Document:

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                                                                   EXHIBIT 10.19

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED OR
QUALIFIED UNDER THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND THUS
MAY NOT BE TRANSFERRED UNLESS REGISTERED OR QUALIFIED UNDER THAT ACT OR SUCH
LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION OR QUALIFICATION IS AVAILABLE.

                                 PROMISSORY NOTE

$10,003,517                                                Due December 31, 2006

      FOR VALUE RECEIVED, RITZ INTERACTIVE, INC., a Delaware corporation (the
"MAKER"), promises to pay to the order of America Online, Inc. ("PAYEE"), or its
registered assigns, the sum of Ten Million Three Thousand Five Hundred Seventeen
Dollars ($10,003,517) and to pay interest thereon at the rate of six percent
(6.00%) per annum (the "INTEREST RATE") from the date hereof until this
Promissory Note (as amended, modified or supplemented from time to time, this
"NOTE") is fully paid.

      Principal and interest shall be payable as set forth below:

            (1) On June 1, 2005, interest only shall be paid in the amount of
Eight Thousand Sixty-Seven and Thirty-Five Hundredths Dollars ($8,067.35); and

            (2) Commencing on July 1, 2005 and on the first business day of each
succeeding month through and including December 31, 2006, interest only shall be
paid in the amount of Fifty Thousand Seventeen Dollars and Fifty-Nine Hundredths
Dollars ($50,017.59).

      The unpaid principal amount of this Note, together with all accrued but
unpaid interest hereon, shall be paid by Maker to Payee on December 31, 2006
(the "DUE DATE").

      During the occurrence and continuation of an Event of Default (defined
below) the Interest Rate shall be increased from 6.0% per annum to 8.0% per
annum. In no event shall Payee be entitled to interest exceeding the maximum
rate permitted by law. If any excess interest is provided for or shall be
adjudicated to be so provided for in this Note, then in such event: (i) the
provisions of this paragraph shall govern and control; (ii) the Maker shall not
be obligated to pay the amount of such interest to the extent that it is in
excess of the maximum amount permitted by law, and the same shall be construed
as a mutual mistake of the parties; and (iii) any such excess which may have
been collected or attributed shall be subtracted from the then unpaid principal
amount hereof, or refunded to the Maker.

      Both principal hereof and interest thereon are payable at such place as
Payee may from time to time designate in writing, in lawful money of the United
States of America by check or wire transfer. Interest hereunder shall be
computed on the basis of a year of three hundred sixty (360) days for the actual
number of days elapsed.

      This Note is subject to the terms and conditions set forth below:

<PAGE>

I.    DEFINITIONS.

      As used in this Note, the following terms shall mean:

      "CHANGE OF CONTROL" shall mean (i) the sale, transfer or other disposition
of all or substantially all of the assets of the Maker; (ii) the merger or
consolidation of the Maker with any other person (other than a wholly-owned
subsidiary of the Maker) unless the Maker's stockholders' of record immediately
prior to such transaction will immediately after such transaction hold at least
50% of the voting power of the corporation; (iii) the acquisition in one or more
transactions of any voting securities of the Maker by any "Person" (as the term
person is used for purposes of Section 13(d) or 14(d) of the 1934 Act, but
excluding any Person that immediately prior to such transaction has Beneficial
Ownership of thirty percent (30%) or more of the then outstanding voting
securities of the Maker), immediately after which such Person has "Beneficial
Ownership" (within the meaning of Rule 13d-3 promulgated under the 1934 Act) of
fifty percent (50%) or more of the then outstanding voting securities of the
Maker or (iv) the acquisition in one or more transactions of Beneficial
Ownership of twenty percent (20%) or more of the then outstanding voting
securities of the Maker by any Person that immediately prior to such transaction
has Beneficial Ownership of thirty percent (30%) or more of the then outstanding
voting securities of the Maker; provided, however, that the acquisition by the
Maker or any corporation or other Person of which a majority of its voting power
or its voting equity securities or equity interest is owned, directly or
indirectly, by the Maker, of Beneficial Ownership of more than fifty percent
(50%) of the then outstanding voting securities of the Maker shall not
constitute a Change in Control.

