Document:

exhibit10-1.htm

    

      
        

      

    

    
 

    

    SEPARATION AGREEMENT AND RELEASE

    

    This
Separation Agreement and Release (“Agreement”) is made by and between Vicki
Marion (“Employee”) and Plantronics, Inc. (the “Company”) (collectively referred
to as the “Parties” or individually referred to as a “Party”).

    

    RECITALS

    

    WHEREAS,
Employee was employed by the Company;

    

    WHEREAS,
Employee signed an Employment Agreement with the Company on
October 3, 2007 (the “Confidentiality Agreement”);

     

    WHEREAS,
the Company and Employee have entered into Plantronics, Inc. Stock Option
Agreements with grant dates of October 3, 2007, May 2, 2008, October 27, 2008
and May 8, 2009, granting Employee the option to purchase shares of the
Company’s common stock subject to the terms and conditions of the Company’s 2003
Stock Plan and the Stock Option Agreements (collectively the “Stock
Agreements”);

    

    WHEREAS,
the Company and Employee have entered into Plantronics, Inc. Amended and
Restated 2003 Stock Plan Restricted Stock Award Agreements, with grant dates of
October 3, 2007 and October 27, 2008, granting Employee the right to purchase
shares of the Company’s common stock subject to the terms and conditions of the
Company’s 2003 Stock Plan and the Restricted Stock Purchase Agreements
(collectively the “Stock Agreements”), and further subject to the Company’s
option to repurchase the restricted stock, as set forth in the Restricted Stock
Purchase Agreements (the “Repurchase Option”);

    

    WHEREAS,
Employee was President and CEO of Altec Lansing, a division of the
Company;

    

    WHEREAS,
the Company sold Altec Lansing, on or about December 1, 2009;

    

    WHEREAS,
as of the closing of the sale, Employee resigned to continue as President and
CEO of Altec Lansing, LLC;

    

    WHEREAS,
the resignation of  Employee was by mutual agreement and was
specifically not a resignation for Good Reason as that term is defined in the
Plantronics, Inc. Change of Control Severance Agreement effective November 25,
2008 between Employee and the Company;

    

    WHEREAS,
Employee separated from employment with the Company effective December 1, 2009
(the “Separation Date”); and

    

    WHEREAS,
Employee is entitled to revoke this Agreement with regard to benefits provided
under the Older Workers Benefits Protection Act for up to seven (7) calendar
days after signature by the Employee. On the eighth day after the Employee signs
an Agreement in a form acceptable to Company, the Agreement shall be
irrevocable.

    

    WHEREAS,
the Parties wish to resolve any and all disputes, claims, complaints,
grievances, charges, actions, petitions, and demands that the Employee may have
against the Company and any of the Releasees as defined below, including, but
not limited to, any and all claims arising out of or in any way related to
Employee’s employment with or separation from the Company;

    

    NOW,
THEREFORE, in consideration of the mutual promises made herein, the Company and
Employee hereby agree as follows:

    

    

    

    

    COVENANTS

    

    1.   Consideration.

    

    a.           Payment.  The
Company agrees to pay Employee a lump sum of seven thousand five hundred dollars
($7,500) less applicable withholding within three (3) business days after this
Agreement becomes irrevocable.

    

    b.           Bonuses. Prior to her separation from the Company, the Employee
was a participant in the Plantronics Executive Incentive Program and a program
called the Vicki Marion “Turn Around” Incentive Plan. These bonus plans both
require Employee to be employed by the Company on the date that payout under
both of these bonus programs was to occur.
The
parties agree that if a bonus is earned under either bonus program in accord
with that program’s respective criteria, Employee will be paid pro rata all
bonuses earned through her Separation Date as compared to full year
participation in accordance with the terms of each respective bonus program in
which Employee participates except that the Employee need not remain an Employee
of the Company on either the last day of the fiscal year or the date that the
Company pays out the bonuses to qualify for the foregoing pro rata payout.
Measurement of bonuses will occur at their ordinary time for all Employees who
participate in the bonus program. All such applicable bonus determinations and
payouts, if any, will be made by June 15, 2010. If no bonus payment will be made
under a program, Employee will be notified or may request a determination by
June 15, 2010.

    

    2.   Stock.

    

    a.           Options. The Parties
agree that for purposes of determining the number of shares of the Company’s
common stock that Employee is entitled to purchase from the Company, pursuant to
the exercise of outstanding options, all vesting of options to purchase Company
stock that are not vested by the Separation Date shall be accelerated to vest on
the date that this Agreement becomes irrevocable and that as of that date
Employee will be considered to have vested in the options to purchase all shares
set forth on Exhibit A and that number equals seventy-five thousand (75,000)
shares and no more.  The exercise of Employee’s vested options and
shares shall continue to be governed by the terms and conditions of the
Company’s Stock Agreements. Employee shall not be subject to any Company imposed
blackout periods in which she is unable to exercise or trade Plantronics stock
unless she again becomes an employee of the Company.

    

    b.           Restricted
Stock.  The Parties agree that for purposes of determining the
number of shares of the Company’s common stock that have been released from the
Company’s Repurchase Option under the Stock Agreements, the Employee shall be
considered to have vested in, and the Company’s Repurchase Option shall be
considered to have been terminated as to, fifteen thousand (15,000)
shares  pursuant to the Restricted Stock Purchase Agreement and as set
forth on Exhibit B. All shares listed on Exhibit B, that  have not
vested as of the Employee’s Separation Date from the Company shall be
accelerated on the date that this Agreement becomes irrevocable and taxes on
those shares will be owed immediately after vesting occurs.  All
shares listed on Exhibit B, including those no longer subject to the Repurchase
Option, shall continue to be subject to all other terms of the Stock
Agreements.

    

    3.   Benefits.  Employee’s
health insurance benefits shall cease as of December 31, 2009, subject to
Employee’s right to continue her health insurance under COBRA. Except as
expressly set forth in this Agreement, Employee’s participation in all benefits
and incidents of employment, including, but not limited to, vesting in stock
options, and the continuing accrual of bonuses, vacation, and paid time off,
ceased as of the Separation Date.

    

    4.   Payment of Salary and
Receipt of All Benefits.  Employee acknowledges and represents
that, other than the consideration set forth in this Agreement, the Company has
paid or provided all salary, wages, bonuses for years prior to the Company’s
fiscal year 2010 accrued vacation/paid time off, premiums, leaves, housing
allowances, relocation costs, interest, severance, outplacement costs, fees,
reimbursable expenses, commissions, stock, stock options, vesting, and any and
all other benefits and compensation due to Employee. The parties agree that
bonuses for the Company’s fiscal year 2010 and a final determination of the
Vicki Marion “Turn Around” Incentive Plan are exempt from the representations in
this section and will be handled in accordance with section 1 b. of this
Agreement.

    

    5.           Resignation.  The
Company shall process the termination of Employee’s employment as a resignation,
and shall represent that Employee resigned from her employment to any potential
future employer who contacts the Company’s human resources department and
requests confirmation of this information.

    

    6.           Release of
Claims.  Employee agrees that the foregoing consideration
represents settlement in full of all outstanding obligations (except for those
expressly addressed in this Agreement as remaining outstanding) owed to Employee
by the Company  and its current and former officers, directors,
employees, agents, investors, attorneys, shareholders, administrators,
affiliates, benefit plans, plan administrators, insurers, trustees, divisions,
and subsidiaries, and predecessor and successor corporations and assigns
(collectively, the “Releasees”).  Employee, on her own behalf and on
behalf of her respective heirs, family members, executors, agents, and assigns,
hereby and forever releases the Releasees from, and agrees not to sue
concerning, or in any manner to institute, prosecute, or pursue, any claim,
complaint, charge, duty, obligation, demand, or cause of action relating to any
matters of any kind, whether presently known or unknown, suspected or
unsuspected, that Employee may possess against any of the Releasees arising from
any omissions, acts, facts, or damages that have occurred up until and including
the Effective Date of this Agreement, including, without
limitation:

    

    a.           any
and all claims relating to or arising from Employee’s employment relationship
with the Company and the termination of that relationship;

    

    b.           any
and all claims relating to, or arising from, Employee’s right to purchase, or
actual purchase of shares of stock of the Company, including, without
limitation, any claims for fraud, misrepresentation, breach of fiduciary duty,
breach of duty under applicable state corporate law, and securities fraud under
any state or federal law;

    

    c.           any
and all claims for wrongful discharge of employment; termination in violation of
public policy; discrimination; harassment; retaliation; breach of contract, both
express and implied; breach of covenant of good faith and fair dealing, both
express and implied; promissory estoppel; negligent or intentional infliction of
emotional distress; fraud; negligent or intentional misrepresentation; negligent
or intentional interference with contract or prospective economic advantage;
unfair business practices; defamation; libel; slander; negligence; personal
injury; assault; battery; invasion of privacy; false imprisonment; conversion;
and disability benefits;

    

    d.           any
and all claims for violation of any federal, state, or municipal statute,
including, but not limited to, Title VII of the Civil Rights Act of 1964;
the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with
Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the
Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the
Older Workers Benefit Protection Act; the Employee Retirement
Income Security Act of 1974; the Worker Adjustment and Retraining Notification
Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the
California Family Rights Act; the California Labor Code; the California Workers’
Compensation Act; and the California Fair Employment and Housing
Act;

     

    e.           any
and all claims for violation of the federal or any state
constitution;

    

    f.           any
and all claims arising out of any other laws and regulations relating to
employment or employment discrimination;

    

    g.           any
claim for any loss, cost, damage, or expense arising out of any dispute over the
non-withholding or other tax treatment of any of the proceeds received by
Employee as a result of this Agreement; and

    

    h.           any
and all claims for attorneys’ fees and costs.

