AMENDMENT NO. 5 TO LOAN AND SECURITY AGREEMENT

                                  PAMIDA, INC.
                                  8800 F Street
                              Omaha, Nebraska 68127

                            SEAWAY IMPORTING COMPANY
                                  8800 F Street
                              Omaha, Nebraska 68127

                                 March 17, 1997

Congress Financial Corporation (Southwest)
1201 Main Street
Dallas, Texas  75250

BankAmerica Business Credit, Inc.
40 East 52nd Street
New York, New York  10017

Gentlemen:

     Congress  Financial  Corporation  (Southwest),  a Texas  corporation in its
individual capacity  ("Congress"),  BankAmerica  Business Credit, Inc., formerly
known as BA Business Credit Inc., a Delaware  corporation ("BABC," together with
Congress each  individually  a "Lender" and  collectively,  "Lenders"),  Pamida,
Inc., a Delaware  corporation  ("Pamida"),  Seaway Importing Company, a Nebraska
corporation  ("Seaway,"  together with Pamida,  collectively,  "Borrowers")  and
Congress Financial Corporation  (Southwest),  a Texas corporation,  as Agent for
Lenders  (in  such  capacity,  "Agent")  have  entered  into  certain  financing
arrangements pursuant to the Loan and Security Agreement,  dated March 30, 1993,
by and among Agent, Lenders and Borrowers (as amended by Amendment No. 1 to Loan
and Security Agreement dated as of January 23, 1995, Amendment No. 2 to Loan and
Security  Agreement  dated as of January 28, 1996,  Amendment  No. 3 to Loan and
Security  Agreement  dated as of September  16, 1996 and Amendment No. 4 to Loan
and Security  Agreement dated as of January 31, 1997 and as amended hereby,  the
"Loan Agreement", and together with all agreements, documents and instruments at
any time executed and/or  delivered in connection  therewith or related thereto,
as the same now  exist or may  hereafter  be  amended,  modified,  supplemented,
extended,   renewed,   restated  or  replaced,   collectively,   the  "Financing
Agreements").

     Borrowers  have  requested  that the "Maximum  Credit"  provided for in the
Financing  Agreements  be  increased,  that the term of the  Loan  Agreement  be
extended  and that certain  other  provisions  of the  Financing  Agreements  be
amended,  and Agent and  Lenders are  willing to  increase  the Maximum  Credit,
extend the Loan Agreement term and amend such other  provisions of the Financing
Agreements,  subject  to the  terms and  conditions  contained  herein.  By this
Amendment,  Agent,  Lenders and  Borrowers  desire and intend to  evidence  such
amendments.

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     In  consideration  of  the  foregoing  and  the  agreements  and  covenants
contained herein, the parties hereto agree as follows:

     1.     Amendments to Definitions.

(a)  All  references  to the  term  "Maximum  Credit"  in  any of the  Financing
     Agreements shall be deemed,  and each such reference is hereby amended,  to
     mean $95,000,000.

(b)  All  references  to the  term  "Renewal  Date"  in  any  of  the  Financing
     Agreements shall be deemed,  and each such reference is hereby amended,  to
     mean March 31, 2000.

(c)  All  references  to the  term  "Interest  Rate"  in  any  of the  Financing
     Agreements shall be deemed,  and each such reference is hereby amended,  to
     mean, as to Prime Rate Loans,  a rate of one half of one (1/2%) percent per
     annum in excess of the Prime Rate and, as to Eurodollar  Rate Loans, a rate
     of three  and  one-quarter  (3 1/4%)  percent  per  annum in  excess of the
     Adjusted  Eurodollar  Rate (based on the Eurodollar Rate applicable for the
     Interest  Period selected by Borrowers as in effect three (3) Business Days
     after the date of receipt by Agent of the  request  of  Borrowers  for such
     Eurodollar  Rate Loans in accordance  with the terms  hereof,  whether such
     rate is  higher or lower  than any rate  previously  quoted to  Borrowers),
     provided, that:

     (i)  as to  Eurodollar  Rate  Loans,  the rate  shall be  reduced to or, if
          previously  reduced,  continued  at three  (3%)  percent  per annum in
          excess of the  Adjusted  Eurodollar  Rate  during any Rate  Adjustment
          Period,  effective as of the first day of such Rate Adjustment Period,
          if the average of the Excess  Availability as of the close of business
          on each of the Fridays in the  immediately  preceding Rate  Adjustment
          Period or, in the case of the initial Rate Adjustment  Period,  in the
          immediately  preceding  period from the date hereof  through April 30,
          1997 shall have been greater than  $10,000,000,  provided,  that,  the
          rate shall  increase to or continue at three and  one-quarter (3 1/4%)
          percent per annum in excess of the Adjusted Eurodollar Rate during any
          subsequent  Rate Adjustment  Period,  effective as of the first day of
          such Rate Adjustment Period, if the average of the Excess Availability
          as of the close of business on each of the Fridays in the  immediately
          preceding Rate  Adjustment  Period or, in the case of the initial Rate
          Adjustment  Period, in the immediately  preceding period from the date
          hereof  through  April  30,  1997  shall not have  been  greater  than
          $10,000,000; and

     (ii) notwithstanding  anything to the  contrary  contained  in this Section
          1(c) or otherwise,  at Agent's option,  without notice, the rate shall
          be, as to Prime  Rate  Loans,  two and one half (2 1/2%)  percent  per
          annum in excess of the Prime Rate and,  as to  Eurodollar  Rate Loans,
          five and  one-quarter  (5 1/4%)  percent  per  annum in  excess of the
          Adjusted Eurodollar Rate, (A) for the period on and after (1) the date
          of  termination  or  non-renewal  hereof  and  until  such time as all
          obligations are indefeasibly paid in full  (nothwithstanding  entry of
          any judgment  against  Borrowers) or (2) the date of the occurrence of
          any  Event of  Default  and for so long as such  Event of  Default  is
          continuing

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          as  determined  by Agent  and (B) on the  Revolving  Loans at any time
          outstanding  in excess of the amounts  available  to  Borrowers  under
          Section 2 of the Loan Agreement  (whether or not such excess(es) arise
          or are made with or without  Agent's  knowledge or consent and whether
          made before or after an Event of Default).

     2. Additional Definitions.  As used herein and in the Financing Agreements,
the following terms shall have the following definitions, and the Loan Agreement
is hereby amended to include these defined terms and definitions:

               "Adjusted  Eurodollar  Rate"  shall  mean,  with  respect to each
          Interest   Period  for  any   Eurodollar   Rate  Loan,  the  rate  per
          annum(rounded upwards, if necessary,  to the next one-sixteenth (1/16)
          of one (1%) percent)  determined by dividing (A) the  Eurodollar  Rate
          for such  Interest  Period by (B) a  percentage  equal to: (i) one (1)
          minus (ii) the  Reserve  Percentage.  For  purposes  hereof,  "Reserve
          Percentage" shall mean the maximum reserve percentage,  expressed as a
          decimal  (rounded  upwards,  if necessary,  to the next  one-sixteenth
          (1/16)  of one (1%)  percent),  prescribed  by any  United  States  or
          foreign  banking  authority for  determining  the reserve  requirement
          which is or would be applicable  to deposits of United States  dollars
          in a non-United States or an international banking office of Reference
          Bank (or,  if  greater,  in a  non-United  States or an  international
          banking office of any Lender, provided, that Agent shall have received
          from  such  Lender  prior  written  notice  of  such  greater  reserve
          percentage) used to fund a Eurodollar Rate Loan or any Eurodollar Rate
          Loan  made  with the  proceeds  of such  deposit,  whether  or not the
          Reference  Bank (or such other Lender)  actually holds or has made any
          such deposits or loans. The Adjusted Eurodollar Rate shall be adjusted
          on and as of the effective day of any change in the Reserve Percentage
          (or, if later,  upon the  receipt by Agent of written  notice from any
          Lender of such greater reserve percentage).

               "Business Day" shall mean any day other than a Saturday,  Sunday,
          or other day on which  commercial  banks are authorized or required to
          close under the laws of the State of New York or the  Commonwealth  of
          Pennsylvania, and a day on which the Reference Bank, Agent and Lenders
          are  open  for  the   transaction  of  business,   except  that  if  a
          determination  of a Business Day shall relate to any  Eurodollar  Rate
          Loans, the term Business Day shall also exclude any day on which banks
          are closed for  dealings in dollar  deposits  in the London  interbank
          market or other applicable Eurodollar Rate market.

