Document:

exv4w2

Exhibit 4.2

 

STOCK PURCHASE AGREEMENT AMONG

FINGERHUT DIRECT MARKETING, INC.,

BAIN CAPITAL VENTURE FUND, L.P.,

BATTERY VENTURES VI, L.P.,

PETTERS COMPANY, INC.,

THEODORE DEIKEL,

AND

THE OTHER PURCHASERS NAMED ON SCHEDULE I HERETO

Dated as of February 24, 2004

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 

	1. Authorization of Securities
	 	 	2	 
	2. Sale and Purchase of the Securities
	 	 	2	 
	3. Closing; Payment of Purchase Price
	 	 	3	 
	4. Representations and Warranties of the Purchasers
	 	 	3	 
	4.1. Organization
	 	 	3	 
	4.2. Validity
	 	 	3	 
	4.3. Brokers
	 	 	3	 
	4.4. Investment Representations and Warranties
	 	 	3	 
	4.5. Acquisition for Own Account
	 	 	4	 
	4.6. Ability to Protect Its Own Interests and Bear Economic Risks
	 	 	4	 
	4.7. Accredited Investor
	 	 	4	 
	4.8. Access to Information
	 	 	4	 
	4.9. Restricted Securities
	 	 	4	 
	4.10. No Public Market
	 	 	4	 
	5. Representations and Warranties by the Company
	 	 	4	 
	5.1. Capitalization
	 	 	5	 
	5.2. Due Issuance and Authorization of Capital Stock
	 	 	5	 
	5.3. Organization
	 	 	6	 
	5.4. Subsidiaries
	 	 	6	 
	5.5. Consents
	 	 	6	 
	5.6. Authorization; Enforcement
	 	 	6	 
	5.7. Issuance of Shares
	 	 	6	 
	5.8. No Conflicts
	 	 	7	 
	5.9. Material Contracts
	 	 	7	 
	5.10. Right of First Refusal; Stockholders Agreement; Voting and Registration Rights
	 	 	7	 
	5.11. Previous Issuances Exempt
	 	 	8	 
	5.12. No Integrated Offering
	 	 	8	 
	5.13. Absence of Certain Changes; Financial Statements
	 	 	8	 
	5.14. No Undisclosed Material Liabilities
	 	 	9	 
	5.15. Litigation
	 	 	10	 
	5.16. Taxes
	 	 	10	 
	5.17. Employee Benefit Plans
	 	 	10	 
	5.18. Compliance with Laws
	 	 	11	 
	5.19. Brokers
	 	 	11	 
	5.20. Environmental Matters
	 	 	11	 
	5.21. Intellectual Property Matters
	 	 	12	 
	5.22. Related-Party Transactions
	 	 	15	 
	5.23. Title to Property and Assets
	 	 	15	 
	5.24. Disclosure
	 	 	16	 
	5.25. Corporate Records; Minute Books
	 	 	16	 
	5.26. Absence of Changes
	 	 	16	 
	5.27. Illegal Payments
	 	 	17	 
	5.28. Suppliers and Vendors
	 	 	18	 

 

 

	 	 	 	 	 

	6. Conditions of Parties’ Obligations
	 	 	18	 
	6.1. Conditions of the Purchasers’ Obligations
	 	 	18	 
	6.2. Conditions of the Company’s Obligations
	 	 	21	 
	6.3. Conditions of Each Party’s Obligations
	 	 	22	 
	7. Transfer Restrictions; Restrictive Legend
	 	 	22	 
	8. Registration, Transfer and Substitution of Certificates for Shares
	 	 	23	 
	8.1. Stock Register; Ownership of Securities
	 	 	23	 
	8.2. Replacement of Certificates
	 	 	23	 
	9. Definitions
	 	 	23	 
	10. Enforcement
	 	 	25	 
	10.1. Cumulative Remedies
	 	 	26	 
	10.2. No Implied Waiver
	 	 	26	 
	11. Miscellaneous.
	 	 	26	 
	11.1. Waivers and Amendments
	 	 	26	 
	11.2. Notices
	 	 	26	 
	11.3. Indemnification
	 	 	28	 
	11.4. No Waivers
	 	 	28	 
	11.5. Successors and Assigns
	 	 	28	 
	11.6. Headings
	 	 	28	 
	11.7. Governing Law
	 	 	28	 
	11.8. Expenses
	 	 	28	 
	11.9. Jurisdiction
	 	 	29	 
	11.10. Waiver of Jury Trial
	 	 	29	 
	11.11. Counterparts; Effectiveness
	 	 	30	 
	11.12. Entire Agreement
	 	 	30	 
	11.13. Severability
	 	 	30	 
	11.14. Exculpation Among Purchasers
	 	 	30	 
	11.15. Non-Disclosure
	 	 	31	 

ii

 

LIST OF EXHIBITS

	 	 	 	 	 

	EXHIBIT

	 	A
	 	Amended and Restated Certificate of Incorporation
	EXHIBIT

	 	B
	 	Form of Investor Rights Agreement
	EXHIBIT

	 	C
	 	Form of Stockholders Agreement
	EXHIBIT

	 	D
	 	Form of Opinion of Counsel
	EXHIBIT

	 	E
	 	Form of Company Non-compete, Confidentiality and Inventions Agreement
	EXHIBIT

	 	F
	 	Form of Management Rights Letter
	EXHIBIT

	 	G
	 	Citigroup Term Sheet
	EXHIBIT

	 	H
	 	List of Certain Senior Management Employees
	EXHIBIT

	 	I	 	Form of Guarantor Agreement

 

 

STOCK PURCHASE AGREEMENT

          This STOCK PURCHASE AGREEMENT (this “Agreement”) is made and entered into this 24th day of
February, 2004 (the “Purchase Date”) by and among Fingerhut Direct Marketing, Inc., a Delaware
corporation (the “Company”), Bain Capital Venture Fund, L.P., a Delaware limited partnership
(“Bain Capital”), certain Affiliates of Bain Capital listed on Schedule I attached
hereto, Battery Ventures VI, L.P., a Delaware limited partnership (“Battery Ventures”), certain
Affiliates of Battery Ventures listed on Schedule I, Petters Company, Inc., a Minnesota
corporation (“PCI”), Theodore Deikel (“Deikel”) and the other purchasers listed on Schedule
I (each such purchaser, including Bain Capital, Battery Ventures, PCI and Deikel, is referred
to herein as a “Purchaser,” and such purchasers collectively are referred to herein as the
“Purchasers”). Certain terms used and not otherwise defined in the text of this Agreement are
defined in Section 9 hereof.

WITNESSETH

          WHEREAS, the Company desires to issue and to sell to the Purchasers, and the Purchasers
desire to purchase from the Company, the shares of Series A Preferred Stock (as hereinafter
defined), all in accordance with the terms and provisions of this Agreement;

          NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties
and covenants herein contained, the parties hereto hereby agree as follows:

     1. Authorization of Securities. The Company has authorized the issuance and sale of
up to 597,469,749 shares of its Series A Convertible Preferred Stock, par value $.00001 per share
(“Series A Preferred Stock”), which will be convertible into shares of the Company’s common
stock, par value $.00001 per share (the “Common Stock”), and which will have the rights,
preferences and privileges set forth in the form of Second Amended and Restated Certificate of
Incorporation attached hereto as Exhibit A (the “Amended and Restated Certificate of
Incorporation”). The shares of Common Stock into which the Series A Preferred Stock is
convertible are sometimes referred to herein as the “Conversion Shares” and the shares of Series
A Preferred Stock and the Conversion Shares are sometimes referred to herein collectively as the
“Securities”.

     2. Sale and Purchase of the Securities. Upon the terms and subject to the conditions
herein contained, the Company agrees to sell to the Purchasers, and each Purchaser agrees,
severally and not jointly, to purchase from the Company, at the Closing (as defined below), the
number of shares of Series A Preferred Stock set forth in the column Shares Purchased opposite
such Purchaser’s name on Schedule I, for a purchase price per share of $0.10511 (the
“Purchase Price”), payable either in cash or by the surrender of instruments or other evidence of
indebtedness as described in Schedule I to the extent set forth therein.

     3. Closing; Payment of Purchase Price. The closing (the “Closing”) with respect to
the transaction contemplated in Section 2 hereof shall take place at the offices of Ropes & Gray
LLP, One International Place, Boston, Massachusetts at 10:00 a.m. on February , 2004, or at

 

 

such other time and place as the Company and Purchasers may agree (the “Closing Date”). At
the Closing, the Company shall deliver to each Purchaser a certificate representing the Series A
Preferred Stock which such Purchaser is purchasing at the Closing, registered in the name of such
Purchaser, against delivery to the Company by such Purchaser of a wire transfer in the amount of
the Purchase Price therefor. In the event that payment by a Purchaser is to be made, in whole or
in part, by cancellation of indebtedness, then such Purchaser shall surrender to the Company for
cancellation at the Closing any evidence of such indebtedness or shall execute an instrument of
cancellation in form and substance acceptable to the Company.

     4. Representations and Warranties of the Purchasers; Register of Securities;
Restrictions on Transfer. Each Purchaser, severally as to itself and not jointly, represents
and warrants to the Company as of the Closing as follows:

          4.1. Organization. In the case of a Purchaser that is an entity, such Purchaser is
validly existing and in good standing under the laws of its jurisdiction of organization, and has
all corporate, limited liability company, or partnership power (as the case may be) and authority
to enter into this Agreement and the other Transaction Documents and instruments referred to herein
to which it is a party and to consummate the transactions contemplated hereby and thereby.

          4.2. Validity. The execution, delivery and performance of this Agreement, and the
other Transaction Documents and instruments referred to herein, in each case to which such
Purchaser is a party, and the consummation by such Purchaser of the transactions contemplated
hereby and thereby, have been duly authorized by all necessary action on the part of such
Purchaser. This Agreement has been duly executed and delivered by such Purchaser, and the other
Transaction Documents and instruments referred to herein to which it is a party will be duly
executed and delivered by such Purchaser, and each such agreement constitutes or will constitute a
valid and binding obligation of such Purchaser enforceable against it in accordance with its terms.

          4.3. Brokers. There is no broker, investment banker, financial advisor, finder or
other person which has been retained by or is authorized to act on behalf of such Purchaser who
might be entitled to any fee or commission for which the Company will be liable in connection with
the execution of this Agreement and the consummation of the transactions contemplated hereby.

          4.4. Investment Representations and Warranties. Such Purchaser understands that the
issuance of the Securities to the Purchasers has not been, and will not be, registered under the
Securities Act.

          4.5. Acquisition for Own Account. Such Purchaser is acquiring the Securities
for its own account for investment and not with a view toward distribution in a manner which
would violate the Securities Act.

          4.6. Ability to Protect Its Own Interests and Bear Economic Risks. Such Purchaser, by
reason of the business and financial experience of its management, has the capacity to protect its
own interests in connection with the transactions contemplated by this

 

 

Agreement. Such Purchaser is able to bear the economic risk of an investment in the Securities
and is able to sustain a loss of all of its investment in the Securities without economic hardship
if such a loss should occur.

          4.7. Accredited Investor. Such Purchaser is an “accredited investor” as that term is
defined in Regulation D promulgated under the Securities Act.

          4.8. Access to Information. Such Purchaser has been given access to all Company
documents, records, and other information, and has had adequate opportunity to ask questions of,
and receive answers from, the Company’s officers, employees, agents, accountants, and
representatives concerning the Company’s business, operations, financial condition, assets,
liabilities, and all other matters relevant to its investment in the Securities. The
representations of Purchasers contained in this Section 4.8 shall not effect the ability of the
Purchasers to rely on the representations and warranties made by the Company pursuant to Section 5
of this Agreement.

          4.9. Restricted Securities.

          (a) Such Purchaser understands that the Securities will be characterized as
“restricted securities” under the federal securities laws inasmuch as they are being
acquired from the Company in a transaction not involving a public offering and that under
such laws and applicable regulations such Securities may be resold without registration
under the Securities Act only in certain limited circumstances.

          (b) Such Purchaser acknowledges that the Securities must be held indefinitely unless
subsequently registered under the Securities Act and under applicable state securities laws
or an exemption from such registration is available.

          (c) Such Purchaser is aware of the provisions of Rule 144 under the Securities Act
which permit limited resale of securities purchased in a private placement.

          4.10. No Public Market. Such Purchaser understands that no public market now exists
for any of the securities issued by the Company, that the Company has made no assurances that a
public market will ever exist for the Securities.

     5. Representations and Warranties by the Company. The Company represents and warrants
to each Purchaser as of the Closing as follows:

	 	5.1.	 	Capitalization.

          (a) As of the date hereof, and after giving effect to the filing of the Amended and
Restated Certificate of Incorporation and the Closing, the authorized capital stock of the
Company consists of 1,080,000,000 shares of Common Stock, par value $0.00001 per share, and
597,469,749 shares of preferred stock, par value $0.00001 per share (“Preferred Stock”), of
which 597,469,749 shares will be designated Series A Preferred Stock. As of the date hereof,
and after giving effect to the filing of the Amended and Restated Certificate of
Incorporation and the Closing, there are outstanding 597,469,749 shares of Series A
Preferred Stock and 62,931,035 shares of Common

 

 

Stock, and 83,465,148 shares of Common Stock are reserved for issuance under the
Company’s current stock option plan (of which options representing 26,754,361 shares of
Common Stock have been granted to employees). The Company has no other shares of capital
stock authorized, issued or outstanding. A capitalization table presenting the
capitalization of the Company after giving effect to the filing of the Amended and Restated
Certificate of Incorporation and the Closing is set forth on Schedule 5.1(a)
hereto.

          (b) As of the date hereof, (i) other than outstanding warrants exercisable for
48,361,030 shares of Common Stock and as set forth in Schedule 5.1(a),there are no
outstanding options, warrants, scrip, rights to subscribe to, calls or commitments of any
character whatsoever relating to, or securities or rights convertible into or exercisable or
exchangeable for, any shares of capital stock of the Company, or arrangements by which the
Company is or may become bound to issue additional shares of capital stock, nor are any such
issuances or arrangements contemplated other than pursuant to the Company’s stock option
plan in existence on the date hereof, the details of which are set forth on Schedule
5.1(a) hereto; (ii) there are no agreements or arrangements under which the Company is
or may become obligated to register the sale of any of its securities under the Securities
Act; (iii) the Company has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any of its equity securities or any interests therein or to pay any
dividend or make any distribution in respect thereof, except as required by the Amended and
Restated Certificate of Incorporation; and (iv) except as set forth in Schedule
5.1(a) hereto, the Company has not reserved any shares of capital stock for issuance
pursuant to any stock option plan or similar arrangement.

          5.2. Due Issuance and Authorization of Capital Stock. All of the outstanding shares of
capital stock of the Company have been validly issued and are fully paid and non-assessable. The
sale and delivery of the shares of Series A Preferred Stock to each Purchaser pursuant to the terms
hereof and the issuance of the Conversion Shares upon conversion of the shares of Series A
Preferred Stock will vest in the holder thereof legal and valid title to such Securities, free and
clear of any lien, claim, judgment, charge, mortgage, security interest, pledge, escrow, equity or
other encumbrance (collectively, “Encumbrances”) other than any Encumbrances created by such
Purchaser.

          5.3. Organization. The Company (a) is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware, (b) is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the nature of the
property owned or leased by it or the nature of the business conducted by it makes such
qualification necessary, except where the failure to be so qualified would not have a Material
Adverse Effect on the Company, (c) has its principal place of business and chief executive office
in the State of Minnesota and (d) has all requisite corporate power and authority to own or lease
and operate its assets and carry on its business as presently being conducted and proposed to be
conducted.

          5.4. Subsidiaries. Except as set forth on Schedule 5.4, the Company has no
Subsidiaries.

 

 

          5.5. Consents. Except as set forth on Schedule 5.5, neither the execution,
delivery or performance of the Amended and Restated Certificate of Incorporation, this Agreement or
the other Transaction Documents by the Company, nor the consummation by it of the obligations and
transactions contemplated hereby or thereby (including, without limitation, the issuance, the
reservation for issuance and the delivery of the Securities) requires any consent of, authorization
by, exemption from, filing with or notice to any Governmental Entity or any other Person, other
than (a) the filings required to comply with the Company’s registration obligations under the
Investor Rights Agreement, and (b) the filing of the Amended and Restated Certificate of
Incorporation with the Secretary of State of Delaware.

          5.6. Authorization; Enforcement. The Company has all requisite corporate power and has
taken all necessary corporate action required for the due authorization, execution, delivery and
performance by the Company of this Agreement and the other Transaction Documents and the
consummation of the transactions contemplated hereby and thereby (including, without limitation,
the issuance of the Securities). The execution, delivery and performance by the Company of each of
the Transaction Documents, the execution and filing of the Amended and Restated Certificate of
Incorporation, and the consummation by the Company of the transactions contemplated hereby and
thereby, have been duly authorized by all necessary corporate action on the part of the Company.
The Company has taken all actions under its certificate of incorporation and its By-laws (the
“Charter Documents”) as may be necessary or advisable to provide the Purchasers with the rights
hereby contemplated.

          5.7. Issuance of Shares. The Securities have been duly authorized and a sufficient
number of shares of authorized but unissued shares of Common Stock have been reserved for issuance
upon conversion of the Series A Preferred Stock, and upon such issuance or conversion in accordance
with the terms of this Agreement or the Amended and Restated Certificate of Incorporation, as the
case may be, all such Securities will be duly authorized, validly issued, fully paid and
non-assessable, and free from all taxes and Encumbrances, and will not be subject to preemptive
rights or other similar rights of stockholders of the Company, and will not impose personal
liability upon the holder thereof.

          5.8. No Conflicts. Except as set forth on Schedule 5.8, the execution,
delivery and performance of each of the Transaction Documents, the execution and filing of the
Amended and Restated Certificate of Incorporation, and the consummation of the transactions
contemplated hereby and thereby (including, without limitation, the issuance and reservation for
issuance, as applicable, of the Series A Preferred Shares and the Conversion Shares) will not (a)
result in a violation of the Charter Documents, (b) conflict with or result in the breach of the
terms, conditions or provisions of or constitute a default (or an event which with notice or lapse
of time or both would become a default) under, or give rise to any right of termination,
acceleration or cancellation under, any agreement, lease, mortgage, license, indenture, instrument
or other contract to which the Company or any Subsidiary is a party, (c) result in a violation of
any law, rule, regulation, order, judgment or decree (including, without limitation, U.S. federal
and state securities laws and regulations) applicable to the Company or any Subsidiary or by which
any property or asset of the Company or any Subsidiary is bound or affected, or (d) result in the
creation of any Encumbrance upon any of their assets. Except as set forth on Schedule 5.8,
the Company is not in violation of its Charter Documents, and neither the Company nor any of its
Subsidiaries is in default (and no event has occurred which, with notice or lapse of time or

 

 

both, would cause the Company to be in default) under, nor has there occurred any event giving
others (with notice or lapse of time or both) any rights of termination, amendment, acceleration or
cancellation of, any material agreement, indenture or instrument to which the Company or any
Subsidiary is a party. The business of the Company is not being conducted in violation in any
material respect of any law, ordinance or regulation of any Governmental Entity.

          5.9. Material Contracts. Each Material Contract of the Company and each of its
Subsidiaries is listed on Schedule 5.9 hereof. Each such contract is the legal, valid and
binding obligation of the Company or the applicable Subsidiary, enforceable against the Company or
the applicable Subsidiary in accordance with its terms, except to the extent that enforceability
may be limited by bankruptcy, insolvency, fraudulent conveyance or other similar laws affecting
creditors’ rights generally and by general equitable principles. Except as set forth on
Schedule 5.9 hereof, there has not occurred any material breach, violation or default or
any event that, with the lapse of time, the giving of notice or the election of any person, or any
combination thereof, would constitute a material breach, violation or default by the Company or the
applicable Subsidiary under any such contract or, to the knowledge of the Company, by any other
person to any such contract. Neither the Company nor any Subsidiary has been notified that any
party to any Material Contract intends to cancel, terminate, not renew or exercise an option under
any Material Contract, whether in connection with the transactions contemplated hereby or
otherwise.

