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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☑
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended February 1, 2020
or
☐
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
 
to
 
Commission file number 1-32545
DESIGNER BRANDS INC.
(Exact name of registrant as specified in its charter)
Ohio
31-0746639
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
 
 
 
 
 
810 DSW Drive,
Columbus,
Ohio
 
43219
(Address of principal executive offices)
(Zip Code)
Registrant's telephone number, including area code: (614) 237-7100

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol
Name of each exchange on which registered
Class A Common Shares, without par value
DBI
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☑ Yes ☐ No

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☐ Yes ☑ No

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☑
 
Accelerated filer
☐
 
 
 
Non-accelerated filer
☐
 
Smaller reporting company
☐
 
 
 
 
 
 
Emerging growth company
☐
 
 
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

The aggregate market value of voting stock held by non-affiliates of the registrant computed by reference to the price at which such voting stock was last sold, as of August 3, 2019, was $1,037,727,844.

Number of shares outstanding of each of the registrant's classes of common stock, as of April 24, 2020: 64,291,421 Class A common shares and 7,732,786 Class B common shares.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's definitive proxy statement relating to the 2020 Annual Meeting of Shareholders are incorporated by reference into Part III of this Annual Report on
Form 10-K.



DESIGNER BRANDS INC.
TABLE OF CONTENTS
 
Page
PART I
 
1
6
16
16
16
16
PART II
 
17
19
20
31
31
31
31
32
PART III
 
32
33
33
33
33
PART IV
 
34
37
38

All references to "we," "us," "our," "Designer Brands Inc.," or the "Company" in this Annual Report on Form 10-K mean Designer Brands Inc. and its subsidiaries.

We own many trademarks and service marks. This Annual Report on Form 10-K may contain trademarks, trade dress, and tradenames of other companies. Use or display of other parties' trademarks, trade dress or tradenames is not intended to and does not imply a relationship with the trademark, trade dress or tradename owner.

i
Table of Contents

DESIGNER BRANDS INC.
TABLE OF CONTENTS TO FINANCIAL STATEMENTS
 
Page
F-1
F-3
F-4
F-5
F-6
F-7
F-8


ii
Table of Contents

Cautionary Statement Regarding Forward-Looking Information for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995

Certain statements in this Annual Report on Form 10-K may constitute forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to, among other things, future events and financial performance. Examples of such forward-looking statements include references to our future expansion and our acquisitions. You can identify these forward-looking statements by the use of forward-looking words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "would," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words. Any forward-looking statements contained in this Annual Report on Form 10-K are based upon current plans, estimates, expectations and assumptions relating to our operations, results of operations, financial condition, growth strategy and liquidity. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to numerous risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In addition to other factors discussed elsewhere in this report, including those factors described under Part I, Item 1A. Risk Factors, some important factors that could cause actual results, performance or achievements to differ materially from those discussed in forward-looking statements include, but are not limited to, the following:
•
risks related to the outbreak of the coronavirus and other adverse public health developments;
•
risks related to holdings of cash and investments and access to liquidity;
•
risks related to our international operations, including international trade, our reliance on foreign sources for merchandise, exposure to foreign tax contingencies, and fluctuations in foreign currency exchange rates;
•
maintaining strong relationships with our vendors, manufacturers, licensors, and retailer customers;
•
our ability to successfully integrate acquired businesses or realize the anticipated benefits of the acquisitions after we complete our integration efforts;
•
risks related to the loss or disruption of any of our distribution or fulfillment centers;
•
our reliance on our loyalty programs and marketing to drive traffic, sales and customer loyalty;
•
our ability to anticipate and respond to fashion trends, consumer preferences and changing customer expectations;
•
failure to retain our key executives or attract qualified new personnel;
•
risks related to the loss or disruption of our information systems and data and our ability to prevent or mitigate breaches of our information security and the compromise of sensitive and confidential data;
•
our ability to comply with privacy laws and regulations, as well as other legal obligations;
•
continuation of agreements with and our reliance on the financial condition of Stein Mart;
•
our success in growing our store base and digital demand;
•
our ability to protect our reputation and to maintain the brands we license;
•
our ability to execute our strategies;
•
fluctuation of our comparable sales and quarterly financial performance;
•
uncertain general economic conditions;
•
our competitiveness with respect to style, price, brand availability and customer service;
•
the imposition of increased or new tariffs on our products; and
•
uncertainty related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing legislation.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results, performance or achievements may vary materially from what we have projected. Furthermore, new factors emerge from time to time and it is not possible for management to predict all such factors, nor can management assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.


iii
Table of Contents

PART I

ITEM 1.
BUSINESS

Overview

Designer Brands Inc., originally founded as DSW Inc. and incorporated in the state of Ohio in 1969, is one of North America's largest designers, producers and retailers of footwear and accessories. We operate a portfolio of retail concepts in the U.S. and Canada under the DSW Designer Shoe Warehouse ("DSW"), The Shoe Company and Shoe Warehouse banners. Through Camuto LLC, a wholly owned subsidiary doing business as "Camuto Group," we design and produce footwear and accessories. We also own licensing rights for the Jessica Simpson footwear business and footwear and handbag licenses for Lucky Brand and Max Studio. In partnership with Authentic Brands Group LLC, a global brand management and marketing company, we have a 40% stake in ABG-Camuto, LLC ("ABG-Camuto"), a joint venture that acquired several intellectual property rights, including Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, and others, and focuses on licensing and developing new category extensions to support the global growth of these brands. We have a licensing agreement with ABG-Camuto whereby we pay royalties on our net sales from the brands owned by ABG-Camuto. Our Affiliated Business Group ("ABG") partners with other retailers to help build and optimize their in-store and online footwear businesses by leveraging our sourcing network to produce a merchandise assortment that meets their needs. ABG currently provides services to 282 Stein Mart stores, Steinmart.com, and a Frugal Fannie's store through ongoing supply arrangements.

We present three reportable segments: the U.S. Retail segment, the Canada Retail segment, and the Brand Portfolio segment. The U.S. Retail segment includes stores operated in the U.S. under the DSW Designer Shoe Warehouse banner and its related e-commerce site. The Canada Retail segment, which is the result of the Town Shoes Limited ("TSL") acquisition, includes stores operated in Canada under The Shoe Company, Shoe Warehouse, DSW Designer Shoe Warehouse banners and related e-commerce sites. Together, the U.S. Retail and Canada Retail segments are referred to as the "retail segments." The Brand Portfolio segment, which is the result of the Camuto LLC acquisition, earns revenue from the sale of wholesale products to retailers, commissions for serving retailers as the design and buying agent for products under private labels ("First Cost"), and the sale of branded products on direct-to-consumer e-commerce sites. Our other operating segments, including ABG, are below the quantitative and qualitative thresholds for reportable segments and are aggregated into Other for segment reporting purposes.

Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year refer to the calendar year in which the fiscal year begins. This reporting schedule is followed by many national retail companies and typically results in a 52-week fiscal year, but occasionally will contain an additional week resulting in a 53-week fiscal year. The periods presented in these financial statements and selected financial data each consisted of 52 weeks, except for fiscal 2017 which consisted of 53 weeks.

Recent Developments

In March 2020, the World Health Organization declared the coronavirus ("COVID-19") outbreak a pandemic, which continues to spread throughout North America and worldwide. The health and safety of our customers and employees remain our top priority as we continue to make decisions during this rapidly evolving situation. We have taken decisive actions across our businesses to help protect employees, customers and others in the communities we serve. As a measure to limit the spread of the virus, effective March 18, 2020, we temporarily closed all of our stores in the U.S. and Canada. Our e-commerce business will continue to be available to customers and our stores will be used in the fulfillment of online orders to be shipped to customers or available for curbside pickup. During this unprecedented period of uncertainty, we have in place business continuity plans involving adjustments to operational plans, inventory disciplines, liquidity management, and reductions to our expense and capital expenditure plans. Such measures include implementing temporary leaves of absence for over 80% of our workforce without direct pay and pay reductions for nearly all employees not placed on temporary leave. The COVID-19 outbreak and the temporary closure of all of our stores has had a material adverse impact on our business, liquidity, financial condition, and results of operations.

On November 5, 2018, we completed the acquisition of Camuto LLC, a footwear design and brand development organization, from Camuto Group LLC (the "Sellers"). The acquisition of Camuto LLC gives us the capabilities to integrate Camuto Group produced products into our retail distribution networks from their existing national brands and to produce our exclusive branded products. Also on November 5, 2018, we formed the ABG-Camuto joint venture.

On May 10, 2018, we acquired the remaining interest in TSL that we did not previously own. Beginning with our second quarter of fiscal 2018, TSL ceased being accounted for under the equity method of accounting and was accounted for as a consolidated wholly owned subsidiary. Subsequent to the acquisition, and as a result of our strategic review, we exited the Town Shoes banner in Canada during fiscal 2018.

1


On March 4, 2016, we acquired Ebuys, Inc. ("Ebuys"), an off-price footwear and accessories retailer operating in digital marketplaces. Due to recurring operating losses incurred by Ebuys since its acquisition, as well as increased competitive pressures in the digital marketplace, we decided to exit the business and ended all operations in early fiscal 2018.

Competition

The footwear market is highly competitive with few barriers to entry. We compete against a diverse group of manufacturers and retailers, both small and large, including department stores, mall-based shoe stores, national chains, independent shoe retailers, single-brand specialty retailers, online shoe retailers, brand-oriented discounters, multi-channel specialty retailers and brand suppliers. In addition, our wholesale retailer customers sell shoes purchased from competing footwear suppliers with owned and licensed brands that are well-known. Many of these suppliers invest significantly in marketing their brands. In our retail segments, many of our competitors generally offer a more limited assortment at higher initial prices in a less convenient format than us and without the benefits of our customer loyalty programs. In addition, we believe we successfully compete against retailers who have attempted to duplicate our format because they typically offer assortments with fewer recognizable brands and more styles from prior seasons, unlike our current on-trend merchandise. We believe our stores provide a competitive advantage that drives growth through customer engagement by using self-service fixtures, stimulating digital sales, and providing a convenient location for customers to pick up and return products ordered online, as well as serving as geographically appropriate shipment centers for our digitally demanded products. In our Brand Portfolio segment, we compete primarily based on providing fashion-forward styles at high quality standards along with strong customer relationships.

Retail Segments

The following table presents the number of stores we operated at the end of each of the last three fiscal years by segment and by banner:
 
February 1, 2020
 
February 2, 2019
 
February 3, 2018
U.S. Retail segment - DSW Designer Shoe Warehouse
521

 
516

 
512

Canada Retail segment:
 
 
 
 
 
The Shoe Company / Shoe Warehouse
118

 
112

 
—

DSW Designer Shoe Warehouse
27

 
27

 
—

 
145

 
139

 
—

Total
666

 
655

 
512


Our growth strategy is to strengthen our position as a leading footwear and accessories retailer by expanding into new markets with the appropriate banners and store format, extending our customer reach through new categories and services, expanding our offering of exclusive brands, and creating a differentiated customer experience and strong value proposition. With our stores playing a key role in supporting our strong online demand growth and increasing fulfillment of that demand, we are regularly evaluating our real estate strategy to optimize how we can best serve the customers' shopping preferences. Our evaluation of potential new stores integrates information on demographics, co-tenancy, retail traffic patterns, site visibility and accessibility, store size and configuration, and lease terms. Our real estate decision-making entails an analysis of underlying demand for our products through both physical and digital channels. Our analysis also considers current penetration levels in markets we serve and our ability to deepen our market share and acquire new customers.

Banners

Our DSW banner stores, both in the U.S. and in Canada, are the destination for on-trend and fashion-forward footwear and accessory brands at a great value every single day. DSW stores tend to serve larger markets and average approximately 20,300 square feet. We offer a wide assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids in stores and on e-commerce platforms.

The Shoe Company and Shoe Warehouse banner stores located in Canada offer on-trend footwear and accessory brands that target every-day family styles at a great value every single day. The Shoe Company and Shoe Warehouse stores tend to serve mid- to smaller markets and average approximately 5,300 square feet. We offer a select assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids in stores and on e-commerce platforms, with a significant number of our products geared towards athletic and kids.


2

Our strong retail market position with all of our banners is driven by our competitive strengths in assortment, convenience, and value as described in more detail below.

Assortment

Our goal is to excite our customers with a competitive, compelling assortment of shoes and complementary accessories and services that fulfill a broad range of style and fashion preferences. We sell a large assortment of brand name, designer and exclusive branded merchandise. We purchase directly from over 580 domestic and foreign vendors, primarily in-season footwear that can be found in specialty and department stores. We offer a broad assortment of handbags, hosiery, jewelry and other accessories that appeal to our brand and fashion-conscious customers.

During fiscal 2019, the retail segments purchased approximately 6% of our merchandise through the Brand Portfolio segment, including First Cost sourced exclusive branded products and wholesale purchases of licensed products. By the end of fiscal 2020, we will have transitioned the sourcing of most of the exclusive branded products to the Brand Portfolio segment. Our other vendors include suppliers who manufacture their own merchandise, or supply merchandise manufactured by others, or both. Most of our domestic vendors import a large portion of their merchandise from abroad. We have quality control programs under which our buyers are involved in establishing standards for quality and fit, and we examine incoming merchandise in regard to color, material and overall quality. As our sales volume grows, we believe there will continue to be adequate sources available to acquire a sufficient supply of quality merchandise in a timely manner and on satisfactory economic terms. Our top three third-party vendors in the aggregate supply approximately 21% of our retail merchandise.

Our merchandising group continuously monitors current fashion trends, as well as historical sales trends, to identify popular styles and styles that may become popular in the upcoming season. We track performance and sales trends on a weekly basis and have a flexible buying process that allows us to reorder successful styles and cancel under-performing styles throughout each season. To keep our product mix fresh and on target, we test new fashions and actively monitor sell-through rates. We also identify new vendor and product category opportunities.

We separate our merchandise into four primary categories: women’s footwear, men’s footwear, kids' footwear, and accessories and other. The following table presents the percentages of the retail segments' total net sales attributable to each merchandise category:
 
Fiscal
 
2019
 
2018
 
2017
Women's footwear
66
%
 
67
%
 
69
%
Men's footwear
20
%
 
21
%
 
22
%
Kids' footwear
7
%
 
5
%
 
2
%
Accessories and other
7
%
 
7
%
 
7
%

Convenience

We provide our customers with the highest level of convenience based on our belief that customers should be empowered to control and personalize their shopping experiences.

In stores, our merchandise is displayed on the selling floor with self-service fixtures to enable customers to view and touch the merchandise. We believe this shopping experience provides our customers with maximum convenience as they are able to browse and try on merchandise without feeling rushed or pressured to make a purchasing decision. Merchandise is organized in a logical manner that groups together similar styles by gender, such as dress, casual, athletic, kids, and seasonal merchandise, for easy browsing.

Our omni-channel capabilities create an endless aisle for the customer. Customers can order additional styles, sizes, widths and categories. Online orders in the U.S. and Canada can be fulfilled from any one of our stores. Online orders from the U.S. can also be fulfilled from our fulfillment center or directly from our suppliers (referred to as "drop ship"). To further meet customer demand of how they receive products, we provide our customers options to buy online, pickup in store and buy online, ship to store.

Our order routing optimization system determines the best location to fulfill digitally demanded products, which allows us to optimize our operating profit. The fulfillment center processes U.S. orders, which are shipped to a customer's home or to a store

3

when an order is placed online and a customer requests it to be shipped to store. Orders originating from a store that cannot be fulfilled immediately in that store can either be fulfilled from our ship from store capability, from the fulfillment center (in the U.S.), or drop shipped from a vendor's warehouse.

Value for Our Customers

Our buying organization aims to provide customers with high quality, in-season fashion styles at attractive prices compared to the sale prices found at specialty retailers and department stores. In addition, we provide additional value through our VIP rewards programs in the U.S. and Canada where members earn points towards discounts on future purchases. Members also receive promotional offers and gifts with purchase offers. We employ a variety of methods, including email, direct mail and social media, to communicate exclusive offers to our rewards members. We have approximately 32 million members enrolled in our loyalty programs who have made at least one purchase over the last two years. In fiscal 2019, shoppers in the loyalty programs generated approximately 91% of the combined U.S. Retail and Canada Retail segments' net sales.

Brand Portfolio Segment

Our Brand Portfolio segment designs, develops and sources fashion footwear and accessories. We provide retailer customers and consumers a portfolio of licensed brands, including Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, Jessica Simpson, Lucky Brand, and others. The Brand Portfolio segment earns revenue from the sale of wholesale products to retailers, First Cost commissions, and the sale of branded products on direct-to-consumer e-commerce sites, which include www.vincecamuto.com and www.solesociety.com. Wholesale retailer customers and First Cost customers include department stores, specialty stores, value priced retailers, national chains and online retailers. The Brand Portfolio segment sells branded products to the Company's retail segments and ABG.

Product Design

We have established a reputation for quality, on-trend merchandise. Our design teams are responsible for the creation and development of new product styles by utilizing our proven design process. Our designers monitor trends in footwear and apparel and work closely with our retailer customers to identify consumer preferences. Our future success will depend on our ability to anticipate and respond to fashion trends, consumer preferences and changing customer expectations. We believe our design process provides us with a competitive advantage allowing us to mitigate the risk of incurring costs associated with the production and distribution of less desirable designs.

Sourcing and Distribution

We source each of our product lines based on the individual design, style and quality specifications of the products. We do not own or operate manufacturing facilities; rather, we use our sourcing offices in China and Brazil to procure our products from third-party manufacturers. We are able to achieve consistent quality, competitive prices and on-time delivery based on the established relationships we have with these manufacturers. Prior to production, our sourcing offices inspect samples and prototypes of each style and monitor the quality of the production process. The manufacturers of our products are required to meet our quality, human rights, local compliance, safety and other standard requirements.

The following table presents the percentages of the Brand Portfolio segment's merchandise units sourced by country for fiscal 2019:
 
Percent of Units Sourced
China
83
%
Vietnam
8
%
All other foreign locations
9
%

We utilize a state-of-the-art distribution center in New Jersey to receive, sort and distribute our products to retailer customers and for drop ship orders.


4

Backlog

Most of the wholesale orders we receive are for deliveries over the following 180 days, subject to any subsequent cancellations. The backlog of wholesale orders at any particular time is affected by a number of factors, including cancellations, seasonality, the volume of customer e-commerce drop ship orders we fulfill, and the timing of wholesale customer purchases of our products. For example, wholesale customers are moving towards more frequent orders at lower volumes per order. Accordingly, a comparison of backlog from period to period may not be indicative of eventual shipments. This is particularly true in light of recent events resulting from the COVID-19 pandemic, which has resulted in material cancellations. As of February 1, 2020, we had a backlog of unfilled wholesale customer orders of $49.3 million, with subsequent cancellations of $30.2 million as a result of COVID-19. This compares to backlog of unfilled wholesale customer orders of $89.1 million as of February 2, 2019. The amount of backlog excludes intersegment orders and is not adjusted for estimated customer allowances, discounts and returns.

ABG-Camuto Joint Venture

ABG-Camuto is responsible for the growth and marketing of the brands held by the joint venture. We pay royalties to ABG-Camuto, with the royalty expense included in cost of sales, based on the sales of footwear, handbags and jewelry. ABG-Camuto also earns royalties on sales from third parties that license the brand names to produce non-footwear product categories. Given our 40% ownership interest in ABG-Camuto, we recognize earnings under the equity method, which will be included within the Brand Portfolio segment, as ABG-Camuto is considered an integral part of the Brand Portfolio segment business.

First Cost

As the design and buying agent for retailer customers, we utilize our expertise and relationships with manufacturers to facilitate the production of private label footwear to retailer customer specifications. Our First Cost model earns commission-based income while leveraging our overall design and sourcing infrastructure.

Additional Information

Intellectual Property

We have registered a number of trademarks, service marks and domain names in the U.S., Canada and internationally, including DSW®, DSW Shoe Warehouse® and DSW Designer Shoe Warehouse®. We also have a 40% interest in ABG-Camuto, which holds the intellectual property rights of Vince Camuto®, Louise et Cie®, Sole Society®, CC Corso Como®, and others. We have entered into a licensing agreement with ABG-Camuto whereby we pay royalties on our net sales from the brands owned by ABG-Camuto. We believe our trademarks and service marks have significant value and are important to building our name recognition. We also hold patents related to our unique store fixtures, which gives us greater efficiency in stocking and operating those stores that currently have the fixtures. We vigorously protect our patented fixture designs, as well as our packaging, private brand names, store design elements, marketing slogans and graphics.

Associates

As of February 1, 2020, we employed approximately 15,800 associates worldwide. None of our associates are covered by any collective bargaining agreements.

Seasonality

Our business is subject to seasonal merchandise trends driven by the change in weather conditions and our customers' interest in new seasonal styles. New spring styles are primarily introduced in the first quarter and new fall styles are primarily introduced in the third quarter.

Available Information

Information about Designer Brands Inc., including its reports filed with or furnished to the Securities and Exchange Commission ("SEC"), is available through Designer Brands Inc.'s website at www.designerbrands.com. Such reports are accessible at no charge through Designer Brands Inc.'s website and are made available as soon as reasonably practicable after such material is filed with or furnished to the SEC. The SEC also maintains a website that contains reports, proxy statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.


5

We have included our website addresses throughout this report as textual references only. The information contained on the websites referenced herein is not incorporated into this Form 10-K.

ITEM 1A.
RISK FACTORS

In addition to the other information in this Annual Report on Form 10-K, shareholders or prospective investors should carefully consider the following risk factors when evaluating Designer Brands Inc. If any of the events described below occurs, our business, financial condition, results of operations and future growth prospects could be adversely affected.

Risks Relating to Our Business

The coronavirus outbreak has had, and may continue to have, a material adverse impact on our business, liquidity, financial condition, and results of operations.
 
In March 2020, the World Health Organization declared the coronavirus ("COVID-19") outbreak a pandemic, which continues to spread throughout North America and worldwide. The health and safety of our customers and employees remain our top priority as we continue to make decisions during this rapidly evolving situation. We have taken decisive actions across our businesses to help protect employees, customers and others in the communities we serve. As a measure to limit the spread of the virus, effective March 18, 2020, we temporarily closed all of our stores in the U.S. and Canada. Our e-commerce business will continue to be available to customers and our stores will be used in the fulfillment of online orders to be shipped to customers or available for curbside pickup. During this unprecedented period of uncertainty, we have in place business continuity plans involving adjustments to operational plans, inventory disciplines, liquidity management, and reductions to our expense and capital expenditure plans. Such measures include implementing temporary leaves of absence for over 80% of our workforce without direct pay and pay reductions for nearly all employees not placed on temporary leave. The COVID-19 outbreak and the temporary closure of all of our stores has had a material adverse impact on our business, liquidity, financial condition, and results of operations.

While we cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact, based on our current understanding of governmental mandates and maintaining the health and safety of our customers and employees, we believe our stores will primarily begin re-opening in the second quarter of fiscal 2020 with a gradual return of store traffic through the remainder of fiscal 2020. As such, the impacts of COVID-19 to our businesses are highly uncertain and we will continue to assess the financial impacts. The disruption to the global economy and to our business, along with a sustained decline in our stock price, may lead to triggering events that may indicate that the carrying value of certain assets, including inventories, accounts receivables, long-lived assets, intangibles, and goodwill, may not be recoverable.

Restrictions under our Credit Facility could limit our ability to access the liquidity we need to run our business.

Our senior unsecured revolving credit agreement (the "Credit Facility"), with a maturity date of August 25, 2022, provides a revolving line of credit up to $400 million, with sub-limits for the issuance of up to $50 million in letters of credit, swing loan advances of up to $15 million, and the issuance of up to $75 million in foreign currency revolving loans and letters of credit. The Credit Facility may be used to provide funds for working capital, capital expenditures, and other expenditures.

Subsequent to February 1, 2020, we borrowed $205.0 million from the Credit Facility as a precautionary measure to increase our cash position and preserve financial flexibility considering uncertainty in the U.S. and global markets resulting from COVID-19, resulting in $2.0 million of available for borrowing. Our future operations may not generate sufficient liquidity to pay amounts that come due and our cash needs may increase in the future. In addition, our existing Credit Facility contains, and any future indebtedness that we may incur may contain, financial and other restrictive covenants that limit our ability to operate our business or raise capital. If we fail to comply with these covenants or to make payments under our indebtedness when due, then we would be in default under that indebtedness, which could, in turn, result in that and our other indebtedness becoming immediately payable in full.

On April 30, 2020, the Credit Facility was amended, which resulted in various changes including:
•
Provides for a lien on all of the Company's assets;
•
Reduces the borrowing availability to $375.0 million on October 31, 2020, $350.0 million on January 30, 2021, $325.0 million on May 1, 2021, and $300.0 million on July 31, 2021;
•
Redefines the components for calculating the leverage ratio and fixed charge coverage ratio to adjust for certain temporary impacts due to COVID-19;

6

•
Changes the maximum leverage ratio covenant to 3.50:1 as of May 2, 2020, 4.00:1 as of August 1, 2020, 3.75:1 as of October 31, 2020, and 3.50:1 as of January 30, 2021 and as of the end of each fiscal quarter thereafter;
•
Changes the minimum fixed charge coverage ratio to 1.25:1 as of May 2, 2020 and 1.05:1 as of August 1, 2020 and as of the end of each fiscal quarter thereafter; and
•
Restricts the Company from paying dividends, making share repurchases, and making certain acquisitions.

Our expanded international operations expose us to political, economic, operational, compliance and other risks.

As a result of several acquisitions, we have international operations, including in China, Canada and Brazil. The success of our international operations may be adversely affected by political, economic and social conditions beyond our control, local laws and customs, and legal and regulatory constraints, including compliance with applicable anti-bribery, anti-corruption, labor and currency laws and regulations. Risks inherent in our existing and future operations also include, among others, public health threats, such as the COVID-19 outbreak, the costs and difficulties of managing operations outside of the U.S., possible adverse tax consequences from changes in tax laws or the unfavorable resolution of tax assessments or audits, and greater difficulty in enforcing intellectual property rights. For example, we rely on manufacturers that operate outside the U.S., including China, and may disclose our intellectual property or other proprietary information to competitors or third parties, which could result in the distribution and sale of counterfeit versions of our products. Additionally, foreign currency exchange rates and fluctuations may negatively impact our financial results. Any of these events could have a material adverse effect on our business, financial condition, and results of operations.

We rely on our strong relationships with vendors to purchase brand name and designer merchandise at favorable prices. If these relationships were to be impaired, we may not be able to obtain a sufficient assortment of merchandise at attractive prices, and we may not be able to respond promptly to changing fashion trends, either of which could have a material adverse effect on our business and financial performance.

Our success depends, to a significant extent, on the willingness and ability of our vendors to supply us with sufficient inventory to stock our sales channels as we generally do not have long-term supply agreements or exclusive arrangements with any vendors. If we fail to maintain strong relationships with our existing vendors or if they fail to ensure the quality of merchandise they supply us, and if we cannot maintain or acquire new vendors of in-season brand name and designer merchandise, our ability to obtain a sufficient amount and variety of merchandise at favorable prices may be limited, which could have a negative impact on our business. Decisions by vendors to not sell to us or to limit the availability of their products to us could have a negative impact on our business. In addition, our inability to stock our sales channels with in-season merchandise at attractive prices could result in lower net sales and decreased customer interest in our sales channels, which could have a material adverse effect on our business. Further, if our merchandise costs increase due to increases incurred by our vendors in raw materials, energy, labor, or duties and taxes on imports, or other reasons, our ability to respond or the effect of our response could adversely affect our net sales or gross profit. During fiscal 2019, three key third-party vendors together supplied approximately 21% of our retail merchandise. The loss of, or a reduction in, the amount and quality of merchandise supplied by any one of these vendors could have an adverse effect on our business. In addition, any negative brand image, wide-spread product defects, or negative publicity related to these key vendors, or other vendors, could have a material adverse effect on our reputation and on our business.

The success of the Camuto Group business is dependent on our third-party manufacturers and other business partners.

The success of the Camuto Group business depends on our ability to obtain products from our third-party manufacturers on a timely basis, on acceptable terms and to our specifications. We do not exert direct control over the manufacturers' operations and cannot guarantee that any third-party manufacturer will have sufficient production capacity, meet our production deadlines or meet our product safety, social compliance, or quality standards. We typically do not have long-term supply contracts with our manufacturers, and the loss of any of our major manufacturers could disrupt our operations and adversely affect our business. In addition, we cannot predict the impact of global events such as inclement weather, natural disasters, public health threats, or acts of terrorism. Our manufacturers operate outside the U.S. and are also subject to additional risks associated with international trade, as discussed in more detail in other risk factors herein. If these third-party manufacturers do not perform their obligations, cease working with us, fail to meet our product safety, social compliance or quality standards, or are unable to provide us with the materials and services we need at prices and terms that are acceptable to us, such disruptions may cause product delays and shortages, failure to deliver quality products to our customers on a timely basis, and damage to our reputation, which could have a material adverse impact on our business and results of operations.


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The success of the Camuto Group business is dependent on the strength of our relationships with our retailer customers, and reductions in or loss of sales to such customers could have a material adverse effect on our business and financial performance.

The Camuto Group business is dependent on sales of branded, licensed and private-label footwear and accessories to customers, primarily department stores and other specialty retailers. We typically do not have long-term contracts with our customers. Sales to these customers are generally on an order-by-order basis and are subject to the rights of cancellation and rescheduling by the customer. Failure to fill customers’ orders in a timely manner could harm our relationships with such customers. If any of our major customers experience a significant downturn in its business, including impacts from a downturn in the global economy as a result of the COVID-19 threat or other threats, or fails to remain committed to our products or brands, such customers may reduce or discontinue purchases from us. In addition, increased promotional activity by our wholesale customers could negatively impact the image of our brands and lead to reduced pricing or purchases of our products, which could have an adverse effect on our business. The Camuto Group business has four retailer customers that make up approximately 60% of its total net sales, and the loss of any or all of these customers would have a material adverse effect on the Brand Portfolio segment.

The loss or disruption of any of our distribution or fulfillment centers could have a material adverse effect on our business and operations.

For our U.S. Retail segment operations, the majority of our inventory is shipped directly from suppliers to our distribution center in Columbus, Ohio and a West Coast facility operated by a third party, where the inventory is then processed, sorted and shipped to one of our pool locations located throughout the country and then on to the stores. Our inventory can also be shipped directly from our fulfillment center, also located in Columbus, Ohio, and supported by a third-party service provider, to our customers. For our Canada Retail segment, we engage a logistics service provider to receive purchases and distribute to our stores. Through our ship from store capability, both in the U.S. and in Canada, inventory is shipped directly from our stores to customers. Through our drop ship program, inventory is shipped from the vendor's warehouse directly to the customer. For our Brand Portfolio segment, the majority of our inventory is shipped directly from factories to our distribution center in Westampton, New Jersey, where our wholesale inventory is then processed, sorted and provided to our customers' shipping carriers.

Our operating results depend on the orderly operation of our receiving, distribution, and fulfillment processes, which in turn depends on vendors' adherence to shipping schedules and our effective management of our facilities. We may not anticipate all the changing demands that our expanding operations will impose on our receiving, distribution, and fulfillment system, and events beyond our control, such as disruptions in operations due to public health threats, such as the COVID-19 outbreak, integration of new stores or customers, catastrophic events, labor disagreements, or shipping problems, that may result in delays in the delivery of merchandise to our stores and customers. While we maintain business interruption and property insurance, in the event any of our distribution and fulfillment centers shut down for any reason or if we were to incur higher costs and longer lead times in connection with a disruption at our distribution and fulfillment centers, our insurance may not be sufficient to cover the impact to the business.

We are dependent on our customer loyalty programs and marketing to drive traffic, sales and loyalty, and any decrease in membership or purchases from members could have a material adverse effect on our business.

Customer traffic is influenced by our marketing and our loyalty programs. We rely on our loyalty programs to drive customer traffic, sales and purchase frequency. Loyalty members earn points toward discounts on future purchases through our VIP rewards programs in the U.S. and Canada. Members also receive promotional offers and gifts with purchase offers. We employ a variety of marketing methods, including email, direct mail and social media, to communicate exclusive offers to our rewards members. We have approximately 32 million members enrolled in our loyalty programs who have made at least one purchase over the last two years. In fiscal 2019, shoppers in the loyalty programs generated approximately 91% of the combined U.S. Retail and Canada Retail segments' net sales. In the event that our rewards members do not continue to shop, we fail to add new members, the number of members decreases, or our marketing is not effective in driving customer traffic, such event could have a material adverse effect on our business.


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We may be unable to anticipate and respond to fashion trends, consumer preferences and changing customer expectations, which could have a material adverse effect on our business.

Our merchandising strategy is based on offering the proper mix of products available to our customers, including our retailer customers. This requires us to anticipate and respond to numerous and fluctuating variables in fashion trends and other conditions in the markets in which our customers are situated. A variety of factors will affect our ability to maintain the proper mix of products, including: local economic conditions impacting customers' discretionary spending; unanticipated fashion trends; our ability to provide timely access to in-season merchandise at attractive prices; our success in distributing merchandise to our stores and our wholesale retailer customers in an efficient manner; and changes in weather patterns, which in turn affect consumer preferences. If we are unable to anticipate and fulfill the merchandise needs of our customers, we may experience decreases in our net sales and may be forced to increase markdowns in relation to slow-moving merchandise, either of which could have a material adverse effect on our business.

Being an omni-channel retailer is a business necessity to meet customer experience expectations and an opportunity to create a competitive advantage as our customers expect to be able to shop across multiple sales channels. In the event that our omni-channel strategy does not meet customer expectations or is not differentiated from our competitors, it may have a material adverse effect on our business.

Our failure to retain our existing senior management team and to continue to attract qualified new personnel could adversely affect our business.

Our business requires disciplined execution at all levels of our organization, which requires an experienced and talented management team. If we were to lose the benefit of the experience, efforts and abilities of any of our key executives and sourcing and buying personnel, our business could be adversely affected. We have entered into employment agreements with several key executives and also offer compensation packages designed to attract and retain talent. Furthermore, our ability to manage our expansion will require us to continue to train, motivate and develop our employees to maintain a high level of talent for future challenges and succession planning. Competition for these types of personnel is intense, and we may not be successful in attracting and retaining the personnel required to grow and operate our business.

The loss or disruption of information technology services could affect our ability to implement our growth strategy and have a material adverse effect on our business.

Our information technology systems are an integral part of our growth strategy in efficiently operating and expanding our business, in managing operations and protecting against security risks related to our electronic processing and transmitting of confidential customer and associate data. The requirements to keep our information technology systems operating at peak performance may be higher than anticipated and could strain our capital resources, management of any system upgrades, implementation of new systems and the related change management processes required with new systems and our ability to prevent any future information security breaches. In addition, any significant disruption of our data center could have a material adverse effect on those operations dependent on those systems, specifically, our store and e-commerce operations, our distribution and fulfillment centers and our merchandising team. While we maintain business interruption and property insurance, in the event of a data center shutdown, our insurance may not be sufficient to cover the impact to the business.

We accept orders through our e-commerce channels and are subject to various risks of operating online and mobile selling capabilities such as: the failure of our information technology infrastructure, including any third-party hardware or software, resulting in downtime or other technical issues; difficulty in integrating acquired businesses; reliance on third-party logistics providers to deliver our products to customers; inability to respond to technological changes; violations of state or federal laws; credit card fraud; or other information security breaches. Failure to mitigate these risks could have a material adverse effect on our business.

We face security risks related to our electronic processing of sensitive and confidential personal and business data. If we are unable to protect our data, a security breach could damage our reputation and have a material adverse effect on our business.

Given the nature of our business, we collect, process and retain sensitive and confidential customer and associate data, in addition to proprietary business information. We may be vulnerable to a data compromise, computer viruses, physical and electronic break-ins, and similar disruptions, which may not be prevented by our efforts to secure our computer systems. Security measures in place include, but are not limited to, vulnerability scanning and patching, web-application firewalls, reverse-proxies, network firewalls, two-factor authentication, identity and access management, data encryption, point-to-point encryption and tokenization, intrusion detection and prevention devices, endpoint detection and response software, and data

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loss prevention software. Regular penetration tests of our networks are conducted by a third-party service provider and we leverage any findings to further enhance our security. We also employ secure file transfer options to provide security for processing, transmission and storage of confidential information. Our critical data is replicated and backed up to a separate secured data center. However, our efforts may not be able to prevent rapidly evolving types of cyber-attacks and a successful breach of our computer systems could result in misappropriation of personal, payment or sensitive business information. In addition, we rely on associates, contractors and other third parties who may attempt to circumvent our security measures in order to obtain such information and may purposefully or inadvertently cause a breach involving such information. Actual or anticipated attacks, as well as the integration of new or existing systems of acquired businesses, may cause us to incur increasing costs, including costs to deploy additional personnel and protection technologies, train employees, pay higher insurance premiums, and engage third-party specialists for additional services. An information security breach involving confidential and personal data could damage our reputation and our customers' willingness to shop in our stores or through our e-commerce platforms. In addition, we may incur material liabilities and remediation costs as a result of an information security breach, including potential liability for stolen customer or associate data, repairing system damage or providing credit monitoring or other benefits to customers or associates affected by the breach. In the event we experience an information security breach, our insurance may not be sufficient to cover the impact to the business. Although we have developed mitigating security controls to reduce our cyber risk and protect our data from loss or disclosure due to a security breach, including processes designed to reduce the impact of a security breach at a third-party vendor, such measures cannot provide absolute security.

Our failure to comply with privacy laws and regulations, as well as other legal obligations, could have a material adverse effect on our business.

State, federal and foreign governments are increasingly enacting laws and regulations governing the collection, use, retention, sharing, transfer and security of personally identifiable information and data. For example, the California Consumer Privacy Act of 2018, which took effect on January 1, 2020, imposes certain restrictions and disclosure obligations on businesses that collect personal information about California residents and provides for a private right of action, as well as penalties for noncompliance. We are subject to other consumer protection laws, including the Fair and Accurate Credit Transactions Act and the Telephone Consumer Protection Act. Additionally, the regulatory environment is increasingly demanding with frequent new and changing requirements concerning cybersecurity, information security and privacy, which may be inconsistent from one jurisdiction to another. Any failure by us or any of our business partners to comply with applicable laws, rules and regulations may result in investigations or actions against us by governmental entities, private claims and litigation, fines, penalties or other liabilities. Such events may increase our expenses, expose us to liabilities and impair our reputation, which could have a material adverse effect on our business.

If Stein Mart were to terminate our supply agreement, close a significant number of stores or liquidate, such event could have a material adverse effect on our business and financial performance.

We currently provide services through ABG to 282 Stein Mart stores and Steinmart.com through ongoing supply arrangements. Our contractual termination date for the supply agreement with Stein Mart is January 2021. Stein Mart has disclosed in its public filings that COVID-19 has adversely impacted their near-term revenues, earnings, liquidity and cash flows, and has required significant actions in response, including but not limited to, employee furloughs and store closings, all in an effort to mitigate such impacts. The extent of the impact of COVID-19 on their business and financial results will depend largely on future developments, including the duration of the spread of the outbreak within the U.S., the impact on capital and financial markets and the related impact on consumer confidence and spending, all of which are highly uncertain and cannot be predicted. Stein Mart also disclosed that continued prolonged store closure would impact their assessment of whether there is substantial doubt about their ability to continue as a going concern within one year after the date that their financial statements are issued and, based on their assessment, could result in the conclusion that substantial doubt exists. If Stein Mart were to terminate our supply agreement, close a significant number of stores or liquidate, such event could have a material adverse effect on our business and financial performance.

Our retail growth strategies could strain our resources and have a material adverse effect on our business and financial performance.

Our growth strategy in part depends on our ability to successfully open and operate new stores on a profitable basis, as well as expand the product lines and services we offer. We also continue to invest in our digital capabilities in order to deliver a high-quality, coordinated shopping experience for our customers, which requires substantial investment in technology. This continued growth could place increased demands on our financial, managerial, operational and administrative resources. We may not achieve our planned growth on a timely and profitable basis or achieve results in new locations similar to those

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achieved in existing locations in prior periods. In addition, the growth in digital demand could result in a diversion of traffic from our stores.

Our ability to open and operate new stores on a timely and profitable basis depends on many factors, including our ability to identify suitable markets and sites for new store locations with financially stable co-tenants and landlords; negotiate acceptable lease terms; build-out or refurbish sites on a timely and effective basis; obtain sufficient financing and capital resources or generate sufficient cash flows from operations to fund growth; open new stores at costs not significantly greater than those anticipated; successfully open new stores in markets in which we currently have few or no stores; control the costs of other capital investments associated with store openings; hire, train and retain qualified managers and store personnel; and successfully integrate new stores into our existing infrastructure, operations, management and distribution systems or adapt such infrastructure, operations and systems to accommodate our growth. As a result, we may be unable to open new stores at the rates expected or at all. If we fail to successfully implement our growth strategy, the opening of new stores could be delayed or prevented, could cost more than anticipated and could divert resources from other areas of our business, any of which could have a material adverse effect on our business. To the extent that we open new stores in our existing markets, we may experience reduced net sales in existing stores in those markets. As our store base increases, our stores will become more concentrated in the markets we serve. As a result, the number of customers and financial performance of individual stores may decline and the average sales per square foot at our stores may be reduced, which could have a material adverse effect on our business. Further, changing local demographics at existing store locations may adversely affect financial performance at those stores. If we determine to close or relocate a store subject to a lease, we may remain obligated under the applicable lease for the balance of the lease term.

Initiatives to introduce new product and service offerings are designed to create growth and improve financial results. New product lines and services may not achieve or sustain profitability or market acceptance at levels sufficient to justify our investment, which could have a material adverse effect on our business. As we introduce enhancements to our point-of-sale ("POS") and e-commerce platforms or migrate to new platforms, we could experience downtime or other technical issues, which could have a material adverse effect on our business.

Our acquisition activity could disrupt our ongoing business and adversely impact our results of operations.

On May 10, 2018, we acquired the remaining interest in TSL and on November 5, 2018, we completed the acquisition of Camuto Group. The integration efforts for acquired businesses may disrupt our existing business or divert the attention of our management. Achieving the expected benefits depends in large part on our successful and timely integration of operations, systems, policies and procedures, and personnel of the acquired businesses. For example, we cannot ensure that Camuto Group will successfully be able to manage the additional volume of the retail segments' exclusive branded products transitioned to it. We cannot ensure that all of our integration efforts will be completed on a timely basis, as planned, or without substantial expense, delay or other operational problems. Until we make substantial progress with our integration efforts, we also face the risk that we may not be able to effectively manage the business and achieve planned results. We may be hindered by having limited system and reporting capabilities. Our operating results or financial condition may be adversely impacted by pre-existing claims or liabilities, both known and unknown. In addition, the integration process may strain our financial and managerial controls, reporting systems and procedures, and may also result in the diversion of management and financial resources from core business objectives. There can be no assurance that we will successfully integrate our businesses or that we will realize the anticipated benefits of the acquisitions after we complete our integration efforts.

Our failure to protect our reputation could have a material adverse effect on our brands.

The value of our brands is largely dependent on the success of our merchandise assortment and our ability to provide a consistent, high quality customer experience. Any negative publicity about us or the significant brands we offer may reduce demand for our merchandise. Failure to comply with ethical, social, product, labor, health and safety, accounting or environmental standards could also jeopardize our reputation and potentially lead to various adverse consumer actions. In addition, negative claims or publicity, including social media, regarding celebrities we have license and endorsement arrangements with could adversely affect our reputation and sales regardless of whether such claims are accurate. Consumer actions could include boycotts and negative publicity through social or digital media. Public perception about us or the products we carry, whether justified or not, could impair our reputation, involve us in litigation, damage our brand and have a material adverse effect on our business.


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The reputation and competitive position for the Camuto Group business are dependent on our ability to maintain the brands we license.

In partnership with Authentic Brands Group LLC, a global brand management and marketing company, we formed ABG-Camuto, a joint venture in which we have a 40% interest. This joint venture acquired several intellectual property rights from the Sellers, including Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, and others, and focuses on licensing and developing new category extensions to support the global growth of these brands. ABG-Camuto has entered into a licensing agreement with us, which will earn royalties from the net sales of Camuto Group under the brands acquired. In addition, we hold footwear licenses of Jessica Simpson, Lucky Brand, Max Studio, and, through a joint venture, Jennifer Lopez.

We rely on our ability to retain and maintain good relationships with the licensors and their ability to maintain strong, well-recognized brands and trademarks. The terms of our license agreements vary and are subject to renewal with various termination provisions. There can be no assurance that we will be able to renew these licenses. Even our longer-term or renewable licenses are typically dependent upon our ability to market and sell the licensed products at specified levels, and the failure to meet such levels may result in the termination or non-renewal of such licenses. Furthermore, many of our license agreements require minimum royalty payments, and if we are unable to generate sufficient sales and profitability to cover these minimum royalty requirements, we may be required to make additional payments to the licensors, which could have a material adverse effect on our business and results of operations.

We are constantly exploring new business opportunities and implementing initiatives. The failure to successfully execute our strategies may have a material adverse effect on our business, results of operations or financial condition.

We have expanded our products and markets in part through strategic acquisitions and we may continue to do so in the future. The continued development and implementation of new business opportunities and strategies involve numerous risks, including risks inherent in entering markets in which we may not have prior experience, and could distract management from our core business. In the event that we lose focus on our core business or are unsuccessful in the execution of our concept, it may have a material adverse effect on our business, results of operations or financial condition.

We are exposed to foreign tax contingencies as a result of the acquisition of Camuto Group, which could have a material adverse effect on our financial performance.

During the due diligence procedures performed related to the acquisition of Camuto Group, we identified probable contingent liabilities associated with unpaid foreign payroll and other taxes that could also result in assessed penalties and interest. We have developed an estimate of the range of outcomes related to these obligations of $28.1 million to $40.0 million for obligations we are aware of at this time. We are continuing to assess the exposure, which may result in material changes to these estimates, and we may identify additional contingent liabilities. We believe that the Sellers are obligated to indemnify us for any payments to foreign taxing authorities for the periods up to the acquisition date. Although a portion of the purchase price is held in escrow and another portion is held in a restricted bank account, there can be no assurance that we will successfully collect all amounts that we may be obligated to settle with the foreign taxing authorities.

Our sales and quarterly financial performance may fluctuate for a variety of reasons, including seasonal variability.

Our business is sensitive to consumer spending patterns, which in turn are subject to prevailing regional and national economic conditions and the general level of economic activity. Our comparable sales and quarterly results of operations have fluctuated in the past, and we expect them to continue to fluctuate in the future. A variety of other factors affect our sales and quarterly financial performance, including: uncertain macro-economic conditions and changes in the retail sales environment; changes in our merchandising strategy; timing and concentration of new store openings and related start-up costs; expenses associated with new stores, our omni-channel strategy and marketing expenses; changes in our merchandise mix; changes in and regional variations in demographic and population characteristics; timing of promotional events; seasonal fluctuations due to weather conditions; and actions by our competitors. Accordingly, our results for any one fiscal quarter are not necessarily indicative of the results to be expected for any other quarter, and comparable sales for any particular future period may increase or decrease. Our future financial performance may fall below the expectations of securities analysts and investors, which may adversely impact the price of our common shares.

In addition, our business is subject to seasonal merchandise trends when our customers' interest in new seasonal styles increases. New spring styles are introduced in the first quarter and new fall styles are introduced in the third quarter. As a result of seasonal merchandise trends, any factors negatively affecting us during these periods, including adverse weather, the timing and level of markdowns, fashion trends or unfavorable economic conditions, could have a material adverse effect on our business.

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Risks Relating to the External Environment

Uncertain economic conditions and other events in the U.S. and other countries in which we operate can adversely affect consumer confidence and consumer spending habits, which could result in reduced net sales.

Consumer spending habits, including spending for the footwear and accessories that we sell, are affected by, among other things, prevailing economic conditions; levels of employment; salaries and wage rates; prevailing interest rates; income tax rates and policies; consumer confidence; and consumer perception of economic conditions. In addition, consumer purchasing patterns may be influenced by consumers' disposable income. Consumer confidence can also be affected by the domestic or international political environment. The outbreak or escalation of war, natural disasters, public health threats, such as the COVID-19 outbreak, or the occurrence of terrorist acts or other hostilities in or affecting the U.S. or other countries in which we operate, could lead to a decrease in spending by consumers. In an economic slowdown, we could experience lower net sales than expected on a quarterly or annual basis and be forced to delay or slow our expansion plans. Reduced net sales may result in reduced operating cash flows if we are not able to appropriately manage inventory levels or leverage expenses. These negative economic conditions could have a material adverse effect on our business.

We may be unable to compete in our highly competitive market, which could have a material adverse effect on our business.

The footwear market is highly competitive with few barriers to entry. We compete against a diverse group of manufacturers and retailers, both small and large, including department stores, mall-based shoe stores, national chains, independent shoe retailers, single-brand specialty retailers, online shoe retailers, brand-oriented discounters, multi-channel specialty retailers and brand suppliers. In addition, our wholesale retailer customers sell shoes purchased from competing footwear suppliers with owned and licensed brands that are well-known. Many of these suppliers invest significantly in marketing their brands. Our success depends on our ability to remain competitive with respect to assortment, quality, convenience and value. The performance of our competitors, as well as a change in their pricing policies as a result of the current economic environment, marketing activities and other business strategies, could have a material adverse effect on our business.

E-commerce networks have rapidly evolved while consumer receptiveness to shopping online has substantially increased. Competition from e-commerce players has significantly increased due to their ability to provide improved user experience, greater ease of buying goods, low or no shipping fees, faster shipping times and more favorable return policies. Businesses, including our suppliers, can easily launch online sites and mobile platforms at nominal costs by using commercially available software or partnering with any of a number of successful digital marketplace providers. Some of our suppliers use such platforms to compete with us by allowing consumers to purchase products directly through the supplier. Competitors with other revenue sources may also be able to devote more resources to marketing and promotional campaigns, adopt more aggressive pricing policies and devote more resources to websites, mobile platforms and applications and systems development.

We rely on foreign sources for our merchandise, and our business is therefore subject to risks associated with international trade.

All of the products we manufacture in the Brand Portfolio segment come from third-party facilities outside of the U.S., with 83% sourced from China, whereas our U.S. Retail and Canada Retail merchandise is purchased from both domestic and foreign vendors. Many of our domestic vendors import a large portion of their merchandise from abroad, with the majority manufactured in China. For this reason, we face risks inherent in purchasing from foreign suppliers, such as: public health threats, such as the COVID-19 outbreak, economic and political instability in countries where these suppliers are located; international hostilities or acts of war or terrorism affecting the U.S. or foreign countries from which our merchandise is sourced; increases in shipping costs; transportation delays and interruptions, including increased inspections of import shipments by domestic authorities; work stoppages; expropriation or nationalization; changes in foreign government administration and governmental policies; changes in import duties or quotas; compliance with trade and foreign tax laws; and local business practices, including compliance with foreign laws and with domestic and international labor standards. COVID-19 has led to work and travel restrictions within, to, and out of mainland China, which in turn has led to delays in workers returning, which may affect our and our vendors’ manufacturers. This viral outbreak may make it difficult for our suppliers and our vendors’ suppliers to source raw materials in China and other countries, manufacture goods in such countries, and export our products from such countries. If the severity and reach of the COVID-19 outbreak continues or increases, there may be significant and material disruptions to our supply chain and operations, and disruptions in the manufacture, shipment, and sale of our products. Such events may increase our costs and disrupt our operations, which could have a material adverse effect on our business, financial condition, and results of operations.


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We require our business partners to operate in compliance with applicable laws and regulations and our internal requirements. However, we do not control such third parties or their labor and business practices. The violation of labor or other laws by one of our vendors could have a material adverse effect on our business.

The imposition of increased or new tariffs on our products could have a material adverse effect on our business and financial performance.

The U.S. government has placed tariffs on certain goods imported from China and may impose new tariffs on goods imported from China and other countries, including footwear and other products that we import. In retaliation, China has responded by imposing tariffs on a wide range of products imported from the U.S. and by adjusting the value of its currency. If renegotiations of existing tariffs are unsuccessful or additional tariffs or trade restrictions are implemented by the U.S. or other countries in connection with a global trade war, the resulting escalation of trade tensions could have a material adverse effect on world trade and the global economy. While it is still too early to predict whether or how the ongoing tariff negotiations between the U.S. and China will impact our business, the imposition of tariffs on footwear or other items imported by us from China could require us to increase prices to our customers or, if unable to do so, result in lowering our gross margin on products sold, which could have a material adverse effect on our business and financial performance. Alternatively, we may seek to shift production outside of China, resulting in significant costs and disruption to our business. Even in the absence of further tariffs or trade restrictions, the related uncertainty and the market's fear of an economic slowdown could lead to a decrease in consumer spending and we may experience lower net sales than expected. Reduced net sales may result in reduced operating cash flows if we are not able to appropriately manage inventory levels or leverage expenses.

Uncertainty in future changes to tax legislation, regulatory reform or policies could have a material adverse effect on our business.

Tax laws, regulations, and policies in various jurisdictions may be subject to significant change due to economic, political and other conditions. The U.S. tax reform legislation, referred to as the Tax Cuts and Jobs Act of 2017 (the "U.S. Tax Reform"), significantly changed how the U.S. taxes corporations and requires complex computations to be performed that were not previously required in U.S. tax law. The U.S. Treasury Department, the U.S. Internal Revenue Service, and other standard-setting bodies could interpret or issue guidance on how provisions of the U.S. Tax Reform will be applied or otherwise administered that is different from our interpretation. In addition, state, local or foreign jurisdictions may enact tax laws in response to the U.S. Tax Reform that could result in further changes to taxation and materially affect our financial position and results of operations.

Our cash and investments are subject to risks that could affect the liquidity of these investments.

As of February 1, 2020, we had cash and cash equivalents and investments of $111.5 million. Subsequent to February 1, 2020, we borrowed $205.0 million from the Credit Facility as a precautionary measure to increase our cash position and preserve financial flexibility considering uncertainty in the U.S. and global markets resulting from COVID-19. A portion of these are held as cash in operating accounts that are with financial institutions. While we regularly monitor the cash balances in our operating accounts and when possible adjust the balances as appropriate to be within Federal Deposit Insurance Corporation insurance limits, these cash balances could be lost or inaccessible if the underlying financial institutions fail or are subject to other adverse conditions in the financial markets.

While we generally invest in lower risk investments, investment risk has been and may further be exacerbated by credit and liquidity issues that have affected various sectors of the financial markets. Our access to cash and investments, their earning potential or our ability to invest in highly rated, low risk investments may be impacted by adverse conditions in the U.S. financial markets. These market risks associated with our cash and investments could have a material adverse effect on our business.

We are exposed to foreign currency risk.

