credit Extension
requested by the Company, the Administrative Agent shall have received evidence satisfactory to it
that (i) there is sufficient Revolving Availability with respect to any Tranche A Revolving Loans
that are part of such Credit Extension and (ii) such Credit Extension will not result in a Tranche
B Borrowing Base Deficiency.

     Each Lender, by delivering its signature page to this Agreement and funding a Loan on the
Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved, each
Credit Document and each other document required to be approved by any Agent, Requisite Lenders or
Lenders, as applicable on the Closing Date.

 

 

     3.2. Conditions to Each Credit Extension.

          (a) Conditions Precedent. The obligation of each Lender to make any Loan, on any
Credit Date, including the Closing Date, are subject to the satisfaction, or waiver in accordance
with Section 9.5, of the following conditions precedent:

          (i) the Administrative Agent shall have received a fully executed and delivered Funding
Notice two Business Days prior to such Credit Date, evidencing sufficient Revolving
Availability with respect to the requested Tranche A Revolving Loans;

          (ii) after making the Credit Extensions requested on such Credit Date, the Total
Utilization of Revolving Commitments as of such Credit Date shall not exceed the lesser of
(A) the Revolving Commitments then in effect and (B) the Borrowing Base multiplied
by the Tranche A Advance Rate;

          (iii) as of such Credit Date, the representations and warranties made by each of the
Credit Parties contained herein and in the other Credit Documents shall be true and correct
in all material respects on and as of that Credit Date to the same extent as though made on
and as of that date, except to the extent such representations and warranties specifically
relate to an earlier date, in which case such representations and warranties shall have been
true and correct in all material respects on and as of such earlier date;

          (iv) as of such Credit Date, after giving effect to such Loan, no event shall have
occurred and be continuing or would result from the consummation of the applicable Credit
Extension that would constitute an Event of Default or a Default;

          (v) as of such Credit Date, after giving effect to such Loan, the amount on deposit in
the Spread Account shall at least equal the Required Spread Account Amount;

          (vi) as of the Credit Date, any and all Contribution Amounts with respect to Eligible
Underlying Receivables owned by the Company shall have been deposited in the Finance Charge
Collections Account;

          (vii) the Administrative Agent shall have received the Daily Settlement and Servicing
Report for the Business Day prior to the Credit Date which shall be delivered on a pro forma
basis for the Credit Date on the Closing Date; and

          (viii) the Servicing Agreement shall not have been terminated.

The Administrative Agent shall be entitled, but not obligated to, request and receive, prior to the
making of any Credit Extension, additional information reasonably satisfactory to the requesting
party confirming the satisfaction of any of the foregoing if, in the good faith judgment of the
Administrative Agent such request is warranted under the circumstances.

 

 

          (b) Funding Notices. Any Funding Notice shall be executed by an Authorized Officer of
the Company delivered to the Administrative Agent. In lieu of delivering a Funding Notice, the
Company may give the Administrative Agent telephonic notice by the required time of any proposed
borrowing; provided each such notice shall be promptly confirmed in writing by delivery of
the applicable Funding Notice to the Administrative Agent on or before the applicable Credit Date.
Neither the Administrative Agent nor any Lender shall incur any liability to the Company in acting
upon any telephonic notice referred to above that the Administrative Agent believes in good faith
to have been given by a duly Authorized Officer of the Company.

SECTION 4. REPRESENTATIONS AND WARRANTIES

     In order to induce Agents and Lenders to enter into this Agreement and to make each Credit
Extension to be made thereby, the Company represents and warrants to each Agent and Lender, on the
Closing Date and on each Credit Date, 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, that
the following statements are true and correct (it being understood and agreed that the
representations and warranties made on the Closing Date are deemed to be made concurrently with the
consummation of the transactions contemplated by Related Agreements):

     4.1. Organization; Requisite Power and Authority; Qualification; Other Names. The Company (a)
is duly organized or formed, validly existing and in good standing under the laws of Delaware, (b)
has all requisite power and authority to own and operate its properties, to carry on its business
as now conducted and as proposed to be conducted, to enter into the Credit Documents and the
Related Agreements to which it is a party, and to carry out the transactions contemplated thereby
and fulfill its Obligations thereunder, (c) is qualified to do business and in good standing in
every jurisdiction where its assets are located and wherever necessary to carry out its business
and operations, except in jurisdictions where the failure to be so qualified or in good standing
has not had, and could not be reasonably expected to have, a Material Adverse Effect. The Company
does not operate or do business under any assumed, trade or fictitious name. The Company has no
Subsidiaries.

     4.2. Capital Stock and Ownership. The Capital Stock of the Company has been duly authorized
and validly issued and is fully paid and non-assessable. There is no existing option, warrant,
call, right, commitment or other agreement to which the Company is a party requiring, and there is
no Capital Stock of the Company outstanding which upon conversion or exchange would require, the
issuance by the Company of Capital Stock of the Company or other Securities convertible into,
exchangeable for or evidencing the right to subscribe for or purchase, Capital Stock of the
Company.

     4.3. Due Authorization. The execution, delivery and performance of the Credit Documents and
the Related Agreements to which the Company is a party have been duly authorized by all necessary
action on the part of the Company.

     4.4. No Conflict. The execution, delivery and performance by the Company of the Credit
Documents and the Related Agreements to which it is a party and the consummation of the
transactions contemplated by the Credit Documents and the Related Agreements do not and

 

 

will not (a) (i) violate any provision of any law or any governmental rule or regulation
applicable to the Company in any material respect, (ii) violate any of the Organizational Documents
of the Company, or (iii) violate any order, judgment or decree of any court or other agency of
government binding on the Company in any material respect; (b) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation
of the Company, except as could not reasonably be expected to result in a Material Adverse Effect;
(c) result in or require the creation or imposition of any Lien upon any of the properties or
assets of the Company (other than any Liens created under any of the Credit Documents in favor of
the Collateral Agent, on behalf of Secured Parties); or (d) require any approval of stockholders,
members or partners or any approval or consent of any Person under any Contractual Obligation of
the Company, except for such approvals or consents which will be obtained on or before the Closing
Date and disclosed in writing to the Administrative Agent.

     4.5. Governmental Consents. The execution, delivery and performance by the Company of the
Credit Documents and the Related Agreements to which it is a party and the consummation of the
transactions contemplated by the Credit Documents and the Related Agreements do not and will not
require any registration with, consent or approval of, or notice to, or other action to, with or
by, any Governmental Authority, and except for (i) filings and recordings with respect to the
Collateral to be made, or otherwise delivered to the Collateral Agent for filing and/or
recordation, as of the Closing Date and (ii) registrations, approvals, consents, exemptions,
authorizations, deletions, notices and filings that have been duly obtained, taken, given or made
and are in full force and effect as set forth in Schedule 4.5 hereto.

     4.6. Binding Obligation. Each Credit Document and each Related Agreement to which the Company
is a party has been duly executed and delivered by the Company and is the legally valid and binding
obligation of the Company and is in full force and effect, enforceable against the Company in
accordance with its respective terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws relating to or limiting creditors’ rights generally or
by equitable principles relating to enforceability.

     4.7. Underlying Receivables. Each Underlying Receivable is a bona fide existing payment
obligation of a Receivables Obligor, owed to the Company without defenses, disputes, offsets,
counterclaims, or rights of return or cancellation. Each Underlying Receivable that is identified
by the Company as an Eligible Underlying Receivable in a Daily Settlement and Servicing Report is
not ineligible on the Final Date of Determination with respect to such Underlying Receivable by
virtue of one or more of the criteria set forth in the definition of Eligible Underlying
Receivable.

     4.8. No Material Adverse Effect. Since January 29, 2010, no event, circumstance or change has
occurred that has caused or evidences, either individually or in the aggregate, a Material Adverse
Effect.

     4.9. Adverse Proceedings, etc. There are no Adverse Proceedings, individually or in the
aggregate, that could reasonably be expected to have a Material Adverse Effect. The Company is not
(a) in violation of any applicable laws that, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect, or (b) subject to or in default with respect to any
final judgments, writs, injunctions, decrees, rules or regulations of any court

 

 

or any federal, state, municipal or other governmental department, commission, board, bureau,
agency or instrumentality, domestic or foreign, that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.

     4.10. Payment of Taxes. Except as otherwise permitted under Section 5.3, all tax returns and
reports of the Company required to be filed 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 the
Company and upon its properties, assets, income, businesses and franchises which are due and
payable have been paid when due and payable. The Company knows of no proposed tax assessment
against it which is not being actively contested by the Company 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.

     4.11. Title to Assets. The Company has good and valid title to all of its assets reflected in
the most recent financial statements delivered pursuant to Section 4.02 of the Servicing Agreement.
Except as permitted by this Agreement, all such properties and assets are free and clear of Liens,
other than Permitted Liens.

     4.12. No Indebtedness. The Company has no Indebtedness, other than Indebtedness incurred
under (or contemplated by) the terms of this Agreement or otherwise permitted hereunder.

     4.13. No Defaults. The Company is not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions contained in any of its Contractual
Obligations, and to the Company’s knowledge no condition exists which, with the giving of notice or
the lapse of time or both, could constitute such a default, except where, individually or in the
aggregate, the consequences, direct or indirect, of such default or defaults, if any, could not
reasonably be expected to have a Material Adverse Effect.

     4.14. Governmental Regulation. The Company is not subject to regulation under the Investment
Company Act of 1940 or under any other federal or state statute or regulation which may limit its
ability to incur Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable. The Company is not a “registered investment company” or a company “controlled” by a
“registered investment company” or a “principal underwriter” of a “registered investment company”
as such terms are defined in the Investment Company Act of 1940.

     4.15. Margin Stock. The Company is not engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or carrying any
Margin Stock. No part of the proceeds of the Loans made to the Company will be used directly or
indirectly to purchase or carry any such Margin Stock, for the purpose of reducing or retiring any
Indebtedness which was originally incurred to purchase or carry Margin Stock, to extend credit to
others for the purpose of purchasing or carrying any such Margin Stock or for any purpose that
violates, or is inconsistent with, the provisions of Regulation T, U or X of the Board of Governors
of the Federal Reserve System.

 

 

     4.16. Plans. No ERISA Event has occurred or is reasonably expected to occur that, when taken
together with all other such ERISA Events for which liability is reasonably expected to occur, in
the opinion of the Administrative Agent, could reasonably be expected to result in liability of the
Company and its ERISA Affiliates in excess of $2,500,000.

     4.17. Certain Fees. No broker’s or finder’s fee or commission will be payable by the Company
with respect hereto or any of the transactions contemplated hereby.

     4.18. Solvency and Fraudulent Conveyance. The Company is and, upon the incurrence of any
Credit Extension by the Company on any date on which this representation and warranty is made, will
be, Solvent. The Company is not transferring any Collateral with any intent to hinder, delay or
defraud any of its creditors. The Company shall not use the proceeds from the transactions
contemplated by this Agreement to give preference to any class of creditors. The Company has given
fair consideration and reasonably equivalent value in exchange for the sale of the Underlying
Receivables by Bluestem under the Receivables Purchase Agreement.

     4.19. Related Agreements.

          (a) Delivery. The Company has delivered to the Administrative Agent complete and
correct copies of (i) each Related Agreement and of all exhibits and schedules thereto as of the
date hereof, and (ii) any material amendment, restatement, supplement or other modification to or
waiver of each Related Agreement entered into after the date hereof.

          (b) Representations and Warranties. Except to the extent otherwise expressly set
forth herein or in the schedules hereto, and subject to the qualifications set forth therein, each
of the representations and warranties given by each of the Company and Bluestem in any Related
Agreement is true and correct in all material respects as of the Closing Date (or as of any earlier
date to which such representation and warranty specifically relates).

     4.20. Compliance with Statutes, etc. The Company is in compliance with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by, all Governmental
Authorities, in respect of the conduct of its business and the ownership of its property, except
such non-compliance that, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect.

     4.21. Disclosure. The representations and warranties of each of the Company and Bluestem
contained in any Credit Document or in any other documents, certificates or written statements
furnished to any Lender or Agent by or on behalf of Bluestem or any of its Subsidiaries for use in
connection with the transactions contemplated hereby taken as a whole, when furnished, do not
contain any untrue statement of a material fact or omit to state a material fact (known to Bluestem
or the Company, in the case of any document not furnished by either of them) necessary in order to
make the statements contained herein or therein not misleading in light of the circumstances in
which the same were made. Any projections and pro forma financial information contained in such
materials are based upon good faith estimates and assumptions by the preparer thereof believed to
be reasonable at the time made, it being recognized by Lenders that such projections as to future
events are not to be viewed as facts and

 

 

that actual results during the period or periods covered by any such projections may differ
from the projected results. There are no facts known (or which should upon the reasonable exercise
of diligence be known) to the Company (other than matters of a general economic nature) that,
individually or in the aggregate, could reasonably be expected to result in a Material Adverse
Effect and that have not been disclosed herein or in such other documents, certificates and
statements furnished to Lenders or Agents for use in connection with the transactions contemplated
hereby.

     4.22. Patriot Act. To the extent applicable, each of the Company and Bluestem is in
compliance, in all material respects, with the (a) Trading with the Enemy Act, as amended, and each
of the foreign assets control regulations of the United States Treasury Department (31 C.F.R.,
Subtitle B, Chapter V, as amended) and any other enabling legislation or executive order relating
thereto, and (b) Uniting and Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism (USA Patriot Act of 2001) (the “Act”). No part of the proceeds of
the Loans will be used, directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for political office, or anyone
else acting in an official capacity, in order to obtain, retain or direct business or obtain any
improper advantage, in violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.

SECTION 5. AFFIRMATIVE COVENANTS

     The Company covenants and agrees that so long as any Revolving Commitment is in effect and
until payment in full of all of the Obligations (other than contingent indemnification
obligations), the Company shall perform all covenants in this Section 5.

     5.1. Reports. Unless otherwise provided below, the Company shall deliver to the
Administrative Agent:

          (a) Collateral Reporting. On each Credit Date and at such other times as the
Administrative Agent shall request, the Company shall cause the Servicer to deliver the Daily
Settlement and Servicing Report. In the event any Funding Notice with respect to a Loan, or a
Daily Settlement and Servicing Report or other information required by this Section 5.1(a) is
delivered to the Administrative Agent by the Company electronically or otherwise without signature,
such request, or such Daily Settlement and Servicing Report or other information shall, upon such
delivery, be deemed to be signed and certified on behalf of the Company by an Authorized Officer
and constitute a representation to the Lenders as to the authenticity thereof. Subject to Section
2.24(a), (i) the Administrative Agent shall have the right to review and adjust any such
calculation of the Borrowing Base to reflect exclusions from Eligible Underlying Receivables,
Reserves, declines in value of Collateral or such other matters as are necessary to determine the
Borrowing Base, and (ii) the Administrative Agent shall have the continuing right to establish and
adjust Reserves in determining the Borrowing Base in such amounts, and with respect to such
matters, as it shall deem appropriate, including without limitation, Reserves with respect to
collection performance, with respect to amounts the Company is required to pay and has failed to
pay (such as taxes, freight and shipping charges, insurance premiums, amounts owing to landlords,
warehousemen, carriers, mechanics, materialmen, laborers or suppliers, or ad valorem, excise,
sales, income, or other taxes);

 

 

          (b) Notice of Default. Promptly upon any Authorized Officer of the Company obtaining
knowledge (i) of any condition or event that constitutes a Default or an Event of Default; (ii)
that any Person has given any notice to the Company or taken any other action with respect to any
event or condition set forth in Section 7.1(b); or (iii) of the occurrence of any event or change
that has caused or evidences, either individually or in the aggregate, a Material Adverse Effect, a
certificate of its Authorized Officers 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 Event of Default, Default, default, event or condition, and what action
the Company has taken, is taking and proposes to take with respect thereto;

          (c) Notice of Litigation. Promptly upon any Authorized Officer of the Company
obtaining knowledge of (i) the institution of, or non-frivolous threat of, any Adverse Proceeding
not previously disclosed in writing by the Company to the Administrative Agent, or (ii) any
material development in any Adverse Proceeding that, in the case of either clause (i) or (ii) if
adversely determined, could be reasonably expected to have a Material Adverse Effect, or 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, written notice thereof together with such other
information as may be reasonably available to the Company to enable Lenders and their counsel to
evaluate such matters;

          (d) ERISA. (i) Promptly upon becoming aware of the occurrence of or forthcoming
occurrence of any ERISA Event that could reasonably be expected to result in liability in excess of
$2,500,000, a written notice specifying the nature thereof, what action the Company or any of its
respective ERISA Affiliates has taken, is taking or proposes to take with respect thereto and, when
known, any action taken or threatened by the Internal Revenue Service, the Department of Labor or
the PBGC with respect thereto; and (ii) with reasonable promptness, copies of (1) each Schedule B
(Actuarial Information) to the annual report (Form 5500 Series) filed by the Company or any of its
respective ERISA Affiliates with the Internal Revenue Service with respect to each Pension Plan;
(2) all notices received by the Company or any of its respective ERISA Affiliates from a
Multiemployer Plan sponsor concerning an ERISA Event; and (3) copies of such other documents or
governmental reports or filings relating to any Employee Benefit Plan as the Administrative Agent
shall reasonably request;

          (e) Breach of Representations and Warranties. Promptly upon the Company becoming
aware of a material breach with respect to any representation or warranty made or deemed made by
the Company in any Credit Document or in any certificate at any time given by Company in writing
pursuant hereto or thereto or in connection herewith or therewith, a certificate of its Authorized
Officers specifying the nature and period of existence of such breach and what action the Company
has taken, is taking and proposes to take with respect thereto;

          (f) Information Regarding Collateral. The Company will furnish to the Collateral
Agent prior written notice of any change (i) in its corporate name, (ii) in its identity, corporate
structure or jurisdiction of organization, or (iii) in its Federal Taxpayer Identification Number.
The Company agrees not to effect or permit any change referred to in the preceding sentence unless
all filings have been made under the UCC or otherwise that are required in order for the Collateral
Agent to continue at all times following such change to have a valid, legal and

 

 

perfected security interest in all the Collateral. The Company also agrees promptly to notify
the Collateral Agent if any material portion of the Collateral is damaged or destroyed; and

          (g) Tax Returns. As soon as practicable and in any event within 30 days following the
filing thereof, the Company shall provide to the Administrative Agent copies of each federal income
tax return filed by or on behalf of Company.

