Document:

EX-10.5

 

Exhibit 10.5

PLEDGE AGREEMENT

     PLEDGE AGREEMENT, dated as of August 16, 2006 made by Retail Ventures, Inc., an Ohio
corporation (the “Company”), with and in favor of Schottenstein Stores Corporation, a
Delaware Corporation (the “Warrant Holder”).

WITNESSETH:

     WHEREAS, pursuant to the terms of the Warrants, upon the exercise of a Warrant into DSW Stock
by the Warrant Holder, the Company has agreed to deliver to the Warrant Holder the DSW Stock into
which the relevant Warrant has been exercised, upon the terms and subject to the conditions set
forth therein;

     NOW, THEREFORE, in consideration of the premises the parties hereto hereby agree as follows:

     1. Defined Terms. (a) Unless otherwise defined herein, each term defined in the
Warrants and used herein shall have the meaning given to such term in the Warrants.

     (b) The following terms shall have the following meanings:

     “Agreement”: this Pledge Agreement, as the same may be amended, modified or otherwise
supplemented from time to time.

     “Collateral”: the collective reference to the Pledged Stock, the certificates (if
any) representing the Pledged Stock, all options and other rights contractual or otherwise in
respect thereof and all, documents, instruments, investment property and other property (including
but not limited to any stock dividend or distribution in connection with a stock split) from time
to time received, receivable or otherwise distributed, issued or delivered in respect of or in
exchange for any or all of the Pledged Stock, and all proceeds of any of the foregoing, in each
case whether now owned or hereafter acquired by the Company and howsoever its interest therein may
arise or appear.

     “Event of Default”: the failure by the Company to perform the Obligations in
accordance with the terms of the Warrants.

     “Obligations”: the obligation of the Company under a Warrant, upon notification that
a Warrant is to be exercised into DSW Stock and upon payment of the Aggregate Purchase Price, to
issue to the Warrant Holder DSW Stock on the terms set forth in the Warrant.

     “Pledged Stock”: 2,302,600 shares of DSW Stock, as the same may be increased pursuant
to the provisions contained in the definition of the term “Collateral” and the final sentence of
Section 5(a) hereof.

     “UCC”: the Uniform Commercial Code as in effect from time to time in the State of New
York.

 

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     “Warrants”: the collective reference to Warrant number C2, and Warrant number W7
issued by the Company to the Warrant Holder (i) on September 26, 2002 and amended and restated on
July 5, 2005, in the case of Warrant number C2, and (ii) on July 5, 2005 in the case of Warrant
number W7, in each case, as the same may be amended, supplemented or modified after the date
hereof.

     (c) The words “hereof,” “herein” and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular provision of this
Agreement, and section and paragraph references are to this Agreement unless otherwise specified.

     (d) The meanings given to terms defined herein shall be equally applicable to both the
singular and plural forms of such terms.

     2. Delivery and Pledge.

     (a) The Company hereby delivers, transfers, assigns, pledges and issues to the Warrant Holder
a continuing first priority Lien on, and security interest in, all of the Company’s right, title
and interest in and to the Collateral, in each case as collateral security for the prompt and
complete performance by the Company when due of the Obligations. The Company hereby agrees that
(i) subject to the terms hereof, the Warrant Holder may exercise its rights set forth herein or
under applicable law, and realize on the Collateral to satisfy, in whole or in part, the
Obligations, in accordance with, and subject to, the terms hereof and the terms of the Warrants.

     (b) The Company agrees promptly to deliver or cause to be delivered to the Warrant Holder any
and all certificated Pledged Stock and any and all certificates or other instruments or documents
representing the Collateral. Upon delivery to the Warrant Holder, (i) any certificates evidencing
Pledged Stock shall be accompanied by transfer powers, duly executed in blank or other instruments
of transfer satisfactory to the Warrant Holder and by such other instruments and documents as the
Warrant Holder may reasonably request and (ii) all other property comprising part of the Collateral
shall be accompanied by proper instruments of assignment duly executed by the Company and such
other instruments or documents as the Warrant Holder may reasonably request.

     3. Restrictions on Transfer of Pledged Stock; Voting of Pledged Stock.

     (a) Unless an Event of Default shall have occurred and be continuing and the Warrant Holder
shall have exercised its remedies under Section 6 hereof, the Warrant Holder shall not sell, assign
or transfer the Pledged Stock.

     (b) Unless an Event of Default shall have occurred and be continuing the Warrant Holder shall
not vote or exercise any rights whatsoever with respect to the Pledged Stock. Notwithstanding the
foregoing, if an Event of Default shall have occurred and be continuing, the Warrant Holder may
vote the Pledged Stock as contemplated by Section 5 of this Agreement.

