RETIREMENT AGREEMENT

EXHIBIT 10.1

This Retirement Agreement (hereinafter the “Agreement”) is made between Xxxxxx Xxxxxxxxx (hereinafter “Xx. Xxxxxxxxx”), an individual, on behalf of himself and his heirs and representatives, and Stage Stores, Inc., a Nevada corporation, including its officers, directors, members, employees, affiliates, agents, subsidiaries, attorneys, benefit plans and plan administrators, joint ventures, successors and/or assigns (hereinafter collectively referred to as “Stage”). Xx. Xxxxxxxxx and Stage are collectively referred to in this Agreement as the “Parties”.

In consideration of the covenants and agreements set forth in this Agreement, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Xx. Xxxxxxxxx and Stage, intending to be legally bound, agree as follows:

1. Employment Agreement. Xx. Xxxxxxxxx and Stage are parties to an Employment Agreement dated January 30, 2002 (the “Employment Agreement”). Terms not otherwise defined in this Agreement shall have the definitions given to them in the Employment Agreement.

2. Nature of Release. This Agreement terminates the Employment Agreement and resolves all past, pending, threatened, or possible claims, if any there be, arising under any state, federal or other law by Xx. Xxxxxxxxx, his heirs and assigns and any derivative claims against Stage, its parent, subsidiaries, related companies, or any Stage related entity or its current and/or former officers, directors, members, attorneys, agents and employees, arising out of the Employment Agreement, any other agreement to which Xx. Xxxxxxxxx and Stage are parties (other than as described in Section 21 or specifically elsewhere herein), or any other terms or conditions of Xx. Xxxxxxxxx’x employment with Stage.

3. Employment. Xx. Xxxxxxxxx acknowledges that his employment with Stage will terminate of his own voluntary action effective October 10, 2008 (the “Retirement Date”). The execution of this Agreement by Xx. Xxxxxxxxx shall evidence Xx. Xxxxxxxxx’x resignation and retirement from his capacities as Executive Vice President, Chief Operating Officer of the Xxxxxxx Division of Stage as of the Retirement Date.

4. Confidentiality of this Agreement. Xx. Xxxxxxxxx agrees he will maintain the terms of this Agreement in confidence in all circumstances and that Xx. Xxxxxxxxx shall only apprise his immediate family and his chosen accountant and/or legal representative to the extent necessary to perform services of the terms and conditions of this Agreement except as it is necessary in the enforcement of this Agreement. Xx. Xxxxxxxxx shall also advise any member of his immediate family and his chosen accountant and/or legal representative who is apprised of the terms of this Agreement of the confidential nature of that information, and any disclosure of the information by one of those individuals to third parties shall be considered a breach of this Agreement by Xx. Xxxxxxxxx and have the same consequences. Notwithstanding the foregoing, Xx. Xxxxxxxxx acknowledges that, if required, this Agreement will be filed by Stage with the Securities and Exchange Commission.

5. Non-Admission. The Parties acknowledge that this Agreement evidences their mutual agreement regarding Xx. Xxxxxxxxx’x voluntary termination of their employment relationship and is not an admission of any wrongdoing or liability on the part of Stage or Xx. Xxxxxxxxx.

6. Texas Contract. The Parties agree that this Agreement constitutes a contract to be governed by the laws of the State of Texas without regard to the laws of any other location. The Parties agree that they shall be subject to Texas jurisdiction (including, as applicable, either a Texas state or federal court in Xxxxxx, County or a duly appointed arbitrator) for any action to enforce this Agreement or to remedy any breach of this Agreement.

7. Health Insurance. Xx. Xxxxxxxxx shall have the right to continue his medical coverage under the terms of his current Stage executive group medical plan for a one year period ending October 10, 2009, after which time he shall have the right to continue medical coverage under the terms of the Stage group medical plan applicable to its retired senior executives; provided, however, in the event Xx. Xxxxxxxxx accepts full time employment subsequent to the Retirement Date, he shall no longer have the right to continue that medical coverage.

8. Life Insurance. Xx. Xxxxxxxxx’x life insurance coverage through Stage will end at 12:01 a.m. local time on October 12, 2008. Conversion options are available and will be made known to him through the insurance carrier.