          (h) Other Information. Such other information and data with respect to the Company
and Bluestem as from time to time may be reasonably requested by the Administrative Agent or the
Class Requisite Lenders of any Class.

     5.2. Existence. The Company shall 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.

     5.3. Payment of Taxes and Claims. The Company shall 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, no such Tax or claim need be paid if it is being contested
in good faith by appropriate proceedings promptly instituted and diligently conducted, so long as
(a) adequate reserve or other appropriate provision, as shall be required in conformity with GAAP
shall have been made therefor, and (b) in the case of a Tax or claim which has or may become a Lien
against any of the Collateral, such contested proceedings conclusively operate to stay the sale of
any portion of the Collateral to satisfy such Tax or claim. The Company shall not file or consent
to the filing of any consolidated income tax return with any Person (other than Bluestem or any of
its Subsidiaries).

     5.4. Audits of Underlying Receivables. The Company shall (i) at any time when a Default or
Event of Default exists, (ii) quarterly, or (iii) more frequently as may be requested by the Class
Requisite Lenders of either Class or the Administrative Agent (and with respect to quarterly audits
or audits following a Default or Event of Default at Company’s expense), permit the Administrative
Agent, at reasonable times during business hours and upon reasonable notice to the Company, to
audit the Underlying Receivables and to inspect, audit, copy and take extracts from its and their
financial and accounting records, and to discuss its and their affairs, financings and accounts
with any Person, including, without limitation, employees of the Company or Bluestem and
independent public accountants. The Company agrees to pay the Administrative Agent’s then
customary charge for field examinations and audits and the preparation of reports thereof performed
or prepared. Subject to Section 2.24(a), the Administrative Agent may, in its sole discretion,
redetermine the value of Eligible Underlying Receivables based on any such audits, or updates of
audits, and, as a result, redetermine the Borrowing Base.

     5.5. Lenders Meetings. The Company will, upon the request of the Administrative Agent or the
Class Requisite Lenders of either Class, participate in a meeting of the Administrative Agent and
Lenders once during each Fiscal Year to be held at the Company’s corporate offices (or at such
other location as may be agreed to by the Company and the

 

 

Administrative Agent) at such time as may be agreed to by the Company and the Administrative
Agent.

     5.6. Compliance with Laws. The Company shall comply with the requirements of all applicable
laws, rules, regulations and orders of any Governmental Authority noncompliance with which could
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect.

     5.7. WebBank Backup Originator Agreement. The Company shall use commercially reasonable
efforts to deliver an executed WebBank Backup Originator Agreement, in form and substance
reasonably satisfactory to the Class Requisite Lenders of each Class, to the Administrative Agent
within 90 days of the Closing Date and in all cases by January 28, 2011 or such later date as may
be consented to by the Requisite Lenders at their reasonable discretion (it being understood that
an agreement in substantially the form and substance of the MetaBank Backup Originator Agreement,
mutatis mutandis, will be satisfactory).

     5.8. Further Assurances. At any time or from time to time upon the request of the
Administrative Agent, the Company 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
Collateral Agent may reasonably request in order to effect fully the purposes of the Credit
Documents, including providing Lenders with any information reasonably requested pursuant to
Section 9.22.

     5.9. Separateness. The Company acknowledges that the Lenders are entering into this Agreement
in reliance upon the Company’s identity as a legal entity that is separate from any other Person.
Therefore, from and after the date of this Agreement, the Company shall take all reasonable steps,
including without limitation, all steps that the Lenders may from time to time reasonably request,
to maintain the Company’s identity as a separate legal entity and to make it manifest to third
parties that the Company is a separate legal entity. Without limiting the generality of the
foregoing, the Company agrees that it has not (except in accordance with the terms of the Prior
Credit Agreement and documents related thereto) and shall not:

          (a) engage, either directly or indirectly, in any business or activity other than the
acquisition, ownership, financing and disposition of the Underlying Receivables in accordance with
the Credit Documents and the Related Agreements and activities incidental thereto;

          (b) acquire or own any material asset other than the Collateral and proceeds thereof;

          (c) merge into or consolidate with any Person or entity or dissolve, terminate or liquidate in
whole or in part, transfer or otherwise dispose of all or substantially all of its assets or change
its legal structure, without in each case, to the extent permitted by law, the consent of the Class
Requisite Lenders of each Class;

          (d) fail to preserve its existence as an entity duly organized, validly existing and in good
standing (if applicable) under the laws of the jurisdiction of its formation, or without the prior
written consent of the Class Requisite Lenders of each Class, amend, modify, change,

 

 

repeal, terminate or fail to comply with the provisions of the Company’s certificate of
formation, or its limited liability company agreement, as the case may be; provided,
however, the Company may amend its certificate of formation or its limited liability
company agreement without such Requisite Lenders’ consent (i) to cure any ambiguity, (ii) with
respect to administrative matters, (iii) to convert or supplement any provision in a manner
consistent with the intent of this Agreement or the other Credit Documents or the Related
Agreements, or (iv) in connection with an initial public offering of Bluestem; provided
that, in the case of clause (iv), the Administrative Agent has consented to such changes (such
consent not to be unreasonably withheld);

          (e) own or create any Subsidiary or make any investment in, any Person or entity without the
consent of the Class Requisite Lenders of each Class, except as permitted under Section 6.4;

          (f) commingle its assets with the assets of any of its general partners, members, Affiliates,
principals or any other Person or entity;

          (g) incur any Indebtedness except the Obligations;

          (h) fail to maintain its records, books of account and bank accounts separate and apart from
those of the general partners, members, principals and Affiliates of the Company or the Affiliates
of a general partner or member of the Company or any other Person;

          (i) except for the Credit Documents and the Related Agreements, and as otherwise expressly
permitted by the Credit Documents, enter into any contract or agreement with any general partner,
member, principal or Affiliate of the Company, Bluestem, or any general partner, member, principal
or Affiliate thereof, except with the consent of the Class Requisite Lenders of each Class and upon
terms and conditions that are intrinsically fair and substantially similar to those that would be
available on an arms-length basis with third parties other than any general partner, member,
principal or affiliate of the Company, Bluestem, or any general partner, member, principal or
Affiliate thereof or fail to maintain separate financial statements from those of its general
partners, members, principals and Affiliates; provided, however, 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 it
maintains separate books and records;

          (j) fail to take reasonable efforts to correct any misunderstanding known to the Company
regarding the separate identity of the Company and Bluestem;

          (k) maintain its assets in such a manner that it will be costly or difficult to segregate,
ascertain or identify its individual assets from those of any other Person;

          (l) assume or guaranty the debts of any other Person, hold itself out to be responsible for
the debts of any other Person, or otherwise pledge its assets for the benefit of any other Person
or hold out its credit as being available to satisfy the obligations of any other Person;

 

 

          (m) make any loans or advances to any third party, including any general partner, member,
principal or affiliate of the Company, or any general partner, member, principal or Affiliate
thereof;

          (n) fail either to hold itself out to the public as a legal entity separate and distinct from
any other entity or Person or to conduct its business solely in its own name in order not (i) to
mislead others as to the identity with which such other party is transacting business, or (ii) to
suggest that the Company is responsible for the debts of any third party (including any general
partner, member, principal or Affiliate of the Company, or any general partner, member, principal
or Affiliate thereof);

          (o) fail to maintain adequate capital for the normal obligations reasonably foreseeable in a
business of its size and character and in light of its contemplated business operations;

          (p) share any common logo with or hold itself out as or be considered as a department or
division of any general partner, principal, member or Affiliate of the Company or any other Person
or entity;

          (q) fail to allocate fairly and reasonably shared expenses (including, without limitation,
shared office space and services performed by an employee of an Affiliate) among the Persons
sharing such expenses and to use separate stationery, invoices and checks;

          (r) acquire obligations or securities of its partners, members, shareholders of other
Affiliates, as applicable;

          (s) violate or cause to be violated the assumptions made with respect to the Company in any
opinion letter pertaining to substantive consolidation delivered to Lenders in connection with the
Credit Documents;

          (t) fail to have a board of managers that is composed differently from that of any of its
Affiliates;

          (u) fail to have Organizational Documents that provide that, so long as the Obligations of the
Company shall be outstanding, the Company shall not (i) seek the dissolution or winding up in
whole, or in part, of the Company or (ii) file or consent to the filing of any petition, either
voluntary or involuntary, or commence a case under any applicable insolvency, bankruptcy,
liquidation or reorganization statute, or make an assignment for the benefit of creditors without
the unanimous consent of the Company’s board of managers, including its independent manager (within
the meaning of Section 6.15);

          (v) fail to cause its board of managers to meet at least annually or act pursuant to written
consent and keep minutes of such meetings and actions and observe all other organizational
formalities;

          (w) account for or treat (whether in financial statements or otherwise) the transactions
contemplated by the Receivables Purchase Agreement in any manner other than the sale of the
Underlying Receivables to the Company or in any other respect account for or treat

 

 

the transactions contemplated therein in any manner other than as a sale of Underlying
Receivables to the Company;

          (x) make any revision or amendment to the Receivables Purchase Agreement without the consent
of the Class Requisite Lenders of each Class, which consent shall not be unreasonably withheld ;
and

          (y) fail to cause its members, managers, directors, officers, agents and other representatives
to act at all times with respect to the Company consistently and in furtherance of the foregoing
and in the best interests of the Company.

In the event of any inconsistency between the covenants set forth in this Section 5.9 or the other
covenants set forth in this Agreement, or in the event that any covenant set forth in this Section
5.9 poses a greater restriction or obligation than is set forth elsewhere in this Agreement, the
covenants set forth in this Section 5.9 shall control.

     5.10. Cash Management Systems. The Company shall establish and maintain cash management
systems as set forth below.

          (a) Lockbox System.

          (i) The Company has established pursuant to the Control Agreements for the benefit of
the Collateral Agent, on behalf of the Secured Parties, a system of lockboxes and related
deposit accounts as described in Section 2.14 (the “Lockbox System”) into which all
Collections (including Principal Collections and Finance Charge Collections) shall be
deposited.

          (ii) The Company shall not establish any new lockbox or lockbox arrangement without
consent of the Collateral Agent in its sole discretion, and prior to establishing any such
new lockbox or lockbox arrangement, the Company shall cause each bank or financial
institution with which it seeks to establish such a lockbox or lockbox arrangement to enter
into a control agreement with respect thereto. In the case of any control agreement with any
such bank or financial institution that is a Lender, such control agreement shall be subject
to the provisions of this Agreement regarding setoffs.

          (iii) Without the prior written consent of the Requisite Lenders, the Company shall
not, in a manner adverse to the Lenders, (A) change the general instructions given to the
Servicer in respect of payments on account of Underlying Receivables to be deposited in the
Lockbox System 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 a Controlled Account.

          (iv) The Company acknowledges and agrees that (A) the funds on deposit in the Lockbox
System shall continue to be collateral security for the Obligations secured thereby, and (B)
upon the occurrence and during the continuance of an Event of Default, the funds on deposit
in the Lockbox System shall be applied as provided in Section 2.13.

 

 

          (b) Payment Collection. The Company has directed, and will at all times
hereafter direct, the Servicer to direct each of the Receivables Obligors to forward all payments
on account of Underlying Receivables directly to the Lockbox System in accordance with Section
2.14. The Company agrees (i) to instruct the Servicer to instruct each Receivables Obligor to make
all payments with respect to Underlying Receivables directly to the Lockbox System and (ii)
promptly (and, except as set forth in the proviso to this Section 5.10(b), in no event later than
two Business Days following receipt) to 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 System in precisely the form in which they are received
(but with any endorsements of the Company necessary for deposit or collection), and until they are
so deposited to hold such payments in trust for and as the property of the Collateral Agent;
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 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.

     5.11. Spread Account.

          (a) Subject to the three Business Day funding requirement set forth in clauses (c) and (d) of
this Section 5.11, the Company shall maintain at all times a minimum balance in the Spread Account
equal to the Required Spread Account Amount.

          (b) On each Credit Date and on each Interest Payment Date, and on any other Business Day in
accordance with Section 2.15(a), the Company shall deposit in the Spread Account an amount equal to
the excess of (i) the Required Spread Account Amount over (ii) the balance of the Spread Account on
such Credit Date.

          (c) If at any time, the three-month average Excess Spread Ratio drops below an Excess Spread
Ratio Threshold as set forth below (such occurrence an “Excess Spread Ratio Event”), (i) the
applicable Spread Account Increase Percentage set forth in the table below shall be added to the
Initial Required Spread Account Percentage and (ii) the Company shall deposit in the Spread Account
within three Business Days an amount equal to the excess of (A) the Required Spread Account Amount
over (B) the balance of the Spread Account immediately prior to making such deposit.

	 	 	 
	Excess Spread Ratio Threshold	 	Spread Account Increase Percentage
	Greater than 14.00%
	 	0.00%
	 	 	 
	Greater than 12.50% but 

less than or equal to 14.00%
	 	2.00%
	 	 	 
	Greater than 11.00% but 

less than or equal to 12.50%
	 	4.00%
	 	 	 
	Greater than 9.50% but 

less than or equal to 11.00%
	 	6.00%

 

 

	 	 	 
	Excess Spread Ratio Threshold	 	Spread Account Increase Percentage
	Less than or equal to 9.50%
	 	8.00%

          (d) In the event that the one-month Principal Delinquency Ratio is greater than a Principal
Delinquency Ratio Threshold as set forth below (such occurrence a “Principal Delinquency Ratio
Event”), (i) the applicable Spread Account Increase Percentage set forth in the table below shall
be added to the Initial Required Spread Account Percentage and (ii) the Company shall deposit in
the Spread Account within three Business Days an amount equal to the excess of (A) the Required
Spread Account Amount over (B) the balance of the Spread Account immediately prior to making such
deposit.

	 	 	 
	 	 	Spread Account Increase
	Principal Delinquency Ratio Threshold	 	Percentage
	Less than 12.5%
	 	0.00%
	 	 	 
	Greater than or equal to 12.5% but less 

than 14.0%
	 	1.00%
	 	 	 
	Greater than or equal to 14.0%
	 	2.00%

          (e) In the event that the one-month Total Payment Ratio drops below a Total Payment Ratio
Threshold as set forth below (such occurrence a “Total Payment Ratio Event”), (i) the applicable
Spread Account Increase Percentage set forth in the table below shall be added to the Initial
Required Spread Account Percentage and (ii) the Company shall deposit in the Spread Account within
three Business Days an amount equal to the excess of (A) the Required Spread Account Amount
over (B) the balance of the Spread Account immediately prior to making such deposit.

	 	 	 
	Total Payment Ratio Threshold	 	Spread Account Increase Percentage
	Greater than 8.0%
	 	0%
	 	 	 
	Greater than 7.25% but 

less than or equal to 8.0%
	 	1%
	 	 	 
	Less than or equal to 7.25%
	 	2%

          (f) After the occurrence of a Spread Account Increase Event, (i) if the Excess Spread Ratio
exceeds the Excess Spread Ratio Threshold that triggered such Spread Account Increase Event for
three consecutive months or (ii) if the Principal Delinquency Ratio is less than the Principal
Delinquency Ratio Threshold or the Total Payment Ratio exceeds the Total Payment Ratio Threshold,
as the case may be, that triggered such Spread Account Increase Event for one month, such Spread
Account Increase Event shall no longer be continuing, the Required Spread Account Percentage shall
be adjusted accordingly and any Excess Spread Account Amounts (after giving effect to the
adjustments to the Required Spread Account Percentage)

 

 

shall be released to the Company, provided, that, no Default or Event of Default has
occurred and is continuing, and no Borrowing Base Deficiency exists.

     5.12. Account Owner True Sale Opinion. Upon determination by the Administrative Agent that
(a) Bluestem has become an Affiliate of any Receivables Account Owner or (b) either Bluestem or 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, the Administrative
Agent shall request and Company shall deliver within 30 Business Days (or such later date as may be
consented to by the Class Requisite Lenders of each Class in their reasonable discretion) following
such request an Account Owner True Sale Opinion; provided that, with respect to a
particular occurrence of any event specified in clauses (a) or (b) above, upon the delivery of an
Account Owner True Sale Opinion, regardless of whether such Account Owner True Sale Opinion has
been requested, the Company’s obligations under this Section 5.12 shall be deemed satisfied and the
Company shall have no further obligations under this Section 5.12 with respect to that particular
occurrence of such event.

SECTION 6. NEGATIVE COVENANTS

     The Company covenants and agrees that, so long as any Revolving Commitment is in effect and
until payment in full of all Obligations (other than contingent indemnification obligations), the
Company shall perform all covenants in this Section 6.

     6.1. Indebtedness. The Company shall not directly or indirectly, create, incur, assume or
guaranty, or otherwise become or remain directly or indirectly liable with respect to any
Indebtedness, except the Obligations.

     6.2. Liens. The Company shall not, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind (including any document or
instrument in respect of goods or accounts receivable) of the Company, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the filing of, or permit
to remain in effect, any financing statement or other similar notice of any Lien with respect to
any such property, asset, income or profits under the UCC of any State or under any similar
recording or notice statute, except (i) Liens in favor of the Collateral Agent for the benefit of
Secured Parties granted pursuant to any Credit Document; (ii) Permitted Liens; and (iii) financing
statements (v) naming a Receivables Account Owner as debtor and Bluestem Brands, Inc. as secured
party in accordance with the applicable Receivables Sale Agreement, (w) naming Bluestem Brands,
Inc. as debtor and Fingerhut Receivables I, LLC as secured party in accordance with the Receivables
Purchase Agreement, (x) naming Fingerhut Receivables I, LLC as debtor and Goldman Sachs Bank USA,
as Collateral Agent, as the secured party in accordance with the Security Agreement, (y) assigning
any of the above to Fingerhut Receivables I, LLC or Goldman Sachs Bank USA, as Collateral Agent, as
the case may be, in accordance with the Receivables Sale Agreements, the Receivables Purchase
Agreement and the Security Agreement or (z) filed in connection with other Permitted Liens.

     6.3. No Further Negative Pledges. The Company shall not enter into any agreement prohibiting
the creation or assumption of any Lien upon any of its properties or assets, whether now owned or
hereafter acquired, except pursuant to the Credit Documents.

 

 

     6.4. Investments. The Company shall not make or own any Investment in any Person, except
Investments in Cash, Cash Equivalents and Underlying Receivables, Interest Rate Agreements and
Permitted Investments in the Controlled Accounts or the Company Account.

