EXHIBIT 1.1
14,062,500 SHARES
DSW INC.
CLASS A COMMON SHARES
UNDERWRITING AGREEMENT
June 2005
▇▇▇▇▇▇ BROTHERS INC .
▇▇▇▇▇▇▇, SACHS & CO.
CIBC WORLD MARKETS CORP.
▇▇▇▇▇▇▇ ▇▇▇▇ & COMPANY, L.L.C.
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
DSW INC., an Ohio corporation (formerly known as Shonac Corporation) (the
"COMPANY") and Retail Ventures Inc., an Ohio corporation and the direct parent
of the Company ("RETAIL VENTURES") propose to enter into this Agreement, whereby
the Company proposes to sell an aggregate of 14,062,500 shares (the "FIRM
SHARES") of the Company's Class A Common Shares, without par value (the "COMMON
SHARES.")
It is understood that, subject to the conditions hereinafter stated,
14,062,500 Firm Shares will be sold to the several Underwriters named in
Schedule 1 hereto (the "UNDERWRITERS") in connection with the offering and sale
of such Firm Shares in the United States and Canada to United States and
Canadian Persons. ▇▇▇▇▇▇ Brothers Inc., ▇▇▇▇▇▇▇, Sachs & Co., CIBC World Markets
Corp. and ▇▇▇▇▇▇▇ ▇▇▇▇ & Company, L.L.C. shall act as representatives (the
"REPRESENTATIVES") of the several Underwriters.
In addition, the Company proposes to grant to the Underwriters an option
to purchase up to an additional 2,109,375 Common Shares on the terms and for the
purposes set forth in Section 2 (the "OPTION SHARES"). The Firm Shares and the
Option Shares, if purchased, are hereinafter collectively called the "SHARES."
This is to confirm the agreement concerning the purchase of the Shares from the
Company by the Underwriters.
The Company understands that the Underwriters propose to consummate a
public offering of the Shares as soon as the Representatives deem advisable
after the registration
statement on Form S-1 with respect to the Shares becomes effective and this
Agreement has been executed and delivered.
It is understood by the parties hereto that, simultaneously with or prior
to the consummation of the sale of the Company's Common Shares contemplated
hereby, the Company and Retail Ventures have entered into or expect to enter
into a series of related transactions providing for the separation of the
Company's business from that of Retail Ventures. These transactions include: (i)
the amendment and restatement by Value City Department Stores LLC, an Ohio
corporation ("VALUE CITY") and the other parties thereto of the existing Value
City revolving credit facility, the amendment, restatement and repayment of a
portion of the principal amount outstanding under the existing Value City senior
subordinated convertible loan facility, the amendment and repayment in full of
the existing Value City term loan facility and the release of the Company from
its obligations under each such facility, in each case as described in the
Prospectus (as such term is defined herein); (ii) the issuance by Retail
Ventures of warrants to purchase common shares of Retail Ventures or Class A
Common Shares of the Company held or to be held by Retail Ventures to certain of
Value City's lenders in connection with the amendment and restatement of the
existing Value City senior subordinated convertible loan facility and the
amendment of the existing warrants issued by Retail Ventures in connection with
the Value City term loan facility to permit the holders thereof to purchase
common shares of Retail Ventures or Class A Common Shares of the Company held or
to be held by Retail Ventures, in each case as described in the Prospectus;
(iii) the entering into by the Company of a registration rights agreement
relating to the Class A Common Shares of the Company underlying the warrants
described in clause (ii) above; (iv) the repayment by the Company of certain
intercompany indebtedness to Retail Ventures; (v) the change of the Company's
existing common shares into Class B Common Shares (the "RECAPITALIZATION"); (vi)
the entering into by the Company of a new $150 million five-year senior secured
credit facility; (vii) the amendment by Retail Ventures, Schottenstein Stores
Corporation and Schottenstein Management Company of an existing Corporate
Services Agreement and the entering into by the Company, Schottenstein Stores
Corporation and Schottenstein Management Company of a supplemental letter
agreement relating thereto; (viii) the entering into by the Company and Filene's
Basement Inc. of a Supply Agreement whereby the Company will supply merchandise
to Filene's Basement stores; and (ix) the entering into by the Company, Value
City and Retail Ventures of the Intercompany Agreements, as such term is defined
herein (such transactions, collectively, the "TRANSACTIONS.")
Section 1. Representations, Warranties and Agreements of the Company and
Retail Ventures. The Company and Retail Ventures, jointly and severally,
represent, warrant and agree with the Underwriters that:
(a) A registration statement on Form S-1 with respect to the Shares has
(i) been prepared by the Company in conformity with the requirements of the
Securities Act
2
of 1933, as amended (the "SECURITIES ACT"), and the rules and regulations (the
"RULES AND REGULATIONS") of the Securities and Exchange Commission (the
"COMMISSION") thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities Act. Copies of
such registration statement and each of the amendments thereto have been
delivered by the Company to you. As used in this Agreement, "EFFECTIVE TIME"
means the date and the time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared effective by the
Commission; "EFFECTIVE DATE" means the date of the Effective Time; "PRELIMINARY
PROSPECTUS" means each prospectus included in such registration statement, or
amendments thereof, before it became effective under the Securities Act and any
prospectus filed with the Commission by the Company with the consent of the
Representatives pursuant to Rule 424(a) of the Rules and Regulations;
"REGISTRATION STATEMENT" means such registration statement, as amended at the
Effective Time, including all information contained in the final prospectus
filed with the Commission pursuant to Rule 424(b) of the Rules and Regulations
and deemed to be a part of the registration statement as of the Effective Time
pursuant to Rule 430A of the Rules and Regulations; and "PROSPECTUS" means the
prospectus in the form first used to confirm sales of Shares. If the Company has
filed an abbreviated registration statement to register additional Common Shares
pursuant to Rule 462(b) under the Securities Act (the "RULE 462 REGISTRATION
STATEMENT"), then any reference herein to the term "Registration Statement"
shall be deemed to include such Rule 462 Registration Statement. The Commission
has not issued any order preventing or suspending the use of any Preliminary
Prospectus.
(b) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date (as to the Registration Statement and any amendment
thereto) and as of the applicable filing date (as to the Prospectus and any
amendment or supplement thereto) contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, and the statistical and
market-related data included in the Prospectus are based on or derived from
sources which each of the Company and Retail Ventures reasonably and in good
faith believes are reliable and accurate; provided that no representation or
warranty is made as to information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or on behalf
of any Underwriter specifically for inclusion therein.
(c) The Company and DSW Shoe Warehouse Inc., a Missouri corporation and
wholly-owned subsidiary of the Company ("DSW SHOE WAREHOUSE"), (i) have been
duly incorporated and are validly existing as corporations in good standing
under the
3
laws of their respective jurisdictions of incorporation, (ii) are duly qualified
to do business and are in good standing as foreign corporations in each
jurisdiction in which their respective ownership or lease of property or the
conduct of their respective businesses requires such qualification, except where
the failure to be so qualified or in good standing would not reasonably be
expected to have, individually or in the aggregate, a material adverse effect on
the general affairs, management, business, prospects, financial position,
revenues or expenses, properties, stockholders' equity or results of operation
of the Company and DSW Shoe Warehouse taken as a whole (a "MATERIAL ADVERSE
EFFECT"), and (iii) have all power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged.
DSW Shoe Warehouse is the only subsidiary of the Company, and is a "SIGNIFICANT
SUBSIDIARY", as such term is defined in Rule 405 of the Rules and Regulations.
Except as set forth in the Prospectus, the Company does not have any direct or
indirect ownership interest by stock ownership or otherwise in any other
corporation, limited liability company, partnership, joint venture, firm,
association or business enterprise.
(d) The Company has an authorized capitalization as set forth in the
Prospectus, and all the issued shares of capital stock of the Company have been
duly and validly authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus; and all the
issued shares of capital stock of DSW Shoe Warehouse have been duly and validly
authorized and issued and are fully paid and non-assessable and are owned
directly by the Company, free and clear of all liens, encumbrances, equities or
claims, except as described in the Prospectus under the caption "Description of
Indebtedness"; and the issuance of such shares of capital stock of the Company
and each subsidiary of the Company has not been made in violation of any
preemptive or other similar rights of shareholders.
(e) Except as described in the Prospectus, the shares of capital stock of
the Company held by Retail Ventures are owned directly by Retail Ventures, free
and clear of all liens, encumbrances, equities or claims.
(f) The Shares to be issued and sold by the Company to the Underwriters
hereunder have been duly and validly authorized and, when issued and delivered
against payment therefor in accordance with this Agreement, will be duly and
validly issued, fully paid and non-assessable; and the Shares will conform to
the descriptions thereof contained in the Prospectus under the caption
"Description of Capital Stock."
(g) Each of the Master Separation Agreement, dated as of _______, 2005,
between the Company and Retail Ventures; the Shared Services Agreement, dated as
of _________, 2005, between the Company and Retail Ventures; and the Tax
Separation Agreement, dated as of __________, 2005, between the Company and
Retail Ventures; (such agreements, collectively, the "INTERCOMPANY AGREEMENTS")
has been duly authorized by each of Retail Ventures, DSW Shoe Warehouse and the
Company, as applicable, and, when duly executed and delivered by each of Retail
Ventures, DSW
4
Shoe Warehouse and the Company, as applicable, will constitute a valid and
binding obligation of Retail Ventures, DSW Shoe Warehouse and/or the Company, as
applicable, enforceable in accordance with its terms, except to the extent that
enforcement thereof may be limited by (A) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (B) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or in
equity).