     4. Representations, Warranties and Covenants. The Company represents, warrants and
covenants that:

 

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     (a) it (i) is and will at all times continue to be the direct owner, beneficially and of
record, of the Collateral (ii) holds the same free and clear of all Liens, except for the security
interest granted hereunder, and (iii) will make no assignment, pledge, hypothecation or transfer
of, or create or permit to exist any security interest in, or other Lien on, the Collateral, other
than pursuant hereto;

     (b) it (i) has the power and authority to execute this Agreement and to pledge the Collateral
in the manner hereby done or contemplated and (ii) will defend its title or interest thereto or
therein against any and all Liens (other than the Lien created by this Agreement), however arising,
of all Persons whomsoever;

     (c) no consent of any other Person (including stockholders, trustees, partners, members or
creditors of the Company) and no consent or approval of any governmental authority or any
securities exchange was or is necessary to the execution and delivery of this Agreement, validity
of the pledge effected hereby; and the exercise of remedies by the Lender hereunder; and (ii)
neither the execution and delivery of this Agreement by the Company, the granting of the security
interest hereunder, nor the exercise of remedies by the Lender hereunder contravene any law or any
contractual restriction binding on or affecting the Company or any of its properties and will not
result in or require the creation of any Lien upon the Collateral other than pursuant to this
Agreement;

     (d) upon delivery of the certificates representing the Pledged Stock to the Warrant Holder,
the Warrant Holder shall have a valid and perfected first Lien upon and security interest in such
Pledged Stock, and (ii) filing of a UCC financing statement in the office of the Secretary of State
of Ohio, the Warrant Holder shall have a valid and perfected first Lien upon and security interest
in the other Collateral, in each case, as security for the performance of the Obligations;

     (e) the pledge effected hereby is effective to vest in the Warrant Holder the rights in the
Collateral as set forth herein and there are no restrictions upon the transfer (other than pursuant
to state and federal securities laws and compliance by the Warrant Holder with the terms of the
Warrant) of, or the right to vote in respect of, any of the Collateral and that the Company has the
right to vote, pledge and grant a security interest in or otherwise transfer such Collateral free
of any Lien;

     (f) it will not make or consent to any amendment or other modification or waiver with respect
to any Collateral or enter into any agreement restricting its right to pledge the Collateral
hereunder without the consent of the Lender (whose consent shall not be unreasonably withheld); and

     (g) at any time and from time to time, upon the written request of the Lender, it will
promptly and duly execute and deliver, such further instruments and documents and take such further
actions as the Lender may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted.

     5. Voting Rights; Dividends and Interest, etc.

 

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     (a) Unless and until an Event of Default shall have occurred and be continuing: (i) the
Company shall be entitled to exercise any and all voting and/or other consensual rights and powers
inuring to an owner of Pledged Stock or any part thereof for any purpose consistent with the terms
of this Agreement, (ii) the Warrant Holder shall execute and deliver to the Company, or cause to be
executed and delivered to the Company, all such proxies, powers of attorney and other instruments
as the Company may reasonably request for the purpose of enabling the Company to exercise the
voting and/or consensual rights and powers it is entitled to exercise pursuant to subparagraph (i)
above and to receive the dividends, distributions and payments it is entitled to receive pursuant
to subparagraph (iii) below, (iii) the Company shall be entitled to receive and retain any and all
dividends, interest, principal and other distributions and payments paid in cash on the Pledged
Stock. All dividends, interest, principal and other distributions and payments made on or in
respect of the Collateral other than in cash, whether resulting from a subdivision, combination or
reclassification of the outstanding capital stock of DSW or received in exchange for the Collateral
or any part thereof, or in redemption thereof, or as a result of any merger, consolidation,
acquisition or other exchange of assets to which DSW may be a party or otherwise, shall be and
become part of the Collateral, and, if received by the Company, shall not be commingled by the
Company with any of its other funds or property but shall be held separate and apart therefrom,
shall be held in trust for the benefit of the Warrant Holder and shall be forthwith delivered to
the Warrant Holder in the same form as so received (with any necessary endorsement).

     (b) Upon the occurrence and during the continuance of an Event of Default, all rights of the
Company to dividends, interest, principal or other distributions or payments that such Company is
authorized to receive, (with respect only to the DSW Stock that is the subject of the Event of
Default) pursuant to paragraph (a)(iii) above shall cease, and all such rights shall thereupon
become vested in the Warrant Holder, which shall have the sole and exclusive right and authority to
receive and retain such dividends, interest, principal or other distributions or payments. All
dividends, interest, principal or other distributions or payments received by the Company contrary
to the provisions of this Section 5 shall be held in trust for the benefit of the Warrant Holder,
shall be segregated from other property or funds of such Company and shall be forthwith delivered
to the Warrant Holder upon demand in the same form as so received (with any necessary endorsement).

