<PAGE>
                                                                    EXHIBIT 10.2

                                      2002
                            AMENDMENT AND RESTATEMENT
                                     OF THE

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                               SHOPKO STORES, INC.

                      DIRECTORS DEFERRED COMPENSATION PLAN

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                      ORIGINALLY EFFECTIVE FEBRUARY 1, 1992

                 AMENDED AND RESTATED EFFECTIVE, AUGUST 21, 2002

<PAGE>


                                TABLE OF CONTENTS
<Table>
<Caption>

<S>               <C>                                                        <C>
Section   1.      Establishment and Purpose...................................1
          1.1     Establishment...............................................1
          1.2     Purpose.....................................................1
Section   2.      Definitions.................................................1
          2.1     Definitions.................................................1
          2.2     Gender and Number...........................................4
Section   3.      Eligibility For Participation...............................4
Section   4.      Election to Defer...........................................4
          4.1     Deferrals...................................................4
          4.2     Procedures..................................................4
          4.3     Maximum and Minimum Deferrals...............................5
          4.4     Election to Defer Irrevocable...............................5
          4.5     Early Distribution Deferrals................................5
Section   5.      Accounts....................................................5
          5.1     Establishment and Crediting of Account......................5
          5.2     Compensation Deferrals......................................6
          5.3     Investment Elections........................................6
          5.4     Crediting Rate..............................................6
          5.5     Contractual Obligation......................................6
          5.6     Charges Against and Balance of Accounts.....................6
          5.7     Statement of Accounts.......................................7
Section   6.      Payment of Benefits.........................................7
          6.1     Termination Benefits........................................7
          6.2     Benefits Following a Change of Control......................7
          6.3     Survivorship Benefits.......................................7
          6.3.1   Death Prior to Commencement of Benefits.....................7
          6.3.2   Death After Commencement of  Benefits.......................8
          6.4     Small Account Exception.....................................8
          6.5.    Recipients of Payments; Designation of Beneficiary..........8
          6.6     Financial Emergency.........................................9
          6.7     Pre-Retirement Benefits.....................................9
          6.8     Unscheduled Withdrawals.....................................9
Section   7.      Forfeiture.................................................10
Section   8.      Non-Transferability........................................10
Section   9.      Administration.............................................10
          9.1     Administration.............................................10
          9.2     Finality of Determination..................................10
          9.3     Claims Procedure...........................................11
</Table>

<PAGE>

<Table>



<S>               <C>                                                        <C>
          9.3.1   Original Claim.............................................11
          9.3.2   Claim Review Procedure.....................................11
          9.3.3   General Rules..............................................11
          9.4     Expenses...................................................13
          9.5     Tax Withholding............................................13
Section   10.     Amendment and Termination..................................13
Section   11.     Applicable Law.............................................13
Section   12.     Binding Agreement..........................................13
Section   13.     Notice.....................................................14
Section   14.     Errors in Benefit Statement or Distribution................14
</Table>

<PAGE>


                               SHOPKO STORES, INC.
                      DIRECTORS DEFERRED COMPENSATION PLAN


SECTION 1. ESTABLISHMENT AND PURPOSE

1.1  ESTABLISHMENT
ShopKo Stores, Inc., a Wisconsin corporation (hereinafter called the "Company"),
hereby establishes this amended and restated deferred compensation plan for
certain of its directors known as the SHOPKO STORES, INC. DIRECTORS DEFERRED
COMPENSATION PLAN (hereinafter called the "Plan"), originally effective February
1, 1992 and amended and restated effective August 21, 2002.

1.2  PURPOSE
The purpose of the plan is (i) to attract high quality directors by providing a
means whereby amounts payable by the Company to directors may be deferred to a
future period, (ii) to motivate such directors to continue to make contributions
to the growth and profits of the Company and (iii) to provide such directors
certain benefits as hereinafter described upon termination as a Director.

SECTION 2. DEFINITIONS

2.1  DEFINITIONS
Whenever used hereinafter, the following terms shall have the meaning set forth
below:

         (a)  "Account" means the account or accounts established for a
              Particular Participant pursuant to Section 5 of the Plan.

         (b)  "Administrator" means the person or persons appointed by the
              Retirement Committee of the Company to administer the Plan
              pursuant to Section 9 of the Plan.

         (c)  "Beneficiary" means the person designated by a Participant
              pursuant to Section 6.6 hereof.

         (d)  "Board" means the Board of Directors of the Company.