          5.10. Right of First Refusal; Stockholders Agreement; Voting and Registration Rights.
Except as set forth on Schedule 5.10, and except with respect to any rights granted to the
Purchasers pursuant to the terms of the Amended and Restated Certificate of Incorporation, this
Agreement or the other Transaction Documents or the transactions contemplated hereby or thereby, no
party has any right of first refusal, right of first offer, right of co-sale, preemptive right or
other similar right regarding the Company’s securities. Except as set forth on Schedule
5.10, there are no provisions of the Charter Documents, no agreements to which the Company is a
party and no agreements by which the Company is bound other than the Amended and Restated
Certificate of Incorporation, this Agreement or the other Transaction Documents, which (a) may
affect or restrict the voting rights of the Purchasers with respect to the Securities in their
capacity as stockholders of the Company, (b) restrict the ability of the Purchasers, or any
successor thereto or assignee or transferee thereof, to transfer the Securities, (c) would
adversely affect the Company’s or any Purchaser’s right or ability to consummate the transactions
contemplated by this Agreement or comply with the terms of the other Transaction Documents or the
Amended and Restated Certificate of Incorporation and the transactions contemplated hereby or
thereby, (d) require the vote of more than a majority of the Company’s issued and outstanding
Common Stock, voting together as a single class, to take or prevent any corporate action, other
than those matters requiring a class vote under Delaware law, or (e) entitle any party to nominate
or elect any director of the Company or require any of the Company’s stockholders to vote for any
such nominee or other person as a director of the Company in each case.

          5.11. Previous Issuances Exempt. All shares of capital stock and other securities
issued by the Company prior to the Closing Date have been issued in transactions exempt from the
registration requirements under the Securities Act and all applicable state securities or “blue
sky” laws, and in compliance with all applicable corporate laws. The Company has not violated the
Securities Act or any applicable state securities or “blue sky” laws

 

 

in connection with the issuance of any shares of capital stock or other securities prior to
the Closing Date. The Company has not offered any of its capital stock, or any other securities,
for sale to, or solicited any offers to buy any of the foregoing from the Company, or otherwise
approached or negotiated with any other person in respect thereof, in such a manner as to require
registration under the Securities Act.

          5.12. No Integrated Offering. Neither the Company, nor any of its Affiliates or any
other person acting on the Company’s behalf, has directly or indirectly engaged in any form of
general solicitation or general advertising with respect to the Securities nor have any of such
persons made any offers or sales of any security or solicited any offers to buy any security under
circumstances that would require registration of the Securities under the Securities Act or cause
this offering of Securities to be integrated with any prior offering of securities of the Company
for purposes of the Securities Act.

          5.13. Absence of Certain Changes; Financial Statements.

          (a) The Company has provided to the Purchasers true and correct copies of its unaudited
consolidated balance sheet and the related statements of operation, accumulated deficit and
cash flows (including notes thereto) for the period from June 11, 2002 (the date of
inception) through October 31, 2003 (the “Balance Sheet Date”), and the unaudited
consolidated balance sheets dated as of October 31, 2003 and the related statements of
operation, accumulated deficit and cash flows for the nine months ended October 31, 2003
(the “Financial Statements”). The Financial Statements have been prepared in accordance with
GAAP and present fairly, in all material respects, the financial position and operating
results of the Company as of the respective dates therein, and in the case of unaudited
Financial Statements, subject to normal year-end audit adjustments and the absence of
footnotes. The Financial Statements are in accordance with the books and records of the
Company.

          (b) Except as set forth on Schedule 5.13 or as contemplated by this Agreement,
or in connection with the Amended and Restated Certificate of Incorporation, this Agreement
or the other Transaction Documents, since the Balance Sheet Date, there has not been:

     (1) any declaration, setting aside or payment of any dividend or other
distribution with respect to any shares of capital stock of the Company or any
repurchase, redemption or other acquisition by the Company of any outstanding shares of its capital stock of the Company;

     (2) any amendment of any term of any outstanding security of the
Company;

     (3) any transaction or commitment made, or any contract, agreement or
settlement entered into, by (or judgment, order or decree affecting) the Company
relating to its assets or business (including the acquisition or disposition of any
material amount of assets) or any relinquishment by the Company of any contract or
other right, other than transactions, commitments,

 

 

contracts, agreements or settlements (excluding settlements of litigation and
tax proceedings) in the ordinary course of business or those contemplated by this
Agreement;

     (4) any (w) grant of any severance or termination pay to (or amendment to any
such existing arrangement with) any director, officer or employee of the Company,
(x) entering into of any employment, deferred compensation, supplemental
retirement or other similar agreement (or any amendment to any such existing
agreement) with any director, officer or employee of the Company, (y) increase in,
or accelerated vesting and/or payment of, benefits under any existing severance or
termination pay policies or employment agreements or (z) increase in or
enhancement of any rights or features related to compensation, bonus or other
benefits payable to directors, officers or senior employees of the Company, in
each case, other than in the ordinary course of business consistent with past
practice; or

     (5) any material tax election made or changed, any audit settled or any
amended tax returns filed.

          5.14. No Undisclosed Material Liabilities. As of the date of this Agreement, there
are no liabilities of the Company or any Subsidiary of any kind whatsoever, whether
interest-bearing indebtedness, or liabilities accrued, contingent, absolute, determined,
determinable or otherwise, other than liabilities:

          (a) reflected in the Financial Statements;

          (b) disclosed on Schedule 5.14 hereto;

          (c) incurred in the ordinary course of business which in the aggregate are less than
$100,000; or

          (d) under this Agreement, or connected herewith, in the other Transaction
Documents or the Amended and Restated Certificate of Incorporation.

          5.15. Litigation. Except as set forth on Schedule 5.15, there is no action,
suit, investigation or other proceeding pending against, or to the knowledge of the Company
threatened against or affecting, the Company, any Subsidiary or any of their properties, or to the
knowledge of the Company, any of its officers or directors in their capacities as such, before any
court or arbitrator or any governmental body, agency or official. To the knowledge of the Company,
there are no facts that would cause a reasonable person to believe that such a proceeding would
likely result.

          5.16. Taxes. The Company and each of its Subsidiaries have properly filed all federal,
foreign, state, local, and other tax returns and reports which are required to be filed, which
returns and reports were properly completed and are true and correct in all material respects, and
all taxes, interest, and penalties due and owing have been timely paid, except where

 

 

any failure with respect thereto would not have a Material Adverse Effect. There are no
outstanding waivers or extensions of time with respect to the assessment or audit of any tax or tax
return of the Company or any Subsidiary, or claims now pending or matters under discussion with any
taxing authority in respect of any tax of the Company or any Subsidiary.

          5.17. Employee Benefit Plans.

          (a) Neither the Company nor any Subsidiary maintains any “employee benefit plan”
subject to the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) other
than as set forth on Schedule 5.17.

          (b) No director, officer or other employee of the Company or any Subsidiary will
become entitled to any retirement, severance or similar benefit or enhanced or accelerated
benefit (including any acceleration of vesting or lapse of repurchase rights or
obligations with respect to any employee benefit plan subject to ERISA or other benefit
under any compensation plan or arrangement of the Company or any Subsidiary (each, an
“Employee Benefit Plan”)) solely as a result of the transactions contemplated in this
Agreement; and (ii) no payment made or to be made to any current or former employee of
director of the Company or any Subsidiary, or any of their Affiliates by reason of the
transactions contemplated hereby (whether alone or in connection with any other event,
including, but not limited to, a termination of employment) will constitute an “excess
parachute payment” within the meaning of Section 280G of the Code.

          (c) The Company and each of its Subsidiaries are in compliance with all applicable
federal, state, local and foreign statutes, laws (including, without limitation, common
law), judicial decisions, regulations, ordinances, rules, judgments, orders and codes
respecting employment, employment practices, labor, terms and conditions of employment and
wages and hours, and no work stoppage or labor strike against the Company or any
Subsidiary is pending or threatened, nor is the Company or any Subsidiary involved in or
threatened with any labor dispute, grievance or litigation relating to labor matters
involving any employees of the Company or any Subsidiary, in each case except as would
not, individually or in the aggregate, have a Material Adverse Effect. There are no suits,
actions, disputes, claims (other than routine claims for benefits), investigations or
audits pending or, to the knowledge of the Company, threatened in connection with any
Employee Benefit Plan, but excluding any of the foregoing which would not have a Material
Adverse Effect.

          5.18. Compliance with Laws. The Company and each of its Subsidiaries have, and are in
material compliance with the terms of, all franchises, permits, licenses and other rights and
privileges necessary to conduct the Company’s present and proposed business and are in compliance
with and have not violated, in any material respect, any applicable provisions of any laws,
statutes, ordinances or regulations or the terms of any judgments, orders, decrees, injunctions or
writs.

          5.19. Brokers. Except as set forth on Schedule 5.19, there is no
investment banker, broker, finder, financial advisor or other person which has been retained by
or is

 

 

authorized to act on behalf of the Company who might be entitled to any fee or commission
in connection with the transactions contemplated by this Agreement.

          5.20. Environmental Matters.

          (a) (i) No written notice, notification, demand, request for information, citation,
summons, complaint or order has been received by, and no investigation, action, claim, suit,
proceeding or review is pending or, to the knowledge of the Company, threatened by any
Person against, the Company or any of its Subsidiaries, and no penalty has been assessed
against the Company or any Subsidiary, in each case, with respect to any matters relating to
or arising out of any Environmental Law; (ii) to the Company’s knowledge, after reasonable
investigation, the Company and each of its Subsidiaries are in material compliance with all
Environmental Laws; and (iii) to the knowledge of the Company, there are no liabilities of
or relating to the Company or any Subsidiary relating to or arising out of any Environmental
Law, and there is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability.

          (b) For purposes of this Agreement, the term “Environmental Laws” means federal,
state, local and foreign statutes, laws, judicial decisions, regulations, ordinances,
rules, judgments, orders, codes, injunctions, permits and governmental agreements
relating to human health and the environment, including, but not limited to, Hazardous
Materials; and the term “Hazardous Material” means all substances or materials regulated
as hazardous, toxic, explosive, dangerous, flammable or radioactive under any
Environmental Law including, but not limited to: (i) petroleum, asbestos, or
polychlorinated biphenyls and (ii) in the United States, all substances defined as
Hazardous Substances, Oils, Pollutants or Contaminants in the National Oil and Hazardous
Substances Pollution Contingency Plan.

          5.21. Intellectual Property Matters.

          (a) “Intellectual Property” means (i) all inventions (whether patentable or
unpatentable and whether or not reduced to practice), all improvements thereon, and all
patents, patent applications and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions and reexaminations thereof,
(ii) all trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all translations, adaptations, derivations and combinations thereof and
including all goodwill associated therewith, and all applications, registrations and
renewals in connection therewith, (iii) all copyrightable works, all copyrights and all
applications, registrations and renewals in connection therewith, (iv) all trade secrets
and confidential business information (including, without limitation, ideas, research and
development, know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer and supplier lists,
pricing and cost information and business and marketing plans and proposals), (v) all
computer software (including, without limitation, data and related documentation and except
for any commercial “shrink-wrapped” software) and source codes, (vi) all other proprietary
rights, (vii) all copies and tangible embodiments of the foregoing (in whatever form or
medium) and

 

 

(viii) all licenses or agreements in connection with the foregoing. “Company
Intellectual Property” means all Intellectual Property which is used in connection with,
and is material to, the business of the Company and all Intellectual Property owned by the
Company and its Subsidiaries which is used in connection with, and is material to, the
business of the Company, provided that any Intellectual Property that is licensed by the
Company or any Subsidiary shall be included within the meaning of Company Intellectual
Property only within the scope of use by the Company or any Subsidiary in connection with
the Company’s business.

          (b) Except as set forth on Schedule 5.21(b), with respect to each item of
Company Intellectual Property:

     (1) the Company or the applicable Subsidiary possesses all rights, titles and
interests in and to the item if owned by the Company or the applicable Subsidiary,
free and clear of any Encumbrance, license or other restriction, and possesses all
rights necessary in the case of a licensed item to use such item in the manner in
which it presently uses the item or reasonably contemplates using such item, and the
Company or the applicable. Subsidiary has taken or caused to be taken reasonable and
prudent steps to protect its rights in and to, and with respect to registered
Company Intellectual Property, the validity and enforceability of, the item owned by
the Company or the applicable Subsidiary;

     (2) the item if owned by the Company or the applicable Subsidiary is not,
and if licensed, to the knowledge of the Company is not, subject to any
outstanding injunction, judgment, order, decree, ruling or charge;

     (3) no action, suit, proceeding, hearing, investigation, charge, complaint,
claim or demand is pending or, to the knowledge of the Company, has been or is
being threatened which challenges the legality, validity, enforceability, use or
ownership of the item;

     (4) the Company or the applicable Subsidiary has sufficient right, title and
interest to use or own the item without infringement of the rights of third
parties;

     (5) except in the ordinary course of business, the Company or the applicable
Subsidiary has never agreed to indemnify any person for or against any
interference, infringement, misappropriation or other conflict with respect to the
item;

     (6) the Company or the applicable Subsidiary is not bound by or a party to any
option, license, sublicense, agreement or permission of any kind with respect to
the item;

     (7) to the knowledge of the Company, no third party has interfered with,
infringed upon, misappropriated or otherwise come into conflict with the
Intellectual Property rights of the Company or the applicable Subsidiary in
the item;

 

 

     (8) to the knowledge of the Company, no party to any option, license,
sublicense or agreement or permission of any kind covering the item is in breach
or default, and no event has occurred which, with notice or lapse of time, would
constitute a breach or default or permit termination, modification or acceleration
thereunder; and

     (9) each option, license, sublicense, agreement or permission of any kind
covering the item if owned by the Company or the applicable Subsidiary is and, if
licensed, to the knowledge of the Company, is legal, valid, binding, enforceable
and in full force and effect.

          Schedule 5.21(b) sets forth a list of all registered Company Intellectual Property.
All registered patents, copyrights, trademarks, and service marks listed on Schedule
5.21(b) (x) are, if owned by the Company or the applicable Subsidiary and (y) if licensed, to
the knowledge of the Company, are valid and subsisting and in full force and effect and are not
subject to any taxes or other fees except for periodic filing and maintenance fees. Except as set
forth on Schedule 5.21(b), neither the Company nor any Subsidiary has interfered with,
infringed upon, misappropriated or otherwise come into conflict with any Intellectual Property
rights of third parties, and there is no pending or, to the knowledge of the Company, threatened
claim or litigation against the Company or any Subsidiary contesting the right to use any third
party’s Intellectual Property rights, asserting the misuse of any thereof, or asserting the
infringement or other violation thereof. True and complete copies of all issued patents and
copies of all filed patent applications, if any, of the Company and each Subsidiary have been
provided to the Purchasers.

          (c) All domain names listed on Schedule 5.21(b) (the “Domain Names”) have been
and are duly registered with Network Solutions, Inc. (“NSI”) through NSI’s registration
procedures, and are operating, accessible domain names. The Company or the applicable
Subsidiary owns and has not waived or granted and, to the best of the Company’s knowledge,
each prior owner of such Domain Names has not waived, forfeited or granted to any third
parties, any rights, title or interest in or to the Domain Names including without
limitation any benefits, entitlements or rights of renewal with respect to the Domain
Names. NSI has not notified the Company or any Subsidiary that any of the Domain Names have
been placed on “hold” or are otherwise subject to a dispute or potential dispute pursuant
to NSI’s dispute resolution policy.

          (d) To the knowledge of the Company, none of the key employees of the Company or any
Subsidiary are obligated under any contract (including, without limitation, licenses,
covenants, or commitments of any nature) or other agreement, or subject to any judgment,
decree, or order of any court or administrative agency, that would interfere with the use
of his or her reasonable diligence to promote the interests of the Company or that would
conflict with the Company’s businesses as presently or proposed to be conducted. To the
knowledge of the Company, after reasonable investigation, neither the execution, delivery
or performance of this Agreement, nor the carrying on of the Company’s businesses by the employees of the Company or any

 

 

Subsidiary, nor the conduct of the Company’s businesses as presently or proposed to be
conducted, will conflict with or result in a breach of the terms, conditions or provisions
of, or constitute a default under, any contract, covenant, or instrument under which any
such key employee is obligated, and which conflict, breach or default would be materially
adverse to the Company.

          (e) The Company and each Subsidiary have entered into acceptable non-compete,
confidentiality and proprietary information and invention agreements, using the form of
which is attached hereto as Exhibit E or a form containing substantially similar
provisions, with all members of senior management thereof, seeking to protect, among other
things, the confidentiality of all Company Intellectual Property and to ensure full and
unencumbered ownership by the Company of all Company Intellectual Property. The Company,
after reasonable investigation, is not aware of any violation by any such employees of such
agreements. The Company and each Subsidiary have entered into acceptable confidentiality and
proprietary information and invention agreements with any consultants, advisors and
independent contractors who may have access to Company Intellectual Property.

          (f) Except as set forth on Schedule 5.21(f), no stockholder, member,
director, officer or employee of the Company or any Subsidiary has any interest, right,
title or interest in any of the Company Intellectual Property.

          (g) The Company Intellectual Property comprises all Intellectual Property necessary
to the Company’s business as presently conducted or proposed to be conducted by it. The
Company does not believe it is or will be necessary to utilize any inventions, trade
secrets or proprietary information of any employees made prior to their employment by the
Company or any Subsidiary, except for inventions, trade secrets or proprietary information
that have been assigned to the Company or a Subsidiary.

          5.22. Related-Party Transactions. Except as set forth on Schedule 5.22, no
employee, officer, director or stockholder of the Company or any Subsidiary or member of his or
her immediate family is currently indebted to the Company or any Subsidiary, nor is the Company or
any Subsidiary indebted (or committed to make loans or extend or guarantee credit) to any of such
individuals, except for amounts incurred in the ordinary course of business for expense
reimbursement and accrued payroll. Except as set forth on Schedule 5.22, as of the date
hereof none of such persons has any direct or indirect ownership interest in any firm or
corporation with which the Company or any Subsidiary is affiliated or with which the Company or
any Subsidiary has a business relationship, or any firm or corporation that competes with the
Company except that employees, officers, or directors of the Company or any Subsidiary and members
of their immediate families may own stock in an amount not to exceed 1% of the outstanding capital
stock of publicly traded companies that may compete with the Company. As of the date hereof,
except as set forth on Schedule 5.22, no employee, director, officer or stockholder of the
Company or any Subsidiary and no member of the immediate family of any such employee, officer,
director or stockholder is directly or indirectly interested in any contract with the Company or
any Subsidiary. The Company has no agreements (whether written, oral or otherwise) or other
business relationships with FAC Acquisition, LLC, Petters Group, LLC,
PCI, or any Affiliates thereof (each, a “Petters Entity,” and collectively, the “Petters
Entities”)

 

 

other than those agreements and relationships disclosed on Schedule 5.22. To
the knowledge of the Company after reasonable investigation, each agreement and business
relationship between the Company and any Petters Entity (each a “Petters Agreement”) is not
commercially unreasonable. No Petters Entity has notified the Company that it intends to
terminate, cancel or amend any of the material terms of any Petters Agreement or to take any
action with respect to any Petters Agreement that is reasonably likely to have a Material Adverse
Effect.

          5.23. Title to Property and Assets. The Company does not own any real property.
Except as set forth on Schedule 5.23, the Company and each of its Subsidiaries own or have
legally enforceable rights to use or hold for use their personal property and assets free and
clear of all Encumbrances except Encumbrances that, individually or in the aggregate, do not and
would not materially detract from the value of any asset or property of the Company or any
Subsidiary or materially interfere with the use or contemplated use of any personal property of
the Company or any Subsidiary. With respect to any real property, neither the Company nor any
Subsidiary is in violation in any material respect of any of its leases. All machinery, equipment,
furniture, fixtures and other personal property and all buildings, structures and other
facilities, if any, including, without limitation, office or other space used by the Company or
any Subsidiary in the conduct of its business, are in good operating condition and fit for
operation in the ordinary course of business (subject to normal wear and tear) except for any
defects which will not interfere with the conduct of normal operations of the Company. The Company
has delivered to the Purchaser true and complete copies of any leases related to the real property
used by the Company and its Subsidiaries in the conduct of their business.

          5.24. Disclosure. (i) No representation or warranty by the Company contained in this
Agreement, (ii) no representation, warranty or statement by the Company contained in any
certificate or schedule furnished at the Closing to the Purchasers pursuant to this Agreement, and
(iii) no other statement made by the Company to the Purchasers in this Agreement, including the
Schedules hereto and any certificates delivered hereunder, contains any untrue statement by the
Company of a material fact or omits to state any material fact necessary to make any statement
herein or therein not misleading. All information relating to or concerning the Company and the
Subsidiaries, set forth in this Agreement, including, without limitation, in the Schedules hereto
and any certificates delivered hereunder, is true and correct in all material respects and the
Company has not omitted to state any material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not misleading.
Except for those matters that have been disclosed to the Purchasers, to the Company’s knowledge
after reasonable investigation, there are no facts in existence as of the date of this Agreement
related to the Company’s business which have had or are reasonably likely to have a Material
Adverse Effect and which, if learned by the Purchasers, might reasonably be expected to materially
diminish the Purchasers’ evaluation of the worth or profitability of the technology or the
business or which, if learned by the Purchasers, might reasonably be expected to deter the
Purchasers from completing the transactions contemplated by this Agreement on the terms of this
Agreement; provided, however, that the foregoing shall not apply to general economic
conditions and matters generally affecting the markets in which the Company conducts its business.

