Document:

EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

     This EMPLOYMENT AGREEMENT (this "Agreement") is made and entered into
effective as of 27th day of January 2006, by and between Duckwall-ALCO Stores,
Inc., a Kansas corporation (the "Company"), and John R. Sturdivant, an
individual.

                             W I T N E S S E T H:

     WHEREAS, the Company desires to employ John R. Sturdivant as the Company's
Senior Vice President, Stores (hereinafter the "Employee") on the terms and
conditions set forth herein;

     NOW, THEREFORE, the Company and the Employee, each intending to be legally
bound, hereby mutually covenant and agree as follows:

                                   SECTION 1.
                                   DEFINITIONS

     The following terms used in this Agreement shall have the meanings set
forth below:

          "Earned Obligations" shall mean, as of the date of Termination of
Employment, the sum of (A) the Employee's aggregate Base Salary through such
date to the extent not theretofore paid, plus(B) all vacation pay, expense
reimbursements and other cash entitlements earned by the Employee hereunder as
of such date to the extent not theretofore paid, plus (C) the Deferred
Compensation and Severance payments required pursuant to Section 3(b) and 3(c)
hereof.

          "Base Salary" shall mean the amount set forth in Section 3(a).

          "Board" shall mean the board of directors of the Company.

          "Cause" shall mean (i) the Employee's material violation of any of
Sections 2(c), 4(a),4(b) or 4(c) of this Agreement; (ii) the Employee engaging
in conduct which is fraudulent or illegal with respect to the Company or any of
its subsidiaries; (iii) the Employee's gross negligence in the performance or
nonperformance of his duties or responsibilities hereunder; (iv) the Employee's
engagement in misconduct which is materially injurious or materially damaging to
the Company or any of its subsidiaries or the reputation of the Company or any
of its subsidiaries; (v) the Employee's conviction of, or plea of nolo
contendere to, a felony; (vi) failure to cooperate with regulatory or legal
proceedings; or (vii) material breach of Company policy.

          "Competitor" shall have the meaning set forth in Section 4(b).

          "Confidential Information" shall have the meaning set forth in
Section 4(c).

          "Change of Control" shall mean a change in control of a nature as set
forth in the Duckwall-ALCO Stores, Inc. Incentives Stock Option Plan of 2003, or
as may be amended ("ISO Plan").

          "Disability" shall mean Employee's permanent disability or
incapacity as determined in accordance with the Company's disability insurance
policy, if such a policy is then in effect, or if no such policy is then in
effect, such permanent disability or incapacity

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shall be determined by the Company in its good faith judgment based upon
inability to perform the essential functions of his position, with reasonable
accommodation by the Company, for a period in excess of 180 days during any
period of 365 calendar days.

          "Good Reason" means assignment of the Employee to duties and
responsibilities that are substantially inconsistent with the scope of the
duties and responsibilities of Employee as set forth herein or the Company has a
Change in Control.

          "Person" shall mean an individual, corporation, partnership, joint
venture, association, joint-stock company, trust, unincorporated organization,
other entity or governmental or other agency or political subdivision thereof.

          "Term" shall mean the period beginning on the date of this Agreement
and ending as provided in Section 2(b).

          "Termination of Employment" shall mean (i) the Employee's death or
Disability, (ii) termination by the Company of the Employee's employment for
Cause or without Cause, (iii) resignation by the Employee from the employ of
the Company, (iv) retirement of the Employee or (v) expiration of the Term.

                                   SECTION 2.
                               EMPLOYMENT AND TERM

      (a)  Employment. The Company hereby offers to employ the Employee as
Employee of the Company and each of its subsidiaries, and the Employee hereby
accepts such employment, for the Term.

      (b)  Term. The Term shall commence on February 13, 2006 and end on January
31, 2007 ("Original Term"). The Term shall automatically extend for successive
one year periods (each, a "Supplemental Term") following the expiration of the
Original Term unless either party delivers written notice to the other party no
later than 60 days preceding the end of the Original Term or any Supplemental
Term, as the case may be, of intent not to renew. See also Section 5.

