Duckwall-ALCO Stores, Inc.
                       AMENDED AND RESTATED
                   INCENTIVE STOCK OPTION PLAN

                           June 5, 1998

          This Amended and Restated Incentive Stock Option Plan
is adopted as an amendment and restatement of the previous
undated Incentive Stock Option Plan.  The previous plan is hereby
revoked and replaced by this plan.

          Duckwall-ALCO Stores, Inc., a corporation organized and
existing under the laws of the State of Kansas (the "Company"),
hereby formulates and adopts, subject to the approval of the
holders of a majority of the issued and outstanding shares of
common stock of the Company ("Duckwall-ALCO Common Stock") voting
in person or by proxy at a duly constituted meeting of the
stockholders of the Company, an incentive stock option plan for
key employees of the Company and its subsidiaries as follows:

1.   Purpose of Plan.   The purpose of this Incentive Stock
Option Plan (the "Plan") is to encourage the key employees of the
Company and its subsidiaries to participate in the ownership of
the Company, and to provide additional incentive for such
employees to promote the success of its business through sharing
in the future growth of such business.

2.   Effectiveness of Plan.   The provisions of this Plan shall
become effective on the date the Plan is adopted by the Board of
Directors of the Company (the "Board of Directors"), subject to
the requirement that the Plan be approved by the holders of a
majority of the shares of Duckwall-ALCO Common Stock voting in
person or by proxy at a duly constituted meeting of the
stockholders of the Company to be held within 12 months after the
date on which the Plan is adopted.

3.   Administration.   This Plan shall be administered by a stock
option committee ("Compensation Committee") which shall be
selected by the Board of Directors and which shall be composed of
not less than two (2) nor more than five (5) members of the Board
of Directors who are not employees and who qualify as
disinterested persons within the meaning of Securities and
Exchange Commission Rule 16b-3.  The Compensation Committee shall
have full power and authority to construe, interpret and
administer the Plan, and may from time to time adopt such rules
and regulations for carrying out this Plan as it may deem proper
and in the best interests of the Company.  Subject to the terms,
provisions and conditions of the Plan, the Compensation Committee
shall have exclusive authority (i) to select key employees to
whom options shall be granted (ii) to determine the number of
shares subject to each option, (iii) to determine the time or
times when options will be granted, (iv) to determine the option
price of the shares subject to each option, (v) to determine the
time when each option may be exercised, (vi) to fix such other
provisions of each option agreement as the Compensation Committee
may deem necessary or desirable, consistent with the terms of
this Plan, and (vii) to determine all other questions relating <PAGE> to
the administration of this Plan.  The interpretation and
construction of this Plan by the Compensation Committee shall be
final, conclusive and binding upon all persons.

4.   Eligibility.

          a.   Key employees--Options to purchase shares of
Duckwall-ALCO Common Stock shall be granted under this Plan only
to key employees of the Company or of any of its subsidiary
corporations, as that term is defined in Section 424(f) of the
Internal Revenue Code of 1986, as amended (the "Code").  Key
employees to whom options may be granted under this Plan  will be
those employees selected by the Compensation Committee from time
to time who, in the sole discretion of the Compensation
Committee, have made material contributions in the past, or who
are expected to make material contributions in the future, to the
successful performance of the Company.

          b.   Stock ownership limitation--No option shall be
granted under this Plan to any employee of the Company or of a
subsidiary corporation who, immediately before the option is
granted, owns (either directly or by application of the rules
contained in Section 424(d) of the Code) stock possessing more
than 10 percent of the total combined voting power of all classes
of stock of the Company or of any of its subsidiary corporations
unless at the time of such grant the option price is fixed at not
less than 110 percent of the fair market value of the stock
subject to the option, and the exercise of such option is
prohibited by its terms after the expiration of five (5) years
from the date such option is granted.

