EXHIBIT 4.1
THIRD AMENDMENT AGREEMENT
This THIRD AMENDMENT AGREEMENT, dated as of October 7,
1998 (the "Agreement"), is among Specialty Retailers, Inc. (the
"Borrower"), Stage Stores, Inc. (the "Parent"), the banks named
therein (the "Banks") and Credit Suisse First Boston, as
Administrative Agent, Collateral Agent, Swingline Bank and L/C Bank
(the "Administrative Agent").
PRELIMINARY STATEMENT
WHEREAS, the Borrower, the Parent, the Banks and the Administrative
Agent are parties to the Credit Agreement, dated as of June 16, 1997 (the
"Credit Agreement");
WHEREAS, the Borrower has requested the amendment of
certain provisions set forth in the Credit Agreement;
WHEREAS, the Banks have agreed to amend the specific provisions set
forth herein under the terms and conditions set forth herein;
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. SECTION DEFINED TERMS. Capitalized terms used and not defined herein shall
have the meanings assigned to such terms in the Credit Agreement.
2.
3. SECTION AMENDMENTS. The Banks hereby agree to amend the Credit Agreement as
follows:
4.
(a) Section 1.1 of the Credit Agreement is hereby amended by deleting the
definition of "Consolidated EBITDA" in its entirety and replacing it with the
following:
(b)
(c) ""Consolidated EBITDA" shall mean, for any period, the sum, without
duplication, of (i) Consolidated Net Income for such period PLUS (ii)
Consolidated Interest Expense for such period PLUS (iii) amortization of
deferred Indebtedness issuance costs and expenses for such period PLUS (iv)
federal and state income taxes deducted in calculating Consolidated Net Income
for such period, PLUS (v) to the extent deducted in the calculation of
Consolidated Net Income for such period, depreciation and amortization expense
PLUS (vi) to the extent deducted in the calculation of Consolidated Net Income
for such period, any noncash charges related to the issuance by the Parent or
any of its Subsidiaries of stock, warrants or options to any employee thereof
(or any exercise of any such warrants or options) or any re-valuation of such
stock, warrants or options, MINUS to the extent added to the calculation of
Consolidated Net Income for such period, any non-
cash gain related to the issuance by the Parent or any of its Subsidiaries of
stock, warrants or options to any employee thereof (or any exercise of any such
warrants or options) or any re-valuation of such stock, warrants or options, all
determined on a consolidated basis for the Parent and its Subsidiaries in
accordance with GAAP."
(d)
(e) Section 1.1 of the Credit Agreement is hereby amended by deleting the
definition of "Consolidated Interest Expense" in its entirety and replacing it
with the following:
(f)
(g) ""Consolidated Interest Expense" shall mean, for any fiscal period of the
Parent, the total interest expense (including, without limitation, interest
expense attributable to Capital Leases in accordance with GAAP) of the Parent
and its Subsidiaries for such period, MINUS all interest earnings received by
the Parent and its Subsidiaries in cash during such period, minus amortization
of deferred Indebtedness issuance costs and expenses for such period, in each
case determined on a consolidated basis in accordance with GAAP."
(h)
(i) The definition of "Consolidated Net Income" in Section 1.1 of the Credit
Agreement is hereby amended by adding the following at the end of clause (e):
(j)
"and there shall be included all restructuring charges taken by the
end of the fourth quarter of fiscal year 1998 of up to $16,000,000
of which no more than $2,500,000 is permitted to be charges which
will be settled by the Borrower by making cash payments to any third
party ("Cash Closure Charges"), determined on a consolidated basis
for the Parent and its Subsidiaries in accordance with GAAP"
(a) The definition of "Excess Cash Flow" in Section 1.1 of the Credit Agreement
is hereby amended by (i) inserting the words "plus amortization of deferred
Indebtedness issuance costs and expenses for such period" after the words
"fiscal period" in clause (iii) of the definition, (ii) inserting the words ",
Retained Offering Proceeds" after the words "Retained Equity Proceeds" within
the parenthetical of clause (vi) of the definition and (iii) by adding the
following at the end of clause (ix):
(b)
"MINUS (x) Cash Closure Charges of up to $2,500,000
taken by the end of the fourth quarter of fiscal year
1998"
(a) Section 1.1 of the Credit Agreement is hereby amended by adding the
following definition in correct alphabetical order:
(b)
(c) ""Permitted Senior Debt" shall mean unsecured Indebtedness of the Borrower
if (i) such Indebtedness has no amortization or required sinking fund pay-
ments and a final maturity no earlier than, and provisions no more onerous or
restrictive on the Borrower and no less favorable to the Banks in any respect
deemed material by the Required Banks than, those terms and provisions of the
Senior Notes, (ii) the interest rate payable in respect of such Indebtedness
shall be a market interest rate as of the time of the incurrence thereof and
shall not, in case of Indebtedness bearing interest at a floating rate, exceed
the rate of interest payable on the Loans and Swingline Loans, (iii) each of the
covenants, events of default and other provisions thereof shall be customary for
issuances of similar indebtedness by companies in a similar financial condition
to the Borrower in accordance with prevailing market conditions in effect at the
time of the issuance thereof and in any event shall be no more onerous or
restrictive on the Borrower than those contained in the Senior Notes and (iv)
the Net Cash Proceeds thereof shall have been applied to the prepayment of the
Loans to the extent provided in Section 2.12(b)."