(h) [Except as described in the Prospectus under the caption "Description
of Indebtedness",] DSW Shoe Warehouse is not currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on its capital stock to the Company, from repaying to the Company
any loans or advances to any such subsidiary from the Company or from
transferring title to any of its property or assets to the Company.
(i) Each of the Company and Retail Ventures has all requisite power and
authority to execute, deliver and perform its respective obligations under this
Agreement. This Agreement has been duly authorized, executed and delivered by
each of the Company and Retail Ventures.
(j) Except as disclosed in or specifically contemplated by the Prospectus,
neither the Company nor DSW Shoe Warehouse has any outstanding options to
purchase, or any preemptive rights or other rights to subscribe for or to
purchase, any shares of their capital stock or obligations convertible into, or
any contracts or commitments to issue or sell, shares of their capital stock or
any such options, rights convertible securities or obligations.
(k) The execution, delivery and performance of this Agreement, each of the
other documents specified in Schedule 2 to be entered into in connection with
the Transactions by the Company, DSW Shoe Warehouse and Retail Ventures (such
agreements, collectively, the "APPLICABLE CONTRACTS") and the Intercompany
Agreements, and the consummation of the transactions contemplated hereby and
thereby will not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which any of
the Company, DSW Shoe Warehouse, Retail Ventures, or any of their respective
subsidiaries is a party or by which any of them or any of their respective
subsidiaries is bound or to which any of the property or assets of any of them
or any of their respective subsidiaries is subject, nor will such actions result
in any violation of the provisions of the charter or by-laws (or other
equivalent organizational document) of any of the Company, DSW Shoe Warehouse,
Retail Ventures or any of their respective subsidiaries, or any statute or any
order, rule or regulation of any court or governmental agency or body having
jurisdiction over any of them or any of their respective subsidiaries, or any of
their respective properties or assets; and except for the registration of the
Shares under the Securities Act and such consents,
5
approvals, authorizations, registrations or qualifications as may be required
under the Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT") and
applicable state and foreign securities laws in connection with the purchase and
distribution of the Shares by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement, any of the Applicable Contracts by any of the
Company, DSW Shoe Warehouse, Retail Ventures or any of their respective
subsidiaries or the Intercompany Agreements, and the consummation of the
transactions contemplated hereby and thereby, except where the failure to have
such consents, approvals, authorizations, registrations or qualifications would
not reasonably be expected to have a Material Adverse Effect.
(l) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting such
person the right to require the Company to file a registration statement under
the Securities Act with respect to any securities of the Company owned or to be
owned by such person or to require the Company to include such securities in the
securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(m) Except in connection with the Recapitalization, neither the Company
nor DSW Shoe Warehouse has sold or issued any Common Shares during the six-month
period preceding the date of the Prospectus, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act other than shares
issued pursuant to employee benefit plans, qualified stock options plans or
other employee compensation plans or pursuant to outstanding options, rights or
warrants.
(n) Neither the Company nor DSW Shoe Warehouse has sustained, since the
date of the latest audited financial statements included in the Prospectus, any
material loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any labor dispute
or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since such date, there has not been any
change in the capital stock or long-term debt of the Company or DSW Shoe
Warehouse, other than in connection with the Transactions, nor any Material
Adverse Effect, nor any development that would reasonably be expected to have a
Material Adverse Effect, in each case, otherwise than as set forth or
contemplated in the Prospectus.
(o) The financial statements (including the related notes and supporting
schedules) filed as part of the Registration Statement or included in the
Prospectus comply as to form in all material respects with the requirements of
Regulation S-X under the Securities Act and present fairly the financial
condition, results of operations and cash flows of the entities purported to be
shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting
6
principles applied on a consistent basis throughout the periods involved. The
pro forma financial statements and the related notes thereto included in the
Registration Statement and the Prospectus present fairly the information shown
therein, have been prepared in accordance with the Commission's rules and
guidelines with respect to pro forma financial statements and have been properly
compiled on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred to
therein. The other financial data, selected financial ratios and other pro forma
financial information, operating data and statistical information and data
included in the Prospectus are presented fairly and have been prepared on a
basis consistent in all material respects (except for, with respect to the pro
forma financial information, the pro forma adjustments described in the
Prospectus) with such financial statements and the books and records of the
Company and DSW Shoe Warehouse.
(p) Deloitte & Touche LLP, who have certified certain financial statements
of the Company, whose report appears in the Prospectus and who have delivered
the initial letter referred to in Section 7(g) hereof, are an independent
registered public accounting firm as required by the Securities Act and the
Rules and Regulations.
(q) Each of the Company and DSW Shoe Warehouse has good and marketable
title in fee simple to (i) all real property and (ii) good and marketable title
to all personal property owned by it that is material to the business of the
Company and DSW Shoe Warehouse taken as a whole, in each case free and clear of
all liens, charges, claims, encumbrances, pledges, security interests, defects
or other restrictions, except such as are described in the Prospectus or such as
do not materially affect the value of such property and do not materially
interfere with the use made and proposed to be made of such property by the
Company and DSW Shoe Warehouse; and all assets held under lease by the Company
and DSW Shoe Warehouse are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere with the
use made and proposed to be made of such property and buildings by the Company
and DSW Shoe Warehouse, in each case, except as described in or contemplated by
the Prospectus.
(r) The Company and DSW Shoe Warehouse carry, or are covered by, insurance
from insurers of recognized financial responsibility in such amounts and
covering such risks as they reasonably believe is adequate for the conduct of
their respective businesses and the value of their respective properties and as
is reasonable and customary for companies engaged in similar businesses in
similar industries; and all policies of insurance of the Company and DSW Shoe
Warehouse or their respective businesses, assets, employees, officers and
directors are in full force and effect in all material respects.
(s) The Company and DSW Shoe Warehouse subsidiaries own or possess
adequate rights to use all material patents, patent rights, patent applications,
trademarks,
7
service marks, service names, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights and licenses necessary for the conduct of their
respective businesses as described in the Prospectus (the "INTELLECTUAL
PROPERTY") and have no reason to believe that the conduct of their respective
businesses will conflict with, infringe or violate, and have not received any
notice of any claim of conflict with, infringement of or violation of, any such
rights of others with respect to any Intellectual Property or of any facts or
circumstances which would render any Intellectual Property invalid or inadequate
to protect the interest of the Company or DSW Shoe Warehouse therein. The
Company knows of no infringement by others of Intellectual Property owned by the
Company or DSW Shoe Warehouse that could reasonably be expected to have a
Material Adverse Effect. The Company and DSW Shoe Warehouse have taken
reasonable security measures to protect the secrecy, confidentiality and value
of their Intellectual Property and other proprietary information in all material
respects.
(t) Except as described in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or DSW Shoe Warehouse is a
party or of which any property or assets of the Company or DSW Shoe Warehouse is
the subject which, if determined adversely to the Company or DSW Shoe Warehouse,
could reasonably be expected to have a Material Adverse Effect; and to the best
of the Company's knowledge, no such proceedings are threatened or contemplated
by governmental authorities or threatened by others.
(u) There are no contracts or other documents which are required to be
described in the Prospectus or filed as exhibits to the Registration Statement
by the Securities Act or by the Rules and Regulations which have not been
described in the Prospectus or filed as exhibits to the Registration Statement.
(v) No relationship, direct or indirect, exists between or among the
Company on the one hand, and directors, officers, shareholders, other
affiliates, customers or suppliers of the Company on the other hand, which is
required to be described in the Prospectus which is not so described.
(w) No labor disturbance by the employees of the Company or DSW Shoe
Warehouse exists or, to the knowledge of the Company, is imminent, and, to the
Company's knowledge, no labor disturbance by the employees of any of its or DSW
Shoe Warehouse's principal suppliers, manufacturers or contractors exists or is
imminent, which, in either case, might be expected to have a Material Adverse
Effect.
(x) The Company has not taken, directly or indirectly, any action that has
constituted or that was designed to or might reasonably be expected to cause or
result in, under the Exchange Act or otherwise, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Common Shares.
8
(y) The Company is in compliance in all material respects with all
presently applicable provisions of the Employee Retirement Income Security Act
of 1974, as amended, including the regulations and published interpretations
thereunder ("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the Company
would have any liability; the Company has not incurred and does not expect to
incur liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the Internal
Revenue Code of 1986, as amended, including the regulations and published
interpretations thereunder (the "CODE"); and each "pension plan" for which the
Company would have any liability that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service with respect to the qualified status of such plan, and,
to the knowledge of the Company, nothing has occurred, whether by action or by
failure to act, which would cause the loss of such qualification.
(z) The Company has filed all federal, state and local income and
franchise tax returns required to be filed through the date hereof (other than
any tax returns not so required to be filed through the date hereof as a result
of the existence of any waiver or extension granted in connection with any such
tax returns) and has paid all taxes due thereon (other than tax assessments
being contested in good faith), and no tax deficiency has been determined
adversely to the Company or DSW Shoe Warehouse which has had (nor does the
Company have any knowledge of any tax deficiency which, if determined adversely
to the Company or any of its subsidiaries, could reasonably be expected to have)
a Material Adverse Effect.
(aa) Since the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, the Company has not (i) issued or granted any securities, (ii)
incurred any liability or obligation, indirect, direct or contingent, other than
non-material liabilities and obligations which were incurred in the ordinary
course of business, (iii) entered into any transaction not in the ordinary
course of business or (iv) declared, paid or made any dividend or distribution
of any kind on its capital stock.
