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EXHIBIT 10.35

CONSULTING AGREEMENT

This Consulting Agreement (the "Agreement") is made and entered into on November
3, 2008 (the “Effective Date”), by and between Stage Stores, Inc., with a
principal place of business at 10201 Main Street, Houston, Texas 77025 (the
"Company"), and James R. Scarborough, whose address is 177 Springfield Point
Road, Wolfeboro, New Hampshire 03894 (the "Consultant").

WHEREAS, the Consultant has served as Chief Executive Officer of the Company
since August 2000 and as Chairman of the Company’s Board of Directors (the
“Board”) since August 2001.

WHEREAS, the Consultant retired as Chief Executive Officer of the Company
effective the close of business on November 3, 2008, but remains a Director and
the Chairman of the Board; and

WHEREAS, because of his depth of knowledge of the Company’s business and his
significant retail experience, the Board believes that it is in the best
interests of the Company and its shareholders to retain the services of the
Consultant.

NOW THEREFORE, in consideration of the mutual terms and provisions set forth
herein, and other good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties agree as follows:

1.           Duties.  The Company hereby retains the Consultant to review,
evaluate, and make recommendations regarding the Company's operations in order
to facilitate a smooth transition of the office of Chief Executive Officer and
to otherwise assist the Company as may be requested from time to time by the
Company and the Board.

2.           Performance.  The Consultant agrees to devote the necessary time
and effort to the performance of his duties under this Agreement.  The
Consultant shall perform such reasonable duties, assume such responsibilities,
and devote such time, energy, and attention to the operations of the Company as
are assigned to the Consultant from time to time by the Company and the Board.

3.           Term.  The term of this Agreement shall begin on the Effective Date
and shall end on June 10, 2010 (the “Term”) unless earlier terminated or
extended by mutual written agreement of the parties.

4.           Compensation; Applicable Taxes; Director Compensation.  The Company
shall pay the Consultant a retainer of $350,000 per Term year (the “Retainer”)
during the Term of this Agreement.  The Retainer shall be payable in regular
installments in accordance with the Company’s general payroll practices
(currently $13,461.53 per each of 26 pay periods); provided, however, as the
Consultant is an independent contractor, the Retainer shall not be subject to
withholdings for applicable taxes, which shall be the sole responsibility of the
Consultant.  So long as this Agreement is in effect, the Consultant shall not be
entitled to receive any compensation he would otherwise receive or be entitled
to as a non-employee Director of the Company.

 
 

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5.           Benefits.  In addition to his entitlement to any and all medical,
compensatory or other benefits that may accrue to him as a result of his
retirement from the Company, the Consultant shall be eligible to participate in
the Company’s Non-Employee Director Health Plan.

6.           Equity Grants.  All awards previously granted the Consultant under
long-term incentive award agreements shall vest in accordance with their terms
(at the Target Number in the case of Performance Shares) and so long as he
remains a member of the Board he shall have until their stated expiration dates
to exercise those awards.

7.           Reimbursement of Expenses.  The Consultant shall be reimbursed by
the Company for any actual expenses he incurs in the performance of his duties
under this Agreement.

8.           Independent Contractor.  For purposes of this Agreement, the
Consultant shall be considered an "independent contractor" and shall not be
considered an employee of the Company.

9.           Binding Effect.  This Agreement shall be binding upon the parties
and their respective heirs, legal representatives, successors, and assigns.

9.           Governing Law; Jurisdiction; Prevailing Party.  This Agreement
shall be construed and enforced in accordance with laws of the State of Texas
without giving effect to principles of conflicts of laws and the courts, state
and federal, located in Harris County, Texas shall have exclusive jurisdiction
in regard to the resolution of any and all disputes arising under this
Agreement.  In the event either party commences a proceeding to enforce the
other party's obligations under this Agreement, the prevailing party in that
proceeding shall be entitled to recover its reasonable attorneys' fees in that
proceeding.

10.         Assignment.  This Agreement may not be assigned by the Consultant
and the Consultant may not delegate his duties under this Agreement.

11.         Amendments. This Agreement may not be amended except by an
instrument in writing signed by the parties.

12.         Notices.  Any notices required or permitted to be given under this
Agreement shall be made in writing and delivered personally or sent by United
States first class mail, postpaid, addressed or delivered to the addresses set
forth in the first paragraph of this Agreement.  Any such notices shall be
deemed given on personal delivery or on the third business day after being
deposited in the United States mail if mailed as provided above.

13.         Entire Agreement.  This Agreement constitutes the entire agreement
between the parties with respect to the subject matter of this Agreement and
supersedes the Employment Agreement between the parties dated January 30, 2002.

14.         Construction.  In the construction and interpretation of the terms
of this Agreement, the rule of construction that a document is to be construed
more strictly against the party who prepared it shall not be applied, it being
agreed that both parties participated in the preparation of the final form of
this Agreement.

 
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15.           Counterparts.  This Agreement may be executed in separate
counterparts, each of which when so executed and delivered will be deemed an
original and both of which together shall constitute one and the same
instrument.  Counterparts may be delivered by facsimile or email and any such
executed counterpart delivered by facsimile or email shall be deemed an
original.

This Agreement has been executed as of the Effective Date.

Company:
Stage Stores, Inc.
             
By:
/s/  Andrew T. Hall
   
Andrew T. Hall, President
           
Consultant:
 
/s/  James R. Scarborough
   
James R. Scarborough

 
 
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