Document:

Commercial Lease Agreement

    THIS LEASE (this "Lease") dated this 23rd day of August, 2005

                               BETWEEN:

                              Vishnu LLC
       Address: 380 East 1700 South, Salt Lake City, Utah 84115
              Telephone: 801363- 7500 Fax: 801 880- 7928
                           (the "Landlord")

                                -AND-

                        Alchemy Coffee Company
                   Jason Briggs and Venessa Vetica
             (collectively and individually the "Tenant")

IN CONSIDERATION OF the Landlord leasing certain premises to the Tenant, the
Tenant leasing those premises from the Landlord and the mutual benefits and
obligations set forth in this Lease, the receipt and sufficiency of which
consideration is hereby acknowledged, the parties to this Lease agree as
follows:

  LEASED PREMISES
  1. The Landlord agrees to rent to the Tenant the store municipally
  described as approx. 400 East 1700 South, (the "Premises") and comprises a
  Leasable Area of approx. 692 square feet. The Premises will be used for
  only the following permitted use (the "Permitted Use"): for the sale of
  coffee and related items and for the events of poetry/music/art. Neither
  the Premises nor any part of the Premises will be used at any time during
  the term of this Lease by Tenant for any purpose other than the Permitted
  Use.

  2. Subject to the provisions of this Lease, Tenant shall have equal access
  to all of the parking belonging to the building premises on a first come
  first served basis. Only properly insured motor vehicles may be parked in
  the Tenant's space.

  TERM
  3. The term of the Lease is for 5 years to commence at 12:00 midnight on
  August 23,2005.

  RENT
  4. Subject to the provisions of this Lease, the Tenant will pay a base rent
  (the "Base Rent") of $865.00 per month for the Premises. In addition to the
  Base Rent, the Tenant shall pay its proportionate share of the cost of
  repairing and maintaining its leased space (approx. 692 sq. ft.) including
  real estate taxes and insurance.  Additionally, the Tenant shall be
  responsible for helping to maintain (by monetary means as well as labor)
  the common areas of the property including but not limited to: planter
  boxes, trees, weeds and snow removal, parking lot, building walls, windows,
  bike rack(s). Responsibility for the above items/payment will begin the
  sooner of ninety (90) days after delivery date, or when tenant opens for
  business. For any partial month, monetary amounts shall be prorated to the
  last day of the month. Payments shall be estimated by the Landlord based on
  the most recent invoices and added to the Base Rent. Actual amounts will be
  examined at the end of the year and adjusted accordingly.

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  5. The Tenant will pay the Base Rent on or before the first of each and
  every month of the term of this Lease to the Landlord at 380 E. 1700 S.,
  Salt Lake City, UT 84115, or at such other place as the Landlord may later
  designate.

  6. The Base Rent for the Premises will increase over the Term of the Lease
  as follows: Rent shall increase by 5% every two years.

   7. The Tenant will be charged an additional amount of ten percent (10% )
  of the Base Rent for any rent that is received more than ten (10) days
  after the due date. Any rent or other charges more than ten (10) days late
  shall accrue interest at the rate of ten percent ( 10% ) per year.

  DEFAULT

  8. In the event that (a) Tenant fails to base its Base Rent or other
  payment within ten (10) days of the date of such payment is due; or (b)
  Tenant fails to observe any other terms of this lease, and fails to cure
  such breach within ten (10) days after written notice of such breach, then
  Landlord, without further notice may, at its option, exercise the following
  remedies, which shall be non exclusive and in addition to all other
  remedies provided by this lease or Utah law:
  (i) terminate this lease and recover from Tenant all damages allowed under
  Utah law; or (ii) not terminate Tenant's right to possession, but continue
  this lease in effect including the right to recover rent and all charges
  due hereunder, as they become due, and any other damages allowed under Utah
  law. Tenant waives all claims or demands for damages that may be caused by
  Landlord's re-entering and re-taking possession of the Premises.

  USE AND OCCUPATION
  9. The Tenant will use and occupy the Premises only for the Permitted Use
  and for no other purpose whatsoever. The Tenant will carryon business under
  the name of Alchemy Coffee Company and will not change such name without
  the prior written consent of the Landlord, such consent not to be
  unreasonably withheld.  The Tenant will open the whole of the Premises for
  business to the public fully fixtured, stocked and staffed and will
  continuously occupy and utilize the entire Premises in the active conduct
  of its business in a reputable manner for the entire period of this Lease.

