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Exhibit 10.2
DUCKWALL-ALCO STORES, INC.
NON-QUALIFIED STOCK OPTION AGREEMENT
THIS AGREEMENT, made and entered into this 1st day
of July, 2008 (the “ Grant
Date ”), by and between
DUCKWALL-ALCO STORES, INC., a Kansas corporation (the
“ Company ”), and Lawrence J. Zigerelli (the “
Optionee ”).
WHEREAS, the Compensation Committee has determined
that the Optionee shall be granted an option to purchase shares of
common stock of the Company (the “ Common Stock ”) on the terms
and conditions herein set forth as a material inducement to the
Optionee to join the Company as its President and Chief Executive
Officer.
NOW, THEREFORE, in consideration of mutual promises
and covenants contained herein and other good and valuable
consideration paid by the Optionee to the Company, the parties
hereto do hereby agree as follows:
1.
Nature of the Option . This Option is not intended to be an
“Incentive Stock Option” as defined in and subject to
the limitations of Section 422A of the Internal Revenue Code of
1986 and it will not be treated as an Incentive Stock Option,
whether or not, by its terms, it meets the requirements of Section
422A.
2.
Grant of Option . Pursuant to the authorization of the
Compensation Committee, and subject to the terms, conditions and
provisions contained in this Agreement, the Company hereby grants
to the Optionee the right and option (the “
Option” ) to purchase from the Company, at the times
and on the terms and conditions hereinafter set forth, all or part
of an aggregate of 10,000 shares of Common Stock at the purchase
price of $9.05 per share, which is equal to the closing sale price
of the Common Stock on the NASDAQ Global Market on the Grant Date.
Exercises of this Option may be honored by issuing authorized and
unissued shares of Common Stock or, at the election of the Company,
by transferring shares of Common Stock which may at the time be
held by the Company as treasury shares.
3.
Exercise of Option . Optionee may exercise this Option by
delivery of written notice to the Company in the form attached as
Exhibit A, stating the number of shares of Common Stock with
respect to which the Option is being exercised, making such
representations, warranties and agreements with respect to such
shares of Common Stock as may be required by the Company, and
accompanied by full payment of the purchase price for the Common
Stock so purchased. Payment may be made in cash, by check, by
delivery of shares of Common Stock or in such other form or
combination of forms as will be acceptable to the Company. No
certificate for fractional shares of stock shall be issued by the
Company.
4.1 Subject
to Section 5 herein, this Option will vest (each date, a “
Vesting Date ”) as follows:
(a) 25%
of the Option will vest on the first anniversary of the Grant
Date,
(b) 50%
of the Option will vest on the second anniversary of the Grant
Date,
(c) 75% of
the Option will vest on the third anniversary of the Grant Date,
and
(d) 100%
of the Option will vest on the fourth anniversary of the Grant
Date.
4.2 Subject
to Section 5 herein, to the extent not earlier vested under Section
4.1,
(a) in
the event the Company shall not be the surviving corporation in any
merger, consolidation, or reorganization, or in the event of the
acquisition by another corporation of all or substantially all of
the assets of the Company and if such surviving, continuing,
successor or purchasing corporation does not agree to assume or
replace the Option granted hereunder in accordance with paragraph 9
of this Agreement, or in the event of the liquidation or
dissolution of the Company, the Option granted hereunder shall
become immediately exercisable to the extent of all of the
aggregate number of shares subject to this Option for a period
commencing 30 days immediately prior to and ending on the day
immediately prior to such merger, consolidation, reorganization or
acquisition of all or substantially all of the assets of the
Company, or the liquidation or dissolution of the
Company.
(b) Notwithstanding
the provisions of paragraph 4.1 of this Agreement, in the event of
a Change of Control of the Company, the Option granted hereunder
shall become immediately exercisable to the extent of all of the
aggregate number of shares subject to this Option. In the event of
a Change of Control, the Company shall notify the Optionee as soon
as practicable of the Optionee’s rights hereunder. For
purposes of this subparagraph (b), a “ Change of
Control ” means a change in control of the Company of a
nature that would be required to be reported in response to item
6(e) of Schedule 14A of Regulation 14A (in effect on the date
hereof) promulgated under the Securities Exchange Act of 1934, as
in effect on the date hereof (the “ Exchange Act
”); provided, however, that, without limitation, such a
change in control shall be deemed to have occurred upon the
occurrence of any of the following events:
(i) any
person (as such term is used in Section 13(d) and 14(d) of the
Exchange Act), other than the Company, becomes, after the date
hereof, the beneficial owner, directly or indirectly, of securities
of the Company representing 40 percent or more of the total voting
power of the Company’s then outstanding securities (“
Interested Shareholder ”);
(ii) less
than a majority of the members of the Board of Directors of the
Company are persons who were either nominated for election or
selected by (A) members of the Board of Directors of the Company
who were in office prior to the time any person became an
Interested Shareholder (the “ Continuing Directors
”), or (B) any successor to a Continuing Director;
(iii) the
merger or consolidation of the Company with any other entity, other
than a merger or consolidation which would result in the voting
securities (which term means any securities which vote generally in
the election of directors) of the Company outstanding immediately
prior thereto continuing to represent (either by remaining
outstanding or by being converted into voting securities of the
surviving entity) at least 80 percent of the total voting power
represented by the voting securities of the Company or such
surviving entity outstanding immediately after such merger or
consolidation; or
(iv) the
sale or disposition by the Company of all or substantially all of
the Company’s assets.
(c) The
Option shall be exercisable in the manner set fo
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