               "Eurodollar Rate" shall mean, with respect to the Interest Period
          for a Eurodollar  Rate Loan,  the interest rate per annum equal to the
          arithmetic  average  of the  rates  of  interest  per  annum  (rounded
          upwards,  if necessary,  to the next one-sixteenth  (1/16) of one (1%)
          percent) at which Reference Bank is offered  deposits of United States
          dollars in the London interbank market on or about 9:00 a.m. (New York
          time) two (2) Business Days prior to the commencement of such Interest
          Period in amounts substantially

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<PAGE>

               equal  to the  principal  amount  of the  Eurodollar  Rate  Loans
               requested by and available to Borrowers in  accordance  with this
               Agreement, with a maturity of comparable duration to the Interest
               Period selected by Borrowers.

                    "Eurodollar  Rate  Loans"  shall  mean any Loans or  portion
               thereof  on which  interest  is  payable  based  on the  Adjusted
               Eurodollar Rate in accordance with the terms hereof.

                    "Interest Period" shall mean for any Eurodollar Rate Loan, a
               period of  approximately  one (1) or two (2) months  duration  as
               Borrowers  may elect,  the exact  duration  to be  determined  in
               accordance   with  the  customary   practice  in  the  applicable
               Eurodollar Rate market;  provided,  that, Borrowers may not elect
               an  Interest  Period  which  will end  after  the last day of the
               then-current term of this Agreement.

                    "Loans"  shall mean any Revolving  Loans and shall,  without
               limitation,  include  any  Revolving  Loans that may from time to
               time have been made as or  converted  to  Eurodollar  Rate  Loans
               pursuant to the terms of this Agreement.

                    "Prime Rate Loans"  shall mean any Loans or portion  thereof
               on  which  interest  is  payable  based  on  the  Prime  Rate  in
               accordance with the terms thereof.

                    "Rate  Adjustment  Period" shall mean any consecutive  three
               (3) calendar month period ending on April 30, July 31, October 31
               or January 31 of any calendar year,  commencing  with such period
               commencing on May 1, 1997 and ending on July 31, 1997.

                    "Reference  Bank" Shall mean CoreStates  Bank, N.A., or such
               other bank as Agent may from time to time designate.

     3. Other Defined Terms. All other  capitalized terms used herein shall have
the  meanings  assigned  thereto  in  the  other  Financing  Agreements,  unless
otherwise defined herein.

     4. Loans.  Section  2.1(a) of the Loan  Agreement is hereby  deleted in its
entirety and the following substituted therefor:

(a)  Subject to, and upon the terms and conditions  contained  herein and in the
     other Financing  Agreements,  at the request of Borrowers,  each of Lenders
     severally,  but not jointly, agrees to lend to Borrowers and authorizes and
     appoints Agent to make Revolving Loans to Borrowers, for the account of and
     as Agent for  Lenders,  in such  amounts  from time to time as Agent  shall
     determine, in its discretion,  at Borrowers' request up to fifty-five (55%)
     percent  of the Value of  Eligible  Inventory  (or such  greater  or lesser
     percentage thereof as Agent may determine from time to time)."

     5.  Facility  Fee. In addition to any other fees  provided  for herein,  in
Section 2.5 of the Loan Agreement or otherwise in the

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<PAGE>

Financing Agreements, while the Loan Agreement is in effect, Borrowers shall pay
to Agent for the  account  of Lenders  an annual  facility  fee in the amount of
$50,000,  which  amount  shall be fully  earned and  payable on March 31 of each
calendar year, commencing with March 31, 1998.

     6.  Interest.  Section 2.6 of the Loan  Agreement is hereby  deleted in its
entirety and the following substituted therefor:

          2.6 Interest.

(a)  Borrowers  shall pay to Agent for the  account of Lenders  interest  on the
     outstanding   principal   amount   of   Revolving   Loans   and  other  the
     non-contingent  Obligations  at the Interest  Rate.  All interest  accruing
     hereunder on and after the date of any Event of Default or  termination  or
     non-renewal hereof shall be payable on demand.