  10. The Tenant covenants that the Tenant will carry on and conduct its
  business from time to time carried on upon the Premises in such manner as
  to comply with all statutes, bylaws, rules and regulations of any federal,
  provincial, municipal or other competent authority and will not do anything
  on or in the Premises in contravention of any of them.

  SECURITY DEPOSIT
  11. On execution of this Lease, The Tenant will pay the Landlord a security
  deposit equal to the amount of $865.00 (the "Security Deposit") to be held
  by the Landlord without interest. The Landlord will return the Security
  Deposit to the Tenant at the end of this tenancy, less such deductions as
  provided in this Lease but no deduction will be made for damage due to
  reasonable wear and tear.

  12. The Tenant may not use the Security Deposit as payment for the Rent.

  QUIET ENJOYMENT
  13. The Landlord covenants that on paying the Rent and performing the
  covenants contained in this Lease, the Tenant will peacefully and quietly
  have, hold, and enjoy the Premises for the agreed term.

  OVERHOLDING

<PAGE>

  14. If the Tenant continues to occupy the Premises with the written consent
  of the Landlord after the expiration or other termination of the term,
  then, without any further written agreement, the Tenant will be a month-to-
  month tenant at a minimum monthly rental equal to twice the Base Rent and
  subject always to all of the other provisions of this Lease insofar as the
  same are applicable to a month-to-month tenancy and a tenancy from year to
  year will not be created by implication of law.

  15. If the Tenant continues to occupy the Premises without the written
  consent of the Landlord at the expiration or other termination of the term,
  then the Tenant will be a tenant at will and will pay to the Landlord, as
  liquidated damages and not as rent, an amount equal to twice the Base Rent
  plus any Additional Rent during the period of such occupancy, accruing from
  day to day and adjusted pro rata accordingly, and subject always to all the
  other provisions of this Lease insofar as they are applicable to a tenancy
  at will and a tenancy from month to month or from year to year will not be
  created by implication of law; provided that nothing herein contained will
  preclude the Landlord from taking action for recovery of possession of the
  Premises.

     INSPECTIONS
  16. At all reasonable times during the term of this Lease and any renewal
  of this Lease, the Landlord and its agents may enter the Premises to make
  inspections or repairs, or to show the Premises to prospective tenants or
  purchasers upon 4 hours notice to the Tenant.

  17. For so long as the Tenant is using and occupying the Premises for the
  Permitted Use and is not in default under the Lease, the Landlord agrees
  not to Lease space in the Building to any tenant who will be conducting in
  such premises as its principal business, the services of for the sale of
  coffee and related items.

   RENEWAL OF LEASE
   18. Upon giving written notice no later than 60 days before the
   expiration of the term of this Lease, the Tenant may renew this Lease for
   one ( 1) additional term. However, in the event Tenant is a "holdover"
   under sections 14 and 15 above, it shall not have any option to renew.

   UTILITIES
   19. Tenant is responsible for all utilities relating to the premises. The
   parties expect gas and electric to be separately metered, and will
   attempt to have water separately metered. To the extent any utility is
   not separately metered, then the parties shall agree on what constitutes
   a fair percentage for Tenant to pay based on use, and tenant shall pay
   its share within ten days of presentation of an invoice.

   INSURANCE
   20. The Tenant is hereby advised and understands that the personal
   property of the Tenant is not insured by the Landlord for either damage
   or loss, and the Landlord assumes no liability for any such loss. The
   Tenant is advised to procure casualty insurance for Tenant's personal
   property.

   21. The Tenant is responsible for insuring the Premises for liability
   insurance for the benefit of the Tenant with the landlord to be named as
   an additional insured in an amount not less than $1,000,000, or such
   other amount as may be agreed to by Landlord.

   22. The Tenant will provide proof of such insurance to the Landlord upon
   the issuance or renewal of such Insurance.

   GOVERNING LAW
   23. It is the intention of the parties to this Lease that the tenancy
   created by this Lease and the performance under this Lease, and all suits
   and special proceedings under this Lease, be construed in accordance with

<PAGE>

   and governed, to the exclusion of the law of any other forum, by the laws
   of the State of Utah, without regard to the jurisdiction in which any
   action or special proceeding may be instituted.

   SEVERABILITY
   24. If there is a conflict between any provision of this Lease and the
   applicable law of the State of Utah the law of the state of Utah will
   prevail and such provisions of the Lease will be amended or deleted as
   necessary in order to comply with such law.

