EXHIBIT 10.16

 

LETTER AMENDMENT AND CONSENT NO. 6

 

Dated as of August 19, 2002

To the Lenders and the Agent

referred to below

Ladies and Gentlemen:

Specialty Retailers (TX) LP

We refer to the Credit Agreement dated as of August 24, 2001, as amended by
Waiver Letter No. 1 dated as of September 23, 2001, Waiver Letter No. 2 dated as
of October 23, 2001, Waiver Letter No. 3 dated as of November 23, 2001, Letter
Amendment and Waiver No. 4 dated as of January 24, 2002 and Letter Amendment and
Waiver No. 5 dated as of March 12, 2002 (as so amended, and as otherwise
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"; the terms defined therein, unless otherwise
defined herein, being used herein as therein defined) among Specialty Retailers
(TX) LP, as Borrower (the "Borrower"), Stage Stores, Inc., as Parent Guarantor
(the "Parent Guarantor", and collectively with the Borrower and its other
Subsidiaries, the "Company"), the Lender Parties party thereto (the "Lenders"),
Citicorp USA, Inc., as Administrative Agent and as Collateral Agent for the
Lender Parties (the "Agent"), and Salomon Smith Barney Inc., as Arranger and
Book Manager.

The undersigned hereby request the approval and consent of the Required Lenders
to (i) permit the creation and capitalization of a new wholly-owned direct
subsidiary of the Parent Guarantor ("Stage Stores LLC"), (ii) permit Investments
consisting solely of Debt by the Parent Guarantor in Stage Stores LLC, (iii)
permit Investments consisting solely of Debt by Stage Stores LLC in the Borrower
and (iv) to permit the sale, transfer or other disposition to the Borrower of up
to ninety percent (90%) of the Equity Interests in Stage Receivable Funding LP
held by Stage Receivable Mgmt LLC on terms reasonably acceptable to the Agent.

It is hereby agreed by you and us that, effective as of the date of this letter
amendment and consent (this "Letter Amendment and Consent No. 6"), the Credit
Agreement is hereby amended as follows:

(a) Section 1.01 is amended by adding thereto the following new definition to
appear in proper alphabetical order:

"'Stage Stores LLC' has the meaning specified therefor in Section 5.02(p)";

(b) Section 5.02(b) is amended by (i) deleting the word "and" at the end of
clause (i) thereof, (ii) deleting the period at the end of sub-clause (G) of
clause (ii) thereof and replacing it with "; and" and (iii) inserting a new
clause (iii) to read as follows:

"(xi) Debt constituting Investments permitted by Section 5.02(f)(xi), provided,
that, such Debt shall satisfy the requirements of sub-clauses (x), (y) and (z)
of clause (i) of this Section 5.02(b).";

(c) Section 5.02(f) is amended by (i) deleting the word "and" at the end of
clause (ix) thereof, (ii) deleting the reference to "clause (ix)" contained in
clause (x) thereof and replacing it with a reference to "clause (x)", (iii)
deleting the period at the end of clause (x) thereof and replacing it with ";
and" and (iv) inserting a new clause (xi) to read as follows:

"(xi) (A) Investments by the Parent Guarantor in Stage Stores LLC to be used for
capitalization purposes, (B) Investments consisting solely of Debt by the Parent
Guarantor and its Subsidiaries in Stage Stores LLC to be used by Stage Stores
LLC solely to make Investments permitted under sub-clause (C) below, and (C)
direct or indirect Investments consisting solely of Debt by Stage Stores LLC in
the Borrower in amounts equal at all times to the Investments permitted under
sub-clause (B) above"; and

(d) Section 5.02(p) is amended in its entirety and replaced with the following:

"(p) Formation of Subsidiaries. Organize or invest, or permit any Subsidiary to
organize or invest, in any new Subsidiary (other than a Securitization Program
Subsidiary) except (i) as permitted under Section 5.02(f)(i) or (x) and (ii)
creation of a new Subsidiary of the Parent Guarantor ("Stage Stores LLC"),
provided that: (A) Stage Stores LLC shall be a limited liability company
organized under the laws of the State of Nevada, (B) Stage Stores LLC shall be a
wholly owned Subsidiary of the Parent Guarantor; (C) immediately before and
after giving effect thereto, no Default shall have occurred and be continuing or
would result therefrom; (D) Stage Stores LLC shall, and the Parent Guarantor
agrees that it shall cause Stage Stores LLC to, immediately upon creation
thereof, take all steps necessary to become a Guarantor and a Grantor under the
Loan Documents including, without limitation, (1) the execution of a Guaranty
Supplement and a Security Agreement Supplement and (2) the filing of a UCC-1
financing statement with the secretary of state of the State of Nevada naming
the Collateral Agent as secured party; and (E) Stage Stores LLC shall have as
its sole purpose to receive and to make Investments permitted under the terms of
this Agreement."

In addition, notwithstanding any contrary provision contained in the Credit
Agreement, the Required Lenders hereby consent to the sale, transfer or other
disposition to the Borrower of up to ninety percent (90%) of the Equity
Interests in Stage Receivable Funding LP held by Stage Receivable Mgmt LLC on
terms reasonably satisfactory to the Agent, and hereby permanently waive any
Default that may arise under the Credit Agreement as a result of such sale,
transfer or other disposition; provided, that, each of the Parent Guarantor and
the Borrower, by its signature below, hereby represents and warrants that such
sale, transfer or other disposition will not violate any term or provision of
any Securitization Program Document that has not or shall not have been
permanently waived by the requisite parties thereto prior to such sale, transfer
or other disposition.

This Letter Amendment and Consent No. 6 shall become effective as of the date
first above written when, and only when, (x) the Agent shall have received
counterparts of this Letter Amendment and Consent No. 6 executed by the
Borrower, the Parent Guarantor and the Required Lenders or, as to any of such
Lenders, advice satisfactory to the Agent that such Lender has executed this
Letter Amendment and Consent No. 6, and the consent and agreement attached
hereto executed by each Subsidiary Guarantor, (y) the Agent shall have received
tax opinions, in form and substance satisfactory to the Agent, of McKinney and
Stringer, P.C. and Jenkens and Gilchrist, as counsel for the Loan Parties,
covering such matters concerning the tax implications, if any, of the creation
and operation of Stage Stores LLC as any Lender through the Agent may reasonably
request and (z) the Borrower shall have paid all fees, costs and expenses of the
Agent in connection with the preparation, execution, delivery and
administration, modification and amendment of this Letter Amendment and Consent
No. 6 (including, without limitation, the reasonable fees and expenses of
counsel for the Agent) in accordance with the terms of Section 9.04 of the
Credit Agreement. This Letter Amendment and Consent No. 6 is subject to the
provisions of Section 9.01 of the Credit Agreement.

On and after the date on which this Letter Amendment and Consent No. 6 become
effective, each reference in the Credit Agreement and each other Loan Document
to "this Agreement", "the Credit Agreement", "hereunder", "thereunder",
"hereof", "thereof" or words of like import referring to the Credit Agreement
shall mean and be a reference to the Credit Agreement, as amended by this Letter
Amendment and Consent No. 6.

The Credit Agreement and each other Loan Document is and shall continue to be in
full force and effect and is hereby in all respects ratified and confirmed. The
execution, delivery and effectiveness of this Letter Amendment and Consent No. 6
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of any Lender or any Agent under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.

This Letter Amendment and Consent No. 6 may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement. Delivery of an executed
counterpart of a signature page to this Letter Amendment and Consent No. 6 by
telecopier shall be as effective as delivery of a manually executed counterpart
of this Letter Amendment and Consent No. 6. This Letter Amendment and Consent
No. 6 shall be governed by, and construed in accordance with, the laws of the
State of New York.

