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                                                                    EXHIBIT 10.1

                              EMPLOYMENT AGREEMENT

         THIS EMPLOYMENT AGREEMENT is entered into as of the 9th day of April,
2002 by and between SHOPKO STORES, INC., a Wisconsin corporation (the
"Company"), and JEFFREY C. GIRARD (the "Executive").

                                    RECITALS
         The Company wishes to employ Executive as the Vice Chairman - Finance
and Administration for the term provided herein, and to appoint Executive as the
Chief Executive Officer of the Company on an interim basis (the "Interim CEO"),
and Executive wishes to accept such positions in accordance with the terms and
provisions contained herein.

         NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained herein, the parties hereto hereby agree as follows.

1. Employment.

         (a) The Company hereby employs Executive, and Executive hereby accepts
employment commencing on April 9, 2002 (the "Commencement Date") on the terms
and subject to the conditions contained herein.

         (b) During the Employment Term as defined in Section 2, below,
Executive shall serve as the Vice Chairman - Finance and Administration of the
Company, and shall faithfully and to the best of his ability, subject to the
direction of the Board of Directors of the Company (the "Board of Directors") or
such officers as the Board may determine, perform such duties and exercise such
power and authority as may from time to time be delegated to him consistent with
his status. Executive shall also serve as an officer of such subsidiaries of the
Company as may be designated by their respective Boards of Directors, all
without compensation other than that specified in this Agreement.

         (c) In addition to Executive's duties as Vice Chairman-Finance and
Administration hereunder, Executive shall have the additional position of
Interim CEO of the Company from the Commencement Date. Executive shall serve as
Interim CEO at the pleasure of the Board of Directors, and termination of the
Executive's duties as Interim CEO shall not be treated as a termination of
employment for purposes of this Agreement.

         (d) During the Employment Term, and excluding any periods of vacation
and sick leave to which Executive is entitled, Executive shall devote
substantially all of his business time, efforts and skills to the business and
affairs of the Company and, to the extent necessary to discharge the
responsibilities assigned to Executive hereunder, to use Executive's reasonable
best efforts to perform faithfully and efficiently such responsibilities. During
his employment with the Company, Executive may participate in charitable
activities and personal investment activities to a reasonable extent, so long as
such activities do not interfere with the performance of his duties and
responsibilities hereunder.

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         2. Employment Term.

         The term of the employment of Executive under this Agreement (the
"Employment Term") shall commence on Commencement Date and shall continue,
unless sooner terminated under Section 7 hereof, until the third anniversary of
the Commencement Date; provided, however, that the Employment Term shall be
automatically extended for one additional year on the third anniversary of the
Commencement Date and on every subsequent anniversary thereafter (such date and
each anniversary thereof referred to as a "Renewal Date"), until the earlier of
(i) termination of the Employment Term under Section 7 hereof or (ii) the
Company giving Executive notice 60 days prior to a Renewal Date that the
Employment Term will not be so extended.

         3. Salary.

         (a) During the Employment Term, Executive shall be paid a salary at the
rate of $500,000 per annum (the "Base Salary"), payable in equal installments in
accordance with the Company's customary payroll practices in effect from time to
time. Because of Executive's informal efforts on behalf of the Company prior to
the Commencement Date, Executive will be paid as if his employment commenced on
April 1, 2002 for purposes of computing his Base Salary.

         (b) Executive's Base Salary shall be reviewed at least annually and may
be increased at any time and from time to time as the Compensation and Stock
Option Committee of the Board of Directors (the "Compensation and Stock Option
Committee"), in its sole discretion, shall deem appropriate. The term Base
Salary as utilized in this Agreement shall refer to Base Salary as so increased.
Any increase in Base Salary shall not serve to limit or reduce any other
obligation to Executive under this Agreement. Base Salary shall not be reduced
at any time during the Employment Term.