   ASSIGNMENT AND SUBLETTING
   25. The Tenant will not assign this Lease, or sublet or grant any
   concession or license to use the Premises or any part of the Premises. An
   assignment, subletting, concession, or license, whether by operation of
   law or otherwise, will be void and will, at Landlord's option, terminate
   this Lease.

   ADDITIONAL PROVISIONS
   26. Landlord shall provide a tenant improvement allowance to be paid
   initially by the Tenant, of a maximum of $15,000. The actual amount shall
   be agreed upon by the Landlord, Tenants and Contractor in advance.
   Amounts up to the maximum will be prorated over a three (3) year period
   and paid in equal monthly installments by the Landlord, in the form of
   subtracting the said amount from the monthly lease payments. Landlord
   shall be included in equal measure in the process of choosing
   contractor(s) and making plans which involve improvements to be paid for
   by Landlord and other changes to the space which involve major changes to
   the building including, but not limited to structural, electrical,
   plumbing, heating/cooling, lighting, roofing, windows/doors, signage,
   facade. All payments to contractors shall be conditioned upon receipt of
   lien waivers, copies of which will be provided to Landlord.
   The above mentioned Tenant improvement allowance shall be applied toward
   the following:
   (a) Roof: labor and materials; roofing material, vent and flashing.
   (b) Ceiling: labor and materials; insulation and papering.
   (c) Building Facade: materials; paint.
   ( d) Heating and cooling
   (e) Windows/Doors: materials and installation of windows and commercial
   doors on North side and West
   side (internal door).
   (1) Plumbing: equipment, installation and hookup of water heater. Also,
   materials for closet enclosure.
   (g) Bathroom: materials; sink hookup, bathroom fixtures (sink, toilet and
   seat, vent fan, lighting fixtures).
   (h) Ramp: materials and labor to connect Alchemy to Soma (for handicap
   bathroom access).
   (i) Electrical: materials and labor; hookup of basic overhead lighting
   with switches in the leased space.

    27. Rent Start Date: The sooner of ninety (90) days after Delivery Date
   as defined below, or when Tenant is open for business. For any partial
   month, rent shall be prorated to the last day of the month.

   28. Adjacent Space Agreement: Tenant shall have equal opportunity to
   lease any adjacent space that is created within the property. Tenant
   shall have access to handicap restrooms as needed in compliance with city
   and state code. Tenant shall also have access to a bathroom and common
   area outside the leased premises as part of this lease agreement.
   Landlord reserves the right to make changes to this portion of the
   agreement as needed.

   29. Termination Clause: After two (2) years from Lease Execution Date,
   Tenant reserves the right to cancel the lease with ninety (90) days
   notice and payment of six (6) months base rent, taxes and insurance
   beyond exit date. Or, if less than six ( 6) months remain in the term of
   this lease, then base rent, taxes and insurance up to the end of term
   shall be paid.

   30. Exterior Signage: Landlord grants permission to Tenant to erect an
   internally illuminated pan channel

<PAGE>

   letter exterior sign on and about the
   premises in accordance with city ordinances.

   MAINTENANCE
   31. The Tenant will, at its sole expense, keep and maintain the Premises
   and appurtenances in good and sanitary condition and repair during the
   term of this Lease and any renewal of this Lease.

   32. In particular, the Tenant will keep the fixtures in the Premises in
   good order and repair. The Tenant will, at Tenant's sole expense, make
   all required repairs to the plumbing, range, heating apparatus, and
   electric and gas fixtures whenever damage to such items will have
   resulted from the Tenant's misuse, waste, or neglect or that of the
   Tenant's employee, family, agent, or visitor.

   CARE AND USE OF PREMISE
   33. The Tenant will promptly notify the Landlord of any damage, or of any
   situation that may significantly interfere with the normal use of the
   Premises or to any furnishings supplied by the Landlord.

   34. The Tenant will not make (or allow to be made) any noise or nuisance
   which, in the reasonable opinion of the Landlord, disturbs the comfort or
   convenience of other tenants.

   35. The Tenant will not engage in any illegal trade or activity on or
   about the Premises.

   36. The Landlord and Tenant will comply with standards of health,
   sanitation, fire, housing and safety as required by law.

   37. At the expiration of the lease term, the tenant will quit and
   surrender the Premises in as good a state and condition as they were at
   the commencement of this Lease, reasonable use and wear and damages by
   the elements excepted.

