Exhibit 10.27 



	MASTER LEASE AGREEMENT 	  	 	  	NUMBER 4168852 

      DATED November 9, 2005
	
      

    





Lessee Legal Name:
DUCKWALL-ALCO STORES, INC.

  Address:  401 Cottage Street

  City, State, Zip: Abilene,
KS 67410-2832
State and Type of Organization: Kansas Corporation  



        This
MASTER LEASE AGREEMENT (“Lease Agreement”), made as of the above date, is
entered into by and between GENERAL ELECTRIC CAPITAL CORPORATION, a Delaware corporation
(together with its successors and assigns, “Lessor”), having a place of business
at 44 Old Ridgebury Road, Danbury, CT 06810, and the Lessee named above
(“Lessee”), having its principal place of business at the address set
forth above. 



         1.       
          LEASE AGREEMENT: Pursuant to the terms of this Lease Agreement, Lessor
          hereby leases to Lessee and Lessee hereby leases from Lessor all of the
          equipment, related replacements, parts, additions, software, accessories,
          alterations and repairs incorporated therein or affixed thereto, together with
          any items included on the related Lease Schedule (the
          “Schedule”) including, but not limited to, training,
          maintenance, services, license agreements, etc. (the
          “Equipment”) listed in the Schedule(s) related hereto which are
          or may from time to time be executed by Lessor and Lessee. This Lease Agreement
          is a master lease and each Schedule is subject to the terms of this Lease
          Agreement. Each Schedule shall be treated as a separate lease (the
          “Lease”) with respect to the Equipment covered by such
          Schedule. In the event of any conflict between the language of this Lease
          Agreement and any Schedule entered into pursuant hereto, the language of the
          Schedule shall prevail with respect to that Schedule and the Equipment covered
          thereby. Capitalized terms used and not defined herein shall mean and refer to
          the corresponding items on the applicable Schedule. Lessor may also finance the
          fees (the “Fees”) for any of the following, if specified on a
          Schedule: (i) software licenses (the “Software”) granted by the
          “Supplier” (as defined by UCC Section 2A-1-103(x)) pursuant to
          a separate licensing agreement between such Supplier and Lessee; and (ii)
          services relating to the transportation, delivery, installation, maintenance or
          operation of the Equipment (the “Services”) provided by the
          Supplier of the Equipment pursuant to a separate agreement between such Supplier
          and Lessee. The parties agree that this Lease Agreement and each Lease is and
          shall be a “Finance Lease” as defined by Section 2A-103(g) of
          the Uniform Commercial Code (“UCC”). Lessee acknowledges (a)
          that Lessee has reviewed and approved any written “Supply
          Contract” (as defined by UCC Section 2A-103(y)) covering the Equipment
          purchased from the Supplier and thereafter leased to Lessee or (b) that Lessor
          has informed or advised Lessee, in writing, either previously or by this Lease
          Agreement of the following: (i) the identity of the Supplier; (ii) that the
          Lessee may have rights under the Supply Contract; and (iii) that the Lessee may
          contact the Supplier for a description of any such rights Lessee may have under
          the Supply Contract. 



         2.       
          TERM: This Lease Agreement shall commence as of the above date, provided
          Lessor accepts this Lease Agreement in writing and shall continue as long as any
          Schedule is in effect. The term of a Schedule (the “Term”) shall
          commence upon the Acceptance Date (as defined in Section 4) of the Equipment
          and/or Software described in the applicable Schedule, and shall continue for the
          number of months or other period set forth in such Schedule, beginning with the
          first month (or other applicable period) commencing after the Acceptance Date,
          unless such term has been extended or otherwise modified in writing executed by
          Lessor and Lessee. Lessee’s execution of a Schedule shall evidence its
          binding commitment to lease the Equipment described therein upon the terms and
          conditions of this Lease Agreement and such Schedule. 



         3.       
          PAYMENTS: Lessee shall pay Lessor the monthly (or other) rent and other
          amounts specified in the applicable Schedule (the “Payments”).
          Unless otherwise expressly provided in a Schedule, Payments shall be payable in
          advance on the first day of each month during the Term, beginning with the first
          month commencing after Acceptance Date. In addition to the Payments, any Advance
          Payment(s) specified on the Schedule and interim rent shall be due and payable
          on the first Payment date. Except as may otherwise be indicated in a Schedule or
          other rider or addendum hereto or thereto, Interim rent shall be in an amount
          equal to 1/30th of the applicable Rental Payment for each day from and including
          the Acceptance Date to and excluding the first Payment date. If a Schedule
          includes any Software or Services, the Payments specified include amounts to
          cover payment of the related Fees, as so expressly provided in a Schedule.
          Payments shall be payable at the mailing address of Lessor, as designated by
          Lessor from time to time. 



    4.       
  ORDER AND ACCEPTANCE OF EQUIPMENT AND SOFTWARE: Lessee has selected or
  will select all of the Equipment, Software and Services and the Supplier(s)
  and therefore acknowledges that Lessor has not selected, manufactured, 













supplied or provided any
  Equipment, Software or Services. In reliance upon Lessee’s execution of
  and compliance with this Lease Agreement and assignment of Lessee’s purchase
  rights for the Equipment to Lessor, Lessor shall take assignment of Lessee’s
  purchase documents and/or Supply Contract(s) from its Supplier(s) (or in the
  alternative, Lessor shall issue its purchase order to the Supplier(s)), for
  the Equipment, Software and/or Services described in the applicable Schedule.
  As soon as practicable after the date on which the Equipment and Software have
  been delivered and determined by Supplier(s) to be ready for use at Lessee’s
  location, Lessee will execute a Certificate of Acceptance (and as applicable,
  staged Certificate(s) of Acceptance), provided by Lessor (the date or date(s),
  as applicable, of each such Certificate of Acceptance being an “Acceptance
  Date”). If prior to the Last Acceptance Date set forth in the Schedule
  (i) no Event of Default has occurred, (ii) Lessor receives such executed Certificate
  of Acceptance, all other documents and information required under this Lease
  Agreement, and any additional credit enhancement Lessor requires in connection
  with the related Schedule, and (iii) Lessor receives appropriate invoices and
  related documents from Supplier(s), Lessor shall pay the Supplier(s) for the
  Equipment and any Fees. (Any reference herein to a Certificate of Acceptance,
  shall also be deemed to refer to and include each and every staged Certificate
  of Acceptance, as applicable, as the context so requires.) 