      "INVESTMENT" shall mean any loan or advance to a person, any purchase or
other acquisition of any capital stock or other securities or substantially all
of the assets of a person or any capital contribution to a person.

      "NOTE" shall mean this Promissory Note and any note delivered in
substitution or exchange therefor as provided herein.

      "EVENT OF DEFAULT" shall have the meaning given such term in SECTION 5
below.

      "TRIGGERING EVENT" shall mean the closing of a public offering of Maker's
common stock pursuant to a registration statement under the Securities Act of
1933, as amended, or the closing of any Change of Control.

II.   PREPAYMENT OF NOTE.

      2.1 MANDATORY PREPAYMENT. Upon the occurrence of a Triggering Event, all
principal and accrued but unpaid interest on this Note shall immediately become
due and payable.

      2.2 OPTIONAL PAYMENT. Maker, at its option, and with no prepayment
penalty, may make additional payments in reduction of the principal outstanding
on this Note in whole multiples of Ten Thousand Dollars ($10,000) on five (5)
days' written notice. Such optional prepayments of principal shall be applied
first to accrued interest and then to outstanding principal.

                                       2
<PAGE>

III.  REPLACEMENT OF NOTE.

      Upon receipt of evidence reasonably satisfactory to the Maker of the
ownership of and the loss, theft, destruction or mutilation of this Note and (in
the case of loss, theft or destruction) upon delivery of an indemnity agreement
in an amount reasonably satisfactory to the Maker, or (in the case of
mutilation) upon surrender and cancellation of the mutilated Note, the Maker
will execute and deliver, in lieu thereof, a new Note of like tenor.

IV.   COVENANTS.

      4.1 AFFIRMATIVE COVENANTS. Until there are no outstanding amounts under
this Note, the Maker will:

            4.1.1 Compliance with Laws. Comply with all applicable laws, rules,
            regulations and orders.

            4.1.2 Preservation of Corporate Existence. Preserve and maintain its
            corporate existence.

            4.1.3 Keeping of Books. Keep proper books and record and account, in
            which full and correct entries shall be made of all financial
            transactions and the assets and business of the Maker in accordance
            with generally accepted accounting principles in effect from time to
            time.

            4.1.4 Transactions with Affiliates. Conduct all transactions
            otherwise permitted under this Note with any of its affiliates on
            terms that are fair and reasonable and no less favorable to the
            Maker than it would obtain in a comparable arm's length transaction
            with a person not an affiliate.

            4.1.5 Reporting Requirements. Maker shall deliver to Payee:

            (A) as soon as practicable, but in any event within one hundred
            twenty (120) days after the end of each fiscal year of Maker (other
            than fiscal year 2004 for which Maker shall have 180 days after the
            end of the fiscal year), a statement of operations for such fiscal
            year, a balance sheet of Maker and statement of shareholder's equity
            as of the end of such year, and a cash flow statement for such year,
            prepared in accordance with generally accepted accounting principles
            and audited by independent public accountants of nationally
            recognized standing; provided, that Maker shall provide as soon as
            reasonably practicable after the end of each fiscal year of Maker,
            an unaudited statement of operations for such fiscal year, an
            unaudited balance sheet of Maker and an unaudited cash flow
            statement for such year;

            (B) as soon as practicable, but in any event within forty five (45)
            days after the end of each of the quarters of each fiscal year of
            Maker (other than Maker's first fiscal quarter of 2005, for which
            Maker shall have ninety (90) days after the end of such fiscal
            quarter), an unaudited statement of operations and cash flow

                                       3
<PAGE>

            statement, for such fiscal quarter and setting forth year-to-date
            financial information, and an unaudited balance sheet as of the end
            of such quarter;

            (C) as soon as practicable, but in any event thirty (30) days prior
            to the end of each fiscal year, a financial budget and business plan
            for the next fiscal year; and

            (D) such other information relating to the financial condition,
            business, prospects or corporate affairs of Maker as Payee may from
            time to time reasonably request; provided, however, that Maker shall
            not be obligated pursuant to this provision to provide access to any
            information which it reasonably considers a trade secret or other
            proprietary intellectual property information, unless Payee has
            agreed to maintain such information in confidence pursuant to a
            written agreement reasonably acceptable to Maker.