(bb) The Company (i) makes and keeps accurate books, records and accounts
that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the Company, and (ii) maintains a system of
internal accounting controls which provides reasonable assurance that (A)
transactions are executed in accordance with management's general or specific
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements in conformity with generally accepted accounting
principles and to maintain accountability for its assets, (C) access to its
assets is permitted only in accordance with management's general or specific
authorization and (D) the recorded accountability for its assets is compared
with the
9
Company's existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(cc) The Company has established and maintains disclosure controls and
procedures (as such term is defined in Rule 13a-15(e) under the Exchange Act),
which (i) are designed to ensure that information required to be disclosed by
the Company in the reports that it files or submits under the Exchange Act is
accumulated and communicated to management, including the principal executive
and principal financial officer of the Company, or persons performing similar
functions, as appropriate to allow timely decisions regarding required
disclosure, and that such information is recorded, processed, summarized and
reported, within the time periods specified in the Rules and Regulations; (ii)
have been evaluated for effectiveness; and (iii) are effective in all material
respects to perform the functions for which they were established.
(dd) Based on an evaluation of its disclosure controls and procedures, the
Company is not aware of (i) any significant deficiency or material weakness in
the design or operation of internal controls over financial reporting which are
reasonably likely to adversely affect the Company's ability to record, process,
summarize and report financial information; or (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls over financial reporting.
(ee) Since the date of the end of the last fiscal year for which audited
financial statements are included in the Prospectus, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.
(ff) To the best knowledge of the Company, no change in any laws or
regulations is pending which could reasonably be expected to be adopted and if
adopted, could reasonably be expected to have, individually or in the aggregate
with all such changes, a Material Adverse Effect, except as set forth in or
contemplated in the Prospectus.
(gg) Neither the Company nor DSW Shoe Warehouse (i) is in violation of its
charter or by-laws (or other equivalent organizational document), (ii) is in
default in any material respect, and no event has occurred which, with notice or
lapse of time or both, would constitute such a default, in the due performance
or observance of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties or assets is subject or (iii) is in violation in any material respect
of any law, ordinance, governmental rule, regulation or court decree to which it
or its property or assets may be subject or has failed to obtain any consent,
approval, authorization, registration, qualification, license, permit,
certificate, franchise or other
10
governmental authorization or permit necessary to the ownership of its property
or to the conduct of its business (each, a "CONSENT"). No Consent contains a
materially burdensome restriction not adequately disclosed in the Registration
Statement and the Prospectus.
(hh) The minute books of each of Retail Ventures, Value City (before the
Company became a subsidiary of Retail Ventures), the Company and DSW Shoe
Warehouse have been made available to the Underwriters and contain a complete
summary of all meetings and other actions of the directors and shareholders of
each of Retail Ventures, Value City (before the Company became a subsidiary of
Retail Ventures), the Company and DSW Shoe Warehouse in all material respects
for the last five years, and reflect all transactions referred to in such
minutes accurately in all material respects.
(ii) Neither the Company nor DSW Shoe Warehouse, nor any director,
officer, agent, employee or other person associated with or acting on behalf of
the Company or DSW Shoe Warehouse, has, directly or indirectly, used any
corporate funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity; made any direct or indirect
unlawful payment to any foreign or domestic government official or employee or
to foreign or domestic political parties or campaigns from corporate funds;
violated or is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or made any bribe, rebate, payoff, influence payment, kickback or
other unlawful payment.
(jj) The operations of the Company and DSW Shoe Warehouse are and have
been conducted at all times in compliance in all material respects with
applicable financial recordkeeping and reporting requirements of the Currency
and Foreign Transactions Reporting Act of 1970, as amended, the money laundering
statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the "MONEY LAUNDERING LAWS")
and no action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or DSW Shoe Warehouse
with respect to the Money Laundering Laws is pending, or to the knowledge of the
Company, threatened.
(kk) Neither the Company nor DSW Shoe Warehouse nor, to the knowledge of
the Company, any director, officer, agent, employee or affiliate of the Company
or DSW Shoe Warehouse is currently subject to any U.S. sanctions administered by
the Office of Foreign Assets Control of the U.S. Treasury Department ("OFAC");
and the Company will not directly or indirectly use the proceeds of the
offering, or lend, contribute or otherwise make available such proceeds to any
subsidiary, joint venture partner or other person or entity, which, to the
Company's knowledge, will use such proceeds for the purpose of financing the
activities of any person currently subject to any U.S. sanctions administered by
OFAC.
11
(ll) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or DSW Shoe
Warehouse (or, to the knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the real property now or previously owned or
leased by the Company or DSW Shoe Warehouse (i) in violation of any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit or (ii)
which would require remedial action under any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit, except, in the case of clauses
(i) and (ii), for any violation or remedial action which would not reasonably be
expected to have, individually or in the aggregate with all such violations and
remedial actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any kind
onto such real property or into the environment surrounding such real property
of any toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or DSW Shoe Warehouse or with respect
to which the Company or DSW Shoe Warehouse have knowledge, except for any such
spill, discharge, leak, emission, injection, escape, dumping or release which
would not reasonably be expected to have, individually or in the aggregate with
all such spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes", "toxic
wastes", "hazardous substances" and "medical wastes" shall have the meanings
specified in any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(mm) No supplier of merchandise to the Company or DSW Shoe Warehouse has
ceased shipments of merchandise to the Company or indicated, to the Company's
knowledge, an interest in decreasing or ceasing its sales to the Company or
otherwise modifying its relationship with the Company, other than in the normal
and ordinary course of business consistent with past practices in a manner which
would not, singly or in the aggregate, result in a Material Adverse Effect.
(nn) Neither RVI nor the Company is, or, as of the applicable Delivery
Date (as hereinafter defined) after giving effect to the Transactions and the
application of the net proceeds therefrom as described in the Prospectus, will
be, an "investment company" or an entity "controlled" by an "investment company"
as defined in the Investment Company Act of 1940, as amended.
(oo) On or prior to the applicable Delivery Date (as hereinafter defined),
each of the Applicable Contracts and the Intercompany Agreements will have been
duly authorized, executed and delivered by each of the Company, DSW Shoe
Warehouse and Retail Ventures, as applicable, in substantially the form
previously provided to the Underwriters and will conform to the descriptions
thereof in the Prospectus.
(pp) The Registration Statement, the Prospectus and any Preliminary
Prospectus comply, and any further amendments or supplements thereto will
comply,
12
with any applicable laws or regulations of foreign jurisdictions in which the
Prospectus or any Preliminary Prospectus, as amended or supplemented, if
applicable, are distributed in connection with the Directed Share Program (as
such term is defined below). No consent, approval, authorization or order of, or
filing or registration with, any court or governmental agency or body, other
than such as have been obtained, is required under the securities laws and
regulations of any foreign jurisdiction in which the Directed Shares (as such
term is defined below) are offered or sold outside the United States.
(qq) Neither the Company nor Retail Ventures has distributed, nor, prior
to the later to occur of any Delivery Date and completion of the distribution of
the Shares, will either of them distribute any offering material in connection
with the offering and sale of the Shares other than the Preliminary Prospectus
and the Prospectus, and, in connection with the Directed Share Program described
in Section 3, the enrollment materials provided by ▇▇▇▇▇▇ Brothers Inc..
(rr) Neither the Company nor Retail Ventures has taken, nor will either of
them take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result in the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
Section 2. Purchase of the Shares by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell the Firm Shares to the
several Underwriters, and each of the Underwriters, severally and not jointly,
agrees to purchase the number of the Firm Shares set forth opposite that
Underwriter's name in Schedule 1 hereto. The respective purchase obligations of
the Underwriters with respect to the Firm Shares shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to purchase
up to 2,109,375 Option Shares if the Underwriters sell more than the number of
Firm Shares in the offering. Option Shares shall be purchased severally for the
account of the Underwriters in proportion to the number of Firm Shares set forth
opposite the name of such Underwriters in Schedule 1 hereto. The respective
purchase obligations of each Underwriter with respect to the Option Shares shall
be adjusted by the Representatives so that no Underwriter shall be obligated to
purchase Option Shares other than in 100 share amounts.
The price of both the Firm Shares and any Option Shares shall be $[ ] per
share.
The Company shall not be obligated to deliver any of the Shares to be
delivered by it on any Delivery Date (as hereinafter defined), except upon
payment for all the Shares to be purchased on such Delivery Date as provided
herein.
13
Section 3. Offering of Shares by the Underwriters.
Upon authorization by the Representatives of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
It is understood that approximately 703,125 Firm Shares (the "DIRECTED
SHARES") will initially be reserved by the several Underwriters for offer and
sale upon the terms and conditions set forth in the Prospectus and in accordance
with the rules and regulations of the National Association of Securities
Dealers, Inc. (the "NASD") to officers, directors, and employees of the Company
and certain persons having business relationships with the Company with Retail
Ventures and with Schottenstein Stores Corporation, a closely-held Delaware
corporation, who have heretofore delivered to ▇▇▇▇▇▇ Brothers Inc. offers or
indications of interest to purchase Firm Shares in form satisfactory to ▇▇▇▇▇▇
Brothers Inc. (such program, the "DIRECTED SHARE PROGRAM") and that any
allocation of such Firm Shares among such persons will be made in accordance
with timely directions received by ▇▇▇▇▇▇ Brothers Inc. from the Company;
provided, that under no circumstances will ▇▇▇▇▇▇ Brothers Inc. or any
Underwriter be liable to the Company or to any such person for any action taken
or omitted in good faith in connection with such Directed Share Program, unless
such action or omission was taken by such Underwriter (including for the
avoidance of doubt ▇▇▇▇▇▇ Brothers Inc.) through its own gross
negligence. It is further understood that any of such Firm Shares which are not
purchased by such persons will be offered by the Underwriters to the public upon
the terms and conditions set forth in the Prospectus.
