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EXHIBIT 10.2

 
EMPLOYMENT AGREEMENT
 
THIS EMPLOYMENT AGREEMENT (“Agreement”) entered into by and between STAGE
STORES, INC., a Nevada corporation (the “Company”), and Richard A. Maloney, an
individual (the “Executive”), is dated October 21, 2008 and is effective as of
October 6, 2008 (the “Effective Date”).
 
WITNESSETH:
 
WHEREAS, the Board of Directors of the Company (the “Board”) desires to provide
for the continued employment of the Executive from and after the effective date,
and has determined that it is in the best interests of the Company to appoint
the Executive to the position of President and Chief Operating Officer of the
Peebles Division (the “Position”), subject to the terms and conditions of this
Agreement; and
 
WHEREAS, the Executive desires to be appointed to the Position by the Company,
subject to the terms and conditions set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the promises and mutual agreements herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:
 
1.         EMPLOYMENT; TERM.  The Company hereby appoints the Executive to the
Position, and the Executive hereby accepts such employment with the Company and
appointment to the Position, subject to the terms and conditions set forth in
this Agreement.  Subject to earlier termination in accordance with Section 4
below, this Agreement shall continue in effect for a period of thirty-six (36)
months commencing from the Effective Date (the “Initial Term”).  Upon the
expiration of the Initial Term or any Renewal Period (as hereafter described),
the term of the Executive’s employment under this Agreement shall automatically
be extended for an additional thirty-six (36) month period (a “Renewal Period”),
unless either the Company or the Executive notifies the other party in writing
at least thirty (30) days prior to the expiration of the Initial Term or the
then current Renewal Period that the Employment Period shall not be extended
upon such expiration.
 
1.1       Failure to Extend by Company.  In the event the Company notifies the
Executive that the Employment Period shall not be extended at the expiration of
the Initial Term or the then current Renewal Period in accordance with Section 1
hereof, such failure to extend shall constitute termination of this Agreement by
the Company without Good Cause (as hereafter defined), and the Company and the
Executive agree that the Executive shall be entitled to receive the payments
described in Section 4.3 hereof.
 
1.2       Failure to Extend by Executive.  In the event the Executive notifies
the Company that the Employment Period shall not be extended at the expiration
of the Initial Term or the then current Renewal Period in accordance with
Section 1, such failure to extend shall constitute termination of this Agreement
by the Executive without Good Reason (as hereafter defined), and the Company and
the Executive agree that the Executive shall be entitled to receive the payments
described in Section 4.5.
 
 
 

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2.         POSITION AND DUTIES.  During such time as the Executive is employed
with the Company (the “Employment Period”), the Executive shall serve in the
Position and shall have the normal duties, responsibilities and authority
associated with or related to such Position, subject to the power and authority
of the Board and executive officers of the Company to expand or limit such
duties, responsibilities and authority and to override actions of the
Executive.  the Executive shall report to the Board and executive management of
the Company.  The Executive shall devote his best efforts and his full business
time and attention (except for permitted vacation periods and reasonable periods
of illness or other incapacity) exclusively to the business and affairs of the
Company and its Subsidiaries (as hereafter defined) and any duty, task or
responsibility assigned or given to the Executive by the Board or executive
management, and the Executive shall perform his duties and responsibilities to
the best of his abilities in a diligent, trustworthy, businesslike and efficient
manner.  As used in this Agreement, “Subsidiaries” shall mean any entity of
which the securities having a majority of the voting power in electing directors
or managers are, at the time of determination, owned by the Company either
directly or through one or more Subsidiaries.
 
2.1       Outside Directorships.  In the event the Executive is invited,
solicited or otherwise asked to become a director, advisor or consultant for any
entity or organization of any type or function whatsoever (other than the
Company or its Subsidiaries, or any charitable, civic or governmental entity or
organization), the Executive shall notify the Board in writing of the
invitation, the entity or organization extending such invitation and the
capacity to be served by the Executive for the entity or organization.  The
Board shall have the sole power and authority to authorize the Executive to
accept the invitation based on such criteria and standards as the Board may
determine, and the Executive shall not accept such invitation without the
Board’s prior written consent, which consent shall not be unreasonably withheld.
 
2.2       Delegation by Board.  Whenever this Agreement calls for action on the
part of the Board, the Board may delegate responsibility for the action to a
duly appointed committee of the Board, including but not limited to the
Compensation Committee of the Board, and the Executive agrees to treat, comply
with and be bound by any action taken by such committee as if the Board had
taken such action directly.
 
3.         COMPENSATION AND BENEFITS.  During the Employment Period, The
Executive shall be paid or receive compensation and benefits as follows:
 
3.1       Base Salary.  The base salary for the Executive shall be $475,000 per
year, or such other rate as the Board may designate from time to time (the “Base
Salary”).  The Base Salary shall be payable in regular installments in
accordance with the Company’s general payroll practices and shall be subject to
withholdings for applicable taxes.
 