      4.2 NEGATIVE COVENANTS. Until there are no outstanding amounts under this
Note, the Maker will not:

            4.2.1 Liens. Create or suffer to exist any lien, security interest
            or other charge or encumbrance of any kind on or with respect to any
            of its properties, whether now owned or hereafter acquired, other
            than (i) liens for taxes, assessments and governmental charges, (ii)
            liens imposed by law and other similar liens arising in the ordinary
            course of business securing obligations that are not overdue for a
            period of more than thirty (30) days, (iii) pledges or deposits to
            secure public or statutory obligations, (iv) easements, rights of
            way and other encumbrances on title to real property that do not
            render title to the property encumbered thereby unmarketable or
            materially adversely affect the use of such property for its present
            purposes, and (v) the liens with respect to the obligations set
            forth on Schedule 4.2.2 hereto.

            4.2.2 Debt. Other than (x) the obligations under this Note, (y)
            those obligations set forth on Schedule 4.2.2 hereto and (z)
            indebtedness for borrowed money (including capitalized lease
            obligations) that do not, in the aggregate (without duplication)
            with those capital expenditures permitted under SECTION 4.2.4 and
            Investments permitted pursuant to CLAUSE (ii) of SECTION 4.2.5,
            exceed $1,000,000, directly or indirectly, create, incur, assume or
            guaranty, or otherwise become or remain directly or indirectly
            liable with respect to any (i) indebtedness for borrowed money, (ii)
            obligations for the deferred purchase price of property or services
            other than trade payables not overdue by more than sixty (60) days
            incurred in the ordinary course of business, (iii) obligations
            evidenced by notes, bonds, debentures or other similar instruments,
            (iv) obligations, contingent or otherwise in respect of letters of
            credit or similar extensions of credit, (v) debt of others
            guarantied by Maker.

            4.2.3 Dividends. Declare or make any dividend payment or other
            distribution of assets, properties, cash, rights, obligations or
            securities on account of any shares of any class of capital stock of
            the Maker, or purchase, redeem or otherwise acquire for value any
            shares of any class of capital stock of the Maker or any

                                       4
<PAGE>

            warrants, rights or options to acquire any such shares, now or
            hereafter outstanding, except that so long as no Event of Default
            shall have occurred and be continuing at the time of any action
            described below or would result therefrom, the Maker may (i) declare
            and make any dividend payment or other distribution payable in
            common stock of the Maker, (ii) purchase, redeem or otherwise
            acquire shares of its common stock or warrants, rights or options to
            acquire any such shares with the proceeds received from the
            substantially concurrent issue of new shares of its common stock, or
            (iii) purchase, redeem or otherwise acquire shares of its common
            stock or warrants, rights or options to acquire any such shares in
            connection with repurchases of capital stock from employees, former
            employees, and consultants or advisors of Maker pursuant to
            restricted stock purchase agreements in effect as of April 6, 2000
            or grants of options made under the Maker's 1999 Stock Option Plan
            not to exceed more than $500,000 in any twelve month period.

            4.2.4 Change in Nature of Business. Make any material change in the
            nature of the business as carried on at the date hereof, except for
            those changes that do not, in the aggregate (without duplication)
            with (x) those Investments permitted under CLAUSE (ii) of SECTION
            4.2.5 and (y) debt permitted pursuant to CLAUSE (z) of SECTION
            4.2.2, result in cash capital expenditures by Maker in excess of
            $1,000,000.