      (c)  Duties. The Employee shall have all powers, duties and
responsibilities commensurate with his position as set forth in Section 2 hereof
or as may be assigned by the Company from time to time (provided any such
powers, duties and responsibilities assigned by the Company are commensurate
with such position). The Employee shall devote substantially all of his business
time, attention and energies to the performance of his duties hereunder.
Notwithstanding the foregoing, nothing in this Agreement shall restrict the
Employee from managing his personal investments, personal business affairs and
other personal matters, or serving on civic or charitable boards or committees,
provided that none of such activities interferes with the performance of his
duties and responsibilities hereunder or conflicts or competes with the
interests of the Company or its subsidiaries. The Employee shall not serve on
the Board of Directors or similar governing body of any for-profit Person
without the consent of the Company, which consents will not be unreasonably
withheld. The Employee shall report to the President of the Company.

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                                   SECTION 3.
                            COMPENSATION AND BENEFITS

      (a)  Base Salary. For services performed by the Employee for the Company
and its subsidiaries pursuant to this Agreement, the Company shall pay the
Employee an initial Base Salary of One Hundred Eighty Thousand Dollars
($180,000.00) per year, payable in accordance with the Company's regular payroll
practices and subject to annual review by the Company to consider increases.

      (b)  Bonus. The Company shall have a bonus plan for the Employee as
follows: If the Company has a Return on Equity ("ROE") as later defined of at
least .0715 percent (7.15%) after the completion of fiscal year 2007, and such
percentage thereafter as set forth by the Company, Employee will receive a bonus
of thirty-five percent (35%) of his base pay, all paid within 30 days after
determination. ROE is defined for any completed fiscal year as (Earnings from
continuing operation before discontinued operations excluding cumulative change
in accounting and one-time termination benefits recognized in accordance with
FAS 146) divided by (stockholders' equity beginning of year plus stockholders'
equity end of year divided by two). The Company, at its sole discretion may pay,
or not pay any other bonus as it determines. Employee agrees to reimburse the
Company and/or have the Company offset any payments due to Employee to the
extent that any bonuses are paid on financial information which is later
determined to be materially overstated and results in any financial restatement,
which would have lessened the amount paid to Employee. Notwithstanding the
foregoing, if the Employee fails to receive a Bonus for the fiscal year 2007 and
that year only, the Company shall pay to the Employee the sum of Ten Thousand
Dollars ($10,000.00). Said sum to be paid on April 1, 2007 provided that this
Agreement has not been terminated prior to that date.

      (c)  Other Benefits. In addition to the Base Salary and participation in
the Company's bonus plans, the Employee shall also be entitled to the following:

      (1)  Participation in Benefit Plans. The Employee shall be entitled to
participate in the executive-level benefit arrangements maintained by the
Company for their executives generally or as modified herein. The Employee shall
also be entitled to participate in all other welfare and benefit plans
maintained by the Company and/or its subsidiaries for their respective employees
generally commencing on the date of his employment.

      (2)  Vacation. The Employee shall be entitled to two (2) weeks of paid
vacation during fiscal year 2007 and three (3) weeks of paid vacation thereafter
and shall have paid holidays consistent with the Company's practices. Any unused
vacation shall not carry over and Employee will not receive additional
compensation for same.

      (3)  Options. Subject to the approval of the Company's Compensation
Committee, the Employee shall receive options to purchase Ten Thousand (10,000)
company shares of common stock in accordance with the terms and conditions of
the Duckwall-Alco Stores, Inc. 2003 Stock Option Plan ("ISO Plan"). The grant
date shall be the date the grant is approved by the Compensation Committee and
the option price shall be the market price on the date of the grant.

      (4)  Moving Expense Reimbursement. The Company will reimburse the Employee
for his actual expenses not to exceed Seventy-Five Thousand Dollars ($75,000.00)
incurred by Employee for (i) any real estate commission paid by the Employee in
the sale of his residence in Atlanta, Georgia, (ii) the expenses incurred by
Employee in moving his

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furniture and personal possessions from Atlanta, Georgia to Abilene, Kansas and
(iii) expenses incurred by Employee for temporary housing in Abilene, Kansas
for a period of not to exceed one (1) year.