 

 

          5.25. Corporate Records; Minute Books. Copies of the certificate of incorporation of
the Company, certified by the Secretary of State of the State of Delaware, and of the By-laws of
the Company, certified by its Secretary, heretofore delivered to the Purchasers are true and
complete copies of such instrument as amended to the date of this Agreement. Such certificates of
incorporation and By-laws are in full force and effect. The minute books of the Company provided
to the Purchasers or their counsel contain a complete summary of all meetings and actions by
written consent of directors and stockholders since the time of incorporation and reflect all
transactions referred to in such minutes accurately in all material respects.

          5.26. Absence of Changes. Since October 31, 2003, the Company has operated its
business in the ordinary course of business, and without limiting the generality of the
foregoing, except as set forth on Schedule 5.26, there has not been:

     (1) any Material Adverse Effect or any event or events that
individually or in the aggregate would have a Material Adverse Effect;

     (2) any damage, destruction or loss (whether or not covered by
insurance) materially and adversely affecting the properties or assets of
the Company or any Subsidiary;

     (3) any sale, assignment or transfer, or any agreement to sell, assign or
transfer, any material asset, liability, property, obligation or right of the
Company or any Subsidiary to any Person, including, without limitation, the
Purchasers and their respective Affiliates;

     (4) except as set forth in Schedule 5.26, any obligation
or liability incurred, or any loans or advances made, by the Company or any
Subsidiary to any of its Affiliates, other than expenses allowable in the
ordinary course of business of the Company;

     (5) any purchase or acquisition of, or agreement, plan or arrangement to
purchase or acquire, any material property, rights or assets other than in the
ordinary course of business of the Company;

     (6) any assignment, lease or other transfer or disposition, or any other
agreement or arrangement therefor by the Company or any Subsidiary of any property
or equipment having a value in excess of $100,000 except in the ordinary course of
business;

     (7) other than for employment compensation, any expenditure by the Company or
any Subsidiary (or series of related expenditures) involving more than $25,000
singly or $100,000 in the aggregate, other than inventory purchased in the
ordinary course of business;

     (8) any waiver of any material rights or claims of the Company or
any Subsidiary;

 

 

     (9) any agreement or commitment by the Company or any Subsidiary to do any of
the foregoing or any transaction by the Company or any Subsidiary outside the
ordinary course of business of the Company; or

     (10) any lien upon, or adversely affecting, any material property or
other assets of the Company or any Subsidiary.

          5.27. Illegal Payments. Neither the Company, nor any Subsidiary, nor, to
the best knowledge of the Company, any director, officer, agent or employee of the Company or any
Subsidiary, has paid, caused to be paid, or agreed to pay, directly or indirectly, in connection
with the business of the Company: (a) to any government or agency thereof, any agent or any
supplier or customer, any bribe, kickback or other similar payment; (b) any contribution to any
political party or candidate (other than from personal funds of directors, officers or employees
not reimbursed by their respective employers or as otherwise permitted by applicable law); or (c)
intentionally established or maintained any unrecorded fund or asset or made any false entries on
any books or records for any purpose.

          5.28. Suppliers and Vendors. The Company does not have any knowledge of any
termination, cancellation or threatened termination or cancellation or limitation of, or any
material dissatisfaction with, the business relationship between the Company or any Subsidiary
and any material supplier or vendor.

     6. Conditions of Parties’ Obligations.

          6.1. Conditions of the Purchasers’ Obligations. The obligations of each of the
Purchasers under Section 2 hereof are subject to the fulfillment prior to or on the Closing Date of
all of the following conditions, any of which may be waived in whole or in part by such Purchaser.

          (a) Representations and Warranties. The representations and warranties of the
Company contained in this Agreement and in any certificate, if any, or other writing, if
any, delivered by the Company pursuant hereto shall be true and correct in all respects on
and as of the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date.

          (b) Performance. The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are required to
be performed or complied with it on or before the Closing.

          (c) Amended and Restated Certificate of Incorporation. The Amended and Restated
Certificate of Incorporation shall have been filed with the Secretary of State of the State
of Delaware, and the Purchasers shall have received confirmation from the Secretary of State
of the State of Delaware reasonably satisfactory to them that such filing has occurred.

          (d) Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals, if any, required under applicable state
securities laws shall have been obtained for the lawful execution, delivery and
performance of this

 

 

Agreement or the other Transaction Documents, including without
limitation the offer and sale of the Securities, as such requirements have been certified
in the legal opinion delivered pursuant to Section 6(g)(1) hereof

          (f) Investor Rights Agreement. The Company shall have executed and delivered the
Investor Rights Agreement.

          (g) Stockholders Agreement. The Stockholders Agreement shall have been executed and
delivered by the Company, Thomas J. Petters and the Common Stockholders (as defined in the
Stockholders Agreement).

          (h) Supporting Documents. The Purchasers at the Closing shall have received the
following:

     (1) a favorable opinion from Fredrikson & Byron, P.A., counsel to the Company,
dated as of the Closing Date (the form of which opinion will be attached to this
Agreement as Exhibit D), with respect to: (A) the Company’s corporate
existence, power, authority and good standing; (B) the due authorization, execution
and delivery of this Agreement, the other Transaction Documents and the Amended and
Restated Certificate of Incorporation; (C) the validity and enforceability of the
Transaction Documents; (D) no conflicts of the Amended and Restated Certificate of
Incorporation or the Transaction Documents with the Charter Documents, any contracts
listed in a schedule to such opinion, any applicable laws or any judgment, order or
decree applicable to the Company; (E) the Company’s capitalization (including that
all outstanding securities, including the Series A Preferred Stock, are validly
issued, fully paid and non-assessable); (F) the due authorization of the Conversion
Shares and upon issuance thereof that such shares will be validly issued, fully paid
and non-assessable; (G) the sale of the Series A Preferred Shares and issuance of shares of Common Stock upon conversion thereof as exempt transactions under the
Securities Act; and (H) any Governmental Approvals required to be obtained by the
Company for the execution and filing of the Amended and Restated Certificate of
Incorporation, or the execution and delivery of, or the consummation of the
transactions contemplated by, the Transaction Documents;

     (2) Copies of resolutions of the Board of Directors of the Company, certified
by the Secretary of the Company, authorizing and approving the filing of the Amended
and Restated Certificate of Incorporation, the execution, delivery and performance
of the Transaction Documents and all other documents and instruments to be delivered
pursuant hereto and thereto;

     (3) Copies of resolutions of the stockholders of the Company, certified by the
Secretary of the Company, authorizing and approving the filing of the Amended and
Restated Certificate of Incorporation and the transactions contemplated thereby and
by the Transaction Documents that are subject to
stockholder approval; and

 

 

     (4) A certificate of incumbency executed by the Secretary of the Company
(A) certifying the names, titles and signatures of the officers authorized to
execute the documents referred to in subparagraphs (2) and (3) above and (B)
further certifying that the Amended and Restated Certificate of Incorporation
delivered to the Purchasers at the time of the execution of this Agreement
has been validly adopted and has not been amended or modified.

          (h) Consents and Waivers Except as set forth in Schedule 6.1(h), the
Company shall have obtained all consents or waivers necessary to execute and perform its
obligations under the Athended and Restated Certificate of Incorporation, this Agreement
and the other Transaction Documents (including consents and waivers listed on Schedule
5.5), to issue the Series A Preferred Stock and the Conversion Shares, and to carry
out the transactions contemplated hereby and thereby. All corporate and other action and
governmental filings necessary to effectuate the terms of the Amended and Restated
Certificate of Incorporation, this Agreement, the other Transaction Documents, the Series
A Preferred Stock and the Conversion Shares, and other agreements and instruments executed
and delivered by the Company in connection herewith shall have been made or taken.

          (i) Satisfaction of Obligations. Each of the other Purchasers shall have
simultaneously complied with their obligations under Section 2 hereof.

          (j) Non-Compete Agreements. All members of senior management of the Company
shall have signed acceptable non-compete, confidentiality and proprietary and invention
agreements (in the form attached hereto as Exhibit E or in a form substantially
similar thereto), and all key consultants shall have signed confidentiality and proprietary
and invention agreements reasonably acceptable to the Purchasers.

          (k) Management Rights Letter. The Company, Bain Capital and Battery
Ventures shall have entered into the Management Rights Letter substantially in the form
of Exhibit F.

          (1) Citibank Facility. The Company shall have entered into the Warehouse Loan
Agreement with CIGPF I Corp., including all related agreements on substantially the same
terms as set forth in the Citigroup term sheet dated December 18, 2003 and attached hereto
as Exhibit G.

          (m) CEO. Brian Smith shall have been appointed the Chief Executive Officer of
the Company.

          (n) Due Diligence. The Purchasers shall have completed their accounting
and legal due diligence with respect to the Company and the transactions contemplated
herein and shall be satisfied with the results thereof

          (o) Termination of Existing Agreements. Effective upon the Closing, except
for the Agreement Regarding FDM and FAC, dated as of April 7, 2003, by and among PCI,
Thomas J. Petters, Theodore Deikel, and FAC Acquisition,

 

 

LLC, as amended on February 24,
2004, (i) any and all prior stockholder agreements, voting agreements, or right of first
offer, right of first refusal or co-sale agreements shall have been terminated and shall
be of no further force and effect, and (ii) any and all prior registration rights
agreements shall have been terminated and shall be of no further force and effect.

          (p) Stock Option Plan. The Company shall have reserved for issuance of
83,465,148 shares of Common Stock under its 2003 Equity Incentive Plan.

          (q) Purchaser Expenses. The Company shall have paid, in accordance with Section
11.8, the expenses of Bain Capital and Battery Ventures, and the fees, expenses and
disbursements of Ropes & Gray LLP, as counsel to Bain Capital and Battery Ventures, and
PricewaterhouseCoopers.

          (r) Board of Directors. The size of the Board of Directors of the Company
shall have been set at seven (7) directors.

          (s) Guarantor Agreement. The Company, FAC Acquisition, LLC, Deikel and
Thomas J. Petters shall have executed and delivered the Guarantor Agreement.

          (t) Material Adverse Change; Market Conditions. (i) The Company shall not have
suffered any Material Adverse Effect with respect to its business, financial condition,
results of operations, assets, liabilities or prospects; (ii) all the key senior management
employees of the Company and its Subsidiaries listed on Exhibit H hereto shall
remain under the employ of the Company or the applicable Subsidiary, and no such employee
shall have informed the Company or any Subsidiary of any intent or desire to resign his or
her position; and (iii) there shall have been no material adverse change in general market
conditions as determined in the reasonable discretion of Bain Capital and Battery Ventures.

          (u) Compliance Certificates. The Company shall have delivered to the Purchasers
a Compliance Certificate, executed by the President of the Company, dated as of the Closing
Date to the effect that the conditions specified in subsections (a) through (f), (h), (j)
through (m), (o) through (s), and (t)(i) and (ii) of this Section 6.1 have been satisfied.

          6.2. Conditions of the Company’s Obligations. The obligations of the Company under
Section 2 hereof are subject to the fulfillment prior to or on the Closing Date of all of the
following conditions, any of which may be waived in whole or in part by the Company.

          (a) Covenants; Representations and Warranties. (i) Each of the Purchasers at
the Closing Date shall have performed in all material respects all of its obligations
hereunder required to be performed by it at or prior to the Closing Date and
(ii) the representations and warranties of each of the Purchasers at the Closing Date
contained in this Agreement shall be true and correct in all material respects at and as of
the Closing Date as if made at and as of the Closing Date (except to the extent expressly

 

 

made as of an earlier date, in which case as of such earlier date).

          (b) Investor Rights Agreement. Each Purchaser shall have executed and
delivered the Investor Rights Agreement.

          (c) Stockholders Agreement. Each Purchaser shall have executed and delivered
the Stockholders Agreement.

          6.3. Conditions of Each Party’s Obligations. The respective obligations of each party
to consummate the transactions contemplated hereunder are subject to the parties being reasonably
satisfied as to the absence of (a) litigation challenging or seeking damages in connection with the
transactions contemplated by this Agreement, any of the Transaction Documents or the Amended and
Restated Certificate of Incorporation and (b) any statute, rule, regulation, injunction, order or
decree, enacted, enforced, promulgated, entered, issued or deemed applicable to this Agreement or
the transactions contemplated hereby (or in the case of any statute, rule or regulation, awaiting
signature or reasonably expected to become law), by any court, government or governmental authority
or agency or legislative body, domestic, foreign or supranational, that would, or would reasonably
be expected to, prohibit or enjoin the transactions contemplated by this Agreement.

     7. Transfer Restrictions; Restrictive Legend.

          7.1. Each Purchaser understands that the Company may, as a condition to the transfer of any of
the Securities, require that the request for transfer be accompanied by an opinion of counsel
reasonably satisfactory to the Company, to the effect that the proposed transfer does not result in
a violation of the Securities Act, unless such transfer is covered by an effective registration
statement or by Rule 144 or Rule 144A under the Securities Act; provided, however, that no
transfer by any Purchaser to any of its Affiliates shall require an opinion of counsel;
provided, further, that such Affiliate in each case agrees to be subject to the
restrictions in this Section 8. It is understood that the certificates evidencing the Securities
may bear substantially the following legends:

     “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.”

          7.2. The Company shall be obligated to reissue promptly unlegended certificates at the request
of any holder thereof if the holder shall have obtained an opinion of counsel reasonably acceptable
to the Company to the effect that, or the Company is otherwise
satisfied that, the securities proposed to be disposed of may lawfully be so disposed of
without registration, qualification or legend.

 

 

     8. Registration, Transfer and Substitution of Certificates for Shares.

          8.1. Stock Register; Ownership of Securities. The Company will keep at its principal
office a register in which the Company will provide for the registration of transfers of the
Securities. The Company may treat the Person in whose name any of the Securities are registered on
such register as the owner thereof and the Company shall not be affected by any notice to the
contrary. All references in this Agreement to a “holder” of any Securities shall mean the Person in
whose name such Securities are at the time registered on such register.

          8.2. Replacement of Certificates. Upon receipt of evidence reasonably satisfactory to
the Company of the loss, theft, destruction or mutilation of any certificate representing
Securities, and, in the case of any such loss, theft or destruction, upon delivery of an indemnity
agreement reasonably satisfactory to the Company or, in the case of any such mutilation, upon
surrender of such certificate for cancellation at the office of the Company maintained pursuant to
Section 9.1 hereof, the Company at its expense will execute and deliver, in lieu thereof, a new
certificate representing Securities of like tenor.

     9. Definitions. Unless the context otherwise requires, the terms defined in
this Section 9 shall have the meanings specified for all purposes of this Agreement. Except
as otherwise expressly provided, all accounting terms used in this Agreement, whether or not
defined in this Section 9, shall be construed in accordance with GAAP. If and so long as the
Company has one or more Subsidiaries, such accounting terms shall be determined on a
consolidated basis for the Company and each of its Subsidiaries, and the financial
statements and other financial information to be furnished by the Company pursuant to this
Agreement shall be consolidated and presented with consolidating financial statements of the
Company and each of its Subsidiaries.

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

          “Agreement” means this Agreement.

          “Amended and Restated Certificate of Incorporation” has the meaning assigned to it in Section
1 hereof.

          “Bain Capital” has the meaning assigned to it in the introductory paragraph of this Agreement.

          “Battery Ventures” has the meaning assigned to it in the introductory paragraph of this
Agreement.

          “Balance Sheet Date” has the meaning assigned to it in Section 5.13(a) hereof

          “Charter Documents” has the meaning assigned to it in Section 5.6 hereof.

          “Closing Date” has the meaning assigned to it in Section 3 hereof. “Code” means the Internal
Revenue Code of 1986, as amended.

 

 

          “Common Stock” has the meaning assigned to it in Section 1 hereof.

          “Conversion Shares” means the shares of Common Stock issuable upon conversion of the Series A
Preferred Stock.

          “Encumbrances” has the meaning assigned to it in Section 5.2 hereof. “Environmental Law” has
the meaning assigned to it in Section 5.20(b) hereof.

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

          “Exchange Act” means the Securities Exchange Act of 1934, as amended.

          “GAAP” means U.S. generally accepted accounting principles consistently applied.

          “Governmental Entity” means any national, federal, state, municipal, local, territorial,
foreign or other government or any department, commission, board, bureau, agency, regulatory
authority or instrumentality thereof, or any court, judicial, administrative or arbitral body or
public or private tribunal.

          “Guarantor Agreement” means the Guarantor Agreement in the form attached hereto as Exhibit
I.

          “Hazardous Material” has the meaning assigned to it in Section 5.20(b) hereof. “Intellectual
Property” has the meaning assigned to it in Section 5.21(a) hereof.

          “Investor Rights Agreement” means the Investor Rights Agreement in the form attached hereto as
Exhibit B.

          “Material Adverse Effect” means any (i) adverse effect on the issuance or validity of the
Securities or the transactions contemplated hereby or on the enforceability or validity of the
Amended and Restated Certificate of Incorporation or on the ability of the Company to perform its
obligations under this Agreement or the other Transaction Documents, or (ii) material adverse
effect on the prospects or condition (financial or otherwise), properties, assets, liabilities,
business or operations of the Company and its Subsidiaries taken as a whole.

          “Material Contract” means all written and oral contracts, agreements, deeds, mortgages,
leases, subleases, licenses, instruments, notes, commitments, commissions, undertakings,
arrangements and understandings (i) which by their terms involve, or would reasonably be expected
to involve, aggregate payments by or to the Company or any Subsidiary of in excess of $100,000,
(ii) which have a remaining term of one year or greater, (iii) under which any of the Company’s or
any Subsidiary’s properties or assets are subject or bound, or (iv) the breach of which would have
a Material Adverse Effect on the Company.

          “Person” means and includes all natural persons, corporations, business trusts, associations,
companies, partnerships, joint ventures, limited liability companies and other

 

 

entities and governments and agencies and political subdivisions.

          “Petters” shall have the meaning assigned to in the introductory paragraph of this Agreement.

          “Purchase Price” has the meaning assigned it in Section 2 hereof.

          “Purchaser” and “Purchasers” have the meaning assigned to them in the introductory paragraph
of this Agreement and shall include any Affiliates of the Purchasers.

          “SEC” means the Securities and Exchange Commission.

          “Securities” has the meaning assigned to it in Section 1 hereof. “Securities Act” or “Act”
means the Securities Act of 1933, as amended.

          “Series A Preferred Stock” has the meaning assigned to such term in Section 1 hereof

          “Stockholders Agreement” means the Stockholders Agreement in the form attached hereto as
Exhibit C.

          “Subsidiary” means any corporation, association trust, limited liability company, partnership,
joint venture or other business association or entity (i) at least 50% of the outstanding voting
securities of which are at the time owned or controlled directly or indirectly by the Company or
(ii) with respect to which the Company possesses, directly or indirectly, the power to direct or
cause the direction of the affairs or management of such person.

          “Transaction Documents” means this Agreement, the Investor Rights Agreement and the
Stockholders Agreement.

10. Enforcement.

          10.1. Cumulative Remedies. None of the rights, powers or remedies conferred upon the
Purchasers on the one hand or the Company on the other hand shall be mutually exclusive, and each
such right, power or remedy shall be cumulative and in addition to every other right, power or
remedy, whether conferred by this Agreement, any of the other Transaction Documents or the Amended
and Restated Certificate of Incorporation or now or hereafter available at law, in equity, by
statute or otherwise.

          10.2. No Implied Waiver. Except as expressly provided in this Agreement, no course
of dealing between the Company and the Purchasers or any other holder of shares of Series A
Preferred Stock and no delay in exercising any such right, power or remedy conferred hereby or
by the Amended and Restated Certificate of Incorporation, or by any of the other Transaction
Documents or now or hereafter existing at law in equity, by statute or otherwise,
shall operate as a waiver of, or otherwise prejudice, any such right, power or remedy.

