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Exhibit 10.7

 
EXECUTIVE EMPLOYMENT AGREEMENT

This EXECUTIVE EMPLOYMENT AGREEMENT (this “Agreement”) is entered into effective
this 18th day of March, 2009 (the “Effective Date”) by and between Cabela’s
Incorporated, a Delaware Corporation (“Company”), and Dennis Highby
(“Executive”).

R E C I T A L S

WHEREAS, Company is a leading specialty retailer and direct marketer of hunting,
fishing, camping and related outdoor merchandise (the “Business”);

WHEREAS; Executive is currently serving as President and Chief Executive Officer
and a director of Company, as well as an officer and director for certain
subsidiaries of Company; and

WHEREAS, Company desires to continue to employ Executive but to transition
Executive to the position of a Vice Chairman of Company’s Board of Directors
(“Board”) on the terms and conditions set forth below, and Executive desires to
accept such employment.

NOW, THEREFORE, Company and Executive, in consideration of the mutual promises
and covenants set forth below, hereby agree as follows:

1.           Title and Duties.  Commencing on April 6, 2009 (the “Transition
Date”), Executive’s employed position with Company shall be a Vice Chairman of
the Board.  Executive’s principal employment duties and responsibilities shall
be those duties and responsibilities as the Board shall from time to time
reasonably assign to Executive.  Executive shall report directly to the Board
and the Board shall nominate Executive for election as a director of Company
each year during the Term of this Agreement, as defined below.  At the request
of the Board, Executive agrees to continue serving as an officer, director or
both of any subsidiary or affiliate of Company without additional compensation
or to resign such positions at the request of the Board in its sole discretion,
provided that acceptance of such positions does not significantly increase
Executive’s time commitments, fiduciary obligations or exposure to potential
liabilities.

2.           Full Time Efforts.  Executive shall devote his working time,
attention and best efforts to the performance of his business duties and
responsibilities under this Agreement.  Executive will not engage in any other
business or render any commercial or professional services, directly or
indirectly, to any other person or organization, whether for compensation or
otherwise, unless explicitly approved in writing by Company.  Notwithstanding
the foregoing, Executive (i) may make any passive investment where he is not
obligated or required to, and shall not in fact, devote any day-to-day
managerial efforts, (ii) may participate in charitable, academic, political or
community activities and boards, and in trade or professional organizations;
(iii) may accept speaking engagements, function as a a guide or escort for
outdoor excursions or engage in similar activities on an occasional basis; and
(iv) may hold directorships in other companies consistent with Company’s
Corporate Governance Guidelines.

 
 

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3.           Salary.  Executive’s current annual base salary of Seven Hundred
Twenty-One Thousand Nine Hundred Twenty-Four and No/100 Dollars ($721,924.00)
shall continue under this Agreement until June 30, 2009.  Beginning July 1,
2009, Executive’s annual base salary shall be Two Hundred Eighty-Eight Thousand
Nine Hundred Sixty-Three and No/100 Dollars ($288,963.00).  The base salaries
provided for in this Section (“Base Salary”) shall be paid to Executive less
applicable withholdings, in accordance with Company’s regular payroll practices
and policies.  The Compensation Committee of the Board (“Compensation
Committee”) shall review the Base Salary at least annually and, in the absolute
discretion of the Compensation Committee, may increase such Base Salary from
time to time based upon the performance of Executive, the financial condition of
Company, prevailing industry salary levels and such other factors as the
Compensation Committee shall consider relevant.

4.           Consulting Fee.  In addition to the Base Salary provided in Section
3 above, beginning July 1, 2009, Company shall pay Executive aggregate
consulting fees of Nine Hundred Fifty Thousand and No/100 Dollars ($950,000.00),
payable at an annual rate of Two Hundred Thousand and No/100 Dollars
($200,000.00) for Executive’s provision of consulting and advisory services to
Company as reasonably requested from time to time through March 31, 2014
(“Consulting Fees”).  The Consulting Fees shall be paid to Executive less
applicable withholdings, in accordance with Company’s regular payroll practices
and policies.

5.           Incentive Compensation.  As of the Transition Date, Executive’s
participation in Company’s bonus policies or programs shall cease, and Executive
shall not be eligible for future performance bonuses of any kind other than
bonuses that may be awarded at the sole discretion of Company; provided,
however, Executive shall be awarded a bonus for 2009 pro-rated through June 30,
2009 contingent on Company metrics (“Bonus”).  If Company reaches its target
bonus criteria, the pro-rated bonus is expected to be in the amount of Three
Hundred Sixty Thousand, Nine Hundred Sixty Two and No/100 Dollars
($360,962.00).  The Bonus hereunder shall be paid to Executive only if Executive
is actively employed at the time the 2009 bonuses are actually paid.