     6.5. Collateral Performance Covenants. The Company shall not violate the following
performance measurements, in each case to be determined on a monthly basis as of the last calendar
day of any calendar month following the Closing Date and calculated on the first Determination Date
occurring after such last calendar day of such calendar month (and based on the information for the
preceding calendar month or months, as applicable, set forth in any Servicing Report related to
such Determination Date):

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

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

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

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

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

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

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

     6.6. Fundamental Changes; Disposition of Assets; Acquisitions. The Company shall not, without
the consent of the Class Requisite Lenders of each Class, (i) enter into any transaction of merger
or consolidation, or liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or (ii) convey, sell, lease or sub-lease (as lessor or sublessor), exchange, transfer
or otherwise dispose of, in one transaction or a series of transactions, all or any part of its
business, assets (including, but not limited to, the Underlying Receivables) or property of any
kind whatsoever, whether real, personal or mixed and whether tangible or intangible, whether now
owned or hereafter acquired, except the sale, in the ordinary course of business, for Cash of
Permitted Charge-Off Receivables to a Person that is not an Affiliate of the Company, or (iii)
acquire by purchase or otherwise the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of business or other
business unit of any Person, except that the Company may sell Permitted Charge-Off Receivables and
may purchase Investments made in accordance with Section 6.4.

 

 

     6.7. Material Contracts and Organizational Documents. The Company shall not (a) enter into
any Material Contract with any Person; (b) agree to any material amendment, restatement, supplement
or other modification to, or waiver of, any of its material rights under any Related Agreement or
Material Contract after the Closing Date or (c), except as otherwise permitted under Section
5.9(d)(iv), amend or permit any amendments to its Organizational Documents, without in each case
obtaining the prior written consent of the Class Requisite Lenders of each Class to such amendment,
restatement, supplement, modification or waiver or Material Contract, as the case may be.

     6.8. Sales and Lease-Backs. The Company shall not directly or indirectly become or remain
liable as lessee or as a guarantor or other surety with respect to any lease of any property
(whether real, personal or mixed), whether now owned or hereafter acquired, which the Company (a)
has sold or transferred or is to sell or to transfer to any other Person, or (b) intends to use for
substantially the same purpose as any other property which has been or is to be sold or transferred
by the Company to any Person in connection with such lease.

     6.9. Transactions with Shareholders and Affiliates. The Company shall not directly or
indirectly, enter into or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with Bluestem, any holder of 5% or more
of any class of Capital Stock of Bluestem or any of its Subsidiaries or with any Affiliate of
Bluestem or of any such holder other than the transactions contemplated by the Credit Documents and
the Related Agreements.

     6.10. Conduct of Business. From and after the Closing Date, the Company shall not engage in
any business other than the businesses engaged in by the Company on the Closing Date. The Company
shall not own any Subsidiaries.

     6.11. Fiscal Year. The Company shall not change its Fiscal Year-end.

     6.12. Accounts. The Company shall not establish or maintain a deposit account or a securities
account that is not the US Bank Account, the Lockbox Account or a Controlled Account and the
Company shall not, and shall not direct any Person to, deposit Collections in a deposit account or
a securities account that is not the US Bank Account or Lockbox Account or a Controlled Account.

     6.13. Prepayments of Certain Indebtedness. Without in any way limiting the Company’s
obligations under Section 6.1, the Company shall not, directly or indirectly, voluntarily purchase,
redeem, defease or prepay any principal of, premium, if any, interest or other amount payable in
respect of any Indebtedness prior to its scheduled maturity, other than the Obligations.

     6.14. Servicing Agreement and Backup Servicing Agreement. The Company shall not (a) terminate
the Servicing Agreement or Backup Servicing Agreement or (b) select a replacement servicer, in each
case without the consent of the Class Requisite Lenders of each Class.

 

 

     6.15. Independent Manager.

          (a) The Company shall not fail at any time to have at least one independent manager which
shall be a natural Person who (i) is provided by one of the following nationally-recognized
companies that provides professional independent managers, directors and/or trustees: Corporation
Service Company, CT Corporation, National Registered Agents, Inc., Independent Director Services,
Inc. and CICS, LLC (each a “Corporate Services Provider”) (provided that the
Company and the Administrative Agent may add or replace, by mutual agreement, any one or more of
the foregoing Corporate Services Providers with other nationally-recognized companies that have
been used by other borrowers for similar financings), and (ii) is not at any time while serving as
a manager of the Company, and has not been at any time during the preceding five years either (A) a
shareholder (or other equity owner) of, or an officer, director, partner, manager, member (other
than as a special member in the case of single member Delaware limited liability companies),
employee, attorney or counsel of, the Company or any of its Affiliates (other than such Person’s
service as an independent manager of the Company or as an independent manager or independent
director of any other special purpose subsidiary of Bluestem that is required by its governing
document to maintain an independent manager or independent director under terms and conditions
substantially as set forth in this Section 6.15); (B) a customer or creditor of, or supplier to,
the Company or any of its Affiliates who derives any of its purchases or revenue from its
activities with the Company or any Affiliate thereof (other than a de minimis amount); (C) a person
who controls or is under common control with any such officer, director, partner, manager, member,
employee, supplier, creditor or customer; or (D) a member of the immediate family of any such
officer, director, partner, manager, member, employee, supplier, creditor or customer;
provided, that upon the death or incapacity of such independent manager, the Company will
have a period of 10 Business Days following such event to appoint a replacement independent
manager.

          (b) The Company shall give the Administrative Agent at least two days’ notice of any new or
replacement independent manager of the Company.

          (c) The Company shall include provisions in its organizational documents that provide that any
voluntary bankruptcy or insolvency event by the Company must be approved by the independent manager
and, solely in connection therewith, the duties of the independent manager shall, to the fullest
extent permitted by applicable law, and notwithstanding any duty otherwise existing at law or in
equity, require such independent manager to consider only the interests of the Company, including
its creditors, who shall each be a third-party beneficiary to such provision. Except for duties to
the Company as set forth in the immediately preceding sentence (including duties to the Company’s
member and the Company’s creditors solely to the extent of their respective economic interests in
the Company but excluding (i) all other interests of the Company’s member, (ii) the interests of
other Affiliates of the Company, and (iii) the interests of any group of Affiliates of which the
Company is a part), the independent manager shall not have any fiduciary duties to the Company’s
member or any other Person bound by this Agreement; provided, however, the
foregoing shall not eliminate the implied contractual covenant of good faith and fair dealing.

          (d) The requirements of this Section 6.15 shall be included in the organizational documents of
the Company.

 

 

SECTION 7. EVENTS OF DEFAULT

     7.1. Events of Default. If any one or more of the following conditions or events shall occur:

          (a) Failure to Make Payments When Due. Other than with respect to a Borrowing Base
Deficiency, failure by the Company to pay (i) when due, the principal of any Loan whether at stated
maturity, by acceleration, by notice of voluntary prepayment, by mandatory prepayment or otherwise;
or (ii) within two Business Days after the due date thereof, any interest, Commitment Reduction
Premium or Prepayment Premium, if any, on any Loan or any fee or any other amount due hereunder or
any other Credit Document; or

          (b) Default in Other Agreements. (i) Failure of the Company 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 in respect of the Obligations) beyond the grace period, if
any, provided therefor; or (ii) breach or default by the Company 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) Breach of Certain Covenants. Failure of the Company to perform or comply with any
term or condition contained in Section 2.4, Section 5.1, Section 5.2, Section 5.3, Section 5.6,
Section 5.7, Section 5.9 (other than clauses (j), (o) and (q) thereof, and, solely in relation to
the matters described in the foregoing clauses of Section 5.9, clause (y)), Section 5.10, Section
5.11, Section 5.12 or Section 6 (other than Section 6.5); or

          (d) Breach of Portfolio Performance Covenants. Failure of the Company to perform or
comply with any term or condition contained in Section 6.5; or

          (e) Breach of Representations, etc. Any representation, warranty, certification or
other statement made or deemed made by any Credit Party in any Credit Document or in any statement
or certificate at any time given by any Credit Party or any of its Subsidiaries in writing pursuant
hereto or thereto or in connection herewith or therewith shall be false in any material respect as
of the date made or deemed made; or

          (f) Other Defaults Under Credit Documents. Any Credit Party shall default in the
performance of or compliance with any term contained herein or any of the other Credit Documents,
other than any such term referred to in any other provision of this Section 7.1, and such default
shall not have been remedied or waived within thirty days after the earlier of (i) an Authorized
Officer of such Credit Party becoming aware of such default, or (ii) receipt by the Company of
notice from the Administrative Agent or the Controlling Class of such default; or

          (g) Involuntary Bankruptcy; Appointment of Receiver, etc. (i) A court of competent
jurisdiction shall enter a decree or order for relief (other than a decree or order

 

 

described in clause (ii)) in respect of the Company in an involuntary case under the
Bankruptcy Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, which decree or order is not stayed; or any other similar relief shall be
granted under any applicable federal or state law; or (ii) an involuntary case shall be commenced
against the Company under the Bankruptcy Code or under any other applicable bankruptcy, insolvency
or similar law now or hereafter in effect; or a decree or order of a court having jurisdiction in
the premises for the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over the Company, or over all or a substantial part of its
property, shall have been entered; or there shall have occurred the involuntary appointment of an
interim receiver, trustee or other custodian of the Company for all or a substantial part of its
property, and any such event described in this clause (ii) shall continue for sixty days without
having been dismissed, bonded or discharged; or

          (h) Voluntary Bankruptcy; Appointment of Receiver, etc. (i) The Company shall
commence a voluntary case under the Bankruptcy Code or under any other applicable bankruptcy,
insolvency or similar law now or hereafter in effect, or shall consent to the entry of an order for
relief in an involuntary case, or to the conversion of an involuntary case to a voluntary case,
under any such law, or shall consent to the appointment of or taking possession by a receiver,
trustee, other custodian or similar officer for all or a substantial part of its property; or the
Company shall make any assignment for the benefit of creditors; or (ii) the Company shall be
unable, or shall fail generally, or shall admit in writing its inability, to pay its debts as such
debts become due; or the board of directors (or similar governing body) of the Company (or any
committee thereof) shall adopt any resolution or otherwise authorize any action to approve any of
the actions referred to herein or in Section 7.1(f); or

          (i) Judgments and Attachments. Any money judgment, writ or warrant of attachment or
similar process involving (i) in any individual case an amount in excess of $250,000 or (ii) in the
aggregate at any time an amount in excess of $500,000 (in either case to the extent not adequately
covered by insurance as to which a solvent and unaffiliated insurance company has not denied
coverage) shall be entered or filed against the Company or any of its 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 of attachment or similar
process); or

          (j) Dissolution. Any order, judgment or decree shall be entered against the Company
decreeing the dissolution or split up of the Company and such order shall remain undischarged or
unstayed for a period in excess of 60 days; or

          (k) Plans. An ERISA Event shall have occurred that, in the opinion of the
Administrative Agent, when taken together with all other ERISA Events that have occurred, could
reasonably be expected to result in liability of the Company and its ERISA Affiliates in an
aggregate amount exceeding $2,500,000; or

          (l) Change of Control. A Change of Control shall occur; or

 

 

          (m) Collateral Documents and other Credit Documents. At any time after the execution
and delivery thereof, (i) this Agreement or any Collateral Document ceases to be in full force and
effect (other than by reason of a release of Collateral in accordance with the terms hereof or
thereof or the satisfaction in full of the Obligations in accordance with the terms hereof) or
shall be declared null and void, or the Collateral Agent shall not have or shall cease to have a
valid and perfected Lien in any Collateral purported to be covered by the Collateral Documents with
the priority required by the relevant Collateral Document, in each case for any reason other than
the failure of the Collateral Agent or any Secured Party to take any action within its control; or
(ii) any of the Credit Documents identified in clause (a) of the definition thereof for any reason,
other than the satisfaction in full of all Obligations (other than contingent indemnification
obligations), shall cease to be in full force and effect (other than in accordance with its terms)
or shall be declared to be null and void or a party thereto, as the case may be, shall repudiate
its obligations thereunder or shall contest the validity or enforceability of any Credit Document
in writing; or

          (n) Servicing Agreement. A Servicer Default shall have occurred and be continuing; or

          (o) Product Agreements, Backup Originator Agreements and Underlying Receivables
Transfer. (i) A Product Agreement Default or a default under a Receivables Sale Agreement;
provided, that, such default results in the termination of such agreement and (x)
prior to such termination, no replacement agreement with any Receivables Account Owner or any other
Person acceptable to the Administrative Agent in its sole and absolute discretion, shall be
effective, or (y) the related Backup Originator Agreement is not in full force and effect or the
related backup originator fails to fulfill its backup origination duties thereunder; (ii) a Backup
Originator Agreement is terminated and a replacement thereof satisfactory to the Class Requisite
Lenders of each Class is not entered into within 30 days of termination; or (iii) a Receivables
Account Owner ceases the transfer of Underlying Receivables to Bluestem under the related
Receivables Sale Agreement; or

          (p) Cross Defaults. (i) a Receivables Purchase Agreement Default or a similar default
under any replacements of the foregoing or substantially similar agreements governing the sale of
the Underlying Receivables to the Company, shall have occurred and be continuing; (ii) the
Receivables Purchase Agreement is terminated prior to the entry into a replacement thereof
satisfactory to the Class Requisite Lenders of each Class; or (iii) the provisions of either of the
Intercreditor Agreements for the benefit of the Lenders, shall cease to be in full force and effect
(other than by reason of the termination or expiration of such agreement by its express terms,
including upon satisfaction in full of the Obligations in accordance with the terms hereof) or any
party thereto shall repudiate its obligations thereunder; or

          (q) Borrowing Base Deficiency. Failure by the Company to pay any Borrowing Base
Deficiency within one Business Day after the due date thereof subject to any extensions granted by
the applicable Class Requisite Lenders pursuant to Section 2.11(g);

THEN, (A) upon the occurrence of any Event of Default described in Section 7.1(g), 7.1(h) or
7.1(j), automatically, (B) upon the occurrence of an Event of Default described in Section 7.1(d),
at the request of (or with the consent of) the Lenders holding a majority of the Loans then

 

 

outstanding and (C) upon the occurrence of any other Event of Default, at the request of (or with
the consent of) the Controlling Class, upon notice to the Company by the Administrative Agent, (w)
the Revolving Commitments, if any, of each Tranche A Lender shall immediately terminate; (x) each
of the following shall immediately become due and payable, in each case without presentment,
demand, protest or other requirements of any kind, all of which are hereby expressly waived by the
Company: (1) the unpaid principal amount of and accrued interest on the Loans and (2) all other
Obligations with respect to such Class; and (y) the Administrative Agent shall cause the Collateral
Agent to enforce any and all Liens and security interests created pursuant to the Collateral
Documents; provided that, for so long as the Tranche A Lenders are the Controlling Class,
the Class Requisite Lenders with respect to the Tranche B Term Loans may take any action under
clause (x) with respect to the Tranche B Term Loans and Obligations related thereto to the extent
permitted under Section 2.25(c).

     7.2. Disposition of Collateral. If an Event of Default shall have occurred and be continuing
at any time when the Controlling Class is the Class Requisite Lenders with respect to the Tranche A
Revolving Loans, the Collateral Agent shall not sell any Collateral pursuant to Section 6 of the
Security Agreement, other than Permitted Charge-Off Receivables, without the prior written consent
of the Class Requisite Lenders of the Tranche B Term Loans (which consent may be given via e-mail),
unless the Collateral Agent has determined that the proceeds of such sale of Collateral shall be at
least equal to the Secured Obligations (as defined in the Security Agreement). Notwithstanding
anything herein to the contrary, at any time after an Event of Default when the Tranche A Revolving
Loans have become immediately due and payable in accordance with the last clause (x) in Section
7.1, the Tranche B Lenders shall have the right to acquire the Tranche A Revolving Loans from the
Tranche A Lenders at a price equal to sum of (1) the principal balance of the Tranche A Revolving
Loans plus interest accrued to the date of purchase and (2) all other Obligations then due and
payable with respect to the Tranche A Lenders. The Tranche B Lenders shall give the Administrative
Agent notice of their intent to make such purchase at least 10 Business Days prior to the effective
date of such purchase.

SECTION 8. AGENTS

     8.1. Appointment of Agents. GS Bank is hereby appointed the Administrative Agent, the
Collateral Agent, the Syndication Agent and the Documentation Agent hereunder and under the other
Credit Documents and each Lender hereby authorizes GS Bank, in such capacity, to act as its agent
in accordance with the terms hereof and the other Credit Documents. Each Agent hereby agrees to
act upon the express conditions contained herein and the other Credit Documents, as applicable.
The provisions of this Section 8 are solely for the benefit of Agents and Lenders and the Company
shall not have any rights as a beneficiary of any of the provisions thereof. In performing its
functions and duties hereunder, each Agent shall act solely as an agent of Lenders and does not
assume and shall not be deemed to have assumed any obligation towards or relationship of agency or
trust with or for the Company. Each of the Syndication Agent and the Documentation Agent, without
consent of or notice to any party hereto, may assign any and all of its rights or obligations
hereunder to any of its Affiliates. As of the Closing Date, GS Bank, in its capacity as
Syndication Agent or in its capacity as Documentation Agent, shall not have any obligations but
shall be entitled to all benefits of this Section 8.

 

 

     8.2. Powers and Duties. Each Lender irrevocably authorizes each Agent to enter into the
Servicing Agreement, the Bluestem Letter Agreement and the Collateral Documents and to take such
action on such Lender’s behalf and to exercise such powers, rights and remedies hereunder and under
the other Credit Documents as are specifically delegated or granted to such Agent by the terms
hereof and thereof, together with such powers, rights and remedies as are reasonably incidental
thereto. Each Agent shall have only those duties and responsibilities that are expressly specified
herein and the other Credit Documents. Each Agent may exercise such powers, rights and remedies
and perform such duties by or through its agents or employees. In addition, each Agent agrees to
deliver to the Lenders any information, notices, documents or requests delivered to it under the
Credit Documents. No Agent shall have, by reason hereof or any of the other Credit Documents, a
fiduciary relationship in respect of any Lender; and nothing herein or any of the other Credit
Documents, expressed or implied, is intended to or shall be so construed as to impose upon any
Agent any obligations in respect hereof or any of the other Credit Documents except as expressly
set forth herein or therein.

