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EXHIBIT 10.35

SEVENTH AMENDMENT
TO
AMENDED AND RESTATED PRIVATE LABEL
CREDIT CARD PROGRAM AGREEMENT
 
 
This Seventh Amendment to Amended and Restated Private Label Credit Card Program
Agreement ("Seventh Amendment") is entered into as of the 1st day of January,
2009 (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 10201 Main Street, Houston, Texas
77025 (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 3100 Easton Square Place, Columbus, OH
43219 ("Bank").  Stage Stores, Specialty, and Bank are collectively referred to
in this Seventh 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, Stage and Bank now desire to amend the Agreement to amend the Fees
provision of the Agreement; and
 
WHEREAS, the current version of Schedule 1.1 of the Agreement is set forth in
the Fifth Amendment to the Agreement and the Parties wish to amend and restate
Schedule 1.1 as provided herein.
 
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein, the Parties hereto agree as follows:
 
1.  
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.  
Section 3.6(d).  Section 3.6(d) of the Agreement is deleted in its entirety and
replaced with a new Section 3.6(d) as follows:

 
 “(d)  Subject to Applicable Law and the terms and conditions set forth in the
Credit Card Agreement, Bank shall charge each Cardholder a finance charge on the
unpaid balance in their Account at an annual percentage rate equal to 24.99%; a
$1 minimum finance charge; late fees equal to $15 for balances under $250 (for
Peebles Accounts, $20 for balances under $250) and $25 for balances equal to or
greater than $250; and returned check fees equal to $30.  Bank will not impose
an over limit fee. The minimum payment shall be the greater of 1/15th of the
balance or $10, plus any late fee.  Bank will not impose finance charges on
Regular Revolving Purchases in any billing period in which payments received and
credits issued by the payment due date, which will be twenty-five (25) days
after the statement closing date, equals or exceeds the previous balance.  Bank
will not assess late fees unless a required payment is not received by Bank by
the Bank’s billing date.  Bank may make any changes in the terms of the Credit
Card Agreement at any time as required by Applicable Law or safety and soundness
considerations or on an individual Account by Account basis in connection with
its servicing of the Accounts.  With respect to any other changes in terms
affecting the APR, imposition of finance charges, and/or fees charged by Bank as
set forth above Bank will, prior to making any changes, review and discuss such
changes with Stage in order to maximize the potential of the Plan and mutually
benefit Stage and Bank, and will not make such changes without Stage’s prior
written consent unless required by Applicable Law or for Bank’s safety and
soundness.  Bank shall determine the fees associated with Bank’s provision of
services to the Cardholders in connection with the Accounts in accordance with
industry practices, including electronic payments, payments by phone, requests
for excessive research (i.e. multiple statement copies), copies of payments and
Charge Slips.”
 
3.
Schedule 1.1.  Schedule 1.1 shall be amended and restated as attached hereto.

 
4.
Governing Law.  This Seventh Amendment shall be governed by and construed in
accordance with the laws of the State of Ohio.

 
5.
Counterparts; Effectiveness.  This Seventh 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 Seventh Amendment shall be
effective as of the Effective Date set forth in the first paragraph of this
Seventh Amendment.

 
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6.
Entire Agreement. As hereby amended and supplemented, the Agreement shall remain
in full force and effect.

 
 
IN WITNESS WHEREOF, the Parties have caused this Seventh Amendment to be
executed by their duly authorized officers as of the Effective Date.
 
WORLD FINANCIAL NETWORK 
NATIONAL BANK
STAGE STORES, INC.     By:  /s/ Daniel T. Groomes By:  /s/ Richard E. Stasyszen
    Name: Daniel T. Groomes     Name: Richard E. Stasyszen     
Title:  President      Title:  Sr. Vice President - Finance & Controller        
  SPECIALTY RETAILERS, INC.       By: /s/ Richard E. Stasyszen           Name:
Richard E. Stasyszen         Title: Sr. Vice President - Finance & Controller

 
 
 
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Schedule 1.1
 
Discount Rate
 
 
A.
DISCOUNT RATE FOR ACCOUNTS EXCEPT PEEBLES ACCOUNTS

 
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.  The Discount Rate shall be equal to (i)
the Base Discount Rate set forth in (A) (1), subject to any adjustments
described in (A) (2).
 
1.
Base Discount Rate.

 
 
The Base Discount Rate shall be 0% (or zero basis points (bps) for all Regular
Revolving Purchases.