(d)
(e) Section 1.1 of the Credit Agreement is hereby amended by adding the
following sentence to the end of the definition of "Retained Equity Proceeds":
(f)
(g) "Notwithstanding the foregoing, only 75% of the first $50,000,000 of Net
Cash Proceeds received from New Equity Issuances during the period from
September 30, 1998 through January 31, 2000, shall be included in Retained
Equity Proceeds."
(h)
(i) Section 1.1 of the Credit Agreement is hereby amended by adding the
following definition in the correct alphabetical order:
(j)
(k) ""Retained Offering Proceeds" shall mean at any time the cumulative amount
of (i) 30% of the Net Cash Proceeds received by the Borrower from the issuance
of Permitted Senior Debt and (ii) 40% of the Net Cash Proceeds received by the
Borrower from the issuance of Permitted Subordinated Debt, in each case, to the
extent such Net Cash Proceeds are not required to be applied to the prepayment
of the Loans and Swingline Loans pursuant to Section 2.12(b) MINUS the amount
thereof previously applied to make additional Capital Expenditures pursuant to
Section 6.1(d)."
(l)
(m) Section 2.12(e) of the Credit Agreement is hereby amended by adding the
following new sentence at the end thereof:
(n)
(o) "Notwithstanding the foregoing, for the period from October 7, 1998 through
January 31, 2000, no prepayment of Expansion Loans under this Section 2.12(e)
shall be required for the first $50,000,000 of Net Cash Proceeds received by the
Parent or any of its Subsidiaries from Equity Issuances other than Equity
Issuances in connection with the exercise of outstanding options, warrants,
purchase rights or conversion rights ("New Equity Issuances") during such
period. The amount of Net Cash Pro-
ceeds received from New Equity Issuances in excess of $50,000,000 during this
period shall be applied in accordance with the first sentence of this Section
2.12(e)."
(p)
(q) Section 6.1(a)(i) of the Credit Agreement is hereby amended by deleting the
grid set forth therein and replacing it with the following:
(r)
DATE RATIO
--------- -----
October 31, 1998 ................................... 5.1:1
From January 31, 1999 until the
third anniversary of the Closing Date ............ 4.5:1
From the third anniversary of the
Closing Date and thereafter ...................... 4.0:1
(a) Section 6.1(b) of the Credit Agreement is hereby amended by deleting the
grid set forth therein and replacing it with the following:
(b)
DATE RATIO
---------- ------
October 31, 1998 .................................. 2.25:1
January 31, 1999 .................................. 2.25:1
April 30, 1999 .................................... 2.25:1
From July 31, 1999 until the
third anniversary of the Closing Date ........... 2.5:1
From the third anniversary of the
Closing Date and thereafter ..................... 3.0:1
(a) Section 6.1(d) of the Credit Agreement is hereby amended by (i) deleting the
number "$63,000,000" opposite the year 1999 and replacing it with the number
"$50,000,000", (ii) inserting the words "other than in fiscal year 1999" after
the words "fiscal year" in the third line of the first proviso and after the
words "fiscal year" in the seventh line of the proviso, (iii) inserting the
words "and Retained Offering Proceeds" after the words "Retained Equity
Proceeds" in clause (b) of the first proviso and (iv) adding at the end thereof
the following:
(b)
(c) "During the fiscal year of the Parent ending closest to December 31, 1999,
the usage of the maximum dollar amount set forth above is restricted in the
fol-
lowing manner: (i) a maximum of $20,000,000 may be used to finance capital
expenditures for maintenance of existing stores and central offices and (ii) a
maximum of $5,000,000 in the aggregate may be used to finance capital
expenditures for new stores; PROVIDED HOWEVER, that the sum of capital
expenditures for (i) and (ii) shall not exceed $12,000,000 in the first fiscal
quarter of fiscal year 1999. In addition, if (a) the average outstanding Loans
during December, 1998 and January, 1999 is less than $125,000,000 and (b) the
Parent has Consolidated EBITDA in excess of $70,000,000 on a combined basis in
the third and fourth fiscal quarters of fiscal year 1998, then the Borrower
shall be permitted to make additional capital expenditures for new stores during
fiscal year 1999 in an amount not to exceed $5,000,000 in the aggregate. Subject
to the maximum dollar amount set forth above opposite the year 1999, during
fiscal year 1999, the Borrower shall be permitted to apply up to 30% of the Net
Cash Proceeds of the issuance of Permitted Senior Debt, 40% of the Net Cash
Proceeds of the issuance of Permitted Subordinated Debt and, to the extent
permitted under Section 2.12(e), 75% of the Net Cash Proceeds of an Equity
Issuance to finance capital expenditures."
