Document:

EX-10.7

 

Exhibit 10.7

AMENDED AND RESTATED

SHARED SERVICES AGREEMENT

DATED AS OF October 29, 2006

BETWEEN

DSW INC.

AND

RETAIL VENTURES, INC.

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	ARTICLE I DEFINITIONS
	 	 	1	 
	 
	 	 	 	 
	            SECTION 1.01. Definitions
	 	 	1	 
	            SECTION 1.02. Internal References
	 	 	5	 
	 
	 	 	 	 
	ARTICLE II PURCHASE AND SALE OF SERVICES
	 	 	5	 
	 
	 	 	 	 
	            SECTION 2.01. Purchase and Sale of Retail Ventures Services
	 	 	5	 
	            SECTION 2.02. Purchase and Sale of DSW Services
	 	 	5	 
	            SECTION 2.03 Additional Services
	 	 	5	 
	 
	 	 	 	 
	ARTICLE III SERVICE COSTS; OTHER CHARGES
	 	 	6	 
	 
	 	 	 	 
	            SECTION 3.01. Service Costs Generally
	 	 	6	 
	            SECTION 3.02. Customary Billing
	 	 	6	 
	            SECTION 3.03. Pass-Through Billing
	 	 	6	 
	            SECTION 3.04. Percent of Sales Billing
	 	 	7	 
	            SECTION 3.05. Benefit Billing
	 	 	7	 
	            SECTION 3.06. Invoicing and Settlement of Costs
	 	 	7	 
	 
	 	 	 	 
	ARTICLE IV STANDARD OF PERFORMANCE AND INDEMNIFICATION
	 	 	8	 
	 
	 	 	 	 
	            SECTION 4.01.
	 	 	8	 
	            (i)General Standard of Service
	 	 	8	 
	            SECTION 4.02. Delegation
	 	 	9	 
	            SECTION 4.03. Limitation of Liability
	 	 	9	 
	            SECTION 4.04. Indemnification Related to Retail Ventures Services
	 	 	10	 
	            SECTION 4.05. Indemnification Related to DSW Services
	 	 	11	 
	 
	 	 	 	 
	ARTICLE V TERM AND TERMINATION
	 	 	12	 
	 
	 	 	 	 
	            SECTION 5.01. Term
	 	 	12	 
	            SECTION 5.02. Termination
	 	 	12	 
	            SECTION 5.03. Effect of Termination
	 	 	12	 
	 
	 	 	 	 
	ARTICLE VI INSURANCE MATTERS
	 	 	13	 
	 
	 	 	 	 
	            SECTION 6.01. DSW Insurance Coverage During Transition Period
	 	 	13	 
	            SECTION 6.02. Cooperation; Payment of Insurance Proceeds to DSW; Agreement Not
to Release Carriers
	 	 	13	 
	            SECTION 6.03. DSW Insurance Coverage After the Insurance Transition Period
	 	 	14	 
	            SECTION 6.04. Deductibles and Self-Insured Obligations
	 	 	14	 
	            SECTION 6.05. Procedures with Respect to Insured DSW Liabilities
	 	 	14	 

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	 	 	Page	 
	            SECTION 6.06. Insufficient Limits of Liability for Retail Ventures Liabilities
and DSW Liabilities
	 	 	14	 
	            SECTION 6.07. Cooperation
	 	 	15	 
	            SECTION 6.08. No Assignment or Waiver
	 	 	15	 
	            SECTION 6.09. No Liability
	 	 	15	 
	            SECTION 6.10. Additional or Alternate Insurance
	 	 	15	 
	            SECTION 6.11. Forbearance and Prior Insurance Coverage
	 	 	15	 
	            SECTION 6.12. Further Agreements
	 	 	16	 
	 
	 	 	 	 
	ARTICLE VII INFORMATION TECHNOLOGY EXECUTIVE STEERING COMMITTEE
	 	 	16	 
	 
	 	 	 	 
	            SECTION 7.01. Formation
	 	 	16	 
	            SECTION 7.02. Meetings
	 	 	16	 
	            SECTION 7.03. Purpose; Agenda; Minutes
	 	 	16	 
	            SECTION 7.04. Budget/Proposals
	 	 	17	 
	            SECTION 7.05. Information Technology Capital Expenditures
	 	 	17	 
	 
	 	 	 	 
	ARTICLE VIII ADDITIONAL AGREEMENTS
	 	 	18	 
	 
	 	 	 	 
	            SECTION 8.01. Annual Budget
	 	 	18	 
	            SECTION 8.02. Employment Matters
	 	 	18	 
	            SECTION 8.03. Shared Expenses Agreement
	 	 	18	 
	 
	 	 	 	 
	ARTICLE VIII MISCELLANEOUS
	 	 	18	 
	 
	 	 	 	 
	            SECTION 9.01. Prior Agreements
	 	 	18	 
	            SECTION 9.02. Other Agreements
	 	 	19	 
	            SECTION 9.03. Future Litigation and Other Proceedings
	 	 	19	 
	            SECTION 9.04. No Agency
	 	 	19	 
	            SECTION 9.05. Subcontractors
	 	 	19	 
	            SECTION 9.06. Force Majeure
	 	 	19	 
	            SECTION 9.07. Entire Agreement
	 	 	20	 
	            SECTION 9.08. Information
	 	 	20	 
	            SECTION 9.09. Notices
	 	 	20	 
	            SECTION 9.10. Governing Law
	 	 	21	 
	            SECTION 9.11. Severability
	 	 	21	 
	            SECTION 9.12. Amendment
	 	 	21	 
	            SECTION 9.13. Counterparts
	 	 	21	 
	            SECTION 9.14. Authority
	 	 	21	 

- ii -

 

 

SCHEDULES

	 	 	 
	SCHEDULE I:

	 	Services To Be Provided By Retail Ventures, Inc.
	SCHEDULE II:

	 	Services To Be Provided By DSW Inc.
	SCHEDULE III:

	 	Insurance Policies Maintained by Retail Ventures, Inc.

- iii -

 

 

AMENDED AND RESTATED

SHARED SERVICES AGREEMENT

     This Amended and Restated Shared Services Agreement is entered into to be effective as of
October 29, 2006 by and between DSW Inc., an Ohio corporation (“DSW”), and Retail Ventures, Inc. an
Ohio corporation (“Retail Ventures”). DSW and Retail Ventures are sometimes being referred to
herein separately as a “Party” and together as the “Parties”. Capitalized terms used herein and
not otherwise defined shall have the meanings ascribed to them in Article I hereof.

RECITALS

     WHEREAS, the Articles of Incorporation of DSW authorize 170,000,000 Class A common shares,
without par value (the “Class A common shares”) and 100,000,000 Class B common shares, without par
value (the “Class B common shares”);

     WHEREAS, DSW made an initial public offering (the “Offering”) of an amount of Class A common
shares pursuant to a registration statement on Form S-1 under the Securities Act of 1933, as
amended (the “Registration Statement”);

     WHEREAS, immediately following consummation of the Offering, Retail Ventures owned and
continues to own Class B common shares evidencing at least 80.1% of the combined voting power of
the holders of the Class A common shares and the Class B common shares with respect to all
shareholder matters;

     WHEREAS, prior to the consummation of the Offering, Retail Ventures directly or indirectly
provided certain financial, management and other services to the DSW Entities (as defined below),
and DSW directly or indirectly provided certain administrative, management and other services to
the Retail Ventures Entities (as defined below);

     WHEREAS, in connection with the consummation of the Offering, each Party set forth in the
Initial Agreement (as defined below) the principal terms and conditions pursuant to which certain
services were to be provided by it to, and certain services were to be provided to it by, the other
Party; and

     WHEREAS, the Parties now wish to amend and restate the Initial Agreement for purposes of (a)
transferring responsibility for certain Information Technology Services (as defined below) from
Retail Ventures to DSW;(b) modifying certain terms applicable to the Shoe Processing Services (as
defined below); and (c) other amendments to reflect agreed upon changes in shared services, all in
accordance with the terms of this Agreement;

     NOW, THEREFORE, in consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto,
for themselves and their respective successors and assigns, hereby covenant and agree as follows:

ARTICLE I DEFINITIONS

     SECTION 1.01. Definitions. (a) As used in this Agreement, the following terms shall have the following meanings,
applicable both to the singular and the plural forms of the terms described:

     “Agreement” means this Amended and Restated Shared Services Agreement, together with the
schedules and exhibits hereto, as the same may be amended and supplemented from time to time in
accordance with the provisions hereof.

1

 

     “Agreement Date” means the effective date of this Agreement first set forth above.

     “Billing Party Entities” means (a) with respect to Services for which DSW is the Billing
Party, DSW Entities, and (b) with respect to Services for which Retail Ventures is the Billing
Party, Retail Ventures Entities.

     “Business Day” means a day other than a Saturday, Sunday or other day on which commercial
banks in New York, New York or Columbus, Ohio are authorized or required by law to close.

     “Contract” means any contract, agreement, lease, license, sales order, purchase order,
instrument or other commitment that is binding on any Person or any part of such Person’s property
under applicable law.

     “Department” means a business section or division of a Party.

     “Distribution Date” means the date on which Retail Ventures is no longer required to
consolidate DSW’s results of operations and financial condition (determined in accordance with
generally accepted accounting principles consistently applied) with Retail Ventures’ results of
operations and financial condition.

     “DSW Business” means the specialty branded footwear retail business engaged in by DSW, as more
completely described in the Registration Statement, and any businesses added under the control of
DSW.

     “DSW Entities” means DSW Inc. and its Subsidiaries, and “DSW Entity” means any one of the DSW
Entities.

     “DSW Liabilities” has the meaning set forth in the Master Separation Agreement.

     “DSW Services” means the various services to be provided by DSW on behalf of or for the Retail
Ventures Entities as described in this Agreement and/or in Schedule II.

     “Exchange Agreement” means an agreement between the parties relating to the exchange of Class
A common shares for Class B common shares.

     “Information Technology Services” means those services referenced on Schedule II that were
provided by or on behalf of Retail Ventures before the Information Technology Services Transfer
Date and will be provided by DSW after the Information Technology Services Transfer Date.

     “Information Technology Services Transfer Date” shall mean the date that is mutually agreed
upon by the Parties for transfer of responsibility for
performance of the Information Technology Services from Retail Ventures to DSW.

     “Initial Agreement” means the Shared Services Agreement between DSW and Retail Ventures, dated
as of January 30, 2005, together with the schedules and exhibits thereto.

     “Insurance Policies” means insurance policies pursuant to which a Person makes a true risk
transfer to an insurer.

     “Insurance Proceeds” means those monies: (a) received by an insured from an insurance
carrier; or (b) paid by an insurance carrier on behalf of the insured; or (c) from Insurance
Policies.

2

 

     “Insured DSW Liability” means any DSW Liability to the extent that (i) it is covered under the
terms of Retail Ventures’ Insurance Policies in effect prior to the end of the Insurance Transition
Period, and (ii) DSW is not a named insured under, or otherwise entitled to the benefits of, such
Insurance Policies.

     “Liabilities” means all debts, liabilities, guarantees, assurances, commitments and
obligations, whether fixed, contingent or absolute, asserted or unasserted, matured or unmatured,
liquidated or unliquidated, accrued or not accrued, known or unknown, due or to become due,
whenever or however arising (including, without limitation, whether arising out of any Contract or
tort based on negligence or strict liability) and whether or not the same would be required by
generally accepted principles and accounting policies to be reflected in financial statements or
disclosed in the notes thereto.

     “Master Separation Agreement” means an agreement entered into by the Parties in connection
with the Offering that sets forth the principal arrangements between them regarding the separation
of the DSW business from Retail Ventures.

     “Offering Date” means 12:01 a.m., New York City Time, on June 28, 2005.

     “Person” means any individual, partnership, limited liability company, joint venture,
corporation, trust, unincorporated organization, government (including any department or agency
thereof) or other entity.

     “Receiving Party Entities” means (a) with respect to Services for which DSW is the Billing
Party, Retail Ventures Entities, and (b) with respect to Services for which Retail Ventures is the
Billing Party, DSW Entities.

     “Retail Ventures Entities” means Retail Ventures and its Subsidiaries (other than the DSW
Entities), and “Retail Venture Entity” means any one of the Retail Venture Entities currently in
place on the effective date of the Registration Statement and any businesses added under the
control of Retail Ventures.

     “Retail Ventures Services” means the various services to be provided by Retail Ventures on
behalf of or for the DSW Entities as described in this Agreement, in Schedule I and/or in Schedule
III.

     “RVSI” means Retail Ventures Services, Inc., an Ohio corporation and wholly-owned subsidiary
of Retail Ventures.

     “Schedule I” means the first Schedule attached hereto which lists Services to be provided by
Retail Ventures on behalf of or for DSW Entities and sets forth the related Retail Ventures Service
Costs and/or billing methodology.

     “Schedule II” means the second Schedule attached hereto which lists Services to be provided by
DSW on behalf of or for Retail Ventures Entities and sets forth the related DSW Service Costs
and/or billing methodology.

     “Schedule III” means the third Schedule attached hereto which lists the Insurance Policies to
be maintained by Retail Ventures on behalf of or for the DSW Entities and premium expenses and/or
the methodology for calculating the premium expenses to be paid by DSW for insurance coverage under
such Insurance Policies.

     “Schedules” means any one or more of the schedules referred to in and attached to this
Agreement.

3

 

     “Services” means the DSW Services and/or the Retail Ventures Services, as the context may
require.

     “Shoe Processing Services” means the shoe processing services for Value City Department Stores
LLC that are included in the DSW Services described in Section 2 of Schedule II.

     “Subsidiary” means, as to any Person, any corporation, association, partnership, joint venture
or other business entity of which more than 50% of the voting capital stock or other voting
ownership interests is owned or controlled directly or indirectly by such Person or by one or more
of the Subsidiaries of such Person or by a combination thereof.

     “Tax Separation Agreement” means the Tax Separation Agreement attached as Exhibit A to the
Master Separation Agreement.

     (b) Each of the following terms is defined in the Section set forth opposite such term:

	 	 	 
	TERM	 	SECTION
	Annual Budget
	 	8.01
	Actions
	 	4.04(a)
	Applicable Insurance
	 	6.11(a)
	Benefit Billing
	 	3.01
	Benefits Services
	 	3.05(b)
	Billing Party
	 	3.02
	Class A common shares
	 	Preamble
	Class B common shares
	 	Preamble
	Committee
	 	7.01
	Coverage Amount
	 	6.06(a)(i)
	Customary Billing
	 	3.01
	DSW Covered Parties
	 	6.01(a)
	DSW Inc.
	 	Preamble
	DSW Indemnified Person
	 	4.03(b)
	DSW/RVI
Shared Asset
	 	7.05
	RVI
Dedicated Asset
	 	7.05
	RVI Shared
Asset
	 	7.05
	DSW Service Costs
	 	3.01
	Employee Welfare Plans
	 	4.02
	Force Majeure
	 	9.06(a)
	Initial Term
	 	5.01
	Insurance Transition Period
	 	6.01(a)
	Net Sales Ratio
	 	3.04
	Offering
	 	Preamble
	Overallocated Party
	 	6.06(a)(iii)
	Parties
	 	Preamble
	Party
	 	Preamble
	Pass-Through Billing
	 	3.01
	Payment Date
	 	3.06(b)
	Percent of Sales Billing
	 	3.01
	Prior Agreements
	 	9.01
	Receiving Party
	 	3.02
	Registration Statement
	 	Preamble
	Retail Ventures
	 	Preamble
	Retail Ventures Indemnified Person
	 	4.03(a)
	Retail Ventures Insurance Policies
	 	6.01(a)
	Retail Ventures Plans
	 	3.05(a)
	Retail Ventures Service Costs
	 	3.01
	RVI
Dedicated Asset
	 	7.05
	RVI Shared Asset
	 	7.05
	Service Costs
	 	3.06(a)
	Shared Expenses Agreement
	 	8.03
	Terminated Party
	 	5.03(a)
	Terminating Party
	 	5.03(a)
	Underallocated Party
	 	6.06(a)(iii)

4

 

     SECTION 1.02. Internal References. Unless the context indicates otherwise, references to
Articles, Sections and paragraphs shall refer to the corresponding articles, sections and
paragraphs in this Agreement and references to the parties shall mean the parties to this
Agreement.

ARTICLE II

PURCHASE AND SALE OF SERVICES

     SECTION 2.01. Purchase and Sale of Retail Ventures Services.

     (a) Subject to the terms and conditions of this Agreement and in consideration of the Retail
Ventures Service Costs described below, Retail Ventures agrees to provide to the applicable DSW
Entities, or to procure the provision to such entities, and DSW agrees to purchase from Retail
Ventures, the Retail Ventures Services. Unless otherwise specifically agreed by Retail Ventures
and DSW, the Retail Ventures Services shall be substantially similar in scope, quality, and nature
to those customarily provided to, or procured on behalf of, the DSW Entities by Retail Ventures
and/or its Subsidiaries prior to the Offering Date.

     (b) The Parties acknowledge and agree that (i) the Retail Ventures Services to be provided by
the applicable Retail Ventures Entities under this Agreement shall, at DSW’s request, be provided
directly to Subsidiaries of DSW
and (ii) Retail Ventures may satisfy its obligation to provide or to procure the Retail
Ventures Services hereunder by causing one or more of its Subsidiaries, including, but not limited
to, RVSI, to provide or to procure such services. With respect to the Retail Ventures Services
provided to, or procured on behalf of, any Subsidiary of DSW, DSW agrees to pay on behalf of such
Subsidiary all amounts payable by or in respect of such services pursuant to this Agreement.

     SECTION 2.02. Purchase and Sale of DSW Services

     (a) Subject to the terms and conditions of this Agreement and in consideration of the DSW
Service Costs described below, DSW agrees to provide to the applicable Retail Ventures Entities, or
to procure the provision to such entities of, and Retail Ventures agrees to purchase from DSW, the
DSW Services. Unless otherwise specifically agreed by Retail Ventures and DSW, (i) the DSW
Services (other than the Information Technology Services) shall be substantially similar in scope,
quality, and nature to those customarily provided to, or procured on behalf of, the Retail Ventures
Entities by DSW and/or its Subsidiaries prior to the Offering Date, and (ii) the Information
Technology Services shall be, at a minimum, substantially similar in scope, quality, and nature to
those customarily provided to, or procured on behalf of, the Retail Ventures Entities by Retail
Ventures and/or its Subsidiaries prior to the Information Technology Services Transfer Date.

     (b) The Parties acknowledge and agree that (i) the DSW Services to be provided by the
applicable DSW Entities on behalf of Retail Ventures under this Agreement shall, at Retail
Ventures’ request, be provided directly to Subsidiaries of Retail Ventures and (ii) DSW may satisfy
its obligation to provide or to procure the DSW Services hereunder by causing one or more of its
Subsidiaries to provide or to procure such services. With respect to the DSW Services provided to,
or procured on behalf of, any Subsidiary of Retail Ventures, Retail Ventures agrees to pay on
behalf of such Subsidiary all amounts payable by or in respect of such services pursuant to this
Agreement.

     SECTION 2.03 Additional Services.

     (a) In addition to the Retail Ventures Services to be provided or procured by Retail Ventures
in accordance with Section 2.01, if requested by DSW, and to the extent that Retail Ventures and
DSW may mutually agree, Retail Ventures shall provide additional services (including services not
provided by

5

 

Retail Ventures to the DSW Entities prior to the Offering Date) to DSW. The scope of
any such services, as well as the costs and other terms and conditions applicable to such services,
shall be as mutually agreed by Retail Ventures and DSW.

     (b) In addition to the DSW Services to be provided or procured by DSW in accordance with
Section 2.02, if requested by Retail Ventures, and to the extent that Retail Ventures and DSW may
mutually agree, DSW shall provide additional services (including services not provided by DSW to
the Retail Ventures Entities prior to the Offering Date) to Retail Ventures. The scope of any such
services, as well as the costs and other terms and conditions applicable to such services, shall be
as mutually agreed by Retail Ventures and DSW.

ARTICLE III

SERVICE COSTS; OTHER CHARGES

     SECTION 3.01. Service Costs Generally. The Schedules hereto indicate, with respect to the
DSW Services and the Retail Ventures Services, respectively, listed therein, whether the costs to
be charged for Services are to be determined by (i) the customary billing method described in
Section 3.02 (“Customary Billing”), (ii) the pass-through billing method described in Section 3.03
(“Pass-Through Billing”), (iii) the percentage of net sales method described in Section 3.04
(“Percent of Sales Billing”), (iv) a calculation of certain costs related to employee benefit plans
and benefit arrangements described in Section 3.05 (“Benefit Billing”), or (v) another specified
method. Unless otherwise indicated on the Schedules, the Customary Billing method will apply. The
costs to be paid by DSW to Retail Ventures for Retail Venture Services are collectively referred to
herein as the “Retail Ventures Service Costs”. DSW agrees to pay to Retail Ventures in the manner
set forth in Section 3.06 an amount equal to the Retail Ventures Service Costs applicable to each
of the Retail Ventures Services provided or procured by Retail Ventures. The costs to be paid by
Retail Ventures to DSW for the DSW Services are collectively referred to herein as the “DSW Service
Costs”. Retail Ventures agrees to pay to DSW in the manner set forth in Section 3.06 an amount
equal to the DSW Service Costs applicable to each of the DSW Services provided or procured by DSW.

     SECTION 3.02. Customary Billing. The costs of Services as to which the Customary Billing
method applies shall be equal to the costs customarily charged and/or allocated by one Party and/or
one or more of its Subsidiaries or Departments (the “Billing Party”) to the other Party and/or one
or more of its Subsidiaries or Departments (the “Receiving Party”) immediately prior to the
Information Technology Services Transfer Date (it being understood that from and after the
Information Technology Services Transfer Date such costs may be increased by the Billing Party in a
manner consistent with the manner in which such costs were increased from time to time prior to the
Information Technology Services Transfer Date, and consistent with the semi-annual reconciliation
described in Section 8.01).

     SECTION 3.03. Pass-Through Billing. The costs of Services as to which the Pass-Through
Billing method applies shall be equal to the aggregate amount of third-party, out-of-pocket costs
and expenses incurred by a Billing Party on behalf of a Receiving Party (which costs shall include
but not be limited to the costs incurred in connection with obtaining the consent of any party to a
contract or agreement to which any Billing Party is a party where such consent is related to and
reasonably required for the provision of any Service). It is intended that Services provided by
third parties will be billed directly to the Receiving Party by the third party; however, if a
Billing Party incurs any such costs or expenses on behalf of any Receiving Party as well as
businesses operated by the Billing Party, the Billing Party shall allocate any such costs or
expenses in good faith between the various businesses on behalf of which such costs or expenses
were incurred as set

6

 

forth on any Schedule hereto or, if not set forth on a Schedule, then as the
Billing Party shall determine in the exercise
of the Billing Party’s reasonable judgment. The Billing Party shall apply usual and accepted
accounting conventions in making such allocations, and the Billing Party or its agents shall keep
and maintain such books and records as may be reasonably necessary to make such allocations. The
Billing Party shall make copies of such books and records available to the Receiving Party upon
request and with reasonable notice.

     SECTION 3.04. Percent of Sales Billing. Services for which the billing methodology is the
Percent of Sales Billing method shall not be billed individually. Instead, the Billing Party shall
provide all such services for an aggregate annual cost equal to the amount obtained by multiplying
(x) the Billing Party’s projected budget for all services which are the same or similar to the
applicable Services which are to be provided to all Retail Ventures Entities and DSW Entities for
the relevant year, by (y) the projected net sales for the year of the Receiving Party Entities
divided by the aggregate projected net sales of all Retail Ventures Entities and DSW Entities (the
“Net Sales Ratio”). At the end of the applicable fiscal year, actual expenses versus budgeted
expenses for the relevant Service shall be compared and any overage or shortfall shall be allocated
based upon the Net Sales Ratio. The Billing Party’s budget for Services to be provided to the
Receiving Party Entities as contemplated by this Section 3.04 shall be determined on a basis
consistent with the manner in which the Billing Party determines the similar budgets for the
Billing Party Entities.

     SECTION 3.05. Benefit Billing.

     (a) Prior to the Offering Date, certain associates of DSW participated in certain benefit
plans sponsored by Retail Ventures (“Retail Ventures Plans”). On and after the Offering Date, DSW
associates shall continue to be eligible to participate in the Retail Ventures Plans, subject to
the terms of the governing plan documents as interpreted by the appropriate plan fiduciaries. On
and after the Offering Date, subject to regulatory requirements and the provisions of Section 4.01
hereof, Retail Ventures shall continue to provide Benefit Services (as hereafter defined) to and in
respect of DSW associates with reference to Retail Ventures Plans as administered by Retail
Ventures prior to the Offering Date.

     (b) The costs payable by DSW for Retail Ventures Services relating to the administration of
employee plans and benefit arrangements, which are included in Human Resources in Schedule I
(“Benefit Services”), shall be determined and billed as set forth in Schedule I. The Parties
acknowledge and agree that some of the costs associated with certain Retail Ventures Plans will be
paid principally through DSW employee payroll deductions for such plans as specified in Schedule I.
The Parties intend that the Retail Ventures Service Costs relating to the performance of Benefit
Services shall not exceed reasonable compensation for such services as defined under applicable
law.