      (5)  Automobile. The Company will provide a company automobile to the
Employee.

      (d)  Expenses. The Company shall reimburse the Employee for all ordinary
and necessary expenses incurred and paid by the Employee in the course of the
performance of the Employee's duties pursuant to this Agreement and consistent
with the Company's policies in effect from time to time with respect to travel,
entertainment and other business expenses, and subject to the Company's
requirements with respect to the manner of approval and reporting of such
expenses.

                                   SECTION 4.
                                    COVENANTS

      (a)  Non-Interference. For a period ending on the second anniversary of
the Termination of Employment of the Employee, the Employee agrees to refrain
from, directly, indirectly or as an agent on behalf of or in conjunction with
any Person, (i) soliciting or encouraging any Employee of the Company or its
subsidiaries who is employed in an executive, managerial, administrative or
professional capacity or who possesses Confidential Information (as defined
below), to leave the employment of the Company or its subsidiaries or (ii)
soliciting any customer of the Company or any of its subsidiaries on behalf of
any Competitor.

      (b)  Noncompetition. For a period ending on the second anniversary of the
Termination of Employment of the Employee, the Employee will not, either
directly or indirectly, own, manage, operate, join or control or participate (or
serve as a consultant or in a similar position) in the ownership, management
operation or control of, any business, entity, firm, partnership, corporation or
other Person, whether, private, governmental or quasi-governmental
("Competitor"), other than the Company and its subsidiaries, which is engaged,
directly or indirectly, in any state where the Company has a retail
establishment, including (i) the business of the development, design,
production, supply, sale or distribution of small variety or discount retail
stores or (ii) any other business engaged in or being developed by the Company
or its subsidiaries in which the Employee has played a material role in the
acquisition, development or management of such business; provided, however, that
the Employee will not be deemed to engage in any of the businesses of any
publicly traded corporation solely by reason of his ownership of less than 2% of
the outstanding stock of such Person or by serving as a director on the board of
directors of a customer or supplier of the Company at the request of the
Company.

      (c)  Nondisclosure of Confidential Information.

           (l) Company Information. In the performance of his duties, the
Employee has previously had, and may be expected in the future to have, access
to Company proprietary information, technical data, trade secrets or know-how,
including, but not limited to, research, product plans, products, methods,
strategies, services, customer lists, prospective customer lists, customer
records, telephone lists and all other information with respect to customers
(including, but not limited to, customers of the Company on whom he called or
with whom he became acquainted during the term of his employment), documents,
notes, working papers, records,

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systems, contracts, agreements, market data and related information, software,
developments, inventions, processes, formulas, technology, designs, drawings,
engineering information, hardware configuration information, marketing plans,
finances, pricing and credit documents and policies, service development
techniques or plans, business acquisition plans, new personnel acquisition plans
or other business information presently owned or at any time hereafter developed
by the Company or its subsidiaries, agents or consultants or used presently or
at any time hereafter in the course of the business of the Company and its
subsidiaries, that are not otherwise part of the public domain (collectively,
the "Company Information"). All such Company Information is considered secret
and has been and/or will be disclosed to the Employee in confidence, and the
Employee acknowledges that, as a consequence of his employment and position with
the Company and its subsidiaries, the Employee will have access to and become
acquainted with Company Information. Except in the performance of his duties to
the Company or its subsidiaries, the Employee shall not, during the Term and at
all times thereafter, directly or indirectly for any reason whatsoever, disclose
or use any such Company Information. All records, files, drawings, documents,
equipment and other tangible items, wherever located, relating in any way to or
containing Company Information, which the Employee has prepared, used or
encountered or shall in the future prepare, use or encounter, shall be and
remain the Company's sole and exclusive property and shall be included in the
Company Information. Upon termination of this Agreement, or whenever requested
by the Company, the Employee shall promptly deliver to the Company any and all
of the Company Information and copies thereof, not previously delivered to the
Company or its subsidiaries, that may be in the possession or under the control
of the Employee. The foregoing restrictions shall not apply to the use,
divulgence, disclosure or grant of access to Confidential Information to the
extent, but only to the extent, (i) expressly permitted or required pursuant to
any other written agreement between or among the Employee and the Company
(and/or any of its subsidiaries), (ii) such Company Information which has become
publicly known and made generally available through no wrongful act of the
Employee or of others who were under confidentiality obligations as to the item
or items involved, (iii) the Employee's general skills and education, and
know-how of broad application known to the Employee or independently developed
by the Employee prior to the Employee's employment by the Company or (iv) the
Employee is required to disclose Company Information by or to any court of
competent jurisdiction or any governmental or quasi-governmental agency,
authority or instrumentality of competent jurisdiction, provided, that the
Employee shall, prior to any such disclosure, immediately notify the Company of
such requirement and provided further, that the Company shall have the right, at
its expense, to object to such disclosures and to seek confidential treatment of
any Company Information to be so disclosed on such terms as it shall determine.

