Document:

EX-10.90

 

Exhibit 10.90

RETAIL VENTURES, INC.

2007 CASH INCENTIVE COMPENSATION PLAN

1.00 PURPOSE AND EFFECTIVE DATE

1.01 Purpose: This Plan is intended to foster and promote the financial success of the Company and
Related Entities and to increase shareholder value by [1] providing Participants an opportunity to
earn incentive compensation if specified objectives are met and [2] enabling the Company to achieve
success by attracting and retaining talented, outstanding employees whose judgment, interest and
special efforts the Company wishes to recognize.

1.02 Effective Date: The Plan will be effective upon its adoption by the Board and approval by the
affirmative vote of the Company’s shareholders under applicable rules and procedures described in
Code §§162(m). Any Award granted before shareholder approval will be null and void if the
shareholders do not approve the Plan within the period just described.

2.00 DEFINITIONS

When used in this Plan, the following terms have the meanings given to them in this section unless
another meaning is expressly provided elsewhere in this document or clearly required by the
context. When applying these definitions and any other word, term or phrase used in this Plan, the
form of any word, term or phrase will include any and all of its other forms.

Act. The Securities Exchange Act of 1934, as amended or any successor statute of similar effect
even if the Company is not subject to the Act.

Award. A grant made under this Plan consisting of an opportunity to earn a cash bonus if terms and
conditions specified in the Award Agreement are met. Notwithstanding any provision contained
elsewhere in this Plan, during any calendar year no Participant may receive more than five million
dollars ($5,000,000) through this Plan.

Award Agreement. The written or electronic agreement between the Company and each Participant that
describes the terms and conditions that must be met if an Award is to be earned. If there is a
conflict between the terms of this Plan and the terms of the Award Agreement, the terms of the Plan
will govern.

Award Date. The later of [1] the date the Committee establishes the terms of an Award or [2] the
date specified in the Award Agreement.

Board. The Company’s board of directors.

Cause. Unless the Committee specifies otherwise in the Award Agreement, with respect to any
Participant and subject to any cure provision included in any written agreement between the
Participant and the Company:

 

 

[1] A material failure to substantially perform his or her position or duties;

[2] Engaging in illegal or grossly negligent conduct that is materially injurious to the
Company or any Related Entity;

[3] A material violation of any law or regulation governing the Company or any Related
Entity;

[4] Commission of a material act of fraud or dishonesty which has had or is likely to have a
material adverse effect upon the Company’s (or any Related Entity’s) operations or financial
conditions;

[5] A material breach of the terms of any other agreement (including any employment
agreement) with the Company or any Related Entity; or

[6] A breach of any term of this Plan or Award Agreement.

If a Participant Terminates (or is Terminated) for any reason other than Cause and the Company
subsequently discovers an act, failure or event that, if known before the Participant’s Termination
would have justified a Termination for Cause and that act, event or failure was actively concealed
by the Participant and could not have been discovered through reasonable diligence before the
Participant Terminated, that Participant will be retroactively treated as having been Terminated
for Cause.

Code. The Internal Revenue Code of 1986, as amended or superseded after the Effective Date and any
applicable rulings or regulations issued under the Code.

Committee. The Board’s Compensation Committee which also constitutes a “compensation committee”
within the meaning of Treas. Reg. §1.162-27(c)(4). The Committee will be comprised of at least
three persons [1] each of whom is [a] an outside director, as defined in
Treas. Reg. §1.162-27(e)(3)(i) and [b] a “non-employee” director within the meaning of Rule 16b-3
under the Act and [2] none of whom may receive remuneration from the Company or any Related Entity
in any capacity other than as a director, except as permitted under
Treas. Reg. §1.162-27(e)(3)(ii).

Company. Retail Ventures, Inc., an Ohio corporation, and any and all successors to it.

Covered Officer. Those employees whose compensation is subject to limited deductibility under
Code §162(m) as of the last day of any calendar year ending with or within any Performance Period.

Disability. Unless the Committee specifies otherwise in the Award Agreement, the Participant’s
inability with a reasonable accommodation, to perform his or her duties on a full-time basis for a
period of more than six consecutive calendar months beginning before Termination due to a physical
or mental infirmity.

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Employee. Any person who, on any applicable date, is a common law employee of the Company or any
Related Entity. A worker who is classified as other than a common law employee but who is
subsequently reclassified as a common law employee of the Company for any reason and on any basis
will be treated as a common law employee only from the date that reclassification occurs and will
not retroactively be reclassified as an Employee for any purpose of this Plan.

Participant. Any Employee to whom an Award has been granted.

Performance Criteria. The criteria described in Section 5.01.

Performance Period. The period over which the Committee will determine if applicable Performance
Criteria have been met.

Plan. The Retail Ventures, Inc. 2007 Cash Incentive Compensation Plan.

Related Entity. Any corporation, partnership or other form of unincorporated entity [1] of which
the Company owns, directly or indirectly, 50 percent or more of the total combined voting power of
all classes of stock, if the entity is a corporation, or of the capital or profits interest, if the
entity is a partnership or another form of unincorporated
entity or [2] which owns 50 percent or more of the total combined voting power of all classes of
the Stock.

Retirement. The date a Participant Terminates on or after reaching age 65 and completing at least
five years of service.

Stock. The common stock, without par value, issued by the Company or any security issued by the
Company in substitution, exchange or in place of these shares.

Termination or Terminated. Unless the Committee specifies otherwise in the Award Agreement,
[1] cessation of the employee-employer relationship between a Participant and the Company and all
Related Entities for any reason or [2] with respect to a Participant who is an Employee of a
Related Entity, a severance or diminution of the Company’s direct or indirect ownership after which
that entity is no longer a Related Entity and after which that person is not an Employee of the
Company or any entity that then is a Related Entity. However, [3] a Termination will not have
occurred while the Participant is absent from active employment for a period of not more than three
months (or, if longer, the period during which reemployment rights are protected by law, contract
or written agreement, including the Award Agreement, between the Participant and the Company) due
to illness, military service or other leave of absence approved by the Committee and [4] in the
Committee’s discretion, a Termination will not have occurred for the duration of a pending
Performance Period if a Participant’s status is changed from Employee to a consultant or
independent contractor during a Performance Period established before that status change occurred.

3.00 PARTICIPATION

3.01 Participation.

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[1] Consistent with the terms of the Plan and subject to Section 3.02, the Committee
will [a] decide which Employees will be granted Awards and [b] specify the type of Award to
be granted and the terms upon which an Award will be granted and may be earned.

[2] The Committee may establish different terms and conditions [a] for each Award, [b] for
each Participant receiving the same type of Award and [c] for the same Participants for each
Award the Participant receives.

[3] The Committee (or the Board, as appropriate) also may amend the Plan and the Award
Agreement without any additional consideration to affected Participants to the extent
necessary to avoid penalties arising under Code §409A, even if those amendments reduce,
restrict or eliminate rights granted under the Plan or Award Agreement (or both) before
those amendments.

[4] Unless permitted by Code §409A, no Award subject to Code §409A will be granted under
this Plan to any person who is performing services only for an
entity that is not an affiliate of the Company within the meaning of Code §414(b) and (c).

3.02 Conditions of Participation. By accepting an Award, each Participant agrees:

[1] To be bound by the terms of the Award Agreement and the Plan and to comply with other
conditions imposed by the Committee; and

[2] That the Committee (or the Board, as appropriate) may amend the Plan and the Award
Agreement without any additional consideration to the extent necessary to avoid penalties
arising under Code §409A, even if those amendments reduce, restrict or eliminate rights
granted under the Plan or Award Agreement (or both) before those amendments.

4.00 ADMINISTRATION

4.01 Committee Duties. The Committee is responsible for administering the Plan and has all powers
appropriate and necessary to that purpose. Consistent with the Plan’s objectives, the Committee
may adopt, amend and rescind rules and regulations relating to the Plan, to the extent appropriate
to protect the Company’s and any Related Entity’s interests, and has complete discretion to make
all other decisions (including whether a Participant has incurred a Disability) necessary or
advisable for the administration and interpretation of the Plan. Any action by the Committee will
be final, binding and conclusive for all purposes and upon all persons.

4.02 Delegation of Ministerial Duties. In its sole discretion, the Committee may delegate any
ministerial duties associated with the Plan to any person (including Employees) that it deems
appropriate. However, the Committee may not delegate any duties it is required to discharge under
Code §162(m).

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4.03 Award Agreement. At the time an Award is made, the Committee will prepare and deliver an Award
Agreement to each affected Participant. The Award Agreement:

[1] Will describe the Award and when and how it may be earned;

[2] To the extent different from the terms of the Plan, will describe [a] any conditions
that must be met before the Award may be earned, including Performance Criteria and [b] any
other applicable terms and conditions affecting the Award.