   HAZARDOUS MATERIALS
   38. Tenant states that it has no expertise with respect to toxic wastes,
   hazardous materials, or undesirable substances and agrees that it will
   not keep or have on the Premises any article or thing of a dangerous,
   flammable, or explosive character that might unreasonably increase the
   danger of fire on the Premises or that might be considered hazardous by
   any responsible insurance company.  Landlord agrees to retain qualified
   experts to deal with the detection and correction of such matters and
   agrees that Tenant will not be held liable if any of the above mentioned
   items are found on the properties, unless due to Tenant negligence.

   GENERAL PROVISIONS
   39. Any waiver by the Landlord of any failure by the Tenant to perform or
   observe the provisions of this Lease will not operate as a waiver of the
   Landlord's rights under this Lease in respect of any subsequent defaults,
   breaches or nonperformance and will not defeat or affect in any way the
   Landlord's rights in respect of any subsequent default or breach.

   40. This Lease will extend to and be binding upon and inure to the
   benefit of the respective heirs, executors, administrators, successors
   and assigns, as the case may be, of each party to this Lease. All
   covenants are to be construed as conditions of this Lease.

   41. All sums payable by the Tenant to the Landlord pursuant to any
   provision of this Lease will be deemed to be Additional Rent and will be
   recovered by the Landlord as rental arrears.

<PAGE>

   42.  Where there is more than one Tenant executing this Lease, all
   Tenants are jointly and severally liable for each other's acts, omissions
   and liabilities pursuant to this Lease.

   IN WITNESS WHEREOF  Jason Briggs and Venessa Vetica have duly affixed
   their signatures and Vishnu LLC has duly affixed its signature by a duly
   authorized officer on this 23rd day of August, 2005.

                LANDLORD

                Vishnu LLC, a Utah Limited Liability Company

                By:________________________________________
                     Its Managing Member

                TENANT

                ___________________________________________
                Jason Briggs

                ___________________________________________
                Venessa VeticaRULE 10B5-1 AND 10B-18 STOCK REPURCHASE AGREEMENT

     THIS RULE 10B5-1 AND 10B-18 STOCK REPURCHASE AGREEMENT dated August 23,
2005 (the "Agreement") is between Duckwall-ALCO Stores, Inc. (the "Company") and
Jefferies & Co., Inc. ("Broker").

WITNESSETH

     WHEREAS, the Board of Directors of the Company has authorized the
repurchase of up to 242,879 shares (the "Shares") of the Company's common stock,
$.0001 par value ("Common Stock"); and

     WHEREAS, the Company desires to repurchase the Shares in accordance with
this Agreement and in conformity with the provisions of the Securities Exchange
Act of 1934, as amended ("Exchange Act") and Rule 10b5-1 promulgated under the
Exchange Act ("Rule 10b5-1") and Rule 10b-18 promulgated under the Exchange Act
("Rule 10b-18"); and

     WHEREAS, Broker is willing to purchase the Shares for the Company in
accordance with this Agreement;

     NOW, THEREFORE, the Company and Broker hereby agree as follows:

1.   Appointment. The Company hereby appoints Broker to purchase Shares on the
terms and conditions set forth herein. Subject to such terms and conditions,
Broker hereby accepts such appointment.

2.   Share Purchases. Beginning on the Commencement Date (as defined in Section
3 below), Broker shall purchase Shares for the Company's account in compliance
with the terms and conditions of this Agreement. The total amount of Shares that
may be purchased under this Agreement shall not exceed 50,000 Shares and the
Broker may not spend more than $1,250,000.00 in purchasing Shares under this
Agreement. Broker shall use reasonable efforts to purchase the Shares at or
below the then prevailing market price. In making such purchases, Broker shall
comply with the following guidelines:

          i.   Orders to purchase hereunder are given on a "not held" basis.

          ii.  Subject to Rule  10b-18(b)(2)  and the  restrictions set forth in
               this  Agreement,  Broker during the term of this Agreement  shall
               use its best efforts to purchase,  or cause to be purchased,  the
               Shares on each day on or after the Commencement Date that trading
               takes place on the Nasdaq Stock Market (a "Trading Day").

          iii. Subject to Rule 10b-18(b)(3),  Broker shall make its purchases at
               or below the then prevailing market price.