We are primarily exposed to the impact of foreign exchange rate risk through our Canadian business where the functional currency is the Canadian dollar ("CAD"). Currency translation adjustments are included in accumulated other comprehensive loss. We also hold cash denominated in CAD with foreign currency exchange gains or losses recorded to income. The impact of all other foreign currencies is immaterial to our financial results and we currently do not utilize hedging instruments to mitigate foreign currency exchange risks.


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Risks Relating to our Common Shares

Our amended articles of incorporation, amended and restated code of regulations and Ohio state law contain provisions that may have the effect of delaying or preventing a change in control of Designer Brands Inc. This could adversely affect the value of our common shares.

Our amended articles of incorporation authorize our Board of Directors to issue up to 100,000,000 preferred shares and to determine the powers, preferences, privileges, rights, including voting rights, qualifications, limitations and restrictions on those shares, without any further vote or action by the shareholders. The rights of the holders of our Class A common shares will be subject to, and may be adversely affected by, the rights of the holders of any preferred shares that may be issued in the future. The issuance of preferred shares could have the effect of delaying, deterring or preventing a change in control and could adversely affect the voting power of our common shares.

In addition, provisions of our amended articles of incorporation, amended and restated code of regulations and Ohio law, together or separately, could discourage potential acquisition proposals, delay or prevent a change in control or limit the price that certain investors might be willing to pay in the future for our common shares. Among other things, these provisions establish a staggered board, require a super-majority vote to remove directors, and establish certain advance notice procedures for nomination of candidates for election as directors and for shareholder proposals to be considered at shareholders' meetings.

We do not expect a trading market for the Company's Class B common shares to develop and therefore any investment in the Class B common shares may be effectively illiquid, unless such shares are converted into the Company's Class A common shares.

There is currently no public market for the Company's Class B common shares. We do not intend to list the Class B common shares on any securities exchange or any automated quotation system. As a result, there can be no assurance that a secondary market will develop, and we do not expect any market makers to participate in a secondary market. Because the Class B common shares are not listed on a securities exchange or an automated quotation system, it may be difficult to obtain pricing information with respect to the shares. Accordingly, there may be a limited number of buyers if a holder decided to sell their Class B common shares. This may affect the price a holder would receive upon such sale. Alternatively, a holder of such shares could convert them into Class A common shares, on a share for share basis, prior to selling. However, such conversion could affect the timing of any such sale, which may in turn affect the price a holder may receive upon such sale.

The Schottenstein Affiliates, entities owned by or controlled by Jay L. Schottenstein, the Executive Chairman of the Designer Brands Inc. Board of Directors, and members of his family, directly control or substantially influence the outcome of matters submitted for Designer Brands Inc. shareholder votes, and their interests may differ from other shareholders.

As of February 1, 2020, the Schottenstein Affiliates have approximately 52% of the voting power of the Company's outstanding common shares. The Schottenstein Affiliates directly control or substantially influence the outcome of matters submitted to Designer Brands Inc.'s shareholders for approval, including the election of directors, approval of mergers or other business combinations, and acquisitions or dispositions of assets. The interests of the Schottenstein Affiliates may differ from or be opposed to the interests of other shareholders, and their level of ownership and voting power in the Company may have the effect of delaying or preventing a subsequent change in control that may be favored by other shareholders.

The Schottenstein Affiliates engage in a variety of businesses, including, but not limited to, business and inventory liquidations, apparel companies and real estate investments. Opportunities may arise in the area of potential competitive business activities that may be attractive to the Schottenstein Affiliates and us. Our amended and restated articles of incorporation provide that the Schottenstein Affiliates are under no obligation to communicate or offer any corporate opportunity to us. In addition, the Schottenstein Affiliates have the right to engage in similar activities as us, do business with our suppliers and customers, and, except as limited by agreement, employ or otherwise engage any of our officers or employees.

Furthermore, as a "controlled company" within the meaning of The New York Stock Exchange ("NYSE") rules, the Company qualifies for and, in the future, may opt to rely on, exemptions from certain corporate governance requirements, including having a majority of independent directors, as well as having nominating and corporate governance and compensation committees composed entirely of independent directors.


15

ITEM 1B.
UNRESOLVED STAFF COMMENTS

None.

ITEM 2.
PROPERTIES

The following table summarizes the location and general use of our principal properties as of February 1, 2020 that we consider to be material to our business:
Facility
 
Location
 
Owned/Leased
 
Segment
 
Approximate Square Feet
Principal corporate office
 
Columbus, Ohio
 
Owned
 
Corporate, U.S. Retail and Other
 
178,000

Distribution center
 
Columbus, Ohio
 
Owned
 
U.S. Retail and Other
 
625,000

Fulfillment center(1)
 
Columbus, Ohio
 
Leased
 
U.S. Retail
 
854,000

Distribution center
 
Westampton, New Jersey
 
Leased
 
Brand Portfolio
 
683,000

U.S. retail stores(2)
 
521 various U.S. locations
 
Leased
 
U.S. Retail
 
10,570,000

Canada retail stores(3)
 
145 various Canadian locations
 
Leased
 
Canada Retail
 
1,162,000

Showrooms
 
10 various U.S. locations
 
Leased
 
Brand Portfolio
 
99,000

Foreign sourcing offices
 
Two locations in China and one location in Brazil
 
Leased
 
Brand Portfolio
 
123,000

(1)
Our fulfillment center is leased from Schottenstein Affiliates, a related party, and expires in September 2022 with two renewal options of five years each.
(2)
Our DSW U.S. stores average approximately 20,300 square feet. Most of the store leases are for a fixed term with options for extension periods, exercisable at our option, with 16 stores leased from Schottenstein Affiliates, a related party.
(3)
The Shoe Company, Shoe Warehouse and DSW stores in Canada average approximately 8,000 square feet. Most of the store leases are for a fixed term with options for extension periods, exercisable at our option.

We believe that our principal properties will meet our operational needs for the foreseeable future.

ITEM 3.
LEGAL PROCEEDINGS

The information set forth in Note 16, Commitments and Contingencies - Legal Proceedings, of the Consolidated Financial Statements of this Annual Report on Form 10-K is incorporated herein by reference.

ITEM 4.
MINE SAFETY DISCLOSURES

Not Applicable.


16

PART II

ITEM 5.
MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Common Shares

Our Class A common shares are listed for trading on the New York Stock Exchange ("NYSE") under the ticker symbol "DBI." There is currently no public market for the Company's Class B common shares, but the Class B common shares can be exchanged for the Company's Class A common shares at the election of the holder on a share for share basis. Holders of Class A common shares are entitled to one vote per share and holders of Class B common shares are entitled to eight votes per share on matters submitted to shareholders for approval. As of April 24, 2020, there were 179 holders of record of our Class A common shares and 13 holders of record of our Class B common shares. The number of holders of record is based upon the actual number of holders registered at such date and does not include holders of shares in "street names" or persons, partnerships, associates, corporations, or other entities identified in security position listings maintained by depositories.

Dividends

The payment of any future dividends is at the discretion of our Board of Directors and is based on our future earnings, cash flow, financial condition, capital requirements, changes in taxation laws, general economic condition and any other relevant factors. It is anticipated that dividends will be declared on a quarterly basis. Our Credit Facility allows the payments of dividends by us or our subsidiaries, provided that immediately before and after a dividend payment there is no event of default, as defined in our Credit Facility. Refer to Item 6. Selected Financial Data of this Annual Report on Form 10-K for additional information on our dividend history. On March 17, 2020, the Board of Directors declared a quarterly cash dividend payment of $0.10 per share for both Class A and Class B common shares. The dividend was paid on April 10, 2020 to shareholders of record at the close of business on March 30, 2020.

Share Repurchase Program

On August 17, 2017, the Board of Directors authorized the repurchase of an additional $500 million of Class A common shares under our share repurchase program, which was added to the $33.5 million remaining from the previous authorization. The share repurchase program may be suspended, modified or discontinued at any time, and we have no obligation to repurchase any amount of our common shares under the program. Shares will be repurchased in the open market at times and in amounts considered appropriate based on price and market conditions.

The following table sets forth the Class A common share repurchases during the most recent quarter:
(in thousands, except per share amounts)
(a)
Total Number of Shares Purchased
 
(b)
Average Price Paid per Share
 
(c)
Total Number of Shares Purchased as Part of Publicly Announced Programs
 
(d)
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
November 3, 2019 to November 30, 2019
—

 
$
—

 
—

 
$
334,935

December 1, 2019 to January 4, 2020
—

 
$
—

 
—

 
$
334,935

January 5, 2020 to February 1, 2020(1)
1

 
$
15.75

 
—

 
$
334,935

 
1

 
$
15.75

 
—

 
 
(1)
The total number of shares repurchased represents shares withheld in connection with tax payments due upon vesting of employee restricted stock awards.
 


17

Performance Graph

The following graph compares our cumulative total shareholder return on our Class A common shares with the cumulative total returns of the Standard and Poor's ("S&P") MidCap 400 Index and the S&P MidCap 400 Retail Index, all of which are published indices. The comparison of the cumulative total returns for each investment assumes that $100 was invested on January 31, 2015 and that all dividends were reinvested. This comparison includes the period ended January 31, 2015 through the period ended February 1, 2020.

PICTURE1.JPG

Company / Index
 
January 31, 2015
 
January 30, 2016
 
January 28, 2017
 
February 3, 2018
 
February 2, 2019
 
February 1, 2020
Designer Brands Inc.
 
$
100.00

 
$
69.31

 
$
60.73

 
$
60.96

 
$
86.61

 
$
48.67

S&P MidCap 400 Index
 
$
100.00

 
$
91.82

 
$
118.23

 
$
133.63

 
$
128.32

 
$
139.87

S&P MidCap 400 Retail Index
 
$
100.00

 
$
86.57

 
$
87.62

 
$
87.83

 
$
88.37

 
$
86.46


18

ITEM 6.
SELECTED FINANCIAL DATA

The following table sets forth various selected financial information. Such selected consolidated financial data should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, set forth in Item 8. Financial Statements and Supplementary Data and Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations of this Annual Report on Form 10-K.
(in thousands, except percentages, per share and per square foot data, and store count)
Fiscal(1)
2019(2)
 
2018(3)
 
2017
 
2016
 
2015
Statement of Operations Data:
 
 

 
 
 
 
 
 
Net sales(4)
$
3,492,687

 
$
3,177,918

 
$
2,805,555

 
$
2,713,355

 
$
2,620,248

Gross profit(4)
$
999,670

 
$
938,689

 
$
799,132

 
$
779,898

 
$
768,369

Operating profit
$
127,299

 
$
59,005

 
$
125,058

 
$
199,977

 
$
213,551

Net income (loss)(5)
$
94,497

 
$
(20,466
)
 
$
67,452

 
$
124,419

 
$
136,034

Diluted earnings (loss) per share(5)
$
1.27

 
$
(0.26
)
 
$
0.84

 
$
1.51

 
$
1.54

Weighted average number of diluted shares outstanding
74,605

 
80,026

 
80,687

 
82,135

 
88,501

Balance Sheet Data:
 
 
 
 
 
 
 
 
 
Cash and cash equivalents and investments
$
111,538

 
$
169,087

 
$
300,537

 
$
287,091

 
$
330,475

Inventory
$
632,587

 
$
645,317

 
$
501,903

 
$
499,995

 
$
484,236

Total assets
$
2,465,070

 
$
1,620,584

 
$
1,421,517

 
$
1,436,884

 
$
1,369,109

Debt
$
190,000

 
$
160,000

 
$
—

 
$
—

 
$
—

Total shareholders' equity
$
720,914

 
$
832,377

 
$
955,251

 
$
942,236

 
$
904,924

Other Data:
 
 
 
 
 
 
 
 
 
Comparable sales change(6)
0.8
%
 
6.1
%
 
(0.4
)%
 
(3.0
)%
 
0.8
%
Number of U.S. Retail stores:
 
 
 
 
 
 
 
 
 
Beginning of period
516

 
512

 
501

 
468

 
431

New stores
7

 
9

 
15

 
34

 
40

Closed stores
(2
)
 
(5
)
 
(4
)
 
(1
)
 
(3
)
End of period
521

 
516

 
512

 
501

 
468

Number of Canada Retail stores:
 
 
 
 
 
 
 
 
 
Beginning of period
139

 
—

 
—

 
—

 
—

Acquired stores
—

 
180

 
—

 
—

 
—

New stores
9

 
—

 
—

 
—

 
—

Closed stores
(3
)
 
(41
)
 
—

 
—

 
—

End of period
145

 
139

 
—

 
—

 
—

Store square footage:(7)
 
 
 
 
 
 
 
 
 
U.S. Retail
10,570

 
10,529

 
10,485

 
10,336

 
9,805

Canada Retail
1,162

 
1,150

 
—

 
—

 
—

Net sales per average square foot:
 
 
 
 
 
 
 
 
 
U.S. Retail
$
260

 
$
260

 
$
246

 
$
246

 
$
258

Canada Retail(8)
$
216

 
$
212

 
$
—

 
$
—

 
$
—

ABG stores serviced
283

 
287

 
293

 
395

 
379

Cash dividends per share
$
1.00

 
$
1.00

 
$
0.80

 
$
0.80

 
$
0.80

(1)
All fiscal years are based on a 52-week year, except for fiscal 2017, which is based on a 53-week year.
(2)
During fiscal 2019, we adopted the new accounting standard for leases, Accounting Standards Update ("ASU") 2016-02 and the related amendments. We elected to initially apply ASU 2016-02 as of February 3, 2019, with the recognition of $1.0 billion of lease assets and $1.1 billion of lease liabilities and a cumulative-effect adjustment that decreased retained

19

earnings by $9.6 million for transition impairments related to previously impaired leased locations. Periods prior to February 3, 2019 were not restated. Upon transition to ASU 2016-02, we recognized lease liabilities based on the present value of the remaining future fixed lease commitments, net of outstanding tenant allowance receivables, with corresponding lease assets. Amounts for prepaid expenses, deferred rent, deferred construction and tenant allowances, the accrual for lease obligations, and favorable and unfavorable leasehold interests were netted against the lease assets.
(3)
On May 10, 2018, we acquired the remaining interest in TSL that we did not previously own. Beginning with our second quarter of fiscal 2018, TSL ceased being accounted for under the equity method of accounting and was accounted for as a consolidated wholly owned subsidiary. On November 5, 2018, we completed the acquisition of Camuto Group.
(4)
We changed our presentation of net sales and gross profit for all periods presented to include commission income. Previously reported other revenue, which primarily included operating sublease income, was reclassified to operating expenses.
(5)
Net income and diluted earnings per share for fiscal 2019 included net after-tax charges of $19.8 million, or $0.26 per diluted share, primarily related to integration and restructuring costs and impairment charges. Net loss and diluted loss per share for fiscal 2018 included net after-tax charges of $155.3 million, or $1.92 per diluted share, primarily related to impairment charges, acquisition-related activities, the exit of the Town Shoes banner, other restructuring costs, and the net tax expense impact of finalizing the U.S. Tax Reform implementation assessment. Net income and diluted earnings per share for fiscal 2017 included net after-tax charges of $55.5 million, or $0.68 per diluted share, primarily related to impairment charges, inventory write-downs, amortization of intangibles and the change in fair value of the contingent consideration liability associated with Ebuys, restructuring costs, foreign exchange net losses, and the initial net tax expense impact of implementing the U.S. Tax Reform.
(6)
A store is considered comparable when in operation for at least 14 months at the beginning of the fiscal year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter they are closed. Comparable sales include e-commerce sales. Stores in Canada from the TSL acquisition that were in operation for at least 14 months at the beginning of fiscal 2019, along with its e-commerce sales, were added to the comparable base beginning with the second quarter of fiscal 2019. Comparable sales for the Canada Retail segment exclude the impact of foreign currency translation and are calculated by translating current period results at the foreign currency exchange rate used in the comparable period in the prior year. For the Brand Portfolio segment, sales from the direct-to-consumer www.vincecamuto.com e-commerce site were added to the comparable base beginning with the fourth quarter of fiscal 2019.
(7)
Store square footage represents the total amount of square footage as of the end of the fiscal year for stores and does not include ABG or square footage of the distribution and fulfillment centers.
(8)
Canada Retail sales for fiscal 2018 included in the calculation of net sales per average square foot have been annualized on a full year basis. The calculation excludes the Town Shoes banner that was exited during fiscal 2018.

ITEM 7.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This management's discussion and analysis of financial condition and results of operations contains forward-looking statements that involve various risks and uncertainties. See Cautionary Statement on page iii for a discussion of the uncertainties, risks and assumptions associated with these statements. This discussion is best read in conjunction with our Consolidated Financial Statements, including the notes thereto, set forth in Item 8. Financial Statements and Supplementary Data of this Annual Report on Form 10-K. The results of operations for the periods reflected herein are not necessarily indicative of results that may be expected for future periods, and our actual results may differ materially from those discussed in the forward-looking statements as a result of various factors, including but not limited to those listed under Item 1A. Risk Factors of this Annual Report on Form 10-K and included elsewhere in this Annual Report on Form 10-K.

The following discussion includes a comparison of our results of operations and liquidity and capital resources for fiscal 2019 and 2018. A discussion of a comparison of our results of operations and liquidity and capital resources for fiscal 2018 and 2017 has been omitted from this Form 10-K but may be found in Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended February 2, 2019, filed with the SEC on March 26, 2019.


20

Executive Overview

In March 2020, the World Health Organization declared the coronavirus ("COVID-19") outbreak a pandemic, which continues to spread throughout North America and worldwide. The health and safety of our customers and employees remain our top priority as we continue to make decisions during this rapidly evolving situation. We have taken decisive actions across our businesses to help protect employees, customers and others in the communities we serve. As a measure to limit the spread of the virus, effective March 18, 2020, we temporarily closed all of our stores in the U.S. and Canada. Our e-commerce business will continue to be available to customers and our stores will be used in the fulfillment of online orders to be shipped to customers or available for curbside pickup. During this unprecedented period of uncertainty, we have in place business continuity plans involving adjustments to operational plans, inventory disciplines, liquidity management, and reductions to our expense and capital expenditure plans. Such measures include implementing temporary leaves of absence for over 80% of our workforce without direct pay and pay reductions for nearly all employees not placed on temporary leave. The COVID-19 outbreak and the temporary closure of all of our stores has had a material adverse impact on our business, liquidity, financial condition, and results of operations.

While we cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact, based on our current understanding of governmental mandates and maintaining the health and safety of our customers and employees, we believe our stores will primarily begin re-opening in the second quarter of fiscal 2020 with a gradual return of store traffic through the remainder of fiscal 2020. As such, the impacts of COVID-19 to our businesses are highly uncertain and we will continue to assess the financial impacts. The disruption to the global economy and to our business, along with a sustained decline in our stock price, may lead to triggering events that may indicate that the carrying value of certain assets, including inventories, accounts receivables, long-lived assets, intangibles, and goodwill, may not be recoverable.

In support of our long-term vision to become the leading footwear retailer in the U.S., we continue to invest in our differentiators. These include private labels, exclusive partnerships, our best in class loyalty programs, and customer experiences. We continually explore new ways to expand our audience and gain market share. We were pleased with the performance of our Canada Retail segment during fiscal 2019 with continued positive comparable sales and further margin growth, benefiting from moving their digital offering to the platform we use in the U.S. Following the first full year of operating the Camuto Group business, we remain on track to convert the production of the majority of our DSW private label to the Brand Portfolio segment in fiscal 2020. At that time, we expect to realize the benefits of having greater exclusivity in product offerings at higher margins.

We were faced with challenges both internally and externally in fiscal 2019, primarily during the second half of the year. During our fourth quarter, we were focused on stabilizing the business through remedying several issues within our control. Following the holidays, we instituted a patch for our new POS system that, combined with the discontinued practice of allowing multiple promotions for a single transaction, has positively impacted both net sales and gross profits. In addition, we adjusted our inventory positions and investments in marketing.

Comparable Sales Performance Metric

We consider comparable sales to be an important indicator of the performance of our retail and direct-to-consumer businesses, and investors may find it useful as such. Comparable sales is a primary metric commonly used throughout the retail industry. A store is considered comparable when in operation for at least 14 months at the beginning of the fiscal year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter they are closed. Comparable sales include e-commerce sales. Stores in Canada from the TSL acquisition that were in operation for at least 14 months at the beginning of fiscal 2019, along with its e-commerce sales, were added to the comparable base beginning with the second quarter of fiscal 2019. Comparable sales for the Canada Retail segment exclude the impact of foreign currency translation and are calculated by translating current period results at the foreign currency exchange rate used in the comparable period in the prior year. For the Brand Portfolio segment, sales from the direct-to-consumer www.vincecamuto.com e-commerce site were added to the comparable base beginning with the fourth quarter of fiscal 2019. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation.


21

Comparability

There are a number of items that affect comparability when reviewing our results of operations for fiscal 2019 and 2018. Significant items to consider include:
•
During fiscal 2019, we incurred integration and restructuring costs related to our prior year acquisition activity of $17.7 million, which consisted primarily of severance, fees for terminating joint ventures, and professional fees and other integration costs. Also during fiscal 2019, we recorded impairment charges of $7.8 million, including $4.8 million for operating lease assets and other property and equipment in the Brand Portfolio segment related to the planned consolidation of certain locations as part of our integration efforts and $3.0 million primarily for operating lease assets related to under-performing stores.
•
During fiscal 2018, we recorded impairment charges of long-lived assets of $19.0 million, primarily for an abandoned corporate internal-use software that was under development and leasehold improvements related to under-performing stores, and as a result of our decision to exit the Town Shoes banner, we closed or re-branded all Town Shoes banner stores and recorded lease exit and other termination costs of $16.4 million. Also during fiscal 2018, we incurred restructuring costs of $5.6 million in severance, primarily related to changes in our store labor model and the exit of the Town Shoes banner, and we incurred acquisition-related costs and target acquisition costs of $27.9 million. In addition, fiscal 2018 included the wind-down operations of Ebuys, which included lease exit and other termination costs of $6.6 million and incremental income tax expense of $2.3 million.
•
On May 10, 2018, we acquired the remaining interest in TSL that we did not previously own. TSL results were included in the consolidated results of operations as a wholly owned subsidiary beginning with the second quarter of fiscal 2018. For the first quarter of fiscal 2018, the loss from our equity investment interest in TSL was included in our consolidated results of operations. Due to the acquisition of the remaining interest in TSL, we remeasured to fair value our previously held assets, which included our equity investment in TSL and notes and accounts receivable from TSL. During fiscal 2018, as a result of the remeasurement, we recorded a loss of $34.0 million to non-operating expenses, net. Also during fiscal 2018, we reclassified a net loss of $12.2 million of foreign currency translation related to the previously held balances from accumulated other comprehensive loss to non-operating expenses, net. In addition, with the TSL acquisition being accounted for as a step acquisition, the purchase price included the fair value of our previously held assets, which considered the valuation of the TSL enterprise. This valuation identified that the resulting goodwill was not supportable as the value of the acquired net assets exceeded the enterprise fair value. As a result, during fiscal 2018, we recorded a goodwill impairment charge of $41.8 million, which resulted in impairing all of TSL’s goodwill.
•
On November 5, 2018, we completed the acquisition of Camuto Group. Camuto Group's results were included in the consolidated results of operations as a wholly owned subsidiary beginning with the fourth quarter of fiscal 2018. During fiscal 2018, we recognized $5.3 million of additional cost of sales related to an inventory valuation step-up recorded as part of the acquisition.

Financial Summary

Net sales increased to $3.5 billion for fiscal 2019 from $3.2 billion for fiscal 2018. The 9.9% increase in net sales was driven by incremental net sales from acquired businesses prior to the anniversary of their acquisitions, a 0.8% increase in comparable sales, and an increase for non-comparable store sales, partially offset by the impact of stores closed, primarily the Town Shoes banner stores, the decrease in Brand Portfolio sales after the anniversary of the acquisition, and the loss of sales from the exit of Ebuys.

In fiscal 2019, gross profit as a percentage of net sales was 28.6%, a decrease of 90 basis points from 29.5% in the previous year. The decrease in the gross profit rate was primarily due to the decline in the U.S. Retail segment primarily driven by higher shipping costs in the current year associated with higher digital penetration and a benefit recognized in fiscal 2018 as a result of adjusting our loyalty programs deferred revenue due to the relaunch of the DSW VIP rewards program. The Canada Retail segment gross profit margin improved primarily due to lower clearance activity with improvements in the inventory position and improved leverage in occupancy costs with the exit of the Town Shoes banner last year.

Net income for fiscal 2019 was $94.5 million, or $1.27 per diluted share, which included net after-tax charges of $19.8 million, or $0.26 per diluted share, primarily related to integration and restructuring expenses associated with the businesses acquired in fiscal 2018 and impairment charges. Net loss for fiscal 2018 was $20.5 million, or $0.26 loss per diluted share, which included net after-tax charges of $155.3 million, or $1.92 per diluted share, primarily related to impairment charges, acquisition-related activities, the exit of the Town Shoes banner, other restructuring costs, and the net tax expense impact of finalizing the U.S. Tax Reform implementation assessment.

22


We continue making investments in our business that support our long-term growth objectives. During fiscal 2019, we invested $77.8 million in capital expenditures compared to $65.4 million during fiscal 2018. Our capital expenditures during fiscal 2019 were primarily related to 16 new store openings, store remodels and business infrastructure.

Results of Operations

The following represents selected components of our consolidated results of operations, with associated percentages of net sales:
 
Fiscal
 
 
 
 
 
2019
 
2018
 
Change
(dollars in thousands, except per share amounts)
Amount
 
% of Net Sales
 
Amount
 
% of Net Sales
 
Amount
 
%
Net sales(1)
$
3,492,687

 
100.0
 %
 
$
3,177,918

 
100.0
 %
 
$
314,769

 
9.9
 %
Cost of sales
(2,493,017
)
 
(71.4
)
 
(2,239,229
)
 
(70.5
)
 
(253,788
)
 
11.3
 %
Gross profit(1)
999,670

 
28.6

 
938,689

 
29.5

 
60,981

 
6.5
 %
Operating expenses(1)
(874,749
)
 
(25.1
)
 
(820,222
)
 
(25.7
)
 
(54,527
)
 
6.6
 %
Income from equity investment in ABG-Camuto
10,149

 
0.3

 
1,298

 
0.0

 
8,851

 
681.9
 %
Impairment charges
(7,771
)
 
(0.2
)
 
(60,760
)
 
(1.9
)
 
52,989

 
(87.2
)%
Operating profit
127,299

 
3.6

 
59,005

 
1.9

 
68,294

 
115.7
 %
Interest income (expense), net
(7,355
)
 
(0.2
)
 
1,288

 
0.0

 
(8,643
)
 
NM
Non-operating expenses, net
(170
)
 
(0.0
 )
 
(49,616
)
 
(1.6
)
 
49,446

 
(99.7
)%
Income before income taxes and loss from equity investment in TSL
119,774

 
3.4


10,677

 
0.3

 
109,097

 
1,021.8
 %
Income tax provision
(25,277
)
 
(0.7
)
 
(29,833
)
 
(0.9
)
 
4,556

 
(15.3
)%
Loss from equity investment in TSL
—

 
—

 
(1,310
)
 
0.0

 
1,310

 
NM
Net income (loss)
$
94,497

 
2.7
 %
 
$
(20,466
)
 
(0.6
)%
 
$
114,963

 
NM
Basic and diluted earnings (loss) per share:
 
 
 
 
 
 
 
 
 
 
 
Basic earnings (loss) per share
$
1.28

 
 
 
$
(0.26
)
 
 
 
$
1.54

 
NM
Diluted earnings (loss) per share
$
1.27

 
 
 
$
(0.26
)
 
 
 
$
1.53

 
NM
Weighted average shares used in per share calculations:
 
 
 
 
 
 
 
 
 
 
 
Basic shares
73,602

 
 
 
80,026

 
 
 
(6,424
)
 
(8.0
)%
Diluted shares
74,605

 
 
 
80,026

 
 
 
(5,421
)
 
(6.8
)%
NM - Not meaningful
(1)
We changed our presentation of net sales and gross profit for all periods presented to include commission income. Previously reported other revenue, which primarily included operating sublease income, was reclassified to operating expenses.


23

Net Sales

The following summarizes the change in consolidated net sales from the previous fiscal year:
 
Fiscal
(in thousands)
2019
 
2018
Consolidated net sales for the previous fiscal year
$
3,177,918

 
$
2,805,555

Increase in comparable sales
23,518

 
158,225

Net increase from non-comparable store sales and other changes
11,920

 
55,474

Loss of net sales from closed stores
(50,342
)
 
(11,707
)
Decrease in Brand Portfolio segment net sales after anniversary of acquisition
(7,687
)
 
—

Incremental external net sales from 2018 acquired businesses prior to the anniversary of their acquisitions
342,992

 
309,961

Loss of net sales from the exit of Ebuys and Gordmans
(5,632
)
 
(103,964
)
Net sales during the 53rd week in fiscal 2017
—

 
(35,626
)
Consolidated net sales
$
3,492,687

 
$
3,177,918


The following summarizes net sales by segment:
 
Fiscal
 
Change
(dollars in thousands)
2019
 
2018
 
Amount
 
%
 
Comparable Sales %(1)
Segment net sales:
 
 
 
 
 
 
 
 
 
U.S. Retail
$
2,745,395

 
$
2,738,989

 
$
6,406

 
0.2
 %
 
0.3%
Canada Retail
249,017

 
220,325

 
28,692

 
13.0
 %
 
7.2%
Brand Portfolio
448,285

 
99,812

 
348,473

 
349.1
 %
 
98.8%
Other
122,090

 
128,968

 
(6,878
)
 
(5.3
)%
 
0.3%
Total segment net sales
3,564,787

 
3,188,094

 
376,693

 
11.8
 %
 
0.8%
Elimination of intersegment net sales
(72,100
)
 
(10,176
)
 
(61,924
)
 
608.5
 %
 
 
Consolidated net sales
$
3,492,687

 
$
3,177,918

 
$
314,769

 
9.9
 %
 
 
(1)
For the Canada Retail segment, stores from the TSL acquisition that were in operation for at least 14 months at the beginning of fiscal 2019, along with its e-commerce sales, were added to the comparable base beginning with the second quarter of fiscal 2019. For the Brand Portfolio segment, sales from the direct-to-consumer www.vincecamuto.com e-commerce site were added to the comparable base beginning with the fourth quarter of fiscal 2019.

The increase in net sales was driven by incremental net sales from acquired businesses prior to the anniversary of their acquisitions, a 0.8% increase in comparable sales, and an increase for non-comparable store sales, partially offset by the impact of stores closed, primarily the Town Shoes banner stores, the decrease in Brand Portfolio sales after the anniversary of the acquisition, and the loss of sales from the exit of Ebuys. Within the U.S. Retail segment, comparable sales increased primarily due to higher comparable transactions driven by an increase in traffic, partially offset by a decline in comparable average dollar sales per transaction. Within the Canada Retail segment, comparable sales increased due to higher comparable average dollar sales per transaction, primarily as a result of the significant improvements to its digital platform and lower clearance inventory.


24

The following summarizes gross profit by segment:
 
Fiscal
 
 
 
 
 
 
 
2019
 
2018
 
Change
(dollars in thousands)
Amount
 
% of Segment Net Sales
 
Amount
 
% of Segment Net Sales
 
Amount
 
%
 
Basis Points
Segment gross profit:
 
 
 
 
 
 
 
 
 
 
 
 
 
U.S. Retail
$
786,976

 
28.7
%
 
$
840,174

 
30.7
%
 
$
(53,198
)
 
(6.3
)%
 
(200
)
Canada Retail
79,850

 
32.1
%
 
55,937

 
25.4
%
 
23,913

 
42.7
 %
 
670

Brand Portfolio
114,170

 
25.5
%
 
18,920

 
19.0
%
 
95,250

 
503.4
 %
 
650

Other
26,065

 
21.3
%
 
25,252

 
19.6
%
 
813

 
3.2
 %
 
170

 
1,007,061

 
 
 
940,283

 
 
 
 
 
 
 
 
Elimination of intersegment gross profit
(7,391
)
 
 
 
(1,594
)
 
 
 
 
 
 
 
 
Consolidated gross profit
$
999,670

 
28.6
%
 
$
938,689

 
29.5
%
 
$
60,981

 
6.5
 %
 
(90
)

The U.S. Retail segment gross profit margin declined primarily driven by higher shipping costs in the current year associated with higher digital penetration and a benefit recognized in fiscal 2018 as a result of adjusting our loyalty programs deferred revenue due to the relaunch of the DSW VIP rewards program. The Canada Retail segment gross profit margin improved primarily due to lower clearance activity with improvements in the inventory position and improved leverage in occupancy costs with the exit of the Town Shoes banner last year. The Brand Portfolio segment gross profit for fiscal 2018 includes only the fourth quarter of activity following the acquisition whereas fiscal 2019 includes a full year of activity. The gross profit margin of the Brand Portfolio segment in fiscal 2018 was negatively impacted by the recognition to cost of sales of $5.3 million of inventory step-up value related to the valuation of inventory at acquisition.

Elimination of intersegment gross profit consisted of the following:
 
Fiscal
 
Change
(dollars in thousands)
2019
 
2018
 
Amount
 
%
Elimination of intersegment activity -
 
 
 
 
 
 
 
Net sales recognized by Brand Portfolio segment
$
(72,100
)
 
$
(10,176
)
 
$
(61,924
)
 
608.5
%
Cost of sales:
 
 
 
 
 
 
 
Cost of sales recognized by Brand Portfolio segment
51,068

 
8,098

 
42,970

 
530.6
%
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period
13,641

 
484

 
13,157

 
2,718.4
%
Gross profit
$
(7,391
)
 
$
(1,594
)
 
$
(5,797
)
 
363.7
%

Operating Expenses

Operating expenses as a percentage of net sales were 25.1% and 25.7% for fiscal 2019 and fiscal 2018, respectively. The decrease as a percentage of net sales over the prior year was primarily driven by lower incentive compensation and marketing investments in fiscal 2019, and the impact of lease exit charges and acquisition-related costs in fiscal 2018, partially offset by the impact of including Camuto Group in the consolidated results and higher integration and restructuring charges in fiscal 2019.

Income from equity investment in ABG-Camuto

We account for our equity investment in ABG-Camuto using the equity method of accounting, with the net earnings attributable to our 40% investment being classified within operating profit. ABG-Camuto is an integral part of the Brand Portfolio segment given the licensing agreement between us and ABG-Camuto, which allows us to sell licensed branded products to wholesale customers. Income from equity investment in ABG-Camuto for fiscal 2018 includes only the fourth quarter of activity whereas fiscal 2019 includes a full year of activity.


25

Impairment charges

During fiscal 2019, we recorded impairment charges of $7.8 million, including $4.8 million for operating lease assets and other property and equipment in the Brand Portfolio segment related to the planned consolidation of certain locations as part of our integration efforts and $3.0 million primarily for operating lease assets related to under-performing stores ($2.3 million and $0.7 million for the U.S. Retail and Canada Retail segments, respectively). During fiscal 2018, we recorded impairment charges of $60.8 million, including $41.8 million for Canada Retail segment goodwill, $13.9 million for an abandoned corporate internal-use software that was under development and $5.1 million primarily for leasehold improvements related to under-performing stores. With the TSL acquisition being accounted for as a step acquisition, the purchase price included the fair value of our previously held assets, which considered the valuation of the TSL enterprise. This valuation identified that the resulting goodwill was not supportable as the value of the acquired net assets exceeded the enterprise fair value. As a result, during fiscal 2018, we recorded a goodwill impairment charge that resulted in impairing all of the Canada Retail segment’s goodwill.

Non-operating Expenses, net

Due to the acquisition of the remaining interest in TSL during the second quarter of fiscal 2018, we remeasured to fair value our previously held assets, which included our equity investment in TSL and notes and accounts receivable from TSL. As a result of the remeasurement, we recorded a loss of $34.0 million to non-operating expenses, net. Also during fiscal 2018, we reclassified a net loss of $12.2 million of foreign currency translation related to the previously held balances from accumulated other comprehensive loss to non-operating expenses, net.

Income Taxes

The effective tax rate for fiscal 2019 was 21.1% compared to 318.5% for fiscal 2018. The effective tax rates reflect the impact of federal, state and local, and foreign taxes. During fiscal 2019, we had $3.9 million valuation allowance release primarily related to the net operating loss utilization for our legal entity in Canada. During fiscal 2018, we had $2.1 million of tax expense due to finalizing the U.S. Tax Reform implementation and we had additional tax provision expense of approximately $20.0 million due to recording an additional valuation allowance and nondeductible discrete items, primarily related to the charges recorded as a result of the acquisition of TSL.

Liquidity and Capital Resources

Overview

Our primary ongoing operating cash flow requirements are for inventory purchases, capital expenditures for new stores, improving our information technology systems and infrastructure growth. Our working capital and inventory levels fluctuate seasonally. We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business, pursue our growth strategy and withstand unanticipated business volatility, including the impact of the outbreak of COVID-19. We believe that cash generated from our operations and the business continuity plans put in place, together with our current levels of cash and investments, as well as the use of our Credit Facility, as subsequently amended, are sufficient over the next 12 months to maintain our ongoing operations, support working capital requirements, and fund capital expenditures. The cash generated from operations is based on our expectation of re-opening our stores beginning primarily in the second quarter of fiscal 2020 with a gradual return of store traffic throughout the remainder of fiscal 2020. If additional liquidity is needed, we may take additional actions including adjusting our marketing spend, implement further employee furloughs, reducing the store labor requirements when stores open, and forego additional capital expenditures and other discretionary expenses.

Operating Cash Flows

For fiscal 2019, our net cash provided by operations was $196.7 million compared to $175.3 million for fiscal 2018. The increase in net cash provided by operating activities was driven by distributions received from our equity investment in ABG-Camuto and improved use of working capital over fiscal 2018, as fiscal 2018 had an increased use of cash to fund working capital requirements due to the addition of the acquired businesses.


26

Investing Cash Flows

For fiscal 2019, net cash used in investing activities was $27.4 million, which was due to capital expenditures of $77.8 million, partially offset by the net liquidation of our available-for-sale securities. For fiscal 2018, net cash used in investing activities was $282.0 million, which was due to the acquisitions of TSL and Camuto Group, capital expenditures of $65.4 million and $16.0 million of additional borrowings by TSL prior to the acquisition, partially offset by the net liquidation of our available-for-sale securities.

Financing Cash Flows

For fiscal 2019, net cash used in financing activities was $183.4 million, which was due to the payment of dividends and the repurchase of Class A common shares under the share repurchase program, offset by the additional borrowings on our revolving line of credit, net of payments made, of $30.0 million. During fiscal 2019, we repurchased 7.1 million Class A common shares at a cost of $141.6 million. For fiscal 2018, net cash provided by financing activities was $30.0 million, which was due to borrowings on our revolving line of credit of $160.0 million, offset primarily by the payment of dividends and the repurchase of Class A common shares under the share repurchase program. During fiscal 2018, we repurchased 2.0 million Class A common shares at a cost of $47.5 million.

Debt

Credit Facility- Our Credit Facility, with a maturity date of August 25, 2022, provides a revolving line of credit up to $400 million, with sub-limits for the issuance of up to $50 million in letters of credit, swing loan advances of up to $15 million, and the issuance of up to $75 million in foreign currency revolving loans and letters of credit. The Credit Facility may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the Credit Facility. Our Credit Facility allows the payments of dividends by us or our subsidiaries, provided that immediately before and after a dividend payment there is no event of default, as defined in our Credit Facility.

Loans issued under the revolving line of credit bear interest, at our option, at a base rate or an alternate base rate as defined in the Credit Facility plus a margin based on our leverage ratio, with an interest rate of 3.4% as of February 1, 2020. Any loans issued in CAD bear interest at the alternate base rate plus a margin based on our leverage ratio. Interest on letters of credit issued under the Credit Facility is variable based on our leverage ratio and the type of letters of credit, with an interest rate of 1.8% as of February 1, 2020. Commitment fees are based on the average unused portion of the Credit Facility at a variable rate based on our leverage ratio. As of February 1, 2020 and February 2, 2019, we had $190.0 million and $160.0 million, respectively, outstanding under the Credit Facility. As of February 1, 2020, with the amount outstanding under the Credit Facility and $3.0 million in letters of credit issued, we had $207.0 million available for borrowings. Interest expense related to the Credit Facility includes interest on borrowings and letters of credit, commitment fees and the amortization of debt issuance costs.

Debt Covenants- The Credit Facility contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and investments, as well as the maintenance of a leverage ratio not to exceed 3.25:1 and a fixed charge coverage ratio not to be less than 1.75:1. A violation of any of the covenants could result in a default under the Credit Facility that would permit the lenders to restrict our ability to further access the Credit Facility for loans and letters of credit and require the immediate repayment of any outstanding loans under the Credit Facility. As of February 1, 2020, we were in compliance with all financial covenants.

Subsequent Events- Subsequent to February 1, 2020, we borrowed $205.0 million from the Credit Facility as a precautionary measure to increase our cash position and preserve financial flexibility considering uncertainty in the U.S. and global markets resulting from COVID-19, resulting in $2.0 million of available for borrowing.

On April 30, 2020, the Credit Facility was amended, which resulted in various changes including:
•
Provides for a lien on all of the Company's assets;
•
Reduces the borrowing availability to $375.0 million on October 31, 2020, $350.0 million on January 30, 2021, $325.0 million on May 1, 2021, and $300.0 million on July 31, 2021;
•
Redefines the components for calculating the leverage ratio and fixed charge coverage ratio to adjust for certain temporary impacts due to COVID-19;
•
Changes the maximum leverage ratio covenant to 3.50:1 as of May 2, 2020, 4.00:1 as of August 1, 2020, 3.75:1 as of October 31, 2020, and 3.50:1 as of January 30, 2021 and as of the end of each fiscal quarter thereafter;

27

•
Changes the minimum fixed charge coverage ratio to 1.25:1 as of May 2, 2020 and 1.05:1 as of August 1, 2020 and as of the end of each fiscal quarter thereafter; and
•
Restricts the Company from paying dividends, making share repurchases, and making certain acquisitions.

Capital Expenditure Plans

We expect to significantly reduce capital expenditures in fiscal 2020 in response to the COVID-19 outbreak. For fiscal 2020, we had started working on new stores and we are reevaluating those plans. Our future investments will depend primarily on the number of stores we will be required to open based on commitments previously made.

Off-Balance Sheet Liabilities and Other Contractual Obligations

We do not have any material off-balance sheet arrangements as defined by Item 303(a)(4) of Regulation S-K. The following table presents a summary of our minimum contractual commitments and obligations as of February 1, 2020:
 
Payments due by Period
(in thousands)
Total
 
Less Than
1 Year
 
1 - 3
Years
 
3 -5
Years
 
More Than
5 Years
Operating lease liabilities
$
1,165,894

 
$
223,107

 
$
428,585

 
$
270,205

 
$
243,997

Debt, including estimated interest payments(1)
206,881

 
6,565

 
200,316

 
—

 
—

Minimum license commitments(2)
276,131

 
33,659

 
67,318

 
68,618

 
106,536

Purchase obligations(3)
11,709

 
9,838

 
1,871

 
—

 
—

Total
$
1,660,615

 
$
273,169

 
$
698,090

 
$
338,823

 
$
350,533

(1)
Interest payments on our revolving line of credit were estimated using the effective interest rate as of February 1, 2020 and assuming interest payments on $190.0 million outstanding on our revolving line of credit through August 25, 2022, the maturity date of our Credit Facility.
(2)
Minimum license commitments include guaranteed minimum royalties, including amounts due to the ABG-Camuto joint venture, and fixed licensing and other fees due to other parties.
(3)
Purchase obligations include commitments where we would not be able to cancel such obligations without payment or penalty, including items to be purchased for projects that were under construction or for which a lease has been signed.

Recent Accounting Pronouncements

The information related to recent accounting pronouncements as set forth in Note 1, Significant Accounting Policies, of the Consolidated Financial Statements included in this Annual Report on Form 10-K is incorporated herein by reference.

Critical Accounting Policies and Estimates

As discussed in Note 1, Significant Accounting Policies, of the Consolidated Financial Statements included in this Annual Report on Form 10-K, the preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the U.S. ("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of commitments and contingencies at the date of the consolidated financial statements and reported amounts of revenue and expenses during the reporting period. We base these estimates and judgments on factors we believe to be relevant, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial and appraisal techniques. We constantly re-evaluate these significant factors and make adjustments where facts and circumstances dictate.

While we believe that the factors considered provide a meaningful basis for the accounting policies applied in the preparation
of the consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. As the determination of these estimates requires the exercise of judgment, actual results may differ from those estimates, and such differences may be material to our consolidated financial statements.


28

We believe the following represent the most significant accounting policies, critical estimates and assumptions, among others, used in the preparation of our consolidated financial statements:
Policy
Judgments and Estimates
Effect if Actual Results Differ from Assumptions
Business Combinations. We account for business combinations using the acquisition method of accounting, which requires that once control is obtained, all the assets acquired and liabilities assumed be recorded at their respective fair values at the date of acquisition. The determination of fair values of assets and liabilities acquired requires estimates and the use of valuation techniques when market value is not readily available. Any excess of purchase price over the fair value of net tangible and intangible assets acquired is allocated to goodwill.

The fair values for property and equipment were determined using the cost and market approaches. The fair value of inventories, which is made up of finished goods, was determined based on market assumptions for realizing a reasonable profit after selling costs. For intangible assets, we generally use an income approach to determine fair value. The income approach requires management to make significant estimates and assumptions. These estimates and assumptions may include the use of discount rates, growth rates, customer attrition rates, royalty rates, and forecasts of net sales and operating income. The discount rates applied to the projections reflect the risk factors associated with those projections. We determined that goodwill should be allocated to reporting units within the U.S. Retail and Brand Portfolio segments based on each reporting unit’s estimated benefit from the expected synergies from the Camuto Group acquisition.
We allocated $67.8 million of the goodwill to the U.S. Retail segment based primarily on a discounted cash flow of the sourcing benefit. The remaining $20.0 million of goodwill was allocated to the First Cost reporting unit within the Brand Portfolio segment based on the fair value of the reporting unit over the fair value of the net assets allocated to the reporting unit. Although we believe our estimates of fair value are reasonable, actual financial results could differ from those estimates due to the inherent uncertainty involved in making such estimates. Changes in assumptions concerning future financial results or other underlying assumptions could result in future impairment charges of long-lived assets and goodwill and other indefinite lived intangible assets, discussed in more detail below.
Impairment of Goodwill and Other Indefinite Lived Intangible Assets. We evaluate goodwill and other indefinite lived intangible assets for impairment annually during our fourth quarter, or more frequently if an event occurs or circumstances change, such as material deterioration in performance or a significant and sustained decline in our stock price, that would indicate that impairment may exist. When evaluating for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that there is an impairment. If we do not perform a qualitative assessment, or if we determine that it is more likely than not that the carrying value exceeds its fair value, we will calculate the estimated fair value. Fair value is the price a willing buyer would pay and is typically calculated using a discounted cash flow analysis. Where deemed appropriate, we may also utilize a market approach for estimating fair value. Impairment charges are calculated as the amount by which the carrying amount exceeds its fair value, but not to exceed the carrying value for goodwill.
When assessing goodwill and other indefinite lived intangible assets for impairment, our decision to perform a qualitative impairment assessment is influenced by a number of factors, including the significance of the excess of the estimated fair value over carrying value at the last assessment date and the amount of time since the last quantitative fair value assessments. Our impairment calculations contain uncertainties as we are required to make assumptions and to apply judgment when estimating future cash flows, including projected revenue growth and operating income, as well as selecting an appropriate discount rate and assumed royalty rate. Estimates of revenue growth and operating income are based on internal projections considering past performance and forecasted growth, strategic initiatives, and the business environment impacting performance. The discount rate and royalty rate are selected based on market participant assumptions. These estimates are highly subjective, and our ability to realize the future cash flows used in our fair value calculations is affected by factors such as the success of strategic initiatives, changes in economic conditions, changes in our operating performance and changes in our business strategies.
As of February 1, 2020, we had $93.7 million in goodwill within the U.S. Retail segment, which is also the reporting unit, and $20.0 million within the Brand Portfolio segment for the First Cost reporting unit, and $15.5 million in indefinite-lived trademarks and tradenames. We determined the fair value of the reporting units and of the indefinite-lived intangibles was significantly in excess of their carrying value and a 10% decrease in fair value would not result in an impairment charge. Accordingly, we did not recognize an impairment charge during fiscal 2019. However, as we periodically reassess estimated future cash flows and asset fair values, changes in our estimates and assumptions may cause us to realize material impairment charges in the future.

29

Policy
Judgments and Estimates
Effect if Actual Results Differ from Assumptions
Asset Impairment of Long-lived Assets. We periodically evaluate the carrying amount of our long-lived assets, primarily property and equipment and operating lease assets, when events and circumstances warrant such a review to ascertain if any assets have been impaired. The carrying amount of a long-lived asset or asset group is considered impaired when the carrying value of the asset or asset group exceeds the expected future cash flows from the asset or asset group. The impairment loss recognized is the excess of the carrying value of the asset or asset group over its fair value.
Our reviews are conducted at the lowest identifiable level, which typically is at the store level for the majority of our long-lived assets. Fair value at the store level is typically based on projected discounted cash flows using a discount rate determined by management. We also review construction in progress projects, including internal-use software under development, for recoverability when we have a strategic shift in our plans.
A 10% change in our projected cash flows for our store fleet would not result in a material amount of additional impairment charges. To the extent these future projections or our strategies change, the conclusion regarding impairment may differ from our current estimates.
Inventories. The U.S. Retail segment accounts for inventory using the retail inventory method and is stated at the lower of cost or market. Under the retail inventory method, the valuation of inventories at cost and the resulting gross profits are determined by applying a calculated cost-to-retail ratio to the retail value of inventories. The cost basis of inventories reflected on the balance sheet is decreased by charges to cost of sales at the time the retail value of the inventory is lowered by markdowns. The Canada Retail and Brand Portfolio segments account for inventory using the weighted average cost method and is stated at the lower of cost or net realizable value. We monitor aged inventory for obsolete and slow-moving inventory that may need to be liquidated at amounts below cost. Reductions to inventory values establish a new cost basis. Favorable changes in facts or circumstances do not result in an increase in the newly established cost basis.

We perform physical inventory counts or cycle counts on all inventory on hand throughout the year and adjust the recorded balance to reflect the results. We record estimated shrinkage between physical inventory counts based on historical experience and recent results.
Inherent in the calculation of inventories are certain significant judgments and estimates, including setting the original merchandise retail value, markdowns, shrinkage, and liquidation values. Shrinkage is calculated as a percentage of sales from the last physical inventory date based on both historical experience as well as recent physical inventory results. Aged inventory may be written down using estimated liquidation values and cost of disposal based on historical experience.
If the reduction to inventories for markdowns, shrinkage, and aged inventories were to change by 10%, cost of sales would increase by approximately $4.3 million.
Customer Allowances and Discounts. We reduce net sales by the amount of actual and remaining expected customer allowances and discounts.
Customer allowances are provided to our wholesale customers for margin assistance, co-op advertising support, and various other deductions. We estimate the reserves needed for margin assistance by reviewing inventory levels held by retailers, expected markdowns, gross margins realized, and other performance indicators. Other customer deductions are estimated using historical experience and anticipated future trends. Co-op advertising allowances are estimated based on arrangements with customers. We continually track the customer allowances and discounts provided to support our estimated reserves and adjust accordingly.
As of February 1, 2020, the reserve for customer allowances and discounts was $11.5 million.

30

Policy
Judgments and Estimates
Effect if Actual Results Differ from Assumptions
Leases. We recognize lease liabilities based on the present value of the future fixed lease commitments over the lease term with corresponding lease assets. The majority of our real estate leases provide for renewal options, which are typically not included in the lease term used for measuring the lease assets and lease liabilities as it is not reasonably certain we will exercise options.
We determine the discount rate for each lease by estimating the rate that we would be required to pay on a secured borrowing for an amount equal to the lease payments over the lease term.
As of February 1, 2020, a change in our discount rate of 100 basis points would have changed the recorded operating lease assets and liabilities by $31.0 million.
Foreign Tax Contingencies. During the due diligence procedures performed related to the acquisition of Camuto Group, we identified probable contingent liabilities associated with unpaid foreign payroll and other taxes that could also result in assessed penalties and interest.
We developed an initial estimate of the range of outcomes related to these obligations and have since refined our estimates with additional analysis. Our current estimate of the range of outcomes is now $28.1 million to $40.0 million for obligations we are aware of at this time. We recorded a contingent liability for the low end of the range and an indemnification asset of $24.5 million representing the estimated amount we expect to collect under the terms of the securities purchase agreement with the Sellers. We are continuing to assess the exposure, which may result in material changes to these estimates, and we may identify additional contingent liabilities. We believe that the Sellers are obligated to indemnify us for any payments to foreign taxing authorities for the periods up to the acquisition date. Although a portion of the purchase price is held in escrow and another portion is held in a restricted bank account, there can be no assurance that we will successfully collect all amounts that we may be obligated to settle with the foreign taxing authorities.
As of February 1, 2020, our liability for foreign tax contingencies was $28.1 million with an estimated range of outcomes of $28.1 million to $40.0 million for obligations we are aware of at this time.
Income Taxes. We determine the aggregate amount of income tax expense to accrue and the amount which will be currently payable based upon tax statutes of each jurisdiction we do business in. Deferred tax assets and liabilities, as a result of these timing differences, are reflected on our balance sheet for temporary differences that will reverse in subsequent years. A valuation allowance is established against deferred tax assets when it is more likely than not that some or all of the deferred tax assets will not be realized. We review and update our tax positions as necessary to add any new uncertain tax positions taken, or to remove previously identified uncertain positions that have been adequately resolved. Additionally, uncertain positions may be remeasured as warranted by changes in facts or law.
Tax laws, regulations, and policies in various jurisdictions may be subject to significant change due to economic, political and other conditions, and significant judgment is required in estimating our provision and accruals for taxes. There may be transactions that occur during the ordinary course of business for which the ultimate tax determination is uncertain. The U.S. Treasury Department, the U.S. Internal Revenue Service, and other standard-setting bodies could interpret or issue guidance on how provisions of tax laws, regulations, and policies will be applied or otherwise administered that is different from our interpretation. In addition, state, local or foreign jurisdictions may enact tax laws that could result in further changes to taxation and materially affect our financial position and results of operations.
As of February 1, 2020, we had a valuation allowance of $9.5 million and gross unrecognized tax benefits of $10.8 million. However, we may be required to make adjustments that may materially impact our provision for income taxes in the period in which the adjustments are made based on additional information, additional guidance or revised interpretations.

ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have market risk exposure related to interest rates and foreign currency exchange rates. Market risk is measured as the potential negative impact on earnings, cash flows or fair values resulting from a hypothetical change in interest rates or foreign currency exchange rates over the next year. We currently do not utilize hedging instruments to mitigate these market risks.