 
2.
Adjustments to Base Discount Rate.

 
           
(a)  Bank shall, at the end of each Plan quarter, calculate the Net Portfolio
Yield. Subject to Section (A) (2) (b) 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 below), Bank shall  also change the Net Portfolio Yield
Range to between 9.9% and 10.9%.

 
 
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.
 
 
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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 divided by 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.
 
For Example:
 
Example 1:
 
 
 

 Collected Finance Charge Yield + Collected Late Fee Yield   = 28.00%  (for
prior 12 months)    Minus Net Principal Write Offs %       = 13.00%  Minus
Weighted Average Prime Rate ÷ average accounts receivable   = 4.25%      Net
Portfolio Yield     = 10.75%      Result:  No change to the Base Discount Rate  

 

 
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Example 2:
 

 Net Portfolio Yield Calculation    Collected Finance Charge Yield + Collected
Late Fee Yield  = 30.00%  (for prior 12 months)    Minus Net Principal Write
Offs %     = 13.25%  Minus Weighted Average prime Rate ÷ Average accounts
receivable     = 4.25%  Net Portfolio Yield   = 12.50%      Accounts Receivable
Turn Calculation    Net Sales:    $430,000,000  Divided by the total average
Principal-Only Accounts Receivable     =$268,000,000  Accounts Receivable
Turn:      =1.6      Discount Rate Adjustor Calculation    Difference between
12.50% Minus 11.00%  = 1.50%  Divided by 2     = 0.75%  Divided by the Account
Receivable Turn of 1.6  = 0.47%      Result: Base Discount Rate is reduced from
0.00% to -0.47%, meaning that Bank shall pay such Discount Fee to Stage.

 
 
Example 3:
 

 Net Portfolio Yield Calculation    Collected Finance Charge Yield + Collected
Late Fee Yield  = 28.00%  (for prior 12 months)    Minus Net Principal Write
Offs %       = 14.25%  Minus Weighted Average prime Rate ÷ Average accounts
receivable    = 4.25%  Net Portfolio Yield      = 9.50%      Accounts Receivable
Turn Calculation    Net Sales:  $430,000,000  Divided by the total average
Principal-Only Accounts Receivable  =$268,000,000  Accounts Receivable Turn:  
 =1.6      Discount Rate Adjustor Calculation    Difference between 9.50% Minus
10.00%   = -0.50%  Divided by 2        = -0.25%  Divided by the Account
Receivable Turn of 1.6    = -0.16%      Result: Base Discount Rate is increased
from 0.00% to 0.16%, meaning that Stage shall pay such Discount Fee to Bank.

 

 
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B.           DISCOUNT RATE FOR PEEBLES ACCOUNTS
 
Unless otherwise revised per the terms of this Section B, the Discount Rate for
Peebles Accounts shall be 0.% (zero bps). After the end of each Plan Year, 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 Bank shall, commencing 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.
 
 
C.           INCREASED APR TRANSITION PERIOD
 
1.           General.
 
The Parties recognize and agree that after the Effective Date the APR shall
increase from 21.6% to 24.99%. The Parties further agree that, for the time
period that this Seventh Amendment applies, Stage shall benefit from finance
charge revenue sooner than would otherwise be the case under the yield share
formula provided for above in this Schedule 1.1. Accordingly, the Parties have
agreed to the provisions of this Section C of Schedule 1.1, which shall apply
only for the time period described herein and only to the Stage Accounts
(unless, under Section B above, the Peebles Accounts would become relevant to
the calculations). In other words, prior to June 30, 2010 and after March 31,
2011, the calculations and payments described in this Section C shall not be
applicable to any Accounts.
 
2.           Definitions.
 
“Actual Discount Rate” shall mean, as to each period for which it applies, the
Discount Rate determined by following the calculations set forth in Section A
above in this Schedule 1.1, which includes accounting for the fact that the APR
of 21.60% changed to 24.99% after the Effective Date.
 
“Actual Finance Charge (or F/C) Yield Revenue" shall mean, as to each period for
which it is calculated, the total collected finance charge yield as calculated
per Section A above in this Schedule 1.1. 

 
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"Baseline Finance Charge (or F/C) Yield Revenue" shall mean, as to each period
for which it is calculated, the amount that is equal to what the Actual F/C
Yield Revenue would have been if the APR were 21.60% at all times.  Said another
way, it is the amount that results from the following calculation: [Actual F/C
Yield Revenue divided by 24.99] x 21.60.  For example, using the hypothetical
figures from the charts set forth on the attached Exhibit 1, if the Actual F/C
Yield Revenue for April 2010 were $4,162,211; then [$4,162,211 divided by 24.99]
= $166,555; [$166,555 x 21.60] = a Baseline F/C Yield Revenue in April of
$3,597,589, as is also set forth in the charts set forth on the attached Exhibit
1.
 