3.2       Incentive Compensation.  For any fiscal year ending during the
Employment Period, the Board may, but is not obligated to, award incentive
compensation to the Executive based upon the Company’s operating results for and
the Executive’s performance during such fiscal year, and that other performance
objectives, targets and criteria for the Executive the Board may establish and
adjust for that fiscal year (the “Incentive Compensation”).  The amount of any
Incentive Compensation shall be calculated as a percentage of the Base Salary in
effect during that fiscal year, which percentage shall be determined and may be
adjusted by the Board (the “Target Rate”) based on such results, performance and
objectives.  In addition to such results, performance and objectives, the Board
may take into account any extraordinary, unusual or non-recurring items realized
or incurred by the Company during any that fiscal year deemed appropriate by the
Board in determining any Incentive Compensation.  The Company shall pay to the
Executive any Incentive Compensation on or around April 1 following the end of
the fiscal year for which the Incentive Compensation was based; provided, that
the Executive was employed in the Position as of that fiscal year end, and any
such Incentive Compensation shall be subject to withholdings for applicable
taxes.
 
 
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3.3       Medical, Dental and Other Benefits.   The Executive shall be eligible
to enroll and participate in any and all benefit plans the Company provides to
its employees including, but not limited to, medical and dental coverage, life
and disability insurance, retirement plans and deferred compensation plans.  The
premiums, costs and expenses for any benefit plans under which the Executive is
participating shall be borne by the Executive and Company in accordance with the
Company’s policies related to such plans.  The Executive shall receive four (4)
weeks of paid vacation each year, which if not taken may not be carried forward
to any subsequent year and the Executive shall not receive any compensation for
any unused vacation days.  Any and all benefits provided for hereunder shall not
be included in the definition of the term “Base Salary” as that term is used in
this Agreement.  All such benefits shall immediately cease and terminate upon
the later of (1) the termination date of the Employment Period, or (2) the
expiration date of coverage for such benefits by the Company as described in
Section 4 ; provided, that upon such termination, the Executive shall have the
right to elect to continue any or all of such health benefits, programs or
coverage, at his [her] sole cost and expense, in accordance with and subject to
the terms and limitations set forth in the Consolidated Omnibus Reconciliation
Act of 1985 (“COBRA”) and the regulations promulgated in connection therewith.
 
3.4       Automobile Allowance.  Company shall provide the Executive with an
automobile allowance in the amount of $1,000 per month to be allocated at the
Executive’s discretion, or such other monthly amount designated by the Board,
and that allowance shall be payable in regular installments in accordance with
the Company’s general payroll practices.
 
3.5       Financial Planning Allowance.  Company shall reimburse the Executive
for any expense incurred by the Executive in connection with the preparation of
taxes, estate planning or financial counseling up to a maximum of $5,000 per
calendar year, or such other annual amount designated by the Board, which amount
may not be carried forward to any subsequent calendar year.  Such expenses shall
be reimbursed in accordance with the standard policies and procedures of the
Company in effect from time to time related to such reimbursable expenses.
 
 
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3.6       Business Expense.  Company shall reimburse the Executive for all
reasonable travel, entertainment and other business expenses incurred by the
Executive in the course of performing the duties of the Position.  Those
expenses shall be reimbursed in accordance with the standard policies and
procedures of the Company in effect from time to time related to such
reimbursable expenses.
 
3.7       Relocation Expense.  Company shall reimburse the executive for all
reasonable and normal relocation expenses per the Company’s executive relocation
policy.  Additionally the Company will provide for the Executive reimbursement
of the closing costs (including real estate commissions up to 6%) to sell his
personal residence in Portland, OR provided that the home sale is completed and
closed not later than April 1, 2012.  Additionally if the Executive is unable to
sell his Portland home residence through traditional means, the Company will
provide the Executive a third party home buyout option within the guidelines of
the companies 3rd party home purchase plan, provided that Executive accepts and
executes the third party offer no later than April 1, 2012.
 
4.         TERMINATION; EFFECTS OF TERMINATION.  This Agreement may be
terminated upon the occurrence of any of the following events:
 
4.1       Terminable At Will.  Notwithstanding any other provision of this
Agreement including, but not limited to Section 1, this Agreement and the
Executive’s employment with the Company or its Subsidiaries shall be terminable
at will at any time for any reason by either party, and this Agreement shall
expire automatically when the Executive ceases to hold the Position with the
Company for any reason.  Upon such termination, the rights of the Executive to
receive the monies and benefits from the Company shall be determined in
accordance with the terms and provisions contained in this Section 4, and the
Executive agrees that such monies and benefits are fair and reasonable and are
the sole monies and benefits which shall be due to him under this Agreement from
the Company in the event of termination.
 