6.           Equity Compensation.  Except as expressly provided below, as of the
Transition Date, Executive shall no longer be entitled to participate in equity
award programs as an executive of Company; however, Executive may be eligible
for equity awards as a director of Company.  Executive’s eligibility for such
director equity awards shall be reviewed annually and be at the discretion of
the Compensation Committee.  Except as provided for herein, any unvested
restricted stock units and options, and other equity compensation awards,
previously granted to Executive will continue to vest in accordance with the
terms of such grants or awards.

a.           Currently Outstanding Awards.  Exhibit A sets forth Executive’s
currently outstanding options and restricted stock units.

b.           Final Award/Successful Transition RSUs.  Upon successful
completion, as determined by the Compensation Committee in its sole discretion,
of a transition to the new Chief Executive Officer and President, Executive
shall be awarded Successful Transition Restricted Stock Units (“Successful
Transition RSUs”).  The number of Successful Transition RSUs awarded to
Executive, if any, shall be determined by dividing $288,963 by the closing price
of one share of the Company’s common stock on the New York Stock Exchange on the
grant date, which shall be no later than March 2010.  The Successful Transition
RSUs awarded, if any, under this subsection 6.b shall vest in whole on the third
(3rd) anniversary of the grant date.

 
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7.           Benefits.  Executive shall continue to be eligible to participate
in any employee benefit plans and programs as in effect from time to time and
generally made available to similarly situated executives of Company, in a
manner consistent with the terms and conditions of such plan or program, and on
a basis that is commensurate with Executive’s positions and duties with
Company.  Continuous health insurance coverage is of material importance to
Executive. From the Effective Date through March 21, 2014 (Executive’s 65th
birthday), the Company agrees to continuously provide Executive at Company
expense with health insurance coverage that is at least equivalent to that
provided to the Company’s senior executives.  In the event of a conflict between
any benefit plan or program and this Agreement, the terms of this Agreement
shall govern.

8.           Facilities and Support.  Executive will perform his services
hereunder at the principal office of Company, which is located in Sidney,
Nebraska.  Company shall furnish and pay for all facilities, equipment,
supplies, and services, including support staff, needed by Executive to perform
his duties hereunder, and all other similar expenses incurred as a result of
this employment or which are incidental to the performance of Executive’s duties
hereunder, in accordance with the uniform policies of Company enforced from time
to time.

9.           Expenses.  Executive shall continue to be entitled to reimbursement
of all reasonable expenses incurred by Executive in connection with the business
of Company in accordance with Company’s then-current policy concerning
reimbursable expenses as in effect from time to time and on a basis no less
favorable than that applicable to any other similarly situated executives of
Company, including, without limitation, cell phone, computer and internet access
expenses incurred by Executive at his residences in Nebraska and Minnesota to
maintain communications with Company, and legal fees and expenses incurred by
Executive with regard to this Agreement.

10.           Term and Termination.  This Agreement shall commence on the
Effective Date and shall continue until this Agreement and Executive’s
employment are automatically terminated upon the first to occur of the following
(“Effective Date of Termination”):

a.           Expiration.  March 31, 2014 (the “Natural Termination Date”).

b.           Death or Disability.  The date of Executive’s death or Executive’s
physical or mental disability which prevents Executive from performing the
essential functions of Executive’s duties as an employee of Company, with or
without reasonable accommodation as defined and required by the Americans with
Disabilities Act.

c.           Without Cause.  By either party, for any reason, upon thirty (30)
days written notice.

d.           For Cause.  At the election of Company, and subject to the
provisions of this Section 10.d, Executive may be terminated immediately upon
written notice by Company to Executive of his termination for Cause, provided
Company notifies Executive of its determination that Cause exists within one
hundred eighty (180) days of the action or omission on which such determination
is based.  For purposes of this Agreement, “Cause” for termination shall be
deemed to exist in the event of:

i.           the conviction of Executive of, or the entry of a plea of guilty or
nolo contendere by Executive to, a felony (exclusive of any felony relating to
negligent operation of a motor vehicle), or

 
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ii.           a breach of Executive’s duty of loyalty which is materially
detrimental to Company, or a failure or refusal to perform Executive’s duties or
adhere to Company rules consistent with the terms of this Agreement, or
Company’s reasonable and customary guidelines of employment or reasonable and
customary corporate governance guidelines or policies, including, without
limitation, Company’s Business Code of Conduct and Ethics, or to follow the
lawful directives of Company (provided such directives are consistent with the
terms of this Agreement) that continues for a period of thirty (30) days after
Company provides written notice to Executive of such breach and a reasonable
opportunity to cure such breach.