     (c) Each Party may request changes in the applicable terms of or Retail Ventures Services
relating to the Retail Ventures Plans, approval of which shall not be unreasonably withheld;
provided, however, that changes in the terms and provisions of any of the Retail Ventures Plans
shall be in the sole discretion of Retail Ventures. The Parties agree to cooperate fully with
each other in the administration and coordination of regulatory and administrative
requirements associated with Retail Ventures Plans.

     SECTION 3.06. Invoicing and Settlement of Costs.

     (a) Except as otherwise provided in a Schedule to this Agreement or to the extent that Retail
Ventures and DSW may mutually agree, each Billing Party shall invoice or notify the Chief Executive
Officer or Chief Financial Officer of the Receiving Party on a monthly basis (not later than the
tenth day of

7

 

each month), in a manner substantially similar to and consistent with the billing
practices used in connection with services provided by Retail Ventures to the DSW Entities prior to
the Offering Date and, as applicable, the Information Technology Services Transfer Date (except as
otherwise agreed), of the Service Costs related to services performed or procured by the Billing
Party during the prior calendar month. As used herein, “Service Costs” means the Retail Ventures
Service Costs, if Retail Ventures is the Billing Party, and the DSW Service Costs, if DSW is the
Billing Party. In connection with the invoicing described in this Section 3.06(a), the Billing
Party shall provide to the Receiving Party the same billing data and level of detail as customarily
or similar to that provided to the Receiving Party prior to the Offering Date and, as applicable,
the Information Technology Services Transfer Date and such other related data as may be reasonably
requested by the Receiving Party.

     (b) The Receiving Party agrees to pay to the Billing Party, on or before the 30th day after
the date on which the Billing Party delivers to the Receiving Party an invoice or notice of Service
Costs (or the next Business Day, if such 30th day is not a Business Day) (each, a “Payment Date”),
by wire transfer of immediately available funds payable to the order of the Billing Party, all
amounts so invoiced or noticed by the Billing Party pursuant to Section 3.06(a). If the Receiving
Party fails to pay any monthly payment within 30 days of the relevant Payment Date, the Receiving
Party shall be obligated to pay, in addition to the amount due on such Payment Date, interest on
such amount at the prime, or best, rate announced by National City Bank, compounded monthly from
the relevant Payment Date through the date of payment. Payment can be made via check, ACH or wire
and, except as set forth in Section 3.15(c) of the Master Separation Agreement, offsetting is not
permitted.

ARTICLE IV

STANDARD OF PERFORMANCE AND INDEMNIFICATION

     SECTION 4.01.

     (i)General Standard of Service. Except as otherwise agreed to in writing by the Parties or as
described in this Agreement, and provided that a Party is not restricted by contract with third
parties or by applicable law, the Parties agree that (i) the nature, quality, and standard of care
applicable to the delivery of the Services hereunder (other than the Information Technology
Services) shall be substantially the same as or consistent with that applicable to the similar
services provided by a Party to the other Party prior to the Offering Date, and (ii) the nature,
quality, and standard of care applicable to the delivery of the Information Technology Services
hereunder shall be, at a minimum,
substantially the same as or consistent with that applicable to the similar services provided
by or on behalf of Retail Ventures prior to the Information Technology Services Transfer Date.
Retail Ventures shall use its reasonable efforts to ensure that the nature and quality of Services
provided to DSW associates under Retail Ventures Plans, either by Retail Ventures directly or
through administrators under contract, shall be undifferentiated as compared with the same services
provided to or on behalf of Retail Ventures associates under Retail Ventures Plans.

     (ii) Service Level Partnership Agreements. Within ninety (90) days of the date of this
Agreement, DSW will enter into Service Level Partnership Agreements with RVI and/or each RVI
entity, with such agreements to include a description of Information Technology Services provided
to each entity and address minimum standards of service each entity should expect.

     SECTION 4.02. Delegation. Subject to Section 4.01 above, DSW hereby delegates to Retail
Ventures final, binding, and exclusive authority, responsibility, and discretion to interpret and
construe the provisions of employee welfare benefit plans in which associates of DSW Entities have

8

 

elected to participate and which are administered by Retail Ventures under this Agreement
(collectively, “Employee Welfare Plans”). Retail Ventures may further delegate such authority to
other parties to:

          (i) provide administrative and other services;

          (ii) reach factually supported conclusions consistent with the terms of the respective
Employee Welfare Plans;

          (iii) make a full and fair review of each claim denial and decision related to the provision
of benefits provided or arranged for under the Employee Welfare Plans pursuant to the requirements
of ERISA, if within 60 days after receipt of the notice of denial, a claimant requests in writing a
review for reconsideration of such decisions (the party adjudicating the claim shall notify the
claimant in writing of its decision on review and such notice shall satisfy all ERISA requirements
relating thereto); and

          (iv) notify the claimant in writing of its decision on review.

     SECTION 4.03. Limitation of Liability.

     (a) Retail Ventures Entities

          (i) DSW agrees that none of the Retail Ventures Entities and their respective directors,
officers, agents, and employees (each, a “Retail Ventures Indemnified Person”) shall have any
liability, whether direct or indirect, in contract or tort or otherwise, to any DSW Entity or any
other Person for or in connection with the Retail Ventures Services rendered or to be rendered by
any Retail Ventures Indemnified Person pursuant to this Agreement, the transactions contemplated
hereby or any Retail Ventures Indemnified Person’s actions or inactions in connection with any
Retail Ventures Services or such transactions, except for damages which have resulted from such
Retail Ventures Indemnified Person’s gross negligence or willful
misconduct in connection with any Retail Ventures Services, actions or inactions.

          (ii) Notwithstanding the provisions of this Section 4.03(a), none of the Retail Venture
Entities shall be liable for any special, indirect, incidental, or consequential damages of any
kind whatsoever (including, without limitation, attorneys’ fees) in any way due to, resulting from
or arising in connection with any of the Retail Ventures Services or the performance of or failure
to perform Retail Ventures’ obligations under this Agreement. This disclaimer applies without
limitation (1) to claims arising from the provision of the Retail Ventures Services or any failure
or delay in connection therewith; (2) to claims for lost profits; (3) regardless of the form of
action, whether in contract, tort (including negligence), strict liability, or otherwise; and (4)
regardless of whether such damages are foreseeable or whether Retail Ventures has been advised of
the possibility of such damages.

          (iii) None of the Retail Venture Entities shall have any liability to any DSW Entity or any
other Person for failure to perform Retail Ventures’ obligations under this Agreement or otherwise,
where (1) such failure to perform is not caused by the gross negligence or willful misconduct of
the Retail Venture Entity designated to perform such obligations and (2) such failure to perform
similarly affects the Retail Venture Entities receiving the same or similar services and does not
have a disproportionately adverse effect on the DSW Entities, taken as a whole.

          (iv) In addition to the foregoing, DSW agrees that, in all circumstances, it shall use
commercially reasonable efforts to mitigate and otherwise minimize damages to the DSW Entities,
individually and collectively,

9

 

whether direct or indirect, due to, resulting from or arising in
connection with any failure by Retail Ventures to comply fully with Retail Ventures’ obligations
under this Agreement.

     (b) DSW Entities

          (i) Retail Ventures agrees that none of the DSW Entities and their respective directors,
officers, agents, and employees (each, a “DSW Indemnified Person”) shall have any liability,
whether direct or indirect, in contract or tort or otherwise, to any Retail Ventures Entity or any
other Person for or in connection with the DSW Services rendered or to be rendered by any DSW
Indemnified Person pursuant to this Agreement, the transactions contemplated hereby or any DSW
Indemnified Person’s actions or inactions in connection with any DSW Services or such transactions,
except for damages which have resulted from such DSW Indemnified Person’s gross negligence or
willful misconduct in connection with any DSW Services, actions or inactions.

          (ii) Notwithstanding the provisions of this Section 4.03(b), none of the DSW Entities shall be
liable for any special, indirect, incidental, or consequential damages of any kind whatsoever
(including, without limitation, attorneys’ fees) in any way due to, resulting from or arising in
connection with any of the DSW Services or the performance of or failure to perform DSW’s
obligations under this Agreement. This disclaimer applies without limitation (1) to claims arising
from the provision of the DSW Services or any failure or delay in connection therewith; (2) to
claims for lost profits; (3) regardless of the form of action, whether in contract, tort (including
negligence),
strict liability, or otherwise; and (4) regardless of whether such damages are foreseeable or
whether DSW has been advised of the possibility of such damages.

          (iii) None of the DSW Entities shall have any liability to any Retail Ventures Entity or any
other Person for failure to perform DSW’s obligations under this Agreement or otherwise, where (1)
such failure to perform is not caused by the gross negligence or willful misconduct of the DSW
Entity designated to perform such obligations and (2) such failure to perform similarly affects the
DSW Entities receiving the same or similar services and does not have a disproportionately adverse
effect on the Retail Ventures Entities, taken as a whole.

          (iv) In addition to the foregoing, Retail Ventures agrees that, in all circumstances, it shall
use commercially reasonable efforts to mitigate and otherwise minimize damages to Retail Ventures
Entities, individually and collectively, whether direct or indirect, due to, resulting from or
arising in connection with any failure by DSW to comply fully with DSW’s obligations under this
Agreement.

     SECTION 4.04. Indemnification Related to Retail Ventures Services.

     (a) DSW agrees to indemnify and hold harmless each Retail Ventures Indemnified Person from and
against any damages related to, and to reimburse each Retail Ventures Indemnified Person for all
reasonable expenses (including, without limitation, attorneys’ fees) as they are incurred in
connection with investigating, preparing, pursuing, or defending, any third party claim, action,
proceeding, or investigation, whether or not in connection with pending or threatened litigation
and whether or not any DSW Indemnified Person or any Retail Ventures Indemnified Person is a party
(collectively, “Actions”), arising out of or in connection with Retail Ventures Services rendered
or to be rendered by any Retail Ventures Indemnified Person pursuant to this Agreement, the
transactions contemplated hereby or any Retail Ventures Indemnified Person’s actions or inactions
in connection with any such Retail Ventures Services or transactions; provided that, DSW shall not
be responsible for any damages incurred by any Retail Ventures Indemnified Person that have
resulted from such Retail Ventures Indemnified Person’s gross negligence or willful misconduct in
connection with any of the advice, actions, inactions,

10

 

or Retail Ventures Services referred to
above (it being understood and agreed that the provision by any Retail Venture Entity of any of the
Retail Ventures Services contemplated by Schedule I hereof without obtaining the consent of any
party to any Contract or agreement to which any Retail Ventures Entity is a party as of the date
hereof shall not constitute gross negligence or willful misconduct by any Retail Ventures Entity,
provided that, the relevant Retail Ventures Entity has used commercially reasonable efforts to
obtain such consent).

     (b) Except as set forth in Section 4.04(c), Retail Ventures agrees to indemnify and hold
harmless each DSW Indemnified Person from and against any damages related to, and to reimburse each
DSW Indemnified Person for all reasonable expenses as they are incurred in connection with
investigating, preparing, or defending, any third party Action arising out of or related to the
gross negligence or willful misconduct of any Retail Ventures Indemnified Person in connection with
the Retail Ventures Services rendered or to be rendered pursuant to this Agreement.

     (c) To the extent that any other Person has agreed to indemnify any Retail Ventures
Indemnified Person or to hold a Retail Ventures Indemnified Person harmless and such Person
provides services to Retail Ventures or any affiliate of Retail Ventures relating directly or
indirectly to any employee plan or benefit arrangement for which Benefit Services are provided
under this Agreement, Retail Ventures will exercise reasonable efforts (x) to make such agreement
applicable to any DSW Indemnified Person so that each DSW Indemnified Person is held harmless or
indemnified to the same extent as any Retail Ventures Indemnified Person and (y) to make available
to each DSW Indemnified Person the benefits of such agreement.

     SECTION 4.05. Indemnification Related to DSW Services.

     (a) Retail Ventures agrees to indemnify and hold harmless each DSW Indemnified Person from and
against any damages related to, and to reimburse each DSW Indemnified Person for all reasonable
expenses (including, without limitation, attorneys’ fees) as they are incurred in connection with
investigating, preparing, pursuing, or defending, any third party Action arising out of or in
connection with DSW Services rendered or to be rendered by any DSW Indemnified Person pursuant to
this Agreement, the transactions contemplated hereby or any DSW Indemnified Person’s actions or
inactions in connection with any such DSW Services or transactions; provided that, Retail Ventures
shall not be responsible for any damages incurred by any DSW Indemnified Person that have resulted
from such DSW Indemnified Person’s gross negligence or willful misconduct in connection with any of
the advice, actions, inactions, or DSW Services referred to above (it being understood and agreed
that the provision by any DSW Entity of any of the DSW Services contemplated by Schedule II hereof
without obtaining the consent of any party to any Contract or agreement to which any DSW Entity is
a party as of the date hereof shall not constitute gross negligence or willful misconduct by any
DSW Entity, provided that, the relevant DSW Entity has used commercially reasonable efforts to
obtain such consent).

     (b) DSW agrees to indemnify and hold harmless the Retail Ventures Indemnified Persons from and
against any damages related to, and to reimburse each Retail Ventures Indemnified Person for all
reasonable expenses as they are incurred in connection with investigating, preparing, or defending,
any third party Action arising out of or related to the gross negligence or willful misconduct of
any DSW Indemnified Person in connection with the DSW Services rendered or to be rendered pursuant
to this Agreement.

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ARTICLE V

TERM AND TERMINATION

     SECTION 5.01. Term. The Initial Agreement was in effect from January 30, 2005 through the
Agreement Date. Except as otherwise provided in this Article V, or in Section 9.06 or as otherwise
agreed in writing by the Parties, (a) this Agreement, (i) as it relates to all Services other than
the Shoe Processing Services, shall have an initial term from the Agreement Date through January
31, 2008, and (ii) as it relates to the Shoe Processing Services, shall have an initial term from
the Agreement Date through January 31, 2011 (in each case, the “Initial Term”), and will be renewed
automatically after the applicable Initial Terms for successive one-year terms unless either Party
elects not to renew this Agreement by notice in writing to the other Party not less than one
hundred and eighty (180) days prior to the end of any term, and (b) a Party’s obligation to provide
or to procure, and the other Party’s obligation to purchase, a Service shall cease as of the
applicable date set forth in the applicable Schedules or such earlier date determined in accordance
with Section 5.02.

     SECTION 5.02. Termination.

     (a) Except as otherwise provided herein or in any Schedule hereto, the Parties may by mutual
agreement from time to time terminate this Agreement with respect to one or more of the Services,
in whole or in part.

     (b) Retail Ventures may terminate any DSW Service at any time if DSW shall have failed to
perform any of its material obligations under this Agreement relating to such DSW Service, Retail
Ventures shall have notified DSW in writing of such failure and such failure shall have continued
for a period of at least thirty (30) days after receipt by DSW of written notice of such failure
from Retail Ventures.

     (c) DSW may terminate any Retail Ventures Service at any time if Retail Ventures shall have
failed to perform any of its material obligations under this Agreement relating to such Retail
Ventures Service, DSW shall have notified Retail Ventures in writing of such failure, and such
failure shall have continued for a period of at least thirty (30) days after receipt by Retail
Ventures of written notice of such failure from DSW.

     (d) On or after October 1, 2007, either Retail Ventures or DSW may terminate the Shoe
Processing Services by giving written notice of such termination to the other Party. Termination
of the Shoe Processing Services shall be effective not less than nine (9) months after the date of
any such termination notice or on any later date that may be specified in such notice.

     SECTION 5.03. Effect of Termination.

     (a) Other than as required by law, upon termination of any Service pursuant to Section 5.02,
or upon termination of this Agreement in accordance with its terms, the Party whose Service is
terminated (the “Terminated Party”) shall have no further obligation to provide the terminated
Service (or any Service, in the case of termination of this Agreement) and the Party terminating
such Service (the “Terminating Party”) shall have no obligation to pay any fees relating to such
terminated Services or to make any other payments hereunder; provided that, notwithstanding such
termination, (i) the Terminating Party shall remain liable to the Terminated Party for fees owed
and payable in respect of Services provided prior to the effective date of the termination; (ii)
the Terminated Party shall continue to charge the Terminating Party for administrative and program
costs relating to benefits paid after but incurred prior to the termination of any Service and
other services required to be provided after the termination of such Service, and the Terminating
Party shall be obligated to pay such expenses in accordance with the terms of this Agreement; and
(iii) the provisions of Articles 4, 5,

12

 

and 9 shall survive any such termination indefinitely. All
program and administrative costs attributable to associates of any DSW Entity under Retail Ventures
Plans that relate to any period after the effective date of any such termination shall be for the
account of and paid by DSW.

     (b) Following termination of this Agreement with respect to any Service provided or procured
by a Party, the Parties agree to cooperate with each other in providing for an orderly transition
of such Service to the other Party or to a successor service provider as designated by the other
Party. Without limiting the foregoing, Retail Ventures agrees to (i) provide to DSW, within 30
days of the termination of any Benefit Service, in a usable format designated by Retail Ventures,
copies of all records relating directly or indirectly to benefit determinations with respect to any
and all associates of a DSW Entity, including, but not limited to, compensation and service
records, correspondence, plan interpretive policies, plan procedures, administration guidelines,
minutes, and any data or records required to be maintained by law and (ii) work with DSW in
developing a transition schedule with respect to such terminated Benefit Service.

ARTICLE VI

INSURANCE MATTERS

     SECTION 6.01. DSW Insurance Coverage During Transition Period.

     (a) As of the Offering Date, Retail Ventures shall maintain insurance coverage under the
Insurance Policies listed in Part (a) of Schedule III (the “Retail Ventures Insurance Policies”).
Throughout the period beginning on the Offering Date and ending upon the earlier of (i) termination
of the Service provided pursuant to this Article VI or (ii) termination or expiration of this
Agreement in accordance with its terms (the “Insurance Transition Period”), Retail Ventures shall,
subject to insurance market conditions and other factors beyond its control, maintain Insurance
Policies covering and for the benefit of the DSW Entities and their respective directors, officers,
and employees (collectively, the “DSW Covered Parties”) which are comparable to those maintained
generally by Retail Ventures covering the DSW Covered Parties prior to the Offering Date; provided,
however, that if Retail Ventures determines that (i) the amount or scope of such insurance coverage
will be reduced to a level materially inferior to the level of insurance coverage in existence
immediately prior to the Insurance Transition Period or (ii) the retention or deductible level
applicable to such insurance coverage, if any, will be increased to a level materially greater than
the levels in existence immediately prior to the Insurance Transition Period, each other than as a
result of the Offering, Retail Ventures shall give DSW notice of such determination as promptly as
practicable. Upon notice of such determination, DSW shall be entitled to no less than sixty (60)
days to evaluate DSW’s options regarding continuance of insurance coverage under said Insurance
Policies and DSW may cancel the DSW Entities’ interest in all or any portion of such insurance
coverage as of any day within such sixty (60) day period.

     (b) DSW shall promptly pay or reimburse Retail Ventures, as the case may be, for premium
expenses, deductibles or retention amounts, and any other costs and expenses which Retail Ventures
may incur in connection with the insurance coverages maintained pursuant to this Section 6.01,
including but not limited to any retroactive or subsequent premium adjustments. DSW’s share of
such costs and expenses shall be calculated as set forth in Part (b) of Schedule III.

     SECTION 6.02. Cooperation; Payment of Insurance Proceeds to DSW; Agreement Not to Release
Carriers. Each Party shall share such information as is reasonably necessary in order to permit the
other Party to manage and conduct its insurance matters in an orderly fashion. Retail Ventures, at
the request of DSW, shall cooperate with and use commercially reasonable efforts to assist DSW in
recovering Insurance Proceeds under the Retail Ventures

13

 

Insurance Policies for claims relating to
the DSW Business, the assets of DSW or DSW Liabilities, whether such claims arise under any
Contract or agreement, by operation of law or otherwise, existing or arising from any past acts or
events occurring or failing to occur or alleged to have occurred or to have failed to occur or any
conditions existing or alleged to have existed before the Offering Date, on the Offering Date or
during the Insurance Transition Period, and Retail Ventures
shall promptly pay any such recovered
Insurance Proceeds to DSW. Neither Retail Ventures nor DSW, nor any of their respective
Subsidiaries, shall take any action which would intentionally jeopardize or otherwise interfere
with the other Party’s ability to collect any proceeds payable pursuant to any Insurance Policy.
Except as otherwise contemplated by this Agreement or any other agreement between the Parties,
after the Offering Date, neither Retail Ventures nor DSW (and each Party shall ensure that no
affiliate of such Party), without the consent of the other Party, shall provide any insurance
carrier with a release, or amend, modify or waive any rights under any such policy or agreement, if
such release, amendment, modification or waiver would adversely affect any rights or potential
rights of the other Party (or its Subsidiary) thereunder. However, nothing in this Section 6.02
shall (A) preclude any Retail Ventures Entity or any DSW Entity from presenting any claim or from
exhausting any policy limit, (B) require any Retail Ventures Entity or any DSW Entity to pay any
premium or other amount or to incur any Liability, or (C) require any Retail Ventures Entity or DSW
Entity to renew, extend or continue any policy in force.

     SECTION 6.03. DSW Insurance Coverage After the Insurance Transition Period. From and after
expiration of the Insurance Transition Period, DSW shall be responsible for obtaining and
maintaining insurance programs for the DSW Entities’ risk of loss and such insurance arrangements
shall be separate and apart from Retail Ventures’ insurance programs.

     SECTION 6.04. Deductibles and Self-Insured Obligations. DSW shall reimburse Retail Ventures
for all amounts necessary to exhaust or otherwise to satisfy all applicable self-insured
retentions, amounts for fronted policies, deductibles and retrospective premium adjustments and
similar amounts not covered by Insurance Policies in connection with DSW Liabilities and Insured
DSW Liabilities to the extent that Retail Ventures is required to pay any such amounts.

     SECTION 6.05. Procedures with Respect to Insured DSW Liabilities.

     (a) DSW shall reimburse Retail Ventures for all amounts incurred to pursue insurance
recoveries from Insurance Policies for Insured DSW Liabilities.

     (b) The defense of claims, suits or actions giving rise to potential or actual Insured DSW
Liabilities shall be managed (in conjunction with Retail Ventures’ insurers, as appropriate) by the
Party that would have had
responsibility for managing such claims, suits or actions had such Insured DSW Liabilities
been DSW Liabilities.

     SECTION 6.06. Insufficient Limits of Liability for Retail Ventures Liabilities and DSW
Liabilities.

     (a) In the event that there are insufficient limits of liability available under Retail
Ventures’ Insurance Policies in effect prior to the Distribution Date to cover the Liabilities of
Retail Ventures and/or DSW that would otherwise be covered by such Insurance Policies, then to the
extent that other insurance is not available to Retail Ventures and/or DSW for such Liabilities an
adjustment will be made in accordance with the following procedures:

          (i) To the extent the Parties are able to specifically quantify and verify the actual
Liabilities incurred by each Party to the exclusion

14

 

of the other Party, each Party will be
allocated an amount equal to the product of (A) the actual Liabilities incurred by such Party,
divided by the total actual Liabilities incurred by the Parties, times (B) the lesser of (1) the
available limits of liability under Retail Ventures’ Insurance Policies in effect prior to the
Distribution Date net of uncollectible amounts attributable to insurer insolvencies and (2) the
proceeds received from Retail Ventures’ Insurance Policies if the Liabilities are the subject of
disputed coverage claims and, following consultation with each other, Retail Ventures and/or DSW
agree to accept less than full policy limits from Retail Ventures’ and DSW’s insurers (such
available limits and/or proceeds being referred to as the “Coverage Amount”).

     (ii) To the extent that the Parties are unable to specifically quantify and verify any such
Liabilities or any part of such Liabilities to each Party (to the exclusion of the other Party),
each Party will be allocated an amount equal to their shared percentage of the Coverage Amount.

     (iii) A Party who receives more than its share of the Coverage Amount (the “Overallocated
Party”) agrees to reimburse the other Party (the “Underallocated Party”) to the extent that the
Liabilities of the Underallocated Party that would have been covered under such Insurance
Policies is less than the Underallocated Party’s share of the Coverage Amount.

     (iv) This Section 6.06 shall terminate ten (10) years following the end of the Insurance
Transition Period, unless terminated sooner in accordance with the provisions of this Agreement.

     SECTION 6.07. Cooperation. Retail Ventures and DSW shall cooperate with each other in all
respects, and shall execute any additional documents which are reasonably necessary, to effectuate
the provisions of this Article VI.

     SECTION 6.08. No Assignment or Waiver. This Agreement shall not be considered as an
attempted assignment of any policy of insurance or as a contract of insurance and shall not be
construed to waive any right or remedy of any Retail Ventures Entity in respect of any
Insurance Policy or any other contract or policy of insurance.

     SECTION 6.09. No Liability. DSW does hereby, for itself and as agent for each other DSW
Entity, agree that no Retail Ventures Entity or Retail Ventures Indemnified Person shall have any
Liability whatsoever as a result of the insurance policies and practices of Retail Ventures and its
Subsidiaries as in effect at any time prior to the end of the Insurance Transition Period,
including as a result of the level or scope of any such insurance, the creditworthiness of any
insurance carrier, the terms and conditions of any policy, or the adequacy or timeliness of any
notice to any insurance carrier with respect to any claim or potential claim or otherwise.

