EMPLOYMENT AGREEMENT

     This  Employment  Agreement  is made and entered  into as of the 6th day of
March,  1997,  among  PAMIDA  HOLDINGS  CORPORATION  ("Holdings"),   a  Delaware
corporation,  PAMIDA, INC.  ("Pamida"),  a Delaware  corporation,  and GEORGE R.
MIHALKO (the "Executive").  Holdings and Pamida  collectively are referred to in
this Employment Agreement as the "Companies".

                                     * * *

     WHEREAS, Pamida is a wholly-owned subsidiary of Holdings; and

     WHEREAS, the Executive currently is employed by Pamida and serves as Senior
Vice President and Chief Financial Officer of both Holdings and Pamida; and

     WHEREAS, the Executive is actively involved in all aspects of the financial
management of the Companies; and

     WHEREAS,  the Companies desire to provide for the continued services of the
Executive; and

     WHEREAS,  the  Companies  desire  concurrently  to retain  and  employ  the
Executive as Senior Vice President and Chief  Financial  Officer for an extended
period of time; and

     WHEREAS,  the  Executive  desires to accept such  concurrent  and  extended
employment;

     NOW,  THEREFORE,  in  consideration  of  the  foregoing  recitals  and  the
respective  covenants and agreements of the parties  contained in this document,
the Companies and the Executive agree as follows:

     1.  EMPLOYMENT  AND  DUTIES.  Each  of the  Companies  hereby  employs  the
Executive as Senior Vice President and Chief  Financial  Officer  throughout the
term of this agreement and agrees to cause the Executive from time to time to be
elected or  appointed  to such  corporate  offices  (or such  other more  senior
corporate  offices as the Boards of Directors of the  Companies  may specify) or
positions.  The duties and  responsibilities  of the Executive shall include the
duties and  responsibilities of the Executive's  corporate offices and positions
referred to above which are set forth in the respective  bylaws of the Companies
from time to time,  responsibility for the financial management of the Companies
(subject to the direction of the Chief Executive Officer of the Companies),  and
such other duties and responsibilities consistent with the Executive's corporate
offices and positions  referred to above and this  agreement  which the Board of
Directors  of  Holdings  (the  "Board")  or the Chief  Executive  Officer of the
Companies  from time to time may assign to the  Executive.  If the  Executive is
elected or  appointed  as a director  of Pamida or  Holdings or as an officer or
director of any of the respective  subsidiaries of the Companies during the term
of this  agreement,  then he also shall serve in such capacity or capacities but
without additional compensation.

     2.  TERM.  The  term of this  agreement  shall  begin  on the  date of this
agreement and shall  continue  thereafter  through March 5, 2000,  unless sooner
terminated in accordance with this agreement.

     3. PLACE OF  EMPLOYMENT.  The executive  offices of the Companies  shall be
located in Omaha, Nebraska, during the term of this agreement, and the Executive
will not be required to relocate or transfer his  principal  residence  from the
immediate vicinity of Omaha, Nebraska.

     4. BASE SALARY.  For all services to be rendered by the Executive  pursuant
to this agreement,  the Companies agree to pay the Executive a base salary at an
annual rate of Two Hundred Ten Thousand Dollars ($210,000.00) during the term of
this  agreement (the "Base  Salary").  The Base Salary shall be paid in periodic
installments in accordance with the Companies'  regular payroll  practices.  The
Board or the Compensation Committee of the Board shall review the Base Salary at
least  annually as of the payroll  payment date  nearest to May 1 (beginning  in
1998);  and the Companies agree to make such increases in the Base Salary as the
Board may approve from time to time.  Once  established at a specific  increased
annual  rate,  the Base Salary  thereafter  may not be reduced by the  Companies
without the Executive's written consent.

     5.  INCENTIVE  BONUS FOR FISCAL 1998. In addition to the  Executive's  Base
Salary and any other  benefits to which the  Executive  is  entitled  under this
agreement but subject to all of the provisions of this paragraph,  the Executive
also shall be entitled to receive an  incentive  bonus (the  "Incentive  Bonus")
from the  Companies  for the fiscal  year of  Holdings  ending  February 1, 1998
("Fiscal 1998"), in accordance with the following provisions of this paragraph:

(a)  If the  consolidated  earnings  of  Holdings  and  its  subsidiaries  (on a
     first-in,  first-out basis with respect to merchandise  inventories) before
     interest,  taxes,  depreciation,  and  amortization  for  Fiscal  1998 (the
     "EBITDA")  are less  than  $42,000,000,  then the  Executive  shall  not be
     entitled to any incentive bonus for Fiscal 1998.

(b)  If the EBITDA equals or exceeds $42,000,000, then the Executive's incentive
     bonus  for  Fiscal  1998  shall  be  determined  as  a  percentage  of  the
     Executive's  base salary from the matrix attached to this agreement  taking
     into  account  (i) the  EBITDA  and (ii)  the  percentage  increase  in the
     comparable  store sales of Pamida for Fiscal 1998  compared with the fiscal
     year ended February 2, 1997.  Comparable store sales  percentage  increases
     shall be determined in accordance with Pamida's historical practices.