<PAGE>

3.   Term of the Agreement; Termination/Suspension.

     (a) Broker is authorized to commence purchasing Shares after the third
business day following the publication of the Company's August 2005 earnings
(the "Commencement Date"), and shall cease purchasing on the earliest to occur
of: (i) the close of trading on November 1, 2005; (ii) the date that the
aggregate purchases under this Agreement reach a total of 50,000 shares; or
(iii) the date notice of the termination of the Agreement is received as
provided in Section 3(a)(iii)(A)-(B), or a public announcement is made as
provided in Section 3(a)(iii)(C), as follows:

          (A) The Company or Broker may terminate this Agreement by giving
     written notice 24 hours in advance of such termination to the other party
     in accordance with Section 10 below;

          (B) This Agreement may be suspended, or at Broker's option and upon
     written notice to the Company, terminated upon the Company's failure to
     forward funds in accordance with Section 10 of this Agreement. If Broker
     determines to suspend or terminate this Agreement pursuant to this
     subsection (B), it shall promptly notify the Company of such determination
     by facsimile or a nationally recognized overnight courier service.

          (C) This Agreement will terminate on the date the Company or any other
     person announces a tender or exchange offer with respect to the Shares or
     other securities of the Company; the date of a public announcement of a
     merger, acquisition, recapitalization, reorganization, or comparable
     transaction in which the Shares or other securities of the Company will be
     exchanged for other securities; or the date of the announcement of the
     voluntary or involuntary liquidation, bankruptcy, insolvency, or
     nationalization of, or any analogous proceeding affecting, the Company.

     (b) Any termination of this Agreement pursuant to subsection (a)(i),
(a)(ii), or (a)(iii)(A) or (C) above would require the Company and Broker to
enter into a new arrangement prior to recommencing repurchases of Shares. If
Broker suspends purchases of Shares pursuant to subsection 3(a)(iii)(B) above or
Section 9 below, Broker may resume purchases of Shares pursuant to this
Agreement when it determines that conditions leading to the suspension no longer
exist and/or will not have a material adverse impact on repurchases of Shares
pursuant to this Agreement.

4.   Modification of the Agreement. This Agreement, including any Addendum
hereto, may be modified by the Company provided that (a) such modification is
made in accordance with Section 13 hereof, in good faith and not as part of a
plan or scheme to evade prohibitions of Rule 10b-5 of the Exchange Act and (b)
the Company is not in possession of material non-public information about it or
its securities.

<PAGE>

5.   Company Representations and Warranties. The Company represents and
warrants:

     (a)  that the purchase of the shares of Shares pursuant to this Agreement:

          (i) has been duly authorized by all necessary corporate action;

          (ii) is consistent with the Company's publicly announced stock
          repurchase program; and

          (iii) will not contravene any provision of its certificate of
          incorporation or by-laws, or to its knowledge, any law,
          regulation or contractual restriction binding on it or its
          assets.

     (b)  This Agreement or any amendment thereto is established in good faith
          compliance with the requirements of Rule 10b5-1 at a time when it was
          not in possession of material, non-public information.

6.   Covenants.

     (a)  The Company will request any modification to this Agreement in
          accordance with this Agreement and in good faith compliance with the
          requirements of Rule 10b5-1 at a time when the Company is not in
          possession of material, non-public information.

     (b)  The Company will notify Broker at the number or address set forth in
          Section 10 of this Agreement, as soon as practicable upon the
          occurrence of any event that would prohibit any repurchase of Shares
          under this Agreement, including, but not limited to, the commencement
          of a "distribution" within the meaning of Regulation M under the
          Exchange Act, of Shares or any securities for which the Shares are a
          "reference security" within the meaning of that regulation, as well as
          any other legal, regulatory or contractual restriction (it being
          agreed that the Company's receipt of material, non-public information
          about the Company or its securities will not constitute such a legal
          restriction). Such notice will indicate only the anticipated duration
          of the restriction and will, in accordance with this subsection 5(d),
          not include any nonpublic or other information about the nature of the
          restriction.

     (c)  The Company will not, directly or indirectly, communicate any material
          nonpublic information about it or its securities, including the
          Shares, to any employee or representative of Broker or its affiliates
          who is involved, directly or indirectly, in executing this Agreement
          at any time while this Agreement is in effect.

     (d)  During the term of this Agreement, the Company may not discuss with
          any employee or representative of Broker or its affiliates the timing
          of the

<PAGE>

          trading in the Shares on its behalf pursuant to this Agreement
          (other than to confirm or describe this Section 6(d), if necessary.