5.   Shares Subject to the Plan.   Options granted under this
Plan shall be granted solely with respect to shares of Duckwall-
ALCO Common Stock.  Subject to any adjustments made pursuant to
the provisions of Section 13, the aggregate number of shares of
Duckwall-ALCO Common Stock which may be issued upon exercise of
the options which will be granted under this Plan shall not
exceed 450,000.

          If any option granted under this Plan shall expire or
terminate for any reason without having been exercised in full,
the unpurchased shares subject to such option shall be added to
the number of shares otherwise available for options which may be
granted in accordance with the terms of this Plan.

          The shares to be delivered upon exercise of the options
granted under this Plan shall be made available, at the
discretion of the Board of Directors, from either the authorized
but unissued shares of Duckwall-ALCO Common Stock or any treasury
shares of Duckwall-ALCO Common Stock held by the Company.

6.   Option Agreement.   Each option granted under this Plan
shall be evidenced by an incentive stock option agreement, which
shall be signed by an officer of the Company and by the employee
to whom the option is granted (the "optionee").  The terms of
said incentive stock option agreement shall be in accordance with
the provisions of this Plan, but it may include such <PAGE> other
provisions as may be approved by the Compensation Committee.  The
granting of an option under this Plan shall be deemed to occur on
the date on which the option grant is authorized by the
Compensation Committee.  Each incentive stock option agreement
shall constitute a binding contract between the Company and the
optionee, and every optionee, upon the execution of an incentive
stock option agreement, shall be bound by the terms and
restrictions of this Plan and such incentive stock option
agreement.

7.   Option Price.   The price at which shares of Duckwall-ALCO
Common Stock may be purchased under an option granted pursuant to
this Plan shall be determined by the Compensation Committee, but
in no event shall the price be less than the greater of (a) the
par value thereof, or (b) 100 percent of the fair market value of
such shares on the date that the option is granted.  If such
shares are then listed on any national securities exchange, the
fair market value shall be the mean between the high and low
sales prices, if any, on the largest such exchange on the date of
the grant of the option, or, if none, shall be determined by
taking a weighted average of the means between the highest and
lowest sales on the nearest date before and the nearest date
after the date of grant in accordance with Treasury Regulations
Section 25.2512-2.  If the shares are not then listed on any such
exchange, the fair market value of such shares shall be the mean
between the closing "Bid" and the closing "Ask" prices, if any,
as reported in the National Association of Securities Dealers
Automated Quotation System ("NASDAQ") for the date of the grant
of the option, or, if none, shall be determined by taking a
weighted average of the means between the highest and lowest
sales on the nearest date before and the nearest date after the
date of grant in accordance with Treasury Regulations Section
25.2512-2.  If the shares are not then either listed on any such
exchange or quoted in NASDAQ, the fair market value shall be the
mean between the average of the "Bid" and the average of the
"Ask" prices, if any, as reported in the National Daily Quotation
Service for the date of the grant of the average of the means
between the highest and lowest sales on the nearest date before
and the nearest date after the date of grant in accordance with
Treasury Regulations Section 25.2512-2.  If the fair market value
cannot be determined under the preceding three sentences, it
shall be determined in good faith by the Compensation Committee.