         (e)  "Change of Control" means any of the following events:

                  (1) the acquisition by an individual, entity or group (within
         the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange
         Act of 1934, as amended (the "Exchange Act") (a "Person") of beneficial
         ownership (within the meaning of Rule 13d-3 promulgated under the
         Exchange Act) of 20% or more of either (i) the then outstanding shares
         of Common Stock of the Company (the "Outstanding Company Common Stock")
         or (ii) the combined voting power of


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<PAGE>


         the then outstanding voting securities of the Company entitled to vote
         generally in the election of directors (the "Outstanding Company Voting
         Securities"); provided, however, that for purposes of this subsection
         (1), the following acquisitions shall not constitute a Change of
         Control: (i) any acquisition directly from the Company, (ii) any
         acquisition by the Company, (iii) any acquisition by any employee
         benefit plan (or related trust) sponsored or maintained by the Company
         or any corporation controlled by the Company, (iv) any acquisition by
         any corporation pursuant to a transaction which complies with clauses
         (i) and (ii) of subsection (3) below, or (v) any acquisition of 20% or
         more but less than a majority of either the Outstanding Company Common
         Stock or the Outstanding Company Voting Securities by any individual,
         entity or group if at least a majority of the members of the Board of
         Directors of the Company were members of the Incumbent Board, as
         defined below, at the time of such acquisition; or

                  (2) individuals who, as of the date hereof, constitute the
         Board (the "Incumbent Board") cease for any reason to constitute at
         least a majority of the Board; provided, however, that any individual
         becoming a director subsequent to the date hereof whose election, or
         nomination for election by the Company's shareholders, was approved by
         a vote of at least a majority of the directors then constituting the
         Incumbent Board shall be considered as though such individual were a
         member of the Incumbent Board, but excluding, for this purpose, any
         such individual whose initial assumption of office occurs as a result
         of an actual or threatened election contest with respect to the
         election or removal of directors or other actual or threatened
         solicitation of proxies or consents by or on behalf of a person other
         than the Board; or

                  (3) consummation of a reorganization, merger or consolidation
         or sale or other disposition of all or substantially all of the assets
         of the Company for which approval of the shareholders of the Company is
         required (a "Business Combination"), in each case, unless, immediately
         following such Business Combination, (i) all or substantially all of
         the individuals and entities who were the beneficial owners,
         respectively, of the Outstanding Company Common Stock and Outstanding
         Company Voting Securities immediately prior to such Business
         Combination beneficially own, directly or indirectly, more than 50% of,
         respectively, the then outstanding shares of common stock and the
         combined voting power of the then outstanding voting securities
         entitled to vote generally in the election of directors, as the case
         may be, of the corporation resulting from such Business Combination
         (including, without limitation, a corporation which as a result of such
         transaction owns the Company or all or substantially all of the
         Company's assets either directly or through one or more subsidiaries)
         in substantially the same proportions as their ownership, immediately
         prior to such Business Combination of the Outstanding Company Common
         Stock and Outstanding Company Voting Securities, as the case may be and
         (ii) at least a majority of the members of the Board of Directors of
         the corporation resulting from such Business Combination were members
         of the Incumbent Board at the


                                       2
<PAGE>


         time of the execution of the initial agreement, or of the action of the
         Board, providing for such Business Combination; or

                  (4) approval by the shareholders of the Company of a complete
         liquidation or dissolution of the Company.

         (f)  "Chief Executive Officer" means the chief executive officer of the
              Company or the person who regularly performs the duties normally
              associated with such office on behalf of the Company.

         (g)  "Company" means SHOPKO STORES, INC., a Wisconsin corporation.

         (h)  "Compensation" means the Participant's annual retainer and meeting
              fees for serving as a Director payable by the Company before
              reductions for deferrals under the Plan.

         (i)  "Crediting Rate" means the notional gains and losses credited on a
              Participant's Account balance based on such Participant's choice
              among investment alternatives made available by the Administrator
              pursuant to Section 5.4 of the Plan.

         (j)  "Deferred Compensation Election Form" means a written agreement
              between a Participant and the Company whereby the Participant
              agrees to defer a portion of his Compensation and the Company
              agrees to make benefit payments all in accordance with the terms
              and conditions of the Plan. The Deferred Compensation Election
              Form may take the form of an electronic communication followed by
              appropriate written confirmation as determined by the
              Administrator.

         (k)  "Director" means an individual who is a member of the Board and
              who is not an employee of the Company.

         (l)  "Effective Date" means February 1, 1992.

         (m)  "Participant" means those eligible Directors who have elected to
              participate in the Plan by filing a Deferred Compensation Election
              from hereunder.

         (n)  "Plan Year" means the calendar year.

         (o)  "Retirement Committee" means the SHOPKO STORES, INC. Retirement
              Committee appointed by the Board for the purpose of performing
              certain administrative functions with respect to the employee
              benefit plans of the Company, including the Plan.