(c)  For purposes of such matrix, comparable store sales percentage increases of
     more than 9% shall be treated as  increases  of 9%, and EBITDA of more than
     $52,000,000 shall be treated as EBITDA of $52,000,000.

(d)  For purposes of applying such matrix,  the Executive's base salary shall be
     the Executive's base salary in effect on February 1, 1998.

(e)  The maximum  incentive  bonus that the Executive shall have the opportunity
     to earn for Fiscal 1998 is 57.5% of the Executive's applicable base salary.

(f)  EBITDA amounts between whole millions of dollars and comparable store sales
     percentage  increases  between whole percentages shall be interpolated on a
     straight-line basis for purposes of applying such matrix.

(g)  Solely by way of  illustration  of the  application of such matrix,  if the
     EBITDA is $44,250,000 and the comparable  store sales  percentage  increase
     for Fiscal 1998 is 4.6%,  then the  Executive's  incentive bonus for Fiscal
     1998 would be 19.5% of the Executive's applicable base salary.

The  Executive's  incentive  bonus for Fiscal 1998 (if any) shall be paid to the
Executive  as soon as  practicable  after  Holdings has received the final audit
report with respect to Fiscal 1998 from its independent accountants.

     6. INCENTIVE  BONUS FOR LATER FISCAL YEARS.  In addition to the Executive's
Base Salary and any other benefits to which the Executive is entitled under this
agreement but subject to all of the provisions of this paragraph,  the Executive
also shall be entitled to earn an  incentive  bonus from the  Companies  for the
fiscal years of Holdings  ending in 1999,  2000, and 2001. On or before December
31,  1997,  1998,  and 1999,  the  Executive  and the Board  shall agree upon an
incentive  bonus  program  for the  Executive  for the fiscal  years of Holdings
ending in 1999, 2000, and 2001, respectively.  Each such incentive bonus program
shall be reflected in a written  amendment to this agreement.  The Executive and
the Companies  understand and acknowledge that, among other things,  such annual
incentive  bonus  programs  will  involve the  achievement  by the  Companies of
various financial objectives, which may include but are not limited to sales and
earnings,  and also may  include the  achievement  by the  Companies  of various
non-financial objectives.

     7.  EXPENSES.  During the term of this  agreement,  the Executive  shall be
entitled to prompt reimbursement by the Companies of all reasonable ordinary and
necessary  travel,  entertainment,  and other expenses incurred by the Executive
(in accordance with the policies and procedures established by the Companies for
their respective senior executive officers) in the performance of his duties and
responsibilities  under  this  agreement;  provided,  that the  Executive  shall
properly  account  for  such  expenses  in  accordance  with  the  policies  and
procedures of the Companies.

     8. OTHER BENEFITS.  During the term of this agreement,  the Executive shall
be entitled  to receive  from the  Companies  all of the fringe  benefits  which
Pamida was providing or was obligated to provide to the Executive as of the date
of this agreement,  including but not limited to (i) medical,  hospital, dental,
disability,  and life insurance plans and coverages,  (ii) unreimbursed  medical
expense reimbursement plans (Exec-U-Care),  (iii) a cash automobile allowance up
to the annual amount set forth in Exhibit A to this agreement, (iv) professional
financial,  tax, and estate planning  services up to the annual amount set forth
in Exhibit A to this  agreement,  and (v) such other  fringe  benefits as may be
reflected  in  Exhibit A  attached  to this  agreement.  During the term of this
agreement,  the Executive  also shall be entitled to  participate  in such other
benefit  plans  or  programs  which  the  Companies  from  time to time may make
available  either to their respective  employees  generally or to some or all of
their respective senior executive officers,  such as but not limited to Pamida's
401(k) plan and Pamida's 1995 Deferred Compensation Plan.

     9.  VACATIONS  AND  HOLIDAYS.  The  Executive  shall  be  entitled  to paid
vacations  and  holidays in  accordance  with the  policies of the  Companies in
effect from time to time for their respective senior executive officers, but not
less than four (4) weeks of vacation during each fiscal year.

     10. OTHER ACTIVITIES.  The Executive shall devote  substantially all of his
working time and efforts  during the normal  business  hours of the Companies to
the  business  and affairs of the  Companies  and to the  diligent  and faithful
performance of the duties and responsibilities  assigned to him pursuant to this
agreement, except for vacations, holidays, and sick days. However, the Executive
may devote a reasonable  amount of his time to civic,  community,  or charitable
activities,   to  service  on  the  governing  bodies  or  committees  of  trade
associations of which either or both of the Companies are members, and, with the
prior approval of the Chief Executive Officer of the Companies,  to service as a
director of other  corporations  and to other types of activities  not expressly
mentioned  in this  paragraph,  so long as the  activities  referred  to in this
sentence  do  not  materially  interfere  with  the  proper  performance  of the
Executive's duties and responsibilities under this agreement. The Executive also
shall be free to manage and invest his assets in such manner as will not require
any  substantial  services by the Executive in the conduct of the  businesses or
affairs of the entities or in the  management  of the  properties  in which such
investments  are made, so long as such  activities do not  materially  interfere
with the proper performance of the Executive's duties and responsibilities under
this agreement.