If you agree to the terms and provisions hereof, please evidence such agreement
by executing and returning a counterpart of the attached agreement to this
Letter Amendment and Consent No. 6.

                                                                                                                   
Very truly yours,

                                                                                                                   
SPECIALTY RETAILERS (TX) LP,

                                                                                                                   
as Borrower

                                                                                                                   
By: /s/ Richard E. Stasyszen_________

                                                                                                                   
Title: SVP Finance & Controller

                                                                                                                   
STAGE STORES, INC.,

                                                                                                                   
as Parent Guarantor

                                                                                                                   
By: /s/ Richard E. Stasyszen______________________

                                                                                                                   
Title: SVP Finance & Controller

The foregoing Letter Amendment and Consent No. 6 dated as of August 19, 2002
from the Borrower and the Parent Guarantor is agreed to as of such date:

 

                                                                                                                   
CITICORP USA, INC., as Administrative Agent

                                                                                                                   
By /s/ Michael M. Schadt_____________

                                                                                                                   
Title: Vice President/Asset Based Finance

 

                                                                                                                   
Lenders: Fleet Retail Finance_________

                                                                                                                   
[Name of Institution]

                                                                                                                   
By _/s/ Daniel Platt____________________

                                                                                                                   
Title: Assistant Vice President

                                                                                                                   
Lenders: Foothill Capital Corp_________

                                                                                                                   
[Name of Institution]

                                                                                                                   
By _/s/ Eileen Quinn____________________

                                                                                                                   
Title: VP

                                                                                                                   
Lenders: National City Commercial Finance, Inc.

                                                                                                                   
[Name of Institution]

                                                                                                                   
By /s/ Gregory A. Godec                                

                                                                                                                   
Title: S.V.P.

                                                                                                                   
Lenders: The CIT Group/Business Credit, Inc.

                                                                                                                   
[Name of Institution]

                                                                                                                   
By /s/ Steven Schuit____________________

                                                                                                                   
Title: Vice President

                                                                                                                            
Team Leader

                                                                                                                   
Lenders: Heller Financial, Inc.__________

                                                                                                                   
[Name of Institution]

                                                                                                                   
By /s/ Arthur Johnston__________________

                                                                                                                   
Title: Vice President

 

CONSENT AND AGREEMENT

Dated as of August 19, 2002

Each of the undersigned, as a Guarantor under the Subsidiary Guaranty dated as
of August 24, 2001 (the "Subsidiary Guaranty"), in favor of the Secured Parties
(as such term is defined in the Credit Agreement), hereby consents and agrees to
the foregoing Letter Amendment and Consent No. 6, and also agrees that
notwithstanding the effectiveness of such Letter Amendment and Consent No. 6,
the Subsidiary Guaranty is, and shall continue to be, in full force and effect
and is hereby ratified and confirmed in all respects, except that, on and after
the effectiveness of such Letter Amendment and Consent No. 6, each reference in
the Subsidiary Guaranty to the "Credit Agreement", "thereunder", "thereof" or
words of like import shall mean and be a reference to the Credit Agreement, as
modified by such Letter Amendment and Consent No. 6.

                                                                                                                           
GNB HOLDING CO., INC.

                                                                                                                           
By /s/ Richard E. Stasyszen

                                                                                                                           
Title: SVP Finance & Controller

 

                                                                                                                           
SPECIALTY RETAILERS, INC.

                                                                                                                           
By /s/ Richard E. Stasyszen

                                                                                                                           
Title: SVP Finance & Controller

 

                                                                                                                           
SRI LIMITED PARTNER LLC

                                                                                                                           
By /s/ Domenic Borriello

                                                                                                                           
Title: Manager

 

                                                                                                                           
SRI GENERAL PARTNER LLC

                                                                                                                           
By /s/ Richard E. Stasyszen

                                                                                                                           
Title: Manager