TO AMENDED AND RESTATED PRIVATE LABEL CREDIT CARD PROGRAM AGREEMENT
FIFTH
AMENDMENT
TO
AMENDED
AND RESTATED PRIVATE LABEL
CREDIT
CARD PROGRAM AGREEMENT
This
Fifth Amendment to Amended and Restated Private Label Credit Card Program
Agreement ("Fifth Amendment") is entered into as of November 1, 2008 (the
"Effective Date") by and among Stage Stores, Inc., a Nevada corporation ("Stage
Stores"), Specialty Retailers, Inc., a Texas corporation ("Specialty"), with
their principal offices at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (Stage Stores
and Specialty hereinafter being referred to collectively as "Stage"), and World
Financial Network National Bank, a national banking association with its
principal offices at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
("Bank"). Stage Stores, Specialty, and Bank are collectively referred
to in this Fifth Amendment as the "Parties".
R E C I T A L
S:
WHEREAS,
Stage and Bank entered into an Amended and Restated Private Label Credit Card
Program Agreement dated as of March 5, 2004, as amended (the "Agreement")
pursuant to which Bank issues private label credit cards which allows Customers
of Stage to purchase goods and/or services from Stage; and
WHEREAS,
Bank and Stage now desire to amend the Agreement to amend the Marketing Fund and
Discount Rate provisions for the Agreement.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, the Parties hereto agree as follows:
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1.
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Definitions;
References. Each term used herein which is not defined
herein shall have the meaning assigned to such term in the
Agreement. Each reference to "hereof", "hereunder", "herein"
and "hereby" and each other similar reference and each reference to "this
Agreement" and each other similar reference contained in the Agreement
shall from and after the date hereof refer to the Agreement amended
hereby.
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2.
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Section 2.5 –
Marketing. Section 2.5 is deleted in its entirety and
replaced with a new Section 2.5 as
follows:
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“2.5 Marketing.
(a) Stage
agrees to advertise and actively promote the Plan wherever Customers can
purchase Goods and Services, including, without limitation, across the range of marketing promotions set forth in Schedule
2.5(a) to this Agreement. Once
Stage and Bank agree upon standards for the use of Bank's name or any trademark, service ▇▇▇▇ or trade name
of Bank or Stage’s Name Rights (as defined in Section 2.10),
neither party will deviate from such standards without the express prior written approval of the other party or as provided for in Section 2.10.
(b) (1) Beginning
with the Plan Year that begins October 1, 2008, each Plan Year Bank shall provide an amount equal to six-tenths of one
percent (0.60%) multiplied by the Net Sales on all Accounts for the prior Plan
Year, which amount may be increased under Section
2.1 (e). All of such funds shall be referred to herein as the
“Marketing Fund”, and any and all marketing and
promotion expenses incurred by Stage in connection with promoting or otherwise encouraging the use of the
Accounts including, but not limited
to, the “Eligible Expenses” described in Schedule
2.5 (b) (1) to this Agreement shall be eligible for reimbursement under
the Marketing Fund. Stage agrees that all reimbursable expenses shall be for actual expenses incurred by Stage and shall
be at market rates for the applicable expense.
If the
Marketing Fund is not used in a Plan Year,
then such funds will not roll over to the next Plan Year and shall not have any
cash value. Stage shall pay the
expenses directly as incurred. On a
monthly basis, Stage shall send Bank an invoice for the aggregate amount
of reimbursable expenses, together with
copies of supporting documentation reasonably satisfactory to Bank, and Bank shall reimburse Stage within thirty
(30) days of receipt of the invoice until
Bank’s maximum contribution amount for the applicable Plan Year has been
met.
(2) Stage
shall also contribute an amount equal to the amounts contributed by Bank per (b)
(1) above, in the same period, in support of and/or in addition to the marketing
promotions outlined in the table set forth in Schedule 2.5(b)(1), including
postage. From time to time, Stage shall provide Bank with a summary
of how such amounts were spent.
(c) In the last Plan Year of the Initial or any Renewal
Term, Bank’s Marketing Fund contributions for such Plan Year shall be limited as
follows: the Marketing Fund must be utilized in the first six (6) months of the
last Plan Year, may not be used for promotion of new Accounts, and Stage must
also contribute toward marketing of the Plan (however Stage’s contributions
shall not be required to exclude promotion of new Accounts) an amount equal to
the amount of the Marketing Fund contributed by Bank during the same six (6)
month period; provided, however, that in the event the parties agree at any time
during the last Plan Year to renew the Term for more than one year, then, unless
otherwise agreed by the Parties in writing, at such time the restrictions set
forth in this Section 2.5(c) shall be lifted, and the Marketing Fund shall be
determined pursuant to Section 2.5(b).
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(d) Bank
will not initiate any marketing incentive programs directed at Stage’s employees
without Stage’s prior written approval, which approval may be withheld,
conditioned or delayed at Stage’s sole discretion.”