e.           For Good Reason.  Executive may terminate his employment
immediately, at his election, for Good Reason, upon written notice to
Company.  For purposes of this Agreement, “Good Reason” shall mean any of the
following actions or omissions, provided Executive notifies Company of his
determination that Good Reason exists within one hundred eighty (180) days of
the action or omission on which such determination is based:

i.           an involuntary reduction in Executive’s then-current Base Salary,

ii.           a material reduction or loss of employee benefits, in the
aggregate, both in terms of the amount of the benefit and the level of
Executive’s participation therein, enjoyed by Executive under the employee
benefit and welfare plans of Company,

iii.           the principal place of business at which Executive may perform
his duties is changed to a location more than fifty (50) miles from Sidney,
Nebraska, or

iv.           a breach by Company of any provision of this Agreement that
continues for a period of thirty (30) days after Executive provides written
notice to Company of such breach and a reasonable opportunity to cure such
breach.

Upon any notice of termination of this Agreement pursuant to Section 10.c above,
Company shall have the right, in its sole and absolute discretion, to
immediately relieve Executive of Executive duties hereunder, but to continue
paying Executive’s then-current Base Salary through the remainder of the notice
period.  If Executive is not relieved of Executive’s regular duties during this
notice period, Executive hereby acknowledges and agrees that Executive shall
continue to perform Executive’s duties hereunder in a professional and ethical
manner.

11.           Payments Upon Termination.

a.           Base Salary and Benefits.  Upon termination of this Agreement,
Company shall pay to Executive his then-current Base Salary, Consulting Fees,
unreimbursed business expenses, and other items earned by and owed to Executive
calculated through and including the Effective Date of Termination.  Executive’s
benefits shall be determined in accordance with Company’s benefit plans or
policies then in effect, provided that Company shall continue to provide health
insurance coverage to Executive as provided in Section 7 of this Agreement
unless this Agreement is terminated by the Company for Cause.  Executive shall
receive no further compensation or benefits of any kind, except as expressly
provided for herein.

 
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b.           Severance Benefits.  In the event this Agreement is terminated
before the Natural Termination Date by Company without Cause pursuant to Section
10.c above, or by Executive for Good Reason pursuant to Section 10.e above, or
due to the death or disability of Executive pursuant to Section 10.b above, and
subject to Executive’s execution of a separation agreement and full general
release of claims against Company in a form to be determined by Company:

i.           Severance.  Company shall pay Executive severance compensation
equal to the amount of Base Salary and Consulting Fees Executive would have been
entitled to through the Natural Termination Date of this Agreement (the
“Severance Compensation”). The Severance Compensation, less applicable
withholdings, shall be paid in equal monthly installments, with the first
monthly installment due on Company’s first regular payday following the
effective date of the general release discussed above.  Notwithstanding the
foregoing, to the extent Executive is determined to be a “specified employee”
within the meaning of U.S. Internal Revenue Code § 409A, all payments under this
Section shall be delayed for six (6) months following the Effective Date of
Termination.  All payments that accumulate during this six-month period shall be
paid in a lump sum on the date that is six (6) months and one (1) day following
the Effective Date of Termination.

ii.           Equity Vesting.  Any unvested stock options, restricted stock
units or other equity interests of Company awarded to Executive, including those
pursuant to Executive’s participation in the 2004 Stock Plan, shall fully vest
on the effective date of the general release discussed above (or on the date of
Executive’s death or disability if applicable) and Executive shall have twelve
(12) months from such date to exercise Executive’s vested equity interests.

iii.           Beneficiaries.  In the event of Executive’s death, Company shall
pay or deliver any amounts or property due hereunder to such beneficiary or
beneficiaries as Executive may have designated in writing and delivered to
Company prior to his death.  In the absence of any effective beneficiary
designation, such amounts or property shall be paid or delivered to Executive’s
spouse if she is then living, otherwise in equal shares to Executive’s then
living children.

12.           Termination of Authority.  Immediately upon the Effective Date of
Termination of Executive’s employment with Company for any reason,
notwithstanding anything else appearing in this Agreement or otherwise to the
contrary, Executive will cease performing duties for Company, other than those
post-employment obligations Executive is bound by.  Executive shall be without
any authority to bind Company or any of its subsidiaries or affiliates.  Upon
termination of employment, Executive shall be deemed to have resigned all
offices and director positions with Company and its subsidiaries and
affiliates.  On request of the Board, Executive shall complete such documents as
may be required to effect Executive’s resignations.