Interest Rate Risk

We hold available-for-sale securities, which are not materially affected by changes in market interest rates. Also, as of February 1, 2020, we had $190.0 million outstanding on our revolving line of credit under our Credit Facility. Borrowings under our Credit Facility are based on a variable rate of interest, which exposes us to interest rate market risks, particularly during a period of rising interest rates. The impact of a hypothetical 100 basis point increase in interest rates on our revolving line of credit would not result in a material amount of additional expense over a 12-month period based on the balance as of February 1, 2020.

Foreign Currency Exchange Risk

We are exposed to the impact of foreign exchange rate risk primarily through our operations in Canada where the functional currency is the Canadian dollar, as well as foreign denominated cash accounts. A hypothetical 10% movement in the exchange rates could result in a $2.1 million foreign currency translation fluctuation, which would be recorded in accumulated other comprehensive loss within the consolidated balance sheets, and $0.5 million of foreign currency revaluation, which would be recorded in non-operating expenses, net within the consolidated statements of operations.

ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Our consolidated financial statements and the Report of Independent Registered Public Accounting Firm thereon are filed pursuant to this Item 8 and are included in this report beginning on page F-1.

ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL    DISCLOSURE

None.

ITEM 9A.
CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded, as of the end of the period covered by this Annual Report, that such disclosure controls and procedures were effective.

Management's Report on Internal Control over Financial Reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting for us (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States of America. Management assessed the effectiveness of our internal control system as of February 1, 2020. In making its assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control - Integrated Framework (2013). Based on this assessment, management concluded that our internal control over financial reporting was effective to provide reasonable assurance regarding the reliability of financial reporting.

Deloitte & Touche LLP, our independent registered public accounting firm, has issued an attestation report covering our internal control over financial reporting, as stated in its report on page F-1 of this Annual Report.


31

Changes in Internal Control over Financial Reporting

During fiscal 2018, we acquired TSL and Camuto Group and integrated TSL and Camuto Group into our system of internal controls during fiscal 2019. As a result, our internal control over financial reporting now includes controls and procedures with respect to transactions and account balances of TSL and Camuto Group. Other than the changes with regard to TSL and Camuto Group, no change was made in our internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d -15(e), during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B.
OTHER INFORMATION

Fourth Amendment to Credit Agreement

The information set forth below is included herein for the purpose of providing disclosure under Item 1.01 (Entry into a Material Definitive Agreement) and Item 2.03 (Creation of a Direct Financial Obligation or an Obligation under an Off-Balance Sheet Arrangement of a Registrant) of Form 8-K.

On April 30, 2020, the Company and certain of its subsidiaries entered into a Fourth Amendment to the Credit Agreement (the "Amendment"), which amends the Credit Facility, dated as of August 25, 2017, as amended, among the Company as lead borrower, certain of the Company’s Canadian subsidiaries that may become borrowers thereunder, certain of the Company’s domestic subsidiaries as guarantors, the lenders party thereto, and PNC Bank, National Association as administrative agent (the "Agent") for the lenders. The Amendment, among other matters, makes the following modifications to the Credit Facility:
•
Provides for a lien on all of the Company's assets;
•
Reduces the borrowing availability to $375.0 million on October 31, 2020, $350.0 million on January 30, 2021, $325.0 million on May 1, 2021, and $300.0 million on July 31, 2021;
•
Redefines the components for calculating the leverage ratio and fixed charge coverage ratio to adjust for certain temporary impacts due to COVID-19;
•
Changes the maximum leverage ratio covenant to 3.50:1 as of May 2, 2020, 4.00:1 as of August 1, 2020, 3.75:1 as of October 31, 2020, and 3.50:1 as of January 30, 2021 and as of the end of each fiscal quarter thereafter;
•
Changes the minimum fixed charge coverage ratio to 1.25:1 as of May 2, 2020 and 1.05:1 as of August 1, 2020 and as of the end of each fiscal quarter thereafter; and
•
Restricts the Company from paying dividends, making share repurchases, and making certain acquisitions.

The foregoing summary of the Amendment does not purport to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Amendment, which is filed as Exhibit 10.4.4 to this Annual Report on Form 10-K and incorporated herein by reference, and the Pledge and Security Agreement entered into as of April 30, 2020 by the Company and certain of its subsidiaries in favor of the Agent for the secured parties, which is filed as Exhibit 10.4.5 hereto and incorporated herein by reference.

PART III

ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information contained under the captions "EXECUTIVE OFFICERS," "ELECTION OF DIRECTORS" and "OTHER DIRECTOR INFORMATION, BOARD COMMITTEES, AND CORPORATE GOVERNANCE INFORMATION" in our definitive Proxy Statement for the 2020 Annual Meeting of Shareholders, to be filed with the SEC pursuant to Regulation 14A promulgated under the Exchange Act (the "Proxy Statement"), is incorporated herein by reference.


32

ITEM 11.
EXECUTIVE COMPENSATION

The information contained under the captions "COMPENSATION OF MANAGEMENT," "OTHER DIRECTOR INFORMATION, BOARD COMMITTEES, AND CORPORATE GOVERNANCE INFORMATION," "REPORT OF THE COMPENSATION COMMITTEE" and "COMPENSATION DISCUSSION AND ANALYSIS" in the Proxy Statement is incorporated herein by reference. Notwithstanding the foregoing, the information contained in the Proxy Statement under the caption "REPORT OF THE COMPENSATION COMMITTEE" shall be deemed furnished, and not filed, in this Annual Report on Form 10-K and shall not be deemed incorporated by reference into any filing we make under the Securities Act of 1933, as amended, or the Exchange Act.

ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information contained under the caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT" in the Proxy Statement is incorporated herein by reference.

Equity Compensation Plan Information

The following table sets forth additional information, as of February 1, 2020, about our Class A common shares that may be issued upon the exercise of options and other rights under our existing equity compensation plans and arrangements, divided between plans approved by our shareholders and plans or arrangements not submitted to our shareholders for approval. The information includes the number of shares covered by, and the weighted average exercise price of, outstanding options, warrants and other rights and the number of shares remaining available for future grants, excluding the shares to be issued upon exercise of outstanding options, warrants and other rights.





Plan Category
 
(a) Number of securities to be issued upon exercise of outstanding options, warrants and rights(1)(2)(3)
 


(b) Weighted-average exercise price of outstanding options, warrants and rights(2)
 
(c) Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a))(3)
Equity compensation plans approved by security holders
 
6,667,818

 
$
24.90

 
2,928,565

Equity compensation plans not approved by security holders
 
N/A

 
N/A

 
N/A

Total
 
6,667,818

 
$
24.90

 
2,928,565

N/A - Not applicable
(1)
DSW Inc. 2005 Equity Incentive Plan.
(2)
Includes 3,760,688 shares issuable pursuant to the exercise of outstanding stock options, 1,686,981 shares issuable pursuant to restricted stock units, 767,537 shares issuable pursuant to performance-based restricted stock units and 452,612 shares issuable pursuant to director stock units. Since the restricted stock units, performance-based restricted stock units and director stock units have no exercise price, they are not included in the weighted average exercise price calculation in column (b).
(3)
DSW Inc. 2014 Equity Incentive Plan.

ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information contained under the captions "CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS" and "OTHER DIRECTOR INFORMATION, BOARD COMMITTEES, AND CORPORATE GOVERNANCE INFORMATION" in the Proxy Statement is incorporated herein by reference.

ITEM 14.
PRINCIPAL ACCOUNTING FEES AND SERVICES

The information contained under the caption "AUDIT AND OTHER SERVICE FEES" in the Proxy Statement is incorporated herein by reference.


33

PART IV

ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES

(a)(1) Financial Statements

The documents listed below are filed as part of this Form 10-K:
 
Page
Report of Independent Registered Public Accounting Firm
F-1
Consolidated Statements of Operations for the years ended February 1, 2020, February 2, 2019 and February 3, 2018
F-3
Consolidated Statements of Comprehensive Income (Loss) for the years ended February 1, 2020, February 2, 2019 and February 3, 2018
F-4
Consolidated Balance Sheets as of February 1, 2020 and February 2, 2019
F-5
Consolidated Statements of Shareholders' Equity for the years ended February 1, 2020, February 2, 2019 and February 3, 2018
F-6
Consolidated Statements of Cash Flows for the years ended February 1, 2020, February 2, 2019 and February 3, 2018
F-7
Notes to Consolidated Financial Statements
F-8

(a)(2) Consolidated Financial Statement Schedules:

Schedules not filed are omitted because of the absence of the conditions under which they are required or because the required information is included in the financial statements or the notes thereto.

(a)(3) and (b) Exhibits:
Exhibit No.
 
Description
2.1
 
2.2
 
2.3
 
2.3.1
 
2.3.2
 
3.1
 
3.2
 
4.1
 
4.2*
 

34
Table of Contents

Exhibit No.
 
Description
10.1
 
10.1.1
 
10.2#
 
10.2.1#
 
10.2.2#
 
10.3#
 
10.3.1#
 
10.3.2#*
 
10.3.3#*
 
10.3.4#*
 
10.3.5#*
 
10.3.6#*
 
10.4
 
10.4.1*
 
10.4.2
 
10.4.3*
 
10.4.4*
 
10.4.5*
 
10.5
 
10.6#
 
10.7*
 
10.8
 
10.9
 
10.9.1
 

35
Table of Contents

Exhibit No.
 
Description
10.10
 
10.10.1
 
10.10.2
 
10.10.3
 
10.10.4
 
10.10.5
 
10.10.6
 
10.11#
 
10.12
 
10.12.1
 
10.12.2
 
10.12.3
 
10.12.4
 
10.13
 
10.14#
 
10.14.1#
 
10.15#
 
10.16#
 
10.17#
 
10.18#
 
10.19#*
 

36
Table of Contents

Exhibit No.
 
Description
10.20#*
 
10.20.1#*
 
10.21#*
 
21.1*
 
23.1*
 
24.1*
 
31.1*
 
31.2*
 
32.1*
 
32.2*
 
101*
 
The following materials from the Designer Brands Inc. Annual Report on Form 10-K for the year ended February 1, 2020, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Consolidated Statements of Operations; (ii) Consolidated Statements of Comprehensive Income (Loss); (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Shareholders’ Equity; (v) Consolidated Statements of Cash Flows; and (vi) Notes to Consolidated Financial Statements.
104*
 
Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.
*
Filed herewith.
#
Management contract or compensatory plan or arrangement.

(c) Additional Financial Statement Schedules:

None.

ITEM 16.
FORM 10-K SUMMARY

None.


37
Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
DESIGNER BRANDS INC.
 
 
 
May 1, 2020
By:
/s/ Jared Poff
 
 
Jared Poff,
Executive Vice President and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons in the capacities and on the dates indicated.
Signature
 
Title
 
Date
 
 
 
 
 
/s/ Roger Rawlins
 
Chief Executive Officer and Director
 
May 1, 2020
Roger Rawlins
 
(Principal Executive Officer)
 
 
 
 
 
 
 
/s/ Jared Poff
 
Executive Vice President and Chief Financial Officer
 
May 1, 2020
Jared Poff
 
(Principal Financial Officer)
 
 
 
 
 
 
 
/s/ Mark Haley
 
Senior Vice President and Controller
 
May 1, 2020
Mark Haley
 
(Principal Accounting Officer)
 
 
 
 
 
 
 
*
 
Executive Chairman of the Board and Director
 
May 1, 2020
Jay L. Schottenstein
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Peter Cobb
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Joanne Zaiac
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Elaine J. Eisenman
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Carolee Lee
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Joanna T. Lau
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Joseph A. Schottenstein
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Harvey L. Sonnenberg
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Allan J. Tanenbaum
 
 
 
 
 
 
 
 
 
*
 
Director
 
May 1, 2020
Ekta Singh-Bushell
 
 
 
 

*By:
/s/ Jared Poff
 
Jared Poff (Attorney-in-fact)


38

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the shareholders and the Board of Directors of Designer Brands Inc.

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Designer Brands Inc. and subsidiaries (the "Company") as of February 1, 2020 and February 2, 2019, the related consolidated statements of operations, comprehensive income (loss), shareholders' equity, and cash flows, for each of the three years in the period ended February 1, 2020, and the related notes (collectively referred to as the "financial statements"). We also have audited the Company’s internal control over financial reporting as of February 1, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 1, 2020 and February 2, 2019, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2020, in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.
Change in Accounting Principle
As discussed in Note 1 to the financial statements, the Company has changed its method of accounting for leases, effective February 3, 2019, due to adoption of Accounting Standards Update 2016-02, Leases, using the modified retrospective approach.

Basis for Opinions

The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the financial statements included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures to respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.


F-1

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Valuation of Inventories - Refer to Note 1 to the financial statements
Critical Audit Matter Description
The U.S. Retail segment, which includes stores operated in the U.S. under the DSW Designer Shoe Warehouse banner and its related e-commerce site, accounts for inventory using the retail inventory method and is stated at the lower of cost or market. Under the retail inventory method, the valuation of inventories at cost and the resulting gross profits are determined by applying a calculated cost-to-retail ratio to the retail value of inventories. The cost basis of inventories reflected on the balance sheet is decreased by charges to cost of sales at the time the retail value of the inventory is lowered by markdowns.
Inherent in the valuation of inventory are certain significant judgments and estimates, including estimating inventory markdowns, which can significantly impact the ending inventory valuation and the resulting gross profit. Earnings are negatively impacted as the merchandise is marked down prior to sale.
Given the significant estimates and assumptions management utilizes to measure inventory markdowns at period end, a high degree of auditor judgment and an increased extent of effort is required when performing audit procedures to evaluate the reasonableness of estimates and assumptions. Such estimates are based on the timing and completeness of recorded markdowns.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the completeness of estimated inventory markdowns included the following, among others:
•
We tested the effectiveness of controls over the timing and completeness of estimated inventory markdowns, including those over the determination of estimated inventory markdowns and those over the lowering of the retail value of inventory through markdowns.
•
We evaluated management’s ability to accurately estimate inventory markdowns by comparing estimated inventory markdowns as of February 1, 2020 to subsequent sales of clearance inventory.
•
We tested the amount of estimated inventory markdowns recorded by developing an expectation for the amount based on the historical amounts recorded as a percentage of sales and compared our expectation to the amount recorded by management.
•
We observed physical inventory counts throughout the fiscal year, including merchandise designated for clearance. We assessed inventory aging and sell through as of March 2020.


/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
May 1, 2020

We have served as the Company's auditor since 1997.



F-2

DESIGNER BRANDS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
 
Fiscal
 
2019
 
2018
 
2017
Net sales
$
3,492,687

 
$
3,177,918

 
$
2,805,555

Cost of sales
(2,493,017
)
 
(2,239,229
)
 
(2,006,423
)
Operating expenses
(874,749
)
 
(820,222
)
 
(617,381
)
Income from equity investment in ABG-Camuto
10,149

 
1,298

 
—

Impairment charges
(7,771
)
 
(60,760
)
 
(89,440
)
Change in fair value of contingent consideration liability
—

 
—

 
32,747

Operating profit
127,299

 
59,005

 
125,058

Interest expense
(8,914
)
 
(2,433
)
 
(488
)
Interest income
1,559

 
3,721

 
3,277

Interest income (expense), net
(7,355
)

1,288

 
2,789

Non-operating expenses, net
(170
)
 
(49,616
)
 
(1,885
)
Income before income taxes and income (loss) from equity investment in TSL
119,774

 
10,677

 
125,962

Income tax provision
(25,277
)
 
(29,833
)
 
(59,567
)
Income (loss) from equity investment in TSL
—

 
(1,310
)
 
1,057

Net income (loss)
$
94,497


$
(20,466
)
 
$
67,452

Basic and diluted earnings (loss) per share:
 
 
 
 
 
Basic earnings (loss) per share
$
1.28

 
$
(0.26
)
 
$
0.84

Diluted earnings (loss) per share
$
1.27

 
$
(0.26
)
 
$
0.84

Weighted average shares used in per share calculations:
 
 
 
 
 
Basic shares
73,602

 
80,026

 
80,160

Diluted shares
74,605

 
80,026

 
80,687


The accompanying Notes are an integral part of the Consolidated Financial Statements.


F-3
Table of Contents

DESIGNER BRANDS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(in thousands)
 
Fiscal
 
2019
 
2018
 
2017
Net income (loss)
$
94,497

 
$
(20,466
)
 
$
67,452

Other comprehensive income, net of income taxes:
 
 
 
 
 
Foreign currency translation gain (loss)
(340
)
 
(7,013
)
 
3,681

Unrealized net gain (loss) on debt securities
609

 
192

 
(1,095
)
Reclassification adjustment for net losses (gains) realized in net income (loss)
(58
)
 
14,189

 
1,281

Total other comprehensive income, net of income taxes
211

 
7,368

 
3,867

Total comprehensive income (loss)
$
94,708

 
$
(13,098
)
 
$
71,319


The accompanying Notes are an integral part of the Consolidated Financial Statements.


F-4
Table of Contents

DESIGNER BRANDS INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
 
February 1, 2020
 
February 2, 2019
ASSETS
 
 
 
Cash and cash equivalents
$
86,564

 
$
99,369

Investments
24,974

 
69,718

Accounts receivable, net
89,151

 
68,870

Inventories
632,587

 
645,317

Prepaid expenses and other current assets
67,534

 
71,945

Total current assets
900,810

 
955,219

Property and equipment, net
395,009

 
409,576

Operating lease assets
918,801

 
—

Goodwill
113,644

 
89,513

Intangible assets
22,846

 
46,129

Deferred tax assets
31,863

 
30,283

Equity investment in ABG-Camuto
57,760

 
58,125

Other assets
24,337

 
31,739

Total assets
$
2,465,070

 
$
1,620,584

LIABILITIES AND SHAREHOLDERS' EQUITY
 
 
 
Accounts payable
$
299,072

 
$
261,625

Accrued expenses
194,264

 
201,535

Current operating lease liabilities
186,695

 
—

Total current liabilities
680,031

 
463,160

Debt
190,000

 
160,000

Non-current operating lease liabilities
846,584

 
—

Other non-current liabilities
27,541

 
165,047

Total liabilities
1,744,156

 
788,207

Commitments and contingencies


 


Shareholders' equity:
 
 
 
Common shares paid in-capital, no par value
971,380

 
953,801

Treasury shares, at cost
(515,065
)
 
(373,436
)
Retained earnings
267,094

 
254,718

Accumulated other comprehensive loss
(2,495
)
 
(2,706
)
Total shareholders' equity
720,914

 
832,377

Total liabilities and shareholders' equity
$
2,465,070


$
1,620,584


The accompanying Notes are an integral part of the Consolidated Financial Statements.


F-5
Table of Contents

DESIGNER BRANDS INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(in thousands, except per share data)
 
Number of Shares
 
Amounts
 
 
 
Class A
common
shares
 
Class B
common
shares
 
Treasury shares
 
Common shares paid in capital
 
Treasury shares
 
Retained
earnings
 
Accumulated other comprehensive loss
 


Total
Balance, January 28, 2017
72,447

 
7,733

 
12,591

 
$
921,358

 
$
(316,531
)
 
$
351,350

 
$
(13,941
)
 
$
942,236

Net income
—

 
—

 
—

 
—

 
—

 
67,452

 
—

 
67,452

Stock-based compensation activity
347

 
—

 
—

 
14,894

 
—

 
—

 
—

 
14,894

Repurchase of Class A common shares
(500
)
 
—

 
500

 
—

 
(9,375
)
 
—

 
—

 
(9,375
)
Dividends paid ($0.80 per share)
—

 
—

 
—

 
—

 
—

 
(63,823
)
 
—

 
(63,823
)
Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
3,867

 
3,867

Balance, February 3, 2018
72,294

 
7,733

 
13,091

 
936,252

 
(325,906
)
 
354,979

 
(10,074
)
 
955,251

Net loss
—

 
—

 
—

 
—

 
—

 
(20,466
)
 
—

 
(20,466
)
Stock-based compensation activity
378

 
—

 
—

 
17,549

 
—

 
—

 
—

 
17,549

Repurchase of Class A common shares
(2,000
)
 
—

 
2,000

 
—

 
(47,530
)
 
—

 
—

 
(47,530
)
Dividends paid ($1.00 per share)
—

 
—

 
—

 
—

 
—

 
(79,795
)
 
—

 
(79,795
)
Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
7,368

 
7,368

Balance, February 2, 2019
70,672

 
7,733

 
15,091

 
953,801

 
(373,436
)
 
254,718

 
(2,706
)
 
832,377

Cumulative effect of accounting change
—

 
—

 
—

 
—

 
—

 
(9,556
)
 
—

 
(9,556
)
Net income
—

 
—

 
—

 
—

 
—

 
94,497

 
—

 
94,497

Stock-based compensation activity
439

 
—

 
—

 
17,579

 
—

 
—

 
—

 
17,579

Repurchase of Class A common shares
(7,078
)
 
—

 
7,078

 
—

 
(141,629
)
 
—

 
—

 
(141,629
)
Dividends paid ($1.00 per share)
—

 
—

 
—

 
—

 
—

 
(72,565
)
 
—

 
(72,565
)
Other comprehensive income
—

 
—

 
—

 
—

 
—

 
—

 
211

 
211

Balance, February 1, 2020
64,033

 
7,733

 
22,169

 
$
971,380

 
$
(515,065
)
 
$
267,094

 
$
(2,495
)
 
$
720,914


The accompanying Notes are an integral part of the Consolidated Financial Statements.


F-6
Table of Contents

DESIGNER BRANDS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Fiscal
 
2019
 
2018
 
2017
Cash flows from operating activities:
 
 
 
 
 
Net income (loss)
$
94,497

 
$
(20,466
)
 
$
67,452

Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
 
 
Depreciation and amortization
86,649

 
79,048

 
80,861

Stock-based compensation expense
17,059

 
17,393

 
14,704

Deferred income taxes
(2,931
)
 
(11,748
)
 
(12,804
)
Loss (income) from equity investments
(10,149
)
 
12

 
(1,057
)
Distributions received from equity investment
10,514

 
—

 
—

Loss on previously held equity investment in TSL and notes receivable from TSL
—

 
33,988

 
—

Impairment charges
7,771

 
60,760

 
89,440

Change in fair value of contingent consideration liability
—

 
—

 
(32,747
)
Loss on foreign currency reclassified from accumulated other comprehensive loss
—

 
13,963

 
1,281

Other
3,957

 
3,780

 
282

Change in operating assets and liabilities:
 
 
 
 
 
Accounts receivable
265

 
36,151

 
(230
)
Inventories
9,290

 
(4,162
)
 
(1,908
)
Prepaid expenses and other current assets
(14,994
)
 
(12,310
)
 
(15,895
)
Accounts payable
36,995

 
(38,059
)
 
(8,855
)
Accrued expenses
(26,595
)
 
16,984

 
10,492

Operating lease assets and liabilities, net
(15,621
)
 
—

 
—

Net cash provided by operating activities
196,707

 
175,334

 
191,016

Cash flows from investing activities:
 
 
 
 
 
Cash paid for property and equipment
(77,820
)
 
(65,355
)
 
(56,282
)
Purchases of available-for-sale investments
(20,973
)
 
(16,735
)
 
(133,153
)
Sales of available-for-sale investments
66,389

 
71,136

 
187,866

Additional borrowings by TSL
—

 
(15,989
)
 
(57,396
)
Repayments of borrowings by TSL
—

 
1,160

 
—

Equity investment in ABG-Camuto
—

 
(56,827
)
 
—

Working capital proceeds received (cash paid) for business acquisitions, net of cash acquired
4,965

 
(199,403
)
 
—

Net cash used in investing activities
(27,439
)
 
(282,013
)
 
(58,965
)
Cash flows from financing activities:
 
 
 
 
 
Borrowing on revolving line of credit
463,300

 
160,000

 
—

Payments on revolving line of credit
(433,300
)
 
—

 
—

Cash paid for treasury shares
(141,629
)
 
(47,530
)
 
(9,375
)
Dividends paid
(72,565
)
 
(79,795
)
 
(63,823
)
Other
841

 
(2,711
)
 
1,769

Net cash provided by (used in) financing activities
(183,353
)
 
29,964

 
(71,429
)
Effect of exchange rate changes on cash balances
81

 
1,351

 
—

Net increase (decrease) in cash, cash equivalents, and restricted cash
(14,004
)
 
(75,364
)
 
60,622

Cash, cash equivalents, and restricted cash, beginning of period
100,568

 
175,932

 
115,310

Cash, cash equivalents, and restricted cash, end of period
$
86,564

 
$
100,568

 
$
175,932

Supplemental disclosures of cash flow information:
 
 
 
 
 
Cash paid for income taxes
$
39,450

 
$
41,695

 
$
77,208

Cash paid for interest on debt
$
8,323

 
$
864

 
$
—

Cash paid for operating lease liabilities
$
236,506

 
$
—

 
$
—

Non-cash investing and financing activities:
 
 
 
 
 
Property and equipment purchases not yet paid
$
12,164

 
$
13,537

 
$
9,778

Operating lease liabilities arising from lease asset additions (excluding ASU 2016-02 transition adjustments)
$
24,137

 
$
—

 
$
—

Adjustment to operating lease assets and lease liabilities for modifications
$
71,945

 
$
—

 
$
—


The accompanying Notes are an integral part of the Consolidated Financial Statements.

F-7
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     SIGNIFICANT ACCOUNTING POLICIES

Business Operations- Designer Brands Inc. is a leading North American footwear and accessories designer, producer and retailer.

On May 10, 2018, we acquired the remaining interest in Town Shoes Limited ("TSL") that we did not previously own. Beginning with our second quarter of fiscal 2018, TSL ceased being accounted for under the equity method of accounting and was accounted for as a consolidated wholly owned subsidiary. As a result of this acquisition, we operate a Canadian business that is a retailer of branded footwear under The Shoe Company, Shoe Warehouse, and DSW Designer Shoe Warehouse banners, as well as related e-commerce sites. Subsequent to the acquisition, and as a result of our strategic review, we exited the Town Shoes banner in Canada during fiscal 2018.

On November 5, 2018, we completed the acquisition of Camuto LLC, doing business as Camuto Group ("Camuto Group"), a footwear design and brand development organization, from Camuto Group LLC (the "Sellers"). The Camuto Group acquisition provides us a global production, sourcing and design infrastructure, including operations in Brazil and China, a new state-of-the-art distribution center in New Jersey, footwear licenses of brands, including Jessica Simpson and Lucky Brand, and branded e-commerce sites. Camuto Group earns revenue from the sale of wholesale products to retailers, commissions for serving retailers as the design and buying agent for products under private labels ("First Cost"), and the sale of branded products on direct-to-consumer e-commerce sites. Also on November 5, 2018, in partnership with Authentic Brands Group LLC, a global brand management and marketing company, we formed ABG-Camuto LLC ("ABG-Camuto"), a joint venture in which we have a 40% interest. This joint venture acquired several intellectual property rights from the Sellers, including Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, and others, and will focus on licensing and developing new category extensions to support the global growth of these brands. We have entered into a licensing agreement with ABG-Camuto whereby we pay royalties on our net sales from the brands owned by ABG-Camuto.

On March 4, 2016, we acquired Ebuys, an off-price footwear and accessories retailer operating in digital marketplaces. Due to recurring operating losses incurred by Ebuys since its acquisition, as well as increased competitive pressures in the digital marketplace, we decided to exit the business and ended all operations in fiscal 2018.

We present three reportable segments: the U.S. Retail segment, the Canada Retail segment, and the Brand Portfolio segment. The U.S. Retail segment includes stores operated in the U.S. under the DSW Designer Shoe Warehouse banner and its related e-commerce site. The Canada Retail segment, which is the result of the TSL acquisition, includes stores operated in Canada under The Shoe Company, Shoe Warehouse, DSW Designer Shoe Warehouse banners and related e-commerce sites. The Brand Portfolio segment, which is the result of the Camuto Group acquisition, includes sales from wholesale, First Cost, and direct-to-consumer branded e-commerce sites. Our other operating segments, including our Affiliated Business Group ("ABG"), are below the quantitative and qualitative thresholds for reportable segments and are aggregated into Other for segment reporting purposes.

Fiscal Year- Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year refer to the calendar year in which the fiscal year begins. This reporting schedule is followed by many national retail companies and typically results in a 52-week fiscal year, but occasionally will contain an additional week resulting in a 53-week fiscal year. The periods presented in these financial statements and selected financial data each consisted of 52 weeks, except for fiscal 2017, which consisted of 53 weeks.

Variable Interest Entities- We had three joint ventures as a result of the Camuto Group acquisition where each joint venture licensed brands and contracted with Camuto Group to provide design, buying and sourcing services. Under these joint ventures, Camuto Group was responsible for managing all aspects of the brands and the joint ventures paid royalties, commissions, or consulting fees to the other parties. We were responsible for providing all funding to support the joint ventures' working capital needs. As a result, we were considered the primary beneficiary of the joint ventures and they were consolidated within our financial statements. Assets and liabilities of the joint ventures in the aggregate were immaterial. During fiscal 2019, we terminated the three joint ventures along with related licensing and design, buying and sourcing arrangements.

During the fourth quarter of fiscal 2019, we formed a joint venture with an entity affiliated with performing artist and celebrity Jennifer Lopez. This partnership was formed in order to design, source and sell the JLO JENNIFER LOPEZ collection, a line of footwear and handbags. Our Camuto Group business will be responsible for design and sourcing and DSW will be the initial exclusive retailer of the products. Jennifer Lopez and her team will lead the creative for marketing and product design, with technical expertise and guidance from our operating units. Jennifer Lopez also has the opportunity to earn the Company's Class A common shares beginning in fiscal 2021 based on the expansion of our VIP rewards programs from her fan base. Based on

F-8
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

certain terms within the joint venture operating agreement, we have determined that we have overall control of the joint venture. In addition, we provide a revolving line of credit to the joint venture and a guarantee for funding in excess of the joint venture's equity. As a result, we are considered the primary beneficiary of the joint venture and it is consolidated within our financial statements. Assets and liabilities of the joint venture are immaterial. We will recognize all of the losses of the joint venture up to the amounts guaranteed and share any profits between the partners under the terms of the joint venture operating agreement.

Integration and Restructuring Costs- During fiscal 2019, we incurred integration and restructuring costs related to our prior year acquisition activity, which consisted primarily of $3.9 million in severance, $7.2 million in fees for terminating joint ventures, and $6.6 million of professional fees and other integration costs. During fiscal 2018, we incurred restructuring costs of $5.6 million in severance, primarily related to changes to our store staffing model. These costs are included in operating expenses in the consolidated statements of operations. As of February 1, 2020 and February 2, 2019, we had $1.7 million and $2.8 million, respectively, of severance liability included in accrued expenses on the consolidated balance sheets.

Principles of Consolidation- The consolidated financial statements include the accounts of Designer Brands Inc. and its subsidiaries, including the joint ventures. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in United States dollars ("USD"), unless otherwise noted.

Use of Estimates- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of net sales and expenses during the reporting period. Significant estimates are required as a part of sales returns allowances, customer allowances and discounts, gift card breakage income, deferred revenue associated with loyalty programs, valuation of inventories, depreciation and amortization, impairments of long-lived assets, intangibles and goodwill, lease accounting, legal reserves, foreign tax contingent liabilities, income taxes, and self-insurance reserves. Although these estimates are based on management's knowledge of current events and actions it may undertake in the future, actual results could differ from these estimates.

Revenue Recognition- Sales from the U.S. Retail and Canada Retail segments are recognized upon customer receipt of merchandise, net of estimated returns and exclude sales tax. Customers can purchase products from one of our stores, online or from our mobile application. For products shipped directly to our customers, we recognize the sale upon the estimated customer receipt date based on historical delivery transit times. Revenue from shipping and handling is recorded in net sales while the related costs are included in cost of sales. For products shipped directly to our customers from our suppliers (referred to as "drop ship"), we record gross sales upon delivery based on the price paid by the customers as we have determined that we are the principal party responsible for the sale transaction.

Sales from the Brand Portfolio segment are recognized upon transfer of control. Generally, our wholesale customers arrange their own transportation of merchandise and control is transferred at the time of shipment. Sales are recorded at the transaction price, excluding sales tax, net of estimated reserves for customer returns, allowances and discounts. Direct-to-consumer sales are also recognized upon shipment of merchandise, net of estimated returns and exclude sales tax. Commission income for serving retailers as the design and buying agent for products under private labels (referred to as "First Cost") is recognized at the point in time when the customer's freight forwarder takes control of the related merchandise.

ABG supplies footwear to other retailers under supply arrangements. We maintain ownership of the merchandise we supply under these arrangements, including risk of loss, returns, shrink up to a certain percentage and loss of inventory value, until customer receipt. Furthermore, we are responsible for the footwear assortment, inventory fulfillment, and pricing at all locations and online. As a result, sales are recognized upon receipt by the end customer, net of estimated returns and exclude sales tax. The affiliated retailers provide the sales associates and retail space. In return, we pay a percentage of net sales to the affiliated retailers, which is included in cost of sales.

Gift Cards- Amounts received from the sale of gift cards are recorded as a liability and are recognized as sales when the cards are redeemed for merchandise. Based on historical information, the likelihood of a gift card remaining unredeemed (referred to as "breakage") can be reasonably estimated at the time of gift card issuance. Breakage income is recognized over the estimated average redemption period of redeemed gift cards.

Loyalty Programs- We offer loyalty programs to our customers in the U.S. and Canada. Members under the programs earn points based on their level of spending, as well as for various other activities. Upon reaching a specified point threshold, members receive reward certificates that may be redeemed for purchases made within the stated expiration date. We record a reduction of net sales when points are awarded based on an allocation of the initial customer purchase and the stand-alone value

F-9
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

of the points earned. We maintain a deferred liability for the outstanding points and certificates based on historical conversion and redemption rates. The deferred liability is reduced and sales are recognized when certificates are redeemed or when points and certificates expire.

Cost of Sales- Cost of sales from the U.S. Retail and Canada Retail segments is recognized net of estimated returns. In addition to the cost of merchandise sold, which includes freight and the impact of markdowns, shrinkage and other inventory valuation adjustments, we include in cost of sales expenses associated with distribution and fulfillment and store occupancy. Distribution and fulfillment expenses are comprised of labor costs, rent, depreciation, insurance, utilities, maintenance and other operating costs associated with the operations of the distribution and fulfillment centers. Store occupancy expenses include rent, utilities, repairs, maintenance, insurance, janitorial costs, and occupancy-related taxes, but excludes depreciation.

Cost of sales from the Brand Portfolio segment is recognized net of estimated returns. In addition to the cost of merchandise sold, which includes freight and the impact of inventory valuation adjustments, we include in cost of sales royalty expense for licensed brands.

Operating Expenses- Operating expenses include expenses related to store management and store payroll costs, advertising, store depreciation, new store costs, design, sourcing and distribution costs associated with the Brand Portfolio segment, and corporate expenses. Corporate expenses include expenses related to buying, information technology, depreciation and amortization expense for corporate assets, marketing, legal, finance, outside professional services, customer service center expenses, and payroll-related costs for associates.

Stock-Based Compensation- We recognize compensation expense for awards of stock options, restricted stock units ("RSUs"), and director stock units, based on the fair value on the grant date and on a straight-line basis over the requisite service period for the awards that vest. Stock-based compensation is included in operating expenses in the consolidated statements of operations.

New Store Opening Costs- Costs associated with the opening of new stores are expensed as incurred. During fiscal 2019, 2018 and 2017, new store opening costs, primarily pre-opening rent and marketing expenses, were $2.6 million, $2.8 million and $2.6 million, respectively.

Marketing Expense- The cost of advertising is generally expensed when the advertising first takes place or when mailed. During fiscal 2019, 2018 and 2017, marketing costs were $123.9 million, $121.4 million and $83.8 million, respectively.

Non-Operating Expenses, Net- Non-operating expenses, net, includes gains and losses from foreign currency revaluation, realized gains and losses related to our investment portfolio, and fair value adjustments of pre-existing assets as a result of the acquisition of the remaining interest in TSL.

Income Taxes- We account for income taxes under the asset and liability method. We determine the aggregate amount of income tax expense to accrue and the amount which will be currently payable based upon tax statutes of each jurisdiction in which we do business. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and respective tax bases and operating loss and tax credit carryforwards, as measured using enacted tax rates expected to be in effect in the periods where temporary differences are expected to be realized or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is provided when it is more likely than not that some portion or all of a deferred tax asset will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become realizable.

We review and update our tax positions as necessary to add any new uncertain tax positions taken, or to remove previously
identified uncertain positions that have been adequately resolved. Additionally, uncertain positions may be remeasured as
warranted by changes in facts or law. Accounting for uncertain tax positions requires estimating the amount, timing and
likelihood of ultimate settlement. Although we believe that these estimates are reasonable, actual results could differ from
these estimates.

Cash, Cash Equivalents, and Restricted Cash- Cash and cash equivalents represent cash, money market funds and credit card receivables that generally settle within three days. Restricted cash represented cash that is restricted as to withdrawal or usage and consisted of a mandatory cash deposit for certain outstanding letters of credit.


F-10
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
(in thousands)
February 1, 2020
 
February 2, 2019
 
February 3, 2018
Cash and cash equivalents
$
86,564

 
$
99,369

 
$
175,932

Restricted cash, included in prepaid expenses and other current assets
—

 
1,199

 
—

Total cash, cash equivalents, and restricted cash shown in the consolidated statements of cash flows
$
86,564

 
$
100,568

 
$
175,932



Investments- We determine the balance sheet classification of investments at the time of purchase and evaluate the classification at each balance sheet date. All income generated from these investments is recorded as interest income. We hold investment securities in bonds and term notes that are classified as available-for-sale, which is based on our intention of the use of the investments. The unrealized holding gains or losses for the available-for-sale securities are reported in other comprehensive income (loss). We account for our purchases and sales of investments on the trade date of the investment. We account for investments using the equity method of accounting when we exercise significant influence over the investment. If we do not exercise significant influence, we account for the investment using the cost method of accounting. Cost method investments are included in other assets on the consolidated balance sheets. We evaluate our investments for impairment and whether impairment is other-than-temporary at each balance sheet date.

Accounts Receivable- Accounts receivable are classified as current assets because the average collection period is generally shorter than one year. We monitor our exposure for credit losses based upon specific accounts receivable balances and record related allowances for doubtful accounts where a risk of default has been identified. We utilize an unrelated third-party provider for credit and collection services for receivables from the sale of wholesale products to certain retailers. This third-party provider guarantees payment for the majority of the serviced receivables.

Inventories- All of our inventory is made up of finished goods. The U.S. Retail segment inventory is accounted for using the retail inventory method and is stated at the lower of cost or market. Under the retail inventory method, the valuation of inventories at cost and the resulting gross profits are determined by applying a calculated cost-to-retail ratio to the retail value of inventories. The cost basis of inventories reflected on the balance sheet is decreased by charges to cost of sales at the time the retail value of the inventory is lowered by markdowns. As a result, earnings are negatively impacted as the merchandise is marked down prior to sale. The Canada Retail segment and the Brand Portfolio segment inventory is accounted for using the weighted average cost method and is stated at the lower of cost or net realizable value. We monitor aged inventory for obsolete and slow-moving inventory that may need to be liquidated in the future at amounts below cost. Reductions to inventory values establish a new cost basis. Favorable changes in facts or circumstances do not result in an increase in the newly established cost basis.

We perform physical inventory counts or cycle counts on all inventory on hand throughout the year and adjust the recorded balance to reflect the results. We record estimated shrinkage between physical inventory counts based on historical experience and recent results.

Inherent in the calculation of inventories are certain significant judgments and estimates, including setting the original merchandise retail value, markdowns, shrinkage, and liquidation values. The ultimate amount realized from the sale of inventory and write offs from counts could differ from management estimates.

Concentration of Risks- We are subject to risk due to concentration of merchandise coming from China. All of the products we manufacture in the Brand Portfolio segment come from third-party facilities outside of the U.S., with 83% of units sourced from China, whereas our U.S. Retail and Canada Retail merchandise is purchased from both domestic and foreign vendors. Many of our domestic vendors import a large portion of their merchandise from abroad, with the majority manufactured in China.

We are also subject to concentration of vendor risk within the U.S. Retail and Canada Retail segments. During fiscal 2019, three key third-party vendors together supplied approximately 21% of our retail merchandise.


F-11
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Financial instruments, which principally subject us to concentration of credit risk, consist of cash and cash equivalents and investments. We invest excess cash when available through financial institutions in money market accounts and investment securities. At times, such amounts invested through banks may be in excess of Federal Deposit Insurance Corporation insurance limits, and we mitigate the risk by utilizing multiple banks.

Fair Value- Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to the subjectivity associated with the inputs to fair value measurements as follows:
•
Level 1 - Quoted prices in active markets for identical assets or liabilities.
•
Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable.
•
Level 3 - Unobservable inputs in which little or no market activity exists.

We measure available-for-sale investments at fair value on a recurring basis. These investments are measured using a market-based approach using inputs such as prices of similar assets in active markets (categorized as Level 2). The carrying value of cash and cash equivalents, accounts receivables and accounts payables approximated their fair values due to their short-term nature. The carrying value of borrowing under our senior unsecured revolving credit agreement (the "Credit Facility") approximates its fair value based on its term and variable interest rate.

Property and Equipment- Property and equipment are stated at cost less accumulated depreciation determined by the straight-line method over the expected useful life of assets. The net book value of property or equipment sold or retired is removed from the asset and related accumulated depreciation accounts with any resulting net gain or loss included in results of operations. The estimated useful lives by class of asset are as follows:
 
Useful Lives
Buildings
39 years
Building and leasehold improvements
3 to 20 years or the lease term if shorter
Furniture, fixtures and equipment
3 to 10 years
Software
5 to 10 years


Internal Use Software Costs- Costs related to software developed or obtained for internal use are expensed as incurred until the application development stage has been reached. Once the application development stage has been reached, certain qualifying costs are capitalized until the software is ready for its intended use. If a cloud computing arrangement includes a software license, the software license element of the arrangement is accounted for in a manner consistent with the acquisition of other software licenses. If the arrangement does not include a software license, the arrangement is accounted for as a service contract.

Impairment of Long-Lived Assets- We periodically evaluate the carrying amount of our long-lived assets, primarily operating lease assets, property and equipment and definite-lived intangible assets, when events and circumstances warrant such a review to ascertain if any assets have been impaired. The carrying amount of a long-lived asset or asset group is considered impaired when the carrying value of the asset or asset group exceeds the expected future cash flows from the asset or asset group (categorized as Level 3 under the fair value hierarchy). The reviews are conducted at the lowest identifiable level. The impairment loss recognized is the excess of the carrying value of the asset or asset group over its fair value.

During fiscal 2019, we recorded impairment charges of $7.8 million, including $4.8 million for operating lease assets and other property and equipment in the Brand Portfolio segment related to the planned consolidation of certain locations as part of our integration efforts and $3.0 million primarily for operating lease assets related to under-performing stores ($2.3 million and $0.7 million for the U.S. Retail and Canada Retail segments, respectively). During fiscal 2018, we recorded impairment charges of $19.0 million, including $13.9 million for an abandoned corporate internal-use software that was under development and $5.1 million primarily for leasehold improvements related to under-performing stores ($1.5 million and $3.6 million for the U.S. Retail and Canada Retail segments, respectively). As a result of recurring operating losses incurred by Ebuys since its acquisition, which led to our decision to exit the business, during fiscal 2017, we recorded impairment charges of $31.9 million for intangible assets and $3.8 million for property and equipment, which resulted in writing off all of Ebuys' long-lived assets.

Goodwill and Other Indefinite Lived Intangible Assets- We evaluate goodwill and other indefinite lived intangible assets for impairment annually during our fourth quarter, or more frequently if an event occurs or circumstances change that would indicate that impairment may exist. When evaluating for impairment, we may first perform a qualitative assessment to determine whether it is more likely than not that there is an impairment. If we do not perform a qualitative assessment, or if we

F-12
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

determine that it is more likely than not that the carrying value exceeds its fair value, we will calculate the estimated fair value. Fair value is typically calculated using a discounted cash flow analysis. Where deemed appropriate, we may also utilize a market approach for estimating fair value. Impairment charges are calculated as the amount by which the carrying amount exceeds its fair value, but not to exceed the carrying value for goodwill.

During fiscal 2018, we determined that the value of the acquired net assets of TSL exceeded its fair value based on the fair value of TSL using a discounted cash flow model (categorized as Level 3 under the fair value hierarchy). As a result, we recorded a goodwill impairment charge of $41.8 million that resulted in impairing all of Canada Retail segment’s goodwill. During fiscal 2017, due to recurring operating losses incurred by Ebuys since its acquisition, which led to our decision to exit the business, we recorded a goodwill impairment charge of $53.8 million, which resulted in writing off all of Ebuys' goodwill.

Self-Insurance Reserves- We record estimates for certain health and welfare, workers' compensation and casualty insurance costs that are self-insured programs. Self-insurance reserves include actuarial estimates of both claims filed, carried at their expected ultimate settlement value, and claims incurred but not yet reported. The liability represents an estimate of the ultimate cost of claims incurred as of the balance sheet date. Estimates for self-insurance reserves are calculated utilizing claims development estimates based on historical experience and other factors. We have purchased stop loss insurance to limit our exposure on a per person basis for health and welfare and on a per claim basis for workers' compensation and general liability, as well as on an aggregate annual basis.

Foreign Currency Translation and Transactions- Prior to our acquisition of the remaining interest in TSL, our equity investment in TSL and notes receivable from TSL, along with certain investments, were denominated in Canadian dollar ("CAD") and translated into USD at exchange rates in effect at the balance sheet date. Each quarter, the income or loss from TSL was recorded in USD at the average exchange rate for the period. The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive loss. During fiscal 2018, as a result of the acquisition of TSL, we reclassified a net loss of $12.2 million of foreign currency translation related to the previously held balances from accumulated other comprehensive loss to non-operating expenses, net.

During fiscal 2018, TSL became a wholly owned subsidiary with CAD as their functional currency. Assets and liabilities of the Canadian business are translated into USD at exchange rates in effect at the balance sheet date or historical rates as appropriate. Each quarter, amounts included in our consolidated statements of operations from the Canadian business are translated at the average exchange rate for the period. The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive loss. Transaction gains and losses are included in the consolidated statements of operations.

Deferred Compensation Plans- We provide deferred compensation plans, including defined contribution plans to eligible employees and a non-qualified deferred compensation plan for certain executives and members of the Board of Directors. Participants may elect to defer and contribute a portion of their eligible compensation to the plans up to limits stated in the plan documents, not to exceed the dollar amounts set by applicable laws. During fiscal 2019, 2018 and 2017, we recognized costs associated with matching contributions of $5.9 million, $5.2 million and $4.4 million, respectively.

Prior Period Reclassifications- Certain prior period reclassifications were made to conform to the current period presentation. For fiscal 2018, commission income of $3.5 million previously presented in commission, franchise and other revenue was reclassified to net sales. For fiscal 2018 and 2017, other revenue, which primarily included operating sublease income, of $5.8 million and $5.2 million, respectively, also previously presented in commission, franchise and other revenue was reclassified to operating expenses. In addition, we reclassified $25.0 million of previously presented basis difference related to acquisition of commonly controlled entity to common shares paid in-capital within shareholders' equity for all periods presented. The basis difference related to acquisition of commonly controlled entity related to a legal entity acquisition in fiscal 2012 from certain Schottenstein Affiliates. The legal entity owned property that was previously leased by us. As this was a transaction between entities under common control, the difference between the historical cost carrying amounts and the consideration transferred is reflected as an equity transaction within common shares paid in-capital.

Adoption of ASU 2016-02, Leases- During the first quarter of fiscal 2019, we adopted the new accounting standard for leases, Accounting Standards Update ("ASU") 2016-02 and the related amendments. We elected to initially apply ASU 2016-02 as of February 3, 2019, with the recognition of $1.0 billion of lease assets and $1.1 billion of lease liabilities and a cumulative-effect adjustment that decreased retained earnings by $9.6 million for transition impairments related to previously impaired leased locations. Periods prior to February 3, 2019 were not restated. Upon transition to ASU 2016-02, we recognized lease liabilities based on the present value of the remaining future fixed lease commitments, net of outstanding tenant allowance receivables, with corresponding lease assets. Amounts for prepaid expenses, deferred rent, deferred construction and tenant allowances, the

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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

accrual for lease obligations, and favorable and unfavorable leasehold interests were netted against the lease assets. At transition, we elected the package of practical expedients, which allows us to carry forward the historical lease classification and not reassess whether any expired or existing contracts are leases or contain leases. We did not elect the use of hindsight to determine the term of our leases at transition.

A lease liability for new leases is recorded based on the present value of future fixed lease commitments with a corresponding lease asset. For leases classified as operating leases, we recognize a single lease cost on a straight-line basis based on the combined amortization of the lease liability and the lease asset. Other leases will be accounted for as finance arrangements. For real estate leases, we are generally required to pay base rent, real estate taxes, and insurance, which are considered lease components, and maintenance, which is a non-lease component. As provided for under ASU 2016-02, we have elected to not separate non-lease payment components from the associated lease component for all new real estate leases. We determine the discount rate for each lease by estimating the rate that we would be required to pay on a secured borrowing for an amount equal to the lease payments over the lease term.

Prior to the adoption of ASU 2016-02, we recognized rent expense on a straight-line basis over the noncancelable terms of the lease. For leases with fixed increases of the minimum rentals during the noncancelable term, we recorded the difference between the amounts charged to expense and the rent paid as deferred rent and amortized such deferred rent upon the delivery of the lease location by the lessor. In addition, cash allowances received from landlords were deferred and amortized on a straight-line basis over the noncancelable terms of the lease as a reduction of rent expense. Deferred rent and construction and tenant allowances are included in other non-current liabilities on the consolidated balance sheets for periods prior to February 3, 2019. Also, we recorded reserves for leased spaces that were abandoned due to closure. Using a credit-adjusted risk-free rate to calculate the present value of the liability, we estimated future lease obligations based on remaining fixed lease payments, estimated or actual sublease income, and any other relevant factors.

Adoption of ASU 2018-15, Intangibles - Goodwill and Other - Internal-Use Software- Also during the first quarter of fiscal 2019, we early adopted ASU 2018-15 on a prospective basis, which aligned the requirements for capitalizing implementation costs incurred in a cloud computing arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or acquire internal-use software. The adoption of ASU 2018-15 did not have a material impact on our consolidated financial statements.

2.    ACQUISITIONS AND EQUITY METHOD INVESTMENT

Step Acquisition of TSL- On May 10, 2018, we acquired the remaining interest in TSL for $36.2 million CAD ($28.2 million USD), net of acquired cash of $8.5 million CAD ($6.6 million USD), by exercising our call option. This was accounted for as a step acquisition whereby we remeasured to fair value our previously held assets, which included our equity investment in TSL and notes and accounts receivable from TSL, and included these assets in the determination of the purchase price. During fiscal 2018, as a result of the remeasurement, we recorded a loss of $34.0 million to non-operating expenses, net, in the consolidated statements of operations. Also during fiscal 2018, we reclassified a net loss of $12.2 million of foreign currency translation adjustments related to the previously held balances from accumulated other comprehensive loss to non-operating expenses, net.


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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The purchase price and the allocation of the total consideration to the fair values of the assets and liabilities acquired was finalized as of February 2, 2019 and consisted of the following (in USD):
(in thousands)
Final Purchase Price and Allocation
Purchase price:
 
Cash consideration, net of cash acquired
$
28,152

Replacement stock-based awards attributable to pre-acquisition services
196

Fair value of pre-existing assets
92,242

 
$
120,590

Fair value of assets and liabilities acquired:
 
Inventories
$
66,072

Other current assets
3,687

Property and equipment
41,008

Goodwill
43,022

Intangible assets
20,689

Accounts payable and other liabilities
(33,196
)
Non-current liabilities
(20,692
)
 
$
120,590



The fair value of previously held assets was determined immediately before the business combination, primarily by considering the income valuation approach (discounted cash flow) and the market valuation approach (precedent comparable transactions). Additionally, other information such as current market, industry and macroeconomic conditions were utilized to assist in developing these fair value measurements. The fair value of intangible assets included $15.7 million for tradenames, $3.6 million for favorable leasehold interests, and $1.4 million for customer relationships associated with the Canada loyalty program. The fair value of unfavorable leasehold interests, included in other non-current liabilities, was $7.6 million. The fair value for tradenames was determined using the relief from royalty method of the income approach, the fair value for leasehold interests was determined based on the market valuation approach, and the fair value for customer relationships related to the loyalty program was determined using the replacement cost method. The fair value for property and equipment was determined using the cost and market approaches. The fair value of inventories, which is made up of finished goods, was determined based on market assumptions for realizing a reasonable profit after selling costs.

The goodwill represents the excess of the purchase price over the fair value of the net assets acquired. With this being a step acquisition, the purchase price included the fair value of our previously held assets, which considered the valuation of the TSL enterprise. This valuation identified that the resulting goodwill was not supportable as the value of the acquired net assets exceeded the enterprise fair value. As a result, during fiscal 2018, we recorded a goodwill impairment charge, net of adjustments as a result of recording adjustments to the preliminary purchase allocations, which resulted in impairing all of the Canada Retail segment’s goodwill. A portion of the goodwill is not expected to be deductible for income tax purposes.

During fiscal 2018, our consolidated statements of operations included net sales and net losses for TSL of $220.3 million and $48.9 million, respectively, which included the pre-tax losses from the wind down of operations for the Town Shoes banner, the goodwill impairment charge of $41.8 million, long-lived asset impairment charges of $3.6 million and lease exit charges of $15.5 million. Primarily in fiscal 2018, we incurred $3.1 million of acquisition-related costs as a result of the step acquisition (not included in the TSL net loss disclosed in the previous sentence), which were included in operating expenses in the consolidated statements of operations.

Acquisition of Camuto Group- On November 5, 2018, we completed the acquisition of all of the outstanding securities of Camuto Group for $166.3 million, net of acquired cash of $9.7 million and a working capital settlement of $5.0 million received during fiscal 2019. The purchase price of the acquisition, along with the acquired equity investment in ABG-Camuto (discussed below), was funded with available cash and borrowings on the revolving line of credit of $160.0 million.