5.00 AWARDS

5.01 Performance Criteria.

[1] The Performance Criteria upon which the payment of an Award to a Covered Officer that is
intended to qualify as “performance-based compensation” under Code §162(m) will be based on
one or more (or a combination of) the following Performance Criteria and may be applied
solely with reference to the
Company (and/or any Related Entity) or relatively between the Company (and/or any Related
Entity) and one or more unrelated entities:

[a] Net earnings or net income (before or after taxes);

[b] Earnings per share;

[c] Net sales or revenue growth;

[d] Net operating profit;

[e] Return measures (including, but not limited to, return on assets, capital,
invested capital, equity, sales or revenue);

[f] Cash flow (including, but not limited to, operating cash flow, free cash flow,
cash flow return on equity and cash flow return on investment);

[g] Earnings before or after taxes, interest, depreciation and/or amortization;

[h] Gross or operating margins;

[i] Productivity ratios;

[j] Share price (including, but not limited to, growth measures and total
shareholder return);

[k] Expense targets;

[l] Margins;

[m] Operating efficiency;

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[n] Market share;

[o] Customer satisfaction;

[p] Working capital targets; and

[q] Economic value added (net operating profit after tax minus the sum of capital
multiplied by the cost of capital).

[2] Performance Criteria upon which the payment of an Award to Participants who are not
Covered Officers may be based on one or more (or a combination of) the Performance Criteria
listed in Section 5.01 or on other factors the Committee believes are relevant and
appropriate.

[3] Different Performance Criteria may be applied to individual Participants or to groups of
Participants and, as specified by the Committee, may be based on
the results achieved [a] separately by the Company or any Related Entity, [b] any
combination of the Company and Related Entities or [c] any combination of segments, products
or divisions of the Company and Related Entities.

[4] The Committee:

[a] Will make appropriate adjustments to Performance Criteria to reflect the effect
on any Performance Criteria of any stock dividend or stock split affecting Stock,
recapitalization (including, without limitation, the payment of an extraordinary
dividend), merger, consolidation, combination, spin-off, distribution of assets to
shareholders, exchange of shares or similar corporate change. Also, the Committee
will make a similar adjustment to any portion of a Performance Criteria that is not
based on Stock but which is affected by an event having an effect similar to those
just described.

[b] May make appropriate adjustments to Performance Criteria to reflect a
substantive change in a Participant’s job description or assigned duties and
responsibilities.

[5] Performance Criteria will be established in an Award Agreement [a] as soon as
administratively practicable after established but [b] in the case of Covered Officers, no
later than the earlier of [i] 90 days after the beginning of the applicable Performance
Period; or [ii] the expiration of 25 percent of the applicable Performance Period.

5.02 Earning Awards. Subject to any terms, restrictions and conditions specified in the Plan or
the Award Agreement, as of the end of each Performance Period, the Committee will certify to the
Board the extent to which each Participant has or has not met his or her Performance Criteria.
Awards will be:

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[1] Forfeited, if Performance Criteria have not been met at the end of the Performance
Period; or

[2] To the extent that related Performance Criteria have been met, subject to
Section 5.03, valued and distributed in a single lump sum cash payment, in the form
specified in the Award Agreement, no later than the fifteenth (15th) day
of the third (3rd) month beginning after the end of the calendar year or
the Company’s fiscal year (whichever is later) during which or with which the
applicable Performance Period ends.

5.03 Deferral of Distribution. Each Participant may direct the Company to defer payment of all or
any portion of his or her Award by electing to have that amount
[1] credited to his or her account
under any nonqualified deferred compensation plan [as defined in Section 201(2) of the Employee
Retirement Income Security Act of 1974, as amended] maintained by the Company and designated by the
Committee as an appropriate repository for these deferrals or any successor plan and
[2] distributed
under the terms of that plan. This election must be made at a time and in a manner that complies
with Code §409A.

5.04 Effect of Termination.

[1] Termination Other Than For Death or Disability. Unless otherwise provided in the Award
Agreement, and except in the case of a Termination on account of death or Disability, no
Award will be paid to a Participant who Terminates before the end of a Performance Period.

[2] Termination Because of Death or Disability. Unless otherwise provided in the Award
Agreement, a prorated Award will be paid to a Participant (or to his or her Beneficiary) who
Terminates on account of death or Disability but only if the Performance Criteria applicable
to that Performance Period are met at the end of that Performance Period. The amount paid
will equal the Award the Disabled or dead Participant would have received had his or her
employment not Terminated before the end of the Performance Period multiplied by the number
of days between the beginning of the Performance Period during which the Termination
occurred on account of death or Disability and divided by the total number of days in that
Performance Period. This amount, if any, will be paid at the same time and in the same
manner as the Award would have been paid if the Disabled or dead Participant had not
Terminated.

6.00 AMENDMENT, MODIFICATION AND TERMINATION OF PLAN

The Board or the Committee may terminate, suspend or amend the Plan at any time without shareholder
approval except to the extent that shareholder approval is required to satisfy applicable
requirements imposed by [1] Rule 16b-3 under the Act, or any successor rule or regulation,
[2] applicable requirements of the Code or [3] any securities exchange, market or other quotation
system on or through which the Company’s securities are listed or traded. Also, no Plan amendment
may [4] result in the loss of a Committee member’s status as a

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“non-employee director” as defined
in Rule 16b-3 under the Act, or any successor rule or regulation, with respect to any employee
benefit plan of the Company, [5] cause the Plan to fail to meet requirements imposed by Rule 16b-3
or [6] without the consent of the affected Participant (and except as specifically provided
otherwise in this Plan or the Award Agreement) adversely affect any Award granted before the
amendment, modification or termination. However, nothing in this section will restrict the
Committee’s right to amend the Plan and any Award Agreements without any additional consideration
to affected Participants to the extent necessary to avoid penalties arising under Code §409A, even
if those amendments reduce, restrict or eliminate rights granted under the Plan or Award Agreement
(or both) before those amendments.

7.00 MISCELLANEOUS

7.01 Assignability. Except as described in this section, an Award may not be transferred except by
will or the laws of descent and distribution.

7.02 Beneficiary Designation. Each Participant may name a Beneficiary or Beneficiaries (who may be
named contingently or successively) to receive or to exercise any Award that becomes payable on
account of or after the Participant’s death. Each designation made will revoke all prior
designations made by the same Participant, must be made on a form prescribed by the Committee and
will be effective only when filed in writing with the Committee. If a Participant has not made an
effective Beneficiary designation, the deceased Participant’s Beneficiary will be his or her
surviving spouse or, if none, the deceased Participant’s estate. The identity of a Participant’s
designated Beneficiary will be based only on the information included in the latest beneficiary
designation form completed by the Participant and will not be inferred from any other evidence.

7.03 No Guarantee of Continuing Services. Nothing in the Plan may be construed as:

[1] Interfering with or limiting the right of the Company or any Related Entity to Terminate
any Employee’s employment at any time;

[2] Conferring on any Participant any right to continue as an Employee of the Company or any
Related Entity;

[3] Guaranteeing that any Employee will be selected to be a Participant; or

[4] Guaranteeing that any Participant will receive any future Awards.

7.04 Tax Withholding. The Company will withhold from the Award or from other amounts owed to the
Participant an amount sufficient to satisfy federal, state and local withholding tax requirements
on any Award.

7.05 Indemnification. Each individual who is or was a member of the Committee or of the Board will
be indemnified and held harmless by the Company against and from any loss, cost, liability or
expense that may be imposed upon or reasonably incurred by him or her in connection with or
resulting from any claim, action, suit or proceeding to which he or she may

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be made a party or in
which he or she may be involved by reason of any action taken or not taken under the Plan as a
Committee or Board member and against and from any and all amounts paid, with the Company’s
approval, by him or her in settlement of any matter related to or arising from the Plan as a
Committee or Board member or paid by him or her in satisfaction of any judgment in any action, suit
or proceeding relating to or arising from the Plan against him or her as a Committee or Board
member, but only if he or she gives the Company an opportunity, at its own expense, to handle and
defend the matter before he or she undertakes to handle and defend it in his or her own behalf.
The right of indemnification described in this section is not exclusive and is independent of any
other rights of indemnification to which the individual may be entitled under the Company’s
organizational documents, by contract, as a matter of law or otherwise. The foregoing right of
indemnification is not exclusive and is independent of any other rights of indemnification to which
the person may be
entitled under the Company’s organizational documents, by contract, as a matter of law or
otherwise.

7.06 No Limitation on Compensation. Nothing in the Plan is to be construed to limit the right of
the Company to establish other plans or to pay compensation to its employees or directors, in cash
or property, in a manner not expressly authorized under the Plan.

7.07 Requirements of Law. The grant of Awards and the issuance of shares of Stock will be subject
to all applicable laws, rules and regulations and to all required approvals of any governmental
agencies or national securities exchange, market or other quotation system.

7.08 Governing Law. The Plan, and all agreements hereunder, will be construed in accordance with
and governed by the laws (other than laws governing conflicts of laws) of the State of Ohio.