         5.       
          DELIVERY AND INSTALLATION: Lessee shall arrange with the Supplier(s) for
          delivery and installation of Equipment and Software under each Schedule. All
          Equipment and Software shall be shipped directly from Supplier(s) to Lessee.
          Lessor shall have no liability for any delay or failure by the Supplier(s) to
          deliver any Equipment, to license any Software or to perform any Services, or
          with respect to the selection, installation, testing, performance, quality,
          maintenance or support of the Equipment, Software or Services. Lessee, at its
          expense, will pay all transportation, packing, taxes, duties, insurance,
          installation, testing, maintenance and other charges in connection with the
          delivery, installation and use of the Equipment and Software, unless the related
          Service is included in the related Schedule. 



         6.       
          DISCLAIMER: (a) LESSOR, NOT BEING THE SUPPLIER OR THE AGENT OF ANY
          SUPPLIER, MAKES NO WARRANTY, REPRESENTATION OR COVENANT, EXPRESS OR IMPLIED, AS
          TO ANY MATTER WHATEVER, INCLUDING, BUT NOT LIMITED TO THE MERCHANTABILITY OF THE
          EQUIPMENT, SOFTWARE OR SERVICES OR THEIR FITNESS FOR ANY PARTICULAR PURPOSE, THE
          DESIGN, QUALITY, CAPACITY OR CONDITION OF THE EQUIPMENT, SOFTWARE OR SERVICES,
          COMPLIANCE OF THE EQUIPMENT, SOFTWARE OR SERVICES WITH THE REQUIREMENT OF ANY
          LAW, RULE, SPECIFICATION OR CONTRACT, PATENT OR COPYRIGHT INFRINGEMENT, TITLE,
          OR LATENT DEFECTS. LESSOR SHALL HAVE NO LIABILITY WHATSOEVER FOR THE BREACH OF
          ANY REPRESENTATION OR WARRANTY MADE BY THE SUPPLIER(S). LESSOR MAKES NO
          REPRESENTATION AS TO THE TREATMENT BY LESSEE OF THIS LEASE AGREEMENT FOR
          FINANCIAL STATEMENT OR TAX PURPOSES. LESSEE LEASES THE EQUIPMENT “AS
          IS”. Lessee agrees, regardless of cause. not to assert any claim whatsoever
          against Lessor for any indirect, consequential, incidental or special damages or
          loss, of any kind, including, without limitation, any loss of business, lost
          profits or interruption of service. 



         (b)
          Lessee shall look solely to the Supplier(s) for any and all claims related to
          the Equipment, Software or Services. LESSEE UNDERSTANDS AND AGREES THAT NEITHER
          SUPPLIER(S) NOR ANY SALESPERSON OR OTHER AGENT OF SUPPLIER(S) IS AN AGENT OF
          Lessor, NOR ARE ANY OF THEM AUTHORIZED TO WAIVE OR ALTER THIS LEASE AGREEMENT.
          No representation by Supplier(s) shall in any way affect Lessee’s duty to
          pay the Payments and perform its obligations under this Lease Agreement. Lessor
          agrees, so long as there shall not have occurred or be continuing any Event of
          Default as defined in section 25, that Lessor will permit Lessee, as
          Lessee’s sole and exclusive remedy hereunder, to enforce in Lessee’s
          own name and at Lessee’s sole expense, any Supplier’s or
          Manufacturer’s warranty or agreement in respect of the Equipment to the
          extent that such warranty or agreement is assignable. 



         7.       
          NO OFFSET: THIS LEASE AGREEMENT IS A NET LEASE. LESSEE’S OBLIGATIONS
          TO PAY ALL AMOUNTS UNDER THIS AGREEMENT SHALL BE ABSOLUTE AND UNCONDITIONAL, AND
          SHALL NOT BE SUBJECT TO ANY SET-OFF, COUNTERCLAIM, ABATEMENT, REDUCTION,
          RECOUPMENT, INTERRUPTION OR DEFENSE FOR ANY REASON WHATSOEVER, INCLUDING DEFECTS
          OR FAILURE IN, LOSS OF USE OR POSSESSION OF, OR DISCONTINUANCE OF THE EQUIPMENT,
          SOFTWARE OR SERVICES. THIS LEASE AGREEMENT CANNOT BE PREPAID OR TERMINATED BY
          LESSEE UNLESS AGREED IN WRITING BY LESSOR. 



         8.       
          TITLE TO AND LOCATION OF EQUIPMENT: (a) Unless otherwise expressly
          provided in a Schedule, title to each item of Equipment shall remain with Lessor
          or its assigns at all times and Lessee shall have no right, title or interest
          therein except as expressly set forth in this Lease Agreement. Lessee, at its
          expense, will keep the Equipment free and clear of all claims, liens, and
          encumbrances, other than those which result from acts of Lessor or its assigns.
          All items of Equipment shall at all times remain personal property
          notwithstanding that any such Equipment may be affixed to realty. 