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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The purchase price and the allocation of the total consideration to the fair values of the assets and liabilities acquired was finalized as of November 2, 2019 and consisted of the following:
(in thousands)
Preliminary Purchase Price and Allocation
as of November 5, 2018
 
Measurement Period Adjustments
 
Final Purchase Price and Allocation
as of November 2, 2019
Purchase price -
 
 
 
 
 
Cash consideration, net of cash acquired
$
171,251

 
$
(4,965
)
 
$
166,286

Fair value of assets and liabilities acquired:
 
 
 
 
 
Accounts receivable
$
83,939

 
$
3,410

 
$
87,349

Inventories
74,499

 
(2,999
)
 
71,500

Other current assets
7,197

 
1,105

 
8,302

Property and equipment
43,906

 
(1,469
)
 
42,437

Goodwill
63,614

 
24,131

 
87,745

Intangible asset
27,000

 
(19,000
)
 
8,000

Other assets
13,351

 
—

 
13,351

Accounts payable and other liabilities
(122,811
)
 
(2,030
)
 
(124,841
)
Non-current liabilities
(19,444
)
 
(8,113
)
 
(27,557
)
 
$
171,251

 
$
(4,965
)
 
$
166,286



The fair value of the intangible asset relates to customer relationships and was based on the excess earnings method under the income approach. The fair value measurement is based on significant unobservable inputs, including the future cash flows and discount and customer attrition rates. The fair values for property and equipment were determined using the cost and market approaches. The fair value of inventories, which consist of finished goods, was determined based on market assumptions for realizing a reasonable profit after selling costs. The inventory valuation step-up was recognized to cost of goods sold during fiscal 2018 based on assumed inventory turns.

The goodwill represents the excess of the purchase price over the fair value of the net assets acquired, and was primarily attributable to acquiring an established design and sourcing process, which provides us the opportunity to expand our exclusive brand products offering at lower cost of goods in our retail segments and an assembled workforce. We determined that goodwill should be allocated to reporting units within the U.S. Retail and Brand Portfolio segments based on each reporting unit’s estimated benefit from the expected synergies from the Camuto Group acquisition. We allocated $67.8 million of the goodwill to the U.S. Retail segment based primarily on a discounted cash flow of the sourcing benefit. The remaining $20.0 million of goodwill was allocated to the First Cost reporting unit within the Brand Portfolio segment based on the fair value of the reporting unit over the fair value of the net assets allocated to the reporting unit. Goodwill is expected to be deductible for income tax purposes.

Other non-current liabilities included $12.7 million of estimated unpaid foreign payroll and other taxes. We recorded an offsetting indemnification asset to other assets, which we expect to collect under the terms of the securities purchase agreement with the Sellers. See Note 16, Commitments and Contingencies, for additional information.

Measurement period adjustments were the result of refining cash flow assumptions relating to certain synergy assumptions, adjusting accruals and related indemnification receivables based on additional information, and other immaterial adjustments identified as we performed additional analysis of the assets and liabilities acquired. Adjustments to the purchase price were based on a working capital settlement with the Sellers as provided by the purchase agreement. Measurement period adjustments are recognized on a prospective basis in the period of change.

During fiscal 2018, our consolidated statements of operations included net sales from external customers and net losses for Camuto Group of $89.6 million and $16.2 million, respectively. We incurred $22.2 million of acquisition-related costs as a result of the acquisition (not included in the Camuto Group net loss disclosed in the previous sentence), which were included in operating expenses in the consolidated statements of operations.


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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Equity Investment in ABG-Camuto- On November 5, 2018, we acquired a 40% interest in the newly formed ABG-Camuto joint venture for $56.8 million in partnership with Authentic Brands Group LLC. Also on November 5, 2018, ABG-Camuto acquired several intellectual property rights from the Sellers and entered into a licensing agreement with us, through which ABG-Camuto earns royalties from the net sales of Camuto Group under the brands acquired.

Activity related to our equity investment in ABG-Camuto was as follows:
 
Fiscal
(in thousands)
2019
 
2018
Balance at beginning of period
$
58,125

 
$
—

Initial investment in ABG-Camuto
—

 
56,827

Share of net earnings
10,149

 
1,298

Distributions received
(10,514
)
 
—

Balance at end of period
$
57,760

 
$
58,125



Combined Results- The following table provides the supplemental unaudited pro forma net sales and net income of the combined entity had the acquisition dates of TSL and Camuto Group and the investment in ABG-Camuto been the first day of our fiscal 2017:
 
Fiscal
(in thousands)
2018
 
2017
Net sales
$
3,562,498

 
$
3,487,314

Net income
$
74,367

 
$
17,645



The amounts in the supplemental pro forma results apply our accounting policies, eliminate intercompany transactions, assume the acquisition-related transaction costs were incurred in fiscal 2017, and reflect adjustments for additional expenses that would have been charged assuming borrowings on the revolving line of credit of $160.0 million and the same fair value adjustments to inventory, property and equipment, and acquired intangibles had been applied on the first day of our fiscal 2017. Related to the TSL acquisition, the supplemental pro forma results also exclude the loss related to the remeasurement of previously held assets, the net loss of foreign currency translation related to the previously held balances from accumulated other comprehensive loss, and the goodwill impairment charge. Because the ABG-Camuto investment was integral to the Camuto Group acquisition, the supplemental pro forma results include royalty expenses that would be due to ABG-Camuto using the guaranteed minimum royalties per the license agreement and the related earnings from our equity investment in ABG-Camuto had the transactions occurred on the first day of our fiscal 2017. Accordingly, these supplemental pro forma results have been prepared for comparative purposes only and are not intended to be indicative of results of operations that would have occurred had the acquisitions actually occurred in the prior year period or indicative of the results of operations for any future period.


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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

3.    REVENUE

Disaggregation of Net Sales- The following table presents net sales disaggregated by product and service category for each segment:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Net sales:
 
 
 
 
 
U.S. Retail segment:
 
 
 
 
 
Women's footwear
$
1,853,265

 
$
1,866,121

 
$
1,771,058

Men's footwear
539,917

 
561,722

 
556,772

Kids' footwear
158,261

 
118,859

 
68,796

Accessories and other
193,952

 
192,287

 
181,085

 
2,745,395

 
2,738,989

 
2,577,711

Canada Retail segment:
 
 
 
 
 
Women's footwear
133,762

 
123,323

 
—

Men's footwear
63,140

 
57,567

 
—

Kids' footwear
40,995

 
30,216

 
—

Accessories and other
11,120

 
9,219

 
—

 
249,017

 
220,325

 
—

Brand Portfolio segment:
 
 
 
 
 
Wholesale
379,698

 
86,209

 
—

Commission income
26,424

 
3,894

 
—

Direct-to-consumer
42,163

 
9,709

 
—

 
448,285

 
99,812

 
—

Other
122,090

 
128,968

 
227,844

Total segment net sales
3,564,787

 
3,188,094

 
2,805,555

Elimination of intersegment sales
(72,100
)
 
(10,176
)
 
—

Total net sales
$
3,492,687

 
$
3,177,918

 
$
2,805,555



Deferred Revenue Liabilities- We record deferred revenue liabilities, included in accrued expenses on the consolidated balance sheets, for remaining obligations we have to our customers. The following table presents the changes and total balances for gift cards and our loyalty programs:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Gift cards:
 
 
 
 
 
Beginning of period
$
34,998

 
$
32,792

 
$
30,829

Gift cards redeemed and breakage recognized to net sales
(91,000
)
 
(90,569
)
 
(91,778
)
Gift cards issued
91,463

 
92,775

 
93,741

End of period
$
35,461

 
$
34,998

 
$
32,792

Loyalty programs:
 
 
 
 
 
Beginning of period
$
16,151

 
$
21,282

 
$
19,889

Loyalty certificates redeemed, expired, and other adjustments recognized to net sales
(37,311
)
 
(41,210
)
 
(30,935
)
Deferred revenue for loyalty points issued
37,298

 
36,079

 
32,328

End of period
$
16,138

 
$
16,151

 
$
21,282




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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Customer Allowances- We reduce sales by the amount of actual and remaining expected customer allowances, discounts and returns, and cost of sales by the amount of merchandise we expect to recover. Customer allowances are provided to our wholesale customers for margin assistance, co-op advertising support, and various other deductions. We estimate the reserves needed for margin assistance by reviewing inventory levels held by retailers, expected markdowns, gross margins realized, and other performance indicators. Product returns and other customer deductions are estimated based on anticipated future returns using historical experience and trends. Co-op advertising allowances are estimated based on arrangements with customers. Customer allowance reserves are included in accrued expenses on the consolidated balance sheets.

The following table presents the changes and total balances for sales reserves:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Sales returns reserve:
 
 
 
 
 
Beginning of period
$
17,743

 
$
14,130

 
$
14,149

Net sales reduced for estimated returns
448,886

 
402,274

 
353,156

Actual returns during the period
(445,221
)
 
(398,661
)
 
(353,175
)
End of period
$
21,408

 
$
17,743

 
$
14,130

Customer allowances and discounts reserve:
 
 
 
 
 
Beginning of period
$
13,094

 
$
—

 
$
—

Assumed liability in acquisitions and measurement period adjustments
(3,267
)
 
15,434

 
—

Net sales reduced for estimated allowances and discounts
43,733

 
10,669

 
—

Actual allowances and discounts during the period
(42,032
)
 
(13,009
)
 
—

End of period
$
11,528

 
$
13,094

 
$
—



As of February 1, 2020 and February 2, 2019, the asset for recovery of merchandise returns was $11.9 million and $10.1 million, respectively, and is included in prepaid expenses and other current assets on the consolidated balance sheets.

4.    RELATED PARTY TRANSACTIONS

Schottenstein Affiliates

As of February 1, 2020, the Schottenstein Affiliates, entities owned or controlled by Jay L. Schottenstein, the executive chairman of our Board of Directors, and members of his family, beneficially owned approximately 16% of the Company's outstanding common shares, representing approximately 52% of the combined voting power. As of February 1, 2020, the Schottenstein Affiliates beneficially owned 3.6 million Class A common shares and 7.7 million Class B common shares. We had the following related party transactions with Schottenstein Affiliates:

Leases- We lease our fulfillment center and certain store locations owned by Schottenstein Affiliates. See Note 15, Leases, for rent expense and future minimum lease payment requirements associated with the Schottenstein Affiliates.

Other Purchases and Services- During fiscal 2019, 2018 and 2017, we had other purchases and services from Schottenstein Affiliates of $6.0 million, $6.5 million and $4.6 million, respectively.

Due to Related Parties- As of February 1, 2020 and February 2, 2019, we had amounts due to related parties of $0.9 million and $1.0 million, respectively, included in accounts payable on the consolidated balance sheets.

ABG-Camuto

Beginning in the fourth quarter of fiscal 2018, we have a 40% interest in ABG-Camuto. ABG-Camuto entered into a licensing agreement with us whereby we pay royalties on the net sales of the brands owned by ABG-Camuto. During fiscal 2019 and 2018, we recorded $18.2 million and $2.4 million of royalty expense payable to ABG-Camuto, respectively. As of February 1, 2020 and February 2, 2019, we had $0.3 million and $2.4 million payable to ABG-Camuto, respectively, included in accrued expenses on the consolidated balance sheets. See Note 16, Commitments and Contingencies - Contractual Obligations, for future guaranteed minimum royalty payment requirements to ABG-Camuto.

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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


5.    EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is based on net income (loss) and the weighted average of Class A and Class B common shares outstanding. Diluted earnings (loss) per share reflects the potential dilution of common shares adjusted for outstanding stock options and RSUs calculated using the treasury stock method.

The following is a reconciliation of the number of shares used in the calculation of earnings (loss) per share:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Weighted average basic shares outstanding
73,602

 
80,026

 
80,160

Dilutive effect of stock-based compensation awards
1,003

 
—

 
527

Weighted average diluted shares outstanding
74,605

 
80,026

 
80,687



For fiscal 2019, 2018 and 2017, the number of potential shares that were not included in the computation of diluted earnings (loss) per share due to the anti-dilutive effect was 3.2 million, 3.2 million and 4.3 million, respectively.

6.
STOCK-BASED COMPENSATION

The DSW Inc. 2014 Long-Term Incentive Plan (the "Plan") provides for the issuance of stock-based compensation awards for eligible recipients. The Plan replaced the DSW Inc. 2005 Equity Incentive Plan but did not affect awards granted under that plan, some of which remain outstanding. Eligible recipients include key employees as well as directors. The maximum number of shares of Class A common shares underlying awards which may be issued over the term of the Plan cannot exceed 8.5 million shares. As of February 1, 2020, 2.9 million shares of Class A common shares remain available for future stock-based compensation grants under the Plan.

Stock-based compensation expense consisted of the following:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Stock options
$
2,079

 
$
4,900

 
$
6,420

Restricted and director stock units
14,980

 
12,493

 
8,284

 
$
17,059

 
$
17,393

 
$
14,704



Stock Options- Stock options were granted with an exercise price per share equal to the fair market value of our common stock on the grant date. Stock options generally vest 20% per year on a cumulative basis and remain exercisable for a period of 10 years from the date of grant.

Stock-based compensation expense is recognized only for those awards that are expected to vest, with forfeitures estimated based on our historical experience and future expectations. As of February 1, 2020, the total compensation cost related to unvested options not yet recognized was approximately $2.0 million, with a weighted average expense recognition period remaining of 1.8 years.


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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the stock-based compensation award activity for outstanding stock options for fiscal 2019:
(in thousands, except per share amounts and years)
Shares Subject to Options
 
Weighted Average Exercise Price per Share
 
Weighted Average Remaining Contractual Life
 
Aggregate Intrinsic Value
Outstanding - beginning of period
4,001

 
$
24.36

 
 
 
 
Exercised
(169
)
 
$
12.46

 
 
 
 
Forfeited
(71
)
 
$
24.87

 
 
 
 
Outstanding - end of period
3,761

 
$
24.90

 
5.5 years
 
$
176

Vested and expected to vest - end of period
3,669

 
$
24.96

 
5.4 years
 
$
176

Exercisable - end of period
2,618

 
$
25.94

 
4.9 years
 
$
176



The aggregate intrinsic value is calculated as the amount by which the fair value of the underlying common shares exceeds the option exercise price. The total intrinsic value of options exercised during fiscal 2019, 2018 and 2017 was $1.2 million, $2.1 million and $2.0 million, respectively. The total fair value of options that vested during fiscal 2019, 2018 and 2017 was $1.1 million, $0.8 million and $0.6 million, respectively.

Restricted Stock Units- Grants of time-based RSUs generally cliff vest over three years and performance-based RSUs generally cliff vest over three years based upon the achievement of pre-established goals as of the end of the first year of the term. RSUs receive dividend equivalents in the form of additional restricted stock units, which are subject to the same restrictions and forfeiture provisions as the original award. The grant date fair value of RSUs is based on the closing market price of the Class A common shares on the date of the grant.

The following table summarizes the stock-based compensation award activity for unvested stock units for fiscal 2019:
 
Time-Based RSUs
 
Performance-Based RSUs
(shares in thousands)
Number of Shares
 
Weighted Average Grant Date Fair Value
 
Number of Shares
 
Weighted Average Grant Date Fair Value
Outstanding - beginning of period
989

 
$
22.45

 
596

 
$
21.87

Granted
970

 
$
21.05

 
519

 
$
21.90

Vested
(162
)
 
$
25.88

 
(179
)
 
$
24.66

Forfeited
(110
)
 
$
21.92

 
(168
)
 
$
21.94

Outstanding - end of period
1,687

 
$
21.37

 
768

 
$
21.24



The total fair value of time-based RSUs that vested during fiscal 2019, 2018 and 2017 was $3.8 million, $1.7 million and $2.9 million, respectively. As of February 1, 2020, the total compensation cost related to unvested time-based RSUs not yet recognized was $15.3 million, with a weighted average expense recognition period remaining of 1.9 years.

The total fair value of performance-based RSUs that vested during fiscal 2019, 2018 and 2017 was $3.9 million, $3.2 million and $1.8 million, respectively. As of February 1, 2020, the total compensation cost related to unvested performance-based RSUs not yet recognized was approximately $4.4 million, with a weighted average expense recognition period remaining of 1.7 years.

Director Stock Units- We issue stock units to directors who are not employees. Stock units are automatically granted to each director on the date of each annual meeting of shareholders based on the closing market price of the Class A common shares. In addition, each director eligible to receive compensation for board service may elect to have the cash portion of such compensation paid in the form of stock units. Stock units granted to directors vest immediately and directors are given the option to settle their units 30 days after the grant date, at a specified date more than 30 days following the grant date, or upon completion of service. Stock units granted to directors not yet settled, which are not subject to forfeiture, are considered to be outstanding for the purposes of computing basic earnings (loss) per share. As of February 1, 2020, we had 0.5 million director stock units not yet settled.


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DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

7.    SHAREHOLDERS' EQUITY

Shares- Our Class A common shares are listed for trading under the ticker symbol "DBI" on the New York Stock Exchange. There is currently no public market for the Company's Class B common shares, but the Class B common shares can be exchanged for the Company's Class A common shares at the election of the holder on a share for share basis. Holders of Class A common shares are entitled to one vote per share and holders of Class B common shares are entitled to eight votes per share on matters submitted to shareholders for approval.

The following table provides additional information for our common shares:
 
February 1, 2020
 
February 2, 2019
(in thousands)
Class A
 
Class B
 
Class A
 
Class B
Authorized shares
250,000

 
100,000

 
250,000

 
100,000

Issued shares
86,202

 
7,733

 
85,763

 
7,733

Outstanding shares
64,033

 
7,733

 
70,672

 
7,733

Treasury shares
22,169

 
—

 
15,091

 
—



We have authorized 100.0 million shares of no-par value preferred shares with no shares issued for any of the periods presented.

Share Repurchases- On August 17, 2017, the Board of Directors authorized the repurchase of an additional $500 million of Class A common shares under our share repurchase program, which was added to the $33.5 million remaining from the previous authorization. During fiscal 2019, we repurchased 7.1 million Class A common shares at a cost of $141.6 million, with $334.9 million of Class A common shares that remain authorized under the program as of February 1, 2020. During fiscal 2018, we repurchased 2.0 million Class A common shares at a cost of $47.5 million, with $476.6 million of Class A common shares that remain authorized under the program as of February 2, 2019. The share repurchase program may be suspended, modified or discontinued at any time, and we have no obligation to repurchase any amount of our common shares under the program. Shares will be repurchased in the open market at times and in amounts considered appropriate based on price and market conditions.

Accumulated Other Comprehensive Loss- Changes for the balances of each component of accumulated other comprehensive loss were as follows (all amounts are net of tax):
(in thousands)
Foreign Currency Translation
 
Available-for-Sale Securities
 
Total
Balance, January 28, 2017
$
(13,699
)
 
$
(242
)
 
$
(13,941
)
Other comprehensive income (loss) before reclassifications
3,681

 
(1,095
)
 
2,586

Amounts reclassified to non-operating expenses, net
740

 
541

 
1,281

Other comprehensive income (loss)
4,421

 
(554
)
 
3,867

Balance, February 3, 2018
(9,278
)
 
(796
)
 
(10,074
)
Other comprehensive income (loss) before reclassifications
(7,013
)
 
192

 
(6,821
)
Amounts reclassified to non-operating expenses, net
13,963

 
226

 
14,189

Other comprehensive income
6,950

 
418

 
7,368

Balance, February 2, 2019
(2,328
)
 
(378
)
 
(2,706
)
Other comprehensive income (loss) before reclassifications
(340
)
 
609

 
269

Amounts reclassified to non-operating expenses, net
—

 
(58
)
 
(58
)
Other comprehensive income (loss)
(340
)
 
551

 
211

Balance, February 1, 2020
$
(2,668
)
 
$
173

 
$
(2,495
)



F-22
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.    ACCOUNTS RECEIVABLE

Accounts receivable, net, consisted of the following:
(in thousands)
February 1, 2020
 
February 2, 2019
Customer accounts receivables:
 
 
 
Serviced by third-party provider with guaranteed payment
$
54,209

 
$
47,599

Serviced by third-party provider without guaranteed payment
365

 
280

Serviced in-house
7,630

 
9,892

Construction and tenant allowance receivables due from landlords(1)
—

 
4,034

Other receivables
28,166

 
8,004

Accounts receivable
90,370

 
69,809

Allowance for doubtful accounts
(1,219
)
 
(939
)
Accounts receivable, net
$
89,151

 
$
68,870

(1)
Upon transition to ASU 2016-02 at the beginning of fiscal 2019, amounts for construction and tenant allowance receivables due from landlords were netted against the operating lease liabilities.

The following presents the activity in our balance in the allowance for doubtful accounts:
 
Fiscal
(in thousands)
2019
 
2018
Allowance for doubtful accounts - beginning of period
$
(939
)
 
$
—

Provision for bad debts
(1,446
)
 
(939
)
Recoveries and other adjustments
1,166

 
—

Allowance for doubtful accounts - end of period
$
(1,219
)
 
$
(939
)


9.    INVESTMENTS

Investments in available-for-sale securities consisted of the following:
(in thousands)
February 1, 2020
 
February 2, 2019
Carrying value of investments
$
24,831

 
$
70,195

Unrealized gains included in accumulated other comprehensive loss
143

 
44

Unrealized losses included in accumulated other comprehensive loss
—

 
(521
)
Fair value
$
24,974

 
$
69,718



10.
PROPERTY AND EQUIPMENT

Property and equipment, net, consisted of the following:
(in thousands)
February 1, 2020
 
February 2, 2019
Land
$
1,110

 
$
1,110

Buildings
12,485

 
12,485

Building and leasehold improvements
449,958

 
437,116

Furniture, fixtures and equipment
482,573

 
487,494

Software
189,291

 
161,226

Construction in progress
32,645

 
38,646

Total property and equipment
1,168,062

 
1,138,077

Accumulated depreciation and amortization
(773,053
)
 
(728,501
)
Property and equipment, net
$
395,009

 
$
409,576




F-23
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

11.
GOODWILL AND INTANGIBLE ASSETS

Goodwill- Activity related to our goodwill was as follows:
 
February 1, 2020
 
February 2, 2019
(in thousands)
Goodwill
 
Accumulated Impairments
 
Net
 
Goodwill
 
Accumulated Impairments
 
Net
Beginning of period by segment:
 
 
 
 
 
 
 
 
 
 
 
U.S. Retail
$
25,899

 
$
—

 
$
25,899

 
$
25,899

 
$
—

 
$
25,899

Canada Retail
42,048

 
(42,048
)
 
—

 
—

 
—

 
—

Brand Portfolio
63,614

 
—

 
63,614

 
—

 
—

 
—

Other
—

 
—

 
—

 
53,790

 
(53,790
)
 
—

 
131,561

 
(42,048
)
 
89,513

 
79,689

 
(53,790
)
 
25,899

Activity by segment:
 
 
 
 
 
 
 
 
 
 
 
U.S. Retail -
 
 
 
 
 
 
 
 
 
 
 
Allocation of goodwill from Brand Portfolio
67,756

 
—

 
67,756

 
—

 
—

 
—

Canada Retail:
 
 
 
 
 
 
 
 
 
 
 
Acquired TSL goodwill
—

 
—

 
—

 
43,022

 
—

 
43,022

Impairment charges
—

 
—

 
—

 
—

 
(41,845
)
 
(41,845
)
Currency translation adjustment
(438
)
 
438

 
—

 
(974
)
 
(203
)
 
(1,177
)
Brand Portfolio:
 
 
 
 
 
 
 
 
 
 
 
Acquired Camuto Group goodwill
—

 
—

 
—

 
63,614

 
—

 
63,614

Purchase price and allocation adjustments
24,131

 
—

 
24,131

 
—

 
—

 
—

Allocation of goodwill to U.S. Retail
(67,756
)
 
—

 
(67,756
)
 
—

 
—

 
—

Other - Eliminated goodwill from Ebuys exit
—

 
—

 
—

 
(53,790
)
 
53,790

 
—

 
23,693

 
438

 
24,131

 
51,872

 
11,742

 
63,614

End of period by segment:
 
 
 
 
 
 
 
 
 
 
 
U.S. Retail
93,655

 
—

 
93,655

 
25,899

 
—

 
25,899

Canada Retail
41,610

 
(41,610
)
 
—

 
42,048

 
(42,048
)
 
—

Brand Portfolio
19,989

 
—

 
19,989

 
63,614

 
—

 
63,614

 
$
155,254

 
$
(41,610
)
 
$
113,644

 
$
131,561

 
$
(42,048
)
 
$
89,513



Intangible Assets- Intangible assets consisted of the following:
 
February 1, 2020
 
February 2, 2019
(in thousands)
Cost
 
Accumulated Amortization
 
Net
 
Cost
 
Accumulated Amortization
 
Net
Definite-lived:
 
 
 
 
 
 
 
 
 
 
 
Customer relationships
$
9,360

 
$
(2,044
)
 
$
7,316

 
$
28,375

 
$
(1,010
)
 
$
27,365

Favorable leasehold interests
—

 
—

 
—

 
3,513

 
(295
)
 
3,218

Indefinite-lived trademarks and tradenames
15,530

 
—

 
15,530

 
15,546

 
—

 
15,546

 
$
24,890

 
$
(2,044
)
 
$
22,846

 
$
47,434

 
$
(1,305
)
 
$
46,129




F-24
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The customer relationships are amortized by the straight-line method over three years associated with the Canada loyalty program and eight years for Brand Portfolio customer relationships. Upon transition to ASU 2016-02 at the beginning of fiscal 2019, amounts for favorable leasehold interests were netted against the operating lease assets.

12.
ACCRUED EXPENSES

Accrued expenses consisted of the following:
(in thousands)
February 1, 2020
 
February 2, 2019
Gift cards and merchandise credits
$
35,461

 
$
34,998

Accrued compensation and related expenses
26,768

 
53,577

Accrued taxes
19,399

 
16,491

Loyalty programs deferred revenue
16,138

 
16,151

Sales returns
21,408

 
17,743

Customer allowances and discounts
11,528

 
13,094

Other
63,562

 
49,481

 
$
194,264

 
$
201,535



13.    OTHER NON-CURRENT LIABILITIES

Other non-current liabilities consisted of the following:
(in thousands)
February 1, 2020
 
February 2, 2019
Foreign tax contingent liabilities
$
6,018

 
$
13,429

Deferred tax liabilities
2,009

 
3,260

Construction and tenant allowances(1)
—

 
71,634

Deferred rent(1)
—

 
35,934

Accrual for lease obligations(1)
—

 
16,483

Unfavorable leasehold interests(1)
—

 
5,779

Other
19,514

 
18,528

 
$
27,541

 
$
165,047


(1)
Upon transition to ASU 2016-02 at the beginning of fiscal 2019, amounts for construction and tenant allowances, deferred rent, the accrual for lease obligations, and unfavorable leasehold interests were netted against the operating lease assets.

The following table presents the changes and total balances for the accrual for lease obligations:
 
Fiscal
(in thousands)
2019
 
2018
Beginning of period
$
16,483

 
$
6,511

Netted against lease assets upon transition to ASU 2016-02
(16,483
)
 
—

Assumed liability in acquisitions
—

 
6,792

Additions
—

 
23,507

Lease obligation payments, net of sublease income
—

 
(20,496
)
Adjustments
—

 
169

End of period
$
—

 
$
16,483




F-25
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As a result of our decision to exit the Ebuys business, which is included in our Other segment, during fiscal 2018, we exited a leased office space that expires in 2020 and a fulfillment center that expires in 2023 and recorded a lease exit charge of $6.3 million. Also during fiscal 2018, as a result of our decision to exit the Town Shoes banner, which is included in our Canada Retail segment, we closed or re-branded all Town Shoes banner stores and recorded lease exit charges of $15.5 million. The lease exit charges were recorded to operating expenses in the consolidated statements of operations with a related addition to the accrual for lease obligations that included the reserves for these leases based on the remaining lease payments and estimated sublease income. We incurred $19.5 million of charges related to the exit of the Town Shoes banner, which included lease exit charges, severance, and inventory write-downs.

14.
DEBT

Credit Facility- Our Credit Facility, with a maturity date of August 25, 2022, provides a revolving line of credit up to $400 million, with sub-limits for the issuance of up to $50 million in letters of credit, swing loan advances of up to $15 million, and the issuance of up to $75 million in foreign currency revolving loans and letters of credit. The Credit Facility may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the Credit Facility. Our Credit Facility allows the payments of dividends by us or our subsidiaries, provided that immediately before and after a dividend payment there is no event of default, as defined in our Credit Facility.

Loans issued under the revolving line of credit bear interest, at our option, at a base rate or an alternate base rate as defined in the Credit Facility plus a margin based on our leverage ratio, with an interest rate of 3.4% as of February 1, 2020. Any loans issued in CAD bear interest at the alternate base rate plus a margin based on our leverage ratio. Interest on letters of credit issued under the Credit Facility is variable based on our leverage ratio and the type of letters of credit, with an interest rate of 1.8% as of February 1, 2020. Commitment fees are based on the average unused portion of the Credit Facility at a variable rate based on our leverage ratio. As of February 1, 2020 and February 2, 2019, we had $190.0 million and $160.0 million, respectively, outstanding under the Credit Facility. As of February 1, 2020, with the amount outstanding under the Credit Facility and $3.0 million in letters of credit issued, we had $207.0 million available for borrowings. Interest expense related to the Credit Facility includes interest on borrowings and letters of credit, commitment fees and the amortization of debt issuance costs.

Debt Covenants- The Credit Facility contains financial and other covenants, including, but not limited to, limitations on indebtedness, liens and investments, as well as the maintenance of a leverage ratio not to exceed 3.25:1 and a fixed charge coverage ratio not to be less than 1.75:1. A violation of any of the covenants could result in a default under the Credit Facility that would permit the lenders to restrict our ability to further access the Credit Facility for loans and letters of credit and require the immediate repayment of any outstanding loans under the Credit Facility. As of February 1, 2020, we were in compliance with all financial covenants.

15.
LEASES

We lease our stores, fulfillment center and other facilities under operating lease arrangements with unrelated parties and related parties owned by Schottenstein Affiliates. The majority of our real estate leases provide for renewal options, which are typically not included in the lease term used for measuring the lease assets and lease liabilities as it is not reasonably certain we will exercise options. We pay variable amounts for certain lease and non-lease components as well as for contingent rentals based on sales for certain leases where the sales are in excess of specified levels and for leases that have certain contingent triggering events that are in effect. We also lease equipment under operating leases.

We receive operating sublease income from unrelated third parties for leasing portions or all of certain properties. Operating sublease income and operating expenses for these properties are included in operating expenses in our consolidated statements of operations.


F-26
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease income and lease expense consisted of the following for fiscal 2019 (after the adoption of ASU 2016-02) and fiscal 2018 and 2017 (prior to the adoption of ASU 2016-02):
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Operating lease income
$
9,601

 
$
4,659

 
$
4,491

Operating lease expense:
 
 
 
 
 
Lease expense to unrelated parties
$
213,156

 
$
204,873

 
$
178,353

Lease expense to related parties
9,486

 
9,220

 
9,150

Variable lease expense to unrelated parties
53,239

 
23,822

 
27,804

Variable lease expense to related parties
1,283

 
—

 
—

 
$
277,164

 
$
237,915

 
$
215,307



 
Fiscal 2019
Other operating lease information:
 
Weighted-average remaining lease term
6.0 years

Weighted-average discount rate
3.9
%


As of February 1, 2020, our future fixed minimum lease payments are as follows:
(in thousands)
Unrelated Parties
 
Related Parties
 
Total
Fiscal 2020
$
214,533

 
$
8,574

 
$
223,107

Fiscal 2021
222,936

 
8,697

 
231,633

Fiscal 2022
189,534

 
7,418

 
196,952

Fiscal 2023
150,003

 
4,573

 
154,576

Fiscal 2024
111,490

 
4,139

 
115,629

Future fiscal years thereafter
232,644

 
11,353

 
243,997

 
1,121,140

 
44,754

 
1,165,894

Less discounting impact on operating leases
(127,431
)
 
(5,184
)
 
(132,615
)
Total operating lease liabilities
993,709

 
39,570

 
1,033,279

Less current operating lease liabilities
(179,548
)
 
(7,147
)
 
(186,695
)
Non-current operating lease liabilities
$
814,161

 
$
32,423

 
$
846,584



As of February 1, 2020, we have entered into lease commitments for eleven new store locations and one store relocation where the leases have not yet commenced, and therefore the lease liabilities have not yet been recorded. We expect the lease commencement to begin in the next fiscal quarter for these locations and we will record additional operating lease liabilities of approximately $20.1 million.













F-27
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of February 2, 2019, future minimum lease payment requirements, excluding contingent rental payments, maintenance, insurance, real estate taxes, and the amortization of deferred rent and construction and tenant allowances, consisted of the following, as determined prior to the adoption of ASU 2016-02:
(in thousands)
Unrelated Parties
 
Related Parties
 
Total
Fiscal 2019
$
233,237

 
$
9,425

 
$
242,662

Fiscal 2020
227,001

 
9,364

 
236,365

Fiscal 2021
204,803

 
8,697

 
213,500

Fiscal 2022
170,030

 
6,518

 
176,548

Fiscal 2023
131,594

 
1,874

 
133,468

Future fiscal years thereafter
298,437

 
5,596

 
304,033

 
$
1,265,102

 
$
41,474

 
$
1,306,576



16.
COMMITMENTS AND CONTINGENCIES
Legal Proceedings- We are involved in various legal proceedings that are incidental to the conduct of our business. Although it is not possible to predict with certainty the eventual outcome of any litigation, we believe the amount of any potential liability with respect to current legal proceedings will not be material to the results of operations or financial condition. As additional information becomes available, we will assess any potential liability related to pending litigation and revise the estimates as needed.

Foreign Tax Contingencies- During the due diligence procedures performed related to the acquisition of Camuto Group, we identified probable contingent liabilities associated with unpaid foreign payroll and other taxes that could also result in assessed penalties and interest. We developed an initial estimate of the range of outcomes related to these obligations and have since refined our estimates with additional analysis. Our current estimate of the range of outcomes is $28.1 million to $40.0 million for obligations we are aware of at this time. We expect to resolve certain obligations with tax authorities over the next twelve months. As of February 1, 2020, we recorded a contingent liability of $28.1 million, with $22.1 million included in accrued expenses and $6.0 million included in other non-current liabilities on the consolidated balance sheets, representing the low end of the range and an indemnification asset of $24.5 million, with $19.6 million included in accounts receivable and $4.9 million included in other assets on the consolidated balance sheets, representing the estimated amount we expect to collect under the terms of the securities purchase agreement with the Sellers. We are continuing to assess the exposure, which may result in material changes to these estimates, and we may identify additional contingent liabilities. We believe that the Sellers are obligated to indemnify us for any payments to foreign taxing authorities for the periods up to the acquisition date. Although a portion of the purchase price is held in escrow and another portion is held in a restricted bank account, there can be no assurance that we will successfully collect all amounts that we may be obligated to settle with the foreign taxing authorities.

Guarantee- As a result of a previous merger, we provided a guarantee for a lease commitment that is scheduled to expire in fiscal 2023 for a location that has been leased to a third party. If the third party does not pay the rent or vacates the premise, we may be required to make full rent payments to the landlord. As of February 1, 2020, the total future minimum lease payment requirements for this guarantee was approximately $13.4 million.

Contractual Obligations- As of February 1, 2020, we have entered into various noncancelable purchase and service agreements, including construction commitments for capital items to be purchased for projects that were under construction or for which a lease has been signed. In addition, we have license agreements that allow us to use third-party owned brands, including a license agreement with ABG-Camuto (a related party), that have guaranteed minimum royalty payments.


F-28
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As of February 1, 2020, our noncancelable purchase obligations and future guaranteed minimum royalty payments are as follows:
 
 
 
Guaranteed Minimum Royalties
(in thousands)
Noncancelable Purchase Obligations
 
Unrelated Parties
 
Related Party
 
Total
Fiscal 2020
$
9,838

 
$
15,309

 
$
18,350

 
$
33,659

Fiscal 2021
1,871

 
15,309

 
18,350

 
33,659

Fiscal 2022
—

 
15,309

 
18,350

 
33,659

Fiscal 2023
—

 
15,309

 
18,350

 
33,659

Fiscal 2024
—

 
15,309

 
19,650

 
34,959

Future fiscal years thereafter
—

 
27,936

 
78,600

 
106,536

 
$
11,709

 
$
104,481

 
$
171,650

 
$
276,131



17.    INCOME TAXES

Income, including income (loss) from equity investment in TSL, before income taxes consisted of the following:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Domestic income
$
111,021

 
$
123,172

 
$
131,131

Foreign income (loss), including income (loss) from equity investment in TSL
8,753

 
(113,805
)
 
(4,112
)
Income, including income (loss) from equity investment in TSL, before income taxes
$
119,774

 
$
9,367

 
$
127,019



Income tax provision consisted of the following:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Current:
 
 
 
 
 
Federal
$
21,196

 
$
29,073

 
$
60,041

Foreign
205

 
188

 
901

State and local
6,596

 
12,268

 
11,382

Total current tax expense
27,997

 
41,529

 
72,324

Deferred:
 
 
 
 
 
Federal
(620
)
 
(2,234
)
 
(10,431
)
Foreign
(1,241
)
 
(9,273
)
 
927

State and local
(859
)
 
(189
)
 
(3,253
)
Total deferred tax expense
(2,720
)
 
(11,696
)
 
(12,757
)
Income tax provision
$
25,277

 
$
29,833

 
$
59,567




F-29
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following presents a reconciliation of the income tax provision based on the U.S. federal statutory tax rate to the total tax provision (the U.S. federal statutory tax rate used below for fiscal 2017 excludes the impact of the revised rate due to the U.S. Tax Reform as that change is reflected in the net impact of implementing the U.S. Tax Reform):
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Income tax provision at federal statutory rate
$
25,152

 
$
1,966

 
$
44,457

State and local taxes, net of federal benefit
4,809

 
5,688

 
3,896

Foreign tax rate differential
546

 
(3,270
)
 
922

Foreign impairment charges
—

 
11,196

 
—

Change in valuation allowance
(3,949
)
 
8,157

 
834

Non-deductible compensation
344

 
2,219

 
54

Change in uncertain tax positions
(527
)
 
2,611

 
1,245

Net impact of implementing the U.S. Tax Reform
—

 
2,144

 
10,079

Other
(1,098
)
 
(878
)
 
(1,920
)
Income tax provision
$
25,277

 
$
29,833

 
$
59,567


On December 22, 2017, the U.S. Tax Reform was enacted in the U.S., which significantly changed how the U.S. taxes corporations. The U.S. Tax Reform reduced the federal statutory tax rate from 35% to 21% and requires complex computations to be performed that were not previously required in U.S. tax law. The U.S. Treasury Department, the U.S. Internal Revenue Service, and other standard-setting bodies could interpret or issue guidance on how provisions of the U.S. Tax Reform will be applied or otherwise administered that is different from our interpretation. During fiscal 2017, we recognized $10.1 million of additional net tax expense based on our initial assessment of implementing the U.S. Tax Reform. During fiscal 2018, we completed our determination of the accounting implications of the U.S. Tax Reform and recognized $2.1 million of additional net tax expense as a result of implementing the U.S. Tax Reform.

For fiscal 2019, the impact of taxation of the foreign operations on our total effective income tax rate was primarily related to valuation allowances taken.


F-30
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities are as follows:
(in thousands)
February 1, 2020
 
February 2, 2019
Deferred tax assets:
 
 
 
State bonus depreciation
$
3,342

 
$
3,233

Inventory
11,669

 
11,131

Construction and tenant allowances
—

 
3,048

Stock-based compensation
10,987

 
9,081

Gift cards
3,801

 
2,763

Accrued expenses
4,193

 
3,389

Accrued rewards
3,405

 
3,356

Accrued rent
—

 
13,441

Lease liability
259,846

 
—

Foreign net operating losses
9,251

 
13,627

Acquisition-related transaction costs
4,194

 
2,832

Other
6,341

 
4,540

 
317,029

 
70,441

Less: valuation allowance
(9,472
)
 
(14,097
)
Total deferred tax assets, net of valuation allowance
307,557

 
56,344

Deferred tax liabilities:
 
 
 
Right of use asset
(242,733
)
 
—

Property and equipment
(25,359
)
 
(23,423
)
Intangible assets
(5,634
)
 
(3,287
)
Prepaid expenses and other
(3,977
)
 
(2,611
)
 
(277,703
)

(29,321
)
Net deferred tax assets
$
29,854

 
$
27,023



Deferred income taxes are reported within the consolidated balance sheets as follows:
(in thousands)
February 1, 2020
 
February 2, 2019
Deferred tax assets
$
31,863

 
$
30,283

Deferred tax liabilities included in other non-current liabilities
(2,009
)
 
(3,260
)
Net deferred tax assets as shown above
$
29,854

 
$
27,023



We establish valuation allowances for deferred tax assets when the amount of expected future taxable income is not likely to support the use of the deduction or credit. As of February 1, 2020, the valuation allowance is primarily related to foreign net operating losses, which, if not utilized, a portion of the carryovers will begin to expire in fiscal 2034. The following presents the changes in valuation allowance:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Valuation allowance - beginning of period
$
14,097

 
$
2,736

 
$
1,972

Additions charged to income tax provision
—

 
8,157

 
834

Additions related to acquisitions
—

 
6,124

 
—

Allowances taken or written off
(3,949
)
 
(2,920
)
 
(70
)
Other adjustments
(676
)
 
—

 
—

Valuation allowance - end of period
$
9,472

 
$
14,097

 
$
2,736



The U.S. Tax Reform included a mandatory one-time tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been previously accrued have now been subject to

F-31
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

U.S. tax. Notwithstanding the U.S. taxation of these amounts, we intend to continue to invest all of these earnings, as well as our capital in these subsidiaries, indefinitely outside of the U.S. and we do not expect to incur any significant, additional taxes related to such amounts.

Changes in gross unrecognized tax benefits were as follows:
 
Fiscal
(in thousands)
2019
 
2018
 
2017
Unrecognized tax benefits - beginning of period
$
11,608

 
$
7,925

 
$
6,773

Additions for tax positions taken in the current year
1,692

 
4,105

 
1,835

Reductions for tax positions taken in prior years:
 
 
 
 
 
Changes in estimates
(340
)
 
—

 
—

Lapses of applicable statutes of limitations
—

 
—

 
(233
)
Settlements
(2,196
)
 
(422
)
 
(450
)
Unrecognized tax benefits - end of period
$
10,764

 
$
11,608

 
$
7,925


Of the $10.8 million, $11.6 million and $7.9 million of total unrecognized tax benefits at February 1, 2020, February 2, 2019 and February 3, 2018, respectively, approximately $9.2 million, $10.2 million and $6.7 million, respectively, represent the amount of unrecognized tax benefits that, if recognized, would affect the effective tax rate in future periods. While it is expected that the amount of unrecognized tax benefits will change in the next 12 months, any changes are not expected to have a material impact on our financial position, results of operations or cash flows. We recognize interest and penalties related to unrecognized tax benefits as a component of the income tax provision. As of February 1, 2020, February 2, 2019 and February 3, 2018, interest and penalties were $2.3 million, $1.8 million and $0.9 million, respectively.

We are no longer subject to U.S. federal income tax examinations for years prior to fiscal 2014 and state income tax examinations for years prior to 2015. We have a federal income tax return and three state income tax returns in the process of examination at this time. We estimate the range of possible changes that may result from any future tax examinations to be insignificant at this time.

18.
SEGMENT REPORTING
Our three reportable segments, which are also operating segments, are the U.S. Retail segment, the Canada Retail segment, and the Brand Portfolio segment. We have determined that the Chief Operating Decision Maker ("CODM") is our Chief Executive Officer and we have identified such segments based on internal management reporting and responsibilities. The performance of each segment is based primarily on net sales and gross profit. As a result, we do not allocate operating expenses to the segments. We changed our presentation of net sales and gross profit for all periods presented to include commission income. Total assets by segment are not presented in the table below as the CODM does not evaluate, manage or measure performance of segments using total assets.


F-32
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following provides certain financial data by segment reconciled to the consolidated financial statements:
(in thousands)
U.S. Retail
 
Canada Retail
 
Brand Portfolio
 
Other
 
Corporate / Eliminations
 
Total
Fiscal 2019
 
 
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
 
 
 
 
 
 
 
External customer sales
$
2,745,395

 
$
249,017

 
$
376,185

 
$
122,090

 
$
—

 
$
3,492,687

Intersegment sales
—

 
—

 
72,100

 
—

 
(72,100
)
 
—

Total net sales
$
2,745,395

 
$
249,017

 
$
448,285

 
$
122,090

 
$
(72,100
)
 
$
3,492,687

Gross profit
$
786,976

 
$
79,850

 
$
114,170

 
$
26,065

 
$
(7,391
)
 
$
999,670

Income from Equity investment in ABG-Camuto
$
—

 
$
—

 
$
10,149

 
$
—

 
$
—

 
$
10,149

Cash paid for property and equipment
$
36,302

 
$
7,600

 
$
3,574

 
$
178

 
$
30,166

 
$
77,820

Depreciation and amortization
$
47,282

 
$
9,583

 
$
5,644

 
$
372

 
$
23,768

 
$
86,649

Fiscal 2018
 
 
 
 
 
 
 
 
 
 
 
Net sales:
 
 
 
 
 
 
 
 
 
 
 
External customer sales
$
2,738,989

 
$
220,325

 
$
89,636

 
$
128,968

 
$
—

 
$
3,177,918

Intersegment sales
—

 
—

 
10,176

 
—

 
(10,176
)
 
—

Total net sales
$
2,738,989

 
$
220,325

 
$
99,812

 
$
128,968

 
$
(10,176
)
 
$
3,177,918

Gross profit
$
840,174

 
$
55,937

 
$
18,920

 
$
25,252

 
$
(1,594
)
 
$
938,689

Income from Equity investment in ABG-Camuto
$
—

 
$
—

 
$
1,298

 
$
—

 
$
—

 
$
1,298

Cash paid for property and equipment
$
32,544

 
$
6,396

 
$
447

 
$
147

 
$
25,821

 
$
65,355

Depreciation and amortization
$
49,552

 
$
6,951

 
$
1,971

 
$
604

 
$
19,970

 
$
79,048

Fiscal 2017
 
 
 
 
 
 
 
 
 
 
 
Total net sales
$
2,577,711

 
$
—

 
$
—

 
$
227,844

 
$
—

 
$
2,805,555

Gross profit
$
783,399

 
$
—

 
$
—

 
$
15,733

 
$
—

 
$
799,132

Cash paid for property and equipment
$
28,608

 
$
—

 
$
—

 
$
3,483

 
$
24,191

 
$
56,282

Depreciation and amortization
$
54,917

 
$
—

 
$
—

 
$
4,524

 
$
21,420

 
$
80,861



The U.S. Retail and Brand Portfolio segments and Other net sales recognized are primarily based on sales to customers in the U.S., and Canada Retail segment net sales recognized are based on sales to customers in Canada. Net sales realized from geographic markets outside of the U.S. and Canada have collectively been immaterial.

As of February 1, 2020 and February 2, 2019, long-lived assets, consisting of property and equipment and operating lease assets, included $1.2 billion and $374.1 million, respectively, in the U.S. and $114.5 million and $35.2 million, respectively, in Canada with only an immaterial amount in other countries. No single customer accounts for ten percent or more of consolidated total net sales. However, the Brand Portfolio segment has four customers that make up approximately 60% of its total net sales, excluding intersegment net sales, and the loss of any or all of these customers could have a material adverse effect on the Brand Portfolio segment.


F-33
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

19.
QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables contain selected quarterly consolidated financial data for fiscal 2019 and 2018 that have been prepared on the same basis as the accompanying audited consolidated financial statements and include all adjustments necessary for a fair presentation, in all material respects, of the information set forth therein on a consistent basis:
 
Fiscal 2019 Quarters Ended(1)
(in thousands, except per share data)
May 4, 2019
 
August 3, 2019
 
November 2, 2019
 
February 1, 2020
Net sales
$
873,289

 
$
855,952

 
$
933,826

 
$
829,620

Gross profit
$
259,333

 
$
261,173

 
$
273,308

 
$
205,856

Operating profit (loss)
$
43,981

 
$
41,267

 
$
56,108

 
$
(14,057
)
Net income (loss)
$
31,194

 
$
27,407

 
$
43,460

 
$
(7,564
)
Diluted earnings (loss) per share(4)
$
0.40

 
$
0.37

 
$
0.60

 
$
(0.11
)


 
Fiscal 2018 Quarters Ended(2)
(in thousands, except per share data)
May 5, 2018
 
August 4, 2018
 
November 3, 2018
 
February 2, 2019
Net sales
$
710,437

 
$
793,735

 
$
831,669

 
$
842,077

Gross profit
$
205,225

 
$
254,495

 
$
271,083

 
$
207,886

Operating profit (loss)
$
38,470

 
$
24,469

 
$
53,089

 
$
(57,023
)
Net income (loss)(3)
$
24,297

 
$
(38,356
)
 
$
39,319

 
$
(45,726
)
Diluted earnings (loss) per share(4)
$
0.30

 
$
(0.48
)
 
$
0.48

 
$
(0.58
)

(1)
During fiscal 2019, operating results were impacted by the following pre-tax items for the quarters presented:
 
Fiscal 2019 Quarters Ended
(in thousands)
May 4, 2019
 
August 3, 2019
 
November 2, 2019
 
February 1, 2020
Integration and restructuring expenses
$
2,488

 
$
9,621

 
$
1,465

 
$
4,148

Impairment charges
$
—

 
$
—

 
$
4,824

 
$
2,947


(2)    During fiscal 2018, operating results were impacted by the following pre-tax items for the quarters presented:
 
Fiscal 2018 Quarters Ended
(in thousands)
May 5, 2018
 
August 4, 2018
 
November 3, 2018
 
February 2, 2019
Lease exit and other termination costs
$
3,994

 
$
409

 
$
16,301

 
$
2,337

Acquisition-related costs and target acquisition costs
$
508

 
$
5,104

 
$
12,982

 
$
9,335

Impairment charges (adjustments)
$
—

 
$
36,240

 
$
(7,163
)
 
$
31,683

Fair value adjustments to TSL's previously held assets
$
—

 
$
33,988

 
$
—

 
$
—

Camuto Group inventory step-up
$
—

 
$
—

 
$
—

 
$
5,300

Restructuring expenses
$
—

 
$
2,708

 
$
563

 
$
2,342

Foreign currency transactions losses (gains)
$
1,978

 
$
13,318

 
$
94

 
$
(1
)

(3)
During the fourth quarter of fiscal 2018, we recognized $2.1 million of additional net tax expense as a result of finalizing the U.S. Tax Reform implementation assessment.
(4)
The sum of the quarterly diluted earnings (loss) per share amounts may not equal the fiscal year amount due to rounding and the use of weighted average shares outstanding for each period.


F-34
Table of Contents
DESIGNER BRANDS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

20.
SUBSEQUENT EVENTS

Coronavirus- In March 2020, the World Health Organization declared the coronavirus ("COVID-19") outbreak a pandemic, which continues to spread throughout North America and worldwide. The health and safety of our customers and employees remain our top priority as we continue to make decisions during this rapidly evolving situation. We have taken decisive actions across our businesses to help protect employees, customers and others in the communities we serve. As a measure to limit the spread of the virus, effective March 18, 2020, we temporarily closed all of our stores in the U.S. and Canada. Our e-commerce business will continue to be available to customers and our stores will be used in the fulfillment of online orders to be shipped to customers or available for curbside pickup. During this unprecedented period of uncertainty, we have in place business continuity plans involving adjustments to operational plans, inventory disciplines, liquidity management, and reductions to our expense and capital expenditure plans. Such measures include implementing temporary leaves of absence for over 80% of our workforce without direct pay and pay reductions for nearly all employees not placed on temporary leave. The COVID-19 outbreak and the temporary closure of all of our stores has had a material adverse impact on our business, liquidity, financial condition, and results of operations.

While we cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact, based on our current understanding of governmental mandates and maintaining the health and safety of our customers and employees, we believe our stores will primarily begin re-opening in the second quarter of fiscal 2020 with a gradual return of store traffic through the remainder of fiscal 2020. As such, the impacts of COVID-19 to our businesses are highly uncertain and we will continue to assess the financial impacts. The disruption to the global economy and to our business, along with a sustained decline in our stock price, may lead to triggering events that may indicate that the carrying value of certain assets, including inventories, accounts receivables, long-lived assets, intangibles, and goodwill, may not be recoverable.

Dividends- On March 17, 2020, the Board of Directors declared a quarterly cash dividend payment of $0.10 per share for both Class A and Class B common shares. The dividend was paid on April 10, 2020 to shareholders of record at the close of business on March 30, 2020.

Credit Facility- Subsequent to February 1, 2020, we borrowed $205.0 million from the Credit Facility as a precautionary measure to increase our cash position and preserve financial flexibility considering uncertainty in the U.S. and global markets resulting from COVID-19, resulting in $2.0 million of available for borrowing.

On April 30, 2020, the Credit Facility was amended, which resulted in various changes including:
•
Provides for a lien on all of the Company's assets;
•
Reduces the borrowing availability to $375.0 million on October 31, 2020, $350.0 million on January 30, 2021, $325.0 million on May 1, 2021, and $300.0 million on July 31, 2021;
•
Redefines the components for calculating the leverage ratio and fixed charge coverage ratio to adjust for certain temporary impacts due to COVID-19;
•
Changes the maximum leverage ratio covenant to 3.50:1 as of May 2, 2020, 4.00:1 as of August 1, 2020, 3.75:1 as of October 31, 2020, and 3.50:1 as of January 30, 2021 and as of the end of each fiscal quarter thereafter;
•
Changes the minimum fixed charge coverage ratio to 1.25:1 as of May 2, 2020 and 1.05:1 as of August 1, 2020 and as of the end of each fiscal quarter thereafter; and
•
Restricts the Company from paying dividends, making share repurchases, and making certain acquisitions.


F-35


EXHIBIT 4.2


DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12
OF THE SECURITIES EXCHANGE ACT OF 1934

      The following is a description of the Class A Common Shares of Designer Brands Inc. (the “Company”), which is the only class of securities of the Company registered pursuant to Section 12 of the Securities Exchange Act of 1934. This description does not purport to be complete and is qualified in its entirety by reference to the Company’s Amended and Restated Articles of Incorporation (the “Articles”) and Amended and Restated Code of Regulations (the “Regulations”), which the Company has previously filed with the Securities and Exchange Commission and applicable provisions of the Ohio General Corporation Law.

 Authorized Capital Shares

The Company’s Articles provide for the issuance of up to 250,000,000 Class A common shares without par value (the "Class A Common Shares"), 100,000,000 Class B common shares without par value (the "Class B Common Shares"), and 100,000,000 preferred shares without par value (the “Preferred Shares”).

Class A Common Shares

The holders of Class A Common Shares and Class B Common Shares (collectively referred to herein as the “Common Shares”) generally have identical rights except that holders of Class A Common Shares are entitled to one vote per share on all matters to be voted on by the shareholders, while holders of Class B Common Shares are entitled to eight votes per share on all matters to be voted on by the shareholders, voting together with the holders of the Class A Common Shares as a single class. The holders of Common Shares are not entitled to cumulative voting rights. Generally, all matters to be voted on by shareholders must be approved by a majority (or, in the case of election of directors, by a plurality) of the votes entitled to be cast by all Class A Common Shares and Class B Common Shares present in person or represented by proxy, voting together as a single class, subject to any voting rights granted to holders of any Preferred Shares.

