SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT Dated as of February __, 2005 Among THE FINANCIAL INSTITUTIONS NAMED HEREIN as the Lenders BANK OF AMERICA, N.A. as the Agent BANC OF AMERICA SECURITIES LLC as Sole Lead Arranger and Book Manager FLEET RETAIL GROUP, INC. and THE CIT GROUP/BUSINESS CREDIT, INC. as Co-Syndication Agents GENERAL ELECTRIC CAPITAL CORPORATION as Documentation Agent SPIEGEL, INC., EDDIE BAUER, INC., SPIEGEL CATALOG, INC. ULTIMATE OUTLET INC. and NEWPORT NEWS, INC. Each as a Debtor-in-Possession Under Chapter 11 of the Bankruptcy Code as Borrowers and Guarantors and THE SUBSIDIARIES OF SPIEGEL, INC. PARTY HERETO as Guarantors TABLE OF CONTENTS Page ARTICLE 1 INTERPRETATION OF THIS AGREEMENT.........................................................2 1.1 Definitions .......................................................................................................................2 1.2 Accounting Terms.........................................................................................................32 1.3 Interpretive Provisions. .................................................................................................32 1.4 Interest Act (Canada) ....................................................................................................33 ARTICLE 2 LOANS AND LETTERS OF CREDIT....................................................................33 2.1 Total Facility.................................................................................................................33 2.2 Revolving Loans. ..........................................................................................................33 2.3 Letters of Credit. ...........................................................................................................40 2.4 Bank Products ...............................................................................................................47 ARTICLE 3 INTEREST AND FEES............................................................................................47 3.1 Interest...........................................................................................................................47 3.2 Conversion and Continuation Elections........................................................................48 3.3 Maximum Interest Rate.................................................................................................49 3.4 Unused Line Fee............................................................................................................50 3.5 Letter of Credit Fee .......................................................................................................50 3.6 Fee Letter.......................................................................................................................50 3.7 Payment of Fees............................................................................................................50 ARTICLE 4 PAYMENTS AND PREPAYMENTS .....................................................................51 4.1 Revolving Loans ...........................................................................................................51 4.2 Termination of Facility..................................................................................................51 4.3 Payments by the Loan Parties .......................................................................................51 4.4 Payments as Revolving Loans.......................................................................................52 4.5 Apportionment and Application and Reversal of Payments .........................................52 4.6 Indemnity for Returned Payments.................................................................................53 4.7 Agent’s and Lenders’ Books and Records: Monthly Statements..................................53 ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY ...........................................54 5.1 Taxes .............................................................................................................................54 5.2 Illegality ........................................................................................................................56 5.3 Increased Costs and Reduction of Return.....................................................................56 5.4 Funding Losses..............................................................................................................57 5.5 Inability to Determine Rates .........................................................................................57 5.6 Certificates of Lenders..................................................................................................57 5.7 Survival.........................................................................................................................58 (i) ARTICLE 6 ...................................................................................................................................58 POST-CONFIRMATION FINANCING.......................................................................................58 ARTICLE 7 COLLATERAL; ADMINISTRATIVE SUPERPRIORITY....................................58 7.1 Grant of Security Interest. .............................................................................................58 7.2 Perfection and Protection of Security Interest...............................................................60 7.3 Location of Collateral....................................................................................................62 7.4 Title to, Liens on, and Sale and Use of Collateral.........................................................63 7.5 [Intentionally Omitted]..................................................................................................63 7.6 Access and Examination: Promotional Materials. ........................................................63 7.7 Collateral Reporting......................................................................................................64 7.8 Accounts........................................................................................................................65 7.9 Collection of Accounts; Payments. ...............................................................................67 7.10 Inventory: Perpetual Inventory......................................................................................68 7.11 Equipment. ....................................................................................................................69 7.12 [Intentionally Omitted]..................................................................................................69 7.13 Documents, Instruments, and Chattel Paper .................................................................69 7.14 Right to Cure .................................................................................................................69 7.15 Power of Attorney.........................................................................................................70 7.16 The Agent’s and Lenders’ Rights, Duties and Liabilities. ............................................70 7.17 Patent, Trademark and Copyright Collateral.................................................................72 7.18 Grant of License to Use Intellectual Property...............................................................73 ARTICLE 8 BOOKS AND RECORDS: FINANCIAL INFORMATION: NOTICES ................73 8.1 Books and Records........................................................................................................73 8.2 Financial and Other Information...................................................................................73 8.3 Notices to the Lenders...................................................................................................77 ARTICLE 9 GENERAL WARRANTIES AND REPRESENTATIONS.....................................79 9.1 Authorization.................................................................................................................79 9.2 Validity and Priority of Security Interest ......................................................................80 9.3 Organization and Qualification.....................................................................................80 9.4 Corporate Name: Prior Transactions .............................................................................81 9.5 Subsidiaries and Affiliates ............................................................................................81 9.6 Financial Statements and Projections............................................................................81 9.7 Capitalization................................................................................................................81 9.8 Reorganization Matters. ................................................................................................81 9.9 Debt ...............................................................................................................................82 9.10 Distributions..................................................................................................................82 9.11 Title to Property............................................................................................................82 9.12 Real Estate: Leases........................................................................................................82 9.13 Proprietary Rights .........................................................................................................82