         (p)  "Settlement Date" means the date by which a lump sum payment shall
              be made or the date by which installment payments shall commence
              pursuant to


                                       3
<PAGE>


              Section 6. Unless otherwise specified, the Settlement Date shall
              be the later of (i) the last day of January of the Plan Year
              following the year in which the event triggering distribution
              occurs or (ii) ninety (90) days following such event. In the case
              of death, the event triggering payout shall be deemed to occur
              upon the date the Administrator is provided with the documentation
              reasonably necessary to establish the fact of the Participant's
              death.

         (q)  "Unscheduled Withdrawal" means a distribution from a Participant's
              Deferral Account other than by reason of termination as a director
              pursuant to Section 6.1; upon a Change of Control pursuant to 6.2;
              or in accordance with an election to receive pre-termination
              benefits pursuant to Sections 4.5 and 6.8.

         (r)  "Valuation Date" means the date through which notional earnings
              and losses are credited and shall be the last day of the month
              preceding the month in which the distribution or other basis for
              valuation occurs.

2.2. GENDER AND NUMBER
Except when otherwise indicated by the context, any masculine terminology, when
used in the Plan, shall also include the feminine gender and the definition or
use of any term herein in the singular shall also include the plural.

SECTION 3.  ELIGIBILITY FOR PARTICIPATION

Participation in the Plan is limited to Directors. Directors eligible to become
Participants after the first Plan Year shall be entitled to defer Compensation
hereunder as of the first day of the Plan Year following their becoming a
Director; provided they submit a Deferred Compensation Election Form to the
Administrator in accordance with Section 4.1 of the Plan. Notwithstanding the
foregoing, the Retirement Committee may establish a special enrollment period
for Directors joining the Board during a Plan Year. A participant shall cease to
be a Participant upon termination as a Director.

SECTION 4.  ELECTION TO DEFER

4.1  DEFERRALS
Any Director eligible to become a Participant may elect to defer Compensation,
otherwise payable in subsequent Plan Years, by submitting a Deferred
Compensation Election Form to the Administrator during the enrollment period
established by the Administrator prior to the beginning of the period during
which the Compensation is earned; provided, however, the Retirement Committee
may establish a special enrollment period for Directors joining the Board during
a Plan Year to allow such Directors to defer Compensation payable during the
Plan Year during which the Participant begins on the Board , for pay periods
beginning after the date of the deferral election.

4.2  PROCEDURES
A participant shall make the election provided for in Section 4.1 hereof by
executing a Deferred Compensation Election Form in the form provided by the
Administrator, subject


                                       4
<PAGE>


to such terms and conditions as the Retirement Committee may impose, including,
but not limited to, medical examinations, health screening, medical records
reviews, etc. The Deferred Compensation Election Form shall set forth the
Participant's election to defer any whole percentage of Compensation earned by
the Participant during the Plan Year in accordance with Section 4.3. A
Participant shall only be entitled to defer Compensation in the amounts and for
the periods determined, from time to time, in the sole and absolute discretion
of the Retirement Committee. A Deferred Compensation Election Form shall be
effective if, and only if, it is timely accepted by the Administrator on behalf
of the Company. If accepted by the Administrator, the Compensation to be
deferred, as specified in the Deferred Compensation Election Form, shall be
deferred and the Participant's Compensation shall be correspondingly reduced.

4.3  MAXIMUM AND MINIMUM DEFERRALS
The following maximum and minimum deferrals of Compensation shall apply to the
amount to be deferred by any Participant, provided, however, that the Retirement
Committee may from time to time, in its sole and absolute discretion, adjust the
maximum and minimum deferrals permitted hereunder:

                           (i)      Minimum Deferral one percent (1%) of
                                    Compensation;

                           (ii)     Maximum Deferral--one hundred percent (100%)
                                    of Compensation.

4.4  ELECTION TO DEFER IRREVOCABLE
Except as provided in this Plan or by action of the Retirement Committee, a
Participant's election to defer any amounts of any nature whatsoever pursuant to
the Plan shall be irrevocable when made and accepted by the Administrator and
shall not be subject to amendment or modification in any manner whatsoever
thereafter.

4.5  EARLY DISTRIBUTION DEFERRALS
At the time of submitting a Deferred Compensation Election Form, a Participant
may make an irrevocable election to create a Scheduled Withdrawal Account which
will be paid out at an earlier time than termination as a Director as provided
in Section 6 hereunder; provided, however, that the deferral period shall in no
case be less than three (3) years from the first day of the initial Plan Year to
which the Deferred Compensation Election Form applies; provided, further, that
the payment of the Scheduled Withdrawal Account shall be in one lump sum, and,
once paid, the Participant shall be entitled to no further benefits with respect
to such Scheduled Withdrawal Account.