            4.2.5 Investments in Other Persons. Make any Investment in any other
            person other than (i) Investments in marketable securities and (ii)
            cash Investments that do not, in the aggregate (without duplication)
            with (x) those capital expenditures permitted under SECTION 4.2.4
            and (y) debt permitted pursuant to CLAUSE (z) of SECTION 4.2.2,
            exceed $1,000,000.

            4.2.6 Issuance of Preferred Stock. Issue any preferred stock of the
            Maker, unless such preferred stock is expressly made junior in right
            of repayment to this Note.

V.    EVENTS OF DEFAULT.

            The occurrence and continuation of any of the events or conditions
described in this ARTICLE V shall be an "EVENT OF DEFAULT."

      5.1 PAYEE ACTION. The failure by Maker to pay any installment of principal
or the failure to pay any installment of interest hereon within five business
days of the date when due shall, at the option of the Payee, entitle Payee to
declare all sums of principal and interest then remaining unpaid, due and
payable, all without demand, presentment, notice or protest, all of which hereby
are expressly waived, and permit Payee to exercise any other right available to
it at law or in equity, all of which rights and powers may be exercised
cumulatively.

      5.2 ACCELERATION WITHOUT SPECIFIC ACTION. The occurrence of any of the
following Events of Default shall make all sums of principal and interest then
remaining unpaid, due and payable, all without demand, presentment, notice or
protest, all of which hereby are expressly

                                       5
<PAGE>

waived, and permit Payee to exercise any other right available to it at law or
in equity, all of which rights and powers may be exercised cumulatively.

            5.2.1 Bankruptcy. The voluntary institution of bankruptcy,
            insolvency, reorganization or liquidation proceedings or other
            proceedings for relief under any bankruptcy law or any law for the
            relief of debtors by the Maker; or the institution of any such
            proceedings against the Maker, which involuntary proceedings shall
            not have been vacated by appropriate court order within sixty (60)
            days of such institution.

            5.2.2 Dissolution. Any order, judgment or decree shall have been
            entered against the Maker decreeing the dissolution or liquidation
            of the Maker and such order shall remain undischarged or unstayed
            for a period of sixty (60) days.

            5.2.3 Insolvency, Receiver or Trustee. The making by the Maker of a
            general assignment for the benefit of creditors; or consent by the
            Maker to the appointment of a receiver or trustee for it or for all
            or substantially all of its property or business; or the appointment
            otherwise of such a receiver or trustee or a committee of the
            Maker's creditors.

      5.3 BREACH OF COVENANT. The Maker shall fail to perform or observe (i) any
term, covenant or agreement contained in SECTION 4.1.2 or 4.2 or (ii) in all
material respects any other term, covenant or agreement contained in this Note
on its part to be performed or observed if such failure shall remain unremedied
for 30 days after written note thereof shall have been given to the Maker by
Payee.

VI.   METHODS; ADDRESSES.

      Any notice, demand or other communication required or permitted under the
terms of this Note shall be in writing and shall be made by telegram, telex or
electronic transmitter (including, without limitation, facsimile) or certified
or registered mail, return receipt requested, and shall be deemed to be received
by the addressee on the date delivery is confirmed, if sent by Federal Express,
Express Mail, or other similar overnight delivery service, the date of
electronic confirmation of receipt, if sent by telegram, telex, telecopy or
electronic transmitter, and three (3) business days after mailing, if sent by
certified or registered mail, with postage prepaid, and properly addressed.
Notices shall be addressed as provided below:

(a)  If to Payee:    America Online, Inc.
                     22000 AOL Way
                     Dulles, Virginia 20166
                     Facsimile: (703) 265-3001
                     Attention: Senior Vice President - Corporate Finance

With copy to:        America Online, Inc.
                     22000 AOL Way
                     Dulles, Virginia 20166
                     Facsimile: (703) 265-3992
                     Attention: General Counsel

                                       6
<PAGE>

(b)   If to the Maker:   Ritz Interactive, Inc.
                         2010 Main Street, Suite 400
                         Irvine, California 92614
                         Facsimile: (949) 255-1560
                         Attention: Scott Neamand

      With a copy to:    O'Melveny & Myers, LLP
                         114 Pacifica, Suite 100
                         Irvine, California 92618
                         Facsimile: (949) 737-2300
                         Attention: J. Jay Herron, Esq.