(b)  Borrowers  may from time to time request that Prime Rate Loans be converted
     to  Eurodollar  Rate  Loans  or that any  existing  Eurodollar  Rate  Loans
     continue for an additional  Interest  Period.  Such request from  Borrowers
     shall  specify  the  amount  of the Prime  Rate  Loans to be  converted  to
     Eurodollar  Rate Loans  (subject  to the  limits  set forth  below) and the
     Interest Period to be applicable to such Eurodollar Rate Loans.  Subject to
     the terms and conditions  contained  herein,  three (3) Business Days after
     receipt by Agent of such a request  from  Borrowers,  such Prime Rate Loans
     shall be converted to Eurodollar  Rate Loans or such  Eurodollar Rate Loans
     shall  continue,  as the  case  may be,  provided,  that,  (i) no  Event of
     Default,  or event  which  with  notice or  passage  of time or both  would
     constitute  an Event of Default  exists or has occurred and is  continuing,
     (ii) no  party  hereto  shall  have  sent  any  notice  of  termination  or
     non-renewal of this  Agreement,  (iii)  Borrowers  shall have complied with
     such  customary  procedures  as are  established  by Agent and specified by
     Agent  to  Borrowers  from  time to time  for  requests  by  Borrowers  for
     Eurodollar  Rate  Loans  (that  are not  inconsistent  with the  procedures
     otherwise set forth herein for such  requests),  (iv) no more than four (4)
     Interest Periods may be in effect at any one time, (v) the aggregate amount
     of the Eurodollar  Rate Loans must be in an amount not less than $5,000,000
     or an integral multiple of $1,000,000 in excess thereof,  (vi) after giving
     effect to the requested  conversion(s) and/or  continuance(s),  the maximum
     principal  amount  of the  Eurodollar  Rate  Loans at any time  outstanding
     during the applicable  Interest Period shall not exceed the amount equal to
     the lesser of (A) the principal  amount of $35,000,000  and (B) fifty (50%)
     percent of the daily average of the principal  amount of all Loans which it
     is  anticipated  will be  outstanding  at any time  during  the  applicable
     Interest  Period,  in  each  case  as  determined  by  Agent  (but  with no
     obligation  of Agent or  Lenders  to make any such  Loans)  and  (vii)  the
     Interest  Period and Adjusted  Eurodollar  Rate are  available to Agent and
     Lenders and can be readily determined as of the Business Date immediately

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     following  the  date  of the  request  for  such  Eurodollar  Rate  Loan by
     Borrowers,  provided,  that, in the event such Interest Period and Adjusted
     Eurodollar  Rate are not  available  to any Lender,  such Lender shall give
     Agent two (2) Business Days prior written notice, and Agent shall so notify
     Borrowers,  and Agent and Lenders  shall not be  required  to provide  such
     requested  Eurodollar  Rate Loan. Any request by Borrowers to convert Prime
     Rate Loans to Eurodollar Rate Loans or to continue any existing  Eurodollar
     Rate Loans shall be irrevocable.  Notwithstanding  anything to the contrary
     contained herein Agent, Lenders and Reference Bank shall not be required to
     purchase  United States Dollar deposits in the London  interbank  market or
     other applicable  Eurodollar rate market to fund any Eurodollar Rate Loans,
     but the provisions hereof shall be deemed to apply as if Agent, Lenders and
     Reference  Bank had  purchased  such deposits to fund the  Eurodollar  Rate
     Loans.

(c)  Any Eurodollar Rate Loans shall  automatically  convert to Prime Rate Loans
     upon the last day of the  applicable  Interest  Period,  unless Agent shall
     have received and approved a request to continue such  Eurodollar Rate Loan
     at least three (3) Business Days prior to such last day in accordance  with
     the terms hereof. Any Eurodollar Rate Loans shall, at Agent's option,  upon
     notice by Agent to Borrowers, convert to Prime Rate Loans in the event that
     (i) an Event of Default  or event  which with the notice or passage of time
     or both  would  constitute  an Event of  Default,  shall  exist,  (ii) this
     Agreement  shall  terminate  or not be  renewed,  or  (iii)  the  aggregate
     principal  amount  of the Prime  Rate  Loans  which  have  previously  been
     converted  to  Eurodollar  Rate  Loans or  existing  Eurodollar  Rate Loans
     continued, as the case may be, at the beginning of an Interest Period shall
     at any time  during  such  Interest  Period  exceed  either (A) fifty (50%)
     percent of the aggregate principal amount of the Loans then outstanding, or
     (B) the  principal  amount of the Loans then  available to Borrowers  under
     Section 2 hereof. Borrowers shall pay to Agent for the accounts of Lenders,
     upon demand by Agent (or Agent may, at its option,  charge any loan account
     of  Borrowers)  any amounts  required to  compensate  Agent,  Lenders,  the
     Reference Bank or any participant  with any Lenders for any loss (including
     loss of anticipated profits), cost or expense incurred by such person, as a
     result of the  conversion  of  Eurodollar  Rate  Loans to Prime  Rate Loans
     pursuant to any of the foregoing.