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3.
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Scheduled 1.1 –
Discount Rate. Schedule 1.1 is deleted in its entirety
and replaced with a new Schedule 1.1 attached hereto and make a part of
this Fifth Amendment.
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4.
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Governing
Law. This Fifth Amendment shall be governed by and
construed in accordance with the laws of the State of
Ohio.
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5.
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Counterparts;
Effectiveness. This Fifth Amendment may be executed in
any number of counterparts, each of which when so executed shall be deemed
to be an original, but all of such counterparts shall together constitute
one and the same instrument. The provisions included in this
Fifth Amendment shall be effective as of the Effective Date set forth in
the first paragraph of this Fifth
Amendment.
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6.
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Entire
Agreement. As hereby amended and supplemented, the
Agreement shall remain in full force and
effect.
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IN
WITNESS WHEREOF, the Parties have caused this Fifth Amendment to be executed by
their duly authorized officers as of the Effective Date.
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WORLD
FINANCIAL
NETWORK
NATIONAL BANK
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STAGE
STORES, INC.
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By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title:
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President
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Title:
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Sr. Vice President - Finance &
Controller
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SPECIALTY
RETAILERS, INC.
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By:
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/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Title:
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Sr. Vice President - Finance &
Controller
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Schedule
1.1
Discount
Rate
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A.
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DISCOUNT
RATE FOR ACCOUNTS EXCEPT PEEBLES
ACCOUNTS
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The
following Discount Rate for Regular Revolving Purchases shall be applied to all
Accounts except for Peebles Accounts, until the conditions set forth in Section
B below are met, at which time the Discount Rate set forth in this Section A
shall apply to all Accounts.
1. Base
Discount Rate.
The
Discount Rate shall be the Base Discount Rate, subject to adjustments as
described in Section (A) (2) and the Rebate Funds described in Section (A)
(3).
The
Base Discount Rate shall be equal to 0 basis points (0 bps).
2. Adjustments to Base Discount
Rate
(a) Bank
shall, at the end of each Plan quarter, calculate the Net Portfolio Yield.
Subject to Sections A (2) (b) and (c) below: (i) if the Net Portfolio Yield is
between 10.0% and 11.0% (the “Net Portfolio Yield Range”), then the Discount
Rate for the next quarter shall be equal to the Base Discount Rate; and (ii) if
the Net Portfolio Yield is less than 10.0% or greater than 11.0%, then Bank
shall calculate the new Discount Rate by adding to or subtracting from the Base
Discount Rate the amount of the Discount Rate Adjustor.
(b) At
such time as Bank commences to include the Peebles Accounts in the calculation
(beginning the first quarter after the Average Balance for the Peebles Accounts
is equal to or greater than $330 for the prior Plan Year pursuant to Section B
(2) below), Bank shall also change the Net Portfolio Yield Range to between 9.9%
and 10.9%.
(c) For
all such calculations conducted during the time period of December 2008 through
December 2009, whatever the result of calculations under Section (A) (2) (a) or
(b), as applicable, it shall be adjusted in such as way as to increase Stage’s
income by 60 bps or, if applicable, decrease any possible income to Bank by that
same amount. The Discount Fees paid to Stage that are generated by
the 60 bps differential in the Base Discount Rate shall be referred to herein as
the “Incremental Discount Fees”.
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Definitions:
The
Accounts Receivable Turn shall be equal to the Net Sales for the prior 12 month
period divided by the total Average Principal-Only Accounts Receivable for the
same period.
The
Average Principal-Only Accounts Receivable shall be equal to the sum of the
month-end principal-only accounts receivable divided by the number of months
being measured. The principal portion of the accounts receivable
contain Purchases, Third-Party Program Charges and Enhancement Marketing
Services charges, and other charges not related to interest and
fees.
The
Collected Finance Charge Yield shall be equal to the sum of all finance charges
collected during a given period.
The
Collected Late Fee Yield shall be equal to the sum of all late fees collected
during a given period.
The
Discount Rate Adjustor shall be equal to the amount by which the Net Portfolio
Yield falls below or exceeds the Net Portfolio Yield Range,
divided by 2, and then divided by the Accounts Receivable Turn for the prior 12
month period.
The Net
Portfolio Yield shall be equal to (i) the sum of the Bank’s collected finance
charge yield for the prior 12 month period plus the Bank’s collected late fee
yield for the prior 12 month period, divided by the Average
Principal-Only
Accounts Receivable, minus (ii) Net Principal
Write Offs %, minus
(iii) the
weighted average Prime Rate.
The Net
Principal Write Offs % shall be equal to the principal balances
written off by Bank related to the Plan, minus any recoveries received
by Bank for prior written off balances dividedby the Average Principal-Only Accounts
Receivable.