9. Retirement Payments. Exclusive of any other consideration or benefit to Xx. Xxxxxxxxx set forth in this Agreement, in consideration of the agreements made herein and as set forth in Sections 4.3.1 and 4.3.2 of the Employment Agreement, Stage agrees to pay Xx. Xxxxxxxxx the following amounts, in each case less applicable payroll taxes, withholding and other deductions, which may be required to be withheld under any provision of applicable laws, agreements or as otherwise requested by Xx. Xxxxxxxxx:

(a)

$688,000, representing one (1) times the aggregate of (x) his Base Salary plus (y) the Incentive Compensation at the Target Rate as of the Retirement Date, which shall be paid to Xx. Xxxxxxxxx in regular installments over a twelve month period, commencing from the Retirement Date in accordance with Stage’s general payroll practices,

(b)

Any Incentive Compensation for Stage’s current fiscal year, pro-rated through the Retirement Date, to which Stage’s Board of Directors determines Xx. Xxxxxxxxx is entitled, which shall be paid to Xx. Xxxxxxxxx in a lump sum on or about April 1, 2009, and

(c)

$200,000, representing a Retirement Bonus, which shall be paid to Xx. Xxxxxxxxx in one lump sum on or before November 10, 2008.

10. Arbitration. The Parties acknowledge that their employment relationship and this Agreement relate to interstate commerce and agree that any disputes, claims or controversies between them which may arise out of their employment relationship and/or this Agreement shall be settled by arbitration. Any arbitration shall be in accordance with the Rules of the American Arbitration Association governing individual employee agreements and shall be undertaken pursuant to the Federal Arbitration Act. Arbitration will be held before a single arbitrator in Xxxxxx County, Texas unless the Parties mutually agree on another location. The decision of the arbitrator will be enforceable in any court of competent jurisdiction. The arbitrator may award costs and attorneys’ fees in connection with the arbitration to the prevailing party; however, in the arbitrator’s discretion, each party may be ordered to bear that party’s own costs and attorneys’ fees to the extent a court of competent jurisdiction would have such discretion. The Parties agree that the arbitrator shall have the authority to award all legal and equitable relief that could be awarded by a court of competent jurisdiction; however, nothing in this Agreement to arbitrate shall preclude Stage from obtaining injunctive relief or other equitable relief from a court of competent jurisdiction prohibiting any on-going breaches of this Agreement by Xx. Xxxxxxxxx while the arbitration is pending.

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11. Return of Property. Xx. Xxxxxxxxx shall deliver to Stage at 00000 Xxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, Attention: Chief Executive Officer, on or before the Retirement Date, any and all property of Stage, including but not limited to keys, computers, credit cards, company car, documents (including Confidential Information as defined herein and as described in Section 14) and/or any other company property in Xx. Xxxxxxxxx’x possession or control.

12. Taxes. The Parties agree that all income and other applicable tax liabilities, if any (including excise taxes and assessed interest and penalties), related to this Agreement, are to be paid by the respective party.

13. No Disparagement. Xx. Xxxxxxxxx and Stage agree not to engage in any disruptive or disparaging activities, directly and/or indirectly, concerning each other. This includes, but is not limited to, disparaging comments, correspondence or conversations with any and all persons; provided, however, this Section 13 shall not prevent either party from testifying truthfully if compelled to do so by subpoena, court order, or other legal process, after providing written notice to the other party.

14. Confidential Information. Xx. Xxxxxxxxx acknowledges that the information, observations and data obtained by him while employed by Stage concerning the business affairs of Stage (“Confidential Information”) are the property of Stage. Xx. Xxxxxxxxx shall not disclose to any unauthorized person, or use for Xx. Xxxxxxxxx’x own purposes, any Confidential Information without the prior written consent of Stage’s Chief Executive Officer or its Board of Directors, unless and to the extent that the aforementioned matters become generally known to, and available for use by, the public other than as a result of Xx. Xxxxxxxxx’x acts or omissions. Xx. Xxxxxxxxx shall deliver to Stage at 00000 Xxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, Attention: Chief Executive Officer, on or before the Retirement Date, all memoranda, notes, plans, records, reports, computer tapes, printouts and software and other documents and data (including any and all copies thereof) relating to or containing any portion of the Confidential Information, or relating to the business of Stage which he may then possess or have under his control.