     SECTION 6.10. Additional or Alternate Insurance. Notwithstanding any other provision of this
Agreement, during the Insurance Transition Period, Retail Ventures and DSW shall work together to
evaluate insurance options and secure additional or alternate insurance for DSW and/or Retail
Ventures if desired by and cost effective for DSW and Retail Ventures. Nothing in this Agreement
shall be deemed to restrict any DSW Entity from acquiring at its own expense any other Insurance
Policy in respect of any Liabilities or covering any period.

     SECTION 6.11. Forbearance and Prior Insurance Coverage.

     (a) From and after the date of this Agreement, Retail Ventures shall not, and shall cause each
of its Subsidiaries not to, take or fail to take any action if such action or inaction, as the case
may be, would adversely affect

15

 

the applicability of any insurance in effect on the effective date
of this Agreement that covers all or any part of the assets, liabilities, business or employees of
any DSW Entity with respect to events occurring prior to the Offering Date (“Applicable
Insurance”), it being understood that in no event shall any Retail Venture Entity be obligated to
pay premiums with respect to periods after the Offering Date in respect of Applicable Insurance.

     (b) Retail Ventures agrees that, from and after the Offering Date, all Applicable Insurance
directly or indirectly applicable to any assets, liabilities, business or employees of any DSW
Entity shall be for the benefit of the DSW Entity, it being understood that such Applicable
Insurance shall also be for the benefit of the Retail Venture Entities to the extent directly or
indirectly applicable to any assets, liabilities, business or employees of the Retail Venture
Entities. Without limiting the generality of the foregoing, upon DSW’s reasonable request, Retail
Ventures shall use its reasonable efforts to modify, amend or assign all Applicable Insurance
policies and arrangements so that DSW is the direct beneficiary of such Applicable Insurance with
all rights to enforce, obtain the benefit of and take all other action in respect of such
Applicable Insurance; provided that, if the modifications, amendments or assignments contemplated
by this Section 6.11(b) are not permissible, Retail Ventures shall, and shall cause each of its
Subsidiaries to, use its reasonable efforts to enter into such other arrangements as DSW may
reasonably request to ensure that DSW and the Subsidiaries of DSW are entitled to the benefit (to
the fullest extent set forth in the relevant policies and arrangements) of any Applicable
Insurance.

     SECTION 6.12. Further Agreements. The Parties acknowledge that they intend to allocate
financial obligations without violating any laws regarding insurance, self-insurance or other
financial responsibility. If it is determined that any action undertaken pursuant to this
Agreement or any related agreement is violative of any insurance, self-insurance or related
financial responsibility law or regulation, the Parties agree to work together to do whatever is
necessary to comply with such law or regulation while trying to accomplish, as much as possible,
the allocation of financial obligations as intended in this Agreement or any such related
agreement.

ARTICLE VII

INFORMATION TECHNOLOGY EXECUTIVE STEERING COMMITTEE

     SECTION 7.01. Formation. Not later than 10 business days after the Agreement Date, the
Parties shall appoint members to an information technology executive steering committee (the
“Committee”) which shall consist of: three (3) members appointed by DSW; three (3) members
appointed by Retail Ventures; and the Chairman of each of DSW and RVI and his or her designee. A
member appointed by DSW shall chair the Committee. If either Party decides at any time to replace
an appointed Committee member, it may do so by written notice to the other Party.

     SECTION 7.02. Meetings. The Committee shall meet, in person and/or by telephone, at such
times and places as it may select but, in any event, it shall meet at least twice per year
thereafter. Reasonable notice must be given in advance of all meeting dates. The first such
meeting shall be held as soon as practicable, but in no event later than ninety (90) days after the
Information Technology Services Transfer Date. To constitute a quorum for purposes of Committee
decisions, each Party must be represented by at least two of the three members appointed by each
Party. Committee members can give their proxy for voting on Committee decisions to other Committee
members.

     SECTION 7.03. Purpose; Agenda; Minutes. As of the Information Technology Services Transfer
Date, the Committee shall be responsible for identifying and reaching agreement on annual and
interim proposed changes to

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the information technology infrastructure and information technology
services to be maintained and provided by DSW, and, as necessary, the billing methodologies .
Minutes of each Committee meeting shall be recorded.

     SECTION 7.04. Budget/Proposals. Prior to December 31, 2006 and each subsequent year so long
as this Agreement is in effect, the Parties agree to work together and to cooperate with each other
in good faith to develop an annual budget (“IT Annual Budget”) to reflect the estimated annual
Service Costs to each Party
for each of the Information Technology Services to be provided and/or procured by the other
Party as contemplated by this Agreement. In the budgeting process, the Parties agree to use their
reasonable efforts to harmonize the interests of the Parties to have quality services at affordable
costs and to recover the costs of performing and/or procuring the Services. On or before December
31 of each calendar year, an Annual Budget for the next calendar year shall be submitted to the
Committee for review and approval. The Committee may make exceptions to the billing methodologies
described on Schedule II and in Article III. Additionally, either Party may present to the
Committee an interim proposal for a specific change to DSW’s information technology infrastructure,
and any such proposal shall include, at a minimum, (a) a statement of the anticipated outcomes of
the proposed change, (b) an identification of the human resources, facilities and equipment that
would be required to implement the proposed change, (c) a budget for the proposed change and a
proposed allocation of the cost of the proposed change between the Parties, and (d) an estimated
time schedule for implementation of the proposed change. The Committee may request additional
information, accept a proposal as presented, accept a proposal subject to mutually agreed upon
modifications, or reject a proposal. If a Party’s proposal is rejected, then the proposing Party
shall nevertheless be free to implement the proposal independently so long as such implementation
has no cost or material adverse impact on the other Party.

      SECTION 7.05. Information Technology Capital Expenditures. Before DSW shall be obligated to
acquire any new or replacement information technology asset (equipment, computer software, etc.)
that will be used for the benefit of any Retail Ventures Entity, the Committee shall determine
whether such asset is a shared asset to be used for the benefit of one or more of the Retail
Ventures Entities and one or more of the DSW Entities (each, a “DSW/RVI Shared Asset”), a shared
asset that will be used primarily for the benefit of two or more of the Retail Ventures Entities
(each, an “RVI Shared Asset”) or a dedicated asset that will be used primarily for the benefit of a
single Retail Ventures Entity (each, an “RVI Dedicated Asset”).

     (a) DSW shall retain title to each DSW/RVI Shared Asset and to each RVI Shared Asset and shall
recover the cost of each such asset in accordance with Sections 5 and 6 of Schedule II hereto.
Retail Ventures hereby gives DSW the guarantee set forth in Schedule IV of timely payment by each
of the Retail Ventures Entities of the amounts described in Sections 5 and 6 of Schedule II hereto
that are applicable to each DSW/RVI Shared Asset and each RVI Shared Asset.

     (b) Each RVI Dedicated Asset will be treated as follows:

     (i) Promptly upon acquisition by DSW of an RVI Dedicated Asset that is to be used at a
facility of a Retail Ventures Entity (e.g., a point-of-sale device) or an RVI Dedicated Asset that
is to be provided to an employee of a Retail Ventures Entity (e.g., a laptop computer), DSW shall
transfer title to such RVI Dedicated Asset to the applicable Retail Ventures Entity, and the
applicable Retail Ventures Entity shall reimburse DSW for the purchase price, license fee and/or
other consideration paid by DSW for such asset not later than thirty (30) days after acquisition of
such asset. Retail Ventures hereby gives to DSW the guarantee set forth in Schedule IV of timely
payment to DSW by the applicable Retail Ventures Entity of the
purchase price, license fee and/or other consideration paid by DSW for each RVI Dedicated Asset; and

     (ii) DSW shall retain title to any RVI Dedicated Asset that is to be used at a DSW data center
or other DSW facility and shall recover the cost of such RVI Dedicated Asset in accordance with
Sections 5 and 6 of Schedule II hereto. Retail Ventures hereby gives to DSW the guarantee set
forth in Schedule IV of timely payment to DSW by the applicable Retail Ventures Entity of such
amounts, and Retail Ventures hereby agrees to purchase each RVI Dedicated Asset from DSW, for an
amount equal to the net book value of such RVI Dedicated Asset on the date of purchase by Retail
Ventures, on the earliest date that such RVI Dedicated Asset is no longer used for the benefit of
the Retail Ventures Entity due to the sale of the equity or of all or substantially all of the
assets of such Retail Ventures Entity, the cessation of operations of such Retail Ventures Entity
or a strategic decision by such Retail Ventures Entity to cease use of such RVI Dedicated Asset.

ARTICLE VIII

ADDITIONAL AGREEMENTS

     SECTION 8.01. Annual Budget. Prior to December 31, 2006 and each subsequent year so long as
this Agreement is in effect, the Parties agree to work together and to cooperate with each other in
good faith to develop an annual budget (“Annual Budget”) to reflect the estimated annual Service
Costs to each Party for each of the Services to be provided and/or procured by the other Party as
contemplated by this Agreement. In the budgeting process, the Parties agree to use their
reasonable efforts to harmonize the interests of the Parties to have quality services at affordable
costs and to recover the costs of performing and/or procuring the Services. On or before December
31 of each calendar year, an Annual Budget for the next calendar year shall be submitted to the
respective Controller or Chief Financial Officer of each of the Parties for review and approval.
Such approval shall constitute approval of the Annual Budget by the Party represented by such
person. During the months of July and January of each year so long as this Agreement is in effect,
the Parties shall conduct a semi-annual reconciliation of actual Service Costs to budgeted Service
Costs to determine if there are any significant discrepancies between such costs and, if so,
whether the payments for services should be adjusted accordingly.

     SECTION 8.02. Employment Matters. During the Initial Term, neither Party shall, directly or
indirectly, solicit active employees of the other Party without the other Party’s consent; provided
that each Party agrees to give such consent if such Party believes, in good faith, that its consent
is necessary to avoid the resignation of an employee from one Party that the other Party would like
to employ.

     SECTION 8.03. Shared Expenses Agreement. The Parties agree to share certain costs and
expenses related to the store facilities located at Four

17

 

Union Square, New York, New York, pursuant
to the terms and conditions set forth in the Shared Expenses Agreement between the Parties (the
“Shared Expenses Agreement”).

ARTICLE VIII

MISCELLANEOUS

     SECTION 9.01. Prior Agreements. In the event there is any conflict between the provisions of
this Agreement, on the one hand, and the provisions of prior services agreements among any Retail
Venture Entity and any DSW Entity (the “Prior Agreements”), on the other hand, the provisions of
this Agreement shall govern and such provisions in the Prior Agreements are deemed to be amended so
as to conform with this Agreement.

     SECTION 9.02. Other Agreements. In the event there is any inconsistency between the
provisions of this Agreement and the respective provisions of the Master Separation Agreement, the
Tax Separation Agreement and the Exchange Agreement, respectively, the respective provisions of the
Master Separation Agreement, the Tax Separation Agreement and the Exchange Agreement shall govern.

     SECTION 9.03. Future Litigation and Other Proceedings. In the event that DSW (or any of its
Subsidiaries or any of its or their respective officers or directors) or Retail Ventures (or any of
its Subsidiaries or any of its or their respective officers or directors) at any time after the
date hereof initiates or becomes subject to any litigation or other proceedings before any
governmental authority or arbitration panel with respect to which the Parties have no prior
agreements (as to indemnification or otherwise), the Party (and its Subsidiaries and its and their
respective officers and directors) that has not initiated and is not subject to such litigation or
other proceedings shall comply, at the other Party’s expense, with any reasonable requests by the
other Party for assistance in connection with such litigation or other proceedings (including by
way of provision of information and making available of associates or employees as witnesses). In
the event that DSW (or any of its Subsidiaries or any of its or their respective officers or
directors) and Retail Ventures (or any of its Subsidiaries or any of its or their respective
officers or directors) at any time after the date hereof initiate or become subject to any
litigation or other proceedings before any governmental authority or arbitration panel with respect
to which the Parties have no prior agreements (as to indemnification or otherwise), each Party (and
its officers and directors) shall, at their own expense, coordinate their strategies and actions
with respect to such litigation or other proceedings to the extent such coordination would not be
detrimental to their respective interests and shall comply, at the expense of the requesting Party,
with any reasonable requests of the other Party for assistance in connection therewith (including
by way of provision of information and making available of employees as witnesses).

     SECTION 9.04. No Agency. Nothing in this Agreement shall constitute or be deemed to
constitute a partnership or joint venture between the Parties hereto or, except to the extent
provided in Section 4.02, constitute or be deemed to constitute any Party the agent or employee of
the other Party for any purpose whatsoever, and neither Party shall have authority or power to bind
the other Party or to contract in the name of, or create a liability against, the other Party in
any way or for any purpose.

     SECTION 9.05. Subcontractors. Either Retail Ventures or DSW may hire or engage one or more
subcontractors to perform all or any of its obligations under this Agreement; provided that,
subject to Section 4.03, Retail Ventures and DSW, as the case may be, shall in all cases remain
primarily responsible for all obligations undertaken by it in this Agreement with respect to the
scope, quality and nature of the Services provided to the other Party and, provided further, that,
in each case, the use of a subcontractor to perform

18

 

such Party’s obligations would not
substantially increase the costs to the other Party without the prior written consent of the other
Party.

     SECTION 9.06. Force Majeure.

     (a) For purposes of this Section 9.06, “Force Majeure” means an event beyond the control of
either Party, which by its nature could not have been foreseen by such Party, or, if it could have
been foreseen, was unavoidable, and includes without limitation, acts of God, storms, floods,
riots, fires, sabotage, civil commotion or civil unrest, interference by civil or military
authorities, acts of war (declared or undeclared) and failure of energy sources.

     (b) Without limiting the generality of Section 4.03, neither Party shall be under any
liability for failure to fulfill any obligation under this Agreement, so long as and to the extent
to which the fulfillment of such obligation is prevented, frustrated, hindered, or delayed as a
consequence of circumstances of Force Majeure; provided that such Party shall have exercised all
commercially reasonable due diligence to minimize to the greatest extent possible the effect of
Force Majeure on its obligations hereunder.

     (c) Promptly on becoming aware of Force Majeure causing a delay in performance or preventing
performance of any obligations imposed by this Agreement (and termination of such delay), the Party
affected shall give written notice to the other Party giving details of the same, including
particulars of the actual and, if applicable, estimated continuing effects of such Force Majeure on
the obligations of the Party whose performance is prevented or delayed. If such notice shall have
been duly given, and actual delay resulting from such Force Majeure shall be deemed not to be a
breach of this Agreement, the period for performance of the obligation to which it relates shall be
extended accordingly; provided that if Force Majeure results in the performance of a Party being
delayed by more than 60 days, the other Party shall have the right to terminate this Agreement with
respect to any Service affected by such delay forthwith by written notice.

     SECTION 9.07. Entire Agreement. This Agreement (including the Schedules constituting a part of this Agreement) and any
other writing signed by the Parties that specifically references or is specifically related to this
Agreement constitute the entire agreement among the Parties with respect to the subject matter
hereof and supersede all prior agreements, understandings and negotiations, both written and oral,
between the Parties with respect to the subject matter hereof. This Agreement is not intended to
confer upon any Person other than the Parties hereto any rights or remedies hereunder.

     SECTION 9.08. Information. Subject to applicable law and privileges, each Party hereto
covenants with and agrees to provide to the other Party all information regarding itself and
transactions under this Agreement that the other Party reasonably believes is required to comply
with all applicable federal, state, county and local laws, ordinances, regulations and codes,
including, but not limited to, securities laws and regulations.

     SECTION 9.09. Notices. Any notice, instruction, direction or demand under the terms of this
Agreement required to be in writing shall be duly given upon delivery, if delivered by hand,
facsimile transmission, or mail (with postage prepaid), to the following addresses:

	 	(a)	 	If to DSW, to:
	 
	 	 	 	Peter Horvath

DSW Inc.

4150 East 5th Avenue

Columbus, OH 43219

Fax: (614) 872-1464

19

 

	 	 	 	With a copy to:
	 
	 	 	 	DSW Inc.

Attn: General Counsel

	 	 	 	4150 East 5th Avenue

Columbus, Ohio 43219

Fax: (614) 872-1464
	 
	 	(b)	 	If to Retail Ventures, to:
	 	 	 	Jim McGrady

Retail Ventures, Inc.

3241 Westerville Road

Columbus, OH 43224

Fax: 614-473-2721
	 
	 	 	 	With a copy to:
	 
	 	 	 	Retail Ventures, Inc.

Attn: General Counsel

3241 Westerville Road

Columbus, Ohio 43224

Fax: 614-337-4682

or to such other addresses or telecopy numbers as may be specified by like notice to the other
Party.

     SECTION 9.10. Governing Law. This Agreement shall be construed in accordance with and
governed by the substantive internal laws of the State of Ohio, excluding its conflict of laws
rules.

     SECTION 9.11. Severability. If any terms or other provision of this Agreement or the
Schedules or exhibits hereto shall be determined by a court, administrative agency or arbitrator to
be invalid, illegal or unenforceable, such invalidity or unenforceability shall not render the
entire Agreement invalid. Rather, this Agreement shall be construed as if not containing the
particular invalid, illegal or unenforceable provision, and all other provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially adverse to either
Party. Upon such determination that any term or other provision is invalid, illegal or
unenforceable, the Parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the Parties as closely as possible in an acceptable manner to the end that
the transactions contemplated hereby are fulfilled to the fullest extent permitted under applicable
law.

     SECTION 9.12. Amendment. This Agreement may only be amended by a written agreement executed
by both Parties hereto.

     SECTION 9.13. Counterparts. This Agreement may be executed in separate counterparts, each of
which shall be deemed an original and all of which, when taken together, shall constitute one and
the same agreement.

     SECTION 9.14. Authority. Each of the Parties represent to the other Party that (a) it has
the corporate or other requisite power and authority to execute, deliver and perform this
Agreement, (b) the execution, delivery and performance of this Agreement by it have been duly
authorized by all necessary corporate or other actions, (c) it has duly and validly executed and
delivered this Agreement, and (d) this Agreement is its legal, valid and binding obligation,
enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors’ rights generally and general
equity principles.

20

 

     IN WITNESS WHEREOF, the Parties have caused this Agreement to be signed by their duly
authorized representatives.

	 	 	 	 	 
	 	DSW INC.

 	 
	 	By:  	/s/ Peter Z. Horvath
 	 
	 	Name: Peter Z. Horvath  	 
	 	Title: President  	 
	 
	 	RETAIL VENTURES, INC.

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

21

 

SCHEDULE I

TO

AMENDED AND RESTATED

SHARED SERVICES AGREEMENT

DATED October 29, 2006

BETWEEN

RETAIL VENTURES, INC.

AND

DSW INC.

 

SERVICES TO BE PROVIDED BY RETAIL VENTURES, INC. AND RETAIL VENTURES

SERVICES, INC.

	 	 	 	 	 
	DESCRIPTION OF RETAIL VENTURES
SERVICE	 	RETAIL VENTURES SERVICE COSTS OR
BILLING METHODOLOGY TO DSW
	 
	 	 	 	 
	1.

	 	GENERAL CORPORATE AND FINANCIAL
SERVICES:	 	 
	 
	 	 	 	 
	 

	 	(i) PAYROLL SERVICES (including
preparation and distribution of
employee checks; payment of
payroll taxes, garnishment and
other deductions to appropriate
parties; preparation and filing of
employer tax returns; and
preparation of annual W-2s for
employees)
	 	Billing pro-rata based upon number
of DSW employee checks and Form
W-2s issued by Retail Ventures.
To be billed weekly in arrears.
	 
	 	 	 	 
	 

	 	(ii) TREASURY SERVICES (including
cash management; processing and
paying invoices and purchase
orders; monthly consolidation of
financial statements; and
preparation of checks for
vendor payment and employee
reimbursement)
	 	DSW to pay $1,000.00 per month and
any stand-alone cash management
software and corresponding support
costs if added for DSW Services
only.
	 
	 	 	 	 
	 

	 	(iii) Sox and AUDITING Fees
(including coordination of
external audit services and
assistance with compliance with
Sarbanes-Oxley requirements)
	 	Shared costs to be allocable based
on Percent of Sales Billing.
	 
	 	 	 	 
	 

	 	(iv) ACCOUNTS PAYABLE, GENERAL
LEDGER, SALES AUDIT, BUDGET
SERVICES- AND INVENTORY
CONTROL. GENERAL LEDGER INCLUDES,
BUT IS NOT LIMITED TO, PREPARATION
OF QUARTERLY,
	 	Overhead costs to be allocated
based on time spent by associates,
which will be reviewed and
determined annually.
	 
	 	 	 	 
	 

	 	 	 	Sales Audit charges to include fees
	 
	 	 	 	 
	 

	 	ANNUAL AND OTHER SEC REPORTS;
ASSISTANCE WITH THE PREPARATION OF
ANNUAL REPORT TO SHAREHOLDERS AND
EARNINGS RELEASES; AND PREPARATION
OF ERISA REPORTS.
	 	associated with software
agreements that support DSW
Entities.

1

 

	 	 	 	 	 
	DESCRIPTION OF RETAIL VENTURES
SERVICE	 	RETAIL VENTURES SERVICE COSTS OR
BILLING METHODOLOGY TO DSW
	 
	 	 	 	 
	 

	 	(v) TAX SERVICES (including
preparation and filing of all
federal, state and local tax
returns, reports and
other required filings;
coordination and management of tax
audits and other similar
proceedings; and
assistance with tax planning,
tax strategy and compliance
with the Tax Separation Agreement)
	 	See Tax Separation Agreement
between DSW and Retail Ventures.
	 
	 	 	 	 
	 

	 	(vi) Controller Services
	 	Cost to be shared by DSW and
Retail Ventures on a 50/50 basis.
	 
	 	 	 	 
	 

	 	(vii) SSC Corporate Services
	 	Charges incurred on behalf of DSW
entities will be allocated to DSW.
Charges billed to other cost
centers listed in these Agreement
Schedules will be billed under the
applicable cost center’s
methodology. General, unallocable
charges to be allocated based on
Percent of Sales billing.
	 
	 	 	 	 
	2.

	 	HUMAN RESOURCES (ALL COST CENTERS)
	 	Pass-Through Billing with respect
to costs directly related to DSW
Entities.
	 
	 	 	 	 
	 

	 	 	 	DSW to pay pro-rata share of
overhead costs per employee of DSW
Entities, subject to adjustment
semi-annually.
	 
	 	 	 	 
	3.

	 	IMPORT MANAGEMENT AND COMPLIANCE
	 	Pass-Through Billing with respect
to costs directly related to DSW
Entities. Importing fees
(including U.S. Customs fees,
Duties, Commissions, Ocean
Freight, Excel/APL Logistic
Carrier fees and other associated
expense) are allocated to the
businesses by invoice (which
historically is a one-to-one
relationship to container) to the
ratio of the container contents to
the whole containers/trailer.
	 
	 	 	 	 
	 

	 	 	 	DSW to pay a percentage of the
overhead costs based upon
percentage of usage. The overhead
allocation percentage will be
reviewed and determined annually.

2

 

	 	 	 
	DESCRIPTION OF RETAIL VENTURES
SERVICE

	 	RETAIL VENTURES SERVICE COSTS OR
BILLING METHODOLOGY TO DSW
	 
	 	 
	4. LEGAL SERVICES (including general legal
advice from in-house legal staff;
preparation and review of SEC filings and
proxy materials; assistance with corporate
resolutions and preparations for
shareholders meetings; overseeing and
managing legal policy and strategy
regarding litigation and regulatory
compliance)

	 	Pass-Through Billing with respect
to costs directly related to DSW
Entities.

Department overhead costs and
general, unallocable professional
fees to be allocated based on
Percent of Sales Billing.
	 
	 	 
	5. RISK MANAGEMENT (including management of
insurance and workers compensation
coverage; administration of claims
services; negotiation and acquisition of
insurance coverages including, but not
limited to, property and business
interruption, casualty (including workers
compensation), director and officer
liability and other liability coverages)

	 	a) Insurance premium costs billed
as specified in Schedule III.

b) Overhead costs are billed on
the weighted value of
administrative time directed to
DSW entities for (i) Workers’
Compensation, (ii) General
Liability and (iii) Property & All
Other Lines combined with the
ratio of the number of claims that
are directly related to DSW
Entities to the total number of
claims for (i) Workers’
Compensation, (ii) General
Liability and (iii) Property & All
Other Lines.
	 
	 	 
	6. INTERNAL AUDIT

	 	Overhead costs to be allocated
based on Percent of Sales Billing.
	 
	 	 
	7. RVI CORPORATE EXECUTIVE OVERHEAD
ALLOWANCE

	 	DSW will pay 35% of the total
overhead of this cost center that
is associated with the CFO of RVI.
It will exclude the costs
associated with the CEO of RVI.
	 
	 	 
	8. DISTRIBUTION SERVICES

	 	DSW will pay 10% of total overhead
costs for this department.
	 
	 	 
	9. LETTERS OF CREDIT ASSOCIATED WITH
WORKERS’ COMPENSATION AND IBNR

	 	DSW to be billed 15% of costs
associated with letters of credit
for workers compensation and IBNR.
	 
	 	 
	10.
DEPRECIATION OF IT ASSETS (CURRENT COST CENTERS including 01109,
01321, 01325, 01326, 01328, 01329, 01330, 01331, 01332, 01333)

	 	Service fee charged to DSW for
depreciation expenses associated with IT Assets used to provide
shared service. The billable charge for depreciation expenses is based
on Percent of Sales Billing, unless otherwise agreed by the Parties
or determined by the Information Technology Executive Steering
Committee.