4.2       By Company For Good Cause.  Upon written notice to the Executive,
Company may immediately terminate this Agreement at any time during the
Employment Period for “Good Cause” (as hereafter defined).
 
4.2.1    Monies and Payments to The Executive.  Upon termination for Good Cause,
the Executive shall be entitled to receive any Base Salary earned and unpaid,
and fringe benefits described in Section 3.3 accrued and unpaid, through the
date of such termination, and no other monies or benefits shall be payable or
owed to the Executive under this Agreement.
 
4.2.2    Forfeiture of Options.  Effective as of such termination date, any and
all stock options, stock appreciation rights, restricted stock options, warrants
and other similar rights granted to or received by the Executive under any
option or incentive plan of the Company to which the Executive is participating
or enrolled shall immediately be terminated and forfeited, except for such
options or rights granted to or received by the Executive which have fully and
completely vested prior to such termination date.  Any and all such options and
rights to which the Executive has become fully and completely vested prior to
such termination date shall expire as set forth in the respective plan document
or agreement granting such options and rights.
 
 
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4.2.3    Good Cause Defined.  For purposes of this Agreement, “Good Cause” means
(i) the Executive’s conviction of, or plea of nolo contendere or guilty to, any
criminal violation involving dishonesty, fraud or moral turpitude; (ii) the
Executive’s gross negligence; (iii) the Executive’s willful and serious
misconduct; (iv) the Executive’s breach of trust or fiduciary duty in the
performance of his duties or responsibilities; (v) the Executive’s willful
failure to comply with reasonable directives and policies of the Board; or (vi)
the Executive’s breach of any term or provision of this Agreement.
 
4.3       By Company Without Good Cause.  Upon ten (10) days prior written
notice to the Executive, Company may terminate this Agreement at any time during
the Employment Period without Good Cause.
 
4.3.1    Monies and Benefits to The Executive.  Upon termination without Good
Cause, the Executive shall be entitled to receive: (i) any Base Salary earned
and unpaid, and fringe benefits described in Section 3.3 accrued and unpaid,
through the date of such termination; (ii) one (1) times the aggregate of
(x) the Base Salary plus (y) the Incentive Compensation at the Target Rate in
effect as of the date of such termination; (iii) any Incentive Compensation for
the fiscal year in which such termination occurs pro-rated through the date of
such termination; provided, however, the Executive shall not receive any portion
of the Incentive Compensation under this Section 4.3.1(iii) unless the Board
determines in good faith that the Executive would have been entitled to receive
any Incentive Compensation for the fiscal year in which such termination
occurred in accordance with Section 3.2; and (iv) continuation of the medical
and dental benefits described in Section 3.3 under which the Executive is
participating as of the date of such termination for a period of twelve (12)
months from the date of such termination.
 
4.3.2    Payment of Monies and Benefits.  The payment described in Section
4.3.1(i) shall be paid to the Executive in a lump sum within thirty (30) days
from the date of such termination and shall be subject to withholdings for
applicable taxes.  The payment described in Section 4.3.1(ii) shall be paid to
the Executive in regular installments commencing from the date of such
termination in accordance with the Company’s general payroll practices and shall
be subject to withholdings for applicable taxes.  The payment described in
Section 4.3.1(iii) shall be payable in a lump sum on or before April 1 following
the end of the fiscal year in which such termination occurred and shall be
subject to withholdings for applicable taxes.  The benefits described in Section
4.3.1(iv) shall be provided in accordance with the Company’s standard policies
and practices.
 
4.3.3    Forfeiture of Options.  Effective as of such termination date, any and
all stock options, stock appreciation rights, restricted stock options, warrants
and other similar rights granted to or received by the Executive under any
option or incentive plan of the Company to which the Executive is participating
shall immediately be terminated and forfeited, except for such options or rights
granted to or received by the Executive which have fully and completely vested
prior to such termination date.  Any and all such options and rights to which
the Executive has become fully and completely vested prior to such termination
date shall expire as set forth in the respective plan document or agreement
granting such options and rights.
 
 
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4.4       By The Executive for Good Reason.  Upon thirty (30) days prior written
notice to Company, the Executive may terminate this Agreement at any time during
the Employment Period for “Good Reason” (as hereafter defined), and if requested
by Company, the Executive shall continue to work exclusively for the Company
during such thirty (30) day period; provided, however, the Company shall have
the right, in its sole discretion, to terminate this Agreement at any time
during such thirty (30) day period upon written notice to the Executive.
 
