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EXHIBIT 10.37

SEPARATION AGREEMENT
 
This Separation Agreement (hereinafter the “Agreement”) is made between Joanne
Swartz  (hereinafter “Ms. Swartz”) an individual, on behalf of herself and her
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”).  Ms. Swartz 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, Ms. Swartz and Stage, intending to be legally
bound, agree as follows:
 
1.           Employment Agreement.  Ms. Swartz and Stage are parties to an
Employment Agreement dated April 11, 2011 (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 Ms. Swartz, her
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 Ms. Swartz
and Stage are parties (other than as described in Section 21 or specifically
elsewhere herein), or any other terms or conditions of Ms. Swartz’s employment
with Stage.
 
3.           Employment.  Ms. Swartz acknowledges that her employment with Stage
will terminate of her own voluntary action effective January 2, 2012 (the
“Separation Date”).  The execution of this Agreement by Ms. Swartz shall
evidence Ms. Swartz’s resignation from her capacities as Executive Vice
President, Sales Promotion and Marketing of Stage Stores Inc. as of the
Separation Date.
 
4.           Confidentiality of this Agreement.  Ms. Swartz agrees she will
maintain the terms of this Agreement in confidence in all circumstances and that
she will only apprise her immediate family and her 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.  Ms. Swartz shall also advise any member of her immediate family
and her 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 Ms. Swartz and have the same
consequences.  Notwithstanding the foregoing, Ms. Swartz 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 Ms. Swartz’s voluntary termination of
their employment
 
 
 

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relationship and is not an admission of any wrongdoing or liability on the part
of Stage or Ms. Swartz.
 
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 Harris County, Texas or a duly appointed arbitrator) for any action to
enforce this Agreement or to remedy any breach of this Agreement.
 
7.           Health Insurance.  Provided Ms. Swartz is eligible for and timely
exercises  her election for COBRA coverage, Stage will pay the full premium for
Ms. Swartz’ and her three (3) children’s COBRA coverage for the first twelve
months following execution of this agreement.  Ms. Swartz will be responsible
for the payment of COBRA premiums for the remainder of the COBRA period
following the initial twelve months.
 
8.           Life Insurance.  Ms. Swartz’s life insurance coverage through Stage
will end at 12:01 a.m. local time on January 2, 2012.  Conversion options are
available and will be made known to her through the insurance carrier.
 
9.           Termination Payments.  Exclusive of any other consideration or
benefit to Ms. Swartz 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 Ms. Swartz 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 Ms. Swartz:
 
 
(a)
$517,599.03, representing one full year’s salary and one full year’s bonus
target amount, which shall be paid to Ms. Swartz in twenty six (26) equal
installments on Stage’s regular bi-weekly paydays, commencing with the first
regular payday that occurs eight (8) days after Ms. Swartz returns this executed
Agreement to Stage (provided she executes this agreement on or before January
23, 2012), and

 
 
(b)
Any Incentive Compensation for Stage’s 2011 fiscal year prorated for 48
completed weeks out of 52 weeks, for which Stage’s Board of Directors determines
Ms. Swartz is entitled, which shall be paid to Ms. Swartz in a lump sum on or
before March 29, 2012.

 
For purposes of applying the provisions of Section 409A to this Agreement, each
separately identified amount to which Ms. Swartz is entitled under this
Agreement shall be treated as a separate payment within the meaning of Section
409A.  In addition, any series of installment payments under this Agreement,
including the payments set forth in Section 9(a), shall be treated as a right to
a series of separate payments under Section 409A, including Treas. Reg. Section
1.409A-2(b)(2)(iii).
 
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
 
 
 

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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 Harris 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 Ms. Swartz while the arbitration is pending.
 