(d)  Interest shall be payable by Borrowers to Agent for the accounts of Lenders
     monthly in arrears not later than the first day of each calendar  month and
     shall be  calculated  on the basis of a three  hundred sixty (360) day year
     and actual days  elapsed.  The interest rate on  noncontingent  Obligations
     (other than  Eurodollar Rate Loans) shall increase or decrease by an amount
     equal to each increase or decrease in the Prime Rate effective on the first
     day of the month after any change in such Prime Rate is announced  based on
     the  Prime  Rate in  effect  on the last day of the month in which any such
     change occurs. In no

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<PAGE>

     event shall  charges  constituting  interest  payable by Borrowers to Agent
     exceed the maximum amount or the rate permitted under any applicable law or
     regulation,  and if any such  part or  provision  of this  Agreement  is in
     contravention  of any such law or regulation,  such part or provision shall
     be deemed amended to conform thereto.

     7. Changes in Laws and Increased  Costs of Loans. A new Section 2.10 to the
Loan Agreement is hereby added, as follows:


          2.10  Changes in Laws and Increased Costs of Loans.

(a)  Notwithstanding  anything to the contrary  contained herein, all Eurodollar
     Rate Loans shall, upon notice by Agent to Borrowers,  convert to Prime Rate
     Loans in the event that (i) any change in applicable  law or regulation (or
     the  interpretation or  administration  thereof) (A) shall make it unlawful
     for Agent,  any of Lenders,  Reference  Bank or any  participant to make or
     maintain  Eurodollar  Rate  Loans or to  comply  with the  terms  hereof in
     connection  with the  Eurodollar  Rate  Loans or (B)  shall  result  in the
     increase  in the  costs to Agent,  any of  Lenders,  Reference  Bank or any
     participant of making or maintaining any Eurodollar Rate Loans or (C) shall
     reduce  the  amounts  received  or  receivable  by Agent,  any of  Lenders,
     Reference Bank or any participants in respect thereof,  by an amount deemed
     by Agent or such Lender to be material, provided, that, in the event of any
     such change of law, regulation, interpretation or administration applicable
     to any Lender, such Lender shall have notified Agent and Borrowers, or (ii)
     the cost to Agent,  any of Lenders,  Reference  Bank or any  participant of
     making or maintaining any Eurodollar Rate Loans shall otherwise increase by
     an amount  deemed by Agent or any Lender to be material to it,  other than,
     with  respect to any  Eurodollar  Rate Loan,  an increase  of cost  arising
     solely as the result of an increase in the rate at which Reference Bank (or
     any other bank used by any  Lender) is offered  deposits  of United  States
     dollars  in the  London  interbank  market  after  the date that is two (2)
     Business Days prior to the  commencement of the Interest Period  applicable
     to such  Eurodollar  Rate Loan,  provided,  that,  in the event of any such
     increase in cost applicable to any Lender,  such Lender shall have notified
     Agent and Borrower.  Borrowers shall pay to Agent, upon demand by Agent (or
     Agent may, at its option, charge any loan account of Borrowers) any amounts
     required to compensate  Agent,  any of Lenders,  the Reference  Bank or any
     participant  with  Lenders  for any  loss  (including  loss of  anticipated
     profits),  cost or  expense  incurred  by such  person  as a result  of the
     foregoing,  including,  without limitation,  any such loss, cost or expense
     incurred by reason of the  liquidation or reemployment of deposits or other
     funds acquired by such person to make or maintain the Eurodollar Rate Loans
     or any portion thereof.  A certificate of Agent setting forth the basis for
     the  determination  of such amount  necessary to compensate  Agent,  any of
     Lenders,  Reference Bank of any participant with Lenders as aforesaid shall
     be delivered to Borrowers and shall be conclusive, absent manifest error.

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(b)  If any payments or prepayments in respect of the Eurodollar  Rate Loans are
     received  by Agent  other than on the last day of the  applicable  Interest
     Period  (whether  pursuant to  acceleration,  upon maturity or  otherwise),
     including any payments  pursuant to the  application of  collections  under
     Section  8 or any other  payments  made with the  proceeds  of  Collateral,
     Borrowers  shall pay to Agent upon  demand by Agent (or Agent  may,  at its
     option,  charge any loan  account of  Borrowers)  any  amounts  required to
     compensate  Agent,  and of Lenders,  the Reference Bank or any  participant
     with any of Lenders for any additional  loss (including loss of anticipated
     profits),  cost or  expense  incurred  by such  person  as a result of such
     prepayment or payment,  including,  without  limitation,  any loss, cost or
     expense  incurred by reason of the  liquidation or reemployment of deposits
     or other funds acquired by such person to make or maintain such  Eurodollar
     Rate Loans or any portion thereof."