7.09 No Impact on Benefits. Plan Awards are incentives designed to promote the objectives
described in Section 1.00. Also, Awards are not compensation for purposes of calculating a
Participant’s rights under any employee benefit plan that does not specifically require the
inclusion of Awards in calculating benefits.

9EX-10.91

 

Exhibit 10.91

SUPPLY AGREEMENT

(Combo Stores)

     THIS SUPPLY AGREEMENT (Combo Stores) (this “Agreement”) is made to be effective as of January
30, 2005 (“Effective Date”), by and between DSW Inc. (f.k.a. Shonac Corporation), an Ohio
corporation with a business address at 4150 East Fifth Ave, Columbus, Ohio 43219 (the “Supplier”),
and Filene’s Basement Inc., a Delaware corporation with a business address at 12 Gill Street, Suite
1600, Woburn, MA 01801 (“Filene’s”).

BACKGROUND

     The following facts constitute the background for this Agreement:

     A. Filene’s currently owns and operates certain retail stores (“Store(s)”) and Supplier is a
distributor of shoes and related merchandise.

     B. Filene’s desires to have Supplier supply Merchandise (as defined herein) for footwear
departments in certain of its Stores by obtaining Merchandise from Supplier who will select the
Merchandise, be the sole owner of the same, and place Merchandise in such Stores with
Filene’s retaining a portion of the sales price of all Merchandise sold as provided herein.

     C. Filene’s and Supplier are parties to an Agreement dated April 1, 2000 (“the Original
Agreement”) relating to Supplier’s supply of Merchandise to Filene’s. Filene’s and Supplier wish to
amend and restate the Original Agreement as it related to Covered Stores (as defined herein).
Contemporaneously herewith, Filene’s and Supplier have also executed a Licensed Department Supply
Agreement (as defined herein) to amend and restate the Original Agreement as it related to Licensed
Departments (as defined herein).

     NOW, THEREFORE, in consideration of the mutual covenants and agreements contained in this
Agreement, and for other good and valuable consideration, the receipt and adequacy of which is
hereby acknowledged, the parties hereto, each intending to be legally bound hereby, agree as
follows:

1. DEFINITIONS.

     In addition to the other terms defined herein, capitalized terms shall have the meanings given
to them as follows:

     1.1. “Consignment Property” means, collectively, the following described property
whether now consigned, owned or existing or in the future consigned, acquired or arising: (i) all
Merchandise which has been, is now or in the future consigned or delivered, directly or indirectly,
by Supplier to, or for the benefit of, Filene’s; (ii) all replacements, additions, accessions,
substitutions, returns, repossessions and exchanges of any and all Merchandise; (iii) all records
of the foregoing (whether the records are maintained in written or electronic form); and (iv) all
products and proceeds of the foregoing described property (such proceeds being in whatever form,
including, without limitation, additional Merchandise, accounts, inventory, instruments, documents,
chattel paper, general intangibles, money, bank accounts and deposits, cash and all insurance
proceeds payable by reason of any loss or damage of any or all of the foregoing described
property).

 

 

     1.2. “Consignment Obligations” means, as of any date, the total unpaid Supplier
Proceeds owed to Supplier for Merchandise which has been, is now, or in the future will be,
delivered by Supplier to Filene’s.

     1.3. “Covered Stores” means all of the Stores operated by Filene’s that include Shoe
Departments and which Supplier has agreed to supply hereunder, each of which have 10,000 or more
square feet of sales floor dedicated to the Shoe Department for each such Store, which number of
Stores may change, increase or decrease to reflect additional or closed Store locations from time
to time during the term of this Agreement.

     1.4. “Covered Store Schedule” means that schedule attached as Exhibit A hereto
of two (2) Stores in which Shoe Departments will be supplied under this Agreement. Exhibit
A may be updated from time to time by written agreement of the parties. The Covered Store
Schedule shall be amended from time to time to include any new Covered Stores which include a Shoe
Department.

     1.5. “Force Majeure” means an event which shall prevent Supplier from
performing, or causes a delay in, the performance of, any obligation required hereunder by reason
of strikes, lock-outs, labor troubles, inability to procure goods, failure of power, riots,
insurrection, fires, floods, explosions, vandalism, acts of a governmental authority, failure of
transportation not under the reasonable control of Supplier, acts of terrorism, whether foreign or
domestic, war, armed conflict, or other reasons of a like nature which are beyond the control of
Supplier.

     1.6. “Gross Sales” means the gross proceeds from all sales of Merchandise, including
(i) the entire sales price of all Merchandise sold, (ii) the amount of all credit sales, whether or
not collected, (iii) the amount of all deposits not refunded to customers, and (iv) any sales,
excise or similar tax chargeable with respect to sales of Merchandise and collected from customers.

     1.7. “Licensed Department” means a store which has less than 10,000 square feet of
sales floor dedicated to the Shoe Department and which is the subject of the Licensed Department
Supply Agreement.

     1.8. “Licensed Department Supply Agreement” means the Supply Agreement dated the same
date hereof, between Supplier and Filene’s covering Licensed Departments.

     1.9. “Merchandise” means shoes, sneakers, boots, sandals, specialty dance footwear,
cleated shoes and other sports shoes, skates, shoe care products (e.g. polish, cleaners and water
proofers), and laces.

     1.10. “Net Sales” means the Gross Sales from the sale of Merchandise less the value of
(i) voided sales, cash or credit refunds or adjustments made with respect to Merchandise sold and
returned, (ii) all returns to manufacturers or shippers, or returns so damaged they must be written
off, (iii) transfers, sales and exchanges among Shoe Departments to other locations as requested by
Supplier, (iv) sales not in the ordinary course of business, (v) employee discounts actually
allowed by Supplier, and (vi) sales tax or excise tax chargeable with respect to Merchandise sales
and collected from customers.

     1.11. “Shoe Department” means the area in the Covered Stores in which Filene’s will
offer for sale the Merchandise.

     1.12. “SKU” means the stock keeping unit number assigned to each separate item of
Merchandise supplied by Supplier.

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     1.13. “Supplier’s Supervisor” means an individual or individuals employed by Supplier,
at Supplier’s cost to provide supervision and recommendations as to the Shoe Departments of
multiple Covered Stores.

2. GRANT OF SUPPLY RIGHT. Filene’s hereby grants to the Supplier an exclusive supply right
(the “Supply Right”) to supply Merchandise to the Shoe Departments of all Covered Stores. Subject
to Section 3, all Merchandise shall be owned by Supplier with Filene’s having the right to sell
such Merchandise for the benefit of Supplier and Filene’s as provided in this Agreement. Filene’s
shall give Supplier the first right of refusal to supply Merchandise pursuant to this Agreement to
any Store that will open a Shoe Department and which Store is not on the Covered Store Schedule at
the time the decision is made by Filene’s to open a Shoe Department in that Store. Filene’s shall
provide Supplier ninety (90) days advance written notice of its intention to open a new footwear
department in any Store that is not a Covered Store or to add a Covered Store and Supplier shall
have thirty (30) days after the date of such notice to agree, in Supplier’s sole discretion, to
supply Merchandise to the new Shoe Department. If Supplier does not so agree, Filene’s may supply
Merchandise to the new department itself or through a third party. In the event that Filene’s
intends to open a significant number of Shoe Departments within a short time period and Supplier
agrees to supply such Shoe Departments as provided above, Supplier shall have a reasonable amount
of time, under the circumstances, to supply such Shoe Departments. Notwithstanding anything to the
contrary herein, Filene’s and Supplier agree that the Filene’s Basement Store # 51 located at 426
Washington Street, Boston, MA 02101 will not be subject to this Agreement.

3. SUPPLY OF MERCHANDISE. Supplier will supply Merchandise for each Covered Store on the
Covered Store Schedule. Filene’s shall acquire no ownership rights in and to the Merchandise
supplied
by the Supplier hereunder and title to Merchandise shall remain in and with Supplier until actually
sold, except that title to Merchandise sold to Filene’s customers shall pass to Filene’s at the
instant the sale of such Merchandise is effected. In the event that Merchandise is returned by the
customer to a Store, title shall automatically re-vest in Supplier.

4. MERCHANDISING AND PRICE PRACTICES.

     4.1. Merchandise Supplied. Supplier shall determine the quantity and mix of the
Merchandise to be sold at the Covered Stores. Supplier shall continuously provide the Covered
Stores with a complete line of salable inventory of current season Merchandise in appropriate
quantities and of a quality in keeping with the quality of other merchandise sold by Filene’s and
targeted to Filene’s normal customer. The Merchandise supplied will generally be shipped in
pre-assorted case packs typical in the footwear industry, and Supplier will not replenish pairs
sold at a size level. Supplier will coordinate with Filene’s to provide Merchandise with scannable
bar codes which are readily readable by Filene’s normal ticket scanning equipment.