     (c) Upon the occurrence and during the continuance of an Event of Default, all rights of any
Company to exercise the voting and consensual rights and powers it is entitled to exercise pursuant
to paragraph (a)(i) of this Section 5, and the obligations of the Warrant Holder under paragraph
(a)(ii) of this Section 5, shall cease, and all such rights shall thereupon become vested in the
Warrant Holder, which shall have the sole and exclusive right and authority to exercise such voting
and consensual rights and powers. After all Events of Default have been cured or waived, such
Company will have the right to exercise the voting and consensual rights and powers that it would
otherwise be entitled to exercise pursuant to the terms of paragraph (a)(i) above.

     6. Remedies.

          If an Event of Default shall have occurred and be continuing, and upon 10 days’ notice by the
Warrant Holder to the Company, the pledge set forth in Section 2 hereof shall be

 

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deemed (effective upon the expiry of the such 10 day period and payment in full of the Aggregate
Purchase Price in accordance with the terms of the applicable Warrant) to be an irrevocable
transfer and delivery, in accordance with the terms of the applicable Warrant, by the Company to
the Warrant Holder of that number of shares of the Pledged Stock then deliverable under the terms
of the relevant Warrant and legal title such shares shall be transferred to the Warrant Holder
without need for further actions on its behalf. Notwithstanding any other provision of this
Agreement, if an Event of Default shall have occurred and be continuing, the Warrant Holder shall
have the rights and remedies available to it as a secured party under the provisions of the UCC.

     7. Warrant Holder’s Appointment as Attorney-in-Fact. At any time after the occurrence
and during the continuance of an Event of Default, the Company hereby irrevocably constitutes and
appoints the Warrant Holder and any officer or agent thereof, with full power of substitution, as
its true and lawful attorney-in-fact with full irrevocable power and authority in the place and
stead of the Company and in the name of the Company or in its own name, for the purpose of carrying
out the terms of this Agreement, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the purposes of this
Agreement. All powers, authorizations and agencies contained in this Agreement are coupled with an
interest and are irrevocable until this Agreement is terminated and the security interests created
hereby are released.

     8. Execution of Financing Statements. Pursuant to any applicable law, the Company
authorizes the Warrant Holder to file or record financing statements and other filing or recording
documents or instruments with respect to the Collateral without the signature of the Company in
such form and in such offices as the Warrant Holder reasonably determines appropriate to perfect
the security interests of the Warrant Holder under this Agreement. A carbon, photographic or other
reproduction of this Agreement shall be sufficient as a financing statement or other filing or
recording document or instrument for filing or recording for filing in any jurisdiction.

     9. Notices. All notices, requests and demands to or upon the Company or the Warrant
Holder to be effective shall be in writing (or by telex, fax or similar electronic transfer
confirmed in writing) and shall be deemed to have been duly given or made (i) when delivered by
hand or (ii) if given by mail, three Business Days after being deposited in the mails by certified
mail, return receipt requested, or (iii) if by telex, fax or similar electronic transfer, when sent
and receipt has been confirmed, addressed to the Company or the Warrant Holder at the following:

(x) if to the Company:

Retail Ventures, Inc

3241 Westerville Road

Columbus, OH 43224

Attn: General Counsel (Ph: 614-478-3424, Fax: 614-473-4682)

and

 

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(y) if to the Warrant Holder:

Schottenstein Stores Corporation.

1800 Molar Road

Columbus, OH 43207

Attn: Irwin A. Bain (Fax: 614-443-0972)

     10. Termination and Release.

     (a) Subject to paragraph (b) below, this Agreement shall terminate and the Liens and security
interests granted hereby shall be released, upon the earlier to occur of (i) the transfer or
assignment to any Person (other than an affiliate of the Warrant Holder) by the Warrant Holder of
any of the Warrants, (ii) the exercise by the Warrant Holder of any of the Warrants into Common
Stock instead of DSW Stock, or (iii) the performance by the Company of the Obligations in
accordance with the terms of the Warrants.

     (b) If the Warrant Holder (i) transfers or assigns to any Person (other than an affiliate of
the Warrant Holder) some but not all of the Warrants held by it; (ii) exercises some but not all of
the Warrants into Common Stock instead of DSW Stock; or (iii) has only exercised some but not all
of the Warrants held by it, this Agreement and the Liens and security interests created hereby will
be terminated and released only as to that number of shares of Pledged Stock relating to the
Warrants so transferred or assigned, so exercised, or in respect of which the Company has performed
the Obligations, as the case may be.

     (c) Upon termination of this Agreement, the Warrant Holder shall surrender the Pledged Stock
to the Company together with all other Collateral previously delivered to the Warrant Holder and
then held by it, in each case without recourse, representation or warranty, and execute and deliver
to the Company such documents of assignment as are reasonably necessary to terminate the Warrant
Holder’s security interest in the Collateral interest hereunder.

     11. Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

     12. Amendments. This Agreement may be amended by the written agreement of the parties
hereto.

     13. Headings. The headings used in this Agreement are for convenience of reference
only and are not to affect the construction hereof or be taken into consideration in the
interpretation hereof.