         (b)
          The Equipment shall be delivered to the location specified in the related
          Schedule and shall not be relocated, displaced or moved without Lessor’s
          prior written consent. Lessee shall in no event permit any Equipment to be
          removed outside the United States. 















         9.       
          SOFTWARE: Lessor and Lessee acknowledge that the Software leased
          hereunder may be owned by a Supplier and that neither Lessor nor Lessee may have
          any ownership rights therein. Lessee shall, where required by the Supplier,
          enter into a license or other such agreement for the use of the software. Any
          software license agreement shall be separate and distinct from this Lease
          Agreement and any Schedule and Lessor and any Assignee shall have no obligations
          thereunder, but shall have the right under this Lease Agreement to require
          Lessee to terminate its use of the Software in an Event of Default. All Software
          leased hereunder shall be subject to all provisions of this Lease Agreement.
          Upon termination of this Lease Agreement or any Schedule, Lessee hereby assigns
          to Lessor, to the extent assignable, any and all licenses and rights to the
          Software. 



         10.       
          TAX BENEFITS: (a) Lessee acknowledges that Lessor intends to claim all
          available tax benefits of ownership with respect to the Equipment (the
          “Tax Benefits”), unless otherwise expressly provided in a
          Schedule. All references to Lessor in this Section include the consolidated
          taxpayer group of which Lessor is a member. Tax Benefits shall include interest
          deductions, investment tax credit and depreciation deductions using the
          “applicable depreciation method” set forth in Section 168(b)(1) of the
          Internal Revenue Code, as amended (the “Code”) over the
          “applicable recovery period” set forth in Section 168(b)(1) of the
          Code. Lessee represents and warrants to Lessor that at no time during the Term
          will Lessee take or omit to take, nor will it permit any sublessee or assignee
          to take or omit to take, any action (whether or not such sublessee or assignee,
          or act or omission is otherwise permitted by the terms of this Lease Agreement),
          which may result in the disqualification of any of the Equipment for, or
          recapture of, all or any portion of the Tax Benefits. 



         (b)       
          If as a result of a breach of any representation, warranty or covenant of Lessee
          in this Lease Agreement, any Schedule or any other Document, or any act,
          omission or misrepresentation by Lessee, (i) tax counsel of Lessor shall
          determine that Lessor is not entitled to claim on its Federal income tax return
          all or my portion of the Tax Benefits, or (ii) any such Tax Benefit is
          disallowed or recaptured (a “Loss”), than Lessee shall pay to
          Lessor, on demand, as an indemnity and as additional rent, an amount which will,
          after deduction therefrom of all taxes required to be paid by Lessor with
          respect to such amount, enable Lessor to receive the same after-tax rate of
          return that Lessor would have realized had such Loss not occurred, plus all
          interest and penalties assessed on such Loss. 



         11.       
          USE OF EQUIPMENT; INSPECTION: During the Term, Lessee may possess and use
          the Equipment in accordance with this Lease Agreement and Lessor shall not
          disturb Lessee’s quiet enjoyment of such Equipment unless an Event of
          Default has occurred and is continuing. During the Term, Lessee shall comply
          with the terms of this Lease Agreement, applicable law, insurance policies,
          installation requirements (including environmental specifications) and
          warranties of Supplier(s) concerning the Equipment. Lessee shall obtain all
          permits and licenses, if any, necessary for the Equipment. Lessor shall have the
          right, upon reasonable prior notice to Lessee and during regular business hours,
          to inspect the Equipment. 



         12.       
          FURTHER ASSURANCES: Lessee shall provide to Lessor at Lessor’s
          request, such documents and assurances as Lessor deems necessary for the
          confirmation or perfection of this Lease Agreement, including corporate or other
          resolutions, opinions of counsel and financing statements. Lessee authorizes
          Lessor to prepare and file financing statements, with respect to the Equipment
          and this Lease Agreement. Any such filings shall not be deemed evidence of any
          intent to create a security interest under the UCC, unless otherwise expressly
          provided in a Schedule. Lessee will within 120 days of the close of each fiscal
          year of Lessee, deliver to Lessor, Lessee’s balance sheet and profit and
          loss statement, certified by a recognized firm of certified public accountants.
          Upon request, Lessee will also deliver to Lessor quarterly, within 60 days of
          the close of each fiscal quarter of Lessee, Lessee’s quarterly financial
          report certified by Lessee’s chief financial officer. Lessee will provide
          Lessor with any further financial information or reports, upon request. Lessee
          agrees to promptly notify Lessor in writing of any change in Lessee’s name,
          its state of organization or in the location of its principal place of business. 



         13.       
          DAMAGE, DESTRUCTION OR LOSS: 



         (a)
          From the date the Supplier(s) ships the Equipment to Lessee and until the
          Equipment is redelivered to Lessor, Lessee shall bear the entire risk of loss,
          damage, or destruction with respect to the Equipment resulting from any cause
          whatsoever. 



         (b)
          If any Equipment becomes damaged beyond repair, lost, stolen, destroyed or
          permanently rendered unfit, or in the event of any condemnation or taking by any
          governmental authority (any such occurrence being hereinafter referred to as an
          “Event of Loss”), then Lessee shall promptly notify Lessor, and
          Lessor shall, at its sole option and in its sole discretion, do either of the
          following: 



         (i)
          At Lessee’s expense, permit Lessee, provided there exists no other Event of
          Default at such time, to promptly replace the affected Equipment with like or
          better replacement equipment of identical make, model, configuration, capacity
          and condition, in good repair, free and clear of all liens, in which case any
          such replacement equipment shall become the property of Lessor and for all
          purposes of this Lease Agreement shall be deemed to be the Equipment which at
          replaced (in which event, Lessee shall certify to Lessor that such replaced
          Equipment shall no longer be in use and shall never again be placed in use); or 



         (ii)
          Terminate the Schedule with respect to the affected Equipment and directed
          Lessee to pay to Lessor on the next payment date, all past due rents and all
          obligations due under the Lease with respect to the affected Equipment,
          including taxes, indemnities and attorney’s fees, plus an amount equal to
          the sum of (A) the present value of the remaining rental payments discounted by
          five percent 













(5%), plus (B) the fair market value
in continued use of the           Equipment as of the date of such Event of Loss (which
fair market value the           parties hereby agree shall not be less than 25% of the
“Capitalized           Lessor’s Cost” (as indicated in the applicable
Schedule) for the           Equipment) (such amount shall be the “Stipulated Loss
Value”).  