         4. Bonuses and Long-Employment Term Incentives.

         (a) (i) On the date this Agreement is signed, the Company will pay
Executive a one-time signing bonus of $100,000. (ii) On the earlier of (A) the
first day of employment of a new CEO for the Company or (B) the last day of the
Company's 2002 fiscal year (February 1, 2003), the Company will pay Executive a
one-time bonus of $100,000 if Executive is in the Company's employ on that date.
Commencing with February 2003, Executive will receive an additional amount of
$8,333 per month for each full or partial month he serves as the Company's
Interim CEO, payable in accordance with the Company's customary payroll
practices.

         (b) In addition to Base Salary, Executive shall be eligible to receive,
for each fiscal year ending during the Employment Term, an annual bonus (the
"Annual Bonus") determined in accordance with the Company's 1999 Executive
Incentive Plan, or if the Executive Incentive Plan is no longer in effect, such
successor plan as is approved by the Company's Board of Directors (the "Bonus
Plan"). Notwithstanding any other provision of this Agreement or the Bonus Plan,
Executive's bonus percentages for the 2002 fiscal year shall be 19.8% if
threshold performance is achieved, 60% if target performance is achieved and
120% if high performance is achieved. If performance is between any of the
performance levels, the percentage will be interpolated. The applicable
percentage will be applied to the amount of Base Salary actually paid during the
2002 fiscal year, plus, if earned, the one-time bonus of $100,000 set out in
Section 4(a)(ii) of this Agreement. The performance criteria for the 2002 fiscal
year shall be those already established by the Compensation and Stock Option
Committee for the position of chief executive officer. The percentage levels and
performance criteria for subsequent fiscal years will be set by the Compensation
and Stock Option Committee and will be consistent with those established for
other comparable senior executives of the Company. In subsequent fiscal years,

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for purposes of computing Executive's bonus under the Bonus Plan only, the
special bonus referenced in the last sentence of Section 4(a) of this Agreement,
if any, shall be added to Base Salary for purposes of then applying the
applicable percentage determined by performance.

         (c) Effective as of the Commencement Date, the Compensation and Stock
Option Committee will grant to Executive 50,000 shares of the Company's common
stock (the "Restricted Shares") which shall vest on the second anniversary of
the date of grant if Executive is in the Company's employ on that date. Vesting
will be accelerated in the event of death, disability as defined in the
Company's long-term disability plan or a Change of Control of the Company as
defined in the Restricted Stock Award Agreement. The Restricted Shares will be
subject, in all events, to the terms and conditions of the Restricted Stock
Agreement between the Company and Executive dated April 9, 2002 and the 1993
Restricted Stock Plan.

         (d) Effective as of the Commencement Date, the Compensation and Stock
Option Committee will grant to Executive a nonqualified stock option for 50,000
shares of the Company's common stock. (the "Option Shares"). The Option Shares
will have an exercise price equal to the closing price of the Company's common
stock on the New York Stock Exchange for the date of grant as reported in the
Midwest Edition of The Wall Street Journal. The Option Shares shall be
completely vested on the date of grant. The Option Shares will be subject, in
all events, to the terms and conditions of the Stock Option Agreement between
the Company and Executive dated April 9, 2002 and the 1998 Stock Incentive Plan.

         (e) Executive shall also be eligible to participate in the Company's
Executive Retirement Plan (the "SERP") starting on the Commencement Date with
the following modifications: (i) references to two (2) percent in Section 3.1(a)
and Section 3.2 (a) of the SERP shall be four (4) percent for the first five of
Executive's Years of Credited Service, as defined in the SERP and (ii) the
reference under "Early Retirement Date" in Section 1.8 to "at least ten Years of
Service" shall be "at least five Years of Service." Any dispute as to the
computation of Executive's Retirement Benefit under the SERP shall be decided by
the Company's outside actuarial firm. Such decision shall be conclusive and
binding on both Executive and the Company.