8.   Period and Exercise of Option:

          a.   Period--Subject to the provisions of Sections 10
and 11 hereof with respect to the death or termination of
employment of an optionee, the period during which each option
granted under this Plan may be exercised shall be fixed by the
Compensation Committee at the time such option is granted,
provided that such period shall expire no later than five (5)
years from the date on which the option is granted.  In the event
the Company shall not be the surviving corporation in any merger,
consolidation, or reorganization, or in the event of acquisition
by another corporation of all or substantially all of the assets
of the Company, every option outstanding hereunder may be assumed
(with appropriate changes) by the surviving, continuing,
successor or purchasing corporation, as the case may be, subject
to any applicable provisions of the Code or replaced with new
options of comparable value (in accordance with Section 424(a) of
the Code).  In the event (i) that such surviving, continuing,
successor or purchasing corporation, <PAGE> as the case may be, does not
assume or replace the outstanding options hereunder, or (ii) of
liquidation or dissolution of the Company, the Compensation
Committee may provide that each optionee shall have the right,
within a period commencing not more than 30 days immediately
prior to and ending on the day immediately prior to such merger,
consolidation, reorganization or acquisition by another
corporation of all or substantially all of the assets of the
Company or the liquidation or dissolution of the Company, to
exercise the optionee's outstanding options to the extent of all
or any part of the aggregate number of shares subject to such
option(s).  In the event of a "Change of Control" (as defined
below) the Compensation Committee may accelerate the time at
which options granted under this Plan may be exercised by the
optionee.  For purposes of this paragraph (a) "Change of Control"
shall mean a change in control of a nature that would be required
to be reported in response to item 5(f) of Schedule 14A of
Regulation 14A (in effect on the date hereof) promulgated under
the Securities Exchange Act of 1934, as in effect on the date
hereof; provided, however, that, without limitation, such a
Change of Control shall be deemed to occur when either (i) a
person (other than a current stockholder, or a director nominated
or selected by the Board of Directors of the Company or an
officer elected by the Board of Directors of the Company)
acquires beneficial ownership (as defined by Securities and
Exchange Commission Rule 13d-3) of 33 percent or more of the
combined voting power of the Company's voting securities, or
(ii) less than a majority of the directors are persons who were
either nominated or selected by the Board of Directors.

          b.   Exercise--Any option granted under this Plan may
be exercised by the optionee (or by the purchaser acting under
Section 11 below) only by (i) delivering to the Company written
notice of the number of shares with respect to which the optionee
is exercising his or her option right, (ii) paying in full the
option price of the purchased shares, and (iii) if the shares to
be purchased have not been registered under the applicable
securities laws and if necessary, in the opinion of counsel for
the Company to secure an exemption from such registration,
furnishing to the Company such representation or agreement in
writing signed by the optionee (or purchaser) as shall be
necessary in the opinion of such counsel to secure such
exemption.  Subject to the limitations of this Plan and the terms
and conditions of the respective incentive stock option
agreement, each option granted under this Plan shall be
exercisable in whole or in part at such time or times as the 
Compensation Committee may specify in such incentive stock option
agreement.

          c.   Payment for shares--Payment for shares of
Duckwall-ALCO Common Stock purchased pursuant to an option
granted under this Plan may be made either in cash or in other
shares of Duckwall-ALCO Common Stock.

          d.   Delivery of certificates--As soon as practicable
after receipt by the Company of the notice and representation
described in subsection (b), and of payment in full of the option
price for all of the shares being purchased pursuant to an option
granted under this Plan, a certificate or certificates
representing such shares of stock shall be registered in the name
of the optionee and shall be delivered to the optionee.  However,
no certificate for fractional shares of stock shall be issued by
the Company notwithstanding any request therefor.  Neither any


<PAGE> 




optionee, nor the legal representative, legatee or distributee of
any optionee, shall be deemed to be a holder of any shares of
stock subject to an option granted under this Plan unless and
until the certificate or certificates for such shares have been
issued.  All stock certificates issued upon the exercise of any
options granted pursuant to this Plan may bear such legend as the
Compensation Committee shall deem appropriate regarding
restrictions upon the transfer or sale of the shares evidenced
thereby.

          e.   Limitations on exercise--Except as provided in
Sections 10 and 11 hereof, no option granted under this Plan
shall be exercised unless the optionee is at the time of such
exercise employed by the Company or one of its subsidiary
corporations and shall have been so employed by the Company or
one of its subsidiary corporations at all times since the date on
which such option was granted.

9.   Limitation on Options Granted to Individual Employees.   The
aggregate fair market value (determined at the time the options
are granted) of stock with respect to which incentive stock
options are exercisable for the first time by any individual
during any calendar year under this Plan (and under any other
plan or plans of such individual's employer corporation and any
parent or subsidiary corporation or corporations) shall not
exceed $100,000.  The limitation provided by the preceding
sentence shall be applied by taking options into account in the
order in which they are granted.