     4.2. Compliance with Law. Supplier shall be responsible to assure that no Merchandise
will be supplied, and no Merchandise will be offered at any price or in any manner, that violates
any applicable Federal, state or other applicable statute or
regulation. If a Filene’s store
manager or officer becomes aware of any actual or suspected violation, Filene’s will immediately
advise Supplier of that violation. Filene’s agrees to comply with all applicable laws and
regulations in the performance of this Agreement and in the operation of the Covered Stores.

     4.3. Delivery Responsibility. Supplier shall arrange to deliver Merchandise, at
Supplier’s cost, to Covered Stores, and Filene’s employees shall be responsible for receiving the
Merchandise, accounting for the Merchandise received, and stocking the Merchandise in or on the
display case or fixture at each of the Covered Stores. Filene’s will maintain the Shoe Departments
in a normal and neat condition consistent with other departments in the Store. Mismates, defective
or damaged Merchandise received from Supplier will be noted and set aside for inspection by
Supplier’s Supervisor and for

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disposition at Supplier’s direction within a reasonable time.
Supplier shall be exempt from Filene’s distribution center, vendor and data exchange requirements.

     4.4. Transfers of Refunded Merchandise in non-Covered Stores. Filene’s will make good
faith efforts to ensure that Merchandise returned to Stores which are not Covered Stores will be
transferred or shipped to a Covered Store at Supplier’s expense.

     4.5. Prices and Discounts. Supplier will set the prices at which its Merchandise will
be sold and put in force reasonable discounting policies designed to clear stale Merchandise.
Except as provided below, Supplier shall have the only authority to markdown Merchandise.
Nevertheless, Supplier agrees (i) to participate in limited, selected promotional events in the
Covered Stores as agreed upon in advance by Supplier, and (ii) to maintain a policy of periodic
markdowns based on length of time Merchandise has been on the selling floor. Supplier shall offer
to employees who receive a discount from Filene’s own departments under Filene’s policies the same
discount on all sales of Merchandise as is normally received by them under Filene’s then current
policies in effect from time to time. Notwithstanding the foregoing, discounts for sales to
Filene’s employees shall only be in accordance with Filene’s normal policies in effect from time to
time and shall in no event exceed 30% of the otherwise applicable price for the Merchandise.

     4.6. Supervisors. Supplier shall provide, at its expense, a sufficient number of
trained Supplier’s Supervisors who will coordinate and make recommendations as to arrangement,
presentation and organization of the Shoe Departments in the Covered Stores.

     4.7. Space. Filene’s, at its expense, shall make available an amount of space for the
Shoe Department in a size and location as listed on the Covered Store Schedule, which space is not
to be less than the greater of (i) the existing Shoe Department space in each Shoe Department on
the date of this Agreement or (ii) 15,000 square feet, unless a smaller space is agreed to by
Supplier. Filene’s shall make available for Supplier’s use with a Shoe Department a minimum of
1,000 square feet of storage space in each Covered Store. Filene’s may, at Filene’s expense,
relocate or renovate the Shoe Department of at any time and from time to time, upon reasonable
notice to Supplier and upon prior approval from Supplier for relocations.

     4.8. Utilities and Personnel. Filene’s, at its expense, will provide all utilities
and personnel to operate the Shoe Department in each Covered Store. Filene’s will be responsible
for all store staffing and all decisions relating to hiring and termination of such personnel
related to the Covered Stores (including all sales and stocking personnel), and will bear all
expenses relating thereto including without limitation, the cost of all employee salaries, payroll
taxes and employee benefits. Filene’s shall use commercially reasonable efforts to assure that the
quality of the personnel in the Shoe Department is consistent with the quality of its personnel in
other departments in the same Covered Store. Supplier at its expense shall provide
Merchandise-related training for Filene’s personnel serving the Shoe Department. Filene’s agrees
to indemnify Supplier from all damages, costs of defense and expenses (including attorneys’ fees)
relating to claims based on wrongdoing by Filene’s employees, agents or contractors unless caused
by Supplier or its agents’, contractors’, or employees’ active negligence (not including negligence
by omission or inaction), gross negligence or willful wrongdoing.

     4.9 Advertising; License. Supplier will, upon request, provide to Filene’s
information related to Merchandise to be advertised in newspapers or other public media. Filene’s
will be responsible for producing the advertising copy and placing it with the appropriate media
according to Filene’s normal procedures for its own merchandise. Supplier will not be obligated to
pay any advertising expenses relating to the Shoe Departments of the Covered Stores. Supplier
hereby grants to Filene’s, a non-exclusive and non-assignable, indivisible right and license to use
the DSW name and logo (“License”) as necessary solely for the purposes of operating the Covered
Stores and producing advertising copy for

4

 

Covered Stores. Prior to the use of the DSW name or logo
Filene’s shall submit to Supplier any and all advertising copy and related information for review
and approval by Supplier. Commencing with the first payment which shall be due on January 30,
2005, and continuing on the first day of Filene’s fiscal year thereafter, providing (i) Filene’s
maintains a 52-53 week fiscal year as traditionally done in the retail industry, or (ii) if
Filene’s does not use the 52-53 week fiscal year, the first day of the traditional retail year as
provided by the National Retail Federation 4-5-4 Merchandising Calendar, Filene’s shall pay to
Supplier $100,000 per Covered Store, in advance, as consideration for the use of the License for
the fiscal year of this Agreement then commencing. The payment shall be prorated for any Covered
Store closed during the year covered by such payment, based upon the number of days such Covered
Store was open, with the balance refunded to Filene’s within thirty (30) days of such Covered
Store’s closing. Supplier and Filene’s shall both use their best efforts to maintain, and to cause
its employees and agents to maintain, the high standard, image and prestige of the name,
trademarks, service marks, symbols or logos associated with the other party hereto.

     4.10. Standards of Operation. The following standards of operation shall be
applicable to the operation of Covered Stores. In the event this Section 4.10 conflicts with other
provisions of this Agreement, this Section 4.10 shall control.

     4.10.1. Filene’s shall install, maintain and replace at Filene’s expense the DSW sign
on the outside of Covered Stores and at such other locations in the interior of the Covered
Store in such number, size and location as agreed to by Filene’s and Supplier. Supplier
shall provide at Supplier’s expense specialty and basic visual merchandising and signage in
the Shoe Department, which merchandising and signage will be subject to Filene’s reasonable
approval.

     4.10.2. The department manager of the Shoe Department shall be an employee of Supplier
and will report to Supplier’s Supervisor, but will comply with all applicable Filene’s
policies. Supplier will pay the salary, applicable employer payroll taxes, employer
benefits, workmen’s compensation and expenses of such department manager.

     4.10.3. Filene’s shall notify Supplier in writing no less than 180 days prior to the
expiration, non-renewal or termination of any Covered Store’s lease and provide to Supplier
all pertinent facts relating to such expiration, non-renewal or termination. In the event
that Filene’s fails to provide such notice and that failure causes Supplier lost revenue or
damages, Filene’s shall indemnify Supplier for such lost revenue or damages.

     4.10.4. Filene’s shall not operate any “going out of business sale”, “liquidation” or
the like which could create any possible confusion with the public as to whether any of
Supplier’s assets are being liquidated.

     4.10.5. Filene’s shall not display any merchandise in the Shoe Department other than
Merchandise without the consent of Supplier and shall immediately remove any merchandise
from the Shoe Department upon request by Supplier. Supplier shall not display any
Merchandise outside of the Shoe Department without the consent of Filene’s and shall
immediately remove any merchandise outside of the Shoe Department upon request by Filene’s.

     4.10.6. Filene’s shall use best efforts to accept returns of Merchandise which are
returned under conditions that would be permitted by the return policy as in effect in DSW
stores from time to time.

     4.10.7. Filene’s shall accept for return at any Covered Store any footwear merchandise
purchased from a store operated by Supplier as a DSW store.

     4.10.8. Filene’s shall accept from customers for discounted purchases of Merchandise
the DSW Reward Your Style program (or other similar program operated by Supplier in DSW

5

 

stores) and transmit information related to customer’s use of such program to DSW. Filene’s
shall not take any action which may discourage the enrollment in or use of the DSW Reward
Your Style program. Filene’s shall accept other promotions by Supplier unless the promotion
would interfere with Filene’s business.