           (2) Third Party Information. In the performance of his duties, the
Employee has previously had, and may be expected in the future to have, access
to confidential or proprietary information with respect to third parties which
is subject to a duty on the Company's part to maintain the confidentiality of
such information and to use it only for certain limited purposes (the "Third
Party Information"). Except in the performance of his duties to the Company or
its subsidiaries, the Employee shall not, during the Term and at all times
thereafter, directly or indirectly for any reason whatsoever, disclose or use
any such Third Party Information.

      (d)  Enforcement.

           (1) The Employee acknowledges that violation of any of the covenants
and agreements set forth in this Section 4 would cause the Company or any of its
subsidiaries irreparable damage for which the Company or any of its subsidiaries
cannot be reasonably compensated in damages in an action at law, and therefore
in the event of any breach by the Employee of this Section 4, the Company or its
subsidiaries shall be entitled to make application to a court of competent
jurisdiction for equitable relief by way of injunction or

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otherwise (without being required to post a bond). Employee agrees to pay all of
the Company's court costs and attorneys' fees incurred in enforcing its rights
under this Section 4 and all other obligations of Employee under this Employment
Agreement. This provision shall not, however, be construed as a waiver of any of
the rights which the Company or its subsidiaries may have for damages under this
Agreement or otherwise, and all of the Company's and its subsidiaries' rights
and remedies shall be unrestricted. This Section 4 shall survive termination of
this Agreement or Termination of Employment for any reason whatsoever.

           (2) If any of the provisions of this Agreement shall otherwise
contravene or be invalid under the laws of any state or other jurisdiction where
it is applicable but for such contravention or invalidity, such contravention or
invalidity shall not invalidate all of the provisions of this Agreement, but
rather the Agreement shall be reformed and construed, insofar as the laws of
that state or jurisdiction are concerned, as not containing the provision or
provisions, but only to the extent that they are contravening or are invalid
under the laws of that state or jurisdiction, and the rights and obligations
created hereby shall be reformed and construed and enforced accordingly. In
particular, if any of the covenants or agreements set forth in Section 4, or any
part thereof, is held to be unenforceable because of the duration of such
provision or the area covered thereby, or otherwise, the parties hereby
expressly agree that the court making such determination shall have the power to
reduce the duration and/or the areas of such provision or otherwise limit any
such provision, and, in its reduced form, such provision shall then be
enforceable. The parties intend that each covenant set forth in this Section 4
shall be deemed to be a series of separate covenants, one for each and every
county and political subdivision to which it is applicable.

           (3) The Employee understands that the provisions of this Section 4
may limit his ability to earn a livelihood in a business similar to the business
of the Company and its subsidiaries but nevertheless agrees and hereby
acknowledges that such provisions do not impose a greater restraint than is
necessary to protect the goodwill or other business interests of the Company and
its subsidiaries and the consideration provided under this Agreement, including,
without limitation, any amounts or benefits provided hereunder, is sufficient to
compensate the Employee for the restrictions contained in this Section 4. In
consideration of the foregoing and in light of the Employee's education, skills
and abilities, the Employee agrees that he will not assert, and it should not be
considered, that any provisions of this Section 4 prevented him from earning a
living or otherwise are void, voidable or unenforceable or should be voided or
held unenforceable.