15. Protection of Confidential Information. Xx. Xxxxxxxxx agrees that, due to his access to the Confidential Information, he would inevitably use and/or disclose that Confidential Information in breach of his confidentiality and non-disclosure obligations if he worked in certain capacities or engaged in certain activities for a period of time following his employment with Stage as an employee or consultant or on behalf of a Comparable Business in a position that involves (i) responsibility and decision-making authority or input at the executive level regarding any subject or responsibility, (ii) decision-making responsibility or input at any management level in Xx. Xxxxxxxxx’x individual area of assignment with Stage, or (iii) responsibility and decision-making authority or input that otherwise allows the use of the Confidential Information (collectively referred to as the “Restricted Occupation”). Therefore, except with the prior written consent of Stage, for the period of one year from the Retirement Date, Xx. Xxxxxxxxx agrees not to be employed by, consult for or otherwise act on behalf of any Comparable Business in any capacity in which he would be involved, directly or indirectly, in a Restricted Occupation. As used in this Agreement, a “Comparable Business” means any business that (a) operates apparel stores in small markets (i.e., with populations of less than 50,000), and (b) operates a significant number of its apparel stores (25% or more of its total apparel stores) in 10,000-30,000 square foot formats, and (c) has sales in excess of $10 million per annum. Xx. Xxxxxxxxx acknowledges that this commitment is intended to protect the Confidential Information and is not intended to be applied or interpreted as a covenant against competition.

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16. Non-Solicitation. Xx. Xxxxxxxxx agrees that, for a period of one year from the Retirement Date, he shall not directly or indirectly, on his own behalf or for any other person or entity, induce or attempt to induce any employee of Stage to leave the employ of Stage, hire any person who is an employee of Stage as of or immediately prior to the time of such hiring, or induce or attempt to induce any manufacturers’ representative, customer, supplier, licensee, agent or any other person or entity having a business relationship with Stage to cease doing business with or reduce the volume of its business with Stage.

17. Damages. Notwithstanding anything in Section 10, because of the difficulty of measuring economic losses to Stage as a result of any breach of this Agreement by Xx. Xxxxxxxxx, and because of the immediate and irreparable damage that could be caused to Stage by such a breach for which it would have no other remedy, Xx. Xxxxxxxxx agrees that Stage may enforce the provisions of this Agreement by injunctions and restraining orders against Xx. Xxxxxxxxx for such a breach in a court of competent jurisdiction pending arbitration, in addition to any other available relief at law or equity. Also, should Xx. Xxxxxxxxx breach this Agreement, (i) any amounts paid by Stage to Xx. Xxxxxxxxx under Section 9 before the breach occurred must be refunded to Stage by Xx. Xxxxxxxxx within thirty (30) days of the breach and (ii) any long-term incentive awards described in Section 21 shall be forfeited. In any action to enforce this Agreement, the prevailing party shall be entitled to recover its costs and a reasonable attorney’s fee.

18. Release. As a material inducement to Stage to enter into this Agreement, Xx. Xxxxxxxxx hereby unconditionally releases and forever discharges Stage and each of its owners, predecessors, successors, assigns, agents, directors, officers, employees, representatives, attorneys, accountants, divisions, subsidiaries, affiliates, and all persons acting by, through, under or in concert with any of them for any and all charges, complaints, claims, liabilities, obligations, promises, agreement, controversies, damages, actions, causes of action, suits, rights, demands, cost, losses, debts and expenses (including attorneys’ fees and costs actually incurred) of any nature whatsoever, known or unknown, suspected or unsuspected, including but not limited to rights under any and all federal, state or local laws prohibiting discrimination, breach of contract or public policy, wrongful or retaliatory discharge, defamation, personal or business injury claims growing out of any legal restrictions on Stage’s right to terminate its employees that Xx. Xxxxxxxxx now has, or holds or claims to have owned or held or which Xx. Xxxxxxxxx would at any time heretofore have had, owned or held against Stage or any Stage related entity arising before or as of the Effective Date. This specifically includes, without limitation, the federal Age Discrimination and Employment Act of 1967 (“ADEA”), as amended, and all comparable state or local laws prohibiting discrimination in employment based on age. Xx. Xxxxxxxxx hereby expressly waives the benefit of any statute or rule of law which, if applied to this Agreement, would otherwise exclude from its binding effect any claims not now known by Xx. Xxxxxxxxx to exist.

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To comply with the Older Worker’s Benefit Protection Act of 1990 (the “Act”), Stage has advised Xx. Xxxxxxxxx of the legal requirements of the Act and fully incorporates the legal requirements of the Act by reference into this Agreement as follows:

This Agreement is written in xxxxxx’x terms, and Xx. Xxxxxxxxx represents that he understands and comprehends its terms;

Xx. Xxxxxxxxx has been advised of his rights to consult an attorney to review this Agreement and have the benefit of an attorney through the settlement process;

Xx. Xxxxxxxxx does not waive any rights or claims that may arise after the date this Agreement is executed;

Xx. Xxxxxxxxx affirms that he is receiving consideration beyond anything of value to which he is already entitled; and

Xx. Xxxxxxxxx has been given a reasonable period of time to consider this Agreement.