4.4.1    Monies and Benefits to The Executive.  Upon termination for Good
Reason, the Executive shall be entitled to receive: (i) any Base Salary earned
and unpaid, and fringe benefits described in Section 3.3 hereof accrued and
unpaid, through the date of such termination or the date on which the Company
terminates this Agreement during such thirty (30) day period; (ii) one (1) times
the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the
Target Rate in effect as of the date of such termination; (iii) any Incentive
Compensation for the fiscal year in which such termination occurs pro-rated
through the date of such termination; provided, however, the Executive shall not
receive any portion of the Incentive Compensation under this Section 4.4.1(iii)
unless the Board determines in good faith that the Executive would have been
entitled to receive any Incentive Compensation for the fiscal year in which such
termination occurred in accordance with Section 3.2; and, (iv) continuation of
the fringe benefits described in Section 3.3 under which the Executive is
participating as of the date of such termination for a period of twelve (12)
months from the date of such termination.
 
4.4.2    Payment of Monies and Benefits.  The payment described in Section
4.4.1(i) shall be paid to the Executive in a lump sum within thirty (30) days
from the date of such termination and shall be subject to withholdings for
applicable taxes.  The payment described in Section 4.4.1(ii) shall be paid to
the Executive in regular installments commencing from the date of such
termination in accordance with the Company’s general payroll practices and shall
be subject to withholdings for applicable taxes.  The payment described in
Section 4.4.1(iii) shall be payable in a lump sum on or before April 1 following
the end of the fiscal year in which such termination occurred and shall be
subject to withholdings for applicable taxes.  The benefits described in Section
4.4.1(iv) shall be provided in accordance with the Company’s standard policies
and practices.
 
 
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4.4.3    Forfeiture of Options.  Effective as of such termination date, any and
all stock options, stock appreciation rights, restricted stock options, warrants
and other similar rights granted to or received by the Executive under any
option or incentive plan of the Company to which the Executive is participating
shall immediately be terminated and forfeited, except for such options or rights
granted to or received by the Executive which have fully and completely vested
prior to such termination date.  Any and all such options and rights to which
the Executive has become fully and completely vested prior to such termination
date shall expire as set forth in the respective plan document or agreement
granting such options and rights.
 
4.4.4    Good Reason Defined.  For purposes of this Agreement, “Good Reason”
shall exist if, without the Executive’s express written consent, the Company:
(i) materially reduces or decreases the Executive’s Base Salary from the level
in effect on the date hereof; (ii) fails to include the Executive in any
incentive compensation plans, bonus plans, or other plans or benefits provided
by the Company to other senior level executives; (iii) materially reduces,
decreases or diminishes the nature, status or duties and responsibilities of the
Position from those in effect on the Effective Date, and such reduction,
decrease or diminution is not reasonably related to or the result of an adverse
change in the Executive’s performance of assigned duties and responsibilities or
the hiring by Company of an executive senior to the Executive; or (iv) requires
the Executive to (A) regularly perform the duties and responsibilities of the
Position at, or (B) relocate the Executive’s principal place of employment to, a
location which is more than fifty (50) miles from the location of the
Executive’s principal place of employment as of the Effective
Date.  Notwithstanding the above, Good Reason shall not include the death,
disability or voluntary retirement of the Executive or any other voluntary
action taken by or agreed to by the Executive related to the Position or its
employment with the Company or its Subsidiaries.
 
4.5       By The Executive Without Good Reason.  Upon thirty (30) days prior
written notice to Company, the Executive may terminate this Agreement at any
time during the Employment Period without Good Reason, and if requested by the
Company, the Executive shall continue to work exclusively for the Company during
such thirty (30) day period; provided, however, the Company shall have the
right, in its sole discretion, to terminate this Agreement at any time during
such thirty (30) day period upon written notice to the Executive.
 
4.5.1    Monies and Benefits to The Executive.  The Executive shall be entitled
to receive any Base Salary earned and unpaid, and fringe benefits described in
Section 3.3 accrued and unpaid, through the date of such termination or the date
on which the Company terminates this Agreement during such thirty (30) day
period, and no other monies or benefits shall be payable or owed to the
Executive under this Agreement.
 
4.5.2    Forfeiture of Options.  Effective as of such termination date, any and
all stock options, stock appreciation rights, restricted stock options, warrants
and other similar rights granted to or received by the Executive under any
option or incentive plan of the Company to which the Executive is participating
or enrolled shall immediately be terminated and forfeited, except for such
options or rights granted to or received by the Executive which have fully and
completely vested prior to such termination date.  Any and all such options and
rights to which the Executive has become fully and completely vested prior to
such termination date shall expire as set forth in the respective plan document
or agreement granting such options and rights.
 
 
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4.6       By Company Due to Change in Control.  In the event a Change in Control
(as hereafter defined) occurs and the Executive is not employed in the Position
with the Company or its successor thereafter, the Executive shall be entitled to
receive, and Company or its successor shall be obligated to pay, the monies and
benefits described in this Section 4.6.
 