           (4) Each of the covenants of this Section 4 is given by the Employee
as part of the consideration for this Agreement and as an inducement to the
Company to enter into this Agreement and accept the obligations hereunder.

                                   SECTION 5.
                                  TERMINATIONS

      (a)  Termination of Agreement. At the Termination of Employment, Sections
4(a)(b)(c)d) and Section 5(c) will survive.

      (b)  Procedures Applicable to Termination of Employment. The Employee
may resign upon notice to the Company. The Employee must, however, give at least
thirty (30) days advance notice of his resignation. The Company may notify the
Employee that his employment is terminated, with or without Cause, or for
Disability and in such case the date of

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Termination of Employment will be the date such notice is given.

      (c)  Obligations of the Company and the Employee Upon Termination of
Employment.

      (1)  Termination In the Event of Death or Disability.

                (A)  In the event of the Employee's death or Disability, the
Company shall pay to the Employee or the Employee's heirs, estate or legal
representatives, as the case may be, the following:

                     (i)   all Earned Obligations in a lump sum within thirty
(30) days after the date of Termination of Employment; and

                     (ii)  any benefits earned by the Employee as of the date
of Termination of Employment under all qualified and non qualified retirement,
pension, profit sharing and similar plans of the Company to such extent, in such
manner and at such time as are provided under the terms of such plans and
arrangements.

                (B)  In the event of Termination of Employment as a result of
the Employee's Disability, the Company shall keep in force existing health and
dental benefits for the Employee and his dependents for a period of twelve (12)
months from the date of Termination of Employment on the basis in effect at the
time of such Termination of Employment.

                (C)  In the event of Termination of Employment as a result of
the Employee's Disability, the Employee agrees that the covenants made by the
Employee set forth in Sections 4(a) and 4(b) of this Agreement will remain in
effect for the period specified therein.

      (2)  Termination Without Cause. for Good Reason. or Company's Failure
to Extend.

                (A)  In the event that the Company terminates the Employee's
employment without Cause or the Employee terminates his employment for Good
Reason (but excluding Termination of Employment by reason of the Employee's
death or Disability), or the Company fails to extend in accordance with Section
2, the Company shall pay to the Employee the following:

                     (iii) all Earned Obligations in a lump sum within thirty
(30) days after the date of Termination of Employment;

                     (iv)  any benefits earned by the Employee as of the date of
Termination of Employment under all qualified and nonqualified retirement,
pension, profit sharing and similar plans of the Company to such extent, in such
manner and at such time as are provided under the terms of such plans and
arrangements;

                     (v)   the Company shall pay to the Employee, subject to
 applicable withholding, one additional year of Base Salary paid in accordance
with the Company's regular payroll practices; and

                     (vi)  the Company shall continue all benefits coverage of
the Employee and his dependents provided under the Company's benefit plans or
policies (or under other benefit plans or policies that provide substantially
equivalent coverage) for the unexpired portion of the Original Term and/or
Supplemental Term.

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                (B)  If the Employee obtains other employment that would cause
Employee to violate Section 4(b) were it then in effect during the period the
Company remains obligated to compensate Employee as set forth in this Section 5,
the Employee shall promptly notify the Company thereof and of the aggregate
gross compensation payable to Employee in respect of such other employment, and
the Company shall have the right to deduct, dollar for dollar, from the amount
payable by the Company to Employee the gross aggregate amount of compensation
Employee receives from such other employment.

                (C)  The Employee agrees that the covenants made by the Employee
set forth in Sections 4(a) and 4(b) of this Agreement will remain in effect for
the period specified therein.

      (3)  Other Terminations.

                (A)  In the event of Termination of Employment for any other
reason (including a termination for Cause or resignation), the Company shall pay
to the Employee the following:

                     (vii)  all Earned Obligations in a lump sum within thirty
(30) days after the date of Termination of Employment; and

                     (viii) any benefits earned by the Employee as of the
date of Termination of Employment under all qualified and nonqualified
retirement, pension, profit sharing and similar plans of the Company to such
extent, in such manner and at such time as are provided under the terms of such
plans and arrangements.