      Any party may change its address for this purpose by giving a written
notice thereof as herein provided.

VII.  MISCELLANEOUS.

      7.1 GOVERNING LAW. THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF THE MAKER
AND THE PAYEE HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF DELAWARE WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES.

      7.2 MODIFICATION. Neither this Note nor any provision hereof may be
amended, modified or waived unless agreed to in writing by the holder of this
Note and Maker.

      7.3 SUBORDINATION. All future indebtedness of the Maker in excess of
$500,000 per instrument (with instruments made in favor of the same person or
such person's affiliates aggregated for this purpose) shall be subordinated to
the obligations of Maker to Payee evidenced by this Note. Upon Payee's request,
Maker and any holder of such debt shall execute a subordination agreement, in
form and substance reasonably acceptable to Payee and such holder, providing
that such debt is subordinated in right of payment to the obligations hereunder,
and requiring such holder to standstill in the exercise of its remedies prior to
the exercise of remedies of Payee, such standstill to be on terms reasonably
acceptable to Payee and the holders or prospective holders of such debt.

      7.4 SEVERABILITY. Whenever possible, each provision of this Note will be
interpreted in such manner as to be effective and valid under applicable law,
but, if any provision of this Note is held to be prohibited by or invalid under
applicable law, such provision will be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of this Note.

      7.5 SUCCESSORS. The terms contained in this Note shall bind the parties
hereto and their respective heirs, executors, administrators, distributees,
successors and assigns. Payee may assign and transfer this Note to any person
that is controlled by, controlling or under common control with the Payee.

                                       7
<PAGE>

      7.6 HEADINGS. The section headings in this Note are inserted for purposes
of convenience only and shall have no substantive effect.

                                       8
<PAGE>

      IN WITNESS WHEREOF, the parties have caused this Note to be signed and
delivered by their respective duly authorized officer and to be dated May 27,
2005.

MAKER:                              PAYEE:

RITZ INTERACTIVE, INC., a Delaware  AMERICA ONLINE, INC., a Delaware
corporation                         corporation

By: /s/ Fred H. Lerner              By: /s/ Arthur Minson
    ----------------------              -----------------------------

Its: President and Chief Executive  Its: SVP, Corporate Finance
     Officer

                                       9
<PAGE>

                                 SCHEDULE 4.2.2

1.    In March 2002, the Maker entered into an agreement with Photoalley, Inc.
and CMA Business Credit Services to purchase the inventory, any rights to the
URL/internet sites and internet related assets, which includes customer email
lists, of Photoalley, Inc. Under the terms of the agreement, the Maker is
obligated to make monthly payments equal to a percentage of net revenues
generated from the internet sites for the period of five years.

2.    In May 2002, the Maker entered into an agreement with CameraWorld.com,
Inc. and NACM-Oregon Service Company to purchase any rights to the URL/internet
sites and internet related assets, which includes customer email lists, of
CameraWorld.com. Under the terms of the agreement, the Maker is obligated to
make monthly payments equal to a percentage of net revenues generated from the
internet sites for the period of five years.

3.    In August 2004, the Maker entered into an agreement with eAngler, Inc. to
purchase any rights to the URL/internet sites and internet related assets, which
includes customer email lists, of eAngler.com. Under the terms of the agreement,
the Maker is obligated to make monthly payments equal to a percentage of net
revenues generated from the internet sites for the period of three years,
provided that no payments are required to be made unless and until gross
revenues from the internet sites exceed approximately $1.4 million. In addition,
the Maker is obligated to make a payment of up to $25,000 in 2006.exv10w1

 

Exhibit 10.1

 

 

September 9, 2005

The Board of Directors

ShopKo Stores, Inc.