     (e)  While the Agreement is in effect, the Company agrees not to enter into
          or alter any corresponding or hedging transactions or positions with
          respect to the Shares, including any securities that are exchangeable
          for, or convertible into, Shares.

     (f)  The number of Shares, other share amounts and prices, if applicable,
          set forth in Section 2 shall be adjusted automatically on a
          proportionate Basis to take into account any stock split, reverse
          stock split or stock dividend with respect to the Shares or any change
          in capitalization with respect to the Company that occurs during the
          term of this Agreement.

     (g)  The Company agrees to not knowingly take any action that would cause
          any such purchases by Broker to not comply with Rule 10b-18.

7.   Acknowledgements.

     (a)  The Company acknowledges that Broker may make a market in the Shares
          and will continue to engage in market-making activities while
          executing transactions on behalf of the Company pursuant to this
          Agreement.

     (b)  The Company acknowledges that it is familiar with Rule 10b5-1 and has
          obtained such legal or other advice as it reasonably deems appropriate
          regarding the Rule 10b5-1.

     (c)  The Company acknowledges that Broker and its affiliates may from time
          to time possess material non-public information relating to the
          Company or its securities and are under no obligation to disclose that
          information to the Company.

8.   Broker Representations, Warranties and Covenants. Broker represents and
warrants that:

     (a)  On the same day a Broker purchases Shares under this Agreement, Broker
          shall send the Company written confirmation such purchases. Such
          notice shall state the date of the purchase, the number of Shares
          purchased, the applicable price paid per Share, the applicable
          settlement dates, and the aggregate fees owed to Broker for executing
          the purchases, which fees shall not exceed the fees set forth under
          Section 10 hereof. Unless otherwise directed by the Company, such
          confirmation shall be sent to the attention of the person at the
          address set forth in Section 12 hereof with a copy being emailed on
          the same day to Warren Gfeller, Charles Bogan and Dick Mansfield at
          whgfeller@strangervalley.com, cbogan@duckwall.com and
          dmansfield@duckwall.com. Broker will also furnish the Company with
          regular monthly reports of its accounts and such other information as
          the Company as reasonably requests.

<PAGE>

     (b)  Broker has implemented reasonable policies and procedures, and will
          enforce such policies and procedures, to ensure that any employee or
          representative of Broker or its affiliates making any repurchases
          pursuant to this Agreement does not purchase Shares on the basis of
          material nonpublic information.

     (c)  In connection with bids and purchases pursuant to clause (a) above,
          Broker shall comply, or cause compliance, with the timing, pricing and
          volume provisions of Sections (b)(2), (3) and (4) of Rule 10b-18;
          provided, however, that Broker shall not be responsible for compliance
          with Rule 10b-18(b)(4)(Volume of Purchases) to the extent that the
          Company has not notified Broker of purchases of shares of Common Stock
          by the Company or any affiliated purchaser of the Company through
          another broker or dealer.

     (d)  Broker shall refrain from purchasing Shares on any day when Broker
          reasonably determines in good faith that it is reasonably required to
          refrain from doing so in light of (i) legal or regulatory
          requirements, or (ii) policies and procedures reasonably adopted by
          Broker in light of legal or regulatory requirements. Broker shall
          promptly notify the Company upon exercising its rights pursuant to
          this Section 8(b) and shall subsequently promptly notify the Company
          on the day Broker shall resume purchasing shares of Common Stock
          pursuant to Section 8(a) above.

     (e)  If Company informs Broker that the Company or an affiliate of the
          Company intends to purchase shares of Common Stock through a broker or
          dealer other than Broker, Broker shall refrain from purchasing any
          Shares hereunder on the day following receipt of such notice or
          subtract purchases of shares of Common Stock by the Company or any
          affiliate of the Company through another broker or dealer from
          "trading volume" permitted under that provision.

9.   Market Disruptions, Restrictions, etc. The Company understands that Broker
may not be able to effect purchases due to a market disruption or a legal,
regulatory or contractual restriction applicable to Broker. If any purchases
cannot be executed as required by this Agreement due to a market disruption or a
legal, regulatory or contractual restriction applicable to Broker, Broker agrees
to give prompt written notice to the Company in accordance with Section 10 and
to effect such purchases promptly as practical after the cessation or
termination of such market disruption or applicable restriction.