                (B)  The Employee agrees that the covenants made by the Employee
set forth in Sections 4(a) and 4(b) of this Agreement will remain in effect for
the periods specified therein.

      (4)  Exclusivity. The amounts payable to the Employee pursuant to
Sections 5(c), as the case may be, shall be the Employee's sole remedy in the
event of the Termination of Employment of the Employee, and the Employee waives
any and all rights to pursue any other remedy at law or in equity; provided,
however, that this shall not constitute a waiver of any rights provided under
any federal, state or local laws or regulations relating to discrimination in
employment and provided, further, that nothing in this Section 5(c) or elsewhere
in this Agreement is intended to limit the Employee's rights under Company Plans
or applicable law which by their terms survive the applicable Termination of
Employment.

                                   SECTION 6.
                            EMPLOYEE REPRESENTATIONS

      (a)  Employee represents that he is free to enter into this Agreement
           and that he has no outstanding agreements which would prohibit him
           from the execution of this Agreement and carrying out the
           responsibilities delegated herein.

                                   SECTION 7.
                                  MISCELLANEOUS

      (a)  Binding Effect. This Agreement shall be binding upon and inure to the
 benefit of the heirs and representatives of the Employee and the successors and
 assigns of the Company.

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The Company shall require any successor (whether direct or indirect, by
purchase, merger, reorganization, consolidation, acquisition of assets or stock,
liquidation, or otherwise), by agreement in form and substance reasonably
satisfactory to the Employee, expressly to assume and agree to perform this
Agreement in the same manner and to the same extent that the Company would be
required to perform this Agreement if no such succession had taken place.
Regardless of whether such agreement is executed, this Agreement shall be
binding upon any successor of the Company in accordance with the operation of
law, and such successor shall be deemed to be the "Company" for purposes of this
Agreement.

      (b)  Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given if
delivered by hand or mailed within the continental United States by first class
certified mail, return receipt requested, postage prepaid, addressed as follows:

           (1)  if to the President or the Company, to:

                Duckwall-ALCO Stores, Inc.
                401 Cottage Street
                Abilene, KS 67410
                Attention:  Bruce C. Dale, President

           (2)  if to the Employee to:

                John R. Sturdivant
                401 Cottage Street
                Abilene, KS  67410

     Any such address may be changed by written notice sent to the other party
at the last recorded address of that party.

      (c)  Tax Withholding. The Company shall provide for the withholding of any
taxes required to be withheld under federal, state and local law (other than the
employer's portion of such taxes) with respect to any payment in cash and/or
other property made by or on behalf of the Company to or for the benefit of the
Employee under this Agreement or otherwise. The Company may, at its option: (i)
withhold such taxes from any cash payments owing from the Company to the
Employee or (ii) make other satisfactory arrangements with the Employee to
satisfy such withholding obligations.

      (d)  No Assignment; No Third-Party Beneficiaries. Except as otherwise
expressly provided in Section 6.1 herein, this Agreement is not assignable by
any party, and no payment to be made hereunder shall be subject to alienation,
sale, transfer, assignment, pledge, encumbrance or other charge. No person shall
be, or deemed to be, a third-party beneficiary of this Agreement.

      (e)  Execution in Counterparts. This Agreement may be executed by the
parties hereto in one or more counterparts, each of which shall be deemed to be
an original, but all such counterparts shall constitute one and the same
instrument, and all signatures need not appear on anyone counterpart.

      (f)  Governing Law: Jurisdiction: The validity of this Agreement and the
interpretation

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<PAGE>

and performance of all its terms shall be governed by and construed in
accordance with the laws of the State of Kansas, without regard to the choice of
law rules thereof. Each of the parties hereto (a) consents to submit itself to
the personal jurisdiction of any federal court sitting the District of Kansas in
the event any dispute that the parties fail to resolve arises out of this
Agreement, (b) agrees that it shall not attempt to deny or defeat such personal
jurisdiction by motion or other request for leave from any such court, and (c)
agrees that it shall not bring any action relating to this Agreement in any
court other than courts set forth above. In any such proceeding, the parties
agree to accept service of process by mail at the addresses herein provided for
notice.