3

 

SCHEDULE II

TO

AMENDED AND RESTATED

SHARED SERVICES AGREEMENT

DATED October 29, 2006

BETWEEN

RETAIL VENTURES, INC.

AND

DSW INC.

SERVICES TO BE PROVIDED BY DSW INC.

	 	 	 	 	 
	DESCRIPTION OF DSW SERVICE	 	DSW SERVICE COSTS OR BILLING METHODOLOGY
TO RETAIL VENTURES
	 
	 	 	 	 
	1.

	 	SHOE MERCHANDISING:	 	 
	 
	 	 	 	 
	 

	 	(i) PLANNING AND
ALLOCATION SUPPORT for
Value City Department
Stores, LLC
	 	Value City to pay the amount per month
reflecting the agreed value of the use of
DSW systems services.
	 
	 	 	 	 
	2.

	 	DISTRIBUTION	 	 
	 
	 	 	 	 
	 

	 	(i) DISTRIBUTION
SERVICES AND
TRANSPORTATION
MANAGEMENT for Value
City Department Stores,
LLC and Filene’s
Basement
	 	(i) Retroactive to October 1, 2006, Value
City to pay 60¢ per pair to process shoes
during the term of the Agreement, with no
extra charge for overhead variances or any
other cost associated with processing
Value City’s shoes. In the event that the
“Reasonable Expectation Program” installed
at DSW, or any other cost reduction
realized by DSW, results in an actual cost
to process Value City shoes that is less
than 60¢ per pair, the cost per pair to
process shoes for Value City shall be
reduced based on quarterly actual cost.
The per-pair cost set forth herein shall
remain in effect through January 30, 2011
or any earlier date on which Retail
Ventures or DSW terminates shoe processing
services for Value City in accordance with
the Agreement.

(ii) Transportation Costs- both inbound
and outbound transportation costs
(inclusive of wages, associated payroll
costs, occupancy expenses and operating
expenses) are allocated to the respective
businesses according to current month
activity, which is based on merchandise
receipts as determined by dollar value.
Value City may use its own carriers for
inbound transportation. In the event that
Value City uses its own carriers for
inbound transportation, such merchandise
receipts shall be excluded from the
allocation of expenses and

1

 

	 	 	 	 	 
	DESCRIPTION OF DSW SERVICE	 	DSW SERVICE COSTS OR BILLING METHODOLOGY
TO RETAIL VENTURES
	 
	 	 	 	 
	 

	 	 	 	DSW shall have
no responsibility or accountability for
the merchandise until it is received at
the DSW distribution center.
	 
	 	 	 	 
	 

	 	 	 	(iii) Professional fees to be billed on
the weighted average cost per case of the
pools that Value City Shoes utilizes.
	 
	 	 	 	 
	3.

	 	PROPERTY MANAGEMENT
	 	Overhead costs to be allocated based
on time spent by associates, which will be
reviewed and determined annually.
Related outside contractors/consultant
costs, including legal services,
allocated based on pass-through
billing.
	 
	 	 	 	 
	4.

	 	STORE DESIGN AND
CONSTRUCTION MANAGEMENT
	 	A 5% service fee based on total
development costs per project, plus
expenses incurred by DSW on RVI
projects. Overhead costs allocated on
the proportion of RVI projects to total
projects (extraordinary projects to be
determined on a project by project
basis). Standard American Institute of
Architects (AIA) form of “Agreement
between Owner and Design/Builder” to be
used as design and construction
management agreement between DSW and
Retail Ventures.
	 
	 	 	 	 
	5.

	 	INFORMATION TECHNOLOGY
(ALL COST CENTERS)
	 	Pass-Through Billing with respect to costs
directly related to Retail Ventures
Entities. Percent of Sales Billing with
respect to overhead and Services shared by
DSW Entities and Retail Ventures Entities,
unless otherwise agreed by the Parties or
determined by the Information Technology
Executive Steering Committee.
	 
	 	 	 	 
	6.

	 	DEPRECIATION OF IT ASSETS
	 	Service fee charged to Retail Ventures for
depreciation expenses associated with IT
Assets used to provide shared service.
The billable charge for depreciation
expenses is based on Percent of Sales
Billing, unless otherwise agreed by the
Parties or determined by the Information
Technology Executive Steering Committee.

2

 

	 	 	 	 	 
	DESCRIPTION OF DSW SERVICE	 	DSW SERVICE COSTS OR BILLING METHODOLOGY
TO RETAIL VENTURES
	 
	 	 	 	 
	7.

	 	Legal Services
	 	Pass-Through Billing with respect to costs
directly related to RVI Entities.
	 
	 	 	 	 
	 

	 	 	 	Professional fees related to shared
services provided by DSW to be allocated
based upon Percent of Sales Billing unless
otherwise agreed.
	 
	 	 	 	 
	 

	 	 	 	Any overhead costs for time spent on
matters performed on behalf of RVI
Entities shall be at an agreed upon price.

3

 

SCHEDULE III

TO

AMENDED AND RESTATED

SHARED SERVICES AGREEMENT

DATED October 29, 2006

BETWEEN

RETAIL VENTURES, INC.

AND

DSW INC.

 

INSURANCE POLICIES MAINTAINED BY RETAIL VENTURES

     The Insurance Polices described in Part (a) below shall be maintained by
Retail Ventures, Inc. (“Retail Ventures”) on behalf of DSW Inc. (“DSW”) and its Subsidiaries
pursuant to the terms of the Amended and Restated Shared Services Agreement between Retail Ventures
and DSW dated October 29, 2006, of which this Schedule is a part. The insurance premiums related
to such policies to be paid by DSW, or for which Retail Ventures shall be reimbursed by DSW, are
set forth or described in Part (b) of this Schedule. Capitalized terms not otherwise defined in
this Schedule shall have the respective meanings assigned to them in the Amended and Restated
Shared Services Agreement.

	(a)	 	LIST OF INSURANCE POLICIES

	 	(i)	 	Liability:

Steadfast Insurance Co. #SCO3822186-02 – primary – $1MM/occurrence

XL Insurance Co. #US00007102LI04A – umbrella — $25MM/occ/agg

Ohio Casualty Co. #ECO(05)52976611, excess GL – $25MM/occ/agg

American Guarantee # AEC5086837500 – excess GL – $50MM/occ/agg

Liberty Mutual Ins. #LQ1-B71 –078764032 – excess GL – $50MM/occ/agg

ACE Ins. Group #HXW776336 — excess GL – $25MM/occ/agg

Great American Ins. #TUE357977102 – excess GL – $25MM/occ/agg
	 
	 	(ii)	 	Property

FM Global Insurance #NB918 — $1,000,000,000 blanket limit

Ace/Westchester #I20651258002 – excess flood – $10MM

Great American #CPP5385581 & #ACG4285581 – excess flood – $5MM

Arrowhead Group #303219EQ1 – excess earthquake – $3MM

North Shore Mgmt. #NSM24310 – excess earthquake – $12MM

FM Global #NB918 – Swanson primary earthquake – $1MM

Federal Flood Policies – various locations & policy numbers — $500K

1

 

	 	(iii)	 	Automobile

St. Paul Travelers #TC2JCAP393K338 – $2MM combined single limit
	 
	 	(iv)	 	Cargo

Lloyd’s #CD044747 – primary cargo – $10MM/conveyance

Lloyd’s #CD044765 – excess cargo – $5MM/conveyance
	 
	 	(v)	 	Worker Compensation

St. Paul Travelers #TC2JUB466K1644 – statutory limits

St. Paul Travelers #TRJUB466K1656 – retro AZ, MA & WI only

Ohio –Self-insured under S120005342

West Virginia – Self-insured (effective no later than 1/1/07)
	 
	 	(vi)	 	Director and Officer Liability Insurance

Chubb #6802-9501 – primary — $10MM

XL Specialty #ELU09312106___– excess D&O – $10MM

AWAC US #___AW6294743 – excess D&O – $10MM

RSUI #___NHS621943 – excess D&O – $10MM

AXIS #___RAN714919012006 – excess D&O – $10MM

Arch Insurance Co. #___DOX0007876-01 – excess D&O – $10MM

Houston Casualty #___14_MGU-06-A12538 – excess D&O – $10MM

Great American #___NSX5236478 – excess D&O – $10MM

Liberty Mutual #___D03AT366109002 – excess D&O – $10MM

National Union (AIG) #___6726927 – excess D&O – $10MM

XL Specialty #___ELU09312206 – Side A coverage – $10MM
	 
	 	(vii)	 	Executive Protection Insurance

National Union (AIG) #006082944 – crime – $10MM

National Union (AIG) #647-5648 – special crime (K&R) – $10MM
	 
	 	(viii)	 	Other

Fireman’s Fund #MXI97900076 – motor truck cargo – $250K/vehicle

XL Insurance #XLPUN1502904 – excess punitives – $25MM agg

Magna Carta #MCPD201467 – excess punitives – $25MM agg

National Union #006731374 – fiduciary

Continental Insurance Company #PST283529925 – foreign package — $1MM/occ

	(b)	 	CALCULATION OF PREMIUM
	 
	 	 	(i) DSW shall promptly pay or reimburse Retail Ventures 100% of premium expenses,
deductibles or retention amounts Retail Ventures may incur in connection with Insurance
Policies that relate solely to the DSW Business.

2

 

(ii) DSW shall promptly pay or reimburse Retail Ventures 50% of premium expenses,
deductibles or retention amounts Retail Ventures may incur in connection with Retail
Ventures’ Director and Officer Liability Insurance and Executive Protection Insurance.

(iii) DSW shall promptly pay or reimburse Retail Ventures its proportionate share of premium
expenses, deductibles or retention amounts Retail Ventures may incur in connection with
Insurance Policies that relate the Retail Ventures Business and the DSW Business. The
“Retail Ventures Business” means any business of Retail Ventures other than the DSW
Business. DSW’s proportionate will be calculated as follows:

     (A) LIABILITY INSURANCE costs shall be prorated based on the ratio of DSW’s sales as
compared to total sales.

     (B) PROPERTY INSURANCE costs shall be prorated based on the ratio of the value of DSW
property covered by the insurance policy as compared to the total value of all property
covered by the insurance policy. [“VALUE OF PROPERTY” IS DEFINED AS RETAIL INVENTORY,
FIXTURES, LEASEHOLDS, REAL PROPERTY, RENTAL INCOME AND BUSINESS INTERRUPTION.]

     (C) AUTOMOBILE INSURANCE costs shall be charged on each insured vehicle owned or leased
by DSW which is covered by the insurance policy.

     (D) CARGO INSURANCE costs shall be prorated based on the ratio of the duties paid for
DSW imports covered by the insurance policy as compared to the total duties paid for all
imports covered by the insurance policy.

     (E) WORKERS COMPENSATION costs shall be prorated based on an actual per state rate
against projected payrolls plus estimated claims cost per location.

     (F) EXECUTIVE PROTECTION AND OTHERS—Executive Protection Insurance (or crime), and
foreign package coverage shall be prorated based on the ratio of sales for DSW as compared
to the total sales covered by the policy. Fiduciary coverage for benefit plans shall be
allocated based on 401K deposit percentages. Federal Flood Program policies are allocated
to each location for which a policy is required to be purchased based on its Federal Flood
Zone determination.

3

 

SCHEDULE IV

TO

AMENDED AND RESTATED

SHARED SERVICES AGREEMENT

DATED October 29, 2006

BETWEEN

RETAIL VENTURES, INC.

AND

DSW INC.

 

GUARANTEE

THIS GUARANTEE is made by RETAIL VENTURES, INC. (the “Guarantor”) in favor of DSW, INC. (“DSW”) in
respect of the obligations of any one or more of the subsidiaries of the Guarantor other than DSW
or any DSW subsidiary (the “Obligor(s)”) that may arise under that certain Amended and Restated
Shared Services Agreement between the Guarantor and DSW, dated as of October 29, 2006 (the “Shared
Services Agreement”) to pay to DSW certain amounts that may become due under and in accordance
with Section 7.05 of the Shared Services Agreement (each, an “Obligation”).

In consideration of DSW acquiring certain information technology assets (equipment, computer
software, etc.) for the benefit of one or more Obligors, the receipt and sufficiency of which are
hereby acknowledged by the Guarantor, the Guarantor hereby agrees as follows:

	 	1)	 	To the fullest extent permitted by applicable law, irrespective of any other
circumstance whatsoever which might otherwise constitute a legal or equitable discharge or
defense of a surety or guarantor, the Guarantor hereby absolutely, irrevocably and
unconditionally guarantees to DSW and its assignees the timely payment to DSW or its
assignees of all Obligations. Without limiting the generality of the foregoing, DSW may
at any time and from time to time, without notice to or consent of the Guarantor and
without impairing or releasing the obligations of the Guarantor, (a) agree with any
Obligor to make any change in the terms of any obligation or liability of such Obligor to
DSW, (b) take or fail to take any action of any kind in respect of any security for any
obligation or liability of any Obligor to DSW, (c) exercise or refrain from exercising any
rights against any Obligor, or (d) compromise or subordinate any obligation or liability
of any Obligor to DSW, including any security therefor.
	 
	 	2)	 	In the event that an Obligor shall fail to make timely payment to DSW of all or any
portion of an Obligation when due, the Guarantor shall remit to DSW, on the business day
immediately following DSW’s request, payment of the full amount of such Obligation. The
Guarantor hereby expressly waives diligence, presentment, demand of payment, protest and
all notices whatsoever, and any requirement for DSW to pursue or exhaust any of its rights
or remedies against the Obligor with respect to performance of any of the Obligations, and
the Guarantor hereby waives any right to require that DSW seek enforcement of any
performance against an Obligor or any other person, prior to any action against the
Guarantor under the terms of this Guarantee.
	 
	 	3)	 	DSW shall not be obligated to file any claim relating to an Obligation in the event
that an Obligor becomes subject to any insolvency, bankruptcy, receivership, assignment
for the benefit of creditors or reorganization of such Obligor, or any similar proceedings
by or against such Obligor or the assets of such Obligor, in order to maintain DSW’s
rights under this Guarantee, and the failure of DSW to so file shall not affect the
Guarantor’s obligations hereunder. The liability of the Guarantor shall not be released,
reduced, impaired or affected by or as a result of any insolvency, bankruptcy,
receivership, assignment for the benefit of creditors or reorganization of an Obligor, or
any similar proceedings instituted by or against an Obligor or the assets of an Obligor.
The obligations of the Guarantor hereunder shall be automatically reinstated if and to the
extent that for any reason any payment by or on behalf of any Obligor in respect of an
Obligation is rescinded or must be otherwise restored by DSW, whether as a result of any
proceedings in bankruptcy or reorganization or otherwise, and the Guarantor agrees that it
will indemnify DSW on demand for all reasonable costs and expenses (including, without
limitation, fees and expenses of counsel) incurred by DSW in connection with such
rescission or restoration, including any such costs and expenses

4

 

	 	 	 	incurred in defending against any claim alleging that such payment constituted a
preference, fraudulent transfer or similar payment under any bankruptcy, insolvency or
similar law.
	 
	 	4)	 	This Guarantee is a guarantee of payment and not of collection, is a continuing
guarantee, and shall apply to all Obligations whenever arising.
	 
	 	5)	 	This Guarantee shall remain in effect for the entire term of the Shared Services
Agreement and thereafter until all Obligations of each Obligor have been indefeasibly
satisfied in full.
	 
	 	6)	 	This Guarantee shall inure to the benefit of and be enforceable by DSW and its
successors, assign(s) or other transferee(s) and shall be deemed to have been made under,
and shall be governed by, the laws of the State of Ohio, excluding its conflicts of laws
rules. None of the terms of this Guarantee may be waived, altered, modified or amended
except in writing signed by the Guarantor and DSW.
	 
	 	7)	 	All notices or other communications to the Guarantor or DSW shall be in writing and
shall be given in the same manner and with the same effect as set forth in Section 9.09 of
the Shared Services Agreement. The address of Guarantor is as follows:
	 
	 	 	 	Retail Ventures, Inc.
3241 Westerville Road
Columbus, Ohio 43224

IN WITNESS WHEREOF, the Guarantor has caused this Guarantee to be duly executed and delivered by
its duly authorized officers effective as of the 29th day of October, 2006.

	 	 	 	 	 
	 	 	RETAIL VENTURES, INC.
	 
	 	 	 	 
	 

	 	By:	 	/s/ James A. McGrady 
	 

	 	 	 	 
	 

	 	Name:

Title:
	 	James A. McGrady

Chief Financial Officer

5EX-10.6

 

Exhibit 10.6

L E A S E

	 	 	 	 	 
	 

	 	LANDLORD:
	 	JLPK – LEVITTOWN NY, LLC
	 

	 	 	 	1800 Moler Road
	 

	 	 	 	Columbus, Ohio 43207
	 
	 	 	 	 
	 

	 	TENANT:
	 	FILENE’S BASEMENT, INC.
	 

	 	 	 	25 Corporate Drive
	 

	 	 	 	Suite 400
	 

	 	 	 	Burlington, MA 01803
	 
	 	 	 	 
	 

	 	PREMISES:
	 	Approximately 30,164 square feet at
	 

	 	 	 	Caldor Shopping Center,
	 

	 	 	 	Levittown, New York

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page	 
	SECTION 1. PREMISES
	 	 	1	 
	 
	 	 	 	 
	SECTION 2. TERM
	 	 	1	 
	 
	 	 	 	 
	SECTION 3. COMMENCEMENT DATE
	 	 	2	 
	 
	 	 	 	 
	SECTION 4. RENEWAL OPTIONS
	 	 	3	 
	 
	 	 	 	 
	SECTION 5. MINIMUM RENT
	 	 	3	 
	 
	 	 	 	 
	SECTION 6. PERCENTAGE RENT
	 	 	4	 
	 
	 	 	 	 
	SECTION 7. TITLE ENCUMBRANCES
	 	 	5	 
	 
	 	 	 	 
	SECTION 8. RIGHT TO REMODEL
	 	 	6	 
	 
	 	 	 	 
	SECTION 9. UTILITIES
	 	 	6	 
	 
	 	 	 	 
	SECTION 10. GLASS
	 	 	6	 
	 
	 	 	 	 
	SECTION 11. PERSONAL PROPERTY
	 	 	6	 
	 
	 	 	 	 
	SECTION 12. RIGHT TO MORTGAGE
	 	 	7	 
	 
	 	 	 	 
	SECTION 13. SUBLEASE OR ASSIGNMENT
	 	 	7	 
	 
	 	 	 	 
	SECTION 14. COMMON AREAS
	 	 	7	 
	 
	 	 	 	 
	SECTION 15. OPERATION OF COMMON AREAS
	 	 	7	 
	 
	 	 	 	 
	SECTION 16. COMMON AREA MAINTENANCE, TENANT’S SHARE
	 	 	8	 
	 
	 	 	 	 
	SECTION 17. EMINENT DOMAIN
	 	 	9	 
	 
	 	 	 	 
	SECTION 18. TENANT’S TAXES
	 	 	10	 
	 
	 	 	 	 
	SECTION 19. RISK OF GOODS
	 	 	10	 
	 
	 	 	 	 
	SECTION 20. USE AND OCCUPANCY
	 	 	10	 
	 
	 	 	 	 
	SECTION 21. NUISANCES
	 	 	11	 
	 
	 	 	 	 
	SECTION 22. WASTE AND REFUSE REMOVAL
	 	 	11	 
	 
	 	 	 	 
	SECTION 23. DESTRUCTION OF PREMISES
	 	 	12	 
	 
	 	 	 	 
	SECTION 24. LANDLORD REPAIRS
	 	 	13	 
	 
	 	 	 	 
	SECTION 25. TENANT’S REPAIRS
	 	 	13	 
	 
	 	 	 	 
	SECTION 26. COVENANT OF TITLE AND PEACEFUL POSSESSION
	 	 	14	 
	 
	 	 	 	 
	SECTION 27. TENANT’S AND LANDLORD’S INSURANCE; INDEMNITY
	 	 	14	 
	 
	 	 	 	 
	SECTION 28. REAL ESTATE TAXES
	 	 	17	 
	 
	 	 	 	 
	SECTION 29. TENANT’S INSURANCE CONTRIBUTION
	 	 	17	 
	 
	 	 	 	 
	SECTION 30. FIXTURES
	 	 	18	 
	 
	 	 	 	 
	SECTION 31. SURRENDER
	 	 	18	 
	 
	 	 	 	 
	SECTION 32. HOLDING OVER
	 	 	18	 

i

 

	 	 	 	 	 
	 	 	Page	 
	SECTION 33. NOTICE
	 	 	18	 
	 
	 	 	 	 
	SECTION 34. DEFAULT
	 	 	19	 
	 
	 	 	 	 
	SECTION 35. WAIVER OF SUBROGATION
	 	 	21	 
	 
	 	 	 	 
	SECTION 36. LIABILITY OF LANDLORD; EXCULPATION
	 	 	21	 
	 
	 	 	 	 
	SECTION 37. RIGHTS CUMULATIVE
	 	 	22	 
	 
	 	 	 	 
	SECTION 38. MITIGATION OF DAMAGES
	 	 	22	 
	 
	 	 	 	 
	SECTION 39. SIGNS
	 	 	22	 
	 
	 	 	 	 
	SECTION 40. ENTIRE AGREEMENT
	 	 	22	 
	 
	 	 	 	 
	SECTION 41. LANDLORD’S LIEN – DELETED BY INTENTION
	 	 	22	 
	 
	 	 	 	 
	SECTION 42. BINDING UPON SUCCESSORS
	 	 	22	 
	 
	 	 	 	 
	SECTION 43. HAZARDOUS SUBSTANCES
	 	 	22	 
	 
	 	 	 	 
	SECTION 44. TRANSFER OF INTEREST
	 	 	23	 
	 
	 	 	 	 
	SECTION 45. ACCESS TO PREMISES
	 	 	24	 
	 
	 	 	 	 
	SECTION 46. HEADINGS
	 	 	24	 
	 
	 	 	 	 
	SECTION 47. NON-WAIVER
	 	 	24	 
	 
	 	 	 	 
	SECTION 48. SHORT FORM LEASE
	 	 	24	 
	 
	 	 	 	 
	SECTION 49. ESTOPPEL CERTIFICATE
	 	 	24	 
	 
	 	 	 	 
	SECTION 50. MASTER LEASE CONTINGENCIES
	 	 	24	 
	 
	 	 	 	 
	SECTION 51. PROVISIONS WITH RESPECT TO MASTER LEASE
	 	 	25	 
	 
	 	 	 	 
	SECTION 52. BROKER
	 	 	25	 
	 
	 	 	 	 
	SECTION 53. UNAVOIDABLE DELAYS
	 	 	25	 
	 
	 	 	 	 
	SECTION 54. TIMELY EXECUTION OF LEASE
	 	 	25	 
	 
	 	 	 	 
	SECTION 55. ACCORD AND SATISFACTION
	 	 	26	 
	 
	 	 	 	 
	SECTION 56. WAIVER OF JURY TRIAL
	 	 	26	 
	 
	 	 	 	 
	SECTION 57. LEASEHOLD FINANCING
	 	 	26	 
	 
	 	 	 	 
	SECTION 58. TENANT ALLOWANCE
	 	 	27	 

LIST OF EXHIBITS:

EXHIBIT “A-1” SITE PLAN

EXHIBIT “A-2” LEGAL DESCRIPTION

EXHIBIT “B” INTENTIONALLY OMITTED

EXHIBIT “C” TENANT’S WORK

EXHIBIT “D” EXISTING USE EXCLUSIVES AND PROHIBITED USES

EXHIBIT “E” TENANT PROTOTYPICAL SIGNAGE

ii

 

L E A S E

     THIS AGREEMENT OF LEASE, made effective the 30th day of June, 2006 (the
“Effective Date”), by and between JLPK – Levittown NY, LLC, a Delaware limited liability company
(hereinafter referred to as “Landlord”), with offices at c/o Schottenstein Management Company, 1800
Moler Road, Columbus, Ohio 43207, and Filene’s Basement, Inc., a Delaware corporation (hereinafter
referred to as “Tenant”) with offices at 25 Corporate Drive, Suite 400, Burlington, MA 01803.

W I T N E S S E T H:

SECTION 1. PREMISES

     (a) Landlord, in consideration of the rents to be paid and covenants and agreements to be
performed by Tenant, does hereby lease unto Tenant approximately 30,164 square feet of leasable
space (hereinafter referred to as the “premises” or “demised premises”) on the ground floor of an
existing multi-tenant building (the “Building”) in the shopping center commonly known as Caldor
Shopping Center on Route 24, City of Levittown, County of Nassau and State of New York (hereinafter
referred to as the “Shopping Center” or “Center”). The location, size, and area of the demised
premises and of the Shopping Center shall be substantially as shown on Exhibit “A-1”
attached hereto and made a part hereof. A legal description of the Shopping Center is shown on
Exhibit “A-2”, attached hereto and made a part hereof. Landlord shall not change the
configuration of the Shopping Center so as to materially adversely affect access to, visibility of
or parking for the premises without the prior written consent of Tenant, nor to the extent that it
has the authority to do so under the Master Lease (as hereinafter defined), shall Landlord consent
to or permit any such change in configuration.