SECTION 5. ACCOUNTS

5.1  ESTABLISHMENT AND CREDITING OF ACCOUNT
The Company shall establish a separate Account on its books with respect to each
Participant and shall credit to such Account certain amounts in accordance with
the provisions of the Plan. Accounts shall be deemed to be credited with
notional gains or


                                       5
<PAGE>


losses as provided in Section 5.4 from the date deferral is credited to the
Account through the Valuation Date.

5.2  COMPENSATION DEFERRALS
The Compensation that is deferred pursuant to a Participant's Deferred
Compensation Election Form shall be credited to a Participant's Account as of
the date the Participant would have otherwise received the Compensation. The
Company shall be entitled to deduct from the Participant's Compensation which is
subject to a Deferred Compensation Election Form any amount it is required to
withhold or collect under any federal, state or local law for taxes or other
charges, including, without limitation, Social Security (F.I.C.A.) taxes.

5.3  INVESTMENT ELECTIONS
The Administrator shall establish a procedure by which a Participant may elect
among investment alternatives or rates made available by the Administrator and
by which the Participant may change investment elections at least quarterly. The
Participant's choice among investments shall be solely for purposes of
calculating the Crediting Rate. If the Participant fails to elect an investment
election, the Crediting Rate shall be based on the investment alternative which
is a money market fund or alternative most similar to a money market fund. At no
time shall the Company be obligated to set aside or invest funds as directed by
the Participant and, if the Company elects to invest funds as directed by the
Participant, the Participant shall have no more right to such investments than
any other unsecured general creditor.

5.4  CREDITING RATE
The Crediting Rate on amounts in a Participant's Account shall be based on the
Participant's investment election pursuant to Section 5.3. A Participant's
Account shall reflect the investments selected by the Participant. If an
investment on which the Crediting Rate is based sustains a loss, the
Participant's Account shall be reduced to reflect such loss. During installment
distributions, a Participant's Account shall continue to be credited at the
Crediting Rate.

5.5  CONTRACTUAL OBLIGATION
It is intended that the Company is under a contractual obligation to make
payments in accordance with terms and conditions of the Plan. A Participant
shall have no rights to such payments, other than as a general, unsecured
creditor of the Company. Account balances shall not be financed through a trust
fund or any other assets or properties in which a Participant has any interest
whatsoever. Payments from such Accounts shall be made out of the general funds
of the Company. All such Accounts shall be utilized solely as a device for the
measurement and determination of the amounts to be paid to a Participant
pursuant to the Plan. Such Accounts shall not constitute or be treated as a
trust fund or an interest in any specific assets or properties of the Company of
any sort.

5.6  CHARGES AGAINST AND BALANCE OF ACCOUNTS
Each Participant's Account, as of each Valuation Date, shall consist of the
balance of such Account as of the immediately preceding Valuation Date, plus
deferrals credited to


                                       6
<PAGE>


the Account since the immediately preceding Valuation Date, plus the amount to
be credited to such Account by the Company based on the Crediting Rate pursuant
to Section 5.4 hereof, (taking into account the timing of any contribution or
distribution), less the amount of all distributions, if any, made from such
Account since the immediately preceding Valuation Date.

5.7    STATEMENT OF ACCOUNTS
The Administrator, shall from time to time, at least quarterly, provide to each
Participant a statement in such form as the Retirement Committee deems desirable
setting forth the Participant's Accounts as of the end of the prior period.

SECTION 6.  PAYMENT OF BENEFITS

6.1    TERMINATION BENEFITS
Upon the Participant's termination as a Director, for any reason, including
Death, the Participant shall be entitled to receive an amount equal to the total
balance of the Participant's Account credited with notional earnings as provided
in Section 5 through the Valuation Date. The Participant may elect to receive
benefits in a lump sum or in annual installments over 3, 5, 10 or 15 years. If
the Participant fails to make a timely election, the benefits shall be paid over
fifteen (15) years. Payments shall begin on the Settlement Date following
termination unless the Participant has made a timely election to have payments
begin on any one of the first five (5) anniversaries of such date but in no
event later than the Settlement Date following the date the Participant attains
age seventy (70). An election to change the form of benefit payout may be made
at any time prior to termination by submitting to the Administrator the form
provided for such purpose but elections shall not be effective unless made no
less than thirteen (13) calendar months prior to termination.

6.2    BENEFITS FOLLOWING A CHANGE OF CONTROL
A new Participant may make an irrevocable election with respect to all future
deferral Accounts on the Participant's first Deferred Compensation Election
Form, to receive the full amount in his Account credited with notional earnings
as provided in Section 5 through the Valuation Date in the event of a Change of
Control prior to Termination of Employment. Such benefit shall be payable in a
lump sum no later than the last day of the month following the month in which
such Change of Control occurs, unless the Participant has elected in the
Deferred Compensation Election Form to have such benefit paid in five (5) annual
installments beginning on such date.