4.6.1    Monies and Benefits to The Executive.  Upon such Change in Control and
the Executive not being employed in the Position with the Company or its
successor thereafter, the Executive shall be entitled to receive: (i) any Base
Salary earned and unpaid, and fringe benefits described in Section 3.3 hereof
accrued and unpaid, through the date of such Change in Control; (ii) two times
the aggregate of (x) the Base Salary plus (y) the Incentive Compensation at the
Target Rate in effect as of the date of such Change in Control; (iii) any
Incentive Compensation for the fiscal year in which such Change in Control
occurs pro-rated through the date of such Change in Control; provided, however,
the Executive shall not receive any portion of the Incentive Compensation under
this Section 4.6.1(iii) unless the Board determines in good faith that the
Executive would have been entitled to receive any Incentive Compensation for the
fiscal year in which such Change in Control occurred in accordance with
Section 3.2; and (iv) continuation of the fringe benefits described in Section
3.3 under which the Executive is participating as of the date of such Change in
Control for a period of twelve (12) months from the date of such Change in
Control.
 
4.6.2    Payment of Monies and Benefits.  The payments described in Sections
4.6.1(i) and 4.6.1(ii) shall be paid to the Executive in a lump sum within
thirty (30) days of the date of such Change in Control and shall be subject to
withholdings for applicable taxes.  The payment described in Section 4.6.1(iii)
shall be payable in a lump sum on or before April 1 following the end of the
fiscal year in which such Change in Control occurred and shall be subject to
withholdings for applicable taxes.  The benefits described in Section 4.6.1(iv)
shall be provided in accordance with the Company’s or its successor’s standard
policies and practices.
 
4.6.3    Vesting of Options.  Effective as of the date of such Change in
Control, any and all stock options, stock appreciation rights, restricted stock
options, warrants and other similar rights granted to or received by the
Executive under any option or incentive plan of the Company to which the
Executive is participating or enrolled shall immediately become fully and
completely vested and exercisable as if the Executive had satisfied any and all
terms, conditions or requirements described or contained in such plan.  In the
event the Executive has not previously exercised, or does not exercise, all or
any portion of such options or rights within sixty (60) days of the date of such
Change in Control (the “Exercise Period”), the Executive shall be entitled to
receive, and Company or its successor shall be obligated to pay, compensation
for such unexercised options or rights in an amount equal to (i) the number of
shares not exercised by the Executive under such options or rights multiplied by
(ii) the closing price of the common stock of the Company as of the day
immediately prior to such Change in Control minus the exercise price of the
Executive described in such options or rights (the “Option Compensation”).  The
Option Compensation shall be payable in a lump sum within thirty (30) days after
the expiration of the Exercise Period, and shall be subject to withholdings for
applicable taxes.  The Executive shall take any and all actions, and execute and
deliver to Company or its successor any and all agreements, certificates or
instruments, necessary or required to consummate the transactions contemplated
under this Section 4.6.3 including, but not limited to, the assignment, transfer
or conveyance of any and all shares to be acquired by the Company or its
successor and the cancellation, revocation or termination of any options or
rights the Executive has or may have under any such option or incentive plan.
 
 
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4.6.4    Change in Control Defined.   For purposes of this Agreement, a “Change
in Control” shall be deemed to have occurred:
 
(a)  on such date within the 12-month period following the date that any one
person, or more than one person acting as a group (as defined in §1.409A
3(i)(5)(v)(B) of the Treasury Regulations), acquires ownership of stock that
represents twenty-five percent (25%) or more of the combined voting power of the
Company’s then outstanding securities (the “Trigger Date”), that a majority of
the individuals who, as of the Trigger Date, constitute the Board (the
“Incumbent Board”) are replaced by new members whose appointment or election is
not endorsed by a majority of the members of the Incumbent Board before the date
of such appointment or election;
 
(b)  as of the date that any one person, or more than one person acting as
a group (as defined in §1.409A-3(i)(5)(v)(B) of the Treasury Regulations),
acquires ownership of stock that, together with stock held by such person or
group, constitutes more than 50% of either (1) the then outstanding shares of
common stock of the Company or (2) the combined voting power of the then
outstanding voting securities of the Company entitled to vote generally in the
election of directors; provided, however, if any one person or more than one
person acting as a group, is considered to own more than fifty percent (50%) of
the total fair market value or total voting power of the stock of the Company,
the acquisition of additional stock by the same person or persons shall not be
considered to cause a Change in Control; or
 