         (f) Executive shall be eligible to participate in such other long-term
incentive programs as the other senior executives of the Company, such as the
Company's 2000 Executive Long-Term Incentive Plan (the "LTIP"), at a level
consistent with Executive's title and responsibilities as determined by the
Compensation and Stock Option Committee. For purposes of the LTIP, the
percentage at target performance applicable to Executive for fiscal year 2002 is
50%. The applicable percentage for any fiscal year shall be applied to the sum
of Executive's Base Salary plus any bonus amounts paid during the applicable
fiscal year pursuant to Section 4(a)(ii) and the last sentence of Section 4(a)
of this Agreement.

         5. Benefits. Subject to the application of any applicable
anti-discrimination rules, and except as more specifically provided in Section
4, above, Executive shall be entitled to participate in all employee benefit
plans, programs, practices or arrangements of the Company in which other senior
executives of the Company are eligible to participate from time to time,
including, without limitation, any qualified or non-qualified pension, profit
sharing and savings plans, any death benefit and disability benefit plans, and
any medical, dental, health and welfare plans on terms and conditions at least
as favorable as provided to other senior executives of the Company. Executive
will be entitled to be reimbursed by the Company for his move to Green Bay,
Wisconsin in accordance with the Company's relocation policy for senior
executives. Executive will be entitled to paid vacation days in accordance with
the Company's vacation policy, but in no event less than 15 days in any fiscal
year starting with the Company's 2003 fiscal. The number of paid vacation days
Executive is entitled to for fiscal year

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2002 will be 13 days, and the number of paid vacation days Executive will be
entitled to in the year his employment terminates will be prorated based on the
number of days he is employed during that fiscal year.

         6. Expenses. The Company shall pay or reimburse Executive for all
reasonable out-of-pocket expenses incurred by him in the course of performing
his duties for the Company in accordance with the Company's reimbursement
policies as in effect from time to time for other senior executives of the
Company. Executive shall keep accurate records and receipts of such expenditures
and shall submit such accounts and proof thereof as may from time to time be
required in accordance with such expense account or reimbursement policies that
the Company may establish for its senior executives generally.

         7. Termination of Employment. During the Employment Term, Executive's
employment hereunder may be terminated under any of the following circumstances:

                  (a) Death or Disability. Executive's employment hereunder
         shall terminate automatically upon Executive's death during the
         Employment Term. If the Company determines in good faith that a
         Disability of Executive has occurred during the Employment Term
         (pursuant to the definition of Disability set forth below), the Company
         shall give to Executive written notice in accordance with Section 7(d)
         of this Agreement of its intention to Terminate Executive's employment
         hereunder. In such event, Executive's employment with the Company shall
         terminate effective on the thirtieth (30th) day after receipt of such
         notice by Executive (the "Disability Effective Date"), provided that,
         within thirty (30) days after such receipt, Executive shall not have
         returned to full-time performance of Executive's duties. For purposes
         of this Agreement, "Disability" has the same meaning as in the
         Company's long-term disability plan as in effect at the time disability
         is being determined.

                  (b) Termination by Company. The Company may terminate
         Executive's employment for Cause or without Cause. For purposes of this
         Agreement, "Cause" means (i) an act or acts of personal dishonesty
         taken by Executive and intended to result in substantial personal
         enrichment of Executive at the expense of the Company, (ii) a violation
         by Executive of Executive's obligations under Section 1(b) of this
         Agreement which is demonstrably willful and deliberate on Executive's
         part and which is not remedied within ten days after receipt of notice
         from the Company describing such violation or (iii) the willful
         commission by the Executive of a criminal or other act that causes or
         will likely cause substantial economic damage to the Company or which
         results in Executive being unavailable to render services to the
         Company.

                  (c) Termination by Executive. Executive may terminate his
         employment with the Company for any reason or Good Reason upon 60 days
         advance written notice to the Company in accordance with Section 7(d)
         of this Agreement. For purposes of this Agreement, "Good Reason" means
         (i) a breach of any of the material terms or conditions of this
         Agreement by the Company, not caused by Executive, which breach has not
         been cured by the Company within 30 days after written notice thereof
         to the Company from Executive; (ii) a reduction in Executive's Base
         Salary; (iii) a reduction in his title of Vice Chairman - Finance and
         Administration or a material reduction in the duties which might
         reasonably be associated with such title without Executive's consent;
         or (iv) the Company giving Executive notice that the Employment Term
         will not be renewed pursuant to Section 2 hereof.