         14.       
          INSURANCE: Lessee, at its own expense, shall insure the Equipment against
          all risks in an amount at least equal to the full replacement cost thereof, with
          carriers acceptable to Lessor, under a policy containing a loss payable
          endorsement and breach of warranty endorsement in favor of Lessor and its
          successors and assigns, irrespective of any breach of warranty or other act or
          omission of Lessee. Lessee shall further, at its expense, maintain in effect a
          policy of comprehensive public liability and property damage insurance in form
          and amount and with carriers satisfactory to Lessor, which names Lessor and its
          successors and assigns as additiona1 insureds. The policies shall provide that
          they may not be canceled or altered without at least 30 days prior written
          notice to Lessor or its assigns. Lessee shall deliver to Lessor copies or other
          evidence satisfactory to Lessor of each insurance policy upon Lessee’s
          execution of each Schedule and each renewal thereof. Lessor shall have the
          right, on behalf of itself and Lessee, and Lessee hereby appoints Lessor as
          Lessee’s attorney-in-fact, to make proofs of loss or claims for, make
          adjustments with insurers, receive payment of, and execute and endorse all
          documents, checks or drafts received in payment for loss or damage under said
          insurance policies. 



         15.       
          MAINTENANCE AND REPAIRS: Lessee shall, at its expense, maintain the
          Equipment and all additions, attachments and accessories thereto, in good
          repair, condition and working order (including replacement of all parts which
          become damaged, worn out or unfit for use with appropriate new replacement
          parts), excluding however, normal wear and tear resulting from Lessee’s
          authorized use. In addition, Lessee shall maintain the Equipment at the most
          current engineering levels issued by the Supplier of the Equipment and shall
          comply with all directives issued by such Supplier. Lessee shall, at its
          expense, enter into and keep in force during the Term a maintenance agreement
          with the Supplier of the Equipment, and shall send Lessor a copy on request.
          Lessee shall promptly inform Lessor of any changes to or terminations of such
          maintenance agreement. Lessee shall take all actions necessary during the Term
          to ensure that the Equipment will be eligible, at the expiration or termination
          of the Rental Term, for a standard, full service maintenance contract with the
          Supplier thereof. Lessee, without the prior written consent of Lessor, shall
          make no modifications or alternations to any item of Equipment except
          engineering changes suggested by the Supplier, nor shall Lessee place any
          Equipment in storage or retire any Equipment from use during the Term. Lessee
          may make repairs, additions or attachments to the Equipment so long as they do
          not interfere with the normal and satisfactory operation or maintenance thereof,
          create a safety hazard or impair the originally intended function of the
          Equipment. All modifications, repairs, alterations, replacement parts, additions
          and attachments to the Equipment shall become the property of Lessor and subject
          to this Lease Agreement, subject, however, to the right of Lessor to require
          Lessee to return the Equipment to its original condition. 



         16.       
          TAXES: (a) Lessee shall timely pay all assessments, license fees, taxes
          (including sales, use, excise, personal property, ad valorem, stamp, documentary
          and other taxes) and all other governmental charges, fees, fines, or penalties
          whatsoever, whether payable by Lessor or Lessee, on or relating to the Payments,
          Equipment, Software or Services, or the use, registration, shipment,
          transportation, delivery, ownership or operation thereof, and on or relating to
          this Lease Agreement; excluding, however, Lessor’s net income taxes.
          Applicable sales and use taxes shall be paid with the Payments unless Lessee
          provides evidence of direct payment authority or an exemption certificate valid
          in the state where the Equipment and/or Software is located, (b) Lessee agrees
          that it will not list or report any Equipment for property tax purposes unless
          otherwise directed in writing by Lessor. If permitted by law, Lessee shall
          report and pay promptly all such taxes. Lessee shall promptly reimburse Lessor
          (on an after tax basis) for any such taxes charged to or assessed against
          Lessor. Unless otherwise expressly provided in a Schedule, Lessee shall show
          Lessor as the owner of the Equipment on all tax reports or returns, and send
          Lessor a copy of each report or return and evidence of Lessee’s payment of
          such taxes upon request. Lessee shall be responsible for claiming or obtaining
          any exemption from property taxes to which Lessee may be entitled under
          applicable law, and for informing Lessor of any such exemption. 



         17.       
          LESSOR’S PERFORMANCE OF LESSEE’S OBLIGATION: If Lessee shall
          fail to comply with any provision of this Lease Agreement, Lessor may, but shall
          not be obligated to, effect such compliance, in whole or in part. All expenses
          incurred by Lessor in effecting such compliance, including reasonable legal
          fees, shall be payable by Lessee to Lessor on demand. Lessor’s performance
          of any of Lessee’s obligations shall not be deemed a waiver or release
          thereof. 



         18.       
          TIME IS OF THE ESSENCE, LATE CHARGES: Time is of the essence in this
          Lease Agreement. If any Payment or other obligation of Lessee hereunder is not
          paid within ten (10) days of its due date, Lessee agrees to pay a late charge of
          five cents ($0.05) per dollar on, and in addition to, the amount of such
          obligation but not exceeding the lawful maximum, if any. Such amount shall be
          payable on demand. 