     11. TERMINATION.

     (a)  TERMINATION  BECAUSE  OF  DEATH.  The  Executive's  employment  by the
Companies   under  this  agreement  shall  terminate  upon  his  death.  If  the
Executive's  employment  under this agreement  terminates  because of his death,
then the Executive's  estate or his  beneficiaries (as the case may be) shall be
entitled to receive the following compensation and benefits from the Companies:

          (i)  The Base Salary (as then may be  applicable)  through the date of
               the Executive's death;

          (ii) A pro rata portion of the Executive's  annual incentive bonus for
               the fiscal  year in which his death  occurs  (computed  as if the
               Executive were employed by the Companies  throughout  such fiscal
               year),  based upon the number of days in such fiscal year elapsed
               through the date of the Executive's  death as a proportion of the
               total number of days in such fiscal year,  to be paid at the same
               time  that  such  incentive  bonus  would  have been paid had the
               Executive's death not occurred;

          (iii)Any other amounts earned, accrued, or owed to the Executive under
               this  agreement  but not paid as of the  date of the  Executive's
               death; and

          (iv) Any other  benefits  payable by reason of the  Executive's  death
               under any benefit plans or programs of the Companies in effect on
               the date of the Executive's death.

     (b) TERMINATION  BECAUSE OF DISABILITY.  If the Executive becomes incapable
by reason of  physical  injury,  disease,  or mental  illness  of  substantially
performing his duties and responsibilities under this agreement for a continuous
period of six (6)  months  or more,  then at any time  after the  elapse of such
six-month period and while such disability is continuing  Holdings may terminate
the  Executive's  employment  by the  Companies  under  this  agreement.  If the
Executive's employment under this agreement is terminated by Holdings because of
such  disability  on the  part of the  Executive,  then the  Executive  shall be
entitled to receive the following compensation and benefits from the Companies:

          (i)  The Base Salary (as then may be applicable) through the effective
               date of such termination;

          (ii) A pro rata portion of the Executive's  annual incentive bonus for
               the fiscal year of the Companies in which such termination occurs
               (computed  as if the  Executive  were  employed by the  Companies
               throughout  such fiscal  year),  based upon the number of days in
               such  fiscal year  elapsed  through  the  effective  date of such
               termination  as a proportion  of the total number of days in such
               fiscal  year,  to be paid at the same time  that  such  incentive
               bonus would have been paid if such termination had not occurred;

          (iii)Any other amounts earned, accrued, or owed to the Executive under
               this  agreement  but not  paid as of the  effective  date of such
               termination; and

          (iv) Any  other  benefits   payable  by  reason  of  the   Executive's
               disability  under any benefit  plans or programs of the Companies
               in effect on the effective date of such termination.

     (c)  TERMINATION   FOR  CAUSE.   Holdings  may  terminate  the  Executive's
employment  by the  Companies  under  this  agreement  for cause;  however,  for
purposes  of  this  agreement  "cause"  shall  mean  only  (i)  the  Executive's
confession  or  conviction  of theft,  fraud,  embezzlement,  or any other crime
involving dishonesty with respect to the Companies or any parent, subsidiary, or
affiliate of the Companies,  (ii) the Executive's  excessive  absenteeism (other
than  by  reason  of  physical  injury,  disease,  or  mental  illness)  without
reasonable cause, (iii) material violation by the Executive of the provisions of
Paragraph  13, (iv)  habitual and material  negligence  by the  Executive in the
performance  of his  duties  and  responsibilities  under  or  pursuant  to this
agreement and failure to cure such negligence  within thirty (30) days after his
receipt of a written  notice from the Board setting  forth in reasonable  detail
the particulars of such negligence, (v) material non-compliance by the Executive
with  his   obligations   under   Paragraph  10  and  failure  to  correct  such
non-compliance  within  thirty (30) days after his  receipt of a written  notice
from the Board  setting  forth in  reasonable  detail  the  particulars  of such
non-compliance,  or (vi)  material  failure by the  Executive  to comply  with a
lawful  directive  of the Board and failure to cure such  non-compliance  within
thirty  (30) days after his receipt of a written  notice from the Board  setting
forth in reasonable detail the particulars of such  non-compliance.  In no event
shall the results of the Companies'  operations or any business judgment made in
good faith by the Executive  constitute an independent basis for termination for
cause of the Executive's employment under this agreement. Any termination of the
Executive's  employment  for cause must be  authorized by a majority vote of the
Board taken not later than twelve (12) months after a majority of the members of
the Board (other than the Executive) have actual  knowledge of the occurrence of
the  event or  conduct  constituting  the  cause  for such  termination.  If the
Executive's employment under this agreement is terminated by Holdings for cause,
then the Executive shall be entitled to receive the following  compensation  and
benefits from the Companies:

          (i)  The Base Salary (as then may be applicable) through the effective
               date of such termination;

          (ii) Any other amounts earned, accrued, or owed to the Executive under
               this  agreement  but not  paid as of the  effective  date of such
               termination; and

          (iii)Any other benefits  payable to the Executive upon his termination
               for cause under any benefit plans or programs of the Companies in
               effect on the effective date of such termination.