6.3    SURVIVORSHIP BENEFITS

6.3.1  DEATH PRIOR TO COMMENCEMENT OF BENEFITS
If a Participant dies prior to receiving any benefits due hereunder, the Company
shall pay to the Participant's Beneficiary a benefit equal to the Participant's
Account at death credited with notional earnings as provided in Section 5,
payable in one lump sum as soon as possible after the Retirement Committee
receives a certified copy of the


                                       7
<PAGE>


Participant's death certificate. Payment of the benefit under this Section 6.31
shall relieve the company of any further obligation to pay benefits under the
Plan.

6.3.2  DEATH AFTER COMMENCEMENT OF BENEFITS
If a participant dies after payments pursuant to this Section 6 have commenced
hereunder, but prior to receiving all of the scheduled annual payments, the
Company shall pay the remaining annual payments to the Participant's
Beneficiary.

6.4  SMALL ACCOUNT EXCEPTION
Notwithstanding any other provision of the Plan or a Participant's Deferred
Compensation Election Form the Administrator, taking into account the expense
and inconvenience of administering the Plan with respect to small Accounts as
set forth herein, may, in its sole discretion, elect to distribute a
Participant's benefits in a lump sum. This Section 6.4 shall only apply to small
Accounts which shall mean all Accounts with a balance of $25,000 or less at the
time benefits payable pursuant to this Section 6 would otherwise commence. In
addition, if the installments payable under this Section 6 would be less than
$3,000 per year, the Administrator, in its sole discretion, may shorten the
period over which the installment payments are made.

6.5  RECIPIENTS OF PAYMENTS; DESIGNATION OF BENEFICIARY
All payments to be made by the Company shall be made to the Participant, if
living. Except as otherwise provided herein, in the event of a Participant's
death prior to the receipt of all benefit payments, all subsequent payments to
be made under the Plan shall be to the Beneficiary of the Participant in
accordance with a Participant's designation of Beneficiary. Unless otherwise
specified in the Participant's Beneficiary designation, in the event a
Beneficiary dies before receiving all payments due to such Beneficiary pursuant
to this Plan, the then remaining payment shall be paid to the legal
representatives of the Beneficiary's estate. The Participant shall designate a
Beneficiary, or during his lifetime change such designation, by filing a written
notice of such designation with the Administrator in such form and subject to
such rules and regulations as the Administrator may prescribe. If the
Participant's Compensation constitutes community property, then any Beneficiary
designation made by the Participant other than a designation of such
Participant's spouse shall not be effective if any such Beneficiary or
beneficiaries are to receive more than fifty percent (50%) of the aggregate
benefits payable hereunder, unless such spouse shall approve such designation in
writing. If no designation shall be in effect at the time when any benefits
payable under this Plan shall become due, the Beneficiary shall be the legal
representatives of the Participant's estate. In the event a benefit is payable
to a minor or person declared incompetent or to a person incapable of handling
the disposition of his property, the Retirement Committee may determine to pay
such benefit to the guardian, legal representative or person having the care or
custody of such minor, incompetent or person. The Retirement Committee may
require proof of incompetence, minority or guardianship as it may deem
appropriate prior to distribution of the benefit. Such distribution shall
completely discharge the Retirement Committee and the Company from all liability
with respect to such benefit.


                                       8
<PAGE>


6.6  FINANCIAL EMERGENCY
In the event of a Participant's unforeseeable emergency, the Retirement
Committee, in its sole and absolute discretion, may alter the timing or manner
of payment of any benefits or deferred amounts to be paid pursuant to the Plan
or release the Participant from the obligation of making deferrals. For purposes
of this section, an unforeseeable emergency shall mean a severe financial
hardship to the Participant resulting from a sudden and unexpected illness or
accident of the Participant or of a dependent of the Participant, loss of the
Participant's property due to a casualty, or other similar extraordinary and
unforeseeable circumstances arising as a result of events beyond the control of
the Participant. Any early payment of benefits or withdrawal of deferred amounts
due to an unforeseeable emergency shall be limited to the amount necessary to
meet such emergency. The Retirement Committee' decision in passing upon severe
financial hardship of the Participant and the manner in which, if at all, the
payment or deferral of any amounts pursuant to the Plan shall be altered or
modified shall be final, conclusive and not subject to appeal. The Participant
shall have no right to make up any amount distributed or transferred as a result
of a determination of financial emergency by the Retirement Committee pursuant
to this Section 6.6.