     14. Successors and Assigns. This Agreement shall be binding upon the successors and
assigns of the Company and shall inure to the benefit of the Warrant Holder and its successors but
not its assigns.

 

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     15. Governing Law. This Agreement shall be governed by, and construed and interpreted
in accordance with, the law of the State of New York.

     16. WAIVER OF JURY TRIAL. THE COMPANY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

     17. Indemnity and Expenses. (a) The Company agrees to indemnify and hold harmless the
Lender (and all of its respective officers, directors, employees, attorneys, consultants and
agents) from and against any and all claims, damages, losses, liabilities, obligations, penalties,
costs and expenses (including, without limitation, reasonable legal fees and disbursements of
counsel) to the extent that they arise out of or otherwise result from an enforcement of this
Agreement by the Lender after an Event of Default under this Agreement, except, as to any such
indemnified Person, claims, losses or liabilities resulting solely and directly from such Person’s
gross negligence or willful misconduct as determined by a final judgment of a court of competent
jurisdiction.

     (b) The Company agrees to pay to the Lender upon demand the amount of any and all costs and
expenses, including the reasonable fees and disbursements of the Lender’s counsel, which the Lender
may incur in connection with (i) the preparation, negotiation, execution, delivery, amendment,
waiver or other modification of this Agreement, (ii) the exercise or enforcement of any of the
rights of the Lender hereunder, or (iii) the failure by the Company to perform or observe any of
the provisions hereof; provided that such costs and expenses shall not include those costs and
expenses that are determined, pursuant to a final judgment by a court of competent jurisdiction to
have resulted from the gross negligence or willful misconduct of the Lender.

     18. Security Interest Absolute. All rights of the Lender, all Liens and all
obligations of each of the Company hereunder shall be absolute and unconditional irrespective of:
(i) any lack of validity or enforceability of the Warrants or any other agreement or instrument
relating thereto, (ii) any change in the time, manner or place of payment of, or in any other term
in respect of, all or any of the Obligations, or any other amendment or waiver of or consent to any
departure from the Warrants, (iii) any exchange or release of, or non-perfection of any Lien on any
Collateral, or any release or amendment or waiver of, or consent to departure from, any guaranty
for all or any of the Obligations, or (iv) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, the Company in respect of the Obligations. All
authorizations and agencies contained herein with respect to any of the Collateral are irrevocable
and powers coupled with an interest.

 

     IN WITNESS WHEREOF, the undersigned has caused this Agreement to be duly executed and
delivered as of the date first above written.

	 	 	 	 	 
	 	RETAIL VENTURES, INC.

 	 
	 	By:  	/s/ James A. McGrady
 	 
	 	 	Name:  	James A. McGrady 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	SCHOTTENSTEIN STORES CORPORATION as Warrant Holder

 	 
	 	By:  	/s/ Irwin A. Bain
 	 
	 	 	Name:  	Irwin A. Bain 	 
	 	 	Title:  	Senior Vice President and General
CounselEX-10.6

 

Exhibit 10.6

FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT

     This First Amendment to Amended and Restated Loan and Security Agreement (the “First
Amendment”) is made as of this 16th day of August, 2006 by and among

     National City Business Credit, Inc., an Ohio corporation with offices at 1965 E. Sixth
Street, Cleveland, Ohio 44114, as administrative agent (in such capacity, herein the
“Administrative Agent”), for the ratable benefit of the “Revolving Credit Lenders”, who
are, at present, those financial institutions identified on the signature pages of this
First Amendment and who in the future are those Persons (if any) who become “Revolving
Credit Lenders” in accordance with the provisions of the Loan Agreement (as defined below);

     National City Business Credit, Inc., as collateral agent (in such capacity, herein the
“Collateral Agent”), for the ratable benefit of the Revolving Credit Lenders;

     and

     The Revolving Credit Lenders;

     and

     Value City Department Stores LLC (in such capacity, the “Lead Borrower”), an Ohio
limited liability company with its principal executive offices at 3241 Westerville Road,
Columbus, Ohio 43224-3751, as agent for the following (individually, a “Borrower” and
collectively, the “Borrowers”):

Said Value City Department Stores LLC (“VCDS LLC”); and

Gramex Retail Stores, Inc. (“Gramex”), a Delaware corporation with its principal
executive offices at 3241 Westerville Road, Columbus, Ohio 43224; and

Filene’s Basement, Inc. (“Filene’s”), a Delaware corporation with its principal
executive offices at 3241 Westerville Road, Columbus, Ohio 43224-3751; and

Value City of Michigan, Inc. (“VC Michigan”), a Michigan corporation with its
principal executive offices at 36901 Warren Road, Westland, Michigan 48185;

GB Retailers, Inc. (“GBR”), a Delaware corporation with its principal executive
offices at 3241 Westerville Road, Columbus, Ohio 43224; and

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Retail Ventures Jewelry, Inc. (“Jewelry”), an Ohio corporation with its principal
executive offices at 3241 Westerville Road, Columbus, Ohio 43224;

in consideration of the mutual covenants contained herein and benefits to be derived herefrom,

WITNESSETH:

	 	A.	 	Reference is hereby made to that certain Amended and Restated Loan and
Security Agreement dated as of July 5, 2005 (the “Loan Agreement”) among (i) the Lead
Borrower, (ii) the other Borrowers, (iii) the Revolving Credit Lenders, (iv) the
Administrative Agent, and (v) the Collateral Agent.
	 