 
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(c)  the date any one person, or more than one person acting as a group
(as defined in §1.409A-3(i)(5)(v)(B) of the Treasury Regulations), acquires (or
has acquired during the 12-month period ending on the date of the most recent
acquisition by such person or persons) all, or substantially all, of the assets
of the   Company, except for any sale, lease exchange or transfer resulting from
any action taken by any creditor of the Company in enforcing its rights or
remedies against any assets of the Company in which such creditor holds a
security interest.  Provided further, a transfer of assets by the Company shall
not be treated as a Change in Control if the assets are transferred to:
 
 
(i)
A shareholder of the Company (immediately before the asset transfer) in exchange
for or with respect to its stock;

 
 
(ii)
An entity, 50% or more of the total value or voting power of which is owned,
directly or indirectly, by the Company;

 
 
(iii)
A person, or more than one person acting as a group, that owns,  directly or
indirectly, 50% or more of the total value or voting power of all the
outstanding stock of the Company; or

 
 
(iv)
An entity, at least 50% of the total value or voting power of which is owned,
directly or indirectly, by a person described in paragraph (iii) herein.

 
For purposes of subsection (c) and except as otherwise provided in paragraph
(i), a person’s status is determined immediately after the transfer of the
assets.
 
4.7       Execution of Release by The Executive.  Company shall not be obligated
to pay any portion of the monies and benefits described above, if any, unless
and until the Executive shall have executed and delivered to the Company a
release of all claims against the Company and its Subsidiaries and their
respective shareholders, partners, member, directors, managers, officers,
employees, agents and attorneys, arising out of or related to any act or
omission which occurred on or prior to the date on which this Agreement was
terminated, in form and substance reasonably satisfactory to the Company.
 
5.         POST-EMPLOYMENT DUTIES.  For a period of three (3) years following
the termination of this Agreement, the Executive shall: (i) fully and truthfully
cooperate and assist the Company and its Subsidiaries, to the fullest extent
possible, in any and all issues, matters, legal proceedings or litigation
related to or associated with the business, management or operation of or any
other matter involving the Company or its Subsidiaries in any way or of any
nature whatsoever arising from, related to or connected with any period in which
the Executive was employed by or otherwise provided services to the Company or
its Subsidiaries or in which the Executive has or may have past knowledge,
information or experience or applicable expertise; and (ii) fully cooperate,
assist, participate and work with the Company or its Subsidiaries on any and all
issues or matters for which the Company or its Subsidiaries may seek the
Executive’s cooperation, assistance, participation, involvement or
consultation.  Such assistance shall be provided at such times and dates which
shall not unreasonably interfere or conflict with the Executive’s then current
employment.  The Company shall reimburse the Executive for any and all costs and
expenses reasonably incurred by the Executive in providing such assistance in
accordance with the standard policies and procedures of the Company in effect
from time to time related to such reimbursable expenses.
 
 
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6.         CONFIDENTIAL INFORMATION.  The Executive acknowledges that the
Executive will have access or be privy to certain confidential business and
proprietary information of the Company and its Subsidiaries as a result of the
Executive’s employment with the Company or its Subsidiaries.  Such confidential
information may include but is not limited to business decisions, plans,
procedures, strategies and policies, legal matters affecting Company and its
Subsidiaries and their respective businesses, personnel, customer records
information, trade secrets, bid prices, evaluations of bids, contractual terms
and arrangements (prospective purchases and sales), pricing strategies,
financial and business forecasts and plans and other information affecting the
value or sales of products, goods, services or securities of the Company or its
Subsidiaries, and personal information regarding employees (collectively, the
“Confidential Information”).  The Executive acknowledges and agrees the
Confidential Information is and shall remain the sole and exclusive property of
the Company or such Subsidiary.  The Executive shall not disclose to any
unauthorized person, or use for the Executive’s own purposes, any Confidential
Information without the prior written consent of the Board, which consent may be
withheld by the Board at its sole discretion, 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 the Executive’s acts or omissions.  The
Executive agrees to maintain the confidentiality of the Confidential Information
after the termination of the Executive’s employment; provided, further, that if
at any time the Executive or any person or entity to which the Executive has
disclosed any Confidential Information becomes legally compelled (by deposition,
interrogatory, request for documents, subpoena, civil investigative demand or
similar process) to disclose any of the Confidential Information, the Executive
shall provide the Company with prompt, prior written notice of such requirement
so the Company, in its sole discretion, may seek a protective order or other
appropriate remedy and/or waive compliance with the terms hereof.  In the event
that such protective order or other remedy is not obtained or the Company waives
compliance with the provisions hereof, the Executive shall ensure that only the
portion of the Confidential Information which the Executive or such person is
advised by written opinion of the Company’s counsel that the Executive is
legally required to disclose is disclosed, and the Executive further covenants
and agrees to exercise reasonable efforts to obtain assurance that the recipient
of such Confidential Information shall not further disclose such Confidential
Information to others, except as required by law, following such disclosure.  In
addition the Executive covenants and agrees to deliver to the Company upon
termination of this Agreement, and at any other time as the Company may request,
any and all property of the Company including, but not limited to, keys,
computers, credit cards, company car, memoranda, notes, plans, records, reports,
computer tapes, printouts and software, Confidential Information in any form
whatsoever, and other documents and data (and copies thereof) and relating to
the Company or any Subsidiary which he may then posses or have under his control
or to which the Executive had access to or possession of in the course of such
employment.
 