     8.3. General Immunity.

          (a) No Responsibility for Certain Matters. No Agent shall be responsible to any
Lender for the execution, effectiveness, genuineness, validity, enforceability, collectability or
sufficiency hereof or any other Credit Document or for any representations, warranties, recitals or
statements made herein or therein or made in any written or oral statements or in any financial or
other statements, instruments, reports or certificates or any other documents furnished or made by
any Agent to Lenders or by or on behalf of any Credit Party to any Agent or any Lender in
connection with the Credit Documents and the transactions contemplated thereby or for the financial
condition or business affairs of any Credit Party or any other Person liable for the payment of any
Obligations, nor shall any Agent be required to ascertain or inquire as to the performance or
observance of any of the terms, conditions, provisions, covenants or agreements contained in any of
the Credit Documents or as to the use of the proceeds of the Loans or as to the existence or
possible existence of any Event of Default or Default or to make any disclosures with respect to
the foregoing. Anything contained herein to the contrary notwithstanding, the Administrative Agent
shall not have any liability arising from confirmations of the amount of outstanding Loans or the
component amounts thereof.

          (b) Exculpatory Provisions. No Agent nor any of its officers, partners, directors,
employees or agents shall be liable to Lenders for any action taken or omitted by any Agent under
or in connection with any of the Credit Documents except to the extent caused by such Agent’s gross
negligence or willful misconduct, as determined by a court of competent jurisdiction in a final,
non-appealable order. Each Agent shall be entitled to refrain from any act or the taking of any
action (including the failure to take an action) in connection herewith or any of the other Credit
Documents or from the exercise of any power, discretion or authority vested in it hereunder or
thereunder unless and until such Agent shall have received instructions in respect thereof from the
Requisite Lenders (or such other Lenders as may be required to give such instructions under Section
9.5) and, upon receipt of such instructions from the Requisite Lenders (or such other Lenders, as
the case may be), such Agent shall be entitled to act or (where so instructed) refrain from acting,
or to exercise such power, discretion or authority, in accordance with such instructions. Without
prejudice to the generality of the foregoing, (i) each Agent shall be entitled to rely, and shall
be fully protected in relying, upon any communication,

 

 

instrument or document believed by it to be genuine and correct and to have been signed or
sent by the proper Person or Persons, and shall be entitled to rely and shall be protected in
relying on opinions and judgments of attorneys (who may be attorneys for the Company), accountants,
experts and other professional advisors selected by it; and (ii) no Lender shall have any right of
action whatsoever against any Agent as a result of such Agent acting or (where so instructed)
refraining from acting hereunder or any of the other Credit Documents in accordance with the
instructions of the Requisite Lenders (or such other Lenders as may be required to give such
instructions under Section 9.5).

     8.4. Agents Entitled to Act as Lender. The agency hereby created shall in no way impair or
affect any of the rights and powers of, or impose any duties or obligations upon, any Agent in its
individual capacity as a Lender hereunder. With respect to its participation in the Loans, each
Agent shall have the same rights and powers hereunder as any other Lender and may exercise the same
as if it were not performing the duties and functions delegated to it hereunder, and the term
“Lender” shall, unless the context clearly otherwise indicates, include each Agent in its
individual capacity. Any Agent and its Affiliates may accept deposits from, lend money to, own
securities of, and generally engage in any kind of banking, trust, financial advisory or other
business with the Company or any of its Affiliates as if it were not performing the duties
specified herein, and may accept fees and other consideration from the Company for services in
connection herewith and otherwise without having to account for the same to Lenders.

     8.5. Lenders’ Representations, Warranties and Acknowledgment.

          (a) Each Lender represents and warrants that it has made its own independent investigation of
the financial condition and affairs of the Company in connection with Credit Extensions hereunder
and that it has made and shall continue to make its own appraisal of the creditworthiness of the
Company. No Agent shall have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders or to provide any
Lender with any credit or other information with respect thereto, whether coming into its
possession before the making of the Loans or at any time or times thereafter, and no Agent shall
have any responsibility with respect to the accuracy of or the completeness of any information
provided to Lenders.

          (b) Each Lender, by delivering its signature page to this Agreement and funding its Loans on
the Closing Date, shall be deemed to have acknowledged receipt of, and consented to and approved,
each Credit Document and each other document required to be approved by any Agent, the Requisite
Lenders or Lenders, as applicable on the Closing Date.

          (c) Each Lender (i) represents and warrants that as of the Closing Date neither such Lender
nor its Affiliates or Related Funds owns or controls, or owns or controls any Person owning or
controlling, any trade debt or Indebtedness of Bluestem or the Company other than the Obligations,
any Capital Stock of Bluestem or the Company or, in the case of JPMSI and its Affiliates, any
Indebtedness of Bluestem under the Bluestem 2010 Inventory Credit Agreement and (ii) covenants and
agrees that from and after the Closing Date until the date of an initial public offering by
Bluestem neither such Lender nor its Affiliates and Related Funds shall purchase any trade debt or
Indebtedness of Bluestem or the Company other than the Obligations, Capital Stock described in
clause (i) above or, in the case of JPMSI and its Affiliates, any

 

 

Indebtedness of Bluestem under the Bluestem 2010 Inventory Credit Agreement without the prior
written consent of the Administrative Agent.

     8.6. Right to Indemnity. EACH LENDER, IN PROPORTION TO ITS PRO RATA SHARE, SEVERALLY AGREES
TO INDEMNIFY EACH AGENT, THEIR AFFILIATES AND THEIR RESPECTIVE OFFICERS, PARTNERS, DIRECTORS,
TRUSTEES, EMPLOYEES AND AGENTS OF EACH AGENT (EACH, AN “INDEMNITEE AGENT PARTY”), TO THE EXTENT
THAT SUCH INDEMNITEE AGENT PARTY SHALL NOT HAVE BEEN REIMBURSED BY ANY CREDIT PARTY, FOR AND
AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
SUITS, COSTS, EXPENSES (INCLUDING COUNSEL FEES AND DISBURSEMENTS) OR DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST SUCH INDEMNITEE AGENT
PARTY IN EXERCISING ITS POWERS, RIGHTS AND REMEDIES OR PERFORMING ITS DUTIES HEREUNDER OR UNDER THE
OTHER CREDIT DOCUMENTS OR OTHERWISE IN ITS CAPACITY AS SUCH INDEMNITEE AGENT PARTY IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR THE OTHER CREDIT DOCUMENTS, IN ALL CASES, WHETHER
OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE COMPARATIVE, CONTRIBUTORY, OR SOLE
NEGLIGENCE OF SUCH INDEMNITEE AGENT PARTY; PROVIDED, NO LENDER SHALL BE LIABLE FOR ANY
PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS RESULTING FROM SUCH INDEMNITEE AGENT PARTY’S GROSS NEGLIGENCE OR
WILLFUL MISCONDUCT, AS DETERMINED BY A COURT OF COMPETENT JURISDICTION IN A FINAL NON-APPEALABLE
ORDER. IF ANY INDEMNITY FURNISHED TO ANY INDEMNITEE AGENT PARTY FOR ANY PURPOSE SHALL, IN THE
OPINION OF SUCH INDEMNITEE AGENT PARTY, BE INSUFFICIENT OR BECOME IMPAIRED, SUCH INDEMNITEE AGENT
PARTY MAY CALL FOR ADDITIONAL INDEMNITY AND CEASE, OR NOT COMMENCE, TO DO THE ACTS INDEMNIFIED
AGAINST UNTIL SUCH ADDITIONAL INDEMNITY IS FURNISHED; PROVIDED, IN NO EVENT SHALL THIS
SENTENCE REQUIRE ANY LENDER TO INDEMNIFY ANY INDEMNITEE AGENT PARTY AGAINST ANY LIABILITY,
OBLIGATION, LOSS, DAMAGE, PENALTY, ACTION, JUDGMENT, SUIT, COST, EXPENSE OR DISBURSEMENT IN EXCESS
OF SUCH LENDER’S PRO RATA SHARE THEREOF; AND PROVIDED FURTHER, THIS SENTENCE SHALL
NOT BE DEEMED TO REQUIRE ANY LENDER TO INDEMNIFY ANY INDEMNITEE AGENT PARTY AGAINST ANY LIABILITY,
OBLIGATION, LOSS, DAMAGE, PENALTY, ACTION, JUDGMENT, SUIT, COST, EXPENSE OR DISBURSEMENT DESCRIBED
IN THE PROVISO IN THE IMMEDIATELY PRECEDING SENTENCE.

     8.7. Successor Administrative Agent and Collateral Agent.

          (a) The Administrative Agent and the Collateral Agent may resign at any time by giving thirty
days’ prior written notice thereof to Lenders and the Company, and may be removed, upon 20 Business
Days written notice, by the Requisite Lenders at any time when the Revolving Exposure and Term Loan
Exposure of GS Bank and/or its Affiliates is less than 8% of

 

 

the sum of the aggregate Term Loan Exposure and aggregate Revolving Exposure. Upon any such
removal or notice of resignation, the Class Requisite Lenders of each Class, collectively, shall
have the right, upon five Business Days’ notice to the Company, to appoint a successor
Administrative Agent and Collateral Agent, which, in each case, unless otherwise consented to by
the Company (such consent not to be unreasonably withheld, conditioned or delayed), shall be a
Person meeting the qualifications set forth in clause (ii), (iii) or (iv) of the definition of
“Eligible Assignee” or an Affiliate of a Person meeting such qualifications. Upon the acceptance
of any appointment as the Administrative Agent and the Collateral Agent hereunder by a successor
Administrative Agent and the Collateral Agent, that successor Administrative Agent and Collateral
Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Administrative Agent and Collateral Agent and the retiring Administrative
Agent and Collateral Agent shall promptly (i) transfer to such successor Administrative Agent and
Collateral Agent all sums, Securities and other items of Collateral held under the Collateral
Documents, together with all records and other documents necessary or appropriate in connection
with the performance of the duties of the successor Administrative Agent and Collateral Agent under
the Credit Documents, and (ii) execute and deliver to such successor Administrative Agent and
Collateral Agent such amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor Administrative Agent
and Collateral Agent of the security interests created under the Collateral Documents, whereupon
such retiring Administrative Agent and Collateral Agent shall be discharged from its duties and
obligations hereunder. After any retiring Administrative Agent’s and Collateral Agent’s
resignation hereunder as the Administrative Agent and the Collateral Agent, the provisions of this
Section 8 shall inure to its benefit as to any actions taken or omitted to be taken by it while it
was the Administrative Agent and the Collateral Agent hereunder.

          (b) Notwithstanding anything herein to the contrary, the Administrative Agent and the
Collateral Agent may assign their rights and duties as the Administrative Agent and the Collateral
Agent hereunder to an Affiliate of GS Bank without the prior written consent of, or prior written
notice to, the Company or the Lenders; provided that the Company and the Lenders may deem
and treat such assigning Administrative Agent and Collateral Agent as the Administrative Agent and
the Collateral Agent for all purposes hereof, unless and until such assigning Administrative Agent
or Collateral Agent, as the case may be, provides written notice to the Company and the Lenders of
such assignment. Upon such assignment such Affiliate shall succeed to and become vested with all
rights, powers, privileges and duties as the Administrative Agent and the Collateral Agent
hereunder and under the other Credit Documents.

     8.8. Collateral Documents and Guaranty.

          (a) Agents under Collateral Documents and Guaranty. Each Lender hereby further
authorizes the Administrative Agent or the Collateral Agent, as applicable, on behalf of and for
the benefit of Lenders, to be the agent for and representative of Lenders with respect to the
Bluestem Guaranty, the Sponsor Indemnity Agreements, the Collateral and the Collateral Documents.
Subject to Section 9.5, without further written consent or authorization from Lenders, the
Administrative Agent or the Collateral Agent, as applicable may execute any documents or
instruments necessary to release any Lien encumbering any item of Collateral that is the subject of
a sale or other disposition of assets permitted hereby or under any other

 

 

Collateral Document or to which each of the Lenders (or such other Lenders as may be required
to give such consent under Section 9.5) have otherwise consented.

          (b) Right to Realize on Collateral and Enforce Guaranty. Anything contained in any of
the Credit Documents to the contrary notwithstanding, the Company, the Administrative Agent, the
Collateral Agent and each Lender hereby agree that (i) no Lender shall have any right individually
to realize upon any of the Collateral or to enforce the Bluestem Guaranty or the Sponsor Indemnity
Agreements and all powers, rights and remedies hereunder, under the Bluestem Guaranty and the
Sponsor Indemnity Agreements may be exercised solely by the Administrative Agent, on behalf of
Lenders in accordance with the terms hereof and all powers, rights and remedies under the
Collateral Documents may be exercised solely by the Collateral Agent, and (ii) in the event of a
foreclosure by the Collateral Agent on any of the Collateral pursuant to a public or private sale,
the Collateral Agent or any Lender may be the purchaser of any or all of such Collateral at any
such sale and the Collateral Agent, as agent for and representative of Secured Parties (but not as
agent of any Lender or Lenders) shall be entitled, for the purpose of bidding and making settlement
or payment of the purchase price for all or any portion of the Collateral sold at any such public
sale, to use and apply any of the Obligations as a credit on account of the purchase price for any
collateral payable by the Collateral Agent at such sale.

SECTION 9. MISCELLANEOUS

     9.1. Notices. Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given to the Company, any other Credit Party, the
Syndication Agent, the Collateral Agent, the Administrative Agent, or the Documentation Agent,
shall be sent to such Person’s address as set forth on Appendix B or in the other relevant Credit
Document, and in the case of any Lender, the address as indicated on Appendix B or otherwise
indicated to the Administrative Agent in writing. Each notice hereunder shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail or courier service
and shall be deemed to have been given when delivered in person or by courier service and signed
for against receipt thereof, upon receipt of telefacsimile or telex, or upon receipt after
depositing it in the United States mail with postage prepaid and properly addressed;
provided, no notice to any Agent shall be effective until received by such Agent.

     9.2. Expenses. Whether or not the transactions contemplated hereby shall be consummated, the
Company agrees to pay promptly (a) all the Administrative Agent’s actual and reasonable,
documented, out-of-pocket costs and expenses of preparation of the Credit Documents and any
consents, amendments, waivers or other modifications thereto; (b) all the reasonable, documented
fees, expenses and disbursements of counsel to Agents in connection with the negotiation,
preparation, execution and administration of the Credit Documents and any consents, amendments,
waivers or other modifications thereto and any other documents or matters requested by the Company;
(c) all the actual costs and reasonable, documented, out-of-pocket expenses of creating and
perfecting Liens in favor of the Collateral Agent for the benefit of Secured Parties, including
filing and recording fees, expenses and taxes, stamp or documentary taxes, search fees, title
insurance premiums and reasonable fees, expenses and disbursements of counsel to each Agent; (d)
the Administrative Agent’s actual costs and reasonable documented, out-of-pocket fees, expenses
for, and disbursements of the

 

 

Administrative Agent’s, auditors, accountants, consultants or appraisers whether internal or
external, and all reasonable, documented attorneys’ fees (including expenses and disbursements of
outside counsel) incurred by the Administrative Agent; (e) all the actual costs and reasonable,
documented, out-of-pocket expenses (including the reasonable fees, expenses and disbursements of
any appraisers, consultants, advisors and agents employed or retained by the Collateral Agent and
its counsel) in connection with the custody or preservation of any of the Collateral; (f) all other
actual and reasonable, documented out-of-pocket costs and expenses incurred by each Agent in
connection with the syndication of the Loans and the Revolving Commitments and the negotiation,
preparation and execution of the Credit Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (g) after the occurrence of a
Default or an Event of Default, all documented costs and expenses, including reasonable attorneys’
fees and costs of settlement, incurred by any Agent and Lenders in enforcing any Obligations of or
in collecting any payments due from any Credit Party hereunder or under the other Credit Documents
by reason of such Default or Event of Default (including in connection with the sale of, collection
from, or other realization upon any of the Collateral or the enforcement of the Bluestem Guaranty
or the Sponsor Indemnity Agreements) or in connection with any refinancing or restructuring of the
credit arrangements provided hereunder in the nature of a “work-out” or pursuant to any insolvency
or bankruptcy cases or proceedings.

     9.3. Indemnity.

          (a) IN ADDITION TO THE PAYMENT OF EXPENSES PURSUANT TO SECTION 9.2, WHETHER OR NOT THE
TRANSACTIONS CONTEMPLATED HEREBY SHALL BE CONSUMMATED, THE COMPANY AGREES TO DEFEND (SUBJECT TO
INDEMNITEES’ SELECTION OF COUNSEL), INDEMNIFY, PAY AND HOLD HARMLESS, EACH AGENT AND LENDER, THEIR
AFFILIATES AND THEIR RESPECTIVE OFFICERS, PARTNERS, DIRECTORS, TRUSTEES, EMPLOYEES AND AGENTS OF
EACH AGENT AND EACH LENDER (EACH, AN “INDEMNITEE”), FROM AND AGAINST ANY AND ALL INDEMNIFIED
LIABILITIES, IN ALL CASES, WHETHER OR NOT CAUSED BY OR ARISING, IN WHOLE OR IN PART, OUT OF THE
COMPARATIVE, CONTRIBUTORY, OR SOLE NEGLIGENCE OF SUCH INDEMNITEE; PROVIDED, THE COMPANY
SHALL NOT HAVE ANY OBLIGATION TO ANY INDEMNITEE HEREUNDER 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. TO THE EXTENT THAT THE UNDERTAKINGS TO DEFEND, INDEMNIFY, PAY
AND HOLD HARMLESS SET FORTH IN THIS SECTION 9.3 MAY BE UNENFORCEABLE IN WHOLE OR IN PART BECAUSE
THEY ARE VIOLATIVE OF ANY LAW OR PUBLIC POLICY, THE COMPANY SHALL CONTRIBUTE THE MAXIMUM PORTION
THAT IT IS PERMITTED TO PAY AND SATISFY UNDER APPLICABLE LAW TO THE PAYMENT AND SATISFACTION OF ALL
INDEMNIFIED LIABILITIES INCURRED BY INDEMNITEES OR ANY OF THEM.