(d)
(e) Section 6.2(e) of the Credit Agreement is hereby amended by adding after the
words "Permitted Subordinated Debt" the words "or Permitted Senior Debt".
(f)
(g) Except as otherwise specified above, there is no amendment of any other
term, condition or provision of the Credit Agreement all of which are hereby
ratified and confirmed by the Borrower and the Parent.
(h)
2. SECTION REPRESENTATIONS AND WARRANTIES; NO DEFAULTS. Each Loan Party hereby
represents and warrants that after giving effect to the amendments set forth in
Section 2 of this Agreement, (a) the representations and warranties contained in
the Credit Agreement and Loan Documents are correct on the effective date of
this Agreement, and (b) no Default or Event of Default has occurred or is
continuing on the date hereof and on the effective date of this Agreement.
3.
4. SECTION COUNTERPARTS. This Agreement (a) may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which taken
together shall constitute one and the same instrument, (b) shall be effective
only in this specific instance for the specific purpose set forth herein, and
(c) does not allow any other or further departure from the terms of the Credit
Agreement or the Loan Documents, which terms shall continue in full force and
effect.
5.
6. SECTION CONDITIONS TO EFFECTIVENESS. This Agreement shall become effective as
of the date hereof when (a) copies hereof, when taken together, bearing the
signatures of each of the Loan Parties and the Required Banks have been received
by the Administrative Agent and (b) an amendment fee of 0.25% of the Commit-
ments of the Banks who have returned executed signature pages of this Agreement
to the Administrative Agent by 5:00 p.m. New York City time on Wednesday,
October 7, 1998 has been received from the Borrower by the Administrative Agent.
7.
8. SECTION APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their duly authorized officers, all as of the date and year
first written above.
SPECIALTY RETAILERS, INC.
By: /S/ XXXX XXXX
Name: Xxxx Xxxx
Title: Treasurer
STAGE STORES, INC.
By: /S/ XXXX XXXX
Name: Xxxx Xxxx
Title: Treasurer
CREDIT SUISSE FIRST BOSTON,
as Administrative Agent, Collateral Agent,
Swingline Bank and L/C Bank
By: /S/ XXXXX X. XXXXXX
Name: Xxxxx X. Xxxxxx
Title: Vice President
By: /S/ XXXXXXX X. XXXXX
Name: Xxxxxxx X. Xxxxx
Title: Vice President
BEAR XXXXXXX INVESTMENT PRODUCTS INC.
By: /S/ XXXXX XXXXXXXXX
Name: Xxxxx Xxxxxxxxx
Title: Authorized Signatory
BANK UNITED
By: /S/ XXXX XXXXX
Name: Xxxx Xxxxx
Title: Director, Financial Markets
BANQUE WORMS CAPITAL CORPORATION
By: /S/ F. GARNET
Name: F. Garnet
Title: Senior Vice President
By: /S/ X. XXXXXXX
Name: X. xxXxxxx
Title: Vice President
PARIBAS (f/k/a BANQUE PARIBAS HOUSTON AGENCY)
By: /S/ XXXXXX XXXXXXX
Name: Xxxxxx Xxxxxxx
Title: Assistant Vice President
By: /S/ XXXXXX X. XXXXXXXX
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
BANK AUSTRIA CREDITANSTALT CORPORATION
FINANCE, Inc. F.K.A. Creditanstalt
Corporation Finance, Inc.
By: /S/ XXXX X. XXXXX
Name: Xxxx X. Xxxxx
Title: Vice President
By: /S/ XXXX X. XXXXXX
Name: Xxxx X. Xxxxxx
Title: Senior Associate
HIBERNIA NATIONAL BANK
By: /S/ XXXX X. XXXXXXXXXX
Name: Xxxx X. Xxxxxxxxxx
Title: Senior Vice president
IMPERIAL BANK, A CALIFORNIA BANKING CORPORATION
By: /S/ XXXXX XXXXXX
Name: Xxxxx Xxxxxx
Title: Vice President
ROYAL BANK OF SCOTLAND
By: /S/ XXXXX XXXXXX
Name: Xxxxx Xxxxxx
Title: Vice President
THE FUJI BANK, LIMITED
By: /S/ XXXXX XXXXXXXX
Name: Xxxxx Xxxxxxxx
Title: Vice President & Manager
UNION BANK OF CALIFORNIA, N.A.
By: /S/ XXXXXXX X. XXXXXX
Name: Xxxxxxx X. Xxxxxx
Title: Vice President
FIRST COMMERCIAL BANK
By: /S/ XXXXXXX X. X. XXXX
Name: Xxxxxxx X. X. Xxxx
Title: Senior Vice President And
General Manager