     8.  Consolidated  Working  Capital.  Section 6.18 of the Loan  Agreement is
hereby deleted in its entirety and the following substituted therefor:

          6.18 Consolidated  Working Capital.  Pamida and its Subsidiaries shall
have Consolidated  Working Capital of not less than the following amounts at the
end of each fiscal quarter during the period indicated below:

                 Period                               Amount
     -------------------------------                -----------
     (a)  From the date of Amendment
            No. 5 to this Agreement
            through May 3, 1998                     $22,500,000

     (b)  From May 4, 1998 through
            May 2, 1999                             $27,500,000

     (c)  From May 3, 1999 and at
            all times thereafter                    $32,500,000

     9. Consolidated  Tangible Net Worth.  Section 6.19 of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:

          "6.19  Consolidated  Tangible Net Worth.  Pamida and its  Subsidiaries
     shall have  Consolidated  Tangible Net Worth of not less than the following
     amounts at the end of each  fiscal  quarter  during  the  period  indicated
     below:

                Period                                Amount
     -------------------------------                -----------
     (a)  From the date of Amendment
            No. 5 to this Agreement
            through May 3, 1998                     $70,000,000

     (b)  From May 4, 1998 through
            May 2, 1999                             $75,000,000

     (c)  From May 3, 1999 and at
            all times thereafter                    $80,000,000

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     10. Consolidated  Adjusted Cash Flow. Section 6.21 of the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:

          "6.21  Consolidated  Adjusted Cash Flow.  Pamida and its  Subsidiaries
     shall not permit Consolidated Adjusted Cash Flow to be less than the amount
     indicated for the following periods of any fiscal year ending on the Sunday
     nearest January 31 of each calendar year:



                    Date                             Amount
     -------------------------------------        -------------
     (i)  The fiscal quarter ending
            on or about April 30                  ($10,000,000)

     (ii) The two (2) fiscal quarters,
            cumulatively, ending on or
            about July 31                         ($ 8,500,000)

     (iii)The three (3) fiscal quarters,
            cumulatively, ending on or
            about October 31                      ($ 5,000,000)

     (iv) The four (4) fiscal quarters,
            cumulatively, ending on or
            about January 31                       $ 5,000,000

     11.   Calculation of Financial Covenants.

(a)  Section 2 of Amendment  No. 2 to Loan  Agreement  is hereby  deleted in its
     entirety  and the  effects of the  one-time  special  charges  referred  to
     therein  shall not be excluded from any  calculations  required by Sections
     6.18, 6.19, 6.20 or 6.21 of the Loan Agreement.

(b)  Notwithstanding  anything to the contrary  contained in Section 1.28 of the
     Loan Agreement, for purposes of any calculations required by Sections 6.18,
     6.19, 6.20 or 6.21 of the Loan Agreement, GAAP shall be determined, in each
     case,  on the basis of  generally  accepted  accounting  principles  in the
     United States of America as in effect on the date of this Amendment, as set
     forth in the  applicable  opinions  and  pronouncements  of the  Accounting
     Principles Board and the American Institute of Certified Public Accountants
     and statements and  pronouncements  of the Financial  Accounting  Standards
     Board issued on or prior to the date of this Amendment, and consistent with
     those  used  in  the  preparation  of the  most  recent  audited  financial
     statements  delivered  to  Agent  and  Lenders  prior  to the  date of this
     Amendment and the debt  compliance  calculation  sheet  attached  hereto as
     Exhibit A, and Section 1.28 of the Loan Agreement  shall be deemed,  and is
     hereby so amended.

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<PAGE>

(c)  For purposes of calculating  Consolidated  Working Capital, as provided for
     in Section 1.19 of the Loan Agreement,  and notwithstanding anything to the
     contrary stated therein,  all Indebtedness of Borrowers under the Financing
     Agreements  shall at all  times be  deemed  to be  classified  as  "current
     liabilities" as that term is used in Section 1.19(b), and shall be included
     as such in such Section 1.19(b) notwithstanding any other classification or
     the  reclassification  of such  Indebtedness  for any  other  purpose,  and
     Section  1.19(b) of the Loan Agreement shall be deemed,  and is hereby,  so
     amended.