 

 

     11. Miscellaneous.

          11.1. Waivers and Amendments. Upon the approval of the Company and the written consent
of the Purchasers holding seventy five percent (75%) of the then outstanding Series A Preferred
Stock (a) the obligations of the Company and the rights of the Purchasers under this Agreement may
be waived (either generally or in a particular instance, either retroactively or prospectively and
either for a specified period of time or indefinitely), and (b) the Company may enter into a
supplementary agreement for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement, or of any supplemental agreement or modifying
in any manner the rights and obligations hereunder or thereunder of the Purchasers and/or the
Company.

          The foregoing notwithstanding, no such waiver or supplemental agreement shall affect any of
the rights of any holder of any Securities created by the Amended and Restated Certificate of
Incorporation or by the Delaware General Corporation Law without compliance with all applicable
provisions of the Amended and Restated Certificate of Incorporation and the Delaware General
Corporation Law.

          Neither this Agreement, nor any provision hereof, may be changed, waived, discharged or
terminated orally or by course of dealing, but only by an instrument in writing.

          11.2. Notices. All notices, requests, consents and other communications required or
permitted hereunder shall be in writing and shall be hand delivered or mailed postage prepaid by
registered or certified mail or by facsimile transmission,

If to Bain Capital:

Bain Capital, LLC

111 Huntington Avenue

Boston, MA 02199

Attention: Michael Krupka

Facsimile No.: (617) 516-2010

with a copy to:

Ropes & Gray LLP

One International

Place Boston, MA 02110

Attention: Joel F. Freedman, Esq.

Facsimile No.: (617) 951-7050

If to Battery Ventures:

 

 

Battery Ventures

20 William Street, Suite 200

Wellesley, MA 02481

Attention: Oliver D. Curme

Facsimile No.: (781) 577-1001

If to the Company:

Fingerhut Direct Marketing,

Inc. 4400 Baker Road

Minnetonka, MN 55343

Attention: Robert C. Kieffer

Facsimile No.: (952) 975-4078

with a copy to:

Fredrikson & Byron, P.A.

4000 Pillsbury Center

200 South Sixth Street

Minneapolis, MN 55402-1425

Attention: Simon C. Root

Facsimile No.: (612) 492-7077

or at such other address as the Company or the Purchasers each may specify by written notice to the
other parties hereto, and each such notice, request, consent and other communication shall for all
purposes of the Agreement be treated as being effective or having been given when delivered if
delivered personally, upon receipt of facsimile confirmation if transmitted by facsimile, or, if
sent by mail, at the earlier of its receipt or 72 hours after the same has been deposited in a
regularly maintained receptacle for the deposit of United States mail, addressed and postage
prepaid as aforesaid.

          11.3. Indemnification. The Company shall indemnify, save and hold harmless each
Purchaser, its directors, officers, employees, partners, representatives and agents from and
against (and shall promptly reimburse such indemnified persons for) any and all liability, loss,
cost, damage, reasonable attorneys’ and accountants’ fees and expenses, court costs and all other
out-of-pocket expenses incurred in connection with or arising from claims, actions, suits,
proceedings or similar claims by any person or entity (other than the Purchasers) associated or
relating to the execution, delivery and performance by the Company of this Agreement, any of the
other Transaction Documents or the Amended and Restated Certificate of Incorporation or the
transactions contemplated hereby or thereby. This indemnification provision shall be in addition
to the rights of the Purchaser to bring an action against the Company for breach of any term of
this Agreement, the other Transaction Documents or the Amended and Restated Certificate of Incorporation.

 

 

          11.4. No Waivers. No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.

          11.5. Successors and Assigns. All the terms and provisions of this Agreement shall be
binding upon and inure to the benefit of and be enforceable by the respective parties hereto, the
successors and permitted assigns of each Purchaser and the successors of the Company, whether so
expressed or not. None of the parties hereto may assign its rights or obligations under Section 2
hereof without the prior written consent of the Company, except that each Purchaser may, without
the prior consent of the Company, assign its rights to purchase the shares of Series A Preferred
Stock hereunder to any of its Affiliates. This Agreement shall not inure to the benefit of or be
enforceable by any other Person.

          11.6. Headings. The headings of the Sections and paragraphs of this Agreement have
been inserted for convenience of reference only and do not constitute a part of this Agreement.

          11.7. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.

          11.8. Expenses. Upon consummation of the purchase of shares of Series A Preferred
Stock by the Purchasers pursuant to this Agreement or in the event that the parties hereto elect to
terminate this Agreement, the Company agrees to pay, reimburse and hold each of the Purchasers
harmless from liability for the payment of all reasonable fees and expenses incurred by any of
them, respectively, in connection with the preparation and negotiation of this Agreement and the
consummation of the transactions contemplated hereby; provided, however,that such fees and
expenses shall not exceed $200,000 in the aggregate. The fees and expenses of the Purchasers may
include, without limitation: the fees and expenses of counsel and accountants and out of pocket
expenses of Bain Capital and Battery Ventures, arising in connection with the preparation,
negotiation and execution of the Amended and Restated Certificate of Incorporation and the
Transaction Documents and the consummation of the transactions contemplated thereby (an estimate of
the fees and expenses of such counsel may be paid by check delivered or wire transfer to such
counsel at the Closing by any Purchaser, the amount of such check or wire transfer being deducted
from the aggregate amount to be paid by such Purchaser at the Closing for the shares of Series A
Preferred Stock to be purchased by them hereunder),

          (a) the fees and expenses incurred with respect to any amendments to the Amended and
Restated Certificate of Incorporation or the Transaction Documents proposed by the Company
(whether or not the same become effective),

          (b) the fees and expenses incurred in connection with any requested waiver of the
right of any holder of Securities or the consent of any holder of Securities to
contemplated acts of the Company not otherwise permissible by the terms of the
Amended and Restated Certificate of Incorporation or the Transaction Documents,

 

 

          (c) stamp and other taxes, excluding income taxes, which may be payable with respect
to the execution and delivery of the Amended and Restated Certificate of Incorporation or
the Transaction Documents, or the issuance, delivery or acquisition of the shares of Series
A Preferred Stock or upon the conversion of the shares of Series A Preferred Stock, and

          (d) all costs of the Company’s performance and compliance with the Amended and
Restated Certificate of Incorporation or the Transaction Documents.

          11.9. Jurisdiction.

          Any suit, action or proceeding seeking to enforce any provision of, or based on any
matter arising out of or in connection with, this Agreement or the transactions contemplated
hereby shall be brought in any federal or state court located in the State of New York, and each
of the parties hereby consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that any such suit,
action or proceeding which is brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any party anywhere in the
world, whether within or without the jurisdiction of any such court. Without limiting the
foregoing, each party agrees that service of process on such party as provided in Section 12.2
shall be deemed effective service of process on such party.

          11.10. Waiver of Jury Trial.

          TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT BE WAIVED, THE INVESTORS AND
THE COMPANY HEREBY WAIVE, AND COVENANT THAT NEITHER THE COMPANY NOR THE INVESTORS WILL ASSERT, ANY
RIGHT TO TRIAL BY JURY ON ANY ISSUE IN ANY PROCEEDING, WHETHER AS PLAINTIFF, DEFENDANT OR
OTHERWISE, IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT, ANY OTHER AGREEMENT OR THE SUBJECT MATTER HEREOF OR THEREOF OR IN ANY
WAY CONNECTED WITH, RELATED OR INCIDENTAL TO THE DEALINGS OF THE INVESTORS AND THE COMPANY
HEREUNDER OR THEREUNDER, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING AND WHETHER IN
TORT OR CONTRACT OR OTHERWISE. The Company acknowledges that it has been informed by the
Purchasers that the provisions of this Section 12.10 constitute a material inducement upon which
the Purchasers are relying and will rely in entering into this Agreement. Any Purchaser or the
Company may file an original counterpart or a copy of this Section 12.10 with any court as written
evidence of the consent of the Purchasers and the Company to the waiver of its right to trial by
jury.

          11.11. Counterparts; Effectiveness. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts, with the
same effect as if all parties had signed the same document. All such counterparts shall be
deemed an

 

 

original, shall be construed together and shall constitute one and the same
instrument. This Agreement shall become effective when each party hereto shall have received
counterparts hereof signed by all of the other parties hereto.

          11.12. Entire Agreement. The Amended and Restated Certificate of Incorporation and
the Transaction Documents contain the entire agreement among the parties hereto with respect to
the subject matter hereof and thereof and such agreements supersede and replace all other prior
agreements, written or oral, among the parties hereto with respect to the subject matter hereof
and thereof.

          11.13. Severability. If any provision of this Agreement shall be found by any court of
competent jurisdiction to be invalid or unenforceable, the parties hereby waive such provision to
the extent that it is found to be invalid or unenforceable. Such provision shall, to the maximum
extent allowable by law, be modified by such court so that it becomes enforceable, and, as
modified, shall be enforced as any other provision hereof, all the other provisions hereof
continuing in full force and effect.

          11.14. Exculpation Among Purchasers. Each Purchaser acknowledges that it is not
relying upon any person, firm or corporation, other than the Company and its officers and
directors, in making its investment or decision to invest in the Company. Each Purchaser agrees
that no Purchaser nor the respective controlling persons, officers, directors, partners, agents,
or employees of any Purchaser shall be liable to any other Purchaser for any action heretofore or
hereafter taken or omitted to be taken by any of them in connection with the purchase of the
Securities.

          11.15. Non-Disclosure. Each Purchaser agrees to use the same degree of care as such
Purchaser uses to protect its own confidential information to keep confidential any proprietary or
other information furnished to such Purchaser that the Company maintains in confidence (so long as
such information is not in the public domain), except that such Purchaser may disclose such
proprietary or confidential information (i) to any partner (limited or otherwise), subsidiary or
parent of such Purchaser for the purpose of evaluating its investment in the Company as long as
such partner, subsidiary or parent is advised of the confidentiality provisions of this Section
11.15, (ii) at such time as the Company voluntarily discloses such information to the public or
such information otherwise enters the public domain through no fault of such Purchaser, (iii) that
is communicated to it free of any obligation of confidentiality, or (iv) that is developed by
Purchaser or its agents independently of and without reference to any confidential information
communicated by the Company. Notwithstanding the foregoing, the parties hereto may disclose to any
and all persons, without limitation of any kind, the tax treatment and the tax structure of this
transaction, and all materials of any kind related to such tax treatment and tax structure.

          11.16. Treatment of Accrual Amount. An amount equal to $799,167 (the “Accrual
Amount”), representing the total accrued and unpaid interest on certain promissory notes issued by
the Company in favor of FAC Acquisition, LLC and PCI (the “Petters Notes”), which Petters Notes
were exchanged for or converted into Series A Preferred Stock at the
Closing, will not be paid or converted into Series A Preferred Stock at the Closing and will
not accrue additional interest in accordance with the Petters Notes or in any other manner. After
the Closing, will not be paid or converted into Series A Preferred Stock at the Closing and
will not accrue additional interest in accordance with the Petters Notes or in any other manner.
After the

 

 

Closing, the Accrual Amount will continue to be reflected as accrued interest on the
financial statements of the Company. One half of the Accrual Amount will be payable to the Petters
Entity designated by PCI at the end of the Company’s first fiscal quarter after the Company’s first
fiscal year during which it has positive net income, as reflected on the Company’s consolidated
audited financial statements. One half of the Accrual Amount will be payable to the Petters Entity
designated by PCI after or in connection with a transaction or series of transactions in which Bain
Capital and its Affiliates and Battery Ventures and its Affiliates receive consideration with a
value in excess of 250% of the total amount invested by such entities in the equity securities of
the Company. The consideration in such transaction shall be in the form of cash or equity
securities that are listed on a national securities exchange or NASDAQ national market that are
either (i) subject to an effective registration statement under the Securities Act or (ii)
immediately salable by the holder and all of its Affiliates without registration under the
Securities Act pursuant to Rule 144(k) under the Securities Act. The fair market value of any
securities received in a transaction will be determined in as mutually agreed by the Board of
Directors of the Company and the holders of at least seventy-five percent (75%) of the then
outstanding Series A Preferred Stock; provided, however, that if such mutual agreement
cannot be reached, such fair market value shall be determined by following the procedures set forth
in the definition of Appraisal Procedure in the Amended and Restated Certificate of Incorporation.

     IN WITNESS WHEREOF, the parties hereto have caused this Stock Purchase Agreement to be duly
executed as of the day and year first above written.

	 	 	 	 	 
	 	THE COMPANY

FINGERHUT DIRECT MARKETING, INC.

 	 
	 	By:  	/s/ Karen Miller Hartje
 	 
	 	 	Name:  	Karen Miller Hartje 	 
	 	 	Title:  	SVP Finance 	 
	 
	 	THE PURCHASERS

BAIN CAPITAL VENTURE FUND, L.P.

 	 
	 	By:  	          Bain Capital Venture Partners, L.P.
its general partner
 	 
	 	 	 
	 	By:  	      Bain Capital Investors, LLC
its general partner
 	 
	 	 	 
	 	By:  	           /s/ Michael Krupka
 	 
	 	 	Name:  	Michael Krupka 	 
	 	 	Title:  	Authorized Person 	 
	 

 

 

	 	 	 	 	 
	 	BCIP ASSOCIATES III, LLC

 	 
	 	By:  	        BCIP Associates III,
its manager
 	 
	 
	 	BCIP ASSOCIATES III-B, LLC

 	 
	 	By:  	      BCIP Associates III-B,
its manager
 	 
	 
	 	 	 
	 	By:  	        Bain Capital Investors, LLC
their Managing Partner
 	 
	 
	 	 	 
	 	By:  	           /s/ Michael Krupka
 	 
	 	 	Name:  	Michael Krupka 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	

BROOKSIDE CAPITAL PARTNERS FUND, L.P.

 	 
	 	By:  	/s/ Michael Goss
 	 
	 	 	Name:  	Michael Goss 	 
	 	 	Title:  	Managing Director 	 
	 
	 	RGIP, LLC

 	 
	 	By:  	/s/ GR (sic)
 	 
	 	 	Name:  	 	 
	 	 	Title:  	Managing Member 	 
	 
	 	BATTERY VENTURES VI, L.P.

 	 
	 	By:  	 Battery Partners VI, LLC
General Partner
 	 
	 
	 	 	 
	 	            /s/ Oiver D C (sic)
 	 
	 	Name:  	 
	 	Title:  Member Manager 	 
	 
	 	BATTERY INVESTMENT PARTNERS VI, LLC

 	 
	 	/s/ Oiver D C (sic)
 	 
	 	Name:  	 
	 	Title:  Member Manager 	 
	 

 

 

	 	 	 	 	 
	 	 	 
	 	                 /s/ Kermit L. Stofer
 	 
	 	Kermit L. Stofer 	 
	 
	 	PETTERS COMPANY, INC.

 	 
	 	/s/
[ILLEGIBLE]	 
	 	Name:  	 	 
	 	Title:  	 	 
	 	 	 
	 	                 /s/ Theodore Deikel
 	 
	 	Theodore Deikel 	 
	 	 	 
	 	                /s/ Brian Smith
 	 
	 	Brian Smith 	 
	 	 	 
	 

 

 

SCHEDULE I

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Purchaser	 	Shares Purchased	 	Purchase Price	 	Debt Conversion Amount
	Bain Capital Venture Fund, L.P.
	 	 	64,276,984	 	 	$	6,756,153.79	 	 	 	—	 
	BCIP Associates III, LLC
	 	 	11,451,535	 	 	$	1,203,670.88	 	 	 	—	 
	BCIP Associates III-B, LLC
	 	 	798,509	 	 	$	83,931.28	 	 	 	 	 
	RGIP, LLC
	 	 	773,000	 	 	$	81,250.06	 	 	 	 	 
	Brookside Capital Partners
	 	 	77,300,027	 	 	$	8,125,005.84	 	 	 	—	 
	Fund, L.P.
	 	 	 	 	 	 	 	 	 	 	 	 
	Battery Ventures VI, L.P.
	 	 	147,959,388	 	 	$	15,552,011.27	 	 	 	 	 
	Battery Investment Partners VI,
LLC
	 	 	6,164,974	 	 	$	648,000.42	 	 	 	 	 
	Kermit L. Stofer
	 	 	475,692	 	 	$	49,999.99	 	 	 	 	 
	Petters Company, Inc. (1)
	 	 	261,630,861	 	 	 	—	 	 	$	27,500,019.80	 
	Theodore Deikel
	 	 	23,784,624	 	 	$	2,500,001.83	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 
	Brian Smith
	 	 	2,854,155	 	 	$	300,000.23	 	 	 	 	 
	TOTAL
	 	 	597,469,749	 	 	$	35,300,025.59	 	 	$	27,500,019.80	 

 

			
	(1)	 	Petters Company, Inc. — 261,630,861 shares issued in exchange for cancellation of
loan in principal amount of $27,500,000, evidenced by a promissory note surrendered at the
Closing.

 

 

SCHEDULES TO STOCK PURCHASE AGREEMENT

     THESE SCHEDULES, including any attachments and exhibits hereto (collectively, the
“Schedules”) are being furnished by FINGERHUT DIRECT MARKETING, INC., a Delaware corporation (the
“Company”), to BAIN CAPITAL VENTURE FUND, L.P., a Delaware limited partnership, BATTERY VENTURES
VI, L.P., a Delaware limited partnership, and the other “Purchasers”, in connection with the
execution and delivery of that certain Stock Purchase Agreement (the “Agreement”) dated as of
February 17, 2004 by and among the Company and certain Purchasers. Unless the context otherwise
requires, all capitalized terms not defined herein shall have the meaning assigned to them in the
Agreement.

     No reference to or disclosure of any item or other matter in these Schedules shall be
construed as an admission or indication that such item or other matter is material or that such
item or other matter is required to be referred to or disclosed in these Schedules. Except as
expressly set forth in the Agreement, no reference in these Schedules to any agreement or document
shall be construed as an admission or indication that such agreement or document is enforceable or
currently in effect or that there are any obligations remaining to be performed or any rights that
may be exercised under such agreement or document. No disclosure in these Schedules relating to any
possible breach or violation of any agreement, law or regulation shall be construed as an admission
or indication that any such breach or violation exists or has actually occurred.

     These Schedules and the information and disclosures contained in these Schedules are intended
to reference documentation as set forth on specific schedules, and otherwise, only to qualify and
limit the representations, warranties and covenants of the Company contained in the Agreement and
shall not be deemed to expand in any way the scope or effect of any of such representations,
warranties or covenants.

[Remainder of page intentionally left blank]

 

 

Schedule 5.1(a) — Capitalization.

A Capitalization Table is attached to Schedule 5.1(a) as Attachment A. 

(section 5.1(b)(i))

     Options:

	 	1.	 	NonQualified Stock Option Agreement Fingerhut Direct
Marketing, Inc. 2003 Equity Incentive Plan, (Ted Deikel);
	 
	 	2.	 	Employee Stock Option Plans:

	 	(a)	 	Company’s 2003 Equity Incentive Plan (the “Plan”);

	 	(b)	 	Non Qualified Stock Option Agreements Fingerhut Direct
Marketing, Inc., 2003 Equity Incentive Plan (Executive Team)
attached to Schedule 5.1(a) as Attachment B;

	 	(c)	 	Incentive Stock Option Agreements, Fingerhut Direct Marketing, Inc.
2003 Equity Incentive Plan attached to Schedule 5.1(a) as Attachment C. 

Schedule 5.4 — Subsidiaries.

The following table sets forth all Subsidiaries of the Company.

	 	 	 	 	 	 	 
	Name	 	Jurisdiction of Organization	 	Percentage Ownership	 
	FDM-AR1, Inc.
	 	Delaware	 	 	100	%
	Fingerhut Fulfillment, Inc.
	 	Delaware	 	 	100	%

Schedule 5.5 — Consents.

Other than consents required and covered by the execution, delivery and performance of this
Agreement and other Transaction Documents consent is required of the following parties:

	 	1.	 	Huntington Bank:

	 	 	 	Restricted Account Agreement, dated November 24, 2003, by and between FDM AR-1,
Inc., Acorn Capital Group, LLC, CIT Group/ Business Credit, Inc. and the Huntington
Bank requires written consent to assign or transfer rights to another party.

 

 

	 	2.	 	Remitco:

	 	 	 	Letter Agreement, by and between Remitco LLC, Acorn Capital Group, LLC, FDM AR-1,
Inc., dated November 24, 2003, requires that upon termination of the Acorn Financing
Agreement, that Acorn Capital Group, LLC shall give Remitco direction regarding the
funds; therefore, written consent from Acorn Capital Group, LLC to Remitco to
release and transfer its security interest in the Lockbox Account is required.