11.           Return of Property.  Ms. Swartz shall deliver to Stage at 10201
Main Street, Houston, Texas 77025, Attention:  Chief Executive Officer, on or
before the Separation 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 Stage property in Ms. Swartz’s 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.  Ms. Swartz 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.  Ms. Swartz acknowledges that the
information, observations and data obtained by her while employed by Stage
concerning the business affairs of Stage (“Confidential Information”) are the
property of Stage.  Ms. Swartz shall not disclose to any unauthorized person, or
use for Ms. Swartz’s 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 Ms. Swartz’s acts or omissions.  Ms. Swartz shall deliver to Stage at 10201
Main Street, Houston, Texas 77025, Attention:  Chief Executive Officer, on or
before the Separation 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 she may
then possess or have under her control.
 
15.           Protection of Confidential Information.  Ms. Swartz agrees that,
due to her access to the Confidential Information, she would inevitably use
and/or disclose that Confidential Information in breach of her confidentiality
and non-disclosure obligations if she worked in certain capacities or engaged in
certain activities for a period of time following her
 
 
 

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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 Ms. Swartz’s 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 two years from the Separation Date, Ms. Swartz agrees not to be
employed by, consult for or otherwise act on behalf of any Comparable Business
in any capacity in which she 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.  Ms. Swartz
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.
 
16.           Non-Solicitation.  Ms. Swartz agrees that, for a period of two
years from the Separation Date, she shall not directly or indirectly, on her 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; Attorney’s Fee.  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 Ms. Swartz, 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, Ms. Swartz agrees that Stage may enforce the
provisions of this Agreement by injunctions and restraining orders against Ms.
Swartz 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 Ms. Swartz breach this Agreement, (i) any amounts paid by Stage to Ms.
Swartz under Section 9 before the breach occurred must be refunded to Stage by
Ms. Swartz within thirty (30) days of the breach. 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, Ms. Swartz hereby unconditionally releases and forever discharges
Stage and each of its owners, predecessors, successors, assigns, agents,
directors, officers, members, 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,
 
 
 

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defamation, personal or business injury claims growing out of any legal
restrictions on Stage’s right to terminate its employees that Ms. Swartz now
has, or holds or claims to have owned or held or which Ms. Swartz 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. Ms. Swartz 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 Ms.
Swartz to exist.
 
To comply with the Older Worker’s Benefit Protection Act of 1990 (the “Act”),
Stage has advised Ms. Swartz of the legal requirements of the Act and fully
incorporates the legal requirements of the Act by reference into this Agreement
as follows:
 
 
a.
This Agreement is written in layman’s terms, and Ms. Swartz represents that she
understands and comprehends its terms;

 
 
b.
Ms. Swartz has been advised of her rights to consult an attorney to review this
Agreement and have the benefit of an attorney through the settlement process;

 
 
c.
Ms Swartz does not waive any rights or claims that may arise after the date this
Agreement is executed;

 
 
d.
Ms. Swartz affirms that she is receiving consideration beyond anything of value
to which he is already entitled; and

 
 
e.
Ms. Swartz has been given a reasonable period of time to consider this
Agreement.

 
19.           Consideration Period, Limited Revocation And Effective Date.  The
Parties agree that Ms. Swartz 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., 10201 Main Street, Houston,
Texas  77025, Attention: Chief Executive Officer, no later than 5:00 p.m.
C.S.T., on January 6, 2012.  In any event, Ms. Swartz will have seven (7)
calendar days from the date she signs and delivers a copy of this Agreement to
Stage Stores, Inc., 10201 Main Street, Houston, Texas 77025, Attention: Chief
Executive Officer, during which Ms. Swartz may revoke this Agreement by
delivering a signed and dated notice of revocation to Stage Stores, Inc., 10201
Main Street, Houston, Texas 77025, Attention: Chief Executive Officer.  This
Agreement becomes effective and enforceable when the seven (7) day revocation
period has expired if Ms. Swartz has not delivered a written revocation to Stage
Stores, Inc., 10201 Main Street, Houston, Texas 77025, Attention: Chief
Executive Officer, before that date (the “Effective Date”).
 