          (b) To the extent permitted by applicable law, the Company shall not assert, and the Company
hereby waives, any claim against Lenders, Agents and their respective Affiliates, directors,
employees, attorneys or agents, on any theory of liability, for special,

 

 

indirect, consequential or punitive damages (as opposed to direct or actual damages) (whether
or not the claim therefor is based on contract, tort or duty imposed by any applicable legal
requirement) arising out of, in connection with, as a result of, or in any way related to, this
Agreement or any Credit Document or any agreement or instrument contemplated hereby or thereby or
referred to herein or therein, the transactions contemplated hereby or thereby, any Loan or the use
of the proceeds thereof or any act or omission or event occurring in connection therewith, and the
Company hereby waives, releases and agrees not to sue upon any such claim or any such damages,
whether or not accrued and whether or not known or suspected to exist in its favor.

     9.4. Set-Off. In addition to any rights now or hereafter granted under applicable law and not
by way of limitation of any such rights, upon the occurrence of any Event of Default each Lender
and its respective Affiliates is hereby authorized by the Company at any time or from time to time
subject to the consent of the Administrative Agent (such consent not to be unreasonably withheld or
delayed), without notice to the Company or to any other Person (other than the Administrative
Agent) except to the extent required by applicable law, any such notice being hereby expressly
waived to the maximum extent under applicable law, and subject to any requirements or limitations
imposed by applicable law, to set off and to appropriate and to apply any and all deposits (general
or special, including Indebtedness evidenced by certificates of deposit, whether matured or
unmatured, but not including trust accounts (in whatever currency)) and any other Indebtedness at
any time held or owing by such Lender to or for the credit or the account of the Company (in
whatever currency) against and on account of the obligations and liabilities of the Company to such
Lender arising hereunder or under the other Credit Documents, including all claims of any nature or
description arising out of or connected hereto or with any other Credit Document, irrespective of
whether or not (a) such Lender shall have made any demand hereunder, (b) the principal of or the
interest on the Loans or any other amounts due hereunder shall have become due and payable pursuant
to Section 2 and although such obligations and liabilities, or any of them, may be contingent or
unmatured or (c) such obligation or liability is owed to a branch or office of such Lender
different from the branch or office holding such deposit or obligation or such Indebtedness.

     9.5. Amendments and Waivers.

          (a) Class Requisite Lenders’ Consent. Subject to Sections 9.5(b) and 9.5(c) and
except where an Agent has an express right to consent to any action or failure to act by the
Company or as otherwise provided in a Credit Document, no amendment, modification, termination or
waiver of any provision of the Credit Documents, or consent to any departure by any Credit Party
therefrom, shall in any event be effective without the written concurrence of each Credit Party
that is party thereto, the Administrative Agent and the Class Requisite Lenders of each Class (in
each case, such consent not to be unreasonably withheld); provided, that the Class
Requisite Lenders with respect to the Tranche A Revolving Loans may, without the consent of any
Tranche B Lender, (i) amend or modify the level for any Portfolio Covenant set forth in Sections
6.5 (a), (b), (c), (f) or (g) as of the Closing Date by up to 5% in the aggregate for each
Portfolio Covenant level or (ii) waive any Event of Default under Section 7.1(d) at a time when the
applicable Portfolio Covenant Level is within 5% of the applicable level for the related Portfolio
Covenant under Section 6.5 as of the Closing Date (for the avoidance of doubt,

 

 

wherever “5%” is specified in the foregoing proviso it is intended to have a multiplicative
effect and not an additive effect).

          (b) Affected Lenders’ Consent. Without the written consent of each Lender (other than
a Defaulting Lender) that would be affected thereby, no amendment, modification, waiver,
termination, or consent shall be effective if the effect thereof would:

          (i) extend the scheduled final maturity of any Loan or Note;

          (ii) waive, reduce or postpone any scheduled repayment;

          (iii) reduce the rate of interest on any Loan (other than any waiver of any increase in
the interest rate applicable to any Loan pursuant to Section 2.8) or any fee payable
hereunder;

          (iv) extend the time for payment of any such interest or fees;

          (v) reduce the principal amount of any Loan;

          (vi) (A) amend the definition of “Borrowing Base”, “Borrowing Base Deficiency”,
“Revolving Availability”, “Tranche A Advance Rate”, “Tranche A Borrowing Base Deficiency”,
“Tranche B Advance Rate” or “Tranche B Borrowing Base Deficiency” or (B) amend, modify,
terminate or waive any provision of the proviso to Section 2.2(a)(i) or Sections 2.1, 2.12,
2.13, 2.15, 2.16, 3.2(a)(ii), 7.2, 9.5(b) or 9.5(c);

          (vii) amend the definition of “Class Requisite Lenders”, “Controlling Class”
“Requisite Lenders” or “Pro Rata Share”; provided, with the consent of the
Administrative Agent and Class Requisite Lenders of the affected Class, additional
extensions of credit pursuant hereto may be included in the determination of “Class
Requisite Lenders”, “Controlling Class”, “Requisite Lenders” or “Pro Rata Share” on
substantially the same basis as the Revolving Commitments of such Class and/or the Loans of
such Class are included on the Closing Date;

          (viii) consent to the assignment or transfer by any Credit Party of any of its rights
and obligations under any Credit Document;

          (ix) amend clauses A.1, A.2 or A.5 of Schedule 1.1; or

          (x) release all or substantially all of the Collateral, the Guarantor from the Bluestem
Guaranty, or any Sponsor from the Sponsor Indemnity Agreements except as expressly provided
in the Credit Documents.

          (c) Other Consents.

          (i) No amendment, modification, termination or waiver of any provision of the Credit
Documents, or consent to any departure by any Credit Party therefrom, shall:

 

 

               (A) increase any Revolving Commitment of any Lender over the amount thereof then in
effect without the consent of such Lender; provided, no amendment, modification or
waiver of any condition precedent, covenant, Default or Event of Default shall constitute an
increase in any Revolving Commitment of any Lender;

               (B) amend, modify, terminate or waive any provision of Section 3.1 or 3.2(a) (other
than Section 3.2(a)(ii)) with regard to any Credit Extension without the consent of the
Class Requisite Lenders affected thereby;

               (C) alter the required application of any repayments or prepayments as between Tranches
pursuant to Sections 2.10, 2.11 or 2.25 without the consent of Class Requisite Lenders of
the affected Tranche; or

               (D) amend, modify, terminate or waive any provision of Section 8 as the same applies to
any Agent, or any other provision hereof as the same applies to the rights or obligations of
any Agent, in each case without the consent of such Agent.

          (ii) Any Lender may forego or waive the payment of any Default Interest due and payable
to it hereunder without the consent of any other party hereto.

          (d) Execution of Amendments, etc. The Administrative Agent may, but shall have no
obligation to, with the concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of such Lender. Any waiver or consent shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or demand on the
Company in any case shall entitle the Company to any other or further notice or demand in similar
or other circumstances. Any amendment, modification, termination, waiver or consent effected in
accordance with this Section 9.5 shall be binding upon each Lender at the time outstanding, each
future Lender and, if signed by a Credit Party, upon such Credit Party. Notwithstanding anything
to the contrary contained in this Section 9.5, if the Administrative Agent and the Company shall
have jointly identified an obvious error or any error or omission of a technical nature, in each
case that is immaterial (as determined by the Administrative Agent in its sole discretion), in any
provision of the Credit Documents, then the Administrative Agent and the Company (and Bluestem, if
applicable) shall be permitted to amend such provision and such amendment shall become effective
without any further action or consent by the Requisite Lenders if the same is not objected to in
writing by the Requisite Lenders within five Business Days following receipt of notice thereof.
The Administrative Agent shall provide notice to the Lenders of any such amendment prior to the
effectiveness thereof.

     9.6. Successors and Assigns; Participations.

          (a) Generally. This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties hereto and the
successors and assigns of Lenders. None of the Company’s rights or obligations hereunder nor any
interest herein may be assigned or delegated without the prior written consent of all Lenders.
Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person

 

 

(other than the parties hereto, Indemnitee Agent Parties under Section 8.6, Indemnitees under
Section 9.3, their respective successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, Affiliates of each of the Agents and Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.

          (b) Register. The Company, the Administrative Agent and Lenders shall deem and treat
the Persons listed as Lenders in the Register as the holders and owners of the corresponding
Revolving Commitments and Loans listed therein for all purposes, and no assignment or transfer of
any such Revolving Commitment or Loan shall be effective, in each case, unless and until an
Assignment Agreement effecting the assignment or transfer thereof shall have been delivered to and
accepted by the Administrative Agent and recorded in the Register as provided in Section 9.6(e).
Prior to such recordation, all amounts owed with respect to the applicable Revolving Commitment or
Loan shall be owed to the Lender listed in the Register as the owner thereof, and any request,
authority or consent of any Person who, at the time of making such request or giving such authority
or consent, is listed in the Register as a Lender shall be conclusive and binding on any subsequent
holder, assignee or transferee of the corresponding Revolving Commitments or Loans.

          (c) Right to Assign.

          (i) Each Lender shall have the right at any time to sell, assign or transfer all or a
portion of its rights and obligations under this Agreement, including, without limitation,
all or a portion of its Revolving Commitment or Loans owing to it or other Obligations
(provided, however, that each such assignment shall be of a uniform, and not
varying, percentage of all rights and obligations under and in respect of any Loan and any
related Revolving Commitments):

               (A) to any Person meeting the criteria of clause (i) of the definition of “Eligible
Assignee” upon the giving of notice to the Company and the Administrative Agent; and

               (B) to any Person otherwise constituting an Eligible Assignee with the consent of the
Administrative Agent (such consent not to be unreasonably withheld); provided, each
such assignment pursuant to this Section 9.6(c)(ii) shall be in an aggregate amount of not
less than (A) $1,000,000 (or such lesser amount as may be agreed to by the Company and the
Administrative Agent or as shall constitute the aggregate amount of Tranche A Revolving
Loans and Revolving Commitments of the assigning Lender) with respect to the assignment of
the Revolving Commitments and the Tranche A Revolving Loans and (B) $1,000,000 (or such
lesser amount as may be agreed to by the Company and the Administrative Agent or as shall
constitute the aggregate amount of the Tranche B Term Loan of the assigning Lender) with
respect to the assignment of Tranche B Term Loans.

          (ii) Notwithstanding the foregoing, a Conduit Lender may, upon the giving of notice to
the Company and the Administrative Agent, grant a security interest in or assign (x) the
Tranche A Revolving Loans (or the portion thereof) funded by it and (y) its rights (but not
its obligations except in accordance with the other provisions of this

 

 

Section 9.6) hereunder related thereto to a Liquidity Bank pursuant to any Liquidity
Agreement, Funding Source, Support Provider or to any other commercial paper conduit which
is administered by such Conduit Lender’s administrator.

          (iii) Notwithstanding the foregoing and except as permitted under Section 7.2, a
Tranche A Lender shall not sell, assign or transfer all or a portion of its rights and
obligations under this Agreement to a Tranche B Lender, its Affiliates or Related Funds.

          (d) Mechanics. The assigning Lender and the assignee thereof shall execute and
deliver to the Administrative Agent an Assignment Agreement, together with such forms, certificates
or other evidence, if any, with respect to United States federal income tax withholding matters as
the assignee under such Assignment Agreement may be required to deliver to the Administrative Agent
pursuant to Section 2.20(c).

          (e) Notice of Assignment. Upon its receipt and acceptance of a duly executed and
completed Assignment Agreement, any forms, certificates or other evidence required by this
Agreement in connection therewith, the Administrative Agent shall record the information contained
in such Assignment Agreement in the Register, shall give prompt notice thereof to the Company and
the Successor Servicer and shall maintain a copy of such Assignment Agreement.

          (f) Representations and Warranties of Assignee. Each Lender, upon execution and
delivery hereof or upon executing and delivering an Assignment Agreement, as the case may be,
represents and warrants as of the Closing Date or as of the applicable Effective Date (as defined
in the applicable Assignment Agreement) that (i) it is an Eligible Assignee; (ii) it has experience
and expertise in the making of or investing in commitments or loans such as the applicable
Revolving Commitments or Loans, as the case may be; (iii) it will make or invest in, as the case
may be, its Revolving Commitments or Loans for its own account in the ordinary course of its
business and without a view to distribution of such Revolving Commitments or Loans within the
meaning of the Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this Section 9.6, the disposition of such Revolving
Commitments or Loans or any interests therein shall at all times remain within its exclusive
control); and (iv) such Lender does not own or control, or own or control any Person owning or
controlling, any trade debt or Indebtedness of Bluestem or the Company other than the Obligations
or any Capital Stock of Bluestem or the Company.

          (g) Effect of Assignment. Subject to the terms and conditions of this Section 9.6, as
of the “Effective Date” specified in the applicable Assignment Agreement: (i) the assignee
thereunder shall have the rights and obligations of a “Lender” hereunder to the extent such rights
and obligations hereunder have been assigned to it pursuant to such Assignment Agreement and shall
thereafter be a party hereto and a “Lender” for all purposes hereof; (ii) the assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have been assigned thereby
pursuant to such Assignment Agreement, relinquish its rights (other than any rights which survive
the termination hereof under Section 9.9) and be released from its obligations hereunder (and, in
the case of an Assignment Agreement covering all or the remaining portion of an assigning Lender’s
rights and obligations hereunder, such Lender shall cease to be a party hereto; provided,
anything contained in any of the Credit Documents to the

 

 

contrary notwithstanding, such assigning Lender shall continue to be entitled to the benefit
of all indemnities hereunder as specified herein with respect to matters arising out of the prior
involvement of such assigning Lender as a Lender hereunder); (iii) the Revolving Commitments shall
be modified to reflect the Revolving Commitment of such assignee and any Revolving Commitment of
such assigning Lender, if any; and (iv) if any such assignment occurs after the issuance of any
Note hereunder, the assigning Lender shall, upon the effectiveness of such assignment or as
promptly thereafter as practicable, surrender its applicable Notes to the Administrative Agent for
cancellation, and thereupon the Company shall issue and deliver new Notes, if so requested by the
assignee and/or assigning Lender, to such assignee and/or to such assigning Lender, with
appropriate insertions, to reflect the Revolving Commitments and/or outstanding Loans of the
assignee and/or the assigning Lender.

          (h) Participations. Each Lender shall have the right at any time to sell one or more
participations to any Person (other than Bluestem, any of its Subsidiaries or any of its
Affiliates) in all or any part of its Revolving Commitments, Loans or in any other Obligation. The
holder of any such participation, other than an Affiliate of the Lender granting such
participation, shall not be entitled to require such Lender to take or omit to take any action
hereunder except with respect to any amendment, modification or waiver that would (i) extend the
final scheduled maturity of any Loan or Note in which such participant is participating, or reduce
the rate or extend the time of payment of interest or fees thereon (except in connection with a
waiver of applicability of any post-default increase in interest rates) or reduce the principal
amount thereof, or increase the amount of the participant’s participation over the amount thereof
then in effect (it being understood that a waiver of any Default or Event of Default or of a
mandatory reduction in the Revolving Commitment shall not constitute a change in the terms of such
participation, and that an increase in any Revolving Commitment or Loan shall be permitted without
the consent of any participant if the participant’s participation is not increased as a result
thereof), (ii) consent to the assignment or transfer by the Company of any of its rights and
obligations under this Agreement, or (iii) release all or substantially all of the Collateral under
the Collateral Documents, the Guarantor from the Bluestem Guaranty or any Sponsor from the Sponsor
Indemnity Agreements (in each case, except as expressly provided in the Credit Documents)
supporting the Loans hereunder in which such participant is participating. The Company agrees that
each participant shall be entitled to the benefits of Sections 2.19 and 2.20 to the same extent as
if it were a Lender and had acquired its interest by assignment pursuant to clause (c) of this
Section 9.6; provided, (i) a participant shall not be entitled to receive any greater
payment under Section 2.19 or 2.20 than the applicable Lender would have been entitled to receive
with respect to the participation sold to such participant, unless the sale of the participation to
such participant is made with the Company’s prior written consent, (ii) a participant that would be
a Non-US Lender if it were a Lender shall not be entitled to the benefits of Section 2.20 unless
the Company is notified of the participation sold to such participant and such participant complies
with Section 2.20 as though it were a Lender and (iii) such participant complies with the written
statement and notice requirements therein. To the extent permitted by law, each participant also
shall be entitled to the benefits of Section 9.4 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.17 as though it were a Lender. Notwithstanding any
participation made hereunder (i) such selling Lender’s obligations under this Agreement shall
remain unchanged, (ii) such Lender shall remain solely responsible to the Company for the
performance of its obligations hereunder, and (iii) except as set forth above the Credit Parties,
the Agents and the other Lenders shall continue to deal solely and directly

 

 

with such Lender in connection with such Lender’s rights and obligations under this Agreement,
and such Lender shall retain the sole right to enforce the obligations of the Credit Parties
relating to the Obligations and to approve, without the consent of or consultation with any
participant, any amendment, modification or waiver of any provision of this Agreement. Each Lender
that sells a participation shall maintain a register on which it enters the name and address of
each participant and the amounts of each participant’s participation (the “Participant
Register”). The entries in the Participant Register shall be conclusive, absent manifest
error, and such Lender shall treat each Person whose name is recorded in the Participant Register
as the owner of such participation for all purposes of this Agreement notwithstanding any notice to
the contrary.

          (i) Certain Other Assignments. In addition to any other assignment permitted pursuant
to this Section 9.6, any Lender may assign, pledge and/or grant a security interest in, all or any
portion of its Loans, the other Obligations owed by or to such Lender, and its Notes, if any, to
secure obligations of such Lender including, without limitation, any Federal Reserve Bank as
collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve
System and any operating circular issued by such Federal Reserve Bank; provided, no Lender,
as between the Company and such Lender, shall be relieved of any of its obligations hereunder as a
result of any such assignment and pledge, and provided further, in no event shall
the applicable Federal Reserve Bank, pledgee or trustee be considered to be a “Lender” or be
entitled to require the assigning Lender to take or omit to take any action hereunder.