                  (d) Notice of Termination. Any purported termination of
         employment by either party shall be communicated by Notice of
         Termination to the other party. For purposes of this Agreement, a
         "Notice of Termination" shall mean a written notice which (i) indicates
         the specific termination provision in this Agreement relied upon; (ii)
         if applicable, sets forth in reasonable

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detail the facts and circumstances claimed to provide a basis for termination of
Executive's employment under the provision so indicated; and (iii) indicates the
Termination Date. "Termination Date" shall mean in the case of Executive's
death, his date of death, or in all other cases of termination by the Company,
the date specified in the Notice of Termination.

8.        Obligations Upon Termination.

         (a) Termination by the Company for Cause; Termination by Executive
Other Than for Good Reason. If Executive's employment with the Company is
terminated by the Company for Cause, or by Executive for any reason other than
Good Reason, the Company will pay and/or provide Executive with the following:
(i) Executive's Base Salary through the Termination Date in a lump sum within
thirty days after the Termination Date, and (ii) all benefits to which Executive
is entitled under any benefit plans or programs of the Company in accordance
with the terms of such plans through the Termination Date.

         (b) Termination by Reason of Disability or Death. If Executive's
employment with the Company is terminated during the Employment Term by reason
of Executive's Disability or death, the Company will pay and/or provide
Executive or Executive's legal representative, as the case may be, with the
following: (i) Executive's Base Salary as then in effect through the Termination
Date in a lump sum within thirty days after the Termination Date, (ii) no later
than the date on which the other senior executives would receive their Annual
Bonus payments and after compliance with subsection (d) hereof, a fraction of
the Annual Bonus that would have been earned by Executive for the fiscal year
including the Termination Date, paid or accrued in accordance with Section 4(b)
hereof, determined by multiplying the Annual Bonus which would have been earned
absent death or Disability by a fraction, the numerator of which shall equal the
number of days during such fiscal year preceding the Termination Date, and the
denominator of which shall equal three hundred sixty-five (365) and (iii) all
benefits to which Executive is entitled under any benefit plans or programs of
the Company in accordance with the terms of such plans or programs through the
Termination Date.

         (c) Termination by the Company Without Cause; Termination by Executive
for Good Reason. If the Company terminates Executive's employment without Cause,
or Executive terminates his employment for Good Reason, the Company will pay
and/or provide Executive with the following after compliance with subsection (d)
hereof: (i) Base Salary continuation for the longer of (a) two years or (b) the
remainder of the Employment Term as in effect on the day the Notice of
Termination is delivered (the "Salary Continuation Period"), (ii) all benefits
to which Executive is entitled under any benefit plans or programs of the
Company in accordance with the terms of such plans through the Termination Date,
(iii) continued participation in the Company's medical plan for the Salary
Continuation Period, subsidized by the Company to the same extent as for active
employees from time to time, if Executive elects to continue participation in
the Company's medical plan, and (iv) bonus payments, paid at such time as other
senior executives of the Company are paid their bonus payments, at the lesser of
(a) the target percentage or (b) the percentage which actually would have been
paid to Executive if he had remained in the Company's employ for such fiscal
year, for the Salary Continuation Period. If the Salary Continuation Period ends
other than on the last day of the Company's fiscal year, the bonus payment
attributable to that fractional portion of a fiscal year shall be prorated based
on the number of days in that fiscal year which are included in the Salary
Continuation Period. Executive shall not be obligated to seek other employment
to mitigate the amounts payable to Executive during the Salary Continuation
Period set forth in (i), above; provided, however, that if Executive accepts
employment during the Salary Continuation Period, the amount of pre-tax cash
compensation paid to Executive for such employment shall reduce the amount
payable by the Company pursuant to (i) and (iv) above by the amount of such
pre-tax cash compensation

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and the medical coverage provided in (iii), above, shall become secondary to any
medical coverage offered by the subsequent employer.