5. FIXTURES, EQUIPMENT, LOCATION AND LAYOUT. Filene’s shall at its sole cost provide the
fixtures and equipment to display Supplier’s Merchandise in the Covered Stores or as needed to
replace existing fixtures. The fixtures and equipment decisions with respect to design, type,
color, material, layout, and location (subject to Section 4.7) within each Covered Store and
related matters for new fixtures shall be made jointly by Supplier and Filene’s. Filene’s shall
maintain at its expense all displays and fixtures in good repair and condition, ordinary wear and
tear excepted. Supplier shall, subject to Filene’s approval, provide individual Merchandise “case
talkers” for depicting the style, price, and any other pertinent information that Supplier deems
appropriate. Title to all fixtures paid for by Filene’s shall remain in Filene’s name and title to
all fixtures paid for by Supplier shall remain in Supplier’s name. Upon termination of this
Agreement, and at Filene’s request, Supplier will remove such fixtures not owned by Filene’s.
Absent a continuing Event of Default, no fixtures or equipment belonging to Supplier or any
patented fixtures of Supplier shall be transferred or removed from a Store without the consent of
Supplier; and, further, in no event will Filene’s sell, transfer or otherwise dispose of any
fixtures patented by Supplier without Supplier’s express written consent.

6. SALES REVENUE SHARING; ACCOUNTING PROCEDURES.

     6.1 Sales. All sales of Merchandise will be identified with the Shoe Department and
shall be made through Filene’s normal cash registers or point-of-sale systems and by use of
Filene’s normal sales recording equipment. Net Sales from sales of Merchandise shall be split 80%
to Supplier and 20% to Filene’s. Supplier’s 80% portion of the Net Sales (“Supplier’s Proceeds”)
shall be held in trust for the benefit of Supplier and Supplier’s Lender; provided however, that
prior to receiving written notice to the contrary from Supplier’s Lender, Filene’s shall deliver
all of Supplier’s Proceeds directly to Supplier and shall be released from any claim by Supplier’s
Lender for all such funds turned over to Supplier.

     6.2 Reports. The reporting of all sales of Merchandise shall be made in conformity
with the methods established by Filene’s from time to time. The costs of such methods and
point-of-sale equipment and maintenance thereof shall be borne by Filene’s. Filene’s also agrees
to provide and make accessible to Supplier information, statistics and reports available within
Filene’s existing merchandise processing system which relate to the Merchandise. Any special
reports or enhancements required by the Supplier will be subject to Filene’s approval. Filene’s
hereby agrees to cooperate and coordinate with Supplier the implementation of electronic exchange
and communication between Filene’s computer system and Supplier’s computer system in connection
with point-of-sale, receiving and shipping and inventory information related to the Merchandise,
including Merchandise returns at any Stores which are not Covered Stores.

     6.3. Books & Records. Supplier shall maintain and preserve the records required to be
maintained hereunder for the length of time required by applicable law. Supplier shall have the
right to obtain from Filene’s all statements, data or explanations reasonably necessary to validate
each Accounting Statement (as defined in Section 6.5) provided by Filene’s to Supplier. Filene’s
shall keep true and correct books of accounts in accordance with Filene’s regular accounting
practices related to the Merchandise, which entries shall be open to examination and inspection by
Supplier upon reasonable advance notice during all normal business hours during the term of this
Agreement and for three (3) years thereafter. Such examination and inspection will not occur more
than twice in any twelve (12) month period.

     6.4. Filene’s Fee. In consideration of granting the Supply Right, Filene’s shall be
entitled to twenty percent (20%) of Net Sales of Merchandise (“Filene’s Fee”).

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     6.5. Accounting. No later than Friday of each week Filene’s shall send to Supplier a
written statement (the “Accounting Statement”) by electronic mail or by personal delivery setting
forth with respect to the immediately preceding week the following:

(i) the total amount of Gross Sales and Net Sales, and

(ii) the amount of Filene’s Fee.

     6.6. Settlement. Contemporaneously with the submission of the Accounting Statement,
Filene’s shall pay to Supplier in immediately available funds or by another method agreed to by the
parties, subject to the provisions of Section 13, an amount equal to Net Sales in or from the Shoe
Department during the immediately preceding week less the amount identified in clause (ii)
of Section 6.5. Supplier may, by notice to Filene’s given no later than ninety (90) days following
the date of an Accounting Statement, question the accuracy of such Accounting Statement. Filene’s
and Supplier shall make diligent, good faith efforts to resolve the disagreement within thirty (30)
days following such notice. If Filene’s does not receive a notice of dispute from Supplier within
one hundred twenty (120) days after the date of the applicable Accounting Statement, Supplier will
be deemed to have accepted such Accounting Statement, subject to any adjustment required as
permitted herein.

7. TERM AND TERMINATION.

     7.1. Basic Term and Renewals. The original term of this Agreement shall commence on
January 30, 2005, and continue through and include January 29, 2010, unless previously terminated
in accordance with the provisions of this Agreement. This Agreement shall be automatically
extended for additional periods of one (1) year each. If either party chooses not to renew this
Agreement at the end of the original term or any successive renewal term, it shall deliver a
written termination notice to the other party not less than one hundred eighty (180) days prior to
the end of the then effective term.

     7.2. Termination for Breach. Either party may terminate the Supply Right and
obligations related thereto as to a particular Shoe Department in an individual Covered Store or as
to all Covered Stores at any time for any Event of Default hereunder by the other party hereto by
giving ninety (90) days prior written notice to the defaulting party. In addition, an individual
Store shall no longer be a Covered Store, and this Agreement shall terminate as to such individual
Store, if at any time that Store ceases for any reason to be operated by Filene’s. Filene’s shall
provide to Supplier written notice no later than ninety (90) days prior to the date when any
Covered Store will no longer be operated by Filene’s.

     7.3. [Intentionally deleted.]

     7.4. [Intentionally deleted.]

     7.5. Effect of Termination. Except as otherwise provided in Section 13 hereof, upon
the termination of the Supply Right and obligations related hereto for any reason permitted herein
as to a particular Covered Store, individually, or as to all Covered Stores (a) Supplier shall have
the option to liquidate existing inventory of the Merchandise; provided, however, that such right
to continue selling shall not extend beyond the date upon which this Agreement shall formally
terminate unless agreed in writing by the parties, (b) Filene’s shall be entitled to offer for sale
Merchandise not obtained from Supplier for a period of thirty (30) days prior to the effective date
of any such termination, and (c) Filene’s will continue to display the remaining inventory of
Merchandise in a manner consistent with such displays prior to such termination although the space
allocated to that remaining inventory of Merchandise will be reduced as the quantity of that
inventory of Merchandise is reduced. Except as otherwise provided in Section 13, Supplier shall
remove, at Supplier’s expense within ninety (90) days following such termination: (y) all
Merchandise supplied by Supplier located in any Filene’s Store, and (z) if demanded by Filene’s in
writing, and except as otherwise provided herein, all fixtures provided by Supplier (if any) which
Filene’s demands be removed. Supplier may purchase from Filene’s any patented fixtures installed
in the Shoe 

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Departments at a price equal to 100% of the unamortized costs of such fixtures with
those costs being amortized on a straight-line basis over five (5) years; provided however, the
purchase price of such patented fixtures shall not be less than 5% of the original cost of such
fixtures. Supplier will promptly pay all costs associated with the repair of any damage to a Store
caused by such removal. Except as otherwise provided in Section 13 hereof, any Merchandise or
fixtures not removed by Supplier as provided above will be deemed abandoned and Filene’s may take
such actions (including destroying) with respect to such items without liability.

8. SHORTAGES AND DAMAGES. Supplier will maintain complete and accurate records of
the inventory of its Merchandise at each Store and make that information available to Filene’s. At
the time of each Annual Inventory (as defined below), Filene’s, at Supplier’s expense, shall
arrange for having an inventory to be taken of Supplier’s Merchandise at the same time of Filene’s
scheduled year-end physical inventory (the “Annual Inventory”). Supplier, at its expense, may have
a representative observe the taking of the Annual Inventory. In the event that the Annual
Inventory shows shrinkage in Merchandise in excess of one percent (1%) of annual Net Sales
(“Allowable Shrink”), Filene’s will pay to Supplier 50% of the retail value (as listed in
Supplier’s inventory retail stock ledger) of that shrinkage amount which exceeds the Allowable
Shrink (less any insurance proceeds payable to Supplier with respect to such loss) within thirty
(30) days of the date of the Annual Inventory.

9. IDENTITY, INDEMNITY AND RELATIONSHIP TO PARTIES.

     9.1. No Agency. Each party to this Agreement agrees that in performing its respective
duties and obligations hereunder, and in exercising any of the rights or benefits granted
hereunder, neither shall at any time hold itself out to be the agent, servant, or employee of the
other party, in any manner whatsoever, and it is expressly understood that it is the intention of
this Agreement that neither party hereto shall at any time be or act as the agent, servant or
employee of the other.

     9.2. Indemnity of Filene’s. Supplier will indemnify Filene’s and save it harmless
from and against any and all claims, actions, damages, liability and expense (including attorneys’
fees) in connection with loss of life, personal injury and/or damage to property arising from or
out of any occurrence caused by Supplier, by its agents, contractors, or employee negligence,
omission or deliberate acts. In case Filene’s shall, without fault on its part, be made a party to
any litigation commenced by or against Supplier and relating to any of the foregoing matters, then
Supplier shall protect and hold Filene’s harmless and shall pay all costs, expenses and reasonable
attorneys’ fees that may be incurred or paid by Filene’s in defending such action.