     (d) TERMINATION  WITHOUT CAUSE PRIOR TO A SIGNIFICANT  CORPORATE Event. If,
prior to the  occurrence of a Significant  Corporate  Event,  Holdings or Pamida
terminates the Executive's  employment under this agreement for any reason other
than cause or the Executive's  death or disability,  then (without  limiting any
other rights or claims which the Executive may have for breach of this agreement
by the  Companies or otherwise)  the Executive  shall be entitled to receive the
following compensation, benefits, and other payments from the Companies:

          (i)  The Base  Salary  (as then may be  applicable)  through  March 5,
               2000,  to be paid at the same times that the Base Salary (as then
               may be applicable)  would have been paid if such  termination had
               not  occurred;   provided,   that  if  the  Executive   commences
               employment with another employer,  whether as an employee or as a
               consultant,  prior  to  March  5,  2000  (for  purposes  of  this
               subparagraph (d), the "Other Employment"),  then such payments of
               the  Base  Salary  shall  be  reduced  from  time  to time by the
               aggregate  amount  of  salary  or  consulting  fees  received  or
               receivable  by  the  Executive  from  the  Other  Employment  for
               services performed by him during the period from the commencement
               of the Other  Employment  through March 5, 2000,  but in no event
               shall the  Executive  be required to repay to the  Companies  any
               portion of any payments  made to the  Executive  pursuant to this
               subparagraph  (i) for any  periods  prior to the  periods  during
               which the Executive  earned such salary or  consulting  fees from
               the Other Employment;

          (ii) A pro rata portion of the Executive's  annual incentive bonus for
               the fiscal year of the Companies in which such termination occurs
               (computed  as if the  Executive  were  employed by the  Companies
               throughout  such fiscal  year),  based upon the number of days in
               such  fiscal year  elapsed  through  the  effective  date of such
               termination  as a proportion  of the total number of days in such
               fiscal  year,  to be paid at the same time  that  such  incentive
               bonus would have been paid if such termination had not occurred;

          (iii)Any other amounts earned, accrued, or owed to the Executive under
               this  agreement  but not  paid as of the  effective  date of such
               termination;

          (iv) Continued   participation  in  the  following  benefit  plans  or
               programs  of the  Companies  which may be in effect  from time to
               time,  to the extent  that such  continued  participation  by the
               Executive is  permitted  under the terms and  conditions  of such
               plans  (unless such  continued  participation  is  restricted  or
               prohibited by applicable governmental  regulations governing such
               plans), until the first to occur of March 5, 2000, or (separately
               with respect to the termination of each benefit) the provision of
               a  substantially  equivalent  benefit to the Executive by another
               employer of the Executive:

               (1) Group medical/hospital insurance, (2) Group dental insurance,
               (3) Group life insurance, (4) Executive life insurance, (5) Group
               long-term disability  insurance,  (6) Exec-U-Care medical expense
               reimbursement  insurance,  (7) Professional  financial,  tax, and
               estate planning services,  (8) Automobile  allowance,  (9) Annual
               physical examination;

               however,  if continued  participation  by the Executive in any of
               the  foregoing  benefit plans or programs of the Companies is not
               permitted  under the terms and conditions of any of such plans or
               programs, then in lieu of continued participation in such plan or
               program  the  Companies  shall  pay to the  Executive  in cash an
               amount equal to the cost that the  Companies  would have incurred
               with respect to the Executive if the Executive  were permitted to
               continue  as a  participant  in such plan or  program  during the
               applicable  period;  and the Companies  agree not to unilaterally
               take any action which would prevent the Executive from continuing
               to  participate  in any of such  plans or  programs  unless  such
               action similarly affects all other  participants in such plans or
               programs; and

          (v)  Any other benefits  payable to the Executive upon his termination
               without  cause  under  any  benefit  plans  or  programs  of  the
               Companies in effect on the  effective  date of such  termination,
               except that the Executive  shall not be entitled to any severance
               pay or severance  benefits unless such  termination  occurs after
               March 5, 1999,  in which  latter case the  effective  date of the
               Executive's  termination  shall be deemed to be the date on which
               he received a Notice pursuant to Paragraph 12, and the provisions
               of Paragraph 12 shall apply.

The  Companies  agree that they will not terminate  the  Executive's  employment
under this  agreement  without  cause  solely for the  purpose of  avoiding  the
obligations  of the Companies to pay or provide any bonus or other  compensation
or benefits to the  Executive  the payment or provision of which is  conditioned
upon the Executive's  continuing in the employ of the Companies for a particular
period of time.  Notwithstanding  the foregoing  provisions of this subparagraph
(d), in the event of the Executive's  death subsequent to the termination of his
employment for a reason other than cause or the Executive's disability and prior
to March 5, 2000,  then (1) the  compensation,  benefits,  and other payments to
which the  Executive is entitled  under this  subparagraph  (d) shall  terminate
(and, when applicable,  be computed) as of the date of the Executive's death and
(2) the  Executive's  estate  or  beneficiaries  (as the case  may be)  shall be
entitled  to receive  any other  benefits  payable by reason of the  Executive's
death under any benefit  plans or  programs  of the  Companies  in effect and in
which the Executive was participating on the date of his death.