Holders of Common Shares have no pre-emptive rights, and the Common Shares are not subject to further calls or assessment by us. There are no redemption or sinking fund provisions applicable to the Common Shares.

Holders of Class A Common Shares and Class B Common Shares will share in an equal amount per share in any dividend declared by the board of directors, subject to any preferential rights of any outstanding Preferred Shares. Dividends consisting of Class A Common Shares and Class B Common Shares may be paid only as follows: (i) dividends of Class A Common Shares may be paid only to holders of Class A Common Shares and dividends of Class B Common Shares may be paid only to holders of Class B Common Shares and (ii) shares shall be paid proportionately with respect to each outstanding Class A Common Share and Class B Common Share.

The Class A Common Shares have no conversion rights. Holders of Class B Common Shares have the right, upon notice to the Company, to convert each Class B Common Share to one Class A Common Share. Any Class B Common Shares converted pursuant to this right will be retired. The Company will reserve and keep available out of the authorized but unissued Class A Common Shares the full number of Class A Common Shares deliverable upon conversion of all outstanding Class B Common Shares for the purpose of effecting this conversion right.

Upon liquidation, dissolution or winding up of the Company’s affairs, creditors and any holders of Preferred Shares will be paid before any distribution to holders of Common Shares. The holders of Common Shares would be entitled to receive a pro rata distribution of any excess amount. All outstanding Common Shares are fully paid and nonassessable.
     
The rights, preferences and privileges of holders of Common Shares are subject to, and may be adversely affected by, the rights of holders of any series of Preferred Shares, which the board of directors may designate and issue in the future.

Preferred Shares

The board of directors may fix by resolution the designations, preferences and relative, participating, optional or other rights and the qualifications, limitations or restrictions of the Preferred Shares, including the number of shares in any series, liquidation preferences, dividend rights, voting rights, conversion rights and redemption provisions. Terms selected could decrease the amount of earnings and assets available for distribution to holders of the Common Shares or adversely affect the rights and




power, including voting rights, of the holders of the Common Shares without any further vote or action by the shareholders. Any series of Preferred Shares issued by the board of directors could have priority over the Common Shares in terms of dividend or liquidation rights or both. The issuance of Preferred Shares, or the issuance of rights to purchase Preferred Shares, could have the effect of delaying, deferring or preventing a change of control of the Company or an unsolicited acquisition proposal or of making the removal of management more difficult. Additionally, the issuance of Preferred Shares may have the effect of decreasing the market price of the Common Shares. There are currently no outstanding Preferred Shares. While we have no present intent to issue any Preferred Shares, any issuance could make it more difficult for a third party to acquire a majority of the Company’s outstanding voting shares.

Anti-Takeover Effects of Certain Provisions of the Articles, Regulations and Ohio Law
  
Certain provisions of the Articles, Regulations and Ohio General Corporation Law summarized below may be deemed to have an anti-takeover effect and may delay, defer or prevent a tender offer or takeover attempt that a shareholder might consider in its best interest, including those attempts that might result in a premium over the market price for the shares held by shareholders.

No Cumulative Voting. Where cumulative voting is permitted, each share is entitled to as many votes as there are directors to be elected and each shareholder may cast all of his or her votes for a single candidate or distribute such votes among two or more candidates. Cumulative voting makes it easier for a minority shareholder to elect a director. The Articles expressly deny shareholders the right to cumulative voting.

Supermajority Vote to Remove Directors. The Company’s Regulations permit shareholders to remove a director only by the vote of the holders of not less than three-fourths of the voting power of the Company entitling them to elect directors in place of those to be removed. This provision, when coupled with the voting power of the Class B Common Shares, will preclude even a majority shareholder of Class A Common Shares from removing incumbent directors and simultaneously gaining control of the board of directors by filling the vacancies. Additionally, the Articles permit a vacancy on the board of directors to be filled for the balance of the unexpired term by the vote of a majority of the remaining directors.
 
Classified Board. The Company’s Regulations provide for the board of directors to be divided into three classes of directors serving staggered three-year terms when the authorized number of directors is nine or more. This provision, when coupled with the vote required to remove directors, can preclude even a majority shareholder of Class A Common Shares from gaining control of the board of directors in one election.
     
Authorized But Unissued Shares. The authorized but unissued Common Shares and Preferred Shares are available for future issuance without shareholder approval under Ohio law. These additional shares may be utilized for a variety of corporate purposes, including future public offerings to raise additional capital, corporate acquisitions and employee benefit plans. The Articles authorize the board of directors to issue up to 100,000,000 Preferred Shares and to determine the powers, preferences, privileges, rights, including voting rights, qualifications, limitations and restrictions on those shares, without any further vote or action by the shareholders. The existence of authorized but unissued Common Shares and Preferred Shares could have the effect of delaying, deterring or preventing an attempt to obtain control of the Company by means of a proxy contest, tender offer, merger or otherwise.
   
Special Meetings of Shareholders. The Company’s Regulations provide that special meetings of the shareholders may be called only by:

•
the chairman of the board of directors, the president, or in case of the president's death or disability, the vice president authorized to exercise the authority of the president;
•
the directors by action at a meeting, or a majority of the incumbent directors acting without a meeting; or
•
the holders of at least 50% of all shares outstanding and entitled to vote thereat.

Actions by Written Consent. Section 1701.54 of the Ohio General Corporation Law requires that an action by written consent of the shareholders in lieu of a meeting be unanimous, except that under Section 1701.11 of the Ohio General Corporation Law, a company’s code of regulations may be amended by an action by written consent of holders of two-thirds of the voting power of the company or, if the articles of incorporation or code of regulations otherwise provide, such greater or lesser amount, but not less than a majority. The Company’s Regulations provide that the Regulations may be amended by an action by written consent of holders of a majority of the Company’s total voting power. Based on the 8-to-1 voting power of the Class B Common Shares relative to the Class A Common Shares, this provision may have the effect of delaying, deterring or preventing a tender offer or takeover attempt that a shareholder might consider in the Company's best interest.
      




Advance Notice Requirements for Shareholder Proposals and Director Nominations. The Company’s Regulations require that shareholders seeking to nominate candidates for election as directors at an annual or special meeting of shareholders must provide timely notice to us in writing. To be timely, a shareholder’s notice must be received at the Company’s principal executive offices not less than 60 days, nor more than 90 days, prior to the first anniversary of the date of the previous year’s annual meeting (or, if the date of the annual meeting is changed by more than 30 days from the anniversary date of the preceding year’s annual meeting, or in the case of a special meeting, within seven days after we mail the notice of the date of the meeting or otherwise publicly disclose the date of the meeting). The Regulations also prescribe the proper written form for a shareholder’s notice. These provisions may preclude shareholders from making nominations for directors at an annual or special meeting.
      
We Have Opted Out of the Ohio Control Share Acquisition Statute. We have opted out of the application of Section 1701.831 of the Ohio General Corporation Law, known as the “Ohio Control Share Acquisition Statute.” This statute provides that, unless a company’s articles of incorporation or code of regulations provide that such section does not apply, notice and information filings, and special shareholder meeting and voting procedures, must occur prior to any person’s acquisition of a company's shares that would entitle the acquirer to exercise or direct the voting power of the company in the election of directors within any of the following ranges:

•
one-fifth or more, but less than one-third, of the voting power;
•
one-third or more, but less than a majority, of the voting power; and
•
a majority of the voting power.
      
We Have Opted Out of the Merger Moratorium Statute. We have opted out of the application of Chapter 1704 of the Ohio General Corporation Law, known as the “Merger Moratorium Statute.” This statute prohibits certain transactions if they involve both the company and either a person who became the beneficial owner of 10% or more of the company’s shares without the prior approval of its board of directors or anyone affiliated or associated with such person, unless the company’s articles of incorporation or code of regulations provide that such statute does not apply. The prohibition imposed by Chapter 1704 is absolute for at least three years and continues indefinitely thereafter unless the transaction is approved by the holders of at least two-thirds of the voting power of the company or satisfies statutory conditions relating to the fairness of the consideration to be received by the shareholders.

Listing

The Class A Common Shares are listed on the NYSE under the symbol “DBI.”

Transfer Agent and Registrar

The transfer agent and registrar for Class A Common Shares is Computershare Inc. but may be subject to change from time to time.







EXHIBIT 10.7

INDEMNIFICATION AGREEMENT

This Indemnification Agreement (this “Agreement”) is made and entered into as of the last date of the signature below, by and between Designer Brands Inc., an Ohio corporation (the “Company”), and [NAME], an individual (“Indemnitee”).
RECITALS

A.The Amended and Restated Articles of Incorporation (the “Articles”) and the Amended and Restated Code of Regulations (the “Regulations”) of the Company provide for the indemnification of the directors and officers of the Company to the greatest extent permitted by Ohio law, including the Ohio General Corporation Law, as amended (the “OGCL”).
B.The Articles, Regulations and the OGCL permit contracts between the Company and the directors and officers of the Company with respect to indemnification of such directors and officers.
C.In accordance with the OGCL, the Company may purchase and maintain a policy or policies of directors’ and officers’ liability insurance covering certain liabilities that may be incurred by its directors and officers in the performance of their obligations to the Company.
D.The Company recognizes that capable and qualified individuals are becoming increasingly reluctant to serve as directors and/or officers of public corporations as a result of the recent and ongoing enactment of statutes and regulations pertaining to directors’ and officers’ responsibilities and the increasing risk of lawsuits against directors and officers in the current corporate climate in the United States, unless such individuals are provided with more certain and secure protection against exposure to unreasonable personal risk arising from their service and activities on behalf of a corporation.
E.The Company is aware that individuals recruited to serve on the boards of public corporations and as officers of public corporations generally are more likely to agree to provide services to corporations that provide for separate indemnification agreements with their directors and officers because, unlike indemnification provisions contained in the articles of incorporation or the regulations of a company or state statutory provisions, the indemnification provisions contained in a separate agreement may not be amended or rescinded without the consent of the director or officer who is a party to the agreement.
F. The Company recognizes that it is in the best interests of the Company and its shareholders to attract and retain capable and qualified individuals to serve on its Board of Directors (the “Board”), and to serve as management of the Company, and to enable such directors and officers to exercise their independent business judgment in their capacities as directors and officers without being affected by the threat of exposure to unreasonable personal risk.
G.To induce Indemnitee to serve and/or continue to serve as a director and/or officer of the Company, the Company desires Indemnitee to be indemnified and advanced expenses as set forth herein.

AGREEMENT

In consideration of Indemnitee’s service as a director and/or officer of the Company after the date hereof, the Company and Indemnitee hereby agree as follows:

1.Certain Definitions. Capitalized terms used but not otherwise defined in this Agreement shall have the meanings set forth below:
“Corporate Status” means the fact that a person is or was a director and/or an officer of the Company. A Proceeding shall be deemed to have been brought by reason of a person’s “Corporate Status” if it is brought because of the status described in the preceding sentence or because of any action or inaction on the part of such person in connection with such status.
“Disinterested Director” means a director of the Company who is not and was not a party to or threatened with a Proceeding in respect of which indemnification is sought by Indemnitee.
“Expenses” shall include all reasonable attorneys’ fees, disbursements and retainers, court costs, transcript costs, fees of experts, witness fees, travel and deposition costs, duplicating costs, printing and binding costs, telephone charges, postage, delivery service fees and all other disbursements or expenses of the types customarily incurred in connection with (a) prosecuting, defending, preparing to prosecute or defend, investigating, settling or appealing a Proceeding (including the cost of any appeal bond or its equivalent), (b) being prepared to be a witness or otherwise participating in a Proceeding or (c) enforcing a right under this Agreement (including any right to indemnification or advancement of expenses under this Agreement).
“Independent Counsel” means an attorney, or a firm having associated with it an attorney, who neither currently is, nor in the past five years has been, retained by or performed services for the Company or any person to be indemnified by the Company.




“Proceeding” includes any threatened, pending or completed action, suit, arbitration, alternate dispute resolution mechanism, investigation, inquiry, administrative hearing or any other actual, threatened or completed proceeding, whether civil, criminal, administrative or investigative, in which Indemnitee was, is or would be involved as a party or otherwise (including, without limitation, as a witness) by reason of the Indemnitee’s Corporate Status, including one pending on or before the date of this Agreement; but excluding one initiated by an Indemnitee pursuant to Section 7 of this Agreement to enforce Indemnitee’s rights under this Agreement. For purposes of this definition, the term “threatened” shall be deemed to include, but not be limited to, Indemnitee’s good faith belief that a claim or other assertion may lead to initiation of a Proceeding.
“Reviewing Party” means the person, persons or entity selected to make the determination of the entitlement to indemnification pursuant to Section 5.3 hereof.

2.Indemnification.
2.1     Proceedings not by or in Right of Company. Subject to the terms of this Agreement, the Company hereby agrees to hold harmless and indemnify Indemnitee to the greatest extent permitted by Ohio law, including but not limited to the provisions of the OGCL, the Articles and the Regulations, as such may be amended from time to time, if Indemnitee was or is a party, witness, or other participant, or is threatened to be made a party, witness, or other participant, to any Proceeding, other than a Proceeding by or in the right of the Company, by reason of Indemnitee’s Corporate Status, against all Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with such Proceeding, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company and, with respect to any criminal Proceeding, had no reasonable cause to believe that his or her conduct was unlawful. The termination of any Proceeding by judgment, order, settlement or conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that Indemnitee did not satisfy the foregoing standard of conduct to the extent applicable thereto.
2.2    Proceedings by or in Right of Company. Subject to the terms of this Agreement, the Company hereby agrees to hold harmless and indemnify Indemnitee to the greatest extent permitted by Ohio law, including but not limited to the provisions of the OGCL, the Articles and the Regulations, as such may be amended from time to time, if Indemnitee was or is a party or is threatened to be made a party to any Proceeding by or in the right of the Company, by reason of Indemnitee’s Corporate Status, against all Expenses actually and reasonably incurred by Indemnitee or on Indemnitee’s behalf in connection with the defense or settlement of such Proceeding, if Indemnitee acted in good faith and in a manner Indemnitee reasonably believed to be in or not opposed to the best interests of the Company; provided, however, that, if applicable law so provides, no indemnification against such Expenses shall be paid in respect of (a) any claim, issue or matter in such Proceeding by or in the right of the Company as to which the Indemnitee shall have been adjudged to be liable to the Company for an act or omission undertaken by such Indemnitee in his or her capacity as a director of the Company with deliberate intent to cause injury to the Company or with reckless disregard for the best interests of the Company, (b) any claim, issue or matter asserted in a Proceeding by or in the right of the Company as to which the Indemnitee shall have been adjudged to be liable to the Company for negligence or misconduct in his or her capacity other than that of a director of the Company, or (c) any Proceeding by or in the right of the Company in which the only liability is asserted pursuant to Section 1701.95 of the OGCL against the Indemnitee, unless and only to the extent that the Franklin County Court of Common Pleas of the State of Ohio or the court of competent jurisdiction in which such Proceeding is brought shall determine, upon application of either the Indemnitee or the Company, that, despite the adjudication or assertion of such liability, and in view of all the circumstances of the case, the Indemnitee is fairly and reasonably entitled to such indemnity as such court shall deem proper.
2.3    Indemnification for Expenses of an Indemnitee Who is Wholly or Partly Successful. To the extent that the Indemnitee has been successful on the merits or otherwise in defense of any Proceeding referred to in Section 2.1 or 2.2 of this Agreement, or in defense of any claim, issue or matter in such Proceeding, Indemnitee shall be indemnified against Expenses actually and reasonably incurred by the Indemnitee or on Indemnitee’s behalf in connection with such Proceeding.
3.Advancement of Expenses.
3.1    The Company shall advance all Expenses incurred by or on behalf of Indemnitee in connection with any Proceeding prior to the final disposition of such Proceeding upon receipt of an undertaking by or on behalf of Indemnitee to repay such amount if it shall ultimately be determined that Indemnitee is not entitled to be indemnified by the Company. Any advances and undertakings to repay pursuant to this Section 3.1 shall not be secured, shall not bear interest and shall provide that, if Indemnitee has commenced or thereafter commences legal proceedings in a court of competent jurisdiction to secure a determination that Indemnitee should be indemnified under applicable law with respect to such Proceeding, Indemnitee shall not be required to reimburse the Company for any advancement of Expenses in respect of such Proceeding until a final judicial determination is made with respect thereto (as to which all rights of appeal therefrom have been exhausted or lapsed).
3.2    Any advancement of Expenses pursuant to Section 3.1 hereof shall be made within ten (10) days after the receipt by the Company of a written statement from Indemnitee requesting such advancement from time to time and accompanied by or preceded by the undertaking referred to in Section 3.1 above. Each statement requesting advancement shall reasonably




evidence the Expenses incurred by or on behalf of the Indemnitee in connection with such Proceeding for which advancement is being sought, unless such documentation or information would undermine or jeopardize attorney-client privilege.  
4.Contribution in the Event of Joint Liability. Whether or not the indemnification provided in this Agreement is available, in respect of any Proceeding in which the Company is jointly liable with Indemnitee (or would be if joined in such Proceeding), the Company shall contribute to the amount of Expenses, judgments, fines and amounts paid in settlement actually and reasonably incurred and paid or payable by Indemnitee in proportion to the relative benefits received by the Company, on the one hand, and Indemnitee, on the other hand, from the transaction from which such Proceeding arose; provided, however, that the proportion determined on the basis of relative benefit may, to the extent necessary to conform to law, be further adjusted by reference to the relative fault of the Company, on the one hand, and Indemnitee, on the other hand, in connection with the events that resulted in such Expenses, judgments, fines or settlement amounts, as well as any other equitable considerations that applicable law may require to be considered. The relative fault of the Company, on the one hand, and Indemnitee, on the other hand, shall be determined by reference to, among other things, the degree to which their actions were motivated by intent to gain personal profit or advantage, the degree to which their liability is primary or secondary, and the degree to which their conduct is active or passive.
5.Procedures and Presumptions for Determination of Entitlement to Indemnification.
5.1    Timing of Payments. All payments of Expenses, judgments, fines, amounts paid in settlement and other amounts by the Company to Indemnitee pursuant to this Agreement shall be made as soon as practicable after written demand therefor by Indemnitee is presented to the Company, but in no event later than (a) 30 days after such demand is presented or (b) such later date as may be permitted for the determination of entitlement to indemnification pursuant to Section 5.7 hereof, if applicable; provided, however, that advances of Expenses shall be made within the time period provided in Section 3.2 hereof.
5.2    Request for Indemnification. Whenever Indemnitee believes that he or she is entitled to indemnification pursuant to this Agreement, Indemnitee shall submit to the Company a written request, including therein or therewith such documentation and information as is reasonably available to Indemnitee and is reasonably necessary to determine whether and to what extent Indemnitee is entitled to indemnification. Indemnitee shall submit such claim for Indemnification within a reasonable time, not to exceed five years, after any judgment, order, settlement, dismissal, arbitration award, conviction, acceptance of a plea of nolo contendere (or its equivalent) or other full or partial final determination or disposition of the Proceeding (with the latest date of the occurrence of any such event to be considered the commencement of the five-year period). The Secretary of the Company shall, promptly upon receipt of such a request for indemnification, advise the Board in writing that Indemnitee has requested indemnification.
5.3    Reviewing Party. Upon written request by Indemnitee for indemnification pursuant to the first sentence of Section 5.2 hereof, to the extent that the Indemnitee’s entitlement to such indemnification is governed by Section 2.1 or 2.2 of this Agreement, a determination with respect to Indemnitee’s entitlement thereto shall be made in the specific case by one of the following methods: (a) by a majority vote of a quorum of the Board consisting of Disinterested Directors; or (b) if such a quorum of Disinterested Directors is not available or if a majority of such quorum so directs, in a written opinion by Independent Counsel (designated for such purpose by the Board).
5.4    Determination by Independent Counsel. If the determination of entitlement to indemnification is to be made by Independent Counsel pursuant to Section 5.3 hereof, the Independent Counsel shall be selected as provided in this Section 5.4. The Independent Counsel shall be selected by the Board of Directors, and the Company shall promptly give written notice to Indemnitee advising him or her of the identity of the Independent Counsel so selected. Indemnitee may, within ten days after such written notice of selection shall have been given, deliver to the Company a written objection to such selection; provided, however, that such objection may be asserted only on the ground that the Independent Counsel so selected does not meet the requirements of “Independent Counsel” as defined in this Agreement, and the objection shall set forth with particularity the factual basis of such assertion. Absent a proper and timely objection, the person so selected shall act as Independent Counsel. If a written objection is made and substantiated, the Independent Counsel selected may not serve as Independent Counsel unless and until such objection is withdrawn or a court has ruled against such objection. If, within 30 days after submission by Indemnitee of a written request for indemnification pursuant to Section 5.2 hereof, no Independent Counsel shall have been selected or an Independent Counsel shall have been selected but an objection thereto shall have been properly made and remained unresolved, either the Company or Indemnitee may petition the Franklin County Court of Common Pleas of the State of Ohio or other court of competent jurisdiction for resolution of any objection that shall have been made by the Indemnitee to the selection of Independent Counsel and/or for the appointment as Independent Counsel of a person selected by the court or by such other person as the court shall designate, and the person with respect to whom all objections are so resolved or the person so appointed shall act as Independent Counsel under Section 5.3 hereof. The Company shall pay any and all reasonable fees and expenses of Independent Counsel incurred by such Independent Counsel in connection with acting pursuant to Section 5.4 hereof.
5.5    Burden of Proof. In making a determination with respect to entitlement to indemnification hereunder, the Reviewing Party shall presume that Indemnitee is entitled to indemnification under this Agreement. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. In making a determination with respect to entitlement to indemnification hereunder which under this Agreement or applicable law requires a determination of Indemnitee’s good faith, and/or whether Indemnitee acted in a manner which he or she reasonably believed to be in or not opposed to the best interests of the Company, and, with respect to any criminal Proceeding, if Indemnitee




had no reasonable cause to believe that Indemnitee’s conduct was unlawful, the Reviewing Party shall presume that (a) Indemnitee has at all times acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Company, and (b) with respect to any criminal Proceeding, that Indemnitee had no reasonable cause to believe that Indemnitee’s conduct was unlawful. Anyone seeking to overcome this presumption shall have the burden of proof and the burden of persuasion, by clear and convincing evidence. Indemnitee, acting in his or her capacity as a director of the Company, shall be deemed to have acted in good faith if Indemnitee’s action or inaction is based on Indemnitee’s reliance on information, opinions, reports or statements, including financial statements and other financial data, that were prepared or presented by (a) one or more directors, officers, or employees of the Company who the Indemnitee reasonably believes are reliable and competent in the matters prepared or presented; (b) counsel, public accountants, or other persons as to matters that the Indemnitee reasonably believes are within the person's professional or expert competence; or (c) a committee of the Board upon which the Indemnitee does not serve, duly established in accordance with a provision of the Company’s Articles or Regulations, as to matters within its designated authority, which committee the Indemnitee reasonably believes to merit confidence. In addition, the knowledge and/or actions, or failure to act, of any other director, officer, agent or employee of the Company shall not be imputed to Indemnitee for purposes of determining the right to indemnification under this Agreement.
5.6    No Presumption in Absence of Determination or as Result of Adverse Determination. Neither the failure of any Reviewing Party to have made a determination as to whether Indemnitee has met any particular standard of conduct or had any particular belief, nor an actual determination by any Reviewing Party that Indemnitee has not met such standard of conduct or did not have such belief, prior to the commencement of legal proceedings by Indemnitee to secure a judicial determination under this Agreement or applicable law that Indemnitee should be indemnified under this Agreement, shall be a defense to Indemnitee’s claim or create a presumption that Indemnitee has not met any particular standard of conduct or did not have any particular belief.
5.7    Timing of Determination. If the Reviewing Party shall not have made a determination within 30 days after receipt by the Company of the request therefor, the requisite determination of entitlement to indemnification shall be deemed to have been made and Indemnitee shall be entitled to such indemnification, absent (a) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not materially misleading, in connection with the request for indemnification, or (b) a prohibition of such indemnification under applicable law; provided, however, that such 30-day period may be extended for a reasonable time, not to exceed an additional 45 days, if the Reviewing Party in good faith requires such additional time for obtaining or evaluating documentation and/or information relating thereto; and provided, further, however, that if the determination is to be made by Independent Counsel as the Reviewing Party, such 30-day period shall be deemed to commence after a final appointment of an Independent Counsel has been made pursuant to the provisions of Section 5.4 hereof.
5.8    Cooperation. Indemnitee shall cooperate with the Reviewing Party with respect to Indemnitee’s entitlement to indemnification, including providing to such Reviewing Party upon reasonable advance request any documentation or information that is not privileged or otherwise protected from disclosure and that is reasonably available to Indemnitee and reasonably necessary to such determination. The Reviewing Party shall act reasonably and in good faith in making a determination under this Agreement of Indemnitee’s entitlement to indemnification.
6.Liability Insurance. The Company shall, from time to time, make the good faith determination whether or not it is practicable for the Company to obtain and maintain a policy or policies of directors’ and officers’ liability insurance with one or more reputable insurance companies. Among other considerations, the Company will weigh the costs of obtaining such insurance coverage against the protection afforded by such coverage. Notwithstanding the foregoing, the Company shall have no obligation to obtain or maintain such insurance if the Company determines in good faith that such insurance is not reasonably available, if the premium costs for such insurance are disproportionately high compared to the amount of coverage provided, or if the coverage provided by such insurance is limited by exclusions so as to provide an insufficient benefit. The Company shall promptly notify Indemnitee of any such determination not to provide insurance coverage. In the event that the Company does maintain such insurance for the benefit of Indemnitee, the right to indemnification and advancement of Expenses as provided herein shall apply only to the extent that Indemnitee has not been indemnified and actually reimbursed pursuant to such insurance or otherwise has not had Expenses advanced in accordance with the terms of such insurance.
7.Remedies of Indemnitee Relating to Indemnification and Advancement of Expenses.
7.1    In the event that (a) a determination is made pursuant to Section 5 of this Agreement that Indemnitee is not entitled to indemnification under this Agreement, (b) advancement of Expenses is not timely made pursuant to Section 3.2 of this Agreement, (c) no determination of entitlement to indemnification shall have been made within the time period specified in Section 5.7 of this Agreement, or (d) payment of indemnified amounts is not made within the applicable time periods specified in Section 5.1 of this Agreement, Indemnitee shall thereafter be entitled under this Agreement to commence a proceeding in the Franklin County Court of Common Pleas of the State of Ohio, or in any other court of competent jurisdiction, seeking an adjudication of Indemnitee’s entitlement to such indemnification or advancement of Expenses. Indemnitee shall commence such proceeding seeking an adjudication within 180 days following the date on which Indemnitee first has the right to commence such proceeding pursuant to this Section 7.1. The Company shall not oppose Indemnitee’s right to seek any such adjudication.
7.2    In the event that a determination shall have been made pursuant to Section 5.3 of this Agreement that Indemnitee is not entitled to indemnification, any judicial proceeding commenced pursuant to this Section 7 shall be conducted




in all respects as a de novo review on the merits and Indemnitee shall not be prejudiced by reason of that adverse determination under Section 5.3.
7.3    If a determination shall have been made pursuant to Section 5.3 of this Agreement that Indemnitee is entitled to indemnification, the Company shall be bound by such determination in any judicial proceeding commenced pursuant to this Section 7, absent (a) a misstatement by Indemnitee of a material fact, or an omission of a material fact necessary to make Indemnitee’s statement not misleading, in connection with the request for indemnification or (b) a prohibition of such indemnification under applicable law.
7.4    Both the Company and the Indemnitee shall be precluded from asserting in any judicial proceeding commenced pursuant to this Section 7 that the procedures and presumptions of this Agreement are not valid, binding and enforceable and shall stipulate in any such court that the Company and the Indemnitee are bound by all the provisions of this Agreement.
7.5    In the event that Indemnitee commences a proceeding pursuant to this Section 7 to enforce a right of Indemnitee under this Agreement, then, to the extent that Indemnitee is successful on the merits or otherwise in such proceeding, or in connection with any claim, issue or matter therein, Indemnitee shall be indemnified by the Company against Expenses actually and reasonably incurred by the Indemnitee in connection with such proceeding.
8.Exceptions to Right of Indemnification. Notwithstanding any other provision of this Agreement, Indemnitee shall not be entitled to indemnification under this Agreement:
(a)    or advancement of Expenses with respect to any claim (whether an original claim, counterclaim, cross-claim or third party claim) brought or made by Indemnitee in a Proceeding, unless the bringing or making of such claim shall have been approved or ratified by the Board; provided, however, that the foregoing shall not apply to any claim brought or made by an Indemnitee to enforce a right of the Indemnitee under this Agreement;
(b)    for Expenses incurred by Indemnitee with respect to any action instituted by or in the name of the Company against Indemnitee, if and to the extent that a court of competent jurisdiction declares or otherwise determines in a final, unappealable judgment that each of the material defenses asserted by Indemnitee was made in bad faith or was frivolous;
(c)    for Expenses and other liabilities arising from the purchase and sale by Indemnitee of securities in violation of Section 16(b) of the Securities Exchange Act of 1934, or any similar state or successor statute; and
(d)    for Expenses and other liabilities if and to the extent that a court of competent jurisdiction declares or otherwise determines in a final, unappealable judgment that the Company is prohibited by applicable law from making such indemnification payment or that such indemnification payment is otherwise unlawful.
9.Notification and Defense of Claim.
9.1    Notification. Indemnitee agrees promptly to notify the Company in writing upon being served with any summons, citation, subpoena, complaint, indictment, information or other document relating to any Proceeding or matter that may be subject to indemnification covered hereunder. Such notification shall include a brief description of the nature of and the facts underlying such Proceeding or matter. The failure to so notify the Company shall not relieve the Company of any obligation that it may have to Indemnitee under this Agreement or otherwise unless and only to the extent that such failure or delay materially prejudices the Company.
9.2    Defense of Claim. With respect to any Proceeding (other than a Proceeding brought by or in the right of the Company) as to which Indemnitee notifies the Company of the commencement thereof:
(a)    The Company may participate therein at its own expense;

(b)    The Company, jointly with any other indemnifying party similarly notified, may assume the defense thereof, with counsel reasonably satisfactory to Indemnitee. After notice from the Company to Indemnitee of its election to assume the defense thereof, the Company shall not be liable to Indemnitee under this Agreement for any Expenses subsequently incurred by Indemnitee in connection with the defense thereof unless (i) the employment of counsel by Indemnitee or the incurrence of any other Expense has been authorized by the Company, (ii) Indemnitee shall have reasonably concluded that there may be a conflict of interest between the Company (or any other person or persons included in the joint defense) and Indemnitee in the conduct of the defense of such Proceeding, or (iii) the Company shall not, in fact, have employed counsel to assume the defense of such Proceeding;

(c)    The Company shall not be liable to Indemnitee under this Agreement for any amounts paid in settlement in any Proceeding effected without its written consent;

(d)    The Company shall not settle any Proceeding in any manner that would impose any penalty or limitation on Indemnitee without Indemnitee's written consent; and





(e)    Neither the Company nor Indemnitee shall unreasonably withhold its consent to any proposed settlement, provided that Indemnitee may withhold consent to any settlement that does not provide a complete release of Indemnitee.

10.Duration of Agreement. All agreements and obligations of the Company and Indemnitee contained herein shall continue during the period Indemnitee is a director and/or officer of the Company and shall continue thereafter so long as Indemnitee shall be subject under applicable law to the assertion of any Proceeding (or any proceeding commenced under Section 7 hereof) by reason of Indemnitee’s Corporate Status, whether or not Indemnitee is acting or serving in any such capacity at the time any liability or expense is incurred for which indemnification can be provided under this Agreement.
11.Miscellaneous.
11.1    No Employment Agreement. Nothing contained in this Agreement shall be construed as giving Indemnitee any right to be retained in the employment of the Company or any of its subsidiaries or affiliated entities.
11.2    Entire Agreement. This Agreement constitutes the entire agreement and understanding of the Company and Indemnitee in respect of its subject matter and supersedes all prior understandings, agreements and representations by or among the Company and Indemnitee, written or oral, to the extent they relate in any way to the subject matter hereof.
11.3    Successors. All of the terms, agreements, covenants, representations, warranties and conditions of this Agreement are binding upon, and inure to the benefit of and are enforceable by, the Company and Indemnitee and their respective heirs, executors, administrators, personal representatives, successors and permitted assigns.
11.4    Assignment. Neither the Company nor Indemnitee may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other; provided, however, that the Company may assign all (but not less than all) of its rights, interests and obligations hereunder to any direct or indirect successor to all or substantially all of the business or assets of the Company by purchase, merger, consolidation or otherwise; provided, however, no such assignment shall relieve the Company of its obligations hereunder and the assignee must agree in writing to be bound by all of the terms and conditions herein.
11.5    Merger or Consolidation. In the event that the Company shall be a constituent corporation in a consolidation, merger or other reorganization, the Company, if it shall not be the surviving, resulting or acquiring entity therein, shall require as a condition thereto that the surviving, resulting or acquiring entity agree to assume all of the obligations of the Company hereunder and to indemnify Indemnitee to the full extent provided herein. Whether or not the Company is the resulting, surviving or acquiring entity in any such transaction, Indemnitee shall also stand in the same position under this Agreement with respect to the resulting, surviving or acquiring entity as the Indemnitee would have with respect to the Company if its separate existence had continued.
11.6    Notices. All notices, requests, demands, claims and other communications hereunder shall be in writing. Any notice, request, demand, claim or other communication hereunder shall be deemed duly given if it is delivered personally against written receipt, by registered or certified mail, return receipt requested, postage prepaid, or by facsimile transmission, and addressed to the intended recipient as set forth below:
If to Company:
Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
Attention: General Counsel


If to Indemnitee:
[NAME]
Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery against written receipt; (ii) if delivered by mail in the manner described above, be deemed given on the earlier of the fourth business day following mailing or upon receipt; and (iii) if delivered by facsimile transmission to the facsimile number as provided for in this Section, be deemed given upon receipt. Either party may change the




address or facsimile number to which notices, requests, demands, claims and other communications hereunder are to be delivered by giving the other parties notice in the manner herein set forth.
11.7    Specific Performance. Each of the Company and Indemnitee acknowledges and agrees that the other would be damaged irreparably if any provision of this Agreement is not performed in accordance with its specific terms or is otherwise breached. Accordingly, each party agrees that the other party shall be entitled to an injunction or injunctions to prevent breaches of the provisions of this Agreement and to enforce specifically this Agreement and its terms and provisions in any action instituted in any court of the United States or any state thereof having jurisdiction over the parties and the matter, in addition to any other remedy to which they may be entitled at law or in equity.

11.8    Counterparts. This Agreement may be executed in two counterparts, each of which shall be deemed an original but both of which together shall constitute one and the same instrument.
11.9    Governing Law. This Agreement and the performance of the parties’ obligations hereunder shall be governed by and construed in accordance with the laws of the State of Ohio, without giving effect to any choice of law principles.
11.10    Amendments and Waivers. No amendment, modification, replacement, termination or cancellation of any provision of this Agreement will be valid, unless the same is in writing and signed by the parties. No waiver by either party of any default, misrepresentation or breach of warranty or covenant hereunder, whether intentional or not, may be deemed to extend to any prior or subsequent default, misrepresentation or breach of warranty or covenant hereunder or affect in any way any rights arising because of any prior or subsequent such occurrence.
11.11    Nonexclusivity of Rights; Survival of Rights; Severability.
(a)    The rights provided by this Agreement (including rights to indemnification, advancement of expenses and contribution) (i) shall not be exclusive of, and shall be in addition to, any other rights to indemnification, advancement of expenses or contribution to which Indemnitee may at any time be entitled under the Articles, the Regulations, applicable law (including the OGCL), any insurance policy, agreement, vote of shareholders or Disinterested Directors or otherwise, as to any actions or failures to act by Indemnitee, (ii) shall continue after the Indemnitee has ceased to be a director and/or an officer of the Company and (iii) shall inure to the benefit of the Indemnitee’s heirs, executors, administrators and personal representatives. In the event of any change, after the date of this Agreement, in any applicable law which expands the right of the Company to indemnify a member of its Board and/or its officers, such changes shall be deemed to be within the purview of Indemnitee's rights and the Company's obligations under this Agreement. In the event of any change in any applicable law which narrows the right of the Company to indemnify a member of its Board and/or its officers, such changes, to the extent not otherwise required by applicable law to be applied to this Agreement, shall have no effect on this Agreement or the parties' rights and obligations hereunder.
(b)    The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof; provided, however, that if any provision of this Agreement, as applied to any party or to any circumstance, is adjudged by a court, arbitrator or mediator not to be enforceable in accordance with its terms, the parties agree that the court, arbitrator or mediator making such determination shall have the power to modify the provision in a manner consistent with its objectives (and only to the extent necessary) such that it is enforceable, and/or to delete specific words or phrases, and in its reduced form, such provision shall then be enforceable and shall be enforced.
11.12    Subrogation; No Duplicative Payments.
(a)    In the event of payment under this Agreement, the Company shall be subrogated to the extent of such payment to all of the rights of recovery of Indemnitee, who shall execute all papers required and shall do everything that may be necessary to secure such rights, including the execution of such documents necessary to enable the Company effectively to bring suit to enforce such rights.
(b)    The Company shall not be liable to make any payment under this Agreement to Indemnitee if and to the extent that Indemnitee has actually received payment under any insurance policy, contract, the Articles, the Regulations or otherwise of the amounts otherwise payable hereunder.
11.13    Expenses. Except as otherwise expressly provided in this Agreement, each party shall bear its own costs and expenses incurred in connection with the preparation, execution and performance of this Agreement, including all fees and expenses of agents, representatives, financial advisors, legal counsel and accountants.




11.14    Construction. If any provision of this Agreement should be deemed to exceed the authority granted to the Company by Ohio law in effect as of the date hereof, then such provision shall be deemed to be amended to the extent (and only to the extent) necessary to comply with Ohio law. The parties have participated jointly in the negotiation and drafting of this Agreement. If an ambiguity or question of intent or interpretation arises, this Agreement shall be construed as if drafted jointly by the parties and no presumption or burden of proof shall arise favoring or disfavoring any party because of the authorship of any provision of this Agreement. Any reference to any federal, state, local or foreign law shall be deemed also to refer to such law as amended and all rules and regulations promulgated thereunder, unless the context requires otherwise. The words “include,” “includes,” and “including” shall be deemed to be followed by “without limitation.” Pronouns in masculine, feminine and neuter genders shall be construed to include any other gender, and words in the singular form shall be construed to include the plural and vice versa, unless the context otherwise requires. The words “this Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar import refer to this Agreement as a whole and not to any particular subdivision unless expressly so limited. The parties intend that each representation, warranty and covenant contained herein will have independent significance. If either party has breached any representation, warranty or covenant contained herein in any respect, the fact that there exists another representation, warranty or covenant relating to the same subject matter (regardless of the relative levels of specificity) that the party has not breached shall not detract from or mitigate the fact that the party is in breach of the first representation, warranty or covenant. The section headings contained in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.
11.15    Remedies. Except as expressly provided herein, the rights and remedies created by this Agreement are cumulative and in addition to any other rights or remedies now or hereafter available at law or in equity or otherwise. Except as expressly provided herein, nothing herein shall be considered an election of remedies. The assertion or employment of any right or remedy shall not prevent the concurrent assertion or employment of any other remedy.
11.16    Mutual Acknowledgement. Nothing in this Agreement is intended to require or shall be construed as requiring the Company to do or fail to do any act in violation of applicable law. Both the Company and Indemnitee acknowledge that in certain instances, Federal law or applicable public policy may prohibit the Company from indemnifying the Indemnitee under this Agreement or otherwise. Indemnitee understands and acknowledges that the Company has undertaken and may be required in the future to undertake with the Securities and Exchange Commission to submit the question of indemnification to a court in certain circumstances for a determination of the Company's right under public policy to indemnify Indemnitee. The Company's inability, pursuant to court order, to perform its obligations under this Agreement shall not constitute a breach of this Agreement.


[Signature Page Follows]

IN WITNESS WHEREOF, the parties hereto have executed this Indemnification Agreement as of the date first hereinabove written.


DESIGNER BRANDS INC.

By: _______________________________
Name:
 
Title:
 

Date: _______________________________

INDEMNITEE

By: _______________________________
Name:
 
Title:
 
Date: _______________________________







EXHIBIT 10.19


STANDARD EXECUTIVE SEVERANCE AGREEMENT
BETWEEN
DESIGNER BRANDS INC.
AND
DREW DOMECQ
This Standard Executive Severance Agreement (this “Agreement”) by and between Designer Brands Inc. (the “Company”) and Drew Domecq (the “Executive”), collectively, the “Parties,” is effective as of the date signed (the “Effective Date”) and supersedes and replaces any other oral or written employment-related agreement between the Executive and the Company.
RECITALS
WHEREAS, the severance offer to the Executive is provided by the Company in exchange for the Executive’s performance of the obligations described in this Agreement. The Executive agrees that the severance offered is adequate consideration for the performance of the duties and the covenants and releases made and entered into by and between the Executive and the Company in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and intending to be legally bound hereby, the Company and the Executive agree to the following:
AGREEMENT
1.00 EXECUTIVE’S OBLIGATIONS
1.01    Scope of Duties. The Executive will:
[1] Devote all available business time, best efforts and undivided attention to the Company’s business and affairs; and
[2] Not engage in any other business activity, whether or not for gain, profit or other pecuniary benefit.
[3] However, the restriction described in Section 1.02[1] and [2] will not preclude the Executive from:
[a] Making or holding passive investments in outstanding shares in the securities of publicly-owned companies or other businesses (other than organizations described in Section 1.05), regardless of when and how that investment was made; or
[b] Serving on corporate, civic, religious, educational and/or charitable boards or committees but only if this activity [i] does not interfere with the performance of duties under this Agreement and [ii] is approved by the Executive’s manager.
1.02    Confidential Information.
[1] Obligation to Protect Confidential Information. The Executive acknowledges that the Company and its subsidiaries, parent corporation and affiliated entities (collectively, “Group” and separately, “Group Member”) have a legitimate and continuing proprietary interest in the protection of Confidential Information (as defined in Section 1.02[2]) and have invested, and will continue to invest, substantial sums of money to develop, maintain and protect Confidential Information. The Executive agrees [a] during and after employment with all Group Members whether or not such termination was voluntary [i] that any Confidential Information will be held in confidence and treated as proprietary to the Group, [ii] not to use or disclose any Confidential Information except to promote and advance the Group’s business interests and [b] immediately upon termination from employment with all Group Members, whether or not such termination was voluntary, to return to the Company any Confidential Information.




[2] Definition of Confidential Information. For purposes of this Agreement, Confidential Information includes any confidential data, figures, projections, estimates, pricing data, customer lists, buying manuals or procedures, distribution manuals or procedures, other policy and procedure manuals or handbooks, supplier information, tax records, personnel histories and records, information regarding sales, information regarding properties and any other Confidential Information regarding the business, operations, properties or personnel of the Group (or any Group Member) which are disclosed to or learned by the Executive as a result of employment with any Group Member, but will not include [a] the Executive’s personal personnel records or [b] any information that [i] the Executive possessed before the date of initial employment (including periods before the Effective Date) with any Group Member, [ii] became or becomes a matter of public knowledge through sources independent of the Executive, [iii] has been or is disclosed by any Group Member without restriction on its use, [iv] has been or is required to be disclosed by law or governmental order or regulation, [v] the Executive discloses to the appropriate governmental or regulatory agency solely for the purpose of reporting, participating in an investigation, or participating in a proceeding involving a suspected violation of law, or [vi] the Executive developed outside the Executive’s employment with the Group without use of the Group’s trade secrets or Confidential Information. The Executive also agrees that, if there is any reasonable doubt whether an item is public knowledge, to not regard the item as public knowledge until and unless the General Counsel of the Company confirms to the Executive that the information is public knowledge or an arbitrator, acting under Section 6.00, finally decides that the information is public knowledge.
[3] Intellectual Property. The Executive expressly acknowledges that all right, title and interest to all inventions, designs, discoveries, works of authorship, and ideas conceived, produced, created, discovered, authored, or reduced to practice during the Executive’s performance of services under this Agreement, whether individually or jointly with any Group Member (the “Intellectual Property”) shall be owned solely by the Group, and shall be subject to the restrictions set forth in Section 1.02[1] above. All Intellectual Property which constitutes copyrightable subject matter under the copyright laws of the United States shall, from the inception of creation, be deemed to be a "work made for hire" under the United States copyright laws and all right, title and interest in and to such copyrightable works shall vest in the Group. All right, title and interest in and to all Intellectual Property developed or produced under this Agreement by the Executive, whether constituting patentable subject matter or copyrightable subject matter (to the extent deemed not to be a "work made for hire") or otherwise, shall be assigned and is hereby irrevocably assigned to the Group by the Executive. The Executive shall, without any additional consideration, execute all documents and take all other actions needed to convey the Executive’s complete ownership interest in any Intellectual Property to the Group so that the Group may own and protect such Intellectual Property and obtain patent, copyright and trademark registrations for it. The Executive agrees that any Group Member may alter or modify the Intellectual Property at the Group Member’s sole discretion, and the Executive waives all right to claim or disclaim authorship.
1.03 Solicitation of Employees. The Executive agrees that during employment, and for the longer of any period of salary continuation or for two years after terminating employment with all Group Members ,whether or not such termination was voluntary, [1] not, directly or indirectly, to solicit any employee of any Group Member to leave employment with the Group, [2] not, directly or indirectly, to employ or seek to employ any employee of any Group Member and [3] not to cause or induce any of the Group’s (or Group Member’s) competitors to solicit or employ any employee of any Group Member. This restriction shall not prohibit (i) the solicitation for employment or employing any employee whose employment was terminated by the Group; provided, that discussions between the Executive and such employee did not commence prior to the date of such termination; or (ii) general solicitations through advertisements in newspapers or other media of general circulation advertising employment opportunities.
1.04 Solicitation of Third Parties. The Executive agrees that during employment, and for the longer of any period of salary continuation or for two years after terminating employment with all Group Members, whether or not such termination was voluntary, not, directly or indirectly, to recruit, solicit or otherwise induce or influence any customer, supplier, sales representative, lender, lessor, lessee or any other person having a business relationship with the Group (or any Group Member) to discontinue or reduce the extent of that relationship except in the course of discharging the duties described in this Agreement and with the good faith objective of advancing the Group’s (or any Group Member’s) business interests.
1.05 Non-Competition. The Executive agrees that for one year after terminating employment with all Group Members, whether or not such termination was voluntary, not, directly or indirectly, to accept employment with, act as a consultant to, or otherwise perform services that are substantially the same or similar to those for which the Executive was compensated by any Group Member (this comparison will be based on job-related functions and responsibilities and not on job title) for any business that directly competes with the Group’s (or any Group Member’s) business, which is understood by the Parties to be the sale of significant branded footwear regardless of whether it is offered at full-price, at discount or off-price, and regardless of the channel of distribution (such as department stores, specialty retail stores, for sale at “first cost” or wholesale rates and/or for sale online), and the manufacture and design of footwear. Illustrations of businesses that compete with the Group’s business include, but are not limited to, Amazon (Footwear); Caleres Inc.; Champs Sports; Deckers Outdoor; Dick’s Sporting Goods; Famous Footwear; Finish




Line; Foot Locker; Genesco; Kohl’s (footwear) Macy’s; Marc Fisher Footwear; Nordstrom and Nordstrom Rack (Non-apparel); Rack Room Shoes/Off Broadway Shoe Warehouse; Shoe Carnival; Skechers USA; Steve Madden; Tapestry, Inc.; The TJX Companies, Inc. (T.J. Maxx; Marshall’s; The Maxx; Marmaxx); Walmart; Wolverine World Wide; and Zappos. This restriction applies to any parent, division, affiliate, newly formed or purchased business(es) and/or successor of a business that competes with the Group’s (or any Group Member’s) business.
1.06 Post-Termination Cooperation. As is required of the Executive during employment, the Executive agrees that during and after employment with any Group Members and without additional compensation (other than reimbursement for reasonable associated expenses), to cooperate with the Group (and with each Group Member) in the following areas:
[1] Cooperation With the Company. The Executive agrees [a] to be reasonably available to answer questions for the Group’s (and any Group Member’s) officers regarding any matter, project, initiative or effort for which the Executive was responsible while employed by any Group Member and [b] to cooperate with the Group (and with each Group Member) during the course of all third-party proceedings arising out of the Group’s (and any Group Member’s) business about which the Executive has knowledge or information. For purposes of this Agreement, [c] “proceedings” includes internal investigations, administrative investigations or proceedings and lawsuits (including pre-trial discovery and trial testimony) and [d] “cooperation” includes [i] the Executive’s being reasonably available for interviews, meetings, depositions, hearings and/or trials without the need for subpoena or assurances by the Group (or any Group Member), [ii] providing any and all documents in the Executive’s possession that relate to the proceeding, and [iii] providing assistance in locating any and all relevant notes and/or documents.
[2] Cooperation With Third Parties. Unless compelled to do so by lawfully-served subpoena or court order, the Executive agrees not to communicate with, or give statements or testimony to, any opposing attorney, opposing attorney’s representative (including private investigator) or current or former employee relating to any matter (including pending or threatened lawsuits or administrative investigations) about which the Executive has knowledge or information (other than knowledge or information that is not Confidential Information as defined in Section 1.02[2]) as a result of employment with the Group (or any Group Member) except in cooperation with the Company. The Executive also agrees to notify the General Counsel of the Company immediately after being contacted by a third party or receiving a subpoena or court order to appear and testify with respect to any matter affected by this Section.
[3] Cooperation With Media. The Executive agrees not to communicate with, or give statements to, any member of the media (including print, television or radio media) relating to any matter (including pending or threatened lawsuits or administrative investigations) about which the Executive has knowledge or information (other than knowledge or information that is not Confidential Information as defined in Section 1.02[2]) as a result of employment with the Group (or any Group Member). The Executive also agrees to notify the General Counsel of the Company immediately after being contacted by any member of the media with respect to any matter affected by this Section.
1.07 Non-Disparagement. The Executive and the Company (on its behalf and on behalf of the Group and each Group Member) agree that neither will make any disparaging remarks about the other and the Executive will not make any disparaging remarks about the Company’s Chairman, Chief Executive Officer or any of the Group’s senior executives. However, this Section will not preclude [1] any remarks that may be made by the Executive under the terms of Section 1.06[2] or that are required to discharge the duties described in this Agreement or [2] the Company from making (or eliciting from any person) disparaging remarks about the Executive concerning any conduct that may lead to a termination for Cause, as defined in Section 2.03 (including initiating an inquiry or investigation that may result in a termination for Cause), but only to the extent reasonably necessary to investigate the Executive’s conduct and to protect the Group’s (or any Group Member’s) interests.
1.08 Notice of Subsequent Employment. The Executive agrees to immediately notify the Company of any subsequent employment during the period of salary continuation after employment terminates.
1.09 Nondisclosure. The Executive agrees not to disclose the terms of this Agreement in any manner to any person other than the Executive’s manager, one of the Company’s Vice Presidents of Human Resources (or any Company representative they expressly approve for such disclosure), the Executive’s personal attorney, accountant and financial advisor, and the Executive’s immediate family or as otherwise required by law.
1.10 Remedies. The Executive acknowledges that money will not adequately compensate the Group for the substantial damages that will arise upon the breach of any provision of Section 1.00. For this reason, any disputes arising under Section 1.00 will not be subject to arbitration under Section 6.00. Instead, if the Executive breaches or threatens to breach any provision of Section 1.00, the Company will be entitled, in addition to other rights and remedies, to specific performance, injunctive relief and other equitable relief to prevent or restrain any breach or threatened breach of Section 1.00.




1.11 Return of Company Property. Upon termination of employment, the Executive agrees to promptly return to the Company all property belonging to the Group or any Group Member.
2.00 TERMINATION AND RELATED BENEFITS
2.01 Rules of General Application. The following rules apply generally to the implementation of Section 2.00:
[1] Method of Payment. If the amount of any installment payments is or becomes less than or equal to the applicable dollar amount under Section 402(g)(1)(B) of the Internal Revenue Code of 1986, the Company may elect to pay such remaining installments as a lump sum.
[2] Application of Pro Rata. Any pro rata share required to be paid under Section 2.00 will be based on the number of days between the first day of the fiscal year during which the Executive terminates employment and the date that the Executive terminates employment divided by the number of days in the fiscal year during which the Executive terminates employment.
2.02 Involuntary Termination Without Cause. The Company may terminate the Executive’s employment at any time Without Cause (as defined below) by delivering to the Executive a written notice specifying the date termination is to be effective. If all requirements of this Agreement are met, the Company will make the following payments to the Executive as of the effective date of Involuntary Termination Without Cause:
[1] Base Salary. For twelve (12) months beginning on the date of Involuntary Termination Without Cause, the Company will continue to pay the Executive’s base salary at the rate in effect on the effective date of Involuntary Termination Without Cause. If such amount exceeds two times the annual compensation limit prescribed by Section 401(a)(17) of the Internal Revenue Code of 1986 (the “Involuntary Termination Limit”), then the Company will pay the severance obligation described in this Section 2.02[1] in two payment streams. The first payment stream will be equal to the Involuntary Termination Limit, and the Company will pay this amount in twelve (12) monthly installments or twenty-four (24) equal biweekly installments, beginning on the date of Involuntary Termination Without Cause. The amount of the second payment stream will equal the amount in excess of the Involuntary Termination Limit. The Company will pay this amount in six (6) monthly installments or twelve (12) equal biweekly installments beginning on the date that is six (6) months after the date of the Executive’s Involuntary Termination Without Cause. As a condition of this salary continuation, the Executive is expected to promptly and reasonably pursue new employment subject to the non-competition provisions set forth in Section 1.05 above. If during the salary continuation period the Executive becomes employed either as an employee or a consultant, the Executive’s base salary paid by the Company will be reduced by fifty percent (50%) of the base salary amount for the remainder of the salary continuation period. The Executive agrees to immediately notify the Company of any subsequent employment or consulting work during the period of salary continuation.
[2] Health Care. The Company will reimburse the Executive for the cost of maintaining continuing health coverage under COBRA for a period of no more than twelve (12) months following the effective date of Involuntary Termination Without Cause, less the amount the Executive is expected to pay as a regular employee premium for such coverage. Such reimbursements will cease if the Executive becomes eligible for similar coverage under another benefit plan. The Executive agrees to immediately notify the Company of any if the Executive becomes eligible for coverage for under another benefit plan.
[3] Cash Incentive Bonus. The Company will pay to the Executive the pro- rata share of any Cash Incentive Bonus that would have been paid to the Executive had the Executive not been involuntarily terminated Without Cause. The pro-rated bonus will be calculated based on the extent to which company performance standards, as formalized through metrics in the incentive plan, are met on the last day of the year in which the Executive is involuntarily terminated Without Cause and will be paid at the same time as all other participants. Notwithstanding anything herein to the contrary, to the extent permitted or required by governing law, the Company’s Compensation Committee shall have discretion to require the Executive to repay to the Company the amount of any Cash Incentive Bonus to the extent the Compensation Committee or Board of Directors determines that such bonus was not actually earned by the Executive due to (A) the amount of such payment was based on the achievement of financial results that were subsequently the subject of a material accounting restatement that occurs within three years of such payment (except in the case of a restatement due to a change in accounting policy or simple error); (B) the Executive has engaged in fraud, gross negligence or intentional misconduct; or (C) the Executive has deliberately misled the market or the Company’s stockholders regarding the Company’s financial performance.