	 	B.	 	The Parent has proposed to issue up to $172.5 million Premium Income
Exchangeable Securities (the “PIES”), the proceeds of which will be used to
substantially repay the Senior Non-Convertible Facility and to repay the Liabilities,
in part, in order to provide Availability for the Borrowers under the Loan Agreement.
	 
	 	C.	 	The PIES transaction contemplates that the Parent will grant a lien on
certain of the DSW Common Stock and the proceeds therefrom to secure payment of the
PIES.
	 
	 	C.	 	The issuance of the PIES by the Parent and consummation of the transactions
related thereto or contemplated thereby, including the grant of collateral security
for the PIES, without the consent of the Majority Lenders would constitute an Event of
Default under the Loan Agreement.
	 
	 	D.	 	The Parent and the Borrowers have requested that the Revolving Credit Lenders
consent to the issuance of the PIES by the Parent and consummation of the transactions
related thereto or contemplated thereby, waive any Events of Default arising
therefrom, and modify and amend certain provisions of the Loan Agreement.
	 
	 	E.	 	The Revolving Credit Lenders have agreed to so consent, waive and modify
certain provisions of the Loan Agreement as provided herein.

     Accordingly, the parties hereto agree as follows:

	1.	 	Definitions. Capitalized terms used herein and not otherwise defined herein shall
have the meanings assigned to such terms in the Loan Agreement.
	 
	2.	 	Amendments to Loan Agreement.

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	 	a.	 	Amendments to Article 1 of Loan Agreement. The provisions of Article
1 of the Loan Agreement are hereby revised as follows:

	 	(a)	 	The definition of “Excluded Property” is hereby amended as
follows:

(i) by adding the following new clause thereto immediately before the
proviso:

(g) the PIES Collateral;

(ii) by deleting the proviso thereto in its entirety and substituting the
following in its stead:

provided that, the Proceeds realized from any of the foregoing
(other than Proceeds of the property described in clauses (f) and
(g)) shall not be deemed Excluded Property but shall constitute
Collateral.

	 	(b)	 	The definition of “Fee Letter” is hereby deleted in its
entirety and the following substituted in its stead:
	 
	 	 	 	“Fee Letter”: That letter dated March 10, 2005 and styled “Fee Letter”
between the Lead Borrower and the Administrative Agent, as such letter
may from time to time be amended.
	 
	 	(c)	 	The definition of “Intercompany Notes” is hereby amended by
deleting the second sentence thereof and substituting the following in its
stead:
	 
	 	 	 	The Intercompany Notes outstanding as of the First Amendment Effective
Date are set forth on Exhibit 1.3 hereto and as of the PIES
Closing Date, after giving effect to the distribution of the proceeds
thereof, shall include the VCDS Note, but exclude the RVI Note.
	 
	 	(d)	 	The definition of “Non-Convertible Senior Collateral” is
hereby deleted in its entirety and the following substituted in its stead:
	 
	 	 	 	“Non-Convertible Senior Collateral” means the sum of $500,000 (plus
interest accruing thereon) deposited in account numbers 984865217 and
984865225 maintained in the name of VCDS LLC with National City Bank, and
any investment property resulting from such deposit, which accounts and
investment property have been pledged as security for the Senior
Non-Convertible Facility.
	 
	 	(e)	 	Clause (g) of the definition of “Permitted Disposition” is
hereby deleted in its entirety and the following substituted in its stead:

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	 	 	 	(g) as long as no Event of Default then exists or would arise therefrom,
the sale or other transfer of the capital stock of DSW owned by the Parent
in order to pay taxes of the Parent and its Subsidiaries then due (or
resulting from such sale) or to pay the Indebtedness owed by the Parent on
account of, or in connection with, the PIES; and

	 	(f)	 	The definition of “Permitted Indebtedness” is hereby amended
by deleting the word “and” at the end of clause (l), relettering clause (m) as
clause (o) and adding the following new clauses (m) and (n):

	 	(m)	 	Indebtedness owed by the Parent under the
PIES;
	 
	 	(n)	 	Indebtedness owed by VCDS LLC and Filene’s
to the Parent on account of the VCDS Note; and

	 	(g)	 	The definition of “Senior Non-Convertible Facility” is hereby
deleted in its entirety and the following substituted in its stead:
	 
	 	 	 	“Senior Non-Convertible Facility”: The loans from CCM and Shottenstein
Stores Corporation each in the principal amount of $250,000 evidenced by
certain promissory notes dated as of the PIES Closing Date.
	 