     (b) Landlord holds a leasehold interest in the Building and the premises pursuant to the
Master Lease. For purposes hereof, the “Master Lease” is that certain Lease dated May 5, 1970, by
and between Miller Associates, a New York partnership (“Master Landlord”) and Children’s Town,
U.S.A., Inc. Landlord is the successor-in-interest to the interest of Children’s Town U.S.A., Inc.
in and to said Master Lease. This Lease is subject and subordinate to the Master Lease.

     (c) Landlord covenants and agrees that Landlord shall at all times comply with and fully
perform all of its obligations under the Master Lease. Landlord shall not, during the term hereof,
(i) do or suffer or permit anything to be done which would constitute a default under the Master
Lease or would cause the Master Lease to be canceled, terminated or forfeited as to the demised
premises by virtue of any rights of cancellation, termination, or forfeiture reserved or vested in
Master Landlord under the Master Lease, (ii) exercise any right reserved or vested in Landlord to
cancel, terminate or forfeit the Master Lease, including, without limitation, any termination
rights for casualty or condemnation or (iii) modify, amend or terminate the Master Lease.
Notwithstanding the foregoing, Tenant acknowledges that the Master Lease contains a recapture right
in favor of the Master Landlord allowing the Master Landlord to terminate the Master Lease as to
any space within the Building which ceases to be actively occupied and operated for business for a
continuous period of eighteen (18) months and recapture that vacant space. Landlord shall not be
required by virtue of this paragraph or any other provision of this Lease to prevent such a
recapture from occurring with respect to any space in the Building other than the demised premises,
or with respect to the demised premises in the event Tenant elects under Section 20 hereof to cease
operation (go dark).

     (d) Landlord agrees to forward to Tenant, upon receipt thereof from Master Landlord, a copy of
each notice of default received by Landlord in its capacity as tenant under the Master Lease.

SECTION 2. TERM

     The term of this Lease shall be for a period of fifteen (15) years beginning on the
commencement date (as hereinafter defined), unless earlier terminated or extended as herein
provided.

 

 

SECTION 3. COMMENCEMENT DATE

     (a) As herein used, the phrase “commencement date” shall mean the earlier of: (i) the day
Tenant opens for business in the demised premises or (ii) one hundred fifty (150) days after
Landlord has delivered possession of the demised premises to Tenant in the condition required by
the terms of Section 3(b) of this Lease (the “Required Condition”). Landlord agrees to deliver the
demised premises to Tenant in the Required Condition within thirty (30) days after the Effective
Date (the “Delivery Date”). If Landlord does not deliver the demised premises to Tenant as
required herein within three (3) days after the Delivery Date, Tenant may terminate this Lease or
defer delivery until January 2, 2007. If Tenant defers delivery and Landlord does not thereafter
deliver the demised premises to Tenant on or before January 2, 2007, Tenant may terminate this
Lease. In the event that the demised premises are not delivered to Tenant in the Required
Condition on or before the Delivery Date, the minimum rent due hereunder shall be adjusted so that,
after the Rent Commencement Date, the Tenant shall receive a credit against minimum rent thereafter
due Landlord equal to one (1) day of minimum rent for each day after the Delivery Date until
delivery of the demised premises is made to Tenant consistent with the terms of this Lease. Time
is of the essence regarding all dates set forth in this Section 3.

     (b) Possession of the demised premises shall not be deemed to have been given to Tenant until
Landlord has, at its sole cost and expense, delivered actual possession of the premises to Tenant
(i) in a water-tight, structurally sound condition, (ii) free of all Hazardous Substances, except
those to be removed/abated by DSW Inc. (“DSW”) as set forth in Section 3(e) below, (iii) with a new
roof, roof decking and roof system for the entire Building and (iv) free of any violation of laws,
ordinances, regulations and building restrictions (collectively, the “Required Condition”). All
work performed by Landlord to put the demised premises in the Required Condition and all Tenant’s
Work shall be performed in compliance with all applicable federal, state and local laws, rules,
regulations and code requirements.

     (c) Subject to the provisions of Section 53 hereof, Tenant shall, at its sole cost and
expense, (i) promptly after the demised premises has been delivered to Tenant in the Required
Condition, commence performance of the work described on Exhibit “C”, attached hereto and
made a part hereof (“Tenant’s Work”) and (ii) within one hundred fifty (150) days after such
delivery, cause Tenant’s Work to be completed. Landlord represents that all approvals of the
Master Landlord required under the Master Lease have been obtained and that all building and other
governmental permits necessary to perform Tenant’s Work can be obtained in the ordinary course of
business from the applicable governmental authority. In the event that Master Landlord takes any
action, or fails to take any necessary action, and as a result, necessary approvals/permits for the
performance of Tenant’s Work cannot be obtained, or additional costs are incurred as a result
thereof, or in the event that necessary governmental permits and approvals for Tenant’s Work cannot
be obtained, Tenant shall have the right to terminate this Lease by written notice to Landlord, in
which event Tenant shall have no further liability hereunder and Landlord shall reimburse Tenant
for all costs incurred by Tenant in connection therewith.

Tenant’s Work shall be performed lien free by Tenant, in a good and workmanlike manner (employing
materials of good quality) in compliance with all governmental requirements. In the event a
mechanic’s lien is filed against the demised premises or the Shopping Center on account of Tenant’s
Work, Tenant shall discharge or bond off same within thirty (30) days from the filing thereof. If
Tenant fails to discharge said lien, Landlord may bond off or pay same without inquiring into the
validity or merits of such lien, and all sums so advanced shall be paid on demand by Tenant as
additional rent. Prior to the date on which possession of the demised premises is delivered to
Tenant as aforesaid, Tenant shall have the right to enter the demised premises at its own risk
rent-free for the purpose of preparing for its occupancy, provided that it does not unreasonably
interfere with Landlord’s efforts to put the demised premises in the Required Condition.

     (d) From the date upon which the demised premises are delivered to Tenant for its work or such
earlier time that Tenant enters the demised premises to prepare for its occupancy until the
commencement date of the lease term, Tenant shall observe and perform all of its obligations under
this Lease (except Tenant’s obligation to operate and pay minimum rent, percentage rent and
additional rent.) In the event Tenant fails to open for business within one hundred eighty (180)
days after the date possession of the demised premises has been delivered

 

 

to Tenant, Landlord, in addition to any and all other available remedies, may require Tenant
to pay to Landlord, in addition to all other rent and charges herein, as liquidated damages and not
as a penalty, an amount equal to one day’s minimum rent for each day such failure to open
continues.

     (e) The parties acknowledge that asbestos is present in the premises, as revealed in that
certain Pre-Demolition Asbestos Survey Report more fully described in Section 43(b) hereof. Based
thereon, DSW has entered into a contract for the abatement of asbestos at the premises and at the
adjacent DSW premises. Landlord shall be liable for the cost of such abatement and such Report, as
more fully set forth in the Lease between Landlord and DSW. It is expressly acknowledged that such
payments by Landlord shall be in addition to, and shall not reduce, the Tenant Allowance set forth
in Section 58 hereof.

SECTION 4. RENEWAL OPTIONS 

     (a) Provided Tenant has fully complied with all of the terms, provisions, and conditions on
its part to be performed under this Lease and is not in default under this Lease, Tenant may, by
giving written notice to the Landlord at least six (6) months on or before the expiration of the
initial term of this Lease, extend such term for a period of five (5) years upon the same covenants
and agreements as are herein set forth, except that the minimum rent during the first renewal term
shall be increased to Seventy-nine Thousand Eight Hundred Eight and 92/100th Dollars
($79,808.92) each month.

     (b) Provided Tenant has fully complied with all of the terms, provisions and conditions on its
part to be performed under this Lease, is not in default under this Lease and has exercised its
first option to renew hereunder, Tenant may, by giving written notice to the Landlord at least six
(6) months on or before the expiration of the first extended term of this Lease, extend such term
for an additional period of five (5) years upon the same covenants and agreements as the first
extended term except that the minimum rent (as increased pursuant to Section 4(a) above) during
this second renewal term shall be further increased to Ninety-two Thousand Three Hundred
Seventy-seven and 63/100th Dollars ($92,377.63) each month.

     (c) Provided Tenant has fully complied with all of the terms, provisions and conditions on its
part to be performed under this Lease, is not in default under this Lease and has exercised its
second option to renew hereunder, Tenant may, by giving written notice to the Landlord at least six
(6) months on or before the expiration of the second extended term of this Lease, extend such term
for an additional period of five (5) years upon the same covenants and agreements as the second
extended term except that the minimum rent (as increased pursuant to Section 4(b) above) during
this third renewal term shall be further increased to One Hundred Six Thousand Two Hundred Two and
42/100th Dollars ($106,202.42) each month. The initial term and any renewal term(s) are
hereinafter collectively referred to as the “term”.

     (d) Landlord agrees that it shall timely exercise any and all options under the Master Lease
so as to extend the term thereof for a period of time equal to or greater than the term hereof, as
extended by the exercise by Tenant of any of its rights under this Section 3.

SECTION 5. MINIMUM RENT

     (a) Tenant agrees to pay to Landlord, as minimum rent for the demised premises, equal
consecutive monthly installments of Fifty-two Thousand One Hundred Fifty-eight and
58/100th Dollars ($52,158.58), commencing on the commencement date, and continuing on
the first day of each calendar month during years one (1) through five (5) of the initial term of
this Lease, monthly installments of Sixty Thousand Nine Hundred Fifty-six and 42/100th
Dollars ($60,956.42) each calendar month during years six (6) through ten (10), and monthly
installments of Sixty-Nine Thousand Seven Hundred Fifty-four and 25/100th Dollars
($69,754.25) each calendar month during years eleven (11) through fifteen (15) of the initial term
of this Lease.. . All such rental shall be payable to Landlord in advance, without prior written
notice or demand and without any right of deduction, abatement, counterclaim or offset whatsoever
(unless specifically permitted in this Lease). Except as expressly set forth herein to the
contrary, in no event shall Tenant have the right to offset more than twenty-five percent (25%) of
minimum rent in any calendar month, and Tenant shall have no right to offset against

 

 

any additional
rent other than any percentage rent payable hereunder. As used in this Lease, the terms “minimum rent”
and “minimum rental” mean the minimum rental set forth in this Section 5(a). As used in this
Lease, the terms “rent and “rental” mean minimum rental, percentage rental, additional rental and
all other sums due and owing from Tenant to Landlord under this Lease.

     (b) If the Lease term shall commence on a day other than the first day of a calendar month or
shall end on a day other than the last day of a calendar month, the minimum rental for such first
or last fractional month shall be such proportion of the monthly minimum rental as the number of
days in such fractional month bears to the total number of days in such calendar month.

     (c) In addition to minimum rent as set forth in this Section 5, Tenant shall initially pay to
Landlord, as additional rental, simultaneously with the payment of minimum rental called for under
Section 5(a) above, the estimated monthly amount of Tenant’s Proportionate Share of Maintenance
Costs (provided for in Section 16 hereof), as reasonably estimated by Landlord, (ii) Nine and
35/100 Dollars ($9.35) per square foot, payable in equal monthly installments of Twenty-Three
Thousand Five Hundred Two and 78/100 Dollars ($23,502.78) as the estimated monthly amount of
Tenant’s Proportionate Tax Share (provided for in Section 28 hereof) and (iii) Fifteen Cents
($0.15) per square foot, payable in equal monthly installments of Three Hundred Seventy-Seven and
05/100 Dollars ($377.05), as the estimated monthly amount of Tenant’s Proportionate Insurance Share
(provided for in Section 29 hereof).

     (d) Until further notice to Tenant, all rental payable under this Lease shall be payable to
Landlord and mailed to Landlord at c/o Schottenstein Management Company, 1800 Moler Road, Columbus,
Ohio 43207.

     (e) In the event any sums required under this Lease to be paid are not received when due, then
all such amounts shall bear interest from the due date thereof until the date paid at the rate of
interest equal to two percent (2%) over the prime rate in effect from time to time as established
by National City Bank, Columbus, Ohio (the “Interest Rate”), and shall be due and payable by Tenant
without notice or demand, Tenant shall pay the foregoing interest thereon in addition to all
default remedies of Landlord pursuant to Section 34 below.

SECTION 6. PERCENTAGE RENT

     (a) Beginning with the first lease year, Tenant shall pay to the Landlord, in addition to
minimum rent, upon the conditions and at the times hereinafter set forth, percentage rent equal to
two percent (2%) of Tenant’s gross sales (as hereinafter defined) in excess of the number obtained
by dividing (a) minimum rent for the applicable lease year by (b) the number .04. The annual
percentage rent shall be paid by Tenant to the Landlord within ninety (90) days after the end of
each lease year. Each such payment shall be accompanied by a statement signed by an authorized
representative of Tenant setting forth Tenant’s gross sales for such lease year. For purposes of
permitting verification by the Landlord of the gross sales reported by Tenant, the Landlord shall
have the right, not more than one (1) time per lease year, upon not less than five (5) business
days notice to Tenant, to audit during normal business hours in Tenant’s corporate office, Tenant’s
books and records relating to Tenant’s gross sales for a period of two (2) years after the end of
each lease year. Landlord agrees that no contingency fee auditor shall be employed by Landlord for
the purpose of conducting any such audit. If such an audit reveals that Tenant has understated its
gross sales by more than three percent (3%) for any lease year, Tenant, in addition to paying the
additional percentage rent due, shall pay the reasonable cost of the audit within thirty (30) days
of Tenant’s receipt of Landlord’s demand for the same and copies of all bills or invoices on which
such cost is based.

     (b) For purposes hereof, a lease year shall consist of a consecutive twelve (12) calendar
month period commencing on the commencement of the term of this Lease; provided, however, that if
this Lease commences on a day other than the first day of a calendar month, then the first lease
year shall consist of such fractional month plus the next succeeding twelve (12) full calendar
months, and the last lease year shall consist of the period commencing from the end of the
preceding lease year and ending with the end of the term of the Lease, whether by expiration of
term or otherwise. In the event percentage rental shall commence to accrue on a

 

 

day other than the first day of a lease year, the percentage rental for such lease year shall be
adjusted on a pro rata basis, based upon the actual number of days in such lease year.

     (c) Each lease year shall constitute a separate accounting period, and the computation of
percentage rental due for any one period shall be based on the gross sales for such lease year.

     (d) The term “gross sales” as used in this Lease is hereby defined to mean the gross dollar
aggregate of all sales or rental or manufacture or production of merchandise and all services,
income and other receipts whatsoever of all business conducted in, at or from any part of the
demised premises, whether for cash, credit, check, charge account, gift or merchandise certificate
purchased or for other disposition of value regardless of collection. Should any departments,
divisions or parts of Lessee’s business be conducted by any subleases, concessionaires, licensees,
assignees or others, then there shall be included in Lessee’s gross sales, all “gross sales” of
such department, division or part, whether the receipts be obtained at the demised premises or
elsewhere in the same manner as if such business had been conducted by Lessee. Gross sales shall
exclude the following: (i) any amount representing sales, use, excise or similar taxes; (ii) the
amount of refunds, exchanges or returns by customers or allowances to customers.

     (e) The percentage rental, if any, shall be paid within ninety (90) days after the end of each
lease year, accompanied by a statement in writing signed by Tenant setting forth its gross sales
from the sale of all items for such lease year. Tenant shall keep at its principal executive
offices, where now or hereafter located, true and accurate accounts of all receipts from the
demised premises. Landlord, its agents and accountants, shall have access to such records at any
and all times during regular business hours for the purpose of examining or auditing the same.
Tenant shall also furnish to Landlord any and all supporting data in its possession relating to
gross sales and any deductions therefrom as Landlord may reasonably require. Landlord agrees to
keep any information obtained therefrom confidential, except as may be required for Landlord’s tax
returns, or in the event of litigation or arbitration where such matters are material, or required
to be provided to the Master Landlord under the Master Lease.

     (f) Tenant shall at all times maintain accurate records which shall be available for
Landlord’s inspection at any reasonable time.

     (b) If Landlord, for any reason, questions or disputes any statement of percentage rental
prepared by Tenant, then Landlord, at its own expense, may employ such accountants as Landlord may
select to audit and determine the amount of gross sales for the period or periods covered by such
statements. If the report of the accountants employed by Landlord shall show any additional
percentage rental payable by Tenant, then Tenant shall pay to Landlord such additional percentage
rental plus interest at one (1) point over the prime rate, commencing on the date such percentage
rentals should have been paid, within thirty (30) days after such report has been forwarded to
Tenant, unless Tenant shall, within said thirty (30) day period, notify Landlord that Tenant
questions or disputes the correctness of such report. In the event that Tenant questions or
disputes the correctness of such report, the accountants employed by Tenant and the accountants
employed by Landlord shall endeavor to reconcile the question(s) or dispute(s) within thirty (30)
days after the notice from Tenant questioning or disputing the report of Landlord’s accountants.
In the event that it is finally determined by the parties that Tenant has understated percentage
rent for any Lease year by three percent (3%) or more, Tenant shall pay the cost of the audit.
Furthermore, if Tenant’s gross sales cannot be verified due to the insufficiency or inadequacy of
Tenant’s records, then Tenant shall pay the cost of the audit. The cost of any audit resulting
from failure to report percentage rent after written notification of default shall be at the sole
cost of Tenant.

SECTION 7. TITLE ENCUMBRANCES

     Tenant’s rights under this Lease are subject and subordinate to those title matters set forth
in Landlord’s owner’s title insurance commitment issued by First American Title Insurance Company
of New York, being Title No.NCS-209129-CHI1, dated January 15, 2006, specifically including but not
limited to the terms and conditions of a certain Agreement made as of July 30, 1970 among Nassau
Mall, Inc., Miller Associates, and Supermarkets General Corporation
recorded in Liber 8163, Page 85 of Nassau County, New York real estate records (“OEA”). Tenant
agrees that it shall abide by the terms and conditions of the OEA.

 

 

SECTION 8. RIGHT TO REMODEL

     (a) Tenant may, at Tenant’s expense, make repairs and alterations to the interior
non-structural portions of the demised premises and remodel the interior of the demised premises,
in such manner and to such extent as may from time to time be deemed necessary by Tenant for
adapting the demised premises to the requirements and uses of Tenant and for the installation of
its fixtures, appliances and equipment. Any structural or exterior alteration may only be made by
Tenant with the prior written approval of Landlord and Master Landlord, to the extent required by
the provisions of the Master Lease, which approval may be granted or withheld in Landlord’s sole
discretion. All plans for any structural alterations shall be submitted to Landlord for
endorsement of its approval prior to commencement of work. Upon Landlord’s request, Tenant shall
be obligated, if it remodels and/or alters the demised premises, to restore the demised premises
upon vacating the same. Tenant will indemnify and save harmless the Landlord from and against all
mechanics liens or claims by reason of repairs, alterations or improvements which may be made by
Tenant to the demised premises. Inasmuch as any such alterations, additions or other work in or to
the demised premises may constitute or create a hazard, inconvenience or annoyance to the public
and other tenants in the Shopping Center, Tenant shall, if so directed in writing by Landlord,
erect barricades, temporarily close the demised premises, or affected portion thereof, to the
public or take whatever measures are necessary to protect the building containing the demised
premises, the public and the other tenants of the Shopping Center for the duration of such
alterations, additions or other work. If Landlord determines, in its sole judgment, that Tenant
has failed to take any of such necessary protective measures, and Tenant fails to cure same within
ten (10) days after notice thereof, Landlord may do so and Tenant shall reimburse Landlord for the
cost thereof within ten (10) days after Landlord bills Tenant therefor.

     (b) All such work, including Tenant’s Work pursuant to Exhibit “C” shall be performed
lien free by Tenant. In the event a mechanic’s lien is filed against the premises or the Shopping
Center, Tenant shall discharge or bond off same within thirty (30) days from the filing thereof.
If Tenant fails to discharge said lien, Landlord may bond off or pay same without inquiring into
the validity or merits of such lien, and all sums so advanced shall be paid on demand by Tenant as
additional rent.

SECTION 9. UTILITIES

     (a) The Tenant agrees to be responsible and pay for all public utility services rendered or
furnished to the demised premises during the term hereof, including, but not limited to, heat,
water, gas, electric, steam, telephone service and sewer services, together with all taxes, levies
or other charges on such utility services when the same become due and payable. Landlord will
separately meter or submeter utilities prior to delivery. Landlord shall provide, or cause to be
provided, all such utility services to the premises during the term of this Lease. Tenant shall be
responsible for all utility services and costs inside the premises. Landlord shall not be liable
for the quality or quantity of or interference involving such utilities unless due directly to
Landlord’s negligence.

     (b) During the term hereof, whether the demised premises are occupied or unoccupied, Tenant
agrees to maintain heat sufficient to heat the demised premises so as to avert any damage to the
demised premises on account of cold weather.

SECTION 10. GLASS

     The Tenant shall maintain the glass part of the demised premises, promptly replacing any
breakage and fully saving the Landlord harmless from any loss, cost or damage resulting from such
breakage or the replacement thereof.

SECTION 11. PERSONAL PROPERTY

     The Tenant further agrees that all personal property of every kind or description that may at
any time be in or on the demised premises shall be at the Tenant’s sole risk, or at the risk of
those claiming under the Tenant, and that the Landlord shall not be liable for any damage to
said property or loss suffered by the business or occupation of the Tenant caused in any manner
whatsoever.

 

 

SECTION 12. RIGHT TO MORTGAGE

     (a) Landlord reserves the right to subject and subordinate this Lease at all times to the lien
of any leasehold deed of trust, mortgage or mortgages now or hereafter placed upon Landlord’s
interest in the Master Lease; provided, however, that no default by Landlord, under any deed of
trust, mortgage or mortgages, shall affect Tenant’s rights under this Lease, so long as Tenant
performs the obligations imposed upon it hereunder and is not in default hereunder, and Tenant
attorns to the holder of such deed of trust or mortgage, its assignee or the purchaser at any
foreclosure sale. Any such subordination shall be contingent upon Tenant receiving a commercially
reasonable non-disturbance agreement. It is a condition, however, to the subordination and lien
provisions herein provided, that Landlord shall procure from any such mortgagee an agreement in
writing, which shall be delivered to Tenant or contained in the aforesaid subordination agreement,
providing in substance that so long as Tenant shall faithfully discharge the obligations on its
part to be kept and performed under the terms of this Lease and is not in default under the terms
hereof, its tenancy will not be disturbed nor this Lease affected by any default under such
mortgage.

     (b) Wherever notice is required to be given to Landlord pursuant to the terms of this Lease,
Tenant will likewise give such notice to any mortgagee of Landlord’s interest in the Master Lease
upon notice of such mortgagee’s name and address from Landlord. Furthermore, such mortgagee shall
have the same rights to cure any default on the part of Landlord that Landlord would have had.

SECTION 13. SUBLEASE OR ASSIGNMENT

     (a) Subject to the provisions of the Master Lease, Tenant may assign Tenant’s interest in this
Lease or sublet all or any portion of the demised premises for any lawful retail use.

     Tenant may grant licenses and/or concessions within the demised premises. Any such assignee
or Tenant shall be bound by the terms of this Lease. Tenant shall deliver to Landlord in the
ordinary course of its business an instrument whereby the assignee or entity succeeding to Tenant’s
interest hereunder agrees to be bound by the terms of this Lease.

     In the event of any assignment of this Lease or subletting of the demised premises, in whole
or in part, Tenant shall remain fully and primarily liable hereunder.

     (b) Landlord may assign Landlord’s interest in this Lease without the consent of Tenant (a) to
any entity to which Landlord transfers its Master Lease leasehold interest in the Master Lease
provided such entity (i) agrees in writing to be bound by all the terms of this Lease and (ii) such
assignment is pursuant to a bona fide arm’s length transaction not designed to reduce Landlord’s
liability or to otherwise exempt Landlord from any provision of this Lease or (b) subject to
Section 12, as security for any indebtedness undertaken by Landlord.

SECTION 14. COMMON AREAS

     Common areas means all areas and facilities in the Shopping Center which are designated as
“Common Facilities” under the Master Lease or otherwise provided and so designated by Master
Landlord and made available by Master Landlord, or Landlord to the extent Landlord has the right to
do so under the Master Lease, in the exercise of good business judgment for the common use and
benefit of tenants of the Shopping Center and their customers, employees and invitees. Common
areas shall include (to the extent the same are constructed), but not be limited to, the parking
areas, sidewalks, landscaped areas, corridors, stairways, boundary walls and fences, incinerators,
truckways, service roads, and service areas not reserved for the exclusive use of Tenant or other
tenants.

SECTION 15. OPERATION OF COMMON AREAS

     (a) Subject to the provisions of the Master Lease, Landlord shall at all times have exclusive
control of the common areas and may at any time and from time to time: (i) promulgate, modify and
amend reasonable rules and regulations for the use of the common areas, which rules and regulations
shall be binding upon the Tenant upon delivery of a copy thereof to

 

 

the Tenant; (ii) temporarily
close any part of the common areas, including but not limited to closing the streets, sidewalks,
road or other facilities to the extent necessary to prevent a dedication thereof or the accrual of
rights of any person or of the public therein; (iii) exclude and restrain anyone from the use or
occupancy of the common areas or any part thereof except bona fide customers and suppliers of the
tenants of the Shopping Center who use said areas in accordance with the rules and regulations
established by Landlord; and (iv) engage others to operate and maintain all or any part of the
common areas, on such terms and conditions as Landlord shall, in its sole judgment, deem reasonable
and proper.