<PAGE>

10.  Fees and Payments. In connection with purchase of Shares hereunder, the
Company agrees to pay Broker a fee of $0.04 per Share ("Fee"). On the
transaction settlement date after the Company has received written confirmation
of such purchase, the Company will pay the Broker or its designee the Share
purchase price plus the related Fee by Fed Funds wire transfer on a normal three
day settlement basis. Upon confirmation that payment has been made under Section
10 hereof, Broker shall deliver the Shares purchased to the Company by the next
business day or such other instructions as an executive officer of the Company
shall provide in writing to Broker.

11.  Indemnification; Limitation of Liability. The Company agrees to indemnify
and hold harmless Broker, its affiliates and their respective directors,
officers, employees, agents and affiliates ("Broker Indemnified Persons") from
and against all claims, losses, damages and liabilities (including, without
limitation, promptly reimbursing any legal or other expenses as incurred in
connection with defending or investigating any such action or claim) arising out
of or attributable to (except in the case of any claims, losses, damages or
liabilities resulting from Broker's misfeasance, bad faith, negligence or
willful misconduct: (a) actions taken or not taken by Broker or its officers,
directors, employees, representatives or affiliates, in good faith, under this
Agreement; (b) any breach by the Company of this Agreement (including the
Company's representations and warranties in this Agreement); or (c) any
violation by the Company of applicable laws or regulations.

     This indemnification will survive termination or expiration of this
Agreement.

     Notwithstanding any other provision of this Agreement, no Indemnified
Person shall be liable to the Company or any other person or entity (i) as a
result of Broker's engagement hereunder or any matter contemplated by this
Agreement, except in the case of liability resulting from Broker's misfeasance,
bad faith, negligence or willful misconduct.

<PAGE>

12.  Notice: All notices concerning this Agreement should be addressed as
follows:

----------------------------------------------------------------------------
Jefferies & Company, Inc.         Duckwall-ALCO Stores, Inc.
----------------------------------------------------------------------------
13355 Noel Road, Suite 1400       401 Cottage Street
Dallas, TX   75240                Abilene, Kansas
(972) 701-3058 (Facsimile)        (785) 263-1905 (Facsimile)
Attn:  Mark Allen                 Attn: Warren H. Gfeller
----------------------------------------------------------------------------

----------------------------------------------------------------------------
With a copy to:                   With a copy to:
----------------------------------------------------------------------------
Edwin J. Hagerty                  Richard Nixon, Esq.
Regional Manager                  Stinson Morrison Hecker LLP
Jefferies & Company, Inc.         1201 Walnut, Suite 2900
13355 Noel Road, Suite 1400       Kansas City, Missouri 64106
Dallas, TX  75240                 861-691-3495 (Facsimile)
(972) 701-3058 (Facsimile)
----------------------------------------------------------------------------

----------------------------------------------------------------------------
13.  Entire Agreement; Amendment. This Agreement, any Addendum hereto and the
Account Agreement constitutes the entire agreement of the parties with respect
to the subject matter hereof and shall not be modified or amended except by a
writing signed by each of the parties. At the time of entering into any Addendum
hereto or any other amendment or modification of this Agreement, the parties
hereto shall deliver closing certificates which state that all of their
representations and warranties provided herein are true and correct as of the
date of execution of such Addendum, amendment or modification.

14.  The Company and Broker acknowledge and agree that this Agreement is a
"securities contract," as such term is defined in Section 741(7) of Title 11 of
the United States Code (the "Bankruptcy Code"), entitled to all of the
protections given such contracts under the Bankruptcy Code.

15.  Governing Law; Construction. This Agreement shall be governed by and
construed in accordance with the laws of the state of New York without regard to
any conflict of laws principles thereto. The Company and Broker intend that this
Agreement is to be construed in a manner to ensure that the repurchase of Shares
is made in compliance with Rule 10b5-1 and Rule 10b5-18.

16.  This Agreement may be executed in any number of counterparts, all of which,
taken together, shall constitute one and the same agreement.

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their duly authorized representatives as of the date first written above.

Duckwall ALCO Stores, Inc.                  Jefferies & Company, Inc.

By:    /s/ Warren H. Gfeller                By:    /s/  Edwin J. Hagerty
       --------------------------                  -----------------------------

Name:  Warren H. Gfeller                    Name:  Edwin J. Hagerty
       --------------------------                  -----------------------------

Title: Chairman                             Title: Regional Manager
       --------------------------                  -----------------------------

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