         19.       
          INDEMNIFICATION: As between Lessee and Lessor, Lessee assumes liability
          for, and agrees to and does hereby indemnify, protect and keep harmless, Lessor,
          its successors and assigns, and their respective agents, employees, officers and
          directors from and against any and all claims, liability, loss, cost, damage or
          expense (including reasonable attorney’s fees), of whatsoever kind 













and           nature, arising out of
the Equipment, any Document or the purchase, use,           condition, operation,
possession, control, selection, manufacture, delivery or           return of any item of
Equipment, regardless of where, how, and by whom operated,           and any failure by
Lessee to comply with any Document. The foregoing indemnities           (i) include,
without limitation, claims, loss, cost, damage or expense suffered           or incurred
as a result of any defect in the Equipment, Software or Services           (whether
discoverable or not) or based upon any theory of liability (including           strict
liability doctrines or statues), and any claim for patent, trademark or
          copyright infringement or environmental damage, and (ii) shall apply with
          respect to the condition of Equipment sold or disposed of after use by Lessee,
          any sublessee or employees of Lessee. Lessee shall, upon request, defend any
          actions based on, or arising out of, any of the foregoing.  



         20.       
          ADVANCE PAYMENTS: If any Advance Payment (as stated in the Schedule) is
          payable, it shall be due when the Lessee signs the Schedule. Advance payments
          shall be applied to the first rent Payment and the balance, if any, to the final
          rent Payment(s) under such Schedule. In no event shall any Advance Payments or
          any other Payments be refunded to Lessee. 



         21.       
          REPRESENTATIONS AND WARRANTIES OF LESSEE: Lessee represents and warrants
          to Lessor that as of the date of each Schedule and Acceptance Date: 



         (a)
          Lessee has adequate power and capacity to enter into this Lease Agreement, each
          Schedule, each Certificate of Acceptance and any other documents required to be
          delivered in connection with this Lease Agreement (collectively, the
          “Documents”); Lessee’s execution, delivery and performance
          of the Documents have been duly authorized by all necessary corporate, limited
          liability or partnership action, as applicable, and constitute valid, legal and
          binding agreements, enforceable in accordance with their terms; there are no
          proceedings presently pending or threatened against Lessee which will impair its
          ability to perform under this Lease Agreement; Lessee’s exact legal name,
          location of its chief executive office, and state of formation are true and
          complete as written on page 1 of this Lease Agreement; and all information
          supplied to Lessor by Lessee is complete, accurate and not materially
          misleading. 



         (b)
          Lessee’s entering into this Lease Agreement and leasing the Equipment and
          financing any Fees hereunder does not and will not: (i) violate any judgment,
          order or law applicable to Lessee, or any other agreement entered into by Lessee
          with its creditors or any other party, or Lessee’s organizational
          documents; or (ii) result in the creation of any lien, security interest or
          other encumbrance upon the Equipment or this Lease Agreement. 



         (c)
          All financial data of Lessee, any guarantor and of any consolidated group of
          companies of which Lessee is a member (“Lessee Group”),
          delivered to Lessor now or in the future have been and will be prepared in
          accordance with generally accepted accounting principles applied on a consistent
          basis with prior periods and fairly present the financial position and results
          from operations of Lessee, or of the Lessee Group, as of the stated date and
          period(s). Since the date of the most recently delivered financial data, there
          has been no material adverse change in the financial or operating condition of
          Lessee or of the Lessee Group. 



         (d)
          Lessee is and will be validly existing and in good standing under the laws of
          the state of its organization; and Lessee is duly qualified to do business as a
          foreign entity and is in good standing in each jurisdiction in which the
          character of its properties or the nature of its business or the performance of
          its obligations under this Lease Agreement requires such qualification; the
          persons signing the Documents are acting with the full authority of its board of
          directors, members or managers (if the Lessee is a limited liability company),
          or partners (if Lessee is a partnership), and hold the offices indicated below
          their signatures, which are genuine. 



         (e)
          The Equipment and Software shall only be used in Lessee’s trade or
          business, in accordance with applicable law. Lessee has not and will not take
          any action or maintain any position inconsistent with treating this Lease
          Agreement as creating a valid leasehold interest in the Equipment. 



         (f)
          Lessee is and will remain in full compliance with all laws and regulations
          applicable to it including, without limitation, (i) ensuring that no person who
          owns a controlling interest in or otherwise controls Lessee is or shall be (Y)
          listed on the Specially Designated Nationals and Blocked Person List maintained
          by the Office of Foreign Assets Control (“OFAC”), Department of
          the Treasury, and/or any other similar lists maintained by OFAC pursuant to any
          authorizing statute, Executive Order or regulation or (Z) a person designated
          under Section 1(b), (c) or (d) of Executive Order No. 13224 (September 23,
          2001), any related enabling legislation or any other similar Executive Orders,
          and (ii) compliance with all applicable Bank Secrecy Act
          (“BSA”) laws, regulations and government guidance on BSA
          compliance and on the prevention and detection of money laundering violations. 



         22.       
           ASSIGNMENT BY LESSEE: WITHOUT LESSOR’S PRIOR WRITTEN CONSENT,
          LESSEE MAY NOT, BY OPERATION OF LAW OR OTHERWISE, (A) ASSIGN, TRANSFER, PLEDGE,
          ENCUMBER OR OTHERWISE DISPOSE OF THIS LEASE AGREEMENT OR THE EQUIPMENT OR ANY
          INTEREST THEREIN, OR (B) SUBLEASE OR LEND THE EQUIPMENT OR PERMIT THE EQUIPMENT
          TO BE USED BY ANYONE OTHER THAN LESSEE OR LESSEE’S EMPLOYEES; provided,
          however, that Lessee may allow third parties under Lessee’s supervision to
          use the equipment so long as Lessee retains uninterrupted possession and control
          of the Equipment. 