6.7  PRE-TERMINATION  BENEFITS
In the event that Participant has made the election provided for in Section 4.5
to receive amounts prior to termination as a Director, such pre-termination
benefits shall be paid in accordance with such election. The calculation of the
amount of such pre-termination benefit shall be made in accordance with the
terms and conditions of the Plan, including, without limitation, Section 5
hereof.

6.8  UNSCHEDULED WITHDRAWALS
A Participant may give written notice to the Retirement Committee that the
Participant wants to receive an Unscheduled Withdrawal of all or any portion of
the amount credited to the Participant's Account. If the Participant requests an
Unscheduled Withdrawal (a "Withdrawal Notice"), he will forfeit 10% of the
Unscheduled Withdrawal to the Company. All Unscheduled Withdrawals are subject
to the following restrictions: (a) only one Unscheduled Withdrawal can be made
from the Participant's Account in any Plan Year; (b) the minimum withdrawal
shall be 25% of the balance of the Participant's Account on the date the
withdrawal is made; (c) an election to withdraw 75% or more of the Account
balance shall be deemed to be an election to withdraw the entire Account
balance. In the case of a Participant who gives a Withdrawal Notice, the
Participant may not defer additional amounts into the Participant's Account
until the first anniversary of the Unscheduled Withdrawal. If the Participant
has a Deferred Compensation Election Form in effect when he gives a Withdrawal
Notice, the Deferred Compensation Election Form shall be deemed amended to
comply with the provisions of this Section 6.8. In addition, nothing shall
prevent a Participant from filing a new Deferred Compensation Election Form
while he is locked out from making further deferrals under this Section 6.8,
except deferrals under such Deferred Compensation Election Form shall not begin
until the lock-out period ends. The Company shall pay the full amount of an
Unscheduled Withdrawal less the ten percent (10%) the Participant must forfeit
within sixty (60) days after the Retirement Committee receives the request.


                                       9
<PAGE>


Notwithstanding anything contained in this Plan to the contrary, the Retirement
Committee may suspend Unscheduled Withdrawals to Participants in the Plan at any
time if the Committee believes that doing so is consistent with the Committee's
fiduciary duty to the Company.

SECTION 7.  FORFEITURE

In the event of a Participant's suicide during the first two (2) years after the
filing of any Deferred Compensation Election Form the Retirement Committee, in
its sole and absolute discretion, may terminate all or any part of a
Participant's (or Beneficiary's) right to receive any benefits whatsoever
hereunder, provided, however, that the Beneficiary of such a Participant shall
be entitled to receive at least an amount equal to that portion of the
Participant's Account which has in fact been deferred pursuant to the Plan,
without increase, growth addition or any other amount, payable in such manner as
the Retirement Committee, in its sole and absolute discretion shall determine.

In the event a Participant (i) makes any material misstatement of information in
connection with any Deferred Compensation Election Form (ii) fails to disclose
to the Company or its agents any material item of his personal or medical
history (including, but not limited to, habits of drug, chemical or tobacco
use), (iii) takes any other action (or fails to take any action), which action
(or failure to act) results in a loss to the Company under the Plan, then the
Retirement Committee, in its sole and absolute discretion, may terminate all or
any part of a Participant's (or Beneficiary's) right to receive any benefits
whatsoever hereunder.

SECTION 8.  NON-TRANSFERABILITY

In no event shall the Company make any payment under the Plan to any assignee or
creditor of a Participant or a Beneficiary. Prior to the time of payment
hereunder, a Participant or Beneficiary shall have no rights by way of
anticipation or otherwise to assign or otherwise dispose of any interest under
the Plan nor shall such rights be assigned or transferred by operation of law.

SECTION 9.  ADMINISTRATION

9.1      ADMINISTRATION
This Plan shall be administered by the Retirement Committee and the
Administrator. The Retirement Committee may from time to time establish rules
for the administration of the Plan that are not inconsistent with the provisions
of the Plan.

9.2      FINALITY OF DETERMINATION
Except as otherwise provided herein, any interpretation or determination by
the Retirement Committee as to any disputed questions arising under the Plan,
including questions of fact (or questions of construction and interpretation,
shall be final, binding and conclusive upon all persons, subject only to a
determination otherwise by the Board.


                                       10
<PAGE>


9.3      CLAIMS PROCEDURE
If any Participant, Beneficiary or other properly interested party is in
disagreement with any determination that has been made under the Plan, a claim
may be presented, but only in accordance with the procedures set forth herein.