700 Pilgrim Way

Green Bay, Wisconsin 54304

	 	 	 	RE: First Amendment to Agreement and Plan
of Merger (“Amendment”)

Ladies and Gentlemen:

     We refer to the Agreement and Plan of Merger (the “Merger Agreement”) by and among Badger
Retail Holding, Inc. (“Parent”), Badger Acquisition Corp. (“Acquisition Sub”) and ShopKo Stores,
Inc. (the “Company”) dated as of April 7, 2005. The parties to the Merger Agreement wish to amend
the Merger Agreement on the terms set forth herein, and to clarify certain matters with respect to
the transactions contemplated in the Merger Agreement. All capitalized terms used in this
Amendment and not otherwise defined shall have the meanings ascribed to them in the Merger
Agreement.

     In consideration of the warranties, covenants and agreements set forth in this Amendment, the
parties hereto agree as follows:

     1. Section 2.7 of the Merger Agreement is hereby amended by deleting the reference to
“$24.00” in the first sentence thereof, and inserting “$25.00” in its place.

     2. Section 7.1 of the Merger Agreement is hereby amended by deleting clause (h) in its
entirety, and inserting the following in its place:

     “(h) by the Company if the Company Board makes a Company Subsequent Determination in accordance
with the terms of Section 5.4(c), and the Company

 

 

The Board of Directors

September 9, 2005

Page 2

 

prior to or concurrently with such termination pays to Parent in immediately available funds the
Termination Fee.”

     3. Section 7.3(a) of the Merger Agreement is hereby amended as follows:

          (a) by deleting the first paragraph of Section 7.3(a) in its entirety up to, but not including
Section 7.3(a)(i), and inserting the following in its place:

     “(a) The Company agrees to reimburse Parent (or its designees) for all
documented out-of-pocket expenses of Parent and its Affiliates (other than any
such expenses paid or payable by Parent or any of its Affiliates to any Affiliate
of Parent), including fees and expenses of financial advisors, outside legal
counsel, accountants, experts and consultants, incurred by Parent and its
Affiliates or on their respective behalf in connection with or related to the
authorization, preparation, negotiation, execution and performance of this
Agreement and the transactions contemplated hereby (collectively,
“Expenses”), up to a maximum amount of $13.5 million, if this Agreement is
terminated:”

     (b) by deleting the phrase “, and on or before the date of any such termination described in
this clause (iv), an Acquisition Proposal shall have been publicly announced, disclosed or
otherwise communicated to the Special Committee or the Company Board” in Section 7.3(a)(iv).

     4. Section 7.3(b) of the Merger Agreement is hereby amended as follows:

     (a) by deleting the reference to “$27 million” in Section 7.3(b)(x), and inserting “$13.5
million” in its place; and

     (b) by deleting Section 7.3(b)(x)(iii) in its entirety and inserting the following in its
place:

     “(iii) by the Company, Parent or Acquisition Sub pursuant to Section 7.1(b) or
Section 7.1(d), and within twelve (12) months of such termination, the Company Board shall
have recommended, the Company shall have entered into a definitive agreement with respect to, or
the Company shall have consummated, a Company Alternative Transaction or a Company Alternative
Transaction shall have occurred (in each case, with references to “20%” in clauses (i), (ii) and
(iii) of the definition of Company Alternative Transaction” deemed to be “50.1%”); or”.

 

 

The Board of Directors

September 9, 2005

Page 3

 

     5. Section 7.3(b)(x)(iv) is hereby amended by deleting “; or” at the end thereof and
inserting a period.

     6. Section 7.3(b)(x)(v) is hereby deleted in its entirety.

     7. Section 7.3(b)(y) is hereby amended by deleting the reference to “$15 million” and
inserting “$13.5 million” in its place.

     8. The Company represents and warrants to Parent and Acquisition Sub as follows:

          (a) The Company is duly organized, validly existing and in good standing under the laws of the
State of Wisconsin.