    

    Notwithstanding
the foregoing, the parties agree that the Company will provide indemnification
to Employee for any third party claims made against the Employee from
occurrences that arose during Employee’s period as an employee of the
Company.  The terms of the indemnification shall be the same as were
provided when Employee was employed by the Company. Further, notwithstanding the
foregoing, to the extent that Directors and Officers Liability insurance covers
Employee, it is not released herein and will be provided.

    

    Further,
notwithstanding the foregoing, the Company acknowledges that Employee has vested
in 42,430 non-qualified stock options and 6,250 shares of restricted stock of
the Company for which the Company repurchase right was removed prior to the
acceleration of equity referenced above and the Company will not contest the
status of those shares as being vested and the Company’s repurchase right as
being removed. Further, notwithstanding the foregoing, Employee has a vested 401
K plan account with the Company and the Employee has full ownership of that
account. Claims regarding the vested stock options and restricted stock for
which the repurchase rights are removed are carved out of the release provided
in this section.

    

    Employee
agrees that the release set forth in this section shall be and remain in effect
in all respects as a complete general release as to the matters
released.  This release does not extend to any obligations incurred
under this Agreement.  This release does not release claims that
cannot be released as a matter of law, including, but not limited to, Employee’s
right to file a charge with or participate in a charge by the Equal Employment
Opportunity Commission, or any other local, state, or federal administrative
body or government agency that is authorized to enforce or administer laws
related to employment, against the Company (with the understanding that any such
filing or participation does not give Employee the right to recover any monetary
damages against the Company; Employee’s release of claims herein bars Employee
from recovering such monetary relief from the Company).  Employee
represents that she has made no assignment or transfer of any right, claim,
complaint, charge, duty, obligation, demand, cause of action, or other matter
waived or released by this Section.

    

    7.           Acknowledgment of Waiver of
Claims under ADEA.  Employee
acknowledges that she is waiving and releasing any rights she may have under the
Age Discrimination in Employment Act of 1967 ("ADEA"), and that this waiver and
release is knowing and voluntary.  Employee agrees that this waiver
and release does not apply to any rights or claims that may arise under the ADEA
after the Effective Date of this Agreement.  Employee acknowledges
that the consideration given for this waiver and release is in addition to
anything of value to which Employee was already entitled.  Employee
further acknowledges that she has been advised by this writing that: (a) she
should consult with an attorney prior to executing
this Agreement; (b) she has twenty-one (21) days within which to consider this
Agreement; (c) she has seven (7) days following her execution of this Agreement
to revoke this Agreement; (d) this Agreement shall not be effective until after
the revocation period has expired; and (e) nothing in this Agreement prevents or
precludes Employee from challenging or seeking a determination in good faith of
the validity of this waiver under the ADEA, nor does it impose any condition
precedent, penalties, or costs for doing so, unless specifically authorized by
federal law.  In the event Employee signs this Agreement and returns
it to the Company in less than the 21-day period identified above, Employee
hereby acknowledges that she has freely and voluntarily chosen to waive the time
period allotted for considering this Agreement. The parties agree that changes,
whether material or immaterial, do not restart the running of the 21-day
period.

    

    Employee
acknowledges and understands that revocation must be accomplished by a written
notification to Rich Pickard at rich.pickard@plantronics.com
or by fax at 831-426-2965 that is received prior to the Effective
Date.

    

    8.           California Civil Code
Section 1542.  Employee acknowledges that she has been advised
to consult with legal counsel and is familiar with the provisions of California
Civil Code Section 1542, a statute that otherwise prohibits the release of
unknown claims, which provides as follows:

    

    A GENERAL
RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, WHICH IF KNOWN
BY HIM OR HER MUST HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE
DEBTOR.

    

    Employee,
being aware of said code section, agrees to expressly waive any rights she may
have thereunder, as well as under any other statute or common law principles of
similar effect.

    

    9.           No Pending or Future
Lawsuits.  Employee  represents that she has no
lawsuits, claims, or actions pending in her name, or on behalf of any other
person or entity, against the Company or any of the other Releasees. Employee
also represents that she does not intend to bring any claims on her own behalf
or on behalf of any other person or entity against the Company or any of the
other Releasees. Company represents that it has no lawsuits, claims or actions
pending in its name or on behalf of any other person or entity against the
Employee.

    

    10.           Confidentiality.  Employee
agrees to maintain in complete confidence the existence of this Agreement, the
contents and terms of this Agreement, and the consideration for this Agreement
(hereinafter collectively referred to as “Separation
Information”).  Except as required by law, Employee may disclose
Separation Information only to her immediate family members, the Court in any
proceedings to enforce the terms of this Agreement, Employee’s attorney(s), and
Employee’s accountant and any professional tax advisor to the extent that they
need to know the Separation Information in order to provide advice on tax
treatment or to prepare tax returns, and must prevent disclosure of any
Separation Information to all other third parties.  Employee agrees
that she will not publicize, directly or indirectly, any Separation Information.
Company agrees to maintain in complete confidence the existence of this
Agreement, and the Separation Information. Except as required by law, Company
may disclose Separation Information to those who have a need to know this
information such as members of the Company’s Finance Department, Legal
Department, Human Resources Department, CEO, CFO, outside counsel, outside
auditors. Either party may disclose the Separation Information to the extent
that it is required to do so to comply with law.

    

    11.           Trade Secrets and
Confidential Information/Company Property.  Employee reaffirms
and agrees to observe and abide by the terms of the Confidentiality Agreement,
specifically including the provisions therein regarding nondisclosure of the
Company’s trade secrets and confidential and proprietary information, and
non-solicitation of Company employees.  Employee agrees that she will
not disclose the Company’s trade secrets and confidential and proprietary
information.

     
 

    12.           No
Cooperation.  Employee agrees that except for Prophet Equity
and Altec Lasnsing LLC or its affiliates, she will not knowingly encourage,
counsel, or assist any attorneys or their clients in the presentation or
prosecution of any disputes, differences, grievances, claims, charges, or
complaints by any third party against any of the Releasees, unless under a
subpoena or other court order to do so or as related directly to the ADEA waiver
in this Agreement.  Employee agrees both to immediately notify the
Company upon receipt of any such subpoena or court order, and to furnish, within
three (3) business days of its receipt, a copy of such subpoena or other court
order.  If approached by anyone for counsel or assistance in the
presentation or prosecution of any disputes, differences, grievances, claims,
charges, or complaints against any of the Releasees, Employee shall state no
more than that she cannot provide counsel or assistance.

    

    Nondisparagement.  Employee
agrees to refrain from any disparagement, defamation, libel, or slander of any
of the Releasees, and agrees to refrain from any tortious interference with the
contracts and relationships of any of the Releasees.  Employee shall
direct any inquiries by potential future employers to the Company’s human
resources department, which shall use its best efforts to provide only the
Employee’s last position and dates of employment.

     

         
13.           Breach.  In
addition to the rights provided in the “Attorneys’ Fees” section below, Employee
acknowledges and agrees that any material breach of this Agreement, unless such
breach constitutes a legal action by Employee challenging or seeking a
determination in good faith of the validity of the waiver herein under the ADEA,
or of any provision of the Confidentiality Agreement shall entitle the Company
immediately to recover and/or cease providing the consideration provided to
Employee under this Agreement and to obtain damages, except as provided by
law.

    

    14.           No Admission of
Liability.  Employee understands and acknowledges that this
Agreement constitutes a compromise and settlement of any and all actual or
potential disputed claims by Employee.  No action taken by the Company
hereto, either previously or in connection with this Agreement, shall be deemed
or construed to be (a) an admission of the truth or falsity of any actual
or potential claims or (b) an acknowledgment or admission by the Company of
any fault or liability whatsoever to Employee or to any third
party.

    

    15.           Costs.  The
Parties shall each bear their own costs, attorneys’ fees, and other fees
incurred in connection with the preparation of this Agreement.

    

     

    16.           Arbitration.

     

    The
Company and Employee each agree that any and all disputes arising out of the
terms of this Agreement, Employee’s employment by the Company, Employee’s
service as an officer or director of the Company, or Employee’s compensation and
benefits, their interpretation and any of the matters herein
released,  will be subject to binding arbitration under the
arbitration rules set forth in California Code of Civil Procedure Sections 1280
through 1294.2, including Section 1281.8 (the “Act”), and pursuant to California
law.  Disputes that the Company and Employee agree to arbitrate, and
thereby agree to waive any right to a trial by jury, include any statutory
claims under local, state, or federal law, including, but not limited to, claims
under Title VII of the Civil Rights Act of 1964, the Americans with Disabilities
Act of 1990, the Age Discrimination in Employment Act of 1967, the Older Workers
Benefit Protection Act, the Sarbanes-Oxley Act, the Worker Adjustment and
Retraining Notification Act, the California Fair Employment and Housing Act, the
Family and Medical Leave Act, the California Family Rights Act, the California
Labor Code, claims of harassment, discrimination, and wrongful termination, and
any statutory or common law claims.  The Company and Employee further
understand that this agreement to arbitrate also applies to any disputes that
the Company may have with Employee.