The Company agrees to pay all fees and disbursements incurred by the
Underwriters in connection with the Directed Share Program and any stamp duties
or other taxes incurred by the Underwriters in connection with the Directed
Share Program.
Section 4. Delivery of and Payment for the Shares. Delivery of and payment
for the Firm Shares shall be made at the offices of Debevoise & ▇▇▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M., New York City time, on the
fourth full business day following the date of this Agreement or at such other
date or place as shall be determined by agreement between the Representatives
and the Company. This date and time are sometimes referred to as the "FIRST
DELIVERY DATE." On the First Delivery Date, the Company shall deliver or cause
to be delivered certificates representing the Firm Shares to the Representatives
for the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligation of each
Underwriter hereunder. Upon delivery, the Firm Shares shall be registered in
such names and in such denominations as the Representatives shall request in
writing not less than two full business days prior to the First Delivery Date.
For the purpose of expediting the checking and packaging of the certificates for
the Firm Shares, the Company shall make the certificates representing the Firm
Shares available for inspection by the
14
Representatives in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the First Delivery Date.
The option granted in Section 2 will expire 30 days after the date of this
Agreement and may be exercised in whole or in part from time to time by written
notice being given to the Company by the Representatives. Such notice shall set
forth the aggregate number of Option Shares as to which the option is being
exercised, the names in which the Option Shares are to be registered, the
denominations in which the Option Shares are to be issued and the date and time,
as determined by the Representatives, when the Option Shares are to be
delivered; provided, however, that this date and time shall not be earlier than
the First Delivery Date nor earlier than the second business day after the date
on which the option shall have been exercised nor later than the fifth business
day after the date on which the option shall have been exercised. The date and
time the Option Shares are delivered are sometimes referred to as a "SUBSEQUENT
DELIVERY DATE" and the First Delivery Date and any Subsequent Delivery Date are
sometimes each referred to as a "DELIVERY Date."
Delivery of and payment for the Option Shares shall be made at the place
specified in the first sentence of the first paragraph of this Section 4 (or at
such other place as shall be determined by agreement between the Representatives
and the Company) at 10:00 A.M., New York City time, on each such Subsequent
Delivery Date. On each such Subsequent Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Shares to be
purchased on such Subsequent Delivery Date to the Representatives for the
account of each Underwriter against payment to or upon the order of the Company
of the purchase price by wire transfer in immediately available funds. Time
shall be of the essence, and delivery at the time and place specified pursuant
to this Agreement is a further condition of the obligation of each Underwriter
hereunder. Upon delivery, the Option Shares shall be registered in such names
and in such denominations as the Representatives shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of the
certificates for the Option Shares, the Company shall make the certificates
representing the Option Shares available for inspection by the Representatives
in New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to each such Subsequent Delivery Date.
Section 5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by the Representatives
and to file such Prospectus pursuant to Rule 424(b) under the Securities Act not
later than the Commission's close of business on the second business day
following the execution and delivery of this Agreement or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the Securities Act; to
make no further amendment or any supplement to the Registration Statement or to
the Prospectus except as permitted herein; to advise the Representatives,
promptly after it receives notice thereof, of the time when any
15
amendment to the Registration Statement has been filed or becomes effective or
any supplement to the Prospectus or any amended Prospectus has been filed and to
furnish the Representatives with copies thereof; to advise the Representatives,
promptly after it receives notice thereof, of the issuance by the Commission of
any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of the qualification
of the Shares for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement or
the Prospectus or for additional information; and, in the event of the issuance
of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such qualification,
to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel for
the Underwriters a signed copy of the Registration Statement as originally filed
with the Commission, and each amendment thereto filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits) and (ii)
each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus; and, if the delivery of a prospectus is required at any time after
the Effective Time in connection with the offering or sale of the Shares and if
at such time any events shall have occurred as a result of which the Prospectus
as then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made
when such Prospectus is delivered, not misleading, or, if for any other reason
it shall be necessary to amend or supplement the Prospectus in order to comply
with the Securities Act (including, without limitation, by filing further
exhibits thereto), to notify the Representatives and, upon their request, to
prepare and furnish without charge to each Underwriter and to any dealer in
securities as many copies as the Representatives may from time to time
reasonably request of an amended or supplemented Prospectus which will correct
such statement or omission or effect such compliance.
(d) To file promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus that may, in the
judgment of the Company or the Representatives, be required by the Securities
Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the Registration
Statement or supplement to the Prospectus or any Prospectus pursuant to Rule 424
of the
16
Rules and Regulations, to furnish a copy thereof to the Representatives and
counsel for the Underwriters and obtain the consent of the Representatives to
the filing;
(f) As soon as practicable after the Effective Date, to make generally
available to the Company's securityholders and to deliver to the Representatives
an earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Securities Act and the Rules and
Regulations (including, at the option of the Company, Rule 158), it being
understood that such delivery requirement shall be deemed to be met by the
Company's timely compliance with its reporting obligations pursuant to the
Exchange Act and the rules and regulations promulgated thereunder;
(g) For a period of three years following the Effective Date, other than
information which is publicly available on the Commission's Electronic Data
Gathering, Analysis and Retrieval System, to furnish to the Representatives
copies of all materials furnished by the Company to its shareholders and all
public reports and all reports and financial statements furnished by the Company
to the principal national securities exchange upon which the Common Shares may
be listed pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or regulation of the
Commission thereunder;
(h) Promptly from time to time to take such action as the Representatives
may reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as the Representatives may request and to
comply with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to complete the
distribution of the Shares; provided that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to file a general
consent to service of process or subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose
of, or enter into any transaction or device (including, without limitation,
through the filing of a registration statement) which is designed to, or could
be expected to, result in the disposition by any person at any time in the
future of, any Common Shares or other capital stock of the Company or securities
convertible into or exchangeable for Common Shares or other capital stock of the
Company (other than (i) the issuance and sale of the Shares; (ii) the issuance
of shares pursuant to employee benefit plans, qualified stock option plans or
other employee compensation plans existing on the date hereof or (iii) pursuant
to currently outstanding options, warrants or rights granted by the Company), or
sell or grant options, rights or warrants with respect to any Common Shares or
other capital stock of the Company or securities convertible into or
exchangeable for Common Shares or other capital stock of the Company (other than
the grant of options pursuant to option plans existing on the date hereof ), or
announce any intention to do any of the foregoing,
17
or (2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such Common Shares or other capital stock of the Company, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Shares or other capital stock of the Company or other securities, in cash
or otherwise, in each case without the prior written consent of ▇▇▇▇▇▇ Brothers
Inc. on behalf of the Underwriters. Notwithstanding the foregoing, if (1) during
the last 17 days of the 180-day restricted period the Company issues an earnings
release or material news or a material event relating to the Company occurs or
(2) prior to the expiration of the 180-day restricted period, the Company
announces that it will release earnings results during the 16-day period
beginning on the last day of the 180-day period, then the restrictions imposed
by this section shall continue to apply until the expiration of the 18-day
period beginning on the issuance of the earnings release or the occurrence of
the material news or material event; and to cause each shareholder, officer and
director of the Company and each of Schottenstein Stores Corporation, Cerberus
Partners L.P. and Back Bay Capital Funding L.L.C., as holders of the warrants
issued by Retail Ventures as described in the Prospectus (the "WARRANTS") to
furnish to the Representatives, prior to the First Delivery Date, a letter or
letters, substantially in the form of Exhibit A-1 hereto (in the case of all
such persons other than Cerberus Partners L.P.) or Exhibit A-2 hereto(in the
case of Cerberus Partners L.P.), pursuant to which each such person shall agree
not to, directly or indirectly, (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any Common Shares or securities convertible into or exchangeable for
Common Shares, or announce any intention to do any of the foregoing, or (2)
enter into any swap or other derivatives transaction that transfers to another,
in whole or in part, any of the economic benefits or risks of ownership of such
Common Shares, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Shares or other securities, in cash or
otherwise, in each case for a period of 180 days (subject to the proviso above)
from the date of the Prospectus, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc. on behalf of the Underwriters;
The Company hereby undertakes to notify in writing each person who
delivers a letter agreement in the form of Exhibit A hereto if at any time the
180-day restricted period described above is extended for any reason described
in such agreement. In addition, the Company will direct the transfer agent to
place stop transfer restrictions upon any securities of the Company that are
bound by such "lock-up" agreements for the duration of the periods contemplated
in such agreements, including any extensions thereof.
For the avoidance of doubt, neither the issuance by Retail Ventures of the
Warrants nor the exercise of such Warrants by the holders thereof for Common
Shares of
18
the Company currently held by Retail Ventures during the restricted period
described above shall constitute a violation of this provision.