     12.  Termination  Fee.  Sections  9.2(e)  (i),  (ii) and  (iii) of the Loan
Agreement are hereby  deleted in their  entirety and the  following  substituted
therefor:

(i)  three (3%) percent of the Maximum  Credit if such  termination is effective
     after the fourth anniversary of this Agreement but on or prior to the fifth
     anniversary of this Agreement; or

(ii) two (2%)  percent of the Maximum  Credit if such  termination  is effective
     after the fifth  anniversary of this Agreement but on or prior to the sixth
     anniversary of this Agreement; or

(iii)one-half  (1/2%)  percent  of the  Maximum  Credit if such  termination  is
     effective  after the sixth  anniversary  of this Agreement but prior to the
     Renewal Date then in effect."

     13.   Representations,   Warranties  and  Covenants.  In  addition  to  the
continuing  representations,  warranties  and covenants  heretofore or hereafter
made by Borrowers  to Agent and Lenders  pursuant to the  Financing  Agreements,
Borrowers hereby  represent,  warrant and covenant with and to Agent and Lenders
as follows  (which  representations,  warranties and covenant are continuing and
shall survive the execution and delivery hereof and shall be  incorporated  into
and made a part of the Financing Agreements):

(a)  No Event of  Default  exists on the date of this  Amendment  (after  giving
     effect  to  the  amendments  to  the  Financing  Agreements  made  by  this
     Amendment).

(b)  This Amendment and the other amendment  agreements  delivered in connection
     herewith,  have been duly  authorized,  executed  and  delivered by each of
     Borrowers  and are in full force and effect as of the date hereof,  and the
     agreements  and  obligations  of each of  Borrowers  contained  herein  and
     therein  constitute  legal,  valid  and  binding  obligations  of  each  of
     Borrowers  enforceable  against each of Borrowers in accordance  with their
     respective terms.

(c)  All required  consents or  approvals of any persons  other than Lenders and
     Agent to the  authorization,  execution and delivery of this  Amendment and
     the other amendment  agreements  delivered in connection herewith have been
     obtained  by each  of  Borrowers  and  Guarantors,  and the  authorization,
     execution  and delivery  hereof does not violate or breach any provision of
     or constitute a default  under any material  indenture,  mortgage,  deed of
     trust,
                                     - 10 -
<PAGE>

     agreement or  instrument  to which any of Borrowers or Guarantors is or may
     be bound, including, without limitation, the Note Indenture.

     14. Conditions  Precedent.  The  effectiveness of the amendments  contained
herein shall be subject to the satisfaction of each of the following  conditions
precedent in a manner satisfactory to Agent on behalf of Lenders:

(a)  Agent shall have received, in form and substance  satisfactory to Agent, an
     executed  original  of  this  Amendment,  duly  authorized,   executed  and
     delivered by each of Borrowers, Guarantors and BABC;

(b)  Agent shall have received, in form and substance  satisfactory to Agent, an
     executed original of Amendment No. 4 to Deed of Trust,  Security  Agreement
     and  Assignment  of Leases  and  Rents by  Pamida in favor of Old  Republic
     National Title Insurance Company, as trustee,  for the benefit of Agent and
     Lenders, duly authorized, executed and delivered by the parties thereto;

(c)  Agent shall have received, in form and substance  satisfactory to Agent, an
     executed  original of Amendment No. 4 to Leasehold Deed of Trust,  Security
     Agreement  and  Assignment  of  Leases  and Rents by Pamida in favor of Old
     Republic National Title Insurance Company,  as trustee,  for the benefit of
     Agent and Lenders,  duly authorized,  executed and delivered by the parties
     thereto;

(d)  Agent shall have received, in form and substance  satisfactory to Agent, an
     executed  original of Amendment No. 4 to Co-Lending  and Agency  Agreement,
     duly authorized, executed and delivered by each of Agent and Lenders;

(e)  Agent shall have received,  in form and substance  satisfactory to Agent, a
     secretary's  certificates for each of Borrowers and Guarantors with respect
     to  directors'  resolutions,  incumbency  and  other  matters  as Agent may
     require; and

(f)  no Event of Default  shall have  occurred  and be  continuing  and no event
     shall have  occurred or condition be existing and  continuing  which,  with
     notice or passage of time or both, would constitute an Event of Default.