9.3.1    ORIGINAL CLAIM
Any Participant, Beneficiary or other properly interested party may, if he so
desires, file with the Retirement Committee a written claim for benefits or a
determination under the Plan. Within ninety (90) days after the filing of such a
claim, the Retirement Committee shall notify the claimant in writing whether his
claim is upheld or denied in whole or in part or shall furnish the claimant a
written notice describing specific special circumstances requiring a specified
amount of additional time (but not more than one hundred eighty (180) days from
the date the claim was filed) to reach a decision on the claim. If the claim is
denied in whole or in part, the Retirement Committee shall state in writing:

                           (i)      the specific reason or reasons for the
                                    denial;

                           (ii)     the references to the pertinent provisions
                                    of this Plan on which the denial is based;

                           (iii)    a description of any additional material or
                                    information necessary for the claimant to
                                    perfect the claim and an explanation of why
                                    such material or information is necessary;
                                    and


                           (iv)     an explanation of the claims review
                                    procedure set forth in this section,
                                    including a statement of the claimant's
                                    right to bring a civil action under ERISA
                                    Section 502(a) following a denial on review.

9.3.2    CLAIM REVIEW PROCEDURE
Within sixty (60) days after receipt of notice that his claim has been denied in
whole or in part, the claimant may file with the Retirement Committee a written
request for a review and may, in conjunction therewith, submit written comments,
documents, records and other information relating to the Claim. The claimant or
his authorized representative, shall be provided, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the claimant's claim. For purposes of this section, a
document, record or other information shall be considered "relevant" to a
claimant's claim if such document, record or other information (i) was relied
upon by the Retirement Committee in making its decision on the claim, (ii) was
submitted, considered or generated in the course of the Retirement Committee's
making its decision on the claim, without regard to whether the Retirement
Committee relied upon such document, record or other information in making its
decision, or (iii) complies with administrative processes and safegards which
are designed to insure and to verify that decisions on claims are made in
accordance with governing Plan documents, whose provisions are applied
consistently with respect to similarly situated claimants. The Retirement
Committee's review of the claimaint's claim and of the Retirement Committee's
denial of such claim shall take into account all comments, documents, records,
and other information submitted by the claimant or his authorized representative


                                       11
<PAGE>


relating to the claim, without regard to whether such information was submitted
or considered in the initial decision on the claim. Within sixty (60) days after
the filing of such a request for review, the Retirement Committee shall notify
the claimant in writing whether, upon review, the claim was upheld or denied in
whole or in part or shall furnish the claimant a written notice describing
specific circumstances requiring a specified amount of additional time (but not
more than one hundred twenty (120) days from the date the request for review was
filed) to reach a decision on the request for review. In the case of a decision
on appeal upholding the Retirement Committee's initial denial of the claimant's
claim, such notice shall set forth, in a manner calculated to be understood by
the claimant, the following information:

                           (i)      the specific reason or reasons for the
                                    decisions on appeal;

                           (ii)     references to the pertinent provisions of
                                    this Plan on which the decision on appeal is
                                    based;

                           (iii)    a statement that the claimant is entitled to
                                    receive, upon request and free of charge,
                                    reasonable access to, and copies of, all
                                    documents, records and other information
                                    relevant to the claimant's claim for
                                    benefits; and

                           (iv)     a statement of the claimaint's right to
                                    bring an action under ERISA Section 502(a).

9.3.3  GENERAL RULES

                           (i)      No inquiry or question shall be deemed to be
                                    a claim or a request for a review of a
                                    denied claim unless made in accordance with
                                    the foregoing claims procedure. The
                                    Retirement Committee may require that any
                                    claim for benefits and any request for a
                                    review of denied claim be filed on forms to
                                    be furnished by the Administrator upon
                                    request.

                           (ii)     All decisions on claims and on requests for
                                    a review of denied claims shall be made by
                                    the Retirement Committee. In accordance with
                                    Section 9.2 hereof, decisions of the
                                    Retirement Committee shall be final, binding
                                    and conclusive upon all persons.

                           (iii)    The Retirement Committee may, in its
                                    discretion, hold one or more hearings on a
                                    claim or a request for a review of a denied
                                    claim.

                           (iv)     Claimants may be represented by a lawyer or
                                    other representative (at their own expense),
                                    but the Retirement Committee reserves the
                                    right to require the claimant to furnish
                                    written authorization. A claimant's
                                    representative shall be entitled to copies
                                    of all notices given to the claimant.

                           (v)      The decision of the Retirement Committee on
                                    a claim and on a request for a review of a
                                    denied claim shall be served on the


                                       12
<PAGE>


                                    claimant in writing. If a decision or notice
                                    is not received by a claimant within the
                                    time specified, the claim or request for a
                                    review of a denied claim shall be deemed to
                                    have been denied.

                           (vi)     Prior to filing a claim or a request for a
                                    review of a denied claim, the claimant or
                                    his representative shall have a reasonable
                                    opportunity to review a copy of this Plan
                                    and all other pertinent documents in the
                                    possession of the Company and the Retirement
                                    Committee.