     9.7. Non-Public Information. The Administrative Agent may (i) distribute documents or notices
required to be delivered pursuant to Section 5.1 hereunder, Sections 4.02 or 4.13 of the Servicing
Agreement or otherwise required to be provided under this Agreement or the Servicing Agreement
through a password protected IntraLinks/IntraAgency, SyndTrak or other relevant website or
information platform (the “Platform”) and (ii) provide each Lender that is not a Public Lender and
each designee of a Public Lender (designated pursuant to clause (b) below) with access to such
Platform. The Company, the Administrative Agent and each Lender acknowledge that, after the initial
public offering of Bluestem, certain of the Lenders may be Public Lenders and, if such documents or
notices are identified by the Company or Bluestem as containing Non-Public Information, the Company
shall, and shall cause Bluestem to, clearly mark each such document and/or notice as containing
Non-Public Information. The Administrative Agent shall not post such documents or notices on the
portion of the Platform that is designated for Public Lenders. After the initial public offering of
Bluestem, the Company shall, and shall cause Bluestem to, clearly designate as such all information
provided to the Administrative Agent by or on behalf of the Company or Bluestem which is suitable
to be made available to Public Lenders. If the Company has not indicated whether a document or
notice delivered pursuant to this Section 9.7 contains Non-Public Information, the Administrative
Agent shall post such document or notice solely on the Platform designated for Lenders who wish to
receive material non-public information with respect to the Company and Bluestem.

     9.8. 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 Default or an Event of Default if such action is taken
or condition exists.

 

 

     9.9. Survival of Representations, Warranties and Agreements. All representations, warranties
and agreements made herein shall survive the execution and delivery hereof and the making of any
Credit Extension. Notwithstanding anything herein or implied by law to the contrary, the
agreements of the Company set forth in Sections 2.19, 2.20, 9.2, 9.3, 9.4 and 9.11 and the
agreements of Lenders set forth in Sections 2.17, 8.3(b) and 8.6 shall survive the payment of the
Loans and the termination hereof.

     9.10. No Waiver; Remedies Cumulative. No failure or delay on the part of any Agent or any
Lender in the exercise of any power, right or privilege hereunder or under any other Credit
Document 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 each Agent and each Lender 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 or any of the Interest Rate
Agreements. 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.

     9.11. Marshalling; Payments Set Aside. Neither any Agent nor any Lender shall be under any
obligation to marshal any assets in favor of the Company or any other Person or against or in
payment of any or all of the Obligations. To the extent that any Credit Party makes a payment or
payments to the Administrative Agent or Lenders (or to the Administrative Agent, on behalf of
Lenders), or the Administrative Agent, the Collateral Agent or Lenders enforce any security
interests or exercise their rights of setoff, and such payment or payments or the proceeds of such
enforcement or setoff or any part thereof are subsequently invalidated, declared to be fraudulent
or preferential, set aside and/or required to be repaid to a trustee, receiver or any other party
under any bankruptcy law, any other state or federal law, common law or any equitable cause, then,
to the extent of such recovery, the obligation or part thereof originally intended to be satisfied,
and all Liens, rights and remedies therefor or related thereto, shall be revived and continued in
full force and effect as if such payment or payments had not been made or such enforcement or
setoff had not occurred.

     9.12. Severability. In case any provision or obligation hereunder or any Note or other Credit
Document 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.

     9.13. Obligations Several; Independent Nature of Lenders’ Rights. The obligations of Lenders
hereunder are several and no Lender shall be responsible for the obligations or Revolving
Commitment of any other Lender hereunder. Nothing contained herein or in any other Credit
Document, and no action taken by Lenders pursuant hereto or thereto, shall be deemed to constitute
Lenders as a partnership, an association, a joint venture or any other kind of entity. The amounts
payable at any time hereunder to each Lender shall be a separate and independent debt, and, subject
to Section 8.8, each Lender shall be entitled to protect and enforce its rights arising under this
Agreement and the other Credit Documents and it shall not be

 

 

necessary for any other Lender to be joined as an additional party in any proceeding for such
purpose.

     9.14. Headings. Section headings herein are included herein for convenience of reference only
and shall not constitute a part hereof for any other purpose or be given any substantive effect.

     9.15. APPLICABLE LAW. THIS 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.

     9.16. CONSENT TO JURISDICTION.

          (a) ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST THE COMPANY ARISING OUT OF OR RELATING HERETO OR
ANY OTHER CREDIT DOCUMENT, OR ANY OF THE OBLIGATIONS, 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 AGREEMENT, THE COMPANY, FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, IRREVOCABLY (i)
ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE JURISDICTION AND VENUE OF SUCH COURTS; (ii)
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS; (iii) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH
PROCEEDING IN ANY SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT REQUESTED,
TO THE APPLICABLE CREDIT PARTY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SECTION 9.1 AND TO ANY
PROCESS AGENT SELECTED IN ACCORDANCE WITH CLAUSE (B) BELOW IS SUFFICIENT TO CONFER PERSONAL
JURISDICTION OVER THE COMPANY IN ANY SUCH PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES
EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT; AND (iv) AGREES THAT AGENTS AND LENDERS RETAIN THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST THE
COMPANY IN THE COURTS OF ANY OTHER JURISDICTION.

          (b) THE COMPANY HEREBY APPOINTS CT CORPORATION SYSTEM, ATT: SERVICE OF PROCESS DEPT., 111
EIGHTH AVENUE, NEW YORK, NY 10011, AS ITS AGENT TO RECEIVE ANY SERVICE OF PROCESS. ANY AND ALL
SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH ACTION, SUIT OR PROCEEDING SHALL BE EFFECTIVE
AGAINST THE COMPANY 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
THE COMPANY SHALL NOT MAINTAIN AN OFFICE IN NEW YORK CITY, SUCH CREDIT PARTY

 

 

SHALL PROMPTLY APPOINT AND MAINTAIN AN AGENT QUALIFIED TO ACT AS AN AGENT FOR SERVICE OF
PROCESS WITH RESPECT TO THE COURTS SPECIFIED IN THIS SECTION 9.16 ABOVE, AND ACCEPTABLE TO THE
ADMINISTRATIVE AGENT, AS THE COMPANY’S AUTHORIZED AGENT TO ACCEPT AND ACKNOWLEDGE ON THE COMPANY’S
BEHALF SERVICE OF ANY AND ALL PROCESS WHICH MAY BE SERVED IN ANY SUCH ACTION, SUIT OR PROCEEDING.

     9.17. WAIVER OF JURY TRIAL. THE COMPANY HEREBY AGREES TO WAIVE ITS RESPECTIVE RIGHTS TO A
JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING HEREUNDER OR UNDER ANY OF THE
OTHER CREDIT DOCUMENTS OR ANY DEALINGS BETWEEN IT RELATING TO THE SUBJECT MATTER OF THIS LOAN
TRANSACTION OR THE LENDER/BORROWER RELATIONSHIP 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 TRANSACTION, INCLUDING CONTRACT CLAIMS, TORT CLAIMS,
BREACH OF DUTY CLAIMS AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE COMPANY 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 AGREEMENT, AND THAT IT WILL CONTINUE TO RELY ON THIS
WAIVER IN ITS RELATED FUTURE DEALINGS. THE COMPANY 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 9.17 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 HEREUNDER. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A
TRIAL BY THE COURT.

     9.18. Confidentiality. Each Lender and Agent shall hold all non-public information regarding
any Bluestem Credit Party and its businesses, or information provided in any Credit Document,
identified as such by such Bluestem Credit Party and obtained by such Lender or Agent pursuant to
the requirements hereof in accordance with such Lender’s or Agent’s customary procedures for
handling confidential information of such nature, it being understood and agreed by the Company
that, in any event, a Lender or Agent may make (i) disclosures of such information to Affiliates of
such Lender or Agent and to their agents and advisors (and to other persons authorized by a Lender
or Agent to organize, present or disseminate such information in connection with disclosures
otherwise made in accordance with this Section 9.18), (ii) disclosures of such information
reasonably required by any bona fide or potential assignee, transferee or participant in connection
with the contemplated assignment, transfer or participation by such Lender or Agent of any Loans or
any participations therein or by any direct or indirect contractual counterparties (or the
professional advisors thereto) in Interest Rate

 

 

Agreements (provided, such counterparties and advisors are advised of and agree to be
bound by the provisions of this Section 9.18), (iii) disclosure to any rating agency when required
by it, provided that, prior to any disclosure, such rating agency is informed of the
confidential nature of the information, (iv) disclosures to any Lender’s or Agent’s financing
sources, provided that prior to any disclosure, such financing source is informed of the
confidential nature of the information, and (v) disclosures required or requested by any
Governmental Authority or representative thereof or by the NAIC or pursuant to legal or judicial
process; provided, unless specifically prohibited by applicable law or court order, each
Lender and Agent shall make reasonable efforts to notify the Company of any request by any
Governmental Authority or representative thereof (other than any such request in connection with
any examination of the financial condition or other routine examination of such Lender by such
Governmental Authority) for disclosure of any such non-public information prior to disclosure of
such information. Notwithstanding the foregoing, on or after the Closing Date, each of the Joint
Arrangers and Joint Bookrunners may, at its own expense issue news releases and publish “tombstone”
advertisements and other announcements relating to this transaction in newspapers, trade journals
and other appropriate media (which may include use of logos of the Company) (collectively, “Trade
Announcements”). The Company shall not issue any Trade Announcement except (i) disclosures
required by applicable law, regulation, legal process or the rules of the Securities and Exchange
Commission or (ii) with the prior approval of the Administrative Agent.

     9.19. Usury Savings Clause. Notwithstanding any other provision herein, the aggregate
interest rate charged or agreed to be paid with respect to any of the Obligations, including all
charges or fees in connection therewith deemed in the nature of interest under applicable law shall
not exceed the Highest Lawful Rate. If the rate of interest (determined without regard to the
preceding sentence) under this Agreement at any time exceeds the Highest Lawful Rate, the
outstanding amount of the Loans made hereunder shall bear interest at the Highest Lawful Rate until
the total amount of interest due hereunder equals the amount of interest which would have been due
hereunder if the stated rates of interest set forth in this Agreement had at all times been in
effect. In addition, if when the Loans made hereunder are repaid in full the total interest due
hereunder (taking into account the increase provided for above) is less than the total amount of
interest which would have been due hereunder if the stated rates of interest set forth in this
Agreement had at all times been in effect, then to the extent permitted by law, the Company shall
pay to the Administrative Agent an amount equal to the difference between the amount of interest
paid and the amount of interest which would have been paid if the Highest Lawful Rate had at all
times been in effect. Notwithstanding the foregoing, it is the intention of Lenders and the
Company to conform strictly to any applicable usury laws. Accordingly, if any Lender contracts
for, charges, or receives any consideration which constitutes interest in excess of the Highest
Lawful Rate, then any such excess shall be cancelled automatically and, if previously paid, shall
at such Lender’s option be applied to the outstanding amount of the Loans made hereunder or be
refunded to the Company. In determining whether the interest contracted for, charged, or received
by the Administrative Agent or a Lender exceeds the Highest Lawful Rate, such Person may, to the
extent permitted by applicable law, (a) characterize any payment that is not principal as an
expense, fee, or premium rather than interest, (b) exclude voluntary prepayments and the effects
thereof, and (c) amortize, prorate, allocate, and spread in equal or unequal parts the total amount
of interest, throughout the contemplated term of the Obligations hereunder.

 

 

     9.20. Counterparts. This Agreement may be executed in any number of counterparts, each of
which when so executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument. Delivery of an executed signature page
to this Agreement by facsimile transmission or other electronic image scan transmission (e.g.,
“PDF” or “tif” via email) shall be as effective as delivery of a manually signed counterpart of
this Agreement.

     9.21. Effectiveness. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by the Company and the Administrative
Agent of written or telephonic notification of such execution and authorization of delivery
thereof.

     9.22. Patriot Act. Each Lender and the Administrative Agent (for itself and not on behalf of
any Lender) hereby notifies the Company that pursuant to the requirements of the Act, it is
required to obtain, verify and record information that identifies the Company, which information
includes the name and address of the Company and other information that will allow such Lender or
the Administrative Agent, as applicable, to identify the Company in accordance with the Act.

     9.23. Prior Agreements. This Agreement and the other Credit Documents contain the entire
agreement of the parties hereto and thereto in respect of the transactions contemplated hereby and
thereby, and all prior agreements among or between such parties, whether oral or written, are
superseded by the terms of this Agreement and the other Credit Documents and unless specifically
set forth in a writing contemporaneous herewith the terms, conditions and provisions of any and all
such prior agreements do not survive execution of this Agreement.

     9.24. Third Party Beneficiaries. The Backup Servicer and any Successor Servicer shall be
express third party beneficiaries of the provisions of Section 2.13(b), Section 2.15(a)(iii) and
Section 2.15(b)(ii).

     9.25. Provisions Specific to Noncommitted Conduit Lenders.

          (a) Noncommitted Conduit Lenders and Tranche A Lenders. Any reference to a Tranche A
Lender herein shall be deemed to be a reference to both such Tranche A Lender and its Noncommitted
Conduit Lender, if any (except in Sections 2.2(b) and 9.25(b)).

          (b) Excess Funds. Notwithstanding any provisions contained in this Agreement to the
contrary, no Noncommitted Conduit Lender shall, or shall be obligated to, pay any amount pursuant
to this Agreement unless (i) such Noncommitted Conduit Lender has received funds which may be used
to make such payment and which funds are not required to repay its Commercial Paper Notes when due
and (ii) after giving effect to such payment, either (x) such Noncommitted Conduit Lender could
issue Commercial Paper Notes to refinance all of its outstanding Commercial Paper Notes (assuming
such outstanding Commercial Paper Notes matured at such time) in accordance with the program
documents governing such Noncommitted Conduit Lender’s commercial paper program or (y) all of such
Noncommitted Conduit Lender’s Commercial Paper Notes are paid in full; provided, that the
related Tranche A Lender shall be obligated to pay any such amounts which such Noncommitted Conduit
Lender fails to pay in

 

 

accordance with the terms hereof. Any amount which any Noncommitted Conduit Lender does not
pay pursuant to the operation of the preceding sentence will not constitute a claim (as defined in
§101 of the Bankruptcy Code) against or corporate obligation of such Noncommitted Conduit Lender
for any such insufficiency unless and until such Noncommitted Conduit Lender satisfies the
provisions of clauses (i) and (ii) above. The provisions of this Section 9.25 will survive the
termination of this Agreement.

          (c) Each Support Provider and Funding Source of a Noncommitted Conduit Lender shall be
entitled to the benefits of Section 2.19 of this Agreement, and, for such purpose such Support
Provider or Funding Source shall be deemed to be a “Lender”; its advances or other fundings made to
such Noncommitted Conduit Lender in respect of its making or maintaining its Loans hereunder shall
be deemed to be “Loans” and its commitment to make such advances or other fundings shall be deemed
to be “Revolving Commitments”, and each Support Provider and Funding Source of any Noncommitted
Conduit Lender shall be express third party beneficiaries of Section 2.19; in each case set forth
above, without duplication of any benefits accruing to a Noncommitted Conduit Lender and its
Support Providers and Funding Sources; provided, that for so long as the Tranche A Lender
related to such Noncommitted Conduit Lender is a Defaulting Lender, neither such Noncommitted
Conduit Lender’s Support Provider nor its Funding Source shall be entitled to any payments under
Section 2.19 that the Tranche A Lender would not be entitled by operation of Section 2.22 or 2.23.

          (d) Each Noncommitted Conduit Lender may act hereunder by and through its administrator or
agent.

     9.26. Provisions Specific to Committed Conduit Lenders.

          (a) Each Committed Conduit Lender may act hereunder by and through its administrator or agent.

          (b) Each Support Provider and Funding Source of a Committed Conduit Lender shall be entitled
to the benefits of Section 2.19 of this Agreement, and, for such purpose such Support Provider or
Funding Source shall be deemed to be a “Lender”; its advances or other fundings made to such
Committed Conduit Lender in respect of its making or maintaining its Loans hereunder shall be
deemed to be “Loans” and its commitment to make such advances or other fundings shall be deemed to
be “Revolving Commitments”, and each Support Provider and Funding Source of any Committed Conduit
Lender shall be express third party beneficiaries of Section 2.19; in each case set forth above,
without duplication of any benefits accruing to a Committed Conduit Lender and its Support
Providers and Funding Sources; provided, that for so long as such Committed Conduit Lender
is a Defaulting Lender, neither such Committed Conduit Lender’s Support Provider nor its Funding
Source shall be entitled to any payments under Section 2.19 that such Committed Conduit Lender
would not be entitled by operation of Section 2.22 or 2.23.

          (c) Notwithstanding any provisions contained in this Agreement to the contrary, obligations of
a Committed Conduit Lender under this Agreement shall be without recourse to any assets or
properties of such Committed Conduit Lender, other than (i) funds received by or available to such
Committed Conduit Lender for such purpose under its applicable

 

 

Liquidity Agreement, or (ii) other funds of such Committed Conduit Lender that are not
required to repay its Commercial Paper Notes. Any amount that a Committed Conduit Lender does not
pay pursuant to the terms hereof shall not constitute a claim (as defined in Section 101 of the
Bankruptcy Code) against the Committed Conduit Lender for any such insufficiency in any bankruptcy
or insolvency proceeding. Without limiting the foregoing, the obligations of a Committed Conduit
Lender under this Agreement shall be without recourse to any officer, director, employee,
stockholder, member, agent, manager and/or Affiliate of such Committed Conduit Lender and shall be
solely the obligations of such Committed Conduit Lender. The provisions contained in this
paragraph (c) shall survive the termination of this Agreement and the repayment of all Obligations.

     9.27. Agreement Not to Petition. Each party hereto agrees, for the benefit of the holders of
the privately or publicly placed indebtedness for borrowed money for each Conduit Lender, not,
prior to the date which is one year and one day after the payment in full of all such indebtedness,
to acquiesce, petition or otherwise, directly or indirectly, invoke, or cause any Conduit Lender to
invoke, the process of any Governmental Authority for the purpose of (a) commencing or sustaining a
case against such Conduit Lender under any federal or state bankruptcy, insolvency or similar law
(including the Bankruptcy Code), (b) appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official for such Conduit Lender, or any substantial part
of its property, or (c) ordering the winding up or liquidation of the affairs of such Conduit
Lender. The provisions of this Section 9.27 will survive the termination of this Agreement.