     15.  Amendment and Line Increase Fee.  Borrowers shall pay to Agent for the
account of Lenders an amendment  fee in an amount  equal to $200,000,  which fee
shall be fully earned and payable as of the date hereof, shall be in addition to
all other amounts payable under the Financing Agreements,  shall constitute part
of the  Obligations  and may,  at Agent's  option,  be charged  directly  to any
account(s) of Borrowers maintained with Agent or Lenders.

     16. Effect of this Amendment.  Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied and
in all other respects the Financing Agreements are hereby specifically ratified,
restated and confirmed by all parties hereto as of the effective date hereof. To
the extent of any  conflict  between the terms of this  Amendment  and the other
Financing Agreements, the terms of this Amendment shall control.

                                     - 11 -
<PAGE>

     17. Further  Assurances.  The parties hereto shall execute and deliver such
additional  documents  and take such  additional  action as may be  necessary or
desirable to effectuate the provisions and purposes of this Amendment.

     18.  Governing  Law.  The rights and  obligations  hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York.

     19. Binding  Effect.  This Amendment shall be binding upon and inure to the
benefit  of each of the  parties  hereto  and their  respective  successors  and
assigns.

     20.  Counterparts.  This  Amendment  may  be  executed  in  any  number  of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment, it shall not be necessary
to produce or account for more than one  counterpart  thereof  signed by each of
the parties hereto.

                                     - 12 -
<PAGE>

     Please  sign  the  enclosed  counterpart  of this  Amendment  in the  space
provided below,  whereupon this Amendment,  as so accepted by Agent and Lenders,
shall become a binding agreement among Borrowers, Agent and Lenders.

                                        Very truly yours,

                                        PAMIDA, INC.

                                        By:     /s/ George R. Mihalko
                                        Title:      Senior Vice President & CFO


                                        SEAWAY IMPORTING COMPANY

                                        By:     /s/ George R. Mihalko
                                        Title:      Senior Vice President & CFO

AGREED:

CONGRESS FINANCIAL CORPORATION
   (SOUTHWEST), individually and as Agent

By:     /s/ Edward Franco
Title:      Senior Vice President


BANKAMERICA BUSINESS CREDIT, INC., formerly known as BA Business Credit Inc.

By:     /s/ Walter T. Shellman
Title:      Vice President


ACKNOWLEDGED AND AGREED:

PAMIDA HOLDINGS CORPORATION

By:     /s/ George R. Mihalko
Title:      Senior Vice President & CFO


PAMIDA TRANSPORTATION COMPANY

By:     /s/ George R. Mihalko
Title:      Senior Vice President & CFO



                                     - 13 -
<PAGE>

                                  Pamida, Inc.
                                    Exhibit A
                          Debt Compliance Calculations
                                  Per Amendment
                               No. 5 Requirements
                              Fiscal Year End 1997

                                                         -----------
                                                         Preliminary
                                                           FYE 1997
                                                           Actuals
                                                         -----------
Section 6.18    Cash flow requirement

                Net income (loss) after taxes:           $     3,696

                Depr & amort                                  11,319
                Amort of def finance costs                       676
                Provision for LIFO                               874
                Post employment health                          (125)
                Stock incentive benefit                            0
                                                         -----------
                Sub total                                     16,440
                Capital expenditures                          (4,947)
                Principal payments non-revolver debt          (1,334)
                Principal payments captial leases             (2,637)
                                                         -----------
                Adjusted cash flow as defined                  7,522
                Adjusted cumulative cash flow as defined       7,522
                Proposed minimum                               3,500
                                                         -----------
                Excess (deficit)                         $     4,022
                                                         ===========

Section 6.19    Consolidated working capital requirement

                Total current assets                     $   176,139
                LIFO reserve                                   6,574
                                                         -----------
                Current assets as adjusted                   182,713
                Total current liabilities                    148,309
                                                         -----------
                Working capital as defined                    34,404
                Proposed minimum                              22,500
                                                         -----------
                Excess (deficit)                         $    11,904
                                                         ===========


Section 6.21    Consolidated tangible net worth
                requirement

                SH equity                                $   (57,531)
                LIFO reserve                                   6,574
                                                         -----------
                Adjusted shareholders' equity                (50,957)

                Subordinated indebtedness                    140,000
                Deferred finance costs                        (3,124)
                                                         -----------
                                                              85,919
                Minimum required/proposed                     70,000
                                                         -----------
                Excess (deficit)                         $    15,919
                                                         ===========

                                     - 14 -