"Baseline Discount Rate" shall mean, as to each period for which it is
calculated, the Discount Rate determined by following the calculations set forth
in Section A above in this Schedule 1.1, except that "Baseline F/C Yield
Revenue" will be substituted for "Actual F/C Yield Revenue" in the calculation.
 
“Incremental Flowthrough” shall mean, as to each month for which it is
calculated, an amount equal to [the Incremental Discount Rate] x [Net Sales].
 
“Incremental Discount Rate” shall mean, as to each month for which it applies,
the Discount Rate equal to [Actual Discount Rate] minus [Baseline Discount
Rate].
 
“Quarterly Pay-out” shall mean, as to each quarterly yield share calculation at
the end of June, September, and December of 2010 and March 2011, respectively,
the amount that is the result of the following calculation: [Actual F/C Yield
Revenue for the prior three (3) months less Baseline F/C Yield Revenue for the
prior three (3) months] = Total Incremental F/C Yield Revenue; Total Incremental
F/C Yield Revenue  x [0.50] = Stage Share; Stage Share minus [Incremental
Flowthrough in the prior three (3) months] = Quarterly Pay-out. Provided,
however, that the Incremental Flowthrough for the June 30, 2010 Quarterly
Pay-out will be zero ($0.00). Therefore, in that one circumstance, the Stage
Share will equal the Quarterly Pay-out amount.
 
“Stage Share” shall mean, as to each period for which it is calculated, an
amount that is equal to one-half (1/2) of the Total Incremental F/C Yield
Revenue for the same time period.  For example, using the hypothetical figures
for April 2010 from the charts set forth on the attached Exhibit 1, the Stage
Share for April 2010 is $282,311, being one-half of the Total Incremental
Finance Charge for April of 2010 ($564,622).
 
“Total Incremental Finance Charge (or F/C) Yield Revenue” shall mean, as to each
period for which it is calculated, the result of the following calculation:
[Actual F/C Yield Revenue] minus [Baseline F/C Yield Revenue]. For example,
using the hypothetical figures for April 2010 set forth in the charts set forth
on the attached Exhibit 1: [Actual F/C Yield Revenue of $ 4,162,211 minus
Baseline F/C Yield Revenue of $3,597,589 = Total Incremental F/C Yield Revenue
of $564,622.
 
3.           Payments to Stage.
 
 
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(Using the hypothetical figures set forth in the tables referenced below for
illustration purposes only)
 
 
(a)  
On June 30, 2010, in compliance with Section A above in this Schedule 1.1, Bank
shall (i) determine the Actual Discount Rate for July through September of 2010
(which in the charts set forth on the attached Exhibit 1 would be 1.82%) . In
addition, Bank shall determine (ii) the June 30, 2010 Quarterly Pay-out, and
(iii) the Baseline and Incremental Discount Rates for July through September
2010.  So, using the hypothetical figures in the charts set forth on the
attached Exhibit 1:

 
(ii)  
Quarterly Pay-out

 
$12,329,082 Actual F/C Yield Revenue for April through June
minus
($10,656,589) Baseline F/C Yield Revenue for April through June
 = $1,672,493 Total Incremental F/C Yield Revenue for April through June
 x [0.50] = $836,246 Stage Share; same as Quarterly Pay-out
 
(iii)  
Other Discount Rates for July through September of 2010

                   
Baseline:  1.58%

                   
Incremental:  0.24% (Actual of 1.82% minus Baseline of 1.58%)

 
 
(c)
On each of September 30 and December 31, 2010, Bank shall repeat the
calculations and payments as described in subsection (b) immediately above,
based on the actual data applicable at that time, except that the
Quarterly-Payouts will take into account Incremental Flowthrough for the subject
period. For instance, using the hypothetical figures in the charts set forth on
the attached Exhibit 1 and applying them to September 30, 2010:

 
(i)  
Actual Discount Rate for October through December 2010: 1.90%

 
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(ii)  
Quarterly Pay-out

  $12,519,314 Actual F/C Yield Revenue for July through September
  minus
  ($10,821,016) Baseline F/C Yield Revenue for July through September
  = $1,698,298 Total Incremental F/C Yield Revenue for July through September
  x [0.50] = $849,149 Stage Share
  minus
  ($67,145) July Incremental Flowthrough  (Net Sales of $27,977,153 x. 0.24%)
  ($83,256) Aug. Incremental Flowthrough) (Net Sales of $34,689,800 x. 0.24%)
($56,357)  Sept. Incremental Flowthrough  (Net Sales of $23,482,208 x. 0.24%)
  = $642,391 Quarterly Pay-out for September 30, 2010
 
(iii)  
Other Discount Rates for October through December 2010

                   
Baseline:  1.42%

                   
Incremental:  0.48% (Actual of 1.90% minus Baseline of 1.42%)

 
 
(d)
On March 31, 2011 Bank shall also calculate the Quarterly Pay-out (which
calculation shall include Incremental Flowthrough). Otherwise, Bank shall follow
the procedures set forth in Section A above in this Schedule 1.1. For instance,
the Discount Rate to be applied for April through June 2011 will not be referred
to as the Actual Discount Rate, and Bank shall neither calculate nor apply a
Baseline Discount Rate or Incremental Discount Rate.

 

 
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Exhibit 1
 
 
Month
Actual F/C Yield Revenue
Baseline F/C Yield Revenue
Total Incr. F/C Yield Revenue
Stage Share
Incremental Flow-Through
Net
Quarterly Pay-out
Apr-10
 $     4,162,211
 $     3,597,589
 $        564,622
 $        282,311
 $                    -  
 $        282,311
 
May-10
 $     4,056,652
 $     3,506,350
 $        550,302
 $        275,151
 $                    -  
 $        275,151
 
Jun-10
 $     4,110,219
 $     3,552,650
 $        557,569
 $        278,784
 $                    -  
 $        278,784
 $        836,246
Jul-10
 $     4,193,125
 $     3,624,310
 $        568,815
 $        284,408
 $           67,145
 $        217,263
 
Aug-10
 $     4,097,417
 $     3,541,585
 $        555,832
 $        277,916
 $           83,256
 $        194,661
 
Sep-10
 $     4,228,772
 $     3,655,121
 $        573,651
 $        286,825
 $           56,357
 $        230,468
 $        642,391
Oct-10
 $     4,225,954
 $     3,652,685
 $        573,269
 $        286,634
 $        123,989
 $        162,645
 
Nov-10
 $     4,177,188
 $     3,610,534
 $        566,653
 $        283,327
 $        162,731
 $        120,596
 
Dec-10
 $     4,263,710
 $     3,685,320
 $        578,390
 $        289,195
 $        279,155
 $           10,041
 $        293,281
Jan-11
 $     4,577,766
 $     3,956,773
 $        620,994
 $        310,497
 $        136,058
 $        174,438
 
Feb-11
 $     4,781,553
 $     4,132,915
 $        648,638
 $        324,319
 $        135,586
 $        188,733
 
Mar-11
 $     4,255,055
 $     3,677,838
 $        577,216
 $        288,608
 $        194,058
 $           94,550
 $        457,722
Total
   
 $     6,935,951
 $     3,467,976
 $     1,238,335
 
 $     2,229,640
               

 

 
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Exhibit 1, Cont’d.
 
Month
Actual Discount Rate (%)
Baseline Discount Rate (%)
Incremental Discount Rate (%)
Net Sales
Incremental Flow-Through
Apr-10
1.57%
1.57%
0.00%
 $   26,485,232
 $                    -  
May-10
1.57%
1.57%
0.00%
 $   33,379,800
 $                    -  
Jun-10
1.57%
1.57%
0.00%
 $   27,132,865
 $                    -  
Jul-10
1.82%
1.58%
0.24%
 $   27,977,153
 $           67,145
Aug-10
1.82%
1.58%
0.24%
 $   34,689,800
 $           83,256
Sep-10
1.82%
1.58%
0.24%
 $   23,482,208
 $           56,357
Oct-10
1.90%
1.42%
0.48%
 $   25,831,140
 $        123,989
Nov-10
1.90%
1.42%
0.48%
 $   33,902,256
 $        162,731
Dec-10
1.90%
1.42%
0.48%
 $   58,157,215
 $        279,155
Jan-11
1.96%
1.24%
0.72%
 $   18,896,999
 $        136,058
Feb-11
1.96%
1.24%
0.72%
 $   18,831,357
 $        135,586
Mar-11
1.96%
1.24%
0.72%
 $   26,952,516
 $        194,058
Total
       
 $     1,238,335
                       

 
 

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