(j) Prior to the Effective Date, to apply for the listing of the Shares on
the New York Stock Exchange, and to use its best efforts to complete that
listing, subject only to official notice of issuance, prior to the First
Delivery Date;
(k) To apply the net proceeds from the offering of the Shares and the
Transactions as set forth in the Prospectus;
(l) In connection with the Directed Share Program, to ensure that the
Directed Shares will be restricted to the extent required by the NASD or the
rules of such association from sale, transfer, assignment, pledge or
hypothecation for a period of three months following the date of the
effectiveness of the Registration Statement, and ▇▇▇▇▇▇ Brothers Inc. will
notify the Company as to which Directed Share Participants will need to be so
restricted. At the request of ▇▇▇▇▇▇ Brothers Inc., the Company will direct the
transfer agent to place stop transfer restrictions upon such securities for such
period of time;
(m) To comply with all applicable securities and other applicable laws,
rules and regulations in each foreign jurisdiction in which the Directed Shares
are offered in connection with the Directed Share Program; and
(n) To take such steps as shall be necessary to ensure that neither the
Company nor any subsidiary shall become an "investment company" as defined in
the Investment Company Act of 1940, as amended.
Section 6. Expenses. The Company agrees to pay (a) the costs incident to
the authorization, issuance, sale and delivery of the Shares and any taxes
payable in that connection; (b) the costs incident to the preparation, printing
and filing under the Securities Act of the Registration Statement and any
amendments and exhibits thereto; (c) the costs of distributing the Registration
Statement as originally filed and each amendment thereto and any post-effective
amendments thereof (including, in each case, exhibits), any Preliminary
Prospectus, the Prospectus and any amendment or supplement to the Prospectus,
all as provided in this Agreement; (d) the costs of producing and distributing
this Agreement, any Supplemental Agreement Among Underwriters and any other
related documents in connection with the offering, purchase, sale and delivery
of the Shares; (e) the filing fees incident to securing the review by the
National Association of Securities Dealers, Inc. of the terms of sale of the
Shares); (f) any applicable listing or other fees; (g) the fees and expenses
(not in excess, in the aggregate, of $10,000) of qualifying the Shares under the
securities laws of the several jurisdictions as provided in Section 5(h) and of
preparing, printing and distributing a Blue Sky Memorandum (including related
fees and expenses of counsel to the Underwriters); (h) the costs and expenses of
the Company relating to investor presentations on any "ROAD SHOW"
19
undertaken in connection with the marketing of the offering of the Shares,
including, without limitation, documented expenses associated with the
production of road show slides and graphics, documented fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, documented travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and the
documented cost of any aircraft chartered in connection with the road show; )
(i) the costs and expenses related to the offer and sale of Shares by the
Underwriters in connection with the Directed Share Program, including the
documented fees and disbursements of counsel to the Underwriters related
thereto, the documented costs and expenses of preparation, printing and
distribution of the Directed Share Program material and all stamp duties or
other taxes incurred by the Underwriters in connection with the Directed Share
Program; and (j) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement; provided that, except as
provided in this Section 6 and in Sections 8 and 11, the Underwriters shall pay
their own costs and expenses, including the costs and expenses of their counsel,
any transfer taxes on the Shares which they may sell and the expenses of
advertising any offering of the Shares made by the Underwriters.
Section 7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of each of the
Company, DSW Shoe Warehouse and Retail Ventures contained herein, to the
performance by each of the Company, DSW Shoe Warehouse and Retail Ventures of
its respective obligations hereunder, and to each of the following additional
terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a); no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or threatened by the
Commission or any other governmental authority (domestic or foreign); and any
request of the Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall have been complied
with.
(b) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Shares, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement, the transactions contemplated hereby and the Transactions shall be
reasonably satisfactory in all material respects to counsel for the
Underwriters, and each of the Company and Retail Ventures shall have furnished
to such counsel all documents and information that they may reasonably request
to enable them to pass upon such matters.
(c) Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP shall have furnished to the
Representatives their written opinion, as counsel to the Company, addressed to
the
20
Underwriters and dated such Delivery Date, in substantially the form attached
hereto as Exhibit B.
(d) ▇▇▇▇▇ ▇. ▇▇▇▇▇, General Counsel to the Company and Retail Ventures,
shall have furnished to the Representatives her written opinion, addressed to
the Underwriters and dated such Delivery Date, in substantially the form
attached hereto as Exhibit C.
(e) Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP shall have furnished to the
Representatives their written opinion, as special counsel to the Company,
addressed to the Underwriters and dated such Delivery Date, in substantially the
form attached hereto as Exhibit D.
(f) Sonnenschein, Nath & ▇▇▇▇▇▇▇▇▇ LLP shall have furnished to the
Representatives their written opinion, as Missouri counsel to DSW Shoe
Warehouse, addressed to the Underwriters and dated such Delivery Date, in
substantially the form attached hereto as Exhibit E.
(g) The Representatives shall have received from Debevoise & ▇▇▇▇▇▇▇▇ LLP,
counsel for the Underwriters, such opinion or opinions, dated such Delivery
Date, with respect to the issuance and sale of the Shares, the Registration
Statement, the Prospectus and other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to pass
upon such matters.
(h) At the time of execution of this Agreement, the Representatives shall
have received from Deloitte & Touche LLP a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission and (ii) stating, as of the date hereof (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "COMFORT LETTERS" to underwriters in
connection with registered public offerings.
(i) With respect to the letter of Deloitte & Touche LLP referred to in the
preceding paragraph and delivered to the Representatives concurrently with the
execution of this Agreement (the "INITIAL LETTER"), the Company shall have
furnished to the Representatives a letter (the "BRING-DOWN LETTER") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with
21
the applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date of
the bring-down letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than five days
prior to the date of the bring-down letter), the conclusions and findings of
such firm with respect to the financial information and other matters covered by
the initial letters and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(j) The Company shall have furnished to the Representatives a certificate,
dated such Delivery Date, of its Chairman of the Board, its President or a Vice
President and its chief financial officer stating that:
The representations, warranties and agreements of the Company in Section 1 are
true and correct as of such Delivery Date; the Company has complied with all its
agreements contained herein; and the conditions set forth in Sections 7(a) and
7(l) have been fulfilled; and
They have carefully examined the Registration Statement and the Prospectus and,
in their opinion (A) as of the Effective Date, the Registration Statement and
Prospectus did not include any untrue statement of a material fact and did not
omit to state a material fact required to be stated therein or necessary to make
the statements therein not misleading, and (B) since the Effective Date, no
event has occurred which should have been set forth in a supplement or amendment
to the Registration Statement or the Prospectus which has not been so set forth.
(k) Retail Ventures shall have furnished to the Representatives a
certificate, dated such Delivery Date, signed by an authorized officer, stating
that the representations, warranties and agreements of Retail Ventures contained
herein are true and correct as of such Delivery Date and that Retail Ventures
have complied with all agreements contained herein to be performed by them at or
prior to such Delivery Date.
(l) (A) Neither the Company nor DSW Shoe Warehouse shall have sustained
since the date of the latest audited financial statements included in the
Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus and (B) since such date there shall not
have been any change in the capital stock or long-term debt of the Company or
DSW Shoe Warehouse or any adverse change, or any development involving a
prospective adverse change, in or affecting the general affairs, management,
financial position, shareholders' equity or results of operations of the Company
or DSW Shoe Warehouse, otherwise than as set forth or contemplated in the
Prospectus, the effect of which, in any such case described in clause (A) or
(B), is, in the judgment of the Representatives, so material and adverse as to
make it impracticable or
22
inadvisable to proceed with the public offering or the delivery of the Shares
being delivered on such Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(m) Subsequent to the execution and delivery of this Agreement there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or in the over-the-counter market, or trading in any
securities of the Company on any exchange or in the over-the-counter market,
shall have been suspended or the settlement of such trading generally shall have
been materially disrupted or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any other
regulatory body or governmental authority having jurisdiction, (ii) a banking
moratorium shall have been declared by Federal or state authorities or there
shall have occurred a material disruption in commercial banking or securities
settlement or clearance services in the United States, (iii) the United States
shall have become engaged in hostilities, there shall have been a material
escalation in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions, including without limitation as a result of
terrorist activities after the date hereof, (or the effect of international
conditions on the financial markets in the United States shall be such) as to
make it, in the judgment of the Representatives, impracticable or inadvisable to
proceed with the public offering or delivery of the Shares being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(n) The New York Stock Exchange, Inc. shall have approved the Shares for
listing, subject only to official notice of issuance.
(o) All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 8. Indemnification and Contribution.