	 	(h)	 	The following definitions are hereby added to Article I of
the Loan Agreement in appropriate alphabetical order:
	 
	 	 	 	“First Amendment Effective Date”: August 16, 2006.
	 
	 	 	 	“PIES” : The Premium Income Exchangeable Securities up to $172.5 million
pursuant to an Indenture dated August 16, 2006 between the Parent and HSBC
Bank USA, National Association, as trustee.
	 
	 	 	 	“PIES Closing Date”: The date on which the PIES are issued and the Parent
receives the proceeds therefrom.
	 
	 	 	 	“PIES Collateral”: Certain of the Capital Stock of DSW consisting of
Class B common shares in the amounts required by the Indenture evidencing
the PIES and the Proceeds therefrom, iincluding, without limitation, (i)
any Proceeds payable to holders of DSW Common Stock received on a cash
merger, reclassification or sale of all or substantially all of the assets
of DSW, and (ii) any Proceeds payable to the holders of the PIES in the
form of the Capital Stock of DSW consisting of Class A common shares for
which the Class B common shares may be exchanged.

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“VCDS Note”: That certain promissory note made by VCDS LLC and Filene’s.
in favor of the Parent dated as of August 16, 2006 evidencing obligations
of VCDS LLC and Filene’s to the Parent as a result of the Parent’s loan of
certain proceeds from the PIES to VCDS LLC and Filene’s, which promissory
note shall be in satisfactory in form and substance to the Administrative
Agent.

	3.	 	Amendments to Article 2 of the Loan Agreement. The provisions of Section 2.11(a) of
the Loan Agreement are hereby amended by adding the following at the end thereof:

The Borrowers shall repay a portion of the principal balance of the Loan
Account with a portion of the proceeds received on account of the
repayment of the RVI Note and/or received in connection with the VCDS
Note.

	4.	 	Amendments to Article 5 of the Loan Agreement. The provisions of Article V of the
Loan Agreement are hereby amended as follows:

	 	a.	 	The provisions of Section 5.16(a) of the Loan Agreement are hereby amended by
adding the following at the end thereof:

In addition, as long as no Event of Default then exists or would arise
therefrom, the Borrowers may make other cash dividends or distributions to
the Parent for the sole purpose of paying interest, fees and other charges
(but not principal) on account of the PIES, provided that no such
dividends or distributions may be made unless the payments made on account
of the VCDS Note are not sufficient to pay such interest, fees and other
charges, and provided further that such dividends and
distributions, when combined with loans made under clause (vii) of Section
5.17(f), shall not exceed $4,000,000 in the aggregate in any fiscal year.

	 	b.	 	The provisions of Section 5.17(f) of the Loan Agreement are hereby amended by
adding the following at the end of clause (v) thereof immediately prior to the
proviso:

, (vi) on account of the VCDS Note, and (vii) as long as no Event of
Default then exists or would arise therefrom, other loans to the Parent
for the sole purpose of paying interest, fees and other charges (but not
principal) on account of the PIES, provided that no such loans
may be made unless the payments made on account of the VCDS Note are not
sufficient to pay such interest, fees and other charges, and
provided further that such loans, when combined with dividends
and distributions made under the last sentence of Section 5.16(a), shall
not exceed $4,000,000 in the aggregate in any fiscal year; and

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	 	c.	 	The provisions of Section 5.25(a)(ii)(A) of the Loan Agreement are hereby
amended by adding the following at the end thereof:

     or from the net cash proceeds of the PIES; or

	 	d.	 	The provisions of Article V of the Loan Agreement are hereby amended by
adding the following new Sections thereto:
	 
	 	e.	 	5.28 Restrictions on Payment of PIES.

	 	(a)	 	The PIES may be paid only as follows:

	 	i)	 	Interest on the PIES may be
paid in cash in the ordinary course in accordance with the
terms of the documents evidencing the PIES;
	 
	 	ii)	 	Principal on the PIES may
be paid only by the delivery of all or any part of the PIES
Collateral; provided that no cash payments of principal on
account of the PIES may be made (other than from Proceeds
constituting the PIES Collateral) without the prior written
consent of the Majority Lenders, which consent shall not be
unreasonably withheld.

	 	(b)	 	The Loan Parties shall not hereafter effect or permit any
changes in or amendment to the PIES or any instruments, agreements or
documents relating thereto, which would (i) accelerate any date for any
payment or prepayment of principal, interest, fees or other amounts due
thereunder, (ii) increase the rate of interest, any fees or other amounts
payable thereunder, (iii) require the Loan Parties to repay the principal of
the PIES in cash, (iv) grant any collateral for the PIES (other than the PIES
Collateral), or (v) otherwise be adverse to the Revolving Credit Lenders
(including, without limitation, any modification which could reasonably likely
be expected to have a Material Adverse Effect).