     (b) Subject to the rights granted in the Master Lease to conduct sidewalk sales and otherwise
use the common areas for sales purposes, Tenant shall keep all common areas free of obstructions
created or permitted by Tenant. Except as aforesaid, Tenant shall permit the use of the common
areas only for normal parking and ingress and egress by its customers and suppliers to and from the
demised premises. If in Landlord’s opinion unauthorized persons are using any of the common areas
by reason of Tenant’s occupancy of the demised premises, Landlord shall have the right at any time
to remove any such unauthorized persons from said areas or to restrain unauthorized persons from
said areas. Landlord, Tenant, and others constructing improvements or making repairs or
alterations in the Shopping Center shall have the right to make reasonable use of portions of the
common areas.

SECTION 16. COMMON AREA MAINTENANCE, TENANT’S SHARE

     (a) Tenant shall pay as additional rental, simultaneously with the payment of minimum rental
called for under Section 5(a), the monthly amount reasonably estimated by Landlord as Tenant’s
Proportionate Share of the “Maintenance Costs” (as defined in Section 16(c) below) for the
operation and maintenance of the common areas as set forth in Section 5(c).

     (b) The Maintenance Costs for the common areas shall be computed on an accrual basis, under
generally accepted accounting principles, and shall include all costs of operating, maintaining,
repairing and replacing the common areas, including by way of example but not limitation: (i) cost
of labor (including worker’s compensation insurance, employee benefits and payroll taxes); (ii)
materials, and supplies used or consumed in the maintenance or operation of the common area; (iii)
the cost of operating and repairing of the lighting; (iv) cleaning, painting, removing of rubbish
or debris, snow and ice, private security services, and inspecting the common areas; (v) the cost
of repairing and/or replacing paving, curbs, walkways, markings, directional or other signs;
landscaping, and drainage and lighting facilities; (vi) rental paid for maintenance of machinery
and equipment; (vii) cost of commercial general liability insurance and property insurance for
property in the common areas which are not part of the building and/or demised premises; and (viii)
a reasonable allowance to Landlord for Landlord’s supervision, which allowance shall not in an
accounting year exceed fifteen percent (15%) of the total of all Maintenance Costs for such
accounting year (all of the foregoing are collectively referred to herein as “Maintenance Costs”).
Notwithstanding the foregoing, costs of a capital nature, including all capital improvements,
alterations, repairs and/or replacements, shall not be included in Maintenance Costs, except for
repaving costs as set forth in (v) above, and the cost of all roof repairs and replacements to the
Building, for which the yearly depreciation, calculated on a straight-line basis and amortized over
the useful life of such item in accordance with IRS code guidelines, shall be included as a
Maintenance Cost, but in no event shall such amortization be over less than five (5) years.

     (c) Landlord shall maintain accurate and detailed records of all Maintenance Costs for the
common areas in accordance with generally accepted accounting principles. For purposes of this
section, “Tenant’s Proportionate Share of Maintenance Costs” shall be the product of the applicable
cost or expense, multiplied by a fraction, the numerator of which shall be the gross leasable area
(expressed in square feet) of the demised premises and the denominator of which shall be the gross
leasable area (expressed in square feet) of all leasable space in the Building.
Tenant’s Proportionate Share is presently Sixty-three and 89/100th Percent
(63.89%), which amount is subject to change from time to time during the term of this Lease.
Tenant acknowledges that, notwithstanding the fact that there are other tenants of the Shopping
Center, Tenant and the other occupants of the Building (or, if any portion of the Building is not
occupied, Landlord) shall, in the aggregate, be responsible for one hundred percent (100%) of the
Maintenance Costs for the Center.

 

 

     (d) The actual amount of Tenant’s Proportionate Share of all Maintenance Costs shall be
computed by Landlord within one hundred eighty (180) days after the end of each accounting year
(which Landlord may change from time to time). At this time Landlord shall furnish to Tenant a
statement showing in reasonable detail the actual Maintenance Costs incurred during such accounting
year and Tenant’s Proportionate Share thereof (prorated for any partial Lease year, with
appropriate adjustments to reflect any change in the floor area of the premises or the gross
leasable area of the Building occurring during such accounting year). Any excess payments from
Tenant shall be applied to the next installments of the Maintenance Costs hereunder, or refunded by
Landlord. Any underpayments by Tenant shall be paid to Landlord within thirty (30) days after
receipt of such reconciliation statement. Tenant’s estimated monthly Maintenance Cost hereunder
may be adjusted by written notice from Landlord.

     (e) If Tenant, for any reason in the exercise of good business judgment, questions or disputes
any statement of Maintenance Costs prepared by Landlord, then Tenant, at its own expense, may
employ such accountants as Tenant may select to review Landlord’s books and records solely with
respect to Maintenance Costs during the prior two Lease years and to determine the amount of
Maintenance Costs for the period or periods covered by such statements. If the report of the
accountants employed by Tenant shall show any overcharge paid by Tenant, then Tenant shall receive
a credit from Landlord for such difference. Any underpayment shall be paid by Tenant. Tenant
agrees that no contingency fee auditors shall be employed by Tenant for the purpose of conducting
any such audit. In the event that Landlord questions or disputes the correctness of such report,
the accountants employed by Tenant and the accountants employed by Landlord shall endeavor to
reconcile the question(s) or dispute(s) within thirty (30) days after the notice from Tenant
questioning or disputing the report of Landlord’s accountants. In the event that it is finally
determined by the parties that Landlord has overstated Maintenance Costs for any Lease year by
three percent (3%) or more, Landlord shall pay the reasonable cost of the audit. Furthermore, if
Landlord’s Maintenance Costs cannot be verified due to the insufficiency or inadequacy of
Landlord’s records, then Landlord shall pay the cost of the audit.

SECTION 17. EMINENT DOMAIN

     (a) In the event the entire premises or any part thereof shall be taken or condemned either
permanently or temporarily for any public or quasi-public use or purpose by any competent authority
in appropriation proceedings or by any right of eminent domain, the entire compensation or award
therefore, including leasehold, reversion and fee, shall belong to the Landlord and Tenant hereby
assigns to Landlord all of Tenant’s right, title and interest in and to such award.

     (b) In the event that only a portion of the demised premises, not exceeding twenty percent
(20%) of same, shall be so taken or condemned, and the portion of the demised premises not taken
can be repaired within ninety (90) days from the date of which possession is taken for the public
use so as to be commercially fit for the operation of Tenant’s business, the Landlord at its own
expense shall so repair the portion of the demised premises not taken and there shall be an
equitable abatement of rent for the remainder of the term and/or extended terms. The entire award
paid on account thereof shall be paid to the Landlord. If the portion of the demised premises not
taken cannot be repaired within ninety (90) days from the date of which possession is taken so as
to be commercially fit for the operation of Tenant’s business, then this Lease shall terminate and
become null and void from the time possession of the portion taken is required for public use, and
from that date on the parties hereto shall be released from all further obligations hereunder
except as herein stated and Tenant shall have no claim for any compensation on account of its
leasehold interest. No other taking, appropriation or condemnation shall cause this Lease to be
terminated. Any such appropriation or condemnation proceedings shall not operate
as or be deemed an eviction of Tenant or a breach of Landlord’s covenant of quiet enjoyment
and Tenant shall have no claim for any compensation on account of its leasehold interest.

     (c) In the event that more than 20% of the demised premises shall at any time be taken by
public or quasi-public use or condemned under eminent domain, then at the option of the Landlord or
Tenant upon the giving of thirty (30) days written notice (after such taking or condemnation), this
Lease shall terminate and expire as of the date of such taking and any prepaid rental shall be
prorated as of the effective date of such termination.

 

 

     (d) The rights of Landlord and Tenant set forth in this Section 17 are subject to the rights
of the Master Landlord to terminate the Master Lease, as therein provided, in which event this
Lease shall terminate simultaneously.

SECTION 18. TENANT’S TAXES

     Tenant further covenants and agrees to pay promptly when due all taxes assessed against
Tenant’s fixtures, furnishings, equipment and stock-in trade placed in or on the demised premises
during the term of this Lease.

SECTION 19. RISK OF GOODS

     All personal property, goods, machinery, and merchandise in said demised premises shall be at
Tenant’s risk if damaged by water, fire, explosion, wind or accident of any kind, and Landlord
shall have no responsibility therefore or liability for any of the foregoing and Tenant hereby
releases Landlord from such liability.

SECTION 20. USE AND OCCUPANCY

     (a) Tenant agrees to initially open and operate a Filene’s Basement for the retail sales of
clothing and apparel, shoes and other footwear, and home goods in the demised premises, fully
staffed and stocked and equivalent to other Filene’s Basement stores operated by Tenant in the
State of New York (the “Permitted Use”). Tenant may thereafter change its use to any other lawful
retail use, subject to (i) any restriction on use imposed by the Master Lease, (ii) those
exclusives and prohibited uses set forth on Exhibit “D”, attached hereto and made a part
hereof, which are the exclusives and prohibited uses in effect for the Building as of the date
hereof, for so long as and to the extent said exclusives and prohibited uses are still in full
force and effect, and (iii) exclusives and prohibited uses hereafter granted for tenants leasing
more than 20,000 square feet of space elsewhere within the Building, for so long as and to the
extent said exclusives are still in full force and effect.

     Landlord represents and warrants to Tenant that there is no restriction in the OEA, Master
Lease or otherwise on the use of the demised premises by Tenant for the Permitted Use.
Notwithstanding the foregoing, however, Tenant acknowledges that a claim may be asserted under the
OEA that a restriction currently exists against the operation of a department store or discount
department store in the Shopping Center. In the event that such a claim is asserted Landlord shall
not be in default of the foregoing representation, but nevertheless agrees that it shall indemnify,
defend and hold Tenant harmless in the event that Tenant incurs any loss, cost, damage or expense
(including reasonable attorney’s fees and expenses) on account of any claim which is or may be
asserted that Tenant’s use of the demised premises for the Permitted Use is not permitted or is
restricted in any material manner by the terms of the OEA.

     (b) For so long as Tenant is continuously and regularly operating its business in the demised
premises, Landlord will not lease any space within the Building or permit any space within the
Building to be used by any person, persons, partnership or entity who devotes five percent (5%) or
more of its selling area to the sale of clothes, apparel and home goods (the “Exclusive Use”). The
foregoing limitation shall not apply to department stores, junior department stores, general
merchandise and discount stores, such as Target, Marshalls and similar type stores. Tenant
acknowledges that this Section 20(b) applies only to the Building and that Master Landlord is not
restricted by the terms hereof.

     (c) Tenant shall at all times conduct its operations on the demised premises in a lawful
manner and shall, at Tenant’s expense, comply with all laws, rules, orders, ordinances, directions,
regulations, and requirements of all governmental authorities, now in force or which may hereafter
be in force, which shall impose any duty upon Landlord or Tenant with respect to the business of
Tenant and the use, occupancy or alteration of the demised premises. Tenant shall comply with all
requirements of the Americans with Disabilities Act, and shall be solely responsible for all
alterations within the demised premises in connection therewith. Tenant covenants and agrees that
the demised premises shall not be abandoned or left vacant and that only minor portions of the
demised premises shall be used for office or storage space in connection with Tenant’s business
conducted in the demised premises.

 

 

     Without being in default of this Lease, Tenant shall have the right to cease operating (go
dark) at any time and for whatever reason after the first day of operations. Notwithstanding the
foregoing, Tenant’s right to vacate (go dark), shall not release or excuse the Tenant from any
obligations or liabilities, including the payment of minimum rent and additional rent and other
charges, under this Lease without the express written consent of Landlord. In the event Tenant
fails to (i) open and operate within ninety (90) days after delivery of the demised premises or
(ii) operate for one hundred twenty (120) or more consecutive days, Landlord shall have the right,
effective upon thirty (30) days prior written notice to Tenant, to terminate the Lease as
Landlord’s sole remedy, provided that if Tenant recommences operating fully stocked in
substantially all of the premises within such thirty (30) days, Landlord’s termination shall be
null and void. In the event Tenant fails to open and operate as provided above or shall cease
operating as provided above, Landlord’s sole remedy on account thereof shall be limited to the
right to elect to recapture the premises and terminate the Lease, whereupon there shall be no
further liability of the parties hereunder. Such termination shall be effective upon written
notice to Tenant any time prior to Tenant reopening for business in the demised premises.
Provided, however, in the event Landlord has not so elected to recapture, Tenant shall have right
to notify Landlord of Tenant’s intention to reopen for business in the demised premises within
sixty (60) days, followed by Tenant’s actually reopening for business fully stocked in
substantially all of the demised premises within such sixty (60) day period, which notice and
actual reopening shall toll Landlord’s right to recapture. Tenant acknowledges that if it ceases
operating at the demised premises for a continuous period of eighteen (18) months, the Master
Landlord may terminate the Master Lease as to the demised premises, and that if the Master Landlord
exercises that right, this Lease shall automatically terminate.

     (d) Landlord and Tenant each agree that during the term of this Lease, it shall not use or
permit to be used any space in the Building for any use prohibited by the Master Lease or for the
operation of a bingo parlor, bar, tavern, restaurant, cocktail lounge, adult book or adult video
store (defined for the purposes hereof as a store devoting ten percent (10%) or more of its floor
space to offering books and/or video materials for sale or for rent which are directed to or
restricted to adult customers due to sexually explicit subject matter or for any other reason
making it inappropriate for general use), adult theater or “strip-tease” establishment, automotive
maintenance or automotive repair facility, warehouse, car wash, pawn shop, check cashing service,
establishment selling second hand goods, flea market, entertainment or recreational facility (as
defined below), training or educational facility (as defined below); the renting, leasing, selling
or displaying of any boat, motor vehicle or trailer; industrial or manufacturing purposes; a
carnival, circus or amusement park; a gas station, facility for the sale of paraphernalia for use
with illicit drugs, funeral home, blood bank or mortuary, gambling establishment, banquet hall,
auditorium or other place of public assembly, second-hand or surplus store, gun range; the sale of
fireworks; a veterinary hospital or animal raising facility; the storage of goods not intended to
be sold from the Center; a video rental store, karate center, central laundry or dry cleaning
plant, supermarket or any facility which is illegal or dangerous, constitutes a nuisance, emits
offensive odors, fumes, dust or vapors or loud noise or sounds or is inconsistent with community
oriented shopping centers. For the purposes of this Section 20(d), the phrase “entertainment or
recreational facility” shall include, without limitation, a movie or live theater or cinema,
bowling alley, skating rink, gym, health spa or studio, dance hall or night club, billiard or pool
hall, massage parlor, health club, game parlor or video arcade (which shall be defined as any store
containing more than five (5) electronic games) or any other facility operated solely for
entertainment purposes (such as a “laser tag” or “virtual reality” theme operation). For the
purposes of this Section 20(d), the phrase “training or educational facility” shall include,
without
limitation, a beauty school, nail salon, barber college, reading room, place of instruction or
any other operation catering primarily to students or trainees as opposed to customers.

SECTION 21. NUISANCES

     Tenant shall not perform any acts or carry on any practice which may injure the demised
premises or be a nuisance or menace to other tenants in the Shopping Center.

SECTION 22. WASTE AND REFUSE REMOVAL

     Tenant covenants that it will use, maintain and occupy said demised premises in a careful,
safe, lawful and proper manner and will not commit waste therein. Landlord or its agent

 

 

shall have
access at all reasonable times to the demised premises for purposes of inspecting and examining the
condition and maintenance of the demised premises. Tenant agrees to remove all refuse from the
demised premises in a timely, clean and sanitary manner. Tenant shall provide a refuse collection
container at the rear of the demised premises to accommodate Tenant’s refuse and Tenant shall
routinely clean up around trash containers. Tenant shall contract with a licensed and insured
refuse collection contractor to timely remove refuse therefrom and the location of the container
shall be approved by Landlord.

SECTION 23. DESTRUCTION OF PREMISES

     (a) Landlord shall at all times during the term of this Lease carry property insurance on the
Building, including the “Structural Portions” (defined in Section 24(a) below) and common utility
lines up to the point they serve individual tenant’s premises. Landlord shall be under no
obligation to maintain insurance on any improvements installed by or for the benefit of Tenant’s
use of the premises or otherwise owned by Tenant. Landlord may elect to self-insure its
obligations hereunder and/or use whatever deductibles as Landlord deems appropriate, in its sole
discretion.

     (b) If the demised premises shall be damaged, destroyed, or rendered untenantable, in whole or
in part, by or as the result or consequence of fire or other casualty during the term hereof,
Landlord shall repair and restore the same to a good tenantable condition with reasonable dispatch.
During such period of repair, the rent herein provided for in this Lease shall abate (i) entirely
in case all of the demised premises are untenantable; and (ii) proportionately if only a portion of
the demised premises is untenantable and Tenant is able to economically conduct its business from
the undamaged portion of the demised premises. The abatement shall be based upon a fraction, the
numerator of which shall be the square footage of the damaged and unusable area of the demised
premises and the denominator shall be the total square footage of the demised premises. Said
abatement shall cease at such time as the demised premises shall be restored to a tenantable
condition.

     (c) In the event the demised premises, because of such damage or destruction, cannot be
repaired and restored to a tenantable condition with reasonable dispatch within one hundred fifty
(150) days from the date of receipt of insurance proceeds for such damage or destruction, as
reasonably determined by an independent contractor selected by Landlord, Tenant or Landlord may, at
their option, terminate this Lease within sixty (60) days following receipt of such contractor’s
determination; further, in the event that this Lease is not terminated as above provided, but the
premises are not restored within one hundred fifty (150) days from the date of receipt of insurance
proceeds, Tenant may terminate this Lease by notice given to Landlord after the expiration of such
one hundred fifty (150) day period but prior to the repair and restoration of same and thereupon
Landlord and Tenant shall be released from all future liability and obligations under this Lease.

     (d) If one-third (1/3) or more of the ground floor area of the demised premises are damaged or
destroyed during the last two (2) years of the original or any extended term of this Lease,
Landlord shall have the right to terminate this Lease by written notice to Tenant within sixty (60)
days following such damage or destruction, unless Tenant shall, within thirty (30) days following
receipt of such notice, offer to extend the term of this Lease for an additional period of five (5)
years from the date such damage or destruction is repaired and restored. If Tenant makes said
offer to extend, Landlord and Tenant shall determine the terms and conditions of said
extension within thirty (30) days thereafter or Tenant’s offer shall not be deemed to prevent
Landlord from canceling this Lease. If such terms and conditions have been mutually agreed to by
the parties, then Landlord shall accept Tenant’s offer and shall repair and restore the demised
premises with reasonable dispatch thereafter.

     (e) If Landlord is required or elects to repair and restore the demised premises as herein
provided, Tenant shall repair or replace its stock in trade, trade fixtures, furniture, furnishings
and equipment and other improvements including floor coverings, and if Tenant has closed, Tenant
shall promptly reopen for business. Anything contained in this Section 23 to the contrary
notwithstanding, Landlord’s restoration and repair obligations under Section 23 shall in no event
include restoration or repair of Tenant’s Work or improvements.

 

 

     (f) The rights of Landlord and Tenant under this Section 23 are subject to the rights of
Master Landlord to terminate the Master Lease pursuant to the provisions thereof, in which event
this Lease shall terminate simultaneously therewith.

SECTION 24. LANDLORD REPAIRS

     (a) Landlord shall keep, in good order, condition, and repair the following: (i) structural
portions of the demised premises and/or the Building; (ii) downspouts; (iii) gutters; (iv) the roof
of the Building of which the demised premises forms a part; and (v) the plumbing and sewage system
serving the demised premises but located outside of the demised premises, except (as to all items)
for damage caused by any negligent act or omission of Tenant or its customers, employees, agents,
invitees, licensees or contractors, which shall be repaired or replaced as necessary, at the sole
cost and expense of Tenant. “Structural Portions” shall mean only the following: (vi) foundations;
(vii) exterior walls (except for interior faces); (viii) concrete slabs; (ix) the beams and columns
bearing the main load of the roof; and (x) the floors (but not floor coverings).

     (b) Notwithstanding the provisions of Section 24(a) above, Landlord shall not be obligated to
repair the following: (i) the exterior or interior of any doors, windows, plate glass, or showcases
surrounding the demised premises or the store front; (ii) HVAC unit(s), equipment and systems
(including all components thereof) in the demised premises; or (iii) damage to Tenant’s
improvements or personal property caused by any casualty, burglary, break-in, vandalism, acts of
terrorism, war or act of God. Landlord shall, in any event, have ten (10) days after notice from
Tenant stating the need for repairs to complete same, or commence and proceed with due diligence to
complete same. Nevertheless, during the term of this Lease, Landlord shall be obligated to replace
all HVAC components as and when necessary so long as Tenant has fulfilled its obligations under
Section 25(a) (ii) below, and provided such replacements did not arise from (x) repairs,
installations, alterations, or improvements made by or for Tenant or anyone claiming under Tenant,
or (y) the fault or misuse of Tenant or anyone claiming under Tenant. Except as specifically set
forth in this Lease, Tenant expressly hereby waives the provisions of any law permitting repairs by
a tenant at Landlord’s expense.

     (c) The provisions of this Section 24 shall not apply in the case of damage or destruction by
fire or other casualty or a taking under the power of eminent domain in which events the
obligations of Landlord shall be controlled by Section 23 and Section 17 respectively.

     (d) Landlord shall assign to Tenant all warranties covering all matters required by the terms
hereof to be repaired and maintained by Tenant.

SECTION 25. TENANT’S REPAIRS

     (a) Tenant shall keep and maintain, at Tenant’s expense, all and every other part of the
demised premises in good order, condition and repair, including, by way of example but not
limitation: (i) all leasehold improvements; (ii) all HVAC unit(s), equipment and systems (including
all components thereof) serving the demised premises; (iii) interior plumbing and sewage
facilities; (iv) all interior lighting; (v) electric signs; (vi) all interior walls; (vii) floor
coverings; (viii) ceilings; (ix) appliances and equipment; (x) all doors, exterior entrances,
windows and window moldings; (xi) plate glass; (xii) signs and showcases surrounding and within the
demised premises; (xiii) the store front; (xiv) sprinkler systems including supervisory
alarm service in accordance with National Fire Protection Association standards and current
local and state fire protection standards to ensure property operation, and as required by Section
27(b) below.

     (b) Sprinkler systems, if any, located in Tenant’s area shall be maintained in accordance with
National Fire Protection Association standards to ensure proper operation. Sprinkler control
valves (interior and exterior) located in Tenant’s area shall be monitored by supervisory alarm
service. In the event local or state codes do not require alarm systems, Tenant shall provide
alarm service on all sprinkler systems to detect water flow and tampering with exterior and
interior main control valves of the sprinkler system servicing Tenant’s premises. Moreover, it
shall be Tenant’s responsibility to contact the Landlord’s property manager, Chuck Seal, at (614)
449-6853, in the event the sprinkler system in the demised premises is ever shut

 

 

off for any
reason, and advise same of any damage occasioned or caused by the actions of Tenant, its agents,
invitees, or employees, and/or as a result of Tenant’s repair obligations hereunder. In the event
fifty percent (50%) or more of the total number of sprinkler heads require replacement at any one
time as part of ordinary maintenance, but excluding repairs or replacements that arise from (x)
repairs, installations alterations, or improvements made by or for Tenant or anyone claiming under
Tenant, or (y) the fault or misuse of Tenant or anyone claiming under Tenant, such cost shall be
fifty percent (50%) borne by Landlord and fifty percent (50%) borne by Tenant. Tenant, at Tenant’s
sole cost and expense, shall replace all sprinkler heads due to repairs, installations,
alterations, or improvements made by or for Tenant or anyone claiming under Tenant, the fault or
misuse of Tenant or anyone claiming under Tenant, painting or environmental exposure from Tenant’s
operations. All other costs of maintaining the sprinkler system in the demised premises shall be
paid by Tenant.

     (c) If Landlord deems any repair which Tenant is required to make hereunder to be necessary,
Landlord may demand that Tenant make such repair immediately. If Tenant refuses or neglects to
make such repair and to complete the same with reasonable dispatch, Landlord may make such repair
and Tenant shall, on demand, immediately pay to Landlord the cost of said repair, together with
annual interest at the Interest Rate, unless it is thereafter determined that such repair was not
necessary. Landlord shall not be liable to Tenant for any loss or damage that may accrue to
Tenant’s stock or business by reason of such work or its results.

     (d) Neither Tenant nor any of its contractors are permitted access to or permitted to perform
alterations of any kind to the roof of the building.

     (e) Tenant shall pay promptly when due the entire cost of work in the demised premises
undertaken by Tenant under this Lease (including, but not limited to, Tenant’s Work and/or
alterations permitted under Section 8 of this Lease) so that the demised premises and the Shopping
Center shall at all times be free of liens for labor and materials arising from such work; to
procure all necessary permits before undertaking any such work; to do all of such work in a good
and workmanlike manner, employing materials of good quality; to perform such work only with
contractors previously reasonably approved of in writing by Landlord; to comply with all
governmental requirements; and save Landlord and its agents, officers, employees, contractors and
invitees harmless and indemnified from all liability, injury, loss, cost, damage and/or expense
(including reasonable attorneys’ fees and expenses) in respect of any injury to, or death of, any
person, and/or damage to, or loss or destruction of, any property occasioned by or growing out of
any such work.