[4] Equity Incentives. Subject to the terms of the Designer Brands Inc. 2014 Equity Incentive Plan, any future shareholder approved Company equity plan, and any applicable agreement, the Executive shall have the following rights:

[a] For these purposes, Award means any award granted under the
Designer Brands Inc. 2014 Equity Incentive Plan, any future shareholder approved Company equity plan, and any other agreement, as such term is defined in the applicable plan.

[b]
With respect to nonqualified stock options, the Executive will have ninety (90) days following the effective date of Involuntary Termination Without Cause, or the grant expiration date set forth in the applicable stock option agreement between the Executive and the Company, whichever period is shorter, to exercise any portion of any outstanding nonqualified stock options that are vested and exercisable on the effective date of Involuntary Termination Without Cause, subject to the trading rules set forth in the Company’s policies and procedures, including the Designer Brands Inc. Insider Trading Policy.

[c]
With respect to Awards that would vest solely upon the passage of time and such vesting date would occur within the twelve (12) month period following the effective date of Involuntary Termination Without Cause, such Award shall vest and, if applicable, be awarded to the Executive as of the date of termination Without Cause.

[d]
With respect to Awards that would vest upon the satisfaction of a specified requirement, or upon satisfaction of the passage of time and satisfaction of a specified requirement; in the event that all such requirements are satisfied prior to the expiration of the twelve (12) month period following the date of termination Without Cause, such Award shall vest and be awarded to the Executive upon the satisfaction of all applicable requirements.
 
In any event, the Executive must exercise any vested Awards during the three-month period following the date of vesting.

[5] Other. Any rights accruing to the Executive under any employee benefit plan, fund or program maintained by any Group Member will be distributed or made available as required by the terms of the plan fund or program or as required by law.
2.03 Definition of Cause. For these purposes, Cause means the Executive’s [a] breach of Section 1.00 of this Agreement, including Scope of Duties, Confidential Information, Solicitation of Employees, Solicitation of Third Parties, Non-Competition, Post-Termination Cooperation, Non-Disparagement, Nondisclosure, and Return of Company Property; [b] willful, illegal or grossly negligent conduct that is materially injurious to the Company or any Group Member monetarily or otherwise; [c] violation of laws or regulations governing the Company or to any Group Member; [d] breach of any fiduciary duty owed to the Company or any Group Member, expressly including the duties of good faith, ordinary care, and to act in a manner that is not opposed to the best interests of the Company; [e] material misrepresentation or dishonesty in violation of the Company’s policies and procedures; [f] involvement in any act of moral turpitude that has or could reasonably have an injurious effect on the Company (or any Group Member) or its reputation; or [g] breach of the terms of any non-solicitation or confidentiality clauses contained in a standard executive employment agreement(s) with a former employer in the event it causes injury to the Company or any Group Member. By way of non-limiting example, conduct constituting Cause under part [f] of this Section 2.03 includes the Executive’s engagement in or facilitation of, as determined by the Company, any form of harassment, sexual or otherwise, or any other sexual misconduct. The Company’s dissatisfaction with the Executive’s performance, or the business results achieved, shall not, in and of itself, constitute Cause under this Section.
2.04 Subsequent Information. The terms of Section 2.03 will apply if, after the Executive terminates, the Company learns of an event that, had it been known before the Executive terminated employment, would have justified a termination for Cause. In this case, the Company may seek to recover any amounts (other than legally protected benefits) that the Executive received.
For purposes of this Agreement, “Involuntary Termination Without Cause” and “Without Cause” means termination of the Executive’s employment by the Company for any reason other than those set forth in Section 2.03 or 2.04.
3.00 NOTICE
3.01 How Given. Any notice permitted or required to be given under this Agreement must be given in writing and delivered in person or by registered, U.S. mail, return receipt requested, postage prepaid, or through Federal Express, UPS, DHL or any other reputable professional delivery service that maintains a confirmation of delivery system. Any delivery must be addressed to the




Company’s General Counsel at the Company’s then-current corporate offices or to the Executive at the Executive’s address as contained in the Executive’s personnel file.
3.02 Effective Date. Any notice permitted or required to be given under this Agreement will be effective on the date it is delivered, in the event of personal delivery, or on the date its receipt is acknowledged, in the event of delivery by registered mail or through a professional delivery service described in Section 3.01.
4.00 RELEASE
In exchange for the payments and benefits described in Section 2.02 of this Agreement, upon termination the Executive and the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and assigns (together, the “Executive Representatives”) agree to execute a release in substantially the form set forth herein, forever discharging the Company, the Group and each Group Member and their executives, officers, directors, agents, attorneys, successors and assigns, from any and all claims, suits and/or causes of action that grow out of or are in any way related to the Executive’s recruitment to or employment with the Company and all Group Members, other than: (i) any claim that the Company has breached this Agreement, and (ii) any charge filed with an administrative agency (although the Executive and the Executive Representatives waives any right to recover any money or other benefits arising from such charge(s)). This release includes, but is not limited to, any claims that the Company, the Group or any Group Member violated the Employee Retirement and Income Security Act of 1974; the Age Discrimination in Employment Act; the Older Worker’s Benefit Protection Act; the Americans with Disabilities Act; Title VII of the Civil Rights Act of 1964 (as amended); the Family and Medical Leave Act; any law prohibiting discrimination, harassment or retaliation in employment; any claim of promissory estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or the public policy of any state, or any federal, state or local law. The release shall be delivered to the Executive within three (3) business days after the date of termination of Executive’s employment. If the Executive or the Executive Representatives fails to execute this release, the Executive or the Executive Representatives agrees to forego any payment from the Company as if the Executive had terminated employment voluntarily. Specifically, the Executive and the Executive Representatives agree that a necessary condition for the payment of any of the amounts described in Section 2.00 in the event of termination is the Executive’s or the Executive Representatives’ execution of the release upon termination of employment. The Executive acknowledges that the Executive is an experienced senior executive knowledgeable about the claims that might arise in the course of employment with the Company and knowingly agrees that the payments upon termination provided for in this Agreement are satisfactory consideration for the release of all possible claims. The Executive is advised to consult with an attorney prior to executing this Agreement. Upon termination, the Executive or the Executive Representatives will receive twenty-one (21) days to consider the release. The Executive or the Executive Representatives may revoke consent to the release by delivering a written notice of such revocation to the Company within seven days of signing the release. If the Executive or the Executive Representatives revokes consent to the release, the release will become null and void and the Executive or the Executive Representatives must return any compensation received under Section 2.02 of this Agreement, except salary the Executive earned for actual work.
5.00 INSURANCE
To the extent permitted by law and its organizational documents, the Company will include the Executive under any liability insurance policy the Company maintains for employees of comparable status. The level of coverage will be at least as favorable to the Executive (in amount and each other material respect) as the coverage of other employees of comparable status. This obligation to provide insurance for the Executive will survive termination of this Agreement with respect to proceedings or threatened proceedings based on acts or omissions occurring during the Executive’s employment with the Company or with any Group Member.
6.00 ARBITRATION
6.01 Acknowledgement of Arbitration. Unless stated otherwise in this Agreement, the Parties agree that arbitration is the sole and exclusive remedy for each of them to resolve and redress any dispute, claim or controversy involving the interpretation of this Agreement or the terms, conditions or termination of this Agreement or the terms, conditions or termination of the Executive’s employment with the Group and with each Group Member, including any claims for any tort, breach of contract, violation of public policy or discrimination, whether such claim arises under federal or state law.
6.02 Scope of Arbitration. The Executive expressly understands and agrees that claims subject to arbitration under this Section include asserted violations of the Employee Retirement and Income Security Act of 1974; the Age Discrimination in Employment Act; the Older Worker’s Benefit Protection Act; the Americans with Disabilities Act; Title VII of the Civil Rights Act of 1964 (as amended); the Family and Medical Leave Act; any law prohibiting discrimination, harassment or retaliation in employment; any




claim of promissory estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or the public policy of any state, or any federal, state or local law.
6.03 Effect of Arbitration. The Parties intend that any arbitration award relating to any matter described in Section 6.00 will be final and binding on them and that a judgment on the award may be entered in any court of competent jurisdiction, and enforcement may be had according to the terms of that award. This Section will survive the termination or expiration of this Agreement.
6.04 Location of Arbitration. Arbitration will be held in Columbus, Ohio, and will be conducted by a retired federal judge or other qualified arbitrator. The arbitrator will be mutually agreed upon by the Parties and the arbitration will be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association. The Parties will have the right to conduct discovery pursuant to the Federal Rules of Civil Procedure; provided, however, that the arbitrator will have the authority to establish an expedited discovery schedule and cutoff and to resolve any discovery disputes. The arbitrator will have no jurisdiction or authority to change any provision of this Agreement by alterations of, additions to or subtractions from the terms of this Agreement. The arbitrator’s sole authority will be to interpret or apply any provision(s) of this Agreement or any public law alleged to have been violated. The arbitrator will be limited to awarding compensatory damages, including unpaid wages or benefits, but, to the extent allowed by law, will have no authority to award punitive, exemplary or similar-type damages.
6.05 Time for Initiating Arbitration. Any claim or controversy not sought to be submitted to arbitration, in writing, within one hundred-twenty (120) days of the date the Party asserting the claim knew, or through reasonable diligence should have known, of the facts giving rise to that Party’s claim, will be deemed waived and the Party asserting the claim will have no further right to seek arbitration or recovery with respect to that claim or controversy. Both Parties agree to strictly comply with the time limitation specified in Section 6.00. For purposes of this Section, a claim or controversy is sought to be submitted to arbitration on the date the complaining Party gives written notice to the other that [1] an issue has arisen or is likely to arise that, unless resolved otherwise, may be resolved through arbitration under Section 6.00 and [2] unless the issue is resolved otherwise, the complaining Party intends to submit the matter to arbitration under the terms of Section 6.00.
6.06 Costs of Arbitration. The Company will bear the arbitrator’s fee and other costs associated with any arbitration, unless the arbitrator, acting under Federal Rule of Civil Procedure 54(b), elects to award these fees to the Company.
6.07 Arbitration Exclusive Remedy. The Parties acknowledge that, because arbitration is the exclusive remedy for resolving issues arising under this Agreement, neither Party may resort to any federal, state or local court or administrative agency concerning breaches of this Agreement or any other matter subject to arbitration under Section 6.00, except as otherwise provided in this Agreement, and that the decision of the arbitrator will be a complete defense to any suit, action or proceeding instituted in any federal, state or local court before any administrative agency with respect to any arbitrable claim or controversy.
6.08 Waiver of Jury. The Executive and the Company each waive the right to have a claim or dispute with one another decided in a judicial forum or by a jury, except as otherwise provided in this Agreement.
7.00 GENERAL PROVISIONS
7.01 Representation of Executive. The Executive represents and warrants that the Executive is not under any contractual or legal restraint that prevents or prohibits the Executive from entering into this Agreement or performing the duties and obligations described in this Agreement.
7.02 Modification or Waiver; Entire Agreement. No provision of this Agreement may be modified or waived except in a document signed by the Executive and the Company’s Chief Executive Officer, Chief Financial Officer, Chief Administrative Officer or other person designated by the Company’s Board of Directors. This Agreement (including the recitals to this Agreement which are incorporated and shall constitute a part of this Agreement), and any attachments referenced in the Agreement, constitute the entire agreement between the Parties regarding the employment relationship described in this Agreement, and any other agreements are superseded, replaced, terminated and of no further force or legal effect. No agreements or representations, oral or otherwise, with respect to the Executive’s employment relationship with the Company have been made or relied upon by either Party which are not set forth expressly in this Agreement.
7.03 Governing Law; Severability. This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provision of this Agreement, or the application of any provision of this Agreement to any person or circumstance, is, for any reason and to any extent, held invalid or unenforceable, such invalidity and unenforceability will not affect the remaining provisions of this Agreement of its application to other persons




or circumstances, all of which will be enforced to the greatest extent permitted by law and the Executive and the Company agree that the arbitrator (or judge) is authorized to reform the invalid or enforceable provision [1] to the extent needed to avoid the invalidity or unenforceability and [2] in a manner that is as similar as possible to the intent (as described in this Agreement). The validity, construction and interpretation of this Agreement and the rights and duties of the Parties will be governed by the laws of the State of Ohio, without reference to the Ohio choice of law rules.
7.04 No Waiver. Except as otherwise provided in Section 6.05, failure to insist upon strict compliance with any term of this Agreement will not be considered a waiver of any such term.
7.05 Withholding. All payments made to the Executive under this Agreement will be reduced by any amount:
[1] That the Company is required to withhold in advance payment of the Executive’s federal, state and local income, wage and employment tax liability; and
[2] To the extent allowed by law, that the Executive owes (or, after employment is deemed to owe) to the Company.
However, application of Section 7.05[2] will not extinguish the Company’s right to seek additional amounts from the Executive (or to pursue other appropriate remedies) to the extent that the amount that may be recovered by application of Section 7.05[2] does not fully discharge the amount the Executive owes to the Company and does not preclude the Company from proceeding directly against the Executive without first exhausting its right of recovery under Section 7.05[2].
7.06 Survival. Subject to the terms of the Executive’s Beneficiary designation form, the Parties agree that the covenants and promises set forth in this Agreement will survive the termination of this Agreement and continue in full force and effect.
7.07 Miscellaneous.
[1] The Executive may not assign any right or interest to, or in, any payments payable under this Agreement; provided, however, that this prohibition does not preclude the Executive from designating in writing one or more beneficiaries to receive any amount that may be payable after the Executive’s death and does not preclude the legal representative of the Executive’s estate from assigning any right under this Agreement to the person or persons entitled to it.
[2] This Agreement will be binding upon and will inure to the benefit of the Executive, the Executive’s heirs and legal representatives and the Company and its successors.
[3] The headings in this Agreement are inserted for convenience of reference only and will not be a part of or control or affect the meaning of any provision of the Agreement.
7.08 Successors to Company. This Agreement may and will be assigned or transferred to, and will be binding upon and will inure to the benefit of, any successor of the Company, and any successor will be substituted for the Company under the terms of this Agreement. As used in this Agreement, the term “successor” means any person, firm, corporation or business entity which at any time, whether by merger, purchase or otherwise, acquires all or essentially all of the assets of the business of the Company. Notwithstanding any assignment, the Company will remain, with any successor, jointly and severally liable for all its obligations under this Agreement.
7.09 IRC Section 409A Compliance. The parties will administer this Agreement in a good faith attempt to avoid imposition on the Executive of penalties under Section 409A of the Internal Revenue Code of 1986 and the guidance promulgated thereunder. If the Executive is a “specified employee” as defined under Section 409A, and to the extent any payments under this Agreement are otherwise payable in the period beginning with the termination date and ending six months after the termination date and would subject the Executive to penalties under Section 409A, such payments will be delayed, aggregated, and paid as soon as practicable after the date that is six months after the date of termination. For purposes of this Agreement, “termination of employment” or any similar term shall be interpreted consistent with the definition of “separation from service” under Section 409A.
[Signature Page Follows]




IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement, which includes an arbitration provision, and consists of 15 pages.
EXECUTIVE
/s/ Drew Domecq                
Drew Domecq
Dated: January 6, 2020

DESIGNER BRANDS INC.
/s/ Roger L. Rawlins                
Roger L. Rawlins
Chief Executive Officer
Dated: January 21, 2020







EXHIBIT 10.20

STANDARD EXECUTIVE SEVERANCE AGREEMENT
BETWEEN
DSW INC.
AND
THOMAS JESSEP
This Standard Executive Severance Agreement (“Agreement”) by and between DSW Inc. (“Company”) and Thomas Jessep (“Executive”), collectively, the “Parties,” is effective as of the date signed (“Effective Date”) and supersedes and replaces any other oral or written employment-related agreement between the Executive and the Company.
The severance offer to the Executive is provided by the Company in exchange for the Executive’s performance of the obligations described in this Agreement. The Executive agrees that the severance offered is adequate consideration for the performance of the duties and the covenants and releases made and entered into by and between the Executive and the Company in this Agreement.
1.00 EXECUTIVE’S OBLIGATIONS
1.01 Scope of Duties. The Executive will:
[1] Devote all available business time, best efforts and undivided attention to the Company’s business and affairs; and
[2] Not engage in any other business activity, whether or not for gain, profit or other pecuniary benefit.
[3] However, the restriction described in Section 1.02[1] and [2] will not preclude the Executive from:
[a] Making or holding passive investments in outstanding shares in the securities of publicly-owned companies or other businesses [other than organizations described in Section 1.05], regardless of when and how that investment was made; or
[b] Serving on corporate, civic, religious, educational and/or charitable boards or committees but only if this activity [i] does not interfere with the performance of duties under this Agreement and [ii] is approved by the Executive’s manager.
1.02 Confidential Information.
[1] Obligation to Protect Confidential Information. The Executive acknowledges that the Company and its subsidiaries, parent corporation and affiliated entities (collectively, “Group” and separately, “Group Member”) have a legitimate and continuing proprietary interest in the protection of Confidential Information (as defined in Section 1.02[2]) and have invested, and will continue to invest, substantial sums of money to develop, maintain and protect Confidential Information. The Executive agrees [a] during and after employment with all Group Members [i] that any Confidential Information will be held in confidence and treated as proprietary to the Group, [ii] not to use or disclose any Confidential Information except to promote and advance the Group’s business interests and [b] immediately upon separation from employment with all Group Members, to return to the Company any Confidential Information.
[2] Definition of Confidential Information. For purposes of this Agreement, Confidential Information includes any confidential data, figures, projections, estimates, pricing data, customer lists, buying manuals or procedures, distribution manuals or procedures, other policy and procedure manuals or handbooks, supplier information, tax records, personnel histories and records, information regarding sales, information regarding properties and any other Confidential Information regarding the business, operations, properties or personnel of the Group (or any Group Member) which are disclosed to or learned by the Executive as a result of employment with any Group Member, but will not include [a] the Executive’s personal personnel records or [b] any information that [i] the Executive possessed before the date of initial employment (including periods before the Effective Date) with any Group Member that was a




matter of public knowledge, [ii] became or becomes a matter of public knowledge through sources independent of the Executive, [iii] has been or is disclosed by any Group Member without restriction on its use or [iv] has been or is required to be disclosed by law or governmental order or regulation. The Executive also agrees that, if there is any reasonable doubt whether an item is public knowledge, to not regard the item as public knowledge until and unless the Senior Vice President of Human Resources confirms to the Executive that the information is public knowledge or an arbitrator, acting under Section 6.00, finally decides that the information is public knowledge.
[3] Intellectual Property. The Executive expressly acknowledges that all right, title and interest to all inventions, designs, discoveries, works of authorship, and ideas conceived, produced, created, discovered, authored, or reduced to practice during the Executive’s performance of services under this Agreement, whether individually or jointly with any Group Member (the “Intellectual Property”) shall be owned solely by the Group, and shall be subject to the restrictions set forth in Section 1.02[1] above. All Intellectual Property which constitutes copyrightable subject matter under the copyright laws of the United States shall, from the inception of creation, be deemed to be a "work made for hire" under the United States copyright laws and all right, title and interest in and to such copyrightable works shall vest in the Group. All right, title and interest in and to all Intellectual Property developed or produced under this Agreement by the Executive, whether constituting patentable subject matter or copyrightable subject matter (to the extent deemed not to be a "work made for hire") or otherwise, shall be assigned and is hereby irrevocably assigned to the Group by the Executive. The Executive shall, without any additional consideration, execute all documents and take all other actions needed to convey the Executive’s complete ownership interest in any Intellectual Property to the Group so that the Group may own and protect such Intellectual Property and obtain patent, copyright and trademark registrations for it. The Executive agrees that any Group Member may alter or modify the Intellectual Property at the Group Member’s sole discretion, and the Executive waives all right to claim or disclaim authorship.
1.03 Solicitation of Employees. The Executive agrees that during employment, and for the longer of any period of salary continuation or for two years after terminating employment with all Group Members [1] not, directly or indirectly, to solicit any employee of any Group Member to leave employment with the Group, [2] not, directly or indirectly, to employ or seek to employ any employee of any Group Member and [3] not to cause or induce any of the Group’s (or Group Member’s) competitors to solicit or employ any employee of any Group Member.
1.04 Solicitation of Third Parties. The Executive agrees that during employment, and for the longer of any period of salary continuation or for two years after terminating employment with all Group Members not, directly or indirectly, to recruit, solicit or otherwise induce or influence any customer, supplier, sales representative, lender, lessor, lessee or any other person having a business relationship with the Group (or any Group Member) to discontinue or reduce the extent of that relationship except in the course of discharging the duties described in this Agreement and with the good faith objective of advancing the Group’s (or any Group Member’s) business interests.
1.05 Non-Competition. The Executive agrees that for the longer of any period of salary continuation or for one year after terminating employment with all Group Members not, directly or indirectly, to accept employment with, act as a consultant to, or otherwise perform services that are substantially the same or similar to those for which the Executive was compensated by any Group Member (this comparison will be based on job-related functions and responsibilities and not on job title) for any business that directly competes with the Group’s (or any Group Member’s) business, which is understood by the Parties to be the sale of significant branded or discount and off-price shoes at department stores, specialty retail stores or online footwear retailers. Illustrations of businesses that compete with the Group’s business include, but are not limited to, The TJX Companies, Inc. (T.J. Maxx; Marshall’s; The Maxx; Marmaxx); Shoe Carnival; MJM Designer Shoes; The Shoe Dept.; Payless ShoeSource; Off-Broadway Shoes; Famous Footwear; Footstar; Nordstrom’s (Non-apparel); Zappos; Piperlime; and Endless. This restriction applies to any parent, division, affiliate, newly formed or purchased business(es) and/or successor of a business that competes with the Group’s (or any Group Member’s) business.
1.06 Post-Termination Cooperation. As is required of the Executive during employment, the Executive agrees that during and after employment with any Group Members and without additional compensation (other than reimbursement for reasonable associated expenses), to cooperate with the Group (and with each Group Member) in the following areas:
[1] Cooperation With the Company. The Executive agrees [a] to be reasonably available to answer questions for the Group’s (and any Group Member’s) officers regarding any matter, project, initiative or effort for which the Executive was responsible while employed by any Group Member and [b] to cooperate with the Group (and with each Group Member) during the course of all third-party proceedings arising out of the Group’s (and any Group Member’s) business about which the Executive has knowledge or information. For purposes of this Agreement, [c] “proceedings” includes internal investigations, administrative investigations or proceedings and lawsuits (including pre-trial discovery and trial testimony) and [d] “cooperation” includes [i] the Executive’s being reasonably available for




interviews, meetings, depositions, hearings and/or trials without the need for subpoena or assurances by the Group (or any Group Member), [ii] providing any and all documents in the Executive’s possession that relate to the proceeding, and [iii] providing assistance in locating any and all relevant notes and/or documents.
[2] Cooperation With Third Parties. Unless compelled to do so by lawfully-served subpoena or court order, the Executive agrees not to communicate with, or give statements or testimony to, any opposing attorney, opposing attorney’s representative (including private investigator) or current or former employee relating to any matter (including pending or threatened lawsuits or administrative investigations) about which the Executive has knowledge or information (other than knowledge or information that is not Confidential Information as defined in Section 1.02[2]) as a result of employment with the Group (or any Group Member) except in cooperation with the Company. The Executive also agrees to notify the Senior Vice President of Human Resources immediately after being contacted by a third party or receiving a subpoena or court order to appear and testify with respect to any matter affected by this section.
[3] Cooperation With Media. The Executive agrees not to communicate with, or give statements to, any member of the media (including print, television or radio media) relating to any matter (including pending or threatened lawsuits or administrative investigations) about which the Executive has knowledge or information (other than knowledge or information that is not Confidential Information as defined in Section 1.02[2]) as a result of employment with the Group (or any Group Member). The Executive also agrees to notify the Senior Vice President of Human Resources immediately after being contacted by any member of the media with respect to any matter affected by this section.
1.07 Non-Disparagement. The Executive and the Company (on its behalf and on behalf of the Group and each Group Member) agree that neither will make any disparaging remarks about the other and the Executive will not make any disparaging remarks about the Company’s Chairman, Chief Executive Officer or any of the Group’s senior executives. However, this section will not preclude [1] any remarks that may be made by the Executive under the terms of Section 1.06[2] or that are required to discharge the duties described in this Agreement or [2] the Company from making (or eliciting from any person) disparaging remarks about the Executive concerning any conduct that may lead to a termination for Cause, as defined in Section 2.03 (including initiating an inquiry or investigation that may result in a termination for Cause), but only to the extent reasonably necessary to investigate the Executive’s conduct and to protect the Group’s (or any Group Member’s) interests.
1.08 Notice of Subsequent Employment. The Executive agrees to immediately notify the Company of any subsequent employment during the period of salary continuation after employment terminates.
1.09 Nondisclosure. The Executive agrees not to disclose the terms of this Agreement in any manner to any person other than the Executive’s manager, one of the Company’s Vice Presidents of Human Resources (or any Company representative they expressly approve for such disclosure), the Executive’s personal attorney, accountant and financial advisor, and the Executive’s immediate family or as otherwise required by law.
1.10 Remedies. The Executive acknowledges that money will not adequately compensate the Group for the substantial damages that will arise upon the breach of any provision of Section 1.00. For this reason, any disputes arising under Section 1.00 will not be subject to arbitration under Section 6.00. Instead, if the Executive breaches or threatens to breach any provision of Section 1.00, the Company will be entitled, in addition to other rights and remedies, to specific performance, injunctive relief and other equitable relief to prevent or restrain any breach or threatened breach of Section 1.00.
1.11 Return of Company Property. Upon termination of employment, the Executive agrees to promptly return to the Company all property belonging to the Group or any Group Member.
2.00 TERMINATION AND RELATED BENEFITS
2.01 Rules of General Application. The following rules apply generally to the implementation of Section 2.00:
[1] Method of Payment. If the amount of any installment payments is or becomes less than or equal to the applicable dollar amount under Section 402(g)(1)(B) of the Internal Revenue Code of 1986, the Company may elect to pay such remaining installments as a lump sum.
[2] Application of Pro Rata. Any pro rata share required to be paid under Section 2.00 will be based on the number of days between the first day of the fiscal year during which the Executive terminates employment and the date that




the Executive terminates employment divided by the number of days in the fiscal year during which the Executive terminates employment.
2.02 Involuntary Termination Without Cause. The Company may terminate the Executive’s employment at any time Without Cause (as defined below) by delivering to the Executive a written notice specifying the date termination is to be effective. If all requirements of this Agreement are met, the Company will make the following payments to the Executive as of the effective date of Involuntary Termination Without Cause:
[1] Base Salary. For twelve (12) months beginning on the date of Involuntary Termination Without Cause, the Company will continue to pay the Executive’s base salary at the rate in effect on the effective date of Involuntary Termination Without Cause. If such amount exceeds two times the annual compensation limit prescribed by Section 401(a)(17) of the Internal Revenue Code of 1986 (the “Involuntary Termination Limit”), then the Company will pay the severance obligation described in this Section 2.02[1] in two payment streams. The first payment stream will be equal to the Involuntary Termination Limit, and the Company will pay this amount in 12 monthly installments, beginning on the date of Involuntary Termination Without Cause. The amount of the second payment stream will equal the amount in excess of the Involuntary Termination Limit. The Company will pay this amount in six monthly installments beginning on the date that is six months after the date of the Executive’s Involuntary Termination Without Cause. As a condition of this salary continuation, the Executive is expected to promptly and reasonably pursue new employment. If during the salary continuation period the Executive becomes employed either as an employee or a consultant, the Executive’s Base Salary paid by the Company will be reduced by 50% of the Base Salary amount for the remainder of the salary continuation period. The Executive agrees to immediately notify the Company of any subsequent employment or consulting work during the period of salary continuation.
[2] Health Care. The Company will reimburse the Executive for the cost of maintaining continuing health coverage under COBRA for a period of no more than twelve (12) months following the effective date of Involuntary Termination Without Cause, less the amount the Executive is expected to pay as a regular employee premium for such coverage. Such reimbursements will cease if the Executive becomes eligible for similar coverage under another benefit plan.
[3] Cash Incentive Bonus. The Company will pay to the Executive the pro- rata share of any Cash Incentive Bonus that would have been paid to the Executive had the Executive not been involuntarily terminated Without Cause. The pro-rated bonus will be calculated based on the extent to which performance standards are met on the last day of the year in which the Executive is involuntarily terminated Without Cause and will be paid at the same time as all other participants.
[4] Equity Incentives. Subject to the terms of the Equity Incentive Plan and any applicable award agreements, [a] the Executive may exercise any outstanding stock options that are vested on the effective date of Involuntary Termination Without Cause, and those that would have vested during the one year following the effective date of Involuntary Termination Without Cause, during the three-month period following the effective date of Involuntary Termination Without Cause and [b] all restricted stock units that would have vested during the one year following the effective date of Involuntary Termination Without Cause will accelerate and become vested on the effective date of Involuntary Termination Without Cause.

[5] Other. Any rights accruing to the Executive under any employee benefit plan, fund or program maintained by any Group Member will be distributed or made available as required by the terms of the plan fund or program or as required by law.
2.03 Definition of Cause. For these purposes, Cause means the Executive’s [a] breach of Section 1.00 of this Agreement; [b] willful, illegal or grossly negligent conduct that is materially injurious to the Company or any Group Member monetarily or otherwise; [c] violation of laws or regulations governing the Company or to any Group Member; [d] breach of any fiduciary duty owed to the Company or any Group Member; [e] misrepresentation or dishonesty which the Company determines has had or is likely to have a material adverse effect upon the Company’s or any Group Member’s operations or financial condition; [f] involvement in any act of moral turpitude that has an injurious effect on the Company (or any Group Member) or its reputation; or [g] breach of the terms of any non-solicitation or confidentiality clauses contained in an standard executive employment agreement(s) with a former employer. The Company’s dissatisfaction with the Executive’s performance, or the business results achieved, shall not, in and of itself, constitute Cause under this Section.
2.04 Subsequent Information. The terms of Section 2.03 will apply if, after the Executive terminates, the Company learns of an event that, had it been known before the Executive terminated employment, would have justified a termination for Cause. In




this case, the Company will be entitled to recover (and the Executive agrees to repay) any amounts (other than legally protected benefits) that the Executive received.
For purposes of this Agreement, Without Cause means termination of the Executive’s employment by the Company for any reason other than those set forth in Section 2.03 or 2.04.
3.00 NOTICE
3.01 How Given. Any notice permitted or required to be given under this Agreement must be given in writing and delivered in person or by registered, U.S. mail, return receipt requested, postage prepaid, or through Federal Express, UPS, DHL or any other reputable professional delivery service that maintains a confirmation of delivery system. Any delivery must be addressed to the Company’s Senior Vice President of Human Resources at the Company’s then-current corporate offices or to the Executive at the Executive’s address as contained in the Executive’s personnel file.
3.02 Effective Date. Any notice permitted or required to be given under this Agreement will be effective on the date it is delivered, in the event of personal delivery, or on the date its receipt is acknowledged, in the event of delivery by registered mail or through a professional delivery service described in Section 3.01.
4.00 RELEASE
In exchange for the payments and benefits described in section 2.02 of this Agreement, upon termination the Executive and the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and assigns (together, the “Executive Representatives”) agree to execute a release forever discharging the Company, the Group and each Group Member and their executives, officers, directors, agents, attorneys, successors and assigns, from any and all claims, suits and/or causes of action that grow out of or are in any way related to the Executive’s recruitment to or employment with the Company and all Group Members, other than: (i) any claim that the Company has breached this Agreement, and (ii) any charge filed with an administrative agency (although Executive and Executive Representatives waives any right to recover any money or other benefits arising from such charge(s)).. This release includes, but is not limited to, any claims that the Company, the Group or any Group Member violated the Employee Retirement and Income Security Act of 1974; the Age Discrimination in Employment Act; the Older Worker’s Benefit Protection Act; the Americans with Disabilities Act; Title VII of the Civil Rights Act of 1964 (as amended); the Family and Medical Leave Act; any law prohibiting discrimination, harassment or retaliation in employment; any claim of promissory estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or the public policy of any state, or any federal, state or local law. If the Executive or the Executive Representatives fails to execute this release, the Executive or the Executive Representatives agrees to forego any payment from the Company as if the Executive had terminated employment voluntarily. Specifically, the Executive and Executive Representatives agree that a necessary condition for the payment of any of the amounts described in Section 2.00 in the event of termination is the Executive’s or the Executive Representatives’ execution of this release upon termination of employment. The Executive acknowledges that the Executive is an experienced senior executive knowledgeable about the claims that might arise in the course of employment with the Company and knowingly agrees that the payments upon termination provided for in this Agreement are satisfactory consideration for the release of all possible claims. The Executive is advised to consult with an attorney prior to executing this Agreement. Upon termination, the Executive or the Executive Representatives will receive 21 days to consider this release. The Executive or the Executive Representatives may revoke consent to the release by delivering a written notice of such revocation to the Company within seven days of signing the release. If the Executive or Executive Representatives revokes consent to the release, the release will become null and void and the Executive or the Executive Representatives must return any compensation received under Section 2.02 of this Agreement, except salary the Executive earned for actual work.
5.00 INSURANCE
To the extent permitted by law and its organizational documents, the Company will include the Executive under any liability insurance policy the Company maintains for employees of comparable status. The level of coverage will be at least as favorable to the Executive (in amount and each other material respect) as the coverage of other employees of comparable status. This obligation to provide insurance for the Executive will survive termination of this Agreement with respect to proceedings or threatened proceedings based on acts or omissions occurring during the Executive’s employment with the Company or with any Group Member.






6.00 ARBITRATION
6.01 Acknowledgement of Arbitration. Unless stated otherwise in this Agreement, the Parties agree that arbitration is the sole and exclusive remedy for each of them to resolve and redress any dispute, claim or controversy involving the interpretation of this Agreement or the terms, conditions or termination of this Agreement or the terms, conditions or termination of Executive’s employment with the Group and with each Group Member, including any claims for any tort, breach of contract, violation of public policy or discrimination, whether such claim arises under federal or state law.
6.02 Scope of Arbitration. The Executive expressly understands and agrees that claims subject to arbitration under this section include asserted violations of the Employee Retirement and Income Security Act of 1974; the Age Discrimination in Employment Act; the Older Worker’s Benefit Protection Act; the Americans with Disabilities Act; Title VII of the Civil Rights Act of 1964 (as amended); the Family and Medical Leave Act; any law prohibiting discrimination, harassment or retaliation in employment; any claim of promissory estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or the public policy of any state, or any federal, state or local law.
6.03 Effect of Arbitration. The Parties intend that any arbitration award relating to any matter described in Section 6.00 will be final and binding on them and that a judgment on the award may be entered in any court of competent jurisdiction, and enforcement may be had according to the terms of that award. This section will survive the termination or expiration of this Agreement.
6.04 Location of Arbitration. Arbitration will be held in Columbus, Ohio, and will be conducted by a retired federal judge or other qualified arbitrator. The arbitrator will be mutually agreed upon by the Parties and the arbitration will be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association. The Parties will have the right to conduct discovery pursuant to the Federal Rules of Civil Procedure; provided, however, that the arbitrator will have the authority to establish an expedited discovery schedule and cutoff and to resolve any discovery disputes. The arbitrator will have no jurisdiction or authority to change any provision of this Agreement by alterations of, additions to or subtractions from the terms of this Agreement. The arbitrator’s sole authority will be to interpret or apply any provision(s) of this Agreement or any public law alleged to have been violated. The arbitrator will be limited to awarding compensatory damages, including unpaid wages or benefits, but, to the extent allowed by law, will have no authority to award punitive, exemplary or similar-type damages.
6.05 Time for Initiating Arbitration. Any claim or controversy not sought to be submitted to arbitration, in writing, within 120 days of the date the Party asserting the claim knew, or through reasonable diligence should have known, of the facts giving rise to that Party’s claim, will be deemed waived and the Party asserting the claim will have no further right to seek arbitration or recovery with respect to that claim or controversy. Both Parties agree to strictly comply with the time limitation specified in Section 6.00. For purposes of this section, a claim or controversy is sought to be submitted to arbitration on the date the complaining Party gives written notice to the other that [1] an issue has arisen or is likely to arise that, unless resolved otherwise, may be resolved through arbitration under Section 6.00 and [2] unless the issue is resolved otherwise, the complaining Party intends to submit the matter to arbitration under the terms of Section 6.00.
6.06 Costs of Arbitration. The Company will bear the arbitrator’s fee and other costs associated with any arbitration, unless the arbitrator, acting under Federal Rule of Civil Procedure 54(b), elects to award these fees to the Company.
6.07 Arbitration Exclusive Remedy. The Parties acknowledge that, because arbitration is the exclusive remedy for resolving issues arising under this Agreement, neither Party may resort to any federal, state or local court or administrative agency concerning breaches of this Agreement or any other matter subject to arbitration under Section 6.00, except as otherwise provided in this Agreement, and that the decision of the arbitrator will be a complete defense to any suit, action or proceeding instituted in any federal, state or local court before any administrative agency with respect to any arbitrable claim or controversy.
6.08 Waiver of Jury. The Executive and the Company each waive the right to have a claim or dispute with one another decided in a judicial forum or by a jury, except as otherwise provided in this Agreement.
7.00 GENERAL PROVISIONS
7.01 Representation of Executive. The Executive represents and warrants that the Executive is not under any contractual or legal restraint that prevents or prohibits the Executive from entering into this Agreement or performing the duties and obligations described in this Agreement.




7.02 Modification or Waiver; Entire Agreement. No provision of this Agreement may be modified or waived except in a document signed by the Executive and the Company’s Chief Executive Officer or other person designated by the Company’s Board of Directors. This Agreement, and any attachments referenced in the Agreement, constitute the entire agreement between the Parties regarding the employment relationship described in this Agreement, and any other agreements are terminated and of no further force or legal effect. No agreements or representations, oral or otherwise, with respect to the Executive’s employment relationship with the Company have been made or relied upon by either Party which are not set forth expressly in this Agreement.
7.03 Governing Law; Severability. This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provision of this Agreement, or the application of any provision of this Agreement to any person or circumstance, is, for any reason and to any extent, held invalid or unenforceable, such invalidity and unenforceability will not affect the remaining provisions of this Agreement of its application to other persons or circumstances, all of which will be enforced to the greatest extent permitted by law and the Executive and the Company agree that the arbitrator (or judge) is authorized to reform the invalid or enforceable provision [1] to the extent needed to avoid the invalidity or unenforceability and [2] in a manner that is as similar as possible to the intent (as described in this Agreement). The validity, construction and interpretation of this Agreement and the rights and duties of the Parties will be governed by the laws of the State of Ohio, without reference to the Ohio choice of law rules.
7.04 No Waiver. Except as otherwise provided in Section 6.05, failure to insist upon strict compliance with any term of this Agreement will not be considered a waiver of any such term.
7.05 Withholding. All payments made to the Executive under this Agreement will be reduced by any amount:
[1] That the Company is required to withhold in advance payment of the Executive’s federal, state and local income, wage and employment tax liability; and
[2] To the extent allowed by law, that the Executive owes (or, after employment is deemed to owe) to the Company.
However, application of Section 7.05[2] will not extinguish the Company’s right to seek additional amounts from the Executive (or to pursue other appropriate remedies) to the extent that the amount that may be recovered by application of Section 7.05[2] does not fully discharge the amount the Executive owes to the Company and does not preclude the Company from proceeding directly against the Executive without first exhausting its right of recovery under Section 7.05[2].
7.06 Survival. Subject to the terms of the Executive’s Beneficiary designation form, the Parties agree that the covenants and promises set forth in this Agreement will survive the termination of this Agreement and continue in full force and effect.

7.07 Miscellaneous.
[1] The Executive may not assign any right or interest to, or in, any payments payable under this Agreement; provided, however, that this prohibition does not preclude the Executive from designating in writing one or more beneficiaries to receive any amount that may be payable after the Executive’s death and does not preclude the legal representative of the Executive’s estate from assigning any right under this Agreement to the person or persons entitled to it.
[2] This Agreement will be binding upon and will inure to the benefit of the Executive, the Executive’s heirs and legal representatives and the Company and its successors.
[3] The headings in this Agreement are inserted for convenience of reference only and will not be a part of or control or affect the meaning of any provision of the Agreement.
7.08 Successors to Company. This Agreement may and will be assigned or transferred to, and will be binding upon and will inure to the benefit of, any successor of the Company, and any successor will be substituted for the Company under the terms of this Agreement. As used in this Agreement, the term “successor” means any person, firm, corporation or business entity which at any time, whether by merger, purchase or otherwise, acquires all or essentially all of the assets of the business of the Company. Notwithstanding any assignment, the Company will remain, with any successor, jointly and severally liable for all its obligations under this Agreement.




7.09 IRC Section 409A Compliance. The parties will administer this Agreement in a good faith attempt to avoid imposition on Executive of penalties under Section 409A of the Internal Revenue Code of 1986 and the guidance promulgated thereunder. If Executive is a “specified employee” as defined under Section 409A, and to the extent any payments under this Agreement are otherwise payable in the period beginning with the termination date and ending six months after the termination date and would subject Executive to penalties under Section 409A, such payments will be delayed, aggregated, and paid as soon as practicable after the date that is six months after the date of termination.

IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement, which includes an arbitration provision, and consists of 13 pages.

EXECUTIVE
/s/ Thomas Jessep
Thomas Jessep                
Dated: January 7    , 2014

DSW INC.
/s/ William L. Jordan
William L. Jordan        
Dated: April 17, 2014





EXHIBIT 10.21

STANDARD EXECUTIVE SEVERANCE AGREEMENT
BETWEEN
DESIGNER BRANDS INC.
AND
MARY TURNER
This Standard Executive Severance Agreement (“Agreement”) by and between Designer Brands Inc. (the “Company”) and Mary Turner (the “Executive”), collectively, the “Parties,” is effective as of the date signed (the “Effective Date”) and supersedes and replaces any other oral or written employment-related agreement or offer letters between the Executive and the Company.
The severance offer to the Executive is provided by the Company in exchange for the Executive’s performance of the obligations described in this Agreement. The Executive agrees that the severance offered is adequate consideration for the performance of the duties and the covenants and releases made and entered into by and between the Executive and the Company in this Agreement.
RECITALS
WHEREAS, the severance offer to the Executive is provided by the Company in exchange for the Executive’s performance of the obligations described in this Agreement. The Executive agrees that the severance offered is adequate consideration for the performance of the duties and the covenants and releases made and entered into by and between the Executive and the Company in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and intending to be legally bound hereby, the Company and the Executive agree to the following:
AGREEMENT
1.00    EXECUTIVE’S OBLIGATIONS
1.01    Scope of Duties. The Executive will:
[1]    Devote all available business time, best efforts and undivided attention to the Company’s business and affairs; and
[2]    Not engage in any other business activity, whether or not for gain, profit or other pecuniary benefit.
[3]    However, the restriction described in Section 1.02[1] and [2] will not preclude the Executive from:
[a]    Making or holding passive investments in outstanding shares in the securities of publicly-owned companies or other businesses [other than organizations described in Section 1.05], regardless of when and how that investment was made; or
[b]    Serving on corporate, civic, religious, educational and/or charitable boards or committees but only if this activity [i] does not interfere with the performance of duties under this Agreement and [ii] is approved by the Executive’s manager.
1.02    Confidential Information.
[1]    Obligation to Protect Confidential Information. The Executive acknowledges that the Company and its subsidiaries, parent corporation and affiliated entities (collectively, “Group” and separately, “Group Member”) have a legitimate and continuing proprietary interest in the protection of Confidential Information (as defined in Section 1.02[2]) and have invested, and will continue to invest, substantial sums of money to develop, maintain and protect Confidential Information. The Executive agrees [a] during and after employment with all Group Members whether or not such termination was voluntary [i] that any Confidential Information will be held in confidence and treated as proprietary to




the Group, [ii] not to use or disclose any Confidential Information except to promote and advance the Group’s business interests and [b] immediately upon termination from employment with all Group Members, whether or not such termination was voluntary, to return to the Company any Confidential Information.
[2]    Definition of Confidential Information. For purposes of this Agreement, Confidential Information includes any confidential data, figures, projections, estimates, pricing data, customer lists, buying manuals or procedures, distribution manuals or procedures, other policy and procedure manuals or handbooks, supplier information, tax records, personnel histories and records, information regarding sales, information regarding properties and any other Confidential Information regarding the business, operations, properties or personnel of the Group (or any Group Member) which are disclosed to or learned by the Executive as a result of employment with any Group Member, but will not include [a] the Executive’s personal personnel records or [b] any information that [i] the Executive possessed before the date of initial employment (including periods before the Effective Date) with any Group Member that was a matter of public knowledge, [ii] became or becomes a matter of public knowledge through sources independent of the Executive, [iii] has been or is disclosed by any Group Member expressly providing for no restrictions on its use, [iv] has been or is required to be disclosed by law or governmental order or regulation or [v] the Executive discloses to the appropriate governmental or regulatory agency solely for the purpose of reporting, participating in an investigation of, or participating in a proceeding involving a suspected violation of law. The Executive also agrees that, if there is any reasonable doubt whether an item is public knowledge, to not regard the item as public knowledge until and unless the General Counsel of the Company confirms to the Executive that the information is public knowledge or an arbitrator, acting under Section 6.00, finally decides that the information is public knowledge.
[3]    Intellectual Property. The Executive expressly acknowledges that all right, title and interest to all inventions, designs, discoveries, works of authorship, and ideas conceived, produced, created, discovered, authored, or reduced to practice during the Executive’s performance of services under this Agreement, whether individually or jointly with any Group Member (the “Intellectual Property”) shall be owned solely by the Group, and shall be subject to the restrictions set forth in Section 1.02[1] above. All Intellectual Property which constitutes copyrightable subject matter under the applicable copyright laws shall, from the inception of creation, be deemed to be a "work made for hire" under the applicable copyright laws and all right, title and interest in and to such copyrightable works shall vest in the Group. All right, title and interest in and to all Intellectual Property developed or produced under this Agreement by the Executive, whether constituting patentable subject matter or copyrightable subject matter (to the extent deemed not to be a "work made for hire") or otherwise, shall be assigned and is hereby irrevocably assigned to the Group by the Executive. The Executive shall, without any additional consideration, execute all documents and take all other actions needed to convey the Executive’s complete ownership interest in any Intellectual Property to the Group so that the Group may own and protect such Intellectual Property and obtain patent, copyright and trademark registrations for it. The Executive agrees that any Group Member may alter or modify the Intellectual Property at the Group Member’s sole discretion, and the Executive waives all right to claim or disclaim authorship.
1.03    Solicitation of Employees. The Executive agrees that during employment, and for the longer of any period of salary continuation or for two years after terminating employment with all Group Members, whether or not such termination was voluntary, Executive will [1] not, directly or indirectly, solicit any employee of any Group Member to leave employment with the Group, [2] not, directly or indirectly, employ or seek to employ any employee of any Group Member and [3] not cause or induce any of the Group’s (or Group Member’s) competitors to solicit for employment or employ any employee of any Group Member.
1.04    Solicitation of Third Parties. The Executive agrees that during employment, and for the longer of any period of salary continuation or for two years after terminating employment with all Group Members, whether or not such termination was voluntary, not, directly or indirectly, to recruit, solicit or otherwise induce or influence any customer, supplier, sales representative, lender, lessor, lessee or any other person having a business relationship with the Group (or any Group Member) to discontinue or reduce the extent of that relationship except in the course of discharging the duties described in this Agreement and with the good faith objective of advancing the Group’s (or any Group Member’s) business interests.
1.05    Non-Competition. The Executive agrees that for the longer of any period of salary continuation or for one year after terminating employment with all Group Members, not, directly or indirectly, to accept employment with, act as a consultant to, or otherwise perform services that are substantially the same or similar to those for which the Executive was compensated by any Group Member (this comparison will be based on job-related functions and responsibilities and not on job title) for any business that directly competes with the Group’s (or any Group Member’s) business within the United States or Canada, which is understood by the Parties to be the sale of significant branded footwear regardless of whether it is offered at full-price, at discount or off-price, and regardless of the channel of distribution (such as department stores, specialty retail stores, for sale at “first-cost” or wholesale rates and/or for sale online), and the manufacture and design of footwear. Illustrations of businesses that compete with the Group’s business include, but are not limited to, Amazon (footwear and accessories); Caleres Inc.; Champs Sports; Deckers




Outdoor; Dick’s Sporting Goods; Famous Footwear; Finish Line; Foot Locker; Genesco; Kohl’s (footwear); Macy’s; Marc Fisher Footwear; Nordstrom and Nordstrom Rack (Non-apparel); Off Broadway Shoes; Shoe Carnival; Sketchers USA; Steve Madden; Stuart Weitzman; Walmart; Wolverine World Wide; and Zappos. This restriction applies to any parent, division, affiliate, newly formed or purchased business(es) and/or successor of a business that competes with the Group’s (or any Group Member’s) business.
1.06    Post-Termination Cooperation. As is required of the Executive during employment, the Executive agrees that during and after employment with any Group Members and without additional compensation (other than reimbursement for reasonable associated expenses), to cooperate with the Group (and with each Group Member) in the following areas:
[1]    Cooperation With the Company. The Executive agrees [a] to be reasonably available to answer questions for the Group’s (and any Group Member’s) officers regarding any matter, project, initiative or effort for which the Executive was responsible while employed by any Group Member and [b] to cooperate with the Group (and with each Group Member) during the course of all third-party proceedings arising out of the Group’s (and any Group Member’s) business about which the Executive has knowledge or information. For purposes of this Agreement, [c] “proceedings” includes internal investigations, administrative investigations or proceedings, arbitrations, and lawsuits (including pre-trial discovery and trial testimony) and [d] “cooperation” includes [i] the Executive being reasonably available for interviews, meetings, depositions, hearings and/or trials without the need for subpoena or assurances by the Group (or any Group Member), [ii] preserving and providing any and all documents in the Executive’s possession that relate to the proceeding, and [iii] providing assistance in locating any and all relevant notes and/or documents.
[2]    Cooperation With Third Parties. Unless compelled to do so by lawfully-served subpoena or court order, the Executive agrees not to communicate with, or give statements or testimony to, any opposing attorney, opposing attorney’s representative (including private investigator) or current or former employee relating to any matter (including pending or threatened lawsuits or administrative investigations) about which the Executive has knowledge or information (other than knowledge or information that is not Confidential Information as defined in Section 1.02[2]) as a result of employment with the Group (or any Group Member) except in cooperation with the Company. The Executive also agrees to notify the General Counsel of the Company immediately after being contacted by a third party or receiving a subpoena or court order to appear and testify with respect to any matter affected by this Section.
[3]    Cooperation With Media. The Executive agrees not to communicate with, or give statements to, any member of the media (including print, television or radio media) relating to any matter (including pending or threatened lawsuits or administrative investigations) about which the Executive has knowledge or information (other than knowledge or information that is not Confidential Information as defined in Section 1.02[2]) as a result of employment with the Group (or any Group Member). The Executive also agrees to notify the General Counsel of the Company immediately after being contacted by any member of the media with respect to any matter affected by this Section.
1.07    Non-Disparagement. The Executive and the Company (on its behalf and on behalf of the Group and each Group Member) agree that neither will make any disparaging remarks about the other and the Executive will not make any disparaging remarks about the Company’s Chairman, Chief Executive Officer or any of the Group’s senior executives. However, this Section will not preclude [1] any remarks that may be made by the Executive under the terms of Section 1.06[2] or that are required to discharge the duties described in this Agreement or [2] the Company from making (or eliciting from any person) disparaging remarks about the Executive concerning any conduct that may lead to a termination for Cause, as defined in Section 2.03 (including initiating an inquiry or investigation that may result in a termination for Cause), but only to the extent reasonably necessary to investigate the Executive’s conduct and to protect the Group’s (or any Group Member’s) interests.
1.08    Notice of Subsequent Employment. The Executive agrees to immediately notify the Company of any subsequent employment during the period of salary continuation after employment terminates.
1.09    Nondisclosure. The Executive agrees not to disclose the terms of this Agreement in any manner to any person other than the Executive’s manager, one of the Company’s Vice Presidents of Human Resources (or any Company representative they expressly approve for such disclosure), the Executive’s personal attorney, accountant and financial advisor, and the Executive’s immediate family or as otherwise required by law.
1.10    Remedies. The Executive acknowledges that money will not adequately compensate the Group for the substantial damages that will arise upon the breach of any provision of Section 1.00. For this reason, any disputes arising under Section 1.00 will not be subject to arbitration under Section 6.00. If the Executive breaches or threatens to breach any provision of Section 1.00, the Company will be entitled, in addition to other rights and remedies, to specific performance, injunctive relief and other equitable relief to prevent or restrain any breach or threatened breach of Section 1.00.