         23.       
          ASSIGNMENT BY LESSOR: LESSOR MAY WITHOUT THE CONSENT OF OR NOTICE TO
          LESSEE, ASSIGN, SELL OR ENCUMBER ALL OR ANY PART OF THIS LEASE AGREEMENT, ANY
          SCHEDULE, THE EQUIPMENT AND THE PAYMENTS AND OTHER AMOUNTS DUE HEREUNDER OR
          THEREUNDER, OR THE RIGHT TO ENTER INTO ANY  













SCHEDULE. In the event of any such
          assignment and written direction by Lessor to Lessee, Lessee shall pay directly
          to any such assignee without abatement, deduction or set-off all Payments and
          other sums under this Lease Agreement. Lessee also agrees to confirm in writing
          receipt of the notice of assignment as may be reasonably requested by assignee.
          ANY SUCH ASSIGNEE SHALL HAVE ALL OF THE RIGHTS, BUT NONE OF THE OBLIGATIONS
          (UNLESS ASSUMED BY SUCH ASSIGNEE), OF LESSOR UNDER THIS LEASE AGREEMENT, AND
          LESSEE SHALL NOT ASSERT AGAINST ANY SUCH ASSIGNEE ANY DEFENSE, COUNTERCLAIMS OR
          SET-OFF WHICH LESSEE MAY HAVE AGAINST LESSOR FOR ANY REASON WHATSOEVER. Any
such           assignment shall be subject to Lessees right to possess and use the
Equipment           pursuant to Section 11. 



         24.       
          RETURN OF EQUIPMENT: At least 90 days but no more than 180 days prior to
          expiration of the Term or any extended Term, Lessee shall give Lessor written
          notice of its intent to return the Equipment. Upon such expiration, Lessee at
          its own risk and expense, (i) will immediately have the Equipment uninstalled
          and returned to Lessor in the same condition as when delivered, ordinary wear
          and tear excepted, to such location as Lessor shall designate; and (ii) will, on
          request from Lessor, obtain from the Supplier (or other maintenance service
          provider previously approved by Lessor) a certificate stating that the Equipment
          qualifies for full maintenance service at the standard rates and terms then in
          effect. 



         25.       
          DEFAULT: (a) Lessee shall be in default under this Lease Agreement upon
          the happening of any of the following events or conditions (each, an
          “Event of Default”): (i) Lessee fails to make any Payment or
          any other amount payable under this Lease Agreement or any other Document and
          such failure continues for 10 days after it becomes due; or (ii) Lessee fails to
          maintain in effect any insurance required under this Lease Agreement; or (iii)
          Lessee fails to perform or breaches any other term, provision, or other
          obligation contained in this Lease Agreement or any other Document, and such
          failure continues for 30 days after Lessor’s written notice; or (iv) the
          attempted sale, lease, rejection, revocation of acceptance or encumbrance of
          this Lease Agreement, any Equipment, or any attachments thereto; or (v) any
          representation or warranty made by Lessee in connection with any Document shall
          be false or misleading in any material respect; or (vi) the dissolution,
          termination of existence or discontinuance of Lessor’s business, or (if
          Lessee is an individual or sole proprietorship) Lessee dies or is judicially
          declared incompetent, or Lessor’s insolvency, business failure, or failure
          to pay debts as they mature; or (vii) the appointment of a receiver or
          assignment for the benefit of creditors of any substantial part of Lessee’s
          property, or the commencement of any proceedings under any bankruptcy,
          insolvency, reorganization or arrangement laws by or against Lessee, and if
          commenced against Lessee, such proceedings are not vacated within 60 days; or
          (viii) the sale of all or substantially all of Lessee’s assets; or (ix) any
          of the foregoing events or conditions occur with respect to any Guarantor; or
          (x) any of the foregoing events or conditions occur with respect to any other
          lease, conditional sale or installment purchase agreement between Lessee and
          Lessor or between a Guarantor and Lessor; or (xi) there is any merger,
          consolidation or change in controlling ownership of Lessee or any Guarantor; or
          (xii) any Guarantor revokes or attempts to revoke its guaranty or fails to
          observe or perform any covenant, condition or agreement to be performed under
          any guaranty or other related documents to which it is a party. (For purposes
          hereof, “Guarantor” shall mean any guarantor or other obligor
          for the Lessee’s obligations hereunder.) 



         (b)
          Upon the occurrence of any Event of Default and at any time thereafter, Lessor
          may, without any further notice, do any one or more of the following in its sole
          discretion: (i) terminate this Lease Agreement; (ii) personally, or by its
          agents, take immediate possession from Lessee of any or all items of Equipment
          wherever found and for this purpose enter upon Lessee’s premises where any
          item of Equipment is located and remove such items of Equipment with due process
          of law, and free from all claims by Lessee, including but not limited to claims
          for storage fees or for any data or information remaining in or accompanying any
          such repossessed Equipment; (iii) declare the Stipulated Loss Value (as defined
          in Section 13b), together with all other sums then due and payable hereunder
          (including, but not limited to, accrued and unpaid Payments, late charges,
          indemnity amounts, legal fees and costs), to be immediately due and payable
          without any presentment, demand or protest (all of which are hereby expressly
          waived by Lessee) as liquidated damages for loss of a bargain and not as a
          penalty and in lieu of further Payments; (iv) cause Lessee to promptly return
          any or all items of Equipment to Lessor pursuant to Section 24; (v) sell any or
          all of the Equipment at public or private sale, with or without notice to Lessee
          or advertisement, or otherwise dispose of, hold, use, operate, lease to others
          or keep idle such Equipment, all free and clear of any rights of Lessee and
          without any duty to account to Lessee for such action or inaction or for any
          proceeds with respect thereto and (vi) exercise any other right or remedy which
          may be available to it under Article 2A of the UCC or other applicable law
          including the right to recover damages for the breach hereof. 



