SEPTEMBER 28, 2005
RULE 10B5-1 AND 10B-18 STOCK REPURCHASE AGREEMENT
THIS RULE 10B5-1
AND 10B-18 STOCK REPURCHASE AGREEMENT dated September 28,
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 120,894 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 September 28,
2005 (the "Commencement Date"), and shall
cease purchasing on the earliest to
occur of: (i) the close of trading on
December 15, 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
at least 24 hours in advance by facsimile or email 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 affil