10.  Termination of Employment.   If an optionee shall cease to
be employed by the Company or any of its subsidiary corporations
for any reason other than death, any option or unexercised
portion thereof granted to him under this Plan which is otherwise
exercisable shall terminate unless it is exercised within thirty
(30) days of the date on which such optionee ceases to be so
employed, and in any event no later than the expiration date of
such option as specified in the respective incentive stock option
agreement.  Nothing in this Plan or in any incentive stock option
agreement shall be construed as an obligation on the part of the
Company or any of its subsidiary corporations to continue the
employment of any employee.

11.  Death of Optionee.   In the event of the death of an
optionee while he is an employee of the Company or any of its
subsidiary corporations (or within thirty (30) days of the date
on which such optionee ceases to be so employed) any option or
unexercised portion thereof granted to him under this Plan which
is otherwise exercisable may be exercised by the person or
persons to whom such optionee's rights under the option pass by
operation of the optionee's will or the laws of descent and
distribution, at any time within a period of twelve (12) months
following the death of the optionee (but in no event later than
the expiration date of the option as specified in the respective
incentive stock option agreement).

12.  Nontransferability of Options.   Each option granted under
this Plan shall not be transferable or assignable by the optionee
other than by will or the laws of descent and distribution, and
during the lifetime of the optionee may be exercised only by said
optionee.



<PAGE> 




13.  Adjustment upon Changes in Capitalization.   In the event of
any change in the capital structure of the Company, including but
not limited to a change resulting from a stock dividend, stock
split, reorganization, merger, consolidation, liquidation or any
combination or exchange of shares, the number of shares of
Duckwall-ALCO Common Stock subject to this Plan and the number of
such shares subject to each option granted hereunder shall be
correspondingly adjusted by the Compensation Committee.  The
option price for which shares of Duckwall-ALCO Common Stock may
be purchased pursuant to an option granted under this Plan shall
also be adjusted so that there will be no change in the aggregate
purchase price payable upon the exercise of any option.

14.  Amendment and Termination of Plan.   No option shall be
granted pursuant to this Plan after May 18, 2003, on which date
this Plan will expire except as to options then outstanding under
the Plan, which options shall remain in effect until they have
been exercised or have expired.  The Board of Directors may at
any time before such date amend, modify or terminate the Plan;
provided, however, that the Board of Directors may not, without
further approval of the holders of a majority of the issued and
outstanding shares of Duckwall-ALCO Common Stock voting in person
or by proxy at a duly constituted meeting of the stockholders of
the Company, (i) increase the maximum number of shares of
Duckwall-ALCO Common Stock as to which options may be granted
pursuant to this Plan, (ii) change the class of employees
eligible to be granted options pursuant to the Plan, (iii) extend
the period under this Plan during which options may be granted or
exercised, or (iv) change the provisions of Section 7 hereof with
respect to the determination of the option price, other than to
change the manner of determining the fair market value of shares
of Duckwall-ALCO Common Stock to conform with any then applicable
provisions of the Internal Revenue Code or the regulations issued
thereunder.  No amendment, modification or termination of this
Plan may adversely affect the rights of any optionee under any
then outstanding option granted hereunder without the consent of
such optionee.

15.  No Special Employment Rights.   Nothing contained in the
Plan or in any option granted under the Plan shall confer upon
any option holder any right with respect to the continuation of
his or her employment by the Company (or any subsidiary) or
interfere in any way with the right of the Company (or any
subsidiary), subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such
employment or to increase or decrease the compensation of the
option holder from the rate in existence at the time of the grant
of an option.  Whether an authorized leave of absence, or absence
in military or government service, shall constitute termination
of employment shall be determined by the Board of Directors at
the time.

16.  Governing Law.   This Plan and the rights of all persons
claiming hereunder shall be construed and determined in
accordance with the laws of the State of Kansas.