     

    Procedure.  The
Company and Employee agree that any arbitration will be administered by Judicial
Arbitration & Mediation Services, Inc. (“JAMS”), pursuant to its Employment
Arbitration Rules & Procedures (the “JAMS Rules”).  The Arbitrator
will have the power to decide any motions brought by any party to the
arbitration, including motions for summary judgment and/or adjudication, motions
to dismiss and demurrers, and motions for class certification, prior to any
arbitration hearing.  The Arbitrator will have the power to award any
remedies available under applicable law, and the Arbitrator will award
attorneys’ fees and costs to the prevailing party, except as prohibited by
law.  The Company will pay for any administrative or hearing fees
charged by the Arbitrator or JAMS except that Employee will pay any filing fees
associated with any arbitration that Employee initiates, but only so much of the
filing fees as Employee would have instead paid had he or she filed a complaint
in a court of law.  The Arbitrator will administer and conduct any
arbitration in accordance with California law, including the California Code of
Civil Procedure, and the Arbitrator will apply substantive and procedural
California law to any dispute or claim, without reference to rules of conflict
of law.  To the extent that the JAMS Rules conflict with California
law, California law will take precedence.  The decision of the
Arbitrator will be in writing.  Any arbitration under this Agreement
will be conducted in Santa Cruz County, California.

     

    Remedy.  Except
as provided by the Act and this Agreement, arbitration will be the sole,
exclusive, and final remedy for any dispute between Employee and the
Company.  Accordingly, except as provided for by the Act and this
Agreement, neither Employee nor the Company will be permitted to pursue court
action regarding claims that are subject to arbitration.

     

    Administrative
Relief.  Employee understands that this Agreement does not
prohibit him or her from pursuing any administrative claim with a local, state,
or federal administrative body or government agency that is authorized to
enforce or administer laws related to employment, including, but not limited to,
the Department of Fair Employment and Housing, the Equal Employment Opportunity
Commission, the National Labor Relations Board, or the Workers’ Compensation
Board.  This Agreement does, however, preclude Employee from pursuing
court action regarding any such claim, except as permitted by law.

     

    Voluntary Nature of
Agreement.  Each of the Company and Employee acknowledges and
agrees that such party is executing this Agreement voluntarily and without any
duress or undue influence by anyone.  Employee further acknowledges
and agrees that he or she has carefully read this Agreement and has asked any
questions needed for him or her to understand the terms, consequences, and
binding effect of this Agreement and fully understand it, including that Employee is
waiving his or her right to a jury trial.  Finally, Employee
agrees that he or she has been provided an opportunity to seek the advice of an
attorney of his or her choice before signing this Agreement.

    

    17.           Tax
Consequences.  The Company makes no representations or
warranties with respect to the tax consequences of the payments and any other
consideration provided to Employee or made on her behalf under the terms of this
Agreement.  Employee agrees and understands that she is responsible
for payment, if any, of local, state, and/or federal taxes on the payments and
any other consideration provided hereunder by the Company and any penalties or
assessments thereon.  Employee further agrees to indemnify and hold
the Company harmless from any claims, demands, deficiencies, penalties,
interest, assessments, executions, judgments, or recoveries by any government
agency against the Company for any amounts claimed due on account of (a)
Employee’s failure to pay or delayed payment of federal or state taxes, or (b)
damages sustained by the Company by reason of any such claims, including
attorneys’ fees and costs.

    

    18.           Section
409A.  If the Company determines that any cash severance
benefits, health continuation coverage, or additional benefits provided under
this Agreement shall fail to satisfy the distribution requirement of Section
409A(a)(2)(A) or the Internal Revenue Code of 1986, as amended (the “Code”) as
result of Section 409A(a)(2)(B)(i) of the Code, the payment of such benefit
shall be accelerated to the minimum extent necessary so that the benefit is not
subject to the provisions of Section 409(a)(1) of the Code.  (It is
the intention of the preceding sentence to apply the short-term deferral
provisions of Section 409A of the Code, and the regulations and other guidance
thereunder, to such payments, and the payment schedule as revised after the
application of the preceding sentence shall be referred to as the “Revised
Payment Schedule.”)  However, if there is no Revised Payment Schedule
that would avoid the application of Section 409A(a)(1) of the Code, the payment
of such benefits shall not be paid pursuant to a Revised Payment Schedule and
instead shall be delayed to the minimum extent necessary so that such benefits
are not subject to the provisions of section 409A(a)(1) of the
Code.  The Company may attach conditions to or adjust the amounts paid
pursuant to this paragraph to preserve, as closely as possible, the economic
consequences that would have applied in the absence of this paragraph; provided, however, that no
such condition or adjustment shall result in the payments being subject to
Section 409A(a)(1) of the Code.

    

    19.           Further Compliance with
Section 409A.

    

    a.           Notwithstanding
anything to the contrary in this Agreement, if Employee is a “specified
employee” within the meaning of Section 409A of the Internal Revenue Code of
1986, as amended (the “Code”) and the final Treasury Regulations and any
guidance promulgated thereunder (“Section 409A”) at the time of Employee’s
termination of employment (other than due to death), and the severance payable
to Employee, if any, pursuant to this Agreement, when considered together with
any other severance payments or separation benefits that are considered deferred
compensation under Section 409A (together, the “Deferred Compensation Separation
Benefits”) that are payable within the first six (6) months following Employee’s
termination of employment, will become payable on the first payroll date that
occurs on or after the date six (6) months and one (1) day following the date of
Employee’s termination of employment.  All subsequent Deferred
Compensation Separation Benefits, if any, will be payable in accordance with the
payment schedule applicable to each payment or
benefit.  Notwithstanding anything herein to the contrary, if Employee
dies following Employee’s termination of employment but prior to the six (6)
month anniversary of Employee’s termination of employment, then any payments
delayed in accordance with this paragraph will be payable in a lump sum as soon
as administratively practicable after the date of Employee’s death and all other
Deferred Compensation Separation Benefits will be payable in accordance with the
payment schedule applicable to each payment or benefit.  Each payment
and benefit payable under this Agreement is intended to constitute separate
payments for purposes of Section 1.409A-2(b)(2) of the Treasury
Regulations.

    

    b.           Any
amount paid under the Agreement that satisfies the requirements of the
“short-term deferral” rule set forth in Section 1.409A-1(b)(4) of the Treasury
Regulations will not constitute Deferred Compensation Separation Benefits for
purposes of this Agreement.  Any amount paid under the Agreement that
qualifies as a payment made as a result of an involuntary separation from
service pursuant to Section 1.409A-1(b)(9)(iii) of the Treasury Regulations that
does not exceed the Section 409A Limit will not constitute Deferred Compensation
Separation Benefits for purposes of this Agreement.  For this purpose,
“Section 409A Limit” means the lesser of two (2) times: (i) Employee’s
annualized compensation based upon the annual rate of pay paid to Employee
during the Company’s taxable year preceding the Company’s taxable year of
Employee’s termination of employment as determined under Treasury Regulation
1.409A-1(b)(9)(iii)(A)(1) and any Internal Revenue Service guidance issued with
respect thereto; or (ii) the maximum amount that may be taken into account under
a qualified plan pursuant to Section 401(a)(17) of the Code for the year in
which Employee’s employment is terminated.

    

    c.           The
foregoing provisions are intended to comply with the requirements of Section
409A so that none of the severance payments and benefits to be provided
hereunder will be subject to the additional tax imposed under Section 409A, and
any ambiguities herein will be interpreted to so comply.  Employee and
the Company agree to work together in good faith to consider amendments to this
Agreement and to take such reasonable actions which are necessary, appropriate
or desirable to avoid imposition of any additional tax or income recognition
prior to actual payment to Employee under Section 409A.

    

    20.           Authority.  The
Company represents and warrants that the undersigned has the authority to act on
behalf of the Company and to bind the Company and all who may claim through it
to the terms and conditions of this Agreement.  Employee represents
and warrants that she has the capacity to act on her own behalf and on behalf of
all who might claim through her to bind them to the terms and conditions of this
Agreement.  Each Party warrants and represents that there are no liens
or claims of lien or assignments in law or equity or otherwise of or against any
of the claims or causes of action released herein.

    

    21.           No
Representations.  Employee represents that she has had an
opportunity to consult with an attorney, and has carefully read and understands
the scope and effect of the provisions of this Agreement.  Employee
has not relied upon any representations or statements made by the Company that
are not specifically set forth in this Agreement.

    

    22.           Severability.  In
the event that any provision or any portion of any provision hereof or any
surviving agreement made a part hereof becomes or is declared by a court of
competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this
Agreement shall continue in full force and effect without said provision or
portion of provision.

    

    23.           Attorneys’
Fees.  Except with regard to a legal action challenging or
seeking a determination in good faith of the validity of the waiver herein under
the ADEA, in the event that either Party brings an action to enforce or effect
its rights under this Agreement, the prevailing Party shall be entitled to
recover its costs and expenses, including the costs of  litigation,
court fees, and reasonable attorneys’ fees incurred in connection with such an
action.