     (e)  CONSTRUCTIVE  TERMINATION.  If at any  time  during  the  term of this
agreement the Board  materially  alters the duties and  responsibilities  of the
Executive  provided for in Paragraph 1 without the Executive's  written consent,
then,  at the  election of the  Executive  (such  election to be made by written
notice  from the  Executive  to the  Board),  (i) such action by the Board shall
constitute a  constructive  termination  of the  Executive's  employment  by the
Companies  without  cause,  (ii) the  Executive  may resign from his offices and
positions  with the  Companies and shall not be obligated to perform any further
services of any kind to or for the Companies,  and (iii) the Executive  shall be
entitled to receive from the Companies all of the  compensation,  benefits,  and
other  payments  described in  subparagraph  (d) of this Paragraph 11 (as if the
effective  date of the  Executive's  resignation  were the effective date of his
termination for purposes of determining such compensation,  benefits,  and other
payments),  subject to all of the provisions and conditions of such subparagraph
(d).

     (f)  TERMINATION  WITHOUT CAUSE AFTER A SIGNIFICANT  CORPORATE  EVENT.  If,
after the occurrence of a Significant Corporate Event, Holdings,  Pamida, or any
Permitted   Assignee  of  this  agreement  under  Paragraph  16  terminates  the
Executive's  employment  under this agreement for any reason other than cause or
the  Executive's  death or disability,  then the Executive  shall be entitled to
receive  the  following  compensation,  benefits,  and other  payments  (without
duplication) from the Companies and the Permitted Assignee,  if any (all of whom
shall be jointly and severally liable therefor):

          (i)  All of the  compensation,  benefits,  and other payments from the
               Companies  which  are  described  in  subparagraph  (d)  of  this
               Paragraph 11, subject to the final sentence of such  subparagraph
               (d); and

          (ii) An  annual  incentive  bonus  for each of the two (2)  successive
               twelve-month   periods  following  the  effective  date  of  such
               termination  in an  amount  equal to the  average  amount  of the
               incentive  bonuses  received by the Executive  from the Companies
               for the three fiscal years of the  Companies  ending prior to the
               fiscal  year  in  which  such  termination  occurs,  such  annual
               incentive   bonuses   to  be  paid  on  the  first   and   second
               anniversaries   of  the  effective  date  of  such   termination;
               provided,  that (1) if such  termination  occurs  after  March 5,
               1998,  and before  March 6, 1999,  then the annual  bonus for the
               second of such two  twelve-month  periods shall be prorated based
               upon  the  number  of days  from  the  first  anniversary  of the
               effective  date of such  termination  through March 5, 2000, as a
               proportion of 365, (2) if such termination  occurs after March 5,
               1999,  and before  March 6, 2000,  then the annual  bonus for the
               first of such two  twelve-month  periods shall be prorated  based
               upon  the  number  of days  from  the  first  anniversary  of the
               effective  date of such  termination  through March 6, 2000, as a
               proportion  of 365,  and no annual bonus shall be payable for the
               second of such two  twelve-month  periods,  (3) each such  annual
               bonus shall be reduced by any bonuses  received or  receivable by
               the Executive  from the Other  Employment (if any) referred to in
               subparagraph  (d)(i) of this Paragraph 11 for services  performed
               by  him  during  the  twelve-month  period   corresponding  to  a
               twelve-month  period referred to in this  subparagraph  (ii); and
               (4) in the event of the  Executive's  death during either of such
               two  twelve-month  periods,  any  incentive  bonus to  which  the
               Executive would be entitled for the twelve-month  period in which
               his death occurred shall be prorated and paid to the  Executive's
               estate or  beneficiaries  (as the case may be) in the  manner set
               forth in  subparagraph  (a)(iii)  of this  Paragraph  11,  and no
               incentive bonus shall be payable for the subsequent  twelve-month
               period (if any).

The Executive agrees to accept the  compensation,  benefits,  and other payments
provided for in this  subparagraph (f) as full and complete  liquidated  damages
for  any  breach  of  this  agreement  resulting  from  the  termination  of the
Executive's  employment  under  this  agreement,   after  the  occurrence  of  a
Significant  Corporate  Event,  for a reason other than cause or the Executive's
death or disability; and the Executive shall not have any other rights or claims
in respect of such breach.

     (g) NOTICE OF OTHER  EMPLOYMENT  AND OF BENEFITS.  The  Executive  promptly
shall  notify  the  Companies  in  writing  of (i) his  acceptance  of the Other
Employment  referred  to in  subparagraph  (d) of this  Paragraph  11,  (ii) the
effective  date of such  Other  Employment,  and (iii)  the  amount of salary or
consulting fees and the amount of any bonuses which the Executive receives or is
entitled to receive  from the Other  Employment  for  services  performed by him
during the period from the commencement of the Other Employment through March 5,
2000.  Whenever  relevant for purposes of this  Paragraph 11, the Executive also
promptly shall notify the Companies of his receipt from another  employer of any
benefits of the types referred to in subparagraph  (d)(iv) of this Paragraph 11.
Such information  shall be updated by the Executive  whenever  necessary to keep
the Companies informed on a current basis.

