EXHIBIT 10
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BADGER RETAIL HOLDING, INC.
September 29, 2005
In connection with the willingness of Badger Retail Holding, Inc.
("Parent") and Badger Acquisition Corp. ("Acquisition Sub") to enter into a
second amendment to the Agreement and Plan of Merger (as amended on September 9,
2005 and September 29, 2005, the "Merger Agreement") by and among Parent,
Acquisition Sub and ShopKo Stores, Inc. (the "Company"), dated as of April 7,
2005, pursuant to which Acquisition Sub will merge with and into the Company and
all of the outstanding shares of the Company shall be converted into the right
to receive $25.50 in cash per share (the "Merger"), Parent and Acquisition Sub
have requested that Levco Alternative Fund, Ltd., Purchase Associates L.P.,
Purchase Associates II, L.P., Xxxxxxxx Capital Partners, L.P., Levco GP, Inc.,
Xxxx X. Xxxxx & Co., Inc. and BKF Capital Group, Inc. (collectively, the "Levco
Shareholders") agree, and each of the Levco Shareholders have agreed, to enter
into this voting agreement (the "Agreement") with respect to all of the Shares
(hereinafter defined), pursuant to which the Levco Shareholders will undertake
to take certain actions and do certain things in respect of the Merger in
accordance with the terms and conditions set forth herein. This Agreement is
being made and created pursuant to Section 180.0731 of the Wisconsin Business
Corporation Law.
The Merger is summarized in the Merger Agreement (and the schedules
thereto) and capitalized terms used herein and not otherwise defined shall have
the meanings set forth in the Merger Agreement.
Each Levco Shareholder, severally and not jointly, represents and
warrants to Parent and Acquisition Sub that as of August 1, 2005 and the date
hereof such Levco Shareholder legally and/or beneficially owns (as such term is
defined in Rule 13d-3 promulgated under the Securities and Exchange Act of 1934,
as amended, and the rules and regulations promulgated thereunder) the shares of
Company Common Stock as set forth opposite the name of such Levco Shareholder on
Schedule A to this Agreement (such shares of Company Common Stock, together with
any shares of Company Common Stock the voting power over which is acquired by
any of the Levco Shareholders after the date of this Agreement, collectively the
"Shares"). Each Levco Shareholder severally and not jointly represents and
warrants that as of the date hereof it has voting power (either sole or shared
with other Levco Shareholders) over the Shares set forth opposite its name on
Schedule A, and has the sole or shared right of disposition over such Shares and
the power to agree to all of the matters set forth in this Agreement. Each Levco
Shareholder severally and not jointly represents and warrants that as of the
date hereof it (either alone or with other Levco Shareholders) has good title to
the Shares set forth opposite its name on Schedule A, free and clear of any and
all Liens. Each Levco Shareholder severally and not jointly represents that as
of the date hereof it has not appointed or granted any proxies or powers of
attorney or attorney in fact with respect to the Shares, or deposited any of the
Shares into a voting trust or entered into a voting agreement, understanding or
arrangement with respect to the voting of any of the Shares, which is still
effective.
Each Levco Shareholder covenants with Parent and Acquisition Sub that
between the date of this Agreement and the earlier of: (a) the date of
termination of the Merger Agreement in accordance with its terms, (b) the
effectiveness of any amendment or modification to the Merger Agreement that
reduces the consideration to be paid in the Merger for the conversion of Company
Common Stock to less than $25.50 in cash per share, (c) the Effective Time of
the Merger or (d) the close of business on November 1, 2005 (such earlier date
being the "Expiry Date") such Levco Shareholder shall not (i) except as
otherwise provided herein, grant any proxies or powers of attorney or attorney
in fact, or deposit any of the Shares into a voting trust or enter into a voting
agreement, understanding or arrangement with respect to the voting of any of the
Shares, (ii) sell (including short sales), transfer, gift, assign, pledge,
hypothecate, encumber, convert or otherwise dispose of any of the Shares or
enter into any agreement, arrangement or understanding in connection therewith,
or (iii) directly or indirectly through another Person, solicit, initiate or
knowingly encourage, or take any other action designed to facilitate, any
inquiries or the making of any proposal that constitutes, or could reasonably be
expected to lead to, an Acquisition Proposal by any Third Party. This Agreement
shall terminate at the Expiry Date. The representations and warranties made
herein shall terminate upon termination of this Agreement. Notwithstanding the
foregoing, any claims hereunder for breaches of representations, warranties and
covenants arising prior to the Expiry Date shall survive the termination of this
Agreement.