     9.3. Indemnity of Supplier. Filene’s will indemnify Supplier and save it harmless
from and against any and all claims, actions, damages, liability and expense in connection with
loss of life, personal injury and/or damage to property rising from or out of any occurrence caused
by Filene’s or its agents, contractors, or employees’ negligence, omission or deliberate acts. In
case Supplier shall, without fault on its part, be made a party to any litigation commenced by or
against Filene’s and relating to any of the foregoing matters, then Filene’s shall protect and hold
Supplier harmless and shall pay all costs, expenses and reasonable attorneys’ fees that may be
incurred or paid by Supplier in defending such action.

     9.4. Indemnification Procedure

     9.4.1. Notice. If any third party makes a claim for which Supplier or
Filene’s, as the case may be, (the “Indemnified Party”) seeks indemnity from the other party
hereto (“Indemnitor”), the Indemnified Party shall as soon as practicable notify Indemnitor
of the details of the claim (“Claim Notice”).

     9.4.2. Defense of Admitted Indemnified Claim. After receiving a Claim Notice,
Indemnitor may elect, by written notice to the Indemnified Party, to assume the defense of
such claim by using counsel selected by Indemnitor, acting reasonably. If Indemnitor
assumes such

8

 

defense and admits that the claim is subject to the Indemnitor’s indemnity
obligations, then: (i) the claim shall be deemed to be a claim indemnified by the
Indemnitor; (ii) the Indemnified Party may, at its election, participate in the defense of
the claim, but Indemnitor will have no obligation to pay for any defense costs including
attorneys’’ fees of the Indemnified Party after Indemnitor assumes the defense of the claim;
and (iii) Indemnitor will have the right, without cost to Indemnified Party, to compromise
and settle the claim on any basis believed reasonable, in good faith, by Indemnitor, and
Indemnified Party shall be bound thereby.

     9.4.3. Disputed Indemnity. After receiving a Claim Notice, if Indemnitor
either does not assume the defense thereof, or does so under a reservation of rights without
admitting that the claim is subject to the Indemnitor’s indemnity obligations, then: (i)
the claim shall not be deemed to be a claim indemnified by the Indemnitor and neither party
shall have waived any rights to assert that the claim is or is not properly a claim subject
to the Indemnitor’s indemnity obligations; (ii) both Indemnitor and Indemnified Party may,
at their individual election, participate in the defense of such claim but Indemnitor will
remain responsible for the costs of defense, including reasonable attorneys’’ fees of the
Indemnified Party should the claim ultimately be determined to be subject to Indemnitor’s
indemnity obligation; and (iii) the Indemnified Party shall have the right to compromise and
settle the claim on any basis believed reasonable, in good faith, by the Indemnified Party,
and the Indemnitor will be bound thereby should the claim ultimately be determined to be
subject to Indemnitor’s indemnity obligation.

10. INSURANCE DAMAGE.

     10.1. Supplier Liability Insurance. Supplier shall maintain commercial general and
product liability insurance coverage against any loss or liability for damages which may result
from Supplier’s operations or Supplier’s Merchandise either to persons or property with limits of
not less than $2 million for injury to one person; and not less than $500,000 for property damage
or occurrence in each location (subject to normal deductibles and retentions). Supplier’s
liability insurance shall name Filene’s as an additional insured and shall contain provisions
waiving subrogation against Filene’s; provided however, that this provision shall not cover claims
provided for in the indemnity clauses of Section 4.8 and/or 9.3.

     10.2. Supplier Casualty Insurance. Supplier agrees to keep, at its own cost and
expense, all of its property and its Merchandise and all fixtures provided by it in the Store
adequately insured against loss by fire and all other casualties covered by broad form extended
coverage and sprinkler leakage insurance policies (or Supplier may self-insure the same). Supplier
shall bear the entire risk of a casualty to its Merchandise and other property and all fixtures
located in the Stores; provided, however, that this provision shall not cover claims provided for
in the indemnity clauses Sections 4.8 and/or 9.3.

     10.3. Filene’s Liability Insurance. Filene’s shall provide broad form comprehensive
commercial general liability insurance coverage insuring Filene’s and Supplier against any loss or
liability for damages which may result from Filene’s operations or Supplier’s operations within the
Covered Stores with limits of not less than $2 million for injury to one person, and for property
damage or occurrence in each location (subject to normal deductibles and retentions); provided,
however, that this provision shall not cover claims provided for in the indemnity clause of Section
9.2 for injuries to persons or damage to property. The limits indicated herein may be satisfied by
a primary policy and umbrella liability policy showing the primary liability policy as an
underlying policy. A certificate of insurance naming Supplier, as an additional insured shall
evidence the insurance required herein. The primary liability policy shall contain provisions
waiving subrogation against Supplier.

     10.4. Filene’s Worker Compensation Insurance. Filene’s shall provide to Supplier
proof of insurance for worker compensation insurance for all Covered Stores which insurance shall
meet or exceed the regulatory requirements of the state in which Covered Stores are located.
Filene’s agrees to indemnify and defend Supplier for all claims brought by employees of Filene’s.

11. LIENS AND TAXES. Supplier agrees to pay all ad valorem, personal property, excise, use
or other taxes and assessments and licenses of every description assessed against it, in respect of
or

9

 

measured by the
Merchandise or other property of Supplier and all fixtures provided by Supplier.
Filene’s shall be responsible for the payment of all sales taxes resulting from sales of the
Merchandise under this Agreement.

12. DEFAULT.

     12.1. Any one of the following shall constitute an event of default (“Event of Default”)
hereunder:

     12.1.1. Either party fails to comply with or perform as and when required or to observe
any of the terms, conditions, or covenants of this Agreement, and such failure continues for
a period of (a) ten (10) days after notice thereof to the defaulting party with respect to
monetary defaults, and (b) thirty (30) days after notice thereof to the defaulting party
with respect to non-monetary defaults; or

     12.1.2. Any proceeding under the United States Bankruptcy Code or any successor law or
any law of the United States or of any state relating to insolvency, receivership, or debt
adjustment is instituted by either party; any such proceeding is instituted against either
party and is consented to by the respondent or remains undismissed for sixty (60) days; an
order for relief is entered under the United States Bankruptcy Code or any successor law
against either party; either party is adjudicated a bankrupt; a trustee, receiver or similar
fiduciary is appointed to administer any substantial part of the property of either party;
or either party makes an assignment for the benefit of creditors, admits in writing an
inability to pay debts generally as they become due or becomes insolvent; or

     12.1.3 Any failure by Filene’s to comply with the provisions of Section 4.10 and such
failure is not cured within ten (10) days after notice thereof is given by Supplier to
Filene’s.

     12.2. Upon the occurrence of an Event of Default hereunder, the non-defaulting party may
terminate this Agreement as provided in Section 7.2, and/or exercise any other remedy provided by
law or equity. An Event of Default under Section 12.1.2 above shall be effective without notice or
the taking of any action by the non-defaulting party.

13. SUPPLIER’S LENDER. If at any time during the term of this Agreement Supplier and
Lender shall no longer both be “Loan Parties” (as defined in the credit facilities existing on the
date hereof) to the same credit facilities, or if Supplier’s supplying of Merchandise hereunder
would otherwise constitute a default under any such credit facility, Supplier’s obligations to
supply Merchandise hereunder shall cease until consent therefor has been obtained from Supplier’s
Lender. Upon the obtaining of such consent, Filene’s and Supplier hereby agree, for the benefit of
such commercial lender(s) which from time to time provide Supplier’s principal credit facilities
(“Supplier’s Lender”), to the following:

     13.1. Security Interest/Consignment.

     13.1.1. All Merchandise delivered by Supplier from time to time to Filene’s under this
Agreement is made on a consignment sales basis. Filene’s acknowledges that Supplier is the
sole owner of, and holds sole title to, the Merchandise.

     13.1.2. Filene’s hereby acknowledges that Supplier has granted to Supplier’s Lender a
security interest in substantially all of its assets, including, without limitation, all
Merchandise, fixtures, equipment and other personal property owned by Supplier and the
proceeds thereof now or hereafter held by, shipped to or otherwise in possession of or
controlled by Filene’s, and unremitted Supplier’s Proceeds (collectively, the “Collateral”,
and as to the Merchandise, the “Collateral Merchandise”), and Filene’s waives and
relinquishes any lien rights or claims of any

10

 

kind against the Collateral. Filene’s authorizes Supplier to file UCC-1 financing
statements covering the Merchandise supplied as part of this Agreement, such UCC-1 financing
statements to be in a form reasonably acceptable to Filene’s and Supplier’s Lender to
acknowledge Supplier’s and/or Supplier’s Lender’s interest in the Collateral. Upon
Supplier’s Lender’s request, Filene’s will execute any documents reasonably required to
perfect or acknowledge Supplier’s Lender’s security interest or other rights in the
Collateral; Filene’s will execute any documents in a form reasonably acceptable to Filene’s
which indicate that the Merchandise has been consigned to Filene’s or that Filene’s has not
granted to any party a lien upon the Collateral, other than any liens which have been
expressly subordinated to the interests of Supplier and Supplier’s Lender. Notwithstanding
the foregoing, the security interests acknowledged under this Agreement and, to the extent
permitted by the Bankruptcy Code, in any order of the Bankruptcy Court approving the
agreement are to be deemed perfected without the necessity of filing any documents otherwise
required under non-bankruptcy law for the perfection of security interests in real or
personal property, with such perfection being binding upon any subsequently appointed
trustee either under Chapter 11 or any other chapter of the Bankruptcy Code and upon all
creditors of the debtor.