    

    24.           Entire
Agreement.  This Agreement represents the entire agreement and
understanding between the Company and Employee concerning the subject matter of
this Agreement and Employee’s employment with and separation from the Company
and the events leading thereto and associated therewith, and supersedes and
replaces any and all prior agreements and understandings concerning the subject
matter of this Agreement and Employee’s relationship with the Company, with the
exception of the Confidentiality Agreement and the Stock
Agreements.

    

    25.           No Oral
Modification.  This Agreement may only be amended in a writing
signed by Employee and the Company’s Chief Executive Officer.

    

    26.           Governing
Law.  This Agreement shall be governed by the laws of the State
of California, without regard for choice-of-law provisions.  Employee
consents to personal and exclusive jurisdiction and venue in the State of
California .

    

    27.           Effective
Date.  Employee understands that this Agreement shall be null
and void if not executed by her within twenty one (21)
days.   Each Party has seven (7) days after that Party signs this
Agreement to revoke it.  This Agreement will become effective on the
eighth (8th) day after Employee signed this Agreement, so long as it has been
signed by the Parties and has not been revoked by either Party before that date
(the “Effective Date”).

    

    28.           Counterparts.  This
Agreement may be executed in counterparts and by facsimile, and each counterpart
and facsimile shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned.

    

    29.           Voluntary Execution of
Agreement.  Employee understands and agrees that she executed
this Agreement voluntarily, without any duress or undue influence on the part or
behalf of the Company or any third party, with the full intent of releasing all
of her claims against the Company and any of the other
Releasees.  Employee acknowledges that:

    

    a.           she
has read this Agreement;

    

    
      	
               
      

            	
              b.

            	
              she
      has been represented in the preparation, negotiation, and execution of
      this Agreement by legal counsel of her own choice or has elected not to
      retain legal counsel;

            

    

    

    
      	
               
      

            	
              c.

            	
              she
      understands the terms and consequences of this Agreement and of the
      releases it contains; and

            

    

    

    d.           she
is fully aware of the legal and binding effect of this Agreement.

    

    IN
WITNESS WHEREOF, the Parties have executed this Agreement on the respective
dates set forth below.

    

    

     

                         Vicki Marion, an
individual

       

    

    Dated:  February 21,
2010                                                     /s/ Vicki
Marion           

     Vicki Marion

    

    

    

     

                                                                            Plantronics, Inc.

     

    

    Dated:  _________,
2010                                          
By:   /s/ S. Kenneth
Kannappan                                                                      

                         S.
Kenneth Kannappan

                         President
and CEO

    

    

    

    

    Approved
as to Form:

     

    Dated:  _______________                                        By:   __________________

                         Gregory
Schick                     

    
                           Sheppard, Mullin, Richter &
Hampton

      
                             Counsel for Vicki
Marionwilsonempagmt.htm

    

      

      

      Duckwall-Alco
Stores, Inc.

      401
Cottage Street

      Abilene,
Kansas 67410

      

      

      

      February
11, 2010

      

      

      

      Mr.
Richard E. Wilson

      48
Woodbine Street

      Newton,
MA  02466

      

      Re: Employment Agreement

      

      This is your Employment
Agreement (the “Agreement’) with Duckwall-Alco Stores, Inc., a
Kansas corporation (the “Company”). It sets forth the
terms of your employment with the Company.

      

      1.  Your Position, Performance and
Other Activities

       

      (a) Position. You will be
employed in the position of President and Chief Executive Officer of the
Company.

       

      (b)   Authority, Responsibilities and
Reporting. You will report directly to the Company’s Board of Directors
(the “Board’) and be
given such duties, authorities and responsibilities that are consistent with
your being the Company’s most senior executive officer as determined by the
Board.

       

      (c) Performance. During your
employment, except as permitted under Section 1(d), you will devote your full
business time and attention to the Company and will use good faith efforts to
discharge your responsibilities under this Agreement to the best of your
ability. During your employment, your primary work place will be at the
Company’s corporate headquarters in Abilene, Kansas.

       

      (d) Other Activities. You may (1)
continue to serve as a member of the Board of Directors of any civic or
charitable boards in your individual capacity, and (2) manage personal
investments, so long as (A) these activities do not interfere with your
performance of your responsibilities under this Agreement, and (B) any service
on a civic or charitable board is approved by the Board.

       

      2. 
 Employment
Period

       

      Your employment under this Agreement
will begin on February 15, 2010 (the “Start Date” of this
Agreement) and will thereafter govern your employment with the Company until the
effective date of termination of your employment in accordance with Section 5
(such period of your employment, the “Employment Period"). During
the Employment Period, you will be an “at-will” employee of the
Company.

      

      3. 
 Your
Compensation

       

      (a) Salary. During your
employment, you will receive an annual base salary of $450,000.00 (your “Salary”). Your Salary will
be paid in accordance with the Company’s normal practices for senior
executives.

       

      (b) Bonus.

       

      (i) For each
Bonus Period (as defined below), you will be eligible to receive an annual bonus
(your “Bonus”), subject
to the Company’s achievement of certain financial objectives as more
particularly described below. Your Bonus will be paid in cash within 60 days
following the end of the applicable Bonus Period. “Bonus Period” means each of
the First Bonus Period and the Subsequent Bonus Period. “First Bonus Period” means
the period commencing on the Start Date and ending at the end of the fiscal
year. “Subsequent Bonus
Period” means each period commencing at the start of each fiscal year
subsequent to the First Bonus Period and ending at the end of such fiscal year.
Any Bonus payments will be prorated based on changes in Salary that may occur
during the fiscal year.

       

      (ii) The
amount of the Bonus will be determined based upon the Company’s Return on Equity
(ROE) (as defined below) for the applicable Bonus Period as described
below:

       

      
        	
                ROE

              	
                Amount
      of Bonus

                 

              
	
                7.49%
      or less

              	
                No
      Bonus

                 

              
	
                7.5%
      to 9.99%

              	
                50%
      of Salary

                 

              
	
                10%
      to 12.49%

              	
                75%
      of Salary

                 

              
	
                12.5%
      to 14.99%

              	
                100%
      of Salary

                 

              
	
                15%
      to 17.49%

              	
                125%
      of Salary

                 

              
	
                17.5
      or more

              	
                150%
      of Salary

              

      

      

      “Return on Equity”, for any
12 month period, means earnings from continuing operations before discontinued
operations for such period, excluding cumulative changes in accounting and
one-time termination benefits recognized in accordance with FAS 146, divided by
the stockholders’ equity at the end of the immediately preceding 12-month
period.

      

      (iii) You agree
to reimburse the Company for, or have the Company offset against additional
amounts owed to you under this Agreement or otherwise, any Bonus paid to you to
the extent that such Bonus was paid on financial information which is later
determined to be materially overstated and results in any financial restatement,
which would have lessened the amount paid to you.

       

      (c) Initial
Incentive Awards.

       

      (i) In
addition to your Salary and Bonus, subject to approval of the Board, on or
promptly following your Start Date, you will be awarded options to purchase (1)
100,000 shares of the Company’s common stock (the “Options”), subject to the
provisions of the Company’s Incentive Stock Option Plan (the “ISO Plan”) and the option
award agreement thereunder.  The exercise price of the Options will be
the closing sale price of the Company’s common stock on the NASDAQ Global Market
on the date of grant (the “Option Grant
Date”).

       

      (ii) Your
Options will become vested and exercisable in accordance with the following
schedule, provided you are employed by the Company on the applicable vesting
date:

       

      •           25%
will vest 12 months from the Option Grant Date;

      •           25%
will vest 24 months from the Option Grant Date;

      •           25%
will vest 36 months from the Option Grant Date; and

      •           25%
will vest 48 months from the Option Grant Date.

       

      Upon a “Change of Control” (as defined
in the ISO Plan), all your Options that have not yet vested shall vest and
become exercisable in accordance with the terms of the option award agreements,
provided that within eighteen (18) months of a Change of Control, you have been
terminated by the Company without Cause or you have terminated your employment
for Good Reason, as those terms are defined in this
Agreement.  Further, should your options vest as a result of a Change
of Control under this Paragraph, your then current salary will continue for
eighteen (18) months under Paragraph 6(b)(2)(A), rather than for twelve (12)
months.

      

      4. 
Other
Employee Benefits

       

      (a) Vacation. You will be
entitled to four weeks of paid annual vacation during your
employment.

       

      (b) Business Expenses. You will
be reimbursed for all reasonable business expenses incurred by you in performing
your responsibilities under this Agreement in accordance with Company policies.
If any business expense is taxable, reimbursement will not be paid later than
December 31 of the year in which the expense is incurred.

       

      (c) Employee Benefit Plans.
During your employment, you will be eligible to participate in each of
the Company’s employee benefit plans, on a basis that is at least as favorable
as that provided to other senior executives of the Company, subject to the terms
of the plans. However, nothing in this Agreement prohibits the Company from
amending any employee benefit plan in accordance with its terms.