      (g)  Headings. The headings in this Agreement are for convenience of
reference only and shall not be construed as part of this Agreement or to limit
or otherwise affect the meaning hereof.

     IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as of the day and year first above written.

                           DUCKWALL-ALCO STORES, INC.

                           By:  /s/ Charles E. Bogan
                                ---------------------------------------
                                Charles E. Bogan, Vice President

                                /s/ John R. Sturdivant
                                ---------------------------------------
                                John R. Sturdivant

                                       10Exhibit 10.1

                            STOCK PURCHASE AGREEMENT

The parties to this Stock  Purchase  Agreement  ("Agreement")  are Elephant Talk
Communications,  Inc.  ("ETCI"),  a  California  corporation,  and Rising  Water
Capital AG ("RWC"), registered in Zug, Switzerland.

When  executed  by RWC and ETCI,  this  Agreement  will set out ETCI's and RWC's
understanding and agreement regarding this proposed transaction.

         1.   RWC wishes to purchase from ETCI,  and ETCI wishes to sell to RWC,
              195,947,395  restricted  common  shares  ("Shares"),  for a  total
              consideration of US$7,837,896.

         2.   The  Shares to be issued to RWC shall be  distributed  as and when
              payment is received from RWC to ETCI for such Shares.

         3.   As a  restriction,  these  Shares  will  have a lock up  period of
              twelve (12) months. ETCI will take care that all shareholders will
              agree to only sell  shares  after  getting  approval  of all other
              shareholders to sell such shares.

         4.   RWC  will be  entitled  to  appoint  six (6)  out of  eleven  (11)
              directors in ETCI.  Current ETCI management will stay in place and
              will be contracted for a five (5) year term.

         5.   The parties to this Agreement acknowledge the following

              (a) That ETCI has closed its 60%  acquisition  of a company herein
              referred as "True Precise";

              (b) That after the closing of its acquisition of True Precise, the
              total number of issued and outstanding  Shares of ETCI amounted to
              80,259,670 shares;

              (c) That this  acquisition and its internal growth will bring ETCI
              a general 2005 turnover of  approximately  US$10  million,  with a
              positive   Earnings   Before  Interest  Taxes   Depreciation   and
              Amortization (EBITDA);

              (d) That ETCI is entering  into the  telecommunications  market in
              Europe  through  the  acquisition  of  various   telecommunication
              assets,  and has entered  into an  agreement  to purchase  all the
              issued  and  outstanding  shares of a  European  telecommunication
              company in exchange for a cash consideration of US$5,900,000;

              (e) That ETCI has planned to take over the companies  that own the
              right of use of a dark fiber optic  network  covering  4,400 km in
              Mainland China in exchange for 64,128,238 new Shares of ETCI to be
              issued;

              (f) That ETCI is seeking  additional funding to further expand its
              growth in both China and Europe to create a strong niche player in

                                     10.1-1

<PAGE>

              outsourced   telecom   provisioning,   value  added  services  and
              integrated VoIP  solutions,  covering  markets in Europe,  the Far
              East and the USA;

              (g)  That  ETCI  will  issue  24,938,759   additional   Shares  to
              management.

         6.   In connection with this transaction, ETCI hereby represents that:

              (a) It has due  corporate  authority to enter into this  Agreement
              and to perform the transaction contemplated herein.

              (b)  ETCI  has no  liability  or  obligation  to pay  any  fees or
              commissions  to any  broker,  finder or agent with  respect to the
              transactions contemplated by this Agreement for which RWC could be
              obligated or liable.

              (c) RWC will not have any anti-dilution rights in the Shares to be
              issued.