         (c)
          Lessee shall be liable for, and reimburse Lessor for, all reasonable and
          necessary legal fees and all commercially reasonable costs and expenses incurred
          by Lessor as a result of an Event of Default hereunder, or the exercise of
          Lessor’s remedies, including placing any Equipment in the condition
          required by Section 24 hereof. 



         (d)
          The proceeds of sale, lease or other disposition of the Equipment shall be
          applied, upon receipt, as follows: (i) to the extent not previously paid by
          Lessee, to pay Lessor the Stipulated Loss Value and all other sums, including
          any accrued Payments and late charges, indemnity amounts, legal fees and costs
          due hereunder; then (ii) to reimburse Lessee any sums previously paid by Lessee
          to Lessor as liquidated damages; and (iii) surplus shall be retained by Lessor,
          except that any surplus from Equipment under a Schedule in which Lessee is
          expressly provided to the owner of the Equipment shall be paid to Lessee. In the
          event such proceeds are less than the sum of all amounts due under (i), Lessee
          shall promptly pay such deficiency to Lessor. 















         (e)
          No remedy referred to in this Section is intended to be exclusive, but each
          shall be cumulative and in addition to any other remedy referred to above or
          otherwise available to Lessor at law or in equity. 



         26.       
          TERMINATION: Each Schedule may be terminated by either party at the end
          of the Term or any extended Term thereof provided written notice of termination
          of a Schedule is given between one hundred eighty days and ninety days prior to
          the termination of the Schedule. If proper of termination is not given, or if
          the Equipment is not returned to Lessor as required under paragraph 24, the term
          of the Schedule shall be extended on the same terms and conditions for six
          months, unless earlier termination in writing by Lessor. Thereafter, the
          Schedule as so extended may be terminated by either party at the end of any
          calendar month by giving the other party ninety days prior written notice. 



         27.       
          SURVIVAL/SEVERABILITY: All of Lessee’s indemnities and assumptions
          of liability in Sections 10, 16 and 19 shall continue in full force and effect
          notwithstanding the expiration or termination of any Term. Any provision of this
          Lease Agreement which is prohibited or unenforceable in any jurisdiction shall,
          as to such jurisdiction, be ineffective to the extent of such prohibition or
          unenforceability, without invalidating the remaining provisions hereof. Such
          remaining provisions shall be construed to effectuate the intent of the parties
          as set forth herein. To the extent permitted by applicable law, Lessee hereby
          waives any provision of law which prohibits or renders unenforceable any
          provision hereof in any respect. 



         28.       
          NOTICES, PARTIES: All notices or demands required or permitted hereunder
          shall be given to the parties in writing and by personal delivery, certified
          mail, facsimile or overnight courier service at the address herein set forth or
          to such other address as the parties may hereafter substitute by written notice
          given in the manner prescribed in this Section. Such notices or demands shall be
          deemed given upon receipt in the case of personal delivery and upon mailing or
          transmission or pickup in the case of mail, facsimile or overnight courier
          service, respectively. The provisions of this Lease Agreement shall be binding
          upon, and (subject to the limitations of Section 23 hereof) shall inure to the
          benefit of the assigns, representatives and successors of Lessor and Lessee. If
          more than one party executes a Schedule as Lessee, the liability of each shall
          be joint and several. 



         29.       
          CONSTRUCTION, JURY TRIAL: This Lease Agreement shall in all respects be
          governed by and construed in accordance with the laws of the State of
          Connecticut. The titles of the Sections of this Lease Agreement are for
          convenience only and shall not define or limit any of the terms or provisions
          hereof. Lessee acknowledges that Lessor would not enter into this Lease
          Agreement unless the laws of the State of Connecticut applied hereto. LESSEE
          AND LESSOR WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY LITIGATION ARISING FROM THIS
          LEASE AGREEMENT, ANY OF THE OTHER DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED
          HEREIN. 



    30.      
  FINANCING, SECURITY INTEREST: (a) In the event that this Lease Agreement
  may be deemed to constitute a secured transaction, Lessee grants to Lessor a
  first priority security interest in the Equipment and any additions, attachments,
  upgrades, accessions, repairs, modifications, replacements thereto and proceeds
  thereof, including insurance proceeds, to secure Lessee’s payment of the
  Payments and all other payment obligations when due, and Lessee’s performance
  of all of the terms and conditions of this Lease Agreement. 



         (b)
          If under applicable law any part of the Payments are deemed or determined to be
          imputed interest, finance charges or time-price differential
          (“Interest”), the parties agree that the Payments shall be deemed to
          be level payments of principal and Interest, with such Interest accruing on
          principal amounts outstanding from time to time. The rate of such Interest is
          not intended to exceed the maximum amount of interest permitted by applicable
          law. If the Interest exceeds such maximum, then at Lessor’s option, if
          permitted by law, the Interest payable will be reduced to the legally permitted
          maximum amount of interest, and any excessive interest will be used to reduce
          the principal amount of Lessor’s obligation or refunded. 