       

      (d) Legal Fees; Relocation. The
Company will reimburse you for (i) reasonable legal fees and expenses in
connection with the negotiation, preparation and execution of this letter and
(ii) reasonable relocation expenses related to your move from the Boston,
Massachusetts metropolitan area to Abilene, Kansas, in an amount not to exceed
$30,000 in the aggregate. Any reimbursements made to you under this Section will
be made on or before December 31, 2010, subject to your prior submission of
appropriate supporting documentation in accordance with the Company’s
policies.

       

      5. 
Early
Termination of Your Employment

       

      (a) No Reason Required. You or
the Company may terminate your employment at any time for any reason, or for no
reason, subject to compliance with Section 5(e).

       

      (b) Termination by the Company for
Cause.

       

      (1) “Cause” means any of the
following:

       

      (A) Your
continued failure, either due to willful action or as a result of negligence, to
perform your duties and responsibilities to the Company under this
Agreement.

       

      (B) Your
engagement in conduct which is injurious to the Company, or that harms the
reputation or financial position of the Company, unless the conduct in question
was undertaken in good faith on an informed basis with due care and with a
rational business purpose and based upon the honest belief that such conduct was
in the best interest of the Company.

       

      (C) Your
conviction of, or plea of guilty or nolo contendere to, a felony
or any other crime involving dishonesty, fraud or moral turpitude.

       

      (D) Your
being found liable in any SEC or other civil or criminal securities law action
or entering any cease and desist order with respect to such action (regardless
of whether or not you admit or deny liability).

       

      (E) Your
breach of your fiduciary duties to the Company which may reasonably be expected
to have a material adverse effect on the Company.

       

      (F) Your
unauthorized use or disclosure of confidential or proprietary information, or
related materials, or the violation of any of the terms of the Company’s
standard confidentiality policies and procedures.

       

      (G) Your
violation of the Company’s policies on discrimination, harassment or substance
abuse.

       

      (2) To
terminate your employment “for Cause”, the Board must determine in good faith
that Cause has occurred, the Company must comply with Section 5(e) and the Company must
deliver to you a copy of a resolution duly adopted by a majority of the entire
Board at a meeting of the Board called and held for such purpose (after
reasonable notice to you and a reasonable opportunity for you to be heard) that
finds that in the good faith opinion of the Board, Cause has occurred and states
the basis for that belief.

       

      (c) Termination
by You for Good Reason.

       

      (1) “Good Reason” means any of
the following:

       

      (A) Any material diminution in your Salary, other than any such reduction
agreed to by you in writing.

       

      (B) Any
material diminution in your authority, duties or responsibilities, other than any such
diminution agreed to by you in writing.

       

      (C) Any other
action or inaction that constitutes a material breach by the Company of this
Agreement.

       

      (2) The
Company’s placing you on paid leave for up to 90 consecutive days while it is
determining whether there is a basis to terminate your employment for Cause will
not constitute Good Reason.

       

      (3) To
terminate your employment “for Good Reason”, you must give the Company a
Termination Notice detailing why you believe a Good Reason event has occurred
and such notice must be provided to the Company within ninety (90) days of the
initial occurrence of such alleged Good Reason event. The Company shall then
have thirty (30) days after its receipt of written notice to cure the item cited
in the written notice. “Good Reason” will not have formally occurred with
respect to the event in question, unless and until the cure period has expired
and the item remains uncured. At the end of the cure period, if the Company has
not cured the basis for the Good Reason termination, your obligation to serve
the Company, and the Company’s obligation to employ you under the terms of this
Agreement, shall terminate simultaneously.

       

      (d) Termination
on Disability or Death.

       

      (1) The term
“Disability” means your
permanent disability or incapacity as determined in accordance with the
Company’s long term or permanent disability insurance policy, if such policy is
then in effect, or if no such policy is then in effect, such permanent
disability or incapacity shall be determined by the Company in its good faith
judgment based upon your inability to perform the essential functions of your
position, with reasonable accommodation by the Company, for a period in excess
of 180 days during any period of 365 calendar days.

       

      (2) Your
employment will terminate automatically on your death. If you die before your
employment starts, all of the provisions of this Agreement will also terminate
and there will be no liability of any kind under this Agreement.

       

      (e) Advance Notice Generally
Required.

       

      (1) To
terminate your employment, either you or the Company must provide a written
notice of termination to the other (a “Termination
Notice”)

       

      (2) You and
the Company agree to provide 30 days’ advance Termination Notice of any
termination, unless
your employment is terminated by the Company for Cause or because of your
Disability or death.

       

      6. 
The
Company’s Obligations in Connection With Your Termination.

       

      (a) General Effect. On
termination in accordance with Section 5, your employment will end and the
Company will have no further obligations to you except as provided in this
Section 6.

       

      (b) Without Cause or for Good Reason.
If the Company terminates your employment without Cause or you terminate
for Good Reason:

       

      (1) The
Company will pay you the following through the effective date of your
termination of employment with the Company (the “Termination Date”): (A) your
unpaid Salary on the next regular payroll date, (B) your Salary for any accrued
but unused vacation on the next regular payroll date, (C) any accrued expense
reimbursements due under Sections 4(b) and 4(d), and (D) any earned but unpaid
Bonus for a Bonus Period that has been completed before the Termination Date,
paid when it otherwise would have been paid if you had remained employed by the
Company (together, your “Accrued Compensation”). In
addition, the Company will timely pay you any amounts and provide you any
benefits that are required, or to which you are entitled under any plan,
contract or arrangement of the Company in accordance with the terms of such
plans, contracts or arrangements, including your rights under any equity
incentive award agreement under Section 3(c) (together, the “Other
Benefits”).

       

      (2) In
addition to the amounts set forth in Section 6(b)(I), the Company will provide
you the following amounts after your “separation from service” (within the
meaning of 409A (defined in Section I2(i)) and the Treasury Regulations
thereunder), in exchange for your release of any claims in the form attached
hereto as Exhibit A, provided you sign said release and it becomes effective
within 60 calendar days after such “separation from service” (the “Release Deadline”)
:

       

      (A) your then
current Salary, at regular pay cycle intervals, for 12 months (the “Severance Period”),
commencing in the first regular pay cycle in the calendar month following
the calendar month containing the Release Deadline, subject to Section I2(i);
and

       

      (B) if your
Termination Date occurs more than six months after the commencement of the most
recent Bonus Period, your Pro-Rated Bonus, payable on the later of (i) the first
day following the Release Deadline and (E) the date it would have been paid if
you had remained employed by the Company. Your “Pro-Rated Bonus” means the
Bonus that you otherwise would have received had you continued to be employed
through the end of the applicable Bonus Period in which your Termination Date
occurs, payable based on the actual performance results for such Bonus Period,
multiplied by a fraction, the numerator of which is the number of days from the
beginning of such applicable Bonus Period through your Termination Date and the
denominator of which is the total number of days in such applicable Bonus
Period.

       

      (C) For Cause or Termination Without
Good Reason by Executive. If the Company terminates your employment for
Cause or you terminate your employment without Good Reason, the Company will pay
your Accrued Compensation and provide your Other Benefits, provided, however,
there will be no further vesting of any stock option, or other equity based
compensation.

       

      (D) For Your Disability or Death.
If your employment terminates as a result of your death or Disability,
the Company will pay your Accrued Compensation and provide your Other Benefits.
In addition, if you are terminated due to death or Disability and the
termination occurs more than six months after the commencement of the most
recent Bonus Period, the Company will pay your Pro-Rated Bonus on the date it
would have been paid if you had remained employed by the Company.

       

      7.   Proprietary
Information

      

      (a) Definition. “Proprietary
Information” means confidential or proprietary information, knowledge or
data concerning (1) the Company’s businesses, strategies, operations, financial
affairs, organizational matters, personnel matters, budgets, business plans,
marketing plans, studies, policies, procedures, products, ideas, processes,
software systems, trade secrets and technical know-how, (2) any other matter
relating to the Company and (3) any matter relating to customers of the Company
or other third parties having relationships with the Company. Proprietary
Information includes (1) information regarding any aspect of your tenure as an
employee of the Company or the termination of your employment, (2) the names,
addresses, and phone numbers and other information concerning customers and
prospective customers of the Company, and (3) information and materials
concerning the personal affairs of employees of the Company. In addition,
Proprietary Information may include information furnished to you orally or in
writing (whatever the form or storage medium) or gathered by inspection, in each
case before or after the date of this Agreement. However, Proprietary
Information does not include information (1) that was or becomes generally
available to you on a non-confidential basis, if the source of this information
was not reasonably known to you to be bound by a duty of confidentiality, (2)
that was or becomes generally available to the public, other than as a result of
a wrongful disclosure by you, directly or indirectly, or (3) that you can
establish was independently developed by you without reference to any
Proprietary Information.

       

      (b) Use and Disclosure. You will
obtain or create Proprietary Information in the course of your involvement in
the Company’s activities and may already have Proprietary Information. You agree
that the Proprietary Information is the exclusive property of the Company, and
that, during your employment, you will use and disclose Proprietary Information
only for the Company’s benefit and in accordance with any restrictions placed on
its use or disclosure by the Company. After your employment, you will not use or
disclose any Proprietary Information. In addition, nothing in this Agreement
will operate to weaken or waive any rights the Company may have under statutory
or common law, or any other agreement, to the protection of trade secrets,
confidential business information and other confidential
information.

       

      (c) Limitations. Nothing in this
Agreement prohibits you from providing truthful testimony concerning the Company
to governmental, regulatory or self-regulatory authorities.