13.           Change in Control and Indemnification.  The parties acknowledge
that they remain bound by the provisions set forth in that certain Management
Change of Control Severance Agreement between Executive and Company, dated June
18, 2004 (“Change of Control Agreement”) and that certain Indemnification
Agreement between Executive and Company, dated June 18, 2004.

 
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14.           Confidential and Proprietary Information.  Executive acknowledges
that as an employee, officer and director of Company, Executive is and will
continue to be subject to policies and agreements intended for the protection of
Company’s confidential and proprietary information, trade secrets, and goodwill,
including, but not limited to, that certain Proprietary Matters Agreement
between Executive and Company, dated May 29, 2008 and any amendment and
restatement of that agreement.  As such, Employee expressly acknowledges that
the obligations under such policies and agreements are not superseded herein and
shall be used together with this Agreement to protect Company’s interest in its
confidential and proprietary information, trade secrets, and goodwill to the
fullest extent allowed by law.  In addition, Executive agrees that Company is
engaged in a highly competitive business.  Executive also acknowledges and
agrees that Executive’s services to Company have been of a special and unique
nature and value to Company, and that due to the nature of Executive’s position
Executive has obtained in-depth knowledge of Company’s business practices and
strategies, customer information and other information considered confidential
and proprietary to Company.  Therefore, Company and Executive agree, as follows:

a.           Non-Competition.  For eighteen (18) months following the Effective
Date of Termination for any reason, Executive shall not, without the express
written approval of the Board, directly or indirectly, on Executive’s own behalf
or on behalf of others, compete with Company, or work for or become associated
with any of Company’s competitors as an employee, independent contractor,
officer, director, investor or in any other capacity.  For purposes of this
Agreement, Company’s competitors shall include, without limitation, Bass Pro
Shops, Gander Mountain, Sportsman’s Warehouse, The Sportsman’s Guide, Orvis,
Dick’s Sporting Goods, Sports Authority, Big 5 Sporting Goods, Scheels, L.L.
Bean, Lands’ End, REI or any other multi-state and/or multi-channel retailer
engaged in the sale of products and/or services associated with hunting,
fishing, camping and/or casual outdoor apparel and footwear.  Occasional
speaking engagements, service as a guide or escort for outdoor excursions or
publication of articles or videos, or provision of services to a small, stand
alone sporting goods store shall not constitute competition for the purposes of
this subparagraph.  Executive agrees that the covenant contained in this
provision is reasonable in scope, necessary to protect Company’s legitimate
business interests and does not constitute a restraint of trade with respect to
Executive’s ability to obtain other employment or to provide services to third
parties. Executive expressly acknowledges and agrees that Company competes
heavily throughout North America, and as such, Company has legitimate and
significant interests in protecting its business from unfair competition
throughout the United States and Canada.

b.           Confidentiality.  Executive shall not, without the express written
consent of the Board, disclose Company’s Confidential Information to any third
party or entity, or use Company’s Confidential Information for any other purpose
than providing services to Company.  For purposes of this Agreement Company’s
“Confidential Information” shall mean any information not generally known by
third parties, including Company’s competitors or the general public, whether or
not expressly identified as confidential, including, without limitation,
information about Company’s software, software source codes, trade secrets,
marketing information, business plans, mergers and acquisitions, sales
information, training materials, data processing, internet or intranet services,
strategic plans, compensation, and finances, as well as information about
Company’s customers and potential customers, including their identities and
their business needs and practices.

 
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c.           Enforcement.  Because Executive’s services are unique and Executive
has knowledge of and access to Company’s Confidential Information, Executive
acknowledges and agrees that Company would be irreparably damaged in the event
of Executive’s non-performance or breach of this Section, and that money damages
would be inadequate for any such non-performance or breach.  Therefore, Company
or its successors and assigns shall be entitled, in addition to any other rights
and remedies existing in their favor, to an injunction or injunctions to prevent
any non-performance or breach of any such provisions.

15.           Assignment.  This Agreement and the rights, interests and
obligations of Company hereunder shall be assignable to and shall inure to the
benefit of any parent, subsidiary or affiliate of Company, or any other person,
corporation, partnership or entity that succeeds to all or substantially all of
the business or assets of Company.  This Agreement is not assignable by
Executive.

16.           Jurisdiction and Venue.  This Agreement shall be governed by,
construed, and enforced in accordance with the laws of the State of
Nebraska.  Each party agrees that any action by either party to enforce the
terms of this Agreement may be brought by the other party in an appropriate
state or federal court in Nebraska and waives all objections based upon lack of
jurisdiction or improper or inconvenient venue of any such court.