1.11    Return of Company Property. Upon termination of employment, the Executive agrees to promptly return to the Company all property belonging to the Group or any Group Member.
2.00    TERMINATION AND RELATED BENEFITS
2.01    Rules of General Application. The following rules apply generally to the implementation of Section 2.00:
[1]    Method of Payment. The Company may elect, but is not obligated, to pay any installment payments as a lump sum.
[2]    Application of Pro Rata. Any pro rata share required to be paid under Section 2.00 will be based on the number of days between the first day of the fiscal year during which the Executive terminates employment and the date that the Executive terminates employment divided by the number of days in the fiscal year during which the Executive terminates employment.
2.02    Involuntary Termination Without Cause. The Company may terminate the Executive’s employment at any time Without Cause (as defined below) by delivering to the Executive a written notice specifying the date termination is to be effective. If all requirements of this Agreement are met, the Company will make the following payments and provide the following entitlements to the Executive as of the effective date of Involuntary Termination Without Cause:
[1]    Base Salary. For twelve (12) months beginning on the date of Involuntary Termination Without Cause, the Company will continue to pay the Executive’s base salary at the rate in effect on the effective date of Involuntary Termination Without Cause. As a condition of this salary continuation, the Executive is expected to promptly and reasonably pursue new employment. If during the salary continuation period the Executive becomes employed either as an employee or a consultant, the Executive’s base salary paid by the Company will be reduced by fifty percent (50%) of the base salary amount, or such lesser percentage required to ensure the Executive receives no less than the minimum entitlements under the applicable employment standards legislation, for the remainder of the salary continuation period. The Executive agrees to immediately notify the Company of any subsequent employment or consulting work during the period of salary continuation.
[2]    Benefits. The Executive will continue to accrue vacation pay until the end of the statutory notice period under the applicable employment standards legislation. The Company will continue all the Executive’s existing benefits for the minimum period required by the applicable employment standards legislation. Thereafter, the Company will only continue the Executive’s health and dental benefits until the Executive becomes eligible for similar coverage under another benefit plan, or the end of the salary continuation period, whichever occurs first. The Executive agrees to immediately notify the Company if the Executive becomes eligible for coverage under another benefit plan.
[3]    Cash Incentive Bonus. The Company will pay to the Executive a “Severance Cash Incentive Bonus” in the amount of the pro-rata share of any Cash Incentive Bonus that would have been paid to the Executive had the Executive not been involuntarily terminated Without Cause. The pro-rated bonus will be calculated based on the extent to which performance standards are met on the last day of the year in which the Executive is involuntarily terminated Without Cause and will be paid at the same time as all other participants. No other cash incentive bonus will be paid to the Executive, and by signing below the Executive waives all rights to claim damages for lost cash incentive bonus or the lost opportunity to earn a cash incentive bonus as a result of being terminated Without Cause.

[4]    Equity Incentives. Subject to the terms of the Designer Brands Inc. 2005 Equity Incentive Plan, the Designer Brands Inc. 2014 Equity Incentive Plan, any future shareholder approved Company equity plan, and any applicable agreement, the Executive shall have the following rights:

[a] For these purposes, “Award” means any award granted under the Designer Brands Inc. 2005 Equity Incentive Plan, the Designer Brands Inc. 2014 Equity Incentive Plan, any future shareholder approved Company equity plan, and any other agreement, as such term is defined in the applicable plan.

[b]
With respect to nonqualified stock options, Executive will have ninety (90) days from the effective date of Involuntary Termination Without Cause, or the grant expiration date set forth in the applicable stock option agreement between the Executive and the Company, whichever period is shorter, to exercise any portion of any outstanding nonqualified stock options that are vested and exercisable on the effective date of Involuntary Termination Without Cause, subject to the trading rules set forth in the Company’s policies and procedures, including the Designer Brands Inc. Insider Trading policy.





[c]
With respect to Awards that would vest solely upon the passage of time and such vesting date would occur within the twelve (12) month period following the effective date of Involuntary Termination Without Cause, such Award shall vest and, if applicable, be awarded to the Executive as of the date of termination Without Cause.

[d]
With respect to Awards that would vest upon the satisfaction of a specified requirement, or upon satisfaction of the passage of time and satisfaction of a specified requirement; in the event that all such requirements are satisfied prior to the expiration of the twelve (12) month period following the date of termination Without Cause, such Award shall vest and be awarded to the Executive upon the satisfaction of all applicable requirements.
 
[5]    Other. Any rights accruing to the Executive under any other employee benefit plan, fund or program maintained by any Group Member will be distributed or made available as required by the terms of the plan fund or program or as required by the applicable employment standards legislation. In no circumstance will the Executive receive less than the minimum entitlements under the applicable employment standards legislation arising from termination of the Executive’s employment Without Cause.
2.03    Definition of Cause. For these purposes, Cause means the Executive’s [a] breach of Section 1.00 of this Agreement, including Scope of Duties, Confidential Information, Solicitation of Employees, Solicitation of Third Parties, Non-Competition, Post-Termination Cooperation, Non-Disparagement, Nondisclosure, and Return of Company Property; [b] willful, illegal or grossly negligent conduct that is materially injurious to the Company or any Group Member monetarily or otherwise; [c] violation of laws or regulations governing the Company or to any Group Member; [d] breach of any fiduciary duty owed to the Company or any Group Member, expressly including the duties of good faith, ordinary care, and to act in a manner that is not opposed to the best interests of the Company; [e] material misrepresentation or dishonesty in violation of the Company’s policies and procedures; [f] involvement in any act of moral turpitude that has or could reasonably have an injurious effect on the Company (or any Group Member) or its reputation; or [g] breach of the terms of any non-solicitation or confidentiality clauses contained in any agreement(s) with a former employer. By way of non-limiting example, conduct constituting Cause under part [f] of this Section 2.03 includes the Executive’s engagement in or facilitation of, as determined by the Company, any form of harassment, sexual or otherwise, or any other sexual misconduct. The Company’s dissatisfaction with the Executive’s performance, or the business results achieved, shall not, in and of itself, constitute Cause under this Section.
2.04    Subsequent Information. The terms of Section 2.03 will apply if, after the Executive terminates, the Company learns of an event that, had it been known before the Executive terminated employment, would have justified a termination for Cause. In this case, the Company will be entitled to recover (and the Executive agrees to repay) any amounts (other than legally protected benefits) that the Executive received.
For purposes of this Agreement, “Involuntary Termination Without Cause” and “Without Cause” mean termination of the Executive’s employment by the Company for any reason other than those set forth in Section 2.03 or 2.04.
2.05    Termination With Cause. The Company reserves the right to terminate the Executive’s employment at any time without notice, pay in lieu of notice, severance pay, or other liability, for Cause. The Company will comply with its minimum obligations under the applicable employment standards legislation arising from the termination of the Executive’s employment for Cause.
2.06     Termination By Resignation. The Executive may resign from her employment by giving the Company not less than two (2) weeks’ written notice, which notice may, at the Company’s option, be waived in whole or in part. If the Company elects to waive such notice in whole or in part in its sole discretion, the Executive will no longer be required to work, the Executive will receive all compensation and benefits to which she is entitled under this Agreement up until her last day of work, and thereafter the Company will have no further financial or other obligation to the Executive under contract, statute, or common law. By signing below, the Executive expressly agrees that the Company’s election to waive the Executive’s notice of resignation in the manner described above will not amount to a termination of the Executive’s employment by the Company.
2.07     Temporary Layoff. The Executive agrees that the Company has the right to lay the Executive off temporarily from her employment as an alternative to termination of employment. The Executive agrees that her employment is subject to temporary lay-off (as defined by applicable employment standards legislation) in the sole discretion of the Company. In the event of a temporary lay-off, the Executive will not be entitled to any notice, pay in lieu of notice, severance pay, or any other payment whatsoever except as expressly required by the Executive’s applicable employment standards legislation. Further, the Executive agrees that the Company may reduce the Executive’s base salary at any time as may be required by business needs and as determined




in the Company’s sole discretion. The Executive agrees that such a salary reduction or a temporary lay-off will not constitute a termination of employment, a constructive dismissal or a breach of contract.
3.00    NOTICE
3.01    How Given. Any notice permitted or required to be given under this Agreement must be given in writing and delivered in person or by registered mail, return receipt requested, postage prepaid, or through Federal Express, UPS, DHL or any other reputable professional delivery service that maintains a confirmation of delivery system. Any delivery must be addressed to the Company’s General Counsel at the Company’s then-current corporate offices or to the Executive at the Executive’s address as contained in the Executive’s personnel file.
3.02    Effective Date. Any notice permitted or required to be given under this Agreement will be effective on the date it is delivered, in the event of personal delivery, or on the date its receipt is acknowledged, in the event of delivery by registered mail or through a professional delivery service described in Section 3.01.
4.00    RELEASE
In exchange for the payments and entitlements described in Section 2.02 of this Agreement, upon termination the Executive and the Executive’s personal or legal representatives, executors, administrators, successors, heirs, distributees, devisees, legatees and assigns (together, the “Executive Representatives”) agree to execute a release forever discharging the Company, the Group and each Group Member and their executives, officers, directors, agents, attorneys, successors and assigns, from any and all claims, suits and/or causes of action that grow out of or are in any way related to the Executive’s recruitment to or employment with the Company and all Group Members, other than: (i) any claim that the Company has breached this Agreement, and (ii) any charge filed with an administrative agency (although the Executive and the Executive Representatives waives any right to recover any money or other benefits arising from such charge(s)). This release includes, but is not limited to, any claims that the Company, the Group or any Group Member violated any law prohibiting discrimination, harassment or retaliation in employment; any claim of promissory estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or any federal, provincial or local law. If the Executive or the Executive Representatives fails to execute this release, the Executive or the Executive Representatives agrees to receive only the minimum entitlements under the applicable employment standards legislation. Specifically, the Executive and the Executive Representatives agree that a necessary condition for the receipt of any of the amounts or entitlements in excess of the minimum entitlements under the applicable employment standards legislation described in Section 2.00 in the event of termination is the Executive’s or the Executive Representatives’ execution of this release upon termination of employment. The Executive acknowledges that the Executive is an experienced senior executive knowledgeable about the claims that might arise in the course of employment with the Company and knowingly agrees that the payments upon termination provided for in this Agreement are satisfactory consideration for the release of all possible claims. The Executive is advised to consult with an attorney prior to executing this Agreement.
5.00    INSURANCE
To the extent permitted by law and its organizational documents, the Company will include the Executive under any liability insurance policy the Company maintains for employees of comparable status. The level of coverage will be at least as favorable to the Executive (in amount and each other material respect) as the coverage of other employees of comparable status. This obligation to provide insurance for the Executive will survive termination of this Agreement with respect to proceedings or threatened proceedings based on acts or omissions occurring during the Executive’s employment with the Company or with any Group Member.
6.00    ARBITRATION
6.01    Acknowledgement of Arbitration. Unless stated otherwise in this Agreement, the Parties agree that arbitration is the sole and exclusive remedy for each of them to resolve and redress any dispute, claim or controversy involving the interpretation of this Agreement or the terms, conditions or termination of this Agreement or the terms, conditions or termination of the Executive’s employment with the Group and with each Group Member, including any claims for any tort, breach of contract, violation of public policy or discrimination, whether such claim arises under federal or state law.
6.02    Scope of Arbitration. The Executive expressly understands and agrees that claims subject to arbitration under this Section include asserted violations of any law prohibiting discrimination, harassment or retaliation in employment; any claim of promissory estoppel or detrimental reliance, defamation, intentional infliction of emotional distress; or any federal, provincial or local law.




6.03    Effect of Arbitration. The Parties intend that any arbitration award relating to any matter described in Section 6.00 will be final and binding on them and that a judgment on the award may be entered in any court of competent jurisdiction, and enforcement may be had according to the terms of that award. This Section will survive the termination or expiration of this Agreement.
6.04    Location of Arbitration. Arbitration will be held in Toronto, Ontario, and will be conducted in accordance with the Arbitration Act, 1991 by a qualified arbitrator. The arbitrator will be mutually agreed upon by the Parties and the arbitration will be conducted in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association. The Parties will have the right to conduct discovery pursuant to the Ontario Rules of Civil Procedure; provided, however, that the arbitrator will have the authority to establish an expedited discovery schedule and cutoff and to resolve any discovery disputes. The arbitrator will have no jurisdiction or authority to change any provision of this Agreement by alterations of, additions to or subtractions from the terms of this Agreement. The arbitrator’s sole authority will be to interpret or apply any provision(s) of this Agreement or any public law alleged to have been violated. The arbitrator will be limited to awarding compensatory damages, including unpaid wages or benefits, but, to the extent allowed by law, will have no authority to award punitive, exemplary or similar-type damages.
6.05    Time for Initiating Arbitration. Any claim or controversy not sought to be submitted to arbitration, in writing, within one-hundred-twenty (120) days of the date the Party asserting the claim knew, or through reasonable diligence should have known, of the facts giving rise to that Party’s claim, will be deemed waived and the Party asserting the claim will have no further right to seek arbitration or recovery with respect to that claim or controversy. Both Parties agree to strictly comply with the time limitation specified in Section 6.00. For purposes of this Section, a claim or controversy is sought to be submitted to arbitration on the date the complaining Party gives written notice to the other that [1] an issue has arisen or is likely to arise that, unless resolved otherwise, may be resolved through arbitration under Section 6.00 and [2] unless the issue is resolved otherwise, the complaining Party intends to submit the matter to arbitration under the terms of Section 6.00.
6.06    Costs of Arbitration. The Company will bear the arbitrator’s fee and other costs associated with any arbitration, unless the arbitrator, acting under Ontario Rules of Civil Procedure 54(b), elects to award these fees to the Company.
6.07    Arbitration Exclusive Remedy. The Parties acknowledge that, because arbitration is the exclusive remedy for resolving issues arising under this Agreement, neither Party may resort to any court or administrative agency concerning breaches of this Agreement or any other matter subject to arbitration under Section 6.00, except as otherwise provided in this Agreement, and that the decision of the arbitrator will be a complete defense to any suit, action or proceeding instituted in any court or before any administrative agency with respect to any arbitrable claim or controversy.
6.08    Waiver of Jury. The Executive and the Company each waive the right to have a claim or dispute with one another decided in a judicial forum or by a jury, except as otherwise provided in this Agreement.
7.00    GENERAL PROVISIONS
7.01    Representation of Executive. The Executive represents and warrants that the Executive is not under any contractual or legal restraint that prevents or prohibits the Executive from entering into this Agreement or performing the duties and obligations described in this Agreement.
7.02    Modification or Waiver; Entire Agreement. No provision of this Agreement may be modified or waived except in a document signed by the Executive and the Company’s Chief Financial Officer, Chief Executive Officer, Chief Administrative Officer or other person designated by the Company’s Board of Directors. This Agreement (including the recitals to this Agreement which are incorporated and shall constitute a part of this Agreement), and any attachments referenced in the Agreement, constitute the entire agreement between the Executive and the Group regarding the employment relationship described in this Agreement, and any other agreements are superseded, replaced, terminated and of no further force or legal effect. No agreements or representations, oral or otherwise, with respect to the Executive’s employment relationship with the Company have been made or relied upon by either Party which are not set forth expressly in this Agreement.
7.03    Governing Law; Severability. This Agreement is intended to be performed in accordance with, and only to the extent permitted by, all applicable laws, ordinances, rules and regulations. If any provision of this Agreement, or the application of any provision of this Agreement to any person or circumstance, is, for any reason and to any extent, held invalid or unenforceable, such invalidity and unenforceability will not affect the remaining provisions of this Agreement of its application to other persons or circumstances, all of which will be enforced to the greatest extent permitted by law and the Executive and the Company agree that the arbitrator (or judge) is authorized to reform the invalid or enforceable provision [1] to the extent needed to avoid the invalidity or unenforceability and [2] in a manner that is as similar as possible to the intent (as described in this Agreement). The




validity, construction and interpretation of this Agreement and the rights and duties of the Parties will be governed by the laws of the Province of Ontario.
7.04    No Waiver. Except as otherwise provided in Section 6.05, failure to insist upon strict compliance with any term of this Agreement will not be considered a waiver of any such term.
7.05 Withholding. All payments made to the Executive under this Agreement will be reduced by any amount:
[1]     That the Company is required to withhold in advance payment of the Executive’s federal, provincial and local income, wage and employment tax liability; and
[2]    To the extent allowed by law, that the Executive owes (or, after employment is deemed to owe) to the Company.
However, application of Section 7.05[2] will not extinguish the Company’s right to seek additional amounts from the Executive (or to pursue other appropriate remedies) to the extent that the amount that may be recovered by application of Section 7.05[2] does not fully discharge the amount the Executive owes to the Company and does not preclude the Company from proceeding directly against the Executive without first exhausting its right of recovery under Section 7.05[2].
7.06    Survival. Subject to the terms of the Executive’s Beneficiary designation form, the Parties agree that the covenants and promises set forth in this Agreement will survive the termination of this Agreement and continue in full force and effect.
7.07    Miscellaneous.
[1]    The Executive may not assign any right or interest to, or in, any payments payable under this Agreement; provided, however, that this prohibition does not preclude the Executive from designating in writing one or more beneficiaries to receive any amount that may be payable after the Executive’s death and does not preclude the legal representative of the Executive’s estate from assigning any right under this Agreement to the person or persons entitled to it.
[2]    This Agreement will be binding upon and will inure to the benefit of the Executive, the Executive’s heirs and legal representatives and the Company and its successors.
[3]    The headings in this Agreement are inserted for convenience of reference only and will not be a part of or control or affect the meaning of any provision of the Agreement.
7.08    Successors to Company. This Agreement may and will be assigned or transferred to, and will be binding upon and will inure to the benefit of, any successor of the Company, and any successor will be substituted for the Company under the terms of this Agreement. As used in this Agreement, the term “successor” means any person, firm, corporation or business entity which at any time, whether by merger, purchase or otherwise, acquires all or essentially all of the assets of the business of the Company. Notwithstanding any assignment, the Company will remain, with any successor, jointly and severally liable for all its obligations under this Agreement.

[Signature Page Follows]










IN WITNESS WHEREOF, the Parties have duly executed and delivered this Agreement, which includes an arbitration provision, and consists of 15 pages.

EXECUTIVE
/s/ Mary Turner                
Mary Turner
Dated: April 8, 2020
DESIGNER BRANDS INC.
/s/ Roger Rawlins                
Roger Rawlins
Chief Executive Officer
Dated: April 9, 2020






EXHIBIT 10.3.2

DESIGNER BRANDS INC.
RESTRICTED STOCK UNITS AGREEMENT
This Agreement is entered into in Franklin County, Ohio. On the Grant Date, Designer Brands Inc., an Ohio corporation (the “Company”), has awarded to the Participant Restricted Stock Units (the “Restricted Stock Units” or “Award”), representing an unfunded unsecured promise of the Company to deliver common shares, without par value, of the Company (the “Shares”) to the Participant as set forth herein. The Restricted Stock Units have been granted pursuant to the Designer Brands Inc. 2014 Long-Term Incentive Plan, as amended (the “Plan”), and shall be subject to all provisions of the Plan, which are incorporated herein by reference, and shall be subject to the provisions of this Restricted Stock Units Agreement (this “Agreement”). Capitalized terms used in this Agreement which are not specifically defined shall have the meanings ascribed to such terms in the Plan. To the extent the terms and conditions set forth in this Agreement differ in any way from the terms and conditions set forth in the Plan, the terms of the Plan shall govern.
1. Vesting. The Restricted Stock Units shall vest on the          anniversary of the grant date (the “Vesting Date”), provided that the Participant has been continuously employed with the Company or any Subsidiary except as otherwise provided in this Agreement. Notwithstanding the foregoing, in the event of a Change in Control before the Participant’s Employment Termination, the Restricted Stock Units shall become fully and immediately vested as of the date of consummation of the Change in Control.
2. Non-Transferable and Unsecured Rights. Except as otherwise provided under this Agreement and the Plan, until the Restricted Stock Units have vested under this Agreement, the Restricted Stock Units granted herein and the rights and privileges conferred hereby may not be sold, transferred, pledged, assigned, or otherwise alienated, other than by will or the laws of descent and distribution. Any attempted transfer in violation of the provisions of this paragraph shall be void, and the purported transferee shall obtain no rights with respect to such Restricted Stock Units.
The right of the Participant or his or her beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of the Company, and neither the Participant nor his or her beneficiary shall have any rights in or against any specific assets of the Company. The Restricted Stock Units granted herein shall constitute general assets of the Company and may be disposed of by the Company at such time and for such purposes, as it may deem appropriate.
3. Termination of Employment.
(a) General. Except as set forth below or as otherwise provided for in an Employment Arrangement (as defined below in Section 14), if an Employment Termination occurs prior to the Vesting Date, then the Participant’s Award will be cancelled and all Restricted Stock Units shall be forfeited by the Participant. The Participant will thereupon cease to have any right or entitlement to receive any Shares with respect to those cancelled Restricted Stock Units.
(b) Death and Disability. If an Employment Termination occurs prior to the vesting in full of the Restricted Stock Units by reason of the Participant’s death or Disability, then any unvested Restricted Stock Units shall, except as otherwise provided in this Agreement, immediately vest in full and shall not be forfeited.
4.     Payment. Once Restricted Stock Units have vested under this Agreement, the Company will determine the number of Shares represented by the Restricted Stock Units and deliver the total number of Shares due to the Participant as soon as administratively possible after such date (but in no event later than the 15th day of the third month after such date). In the event of the Participant’s death, payment shall be made to the Participant’s designated beneficiary, or absent such designation, in accordance with the laws of descent and distribution. Notwithstanding any provision to the contrary, if, in the reasonable determination of the Company, the Participant is a “specified employee” for purposes of Code Section 409A, then, if necessary to avoid the imposition of additional taxes or interest under Code Section 409A, the Company shall not deliver the Shares otherwise payable upon the Participant’s termination and separation of Service until the first business day after the date that is at least 6 months following the Participant’s termination and separation of Service. The delivery of the Shares shall be subject to payment of the applicable withholding tax liability and the forfeiture provisions of this Agreement.
5.     Dividend Equivalents. To the extent that cash dividends are paid on Shares after the Grant Date and before the date the Participant receives the Shares subject to Restricted Stock Units subject to this Agreement, the Restricted Stock Units hereunder will be credited with an additional number of Restricted Stock Units to reflect reinvested dividend equivalents with respect to the period of time between the Grant Date and the delivery of Shares under this Agreement. Such dividend equivalent credits will be equal in value (based on the reported dividend rate on the date dividends were paid) to the amount of dividends paid on the Shares represented by the Restricted Stock Units under this Agreement. The Restricted Stock Units will be credited with whole Restricted Stock Units equal to the dollar amount of the reinvested dividend equivalents based on the Fair Market Value on the dividend




payment dates. The Participant shall vest in the additional Restricted Stock Units in accordance with Sections 1 and 3 of the Agreement in the same manner that the Participant vests in the original grant of Restricted Stock Units. These additional Restricted Stock Units will be distributed in whole Shares in accordance with Section 4 of this Agreement.
6.     Right of Set-Off. By accepting these Restricted Stock Units, the Participant consents to a deduction from, and set-off against, any amounts owed to the Participant by the Company or a Subsidiary from time to time (including, but not limited to, amounts owed to the Participant as wages, severance payments or other fringe benefits) to the extent of the amounts owed to the Company or a Subsidiary by the Participant under this Agreement.
7.    No Shareholder Rights. The Participant shall have no rights of a shareholder with respect to the Restricted Stock Units, including, without limitation, voting rights and actual dividend rights with respect to the Shares represented by the Restricted Stock Units.
8.     Withholding Tax.
(a) Generally. The Participant is liable and responsible for all taxes owed in connection with the Restricted Stock Units regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Restricted Stock Units. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant or vesting of the Restricted Stock Units or the subsequent sale of Shares issuable pursuant to the Restricted Stock Units. The Company does not commit and is under no obligation to structure the Restricted Stock Units to reduce or eliminate the Participant’s tax liability.
(b) Payment of Withholding Taxes. Prior to any event in connection with the Restricted Stock Units (e.g., vesting or settlement) that the Company determines may result in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any employment tax obligation (the “Tax Withholding Obligation”), the Participant is required to arrange for the satisfaction of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company. Unless the Participant elects to satisfy the Tax Withholding Obligation by an alternative means that is then permitted by the Company, the Participant’s acceptance of this Agreement constitutes the Participant’s instruction and authorization to the Company to withhold on the Participant’s behalf the number of shares from those Shares issuable to the Participant at the time when the Restricted Stock Units become vested and payable as the Company determines to be sufficient to satisfy the Tax Withholding Obligation. In the case of any amounts withheld for taxes pursuant to this provision in the form of Shares, the amount withheld shall not exceed the minimum required by applicable law and regulations. The Participant will be liable for the payment of the employee share of the FICA (Social Security and Medicare) taxes applicable to the Shares subject to the Participant at the time those Shares vest, and not at the time they are subsequently issued. No additional FICA taxes will be due when the Shares are actually issued. FICA taxes will be based on the closing selling price of the Shares on the date those Shares vest under the Award.
9.     Governing Law/Venue for Dispute Resolution. This Agreement shall be governed by the laws of the State of Ohio, without regard to principles of conflicts of law, except to the extent superceded by the laws of the United States of America. The parties agree and acknowledge that the laws of the State of Ohio bear a substantial relationship to the parties and/or this Agreement and that the Restricted Stock Units and benefits granted herein would not be granted without the governance of this Agreement by the laws of the State of Ohio. In addition, all legal actions or proceedings relating to this Agreement shall be brought exclusively in state or federal courts located in Franklin County, Ohio and the parties executing this Agreement hereby consent to the personal jurisdiction of such courts. Any provision of this Agreement which is determined by a court of competent jurisdiction to be invalid or unenforceable should be construed or limited in a manner that is valid and enforceable and that comes closest to the business objectives intended by such provision, without invalidating or rendering unenforceable the remaining provisions of this Agreement.
10. Action by the Committee. The parties agree that the interpretation of this Agreement shall rest exclusively and completely within the sole discretion of the Committee. The parties agree to be bound by the decisions of the Committee with regard to the interpretation of this Agreement and with regard to any and all matters set forth in this Agreement. The Committee may delegate its functions under this Agreement to an officer of the Company designated by the Committee (hereinafter the “Designee”). In fulfilling its responsibilities hereunder, the Committee or its Designee may rely upon documents, written statements of the parties or such other material as the Committee or its Designee deems appropriate. The parties agree that there is no right to be heard or to appear before the Committee or its Designee and that any decision of the Committee or its Designee relating to this Agreement shall be final and binding unless such decision is arbitrary and capricious.
11. Prompt Acceptance of Agreement. The Restricted Stock Units grant evidenced by this Agreement shall, at the discretion of the Committee, be forfeited if this Agreement is not manually executed and returned to the Company, or electronically executed by the Participant by indicating the Participant’s acceptance of this Agreement in accordance with the acceptance procedures set forth on the Company’s third-party equity plan administrator’s web site, within 90 days of the Grant Date.




12. Electronic Delivery and Consent to Electronic Participation. The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units grant under and participation in the Plan or future Restricted Stock Units that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of restricted stock unit grants and the execution of restricted stock unit agreements through electronic signature.
13. Notices. All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Participant to the Company will be in writing and will be deemed sufficient if delivered by hand, facsimile, nationally recognized overnight courier, or certified or
registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Company at the address set forth below:

Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
Attention: Chief Administrative Officer
Facsimile: (614) 872-1475

With a copy to:

Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
Attention: General Counsel
Facsimile: (614) 872-1475
All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Company to the Participant may be delivered by e-mail or in writing and will be deemed sufficient if delivered by e-mail, hand, facsimile, nationally recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Participant.
14. Employment Agreement, Offer Letter or Other Arrangement. To the extent a written employment agreement, offer letter or other arrangement (“Employment Arrangement”) that was approved by the Committee or the Board of Directors or that was approved in writing by an officer of the Company pursuant to delegated authority of the Committee provides for greater benefits to the Participant with respect to vesting of the Award on Employment Termination, than provided in this Agreement or in the Plan, then the terms of such Employment Arrangement with respect to vesting of the Award on Employment Termination by reason of such specified events shall supersede the terms hereof to the extent permitted by the terms of the Plan under which the Award was made.
15. Code Section 409A. This Agreement shall be interpreted in accordance with Code Section 409A so as to comply with an exception to Code Section 409A, or to the extent that this Agreement provides deferred compensation, to be in compliance with Code Section 409A. Accordingly, references to termination of service, and similar terms shall be interpreted in a manner consistent with the definition of “separation from service” under Code Section 409A. This Agreement shall be deemed to be modified to the maximum extent necessary to be in compliance with Code Section 409A’s rules. If the Participant is unexpectedly required to include in the Participant’s current year’s income any amount of compensation relating to this Award because of a failure to meet the requirements of Code Section 409A, then to the extent permitted by Code Section 409A, the Participant may receive a distribution of cash or Shares in an amount not to exceed the amount required to be included in income as a result of the failure to comply with Code Section 409A. In no event may the Participant directly or indirectly designate the calendar year of a payment, except as expressly permitted by Code Section 409A. Notwithstanding the foregoing, the Participant recognizes and acknowledges that Code Section 409A may impose certain taxes or interest charges upon the Participant for which the Participant is and shall remain solely responsible.
16. Entire Agreement. Except as otherwise provided in this Agreement, this Agreement and the Plan are: (a) intended to be the final, complete, and exclusive statement of the terms of the agreement between the Participant and the Company with regard to the subject matter of this Agreement; (b) supersede all other prior agreements, communications and statements, whether written or oral, express or implied, pertaining to that subject matter; and (c) may not be contradicted by evidence of any prior or contemporaneous statements or agreements, oral or written, and not be explained or supplemented by evidence of consistent additional terms.




17. No Employment Rights. Nothing in this Agreement will provide the Participant with any right to continue in the Company’s and its affiliates’ employ for any period of specific duration or interfere with or otherwise restrict in any way the rights of the Company and its affiliates to terminate the Participant’s service at any time for any reason, with or without cause.
18. Clawback. Notwithstanding any provisions in this Agreement to the contrary, any compensation, benefits or payments provided hereunder (or profits realized from the sale of Shares delivered hereunder), shall be subject to recoupment and recapture to the extent necessary to comply with the requirements of any Company-adopted policy and/or laws or regulations, including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Exchange Act, Section 304 of the Sarbanes Oxley Act of 2002, any stock exchange listed company manual or any rules or regulations promulgated thereunder with respect to such laws, regulations and/or securities exchange listing requirements, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this grant and recovery of amounts relating thereto. By accepting this Award, the Participant agrees and acknowledges that the Participant is obligated to cooperate with, and provide any, and all assistance necessary to, the Company to recover, recoup or recapture this Award or amounts paid under this Award pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or amounts paid under this Award from a Participant’s accounts, or pending or future compensation or other grants.

DESIGNER BRANDS INC.

By:
 
Name:
 
Its:
 


ACCEPTANCE OF AGREEMENT
The Participant hereby: (a) acknowledges that he or she has received a copy of the Plan, a copy of the Company’s most recent annual report to shareholders and other communications routinely distributed to the Company’s shareholders, and a copy of the Plan description (Prospectus) pertaining to the Plan; (b) accepts this Agreement and the Restricted Stock Units granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; (c) represents that he or she understands that the acceptance of this Agreement through an on-line or electronic system, if applicable, carries the same legal significance as if he or she manually signed the Agreement; and (d) agrees that no transfer of the Shares delivered in respect of the Restricted Stock Units shall be made unless the Shares have been duly registered under all applicable Federal and state securities laws pursuant to a then-effective registration which contemplates the proposed transfer or unless the Company has received a written opinion of, or satisfactory to, its legal counsel that the proposed transfer is exempt from such registration.



 
Participant’s Signature
 
Date












EXHIBIT 10.3.3

THIS FORM OF AWARD AGREEMENT IS PART OF A PROSPECTUS COVERING SECURITIES THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
Designer Brands Inc.
2014 LONG-TERM INCENTIVE PLAN
FORM OF STOCK UNITS
GRANTED TO _______________ ON _______, ___ 20__
Designer Brands Inc. (“Company”) and its shareholders believe that their business interests are best served by extending to you an opportunity to earn additional compensation based on the growth of the Company’s business. To this end, the Company and its shareholders adopted the Designer Brands Inc. 2014 Long-Term Incentive Plan, as amended (“Plan”) as a means through which you may share in the Company’s success. This is done by granting Awards to Directors.
This Award Agreement describes many features of your Award and the conditions you must meet before you may receive the value associated with your Award. To ensure you fully understand these terms and conditions, you should:
•
Read the Plan and the Plan’s Prospectus carefully to ensure you understand how the Plan works;
•
Read this Award Agreement carefully to ensure you understand the nature of your Award and what must happen if you are to earn it; and
•
Contact the Company __________ at __________ if you have any questions about your Award.
Also, no later than _______, ___ 20__, you must return a signed copy of the Award Agreement to:
_________________
Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
If you do not do this, your Award will be revoked automatically as of the Grant Date and you will not be entitled to receive anything on account of the retroactively revoked Award.
Section 409A of the Internal Revenue Code (“Section 409A”) imposes substantial penalties on persons who receive some forms of deferred compensation (see the Plan’s Prospectus for more information about these penalties). Your Award has been designed to avoid these penalties. However, because the Internal Revenue Service periodically issues new rules that further define the effect of Section 409A, it may be necessary to revise your Award Agreement if you are to avoid these penalties. As a condition of accepting this Award, you must agree to accept those revisions, without any further consideration, even if those revisions change the terms of your Award and reduce its value or potential value.
Nature of Your Award
You have been granted a Stock Award consisting of _____ units, which will be converted to common shares of the Company if the conditions described in this Award Agreement are met, (“Stock Units”). Federal income tax rules apply to the payment of your Award. These and other conditions affecting your Award are described in this Award Agreement, the Plan and the Plan’s Prospectus, all of which you should read carefully. To the extent the terms and conditions set forth in this Award Agreement differ in any way from the terms and conditions set forth in the Plan, the terms of the Plan shall govern.
Grant Date: Your Stock Units were granted on _______,__ 20__ and it also is the date your Stock Units vested.
Number of Stock Units: You have been granted _____ Stock Units in payment of a portion of your annual retainer. Although these Stock Units are not actual shares of Company Stock, they will be credited with “dividend equivalents” at the same rate and at the same time dividends are paid on actual shares of Company Stock. These dividend equivalents will be converted to additional Stock Units based on the amount of dividends paid and the Fair Market Value (as defined in the Plan) of a share of Company Stock. These additional Stock Units will be distributed at the same time and subject to the same terms and conditions that apply to other Stock Units granted with this Award Agreement.
The conditions that must be met before the Award is converted into shares of Company Stock are discussed below in the Section titled “When Your Award Will Be Settled.”





When Your Award Will Be Settled
Normal Settlement: Your Stock Units normally will be settled and converted to an equal number of shares of Company Stock in accordance with the election you previously made for Stock Units granted to you in calendar year 20__. Such settlement date is the “Normal Settlement Date.”
How Your Stock Units Might Be Settled Before the Normal Settlement Date: If there is a Change in Control (as defined in the Plan) before the Normal Settlement Date, your Stock Units will be settled as of the date of the Change in Control.
How Your Stock Units May Be Forfeited: Your Stock Units will be cancelled and you will forfeit any Stock Units if, before they are settled and before a Change in Control, your board service ends because:
•
You materially fail to substantially perform your position or duties;
•
You engage in illegal or grossly negligent conduct that is materially injurious to the Company or any Subsidiary (as defined in the Plan);
•
You materially violate any law or regulation governing the Company or any Subsidiary;
•
You commit a material act of fraud or dishonesty which has had or is likely to have a material adverse effect upon the Company’s (or any Subsidiary’s) operations or financial conditions;
•
You materially breach the terms of any other agreement with the Company or any Subsidiary; or
•
You breach any term of the Plan or this Award Agreement.
Upon your Stock Units being cancelled, you will cease to have any right or entitlement to receive any shares with respect to those cancelled Stock Units.
Also, if you terminate your board service for any reason other than those just listed and the Company subsequently discovers that you actively concealed an act, event or failure that is within those just listed and the Company could not have discovered that act, event or failure through reasonable diligence before your termination, you will be required to repay to the Company the full value you received under this Award.
Settling Your Award
Your Stock Units will be settled automatically in accordance with the election you previously made for stock units granted to you in calendar year 20__. At that time, you will receive one share of Company Stock for each Stock Unit.
Other Rules Affecting Your Award
Rights Before Your Stock Units Are Settled: Until your Stock Units are settled, you may not exercise any voting rights, nor will you have any actual dividend rights, associated with the shares underlying your Stock Units. See Section titled “Nature of Your Award - Number of Stock Units for a description of how dividend equivalents will be paid on your Stock Units.
Beneficiary Designation: You may name a “Beneficiary” or Beneficiaries to receive any Stock Units to be settled after you die. This may be done only on the Beneficiary Designation Form on file and by following the rules described in that form and in the Plan. If you die without making an effective Beneficiary designation, the Stock Units subject to this Award will be converted to shares and distributed to your surviving spouse or, if you do not have a surviving spouse, to your estate.
Tax Withholding: You (and not the Company) are solely responsible for any income and other taxes (including payment of estimated taxes) associated with this Award or its conversion to shares of Company Stock.
Transferring Your Stock Units: Normally, your Stock Units may not be transferred to another person. However, you may complete a Beneficiary Designation Form to name the person to receive any Stock Units settled after you die. Also, the Committee may allow you to place your Stock Units into a trust established for your benefit or the benefit of your family. Contact the Company _______________ at ______________ or at the address given below if you are interested in doing this.
Governing Law: This Award Agreement will be construed in accordance with and governed by the laws of the United States and the laws of the State of Ohio (other than laws governing conflicts of laws).
Other Agreements: Your Stock Units will be subject to the terms of any other written agreements between you and the Company.
Adjustments to Your Stock Units: Your Stock Units will be adjusted, if appropriate, to reflect any change to the Company’s capital structure (e.g., the number of your Stock Units will be adjusted to reflect a stock split).




Nature of Award: The grant of Stock Units under this Award Agreement shall not confer upon you any right to continued service with the Company.
Other Rules: Your Stock Units also are subject to more rules described in the Plan and in the Plan’s Prospectus. You should read both these documents carefully to ensure you fully understand all the conditions of this Award.
Entire Agreement: Except as otherwise provided in this Award Agreement, this Award Agreement and the Plan are: (a) intended to be the final, complete, and exclusive statement of the terms of the agreement between you and the Company with regard to the subject matter of this Award Agreement; (b) supersede all other prior agreements, communications and statements, whether written or oral, express or implied, pertaining to that subject matter; and (c) may not be contradicted by evidence of any prior or contemporaneous statements or agreements, oral or written, and not be explained or supplemented by evidence of consistent additional terms. To the extent the terms and conditions set forth in this Award Agreement differ in any way from the terms and conditions set forth in the Plan, the terms of the Plan shall govern.
Tax Treatment of Your Award
This Award is intended to comply with Section 409A of the Code (or an exception thereto) and the regulations promulgated thereunder and shall be construed accordingly. Notwithstanding, you recognize and acknowledge that Section 409A of the Code may impose upon you certain taxes or interest charges for which you are and shall remain solely responsible. A more complete description of the federal income tax treatment of your Stock Units is discussed in the Plan’s Prospectus.
You may contact the Company ____________ at _____________or at the address given below if you have any questions about your Award or this Award Agreement.
Your Acknowledgment of Award Conditions
By signing below, I acknowledge and agree that:
•
A copy of the Plan has been made available to me;
•
I have received a copy of the Plan’s Prospectus;
•
I understand and accept the conditions placed on my Award and understand what I must do to earn my Award; and
•
I will consent (in my own behalf and in behalf of my beneficiaries and without any further consideration) to any change to my Award or this Award Agreement to avoid paying penalties under Section 409A of the Internal Revenue Code, even if those changes affect the terms of my Award and reduce its value or potential value.

_______________________________________
(signature)
Date signed: _____________________________
Committee’s Acknowledgment of Receipt
A signed copy of this Award Agreement was received on ______________.
By: ______________________________________
Designer Brands Inc. 2014 Long-Term Incentive Plan Committee

Date:    _____________________________





EXHIBIT 10.3.4

DESIGNER BRANDS INC.
NONQUALIFIED STOCK OPTION AGREEMENT
This Agreement is entered into in Franklin County, Ohio. On the Grant Date, Designer Brands Inc., an Ohio corporation (the “Company”), has awarded to the Participant, an option (the “Option”) to purchase common shares, without par value, of the Company (the “Shares”) for the Exercise Price per share. The Option has been granted under the Designer Brands Inc. 2014 Long Term Equity Incentive Plan, as amended (the “Plan”), and will include and be subject to all provisions of the Plan, which are incorporated herein by reference, and will be subject to the provisions of this Agreement. Capitalized terms used in this Agreement which are not specifically defined will have the meanings ascribed to such terms in the Plan. To the extent the terms and conditions set forth in this Agreement differ in any way from the terms and conditions set forth in the Plan, the terms of the Plan shall govern. This Option shall vest and become exercisable in five installments, which shall be as nearly equal as possible, on the ________ anniversaries of the Grant Date (each, the “Vesting Date” with respect to the portion of the Option scheduled to vest on such date), subject to the provisions of this Agreement, including those relating to the Participant’s continued employment with the Company or a Subsidiary. Notwithstanding the foregoing, in the event of a Change in Control prior to the Participant’s Termination of Employment, the vesting of the Option shall be accelerated and settled in accordance with the terms of Article VIII of the Plan. This Option shall expire on the 10th anniversary of the Grant Date (the “Grant Expiration Date”).
1.Method of Exercise and Payment of Price.
(a)Method of Exercise. At any time when all of the Option or a portion of the Option (such portion not to be fewer than 100 Shares or the total number of Shares then underlying such Option) is exercisable under the Plan and this Agreement, some or all of the exercisable portion of the Option may be exercised from time to time by written notice to the Company, or such other method of exercise as may be specified by the Company, including without limitation, exercise by electronic means on the web site of the Company’s third-party equity plan administrator, which will:
(i)State the number of whole Shares with respect to which the Option is being exercised; and
(ii)If the Option is being exercised by anyone other than the Participant, if not already provided, be accompanied by proof satisfactory to counsel for the Company of the right of such person or persons to exercise the Option under the Plan and all applicable laws and regulations.
(b)Payment of Price. The full exercise price for the portion of the Option being exercised shall be paid to the Company as provided below:
(i)In cash;
(ii)By check or wire transfer (denominated in U.S. Dollars);
(iii)Subject to any conditions or limitations established by the Committee, other Shares which (A) in the case of Shares acquired from the Company (whether upon the exercise of an Option or otherwise), have been owned by the Participant for more than six months on the date of surrender (unless this condition is waived by the Committee), and (B) have a Fair Market Value on the date of surrender equal to or greater than the aggregate exercise price of the Shares as to which the Option shall be exercised (it being agreed that the excess of the Fair Market Value over the aggregate exercise price shall be refunded to the Participant, with any fractional Share being repaid in cash);
(iv)Consideration received by the Company under a broker-assisted sale and remittance program acceptable to the Committee; or
(v)Any combination of the foregoing methods of payment.
2.Transferability. The Option generally shall not be transferrable except at the Participant’s death, in which case the Option may be transferred to the Participant’s designated beneficiary, or absent any such designation, by will or pursuant to the laws of descent and distribution.
3.Termination of Employment.
(a)Employment Termination by Reason of Death or Disability. If employment Termination occurs by reason of death or Disability prior to the vesting in full of the Option, then any unvested portion of the Option shall, except as otherwise provided in this Agreement, vest upon and become exercisable in full from and after such death or Disability. The Option may thereafter be exercised by the Participant or any beneficiary or transferee of the Participant, if applicable, for a period of one year from the date of such death or Disability until the Grant Expiration Date.
(b)Other Employment Termination. Except as otherwise provided for in an Employment Arrangement (as defined in Section 12), if employment Termination occurs by any reason other than death or Disability, any unexercised portion of the Option which has not vested on such date of employment Termination will automatically be cancelled and forfeited. The Participant will thereupon cease to have any right or entitlement to receive any Shares with respect to the cancelled portion of the Option. Except as otherwise provided in the Plan, the Participant will have 90 days from the date of employment Termination or until the Grant Expiration Date, whichever period is shorter, to exercise any portion of the Option that is vested and exercisable on the date of employment Termination.




4.Restrictions on Exercise. The Option is subject to all restrictions in this Agreement and/or in the Plan. As a condition of any exercise of the Option, the Company may require the Participant or his or her beneficiary, transferee or successor to make any representation and warranty to comply with any applicable law or regulation or to confirm any factual matters reasonably requested by the Company. The Option shall not be exercisable if such exercise would involve a violation of any applicable law or regulation. 
5.Right of Set-Off. By accepting this Option, the Participant consents to a deduction from, and set-off against, any amounts owed to the Participant by the Company or any Subsidiary from time to time (including, but not limited to, amounts owed to the Participant as wages, severance payments or other fringe benefits) to the extent of the amounts owed to the Company or any Subsidiary by the Participant under this Agreement.
6.Withholding Tax.
(a)Generally. The Participant is liable and responsible for all taxes owed in connection with the exercise of the Option, regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Option. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the exercise of the Option. The Company does not commit and is under no obligation to structure the Option or the exercise of the Option to reduce or eliminate the Participant’s tax liability.
(b)Payment of Withholding Taxes. Concurrently with the payment of the exercise price pursuant to paragraph 1 hereof, the Participant is required to arrange for the satisfaction of the minimum amount of any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any employment tax obligation (the “Tax Withholding Obligation”) in a manner acceptable to the Company. Any manner provided for in subparagraph 1(b) hereof shall be deemed an acceptable manner to satisfy the Tax Withholding Obligation unless otherwise determined by the Company.
7.Governing Law/Venue for Dispute Resolution. This Agreement shall be governed by the laws of the State of Ohio, without regard to principles of conflicts of law, except to the extent superseded by the laws of the United States of America. The parties agree and acknowledge that the laws of the State of Ohio bear a substantial relationship to the parties and/or this Agreement and that the Option and benefits granted herein would not be granted without the governance of this Agreement by the laws of the State of Ohio. In addition, all legal actions or proceedings relating to this Agreement shall be brought exclusively in state or federal courts located in Franklin County, Ohio and the parties executing this Agreement hereby consent to the personal jurisdiction of such courts. Any provision of this Agreement which is determined by a court of competent jurisdiction to be invalid or unenforceable should be construed or limited in a manner that is valid and enforceable and that comes closest to the business objectives intended by such provision, without invalidating or rendering unenforceable the remaining provisions of this Agreement.
8.Action by the Committee. The parties agree that the interpretation of this Agreement shall rest exclusively and completely within the sole discretion of the Committee. The parties agree to be bound by the decisions of the Committee with regard to the interpretation of this Agreement and with regard to any and all matters set forth in this Agreement. The Committee may delegate its functions under this Agreement to an officer of the Company designated by the Committee (hereinafter the “designee”). In fulfilling its responsibilities hereunder, the Committee or its designee may rely upon documents, written statements of the parties or such other material as the Committee or its designee deems appropriate. The parties agree that there is no right to be heard or to appear before the Committee or its designee and that any decision of the Committee or its designee relating to this Agreement shall be final and binding unless such decision is arbitrary and capricious.
9.Prompt Acceptance of Agreement. The Option grant evidenced by this Agreement shall, at the discretion of the Committee, be forfeited if this Agreement is not manually executed and returned to the Company, or electronically executed by the Participant by indicating the Participant’s acceptance of this Agreement in accordance with the acceptance procedures set forth on the Company’s third-party equity plan administrator’s web site, within 90 days of the Grant Date.
10.Electronic Delivery and Consent to Electronic Participation. The Company may, in its sole discretion, decide to deliver any documents related to the Option grant under and participation in the Plan or future options that may be granted under the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of option grants and the execution of option agreements through electronic signature.
11.Notices. All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Participant to the Company will be in writing and will be deemed sufficient if delivered by hand, facsimile, nationally recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Company at the address set forth below:

Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
Attention: Chief Administrative Officer
Facsimile: (614) 872-1475





All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Company to the Participant may be delivered by e-mail or in writing and will be deemed sufficient if delivered by e-mail, hand, facsimile, nationally recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Participant.
12.Employment Agreement, Offer Letter or Other Arrangement. To the extent a written employment agreement, offer letter or other arrangement (“Employment Arrangement”) that was approved by the Committee or the Board of Directors or that was approved in writing by an officer of the Company pursuant to delegated authority of the Committee provides for greater benefits to the Participant with respect to (i) vesting of the Option on Termination of Employment by reason of specified events or (ii) exercisability of the Option following Termination of Employment, than provided in this Agreement or in the Plan, then the terms of such Employment Arrangement with respect to vesting of the Option on Termination of Employment by reason of such specified events or exercisability of the Option following Termination of Employment shall supersede the terms hereof to the extent permitted by the terms of the Plan under which the Option was granted.
13.Entire Agreement. Except as otherwise provided in this Agreement, this Agreement and the Plan are: (a) intended to be the final, complete, and exclusive statement of the terms of the agreement between the Participant and the Company with regard to the subject matter of this Agreement; (b) supersede all other prior agreements, communications and statements, whether written or oral, express or implied, pertaining to that subject matter; and (c) may not be contradicted by evidence of any prior or contemporaneous statements or agreements, oral or written, and not be explained or supplemented by evidence of consistent additional terms.
14.Nature of Award. The Participant acknowledges that (a) the future value of the underlying Shares is unknown and cannot be predicted with certainty and (b) in consideration of the grant of the Options, no claim or entitlement to compensation or damages shall arise from termination of the Options or diminution in value of the shares received upon settlement including (without limitation) any claim or entitlement resulting from termination of the Participant’s active employment by the Company or a Subsidiary (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant hereby releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the Options and this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.
15.Clawback. Notwithstanding any provisions in this Agreement to the contrary, any compensation, benefits or payments provided hereunder (or profits realized from the sale of Shares delivered hereunder), shall be subject to recoupment and recapture to the extent necessary to comply with the requirements of any Company-adopted policy and/or laws or regulations, including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Exchange Act, Section 304 of the Sarbanes Oxley Act of 2002, any stock exchange listed company manual or any rules or regulations promulgated thereunder with respect to such laws, regulations and/or securities exchange listing requirements, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this grant and recovery of amounts relating thereto. By accepting this Award, the Participant agrees and acknowledges that the Participant is obligated to cooperate with, and provide any, and all assistance necessary to, the Company to recover, recoup or recapture this Award or amounts paid under this Award pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or amounts paid under this Award from a Participant’s accounts, or pending or future compensation or other grants.
Designer Brands INC.
By:    
Name:    
Its:    

ACCEPTANCE OF AGREEMENT
The Participant hereby: (a) acknowledges receiving a copy of the Plan, which has either been previously delivered or is provided with this Agreement, and represents that he or she is familiar with and understands all provisions of the Plan and this Agreement; (b) voluntarily and knowingly accepts this Agreement and the Option granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; and (c) represents that he or she understands that the acceptance of this Agreement through an on-line or electronic system, if applicable, carries the same legal significance as if he or she manually signed the Agreement. The Participant further acknowledges receiving a copy of the Company’s most recent annual report to shareholders and other communications routinely distributed to the Company’s shareholders and a copy of the Plan Description (Prospectus) pertaining to the Plan.
Participant’s Signature:
Date:





EXHIBIT 10.3.5

DESIGNER BRANDS INC.
PERFORMANCE STOCK UNIT AGREEMENT

This Agreement is entered into in Franklin County, Ohio. On the Grant Date, Designer Brands Inc., an Ohio corporation (the “Company”), has awarded to the Participant Performance Units (the “Performance Units” or “Award”), representing an unfunded unsecured promise of the Company to deliver Class A common shares, without par value, of the Company (the “Shares”) to the Participant as set forth herein. The Performance Units have been granted pursuant to the Designer Brands Inc. 2014 Long-Term Incentive Plan, as amended (the “Plan”), and shall be subject to all provisions of the Plan, which are incorporated herein by reference, and shall be subject to the provisions of this Performance Unit Agreement (this “Agreement”). Capitalized terms used in this Agreement which are not specifically defined shall have the meanings ascribed to such terms in the Plan. To the extent the terms and conditions set forth in this Agreement differ in any way from the terms and conditions set forth in the Plan, the terms of the Plan shall govern.
1.Vesting.
(a)General. The right to receive the Shares underlying the Performance Units shall be subject to the Company’s achievement of the Performance Goal described in 1(b) below. Subject to the Committee’s absolute discretion to reduce the Award, in general, the Participant is able to earn a minimum of 50% and up to a maximum of 150% of the Award, depending upon the extent to which the Performance Goal is achieved. The Award will be cancelled if the “Threshold” level of the Performance Goal is not achieved. In addition to the requirement of achieving the Performance Goal, the right to receive the Shares underlying the Performance Units shall be subject to the Participant’s satisfaction of the service requirements described in Sections 1(c) and 3 of this Agreement.
(b)Performance Goal. The Performance Goal is based on the achievement of the Company’s                              goal during the Company’s 20    fiscal year (the period beginning                , 20    and ending on                , 20   ). The amount of the Award that vests (subject to the service-based vesting requirements described in this Agreement), shall be based upon the level of achievement of the Performance Goal in accordance with the following table:
FY20    Performance Goal
Threshold
Target
Max
                                                                                 
$     
$      
$      
                                                                                 
      %
      %
      %

If the specific financial performance result falls within the range of metrics in the table above, the Committee will interpolate among Threshold, Target, and Max to calculate the number of Shares that may vest.
(c)Timing of Vesting. The Performance Units shall vest on the          anniversary of the Grant Date (the “Vesting Date”) subject to the Company’s achievement of the Performance Goal. Vesting is further subject to the provisions of this Agreement, including those relating to the Participant’s continued employment with the Company or any Subsidiary. Notwithstanding the foregoing, in the event of a Change in Control prior to the Participant’s Employment Termination, the Performance Units shall vest in full.
(d)Determination by the Committee. Achievement of the Performance Goal and whether the Participant has satisfied performance-based criteria sufficiently to be entitled to an Award shall be determined by the Committee. As provided under the Plan, the Committee shall retain the absolute discretion to adjust this Award, either on a formulaic or discretionary basis or a combination of the two, as the Committee determines.
2.Transferability. The Award generally shall not be transferrable except as otherwise provided under this Agreement and the Plan.
3.Termination of Employment.
(a)General. Except as set forth below or as otherwise provided for in an Employment Arrangement (as defined in Section 14), if an Employment Termination occurs prior to the vesting of the Award, then the Participant’s Award will be cancelled and such Award shall be forfeited by the Participant. The Participant will thereupon cease to have any right or entitlement to receive any Shares with respect to the cancelled Award.
(b)Death and Disability. If an Employment Termination occurs prior to the vesting in full of the Award by reason of Awardee’s death or Disability, then any unvested portion of the Award shall, except as otherwise provided in this Agreement, immediately vest in full and shall not be forfeited so long as the Performance Goal is achieved.
4.Payment. The Participant shall be entitled to receive from the Company (without any payment on behalf of the Participant other than as described in Paragraph 8) the Shares represented by such Award; provided, however, that in the event that such Award vests prior to the applicable Vesting Date as a result of the death or Disability of the Participant or as a result of a Change in Control, the Participant shall be entitled to receive the corresponding Shares from the Company on the date of such




vesting; provided further that once the Performance Units have vested under this Agreement, the Committee will determine the number of Shares represented by the Performance Units and deliver the total number of Shares due to the Participant as soon as administratively possible after the end of the applicable performance period (but in no event later than the 15th day of the third month after such date). In the event of the Participant’s death, payment shall be made to the Participant’s designated beneficiary, or absent such designation, in accordance with the laws of descent and distribution. Notwithstanding the foregoing, if the Participant is a “specified employee” for purposes of Code Section 409A, then if necessary to avoid the imposition of additional taxes or interest under Code Section 409A, the Company shall not deliver the corresponding Shares otherwise payable upon the Participant’s termination of service until the first business day after the date that is 6 months after the Participant’s termination of service.
5.Dividend Equivalents. The Participant’s Performance Units will be credited with dividend equivalents at the same rate and at the same time dividends are paid on Shares.
6.Right of Set-Off. By accepting these Performance Units, the Participant consents to a deduction from, and set-off against, any amounts owed to the Participant by the Company or a Subsidiary from time to time (including, but not limited to, amounts owed to the Participant as wages, severance payments or other fringe benefits) to the extent of the amounts owed to the Company or a Subsidiary by the Participant under this Agreement.
7.No Shareholder Rights. The Participant shall have no rights of a shareholder with respect to the Performance Units, including, without limitation, voting rights and actual dividend rights with respect to the Shares represented by the Performance Units.
8.Withholding Tax.
(a)Generally. The Participant is liable and responsible for all taxes owed in connection with the Award regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Award. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant or vesting of the Award or the subsequent sale of Shares issuable pursuant to the Award. The Company does not commit and is under no obligation to structure the Award to reduce or eliminate the Participant’s tax liability.
(b)Payment of Withholding Taxes. Prior to any event in connection with the Award (e.g., vesting or settlement) that the Company determines may result in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any employment tax obligation (the “Tax Withholding Obligation”), the Participant is required to arrange for the satisfaction of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company. Unless the Participant elects to satisfy the Tax Withholding Obligation by an alternative means that is then permitted by the Company, the Participant’s acceptance of this Agreement constitutes the Participant’s instruction and authorization to the Company to withhold on the Participant’s behalf the number of shares from those Shares issuable to the Participant at the time when the Award becomes vested and payable as the Company determines to be sufficient to satisfy the Tax Withholding Obligation. In the case of any amounts withheld for taxes pursuant to this provision in the form of Shares, the amount withheld shall not exceed the minimum required by applicable law and regulations. The Participant will be liable for the payment of the employee share of the FICA (Social Security and Medicare) taxes applicable to the Shares subject to the Participant at the time those Shares vest, and not at the time they are subsequently issued. No additional FICA taxes will be due when the Shares are actually issued. FICA taxes will be based on the closing selling price of the Shares on the date those Shares vest under the Award.
9.Governing Law/Venue for Dispute Resolution. This Agreement shall be governed by the laws of the State of Ohio, without regard to principles of conflicts of law, except to the extent superceded by the laws of the United States of America. The parties agree and acknowledge that the laws of the State of Ohio bear a substantial relationship to the parties and/or this Agreement and that the Award and benefits granted herein would not be granted without the governance of this Agreement by the laws of the State of Ohio. In addition, all legal actions or proceedings relating to this Agreement must be brought exclusively in state or federal courts located in Franklin County, Ohio and the parties executing this Agreement hereby consent to the personal jurisdiction of such courts. Any provision of this Agreement which is determined by a court of competent jurisdiction to be invalid or unenforceable should be construed or limited in a manner that is valid and enforceable and that comes closest to the business objectives intended by such provision, without invalidating or rendering unenforceable the remaining provisions of this Agreement.
10.Action by the Committee. The parties agree that the interpretation of this Agreement shall rest exclusively and completely within the sole discretion of the Committee. The parties agree to be bound by the decisions of the Committee with regard to the interpretation of this Agreement and with regard to any and all matters set forth in this Agreement. The Committee may delegate its functions under this Agreement to an officer of the Company designated by the Committee (hereinafter the “Designee”). In fulfilling its responsibilities hereunder, the Committee or its Designee may rely upon documents, written statements of the parties or such other material as the Committee or its Designee deems appropriate. The parties agree that there is no right to be heard or to appear before the Committee or its Designee and that any decision of the Committee or its Designee relating to this Agreement shall be final and binding.
11.Prompt Acceptance of Agreement. The Award evidenced by this Agreement shall, at the discretion of the Committee, be forfeited if this Agreement is not manually executed and returned to the Company, or electronically executed by the Participant by indicating the Participant’s acceptance of this Agreement in accordance with the acceptance procedures set forth on the Company’s third-party equity plan administrator’s web site, within 90 days of the Grant Date.