(a) Each of the Company and Retail Ventures, jointly and severally, shall
indemnify and hold harmless each Underwriter, its officers and employees and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Shares), to which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary
23
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, or (B) in any materials or information provided to investors
by, or with the approval of, the Company in connection with the marketing of the
offering of the Shares ("MARKETING MATERIALS"), including any road show or
investor presentations made to investors by the Company (whether in person or
electronically), (ii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Marketing Materials, any material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (iii) any act or failure to act or any alleged act or failure
to act by any Underwriter in connection with, or relating in any manner to, the
Shares or the offering contemplated hereby, and that is included as part of or
referred to in any loss, claim, damage, liability or action arising out of or
based upon matters covered by clause (i) or (ii) above (provided that neither
the Company nor Retail Ventures shall be liable under this clause (iii) to the
extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct), and
shall reimburse each Underwriter and each such officer, employee or controlling
person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that neither the Company nor Retail Ventures shall be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out of,
or is based upon, any untrue statement or alleged untrue statement or omission
or alleged omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any such amendment or supplement or in any
Marketing Materials, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion therein which
information consists solely of the information specified in Section 8(e); and
provided further, that the foregoing indemnity agreement with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter who it
shall be established failed to deliver the Prospectus to the person asserting
any losses, claims, damages, liabilities and judgments caused by any untrue
statement or alleged untrue statement of a material fact or an omission or
alleged omission to state a material fact required to be stated in such
Preliminary Prospectus or necessary to make the statements in such Preliminary
Prospectus not misleading, if (A) the Company shall have furnished copies of the
Prospectus to the several Underwriters in the requisite quantity and
sufficiently in advance of the Effective Date to permit proper delivery of the
Prospectus to such person on or prior to the Effective Date; (B) such
misstatement or omission or alleged misstatement or omission was identified at
such time to such Underwriter or its counsel and cured in the Prospectus and the
Prospectus was required by law to be delivered to such person at or prior to the
written confirmation of the sale of Shares to such person
24
and (C) the timely delivery of the Prospectus to such person would have
constituted a complete defense to the losses, claims, damages, liabilities and
judgments asserted by such person. The foregoing indemnity agreement is in
addition to any liability that either of the Company or Retail Ventures may
otherwise have to any Underwriter or to any officer, employee or controlling
person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold
harmless each of the Company, Retail Ventures, each officer of the Company who
has signed the Registration Statement, each director of the Company (including
any person who, with his or her consent, is named in the Registration Statement
as about to become a director of the Company), and each person, if any, who
controls the Company within the meaning of the Securities Act, from and against
any loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company or any such director, officer or controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or in any amendment or supplement thereto, any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with written information concerning such
Underwriter furnished to the Company through the Representatives by or on behalf
of that Underwriter specifically for inclusion therein, and shall reimburse the
Company, Retail Ventures, and any such director, officer or controlling person
for any legal or other expenses reasonably incurred by the Company, Retail
Ventures, or any such director, officer or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to any of the Company, Retail Ventures or any such director,
officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of any claim or the commencement of any action, the indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under subsection 8(a) or 8(b) hereof, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under subsection 8(a) or 8(b) hereof except to the
extent it has been materially prejudiced by such failure and, provided further,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under
subsection 8(a) or 8(b) hereof. If any such claim or action shall be brought
against
25
an indemnified party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to the extent
that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Representatives shall have
the right to employ counsel to represent jointly the Representatives and those
other Underwriters and their respective officers, employees and controlling
persons who may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Underwriters against any of the Company or
Retail Ventures under this Section 8 if, in the reasonable judgment of the
Representatives, it is advisable for the Representatives and those Underwriters,
officers, employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company. Notwithstanding anything contained herein
to the contrary, if indemnity may be sought pursuant to Section 8(f) hereof in
respect of a claim or action referred to in Section 8(f), then in addition to
such separate firm for the indemnified parties, the indemnifying party shall be
liable for the fees and expenses of not more than one separate firm (in addition
to any local counsel) for the ▇▇▇▇▇▇ Brothers Entities (as defined in Section
8(f)) for the defense of any loss, claim, damage, liability or action arising
out of the Directed Share Program. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld), settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
(a) includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding and (b) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of any indemnified party, or (ii) be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with the consent of
the indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any
reason be unavailable to or insufficient to hold harmless an indemnified party
under Section 8(a) or 8(b) in respect of any loss, claim, damage or liability,
or any action in respect thereof, referred to therein, then each indemnifying
party shall, in lieu of indemnifying such indemnified party, contribute to the
amount paid or payable by such indemnified party as
26
a result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company and Retail Ventures, on the one hand, and the
Underwriters, on the other hand, from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company,
and/or Retail Ventures, on the one hand, and the Underwriters, on the other
hand, with respect to the statements or omissions which resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the Company
and Retail Ventures, on the one hand, and the Underwriters, on the other hand,
with respect to such offering shall be deemed to be in the same proportion as
the total net proceeds from the offering of the Shares purchased under this
Agreement (before deducting expenses) received by the Company, on the one hand,
and the total underwriting discounts and commissions received by the
Underwriters with respect to the Shares purchased under this Agreement, on the
other hand, bear to the total gross proceeds from the offering of the Shares
under this Agreement, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to
whether the untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company and/or Retail Ventures or the Underwriters, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company, Retail Ventures and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 8 were to be determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage or liability, or action in respect
thereof, referred to above in this Section 8 shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8(d), no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price at which the Shares underwritten by it and distributed
to the public was offered to the public exceeds the amount of any damages which
such Underwriter has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Underwriters' obligations
to contribute as provided in this Section 8(d) are several in proportion to
their respective underwriting obligations and not joint.
(e) The Underwriters severally confirm and each of the Company and Retail
Ventures acknowledges that the statements with respect to the following
information
27
contained under the caption "Underwriting" in the Prospectus are correct and
constitute the only information concerning such Underwriters furnished in
writing to the Company by or on behalf of the Underwriters specifically for
inclusion in the Registration Statement, the Prospectus and any Marketing
Materials: the second paragraph under the subheading "Commissions and Expenses";
all three of the paragraphs under the subheading "Stabilization Short Positions
and Penalty Bids"; and the paragraph under the subheading "Discretionary Sales".
(f) The Company shall indemnify and hold harmless ▇▇▇▇▇▇ Brothers Inc.
(including its directors, officers and employees) and each person, if any, who
controls ▇▇▇▇▇▇ Brothers Inc. within the meaning of Section 15 of the Securities
Act ("▇▇▇▇▇▇ BROTHERS ENTITIES"), from and against any loss, claim, damage or
liability or any action in respect thereof to which any of the ▇▇▇▇▇▇ Brothers
Entities may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action (i) arises out of, or is based
upon, any untrue statement or alleged untrue statement of a material fact
contained in any material prepared by or with the approval of the Company for
distribution to Directed Share Participants in connection with the Directed
Share Program or any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, (ii) arises out of, or is based upon, the failure of the
Directed Share Participant to pay for and accept delivery of Directed Shares
that the Directed Share Participant agreed to purchase or (iii) is otherwise
related to the Directed Share Program; provided that, with respect to clause
(ii), the Company or an affiliate of the Company has the option to pay for and
accept delivery of any and all Directed Shares for which a Directed Share
Participant fails to pay and accept delivery (provided that prior to such
purchase, the Company or such affiliate shall have received a written legal
opinion from Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP stating that such purchase
will not violate the Securities Act, the Rules and Regulations, the Exchange Act
or the rules and regulations of the Commission thereunder, including Regulation
M); provided further that, the Company shall not be liable under this clause
(iii) for any loss, claim, damage, liability or action that is determined in a
final judgment by a court of competent jurisdiction to have resulted from the
gross negligence or willful misconduct of the ▇▇▇▇▇▇ Brothers Entities. The
Company shall reimburse the ▇▇▇▇▇▇ Brothers Entities promptly upon demand for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. Retail Ventures or
any of the Company's other affiliates may satisfy the Company's obligations
under this paragraph by making any required payments on behalf of the Company.
Section 9. Defaulting Underwriters.
If, on any Delivery Date, any Underwriter defaults in the performance of
its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the Shares which the defaulting Underwriter
agreed but failed to purchase on such Delivery Date in the respective
proportions which the number of Firm Shares set opposite the name of each
remaining non-defaulting Underwriter in Schedule 1 hereto bears to the total
number of Firm Shares set opposite the names of all the remaining non-defaulting
Underwriters in Schedule 1 hereto; provided, however, that the remaining
non-defaulting Underwriters shall not be obligated to purchase any of the Shares
on such Delivery Date if the total number of Shares which the defaulting
28
Underwriter or Underwriters agreed but failed to purchase on such date exceeds
9.09% of the total number of Shares to be purchased on such Delivery Date, and
any remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the number of Shares which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 2. If the foregoing maximums are exceeded,
the remaining non-defaulting Underwriters, or those other underwriters
satisfactory to the Representatives who so agree, shall have the right, but
shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, all the Shares to be purchased on such Delivery Date. If the
remaining Underwriters or other underwriters satisfactory to the Representatives
do not elect to purchase the shares which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such Delivery Date, this Agreement
(or, with respect to any Subsequent Delivery Date, the obligation of the
Underwriters to purchase, and of the Company to sell, the Option Shares) shall
terminate without liability on the part of any non-defaulting Underwriter or the
Company, except that the Company will continue to be liable for the payment of
expenses to the extent set forth in Sections 6 and 11. As used in this
Agreement, the term "UNDERWRITER" includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule 1 hereto
who, pursuant to this Section 9, purchases Shares which a defaulting Underwriter
agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Shares of a defaulting or
withdrawing Underwriter, either the Representatives or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that, in the opinion of counsel for the Company or counsel for the
Underwriters, may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
Section 10. Termination. The obligations of the Underwriters hereunder may
be terminated by the Representatives by notice given to and received by the
Company prior to delivery of and payment for the Firm Shares if, prior to that
time, any of the events described in Sections 7(l) or 7(m), shall have occurred
or if the Underwriters shall decline to purchase the Shares for any reason
permitted under this Agreement.
Section 11. Reimbursement of Underwriters' Expenses. If the Company shall
fail to tender the Shares for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company
(including, without limitation, with respect to the Transactions) is not
fulfilled, the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by
the Underwriters in connection with this Agreement and the proposed purchase of
the Shares, and upon demand the Company shall pay the full amount thereof
29
to the Representatives. If this Agreement is terminated pursuant to Section 9 by
reason of the default of one or more Underwriters, the Company shall not be
obligated to reimburse any defaulting Underwriter on account of those expenses.