17.           Cooperation in Future Matters.  Executive hereby agrees that for a
period of eighteen (18) months following his termination of employment, he shall
cooperate with Company’s reasonable requests relating to matters that pertain to
Executive’s employment by Company, including, without limitation, providing
information or limited consultation as to such matters, participating in legal
proceedings, investigations or audits on behalf of Company, or otherwise making
himself reasonably available to Company for other related purposes. Any such
cooperation shall be performed at scheduled times taking into consideration
Executive’s other commitments, and Executive shall be compensated at a rate of
$250.00 per hour, plus expenses, or at a per diem rate to be agreed upon by the
parties, to the extent such cooperation is required on more than an occasional
and limited basis.  Executive shall not be required to perform such cooperation
to the extent it conflicts with any requirements of exclusivity of services for
another employer or otherwise, nor in any manner that in the good faith belief
of Executive would conflict with his rights under or ability to enforce this
Agreement.  Notwithstanding anything herein to the contrary, no cooperation
shall be required from Executive after his termination during any period of time
in which Executive is in a dispute with Company concerning any compensation or
arrangement or other benefit provided for herein.

18.           General.

a.           Notices.  All notices and other communications hereunder shall be
in writing or by written telecommunication, and shall be deemed to have been
duly given if delivered personally or if sent by overnight courier or by
certified mail, return receipt requested, postage prepaid or sent by written
telecommunication or telecopy, to the relevant address set forth below, or to
such other address as the recipient of such notice or communication shall have
specified in writing to the other party hereto, in accordance with this Section
14.a.

 
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If to Company, to:
Cabela’s Incorporated

 
ATTN:  Legal Department

 
One Cabela Drive

 
Sidney, Nebraska 69160

 
(308) 254-8060 (facsimile)

If to Executive, at his last place of business and residence shown on the
records of Company.

Any such notice shall be effective (i) if delivered personally, when received,
(ii) if sent by overnight courier, when receipted for, (iii) if mailed, five (5)
days after being mailed, and (iv) on confirmed receipt if sent by written
telecommunication or telecopy, provided a copy of such communication is sent by
regular mail, as described above.

b.           Reformation and Severability.  Executive and Company intend and
agree that if a court of competent jurisdiction determines that the scope of any
provision of this Agreement is too broad to be enforced as written, the court
should reform such provision(s) to such narrower scope as it determines to be
enforceable.  Executive and Company further agree that if any provision of this
Agreement is determined to be unenforceable for any reason, and such provision
cannot be reformed by the court as anticipated above, such provision shall be
deemed separate and severable and the unenforceability of any such provision
shall not invalidate or render unenforceable any of the remaining provisions
hereof.

c.           Waivers.  No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privileges, nor shall any single or partial exercise of any such right, power or
privilege preclude any further exercise thereof or the exercise of any other
right, power or privilege.

d.           Counterparts.  This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and same instrument.

e.           Entire Agreement.  This Agreement, including the initial paragraph,
the recitals to this Agreement, and the exhibit to this Agreement, each of which
are incorporated herein and made part of this Agreement by this reference,
contains the entire understanding of the parties, supersedes all prior
agreements and understandings, whether written or oral, relating to the subject
matter hereof and may not be amended except by a written instrument hereafter
signed by Executive and a duly authorized representative of the Company (other
than Executive).

f.           Survival.  The provisions of Sections 11 through 18 shall survive
the termination of this Agreement.

 
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IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto
have caused this Agreement to be duly executed as of the date first above
written.

CABELA’S INCORPORATED,
a Delaware corporation
                   
By:
/s/ James W. Cabela
 
/s/ Dennis Highby
 
James W. Cabela, Vice Chairman
 
Dennis Highby

 
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EXHIBIT A
TO
EXECUTIVE EMPLOYMENT AGREEMENT

1.      Outstanding Non-Qualified Stock Options

Grant Date
Grant Price
Granted
Vested
Expiration Date
5/1/2004
$20.00
238,550
 
238,550
5/1/2014
4/14/2005
 
$20.00
40,000
40,000
4/14/2015
5/9/2006
$19.35
 
40,000
16,000
5/9/2016
5/15/2007
 
$22.37
100,000
33,334
5/15/2015
5/22/2008
 
$15.25
100,000
0
5/22/2016
3/2/2009
$8.01
60,000
0
3/2/2017

2.           Outstanding Restricted Stock Units

Grant Date
Granted
Vested
Vesting Schedule
3/2/2009
60,000
0
1/3 on each of
1st, 2nd and 3rd
Anniversary of
Grant Date

 
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