     12. NOTICE OF  NONRENEWAL.  If the Companies  determine not to continue the
employment of the Executive  after the  expiration of the term of this agreement
at a base salary at least equal to the Base Salary  which is in effect as of the
last day of the term of this agreement and with fringe benefits and an incentive
bonus program reasonably comparable to those in effect as of the last day of the
term of this  agreement,  then the  Companies  shall so notify the  Executive in
writing (the "Notice")  promptly after such  determination has been made. If the
Executive  receives  the Notice at a time when there are less than  twelve  (12)
months left in the term of this  agreement and if the Executive  does not remain
in the  employ  of the  Companies  after  the  expiration  of the  term  of this
agreement, then after the expiration of the term of this agreement the Executive
shall be  entitled to receive  the  following  payments  and  benefits  from the
Companies:

(a)  Continued  payment of the  Executive's  Base Salary,  at the annual rate in
     effect on the last day of the term of this agreement,  until that date (the
     "Extended  Payment  Date")  which is twelve (12)  months  after the date on
     which the Executive received the Notice; provided, that such payments shall
     be reduced by the aggregate  amount of salary or consulting  fees which the
     Executive  derives from employment  with another  employer (for purposes of
     this Paragraph 12, the "Other Employment"),  whether as an employee or as a
     consultant,  during the period  from March 6, 2000,  through  the  Extended
     Payment Date (the "Extended Payment Period"). In no event,  however,  shall
     the  Executive  be  required to repay to the  Companies  any portion of any
     payments made to the Executive  pursuant to this subparagraph 12(a) for any
     periods prior to the periods during which the Executive  earned such salary
     or consulting fees from the Other Employment.

(b)  Continued  participation in the following  benefit plans or programs of the
     Companies  which may be in effect  from time to time,  to the  extent  that
     continued  participation  by the Executive is permitted under the terms and
     conditions of such plans or programs  (unless such continued  participation
     is  restricted  or  prohibited  by  applicable   governmental   regulations
     governing  such  plans  or  programs),  until  the  first  to  occur of the
     expiration of the Extended  Payment Period or  (separately  with respect to
     the   termination  of  each  benefit)  the  provision  of  a  substantially
     equivalent benefit to the Executive by another employer of the Executive:

               (1) Group medical/hospital insurance, (2) Group dental insurance,
               (3) Group life insurance, (4) Executive life insurance, (5) Group
               long-term disability  insurance,  (6) Exec-U-Care medical expense
               reimbursement  insurance,  (7) Professional  financial,  tax, and
               estate planning services,  (8) Automobile  allowance,  (9) Annual
               physical examination.

               If  continued  participation  by  the  Executive  in  any  of the
               foregoing  benefit  plans or  programs  of the  Companies  is not
               permitted  under the terms and conditions of any of such plans or
               programs, then in lieu of continued participation in such plan or
               program  the  Companies  shall  pay to the  Executive  in cash an
               amount equal to the cost that the  Companies  would have incurred
               with respect to the Executive if the Executive  were permitted to
               continue  as a  participant  in such plan or  program  during the
               applicable  period.  The Companies agree not to unilaterally take
               any action which would prevent the Executive  from  continuing to
               participate  in any of such plans or programs  unless such action
               similarly  affects  all  other  participants  in  such  plans  or
               programs.

The Executive promptly shall notify the Companies of his acceptance of the Other
Employment  and of the amount of  compensation  and benefits which the Executive
receives or is entitled to receive from the Other Employment during the Extended
Payment Period.  In the event of the  Executive's  death prior to the end of the
Extended  Payment  Period,  the  payments  and  benefits  provided  for in  this
Paragraph 12 shall cease and terminate as of the date of the Executive's  death,
except as otherwise required by applicable law.

     13.  NONDISCLOSURE.  During the term of this agreement and thereafter,  the
Executive shall not,  without the prior written consent of the Board or a person
(other than the  Executive) so authorized by the Board,  disclose or use for any
purpose  (except in the course of his  employment  under this  agreement  and in
furtherance  of the  business  of the  Companies  or  any  of  their  respective
subsidiaries) any confidential  information or proprietary data of the Companies
or any of their respective  subsidiaries;  provided,  however, that confidential
information shall not include any information then known generally to the public
or ascertainable from public or published information (other than as a result of
unauthorized  disclosure  by the  Executive)  or any  information  of a type not
otherwise  considered  confidential by persons engaged in the same business or a
business  similar  to  that  conducted  by the  Companies  or  their  respective
subsidiaries, as the case may be.

     14.  SUCCESSORS  AND  ASSIGNS.  This  agreement  and all rights  under this
agreement shall be binding upon,  inure to the benefit of, and be enforceable by
the  parties  hereto and their  respective  personal  or legal  representatives,
executors, administrators,  heirs, distributees, devisees, legatees, successors,
and assigns.  This  agreement is personal in nature,  and none of the parties to
this  agreement  shall,  without  the written  consent of the others,  assign or
transfer this  agreement or any right or obligation  under this agreement to any
other person or entity, except as permitted by Paragraph 16.

     15.   NOTICES.   For  purposes  of  this   agreement,   notices  and  other
communications  provided  for in this  agreement  shall be deemed to be properly
given if delivered  personally or sent by United States  certified mail,  return
receipt requested, postage prepaid, addressed as follows:

     If to the Executive:               George R. Mihalko
                                        c/o Pamida, Inc.
                                        8800 "F" Street
                                        Omaha, Nebraska  68127

     If to the Companies:               Pamida, Inc. and Pamida
                                        Holdings Corporation
                                        Post Office Box 3856
                                        Omaha, Nebraska  68103
                                        Attn:  Chief Executive Officer

or to such other  address as either party may have  furnished to the other party
in  writing  in  accordance   with  this   paragraph.   Such  notices  or  other
communications shall be effective only upon receipt.