         (d) Release of Claims. Notwithstanding the foregoing, the Company will
not pay to Executive, and Executive will not have any right to receive any
payments described in Sections 8(b) and (c), above, unless and until Executive
or his legal representative (in the case of Executive's death or if Executive is
disabled such that he is unable to consent) executes, and there shall be
effective following any statutory period for revocation, a release, in a form
reasonably acceptable to the Company, that irrevocably and unconditionally
releases, waives, and fully and forever discharges the Company and its past and
current shareholders, members of the Board of Directors, officers, employees,
and agents from and against any and all claims, liabilities, obligations,
covenants, rights, demands and damages of any nature whatsoever, whether known
or unknown, anticipated or unanticipated, relating to or arising out of
Executive's employment with the Company, including without limitation claims
arising under the Age Discrimination in Employment Act of 1977, as amended,
Title VII of the Civil Rights Act of 1974, as amended, the Civil Rights Act of
1991, as amended, the Equal Pay Act, as amended, and any other federal, state,
or local law or regulation; provided, however, that the release will not include
any rights or claims Executive may have to indemnification or advancement of
expenses under the Company's charter documents, applicable law, or any
indemnification agreement, or any claims for continuation of coverage under the
Consolidated Omnibus Budget Reconciliation Act or similar state law ("COBRA").

         (e) COBRA. Except in the case of subparagraph (c), above, in the event
of termination of Executive's employment, Executive shall be entitled to
continue coverage, at his expense, under the group health insurance plan then in
effect for the period for which continuation of such coverage is received
pursuant to COBRA. In the case of subparagraph (c), above, the COBRA
continuation period will run concurrently with the Salary Continuation Period.

         (f) Withholding and Other Issues. Payments to be made to Executive
under this Section 8 will be reduced by any applicable income or employment
taxes which are required by be withheld under applicable law, and all amounts
are stated before any such deduction. Furthermore, none of the payments under
Section 8(c) hereof shall be included as compensation for purposes of any
retirement, deferred compensation or welfare benefit plan or program of the
Company.

9. Nondisclosure.

         (a) During the Employment Term and during the Restricted Period, as
defined in subsection (d), below, Executive shall not make any Unauthorized
Disclosure. For purposes of this Agreement, "Unauthorized Disclosure" shall mean
use by Executive or disclosure by Executive without the consent of the Board of
Directors of the Company to any person, other than use or disclosure that is
reasonably necessary or appropriate in connection with the performance by
Executive of his duties as an executive of the Company or as may be legally
required (provided the provisions of Section 9(c) hereof are complied with), of
any confidential information obtained by Executive while in the employ of the
Company, including, but not limited to, confidential information with respect to
any of the Company's customers, suppliers, contractors, methods of operation,
services, products, mechanisms, databases, processes, programs and access codes
(the "Confidential Information"); provided, however, that Confidential
Information shall not include any information known generally to the public or
within the industry (other than as a result of disclosure by him in violation of
this Section 9(a)). Nothing herein shall limit Executive's confidentiality
obligation as regards any information which

                                       27
<PAGE>

         is a trade secret as defined in Section 134.90 of the Wisconsin
         Statutes, or any successor thereto.

                  (b) Executive agrees that all memoranda, notes, records,
         papers, financial models, mechanisms, programs, flow charts, work
         papers, source codes, computer codes, designs, software, data and other
         documents and all copies thereof relating to the operations or business
         of the Company, some of which may be prepared by him, and all objects
         associated therewith (such as samples) in any way obtained by him in
         connection with the performance of his duties hereunder shall be the
         exclusive property of the Company. Executive shall not, except for the
         Company's use, copy or duplicate any of the aforementioned, not remove
         them from the Company's facilities, nor use any information concerning
         them, in each case, except for the Company's benefit, either during his
         employment or thereafter. Executive agrees that he will deliver the
         original and all copies of all of the aforementioned that may be in his
         possession to the Company on termination of his employment, or at any
         other time on the request of the Board of Directors.