	 	3.	 	Minnetonka Lease, located at 4400 Baker Road, Minnetonka, MN: The Office
Lease, by and between Fingerhut Direct Marketing, Inc. and FAC Acquisition LLC
(“Landlord”), dated May 1, 2003, Section 2.4, has a change of ownership or
effective control provision requiring the Landlord’s written consent. The Company
has obtained the Landlord’s written consent.

	 	4.	 	St. Cloud West Campus Facility Lease, located at 6250 Ridgewood
Road, St. Cloud, MN:

	 	 	 	The Building Lease, by and between Fingerhut Direct Marketing, Inc. and FAC
Acquisition LLC (“Landlord”), dated November 26, 2003, Section 19(B), has a change
of majority ownership provision requiring the Landlord’s written consent. The
Company has obtained the Landlord’s written consent.

	 	5.	 	St. Cloud Building No. 1 Lease, located at 11 McLeland Road, St. Cloud,
MN: The Building Lease, by and between Fingerhut Direct Marketing, Inc. and FAC
Acquisition, LLC, dated November 26, 2003, Section 19(B), has a change of
majority ownership provision requiring the Landlord’s written consent. The
Company has obtained the Landlord’s written consent.

Schedule 5.8 — No Conflicts.

(section 5.8(a))   None

(section 5.8(b))   None

(section 5.8(c))   None

(section 5.8(d))   None

(section 5.8 part II)

1. The Company and its Subsidiary, FDM AR-1, Inc. have received notice dated
January 14, 2004 of the EBITDA Covenant Breach under the Financing Agreement, by
and between FDM AR-1, Inc. and Acorn Capital Group, LLC, dated November 24, 2003;

2. The Covenant Breach in the preceding sentence has triggered Notices of
Enforcement under the following agreements:

 

 

     (a) Intercreditor Agreement by and between CIT Group/ Business Credit Inc., Acorn
Capital Group, LLC, and CIT Bank, dated November 24, 2003;

     (b) Intercreditor Agreement (Subordinating Creditors), by and between Acorn Capital
Group, LLC, Petters Company, Inc., FAC Acquisition LLC, Stafford Towne, Ltd., Bennington
International Holdings, Ltd., Westford Special Situations Fund, Ltd., dated November 24,
2003;

Schedule 5.9 — Material Contracts.

(5.9 part I)

The Material Contracts of the Company and its Subsidiaries are attached to Schedule 5.9 as
Attachment A.

(5.9 part II)

FDM AR-1, Inc. has been notified of an EBITDA Covenant Breach under the Financing Agreement
between FDM AR-1, Inc. and Acorn Capital Group, LLC dated November 24, 2003 as stated above
under Schedule 5.8.

The Company is past due on various inventory and expense payables. The aggregate amount of past
due amounts as of February 9, 2004, was $5,652,657. The Company intends to promptly satisfy its
obligations following closing of this Agreement and other Transaction Documents

Schedule 5.10 Ri ht of First 
Refusal; Stockholders Agreement; Voting and Registration Rights.

(5.10 part I)

	 	1.	 	Stockholders Agreement, by and between Fingerhut Direct Marketing, Inc., FAC
Acquisition LLC, Petters Company, Inc, Redtag, LLC, Stafford Towne, Ltd., and Epsilon
Global Equities Limited, dated April 9, 2003 (which will be terminated upon Closing);
	 
	 	2.	 	Warrant, dated April 9, 2003, entitling Epsilon Global Entities Limited to
subscribe and purchase from Fingerhut Direct Marketing, Inc.(which will be terminated
and replaced with warrants without registration rights upon Closing);
	 
	 	3.	 	Agreement Regarding FDM and FAC., by and between FAC Acquisition LLC,
Theodore Deikel, Thomas J. Petters, and Petters Company, Inc. dated April 7, 2003,
as amended as of February 17, 2004;

 

 

Schedule 5.13 — Absence of Certain Changes; Financial Statements.

(section 5.13(a))
None.

(section
5.13(b)(1)) None

(section
5.13(b)(2)) None

(section 5.13(b)(3))

	 	1.	 	Master Craft Sales and Licensing Agreement, as disclosed in Schedule
5.9 Attachment A, Numbers 87 and 88;
	 
	 	2.	 	Financing Agreement (Acorn Capital Group) as disclosed in Schedule
5.9 Attachment A , Numbers 106, 107, 108);

(section 5.13(b)(4)).

	 	(w)	The Company provided a two week severance package, pursuant to the Separation
Agreement and Release dated December 19, 2003, to former employee, Cindy Pogachnik.
The position was eliminated.

(x) The Company has entered into the following deferred compensation agreements:

(1) FY 2004 Supplemental Short Term Incentive Plan Fingerhut Direct
Marketing by and between Fingerhut Direct Marketing, Inc. and Megan Kavanaugh,
dated May 7, 2003;

(2) FY 2004 Supplemental Short Term Incentive Plan Fingerhut Direct Marketing
by and between Fingerhut Direct Marketing, Inc. and Don Lynch dated May 5, 2003;

(y) None

(z) None

(section 5.13(b)(5)
None

 

 

Schedule 5.14 — No Undisclosed Material Liabilities.

(section 5.14 (a))

	 	1.	 	Financial Disclosures are attached to Schedule 5.14 as Attachment A

	 	2.	 	The Company is past due on various inventory and expense payables. The
aggregate amount of past due amounts as of February 9, 2004, was $5,652,657. The
Company intends to promptly satisfy its obligations following closing of this
Agreement and other Transaction Documents.

(section 5.14(b))

None other than noted above

(section 5.14(c))

None

(section 5.14 (d))

None.

Schedule 5.15 — Litigation.

1. The Company is in receipt of a Summons and Complaint filed by Eldridge E. and Carol A.
Moreland. The suit has been tendered to Charles Moore, Federated Department Stores, Inc.,
for handling because the plaintiffs are customers of the former Fingerhut/Federated. Company
does not have reason to believe that there will be any resulting liability to Company.

2. On February 2, 2004, Fingerhut Direct Marketing, Inc. (“FDM”) received a Subpoena Duces
Tecum from the Office of the Attorney General of the State of Kansas, Consumer Protection
Division. The subpoena was issued in connection with a consumer complaint submitted to the
Kansas Attorney General’s office by Jeri Strange regarding collection activities relating to
purchases made by Mr. Strange between 1998 and 2002, from Fingerhut Corporation (“old
Fingerhut”). Mr. Strange does not have an account the FDM and FDM has never marketed to or
contacted Mr. Strange in any manner. In a telephone conversation on February 6, 2004,
between Robert Kieffer, FDM’s General Counsel and Kevin Schumaker, Assistant Attorney
General, Consumer Protection/AntiTrust Division, Mr. Schumaker acknowledged that, based on
FDM’s representation of the facts, FDM was improperly identified as the target of the
subpoena and that it would not be necessary for FDM to respond. Written confirmation (via
email) from Mr. Schumaker has been received indicating Fingerhut Direct Marketing, Inc. does
not need to respond to the Subpoena Duces Tecum. See Attachment A to
Schedule 5.15

 

 

Schedule 5.17 — Employee Benefit

Plans. (section 5.17(a))

The Company has the following benefit plans under the Shared Resources Agreement dated
January 1, 2003 with Petters Group:

	 	1.	 	Group Medical Insurance — Medica Choice Select;
	 
	 	2.	 	Group Dental Insurance- Delta Dental;
	 
	 	3.	 	Basic Life and AD&D Insurance, Optional Life Insurance, Short Term
Disability Insurance, Long Term Disability Insurance — UNUM Provident;
	 
	 	4.	 	401(k) Savings Program- CitiStreet-Salomen Smith Barney;
	 
	 	5.	 	Flexible Spending Accounts (Pre-Tax Dependent Care Reimbursement Plan, Pre-Tax
Health Care Reimbursement Plan) administered by Acclaim Benefits,
	 
	 	6.	 	The Company is obligated under the Collective Bargaining Agreement by and
between Fingerhut Fulfillment, Inc and the Midwest Regional Joint Board Union of
Needletrades, Industrial and Textile Employees, dated September 30, 2003 to
contribute to the following:

(a) Hospital-Medical Benefits (FFI, Inc. shall pay 75% of total monthly
premium each year);

(b) AD&D, Short Term Disability and Dental Insurance will be paid in full by
FFI, Inc. effective the second year of the contract;

(c) Dental Insurance — (FFI, Inc. shall pay 70% of total monthly premium);

(d) Employee Retirement Benefit- FFI, Inc. shall contribute five cents ($.05)
per hour worked, effective on the employee’s join Union date or effective date of
the contract, whichever occurs last, the first year of the contract; and an
additional ten cents ($.10) per hour worked for a total of fifteen cents ($.15) per
hour worked the second year of the contract.

(section 5.17(b) None

(section 5.17(c))

 

 

A Union Grievance was filed against FFI, Inc. on 11-11-03 by Unite Local 978. On 11-15-03 an
employer response was made that the concern was understood, however, no contract violation
occurred. There has been complete resolution of the matter.

Schedule 5.19 — Brokers.

The Company has engaged and entered agreements with the following brokers to assist
in securing financing for the Company:

	 	1.	 	Cherry Tree / Fingerhut Engagement Letter, by and between The Petters Company,
Inc., Cherry Tree Securities, LLC, Cherry Tree Development, LLC and Fingerhut Direct
Marketing, Inc., dated June 25, 2003;

	 	2.	 	Engagement as Financial Advisor , by and between Cherry Tree Securities, LLC,
Fingerhut Direct Marketing, Inc. and Thomas J. Petters , dated September 19, 2003;

	 	3.	 	Amendment to Engagement Agreement Dated September 19, 2003, by and between
Cherry Tree Securities, LLC and Fingerhut Direct Marketing, Inc., dated September 23,
2003;

	 	4.	 	Engagement as Financial Advisor, by and between USbancorp Pipar Jaffray and
Fingerhut Direct Marketing, Inc., dated September 19, 2003;

	 	5.	 	Letter Engagement as Financial Advisor Agreement(Piper Jaffray), by and between
Pipar Jaffray and Fingerhut Direct Marketing, Inc. and Thomas J. Petters, dated
February 10, 2004;

	 	6.	 	Engagement as Financial Advisor Agreement (Piper Jaffray), by and between Pipar
Jaffray and Fingerhut Direct Marketing, Inc. and Thomas J. Petters, dated February 10,
2004;

	 	7.	 	Letter Engagement as Financial Advisor Agreement (Cherry Tree), by and between
Cherry Tree Securities, LLC and Fingerhut Direct Marketing, Inc., dated February 10,
2004.

 

 

Schedule 5.21(b) — Intellectual Property Matters.

(section 5.21(b)(1-9)) None

	 	1.	 	The Company’s registered Domain Names are attached to Schedule 5.21(b) as
Attachment A;

	 	2.	 	The Company’s registered Patents are attached to Schedule 5.21(b)as
Attachment B;

	 	3.	 	The Company’s registered Copyrights are attached to Schedule 5.21(b)as
Attachment C;

	 	4.	 	The Company’s registered Trademarks and Service Marks are attached to Schedule
5.21(b) as Attachment D;

	 	5.	 	Other Specified Assets are attached to Schedule 5.21(b) as Attachment E;

	 	6.	 	Intellectual property of others attached to Schedule 5.21 (b) as
Attachment F; 

On August 28, 2003, the Company received a letter from Medic Alert’s counsel alleging the
Company’s infringement upon the use of the “MEDIC ALERT” mark owned by MedicAlert Foundation.
Without admitting liability, the Company promptly agreed to and did change its advertising
materials. The matter has been completely resolved.

(section 5.21(c )) None

(section 5.21(d)) None

(section 5.21(e))

	 	 	Non Disclosure Confidentiality Agreements have been have entered into by the Company’s executive
team with the exception of the following:

	 	1.	 	Megan Kavanaugh
	 
	 	2.	 	Don Lynch (part of Agreement stricken).

 

 

Schedule 5.21(f)

The Master Craft Licensing Agreement, disclosed in Schedule 5.9 (20), is owned by Petters Group
Worldwide, LLC, which is controlled by Thomas J. Petters.

Schedule 5.22 — Related-Part Transactions.

(section 5.22, part
I) None

(section 5.22, part H and part III)

The Company is affiliated with, has a business relationship with and is under contract with The
GEM Group, the creative advertising company. The President of GEM Group North America is the
spouse of Megan Kavanaugh, Executive Vice President.

(section 5.22, part IV)

	1.	 	The Company is party to a Promissory Note in the amount of $24,000,000, by and between
FAC Acquisition, LLC and Fingerhut Direct Marketing, with Fingerhut Direct Marketing as
the debtor (which will be terminated upon Closing);
	 
	2.	 	The Company is party to a Promissory Note in the amount of $15,686,000 (current balance is
$11,000,000), by and between Petters Company, Inc. and Fingerhut Direct Marketing, Inc.,
with Fingerhut Direct Marketing, Inc. as the debtor (which will be terminated upon
Closing);
	 
	3.	 	The Company has the following agreements or other business relationships with
FAC Acquisition, LLC, Petters Group, LLC, PCI, or any Affiliates thereof (each, a
“Petters Entity,” and collectively, the “Petters Entities”):

	 	(b)	 	Real Property Lease, as disclosed in Schedule 5.9, Attachment A, Numbers 1, 2, 3,
6 and 7;
	 
	 	(c)	 	Shared Resources Agreement, as disclosed in Schedule 5.9 , Attachment A, Number 18;
	 
	 	(d)	 	Master Craft Trademark Sale and Assignment Agreement, as disclosed in Schedule 5.9,
Attachment A, Number 19;
	 
	 	(e)	 	Master Craft Licensing Agreement, as disclosed in Schedule 5.9, Attachment A,
Number 20;

	 	4	 	Supplemental Financing Agreement, by and between Fingerhut Direct Marketing, Inc.

 

 

and Petters Company, Inc, dated February 17, 2004.

	5.	 	Warehouse Fulfillment Agreements (under negotiations and not yet finalized) to provide
warehousing services:

(a) Fulfillment Services Agreement, by and between Petters Company, Inc. and Fingerhut
Fulfillment, Inc.;

(b) Fulfillment Services Agreement, by and between ubid.com and Fingerhut
Fulfillment, Inc.;

(c) Fulfillment Services Agreement, by and between Petters Group Worldwide, LLC;

(d) Agreement of Lease for Storage Space, by and between Fingerhut Fulfillment, Inc.
and Thermo King.

[Remainder of page intentionally left blank].

 

 

Schedule 5.23 — Title to Property and Assets.

None, except the Encumbrances permitted under agreements with senior lenders.

At the time of Closing of this Agreement and other Transaction Documents, the Company will be
past due on various lease payments, including:

	 	1.	 	Minnetonka (as disclosed in Schedule 5.9, Attachment A, No. 1); the
aggregate amount of past due amounts as of February 17, 2004 with respect to the
Minnetonka Lease was $80,938.00;

	 	2.	 	Equipment Lease (as disclosed in Schedule 5.9, Attachment A, No. 6); the
aggregate amount of past due amounts as of February 17, 2004 with respect to the
Equipment Lease was $27,711.25;

	 	3.	 	Photo Studio Equipment (as disclosed in Schedule 5.9, Attachment A, No. 7);
the aggregate amount of past due amounts as of February 17, 2004 with respect to the
Photo Studio Equipment Lease was $25,000.00 plus use and tax;

	 	4.	 	Building No. 1 Lease (as disclosed in Schedule 5.9, Attachment A, No. 2),
the aggregate amount of past due amounts as or February 17, 2004 with
respect to the Building No. 1 Lease was $12,713.81; and

	 	5.	 	St. Cloud West Campus (as disclosed in Schedule 5.9, Attachment A, No. 3);
the aggregate amount of past due amounts as of February 17, 2004 with respect to the
St. Cloud West Campus Lease was $220,235.77..

	 	 	The Company intends to promptly satisfy its obligations following closing of this Agreement
and other Transaction Documents, subject to the Financial Disclosures in Schedule 5.14,
Attachment A.

Schedule 5.26 — Absence of Changes.

(section 5.26(1))

The following may qualify individually or in the aggregate as having a Material Adverse Effect:

	 	1.	 	Default of the CIT Group/Business Credit EBITDA covenants of the Financing
Agreement, resulting in cross Notices of Enforcement of the Intercreditors (Acorn
Capital, Stafford Towne, CIT Bank).

	 	2.	 	The Company is past due on various inventory and expense payables. The
aggregate amount of past due amounts as of February 9, 2004, was $5,652,657. The
Company intends to promptly satisfy its obligations following closing of this
Agreement and other Transaction Documents.

 

 

(section 5.26 (2)) None

(section 5.26(3))

The Company has entered into a Trademark Sale and Assignment Agreement (as disclosed in Schedule
5.9, Attachment A, Number 19) of the Master Craft trademark to Petters Group Worldwide, LLC.;
however, maintaining the Company’s right to use the mark as needed under a License Agreement (as
disclosed in Schedule 5.9, Attachment A, Number 20).

(section 5.26(4)) None

(section 5.26(5)) None

(section 5.26(6)

The Company has entered into a Trademark Sale and Assignment Agreement (as disclosed in Schedule
5.9, Attachment A, Number 19) of the Master Craft trademark to Petters Group Worldwide, LLC.

(section 5.26(7))

See Attachment A to Schedule 5.26, (Company or Subsidiary Expenditures (or series of
related expenditures) involving more than $25,000 singly or $100,000 in the aggregate)

(section 5.26(8))

The Company has entered into a Trademark Sale and Assignment Agreement (as disclosed in Schedule
5.9, Attachment A, Number 19) of the Master Craft trademark to Petters Group Worldwide, LLC.

Schedule 5.28 Suppliers and Vendors.

The Company is past due on various inventory and expense payables. The aggregate amount of past due
amounts as of February 9, 2004, was $5,652,657. The Company intends to promptly satisfy its
obligations following closing of this Agreement and other Transaction Documents.

Schedule 6.1(h)

NONE except those listed in Schedule 5.5exv4w3

Exhibit 4.3

 

 

SUPPLEMENT NO. 1 TO STOCK PURCHASE AGREEMENT

AMONG

FINGERHUT DIRECT MARKETING, INC.

AND

THE SUPPLEMENTAL PURCHASERS NAMED ON

THE SUPPLEMENTAL SCHEDULE I HERETO

Dated as of October 27, 2004

 

 

 

 

SUPPLEMENT NO. 1 TO STOCK PURCHASE AGREEMENT

          This SUPPLEMENT NO. 1 TO STOCK PURCHASE AGREEMENT (this “Supplement”) is made and
entered into this 27th day of October, 2004 (the “Purchase Date”) by and among
Fingerhut Direct Marketing, Inc., a Delaware corporation (the “Company”), Bain Capital
Venture Fund, L.P., a Delaware limited partnership (“Bain Capital”). certain entities
related to Bain Capital listed on Supplemental Schedule I attached hereto, Battery
Ventures VI, L.P., a Delaware limited partnership (“Battery Ventures”), certain Affiliates
of Battery Ventures listed on Supplemental Schedule I, Petters Company, Inc., a Minnesota
corporation (“PCI”), CIGPF I. Corp. (the “Warrant Investor” or the “Additional
Purchaser” in its capacity as a holder of a Warrant or as a purchaser hereunder, and not its
capacity as a lender) and the other purchasers listed on the Supplemental Schedule I (each
such purchaser is referred to herein as a “Supplemental Purchaser,” and such purchasers
collectively are referred to herein as the “Supplemental Purchasers”).

          This Supplement supplements and amends that certain Stock Purchase Agreement dated as of
February 24, 2004 (the “Purchase Agreement”) by and among the persons and entities named
on Schedule I thereto (the “Existing Purchasers”), which Existing Purchasers include, but
are not limited to, the Supplemental Purchasers other than the Additional Purchaser. The Existing
Purchasers and the Supplemental Purchasers are collectively referred to as the
“Purchasers.” Terms not defined in this Supplement have the meaning given them in the
Purchase Agreement.