     16. MERGER, CONSOLIDATION,  SALE OF ASSETS. In the event of (a) a merger of
Pamida with  another  corporation  in a  transaction  in which Pamida is not the
surviving  corporation,  (b) the  consolidation of Pamida into a new corporation
resulting from such  consolidation,  (c) the sale or other disposition of all or
substantially  all of the  assets of  Pamida,  the  Companies  may  assign  this
agreement  and all of the rights and  obligations  of the  Companies  under this
agreement  to the  surviving,  resulting,  or  acquiring  entity  (a  "Permitted
Assignee");  provided, that such surviving, resulting, or acquiring entity shall
in writing  assume and agree to perform all of the  obligations of the Companies
under this  agreement;  and provided  further,  that the Companies  shall remain
jointly and severally liable for the performance of their obligations under this
agreement  in the event of a failure of the  Permitted  Assignee  to perform its
obligations under this agreement.

     17.  SIGNIFICANT  CORPORATE  EVENT.  For  purposes  of  this  agreement,  a
"Significant  Corporate Event" shall be deemed to have occurred upon the earlier
of (i) the  happening  of any of the  following  events or (ii) the first public
announcement of the anticipated  happening of any of the following  events:  (a)
Holdings  ceases to own a majority of the  outstanding  Voting  Shares of Pamida
(unless  such event  results  from the merger of Pamida into  Holdings,  with no
change in the ownership of the Voting Shares of Holdings),  (b) Pamida is merged
or consolidated  into a corporation  other than Holdings,  and at any time after
such merger or consolidation  becomes effective Holdings does not own a majority
of the  outstanding  Voting Shares of the surviving or resulting  corporation in
such  merger or  consolidation,  (c)  Holdings  is merged or  consolidated  into
another corporation,  and immediately after such merger or consolidation becomes
effective the holders of a majority of the outstanding Voting Shares of Holdings
immediately  prior to the  effectiveness  of such merger or consolidation do not
own a majority of the  outstanding  Voting  Shares of the surviving or resulting
corporation in such merger,  (d) any person,  entity, or group of persons within
the meaning of Sections  13(d) or 14(d) of the  Securities  Exchange Act of 1934
(the "1934 Act") and the rules  promulgated  thereunder,  other than 399 Venture
Partners, Inc. or any of its affiliates (as defined in Rule 12b-2 under the 1934
Act), becomes the beneficial owner (within the meaning of Rule 13d-3 of the 1934
Act) of  thirty  percent  (30%)  or more of the  outstanding  Voting  Shares  of
Holdings,  or (e) the stockholders of Pamida vote (or act by written consent) to
dissolve Pamida or to sell or otherwise  dispose of all or substantially  all of
the property and assets of Pamida.  For purposes of this  Paragraph 17,  "Voting
Shares" of a corporation  means the outstanding  shares of capital stock of such
corporation  entitled to vote  generally  in the  election of  directors of such
corporation.

     18. MISCELLANEOUS.  No provision of this agreement may be modified, waived,
or  discharged  unless such waiver,  modification,  or discharge is agreed to in
writing and is signed by the  Executive  and an officer of Holdings  (other than
the Executive) so authorized by the Board of Directors of Holdings. No waiver by
any party to this  agreement at any time of any breach by any other party of, or
compliance by any other party with, any condition or provision of this agreement
to be performed by such other party shall be deemed to be a waiver of similar or
dissimilar provisions or conditions at the same or any prior or subsequent time.
No agreements or representations,  oral or otherwise,  express or implied,  with
respect to the subject matter of this agreement have been made by any party that
are not expressly set forth in this agreement.

     19.  REPRESENTATIONS OF COMPANIES.  The Companies  severally  represent and
warrant to the Executive  that they have full legal power and authority to enter
into this  agreement and that the  performance of their  respective  obligations
under this  agreement will not violate any agreement  between the Companies,  or
either of them, and any other person, firm, or organization.

     20.  NON-SOLICITATION  OF  EMPLOYEES.  Until the later of (i)  twelve  (12)
months after the effective date of the termination of the Executive's employment
under this  agreement  or (ii) twelve (12) months after the last payment of Base
Salary to the  Executive  pursuant to  Paragraph 11 or Paragraph 12 (as the case
may be), without the prior written consent of Holdings, the Executive agrees not
to employ,  solicit for  employment,  assist any other  person in  employing  or
soliciting for employment,  or advise or recommend to any other person that such
other person employ or solicit for  employment any person who then is, or during
any portion of the twelve (12) months prior to such  employment or  solicitation
for  employment  was, an employee of the Companies (or either of them) or any of
the Companies' respective subsidiaries.