     13.1.3. It is the intent of Supplier and Filene’s to create a true consignment
arrangement with regard to Supplier’s supply of Merchandise to Filene’s with Supplier as
consignor and Filene’s as consignee. Supplier’s ownership of the Merchandise
notwithstanding, as a precaution and without affecting the intention of the parties to
create a true consignment arrangement, Filene’s, by this Agreement, grants to, and creates
in favor of, Supplier a continuing security interest in the Consignment Property to secure
the Consignment Obligations. It is the intention of the parties that the precautionary
security interest granted by Filene’s to Supplier hereby is and will be a first priority
security interest in the Consignment Property.

     13.2. Notice of Identity. Supplier will give written notice to Filene’s from time to
time of the identity of the Supplier’s Lender, and Filene’s shall be under no obligation hereunder
to any party unless and until Filene’s shall have received such notice, and then Filene’s sole
obligation to Supplier’s Lender are only as expressly provided in Section 13 hereof and to follow
such instructions as to remitting Supplier’s Proceeds. Upon receipt by Filene’s of such notice
from the Supplier, Filene’s will acknowledge only the party specifically named by Supplier in such
notice as Supplier’s Lender. Any notice subsequently given by Supplier and signed by the lender
named in the preceding notice shall revoke any previous notice given by Supplier hereunder. Upon
receipt by Filene’s of such subsequent notice, Filene’s shall have no obligation to any party
previously named by Supplier as Supplier’s Lender.

     13.3. Collateral.

     13.3.1. Filene’s agrees that upon receipt of written notice from Supplier’s Lender
referring to this Section 13, Filene’s will hold Supplier’s Proceeds from the Collateral for
the account of Supplier’s Lender and subject to Supplier’s Lender’s instructions and shall
release such proceeds only to Supplier’s Lender or as otherwise directed by a court. Any
such payments shall be made free of any set-off, reduction, or counterclaim, (including,
without limitation, any set-off, reduction or counterclaim based upon any alleged breach by
Supplier of this Agreement). Supplier agrees to indemnify and hold harmless Filene’s for
complying with any notice purporting to be the written notice of Supplier’s Lender.

     13.3.2. Upon receipt of Lender’s Default Notice (as defined below), Filene’s agrees to
provide Supplier’s Lender with all reasonably requested reporting regarding the Collateral
that it would otherwise provide to Supplier.

     13.3.3. Filene’s agrees that, in addition to its obligations under this Section 13,
upon receipt of written notice from Supplier’s Lender (“Lender’s Default Notice”) referring
to this Section 13.3 that represents to Filene’s that there is the
occurrence and continuance of a default under the financing arrangements between
Supplier and Supplier’s Lender and stating the intent of Supplier’s Lender to exercise its
remedies as a result of the occurrence of such default, such

11

 

Lender’s Default Notice shall
constitute a termination of the Supply Right and Filene’s shall hold the Supplier’s Proceeds
for the account of Supplier’s Lender and subject to the instructions of Supplier’s
Lender. In that regard, Supplier’s Lender may elect to immediately remove the Collateral or
it may sell the then existing inventory of Collateral Merchandise subject to Section 7.5 for
a period of up to ninety (90) days after Filene’s receipt of Lender’s Default Notice (but in
no event later than the then current termination date of this Agreement) and in connection
with such sale, Filene’s shall comply with its obligations under this Agreement to the same
extent as if Supplier’s Lender were the Supplier. At the end of such sale, and subject to
the provisions of Section 5 hereof, the Supplier’s Lender may repossess and remove any
remaining Collateral from the Filene’s locations, as Supplier’s Lender in its discretion may
elect; provided, however, that Supplier’s Lender agrees to the removal of such Collateral
only in accordance with such reasonable limitations on the time and manner of such removal
as Filene’s shall require
which limitations are intended to avoid disruption of Filene’s normal operations or
any possible confusion in the mind of the public as to whether any of Filene’s assets are
being removed. In connection with any sale of the Collateral Merchandise from Filene’s
premises, all advertising with respect to such sale shall be subject to the prior approval
of Filene’s (which approval shall not be unreasonably withheld and given promptly so as not
to unreasonably delay the exercise of Supplier’s Lender’s rights). Filene’s shall not be
deemed to have failed to have acted in good faith or unreasonably withheld approval by
refusing to approve any advertising which refers to any “going out of business sale”,
“liquidation” or similar terms or which could create any possible confusion in the mind of
the public as to whether any of Filene’s assets are being liquidated. Upon any removal of
the Collateral in accordance with this Agreement, Supplier’s Lender shall not be liable for
any diminution in the value of Filene’s business which is caused by the termination of the
Supply Right or the removal or absence of the Collateral; provided however, Supplier’s
Lender does hereby agree to indemnify and hold harmless Filene’s from (i) all damages and
costs of defense (including reasonable attorneys’’ fees) arising from the claims of any and
all third parties, including, without limitation, Supplier, against Filene’s for complying
with any directions of Supplier’s Lender, except to the extent Filene’s is finally
determined by a court of competent jurisdiction to have committed willful misconduct or to
have acted in a grossly negligent manner or in actual bad faith; and (ii) any costs, damages
or expenses to Filene’s tangible property or third party claims for personal injury arising
as a result of Supplier’s Lender exercising its rights hereunder.

          13.3.4. Nothing contained herein shall obligate Supplier’s Lender to undertake any
such action, nor shall anything contained herein constitute the Supplier’s Lender’s
assumption of any obligations of the Supplier under this Agreement. However, to the extent
and during the period of Supplier’s Lender’s exercise of control over the Collateral while
in Filene’s stores, Supplier’s Lender agrees to abide by the terms hereof as they relate to
the Collateral and Filene’s right to its 20% split of the Net Sales.

          13.3.5. Filene’s will provide to the Supplier’s Lender, as and when forwarded or
furnished to the Supplier, a copy of any formal notice of any breach by Supplier (with the
same degree of particularity as Filene’s provides Supplier) of this Agreement given by
Filene’s to the Supplier and any notice of termination of this Agreement. Filene’s
acknowledges that Supplier’s Lender shall have the right but not the obligation to cure
any such breach within the time frames and/or conditions set forth in this Agreement which
are otherwise applicable to Supplier.

          13.3.6. Filene’s acknowledges and agrees that the Supplier’s Lender has no
obligation to make any loan or advance to the Supplier for the purpose of assisting the
Supplier in the performance of its obligations under this Agreement, including, without
limitation, for paying any amounts due from the Supplier to Filene’s. Filene’s is not a
beneficiary of the financing agreements and shall have no right to enforce the terms thereof
or assert any claims thereunder.
 

	14.	 	MISCELLANEOUS.

14.1. Indulgences, Etc. Neither the failure nor any delay on the part of either party
to exercise

12

 

any right, remedy, power or privilege under this Agreement shall operate as a waiver thereof,
nor shall any single or partial exercise of any right, remedy, power or privilege preclude any
other or further exercise of the same or of any other right, remedy, power or privilege, nor shall
any waiver of any right, remedy, power or privilege with respect to any occurrence be construed as
a waiver of such right, remedy, power or privilege with respect to any other occurrence. No waiver
shall be effective unless it is in writing and is signed by the party asserted to have granted such
waiver.

     14.2. Confidentiality. The terms of this Agreement are confidential to the parties
hereto and each party agrees not to make any public announcement related to this Agreement or the
relationship of the parties without prior notice to the other party hereto except as may be
required by law.

     14.3. Controlling Law. This Agreement and all questions relating to its validity,
interpretation, performance and enforcement (including, without limitation, provisions concerning
limitations of actions), shall be governed by and construed in accordance with the laws of the
State of Ohio.