WITNESSETH

          WHEREAS, the Company previously sold and issued an aggregate of 597,469,749 shares of Series A
Preferred Stock pursuant to the Purchase Agreement;

          WHEREAS, the Company desires to sell and issue to the Supplemental Purchasers listed on
Supplemental Schedule I attached hereto 47,569,213 shares of Series A Convertible
Preferred Stock;

          WHEREAS, the Company desires to supplement and amend the Purchase Agreement to, among other
things, reflect the aggregate number of shares of Series A Preferred Stock it desires to sell and
issue; and

          WHEREAS, Section 11.1 of the Purchase Agreement provides that the Purchase Agreement may be
amended by a written instrument signed by the Company and holders of 75% of the shares of Series
A Preferred Stock then outstanding;

          WHEREAS, the Supplemental Purchasers hold more than 75% of the shares of Series A Preferred
Stock currently outstanding;

          NOW, THEREFORE, in consideration of the foregoing and the mutual representations, warranties
and covenants herein contained, the parties hereto hereby agree as follows:

 

 

     1. Authorization of Additional Securities. The Company has authorized the issuance and
sale to the Supplemental Purchasers of up to an additional 47,569,213 shares of its Series A
Convertible Preferred Stock, par value $.00001 per share (the “Series A Preferred Stock”),
which are convertible into shares of the Company’s common stock, par value $.00001 per share (the
“Common Stock”), pursuant to an Amendment No. 1 to the Second Amended and Restated
Certificate of Incorporation attached hereto as Exhibit A (the “Amended Charter”).
For purposes of their Supplement, the term “Securities” shall include the shares of Series
A Preferred Stock sold hereunder, as well as the shares of Common Stock into which such Series A
Preferred Stock is convertible (the “Conversion Shares”).

     2. Sale and Purchase; Supplemental Closing.

          2.1. Purchase and Sale. Upon the terms and subject to the conditions herein contained,
the Company agrees to sell to the Supplemental Purchasers, and each Supplemental Purchaser agrees,
severally and not jointly, to purchase from the Company, at the Supplemental Closing (as defined
below), the number of shares of Series A Preferred Stock set forth in the column “Shares Purchased”
opposite such Supplemental Purchaser’s name on Supplemental Schedule I, for a purchase
price per share of $0.10511 (the “Purchase Price”), payable in cash.

          2.2. Supplemental Closing; Payment of Purchase Price. The supplemental closing (the
“Supplemental Closing”) with respect to the transaction contemplated in Section 2.1 hereof
shall take place at the offices of the Company at 10:00 a.m. on October ____, 2004, or at such
other time and place as the Company and Supplemental Purchasers may agree (the “Supplemental
Closing Date”). At the Supplemental Closing, the Company shall deliver to each Supplemental
Purchaser a certificate representing the Series A Preferred Stock which such Supplemental Purchaser
is purchasing at the Supplemental Closing, registered in the name of such Supplemental Purchaser,
against delivery to the Company by such Supplemental Purchaser of a wire transfer in the amount of
the Purchase Price therefor.

     3. Other Transactional Documents.

          3.1. Investor Rights Agreement. With respect to that certain Investor Rights Agreement
dated as of February 24, 2004 among the Company, the Supplemental Purchasers and the other parties
identified therein (the “Investor Rights Agreement”), the parties hereto acknowledge and
agree that the Series A Preferred Stock issued and sold hereunder shall be deemed to be “Series A
Preferred Stock,” and the Conversion Shares shall also be “Registrable Securities,” each with the
meaning of the Investor Rights Agreement.

          3.2. Stockholders Agreement. With respect to that certain Stockholders Agreement dated
as of February 24, 2004 among the Company, the Supplemental Purchasers and the other parties
identified therein (the “Stockholders Agreement”), the Supplemental Purchasers, including
the Warrant Investor, holding more than 75% of the currently outstanding shares of Series A
Preferred Stock, hereby:

 

 

          (a) Designate the Securities as Excluded Securities within the meaning of Section 3.6
of the Stockholders Agreement pursuant to Section 3.6(g) thereof, and agree and acknowledge
that, as a result, the Investors’ Purchase Rights (as defined in Section 3.1 of the
Stockholders Agreement) shall not apply to the issuance of the Securities, and the parties
hereto acknowledge and agree that the Series A Preferred Stock issued and sold hereunder
shall also be “Series A Preferred Stock,” and the Securities shall also be “Shares,” each
with the meaning of the Stockholders Agreement.

          (b) Acknowledge and agree that with respect to 17,672,414 shares of Common Stock of
the Company currently held by FAC Acquisition, LLC, such shares of Common Stock may be
transferred to Theodore Deikel (“Deikel”) and then by him to Nicole Needham-Faidi, a
step-daughter of Deikel, each as a Permitted Transferee within the meaning of the
Stockholder Agreement (subject to her agreement in writing to be bound by the Stockholders
Agreement).

          (c) Consent to the consummation of the transactions contemplated by the Repurchase
Agreement dated as of October 25, 2004 between the Company and Deikel (the “Repurchase
Agreement”), and acknowledge and agree that the Stockholders Agreement shall not apply
thereto, provided, however, that the foregoing is subject to consummation of such
transaction consistent with the Capitalization Table attached hereto as Exhibit A.

          3.3. Representations and Warranties of the Supplemental Purchasers; Register of
Securities; Restrictions on Transfer. Each Supplemental Purchaser, severally as to itself and
not jointly, represents and warrants to the Company as of the Supplemental Closing that the
representations and warranties in Section 4 of the Purchase Agreement are true and correct in
respect of such Purchaser as of the date hereof.

     4. Representations and Warranties by the Company. The Company represents and warrants
to each Supplemental Purchaser as of the Supplemental Closing that the representations and
warranties of the Company in Section 4 of the Purchase Agreement, as supplemented and amended by
this Section 4 of this Supplement, are true and correct as of the date hereof, except as set forth
on the Disclosure Schedules attached to the Purchase Agreement and the Supplemental Disclosure
Schedule attached hereto. To the extent that the following Sections of this Section 4 of this
Supplement expressly provide that certain matters, facts or circumstances need not be disclosed in
the Supplemental Disclosure Schedule, the existence of such matters, facts or circumstances which
do not need to be disclosed shall not be deemed to be a breach of any of the representations and
warranties in Section 4 of the Purchase Agreement, as supplemented and amended hereby. Solely for
purposes of the Supplemental Closing, the representations and warranties of the Company in Section
4 of the Purchase Agreement are supplemented and amended by this Supplement as follows:

          4.1. Material Contracts. With reference to Section 5.9 of the Purchase Agreement, the
Supplemental Disclosure Schedule need not identify any Material Contracts which have been entered
into by the Company or a Subsidiary since February 24, 2004, (i) which have

 

 

been approved by the Board of Directors, or (ii) which, by their terms involve, or would
reasonably be expected to involve, aggregate payments by or to the Company or any Subsidiary of
less than $1,000,000 (a Material Contract that meets the requirements of such clauses (i) and (ii),
a “Substantial Contract”).

          4.2. Absence of Certain Changes; Financial Statements. With reference to Section 5.13
of the Purchase Agreement, the “Balance Sheet Date” shall be August 31, 2004 and the “Financial
Statements” shall refer to the Company’s financial statements as of such date. With reference to
Section 5.13(b)(3), the Supplemental Disclosure Schedule need identify only Substantial Contracts
entered into by the Company since February 24, 2004. With reference to Section 5.13(b)(4), the
Supplemental Disclosure Schedule need not identify any matter, fact or circumstance referenced in
Section 5.13(b)(4) that has been approved by the Board of Directors.

          4.3. No Undisclosed Material Liabilities. With reference to Section 5.14(c) of the
Purchase Agreement, the Supplemental Disclosure Schedule need not identify any liability referenced
in Section 5.14(c)(i) which has been approved by the Board of Directors, or (ii) which involves, or
would reasonably be expected to involve, aggregate payments by the Company or any Subsidiary of
less than $1,000,000.

          4.4. Absence of Changes. With reference to Section 5.26 of the Purchase Agreement, the
date referenced in the introductory sentence shall be changed from October 31, 2003 to August 31,
2004. With reference to Section 5.26(1), effects resulting from a delay in consummating the
transactions contemplated hereby shall not be deemed a “Material Adverse Effect” and the
Supplemental Disclosure Schedule need not identify any such effect. Further, the representations
and warranties made in Section 5.26(2) to (10) are made only to the knowledge of the Chief
Executive Officer and General Counsel, and the Supplemental Disclosure Schedule need not identify
any matter, fact or circumstance otherwise referenced therein which is not known to them.

          4.5. Late Payments. With reference to Sections 5.8; 5.9, 5.13 and 5.26 of
the Purchase Agreement, to the extent that the failure to pay amounts owing to third parties when
due (a “Late Payment”) would otherwise constitute a breach of the representations or warranties
made therein, the Supplemental Disclosure Schedule need disclose such Late Payments only to the
extent (i) such Late Payments are owed to any senior financial institution lender by the Company,
(ii) are in excess of $1,000,000 owed to any one party, or (iii) are in the aggregate in excess of
$2,000,0000 (in which case the Supplemental Disclosure Schedule need identify only the aggregate
amount thereof).

     5. Conditions of Parties’ Obligations.

          5.1. Conditions of the Supplemental Purchasers’ Obligations. The obligations of each
of the Supplemental Purchasers under this Supplement are subject to the fulfillment prior to or on
the Supplemental Closing Date of 211 of the following conditions, any of which may be
waived in whole or in part by such Supplemental Purchaser.

          (a) Representations and Warranties. The representations and

 

 

warranties of the Company contained in this Agreement shall be true and correct in all
respects on and as of the Supplemental Closing Date with the same effect as though such
representations and warranties had been made on and as of the Supplemental Closing Date.

          (b) Performance The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are required to
be performed or complied with it on or before the Supplemental Closing.

          (c) Amended Charter. The Amended Charter shall have been filed with the
Secretary of State of the State of Delaware, and the Supplemental Purchasers shall have
received confirmation from the Secretary of State of the State of Delaware reasonably
satisfactory to them that such filing has occurred.

          (d) Qualification Under State Securities Laws. All registrations,
qualifications, permits and approvals, if any, required under applicable state securities
laws shall have been obtained for the lawful execution, delivery and performance of this
Agreement , including without limitation the offer and sale of the Securities.

          (e) Consents and Waivers The Company shall have obtained all consents or
waivers necessary to execute and perform its obligations under this Agreement, to issue the
Series A Preferred Stock and the Conversion Shares, and to carry out the transactions
contemplated hereby. All corporate and other action and governmental filings necessary to
effectuate the terms of the Amended Charter, this Agreement, the Series A Preferred Stock
and the Conversion Shares, and other agreements and instruments executed and delivered by
the Company in connection herewith shall have been made or taken.

          (f) Satisfaction of Obligations. Each of the other Supplemental Purchasers
shall have simultaneously complied with their obligations under Section 2
hereof.

          (g) Supporting Documents. The Purchasers at the Supplemental Closing
shall have received the following:

     (1) an opinion or opinions from counsel to the Company dated as of the
Supplemental Closing Date;

     (2) Copies of resolutions of the Board of Directors of the Company, certified
by the Secretary of the Company, authorizing and approving the filing of the Amended
Charter, the execution, delivery and performance of this Agreement and all other
documents and instruments to be delivered pursuant hereto and thereto;

     (3) Copies of resolutions of the stockholders of the Company, certified by the
Secretary of the Company, authorizing and approving the filing of the Amended
Charter and the transactions contemplated hereby; and

 

 

     (4) A certificate of incumbency executed by the Secretary of the Company (A)
certifying the names, titles and signatures of the officers authorized to execute
the documents referred to in subparagraphs (2) and (3) above and (B) further
certifying that the Amended Charter at the time of the execution of this Agreement
has been validly adopted and has not been amended or modified.

          (h) Purchaser Expenses. The Company shall have paid the expenses of Bain
Capital and Battery Ventures, and the fees, expenses and disbursements of Ropes & Gray LLP,
as counsel to Bain Capital and Battery Ventures, incurred in connection with the
transactions contemplated hereby up to a maximum of $

          (i) Compliance Certificates. The Company shall have delivered to the
Supplemental Purchasers a Compliance Certificate, executed by the President of the Company,
dated as of the Supplemental Closing Date to the effect that the conditions specified in
subsections (a) through (e) and (h) of this Section 5.1 have been satisfied.

          (j) Material Adverse Change; Market Conditions. (i) The Company shall not have
suffered any Material Adverse Effect with respect to its business, financial condition,
results of operations, assets, liabilities or prospects (excluding any Material Adverse
Effect that does not need to be disclosed in the Supplemental Disclosure Schedule); and
(ii) there shall have been no material adverse change in general market conditions as
determined in the reasonable discretion of Bain Capital and Battery Ventures.

          5.2. Conditions of the Company’s Obligations. The obligations of the Company under
Section 2 hereof are subject to the fulfillment prior to or on the Supplemental Closing
Date of all of the following conditions, any of which may be waived in whole or in part by the
Company.

          (a) Covenants; Representations and Warranties. (i) Each of the Supplemental
Purchasers at the Supplemental Closing Date shall have performed in all material respects
all of its obligations hereunder required to be performed by it at or prior to the
Supplemental Closing Date and (ii) the representations and warranties of each of the
Supplemental Purchasers at the Supplemental Closing Date contained in this Agreement shall
be true and correct in all material respects at and as of the Supplemental Closing Date as
if made at and as of the Supplemental Closing Date (except to the extent expressly made as
of an earlier date, in which case as of such earlier date).

          5.3. Conditions of Each Party’s Obligations. The respective obligations of each party
to consummate the transactions contemplated hereunder are subject to the parties being reasonably
satisfied as to the absence of (a) litigation challenging or seeking damages in connection with
the transactions contemplated by this Supplement and (b) any statute, rule, regulation,
injunction, order or decree, enacted, enforced, promulgated, entered, issued or deemed applicable
to this Agreement or the transactions contemplated hereby (or in the case of any statute, rule or
regulation, awaiting signature or reasonably expected to become law), by any court, government or
governmental authority or agency or legislative body, domestic, foreign or

 

 

supranational, that would, or would reasonably be expected to, prohibit or enjoin the
transactions contemplated by this Supplement.

     6. Miscellaneous. Except as supplemented and amended hereby, the Purchase Agreement
shall continue in full force and effect.

 

 

     IN WITNESS WHEREOF, the parties hereto have caused this Supplement to be duly executed as of
the day and year first above written.

	 	 	 	 	 
	 	THE COMPANY

FINGERHUT DIRECT MARKETING, INC.

 	 
	 	By:  	/s/ Brian Smith
 	 
	 	 	Name:  	Brian Smith 	 
	 	 	Title:  	CEO 	 
	 

 

 

	 	 	 	 	 
	 	THE SUPPLEMENTAL PURCHASERS

BAIN CAPITAL VENTURE FUND, L.P.

 	 
	 	By:  	     Bain Capital Venture Partners, L.P.
its general partner
 	 
	 
	 	 	 
	 	By:  	             Bain Capital Investors, LLC
its general partner
 	 
	 
	 	 	 
	 	By:  	        /s/ Michael Krupka
 	 
	 	 	Name:  	Michael Krupka 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	BCIP ASSOCIATES III, LLC

 	 
	 	By:  	       BCIP Associates III,
its manager
 	 
	 
	 	BCIP ASSOCIATES III-B, LLC

 	 
	 	By:  	        BCIP Associates III-B, its manager
 	 
	 
	 	 	 
	 	By:  	             Bain Capital Investors, LLC
their Managing Partner
 	 
	 
	 	 	 
	 	By:  	      /s/ Michael Krupka
 	 
	 	 	Name:  	Michael Krupka 	 
	 	 	Title:  	Authorized Person 	 
	 
	 	Brookside Capital Partners Fund, L.P.

 	 
	 	By:  	/s/ [ILLEGIBLE]
 	 
	 
	 	RGIP, LLC

 	 
	 	By:  	/s/
[ILLEGIBLE]
 	 
	 	 	Name:  	 	 
	 	 	Title:  	Managing Member 	 
	 

 

 

	 	 	 	 	 
	 	BATTERY VENTURES VI, L.P. 

 	 
	 	By:  	 Battery Partners VI, LLC
General Partner
 	 
	 
	 	            /s/ Oliver D. Curme
 	 
	 	Name:  Oliver D. Curme 	 
	 	Title:  Member Manager 	 
	 
	 	BATTERY INVESTMENT PARTNERS VI, LLC

 	 
	 	/s/ Oliver D. Curme
 	 
	 	Name:  Oliver D. Curme 	 
	 	Title:  Member Manager 	 
	 
	 	PETTERS COMPANY, INC.

 	 
	 	/s/ Thomas J. Petters
 	 
	 	Name:  Thomas J. Petters 	 
	 	Title:  CEO 	 
	 
	 	                     /s/ Brian Smith
 	 
	 	Brian Smith 	 
	 
	 	CIGPF I Corp.

 	 
	 	By:  	/s/ Ari Rosenberg
 	 
	 	 	Name:  	Ari Rosenberg 	 
	 	 	Title:  	Vice President 	 
	 

 

 

SUPPLEMENTAL SCHEDULE I

	 	 	 	 	 	 	 	 	 
	Supplemental Purchaser	 	Shares Purchased	 	Purchase Price
	Bain Capital Venture Fund, L.P.
	 	 	5,116,573	 	 	$	537,802.99	 
	BCIP Associates III, LLC
	 	 	911,564	 	 	$	95,814.49	 
	BCIP Associates III-B, LLC
	 	 	63,563	 	 	$	6,681.11	 
	RGIP, LLC
	 	 	61,532	 	 	$	6,467.63	 
	Brookside
Capital Partners Fund, L.P.
	 	 	6,153,231	 	 	$	646,766.11	 
	Battery Ventures VI, L.P.
	 	 	11,814,204	 	 	$	1,241,790.98	 
	Battery Investment Partners VI,
LLC
	 	 	492,259	 	 	$	51,741.34	 
	Petters Company, Inc.
	 	 	20,826,322	 	 	$	2,189,054.71	 
	Brian Smith
	 	 	227,196	 	 	$	23,880.57	 
	CIGPF I Corp.
	 	 	1,902,769	 	 	$	200,000.05	 
	TOTAL
	 	 	47,569,213	 	 	$	4,999,999.96	 

 

 

EXHIBIT A

 

 

SUPPLEMENTAL CONSENT

     The undersigned is a holder of Series A Convertible Preferred Stock, but is not a Supplemental
Purchaser. Whether or not the undersigned’s consent is otherwise required, for avoidance of doubt,
the undersigned hereby consents to the Supplement and the transactions contemplated thereby,
including, without limitation, with respect to those matters set forth in Section 3 of above.

	 	 	 	 	 

	 
	 

	 	 

Theodore Deikel
	 	 

 

 

Schedule 5.1(a)

Capitalization Table after giving effect to the Amended and Restated Certificate of Incorporation
and Closing.