              (d) The execution,  delivery and  performance of this Agreement by
              ETCI and the consummation by ETCI of the transaction  contemplated
              herein  does not and will not  result in a  violation  of any law,
              rule,  regulation,  order, judgment,  injunction,  decree or other
              restriction of any court or  governmental  authority to which ETCI
              is subject,  or by which any property or asset of ETCI is bound or
              affected.

         7.   In connection with this transaction, RWC hereby represents that:

              (a) RWC is duly organized,  validly  existing and in good standing
              under  the  laws  of  its  jurisdiction,  and  has  the  necessary
              authority to enter into this transaction.

              (b) RWC is an  accredited  investor  as the  meaning  is set forth
              under  Regulation D of the  Securities Act of 1933 as amended (the
              "Act").

              (c) RWC was not solicited by ETCI or any of ETCI's representatives
              for the purchase of these shares.

              (d) RWC has received all of the  information  from its independent
              professional,  legal and/or tax advisors as it considers necessary
              or appropriate for determining whether to purchase the shares. RWC
              is familiar with the business,  affairs,  risks and  properties of
              ETCI, and RWC has had an opportunity to make inquiries of ETCI and
              its officers, directors and representatives.

              (e) RWC has such knowledge and expertise in financial and business
              matters  that  it  is  capable  of   evaluating   the  merits  and
              substantial  risks of an investment in the shares to be issued and
              is able to bear the economic risks relevant to the purchase of the
              Shares hereunder.

                                     10.1-2

<PAGE>

              (f) RWC understands  that there may be no market for the Shares to
              be issued.

              (g) RWC's financial condition is such that RWC is under no present
              or  contemplated  future  need to  dispose  of any  portion of the
              Shares to satisfy any existing or contemplated  undertaking,  need
              or indebtedness.

              (h)  RWC  has no  liability  or  obligation  to pay  any  fees  or
              commissions  to any  broker,  finder or agent with  respect to the
              transactions  contemplated  by this Agreement for which ETCI could
              become liable or obligated.

              (i) RWC acknowledges that ETCI has not made any representations or
              warranties as to the past, present or future operations of ETCI or
              of the price or activity of ETCI's Shares.

              (j) The execution,  delivery and  performance of this Agreement by
              RWC and the  consummation  by it of the  transaction  contemplated
              herein  does not and will not  result in a  violation  of any law,
              rule,  regulation,  order, judgment,  injunction,  decree or other
              restriction of any court or governmental authority to which RWC is
              subject.

         8.   ETCI and RWC agree to execute such  additional  documents and take
              whatever   actions   reasonably   necessary  to  effectuate   this
              transaction or otherwise  carry out the intent and purpose of this
              Agreement, or subsequently transfer the Shares to be issued.

         9.   This  Agreement  sets forth the entire  understanding  between the
              parties  and no other  prior  written or oral  agreement  shall be
              recognized or enforced.

         10.  If any clause or provision of this  Agreement is later  determined
              to be invalid,  illegal or  unenforceable,  the other  clauses and
              provisions  of this  Agreement  shall  remain  in full  force  and
              effect.

         11.  Every right and remedy  provided  herein shall be cumulative  with
              every other right and remedy,  whether conferred herein, at law or
              in  equity,  and may be  enforced  concurrently  herewith,  and no
              waiver by the parties in the  performance of any obligation by the
              other shall be construed as a waiver of the same or other  default
              then, theretofore or thereafter occurring or existing. At any time
              prior to the  issuance or  exchange of the Shares as  contemplated
              herein,  this  Agreement may be amended by a writing signed by all
              parties hereto.

         12.  This  Agreement  may be  executed in  counterparts,  each of which
              shall constitute an original and which together,  shall constitute
              one and the same document.

                                     10.1-3

<PAGE>

         Date: June 30, 2005                Elephant Talk Communications, Inc.
               ---------------------

                                            By: /s/ Russelle Choi
                                                    Russelle Choi
                                                    President

         Date: June 30, 2005                Rising Water Capital AG
               ---------------------

                                            By: /s/ Marion Schumacher
                                                    Marion Schumacher
                                                    Managing Director

Stock Purchase Agreement June 30, 2005.RWC

                                     10.1-4

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