[Remainder of page intentionally left blank]

 

 

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

	 	 	 	 	 
	 	FINGERHUT RECEIVABLES I, LLC

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

as Administrative Agent, Collateral Agent, Joint Arranger, Joint Bookrunner,
Syndication Agent and Documentation Agent

 	 
	 	By:  	/s/ Jason P. Gelberd
 	 
	 	 	Name:  	Jason P. Gelberd 	 
	 	 	Title:  	Authorized Signatory 	 
	 
	 	J.P. MORGAN SECURITIES INC.,

as Joint Arranger and Joint Bookrunner

 	 
	 	By:  	/s/ T. Heldrig
 	 
	 	 	Name:  	T. Heldrig 	 
	 	 	Title:  	MD 	 
	 

Signature Page to

Credit Agreement

S-1

 

	 	 	 	 	 
	 	THE ROYAL BANK OF SCOTLAND PLC

as a Tranche A Lender

 	 
	 	By:  	/s/ David Viney
 	 
	 	 	Name: David Viney	 
	 	 	Title:   Managing Director	 
	 	 		
	 	 	Address:
	The Royal Bank of Scotland plc
600 Washington Boulevard
Stamford, CT 06901	 
	 	 	Attention:
	Liz Rogers, Conduit Operations	 
	 	 	Telephone:
	 (203) 897-6937	 
	 	 	Facsimile: 	(203) 873-3737	 
	 
	 	WINDMILL FUNDING CORPORATION,

as a Noncommitted Conduit Lender for The Royal Bank of Scotland plc

 	 
	 	By:  	/s/ Bernard J. Angelo
 	 
	 	 	Name: Bernard J. Angelo	 
	 	 	Title:    Vice President	 
	 	 			 
	 	 	Address:
	c/o GSS, LLC

68 South Service Road

Suite 120

Melville, NY 11747	 
	 	 	Attention:	 Frank B. Bilotta	 
	 	 	Telephone: 	(631) 587-4780	 
	 	 	Facsimile:
	(212) 302-8767	 
	 
	 	 	with a copy to:
	 
	 	 			 
	 	 	Address:
	The Royal Bank of Scotland plc

600 Washington Boulevard

Stamford, CT 06901	 
	 	 	Attention:
	 Liz Rogers, Conduit Operations	 
	 	 	Telephone:
	 (203) 897-6937	 
	 	 	Facsimile: 	(203) 873-3737	 
	 

Signature Page to

Credit Agreement

S-2

 

	 	 	 	 	 
	 	RIVERSIDE FUNDING LLC,

as a Committed Conduit Lender

 	 
	 	By:  	/s/ Jill A. Russo
 	 
	 	 	Name: Jill A. Russo 	 
	 	 	Title:    Vice President	 
	 
	 	 	Address:
	 68 South Service Road

Suite 120

Melville, NY 11747	 
	 	 	Telephone: 	 631-587-4700	 
	 
	 	PNC BANK, NATIONAL ASSOCIATION,

as a Tranche A Lender

 	 
	 	By:  	/s/ Sara V. Traberman
 	 
	 	 	Name: Sara V. Traberman 	 
	 	 	Title:    Vice President	 
	 	 			 
	 	 	Address:
	Two Tower Center Blvd.

8th Floor

East Bruswick, NJ 08816	 
	 	 	Attention:
	Gurdatt Jagnanan	 
	 	 	Telephone:
	  (732) 220-4302	 
	 	 	Facsimile: 	(7320 220-3268	 
	 
	 	GOLDMAN SACHS SPECIALTY LENDING HOLDINGS, INC.,

as a Tranche B Lender

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

Signature Page to

Credit Agreement

S-3

 

APPENDIX A-1

Revolving Commitments

	 	 	 	 	 	 	 	 	 
	Tranche A Lender	 	Revolving Commitment	 	 	Pro Rata Share	 
	Goldman Sachs Bank USA
	 	$	73,000,000	 	 	 	25.17	%
	Royal Bank of Scotland, plc /
Windmill Funding Corporation
	 	$	73,000,000	 	 	 	25.17	%
	Riverside Funding LLC
	 	$	73,000,000	 	 	 	25.17	%
	JPMorgan Chase Bank, N.A.
	 	$	48,000,000	 	 	 	16.55	%
	PNC Bank, National Association
	 	$	23,000,000	 	 	 	7.93	%
	Total
	 	$	290,000,000	 	 	 	100	%

Appendix A-1

 

 

APPENDIX A-2

Term Loan Commitments

	 	 	 	 	 	 	 	 	 
	Tranche B Lender	 	Term Loan Commitment	 	 	Pro Rata Share	 
	Goldman Sachs Specialty Lending
Holdings Inc.
	 	$	75,000,000	 	 	 	100	%
	Total
	 	$	75,000,000	 	 	 	100	%

APPENDIX A-2

 

 

CREDIT AGREEMENT

APPENDIX B

TO CREDIT AGREEMENT

Notice Addresses

FINGERHUT RECEIVABLES I, LLC

6509 Flying Cloud Drive

Suite 101

Eden Prairie, MN 55344

Attention: Executive Vice President & Chief Financial Officer

Telecopier: (952) 656-4117

in each case, with copies to:

Bluestem Brands, Inc.

6509 Flying Cloud Drive

Eden Prairie, MN 55344

Attention: Senior Vice President & General Counsel

Telecopier: (952) 656-4117;

and:

Skadden, Arps, Slate, Meagher & Flom LLP

Four Times Square

New York, NY 10036

Attention: Andrew Faulkner

Telecopier: (917) 777-2853

GOLDMAN SACHS BANK USA

as Administrative Agent and Collateral Agent, Joint Arranger, Joint Bookrunner, Syndication Agent
and Documentation Agent

Goldman Sachs Bank USA

6011 Connection Drive

Irving, TX 75039

Attention: Bluestem Account Manager

Telecopier: 972-368-5099

with a copy to:

Goldman Sachs Bank USA

6011 Connection Drive

Irving, TX 75039

EXHIBIT A-1-1

 

 

EXHIBIT A-1 TO

CREDIT AGREEMENT

Attention: GSSLG In-House Counsel

Telecopier: 972-368-5099

J.P. MORGAN SECURITIES INC.,

as Joint Arranger and Joint Bookrunner

J.P. Morgan Securities Inc.

10 South Dearborn

Chicago, IL 60603

Attention: Shawn Pelc

Telephone: 312-732-6357

Telecopier: 312-386-7579

JPMORGAN CHASE BANK, N.A.

as a Tranche A Lender

JPMorgan Chase Bank, N.A.

10 South Dearborn, MC IL1-1454

Chicago, IL 60603

Attention: Brad Kuhn

Telephone: 312-732-7406

Telecopier: 312-732-7593

ROYAL BANK OF SCOTLAND, plc

as a Tranche A Lender

RBS Global Banking & Markets

600 Washington Boulevard

Stamford, CT 06901

Attention: Liz Rogers

Telephone: 203-897-6937

Telecopier: 203-873-3737

with copies to:

RBS Global Banking & Markets

600 Washington Boulevard

Stamford, CT 06901

Attention: David Donofrio

Telephone: 312-664-6584

RIVERSIDE FUNDING LLC

as a Committed Conduit Lender

Riverside Funding LLC

c/o Global Securitization Services, LLC

68 South Service Road, Suite 120

EXHIBIT A-1-2

 

 

EXHIBIT A-1 TO

CREDIT AGREEMENT

Melville, New York 11747

Attention: Kevin Burns

with a mandatory copy to:

Deutsche Bank AG, New York Branch, Administrator

60 Wall Street

New York, NY 10005

Attention: Mary Connors

DEUTSCHE BANK AG, NEW YORK BRANCH

Deutsche Bank AG, New York Branch

60 Wall Street

New York, NY 10005

Attention: Denise Chen

PNC BANK, NATIONAL ASSOCIATION

as a Tranche A Lender

PNC Bank, National Association

99 High Street, 27th Floor

Boston, MA 02115

Attention: Graham Holding

Telephone: 617-338-6673

EXHIBIT A-1-2

 

 

EXHIBIT A-1 TO

CREDIT AGREEMENT

GOLDMAN SACHS SPECIALTY LENDING HOLDINGS INC.

as Tranche B Lender

Goldman Sachs Specialty Lending Holdings Inc.

6011 Connection Drive

Irving, Texas 75039

Attention: Jason Gelberd

Telecopier: 972-368-5099

EXHIBIT A-1-2

 

 

EXHIBIT A-1 TO

CREDIT AGREEMENT

[FORM OF] FUNDING NOTICE

     Reference is made to the Credit Agreement, [anticipated to be] dated as of August 20, 2010 (as
amended, restated, replaced, supplemented or otherwise modified from time to time, the “Credit
Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein
defined), by and among FINGERHUT RECEIVABLES I, LLC (“Company” ), the Lenders party thereto from
time to time, GOLDMAN SACHS BANK USA, 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.

     [Pursuant to Section 2.2 of the Credit Agreement, the Company desires that the Tranche A
Lenders make the following Tranche A Revolving Loans to Company in accordance with the applicable
terms and conditions of the Credit Agreement on [●] (the “Credit Date”):]

     [Pursuant to Section 2.1 of the Credit Agreement, the Company desires that the Tranche B
Lenders make the following Tranche B Term Loans to Company in accordance with the applicable terms
and conditions of the Credit Agreement on the Closing Date (the “Credit Date”): $75,000,000]

     The Company hereby certifies that:

     (i) as of the date hereof:

	 	 	 	 	 	 	 	 	 

	 

	 	 	1.	 	 	the Total
Utilization of Revolving
Commitments is:
	 	$[___,___,___]
	 
	 

	 	 	2.	 	 	the product of the
Borrowing Base and 54% is:	 	 
	 

	 	 	 	 	 	 	 	$[___,___,___]
	 

	 	 	3.	 	 	the product of the
Borrowing Base and 68%
minus the Total Utilization
of Revolving Commitments
is:	 	 
	 

	 	 	 	 	 	 	 	$[___,___,___]

     (ii) after making the Credit Extensions requested on such Credit Date, the Total
Utilization of Revolving Commitments as of such Credit Date shall not exceed the lesser of
(A) the Revolving Commitments then in effect and (B) the Borrowing Base multiplied by 54%;

     (iii) as of such Credit Date, the representations and warranties made by each of the
Credit Parties contained in the Credit Agreement and in the other Credit Documents shall be
true and correct in all material respects on and as of that Credit Date to the same extent
as though made on and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such representations and
warranties shall have been true and correct in all material respects on and as of such
earlier date;

     (iv) as of such Credit Date, after giving effect to such Loan, no event shall have
occurred and be continuing or would result from the consummation of the applicable Credit
Extension that would constitute an Event of Default or a Default;

     (v) as of such Credit Date, after giving effect to such Loan, the amount on deposit in
the Spread Account shall at least equal the Required Spread Account Amount;

EXHIBIT A-1-2

 

 

EXHIBIT A-1 TO
CREDIT AGREEMENT

     (vi) as of the Credit Date, any and all Contribution Amounts with respect to Eligible
Underlying Receivables owned by the Company shall have been deposited in the Finance Charge
Collections Account;

     (vii) the Daily Settlement and Servicing Report for the Business Day prior to the
Credit Date, which shall be delivered on a pro forma basis for the Credit Date on the
Closing Date, has been provided to the Administrative Agent; and

     (viii) there is sufficient Revolving Availability with respect to any Tranche A
Revolving Loans that are part of such Credit Extension and such Credit Extension will not
result in a Tranche B Borrowing Base Deficiency.

	 	 	 	 	 
	Date: [mm/dd/yy]  	
 FINGERHUT RECEIVABLES I, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

EXHIBIT A-1-2

 

 

EXHIBIT A-2 TO

CREDIT AGREEMENT

[FORM OF] PRINCIPAL COLLECTIONS NOTICE

     Reference is made to the Credit Agreement, dated as of August 20, 2010 (as amended, restated, replaced, supplemented or otherwise
modified from time to time, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being used
herein as therein defined), by and among FINGERHUT RECEIVABLES I, LLC (“Company”), the Lenders party thereto from time to time,
GOLDMAN SACHS BANK USA, 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.

     Pursuant to Section 2.15 of the Credit Agreement, Company desires that Administrative Agent
make the following Principal Collections available to Company in accordance with the applicable
terms and conditions of the Credit Agreement on [●] (the “Principal Collections Date”):

	 	 	 	 	 	 	 	 	 

	 

	 	 	1.	 	 	Principal Collections:
	 	$[___,___,___]

     The Company hereby certifies that:

     (i) As of the date hereof,

	 	 	 	 	 	 	 	 	 

	 

	 	 	1.	 	 	the Total Utilization of Revolving Commitments is:
	 	$[___,___,___]
	 
	 	 	 	 	 	 	 	 
	 

	 	 	2.	 	 	the Term Loan Exposure is:
	 	$[___,___,___]
	 
	 	 	 	 	 	 	 	 
	 

	 	 	3.	 	 	the product of the Borrowing Base and 54% is:
	 	$[___,___,___]
	 
	 	 	 	 	 	 	 	 
	 

	 	 	4.	 	 	the product of the Borrowing Base and 68% minus the
Total Utilization of Revolving Commitments is:
	 	$[___,___,___]

     (ii)
after giving effect to the release of Principal Collections on the Principal Collections Date, Total Utilization of
Revolving Commitments shall not exceed the lesser of (A) the Revolving Commitments then in effect and (B) the product
of the Borrowing Base and 54%;

     (iii)
after giving effect to the release of Principal Collections on the Principal Collections Date, there will
not exist any Borrowing Base Deficiency; and

EXHIBIT A-2-1

 

 

EXHIBIT A-1 TO

CREDIT AGREEMENT

     (iv)
after giving effect to the release of Principal Collections on the Principal Collections Date, no event
has occurred and is continuing or would result from the release of Principal Collections hereby that would constitute
an Event of Default or a Default.

	 	 	 	 	 
	Date: [mm/dd/yy] 	FINGERHUT  RECEIVABLES I, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 

EXHIBIT A-1-2

 

 

CREDIT AGREEMENT

[FORM OF] TRANCHE A REVOLVING LOAN NOTE

Up to $[___,___,___]1

[mm/dd/yy]2 

     FOR
VALUE RECEIVED, FINGERHUT RECEIVABLES I, LLC, a Delaware LLC (“Company”), promises to
pay [NAME OF LENDER] (“Payee”) or its registered assigns, on or before [mm/dd/yy], the lesser of
(a) [DOLLARS] ($[___,___,___]) and (b) the outstanding principal amount of all advances made by
Payee to Company as Tranche A Revolving Loans under the Credit Agreement referred to below, as
evidenced on the books and records of the Tranche A Lender and on the Register.

     Company also promises to pay interest on the unpaid principal amount hereof, from the date
hereof until paid in full, at the rates and at the times which shall be determined in accordance
with the provisions of that certain Credit Agreement, dated as of August 20, 2010 (as amended,
restated, replaced, supplemented or otherwise modified from time to
time, the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as therein defined),
by and among the Company, the Lenders party thereto from time to time, GOLDMAN SACHS BANK USA, 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.

     This Tranche A Revolving Loan Note is one of the “Tranche A Revolving Loan Notes” issued
pursuant to and entitled to the benefits of the Credit Agreement, to which reference is hereby made
for a more complete statement of the terms and conditions under which the Tranche A Revolving Loan
evidenced hereby was made and is to be repaid.

     All payments of principal and interest in respect of this Tranche A Revolving Loan Note shall
be made in lawful money of the United States of America in same day funds at the Principal Office
of Administrative Agent or at such other place as shall be designated in writing for such purpose
in accordance with the terms of the Credit Agreement. Unless and until an Assignment Agreement
effecting the assignment or transfer of the obligations evidenced hereby shall have been accepted
by Administrative Agent and recorded in the Register, Company, each Agent and the Lenders shall be
entitled to deem and treat Payee as the owner and holder of this Tranche A Revolving Loan Note and
the obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof, that before
disposing of this Tranche A Revolving Loan Note or any part hereof it will make a notation hereon
of all principal payments previously made hereunder and of the date to which interest hereon has
been paid; provided, the failure to make a notation of any payment made on this Tranche A Revolving
Loan Note shall not limit or otherwise affect the obligations of Company hereunder with respect to
payments of principal of or interest on this Tranche A Revolving Loan Note.

 

			
	1	 	Lender’s Revolving Commitment.
	 
	2	 	Date of issuance.

EXHIBIT B-1-1

 

CREDIT AGREEMENT

     This Tranche A Revolving Loan Note is subject to mandatory prepayment and to prepayment at the
option of Company, each as provided in the Credit Agreement.

     THIS TRANCHE A REVOLVING LOAN NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE
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 CONFLICTS OF LAWS PRINCIPLES THEREOF (OTHER THAN SECTIONS
5-1401 AND 5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this
Tranche A Revolving Loan Note, together with all accrued and unpaid interest thereon, may become,
or may be declared to be, due and payable in the manner, upon the conditions and with the effect
provided in the Credit Agreement.

     The terms of this Tranche A Revolving Loan Note are subject to amendment only in the manner
provided in the Credit Agreement.

     No reference herein to the Credit Agreement and no provision of this Tranche A Revolving Loan
Note or the Credit Agreement shall alter or impair the obligations of Company, which are absolute
and unconditional, to pay the principal of and interest on this Tranche A Revolving Loan Note at
the place, at the respective times, and in the currency herein prescribed.

     Company promises to pay all reasonable, out-of-pocket costs and expenses, including reasonable
attorneys’ fees, all as provided in the Credit Agreement, incurred in the collection and
enforcement of this Tranche A Revolving Loan Note. Company and any endorsers of this Tranche A
Revolving Loan Note hereby consent to renewals and extensions of time at or after the maturity
hereof, without notice, and hereby waive diligence, presentment, protest, demand notice of every
kind and, to the full extent permitted by law, the right to plead any statute of limitations as a
defense to any demand hereunder.

EXHIBIT B-1-2

 

 CREDIT AGREEMENT

     IN WITNESS WHEREOF, Company has caused this Tranche A Revolving Loan Note to be duly executed
and delivered by its officer thereunto duly authorized as of the date and at the place first
written above.

	 	 	 	 	 
	 	FINGERHUT RECEIVABLES I, LLC

 	 
	 	By:  	 	 
	 	 	Name 	 
	 	 	Title:  	 	 

EXHIBIT B-1-3

 

CREDIT AGREEMENT

	 	 	 	 	 

TRANSACTIONS ON

TRANCHE A REVOLVING LOAN NOTE

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Amount of Tranche A	 	 	 	 	 	 	Outstanding	 	 	 	 
	 	 	 	 	Revolving Loan Made	 	 	Amount of Principal	 	 	Principal	 	 	Notation	 
	Date	 	 	This Date	 	 	Paid This Date	 	 	Balance This Date	 	 	Made By	 
	 
	 
	 

EXHIBIT B-1-4

 

EXHIBIT B-2 TO

CREDIT AGREEMENT

[FORM OF] TRANCHE B TERM LOAN NOTE

$[___,___,___]1

[mm/dd/yy]2

     FOR VALUE RECEIVED, FINGERHUT RECEIVABLES I, LLC, a Delaware LLC (“Company”), promises to
pay [NAME OF LENDER] (“Payee”) or its registered assigns the principal amount of [DOLLARS]
($[___,___,___]) or, if less, the then outstanding principal amount outstanding of the Tranche B
Term Loan made by the Tranche B Lender, as evidenced on the books and records of the Tranche B
Lender and on the Register.