       

      8.   Ongoing Restrictions on
Your Activities

      

      (a) General Effect. This Section
8 applies during your employment and for the 12-month period after your
employment ends. This Section uses the following defined terms:

       

      

      
        	
                 
      

              	
                “Competitive Enterprise”
      means any business enterprise that either (1) engages in any
      material activity that competes anywhere with any material activity in
      which the Company is then engaged or (2) holds a 5% or greater equity,
      voting or profit participation interest in any enterprise that engages in
      such a competitive activity.

              

      

      

      
        	
                 
      

              	
                “Customer” means any
      customer or prospective customer of the Company to whom you provided
      services, or for whom you transacted business, or whose identity became
      known to you in connection with your relationship with or employment by
      the Company.

              

      

      

      
        	
                 
      

              	
                “Solicit” means any
      direct or indirect communication of any kind, regardless of who initiates
      it, that in any way invites, advises, encourages or requests any person to
      take or refrain from taking any
action.

              

      

      

      (b) Your
Importance to the Company and the Effect of this Section 8. You acknowledge
that:

       

      (1) In the
course of your involvement in the Company’s activities, you will have access to
Proprietary Information and the Company’s customer base and will profit from the
goodwill associated with the Company. On the other hand, in view of your access
to Proprietary Information and your importance to the Company, if you compete
with the Company for some time after your employment, the Company will likely
suffer significant harm. In return for the benefits you will receive from the
Company and to induce the Company to enter into this Agreement, and in light of
the potential harm you could cause the Company, you agree to the provisions of
this Section 8. The Company would not have entered into this Agreement if you
did not agree to this Section 8.

       

      (2) In light
of Section 8(b)(l), if you breach any provision of this Section 8, the loss to
the Company would be material but the amount of loss would be uncertain and not
readily ascertainable.

       

      (3) This
Section 8 limits your ability to earn a livelihood in a Competitive Enterprise
and your relationships with Customers. You acknowledge, however, that complying
with this Section 8 will not result in severe economic hardship for you or your
family.

       

      (c) Your Payment
Obligations.

       

      (1) If you
fail to comply with this Section 8 during the Employment Period and for a
12-month period thereafter, other than any isolated, insubstantial and
inadvertent failure that is not in bad faith, you will:

       

      (A) forfeit
all (i) Options and other equity-based compensation (with features similar to
exercise) that have been awarded by the Company to you and not been exercised at
the time of determination and (ii) restricted stock and other equity-based
compensation (without features similar to exercise) that have been awarded by
the Company and not vested at the time of determination; and

       

      (B) pay to
the Company the amount of all gain to you within the 12 months before the time
of determination from (i) the exercise of any Options and other equity-based
compensation (with features similar to exercise) that have been awarded by the
Company to you, (ii) the vesting of any restricted stock and other equity-based
compensation (without features similar to exercise) that have been awarded by
the Company to you and (iii) the forgiveness by the Company of any loan to
you.

       

      (2) To
determine the amount you owe under this Section 8(c)(I)(B):

       

      (A) The value
of the Company’s common stock on any date will be calculated using the average
closing sale price of the Company’s common stock on the NASDAQ Global Market for
the 20 full trading days ending on that date.

       

      (B) Gain on
the exercise of stock options and other equity-based compensation with features
similar to exercise will be based on the value of the Company’s common stock on
the date of exercise.

       

      (C) Gain on
the vesting of any restricted stock and other equity-based compensation without
features similar to exercise will be based on the value of the Company’s common
stock on the date of vesting.

       

      (D) Gain will
be determined after any income taxes that you owe as a result of vesting,
exercise or forgiveness (or would owe if the exercise or vesting resulted in the
realization of income or gain at the time for income tax purposes) so long as you timely pay all of
these taxes that you owe and you pay to the Company any federal, state or local
income tax benefit to you as a result of paying the Company under this Section
8(c) within 5 Business Days of the time that you actually realize the benefit. A
“Business Day” means
any day on which banks are open for business in New York, New York.

       

      (3) You will
pay the Company under this Section 8(c) within 5 Business Days of notice by the
Company, and the date of notice will be the date of determination for purposes
of this Section. You will pay the Company in cash. However, you may choose to
deliver Company stock (valued in accordance with Section 8(c)(2)) in partial or
full satisfaction of your obligation. Your obligations under Section 8(c) are
full recourse obligations. The Company will have the right to offset your
obligations under this Section 8(c) against any amounts otherwise owed to you by
the Company, including under this Agreement.

       

      (d) Non-Competition. During your
Employment Period and for a 12-month period after termination of your
employment, you will not directly or indirectly:

       

      (1) hold a 5%
or greater equity, voting or profit participation interest in a Competitive
Enterprise; or

       

      (2) associate
(including as a director, officer, employee, partner, consultant, agent or
advisor) with a Competitive Enterprise.

       

      (e) Non-Solicitation of Customers.
During your Employment Period and for a 12 month period after termination
of your employment, you will not attempt to:

       

      (1) Solicit
any Customers to transact business with a Competitive Enterprise;

       

      (2) cause
Customers to reduce or refrain from doing any business with the
Company;

       

      (3) transact
business with any Customers that would cause you to be a Competitive Enterprise
or to cause Customers to reduce or refrain from doing any business with the
Company, or

       

      (4) interfere
with or damage any relationship between the Company and a Customer.

       

      (f) Non-Solicitation of Company
Employees. During your Employment Period and for a 12-month period after
termination of your employment, you will not attempt to Solicit anyone who is
then an employee of the Company (or who was an employee of the Company within
the six months prior to your Termination Date) to resign from the Company or to
apply for or accept employment with any Competitive Enterprise.

       

      (g) Notice to New Employers. Before you
either apply for or accept employment with any other person or entity while any
of Section 8(d), (e) or (f) is in effect, you will provide the prospective
employer with written notice of the provisions of this Section 8 and will
deliver a copy of the notice to the Company.

       

      (h) No Public Statements. You
agree that you will not make any public statements regarding your employment or
the termination of your employment (for whatever reason) that are not agreed to
by the Company. You agree that you will not make any public statement that would
libel, slander or disparage the Company or any of its respective past or present
officers, directors, employees or agents. The Company agrees that it will not
make any public statement that would libel or slander you. This Section 8(h) is
subject to Section 7(c).

       

      

      9.   Effect on Other
Agreements; Entire Agreement

      

      (a) This
Agreement is the entire agreement between you and the Company with respect to
the relationship contemplated by this Agreement and supersedes any earlier
agreement, written or oral, with respect to the subject matter of this
Agreement. In entering into this Agreement, no party has relied on or made any
representation, warranty, inducement, promise or understanding that is not in
this Agreement.

       

      (b) You
represent and warrant that you do not have any agreements, obligations,
relationships or commitments to any other person or entity that conflict or
would conflict with accepting this offer or fully performing your duties and
obligations of this position, including, without limitation any ongoing
obligations you may have to your former employer. You further represent that the
credentials and information you provided to the Company (or its agents) related
to your qualifications and ability to perform this position are true and
correct.

       

      10.  Successors

      

      (a) Payments on Your Death. If
you die and any amounts become payable under this Agreement, we will pay those
amounts to your designated beneficiaries and in the absence thereof, your
estate.

       

      (b) Assignment by You. You may
not assign this Agreement without the Company’s consent. Also, except as
required by law, your right to receive payments or benefits under this Agreement
may not be subject to execution, attachment, levy or similar process. Any
attempt to effect any of the preceding in violation of this Section 10(b),
whether voluntary or involuntary, will be void.

       

      (c) Assumption by any Surviving Company.
Before the effectiveness of any merger, consolidation, statutory share
exchange or similar transaction (including an exchange offer combined with a
merger or consolidation) involving the Company (a “Reorganization”) or any
sale, lease or other disposition (including by way of a series of transactions
or by way of merger, consolidation, stock sale or similar transaction involving
one or more subsidiaries) of all or substantially all of the Company’s
consolidated assets (a “Sale”), the Company will
cause (1) the Surviving Company to assume this Agreement in writing and (2) a
copy of the assumption to be provided to you. After the Reorganization or Sale,
the Surviving Company will be treated for all purposes as the Company under this
Agreement. The “Surviving Company” means (i) in a Reorganization, the entity
resulting from the Reorganization or (ii) in a Sale, the entity that has
acquired all or substantially all of the assets of the Company.

       

      11.  Disputes

      

      (a) This
Section 11 applies to any controversy or claim between you and the Company
arising out of or relating to or concerning this Agreement or any aspect of your
employment with the Company or the termination of that employment (together, an
“Employment
Matter”).

       

      (b) Mandatory
Arbitration. Subject to
the provisions of this Section 11, any Employment Matter will be finally settled
by arbitration in the County of New York administered by the American
Arbitration Association under its Employee Arbitration Rules then in
effect. However, the rules will be modified in the following ways: (1)
the decision must not be a compromise but must be the adoption of the submission
by one of the parties, (2) each arbitrator will agree to treat as confidential
evidence and other information presented to the same extent as the information
is required to be kept confidential under Section 7, (3) there will be no
authority to amend or modify the terms of this Agreement except as provided in
Section 12(c) (and you and the Company agree not to request any such amendment
or modification), (4) a decision must be rendered within 10 Business Days of the
parties’ closing statements or submission of post-hearing briefs and (5) the
arbitration will be conducted before a panel of three arbitrators, one selected
by you within 10 days of the commencement of arbitration, one selected by the
Company in the same period and the third selected jointly by these arbitrators
(or, if they are unable to agree on an arbitrator within 30 days of the
commencement of arbitration, the third arbitrator will be appointed by the
American Arbitration Association; provided that the arbitrator shall be a
partner or former partner at a nationally recognized law firm).