	 	5.29	 	Restrictions on Payment of VCDS Note.

(a) As long as no Default or Event of Default then exists or would arise therefrom,
the Loan Parties may make regularly scheduled payments of principal and interest on
the VCDS Note to the Parent.

(b) The Loan Parties shall not prepay the VCDS Note, in whole or in part, at any
time, without the prior written consent of the Majority Lenders, which consent
shall not be unreasonably withheld.

6

 

	5.	 	Amendments to Exhibits to Loan Agreement. Exhibit 1.3 [Intercompany Notes] to the
Loan Agreement is hereby amended and restated in its entirety in the form of Exhibit 1.3
attached hereto and incorporated by reference herein.
	 
	6.	 	Representations and Warranties. The Borrowers hereby restate and reaffirm all
representations, warranties, and covenants set forth in the Loan Agreement and the other Loan
Documents as of the date hereof.
	 
	7.	 	Conditions Precedent to Effectiveness. This First Amendment shall not be effective
until each of the following conditions precedent have been fulfilled to the satisfaction of
the Administrative Agent:

	 	a.	 	This First Amendment shall have been duly executed and delivered by the
Majority Lenders and the other parties hereto, and shall be in full force and effect
and shall be in form and substance satisfactory to the Administrative Agent and the
Majority Lenders.
	 
	 	b.	 	All action on the part of the Borrowers necessary for the valid execution,
delivery and performance by the Borrowers of this First Amendment and all other
documentation, instruments, and agreements to be executed in connection herewith shall
have been duly and effectively taken and evidence thereof satisfactory to the
Administrative Agent shall have been provided to the Administrative Agent.
	 
	 	c.	 	The Lead Borrower and each other Loan Party shall each have delivered the
following to the Administrative Agent, in form and substance satisfactory to the
Administrative Agent:

	 	(a)	 	Certificate of each Loan Party’s Secretary of the due
adoption, continued effectiveness, and setting forth the text of each
corporate resolution adopted in connection with the loan arrangement, as
modified by the First Amendment, and attesting to the true signatures of each
Person authorized as a signatory to any of the Loan Documents.
	 
	 	(b)	 	Opinion of counsel to the Loan Parties.

	 	d.	 	The Administrative Agent shall have received the consent of the holders of
the Senior Non-Convertible Facility to this First Amendment.
	 
	 	e.	 	All costs and expenses incurred by the Agents in connection with the
preparation and negotiation of this First Amendment and related documents (including
the fees and expenses of counsel to the Agents), shall have been paid in full.
	 
	 	f.	 	No Default or Event of Default shall be then occurring.

7

 

	 	g.	 	The Loan Parties shall have executed and delivered to the Administrative
Agent such other documents, instruments, and agreements as may be required by the
Administrative Agent.

	8.	 	Conditions Precedent to PIES Transaction. Notwithstanding anything to the contrary
contained in this First Amendment, the Borrowers shall not consummate the transactions
contemplated by the PIES, and the amendments set forth in Paragraphs 2(d), 2(e), and 2(f)
hereof shall not become effective, until each of the following have been fulfilled to the
satisfaction of the Administrative Agent:

	 	a.	 	The Administrative Agent shall have received the written agreement of the
holders of the Senior Non-Convertible Facility terminating the Intercreditor
Agreement, effective upon delivery of a portion of the proceeds from the PIES to
reduce the Senior Non-Convertible Facility, and agreeing to promptly thereafter (i)
assign and deliver to the Collateral Agent all leasehold mortgages, stock
certificates, stock powers and other documents and agreements evidencing or relating
to the Collateral, and (ii) terminate (or authorize the Administrative Agent to
terminate on their behalf) all of such holders’ Encumbrances on the Collateral, each
of the foregoing in form and substance reasonably satisfactory to the Administrative
Agent.
	 
	 	b.	 	The Administrative Agent shall have received copies of all documents and
agreements relating to the PIES and the VCDS Note such documents and agreements shall
be reasonably satisfactory to the Administrative Agent. The Parent shall have
received gross proceeds from the PIES in an amount of at least $125,000,000.
	 
	 	c.	 	All costs and expenses incurred by the Agents (including the fees and
expenses of counsel to the Agents), shall have been paid in full.
	 
	 	d.	 	No Default or Event of Default shall be then occurring.
	 
	 	e.	 	The Loan Parties shall have executed and delivered to the Administrative
Agent such other documents, instruments, and agreements as may be required by the
Administrative Agent.