 
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7.         COVENANT NOT TO COMPETE, SOLICIT OR DISPARAGE.  The Executive hereby
agrees that for a period of three (3) years following the expiration or
termination of this Agreement (the “Non-Compete Period”), the Executive shall
not: (i) directly or indirectly, either individually or for any other person or
entity (whether as an officer, director, employee, owner, stockholder,
consultant, agent, advisor, general partner, limited partner or otherwise), or
as a part of a group, own, operate, manage, control, participate in, consult
with, render services for, or in any manner engage in any business competing
with any part of the business presently engaged in by the Company within any
geographical area in which the Company engages or has proposed to engage in such
business (or solicit any person to engage in any of the foregoing activities);
(ii) directly or indirectly, individually or for any other person or entity
induce or attempt to induce any employee of the Company to leave the employ of
the Company, hire any person who is an employee of the Company 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 the Company to cease doing
business with or reduce the volume of its business with the Company; or
(iii) initiate, participate or engage in any communication whatsoever with any
current or former customer, supplier, vendor or competitor of the Company or its
Subsidiaries or any of their respective shareholders, partners, members,
directors, managers, officers, employees or agents, or with any current or
former shareholder, partner, member, director, manager, officer, employee or
agent of the Company or its Subsidiaries, or with any third party, which
communication could reasonably be interpreted as derogatory or disparaging to
the Company or its Subsidiaries, including but not limited to the business,
practices, policies, shareholders, partners, members, directors, managers,
officers, employees, agents, advisors and attorneys of the Company or its
Subsidiaries.  Provided, however, nothing herein shall prohibit the Executive
from being a passive owner of or controlling, directly or indirectly, not more
than five percent (5%) in the aggregate of the outstanding stock of any class of
a corporation which is publicly traded and which competes in the business of the
Company so long as the Executive has no direct or indirect participation in the
management of such corporation. The Executive acknowledges that the foregoing
restriction is reasonable in all respects and that there is no less restrictive
provision in terms of duration, prohibited activities or geographic area which
would adequately protect the Company’s assets and other legitimate business
interests.  For purposes of the foregoing, a business shall be deemed to be
competing with the business of the Company if such business (a) operates apparel
stores in small markets (populations of less than 25,000) and (b) operates a
significant number of its apparel stores (75% or more of its total apparel
stores) in 10,000 to 30,000 square foot formats.  Notwithstanding the foregoing,
in the event any part of this covenant set forth in this provision shall be held
invalid, illegal or unenforceable by a court of competent jurisdiction, the
Executive and the Company hereby agree that such invalid, illegal or
unenforceable provision or section hereof shall be severed from this Agreement
without affecting the remaining portions hereof in any manner.  In the event any
portion of this provision related to the time or geographical area restrictions
hereof shall be declared by a court of competent jurisdiction to exceed the
maximum time or geographical area restrictions such court deems reasonable or
enforceable, said time or geographic area restriction shall be deemed to become
and thereafter shall be such time or geographic area which such court shall deem
reasonable and enforceable.
 
8.         ARBITRATION.  Should any dispute arise relating to the meaning,
interpretation, enforcement or application of this Agreement, the dispute shall
be settled in Harris County, Texas, in accordance with the terms, conditions and
requirements described or contained in the Company’s arbitration policy, if any,
and the employment dispute arbitration rules of the American Arbitration
Association, and all costs incurred by each party related to such arbitration
including, but not limited to reasonable attorney’s fees and costs, shall be
borne by the losing party.
 
 
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9.         NOTICES.  Any notice provided for in this Agreement shall be in
writing and shall be either personally delivered, or mailed by first class mail,
return receipt requested, to the recipient at the address indicated below:
 
 
To the Executive:
Richard A. Maloney

One Peebles Street
South Hill, Virginia 23970-5001
 
 
To Company:
Stage Stores, Inc.

10201 Main Street
Houston, Texas  77025
Attention:  Executive VP, Human Resources
 
 
 
With a copy to:
McAfee & Taft

Two Leadership Square
211 North Robinson, 10th floor
Oklahoma City, Oklahoma 73102-7103
Attn:  N. Martin Stringer, Esq.
 
or such other address or to the attention of such other person as the recipient
party shall have specified by prior written notice to the sending party.  Any
notice under this Agreement shall be deemed to have been given when so delivered
or mailed.
 