     14.4. Notices. All notices, requests, demands and other communications, required or
permitted under this Agreement shall be in writing and shall be deemed to have been duly given,
made and received when delivered (personally, by courier service such as Federal Express, or by
other messenger) against receipt or upon actual receipt of registered or certified mail, postage
prepaid, return receipt requested, addressed as set forth below:

	 	 	 	 	 
	 	 	To Filene’s:
	 	Filene’s Basement Inc.
	 	 	 	 	12 Gill Street, Suite 1600
	 	 	 	 	Woburn, MA 01801
	 	 	 	 	Attn: Jim Rudd
	 
	 	 	 	 
	 	 	 	 	and
	 
	 	 	 	 
	 	 	with a copy to:	 	General Counsel
	 	 	 	 	3241 Westerville Road
	 	 	 	 	Columbus, OH 43224
	 
	 	 	 	 
	 	 	If to Supplier:
	 	DSW Inc.
	 	 	 	 	4150 East Fifth Avenue
	 	 	 	 	Columbus, OH 43219
	 	 	 	 	Attn: Doug Probst
	 
	 	 	 	 
	 	 	 	 	and
	 
	 	 	 	 
	 	 	 	 	General Counsel
	 	 	 	 	3241 Westerville Road
	 	 	 	 	Columbus, OH 43224

Any party may alter the address to which communications or copies are to be sent by giving notice
of such change of address in conformity with the provisions of this paragraph for the giving of
notice.

     14.5. Arbitration.

     14.5.1. The parties agree that arbitration is the sole and exclusive remedy for each of
them to resolve and redress any dispute, claim or controversy involving the interpretation
of this Agreement or the terms, conditions or termination of this Agreement. The arbitrator
will be mutually agreed upon by the parties, and the arbitration will be conducted in
accordance with the

13

 

Commercial Arbitration Rules of the American Arbitration Association. The parties will
have the right to conduct discovery for such arbitration pursuant to the Federal Rules of
Civil Procedure; provided, however, that the arbitrator will have the authority to establish
an expedited discovery schedule and discovery cut-off point, and to resolve any discovery
disputes. The arbitrator will have no jurisdiction or authority to change any provision of
this Agreement by alterations of, additions to or subtractions from the terms of this
Agreement. The arbitrator’s sole authority will be to interpret or apply any provision(s)
of this Agreement or any public law alleged to have been violated. The arbitrator will be
limited to awarding compensatory damages, but, to the extent allowed by law, will have no
authority to award punitive, exemplary or similar-type damages. The parties intend that any
arbitration award will be final and binding on them, and that a judgment on the award may be
entered in any court of competent jurisdiction, and enforcement may be had according to the
terms of that award. This Section will survive the termination or expiration of this
Agreement.

     14.5.2. The parties shall share equally the arbitrator’s fee and other costs associated
with any arbitration.

     14.5.3. The parties acknowledge that, because arbitration is the exclusive remedy for
resolving issues arising under this Agreement, neither party may resort to any federal,
state or local court or administrative agency concerning breaches of this Agreement or any
other matter subject to arbitration under this Section, and that the decision of the
arbitrator will be a complete defense to any suit, action or proceeding instituted in any
federal, state or local court or before any administrative agency with respect to any
arbitrable claim or controversy.

     14.5.4. The parties each waive the right to have a claim or dispute with one another
decided in a judicial forum or by a jury.

     14.6. Binding Nature of Agreement. Subject to the provisions hereof relating to
assignments, this Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assign.

     14.7. Execution of Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as the signatories.

     14.8. Provisions Separable. The provisions of this Agreement are independent of and
separable from each other, and no provision shall be affected or rendered invalid or unenforceable
by virtue of the fact that for any reason any other or others of them may be invalid or
unenforceable in whole or in part.

     14.9. Entire Agreement. This Agreement contains the entire understanding among the
parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements and understanding, inducements or conditions, express or implied, oral
or written, except as herein contained. The express terms hereof control and supersede any course
of performance and /or usage of the trade inconsistent with any of the terms hereof. This
Agreement may not be modified or amended other than by an agreement in writing.

     14.10. Paragraph Headings. The paragraph headings in this Agreement are for
convenience only; they form no part of this Agreement and shall not affect its interpretation.

14

 

     14.11. Gender, Etc. Words used herein, regardless of the number and gender
specifically used, shall be deemed and construed to include any other number, singular or plural,
and any other gender, masculine, feminine or neuter, as the context indicates is appropriate.

     14.12. Number of Days. In computing the number of days for purposes of any payments
due under this Agreement, all days shall be counted, including Saturdays, Sundays and holidays;
provided, however, that if the final day of any time period falls on a Saturday, Sunday or holiday
on which federal banks are or may elect to be closed, then the final day shall be deemed to be the
next day which is not a Saturday, Sunday or such holiday.

     14.13. Assignment. Except as provided in Section 14.16, neither the Supplier nor
Filene’s may assign or in any other manner transfer by voluntary act, operation of law or
otherwise, its rights hereunder without the written consent of the other party hereto, provided,
however, that Filene’s may assign this Agreement to an affiliate or any entity which acquires
substantially all of its assets.

     14.14. No Conflict. Each party hereto represents to the other that the entering into
of this Agreement and the carrying out of the terms hereof does not conflict with the terms of any
other agreement by which the representing party is bound.

     14.15. Amendment/Waiver. This Agreement may be modified or amended only in writing
signed by an officer of Filene’s and by Supplier. No failure by any party to enforce any provision
of this Agreement or to exercise any right or remedy resulting from a breach thereof, no acceptance
of full or partial payment or acceptance of performance with the knowledge of the breach of any
provision of this Agreement, and no custom or practice of the parties at variance with the terms of
this Agreement shall be construed as a waiver of such breach, any provision of this Agreement or
other right of such party under this Agreement. No waiver of any provision of this Agreement shall
be effective unless in writing and signed by the party against whom such waiver is charged.
Further, except to add or delete one or more Covered Stores to the coverage of this Agreement, this
Agreement shall not be amended, revised, supplemented, or otherwise changed without prior written
notice to Supplier’s Lender, and, if such modifications affect Supplier’s Lender’s rights under
this Agreement, such modifications shall not be effective without the consent of the Supplier’s
Lender, which consent shall not unreasonably be withheld or delayed.

     14.16. Third Party Beneficiaries. Filene’s acknowledges that Supplier’s Lender is an
intended beneficiary of this Agreement, has been collaterally assigned and granted a security
interest in all of Supplier’s rights hereunder and, upon the terms and conditions specified herein,
shall have the right to directly enforce the provisions hereof as though Supplier’s Lender stood in
Supplier’s shoes. By accepting any of the benefits of this Agreement, Supplier’s Lender agrees to
be bound by the provisions hereof relating to Supplier’s Lender.

     14.17. Force Majeure. If an event of Force Majeure prevents Supplier from carrying
out its responsibilities in any Covered Store, Supplier shall not be deemed in default under this
Agreement.

     15. AMENDMENT AND RESTATEMENT. The parties agree that this Agreement amends and
restates the Original Agreement and shall replace the Original Agreement for all Shoe Departments
which equal or exceed 10,000 square feet. For all Shoe Departments which are less than 10,000
square feet, the Licensed Department Supply Agreement, executed contemporaneously herewith as
between Supplier and Filene’s, shall control. Notwithstanding the foregoing, nothing herein shall
be deemed to release or terminate any obligations of the parties which accrued under the Original
Agreement with respect to the Covered Stores subject to this Agreement.

[remainder of page intentionally left blank]

15

 

     IN WITNESS WHEREOF, the parties have executed and delivered this Agreement by their duly
authorized officers as of the date first above written.

	 	 	 	 	 	 	 
	 	 	DSW INC.	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ Peter Z. Horvath	 	 
	 	 	 	 	 

	 	 
	 	 	Printed Name: Peter Z. Horvath	 	 
	 	 	Title: Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	FILENE’S BASEMENT INC.	 	 
	 
	 	 	 	 	 	 
	 	 	By:	 	/s/ James A. McGrady	 	 
	 	 	 	 	 

	 	 
	 	 	Printed Name: James A. McGrady	 	 
	 	 	Title: Executive Vice President	 	 

16

 

     Date: January 30, 2005

Amendment:                      

EXHIBIT A

Covered Store Schedule

Filene’s Basement

Covered Stores

Combo Stores

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Unit	 	Name	 	Street Address	 	City	 	State	 	Zip	 	Sq. Feet
	53800
	 	SAWMILL	 	3700 W. Dublin-Granville Rd.	 	Columbus	 	OH	 	 	43235	 	 	 	22,201	 
	56000
	 	JERSEY GARDENS	 	651 Kapkowski Rd	 	Elizabeth	 	NJ	 	 	07021	 	 	 	13,652	 

	 	 	 	 	 	 	 	 	 	 	 
	Filene’s Basement Inc.	 	 	 	DSW Inc.	 	 
	 
	 	 	 	 	 	 	 	 	 	 
	By:
	 	/s/ James A. McGrady	 	 	 	By:	 	/s/ Peter Z. Horvath	 	 
	 
	 	 
	 	 	 	 	 	 
	 	 
	Name: James A. McGrady	 	 	 	Name: Peter Z. Horvath	 	 
	Title: Executive Vice President	 	 	 	Title: Executive Vice President

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