	9.	 	Miscellaneous.

	 	a.	 	The Administrative Agent shall take such action and execute such instruments,
at the Loan Parties’ expense, as the Parent may reasonably request in order to confirm
that the Collateral does not include the PIES Collateral.
	 
	 	b.	 	This First Amendment may be executed in several counterparts and by each
party on a separate counterpart, each of which, when so executed and delivered, shall
be an original, and all of which together shall constitute one instrument.

8

 

	 	c.	 	This First Amendment expresses the entire understanding of the parties with
respect to the transactions contemplated hereby. No prior negotiations or discussions
shall limit, modify, or otherwise affect the provisions hereof.
	 
	 	d.	 	Any determination that any provision of this First Amendment or any
application hereof is invalid, illegal or unenforceable in any respect and in any
instance shall not effect the validity, legality, or enforceability of such provision
in any other instance, or the validity, legality or enforceability of any other
provisions of this First Amendment.
	 
	 	e.	 	The Loan Parties shall pay on demand all costs and expenses of the Agents,
including, without limitation, reasonable attorneys’ fees in connection with the
preparation, negotiation, execution and delivery of this First Amendment.
	 
	 	f.	 	This First Amendment and all rights and obligations hereunder, including
matters of construction, validity, and performance, shall be governed by the law of
State of Ohio.

[SIGNATURE PAGES FOLLOW]

9

 

     IN WITNESS WHEREOF, the parties have duly executed this First Amendment as of the day and
year first above written.

	 	 	 	 	 
	BORROWERS: 	 VALUE CITY DEPARTMENT STORES LLC

 	 
	 	By:  	                /s/ James A. McGrady
 	 
	 	 	Name:  	James A. McGrady 	 
	 	 	Title:  	Vice President 	 
	 
	 	GRAMEX RETAIL STORES, INC.

 	 
	 	By:  	/s/ James A. McGrady
 	 
	 	 	Name:  	James A. McGrady 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	FILENE’S BASEMENT, INC.

 	 
	 	By:  	/s/ James A. McGrady
 	 
	 	 	Name:  	James A. McGrady 	 
	 	 	Title:  	Chief Financial Officer 	 

10

 

	 	 	 	 	 

	 	 	 	 	 
	 	VALUE CITY OF MICHIGAN, INC.

 	 
	 	By:  	/s/ James A. McGrady
 	 
	 	 	Name:  	James A. McGrady 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	GB RETAILERS, INC.

 	 
	 	By:  	/s/ James A. McGrady
 	 
	 	 	Name:  	James A. McGrady 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	RETAIL VENTURES JEWELRY, INC.

 	 
	 	By:  	/s/ James A. McGrady
 	 
	 	 	Name:  	James A. McGrady 	 
	 	 	Title:  	Chief Financial Officer 	 
	 
	 	NATIONAL CITY BUSINESS CREDIT, INC.

(Administrative Agent, Collateral agent and

revolving credit lender)

 	 
	 	By:  	/s/ Joseph L. Kwasny
 	 
	 	 	Name:  	Joseph L. Kwasny 	 
	 	 	Title:  	Director 	 

11

 

	 	 	 	 	 

	 	 	 	 	 
	 	BANK OF AMERICA, N.A.

 	 
	 	By:  	/s/ Christine M. Scott
 	 
	 	 	Name:  	Christine M. Scott 	 
	 	 	Title:  	Director 	 
	 
	 	WELLS FARGO RETAIL FINANCE II, LLC

 	 
	 	By:  	/s/ Cory Loftus
 	 
	 	 	Name:  	Cory Loftus 	 
	 	 	Title:  	Vice President 	 
	 
	 	THE CIT GROUP/BUSINESS CREDIT, INC.

 	 
	 	By:  	/s/ Manual Borges
 	 
	 	 	Name:  	Manual Borges 	 
	 	 	Title:  	Vice President 	 

12

 

	 	 	 	 	 

	 	 	 	 	 
	 	GENERAL ELECTRIC CAPITAL CORPORATION

 	 
	 	By:  	/s/ Rebecca A. Ford
 	 
	 	 	Name:  	Rebecca A. Ford 	 
	 	 	Title:  	Duly Authorized Signatory 	 
	 
	 	HSBC BUSINESS CREDIT (USA), INC.

 	 
	 	By:  	/s/ Jimmy Schwartz
 	 
	 	 	Name:  	Jimmy Schwartz 	 
	 	 	Title:  	Vice President 	 
	 
	 	WACHOVIA CAPITAL FINANCE CORPORATION (CENTRAL)

 	 
	 	By:  	/s/ Vicky Geist
 	 
	 	 	Name:  	Vicky Geist 	 
	 	 	Title:  	Vice President 	 
	 
	 	LASALLE BANK NATIONAL ASSOCIATION

 	 
	 	By:  	/s/ Sara H. DeKuiper
 	 
	 	 	Name:  	Sara H. DeKuiper 	 
	 	 	Title:  	Vice President 	 
	 

13

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