Section 12. Notices, Etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to (i) ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department (Fax:
▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the case of any notice pursuant to Section
8(c), to the Director of Litigation, Office of the General Counsel, ▇▇▇▇▇▇
Brothers Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (Fax:
▇▇▇-▇▇▇-▇▇▇▇), and (ii) with a copy, which shall not constitute notice, to
Debevoise & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇);
(b) if to the Company or DSW Shoe Warehouse, (i) shall be delivered
or sent by mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention: ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Chief Operating Officer (Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy to ▇▇▇▇▇
▇. ▇▇▇▇▇, Esq., General Counsel, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
(Fax: ▇▇▇-▇▇▇-▇▇▇▇) (ii) with a copy, which shall not constitute notice,
to Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, Four Times Square, ▇▇▇ ▇▇▇▇,
▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇);
(c) if to Retail Ventures, shall be delivered or sent by mail, telex
or facsimile transmission to ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq., General Counsel, ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (Fax: ▇▇▇-▇▇▇-▇▇▇▇);
(d) provided, however, that any notice to an Underwriter pursuant to
Section 8(c) shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its
acceptance telex to the Representatives, which address will be supplied to
any other party hereto by the Representatives upon request. Any such
statements, requests, notices or agreements shall take effect at the time
of receipt thereof. The Company, DSW Shoe Warehouse and Retail Ventures
shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by ▇▇▇▇▇▇ Brothers
Inc. on behalf of the Representatives.
Section 13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company,
Retail Ventures and their respective successors. This Agreement and the terms
and provisions hereof are for the sole benefit of only those persons, except
that (A) the representations,
30
warranties, indemnities and agreements of the Company and Retail Ventures
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control any Underwriter within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriters contained in Section 8(b) of this Agreement shall be deemed to be
for the benefit of directors of the Company, officers of the Company who have
signed the Registration Statement and any person controlling the Company within
the meaning of Section 13 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
Section 14. No fiduciary duty. Notwithstanding any preexisting
relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the
underwriters, the Company and Retail Ventures acknowledge and agree that:
(a) nothing herein shall create a fiduciary or agency relationship between
the Company or Retail Ventures, on the one hand, and the Underwriters, on the
other;
(b) the Underwriters are not acting as advisors, expert or otherwise, to
either the Company or Retail Ventures in connection with this offering, sale of
the Shares or any other services the Underwriters may be deemed to be providing
hereunder, including, without limitation, with respect to the public offering
price of the Shares;
(c) the relationship between the Company and Retail Ventures, on the one
hand, and the Underwriters, on the other, is entirely and solely commercial,
based on arms-length negotiations;
(d) any duties and obligations that the Underwriters may have to the
Company or Retail Ventures shall be limited to those duties and obligations
specifically stated herein; and
(e) notwithstanding anything in this Underwriting Agreement to the
contrary, the Company and Retail Ventures acknowledge that the Underwriters may
have financial interest in the success of the Offering that are not limited to
the difference between the price to the public and the purchase price paid to
the Company by the Underwriters for the shares and the Underwriters have no
obligation to disclose, or account to the Company or Retail Ventures for, any of
such additional financial interests.
The Company and Retail Ventures hereby waive and release, to the fullest
extent permitted by law, any claims that the Company or Retail Ventures may have
against the Underwriters with respect to any breach or alleged breach of
fiduciary duty.
31
Section 15. Survival. The respective indemnities, representations,
warranties and agreements of the Company, Retail Ventures and the Underwriters
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Shares and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling any
of them.
Section 16. Definition of the Terms "BUSINESS DAY" and "SUBSIDIARY". For
purposes of this Agreement, (a) "BUSINESS DAY" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "SUBSIDIARY" has the meaning set forth in Rule 405 of the Rules
and Regulations.
Section 17. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
Section 18. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
Section 19. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
32
If the foregoing correctly sets forth the agreement among the Company,
Retail Ventures and the Underwriters, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
DSW INC.
By ______________________________
Name:
Title:
RETAIL VENTURES, INC.
By ____________________________
Name:
Title:
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
CIBC WORLD MARKETS CORP.
▇▇▇▇▇▇▇ RICE & COMPANY, L.L.C.
For themselves and as Representatives
of the several Underwriters named
in Schedule 1 hereto
By: ▇▇▇▇▇▇ Brothers Inc.
By __________________________________________
Authorized Representative
SCHEDULE 1
Number of Firm
Shares to be Purchased
----------------------
▇▇▇▇▇▇ Brothers Inc........................................
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co........................................
CIBC World Markets Corp....................................
▇▇▇▇▇▇▇ Rice & Company, L.L.C..............................
[Names of other underwriters]..............................
Total......................................................
SCHEDULE 2
1. Registration Rights Agreement, dated [ ], 2005, by and among DSW Inc.,
Schottenstein Stores Corporation, Cerberus Partners, L.P. and Back Bay
Capital Funding L.L.C.
2. Loan and Security Agreement, dated June [ ], 2005, between DSW Inc. and
DSW Shoe Warehouse, Inc., as borrowers, and National City Business Credit
Finance, Inc., as Administrative Agent and Collateral Agent for the
Revolving Credit Lenders.
3. Amended and Restated Loan and Security Agreement, dated [ ], 2005, by and
between Value City Department Stores LLC, as Lead Borrower, Gramex Retail
Stores, Inc., Filene's Basement, Inc., Value City of Michigan, Inc., GB
Retailers, Inc., Retail Ventures Jewelry, Inc., as Borrowers, and National
City Business Credit, Inc., as Administrative Agent and Collateral Agent
for the Revolving Credit Lenders referenced therein.
4. Fourth Amendment to Financing Agreement, dated [ ], 2005, by and among the
Borrowers named therein, the Guarantors named therein, the Lenders named
therein, and Cerberus Partners, L.P.
5. Second Amended and Restated Senior Loan Agreement, dated [ ], 2005, by and
among Value City Department Stores, LLC as Borrower, Retail Ventures,
Inc., Gramex Retail Stores, Inc., Filene's Basement, Inc., GB Retailers,
Inc., Value City of Michigan, Inc. ▇.▇. ▇▇▇▇▇▇▇▇ Delivery, Inc., Value
City Department Stores Services, Inc. Retail Ventures Jewelry, Inc.,
Retail Ventures Services, Inc. and Retail Ventures Import, Inc., as
Guarantors, the Lenders from time to time party thereto, and Cerberus
Partners, L.P., as agent.
6. Conversion Loan Warrants issued by Retail Ventures to Schottenstein Stores
Corporation and Cerberus Partners, L.P. on [ ], 2005.
7. Term Loan Warrants issued by Retail Ventures to Schottenstein Stores
Corporation, Cerberus Partners, L.P. and Back Bay Capital Funding, LLC on
[ ], 2005.
8. Amendment, dated [ ], 2005, to Corporate Services Agreement among Retail
Ventures, Schottenstein Stores Corporation and Schottenstein Management
Company, and the supplemental letter agreement among Schottenstein Stores
Corporation, Schottenstein Management Company and DSW Inc. related
thereto.
9. Supply Agreement, dated [ ], 2005, between Filene's Basement, Inc. and DSW
Inc.
Exhibit A-1
FORM OF LOCK-UP LETTER AGREEMENT
[To be delivered by all lock-up parties other than Cerberus Partners L.P.]
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇, SACHS & CO.
CIBC WORLD MARKETS CORP.
▇▇▇▇▇▇▇ ▇▇▇▇ & COMPANY, L.L.C.
As Representatives of the several
Underwriters named in Schedule 1,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇(▇▇) ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
The undersigned understands that you and certain other firms propose to
enter into an Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing
for the purchase by you and such other firms (the "UNDERWRITERS") of certain
shares (the "SHARES") of the Class A Common Shares, without par value (the
"COMMON SHARES"), of DSW Inc., an Ohio corporation (the "COMPANY"), and that the
Underwriters propose to reoffer the Shares to the public (the "OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, the undersigned
hereby irrevocably agrees that, without the prior written consent of ▇▇▇▇▇▇
Brothers Inc., on behalf of the Underwriters, the undersigned will not, directly
or indirectly, (1) offer for sale, sell, pledge, or otherwise dispose of (or
enter into any transaction or device that is designed to, or could be expected
to, result in the disposition by any person at any time in the future of) any
Common Shares (including, without limitation, Common Shares that may be deemed
to be beneficially owned by the undersigned in accordance with the rules and
regulations of the Securities and Exchange Commission and Common Shares that may
be issued or delivered upon exercise of any option or warrant) or securities
convertible into or exchangeable for Common Shares (other than the Shares in the
Offering) owned by the undersigned on the date of execution of this Lock-Up
Letter Agreement or on the date of the completion of the Offering or announce
any intention to do any of the foregoing, or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such Common Shares, whether any
such transaction described in clause (1)
or (2) above is to be settled by delivery of Common Shares or other securities,
in cash or otherwise, for a period of 180 days after the date of the final
Prospectus relating to the Offering.
Notwithstanding the foregoing, if (1) during the last 17 days of the
180-day restricted period the Company issues an earnings release or material
news or a material event relating to the Company occurs or (2) prior to the
expiration of the 180-day restricted period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the 180-day period, then the restrictions imposed by this letter shall continue
to apply until the expiration of the 18-day period beginning on the issuance of
the earnings release or the occurrence of the material news or material event.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not intend
to proceed with the Offering, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive termination) shall terminate or be terminated prior to payment for
and delivery of the Shares, we will be released from our obligations under this
Lock-Up Letter Agreement.