Pursuant to the above, each of the Levco Shareholders irrevocably
undertakes, until the Expiry Date, to appear, either in person or by proxy, at
any meeting of the Company shareholders and to vote (or cause to be voted) all
of the Shares at any such meeting, and in any action by written consent of the
Company shareholders (i) in favor of the approval, consent, ratification and
adoption of the Merger Agreement (and any actions required in furtherance
thereof), (ii) against any Company Alternative Transaction, and (iii) against
any actions or agreements that would impede, frustrate, hinder, delay, prevent
or nullify this Agreement or the Merger Agreement or the transactions
contemplated thereunder. Each Levco Shareholder shall not enter into any
agreement or understanding with any person or entity prior to the termination of
this Agreement to vote or give instructions in a manner inconsistent this
Agreement.
In furtherance and not in limitation of the foregoing, each Levco
Shareholder hereby grants an irrevocable proxy, with effect until the Expiry
Date, to Parent and hereby constitutes and appoints Parent, or any nominee of
Parent, as it attorney-in-fact and proxy, with full power of substitution, for
and in its name, place and stead, to vote (by written consent or otherwise) the
Shares which such Levco Shareholder is entitled to vote at any meeting of the
shareholders of the Company, on the matters and in the manner set forth in the
previous paragraph. Each Levco Shareholder hereby confirms that this proxy is
being given in connection with the execution of the second amendment to the
Merger Agreement and intends THIS PROXY TO BE IRREVOCABLE AND COUPLED WITH AN
INTEREST. Each Levco Shareholder hereby revokes all previous proxies and powers
of attorney granted with respect to the Shares that relate to the approval of
the Merger, and no subsequent proxy or power of
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attorney shall be given by such Levco Stockholder that relates to the approval
of the Merger.
Each of the Levco Shareholders agrees to promptly take all reasonably
necessary and appropriate actions to withdraw the Preliminary Proxy Statement,
dated August 24, 2005 (as amended), filed with the Securities and Exchange
Commission by the Levco Shareholders and certain other Persons.
Each of the Levco Shareholders agrees to details of this Agreement
being set out in any proxy solicitation materials produced by the Company in
connection with the Merger and to this Agreement being available for inspection
to the extent required by Law. Each of the Levco Shareholders further agrees
that in all public comments made by them (including in response to any media
inquiries) with respect to the Merger they will voice their support for the
Merger.
Each of the Levco Shareholders hereby severally and not jointly
represents and warrants to Parent and Acquisition Sub that: such Levco
Shareholder is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization or formation and has all requisite
power and authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated by this Agreement;
this Agreement has been duly and validly executed and delivered by such Levco
Shareholder and, assuming due execution and delivery by each of the other
parties hereto, this Agreement constitutes a legal, valid and binding obligation
of such Levco Shareholder enforceable against such Levco Shareholder in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws of general applicability relating to or affecting creditors'
rights, and to general equitable principles; and the execution and delivery of
this Agreement by such Levco Shareholder does not, and the performance of this
Agreement by such Levco Shareholder will not, (i) conflict with or violate the
certificate of incorporation, limited partnership agreement or equivalent
organizational documents, as the case may be, of such Levco Shareholder, (ii)
conflict with or violate any applicable Law by which any property or asset of
such Levco Shareholder is bound or affected or (iii) result in any breach of, or
constitute a default (or event that with notice or lapse of time or both would
become a default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a Lien on any of
the Shares (other than pursuant to this Agreement) pursuant to, any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation of such Levco Shareholder (including any trust
agreement, voting agreement, stockholders agreement or voting trust), except, in
the case of clauses (ii) and (iii), for any such conflicts, violations,
breaches, defaults or other occurrences which would not prevent or delay the
performance by such Levco Shareholder of its obligations under this Agreement.