                           (vii)    The Administrator and the individuals
                                    serving on the Retirement Committee shall,
                                    except as prohibited by law, be indemnified
                                    and held harmless by the employer from any
                                    and all liabilities, costs, and expenses
                                    (including legal fees), to the extent not
                                    covered by liability insurance arising out
                                    of any action taken by any individual of
                                    this Committee with respect to this plan,
                                    unless such liability arises from the
                                    individual's own claim for his or her own
                                    benefit, the proven gross negligence, bad
                                    faith, or (if the individual had reasonable
                                    cause to believe his or her conduct was
                                    unlawful) the criminal conduct of such
                                    individual. This indemnification shall
                                    continue as to an individual who has ceased
                                    to be a member of the Retirement Committee
                                    for the employer and shall enure to the
                                    benefit of the heirs, executors and
                                    administrators of such an individual.

9.4      EXPENSES
The cost of payment from the Plan and the expense of administering the Plan
shall be borne by the Company.

9.5      TAX WITHHOLDING
The Company shall have the right to deduct from all payments to be made under
the Plan, any federal, state or local taxes or other charges required by law to
be withheld with respect to such payments.

SECTION 10.  AMENDMENT AND TERMINATION

The Company may at any time amend, modify, terminate or suspend, this Plan and
no Participant or any other person shall have any right, title, interest or
claim against the Company, its directors, officers or employees for any amounts,
except that (i) the Participant shall be fully vested in his Account hereunder
as of the date on which the Plan is terminated or suspended, (ii) no amendment
shall eliminate the crediting of an investment return on an Account prior to the
complete distribution thereof or provide for a distribution method which
accelerates the timing of distributions hereunder without the consent of a
Participant and (iii) subsequent to a Change of Control, unless a majority of
the holders of Account balances agree to the contrary, the Company or the
Administrator may not alter (a) the choice of investments in the Investment
Election as in effect


                                       13
<PAGE>


immediately before the Change of Control and (b) the payout options as in effect
immediately before the Change of Control. Any such amendment, modification or
termination of the Plan may occur either (i) without limitation, by resolution
of the Board or (ii) in any respect that does not materially increase the cost
of the Plan to the Company, by action of the Retirement Committee (with the
written concurrence of the Chief Executive Officer).

SECTION 11.  APPLICABLE LAW

The Plan shall be governed and construed in accordance with the laws of the
State of Wisconsin. The invalidity of any portion of the Plan shall not
invalidate the remainder hereof and said remainder shall continue in full force.
The captions and other titles herein are designed for convenience only and are
not to be resorted to for the purposes interpreting any provision of the Plan.
The waiver by the Company of any breach of any provision of the Plan shall not
operate or be construed as a waiver of any subsequent breach by that Participant
or any other Participant.

SECTION 12.  BINDING AGREEMENT

The provisions of the Plan shall be binding upon the Participant, his or her
heirs, personal representatives and beneficiaries, and subject to the rights
granted to amend or terminate the Plan, the provisions of the Plan shall also be
binding upon the Company, its successors and assigns.

SECTION 13.  NOTICE

Any notice or filing required or permitted to be given to the Company or a
Participant under this Plan shall be sufficient if in writing and
hand-delivered, or sent by registered or certified mail, in the case of the
Company, to the principal office of the Company, directed to the attention of
the Administrator, and in the case of a Participant, to the last known address
of such Participant indicated on the records of the Company. Such notice shall
be deemed given as of the date of delivery or, if delivery is made by mail, as
of the date shown on the postmark on the receipt for registration or
certification.

SECTION 14.  ERRORS IN BENEFIT STATEMENT OR DISTRIBUTION

In the event an error is made in a benefit statement, such error shall be
corrected on the next benefit statement following the date such error is
discovered. In the event of an error in a distribution, the Participant's
Account shall, immediately upon discovery of such error, be adjusted to reflect
such under or overpayment and, if possible, the next distribution shall be
increased or decreased to correct such prior error. If the remaining balance of
a Participant's Account is insufficient to cover an erroneous overpayment, the
Company, may, at its discretion, offset other amount payable to the Participant
from the Company (including but not limited to salary, bonuses, expense
reimbursements, severance benefits or other employee compensation benefit
arrangements, as allowed by law) to recoup the amount of such overpayment.


                                       14
<PAGE>


The Company has caused this amendment and restatement of the Plan to be adopted
and approved by the Board as of the date hereof.

IN WITNESS WHEREOF, the Company has caused this amended and restated Plan to be
executed 21st day of August, 2002.


SHOPKO STORES, INC.


By
   --------------------------------
Its Interim Chief Executive Officer


Adopted by the Board of Directors: August 21, 2002.