The
Weighted Average Prime Rate shall be the sum of the product of the month-end
principal-only accounts receivable multiplied by the Prime Rate quoted in The Wall Street Journal on
the last Business Day of the month being measured for each month in the measured
period divided by the sum of the month-end principal-only accounts receivable
for the period being measured.
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For
Example:
Example
1:
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Collected
Finance Charge Yield + Collected Late Fee Yield
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=
28.00%
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(for
prior 12 months)
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Minus
Net Principal Write Offs %
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=
13.00%
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Minus
Weighted Average Prime Rate ¸
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average
accounts receivable
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=
4.25%
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Net
Portfolio Yield
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=
10.75%
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Result: No
change to the Base Discount Rate. [Note: during the time period of
December 2008 through December 2009, 60 bps would be subtracted to yield a
Discount Rate of – 60 bps, meaning that Bank shall pay such Discount Fee
to
Stage.]
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Example
2:
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Net
Portfolio Yield Calculation
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Collected
Finance Charge Yield + Collected Late Fee Yield
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=
30.00%
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(for
prior 12 months)
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Minus
Net Principal Write Offs %
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=
13.25%
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Minus
Weighted Average prime Rate ¸
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Average
accounts receivable
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=
4.25%
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Net
Portfolio Yield
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=
12.50%
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Accounts
Receivable Turn Calculation
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Net
Sales:
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$430,000,000
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Divided
by the total average
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Principal-Only
Accounts Receivable
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=$268,000,000
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Accounts
Receivable Turn:
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=1.6
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Discount
Rate Adjustor Calculation
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Difference
between 12.50% Minus 11.00%
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=
1.50%
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Divided
by 2
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=
0.75%
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Divided
by the Account Receivable Turn of 1.6
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=
0.47%
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Result:
Base Discount Rate is reduced from 0.00% to -0.47%, meaning that Bank
shall pay such Discount Fee to Stage. [Note: during the time period of
December 2008 through December 2009, 60 bps would be subtracted to yield a
Discount Rate of -107 bps, meaning that Bank shall pay such Discount Fee
to
Stage.]
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Example
3:
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Net
Portfolio Yield Calculation
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Collected
Finance Charge Yield + Collected Late Fee Yield
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=
28.00%
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(for
prior 12 months)
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Minus
Net Principal Write Offs %
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=
14.25%
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Minus
Weighted Average prime Rate ¸
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Average
accounts receivable
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=
4.25%
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Net
Portfolio Yield
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=
9.50%
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Accounts
Receivable Turn Calculation
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Net
Sales:
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$430,000,000
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Divided
by the total average
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Principal-Only
Accounts Receivable
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=$268,000,000
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Accounts
Receivable Turn:
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=1.6
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Discount
Rate Adjustor Calculation
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Difference
between 9.50% Minus 10.00%
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=
-0.50%
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Divided
by 2
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=
-0.25%
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Divided
by the Account Receivable Turn of 1.6
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=
-0.16%
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Result:
Base Discount Rate is increased from 0.00% to 0.16%, meaning that Stage
shall pay such Discount Fee to Bank. [Note: during the time
period of December 2008 through December 2009, 60 bps would be subtracted
to yield a Discount Rate of -44 bps, which Discount Fees Bank shall pay to
Stage]
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3. Discount
Fee Rebates and Incremental Late Fee Share
Definitions
The
following definitions shall apply to this Section (A) (3) as well as Section (B)
(1) below.
“Current
Account” means an Account for which no amounts owed on the Account are past due
as of the time of reference.
“Current
Account to Write-off Ratio” means the number, represented as a percentage,
determined by the following calculation: [the amount of Accounts
Receivable written-off by Bank for the month being measured] divided by [the amount of
Accounts Receivable on Current Accounts for the month seven (7) months prior to
the month being measured]. As a point of reference only, the Current
Account to Write-off Ratio for September 2008 was 0.75%, calculated as follows:
$406,386 divided by
$54,497,334.
“Incremental
Late Fee Payment” means a payment: (i) made between [due date +1] and [the
billing date], (ii) made on an Account that is a Current Account at the time of
payment or as a result of the payment, and (iii) which generates a late fee of $
X based on the
outstanding balance on the Account at the time of such payment, as set forth in
Section 3.6 (d).
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“Stage
Incremental Late Fee Share” means fifty percent (50%) of the amount that, for
the period of December 1, 2008 through December 31, 2009, is the sum
of:
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(i)
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[Number
of $15 Incremental Late Fee Payments] multiplied by [$15];
plus
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(ii)
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[Number
of $25 Incremental Late Fee Payments] multiplied by
[$25].
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“Weighted
Average Current Account to Write-off Ratio” means the
number, represented as a percentage, determined by the
following calculation: [the month-end write-off amounts for the most recent
trailing 12 month period] divided by [the sum of the
Accounts Receivable on Current Accounts for the trailing months 7 through 18].