          (b) The Company has the requisite corporate power and authority to execute and deliver this
Amendment and (subject to receipt of the Company Shareholder Approval) to perform its obligations
hereunder. The execution and delivery of this Amendment and the performance of its obligations
hereunder have been duly and validly authorized by all necessary corporate action (subject to
receipt of the Company Shareholder Approval). This Amendment has been duly executed and delivered
by the Company, and constitutes, assuming due authorization, execution and delivery of this
Amendment by Parent and Acquisition Sub, a valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the rights and remedies of
creditors generally and to general principles of equity (regardless of whether considered in a
proceeding in equity or at law).

     9. Each of Parent and Acquisition Sub hereby jointly and severally represents and warrants to
the Company as follows:

          (a) Each Acquiror Entity is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization.

          (b) Each Acquiror Entity has the requisite corporate power and authority to execute and
deliver this Amendment and to perform its obligations hereunder. The execution and delivery of
this Amendment and the performance of its obligations hereunder have been duly and validly
authorized, and this Amendment has been approved and adopted by the Board of Directors of each
Acquiror Entity, and no other corporate proceedings on the part of either Acquiror Entity are
necessary to authorize the execution, delivery and performance of this Amendment. Concurrently
with the execution of this Amendment, Parent, as the

 

 

The Board of Directors

September 9, 2005

Page 4

 

sole shareholder of Acquisition Sub, is approving this Amendment and the transactions
contemplated hereby, including the Merger. This Amendment has been duly executed and delivered by
each Acquiror Entity and constitutes, assuming due authorization, execution and delivery of this
Amendment by the Company, a valid and binding obligation of each Acquiror Entity, enforceable
against each Acquiror Entity in accordance with its terms, subject to applicable bankruptcy,
insolvency, reorganization, moratorium or other laws relating to or affecting the rights and
remedies of creditors generally and to general principles of equity (regardless of whether
considered in a proceeding in equity or at law).

     10. For the avoidance of doubt, from and after the date of this Amendment, references in the
Merger Agreement to the “Agreement” or any provision thereof shall be deemed to refer to the Merger
Agreement or such provision as amended hereby unless the context otherwise requires, and references
in the Merger Agreement to the “date hereof” or the “date of this Agreement” shall be deemed to
refer to April 7, 2005.

     11. The provisions of the Merger Agreement set forth in Sections 8.2, 8.4, 8.5, 8.6, 8.7,
8.8, 8.9, 8.10 and 8.12 are incorporated herein by reference, and are deemed to be part of this
Amendment.

     12. Except as expressly set forth herein, this Amendment shall not by implication or
otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of any
party under, the Merger Agreement, nor alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Merger Agreement, all of which
shall continue in full force and effect.

 

 

The Board of Directors

September 9, 2005

Page 5

 

Please indicate your agreement with the forgoing by executing two copies of this Amendment and
returning one copy to the undersigned.

	 	 	 	 	 
	 	 	Yours truly,
	 
	 	 	 	 
	 	 	BADGER RETAIL HOLDING, INC.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	   /s/ Michael S. Israel
	 

	 	 	 	 
	 

	 	 	 	Name: Michael S. Israel
	 

	 	 	 	Title: Secretary and Treasurer
	 
	 	 	 	 
	 
	 	 	 	 
	 	 	BADGER ACQUISITION CORP.
	 
	 	 	 	 
	 
	 	 	 	 
	 

	 	By:
	 	   /s/ Michael S. Israel
	 

	 	 	 	 
	 

	 	 	 	Name: Michael S. Israel
	 

	 	 	 	Title: Secretary and Treasurer

Agreed to and acknowledged by this 9th day of September, 2005:

	 	 	 
	SHOPKO STORES, INC.
	 
	 	 
	By:

	 	   /s/ Steven R. Andrews       
	 

	 	Name: Steven R. Andrews
	 

	 	Title: Senior Vice President
          Law
and Human Resources

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