SECTION 26. COVENANT OF TITLE AND PEACEFUL POSSESSION

     So long as Tenant is not in default hereunder beyond applicable notice and cure periods, but
subject to the terms and conditions of this Lease, Tenant shall have quiet and peaceful possession
of the premises from and against anyone acting by, through or under Landlord, and, except for such
obligations which are to be performed by Tenant under this Lease, Landlord shall perform all of its
obligations under the Master Lease. Landlord expressly warrants and represents to Tenant that: (i)
the Master Lease is a valid and binding lease agreement which is in full force and effect and is
enforceable against Landlord and Master Landlord in accordance with its terms; (ii) Landlord has a
good and valid leasehold interest in the premises pursuant to the Master Lease; (iii) no event has
occurred, which with the giving of notice or the passage of time would constitute a default by
either Master Landlord or Landlord under the Master Lease; (iv) a
true, correct and complete copy of the Master Lease has been provided to Tenant; and (v)
Landlord has the right to enter into this Lease.

SECTION 27. TENANT’S AND LANDLORD’S INSURANCE; INDEMNITY

     (a) Tenant’s Property Insurance. Tenant agrees to procure and maintain during the demised
term a property insurance policy written on the causes of loss-special form (also referred to as
the special extended coverage form), or the most broad property insurance form then available,
insuring against loss of, or damage to, Tenant’s property, in, on or about the demised premises.
Such property insurance shall include coverage (whether by additional policies, endorsements or
otherwise): (i) against earthquake and flood; (ii) for plate glass; (iii) in an amount equal to the
full insurable replacement cost, without deduction for depreciation; (iv) with an agreed valuation
provision in lieu of, or in an amount sufficient to satisfy, any

 

 

co-insurance clause; (v) against
inflation (also known as inflation guard); (vi) for any costs due to ordinances or laws; and (vii)
as Landlord may from time to time reasonably require Tenant to procure and maintain. Landlord
shall not be liable for any damage to Tenant’s property in, on or about the demised premises caused
by fire or other insurable hazards regardless of the nature or cause of such fire or other
casualty, and regardless of whether any negligence of Landlord or Landlord’s employees or agents
contributed thereto. Tenant expressly releases Landlord of and from all liability for any such
damage and Tenant agrees that its property insurance policies required hereunder shall include a
waiver of subrogation recognizing this release from liability.

     (b) Boiler and Machinery Insurance. Tenant agrees to maintain a comprehensive boiler and
machinery policy on a full repair and replacement cost basis, and further in accordance with the
requirements of Section 27(a)(iii)-(vi) above, with an admitted, reputable insurance carrier
covering property damage as a result of a loss from boiler(s), pressure vessel(s), HVAC equipment,
or other electrical or mechanical apparatus within or servicing the demised premises, furniture,
fixtures, equipment and inventory together with property of others in the care, custody and control
of Tenant. The deductible for property damage under such policy shall not exceed Five Thousand
Dollars ($5,000.00) per occurrence.

     (c) Additional Tenant Insurance. Tenant’s insurance required under Section (27(a) and (b)
above shall also include business income coverage against any interruption (including utility
interruption) in Tenant’s business (whether direct, indirect, contingent or interdependent),
including, but not limited to, coverage for Tenant’s leasehold interests and obligations to
continue paying all rental amounts hereunder, lost revenues and income, and extra expense. Such
coverage should be for a period of at least twelve (12) months, with an extended period of
indemnity of at least thirty (30) days. The deductible for such coverage may not exceed
twenty-four (24) hours.

     (d) Tenant’s Commercial General Liability Insurance. Tenant agrees to procure and maintain
during the demised term commercial general liability insurance by a responsible insurance company
or companies, with policy limits of not less than the greater of any requirement imposed on
Landlord under the Master Lease or $1,000,000.00 per occurrence and $2,000,000.00 annual aggregate,
and $500,000.00 limits for fire and legal liability, insuring against liability for losses, claims,
demands or actions for bodily injury (including death) and property damage arising from Tenant’s
conduct and operation of its business in and Tenant’s use, maintenance and occupancy of, the
demised premises and any areas adjacent thereto, or the acts or omissions of Tenant’s employees and
agents. Such commercial general liability policy may be written on a blanket basis to include the
demised premises in conjunction with other premises owned or operated by Tenant but shall be
written such that the required policy limits herein specifically apply on a per location basis to
the demised premises. Tenant’s commercial general liability insurance policy shall further
provide: (i) coverage for defense costs (in excess of policy limits); (ii) contractual liability
coverage; (iii) cross-liability coverage; and, (iv) that Landlord, its shareholders, officers,
directors, employees, and agents, Master Landlord, and Master Landlord’s mortgagee, if any, are
named as additional insureds such that (Y) Tenant’s policy shall be the primary source of insurance
for such additional insured and (Z) any liability policy carried by such additional insureds shall
be in excess of, and will not contribute with or to, Tenant’s commercial general liability
insurance required to be maintained hereunder. At the time this Lease is executed and thirty (30)
days prior to the expiration of such insurance policy, Tenant shall furnish to Landlord, Master
Landlord, and Master Landlord’s mortgagee, if any, certificates
of insurance evidencing the continuous existence during the term of this Lease of Tenant’s
commercial general liability insurance coverage, which certificates shall include attachment of
additional insured endorsement, name any and all non-standard exclusions or limitations, and
provide not less than thirty (30) days notice of cancellation or termination to Landlord (and any
other additional insured, if applicable). All insurance companies must be licensed to do business
in the state where the premises are located. Tenant shall further procure and maintain other
liability insurance (including, but not limited to, liquor and pollution insurance) as Landlord may
from time to time reasonably require.

     (e) Worker’s Compensation. Tenant agrees to provide and keep in force at all times worker’s
compensation insurance complying with the law of the state in which the premises are located.
Tenant agrees to defend, indemnify and hold harmless Landlord from all actions or claims of
Tenant’s employees or employee’s family members. Tenant agrees to provide a certificate as
evidence of proof of worker’s compensation coverage.

 

 

     If Tenant hires contractors to do any improvements on the demised premises, each contractor
must provide proof of worker’s compensation coverage on its employees and agents to Landlord.

     (f) Contingent Liability and Builder’s Risk Insurance. With respect to any alterations or
improvements by Tenant, Tenant shall maintain contingent liability and builder’s risk coverage
naming Landlord as an additional insured, in compliance with the additional insured requirements
set forth in Section 27(d).

     (g) Landlord’s Property Insurance. Commencing as of the Commencement Date, and thereafter
throughout the term of this Lease, Landlord shall, at Landlord’s sole cost and expense, provide and
maintain or cause to be provided and maintained a property insurance policy insuring the Building
(including any permanent improvements to the demised premises paid for by the Tenant Reimbursement
but excluding those items insured by Tenant as required under this Section 27) for all the hazards
and perils normally covered by the Causes of Loss-Special Form. Said property insurance policy
shall include endorsements for coverage against: (i) earthquake and flood (including, but not
limited to, mud slide, flood hazard or fault area(s), as designated on any map prepared or issued
for such purpose by any governmental authority); and (ii) increased costs of construction and
demolition due to law and ordinance. The foregoing property coverage shall be provided in amounts
sufficient to provide one hundred percent (100%) of the full replacement cost of all buildings (and
building additions) and other improvements in the Center and in the demised premises and Tenant’s
store building (including any permanent improvements to the demised premises paid for by Tenant
Reimbursement but excluding those items insured by Tenant as required under this Section 27). If
for any reason the Causes of Loss-Special Form is not customarily used in the insurance industry,
then the property insurance policy then in effect shall at least provide coverage for the following
perils: fire, lightning, windstorm and hail, explosion, smoke, aircraft and vehicles, riot and
civil commotion, vandalism and malicious mischief, sprinkler leakage, sinkhole and collapse,
volcanic action, earthquake or earth movement, and flood, and increased costs of construction and
demolition due to law, ordinance and inflation. Neither Tenant nor any of its affiliates or
subtenants shall be liable to Landlord for any loss or damage (including loss of income),
regardless of cause, resulting from fire, flood, act of God or other casualty.

     (h) Landlord’s Commercial General Liability Insurance. Commencing as of the Commencement
Date, and thereafter throughout the term of this Lease, Landlord shall, at Landlord’s sole cost and
expense, provide and maintain or cause to be provided and maintained a commercial general liability
policy, naming Landlord as an insured (and naming Tenant as an additional insured, said additional
insured’s coverage under Landlord’s commercial general liability policy to be primary), protecting
Landlord, the business operated by Landlord, and any additional insureds (including Tenant) against
claims for bodily injury (including death) and property damage occurring upon, in or about the
Center (other than the demised premises and those areas insured by other tenants at the Center),
including Common Areas. Such insurance shall afford protection to the limits of not less than the
greater of any requirement imposed upon Landlord by the Master Lease or One Million Dollars
($1,000,000.00) per occurrence, Two Million Dollars ($2,000,000.00) annual aggregate, and Five
Hundred Thousand Dollars ($500,000.00) with respect to property damage for fire legal liability.
All liability policies shall
be written on an occurrence form unless such form is no longer customarily used in the
insurance industry. Landlord may use commercially reasonable deductibles Landlord customarily
carries in the conduct of its business; however, the amount of such deductibles which may be
charged to Tenant pursuant to Section 12.09 below may not exceed $0.20 per square foot of gross
leasable area of the demised premises in any lease year.

     (i) Landlord’s Umbrella. Commencing as of the Commencement Date, and thereafter throughout
the term of this Lease, Landlord shall, at Landlord’s sole cost and expense, provide and maintain
or cause to be provided and maintained an umbrella liability insurance policy with a Ten Million
Dollar ($10,000,000.00) minimum annual aggregate, which umbrella policy (or policies) shall list
Landlord’s commercial general liability policy required under this Section 27 and any other
liability policy or policies carried by, or for the benefit of, Landlord as underlying policies.
Said umbrella liability policy shall also name Tenant as an additional insured (said additional
insured’s coverage under Landlord’s umbrella liability policy to be primary). All liability
policies shall be written on an occurrence form unless such form is no longer customarily used in
the insurance industry.

 

 

     (j) Tenant Indemnity. Tenant shall indemnify Landlord, Landlord’s agents, employees,
officers or directors, against all damages, claims and liabilities arising from any alleged
products liability or from any accident or injury whatsoever caused to any person, firm or
corporation during the demised term in the demised premises, unless such claim arises from a breach
or default in the performance by Landlord of any covenant or agreement on its part to be performed
under this Lease or, to the extent not required to be insured hereunder, the negligence of
Landlord. The indemnification herein provided shall include all reasonable costs, counsel fees,
expenses and liabilities incurred in connection with any such claim or any action or proceeding
brought thereon.

     (k) Landlord Indemnity. Landlord shall indemnify Tenant, Tenant’s officers, directors,
employees and agents against all damages, claims and liabilities arising from any accident or
injury whatsoever caused to any person, firm or corporation during the demised term in the common
areas of the Shopping Center, unless such claim arises from a breach or default in the performance
by Tenant of any covenant or agreement on Tenant’s part to perform under this Lease or, to the
extent not required to be insured hereunder, the negligence of Tenant. The indemnification herein
provided shall include all reasonable costs, counsel fees, expenses and liabilities incurred in
connection with any such claim or any action or proceeding brought thereon.

SECTION 28. REAL ESTATE TAXES

     (a) Tenant shall pay Tenant’s Proportionate Tax Share of any “real estate taxes” (defined in
Section 16(b) above) for which Landlord has a payment or reimbursement obligation pursuant to the
Master Lease. Tenant’s Proportionate Tax Share shall be equal to the real estate taxes payable by
Landlord to Master Landlord, multiplied by a fraction, the numerator of which shall be the leasable
square feet in the demised premises and the denominator of which shall be the leasable square feet
in the Building. Tenant shall initially pay to Landlord as additional rental, simultaneously with
the payment of minimum rental called for under Section 5(a), the estimated monthly amount of
Tenant’s Proportionate Tax Share of real estate taxes as set forth in Section 5(c) of Nine and
35/100 Dollars ($9.35) per square foot, payable in equal monthly installments of Twenty-Three
Thousand Five Hundred Two and 78/100 Dollars ($23,502.78), as the estimated amount of Tenant’s
Proportionate Tax Share. Within one hundred twenty (120) days after the end of each accounting
year (which Landlord may change from time to time), Landlord shall provide Tenant with an annual
reconciliation of real estate taxes and a statement of the actual amount of Tenant’s Proportionate
Share thereof. Any excess payments from Tenant shall be applied to the next installments of real
estate taxes hereunder, or refunded by Landlord. Any underpayments by Tenant shall be paid to
Landlord within thirty (30) days after receipt of such reconciliation statement. Tenant’s estimated
monthly installment of real estate taxes payable hereunder may be adjusted by written notice from
Landlord.

     (b) For the purpose of this Lease, the term “real estate taxes” shall include “Impositions” as
defined in the Master Lease.

     (c) The real estate taxes for any lease year shall be the real estate taxes for which Landlord
has a payment or reimbursement obligation pursuant to the Master Lease during such lease year.

     (d) Upon request, Landlord shall submit to Tenant true copies of the real estate tax bills
submitted to Landlord by Master Landlord for each tax year or portion of a tax year included within
the term of this Lease and shall bill Tenant for the amount to be paid by Tenant hereunder. Said
bill shall be accompanied by a computation of the amount payable by Tenant and such amount shall be
paid by Tenant within thirty (30) days after receipt of said bill.

SECTION 29. TENANT’S INSURANCE CONTRIBUTION

     Tenant shall pay as additional rent, Tenant’s Proportionate Insurance Share of (i) the
premiums for the insurance maintained by Landlord on the Building pursuant to Section 27(g) hereof
and (ii) the insurance premiums for the liability insurance maintained by Landlord or the Center
pursuant to Section 27(h) for each lease year during the term of this Lease, less any amounts
reimbursed to Landlord by Master Landlord pursuant to the Master Lease (collectively, the
“Insurance Charges”). Tenant’s Proportionate Insurance Share shall be equal to the

 

 

Insurance
Charges multiplied by a fraction, the numerator of which shall be the leasable square feet in the
demised premises and the denominator of which shall be the leasable square feet in the
Building. The premiums for the first and last lease years shall be prorated. Tenant
shall pay Tenant’s Proportionate Share of such premiums annually upon demand for such payment by
Landlord. Tenant’s Proportionate Share thereof shall be paid by Tenant within thirty (30) days
after Landlord’s demand therefore. Tenant shall initially pay to Landlord as additional rental,
simultaneously with the payment of minimum rental called for under Section 5(a), the estimated
monthly amount of Tenant’s Proportionate Share of such insurance premiums as set forth in Section
5(c), of Fifteen Cents ($0.15) per square foot, payable in equal monthly installments of
Three Hundred Seventy-Seven and 05/100 Dollars ($377.05), as the estimated amount of
Tenant’s Proportionate Share of such insurance premiums. Within one hundred twenty (120) days
after the end of each accounting year (which Landlord may change from time to time), Landlord shall
provide Tenant with a reconciliation of the premiums for the insurance maintained by Landlord
hereunder and a statement of the actual amount of Tenant’s Proportionate Share thereof. Any excess
payments from Tenant shall be applied to the next installments of insurance premiums payable by
Tenant hereunder, or refunded by Landlord. Any underpayments by Tenant shall be paid to Landlord
within thirty (30) days after receipt of such reconciliation statement. Tenant’s monthly
installment of insurance premiums payable hereunder may be adjusted by written notice from
Landlord.

SECTION 30. FIXTURES

     Provided that Tenant shall repair any damage caused by removal of its property and provided
that the Tenant is not in default under this Lease, Tenant shall have the right to remove from the
demised premises all of its signs, shelving, electrical, and other fixtures and equipment, window
reflectors and backgrounds and any and all other trade fixtures which it has installed in and upon
the demised premises.

SECTION 31. SURRENDER

     The Tenant covenants and agrees to deliver up and surrender to the Landlord the physical
possession of the demised premises upon the expiration of this Lease or its termination as herein
provided in as good condition and repair as the same shall be at the commencement of the initial
term, loss by fire and/or ordinary wear and tear excepted, and to deliver all of the keys to
Landlord or Landlord’s agents.

SECTION 32. HOLDING OVER

     There shall be no privilege of renewal hereunder (except as specifically set forth in this
Lease) and any holding over after the expiration by the Tenant shall be from day to day on the same
terms and conditions (with the exception of rental which shall be prorated on a daily basis at
twice the daily rental rate of the most recent expired term) at Landlord’s option; and no
acceptance of rent by or act or statement whatsoever on the part of the Landlord or his duly
authorized agent in the absence of a written contract signed by Landlord shall be construed as
an extension of the term or as a consent for any further occupancy.

SECTION 33. NOTICE

Whenever under this Lease provisions are made for notice of any kind to Landlord, it shall be
deemed sufficient notice and sufficient service thereof if such notice to Landlord is in writing,
addressed to Landlord at c/o Schottenstein Management Company, 1800 Moler Road, Columbus, Ohio
43207, or at such address as Landlord may notify Tenant in writing, and deposited in the United
States mail by certified mail, return receipt requested, with postage prepaid or Federal Express,
Express Mail or such other expedited mail service as normally results in overnight delivery, with a
copy of same sent in like manner to President, Real Estate, 1800 Moler Road, Columbus, Ohio 43207.
Notice to Tenant shall be sent in like manner to 25 Corporate Drive, Suite 400, Burlington, MA
01803, with copies of same sent to (i) General Counsel, 3241 Westerville Road, Columbus, Ohio
43224-3751 and (ii) Randall S. Arndt, Esq., Schottenstein Zox & Dunn, 250 West Street, Columbus,
Ohio 43215. All notices shall be effective upon receipt or refusal of receipt. Either party may
change the place for service of notice by notice to the other party.

 

 

SECTION 34. DEFAULT

     (a) Elements of Default: The occurrence of any one or more of the following events shall
constitute a default of this Lease by Tenant:

     1. Tenant fails to pay any monthly installment of rent within ten (10) days after the same
shall be due and payable, except for the first two (2) times in any consecutive twelve (12) month
period, in which event Tenant shall have five (5) days after receipt of written notice of such
failure to pay before such failure shall constitute a default;

     2. Tenant fails to perform or observe any term, condition, covenant or obligation required to
be performed or observed by it under this Lease for a period of twenty (20) days after notice
thereof from Landlord; provided, however, that if the term, condition, covenant or obligation to be
performed by Tenant is of such nature that the same cannot reasonably be cured within twenty (20)
days and if Tenant commences such performance or cure within said twenty (20) day period and
thereafter diligently undertakes to complete the same, then such failure shall not be a default
hereunder if it is cured within a reasonable time following Landlord’s notice, but in no event
later than forty-five (45) days after Landlord’s notice.

     3. If Tenant refuses to take possession of the demised premises as required pursuant to this
Lease or abandons the demised premises for a period of thirty (30) days or substantially ceases to
operate its business or to carry on its normal activities in the demised premises as required
pursuant to this Lease.

     4. A trustee or receiver is appointed to take possession of substantially all of Tenant’s
assets in, on or about the demised premises or of Tenant’s interest in this Lease (and Tenant or
any guarantor of Tenant’s obligations under this Lease does not regain possession within sixty (60)
days after such appointment); Tenant makes an assignment for the benefit of creditors; or
substantially all of Tenant’s assets in, on or about the demised premises or Tenant’s interest in
this Lease are attached or levied upon under execution (and Tenant does not discharge the same
within sixty (60) days thereafter).

     5. A petition in bankruptcy, insolvency, or for reorganization or arrangement is filed by or
against Tenant or any guarantor of Tenant’s obligations under this Lease pursuant to any Federal or
state statute, and, with respect to any such petition filed against it, Tenant or such guarantor
fails to secure a stay or discharge thereof within sixty (60) days after the filing of the same.

     (b) Landlord’s Remedies: Upon the occurrence of any event of default, Landlord shall have the
following rights and remedies, any one or more of which may be exercised without further notice to
or demand upon Tenant:

     1. Landlord may re-enter the demised premises and cure any default of Tenant, in which event
Tenant shall reimburse Landlord for any cost and expenses which Landlord may incur to cure such
default; and Landlord shall not be liable to Tenant for any loss or damage which Tenant may sustain
by reason of Landlord’s action.

     2. Landlord may terminate this Lease or Tenant’s right to possession under this Lease as of
the date of such default, without terminating Tenant’s obligation to pay rent due hereunder, in
which event (A): neither Tenant nor any person claiming under or through Tenant shall thereafter be
entitled to possession of the demised premises, and Tenant shall immediately thereafter surrender
the demised premises to Landlord; (B) Landlord may re-enter the demised premises and dispose Tenant
or any other occupants of the demised premises by force, summary proceedings, ejectment or
otherwise, and may remove their effects, without prejudice to any other remedy which Landlord may
have for possession or arrearages in rent; and (C) notwithstanding a termination of this Lease,
Landlord may re-let all or any part of the demised premises for a term different from that which
would otherwise have constituted the balance of the term of this Lease and for rent and on terms
and conditions different from those contained herein, whereupon Tenant shall immediately be
obligated to pay to Landlord as liquidated damages the difference between the rent provided for
herein and that provided for in any lease covering a subsequent re-letting of the demised premises,
for the period which would otherwise have constituted the balance of the term of this Lease,
together with all of Landlord’s costs and

 

 

expenses for preparing the demised premises for
re-letting, including all repairs, tenant finish improvements, broker’s and attorney’s fees, and
all loss or damage which Landlord may sustain by reason of such termination, re-entry and
re-letting, it being expressly understood and agreed that the liabilities and remedies specified
herein shall survive the termination of this Lease. Notwithstanding a termination of this Lease by
Landlord, Tenant shall remain liable for payment of all rentals and other charges and costs imposed
on Tenant herein, in the amounts, at the times and upon the conditions as herein provided.
Landlord shall credit against such liability of the Tenant all amounts received by Landlord from
such re-letting after first reimbursing itself for all reasonable costs incurred in curing Tenant’s
defaults and re-entering, preparing and refinishing the demised premises for re-letting, and
re-letting the demised premises.

     3. Upon termination of this Lease pursuant to Section 34(b)2, Landlord may recover possession
of the demised premises under and by virtue of the provisions of the laws of the State of New York,
or by such other proceedings, including reentry and possession, as may be applicable.

     4. If the Tenant shall not remove all of Tenant’s property from said demised premises as
provided in this Lease, Landlord, at its option, may remove any or all of said property in any
manner that Landlord shall choose and store same without liability for loss thereof, and Tenant
will pay the Landlord, on demand, any and all reasonable expenses incurred in such removal and
storage of said property for any length of time during which the same shall be in possession of
Landlord or in storage, or Landlord may, upon thirty (30) days prior notice to Tenant, sell any or
all of said property in such manner and for such price as the Landlord may reasonably deem best and
apply the proceeds of such sale upon any amounts due under this Lease from the Tenant to the
Landlord, including the reasonable expenses of removal and sale.

     5. Any damage or loss of rent sustained by Landlord may be recovered by Landlord, at
Landlord’s option, at the time of the reletting, or in separate actions, from time to time, as said
damage shall have been made more easily ascertainable by successive relettings, or at Landlord’s
option in a single proceeding deferred until the expiration of the term of this Lease (in which
event Tenant hereby agrees that the cause of action shall not be deemed to have accrued until the
date of expiration of said term) or in a single proceeding prior to either the time of reletting or
the expiration of the term of this Lease.

     6. In the event of a breach by Tenant of any of the covenants or provisions hereof, Landlord
shall have the right of injunction and the right to invoke any remedy allowed at law or in equity
as if reentry, summary proceedings, and other remedies were not provided for herein. Mention in
this Lease of any particular remedy shall not preclude Landlord from any other remedy, in law or in
equity. Tenant hereby expressly waives any and all rights of redemption granted by or under any
present or future laws in the event of Tenant being evicted or dispossessed for any cause, or in
the event of Landlord obtaining possession of the demised
premises by reason of the violation by Tenant of any of the covenants and conditions of this Lease
or other use.

     7. Tenant hereby expressly waives any and all rights of redemption granted by or under any
present or future laws, in the event of eviction or dispossession of Tenant by Landlord under any
provision of this Lease. No receipt of monies by Landlord from or for the account of Tenant or
from anyone in possession or occupancy of the demised premises after the termination of this Lease
or after the giving of any notice shall reinstate, continue or extend the term of this Lease or
affect any notice given to the Tenant prior to the receipt of such money, it being agreed that
after the service of notice or the commencement of a suit, or after final judgment for possession
of said demised premises, the Landlord may receive and collect any rent or other amounts due
Landlord and such payment shall not waive or affect said notice, said suit or said judgment.

     (c) Additional Remedies and Waivers: The rights and remedies of Landlord set forth herein
shall be in addition to any other right and remedy now or hereinafter provided by law and/or equity
and all such rights and remedies shall be cumulative and shall not be deemed inconsistent with each
other, and any two or more or all of said rights and remedies may be exercised at the same time or
at different times and from time to time without waiver thereof of any right or remedy provided or
reserved to Landlord. No action or inaction by Landlord shall

 

 

constitute a waiver of a default and
no waiver of default shall be effective unless it is in writing, signed by the Landlord.

     (d) Default by Landlord. Any failure by Landlord to observe or perform any provision,
covenant or condition of this Lease to be observed or performed by Landlord, if such failure
continues for thirty (30) days after written notice thereof from Tenant to Landlord, shall
constitute a default by Landlord under this Lease, provided, however, that if the nature of such
default is such that the same cannot reasonably be cured within a thirty (30) day period, Landlord
shall not be deemed to be in default if it shall commence such cure within such thirty (30) day
period and thereafter rectify and cure such default with due diligence.