         31.       
          ARTICLE 2A WAIVERS: Lessee, to the extent permitted by law, waives any
          and all rights and remedies conferred upon a Lessee by Sections 2A-508 through
          2A-522 of such Article 2A, including, but not limited to, Lessee’s rights
          to: (i) cancel or repudiate this Lease Agreement; (ii) reject or revoke
          acceptance of the Equipment, Software or Services; (iii) claim, grant or permit
          a security interest in the Equipment in Lessee’s possession or control for
          any reason; (iv) deduct from payments or other amounts due hereunder, all or any
          part of any claimed damages resulting from Lessor’s default, if any, under
          this Lease Agreement; (v) accept partial delivery of the Equipment; (vi)
          “cover” by making any purchase or lease of or contract to purchase or
          lease equipment in substitution for Equipment designated in this Lease
          Agreement; and (viii) obtain specific performance, replevin, detinue,
          sequestration, claim and delivery or the like for any Equipment identified to
          this Lease Agreement. To the extent permitted by applicable law, Lessee also
          hereby waives any rights now or hereafter conferred by statute or otherwise
          which may require Lessor to sell, lease or otherwise use any Equipment in
          mitigation of Lessor’s damages or which may otherwise limit or modify any
          of Lessor’s rights or remedies. 



         32.       
          NO ACCORD AND SATISFACTION: No payment by Lessee or receipt by Lessor of
          a lesser amount than the Payments specified in a Schedule shall be deemed to be
          other than on account of the Payments, nor shall any endorsement or statement on
          any check or letter accompanying any check or payment be deemed an accord and
          satisfaction. Lessor may accept any such check or  













payment without prejudice to
          Lessor’s right to recover the balance of Payments or any other amount then
          due and owing hereunder or to pursue any other remedy provided in this Lease
          Agreement. 



         33.       
          ENTIRE AGREEMENT, AMENDMENTS AND WAIVERS, MISCELLANEOUS: This Lease
          Agreement, any Schedules hereunder and the Certificate of Acceptance constitute
          the entire agreement between Lessor and Lessee with respect to the Equipment,
          the Payments and other amounts due hereunder, and the Software, Services, and
          Fees, and supersede all prior proposals, communications and agreements, both
          written and oral, between the parties. NO TERM OR PROVISION OF THIS LEASE
          AGREEMENT OR ANY CERTIFICATE OF ACCEPTANCE MAY BE CHANGED, WAIVED, AMENDED OR
          TERMINATED EXCEPT BY A WRITTEN AGREEMENT SIGNED BY BOTH LESSOR AND LESSEE,
          except that LESSOR may insert the serial numbers of any Equipment into the
          applicable Schedule. This Lease Agreement may be executed in any number of
          counterparts, all of which taken together shall constitute one and the same
          instrument, and either of the parties hereto may execute this Lease Agreement by
          signing any such counterpart. Any Payments or other amount not paid to Lessor
          when due shall bear interest, from the due date until paid, at the lesser of
          eighteen percent (18%) per annum or the maximum rate allowed by law. Such amount
          shall be payable on demand. 



         34.       
          CONFIDENTIALITY: Each party hereto agrees to keep confidential, the terms
          and provisions of the Documents and the transactions contemplated hereby and
          thereby (collectively, the “Transaction”). Notwithstanding the
          foregoing, the obligations of confidentiality contained herein, as they relate
          to the Transactions, shall not apply to the federal tax structure or federal tax
          treatment of the Transactions, and each party hereto (and any employee,
          representative, or agent of any party hereto) may disclose to any and all
          persons, without limitation of any kind, the federal tax structure and federal
          tax treatment of the Transactions. The preceding sentence is intended to cause
          each Transaction to be treated as not having been offered under conditions of
          confidentiality for purposes of Section 1.6011-4(b)(3) (or any successor
          provision) of the Treasury Regulations promulgated under Section 6011 of the
          Internal Revenue Code of 1986, as amended, and shall be construed in a manner
          consistent with such purpose. In addition, each party hereto acknowledges that
          it has no proprietary or exclusive rights to the federal tax structure of the
          Transactions or any federal tax matter or federal tax idea related to the
          Transactions. 



        Lessor’s
failure at any time to require strict performance by Lessee of any provisions of this
Lease Agreement or the Certificate of Acceptance shall not waive or diminish Lessor’s
right thereafter to demand strict performance. Waiver of any Event of Default shall not be
a waiver of any other or further Event of Default. LESSEE HEREBY ACKNOWLEDGES THAT IT HAS
READ, RECEIVED, RETAINED A COPY OF AND UNDERSTANDS THIS LEASE AGREEMENT, AND AGREES TO BE
BOUND BY ALL OF ITS TERMS AND CONDITIONS. To the extent that any Schedule would constitute
chattel paper, as such term is defined in the UCC as in effect in any applicable
jurisdiction, no security interest herein may be created through the transfer or
possession of this Lease Agreement in and of itself without the transfer or possession of
the original of a Schedule executed pursuant to this Lease Agreement and incorporating
this Lease Agreement by reference; and no security interest in this Lease Agreement and a
Schedule may be created by the transfer or possession of any counterpart of a Schedule
other than the original thereof, which shall be identified as the document marked
“Original” and all other counterparts shall be marked “Duplicate. This
Lease Agreement, identified as the document marked “Original”, is the only
original hereof assignable for purposes of financing or pledging the assets described
hereunder. 



        IN
WITNESS WHEREOF, Lessor and Lessee have each caused this Lease Agreement to be duly
executed as of the date first above written. 



GENERAL ELECTRIC
CAPITAL CORPORATION (LESSOR) 



	By:  	  	/s/ Susan Lydon
      
      

      






	Name:  	  	Susan
Lydon 







	Title:  	  	Manager
Portfolio Admin.  







	Date:  	  	12-1-05  







DUCKWALL-ALCO STORES,
INC. (Lessee) 



	By:  	  	/s/
Richard A. Mansfield  







	Name:  	  	Richard
A. Mansfield  







	Title:  	  	V.P./CFO  







	Date:  	  	12-1-05