 

 

     

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Cannot	 	 	Series A First Closing	 	 	Pro Forma Series A Second Closing & Redemption	 
	Fingerhut Direct Marketing, inc.	 	 	 	 	 	 	 	 	 	 	Fully	 	 	 	 	 	 	 	 	 	 	 	Addl	 	 	 	 	 	 	 	Additional	 	 	 	 	 	Fully	 	 	 	 	 	 		 	 	 	 	 	 	Addl	 	 	Additional	 	 	 	 	 	 	 	 	 	 	 	 	 
	Cap Table 10.2704	 	Series A	 	 	Fully Diluted	 	 	 	Diluted Series A	 	Outstanding	 	 	Achill Equity	 	 	Equity	 	 	 	 	 	 	 	Series A	 	 	Fully Diluted	 	 	Diluted	 	 	Pfd	 	 	OUtstanding	 	 	Addtl Equity	 	 	Equity	 	 	Series A	 	 	Fully Diluted	 	 	Fully	 	 	Pfd	 	 	 	 
	Sodas A	 	Investment	 	 	Shares	 	 	 	%	 	 	'1	 	 	%	 	 	Investment	 	 	%	 	 	 	 	 	 	 	Shares	 	 	Shares	 	 	%	 	 	%	 	 	%	 	 	Investment	 	 	%	 	 	Shares	 	 	Shares	 	 	Diluted	 	 	%	 	 	OutstendIng	 
	Series A (Two Ctosings)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bain/Battery Investors
	 	$	32,500,000	 	 	 	309,200,109	 	 	 	35.0	%	 	 	51.8	%	 	 	48.2	%	 	5	             2,587,065	 	 	 	51.7	%	 	 	 	 	 	 	24,612,626	 	 	 	333,813,035	 	 	 	39.7	%	 	 	51.8	%	 	 	460	%	 	$	0960.464	 	 	 	52.8	%	 	 	68,505,178	 	 	 	400.319,213	 	 	 	42.4	%	 	 	53.8	%	 	 	48.9	%
	Petters
	 	5	        27.500,000	 	 	 	281,930,881	 	 	 	33.0	%	 	 	43.8	%	 	 	301	%	 	S	             2,189.055	 	 	 	43.8	%	 	 	 	 	 	 	20,826,322	 	 	 	282,457,183	 	 	 	33.8	%	 	 	43.8	%	 	 	39.4	%	 	5	           5,915,008	 	 	 	44.5	%	 	 	56,274,458	 	 	 	338,731,541	 	 	 	35.9	%	 	 	45.3	%	 	 	41.4	%
	Smah
	 	5	        300,000	 	 	 	2,854,155	 	 	 	0.4	%	 	 	0.5	%	 	 	0.4	%	 	5	                23,881	 	 	 	0.6	%	 	 	 	 	 	 	227,186	 	 	 	3,081,351	 	 	 	0.4	%	 	 	0.5	%	 	 	0.4	%	 	$	84,527	 	 	 	0.5	%	 	 	813,803	 	 	 	3.695.254	 	 	 	0.4	%	 	 	0.5	%	 	 	0505	 
	Dental
	 	$	2.500,000	 	 	 	23.784.824	 	 	 	3.0	%	 	 	4.0	%	 	 	3.6	%	 	$	 	 	 	 	0.0	%	 	 	 	 	 	 	 	 	 	 	23,784,624	 	 	 	2.8	%	 	 	3.7	%	 	 	3.3	%	 	$	 	 	 	 	0.0	%	 	 	 	 	 	 	 	 	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%
	 	 	 	 	 	 	 	 	 
	Subtotal
	 	$	62,800,000	 	 	 	597,4614748	 	 	 	75.4	%	 	 	100.0	%	 	 	88.3	%	 	S	             4,800,000	 	 	 	86.0	%	 	 	 	 	 	 	45,868444	 	 	 	643,136,193	 	 	 	75.6	%	 	 	99.7	%	 	 	89.7	%	 	$	12.970,000	 	 	 	97.9	%	 	 	123,384,539	 	 	 	742,746,108	 	 	 	78.7	%	 	 	99.4	%	 	 	90.7	%
	Citigroup (1)
	 	$	 	 	 	 	 	 	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	$	200.000	 	 	 	4.0	%	 	 	 	 	 	 	1,902,769	 	 	 	1,902,769	 	 	 	0.2	%	 	 	0.3	%	 	 	0.3	%	 	$	280,000	 	 	 	2.1	%	 	 	2,663.876	 	 	 	4,566,845	 	 	 	0.5	%	 	 	0.8	%	 	 	0.9	%
	 	 	 	 	 	 	 	 	 
	Series A Subtotal
	 	$	62,800.000	 	 	 	597,489,749	 	 	 	75.4	%	 	 	100.0	%	 	 	89.3	%	 	$	5,000.000	 	 	 	100.0	%	 	 	 	 	 	 	47,569,213	 	 	 	645,038,962	 	 	 	76,8	%	 	 	100.11	%	 	 	90.0	%	 	$	13,250,000	 	 	 	100.9	%	 	 	128,058,415	 	 	 	747,312,753	 	 	 	79.2	%	 	 	100.0	%	 	 	91.2	%
	Common Shams
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Petters
	 	 	 	 	 	 	32,758,621	 	 	 	4.1	%	 	 	 	 	 	 	4.9	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	32,758.621	 	 	 	3.9	%	 	 	 	 	 	 	4.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	32,758,621	 	 	 	3.5	%	 	 	 	 	 	 	4.0	%
	FAC/Delkel (2)
	 	 	 	 	 	 	28,850,862	 	 	 	3.6	%	 	 	 	 	 	 	4.3	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	28,850,862	 	 	 	3.4	%	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	28,850,862	 	 	 	3.1	%	 	 	 	 	 	 	3.5	%
	FITS (3)
	 	 	 	 	 	 	1,321,552	 	 	 	0.2	%	 	 	 	 	 	 	0.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,321.552	 	 	 	0.2	%	 	 	 	 	 	 	02	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,321,552	 	 	 	0.1	%	 	 	 	 	 	 	02	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outstanding Common
	 	 	 	 	 	 	62,931,035	 	 	 	7.9	%	 	 	 	 	 	 	9.4	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	62,931,035	 	 	 	7.5	%	 	 	 	 	 	 	8.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	62,931,035	 	 	 	6.7	%	 	 	 	 	 	 	7.7	%
	Existing Mike! Option
	 	 	 	 	 	 	.3,983233	 	 	 	0.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,983,333	 	 	 	0.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,983,333	 	 	 	0.4	%	 	 	 	 	 	 	 	 
	New Delkel Option
	 	 	 	 	 	 	18,1113,658	 	 	 	2.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	16,103,658	 	 	 	1.9	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	16,103.655	 	 	 	1.7	%	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	 	20,086,991	 	 	 	2.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	20,088,991	 	 	 	2.4	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	20086,891	 	 	 	2.1	%	 	 	 	 	 	 	 	 
	Management Option Pool (4)
	 	 	 	 	 	 	63,378,157	 	 	 	8.0	%	 	 	 	 	 	 	1.3	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	63,378,157	 	 	 	7.5	%	 	 	 	 	 	 	1.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	63,378.157	 	 	 	6.7	%	 	 	 	 	 	 	1.1	%
	atiGroup Warrant
	 	 	 	 	 	 	31,689,078	 	 	 	4.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	31,669,078	 	 	 	3.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	31,689,078	 	 	 	3.4	%	 	 	 	 	 	 	 	 
	Additional CIiGroup Warrant
	 	 	 	 	 	 	 	 	 	 	0.0	%	 	 	..-	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,427,076	 	 	 	0.2	%	 	 	 	 	 	 	 	 
	Epsilon Warrant
	 	 	 	 	 	 	4,779,840	 	 	 	0.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,779,640	 	 	 	0.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,779,640	 	 	 	0.5	%	 	 	 	 	 	 	 	 
	ChenyTree Warrant
	 	 	 	 	 	 	7,135,387	 	 	 	0.9	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7,135,387	 	 	 	0.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7,135,387	 	 	 	0.8	%	 	 	 	 	 	 	 	 
	Piper Warrant
	 	 	 	 	 	 	4,756,925	 	 	 	0.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,766,925	 	 	 	0.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4.756.925	 	 	 	0.5	%	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	 	48,361,030	 	 	 	6.1	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	48,381,030	 	 	 	5.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	48,788,108	 	 	 	5.3	%	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Common Subtotal
	 	 	 	 	 	 	184,757,213	 	 	 	24.6	%	 	 	 	 	 	 	10.7	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	194.757,213	 	 	 	23.2	%	 	 	 	 	 	 	10.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	196,184,289	 	 	 	20.8	%	 	 	 	 	 	 	8.8	%
	 
	 	Per Share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 		 	 	Per Share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Per Share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 
	Total
	 	 	00.1051 to 1	 	 	 	702,226962	 	 	 	100.0	%	 	 	 	 	 	 	100.0	%	 	 	50.1051101	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	839,796,175	 	 	 	100.01,	 	 	 	 	 	 	 	100.0	%	 	 	50.1051101	 	 	 	 	 	 	 	 	 	 	 	943,497,442	 	 	 	100.0	%	 	 	 	 	 	 	100.0	%
	 	 	 	 	 	 	 	 	 
	Total BainlBattery Ownership
	 	 	 	 	 	 	 	 	 	 	30.0	%	 	 	 	 	 	 	46.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	39.7	%	 	 	 	 	 	 	45.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	42.4	%	 	 	 	 	 	 	48.9	%
	Total Petters Ownership
	 	 	 	 	 	 	 	 	 	 	38.6	%	 	 	 	 	 	 	.45.7	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	38.9	%	 	 	 	 	 	 	45.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	40.6	%	 	 	 	 	 	 	46.8	%
	Total Demi Ownership
	 	 	 	 	 	 	 	 	 	 	7.8	%	 	 	 	 	 	 	6.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7.3	%	 	 	 	 	 	 	5.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	2.2	%
	Total Ckigroup Ownership
	 	 	 	 	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	0.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	0.3	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	0,6	%

 

			
	(1)	 	Actually held by CIGPF I Corp.
	 
	(2)	 	Of FAC’s common ownership, 11,178,448 is allocable lo Petters and
17,672,414 is allocable to Deiket Delkers common share to be transferred to
family member.
	 
	(3)	 	Of RTB’s ownership, 226,000 is allocable to Petters
	 
	(4)	 	Subject to confirmation, approximately 8.7 million restricted shares have
been issued under the 2003 Equity Incentive Plan.

 

     

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	Current	 	 	Series A First Closure	 	 	Pro Forma Series A Second Closing & Redemption	 
	FIngerhut Direct Marketing, inc.	 	 	 	 	 	 	 	 	 	Fully	 	 	 	 	 	 	Outstan	 	 	 	 	 	 	Add'!	 	 	Additional	 	 	 	 	 	Fully	 	 	 	 	 	 	Outstare	 	 	 	 	 	 	Add"	 	 	Additional	 	 	 	 	 	 	Fully	 	 	 	 	 	 	 
	Cap Table 10-27-04	 	Series A	 	 	Fully Diluted	 	 	Diluted Series A	 	 	ding	 	 	Addll Equity	 	 	Equity	 	 	Series A	 	 	Fully Diluted	 	 	Diluted	 	 	Pfd	 	 	ding	 	 	Adrift Equity	 	 	Equity	 	 	Series A	 	 	Fully Diluted	 	 	Diluted	 	 	Pfd	 	 	Outstanding	 
	Series A	 	Investment	 	 	Shares	 	 	%	 	 	%	 	 	%	 	 	Investment	 	 	%	 	 	Shares	 	 	Shares	 	 	%	 	 	%	 	 	%	 	 	Investment	 	 	'Y.	 	 	Shares	 	 	Shams	 	 	%	 	 	•	 	 	%	 
	 	 	 	 	 	 	 	 	 	 
	Series A (Two (l051505)
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Bain/Battery Investors
	 	$	32.500.000	 	 	 	309,200,109	 	 	 	39.0	%	 	 	51.8	%	 	 	462	%	 	$	2,587,066	 	 	 	51.7	%	 	 	24,612,928	 	 	 	333,813,035	 	 	 	39.7	%	 	 	51,614	 	 	 	46.6	%	 	$	6,990,464	 	 	 	52.8	%	 	 	68,506,176	 	 	 	400,319,213	 	 	 	42.4	%	 	 	53.8	%	 	 	48.8	%
	Petters
	 	S	27.500.000	 	 	 	281,630,861	 	 	 	33.0	%	 	 	43.8	%	 	 	39.1	%	 	$	2,189,065	 	 	 	43.8	%	 	 	20,826,322	 	 	 	282.457,183'	 	 	 	33.6	%	 	 	43.8	%	 	 	39.4	%	 	$	5,915,008	 	 	 	44.5	%	 	 	58,274,458	 	 	 	338,731,841	 	 	 	35.9	%	 	 	45.3	%	 	 	41.4	%
	Smith
	 	$	300,000	 	 	 	2,854,155	 	 	 	0.4	%	 	 	0.5	%	 	 	0.4	%	 	$	23,881	 	 	 	0.5	%	 	 	227,196	 	 	 	3,681,351	 	 	 	0.4	%	 	 	0.5	%	 	 	0.4	%	 	6	64,627	 	 	 	0.5	%	 	 	613,903	 	 	 	3,695,254	 	 	 	0.4	%	 	 	0.5	%	 	 	0.5	%
	Deikel
	 	$	2.500,000	 	 	 	23,764,624	 	 	 	3.0	%	 	 	4.0	%	 	 	3.6	%	 	S	 	 	 	 	0.0	%	 	 	 	 	 	 	23,784,624	 	 	 	2.8	%	 	 	3.7	%	 	 	3.3	%	 	$	 	 	 	 	0.0	%	 	 	—	 	 	 	 	 	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%
	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	$	62,800,000	 	 	 	507,469,749	 	 	 	75.4	%	 	 	100.0	%	 	 	89.3	%	 	$	4,800,000	 	 	 	' 96.0	%	 	 	45,666,444	 	 	 	643,138,193	 	 	 	76.6	%	 	 	99.7	%	 	 	99.7	%	 	S	          12,970,000	 	 	 	97.9	%	 	 	123,394,539	 	 	 	742,749108	 	 	 	78.7	%	 	 	99.4	%	 	 	90.7	%
	Ckigroup (1)
	 	$	—	 	 	 	—	 	 	 	0.0	%	 	 	0.0	%	 	 	0.0	%	 	$	200,000	 	 	 	4.0	%	 	 	1,902,769	 	 	 	1,902,769	 	 	 	0.2	%	 	 	0.3	%	 	 	0.3	%	 	$	280.500	 	 	 	2.1	%	 	 	2.663,876	 	 	 	4.556.645	 	 	 	0.5	%	 	 	0.6	%	 	 	0.6	%
	 	 	 	 	 	 	 	 	 	 
	Series A Subtotal
	 	$	62,800,000	 	 	 	597,469.749	 	 	 	75.4	%	 	 	100.0	%	 	 	89.3	%	 	$	5900,000	 	 	 	100.0	%	 	 	47,569,213	 	 	 	645,038,962	 	 	 	78.8	%	 	 	100.9	%	 	 	90.0	%	 	6	          13,250.000	 	 	 	100.0	%	 	 	129058,415	 	 	 	747,312,753	 	 	 	79.2	%	 	 	100.0	%	 	 	91.2	%
	Common Shares
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Petters
	 	 	 	 	 	 	32,758,621	 	 	 	4.1	%	 	 	 	 	 	 	4.9	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	32,768,621	 	 	 	3.9	%	 	 	 	 	 	 	4.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	32,758,621	 	 	 	3.5	%	 	 	 	 	 	 	4.0	%
	FACrDeikel (2)
	 	 	 	 	 	 	28,650,862	 	 	 	3.6	%	 	 	 	 	 	 	4.3	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	28,550,862	 	 	 	3.4	%	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	28,850,862	 	 	 	3.1	%	 	 	 	 	 	 	3.5	%
	RTS (3)
	 	 	 	 	 	 	1,321,552	 	 	 	0.2	%	 	 	 	 	 	 	0.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,321,552	 	 	 	0.2	%	 	 	 	 	 	 	0.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1.321,552	 	 	 	0.1	%	 	 	 	 	 	 	0.2	%
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Outstanding Common
	 	 	 	 	 	 	62,931935	 	 	 	7.9	%	 	 	 	 	 	 	9.4	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	62,931,035	 	 	 	7.5	%	 	 	 	 	 	 	8.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	62.931,035	 	 	 	6.7	%	 	 	 	 	 	 	7.7	%
	 
	 	 	 	 	 	 	3,989333	 	 	 	0.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,083,333	 	 	 	0.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	3,983,333	 	 	 	04	%	 	 	 	 	 	 	 	 
	Existing Deikel Option
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	New Deikel Option
	 	 	 	 	 	 	16,103,658	 	 	 	2.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	15,103,658	 	 	 	1.9	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	16,103668	 	 	 	1.7	%	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	 	29086,9131	 	 	 	2.5	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	20.086,991	 	 	 	2,4	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	29086,991	 	 	 	2.1	%	 	 	 	 	 	 	 	 
	Management Option Pool (4)
	 	 	 	 	 	 	83,378,157	 	 	 	8.0	%	 	 	 	 	 	 	1.3	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	63,378,157	 	 	 	7.5	%	 	 	 	 	 	 	1.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	69378.157	 	 	 	6.7	%	 	 	 	 	 	 	1.1	%
	CiliGroup Warrant
	 	 	 	 	 	 	31,699,078	 	 	 	4.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	31.889,078	 	 	 	3.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	31,689,078	 	 	 	3.4	%	 	 	 	 	 	 	 	 
	Additional CitiGroup Warrant
	 	 	 	 	 	 	—	 	 	 	0.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	0.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	1,427,076	 	 	 	0.2	%	 	 	 	 	 	 	 	 
	Epsilon Warrant
	 	 	 	 	 	 	4,779640	 	 	 	0.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,779,643	 	 	 	0.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,779.040	 	 	 	0.5	%	 	 	 	 	 	 	 	 
	ChenyTree Warrant
	 	 	 	 	 	 	7,135,387	 	 	 	0.9	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7.135,387	 	 	 	0.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7,135,387	 	 	 	0.8	%	 	 	 	 	 	 	 	 
	Piper Warrant
	 	 	 	 	 	 	4,756,925	 	 	 	0.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,756,925	 	 	 	0.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4,756,925	 	 	 	0.5	%	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Subtotal
	 	 	 	 	 	 	48,381,030	 	 	 	6.1	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	48,381.030	 	 	 	5.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	49,788,106	 	 	 	5.3	%	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	Common Subtotal
	 	 	 	 	 	 	194,757,213	 	 	 	246	%	 	 	 	 	 	 	10.7	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	194,757,213	 	 	 	232	%	 	 	 	 	 	 	10.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	199,184,289	 	 	 	20.8	%	 	 	 	 	 	 	8.8	%
	 
	 	Per Share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Per Share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	Per        Share	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	 	 
	Total
	 	$	0.1051101	 	 	 	792,228,962	 	 	 	100.0	%	 	 	 	 	 	 	100.0	%	 	 	50.105110	 	 	 	 	 	 	 	 	 	 	 	839,796,175	 	 	 	100.0	%	 	 	 	 	 	 	100.0	%	 	$	0.105110	 	 	 	 	 	 	 	 	 	 	 	943,497,042	 	 	 	100.0	%	 	 	 	 	 	 	100.0	%
	 	 	 	 	 	 	 	 	 	 
	Total Bain/Battery Ownership
	 	 	 	 	 	 	 	 	 	 	39.0	%	 	 	.	 	 	 	46.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	39.7	%	 	 	 	 	 	 	46.6	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	42_4	%	 	 	 	 	 	 	48.9	%
	Total Petters Ownership
	 	 	 	 	 	 	 	 	 	 	38.6	%	 	 	 	 	 	 	45.7	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	389	%	 	 	 	 	 	 	45,8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	40.6	%	 	 	 	 	 	 	48.8	%
	Total Deikel Ownership
	 	 	 	 	 	 	 	 	 	 	7.8	%	 	 	 	 	 	 	6.2	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	7.3	%	 	 	 	 	 	 	5.8	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	2.2	%
	Total CiOgroup Ownership
	 	 	 	 	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	0.0	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	0.3	%	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	4.0	%	 	 	 	 	 	 	0.6	%

 

			
	(1)	 	Actually held by CIGPF I Corp.
	 
	(2)	 	Of PAC’s common ownership, 11,178,448 is allocable to Petters and 17,672,414
is allocable to Deikel: Delkers common share to be transferred 10 family
member.
	 
	(3)	 	Of RTS’s ownership, 226,000 is allocable to Petters
	 
	(4)	 	Subject to confirmation, approximately 8.7 million restricted shares have
been issued under the 2003 Equity Incentive Plan.

 

 

Schedule 5.101

Schedule 5.10 of the February 24, 2004 Stock Purchase Agreement is supplemented by including the
rights granted to investors under the related documents to the February 24, 2004 Stock Purchase
Agreement, including:

	 	•	 	Investor Rights Agreement by and among FDM, Bain, Battery, PCI, FAC,
Epsilon, CIGPF, Piper Jaffray and Cherry Tree, dated February 24, 2004;
	 
	 	•	 	Stockholders Agreement by FDM, PCI, FAC, RTB Holdings, Bain, Battery,
Epsilon, CIGPF, Piper Jaffray, Cherry Tree and Deikel, dated February 24, 2004;
	 
	 	•	 	Management Rights Letter among FDM, Battery and Bain, dated February 24,
2004;
	 
	 	•	 	CIGPF Warrant to Subscribe for and Purchase Common Stock of FDM, dated
February 24, 2004;
	 
	 	•	 	Second Amendment to Stafford Loan Agreement, dated February 24, 2004;
	 
	 	•	 	Epsilon Warrant to Subscribe for and Purchase Common Stock of FDM, dated
February 24, 2004;
	 
	 	•	 	Fingerhut Direct Marketing, Inc. 2003 Equity Incentive Plan ;
	 
	 	•	 	Letter Agreement with Piper Jaffray, dated February 10, 2004;
	 
	 	•	 	Letter Agreement with Cherry Tree, dated February 10, 2004;
	 
	 	•	 	Piper Jaffray Warrant to Subscribe for and Purchase Common Stock of FDM,
dated February 18, 2004;
	 
	 	•	 	Cherry Tree Warrant to Subscribe for and Purchase Common Stock of FDM,
dated February 18, 2004;
	 
	 	•	 	Financing Agreement with CIT Group/ Business Credit, Inc. dated April 9, 2003
	 
	 	•	 	Subordinated Loan Agreement among Stafford Towne, Ltd, Various Lenders and
FDM, dated April 9, 2003.