     (e) Interest on Past Due Obligations: All monetary amounts required to be paid by Tenant or
Landlord hereunder which are not paid on or before the due date thereof shall, from and after such
due date, bear interest at the Interest Rate, and shall be due and payable by such party without
notice or demand.

     (f) Tenant’s Remedies. In the event of default by the Landlord with respect to the demised
premises, Tenant shall have the option to cure said default. Landlord shall reimburse Tenant for
the reasonable costs incurred by Tenant in curing such default within thirty (30) days after
invoice thereof by Tenant, together with reasonable evidence supporting such invoiced amount.
Tenant shall also have any and all rights available under the laws of the state in which the
demised premises are situated; provided, however, that any right of offset available to Tenant
shall be subject to the provisions of Section 36 below.

SECTION 35. WAIVER OF SUBROGATION

     Landlord and Tenant, and all parties claiming under each of them, mutually release and
discharge each other from all claims and liabilities arising from or caused by any casualty or
hazard covered or required hereunder to be covered in whole or in part by insurance coverage
required to be maintained by the terms of this Lease on the demised premises or in connection with
the Shopping Center or activities conducted with the demised premises, and waive any right of
subrogation which might otherwise exist in or accrue to any person on account thereof. All
policies of insurance required to be maintained by the parties hereunder shall contain waiver of
subrogation provisions so long as the same are available.

SECTION 36. LIABILITY OF LANDLORD; EXCULPATION

     (a) Except with respect to any damages resulting from the gross negligence of Landlord, its
agents, or employees, or resulting from the breach of Landlord’s obligations hereunder, Landlord
shall not be liable to Tenant, its agents, employees, or customers for any damages, losses,
compensation, accidents, or claims whatsoever. The foregoing notwithstanding, it is expressly
understood and agreed that nothing in this Lease contained shall be construed as
creating any liability whatsoever against Landlord personally, and in particular without
limiting the generality of the foregoing, there shall be no personal liability to pay any
indebtedness accruing hereunder or to perform any covenant, either express or implied, herein
contained, or to keep, preserve or sequester any property of Landlord and that all personal
liability of Landlord to the extent permitted by law, of every sort, if any, is hereby expressly
waived by Tenant, and by every person now or hereafter claiming any right or security hereunder.

     (b) If the Tenant obtains a money judgment against Landlord, any of its officers, directors,
shareholders, partners, members or their successors or assigns under any provisions of or with
respect to this Lease or on account of any matter, condition or circumstance arising out of the
relationship of the parties under this Lease, Tenant’s occupancy of the Building or Landlord’s
ownership of the leasehold estate created by the Master Lease, Tenant shall be entitled to have
execution upon any such final, unappealable judgment only upon Landlord’s leasehold estate in the
Shopping Center and not out of any other assets of Landlord, or any of its officers, directors,
shareholders, members or partners, or their successor or assigns; and Landlord shall be entitled to
have any such judgment so qualified as to constitute a lien only on said fee simple or leasehold
estate.

 

 

     Notwithstanding the above, Tenant shall have the right to offset any final, unappealable
judgment against twenty five percent (25%) of all minimum rent and all percentage rental (but no
other additional rent components) if not paid to Tenant by Landlord within thirty (30) days
thereafter.

     (c) It is expressly agreed that nothing in this Lease shall be construed as creating any
personal liability of any kind against the assets of any of the officers, directors, members,
partners or shareholders of Tenant, or their successors and assigns.

SECTION 37. RIGHTS CUMULATIVE

     Unless expressly provided to the contrary in this Lease, each and every one of the rights,
remedies and benefits provided by this Lease shall be cumulative and shall not be exclusive of any
other of such rights, remedies and benefits or of any other rights, remedies and benefits allowed
by law.

SECTION 38. MITIGATION OF DAMAGES

     Notwithstanding any of the terms and provisions herein contained to the contrary, Landlord and
Tenant shall each have the duty and obligation to mitigate, in every reasonable manner, any and all
damages that may or shall be caused or suffered by virtue of defaults under or violation of any of
the terms and provisions of this Lease agreement committed by the other.

SECTION 39. SIGNS

     No signs shall be placed on the demised premises by Tenant except as shall comply with all
applicable governmental codes, restrictions of record in accordance with Section 7 above, sign
criteria established by Landlord or Master Landlord for the Shopping Center, and with the prior
written consent of Landlord (not to be unreasonably withheld) after sign drawings have been
submitted to Landlord by Tenant. Subject to the foregoing, Tenant shall have the right to install
its prototypical signage and awnings on the front of the demised premises as described on
Exhibit “E” attached hereto and made a part hereof. Tenant shall be entitled to pylon,
monument or other freestanding signage as shown on Exhibit “E” (and any future replacement
signage therefore).

SECTION 40. ENTIRE AGREEMENT

     This Lease shall constitute the entire agreement of the parties hereto; all prior agreements
between the parties, whether written or oral, are merged herein and shall be of no force and
effect. This Lease cannot be changed, modified, or discharged orally but only by an agreement in
writing signed by the party against whom enforcement of the change, modification or discharge is
sought.

SECTION 41. LANDLORD’S LIEN – DELETED BY INTENTION

SECTION 42.  BINDING UPON SUCCESSORS

     The covenants, conditions, and agreements made and entered into by the parties hereto shall be
binding upon and inure to the benefit of their respective heirs, representatives, successor and
assigns.

SECTION 43. HAZARDOUS SUBSTANCES

     (a) During the term of this Lease, Tenant shall not suffer, allow, permit or cause the
generation, accumulation, storage, possession, release or threat of release of any hazardous
substance or toxic material, as those terms are used in the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, and any regulations promulgated thereunder, or
any other present or future federal, state or local laws, ordinances, rules, and regulations.
Tenant shall indemnify and hold Landlord harmless from any and all liabilities, penalties, demands,
actions, costs and expenses (including without limitation reasonable attorney fees), remediation
and response costs incurred or suffered by Landlord directly or indirectly arising due to the
breach of Tenant’s obligations set forth in this Section.

 

 

Such indemnification shall survive
expiration or earlier termination of this Lease. At the expiration or sooner termination hereof,
Tenant shall return the demised premises to Landlord in substantially the same condition as existed
on the date of commencement hereof free of any hazardous substances in, on or from the demised
premises.

     (b) Landlord hereby represents and warrants that, except as set forth in that certain
Pre-Demolition Asbestos Survey Report of “Former” Toys R’ Us, 3501 Hempstead Turnpike, Levittown,
New York, CNS Job #: A26887, dated April 27, 2006, prepared by CNS Management Corp.: (i) it has not
used, generated, discharged, released or stored any hazardous substances on, in or under the
Shopping Center and has received no notice and has no knowledge of the presence in, on or under the
Shopping Center of any such hazardous substances; (ii) to Landlord’s knowledge there have never
been any underground storage tanks at the Shopping Center, whether owned by the Landlord or its
predecessors in interest; (iii) to Landlord’s knowledge there have never been accumulated tires,
spent batteries, mining spoil, debris or other solid waste (except for rubbish and containers for
normal scheduled disposal in compliance with all applicable laws) in, on or under the Shopping
Center; (iv) to Landlord’s knowledge it has not spilled, discharged or leaked petroleum products
other than de minimis quantities in connection with the operation of motor vehicles on the Shopping
Center; (v) to Landlord’s knowledge there has been no graining, filling or modification of wetlands
(as defined by federal, state or local law, regulation or ordinance) at the Shopping Center; and
(vi) to Landlord’s knowledge there is no asbestos or asbestos-containing material in the demised
premises. The representations and warranties set forth in this subparagraph shall apply to any
contiguous or adjacent property owed by the Landlord. Landlord hereby indemnifies Tenant for any
and all loss, cost, damage or expense to Tenant resulting from any misrepresentation or breach of
the foregoing representations and warranties.

     (c) It is acknowledged by the parties that DSW is causing to be performed removal/abatement of
asbestos as specifically set forth in Section 3(e) hereof, but at Landlord’s expense, as set forth
in Section 3(e); Landlord shall be responsible to cause the demised premises to be free of any
other hazardous substances not specifically included in the description of such abatement work
described in Section 3(e). Except as set forth in the preceding sentence, if any hazardous
substances are discovered at the Shopping Center (unless introduced by the Tenant, its agents or
employees) or if any asbestos or asbestos containing material is discovered in the demised premises
(unless introduced by the Tenant, its agents or employees), and removal, encapsulation or other
remediation is required by applicable laws, the Landlord immediately and with all due diligence and
at no expense to the Tenant shall take all measures necessary to comply with all applicable laws
and to remove such hazardous substances or asbestos from the Shopping Center and/or encapsulate or
remediate such hazardous substances or asbestos, which removal and/or encapsulation or remediation
shall be in compliance with all environmental laws and regulations, and the Landlord shall repair
and restore the Shopping Center at its expense. From the date such encapsulation, remediation and
restoration is complete, the rent due hereunder shall be reduced by the same percentage as the
percentage of the demised premises
which, in the Tenant’s reasonable judgment, cannot be safely, economically or practically used
for the operation of the Tenant’s business. Anything herein to the contrary notwithstanding, if in
the Tenant’s reasonable judgment, such removal, encapsulation, remediation and restoration cannot
be completed within one hundred eighty (180) days or the same is not actually completed by Landlord
within such one hundred eighty (180) day period following the date such hazardous substances or
asbestos are discovered and such condition materially adversely affects Tenant’s ability to conduct
normal business operations in the premises, then the Tenant may terminate this Lease by written
notice to the Landlord within thirty (30) days after such 180 day period, which notice shall be
effective on Landlord’s receipt thereof. Landlord shall comply with OSHA 29 CFR 1910.1001 (j) to
notify tenants, including Tenant, of asbestos related activities in the demised premises and the
Shopping Center including, but not limited to, selection of the certified/licensed asbestos
abatement contractor, scope of the abatement work, and final clearance testing procedures and
results.

SECTION 44. TRANSFER OF INTEREST

     If Landlord should sell or otherwise transfer its interest in the demised premises, upon an
undertaking by the purchaser or transferee to be responsible for all the covenants and undertakings
of Landlord accruing subsequent to the date of such sale or transfer, Tenant agrees that Landlord
shall thereafter have no liability to Tenant under this Lease or any modifications or

 

 

amendments
thereof, or extensions thereof, except for such liabilities which might have accrued prior to the
date of such sale or transfer of its interest by Landlord.

SECTION 45. ACCESS TO PREMISES

     Landlord and its representatives shall have free access to the demised premises at all
reasonable times for the purpose of: (a) examining the same or to make any alterations or repairs
to the demised premises that Landlord may deem necessary for its safety or preservation; (b)
exhibiting the demised premises for sale or mortgage financing; (c) during the last three (3)
months of the term of this Lease, for the purpose of exhibiting the demised premises and putting up
the usual notice “for rent” which notice shall not be removed, obliterated or hidden by Tenant,
provided, however, that any such action by Landlord shall cause as little inconvenience as
reasonably practicable and such action shall not be deemed an eviction or disturbance of Tenant nor
shall Tenant be allowed any abatement of rent, or damages for an injury or inconvenience occasioned
thereby.

SECTION 46. HEADINGS

     The headings are inserted only as a matter of convenience and for reference and in no way
define, limit or describe the scope or intent of this Lease.

SECTION 47. NON-WAIVER

     No payment by Tenant or receipt by Landlord or its agents of a lesser amount than the rent in
this Lease stipulated shall be deemed to be other than on account of the stipulated rent nor shall
an endorsement or statement on any check or any letter accompanying any check or payment of rent be
deemed an accord and satisfaction and Landlord or its agents may accept such check or payment
without prejudice to Landlord’s right to recover the balance of such rent or pursue any other
remedy in this Lease provided.

SECTION 48. SHORT FORM LEASE

     This Lease shall not be recorded, but a short form lease, which describes the property herein
demised, gives the term of this Lease and refers to this Lease, shall be executed by the parties
hereto, upon demand of either party and such short form lease may be recorded by Landlord or Tenant
at any time either deems it appropriate to do so. The cost and recording of such short form lease
shall belong to the requesting party.

SECTION 49. ESTOPPEL CERTIFICATE

     Each party agrees that at any time and from time to time on ten (10) days prior written
request by the other, it will execute, acknowledge and deliver to the requesting party a statement
in writing stating that this Lease is unmodified and in full force and effect (or, if there have
been modifications, stating the modifications, and that the Lease as so modified is in full force
and effect, and the dates to which the rent and other charges hereunder have been paid, and such
other information as may reasonably re requested, it being intended that any such statements
delivered pursuant to this Section may be relied upon by any current or prospective purchaser of or
any prospective holder of a mortgage or a deed of trust upon or any interest in the fee or any
leasehold or by the mortgagee, beneficiary or grantee of any security or interest, or any assignee
of any thereof or under any mortgage, deed of trust or conveyance for security purposes now or
hereafter done or made with respect to the fee of or any leasehold interest in the demised
premises.

SECTION 50. MASTER LEASE CONTINGENCIES 

     This Lease and the liability of Tenant hereunder is and shall be wholly contingent upon Tenant
obtaining, on or before September 30, 2006, the following:

	 	(i)	 	a copy of a Subordination, Non-disturbance and Attornment Agreement in form
and substance reasonably acceptable to Tenant duly executed by the holder of any
mortgage or deed of trust on the Shopping Center, pursuant to which the lender agrees
to recognize the leasehold rights created by the Master Lease in the event that Master
Landlord shall default under such mortgage or deed of trust; and

 

 

	 	(ii)	 	such other consents, approvals or information that Tenant may reasonably
require pursuant to its review of the Master Lease.

SECTION 51. PROVISIONS WITH RESPECT TO MASTER LEASE

     (a) Consents and Approvals. Wherever pursuant to the Master Lease and this Lease the
consent and/or approval of the Master Landlord and Landlord is required, Landlord’s refusal to
consent to or approve any matter or thing shall be deemed reasonable if the consent or approval of
Master Landlord is required, and despite Landlord’s commercially reasonable efforts, such consent
or approval has not been obtained from Master Landlord. In the event that Tenant seeks the
consent or approval of Master Landlord, Tenant shall submit such request to Landlord and Landlord
shall promptly thereafter submit such request to Master Landlord and use commercially reasonable
efforts to obtain on behalf of Tenant such consent or approval of Master Landlord, but at no cost
or expense to Landlord.

     (b) Master Landlord Default and Remedy. If Master Landlord fails to perform any
obligation which it has under the Master Lease and such failure materially adversely effects the
rights of Tenant hereunder or its ability to use, operate and maintain its business in the
premises, then Tenant shall prepare and deliver to Landlord a written notice specifying such
failure to perform in reasonable detail. Landlord shall promptly thereafter transmit such notice
to Master Landlord and shall use commercially reasonable efforts to cause Master Landlord to
perform such obligation. If, despite Landlord’s reasonable efforts, Master Landlord fails to timely
perform such obligation as required by the Master Lease, Landlord hereby assigns to Tenant the
right, at Landlord’s expense, to enforce such obligations against Master Landlord on behalf of
Landlord. Landlord agrees to cooperate with Tenant in such enforcement efforts, at no expense to
Tenant, and shall permit Tenant to undertake such efforts in Landlord’s name, if necessary in order
to effectively prosecute such enforcement actions. The foregoing is in addition to any and all
other remedies available to Tenant under this Sublease or at law or in equity, including but not
limited to, exercise of “self-help” remedies.

SECTION 52. BROKER

     Landlord and Tenant each represent to the other that they have not entered into any agreement
or incurred any obligation in connection with this transaction which might result in the obligation
to pay a brokerage commission to any broker other than E.M.B. Associates, Inc. Landlord agrees to
be solely responsible for any and all commission due to such broker pursuant to a separate written
agreement between Landlord and such broker. Each party shall indemnify and hold the other party
harmless from and against any claim or demand by any broker or other person for bringing about this
Lease who claims to have dealt with such indemnifying party,
including all expenses incurred in defending any such claim or demand (including reasonable
attorney’s fees).

SECTION 53. UNAVOIDABLE DELAYS

     In the event either party hereto (the “Delayed Party”) shall be delayed or hindered in or
prevented from the performance of any act required under this Lease by reason of strikes, lockouts,
labor troubles, inability to procure materials, failure of power, the unforeseen application of
restrictive governmental laws or regulations, riots, insurrection, war, acts of terrorism or other
reason of a like nature not the fault of the Delayed Party in performing work or doing acts
required under the terms of this Lease, then performance of such act shall be excused for the
period of the delay, and the period for the performance of any such act shall be extended for a
period equivalent to the period of such delay, provided that the Delayed Party notified the other
party within fifteen (15) days of the Delayed Party being informed of the occurrence of the event
causing such delay. The provisions of this Section 53 shall not operate to excuse either party
from the payment of any rental or other monetary sums due under the terms of this Lease.

SECTION 54. TIMELY EXECUTION OF LEASE

     Landlord and Tenant agree that this Lease, and the parties’ obligations hereunder, shall
automatically be null and void and this Lease shall terminate automatically without further action
of the parties if both parties do not execute this Lease and both parties have not received

 

 

an
original thereof within sixty (60) days after the date of execution hereof by the first party to
execute this Lease.

SECTION 55. ACCORD AND SATISFACTION

     No payment by Tenant or receipt by Landlord of a lesser amount than the entire rent and all
other additional rents and charges hereunder shall be deemed to be other than payment on account of
the earliest stipulated rent and other additional rents and charges hereunder, nor shall any
endorsement or statement on any check or any letter accompanying any check or payment for rent or
other additional rent and charges be deemed an accord and satisfaction, and Landlord may accept
such check or payment without prejudice to Landlord’s right to recover the balance of such rent and
other additional rents and charges or pursue any other right or remedy available to the Landlord.

SECTION 56. WAIVER OF JURY TRIAL

     The Landlord and Tenant do hereby knowingly, voluntarily and intentionally waive the right to
a trial by jury of any and all issues either now or hereinafter provided by law in any action or
proceeding between the parties hereto, or their successors, arising directly or indirectly out of
or in any way connected with this Lease or any of its provisions, the Tenant’s use or occupancy of
said premises and/or any claim for personal injury or property damage including, without
limitation, any action to rescind or cancel this Lease, and any claim or defense asserting that
this Lease was fraudulently induced or is otherwise void or voidable. It is intended that said
waiver shall apply to any and all defenses, rights and/or counterclaims in any action or proceeding
at law or in equity. This waiver is a material inducement for Landlord and Tenant to enter into
this Lease.

SECTION 57. LEASEHOLD FINANCING

     (a) Tenant’s Financing Rights. Landlord acknowledges and agrees that Tenant may from time to
time during the term, without the consent of Landlord, mortgage or otherwise finance and encumber,
whether by leasehold deed of trust or mortgage, collateral assignment of this Lease,
lease/sublease-back, and/or assignment/leaseback, any and/or all of its leasehold estate hereunder,
and property and rights in and to the Leased Premises granted to it under this Lease, as security
for the payment of an indebtedness (any and all of which are herein referred to as a “Leasehold
Mortgage” and the holder thereof is herein referred to as “Leasehold Mortgagee”). Any such
Leasehold Mortgage shall be a lien only upon Tenant’s leasehold estate hereunder and Tenant’s
interests in this Lease. Leasehold Mortgagee or its assigns may enforce such Leasehold Mortgage and
acquire title to the leasehold estate and Tenant’s interest in the
Leased Premises in any lawful way, and in connection therewith Leasehold Mortgagee may take
possession of and rent the Leased Premises.

     (b) Cooperation with Leasehold Mortgagee. Tenant shall notify Landlord (and any Fee Mortgagee,
as hereinafter defined in Section 57(c) below), in the manner hereinafter provided for the giving
of notice, of the execution of such Leasehold Mortgage and the name and place for service of notice
upon Leasehold Mortgagee. Upon such notification of Landlord that Tenant has entered into a
Leasehold Mortgage, Landlord hereby agrees for the benefit of such Leasehold Mortgagee, and upon
written request by Tenant, to execute and deliver to Tenant and Leasehold Mortgagee: (i) a
commercially reasonable “Landlord’s Agreement” and (ii) a commercially reasonable “Landlord’s
Waiver”, as described in Section 57(d) below. Landlord further agrees that it will comply with all
of the covenants and obligations contained in said documents.

     (c) Tenant shall notify Landlord (and any Landlord Mortgagee, as hereinafter defined in
Section 57(e) below), in the manner hereinafter provided for the giving of notice, of the execution
of such Leasehold Mortgage and the name and place for service of notice upon Leasehold Mortgagee.
Upon such notification of Landlord that Tenant has entered into a Leasehold Mortgage, Landlord
hereby agrees for the benefit of such Leasehold Mortgagee, and upon written request by Tenant, to
execute and deliver to Tenant and Leasehold Mortgagee a “Landlord’s Agreement” whereby Landlord
agrees to recognize the interest of Leasehold Mortgagee and any Successor-Tenant hereunder, on
commercially reasonable terms and conditions acceptable to Leasehold Mortgagee.

 

 

     (d) Landlord does hereby waive any statutory or other lien of the Landlord in Tenant’s present
and after-acquired assets, including among other things, Tenant’s inventory and equipment. To
evidence such waiver for the benefit of any lender of Tenant, Landlord shall, upon request, execute
and deliver to Tenant a commercially reasonable “Landlord’s Waiver”.

     (e) Landlord Mortgagee. Landlord represents to Tenant that as of the date of this Lease there
is no mortgage encumbering Landlord’s leasehold interest in the Building or common areas, and that
there will not be such a mortgage for at least sixty (60) days after the date this Lease is fully
executed by Landlord and Tenant.

SECTION 58. TENANT ALLOWANCE

     Provided Tenant is not in default under any of the terms and conditions contained herein,
Landlord shall reimburse Tenant for a portion of the cost of Tenant’s Work within the demised
premises, in the amount and manner hereinafter provided. The amount of such reimbursement shall
hereinafter be referred to as “Tenant’s Allowance.” It is understood and agreed that Tenant’s
Allowance shall be a reimbursement for a portion of the actual cost incurred by Tenant to complete
Tenant’s Work within the demised premises as detailed on Exhibit C. Tenant’s Allowance shall be
equal to One Million Seven Hundred Eight Thousand Dollars ($1,708,000.00).

     Landlord shall pay Tenant’s Allowance to Tenant as follows:

(a) Five Hundred Seventy Thousand Dollars ($570,000.00) shall be paid to Tenant at such time
as Tenant submits to Landlord (i) a draw request for such amount, (ii) an original notarized
affidavit of Tenant’s general contractor certifying that one-third of Tenant’s Work has been
completed in accordance with the plans and specifications described on Exhibit C and (iii)
an original notarized waiver of liens with respect to the premises, executed by Tenant’s
general contractor;

(b) Five Hundred Seventy Thousand Dollars ($570,000.00) shall be paid to Tenant at such time
as Tenant submits to Landlord (i) a draw request for such amount, (ii) an original notarized
affidavit of Tenant’s general contractor certifying that two-thirds of Tenant’s Work has
been completed in accordance with the plans and specifications described on Exhibit C and
(iii) an original notarized waiver of liens with respect to the premises, executed by
Tenant’s general contractor; and

(c) The balance of the Tenant Allowance (Five Hundred Sixty-Eight Thousand Dollars
[$568,000.00]) when Tenant has opened for business in the premises, paid the minimum rent
and additional rent under Section 5(c) of this Lease for the first month of the term of this
Lease and furnished to Landlord the following:

(1) An original notarized affidavit of Tenant’s general contractor stating that (i)
Tenant’s Work has been fully completed in accordance with the plans and specifications
approved by Landlord, subject, however, to Landlord’s verification thereof, and (ii)
all subcontractors, laborers and material suppliers have been paid in full;

(2) An original notarized waiver of liens with respect to the Premises, executed by
Tenant’s general contractor; and

(3) A certificate of use and occupancy for the Premises issued by the appropriate
governmental authority.

     Notwithstanding anything to the contrary contained herein, including Section 36 hereof, in the
event Landlord does not timely pay the Tenant Reimbursement to Tenant, (a) Landlord shall pay to
Tenant interest on such unpaid amounts at eighteen percent (18%) per annum and (b) Tenant shall
have the right to deduct any and all such amounts owed Tenant against all minimum rent and all
percentage rental (but no other additional rent components ) thereafter due Landlord until
such time as Tenant has been credited the full amount of the Tenant Reimbursement plus applicable
interest.

 

 

     Notwithstanding anything to the contrary contained herein, Landlord reserves the right to
offset against Tenant’s Allowance any delinquent amounts due to Landlord by Tenant accrued
hereunder. In the event this Lease shall be terminated for any reason prior to the natural
expiration of the term of this Lease, Tenant shall pay to Landlord the unamortized portion of
Tenant’s Allowance, said amortization to be computed based upon a fifteen (15) year term commencing
on the commencement date, and an annual interest of eighteen percent (18%). All tenant
improvements and fixtures which are not personal property paid for with the Tenant’s Allowance
(“Tenant Improvement Fixtures”) shall, at all times during the term of the Lease and upon the
expiration or earlier termination of the Lease, be the property of Landlord. Tenant shall not
acquire any interest, equitable or otherwise, in any Tenant Improvement Fixtures.

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