     Company also promises to pay interest on the unpaid principal amount hereof, from the date
hereof until paid in full, at the rates and at the times which shall be determined in accordance
with the provisions of that certain Credit Agreement, dated as of August 20, 2010 (as amended,
restated, replaced, supplemented or otherwise modified from time to time, the “Credit Agreement”;
the terms defined therein and not otherwise defined herein being used herein as therein defined),
by and among the Company, the Lenders party thereto from time to time, GOLDMAN SACHS BANK USA, 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.

     This Tranche B Term Loan Note is one of the “Tranche B Term Loan Notes” issued pursuant to and
entitled to the benefits of the Credit Agreement, to which reference is hereby made for a more
complete statement of the terms and conditions under which the Term Loan evidenced hereby was made
and is to be repaid.

     All payments of principal and interest in respect of this Tranche B Term Loan Note shall be
made in lawful money of the United States of America in same day funds at the Principal Office of
Administrative Agent or at such other place as shall be designated in writing for such purpose in
accordance with the terms of the Credit Agreement. Unless and until an Assignment Agreement
effecting the assignment or transfer of the obligations evidenced hereby shall have been accepted
by Administrative Agent and recorded in the Register, Company, each Agent and the Lenders shall be
entitled to deem and treat Payee as the owner and holder of this Tranche B Term Loan Note and the
obligations evidenced hereby. Payee hereby agrees, by its acceptance hereof, that before disposing
of this Tranche B Term Loan Note or any part hereof it will make a notation hereon of all principal
payments previously made hereunder and of the date to which interest hereon has been paid;
provided, the failure to make a notation of any payment made on this Tranche B Term Loan Note shall
not limit or otherwise affect the obligations of Company hereunder with respect to payments of
principal of or interest on this Tranche B Term Loan Note.

     This Tranche B Term Loan Note is subject to mandatory prepayment and to prepayment at the
option of Company, each as provided in the Credit Agreement.

 

			
	1	 	Lender’s Term Loan Commitment
	 
	2	 	Date of Issuance

EXHIBIT B-2-1

 

     THIS TRANCHE B TERM LOAN NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE 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 THEREOF (OTHER THAN SECTIONS 5-1401 AND
5-1402 OF THE NEW YORK GENERAL OBLIGATIONS LAW).

     Upon the occurrence of an Event of Default, the unpaid balance of the principal amount of this
Tranche B Term Loan Note, together with all accrued and unpaid interest thereon, may become, or may
be declared to be, due and payable in the manner, upon the conditions and with the effect provided
in the Credit Agreement.

     The terms of this Tranche B Term Loan Note are subject to amendment only in the manner
provided in the Credit Agreement.

     No reference herein to the Credit Agreement and no provision of this Tranche B Term Loan Note
or the Credit Agreement shall alter or impair the obligations of Company, which are absolute and
unconditional, to pay the principal of and interest on this Tranche B Term Loan Note at the place,
at the respective times, and in the currency herein prescribed.

     Company promises to pay all costs and expenses, including reasonable attorneys’ fees, all as
provided in the Credit Agreement, incurred in the collection and enforcement of this Tranche B Term
Loan Note. Company and any endorsers of this Tranche B Term Loan Note hereby consent to renewals
and extensions of time at or after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand notice of every kind and, to the full extent permitted by law, the
right to plead any statute of limitations as a defense to any demand hereunder.

EXHIBIT B-2-1

 

IN WITNESS WHEREOF, Company has caused this Tranche B Term Loan Note to be duly executed and
delivered by its officer thereunto duly authorized as of the date and at the place first written
above.

	 	 	 	 	 
	 	FINGERHUT RECEIVABLES I, LLC

 	 
	 	By:  	 	 
	 	 	Title: 	 
	 	 	 	 
	 

EXHIBIT B-2-1

 

EXHIBIT C TO

CREDIT AGREEMENT

[FORM OF] ASSIGNMENT AND ASSUMPTION AGREEMENT

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

     For an agreed consideration, the Assignor hereby irrevocably sells and assigns to the
Assignee, and the Assignee hereby irrevocably purchases and assumes from the Assignor, subject to
and in accordance with the Standard Terms and Conditions and the Credit Agreement, as of the
Effective Date inserted by the Administrative Agent as contemplated below, (i) the interest in and
to all of the Assignor’s rights and obligations under the Credit Agreement and any other documents
or instruments delivered pursuant thereto that represents the amount and percentage interest
identified below of all of the Assignor’s outstanding rights and obligations under the respective
facilities identified below and (ii) to the extent permitted to be assigned under applicable law,
all claims, suits, causes of action and any other right of the Assignor (in its capacity as a
Lender) against any Person, whether known or unknown, arising under or in connection with the
Credit Agreement, any other documents or instruments delivered pursuant thereto or the loan
transactions governed thereby or in any way based on or related to any of the foregoing, including,
but not limited to, contract claims, tort claims, malpractice claims, statutory claims and all
other claims at law or in equity related to the rights and obligations sold and assigned pursuant
to clause (i) above (the rights and obligations sold and assigned by the Assignor to the Assignee
pursuant to clauses (i) and (ii) above being referred to herein collectively as the “Assigned
Interest”). Such sale and assignment is without recourse to the Assignor and, except as expressly
provided in this Assignment and the Credit Agreement, without representation or warranty by the
Assignor.

	 	 	 	 	 

	1.

	 	Assignor:
	 	                                                                         
       
	 
	 	 	 	 
	2.

	 	Assignee:
	 	                                                                         
       
	 

	 	[and is an Eligible Assignee]
	 
	 	 	 	 
	3.

	 	Borrower:
	 	Fingerhut Receivables I, LLC
	 
	 	 	 	 
	4.

	 	Administrative Agent:
	 	Goldman Sachs Bank USA,

	 
	 	as administrative agent under the Credit Agreement

EXHIBIT C-1

 

EXHIBIT C TO

CREDIT AGREEMENT

	 	 	 

	5.      Credit Agreement:

	 	The Credit Agreement, dated as of August 20, 2010 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, by and among FINGERHUT
RECEIVABLES I, LLC (“Company”), the Lenders party thereto from time to time, GOLDMAN SACHS
BANK USA, 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.
	 
	 	 
	6.      Assigned Interest:
	 	 

	 	 	 	 	 
	 	 	Aggregate Amount of	 
	 	 	[Revolving Commitment/	 
	 	 	Tranche A Revolving Loans]	 
	 	 	[Tranche B Term Loans] for all	 
	 	 	Lenders	 
	 
	 	$	 	 
	 
	 	 	 
	 
	 	$	 	 
	 
	 	 	 
	 
	 	$	 	 
	 
	 	 	 

	 	 	 	 	 
	[Amount of Revolving	 	[Percentage Assigned	 
	Commitment Assigned]	 	of Revolving Commitment]	 
	$
	 	 	%	 
	 
	 	 	 
	$
	 	 	%	 
	 
	 	 	 
	$
	 	 	%	 
	 
	 	 	 

EXHIBIT C-2

 

EXHIBIT C TO

CREDIT AGREEMENT

	 	 	 	 	 
	Amount of [Tranche A Revolving	 	Percentage Assigned of	 
	Loans] [Tranche B Term Loans]	 	[Tranche A Revolving Loans] [Tranche	 
	Assigned	 	B Term Loans]1	 
	$
	 	 	%	 
	 
	 	 	 
	$
	 	 	%	 
	 
	 	 	 
	$
	 	 	%	 
	 
	 	 	 

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

	7.	 	Notice and Wire Instructions:

	 	 	 	 	 	 	 	 	 
	[NAME OF ASSIGNOR]	 	 	 	[NAME OF ASSIGNEE]	 	 	 	 
	 
	Notices:	 	 	 	Notices:	 	 	 	 
	 
	 

	 	 

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

	 	 
	 

	 	Attention:
	 	 	 	Attention:	 	 
	 

	 	Telecopier:
	 	 	 	Telecopier:	 	 
	
 
	with a copy to:	 	 	 	with a copy to:	 	 	 	 
	 
	 

	 	 

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 

	 	 
	 	 

	 	 
	 

	 	Attention:
	 	 	 	Attention:	 	 
	 

	 	Telecopier:
	 	 	 	Telecopier:	 	 

	 	 	 	 	 	 	 
	Wire Instructions:	 	 	 	Wire Instructions:	 	 
	 
	 	 	 	 	 	 

 

			
	1	 	Set forth, to at least 9 decimals, as a
percentage of the Revolving Commitment/Revolving Loans of all Lenders
thereunder.

EXHIBIT C-3

 

EXHIBIT C TO

CREDIT AGREEMENT

EXHIBIT C-4

 

EXHIBIT C TO

CREDIT AGREEMENT

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

	 	 	 	 	 
	 	ASSIGNOR

[NAME OF ASSIGNOR]

 	 
	 	By:  	 	 
	 	 	Name 	 
	 	 	Title:  	 	 
	 

	 	 	 	 	 
	 	ASSIGNEE

[NAME OF ASSIGNEE]

 	 
	 	By:  	 	 
	 	 	Name 	 
	 	 	Title:  	 	 
	 

Consented to and Accepted:

	 	 	 	 	 
	 	GOLDMAN SACHS BANK USA, as
Administrative Agent

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

EXHIBIT C-5

 

EXHIBIT C TO

CREDIT AGREEMENT

ANNEX 1

STANDARD TERMS AND CONDITIONS FOR ASSIGNMENT

AND ASSUMPTION AGREEMENT

	1.	 	Representations and Warranties.

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

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

	2.	 	Payments. All payments with respect to the Assigned Interests shall be made on the
Effective Date as follows:

With respect to Assigned Interests for [Tranche A Revolving Loans] [Tranche B Term
Loans], from and after the Effective Date, the Administrative Agent shall make all
payments in respect of the Assigned Interest (including payments of principal,
interest, fees and other amounts) to the Assignor for amounts which have accrued to
but excluding the Effective Date and to the Assignee for amounts which have accrued
from and after the Effective Date.

EXHIBIT C-6

 

EXHIBIT C TO

CREDIT AGREEMENT

	 	3.	 	General Provisions. This Assignment and Assumption shall be binding upon, and inure
to the benefit of, the parties hereto and their respective successors and assigns. This
Assignment and Assumption may be executed in any number of counterparts, which together shall
constitute one instrument. Delivery of an executed counterpart of a signature page of this
Assignment and Assumption by telecopy shall be effective as delivery of a manually executed
counterpart of this Assignment and Assumption. This Assignment and Assumption shall be
governed by, and construed in accordance with, the laws of the State of New York without
regard to conflict of laws principles thereof (other than Sections 5-1401 and 5-1402 of the
New York general obligations law).

EXHIBIT C-7

 

CREDIT AGREEMENT

[FORM OF] CERTIFICATE REGARDING NON-BANK STATUS

          Reference is made to the Credit Agreement, dated as of August 20, 2010 (as amended, restated,
replaced, supplemented or otherwise modified from time to time, the “Credit Agreement”; the terms
defined therein and not otherwise defined herein being used herein as therein defined), by and
among FINGERHUT RECEIVABLES I, LLC (“Company”), the Lenders party thereto from time to time,
GOLDMAN SACHS BANK USA, 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. Pursuant to Section 2.19(c) of the Credit Agreement, the
undersigned hereby certifies that it is not a “bank” or other Person described in Section 881(c)(3)
of the Internal Revenue Code of 1986, as amended.

	 	 	 	 	 
	 	[NAME OF LENDER]

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 

EXHIBIT D-1

 

EXHIBIT E-1 TO

CREDIT AGREEMENT

[FORM OF] COMPANY CLOSING DATE CERTIFICATE

     THE UNDERSIGNED HEREBY CERTIFY AS FOLLOWS:

     1. I am the [chief financial officer] of FINGERHUT RECEIVABLES I, LLC (“Company”).

     2. I am delivering this certificate pursuant to Section 3.1(n) of the Credit Agreement, dated
as of August 20, 2010 (as amended, restated, replaced, supplemented or otherwise modified from time
to time, the “Credit Agreement”; the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among the Company, the Lenders party thereto from time to
time, GOLDMAN SACHS BANK USA, 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.

     3. I have reviewed the terms of Section 4 of the Credit Agreement and the definitions and
provisions contained in such Credit Agreement relating thereto, and, in my opinion, I have made, or
have caused to be made under my supervision, such examination or investigation as is necessary to
enable me to express an informed opinion as to the matters referred to herein.

     4. Based upon my review and examination described in paragraph 4 above, I certify, on behalf
of Company, that on and as of the Closing Date:

     (i) the representations and warranties contained in each of the Credit
Documents to which Company is a party are true and correct in all material respects
on and as of the Closing Date to the same extent as though made on and as of such
date, except to the extent such representations and warranties specifically relate
to an earlier date, in which case such representations and warranties are true and
correct in all material respects on and as of such earlier date;

     (ii) as of the Closing Date, no injunction or other restraining order shall
have been issued and no hearing to cause an injunction or other restraining order to
be issued shall be pending or noticed with respect to any action, suit or proceeding
seeking to enjoin or otherwise prevent the consummation of, or to recover any
damages or obtain relief as a result of, the borrowing contemplated hereby; and

     (iii) no event has occurred and is continuing or would result from the
consummation of the borrowing contemplated hereby that would constitute an Event of
Default or a Default.

[Remainder of page intentionally left blank.]

EXHIBIT E-1-1

 

EXHIBIT E-1 TO

CREDIT AGREEMENT

The foregoing certifications are made and delivered as of the date first written above.

	 	 	 	 	 
	 	FINGERHUT RECEIVABLES I, LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	[Chief Financial Officer] 	 

EXHIBIT E-1-2

 

EXHIBIT E-1 TO

CREDIT AGREEMENT

[FORM OF] BLUESTEM CLOSING DATE CERTIFICATE

     THE UNDERSIGNED HEREBY CERTIFY AS FOLLOWS:

     1. I am the [executive vice president and chief financial officer] of BLUESTEM BRANDS,
INC. (“Bluestem”).

     2. I am delivering this certification pursuant to Section 3.1(n) of the Credit Agreement,
dated as of August 20, 2010 (as amended, restated, replaced, supplemented or otherwise modified
from time to time, the “Credit Agreement”; the terms defined therein and not otherwise defined
herein being used herein as therein defined), by and among FINGERHUT RECEIVABLES I, LLC
(“Company”), the Lenders party thereto from time to time, GOLDMAN SACHS BANK USA, 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.

     3. I have reviewed the terms of Section 4 of the Credit Agreement and the definitions and
provisions contained in such Credit Agreement relating thereto, and, in my opinion, I have made, or
have caused to be made under my supervision, such examination or investigation as is necessary to
enable me to express an informed opinion as to the matters referred to herein.

     4. Based upon my review and examination described in paragraph 3 above, we certify, on behalf
of Bluestem, that on and as of the Closing Date:

     (i) the representations and warranties contained in each of the Credit
Documents to which Bluestem is a party are true and correct in all material respects
on and as of the Closing Date to the same extent as though made on and as of such
date, except to the extent such representations and warranties specifically relate
to an earlier date, in which case such representations and warranties are true and
correct in all material respects on and as of such earlier date; and

     (ii) no event has occurred and is continuing or would result from the
consummation of the borrowing contemplated hereby that would constitute an Event of
Default or a Default.

     5. Attached hereto as Annex B are true, complete and correct copies of (a) the
Historical Financial Statements, (b) Servicing Reports for the most recent calendar month
completed five Business Days after the last day of the preceding calendar month, (c) a
pro-forma consolidated balance sheet of Bluestem and its Subsidiaries dated as of July 2,
2010, prepared in accordance with GAAP and reflecting the consummation of the transactions
contemplated by the Credit Documents and the Related Agreements, (d) a current Daily
Settlement and Servicing Report (as defined in, and calculated under, the Prior Credit
Agreement and the related servicing agreement) for each Business Day from August 2, 2010 to
the Business Day prior to the date hereof, and (e) the Three-Year Forecast.

EXHIBIT E-1-3

 

EXHIBIT E-1 TO

CREDIT AGREEMENT

The foregoing certifications are made and delivered as of the date first written above.

	 	 	 	 	 
	 	BLUESTEM BRANDS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	[Executive Vice President and

Chief Financial Officer] 	 

EXHIBIT E-1-4

 

EXHIBIT A-2 TO

CREDIT AGREEMENT

[FORM OF] SOLVENCY CERTIFICATE

     THE UNDERSIGNED HEREBY CERTIFIES AS FOLLOWS:

     1. I am the chief financial officer of BLUESTEM BRANDS, INC., a Delaware Corporation
(“Bluestem”), and FINGERHUT RECEIVABLES I, LLC, a Delaware LLC (“Company”).

     2. Reference is made to that certain Credit Agreement, dated as of August 20, 2010 (as
amended, restated, replaced, supplemented or otherwise modified from time to time, the “Credit
Agreement”; the terms defined therein and not otherwise defined herein being used herein as therein
defined), by and among the Company, the Lenders party thereto from time to time, GOLDMAN SACHS BANK
USA, 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.

     3. I have reviewed the terms of Section 3 of the Credit Agreement and the definitions and
provisions contained in such Credit Agreement relating thereto, together with each of Credit
Documents and of the Related Agreements, and, in my opinion, have made, or have caused to be made
under my supervision, such examination or investigation as is necessary to enable me to express an
informed opinion as to the matters referred to herein.

     4. Based upon my review and examination described in paragraph 3 above, I certify that as of
the date hereof, after giving effect to the consummation of the transactions contemplated by the
Credit Document and the Related Agreements, each of the Company and Bluestem, as the case may be,
is Solvent.

     The foregoing certifications are made and delivered as of [•], 2010.

	 	 	 	 	 
	 	 	 
	 	By:  	
 	 
	 	 	Name:  	 	 
	 	 	Title:  	Chief Financial Officer 	 
	 

APPENDIX B-1

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