Each of Parent and Acquisition Sub hereby jointly and severally
represents and warrants to the Levco Shareholders that: each of Parent and
Acquisition Sub is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization or formation and has all
requisite power and authority to enter into this Agreement, to carry out its
obligations hereunder and to consummate the transactions
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contemplated by this Agreement; this Agreement has been duly and validly
executed and delivered by Parent and Acquisition Sub and, assuming due execution
and delivery by each of the other parties hereto, this Agreement constitutes a
legal, valid and binding obligation of Parent and Acquisition Sub enforceable
against Parent and Acquisition Sub in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and other similar laws of general applicability
relating to or affecting creditors' rights, and to general equitable principles;
and the execution and delivery of this Agreement by Parent and Acquisition Sub
does not, and the performance of this Agreement by Parent and Acquisition Sub
will not, (i) conflict with or violate the certificate of incorporation or
equivalent organizational documents, as the case may be, of Parent or
Acquisition Sub, (ii) conflict with or violate any applicable Law by which any
properties or assets of Parent or Acquisition Sub are bound or affected or (iii)
result in any breach of, or constitute a default (or event that with notice or
lapse of time or both would become a default) under, or give to others any
rights of termination, amendment, acceleration or cancellation of any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument or obligation of Parent or Acquisition Sub
(including any trust agreement, voting agreement, stockholders agreement or
voting trust), except, in the case of clauses (ii) and (iii), for any such
conflicts, violations, breaches, defaults or other occurrences which would not
prevent or delay the performance by Parent or Acquisition Sub of its obligations
under this Agreement.
This Agreement is governed by the laws of the State of Wisconsin. Each
party submits to the exclusive jurisdiction of the courts of competent
jurisdiction in the State of Wisconsin in respect of any action or proceeding
relating to this Agreement. The parties shall not raise any objection to the
venue of any proceedings in any such court, including the objection that the
proceedings have been brought in an inconvenient forum.
The parties hereto agree that irreparable damage would occur in the
event any of the provisions of this Agreement were not to be performed in
accordance with the terms hereof and that the parties shall be entitled to seek
specific performance of the terms hereof in addition to any other remedies at
Law or in equity.
This Agreement is not intended to be for the benefit of, and shall not
be enforceable by, any Person or entity who or which is not a party hereto, nor
shall it confer upon any other Person any rights or remedies hereunder.
This Agreement may not be amended except by an instrument in writing
signed by each of the parties hereto.
This Agreement may be executed by facsimile and in one or more
counterparts, all of which shall be considered one and the same agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, this Agreement has been agreed and accepted this
29th day of September, 2005.
BADGER RETAIL HOLDING, INC.
By: /s/ Xxxxxxx X. Israel
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Name: Xxxxxxx X. Israel
Title: Secretary and Treasurer
BADGER ACQUISITION CORP.
By: /s/ Xxxxxxx X. Israel
--------------------------------------
Name: Xxxxxxx X. Israel
Title: Secretary and Treasurer
LEVCO ALTERNATIVE FUND, LTD.
By: Xxxx X. Xxxxx & Co., Inc., its
investment adviser
By: /s/ Xxxxxx Xxxxxx
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Name: Xxxxxx Xxxxxx
Title: Vice President and General
Counsel
PURCHASE ASSOCIATES L.P.
By: Levco GP, Inc., its managing general
partner
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President and General
Counsel
PURCHASE ASSOCIATES II, L.P.
By: Levco GP, Inc., its managing general
partner
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President and General
Counsel
XXXXXXXX CAPITAL PARTNERS, L.P.
By: Levco GP, Inc., its managing general
partner
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President and General
Counsel
XXXX X. XXXXX & CO., INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President and General
Counsel
LEVCO GP, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President and General
Counsel
BKF CAPITAL GROUP, INC.
By: /s/ Xxxxxx Xxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxx
Title: Vice President and General
Counsel
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SCHEDULE A
SHARES
LEVCO SHAREHOLDER: NUMBER OF SHARES:
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Levco Alternative Fund, Ltd. 1,521,800
Purchase Associates L.P. 93,400
Purchase Associates II, L.P. 129,000
Xxxxxxxx Capital Partners, L.P. 12,000
Levco GP, Inc. 234,400
Xxxx X. Xxxxx & Co., Inc. 1,818,400
BKF Capital Group, Inc. 1,818,400