                  (c) If Executive is requested or becomes legally required or
         compelled (by oral questions, interrogatories, requests for information
         or documents, subpoena, civil or criminal investigative demand, or
         similar process) or is required by a governmental body to make any
         disclosure that is prohibited or otherwise constrained by this
         Agreement, Executive will provide the Company with prompt notice of
         such request so that it may seek an appropriate protective order or
         other appropriate remedy. Subject to the foregoing, Executive may
         furnish that portion (and only that portion) of the Confidential
         Information that Executive is legally compelled or is otherwise
         required to disclose or else stand liable for contempt or suffer other
         material censure or material penalty.

                  (d) The "Restricted Period" means the two-year period
         immediately following Executive's termination of employment with the
         Company, except in the case of a voluntary termination of employment by
         Executive without Good Reason in which case the Restricted Period is
         the one-year period immediately following Executive's termination of
         employment with the Company.

         10. Nonsolicitation. In consideration for the Company entering into
this Agreement, during the Employment Term and during the Restricted Period:

                  (a) Executive will not, directly or indirectly, contact any
         supplier of the Company with whom Executive has had contact on behalf
         of the Company during the two-year period preceding the date of such
         termination so as to cause or attempt to cause such supplier of the
         Company not to do business or to reduce or limit such supplier's
         business with the Company or divert any business from the Company; and

                  (b) Executive will not, directly or indirectly, induce,
         solicit, entice or encourage any person who is a management employee of
         the Company to terminate his or her employment with the Company so as
         to accept employment with any person, company, business entity, or
         other organization whatsoever. General solicitation by advertisement,
         recruiter, or similar means not specifically targeted at a particular
         employee of the Company shall not be a violation of this Section 10(b).

                  11. Noncompetition.

                  (a) Restrictions. Executive agrees that he shall not at any
         time while Executive is employed by the Company compete with it. In
         addition, for the Restricted Period, Executive

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<PAGE>

         shall not, without the Company's prior written consent, directly or
         indirectly, accept employment with, consult for or otherwise render
         advice or assistance to, any Competitor in any capacity which involves
         the performance or fulfillment of any duty, responsibility or service
         substantially similar to any of the duties, responsibilities or
         services performed or fulfilled by Executive at the time of the
         termination of his employment with the Company or during the one-year
         period preceding such termination. The Executive acknowledges that the
         scope of this limitation is reasonable in that, among other things,
         providing any such services or assistance during the Restricted Period
         would permit the Executive to use unfairly his close identification
         with the Company and the supplier contacts the Executive developed
         while employed by the Company and would involve the use or disclosure
         of Confidential Information pertaining to the Company.

                  (b) Definition of Competitor. For purposes of this Agreement,
         the term "Competitor" shall mean any business, incorporated or
         otherwise, which is engaged, as its primary business, in the retail
         sale of a diversified offering of discount household goods (including,
         without limitation, K-Mart Corporation, Wal-Mart Stores, Inc. or Target
         Corporation), or the retail sale of health, hygiene or prescriptive
         products, and which engages in such business within, or is located
         within, any state in which the Company's business generated more than
         $30 million in revenues in the fiscal year preceding the termination of
         Executive's employment with the Company.

                  (c) Executive, except as may be required by legal process,
         will refrain from making any written or oral statement, publicly or
         privately, which disparages the Company or its current or former
         directors or employees.

         12. Enforcement of Covenants. Executive recognizes that irreparable and
incalculable injury will result to the Company, its businesses or properties in
the event of his breach of any of the restrictions imposed by Sections 9, 10 and
11, above. Executive therefore agrees that, in the event of any such actual,
impending or threatened breach, the Company will be entitled, in addition to any
other remedies and damages, to temporary and permanent injunctive relief
(without the necessity of posting a bond or other security) restraining the
violation, or further violation, of such restrictions by Executive and by any
other person or entity for whom Executive may be acting or who is acting for
Executive or in concert with Executive. As used in Sections 9, 10 and 11, above,
the term "Company" shall include any direct or indirect subsidiaries, sister
corporations or other corporations or business entities which the Company
controls or which are controlled by or under common control with the Company. As
used herein the term "Control" means the power, through the ownership of voting
stock or otherwise, to elect a majority of the Board of Directors of a
corporation or other business entity or to otherwise manage or control the
business of such entity.