       

      (c) Limitation on Damages. You
and the Company agree that there will be no punitive damages payable as a result
of any action brought under this Agreement and agree not to request punitive
damages.

       

      (d) Injunctions and
Enforcement of Arbitration Awards. You or the Company may bring an
action or special proceeding in a state or federal court of competent
jurisdiction sitting in the County of New York to enforce any arbitration award
under Section 11(b). Also, the Company may bring such an action or
proceeding, in addition to its rights under Section 11(b) and whether or not an
arbitration proceeding has been or is ever initiated, to temporarily,
preliminarily or permanently enforce any part of Sections 7 and 8. You agree
that (1) your violating any part of Sections 7 and 8 would cause damage to the
Company that cannot be measured or repaired, (2) the Company therefore is
entitled to an injunction, restraining order or other equitable relief
restraining any actual or threatened violation of those Sections, (3) no bond
will need to be posted for the Company to receive such an injunction, order or
other relief, and (4) no proof will be required that monetary damages for
violations of those Sections would be difficult to calculate and that remedies
at law would be inadequate.

       

      (e) Jurisdiction and
Choice of Forum. You and
the Company irrevocably submit to the exclusive jurisdiction of any state or
federal court located in the County of New York over any Employment Matter that
is not otherwise arbitrated or resolved according to Section II(b). This
includes any action or proceeding to compel arbitration or to enforce an
arbitration award. Both you and the Company (1) acknowledge that the forum
stated in this Section 11 (e) has a reasonable relation to this Agreement and to
the relationship between you and the Company and that the submission to the
forum will apply even if the forum chooses to apply non-forum law, (2) waive, to
the extent permitted by law, any objection to personal jurisdiction or to the
laying of venue of any action or proceeding covered by this Section 11(e) in the
forum stated in this Section, (3) agree not to commence any such action or
proceeding in any forum other than the forum stated in this Section 11 (e) and
(4) agree that, to the extent permitted by law, a final and non-appealable
judgment in any such action or proceeding in any such court will be conclusive
and binding on you and the Company. However, nothing in this Agreement precludes
you or the Company from bringing any action or proceeding in any court for the
purpose of enforcing the provisions of Sections 11(b) and this
11(e).

       

      (f) Waiver of Jury Trial. To the
extent permitted by law, you and the Company waive any and all rights to a jury
trial with respect to any Employment Matter.

       

      (g) Governing Law. This Agreement
will be governed by and construed in accordance with the law of the State of
Kansas applicable to contracts made and to be performed entirely within that
State.

       

      12.           General
Provisions

      

      (a)           Construction.

      

      (1) References
(A) to Sections are to sections of this Agreement unless otherwise stated; (B)
to any contract (including this Agreement) are to the contract as amended,
modified, supplemented or replaced from time to time; (C) to any statute, rule
or regulation are to the statute, rule or regulation as amended, modified,
supplemented or replaced from time to time (and, in the case of statutes,
include any rules and regulations promulgated under the statute) and to any
section of any statute, rule or regulation include any successor to the section;
(D) to any governmental authority include any successor to the governmental
authority; (E) to any plan include any programs, practices and policies; (F) to
any entity include any corporation, limited liability company, partnership,
association, business trust and similar organization and include any
governmental authority; and (G) to any affiliate of any entity are to any person
or other entity directly or indirectly controlling, controlled by or under
common control with the first entity.

       

      (2) The
various headings in this Agreement are for convenience of reference only and in
no way define, limit or describe the scope or intent of any provisions or
Sections of this Agreement.

       

      (3) Unless
the context requires otherwise, (A) words describing the singular number include
the plural and vice versa, (B) words denoting any gender include all genders and
(C) the words “include”, “includes” and “including” will be deemed to be
followed by the words “without limitation.”

       

      (4) It is
your and the Company’s intention that this Agreement not be construed more
strictly with regard to you or the Company.

       

      (b) Withholding. You and the
Company will treat all payments to you under this Agreement as compensation for
services. Accordingly, the Company may withhold from any payment any taxes that
are required to be withheld under any law, rule or regulation.

       

      (c) Severability. If any
provision of this Agreement is found by any court of competent jurisdiction (or
legally empowered agency) to be illegal, invalid or unenforceable for any
reason, then (1) the provision will be amended automatically to the minimum
extent necessary to cure the illegality or invalidity and permit enforcement and
(2) the remainder of this Agreement will not be affected. In particular, if any
provision of Section 8 is so found to violate law or be unenforceable because it
applies for longer than a maximum permitted period or to greater than a maximum
permitted area, it will be automatically amended to apply for the maximum
permitted period and maximum permitted area.

       

      (d) Notices. All notices,
requests, demands and other communications under this Agreement must be in
writing and will be deemed given (1) on the business day sent, when delivered by
hand during normal business hours, (2) on the business day after the business
day sent, if delivered by a nationally recognized overnight courier or (3) on
the third business day after the business day sent if delivered by registered or
certified mail, return receipt requested, in each case to the following address
(or to such other addresses as may be specified by notice that conforms to this
Section 12(d)):

       

      If to
you, to your address then on file with the Company’s payroll
department.

      

      If to the
Company or any other member of the Company, to:

      

      Duckwall-Alco
Stores, Inc.

      401
Cottage Street

      Abilene,
Kansas 67410

      Attention:  Chairman
of the Board of Directors

      

      (e) Consideration and Approvals.
This Agreement is in consideration of the mutual covenants contained in
it. You and the Company acknowledge the receipt and sufficiency of the
consideration to this Agreement and intend this Agreement to be legally binding.
The Company represents and warrants it has taken all actions necessary to
approve this Agreement, including the equity grants provided by this
Agreement.

       

      (f) Amendments and Waivers. Any
provision of this Agreement may be amended or waived but only if the amendment
or waiver is in writing and signed, in the case of an amendment, by you and the
Company or, in the case of a waiver, by the party that would have benefited from
the provision waived. Except as this Agreement otherwise provides, no failure or
delay by you or the Company to exercise any right or remedy under this Agreement
will operate as a waiver, and no partial exercise of any right or remedy will
preclude any further exercise.

       

      (g) Third Party Beneficiaries.
Subject to Section 10, this Agreement will be binding on, inure to the
benefit of and be enforceable by the parties and their respective heirs,
personal representatives, successors and assigns. This Agreement does not confer
any rights, remedies, obligations or liabilities to any entity or person other
than you and the Company and your and the Company’s permitted successors and
assigns, although this Agreement will inure to the benefit of the
Company.

       

      (h) Counterparts. This Agreement
may be executed in counterparts, each of which will constitute an original and
all of which, when taken together, will constitute one agreement.

       

      (i) Internal Revenue Code Section 409A.
Notwithstanding anything contained in this Agreement to the contrary, if
you are deemed by the Company at the time of your “separation from service” with
the Company to be a “specified employee,” each within the meaning of Section
409A of the Internal Revenue Code (“409A”), severance payments in Section
6(b)(2)(A) that otherwise would be paid in the first six months following
separation from service will instead be paid in the seventh month following
separation from service or, if earlier, within 30 days of your death, except no
delay shall apply with respect to amounts that are due only upon an involuntary
separation from service (as defined in Section 1.409A-1(n) of the Department of
Treasury Regulations), and that, when combined with all other such payments, do
not exceed the amount specified in Section 1.409A1(b)(9)(iii)(A) of the
Department of Treasury Regulations (generally the lesser of two times annualized
payor two times the compensation limit in Section 401 (a)(17) of the Internal
Revenue Code), and to the extent severance amounts are required to be delayed,
such severance amounts are considered for purposes of 409A to be separate
payments from the severance amounts that are not required to be delayed. The
Agreement shall be interpreted to ensure that the payments made to you are
exempt from, or comply with, 409A; provided, however, that nothing in this
Agreement shall be interpreted or construed to transfer any liability for any
tax (including a tax or penalty due as a result of a failure to comply with
409A) from you to the Company or to any other individual or entity.

       

       

      
 

      
        	 
      	
                Very truly yours,

                /s/ Royce Winsten

                 

                Royce
      Winsten

                Chairman
      of the Board

                 

              
	 
      	 
      
	
                Accepted
      and Agreed to:

                 

                 

                 

                /s/ Richard E. Wilson

                Richard
      E. Wilson

                 

                February
      15, 2010

              	 
      

      

      
        
          
            85491499.1

          

           

        

        
           

          
            

          

        

        
           

        

      

      

      Separation and Release
Agreement

      

      THIS SEPARATION AND RELEASE AGREEMENT
(this “Agreement”) is
made as of the ____ day of ______________, by and between Richard E. Wilson (the
“Executive”) and
Duckwall-Alco Stores, Inc., a Kansas corporation (the “Company”).