As a point of reference only, the Weighted Average Current Account to Write-off
Ratio for September 2008 was 0.71%, calculated as follows: $4,395,531 divided by
$615,040,955.
Payments
During
the calendar year 2009, Stage shall pay to Bank the following amounts at the
following times (collectively referred to herein as “Rebate
Funds”).
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January
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an
amount equal to 5 bps of Net Sales for December
2008
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April
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an
amount equal to 10 bps of Net Sales for Jan. - March
2009
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July
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an
amount equal to 30 bps on Net Sales for April – June
2009
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October
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an
amount equal to 45 bps on Net Sales for July – Sept.
2009
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In
January 2010, as
applicable, Stage shall pay to Bank the amount by which the “Net
Incremental Discount Fees” (defined as Incremental Discount Fees less Rebate
Funds) exceed the Stage Incremental Late Fees Share for the subject thirteen
(13) months; or, Bank shall pay to Stage the amount by which the Stage
Incremental Late Fees Share for exceeds the Net Incremental Discount Fees. If
the amounts are equal, neither party shall owe the other.
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B.
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DISCOUNT RATE AND INCREMENTAL
LATE FEE SHARE FOR PEEBLES
ACCOUNTS
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1. General.
Unless
and until the Peebles Accounts shall be treated like Stage Accounts per Section
(B) (2) immediately below, the following provisions shall apply with regards to
Peebles Accounts.
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Definitions
“Peebles
Net Incremental Late Fee Share” means the product of multiplying [the Peebles Gross
Incremental Late Fee Share] by [1 minus the Weighted Average
Current Account to Write-off Ratio]. As a point of reference only,
the Weighted Average Current Account to Write-off Ratio for September 2008 was
0.9929, calculated as follows: 1 minus 0.0071.
“Peebles
▇▇▇▇▇ Incremental Late Fee Share” means fifty percent (50%) of the amount that,
for the period being measured, is the sum of:
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(iii)
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[Number
of $20 Incremental Late Fee Payments] multiplied by [$20];
plus
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(iv)
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[Number
of $25 Incremental Late Fee Payments] multiplied by
[$25]
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Discount
Fees
For the
time period of December 1, 2008 through December 31, 2009 (only), Bank shall pay
to Stage an amount of Peebles Discount Fees based on a Discount Rate of 85 bps
on Regular Revolving Purchases.
In
January of 2010, the (i) amount of Discount Fees paid to Stage over the
preceding thirteen (13) month period shall be reconciled against (ii) the Net
Peebles Incremental Late Fee Share (calculated based on the Weighted Average
Current Accounts to Write-off Ratio for the period of December 2007 through
November 2008). As applicable, Stage shall pay to Bank any amount by which (i)
exceeds (ii); or, Bank shall pay Stage any amount by which (ii) exceeds
(i). If the amounts are equal, neither party shall owe the
other.
Peebles Net Incremental Late
Fee Share
Beginning
in February of 2010, and in each month thereafter, Bank shall pay to Stage its
Peebles Net Incremental Late Fee Share for the preceding month (calculated based
on the Weighted Average Current Account to Write-off Ratio for the preceding
calendar year).
2. Peebles Accounts to be
Treated as Stage Accounts.
(a) Commencing
after the end of the first Plan Year and after the end of each Plan Year
thereafter, Bank shall calculate the Average Balance for the Peebles Accounts
for the prior Plan Year and if the Average Balance for the Peebles Accounts is
less than $330, then the Discount Rate for Regular Revolving Purchases for the
next Plan Year shall remain at 0%. However, if the Average Balance for the
Peebles Accounts is greater than $330, then, subject to Section B (2) (b) below,
Bank shall commence with its next quarterly calculation pursuant to Section A
(2) above, and continuing thereafter, include the Peebles Accounts in the
calculation of the Discount Rate for Regular Revolving Purchases on a quarterly
basis pursuant to the calculation as set forth in Section A (2)
above.
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(b) If
the Average Balance of $330 contingency referenced in Section B (2) (a) above
occurs and any resulting calculations are conducted during the time period of
December 2008 through December 2009, the following provisions shall apply.
First, the 60 bps adjustment in the otherwise applicable Discount Rate
referenced in Section A (2) (c) above shall be read to be an 85 bps adjustment
in the otherwise applicable Discount Rate with respect to Peebles
Accounts.
Second,
the parties shall work together in good faith to ensure that they honor the
intent of the January 10, 2010 reconciliation described in Section B (1) above.
Namely, that any amounts Discount Fees Stage received during the preceding 13
months are reconciled against the Net Peebles Incremental Late Fee Share
(calculated based on the Weighted Average Current Accounts to Write-off Ratio
for the period of December 2007 through November 2008).
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