19. Consideration Period, Limited Revocation And Effective Date. The Parties agree that Xx. Xxxxxxxxx was provided at least twenty-one (21) calendar days during which to consider whether to sign this Agreement. The signed Agreement must be delivered to Stage Stores, Inc., 00000 Xxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, Attention: Chief Executive Officer, no later than 5:00 p.m. C.S.T., on November 1, 2008. In any event, Xx. Xxxxxxxxx will have seven (7) calendar days from the date he signs and delivers a copy of this Agreement to Stage Stores, Inc., 00000 Xxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, Attention: Chief Executive Officer, during which Xx. Xxxxxxxxx may revoke this Agreement by delivering a signed and dated notice of revocation to Stage Stores, Inc., 00000 Xxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, Attention: Chief Executive Officer. This Agreement becomes effective and enforceable when the seven (7) day revocation period has expired if Xx. Xxxxxxxxx has not delivered a written revocation to Stage Stores, Inc., 00000 Xxxx Xxxxxx, Xxxxxxx, Xxxxx 00000, Attention: Chief Executive Officer, before that date (the “Effective Date”).

20. Payment Of Other Compensation. Xx. Xxxxxxxxx acknowledges that except as set forth in Section 9, all compensation normally due him at the time of his retirement will be paid by Stage within fourteen (14) calendar days from the Retirement Date. Except as set forth in Section 9, any other benefits to which Xx. Xxxxxxxxx may be entitled shall be distributed in accordance with the terms of the individual plan documents.

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21. Long-Term Incentive Awards. The Parties acknowledge and agree that pursuant to the terms and conditions of various award agreements (a) Xx. Xxxxxxxxx is fully vested in long-term incentive awards as set forth in Exhibit A to this Agreement, (b) Exhibit A is accurate and complete, and (c) Xx. Xxxxxxxxx is not entitled to any other long-term incentive awards. With respect to the Stock Options and Stock Appreciation Rights set forth in Exhibit A, Xx. Xxxxxxxxx acknowledges that he will have one year from the Retirement Date (until October 10, 2009) to exercise them, after which they shall be forfeited. Notwithstanding anything to the contrary in this Section 21, Xx. Xxxxxxxxx understands and acknowledges that in the event that he accepts full time employment in the retail industry after sixty (60) days from the Retirement Date and prior to October 10, 2009, he will forfeit the right to exercise any of the vested long-term incentive awards set forth in Exhibit A and the related various award agreements shall be null and void as of the first day of the full time employment. Xx. Xxxxxxxxx agrees that within five business days after he accepts full time employment of any kind, he must give written notice to the Executive Vice President-Human Resources at Stage.

22. Exchange Act Compliance. Xx. Xxxxxxxxx acknowledges (a) that as an officer of Stage he has received a copy of the Company’s 2008 Xxxxxxx Xxxxxxx and Reporting Policy (For Directors, Executive Officers and Principal Shareholders) (the “Policy”) and that he is a Section 16(a) Reporting Person as identified on Exhibit A to the Policy, (b) that pursuant to Section 16(b) of the Securities Exchange Act of 1934, as amended (“Section 16(b)”), directors, officers and principal shareholders must disgorge profits received in the event they purchase and sell, or sell and purchase, Stage’s common stock or other equity securities within a six month period (any transaction executed within six months of an opposite transaction) (“short-swing profits”), (c) that the exercise of a stock option and the sale of the stock acquired does not trigger liability for short-swing profits; however, the sale of the stock acquired from the exercise of a stock option by a former officer or director of Stage will be matched against all purchases of Stage stock within six months prior to the date of sale of the stock acquired from exercise of the stock option and is therefore reportable under Section 16(a) on Form 4; and Section 16(b) remains applicable to former officers and directors for a period of six months after they cease to be in those positions, (d) it is becoming common practice for shareholders of public companies and their counsel to monitor transactions reported to the SEC by directors, officers and principal shareholders of those public companies in an effort to cause the disgorgement of profits made by those persons, (e) in addition to the disgorgement of profits, those shareholders also seek the reimbursement of their attorneys fees related to their investigation of Section 16(b) violations even if a lawsuit is not filed to recover the profits, and (f) directors and officers may also be subject to SEC or court imposed civil penalties of up to $100,000. Therefore, Xx. Xxxxxxxxx acknowledges and agrees as follows:

Transactions by him after the Retirement Date that occur within six months of an opposite transaction that occurred before the Retirement Date must be reported by him on a Form 4, the preparation and electronic filing with the SEC of which he agrees to be solely responsible,

Transactions by him after the Retirement Date that do not occur within six months of an opposite transaction that occurred before the Retirement Date do not have to be reported on a Form 4,

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He need not file a Form 4 solely to indicate his resignation, and

He will indemnify Stage against, and immediately reimburse Stage for, any losses, including attorney’s fees, Stage may incur as a result of any violation by him of Section 16(b).