         13. Exclusive Remedy. The payments, severance benefits and severance
protections provided to Executive pursuant to this Agreement are to be paid and
provided in lieu of any severance payments, severance benefits and severance
protections provided in any other plan or policy of the Company.

         14. Successors.

                  (a) This Agreement is personal to Executive and without the
         prior written consent of the Company shall not be assignable by
         Executive otherwise than by will or the laws of descent and
         distribution. This Agreement shall inure to the benefit of and be
         enforceable by Executive's legal representatives.

                  (b) This Agreement shall inure to the benefit of and be
         binding upon the Company and its successors.


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<PAGE>

         15.      Miscellaneous.

                  (a) This Agreement shall be governed by and construed in
         accordance with the laws of the State of Wisconsin, without reference
         to principles of conflict of laws. The captions of this Agreement are
         not part of the provisions hereof and shall have no force or effect.
         This Agreement may not be amended or modified otherwise than by a
         written agreement executed by the Company and Executive or their
         respective successors and legal representatives.

                  (b) All notices and other communications hereunder shall be in
         writing and shall be given by hand delivery to the other party,
         delivered by overnight courier, or by certified mail, return receipt
         requested, postage prepaid, addressed as follows:

                  If to Executive:                   c/o ShopKo Stores, Inc.
                                                     700 Pilgrim Way
                                                     Green Bay, WI 54307-9070

                  If to the Company:                 ShopKo Stores, Inc.
                                                     700 Pilgrim Way
                                                     P.O. Box 19070
                                                     Green Bay, WI 54307-9070
                                                     Attention: Secretary

         or to such other address as either party shall have furnished to the
         other in writing in accordance herewith. Notice and communications
         shall be effective when actually received by the addressee.

                  (c) The provisions of this agreement are severable and the
         invalidity or unenforceability of any provision of this Agreement shall
         not affect the validity or enforceability of any other provision of
         this Agreement.

                  (d) Executive's or Company's failure to insist upon strict
         compliance with any provision hereof shall not be deemed to be a waiver
         of such provision or any other provision thereof.

                  (e) This Agreement contains the entire understanding of the
         Company and Executive with respect to the subject matter hereof. It is
         expressly agreed that this Agreement supersedes and replaces any other
         agreements, if any, understandings and arrangements, oral or written,
         between the parties hereto regarding the subject matter of this
         Agreement other than (i) the Indemnification Agreement between the
         Company and Executive, (ii) the terms of all qualified, welfare benefit
         and compensation plans and awards in which Executive participates, and
         (iii) the Change of Control Severance Agreement which will be entered
         into between the Company and Executive of even date herewith (the
         "Change of Control Agreement"). In all events, and notwithstanding
         anything herein contained to the contrary, if a Change of Control, as
         defined in the Change of Control Agreement, occurs, this Agreement
         shall be of no further force and effect and the Change of Control
         Agreement shall govern the terms of Executive's employment and any
         payments he is to receive upon the termination of his employment with
         the Company. In no event will Executive be entitled to payments upon
         termination of his employment under this Agreement if he is entitled to
         payments upon termination of his employment under the Change of Control
         Agreement.

                  (f) All compensation amounts in this Agreement which are
         subject to income and employment tax withholding are stated prior to
         any such deductions.

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         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.

                                       SHOPKO STORES, INC.


                                 By:_ /s/ Jack W. Eugster
                                      ------------------------------------------
                                          Jack W. Eugster, Chairman of the Board


                                       EXECUTIVE

                                      /s/ Jeffrey C. Girard
                                      ------------------------------------------
                                      Jeffrey C. Girard

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