     21. JOINT AND SEVERAL OBLIGATIONS.  All of the obligations of the Companies
under  this  agreement  are joint  and  several;  and  neither  the  bankruptcy,
insolvency, dissolution, merger, consolidation, reorganization, nor cessation of
business or corporate existence of one of the Companies shall affect, impair, or
diminish the obligations under this agreement of the other of the Companies. The
compensation  and  benefits  to which  the  Executive  is  entitled  under  this
agreement  are  aggregate  compensation  and  benefits,  and the payment of such
compensation  or the provision of such benefits by one of the Companies shall to
the extent of such payment or provision  satisfy the obligations of the other of
the  Companies.  The Companies may agree between  themselves as to which of them
will be responsible for some or all of the Executive's compensation and benefits
under this  agreement,  but any such agreement  between the Companies  shall not
diminish to any extent the joint and several  liability of the  Companies to the
Executive for all of such compensation and benefits.

     22.  TERMINATION  OF PRIOR  AGREEMENT.  The Retention  and  Confidentiality
Agreement  dated  February 21, 1996,  between the Executive and Pamida hereby is
terminated, effective as of the date of this agreement.

     23.  VALIDITY.  The  invalidity  or  unenforceability  of any  provision or
provisions of this agreement shall not affect the validity or  enforceability of
any other  provision of this  agreement,  which other  provision shall remain in
full force and effect; nor shall the invalidity or unenforceability of a portion
of any provision of this agreement affect the validity or  enforceability of the
balance of such provision.

     24.   COUNTERPARTS.   This   document  may  be  executed  in  one  or  more
counterparts,  each of which shall be deemed to be an original  and all of which
together shall constitute a single agreement.

     25. HEADINGS. The headings of the paragraphs contained in this document are
for  reference  purposes  only and shall not in any way  affect  the  meaning or
interpretation of any provision of this agreement.

     26.  APPLICABLE  LAW. This agreement  shall be governed by and construed in
accordance with the internal  substantive laws, and not the choice of law rules,
of the State of Nebraska.

     IN WITNESS  WHEREOF,  the Companies  and the  Executive  have executed this
agreement on the day and year first above written.


                                        PAMIDA HOLDINGS CORPORATION, a
                                        Delaware corporation

                                    By: /S/ STEVEN S. FISHMAN
                                        Steven S. Fishman, Chairman of the
                                        Board and Chief Executive Officer

                                        PAMIDA, INC., a Delaware corporation

                                    By: /S/ STEVEN S. FISHMAN
                                        Steven S. Fishman, Chairman of the
                                        Board and Chief Executive Officer

                                        /S/ GEORGE R. MIHALKO
                                        George R. Mihalko

             Attachment to Exhibit 10.31 - Executive Bonus Matrix

            Bonus as % of Pay - FYE98 Bonus Plan - George R. Mihalko

            Comp store sales increase
EBITDA       <3%     3.0%     4.0%     5.0%     6.0%     7.0%     8.0%     9.0%
===============================================================================
   <42        0        0        0        0        0        0        0        0
-------------------------------------------------------------------------------
    42      9.8%    11.9%    12.6%    13.3%    14.0%    14.7%    15.4%    16.1%
-------------------------------------------------------------------------------
    43     11.2%    13.6%    14.4%    15.2%    16.0%    16.8%    17.6%    18.4%
-------------------------------------------------------------------------------
    44     14.0%    17.0%    18.0%    19.0%    20.0%    21.0%    22.0%    23.0%
-------------------------------------------------------------------------------
    45     16.8%    20.4%    21.6%    22.8%    24.0%    25.2%    26.4%    27.6%
-------------------------------------------------------------------------------
    46     20.3%    24.7%    26.1%    27.6%    29.0%    30.5%    31.9%    33.4%
-------------------------------------------------------------------------------
    47     23.8%    28.9%    30.6%    32.3%    34.0%    35.7%    37.4%    39.1%
-------------------------------------------------------------------------------
    48     28.0%    34.0%    36.0%    38.0%    40.0%    42.0%    44.0%    46.0%
-------------------------------------------------------------------------------
    49     31.5%    38.3%    40.5%    42.8%    45.0%    47.3%    49.5%    51.8%
-------------------------------------------------------------------------------
    50     35.0%    42.5%    45.0%    47.5%    50.0%    52.5%    55.0%    57.5%
-------------------------------------------------------------------------------
    51     35.0%    42.5%    45.0%    47.5%    50.0%    52.5%    55.0%    57.5%
-------------------------------------------------------------------------------
    52     35.0%    42.5%    45.0%    47.5%    50.0%    52.5%    55.0%    57.5%
===============================================================================

                                   EXHIBIT A

                          "OTHER BENEFITS" RELATED TO
                    EMPLOYMENT AGREEMENT DATED MARCH 6, 1997
                        AMONG PAMIDA HOLDINGS CORPORATION
                  AND GEORGE R. MIHALKO, SENIOR VICE PRESIDENT



          Company paid Exec-U-Care insurance

          Company paid life insurance - $200,000

          Financial, legal counseling services - up to $10,000 annually

          Company car - combined with financial services maximum

          Annual physical examination

          Car phone - as needed

          Interest free loans - up to $50,000 approved by Chairman

          Spousal travel - where appropriate and approved

          Minimum vacation accrual * - 3 weeks

          Deferred compensation



*The greater of general employee vacation schedule or this list will be granted