23. Terms of This Agreement are Severable. If any provision of this Agreement is held invalid, the invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provision or applications; and to this end the provisions of this Agreement are declared to be severable.

24. Entire Agreement. The Parties agree that this Agreement contains the entire agreement between them with respect to Xx. Xxxxxxxxx’x voluntary termination of employment and supersedes all prior and/or contemporaneous written or oral agreements between them (other as described in Section 21 or specifically elsewhere herein). The Parties also agree and acknowledge that no other promises or agreements have been offered before this Agreement and that no other promise or agreement between the Parties will be binding unless it is in writing and signed by the Parties.

25. XX. XXXXXXXXX ACKNOWLEDGES THAT HE HAS CAREFULLY READ THIS AGREEMENT, KNOWS AND UNDERSTANDS ITS CONTENT AND MEANING, AND HAS NOT BEEN COERCED OR THREATENED INTO SIGNING IT. XX. XXXXXXXXX REPRESENTS THAT HE UNDERSTANDS THAT HE HAS 21 DAYS (OR MORE) TO CONSIDER THIS AGREEMENT AND THAT HE MAY REVOKE THIS AGREEMENT WITHIN 7 DAYS AFTER HE SIGNS IT. XX. XXXXXXXXX FURTHER REPRESENTS THAT HE FULLY UNDERSTANDS HOW TO EXERCISE THAT RIGHT OF REVOCATION SHOULD HE CHOSE TO DO SO. XX. XXXXXXXXX IS HEREBY ADVISED TO CONSULT WITH AN ATTORNEY OF XX. XXXXXXXXX’X CHOOSING REGARDING THE EFFECT OF THIS AGREEMENT PRIOR TO SIGNING IT.

The Parties enter into this Agreement voluntarily and with full knowledge of its contents.

READ THIS AGREEMENT CAREFULLY BEFORE SIGNING.

Signed this 15 day of October , 2008.

	/s/ Xxxxxx Xxxxxxxxx
	Xxxxxx Xxxxxxxxx

Signed this 14th day of October , 2008.

	Stage Stores, Inc.


	By:	/s/ Xxxxxx X. Xxxx
		Name: Xxxxxx X. Xxxx
		Title: President & COO

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ACKNOWLEDGMENTS

STATE OF Virginia )

) ss:

COUNTY OF Mecklenburg )

On this 15th day of October , 2008, before me, a Notary Public, personally appeared Xxxxxx Xxxxxxxxx, to me known to be the person who executed the foregoing Retirement Agreement, and acknowledged that he executed it as his free and voluntary act and deed.

Given under my hand and seal the day and year last above written.

	/s/ Xxxxx X. Xxxxxx
	Notary Public

My Commission Expires: __November 30, 2010 ______

STATE OF TEXAS )

) ss:

COUNTY OF XXXXXX )

On this 14th day of October , 2008, before me, a Notary Public, personally appeared Xxxxxx X. Xxxx, to me known to be the identical person who executed the foregoing Retirement Agreement as the authorized representative of Stage Stores, Inc. and acknowledged to me that he executed the same as his free and voluntary act and deed and as the free and voluntary act and deed of such corporation, for the uses and purposes therein set forth.

Given under my hand and seal the day and year last above written.

	/s/ Xxxxxxx Xx Xxxxx
	Notary Public

My Commission Expires: August 1, 2009

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Exhibit A

Xxxxxx Xxxxxxxxx Vested Long-Term Incentive Awards

Stock Options

Grant Date	Number of Shares	Exercise Price per Share
8-24-01	28,125	$6.67
8-24-01	28,125	$7.22
3-30-05	10,428	$17.01

Stock Appreciation Rights

Grant Date	Number of Shares	Exercise Price per Share
3-17-06	11,250	$19.18
3-28-07	5,000	$22.96

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RETIREMENT AGREEMENT

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