20.           Payment Of Other Compensation.  Ms. Swartz acknowledges that
except as set forth in Section 9, all compensation normally due her at the time
of her termination will be paid by Stage within fourteen (14) calendar days from
the Separation Date.  Except as set forth in Section 9, any other benefits to
which Ms. Swartz 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) Ms.
Swartz is not entitled to any other long-term incentive awards which were not
previously vested on her Separation Date, and (b) Ms. Swartz will have sixty
(60) calendar days after the Separation Date (which date is the close of
business on Friday, March 2, 2012) during which she can exercise previously
vested Stock Option and SARs award shares, and any unexercised Stock Option and
SARs awards will expire and be forfeited to Stage on that date.
 
22.           Section 16(b) Compliance. Ms. Swartz acknowledges (a) that as an
officer of Stage she has received a copy of Stage’s 2011 Insider Trading and
Reporting Policy (For Directors, Executive Officers and Principal Shareholders)
(the “Policy”) and that she 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, Ms. Swartz acknowledges and agrees as
follows:
 
·  
Transactions by her after the Separation Date that occur within six months of an
opposite transaction that occurred before the Separation Date must be reported
by her on a Form 4, the preparation and electronic filing with the SEC of which
she agrees to be solely responsible,

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

 
·  
She need not file a Form 4 solely to indicate her resignation, and

 
·  
She 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 her of Section 16(b).

 
 
 

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·  
This agreement does not effect any rights Ms. Swartz may have as an Executive or
former Executive under the Stage Stores Directors and Officers Insurance Policy
coverage.

 
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 Ms. Swartz 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.  The parties further agree that upon the
expiration of seven (7) days following Ms. Swartz’s execution of this agreement,
all provisions of the Employment Agreement shall be superseded by this
agreement.
 
25.           MS. SWARTZ ACKNOWLEDGES THAT SHE HAS CAREFULLY READ THIS
AGREEMENT, KNOWS AND UNDERSTANDS ITS CONTENT AND MEANING, AND HAS NOT BEEN
COERCED OR THREATENED INTO SIGNING IT. MS. SWARTZ REPRESENTS THAT SHE
UNDERSTANDS THAT SHE HAS 21 DAYS (OR MORE) TO CONSIDER THIS AGREEMENT AND THAT
SHE MAY REVOKE THIS AGREEMENT WITHIN 7 DAYS AFTER SHE SIGNS IT.  MS. SWARTZ
FURTHER REPRESENTS THAT SHE FULLY UNDERSTANDS HOW TO EXERCISE THAT RIGHT OF
REVOCATION SHOULD SHE CHOSE TO DO SO. MS. SWARTZ IS HEREBY ADVISED TO CONSULT
WITH AN ATTORNEY OF MS. SWARTZ’S 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 14 day of January, 2012.
 
 
/s/ Joanne Swartz
 
Joanne Swartz
 
            Signed this 16 day of January, 2012.
 
   Stage Stores, Inc.
 
 
 
By:  /s/ Andrew T. Hall
         Name: Andrew T. Hall  
       Title: President & CEO

 
 
 
 

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ACKNOWLEDGMENTS
 

 

 STATE OF TEXAS    )      )  ss:  COUNTY OF HARRIS    )  

 
On this 10 day of January, 2012, before me, a Notary Public, personally appeared
Joanne Swartz, to me known to be the person who executed the foregoing
Separation Agreement, and acknowledged that she executed it as her free and
voluntary act and deed.
 
Given under my hand and seal the day and year last above written.
 
 

   /s/ Sue E. Howton    Notary Public

 
My Commission Expires:  3/5/15
 
 
 
 

 STATE OF TEXAS    )      )  ss:  COUNTY OF HARRIS    )  

On this _____ day of _______________, 2012, before me, a Notary Public,
personally appeared Andrew T. Hall, to me known to be the identical person who
executed the foregoing Separation 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.
 
 

       Notary Public

 
My Commission Expires:  ____________________

 
 

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