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.131 

5.13(b)(3) See List of Material Contracts entered after February 2004 listed in Schedule 5.9.

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.141 

See Schedule 5.9

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.151 

Litigation:

	 	1)	 	The Company has received notice of a claim for a house fire caused by a fan
that was allegedly purchased from Fingerhut. No formal litigation has been initiated.
Claimant has not provided details as to the extent (dollar amount) of the claimed
damage. The claim has been turned over to our general liability insurance carrier for
investigation. To date, claimant has not provided any proof of purchase or any
information regarding the date of the purchase of the fan Fingerhut Direct Marketing,
Inc. does not have any record of any sale to the claimant or any purchase to the
claimant’s address. Claimant does not show up in Fingerhut Direct Marketing, Inc.’s
records as a customer.1
	 
	 	2)	 	The Company is aware of potential litigation that may be brought in the future
by Megan Kavanaugh in connection with the termination of her employment.

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.171 

None.

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.191 

Pursuant to February 10, 2004 Engagement as Financial Advisor, upon the closing of this financing,
Piper Jaffray is owed a one time fee of $250,000.

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.211

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mark has been abandoned.	 	Mark has been renewed.	 	Mark has been reserved.	 	[ILLEGIBLE]	 	 	 	 
	Trademark / Servicemark	 	 	 	Serial No./	 	Reg. No./	 	Rolling	 	Current	 	Action Pending/	 	 
	Name	 	Goods / Services	 	Filling Date	 	Reg. Date	 	History	 	Status	 	Date Due	 	Notification Date
	FEEL THE POWER

	 	Class: 35, 42, 100, 101, 102
	 	74/522942

4/29/1994
	 	2146923

3/31/1998
	 	3/1/04 — Abandonded.
	 	Abandoned
	 	3/31/04, Affidavid of Use	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[ILLEGIBLE]

	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]	 	[ILLEGIBLE]	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	INSTANT FIT

	 	Class: 24, 42, 50
	 	74/679114
	 	2084514

7/29/1997
	 	7/28/01 Filed o mth. Ext. Final DOU due 1/29/01. 1/16/04 — Abandoned.
	 	Abandoned
	 	7/29/03, Affidavit of Use	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ACCOLADE

	 	Audio amplifiers,
microphones (Class 9)
Electric guitars,
acoustical guitars,
guitar bags, guitar
cases, keyboards,
keyboard stands,
keyboard benches,
keyboard carrying
cases, guitar tuners,
drum sets, music
stands, violins, wind
instruments (Class 15)
	 	75/225,624

8/15/1997
	 	2,186,721

9/1/1998
	 	8/23/04, Notified M&G to cancel.
	 	Abandoned
	 	9/1/04, Affidavit of Use 9/1/08, Next Renewal	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FASHION ELEMENTS

	 	Class: 25
	 	75/121616

6/14/1996
	 	2192586

9/29/1998
	 	8/30/04, Notified M&G to cancel.
	 	Abandoned
	 	9/29/04, Affidavit of Use 9/29/08, Next
Renewal
	 	8/18/2004
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[ILLEGIBLE]

	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	FINGERHUT

	 	Class: 7, 9, 12, 14, 16
	 	72/465973

8/20/1973
	 	999881

12/17/1974
	 	 	 	Registered
	 	12/17/04, Next Renewal
	 	11/5/2004
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	[ILLEGIBLE]

	 	[ILLEGIBLE]	 	[ILLEGIBLE]
	 	[ILLEGIBLE]
	 	[ILLEGIBLE]	 	[ILLEGIBLE]
	 	[ILLEGIBLE]	 	 
	 
	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	ACCOLADE AND DESIGN

	 	Class: 9, 15
	 	75/341841

8/15/1997
	 	2232979

3/16/1999
	 	9/20/04, Notified M&G to cancel.
	 	Abandoned
	 	3/16/05, Affidavit of Use 3/16/09, Next
Renewal
	 	2/2/2005
	 
	MIRACLE FIT

	 	Class: 20, 24
	 	75/152771

8/19/1996
	 	2247997

5/25/1999
	 	 
	 	Registered
	 	5/25/05, Affidavit
of Use 5/25/09,
Next Renewal
	 	4/13/2005

Schedules attached to this Section are intended to supplement th
 disclosures made to the Stock Purchase Agreement dated February 24, 2004, and reflect only
those additional disclosures herein required occurring from February 24, 2004 to the present.

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mark has been abandoned.	 	Mark has been renewed.	 	Mark has been reserved.	 	[ILLEGIBLE]	 	 	 	 
	Trademark / Servicemark	 	 	 	Serial No./	 	Reg. No./	 	Rolling	 	Current	 	Action Pending/	 	 
	Name	 	Goods
/ Services	 	Filling Date	 	Reg. Date	 	History	 	Status	 	Date Due	 	Notification Date
	COLOR FOCUS

	 	Class: 24
	 	74/709674

7/31/1995
	 	2253887

6/15/1999	 	 	 	Registered
	 	6/15/05, Affidavit of Use 
6/15/09, Next Renewal
	 	5/4/2005
	BACKYARD LIVING

	 	Class: 35
	 	75/406940

12/17/1997
	 	2274991

8/31/1999	 	 	 	Registered
	 	8/31/05, Affidavit of Use 
8/31/09, Next Renewal
	 	7/20/2005
	SPORTS CENTRAL

	 	Class: 35
	 	75/457034

3/25/1998
	 	2279009

9/21/1999	 	10/5/04, Notified M&G to cancel.
	 	Abandoned
	 	9/21/05, Affidavit of Use 
9/21/09, Next Renewal
	 	ri2005
	QUALITY ASSURED & DESIGN

	 	Class: 42
	 	74/414587

7/16/1993
	 	1931994

10/31/1995	 	 	 	Registered
	 	10/31/05, Next Renewal
	 	9/19/2005
	SUPER CHEF

	 	Class: 11
	 	74/376304
	 	1933548	 	 	 	Registered
	 	11/7/05, Next Renewal
	 	9/26/2005
	 

	 	 	 	4/5/1993
	 	11/7/1995	 	 	 	 	 	 	 	 
	LIFE MAX

	 	Class: 9, 10
	 	75/978794
	 	2312598	 	 	 	Registered
	 	1/25/06, Affidavit of Use
	 	12/14/2005
	 

	 	 	 	6/17/1999
	 	1/25/2000	 	 	 	 	 	1/25/2010, Next Renewal	 	 
	THE ACCENTS ON OUTERWEAR

	 	Class: 35
	 	75/541585
	 	2315853	 	 	 	Registered
	 	2/8/06, Affidavit of Use
	 	12/26/2005
	 	 	 	8/24/1998
	 	2/8/2000	 	 	 	 	 	2/8/2010, Next Renewal	 	 
	TAKE TIME FOR KIDS

	 	Class: 35
	 	75/651672
	 	2329075	 	 	 	Registered
	 	3/14/06, Affidavit of Use
	 	1/31/2006
	 

	 	 	 	3/2/1999
	 	3/14/2000	 	 	 	 	 	3/14/2010, Next Renewal	 	 
	INSTANT FIT

	 	Class: 20
	 	75/251786
	 	2333507	 	 	 	Registered
	 	3/21/06, Affidavit of Use
	 	2/7/2006
	 

	 	 	 	3/4/1997
	 	3/21/2000	 	 	 	 	 	3/21/2010, Next Renewal	 	 
	BULL’S HEAD & CHEF’S

	 	Class: 8
	 	73/565985
	 	1393812	 	 	 	Registered
	 	5/20/06, Next Renewal
	 	4/7/2006
	HAT LOGO

	 	 	 	10/31/1985
	 	5/20/1986	 	 	 	 	 	 	 	 
	FASHION JEWELRY BAZAAR

	 	Class: 35
	 	75/499505
	 	2352633	 	 	 	Registered
	 	5/23/06, Affidavit of Use
	 	4/10/2006
	 	 	 	6/10/1998
	 	5/23/2000	 	 	 	 	 	5/23/2010, Next Renewal	 	 
	THE COOK’S BOOK

	 	Class: 35
	 		 	2363151	 	 	 	Registered
	 	6/27/06, Affidavit of Use
	 	5/16/2006
	 

	 	 	 	7/28/1998
	 	6/27/2000	 	 	 	 	 	6/27/2010, Next Renewal	 	 
	THE COOK’S BOOK

	 	Class: 35
	 	75/526973
	 	2363143	 	 	 	Registered
	 	6/27/06, Affidavit of Use
	 	5/16/2006
	(STYLIZED)

	 	 	 	7/28/1998
	 	6/27/2000	 	 	 	 	 	6/27/2010, Next Renewal	 	 
	 
	CORNER SHOP

	 	Class: 42
	 	73/571696
	 	1401719	 	 	 	Registered
	 	7/15/06, Next Renewal
	 	6/2/2006
	 

	 	 	 	12/5/1985
	 	7/15/1986	 	 	 	 	 	 	 	 
	GOLD KEY

	 	Class: 35
	 	75/719834
	 	2368354	 	 	 	Registered
	 	7/18/06, Affidavit of Use
	 	6/6/2006
	 

	 	 	 	6/3/1999
	 	7/18/2000	 	 	 	 	 	7/18/2010, Next Renewal	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mark has been abandoned.	 	Mark has been renewed.	 	Mark has been reserved.	 	[ILLEGIBLE]	 	 	 	 
	Trademark/Servicemark	 	 	 	Serial No./	 	Reg. No./	 	Rolling	 	Current	 	Action Pending/	 	 
	Name	 	Goods/Services	 	Filling Date	 	Reg. Date	 	History	 	Status	 	Date Due	 	Notification Date
	HOLIDAY BIG BOOK

	 	Class: 35
	 	75/498298

6/8/1998
	 	2386204

9/12/2000	 	 	 	Registered
	 	9/12/06, Affidavit of Use 9/12/2010, Next Renewal
	 	8/1/2006
	DIGITAL ZONE.

	 	Class: 35
	 	75/638137

2/10/1999
	 	2398630

10/24/2000	 	Abandonded
	 	 	 	10/21/06, Affidavit Use
of
	 	9/12/2006
	LIFE MAX

	 	Class: 11, 25
	 	75/979831

8/15/1997
	 	2411462

12/5/2000	 	 	 	Registered
	 	12/5/06, Affidavit of Use 12/05/2010. Next Renewal
	 	10/24/2006
	TREASURE CREEK

	 	Class: 35
	 	75/731771
	 	2435895	 	 	 	Registered
	 	3/13/07, Affidavit of Use
	 	1/30/2007
	 

	 	 	 	6/18/1999
	 	3/13/2001	 	 	 	 	 	3/13/2011, Next Renewal	 	 
	AL AND DESIGN

	 	Class: 35
	 	76/040531
	 	2453125	 	 	 	Registered
	 	5/22/07, Affidavit of Use
	 	4/10/2007
	 

	 	 	 	5/4/2000
	 	5/22/2001	 	 	 	 	 	5/22/2011, Next Renewal	 	 
	SPRING BIG BOOK

	 	Class: 35
	 	75/659741
	 	2476310	 	 	 	Registered
	 	8/7/07, Affidavit of Use
	 	6/19/2007
	 

	 	 	 	3/12/1999
	 	8/7/2001	 	 	 	 	 	8/7/2011, Next Renewal	 	 
	CHEF’S MARK

	 	Class: 7, 11
	 	75/980599
	 	2489361	 	 	 	Registered
	 	9/11/07, Affidavit of Use
	 	7/24/2007
	 

	 	 	 	8/15/1997
	 	9/11/2001	 	 	 	 	 	9/11/2011, Next Renewal	 	 
	LIFE MAX

	 	Class: 28
	 	74/709163
	 	2099973	 	 	 	Registered
	 	9/23/07, Next Renewal
	 	8/13/2007
	 

	 	 	 	7/31/1995
	 	9/23/1997	 	 	 	 	 	 	 	 
	CHEF’S MARK PREFERRED

	 	Class: 7, 11
	 	75/980739
	 	2497159	 	 	 	Registered
	 	10/9/07. Affidavit of Use
	 	8/28/2007
	QUALITY & DESIGN

	 	 	 	8/15/1997
	 	10/9/2001	 	 	 	 	 	10/9/2011, Next Renewal	 	 
	 
	SUITE LUXURIES

	 	Class: 35
	 	75/668055
	 	2496775	 	 	 	Registered
	 	10/9/07, Affidavit of Use
	 	8/28/2007
	 

	 	 	 	3/25/1999
	 	10/9/2001	 	 	 	 	 	10/9/2011, Next Renewal	 	 
	FIN GERHUT HOME

	 	Class: 35
	 	76/010637
	 	2523477	 	 	 	Registered
	 	12/25/07, Affidavit of Use
	 	11/13/2007
	 

	 	 	 	3/27/2000
	 	12/25/2001	 	 	 	 	 	12/25/2011, Next 	 	 
	 
	ST. CROIX COLORS AND DESIGN

	 	Class: 7, 9, 11, 21, 24
	 	75/981028
	 	2530650	 	 	 	Registered
	 	1/15/08, Affidavit of Use
	 	12/4/2007
	 

	 	 	 	8/15/1997
	 	1/15/2002	 	 	 	 	 	1/15/2012, Next Renewal	 	 
	 
	ST. CROIX COLORS AND DESIGN

	 	Class: 20
	 	75/341622
	 	2552910	 	 	 	Registered
	 	3/26/08. Affidavit of Use
	 	2/13/2008
	 

	 	 	 	8/15/1997
	 	3/26/2002	 	 	 	 	 	3/26/2012, Next Renewal	 	 
	 
	ST. CROIX COLORS

	 	Class: 7, 11, 21, 24, 27
	 	75/981566
	 	2579749	 	 	 	Registered
	 	6/11/08, Affidavit of Use
	 	4/30/2008
	 

	 	 	 	8/15/1997
	 	6/11/2002	 	 	 	 	 	6/11/2012, Next Renewal	 	 
	SENSOMA

	 	Class: 20, 24
	 	75/397546
	 	2601356	 	 	 	Registered
	 	7/30/08, Affidavit of Use
	 	6/18/2008
	 

	 	 	 	12/1/2007
	 	7/30/2002	 	 	 	 	 	7/30/2012, Next Renewal	 	 

 

 

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Mark has been abandoned.	 	Mark has been renewed.	 	Mark has been reserved.	 	[ILLEGIBLE]	 	 	 	 
	Trademark / Servicemark	 	 	 	Serial No./	 	Reg. No./	 	Rolling	 	Current	 	Action Pending/	 	 
	Name	 	Goods
/ Services	 	Filling Date	 	Reg. Date	 	History	 	Status	 	Date Due	 	Notification Date
	CAREFREE LIVING

	 	Class: 35
	 	73/701228

12/14/1997
	 	1505333

9/20/1988	 	 	 	Registered
	 	9/20/08, Next Renewal
	 	8/8/2008
	CHEF’S MARK

	 	Class: 8, 21, 24
	 	75/341842
	 	2645988	 	 	 	Registered
	 	11/5/08, Affidavit of Use
	 	9/24/2008
	 

	 	 	 	8/15/1997
	 	11/5/2002	 	 	 	 	 	11/05/2012, Next Renewal	 	 
	FALL BIG BOOK

	 	Class: 35
	 	76/239983
	 	2655853	 	 	 	Registered
	 	12/3/08, Affidavit of Use
	 	10/22/2008
	 

	 	 	 	4/12/2001
	 	12/3/2002	 	 	 	 	 	12/3/2012, Next Renewal	 	 
	CHEF’S MARK PREFERRED

	 	Class: 8, 21, 24
	 	75/341494
	 	2659758	 	 	 	Registered
	 	12/10/08, Affidavit of Use
	 	10/29/2008
	QUALITY & DESIGN

	 	 	 	8/15/1997
	 	12/10/2002	 	 	 	 	 	12/10/2012, Next Renewal	 	 
	 
	ST.
CROIX COLORS

	 	Class: 20
	 	75/341826
	 	2681467	 	 	 	Registered
	 	1/28/09, Affidavit of Use
	 	12/17/2008
	 

	 	 	 	8/15/1997
	 	1/28/2003	 	 	 	 	 	1/28/2013, Next Renewal	 	 
	COUNTRY BEAR

	 	Class: 7, 11, 24
	 	76/172068
	 	2782394	 	 	 	Registered
	 	11/11/09, Affidavit of Use
	 	9/30/2009
	 

	 	 	 	11/28/2000
	 	11/11/2003	 	 	 	 	 	11/11/2013, Next Renewal	 	 
	GOOD DEALS, GREAT BUYS

	 	Class: 35
	 	75/699395
	 	2503225	 	 	 	Registered
	 	10/30/2011, Next Renewal
	 	9/19/2011
	 

	 	 	 	5/7/1999
	 	10/30/2001	 	 	 	 	 	 	 	 
	ROOMS FOR LIVING

	 	Class: 42
	 	74/138822
	 	1693689	 	 	 	Registered
	 	6/9/2012, Next Renewal
	 	4/27/2012
	 

	 	 	 	2/13/1991
	 	6/9/1992	 	 	 	 	 	 	 	 
	GATE ONE LUGGAGE (AND DESIGN)

	 	Class: 18
	 	74/147438
	 	1722969	 	 	 	Registered
	 	10/6/2012, Next Renewal
	 	8/24/2012
	 	 	 	3/13/1991
	 	10/6/1992	 	 	 	 	 	 	 	 
	GATE ONE (AND DESIGN)

	 	Class: 18
	 	74/147437
	 	1724645	 	 	 	Registered
	 	10/13/2012, Next
	 	8/31/2012
	 

	 	 	 	3/13/1991
	 	10/13/1992	 	 	 	 	 	 	 	 
	FINGERHUT

	 	Class: 35
	 	72/428394
	 	973080	 	 	 	Registered
	 	11/13/2013, Next
	 	10/2/2013
	 

	 	 	 	6/26/1972	 	11/13/1973	 	 	 	 	 	 	 	 
	HOME DEALS

	 	Class: 35	 	75/838,383

11/2/1999	 	N/A	 	Pending — Filed 4th
Ext. on 8/6/04

	 	Registered
	 	1/9/05, Next Renewal	 	 

 

 

Schedule 5.221

FDM Agreements with Related Parties

	 	 	 	 	 
	 	 	COMPANY	 	 
	 	 	FDM, FFI or	 	 
	TITLE	 	FAC	 	NOTES / KEYWORDS
	uBid.com

	 	FFI
	 	Letter of Intent dated 7/2/04
	 
	 	 	 	 
	 Fulfillment Services Agreement 

	 	FDM
	 	Between FDM & Petters Group
Worldwide, LLC; Schwans
Project — Agreement in Final
Stages — waiting for
signature

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional disclosures
herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.261 

5.26(7) In October 2004, the Company incurred and paid a Minnesota State tax debt in the
amount of $150,000 that was not anticipated or included in the budget.

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.41

Subsidiaries to the Company:

FDM AR-1, Inc. was dissolved on March 23, 2004

Fingerhut Fulfillment, Inc. remains as the only subsidiary to the Company.

 

			
	I	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.51

Consent is required for the conveyance of any interest in Company for the following:

	 	1)	 	Building One Lease for property located at 11 McLeland Road, St. Cloud,
MN dated November 26, 2003 by and between Fingerhut Direct Marketing, Inc. and
FAC Acquisition, LLC. The Company has obtained Landlord’s (FAC Acquisition, LLC)
written consent.
	 
	 	2)	 	Office Lease for property located at 4400 Baker Road, Minnetonka, MN dated
May 1, 2003 by and between Fingerhut Direct Marketing, Inc. and FAC Acquisition,
LLC. The Company has obtained Landlord’s (FAC Acquisition, LLC) written consent.
	 
	 	3)	 	Building Lease for property located at 6250 Ridgewood Road, St. Cloud, MN dated
November 26, 2003 by and between Fingerhut Direct Marketing, Inc. and FAC Acquisitions,
LLC. The Company has obtained Landlord’s (FAC Acquisition, LLC) written consent.

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

 

 

Schedule 5.8

5.8 (b) The Company is past due on various inventory and expense payables under various agreements
and contracts. The aggregate amount of past due amounts as of October 27, 2004, was $4,105,044.61.
The Company intends to satisfy its obligations following closing of this Agreement and other
related transactions.

 

 

Schedule 5.91

None.

 

			
	1	 	Schedules attached to this Section are intended to supplement the disclosures made to
the Stock Purchase Agreement dated February 24, 2004, and reflect only those additional
disclosures herein required occurring from February 24, 2004 to the present.

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