The undersigned understands that the Company and the Underwriters will
proceed with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Lock-Up Letter Agreement and that,
upon request, the undersigned will execute any additional documents necessary in
connection with the enforcement hereof. Any obligations of the undersigned shall
be binding upon the heirs, personal representatives, successors and assigns of
the undersigned.
Very truly yours,
By: ______________________________
Name:
Title:
Dated: _______________
Exhibit A-2
[Form of Cerberus Lock-up Letter Agreement]
LOCK-UP LETTER AGREEMENT
▇▇▇▇▇▇ BROTHERS INC.
▇▇▇▇▇▇▇, ▇▇▇▇▇ & CO.
CIBC WORLD MARKETS CORP.
▇▇▇▇▇▇▇ RICE & COMPANY, L.L.C.
As Representatives of the several
Underwriters named in Schedule 1
to the Underwriting Agreement,
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Cerberus Partners L.P. (together with its affiliates, "Cerberus")
understands that you and certain other firms propose to enter into an
Underwriting Agreement (the "UNDERWRITING AGREEMENT") providing for the purchase
by you and such other firms (the "Underwriters") of certain shares (the
"SHARES") of the Class A Common Shares, without par value (the "COMMON SHARES"),
of DSW Inc., an Ohio corporation (the "COMPANY"), and that the Underwriters
propose to reoffer the Shares to the public (the "OFFERING").
In consideration of the execution of the Underwriting Agreement by the
Underwriters, and for other good and valuable consideration, Cerberus hereby
irrevocably agrees that, without the prior written consent of ▇▇▇▇▇▇ Brothers
Inc., on behalf of the Underwriters, Cerberus will not, directly or indirectly,
(1) offer for sale, sell, pledge, or otherwise dispose of (or enter into any
transaction or device that is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any Common Shares
(including, without limitation, Common Shares that may be deemed to be
beneficially owned by Cerberus in accordance with the rules and regulations of
the Securities and Exchange Commission and Common Shares that may be issued or
delivered upon exercise of any option or warrant) or securities convertible into
or exchangeable for Common Shares (other than the Shares in the Offering) owned
by Cerberus on the date of execution of this Lock-Up Letter Agreement or on the
date of the completion of the Offering or announce any intention to do any of
the foregoing, or (2) enter into any swap or other derivatives transaction that
transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such Common
Shares, whether any such transaction described in clause (1) or (2) above is to
be settled by delivery of Common Shares or other securities, in cash or
otherwise, for a period of 180 days after the date of the final Prospectus
relating to the Offering (any transaction described in clause (1) or (2) above,
a "TRANSFER").
If (1) during the last 17 days of the 180-day restricted period the
Company issues an earnings release or material news or a material event relating
to the Company occurs or (2) prior to the expiration of the 180-day restricted
period, the Company announces that it will release earnings results during the
16-day period beginning on the last day of the 180-day period, then the
restrictions imposed by this letter shall continue to apply until the expiration
of the 18-day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
For the avoidance of doubt, the foregoing restrictions are not intended to
apply to Transfers solely of Retail Ventures, Inc.'s common stock.
Anything contained herein to the contrary notwithstanding, Cerberus may,
prior to the expiration of the 180-day restricted period (such period, as the
same may be extended as provided above, the "RESTRICTED PERIOD"), Transfer the
warrants issued by Retail Ventures, Inc. and held by Cerberus as of the
effective date of the Offering (such warrants, as described in the prospectus
relating to the Offering, but excluding any Common Shares of the Company for
which they may be exercised, the "WARRANTS") to up to four (4) transferees;
provided, however, that it shall be a condition to each such Transfer of
Warrants that (1) each such Transfer is made to a single person or group of
persons that is under common control (any such group of persons, a "GROUP"); (2)
any such person or, in the case of a Group, each member of the Group acquiring
any Warrants (whether directly from Cerberus or indirectly from one or more
transferees) during the Restricted Period executes and delivers to ▇▇▇▇▇▇
Brothers Inc. prior to such Transfer an agreement stating that such transferee
is receiving and holding the Warrants subject to the provisions of this Lock-Up
Letter Agreement, and agreeing that any further Transfer of such Warrants during
the Restricted Period shall be made on the terms set forth in the following
paragraph; (3) Cerberus (or any transferee) proposing to make any such Transfer
during the Restricted Period notifies ▇▇▇▇▇▇ Brothers Inc. at least three
business days prior to the proposed Transfer, and (4) no filings relating to
beneficial ownership of securities of the Company shall be required or
voluntarily made by Cerberus or by any transferee pursuant to the Securities
Exchange Act of 1934, as amended, in connection with such Transfer (including
the acquisition of such Warrants by the transferee) of Warrants for the duration
of the Restricted Period, except that neither (i) any initial filing on Schedule
13G relating to the acquisition by Cerberus of beneficial ownership of the
Common Shares of the Company underlying the Warrants nor (ii) any filing or
amendment to a filing on Schedule 13G required by law, if such filing is made on
or after February 10, 2006, shall be deemed to violate this Lock-Up
2
Letter Agreement. For the avoidance of doubt, it is understood by the parties
hereto that the foregoing exceptions apply only to Transfers of Warrants during
the Restricted Period, and not to any Common Shares of the Company underlying
any such Warrants. In addition, for the avoidance of doubt, the foregoing
restrictions are not intended to apply to Retail Ventures, Inc.'s common stock
underlying any such Warrants, or any filings under the Securities Exchange Act
of 1934, as amended, with respect thereto.
With respect to further Transfers of Warrants by transferees of Cerberus,
such transferees may, during the Restricted Period, effect a Transfer of the
Warrants acquired by such transferee from Cerberus; provided, however, that it
shall be a condition to such Transfer of Warrants by any such transferee that:
(1) the amount transferred represents not less than all of the unexercised
Warrants held by the such transferee as of the date of such transfer; (2) such
Transfer is made to a single person or a Group; (3) any such person or, in the
case of a Group, each member of the Group acquiring any Warrants (whether
directly from Cerberus or indirectly from one or more transferees) during the
Restricted Period executes and delivers to ▇▇▇▇▇▇ Brothers Inc. prior to such
Transfer an agreement stating that such transferee is receiving and holding the
Warrants subject to the provisions of this Lock-Up Letter Agreement, and
agreeing that any further Transfer of such Warrants during the Restricted Period
shall be made on the terms set forth in this paragraph; (4) any such transferee
proposing to make any such Transfer during the Restricted Period notifies ▇▇▇▇▇▇
Brothers Inc. at least three business days prior to the proposed Transfer, and
(5) no filings relating to beneficial ownership of securities of the Company
shall be required or voluntarily made by the transferee or any person to whom
the transferee proposes to make a Transfer in accordance with this paragraph
pursuant to the Securities Exchange Act of 1934, as amended, in connection with
such Transfer (including the acquisition of such Warrants by the party to whom
the transferee proposes to make such Transfer) of Warrants for the duration of
the Restricted Period, except that no filing or amendment to a filing on
Schedule 13G required by law, if such filing is made on or after February 10,
2006, shall be deemed to violate this Lock-Up Letter Agreement. For the
avoidance of doubt, it is understood by the parties hereto that the foregoing
exceptions apply only to Transfers of Warrants during the Restricted Period, and
not to any Common Shares of the Company underlying any such Warrants. In
addition, for the avoidance of doubt, the foregoing restrictions are not
intended to apply to Retail Ventures, Inc.'s common stock underlying any such
Warrants, or any filings under the Securities Exchange Act of 1934, as amended,
with respect thereto.
In furtherance of the foregoing, the Company and its Transfer Agent are
hereby authorized to decline to make any transfer of securities if such transfer
would constitute a violation or breach of this Lock-Up Letter Agreement.
It is understood that, if the Company notifies you that it does not intend
to proceed with the Offering, if the Underwriting Agreement does not become
effective, or if the Underwriting Agreement (other than the provisions thereof
which survive
3
termination) shall terminate or be terminated prior to payment for and delivery
of the Shares, we will be released from our obligations under this Lock-Up
Letter Agreement.
Cerberus understands that the Company and the Underwriters will proceed
with the Offering in reliance on this Lock-Up Letter Agreement.
Whether or not the Offering actually occurs depends on a number of
factors, including market conditions. Any Offering will only be made pursuant to
an Underwriting Agreement, the terms of which are subject to negotiation between
the Company and the Underwriters.
4
Cerberus hereby represents and warrants that Cerberus has full power and
authority to enter into this Lock-Up Letter Agreement and that, upon request,
Cerberus will execute any additional documents necessary in connection with the
enforcement hereof. Any obligations of Cerberus shall be binding upon the heirs,
personal representatives, successors and assigns of Cerberus.
Very truly yours,
CERBERUS PARTNERS L.P.
By: _____________________________
Name:
Title:
Dated: _______________
5
EXHIBIT B
FORM OF OPINION OF VORYS, ▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP
[To be inserted]
EXHIBIT C
FORM OF OPINION OF ▇▇▇▇▇ ▇. ▇▇▇▇▇, ESQ.
[To be inserted]
EXHIBIT D
FORM OF OPINION OF SKADDEN, ARPS, SLATE, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP
[To be inserted]
EXHIBIT E
FORM OF OPINION OF SONNENSCHEIN, NATH & ▇▇▇▇▇▇▇▇▇ LLP
[To be inserted]