      

      WHEREAS, the Executive’s employment as
an executive of the Company has terminated; and

      

      WHEREAS, pursuant to Section 6(b)(2) of
the Employment Agreement by and between the Company and the Executive dated
February 15, 2010 (the “Employment Agreement”), the
Company has agreed to pay the Executive certain amounts, subject to the
execution of this Agreement.

      

      NOW THEREFORE, in consideration of
these premises and the mutual promises contained herein, and intending to be
legally bound hereby, the parties agree as follows:

      

      1.           Consideration. The
Executive acknowledges that: (i) the payments set forth in Section 6(b) of the
Employment Agreement constitute full settlement of all his rights under the
Employment Agreement, (ii) he has no entitlement under any other severance or
similar arrangement maintained by the Company, and (iii) except as otherwise
provided specifically in this Agreement, the Company does not and will not have
any other liability or obligation to the Executive. The Executive further
acknowledges that, in the absence of his execution of this Agreement, the
benefits and payments specified in Section 6(b) of the
Employment Agreement would not otherwise be due to him.

      

      2.           Release and Covenant Not to
Sue.

      

      2.1           The
Executive, his heirs and representatives release, waive and forever discharge
the Company, its predecessors and successors, assigns, stockholders,
subsidiaries, parents, affiliates, officers, directors, trustees, current and
former employees, agents and attorneys, past and present and in their respective
capacities as such (the Company and each such person or entity is each referred
to as a “Released
Person”) from all pending or potential claims, counts, causes of action
and demands of any kind whatsoever or nature for money or anything else, whether
such claims are known or unknown, that arose prior to the Executive’s signing
this Agreement or that relate in any way to the Executive’s employment or
termination of employment with the Company. This release includes, but is not
limited to, any and all claims of race discrimination, sexual discrimination,
national origin discrimination, religious discrimination, disability
discrimination, age discrimination and unlawful retaliation and any and all
claims under the following: Title VII of the Civil Rights Act of 1964, as
amended, 42 U.S.C. § 2000e et seq.; Civil Rights Act of 1866,42 U.S.C. § 1981 et
seq.; the Family and Medical Leave Act, as amended, 29 U.S.C. § 2601, et seq.;
the Americans with Disabilities Act, as amended, 42 U.S.C. § 12101, et seq.; the
Age Discrimination in Employment Act, as amended by the Older Workers Benefit
Protection Act, 29 U.S.C. § 621, et seq.; Kansas Act Against Discrimination,
Chapter 44, Art. 10, K.S.A.; Employee Retirement Income Security Act of 1974, as
amended, 29 U.S.C. § 1001, et seq.; Rehabilitation Act of 1973,29 U.S.C. § 706,
et seq.; any state, municipal and other local anti-discrimination statutes; any
and all claims for alleged breach of an express or implied contract; any and all
tort claims including, but not limited to, alleged retaliation for assertion of
workers’ compensation rights; any and all claims under workers’ compensation
law; and any and all claims for attorney’s fees.

      

      2.2           The
Executive expressly represents that he has not filed a lawsuit or initiated any
other administrative proceeding against a Released Person and that he has not
assigned any claim against a Released Person. The Executive further promises not
to initiate a lawsuit or to bring any other claim against any Released Person
arising out of or in any way related to the Executive’s employment by the
Company or the termination of that employment. This Agreement will not prevent
the Executive from filing a charge with the Equal Employment Opportunity
Commission (or similar state agency) or participating in any investigation
conducted by the Equal Employment Opportunity Commission (or similar state
agency); provided, however,
that any claims by the Executive for personal relief in connection with
such a charge or investigation (such as reinstatement or monetary damages) would
be barred. In addition, this release shall not affect the Executive’s rights
under the Older Workers Benefit Protection Act to have a judicial determination
of the validity of this release and waiver.

      

      2.3           The
foregoing will not be deemed to release the Company from (a) claims solely to
enforce this Agreement, (b) claims solely to enforce Section 6(b) of the
Employment Agreement, (c) claims solely to enforce the terms of any equity
incentive award agreement between the Executive and the Company, (d) claims for
indemnification under the Company’s By-Laws and/or any applicable
indemnification agreements, and/or

      (e) claims to continue health
care coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985,
as amended or similar state law. The foregoing will not be deemed to release any
person or entity from claims arising after the date of this Agreement, whether
under this Agreement, under the Employment Agreement or otherwise.

      

      3.           Restrictive
Covenants. The Executive acknowledges that the restrictive covenants
contained in Sections
7 and 8 of the Employment Agreement (the “Restrictive Covenants”) will
survive the termination of Executive’s employment. The Executive affirms that
the Restrictive Covenants are reasonable and necessary to protect the legitimate
interests of the Company, that he received adequate consideration in exchange
for agreeing to those restrictions and that he will abide by those restrictions.
The Company acknowledges that its obligations contained in Section 8(h) of the
Employment Agreement will survive the termination of the Executive’s
employment.

      

      4.           Return of Company
Property. The Executive represents and warrants that he has returned all
property belonging to the Company, including, but not limited to, all keys,
access cards, office equipment, computers, cellular telephones, notebooks,
documents, records, files, written materials, electronic information, credit
cards bearing the Company’s name, and other Company property (originals or
copies in whatever form) in the Executive’s possession or under the Executive’s
control.

      

      5.           Cooperation. The
Executive further agrees that, subject to reimbursement of his reasonable
expenses, he will cooperate fully with the Company and its counsel with respect
to any matter (including litigation, investigations, or governmental
proceedings) in which the Executive was in any way involved during his
employment with the Company; provided that such cooperation shall not
unreasonably interfere with Executive’s employment with another employer after
termination of his employment with the Company. The Executive shall render such
cooperation in a timely manner on reasonable notice from the
Company.

       

      6.           Rescission
Right. The Executive
expressly acknowledges and recites that (a) he has read and understands the
terms of this Agreement in its entirety, (b) he has entered into this Agreement
knowingly and voluntarily, without any duress or coercion; (c) he has been
advised orally and is hereby advised in writing to consult with an attorney with
respect to this Agreement before signing it; (d) he was provided twenty-one (21)
calendar days after receipt of the Agreement to consider its terms before
signing it; and (e) he is provided seven (7) calendar days from the date of
signing to terminate and revoke this Agreement, in which case this Agreement
shall be unenforceable, null and void. The Executive may revoke this Agreement
during those seven (7) days by providing written notice of revocation to the
Company at the address specified in Section 12(d) of the Employment
Agreement.

      

      7.           Challenge. If the
Executive violates or challenges the enforceability of any provisions of the
Restrictive Covenants or this Agreement, no further payments, rights or benefits
under Section
6(b)(2) of the Employment Agreement will be due to the
Executive.

      

      8.           Miscellaneous.

      

      8.1           No Admission of
Liability. This Agreement is not to be construed as an admission of any
violation of any federal, state or local statute, ordinance or regulation or of
any duty owed by the Company to the Executive. There have been no such
violations, and the Company specifically denies any such
violations.

      

      8.2           No Reinstatement. The
Executive agrees that he will not without the consent of the Company apply for
reinstatement with the Company or seek in any way to be reinstated, re-employed
or hired by the Company in the future.

      

      8.3           Successors and
Assigns. This Agreement shall inure to the benefit of and be binding upon
the Company and the Executive and their respective successors, permitted
assigns, executors, administrators and heirs. The Executive may not make any
assignment of this Agreement or any interest herein, by operation of law or
otherwise. The Company may assign this Agreement to any successor to all or
substantially all of its assets and business by means of liquidation,
dissolution, merger, consolidation, transfer of assets, or
otherwise.

      

      8.4           Severability.
Whenever possible, each provision of this Agreement will be interpreted in such
manner as to be effective and valid under applicable law. However, if any
provision of this Agreement is held to be invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability will not affect any
other provision, and this Agreement will be reformed, construed and enforced as
though the invalid, illegal or unenforceable provision had never been herein
contained.

      

      8.5           Entire Agreement;
Amendments. Except as otherwise provided herein, this Agreement contains
the entire agreement and understanding of the parties hereto relating to the
subject matter hereof, and merges and supersedes all prior and contemporaneous
discussions, agreements and understandings of every nature relating to the
subject matter hereof. This Agreement may not be changed or modified, except by
an agreement in writing signed by each of the parties hereto.

      

      8.6           Governing Law. This
Agreement shall be governed by, and enforced in accordance with, the laws of the
State of Kansas, without regard to the application of the principles of
conflicts of laws.

      

      8.7           Counterparts and
Facsimiles. This Agreement may be executed, including execution by
facsimile signature, in multiple counterparts, each of which shall be deemed an
original, and all of which together shall be deemed to be one and the same
instrument.

      

      IN
WITNESS WHEREOF, the Company has caused this Agreement to be executed by its
duly authorized officer, and the Executive has executed this Agreement, in each
case as of the date first above written.

      

      

      
        	
                                   EMPLOYEE:

                                  

                 

                 

                                   Richard
      E. Wilson

                 

                                   Date:                      
      

                 

                                   COMPANY:

                 

                                   DUCKWALL-ALCO
      STORES, INC.

                 

                 

                                   By:                                                      

                                   Its:                                                      

                                   Date:                                                      

                 

              

      

      

      
        
          
            85491499.1

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