10.       GOVERNING LAW.  All issues and questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by,
and construed in accordance with, the laws of the State of Texas, without giving
effect to any choice of law or conflict of law rules or provisions (whether of
the State of Texas or any other jurisdiction) that would cause the application
of the laws of any jurisdiction other than the State of Texas.  In furtherance
of the foregoing, the internal law of the State of Texas shall control the
interpretation and construction of this Agreement, even though under the
jurisdiction’s choice of law or conflict of law analysis, the substantive law of
some other jurisdiction would ordinarily apply.
 
11.       SEVERABILITY.  Each section, subsection and lesser section of this
Agreement constitutes a separate and distinct undertaking, covenant or provision
of this Agreement.  In the event that any provision of this Agreement shall be
determined to be invalid or unenforceable, that provision shall be deemed
limited by construction in scope and effect to the minimum extent necessary to
render it valid and enforceable, and, in the event that a limiting construction
is impossible, the invalid or unenforceable provision shall be deemed severed
from this Agreement, but every other provision of this Agreement shall remain in
full force and effect.
 
12.       AMENDMENTS; MODIFICATIONS.  Neither this Agreement nor any term or
provision in it may be changed, waived, discharged, rescinded or terminated
orally, but only by an agreement in writing signed by the party against whom or
which the enforcement of the change, waiver, discharge, rescission or
termination is sought.
 
 
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13.       WAIVER.  No failure on the part of either party to this Agreement to
exercise, and no delay in exercising, any right, power or remedy created under
this Agreement shall operate as a waiver thereof, nor shall any single or
partial exercise of any right, power or remedy by any such party preclude any
other or further exercise thereof or the exercise of any other right, power or
remedy.  No waiver by either party to this Agreement to any breach of, or
default in, any term or condition of this Agreement shall constitute a waiver of
or assent to any succeeding breach of or default in the same or any other term
or condition of this Agreement.  The terms and provisions of this Agreement,
whether individually or in their entirety, may only be waived in writing and
signed by the party against whom or which the enforcement of the waiver is
sought.
 
14.       SUCCESSORS AND ASSIGNS.  This Agreement shall be binding upon and
inure to the benefits of the successors, assigns, heirs, legatees, devisees,
executors, administrators, receivers, trustees and representatives of the
Executive and the Company and its Subsidiaries and their respective successors,
assigns, administrators, receivers, trustees and representatives.
 
15.       HEADINGS.  The headings contained in this Agreement are for reference
purposes only and shall not affect in any way the meaning or interpretation of
this Agreement.
 
16.       MULTIPLE COUNTERPARTS.  This Agreement may be executed in
counterparts, each of which is deemed to be an original and both of which taken
together constitute one and the same agreement.
 
17.       FEES AND EXPENSES.  All costs and expenses incurred by either party in
the preparation, negotiation or performance of this Agreement shall be borne
solely by the party incurring such expense without right of reimbursement.
 
18.       FURTHER ASSURANCES.  The Executive and the Company covenant and agree
that each will execute any additional instruments and take any actions as may be
reasonably requested by the other party to confirm or perfect or otherwise to
carry out the intent and purpose of this Agreement.
 
19.       CONSTRUCTION.  In the event an ambiguity or question of intent or
interpretation arises, this Agreement shall be construed as if drafted jointly
by the Executive and the Company, and no presumption or burden of proof shall
arise favoring or disfavoring either by virtue of the authorship of any of the
provisions of this Agreement.
 
20.       SURVIVAL.  The Executive and the Company agree that the terms and
conditions of Sections 4 through 15 (inclusive), 19, 20 and 21 hereof shall
survive and continue in full force and effect, notwithstanding any expiration or
termination of the Employment Period or this Agreement.
 
21.       ENTIRE AGREEMENT.  This Agreement contains and constitutes the entire
agreement between the Executive and the Company and supersedes and cancels any
prior agreements, representations, warranties, or communications, whether oral
or written, between the Executive and the Company or its Subsidiaries relating
to the subject matter hereof in any way.
 
 
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22.       GENDER; NUMBER PLURALITY.  Unless the context otherwise requires,
whenever used in this Agreement the singular shall include the plural, the
plural shall include the singular, and the masculine gender shall include the
neuter or feminine gender and vice versa.
 
 
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Employment Agreement as of the date first above written.
 

“COMPANY”
 
STAGE STORES, INC.,
   
a Nevada corporation
                   
By:
/s/  Andrew T. Hall
   
Name:
Andrew T. Hall
   
Title:
President & COO
               
“EXECUTIVE”
 
/s/ Richard A. Maloney
   
Richard A. Maloney

 
 
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