12.Electronic Delivery and Consent to Electronic Participation. The Company may, in its sole discretion, decide to deliver any documents related to the Award under and participation in the Plan or future Awards that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of the Award and the execution of the Agreement through electronic signature.
13.Notices. All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Participant to the Company will be in writing and will be deemed sufficient if delivered by hand, facsimile, nationally recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Company at the address set forth below:

Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
Attention: Chief Administrative Officer
Facsimile: (614) 872-1475

With a copy to:

Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
Attention: General Counsel
Facsimile: (614) 872-1475

All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Company to the Participant may be delivered by e-mail or in writing and will be deemed sufficient if delivered by e-mail, hand, facsimile, nationally recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Participant.
14.Employment Agreement, Offer Letter or Other Arrangement. To the extent a written employment agreement, offer letter or other arrangement (“Employment Arrangement”) that was approved by the Committee or the Board of Directors or that was approved in writing by an officer of the Company pursuant to delegated authority of the Committee provides for greater benefits to the Participant with respect to vesting of the Award on Employment Termination, than provided in this agreement or in the Plan, then the terms of such Employment Arrangement with respect to vesting of the Award on Employment Termination by reason of such specified events shall supersede the terms hereof to the extent permitted by the terms of the plan under which the Award was made.
15.Code Section 409A. This Agreement shall be interpreted in accordance with Code Section 409A so as to comply with an exception to Code Section 409A, or to the extent that this Agreement provides deferred compensation, to be in compliance with Code Section 409A. Accordingly, references to termination of service, and similar terms shall be interpreted in a manner consistent with the definition of “separation from service” under Code Section 409A. This Agreement shall be deemed to be modified to the maximum extent necessary to be in compliance with Code Section 409A’s rules. If the Participant is unexpectedly required to include in the Participant’s current year’s income any amount of compensation relating to this Award because of a failure to meet the requirements of Code Section 409A, then to the extent permitted by Code Section 409A, the Participant may receive a distribution of cash or Shares in an amount not to exceed the amount required to be included in income as a result of the failure to comply with Code Section 409A. In no event may the Participant directly or indirectly designate the calendar year of a payment, except as expressly permitted by Code Section 409A. Notwithstanding the foregoing, the Participant recognizes and acknowledges that Code Section 409A may impose certain taxes or interest charges upon the Participant for which the Participant is and shall remain solely responsible.
16.Entire Agreement. Except as otherwise provided in this Agreement, this Agreement and the Plan are: (a) intended to be the final, complete, and exclusive statement of the terms of the agreement between the Participant and the Company with regard to the subject matter of this Agreement; (b) supersede all other prior agreements, communications and statements, whether written or oral, express or implied, pertaining to that subject matter; and (c) may not be contradicted by evidence of any prior or contemporaneous statements or agreements, oral or written, and not be explained or supplemented by evidence of consistent additional terms.

17.Nature of Award. The Participant acknowledges that (a) the future value of the underlying Shares is unknown and cannot be predicted with certainty and (b) in consideration of the grant of the Performance Units, no claim or entitlement to compensation or damages shall arise from termination of the Performance Units or diminution in value of the shares received




upon settlement including (without limitation) any claim or entitlement resulting from termination of the Participant’s active employment by the Company or a Subsidiary (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant hereby releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the Performance Units and this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.
18.Clawback. Notwithstanding any provisions in this Agreement to the contrary, any compensation, benefits or payments provided hereunder (or profits realized from the sale of Shares delivered hereunder), shall be subject to recoupment and recapture to the extent necessary to comply with the requirements of any Company-adopted policy and/or laws or regulations, including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Exchange Act, Section 304 of the Sarbanes-Oxley Act of 2002, any stock exchange listed company manual or any rules or regulations promulgated thereunder with respect to such laws, regulations and/or securities exchange listing requirements, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this grant and recovery of amounts relating thereto. By accepting this Award, the Participant agrees and acknowledges that the Participant is obligated to cooperate with, and provide any, and all assistance necessary to, the Company to recover, recoup or recapture this Award or amounts paid under this Award pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or amounts paid under this Award from a Participant’s accounts, or pending or future compensation or other grants.

DESIGNER BRANDS INC.
By:    
Name:    
Its:    

ACCEPTANCE OF AGREEMENT
The Participant hereby: (a) acknowledges that he or she has received a copy of the Plan, a copy of the Company’s most recent annual report to shareholders and other communications routinely distributed to the Company’s shareholders, and a copy of the plan description (Prospectus) dated pertaining to the Plan; (b) accepts this Agreement and the Performance Units granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; (c) represents that he or she understands that the acceptance of this Agreement through an on-line or electronic system, if applicable, carries the same legal significance as if he or she manually signed the Agreement; and (d) agrees that no transfer of the Shares delivered in respect of the Performance Units shall be made unless the Shares have been duly registered under all applicable Federal and state securities laws pursuant to a then-effective registration which contemplates the proposed transfer or unless the Company has received a written opinion of, or satisfactory to, its legal counsel that the proposed transfer is exempt from such registration.
Participant Name:
Date:    




EXHIBIT 10.3.6

DESIGNER BRANDS INC.
RESTRICTED STOCK UNITS AGREEMENT
This Agreement is entered into in Franklin County, Ohio. On the Grant Date, Designer Brands Inc., an Ohio corporation (the “Company”), has awarded to the Participant Restricted Stock Units (the “Restricted Stock Units” or “Award”), representing an unfunded unsecured promise of the Company to deliver common shares, without par value, of the Company (the “Shares”) to the Participant as set forth herein. The Restricted Stock Units have been granted pursuant to the Designer Brands Inc. 2014 Long-Term Incentive Plan, as amended (the “Plan”), and shall be subject to all provisions of the Plan, which are incorporated herein by reference, and shall be subject to the provisions of this Restricted Stock Units Agreement (this “Agreement”). The participation of the Participant in the Plan is entirely voluntary and not obligatory. Capitalized terms used in this Agreement which are not specifically defined shall have the meanings ascribed to such terms in the Plan. To the extent the terms and conditions set forth in this Agreement differ in any way from the terms and conditions set forth in the Plan, the terms of the Plan shall govern.

1.Vesting. The Restricted Stock Units shall vest on the          anniversary of the Grant Date (the “Vesting Date”), provided that the Participant has been continuously employed with the Company or any Subsidiary except as otherwise provided in this Agreement. Notwithstanding the foregoing, in the event of a Change in Control before the Participant’s Employment Termination, the Restricted Stock Units shall become fully and immediately vested as of the date of consummation of the Change in Control.

2.Non-Transferable and Unsecured Rights. Except as otherwise provided under this Agreement and the Plan, until the Restricted Stock Units have vested under this Agreement, the Restricted Stock Units granted herein and the rights and privileges conferred hereby may not be sold, transferred, pledged, assigned, or otherwise alienated, other than by will or the laws of descent and distribution. Any attempted transfer in violation of the provisions of this paragraph shall be void, and the purported transferee shall obtain no rights with respect to such Restricted Stock Units.
The right of the Participant or his or her beneficiary to receive a distribution hereunder shall be an unsecured claim against the general assets of the Company, and neither the Participant nor his or her beneficiary shall have any rights in or against any specific assets of the Company. The Restricted Stock Units granted herein shall constitute general assets of the Company and may be disposed of by the Company at such time and for such purposes, as it may deem appropriate.

3.Termination of Employment.

(a)General. Except as set forth below or as otherwise provided for in an Employment Arrangement (as defined below in Section 15), if an Employment Termination occurs prior to the Vesting Date, then the Participant’s Award will be canceled and all Restricted Stock Units shall be forfeited by the Participant effective as of the Termination Date. The Participant will thereupon cease to have any right or entitlement to receive any Shares with respect to those canceled Restricted Stock Units.

(b)Death and Disability. If an Employment Termination occurs prior to the vesting in full of the Restricted Stock Units by reason of the Participant’s death or Disability, then any unvested Restricted Stock Units shall, except as otherwise provided in this Agreement, immediately vest in full and shall not be forfeited.

(c) Definitions. For purposes of this Award:
“Termination Date” means (i) the date designated by the Participant and the Company or an affiliate in a written Employment Arrangement (as such term is defined below in section 15) between the Participant and Company or an affiliate, or (ii) if no written Employment Arrangement exists, the Participant’s last day of active and actual employment with the Company or any affiliate, whether that day is selected by agreement with the Participant, unilaterally by the Company or its affiliate or otherwise and whether advance notice (pursuant to contract, common or civil law) is or is not given to the Participant and, except if required by applicable employment standards legislation, no period of notice or payment in lieu of notice that is given or ought to have been given to a Participant upon termination of the Participant’s employment (whether pursuant to contract, common or civil law) which follows or is in respect of a period that follows the Participant’s last day of actual and active employment with the Company or any affiliate shall be deemed to extend the Participant’s period of employment for any purpose, including for the purpose of determining any right or entitlement the Participant has under the Plan, including any entitlement to vesting or grants under the Plan.





4.Payment. Once Restricted Stock Units have vested under this Agreement, the Company will determine the number of Shares represented by the Restricted Stock Units and deliver the total number of whole Shares and cash for any fractional Share interest due to the Participant as soon as administratively possible after such date (but in no event later than the 15th day of the third month after such date). In the event of the Participant’s death, payment shall be made to the Participant’s designated beneficiary, or absent such designation, in accordance with the laws of descent and distribution. Notwithstanding any provision to the contrary, if, in the reasonable determination of the Company, the Participant is a “specified employee” for purposes of Code Section 409A, then, if necessary to avoid the imposition of additional taxes or interest under Code Section 409A, the Company shall not deliver the Shares otherwise payable upon the Participant’s termination and separation of Service until the first business day after the date that is at least six months following the Participant’s termination and separation of Service. The delivery of the Shares shall be subject to payment of the applicable withholding tax liability and the forfeiture provisions of this Agreement.
The Restricted Stock Units under the Award shall be settled solely in newly issued shares of Stock of Designer Brands Inc. The Participant may direct the Company or any company appointed by the Company to effect the sale on behalf of the Participant through the facilities of the New York Stock Exchange of Shares issued to the Participant pursuant to this Award.

5.Dividend Equivalents. To the extent that cash dividends are paid on Shares after the Grant Date and before the date the Participant receives the Shares subject to Restricted Stock Units subject to this Agreement, the Restricted Stock Units hereunder will be credited with an additional number of Restricted Stock Units to reflect reinvested dividend equivalents with respect to the period of time between the Grant Date and the delivery of Shares under this Agreement. Such dividend equivalent credits will be equal in value (based on the reported dividend rate on the date dividends were paid) to the amount of dividends paid on the Shares represented by the Restricted Stock Units under this Agreement. The Restricted Stock Units will be credited with whole and fractional Restricted Stock Units equal to the dollar amount of the reinvested dividend equivalents based on the Fair Market Value on the dividend payment dates. The Participant shall vest in the additional Restricted Stock Units in accordance with Sections 1 and 3 of the Agreement in the same manner that the Participant vests in the original grant of Restricted Stock Units. These additional Restricted Stock Units will be distributed in whole Shares in accordance with Section 4 of this Agreement.

6.Right of Set-Off. By accepting these Restricted Stock Units, the Participant consents to a deduction from, and set-off against, any amounts owed to the Participant by the Company or a Subsidiary from time to time (including, but not limited to, amounts owed to the Participant as wages, severance payments or other fringe benefits) to the extent of the amounts owed to the Company or a Subsidiary by the Participant under this Agreement.

7.No Shareholder Rights. The Participant shall have no rights of a shareholder with respect to the Restricted Stock Units, including, without limitation, voting rights and actual dividend rights with respect to the Shares represented by the Restricted Stock Units.

8.Withholding Tax.

(a)Generally. The Participant is liable and responsible for all taxes owed in connection with the Restricted Stock Units regardless of any action the Company takes with respect to any tax withholding obligations that arise in connection with the Restricted Stock Units. The Company does not make any representation or undertaking regarding the tax treatment or the treatment of any tax withholding in connection with the grant or vesting of the Restricted Stock Units or the subsequent sale of Shares issuable pursuant to the Restricted Stock Units. The Company does not commit and is under no obligation to structure the Restricted Stock Units to reduce or eliminate the Participant’s tax liability.

(b)Payment of Withholding Taxes. Prior to any event in connection with the Restricted Stock Units (e.g., vesting or settlement) that the Company determines may result in any domestic or foreign tax withholding obligation, whether national, federal, state or local, including any employment tax obligation (the “Tax Withholding Obligation”), the Participant is required to arrange for the satisfaction of the minimum amount of such Tax Withholding Obligation in a manner acceptable to the Company. Unless the Participant elects to satisfy the Tax Withholding Obligation by an alternative means that is then permitted by the Company, the Participant’s acceptance of this Agreement constitutes the Participant’s instruction and authorization to the Company to sell on the Participant’s behalf the number of shares from those Shares issued to the Participant at the time when the Restricted Stock Units become vested and payable as the Company determines to be sufficient to generate net proceeds sufficient satisfy the Tax Withholding Obligation. The Participant may not satisfy the Participant’s tax withholding obligation by having the Company withhold from Shares otherwise deliverable to the Participant. To the extent the Participant is subject to U.S. tax laws, the Participant will be liable for the payment of the employee share of the FICA (Social Security and Medicare) taxes applicable to the Shares subject to the Participant at the time those Shares vest, and not at the time they are subsequently issued. No additional FICA taxes will be due when the Shares are actually issued. FICA taxes will be based on the closing selling price of the Shares on the date those Shares vest under the Award.




1.Governing Law/Venue for Dispute Resolution. This Agreement shall be governed by the laws of the State of Ohio, without regard to principles of conflicts of law, except to the extent superseded by the laws of the United States of America. The parties agree and acknowledge that the laws of the State of Ohio bear a substantial relationship to the parties and/or this Agreement and that the Restricted Stock Units and benefits granted herein would not be granted without the governance of this Agreement by the laws of the State of Ohio. In addition, all legal actions or proceedings relating to this Agreement shall be brought exclusively in state or federal courts located in Franklin County, Ohio and the parties executing this Agreement hereby consent to the personal jurisdiction of such courts. Any provision of this Agreement which is determined by a court of competent jurisdiction to be invalid or unenforceable should be construed or limited in a manner that is valid and enforceable and that comes closest to the business objectives intended by such provision, without invalidating or rendering unenforceable the remaining provisions of this Agreement.

2.Action by the Committee. The parties agree that the interpretation of this Agreement shall rest exclusively and completely within the sole discretion of the Committee. The parties agree to be bound by the decisions of the Committee with regard to the interpretation of this Agreement and with regard to any and all matters set forth in this Agreement. The Committee may delegate its functions under this Agreement to an officer of the Company designated by the Committee (hereinafter the “Designee”). In fulfilling its responsibilities hereunder, the Committee or its Designee may rely upon documents, written statements of the parties or such other material as the Committee or its Designee deems appropriate. The parties agree that there is no right to be heard or to appear before the Committee or its Designee and that any decision of the Committee or its Designee relating to this Agreement shall be final and binding unless such decision is arbitrary and capricious.

3.Prompt Acceptance of Agreement. The Restricted Stock Units grant evidenced by this Agreement shall, at the discretion of the Committee, be forfeited if this Agreement is not manually executed and returned to the Company, or electronically executed by the Participant by indicating the Participant’s acceptance of this Agreement in accordance with the acceptance procedures set forth on the Company’s third-party equity plan administrator’s web site, within 90 days of the Grant Date.

4.Electronic Delivery and Consent to Electronic Participation. The Company may, in its sole discretion, decide to deliver any documents related to the Restricted Stock Units grant under and participation in the Plan or future Restricted Stock Units that may be granted under the Plan by electronic means or to request the Participant’s consent to participate in the Plan by electronic means. The Participant hereby consents to receive such documents by electronic delivery and to participate in the Plan through an on-line or electronic system established and maintained by the Company or another third party designated by the Company, including the acceptance of restricted stock unit grants and the execution of restricted stock unit agreements through electronic signature.

5.Participant Information. By accepting the Award the Participant agrees to provide the Company with all information (including personal information) required by the Company in order to administer to the Plan. Each Participant acknowledges that information required by the Company in order to administer the Plan may be disclosed to any custodian appointed in respect of the Plan and other third parties, and may be disclosed to such persons (including persons located in the jurisdictions other than the Participant’s jurisdiction of residence), in connection with the administration of the Plan. Each Participant consents to such disclosure and authorizes the Company to make such disclosure on the Participant’s behalf.

6.Notices. All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Participant to the Company will be in writing and will be deemed sufficient if delivered by hand, facsimile, nationally recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Company at the address set forth below:

Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
Attention: Chief Administrative Officer
Facsimile: (614) 872-1475
With a copy to:
Designer Brands Inc.
810 DSW Drive
Columbus, Ohio 43219
Attention: General Counsel
Facsimile: (614) 872-1475




All notices, requests, consents and other communications required or provided under this Agreement to be delivered by the Company to the Participant may be delivered by e-mail or in writing and will be deemed sufficient if delivered by e-mail, hand, facsimile, nationally recognized overnight courier, or certified or registered mail, return receipt requested, postage prepaid, and will be effective upon delivery to the Participant.

7.Employment Agreement, Offer Letter or Other Arrangement. To the extent a written employment agreement, offer letter or other arrangement (“Employment Arrangement”) that was approved by the Committee or the Board of Directors or that was approved in writing by an officer of the Company pursuant to delegated authority of the Committee provides for greater benefits to the Participant with respect to vesting of the Award on Employment Termination, than provided in this Agreement or in the Plan, then the terms of such Employment Arrangement with respect to vesting of the Award on Employment Termination by reason of such specified events shall supersede the terms hereof to the extent permitted by the terms of the Plan under which the Award was made.

8.Code Section 409A. To the extent the Participant is subject to US federal income tax in connection with this Agreement, this Agreement shall be interpreted in accordance with Code Section 409A so as to comply with an exception to Code Section 409A, or to the extent that this Agreement provides deferred compensation, to be in compliance with Code Section 409A. Accordingly, references to termination of service, and similar terms shall be interpreted in a manner consistent with the definition of “separation from service” under Code Section 409A. This Agreement shall be deemed to be modified to the maximum extent necessary to be in compliance with Code Section 409A’s rules. If the Participant is unexpectedly required to include in the Participant’s current year’s income any amount of compensation relating to this Award because of a failure to meet the requirements of Code Section 409A, then to the extent permitted by Code Section 409A, the Participant may receive a distribution of cash or Shares in an amount not to exceed the amount required to be included in income as a result of the failure to comply with Code Section 409A. In no event may the Participant directly or indirectly designate the calendar year of a payment, except as expressly permitted by Code Section 409A. Notwithstanding the foregoing, the Participant recognizes and acknowledges that Code Section 409A may impose certain taxes or interest charges upon the Participant for which the Participant is and shall remain solely responsible.

9.Entire Agreement. Except as otherwise provided in this Agreement, this Agreement and the Plan are: (a) intended to be the final, complete, and exclusive statement of the terms of the agreement between the Participant and the Company with regard to the subject matter of this Agreement; (b) supersede all other prior agreements, communications and statements, whether written or oral, express or implied, pertaining to that subject matter; and (c) may not be contradicted by evidence of any prior or contemporaneous statements or agreements, oral or written, and not be explained or supplemented by evidence of consistent additional terms.

10.Nature of Award. The Participant acknowledges that (a) the future value of the underlying Shares is unknown and cannot be predicted with certainty and (b) in consideration of the grant of the Restricted Stock Units, no claim or entitlement to compensation or damages shall arise from termination of the Restricted Stock Units or diminution in value of the shares received upon settlement including (without limitation) any claim or entitlement resulting from termination of the Participant’s active employment by the Company or a Subsidiary (for any reason whatsoever and whether or not in breach of local labor laws) and the Participant hereby releases the Company and its Subsidiaries from any such claim that may arise; if, notwithstanding the foregoing, any such claim is found by a court of competent jurisdiction to have arisen, then, by accepting the Restricted Stock Units and this Agreement, the Participant shall be deemed irrevocably to have waived his or her entitlement to pursue such claim.

11.Data Privacy. The Participant explicitly and unambiguously consents to the collection, use and transfer, in electronic or other form, of the Participant’s personal data as described in this document by and among, as applicable, the Participant’s employer (“Employer”) and the Company and its Subsidiaries, for the exclusive purpose of implementing, administering and managing the Participant’s participation in the Plan. The Participant understands that Employer and the Company and its Subsidiaries hold (but only process or transfer to the extent required or permitted by local law) the following personal information about the Participant: the Participant’s name, home address and telephone number, date of birth, social insurance number or other identification number, salary, nationality, job title, any Shares or directorships held in the Company, details of all Restricted Stock Units or any other entitlement to Shares awarded, canceled, exercised, vested, unvested or outstanding in the Participant’s favor, for the purpose of implementing, administering and managing the Plan (collectively, the “Data”). The Participant understands that Data may be transferred to third parties assisting in the implementation, administration and management of the Plan, that these recipients may be located in the Participant’s country or elsewhere, and that the recipient’s country may have different data privacy laws and protections than those that apply in the Participant’s country. The Participant understands that the Participant may request a list with the names and addresses of any potential recipients of the Data by contacting the Participant’s local human resources representative. The Participant authorizes these recipients to receive, possess, use, retain and transfer the Data, in electronic or other form, for the purposes of implementing, administering and managing the Participant’s participation in the Plan, including any requisite transfer of such Data as may be required to a broker or other third party with whom the Participant




may elect to deposit any Shares acquired upon vesting or earning of the Restricted Stock Units. Grantee understands that Data will be held only as long as is necessary to implement, administer and manage the Participant’s participation in the Plan and in accordance with local law. Grantee understands that the Participant may, at any time, view Data, request additional information about the storage and processing of Data, require any necessary amendments to Data or refuse or withdraw the consents herein, in any case without cost, by contacting in writing the Participant’s local human resources representative. The Participant understands, however, that refusing or withdrawing the Participant’s consent may affect the Participant’s ability to participate in the Plan. For more information on the consequences of the Participant’s refusal to consent or withdrawal of consent, the Participant hereby understands that the Participant may contact his or her local human resources representative.

12.Clawback. Notwithstanding any provisions in this Agreement to the contrary, any compensation, benefits or payments provided hereunder (or profits realized from the sale of Shares delivered hereunder), shall be subject to recoupment and recapture to the extent necessary to comply with the requirements of any Company-adopted policy and/or laws or regulations, including, but not limited to, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, the Exchange Act, Section 304 of the Sarbanes Oxley Act of 2002, any stock exchange listed company manual or any rules or regulations promulgated thereunder with respect to such laws, regulations and/or securities exchange listing requirements, as may be in effect from time to time, and which may operate to create additional rights for the Company with respect to this grant and recovery of amounts relating thereto. By accepting this Award, the Participant agrees and acknowledges that the Participant is obligated to cooperate with, and provide any, and all assistance necessary to, the Company to recover, recoup or recapture this Award or amounts paid under this Award pursuant to such law, government regulation, stock exchange listing requirement or Company policy. Such cooperation and assistance shall include, but is not limited to, executing, completing and submitting any documentation necessary to recover, recoup or recapture this Award or amounts paid under this Award from a Participant’s accounts, or pending or future compensation or other grants


DESIGNER BRANDS INC.

By:
 
Name:
 
Its:
 



ACCEPTANCE OF AGREEMENT
The Participant hereby: (a) acknowledges that he or she has received a copy of the Plan, a copy of the Company’s most recent annual report to shareholders and other communications routinely distributed to the Company’s shareholders, and a copy of the Plan description (Prospectus) pertaining to the Plan; (b) accepts this Agreement and the Restricted Stock Units granted to him or her under this Agreement subject to all provisions of the Plan and this Agreement; (c) represents that he or she understands that the acceptance of this Agreement through an on-line or electronic system, if applicable, carries the same legal significance as if he or she manually signed the Agreement; and (d) agrees that no transfer of the Shares delivered in respect of the Restricted Stock Units shall be made unless the Shares have been duly registered under all applicable Federal and state securities laws pursuant to a then-effective registration which contemplates the proposed transfer or unless the Company has received a written opinion of, or satisfactory to, its legal counsel that the proposed transfer is exempt from such registration.



 
Participant’s Signature
 
Date





EXHIBIT 10.4.1

FIRST AMENDMENT TO
CREDIT AGREEMENT

This First Amendment to Credit Agreement is dated as of January 30, 2018, by and among DSW Inc., an Ohio corporation (the “Lead Borrower”), PNC Bank, National Association (“PNC Bank”) and the other Lenders party hereto, and PNC Bank, in its capacity as administrative agent for the Lenders (hereinafter referred to in such capacity as the “Administrative Agent”) (the “First Amendment”).
W I T N E S S E T H:
WHEREAS, the Lead Borrower, the Designated Borrowers from time to time party thereto, the Guarantors from time to time party thereto, the Lenders from time to time party thereto and the Administrative Agent entered into that certain Credit Agreement, dated as of August 25, 2017 (as may be amended, restated, modified or supplemented from time to time, the “Credit Agreement”); and
WHEREAS, the Lead Borrower, on behalf of itself and the other Loan Parties, desires to amend certain provisions of the Credit Agreement and the Lenders and the Administrative Agent shall permit such amendments pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
1.All capitalized terms used herein which are defined in the Credit Agreement shall have the same meanings herein as in the Credit Agreement unless the context clearly indicates otherwise.
2.Section 7.2.4 of the Credit Agreement is hereby amended to (a) delete the reference to “and” at the end of clause (viii) thereof, (b) delete the reference to “above” in clause (ix) thereof and in its stead insert a reference to “above or below”, (c) delete the reference to “.” at the end of clause (ix) thereof and in its stead insert a reference to “;”, and (d) add the following new clauses (x) and (xi) to the end thereof, immediately following clause (ix):
(x)    (a) loans, advances and investments by DSW Canada TS Inc., a Canadian corporation (“DSW Canada”), in or to Town Shoes Limited, an Ontario corporation (“Town Shoes”), in an amount, measured at the time any such loan, advance or investment is made, which shall not exceed One Hundred Million and 00/100 Canadian Dollars (CAD $100,000,000.00) in the aggregate at any one time outstanding, and (b) loans, advances and investments by a Domestic Loan Party in or to DSW Canada, in an amount necessary to allow DSW Canada to acquire the remaining equity interests of Town Shoes in accordance with clause (iii) of Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions]; and
(xi)    loans, advances and investments by Foreign Subsidiaries in other Foreign Subsidiaries.
3.Effective as of the Closing Date, Schedule 7.2.4 of the Credit Agreement is hereby amended to delete the reference therein to “None”, and in its stead insert a reference to “Loans, advances and/or investments by the Lead Borrower or any of its Subsidiaries in any Subsidiary of the Lead Borrower or in Town Shoes Limited, an Ontario corporation, in each case existing on the date hereof”.
4.The provisions of Sections 2 and 3 of this First Amendment shall not become effective until the Administrative Agent has received the following items, each in form and substance acceptable to the Administrative Agent and its counsel:
(a)    this First Amendment, duly executed by the Lead Borrower, the Administrative Agent and the Required Lenders; and
(b)    such other documents as may be requested by the Administrative Agent, if any.
5.The Lead Borrower hereby reconfirms and reaffirms all representations and warranties made by the Lead Borrower and the other Loan Parties pursuant to the terms and conditions of the Credit Agreement and the other Loan Documents as of the date hereof (except to the extent




any representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on such earlier date), except as such representations and warranties may have heretofore been amended, modified or waived in writing in accordance with the Credit Agreement..
6.The Lead Borrower hereby represents and warrants to the Lenders and the Administrative Agent that (i) it has the legal power and authority to execute and deliver this First Amendment, (ii) the officer of the Lead Borrower executing this First Amendment has been duly authorized to execute and deliver the same and bind the Lead Borrower with respect to the provisions hereof, (iii) the execution and delivery hereof by the Lead Borrower and the performance and observance by the Lead Borrower and the other Loan Parties of the provisions hereof and of the Credit Agreement and all documents executed or to be executed herewith or therewith, do not violate or conflict with (A) the organizational agreements of any Loan Party or (B) any Law applicable to such Loan Party or result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against such Loan Party, in each case under clause (B) except as would not result in a Material Adverse Change, and (iv) this First Amendment and the documents executed or to be executed by any Loan Party in connection herewith or therewith constitute valid and binding obligations of such Loan Party in every respect, enforceable in accordance with their respective terms, except to the extent that enforceability of thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or limiting the right of specific performance or by general principles of equity.
7.The Lead Borrower represents and warrants that (i) no Event of Default exists under the Credit Agreement, nor will any occur as a result of the execution and delivery of this First Amendment or the performance or observance of any provision hereof, and (ii) the schedules attached to and made a part of the Credit Agreement, are true and correct in all material respects as of the date hereof, except as such schedules may have heretofore been amended or modified in writing in accordance with the Credit Agreement.
8.Each reference to the Credit Agreement that is made in the Credit Agreement or any other document executed or to be executed in connection therewith shall hereafter be construed as a reference to the Credit Agreement as amended hereby.
9.The agreements contained in this First Amendment are limited to the specific agreements made herein. Except as amended hereby, all of the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect. This First Amendment amends the Credit Agreement and is not a novation thereof.
10.This First Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed to be an original, but all such counterparts shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this First Amendment by e-mail or telecopy shall be effective as delivery of a manually executed counterpart of this First Amendment.
11.This First Amendment shall be deemed to be a contract under the Laws of the State of Ohio without regard to its conflict of laws principles. Each Loan Party hereby consents to the exclusive jurisdiction of the courts of the State of Ohio sitting in Franklin County, Ohio and of the United States District Court for the Southern District of Ohio, and any appellate court from any thereof, with respect to any suit arising out of or mentioning this First Amendment.
[INTENTIONALLY LEFT BLANK]








[Signature Page to First Amendment to Credit Agreement - DSW Inc.]
IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused this First Amendment to be duly executed by their duly authorized officers the day and year first above written.
LEAD BORROWER:
DSW Inc., an Ohio corporation,
By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Senior Vice President, Chief Financial Officer
[Lender Signature Pages Follow]

[Signature Page to First Amendment to Credit Agreement - DSW Inc.]
 
ADMINISTRATIVE AGENT AND LENDERS:
 
PNC Bank, National Association,
as a Lender and as Administrative Agent


By: /s/ George M. Gevas
Name: George M. Gevas
Title: Senior Vice President

 
Wells Fargo Bank, National Association,
as a Lender


By: /s/ Ekta Patel
Name: Ekta Patel
Title: Director







 
Branch Banking and Trust Company,
as a Lender


By: /s/ Brian J. Blomeke
Name: Brian J. Blomeke
Title: Senior Vice President

 
Bank of America, N.A.,
as a Lender


By: /s/ Gregg Bush
Name: Gregg Bush
Title: Senior Vice President


 
The Huntington National Bank,
as a Lender


By: /s/ Dan Swanson           
Name: Dan Swanson
Title: Assistant Vice President


 
BMO Harris Bank, N.A.,
as a Lender


By: /s/ Jennifer Wolter 
Name: Jennifer Wolter
Title: VP








EXHIBIT 10.4.3


THIRD AMENDMENT TO
CREDIT AGREEMENT

This Third Amendment to Credit Agreement is dated as of March 16, 2020, by and among Designer Brands Inc., an Ohio corporation (f/k/a DSW Inc.) (the “Lead Borrower”), PNC Bank, National Association (“PNC Bank”) and the other Lenders party hereto, and PNC Bank, in its capacity as administrative agent for the Lenders (hereinafter referred to in such capacity as the “Administrative Agent”) (the “Third Amendment”).
W I T N E S E T H:
WHEREAS, the Lead Borrower, the Designated Borrowers from time to time party thereto, the Guarantors from time to time party thereto, the Lenders from time to time party thereto and the Administrative Agent have entered into that certain Credit Agreement, dated as of August 25, 2017 (as (i) amended by that certain First Amendment to Credit Agreement, dated as of January 30, 2018, by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent, (ii) amended by that certain Second Amendment to Credit Agreement, dated as of October 10, 2018, by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent, and (iii) may be further amended, restated, modified or supplemented from time to time (including, without limitation, by this Third Amendment), the “Credit Agreement”); and
WHEREAS, the Lead Borrower, on behalf of itself and the other Loan Parties, hereby desires to amend certain provisions of the Credit Agreement, and the Lenders and the Administrative Agent shall permit such amendments pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
1.All capitalized terms used herein which are defined in the Credit Agreement shall have the same meanings herein as in the Credit Agreement unless the context clearly indicates otherwise.

2.Effective as of the Effective Date, the Credit Agreement is amended as follows:

(A)    Section 1.1 is hereby amended by inserting in the proper alphabetical order the following new definitions:
“Available Currencies means, at any time, Dollars and all Optional Currencies at such time; each individually an “Available Currency”.
Benchmark Replacement means, with respect to any Available Currency, the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Lead Borrower for such Available Currency giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body with respect to such Available Currency or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the Euro-Rate for (A) with respect to Dollar Loans under the Euro-Rate Option, U.S. dollar-denominated credit facilities or (B) with respect to Optional Currency Loans, U.S. credit facilities providing for loans in such Optional Currency and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement.
Benchmark Replacement Adjustment means, with respect to any replacement of the Euro-Rate for any Available Currency with an alternate benchmark rate for each applicable Interest Period for such Available Currency, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Lead Borrower giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the Euro-Rate in




such Available Currency with the applicable Benchmark Replacement for such Available Currency (excluding such spread adjustment) by the Relevant Governmental Body with respect to such Available Currency or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for such replacement of the Euro-Rate for (A) with respect to Dollar Loans under the Euro-Rate Option, U.S. dollar-denominated credit facilities at such time or (B) with respect to Optional Currency Loans, U.S. credit facilities providing for loans in such Optional Currency.
Benchmark Replacement Conforming Changes means, with respect to any Benchmark Replacement for any Available Currency, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement for such Available Currency and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice in the United States (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement).
Benchmark Replacement Date means the earlier to occur of the following events with respect to the Euro-Rate:
(1)    in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the Euro-Rate for such Available Currency permanently or indefinitely ceases to provide the Euro-Rate for such Available Currency; or
(2)     in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein.
Benchmark Transition Event means the occurrence of one or more of the following events with respect to the Euro-Rate:
(1)     a public statement or publication of information by or on behalf of the administrator of the Euro-Rate for such Available Currency announcing that such administrator has ceased or will cease to provide the Euro-Rate for such Available Currency, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Euro-Rate for such Available Currency;
(2)     a public statement or publication of information by an Official Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of the Euro-Rate for such Available Currency, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for the Euro-Rate for such Available Currency, a resolution authority with jurisdiction over the administrator for the Euro-Rate for such Available Currency or a court or an entity with similar insolvency or resolution authority over the administrator for the Euro-Rate for such Available Currency, which states that the administrator of the Euro-Rate for such Available Currency has ceased or will cease to provide the Euro-Rate for such Available Currency permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Euro-Rate for such Available Currency; or
(3)     a public statement or publication of information by the regulatory supervisor for the administrator of the Euro-Rate for such Available Currency or an Official Body having




jurisdiction over the Administrative Agent announcing that the Euro-Rate for such Available Currency is no longer representative.
Benchmark Unavailability Period means, with respect to any Available Currency, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the Euro-Rate for such Available Currency and solely to the extent that the Euro-Rate for such Available Currency has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date for such Available Currency has occurred if, at such time, no Benchmark Replacement for such Available Currency has replaced the Euro-Rate for such Available Currency for all purposes hereunder in accordance with Section 3.6 and (y) ending at the time that a Benchmark Replacement for such Available Currency has replaced the Euro-Rate for such Available Currency for all purposes hereunder pursuant to Section 3.6.
Early Opt-in Event means a determination by the Administrative Agent that (a) with respect to Dollar Loans under the Euro-Rate Option, U.S. dollar-denominated credit facilities being executed at such time, or that include language similar to that contained in this Section 3.6, are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace the Euro-Rate for loans in Dollars or (b) with respect to Optional Currency Loans, U.S. credit facilities providing for loans in such Optional Currency being executed at such time, or that include language similar to that contained in this Section 3.6, are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace the Euro-Rate for loans in such Optional Currency.
Relevant Governmental Body means (a) the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto and (b) with respect to Optional Currency Loans, in addition to the Persons named in clause (a) of this definition, the comparable Official Body or other applicable Person for loans in such Optional Currency as determined by the Administrative Agent in its sole discretion.”
(B)    Section 1.1 is hereby amended by deleting the following definitions in their entirety and in their stead inserting the following:
“Consolidated EBITDAR means, for any period of determination, without duplication, consolidated net income plus (i) the following (to the extent deducted from such calculation of consolidated net income): depreciation, amortization, non-cash expenses related to stock based compensation, other non-cash charges, non-cash expenses, or non-cash losses to net income (provided, however that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses shall be subtracted from consolidated net income in calculating Consolidated EBITDAR), interest expense, income tax expense and Consolidated Rental Expense, transaction expenses incurred in connection with the Camuto Transactions and Permitted Acquisitions in an aggregate cumulative amount for the balance of the term of this Agreement not greater than $40,000,000 and restructuring charges or expenses (including integration costs, restructuring costs and severance costs related to acquisitions and to closure or consolidation of plants, facilities or locations and any expense related to any reconstruction, recommissioning or reconfiguration of fixed assets for alternate use) not to exceed $20,000,000 in an aggregate cumulative amount for the balance of the term of this Agreement, minus (ii) non-cash credits or non-cash gains (to the extent included in such calculation of consolidated net income), in each case determined and consolidated for the Lead Borrower and its Subsidiaries in accordance with GAAP; provided that the foregoing shall exclude the income (or deficit) of any Person (other than a Subsidiary) in which the Lead Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Lead Borrower or such Subsidiary in the form of dividends or similar distributions.  For purposes of calculating Consolidated EBITDAR, (a) with respect to a business acquired by the Loan Parties pursuant to a Permitted Acquisition, Consolidated EBITDAR shall be calculated on a pro forma basis, using historical numbers, in accordance with GAAP as if the Permitted Acquisition had been consummated at the beginning of such period, and (b) with respect to a business liquidated, sold or disposed of by




the Loan Parties pursuant to Section 7.2.7 [Dispositions of  Assets or Subsidiaries], Consolidated EBITDAR shall be calculated on a pro forma basis, using historical numbers, in accordance with GAAP as if such liquidation, sale or disposition had been consummated at the beginning of such period.
Leverage Ratio means, as of the date of determination, the ratio of (A) Total Funded Debt on such date, to (B) Consolidated EBITDAR (with respect to such calculation of Consolidated Rental Expense and Consolidated EBITDAR (i) for the four (4) consecutive fiscal quarters then ending if such date is a fiscal quarter end or (ii) for the four (4) fiscal quarters most recently ended for which financial statements are available if such date is not a fiscal quarter end).
Total Funded Debt means, as of any date of determination, the sum of (i) all Indebtedness (excluding any Hedge Liabilities or any other obligations (contingent or otherwise) under any Swap) representing borrowed money, including both current and long term portion thereof and guaranty obligations with respect thereto, Capital Lease Obligations and reimbursement obligations under letters of credit, in each case of the Lead Borrower on a Consolidated Basis, plus (ii) the aggregate current and long-term operating lease liabilities in accordance with FASB ASC 842, in each case determined and consolidated for the Lead Borrower and its Subsidiaries in accordance with GAAP.
Relevant Interbank Market means, with respect to any currency the London interbank market or other applicable offshore interbank market.”
(C)    The following new Section 1.6 is hereby added, immediately following Section 1.5:
“Section 1.6    Euro-Rate Notification. Section 3.6 of this Agreement provides a mechanism for determining an alternative rate of interest in the event that one or more Relevant Interbank Market offered rates is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to any Relevant Interbank Market offered rate or other rates in the definition of "Euro- Rate" or with respect to any alternative or successor rate thereto, or replacement rate therefor.
(D)    Section 3.6 is hereby deleted in its entirety and in its stead is inserted the following:
“Section 3.6    Successor Euro-Rate Index.
(a)    Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event or if an Early Opt-in Event has occurred with respect to the Euro-Rate for any Available Currency, the Administrative Agent and the Lead Borrower may amend this Agreement to replace the Euro-Rate for such Available Currency with a Benchmark Replacement for such Available Currency; and any such amendment will become effective at 5:00 p.m. New York City time on the fifth (5th) Business Day after the Administrative Agent has provided such proposed amendment to all Lenders, so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. Until the Benchmark Replacement with respect to the Euro-Rate for any Available Currency is effective, each advance, conversion and renewal of a Loan in such Available Currency under the Euro-Rate Option will continue to bear interest with reference to the Euro-Rate for such Available Currency; provided however, during a Benchmark Unavailability Period with respect to any Available Currency (i) any pending selection of, conversion to or renewal of a Loan in such Available Currency bearing interest under the Euro-Rate Option that has not yet gone into effect shall be deemed to be a selection of, conversion to or renewal of the Base Rate Option with respect to such Loan in the Dollar Equivalent amount of such Loan, (ii) all outstanding Loans in such Available Currency bearing interest under the Euro-Rate Option shall automatically be (A) if in Dollars, converted to the Base Rate Option at the expiration of the existing Interest Period (or sooner, if Administrative Agent cannot continue to lawfully maintain such affected Loan under the Euro-Rate Option) (B) if in an Optional Currency,




converted to a Loan in Dollars under the Base Rate Option in the Dollar Equivalent amount of such Loan at the expiration of the existing Interest Period (or sooner, if the Administrative Agent cannot continue to lawfully maintain such affected Loan under the Euro-Rate Option in such Optional Currency) and (iii) the component of the Base Rate based upon the Euro-Rate will not be used in any determination of the Base Rate
(b)    Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement.
(c)    Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Lead Borrower and the Lenders of (i) the implementation of any Benchmark Replacement, (ii) the effectiveness of any Benchmark Replacement Conforming Changes and (iii) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or the Lenders pursuant to this Section 3.6 including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.6.”
(E)    The following new sentence is hereby added to the end of Section 5.1.1:
“No Loan Party is a Covered Person (as such term is defined in Section 10.18).
(F)    Section 7.2.13 is hereby deleted in its entirety and in its stead is inserted the following:
“7.2.13 Minimum Fixed Charge Coverage Ratio. The Loan Parties shall not permit the Fixed Charge Coverage Ratio to be less than (i) 1.75 to 1.00, calculated as of October 28, 2017 and as of the end of each fiscal quarter thereafter through and including February 1, 2020, and (ii) 1.50 to 1.00, calculated as of May 2, 2020 and as of the end of each fiscal quarter thereafter, in each case for the four (4) fiscal quarters then ended.”
(G)    The following new Section 10.18 is hereby added, immediately following Section 10.17:
“Section 10.18. Acknowledgement Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any agreement evidencing Hedge Liabilities or any other agreement or instrument that is a QFC (such support, "QFC Credit Support", and each such QFC, a "Supported QFC"), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the "U.S. Special Resolution Regimes") in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States):
(a) In the event a Covered Person that is party to a Supported QFC (each, a "Covered Party") becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered




Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support.
(b) As used in this Section 10.18, the following terms have the following meanings:
BHC Act Affiliate of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party.
Covered Person means any of the following: (i) a "covered entity" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a "covered bank" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a "covered FSI" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b).
Default Right has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable.
QFC has the meaning assigned to the term "qualified financial contract" in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D).”
(H)    Exhibit 7.2.6 [Acquisition Compliance Certificate] is hereby deleted in its entirety and in its stead is inserted the Exhibit 7.2.6 [Acquisition Compliance Certificate] attached hereto as Exhibit A.
(I)    Exhibit 7.3.3 [Quarterly Compliance Certificate] is hereby deleted in its entirety and in its stead is inserted the Exhibit 7.3.3 [Quarterly Compliance Certificate] attached hereto as Exhibit B.
3.The provisions of Section 2 of this Third Amendment shall become effective on the date that the Administrative Agent has reasonably determined that it has received, or the Required Lenders have otherwise waived the requirement for the Administrative Agent to receive, each of the following, in each case in form and substance reasonably satisfactory to the Administrative Agent (the date of such effectiveness, the “Effective Date”):
(i)    this Third Amendment, duly executed by the Lead Borrower, the Administrative Agent and the Required Lenders;
(ii)    that certain fee letter, dated of even date herewith, executed and delivered by the Administrative Agent and acknowledged and agreed to by the Lead Borrower in connection herewith (the “Fee Letter”); and
(iii)    payment of (a) the fees due and payable under the Fee Letter and (b) all other reasonable fees and expenses owed to the Administrative Agent and its counsel and the Lenders in connection with this Third Amendment and the Credit Agreement as of the Effective Date to the extent an invoice in respect thereof has been delivered to the Lead Borrower at least one Business Day prior to the date of this Third Amendment.
4.The Lead Borrower hereby reconfirms and reaffirms all representations and warranties made by the Lead Borrower and the other Loan Parties pursuant to the terms and conditions of the Credit Agreement and the other Loan Documents as of the Effective Date (except to the extent any representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on such earlier date), except as such representations and warranties may have heretofore been amended, modified or waived in writing in accordance with the Credit Agreement.

5.The Lead Borrower hereby represents and warrants to the Lenders and the Administrative Agent as of the Effective Date that (i) it has the legal power and authority to execute and deliver this Third Amendment, (ii) the officer of the




Lead Borrower executing this Third Amendment has been duly authorized to execute and deliver the same and bind the Lead Borrower with respect to the provisions hereof, (iii) the execution and delivery hereof by the Lead Borrower and the performance and observance by the Lead Borrower and the other Loan Parties of the provisions hereof and of the Credit Agreement and all documents executed or to be executed herewith or therewith, do not violate or conflict with (A) the organizational agreements of any Loan Party or (B) any Law applicable to such Loan Party or result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against such Loan Party, in each case under clause (B) except as would not result in a Material Adverse Change, and (iv) this Third Amendment and the documents executed or to be executed by any Loan Party in connection herewith or therewith constitute valid and binding obligations of such Loan Party in every respect, enforceable in accordance with their respective terms, except to the extent that enforceability of thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or limiting the right of specific performance or by general principles of equity.

6.The Lead Borrower represents and warrants that as of the Effective Date, after giving effect to the amendments set forth in this Third Amendment (i) no Event of Default exists under the Credit Agreement, nor will any occur as a result of the execution and delivery of this Third Amendment or the performance or observance of any provision hereof, and (ii) the schedules attached to and made a part of the Credit Agreement, are true and correct in all material respects as of the date hereof, except as such schedules may have heretofore been amended or modified in writing in accordance with the Credit Agreement.

7.Each reference to the Credit Agreement that is made in the Credit Agreement or any other document executed or to be executed in connection therewith shall hereafter be construed as a reference to the Credit Agreement as amended hereby.

8.The agreements contained in this Third Amendment are limited to the specific agreements made herein. Except as amended hereby, all of the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect. This Third Amendment amends the Credit Agreement and is not a novation thereof.

9.This Third Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed to be an original, but all such counterparts shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Third Amendment by e-mail or telecopy shall be effective as delivery of a manually executed counterpart of this Third Amendment.

10.This Third Amendment shall be deemed to be a contract under the Laws of the State of Ohio without regard to its conflict of laws principles. Each Loan Party hereby consents to the exclusive jurisdiction of the courts of the State of Ohio sitting in Franklin County, Ohio and of the United States District Court for the Southern District of Ohio, and any appellate court from any thereof, with respect to any suit arising out of or mentioning this Third Amendment.

[INTENTIONALLY LEFT BLANK]




























IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused this Third Amendment to be duly executed by their duly authorized officers the day and year first above written.
LEAD BORROWER:
Designer Brands Inc., an Ohio corporation
By: /s/ Marla Walters    
Name: Marla Walters
Title: SVP, Tax & Treasurer     
[Lender Signature Pages Follow]












































[Signature Page to Third Amendment to Credit Agreement - Designer Brands, Inc.]




 
ADMINISTRATIVE AGENT AND LENDERS:
 
PNC Bank, National Association,
as a Lender and as Administrative Agent


By: /s/ George M. Govas
Name: George M. Govas
Title: Managing Director

 
Wells Fargo Bank, National Association,
as a Lender


By: /s/ Carl Hinrichs
Name: Carl Hinrichs
Title: Director
 
Truist Bank (formerly known as Branch Banking and Trust Company),
as a Lender


By: /s/ J. Carlos Navarrete
Name: J. Carlos Navarrete
Title: Vice President
 
Bank of America, N.A.,
as a Lender


By: /s/ Gregg Bush
Name: Gregg Bush
Title: Senior Vice President
 
The Huntington National Bank,
as a Lender


By: /s/ Dan Swanson
Name: Dan Swanson
Title: Vice President

 
BMO Harris Bank, N.A.,
as a Lender


By: /s/ Joshua J. Thompson
Name: Joshua J. Thompson
Title: Associate VP





[Signature Page to Third Amendment to Credit Agreement - Designer Brands, Inc.]




EXHIBIT A
[See attached]

EXHIBIT 7.2.6

FORM OF
ACQUISITION COMPLIANCE CERTIFICATE
_________________________________, 20__
PNC Bank, National Association, as Administrative Agent
155 East Broad Street
Columbus, Ohio 43215
Ladies and Gentlemen:

I refer to the Credit Agreement, dated as of August 25, 2017, by and among Designer Brands Inc. (f/k/a DSW Inc.), an Ohio corporation (the “Lead Borrower”), the Designated Borrowers party thereto, the Guarantors party thereto, the Lenders party thereto, and PNC Bank, National Association, in its capacity as administrative agent for the Lenders (the “Administrative Agent”) , as amended by that certain (i) First Amendment to Credit Agreement, dated as of January 30, 2018 (the “First Amendment”), by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent, (ii) Second Amendment to Credit Agreement, dated October 10, 2018 (the “Second Amendment”), by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent and (iii) Third Amendment to Credit Agreement, dated March 16, 2020 (the “Third Amendment”), by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent (as so amended by the First Amendment, the Second Amendment and the Third Amendment and as may be further amended, modified, supplemented or restated from time to time, the “Credit Agreement”). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings.
________________________ [insert name of applicable Loan Party] intends to enter into a Permitted Acquisition with ___________________ [enter name of the target company] pursuant to which ____________________ [insert name of applicable Loan Party] will ____________________ [provide a brief description of the transactions contemplated by such Permitted Acquisition]. This Certificate is delivered to the Administrative Agent in accordance with Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] of the Credit Agreement. I, the _________________________ [Insert Name of Authorized Officer] of the Lead Borrower, do hereby certify as of ____________ ___, 20___, which is at least five (5) days prior to any Permitted Acquisition (the “Report Date”), as follows:
1.
The representations and warranties of the Loan Parties contained in Section 5 [Representations and Warranties] of the Credit Agreement and in each of the other Loan Documents to which they are a party are true and correct in all material respects (unless qualified by materiality or reference to the absence of a Material Adverse Change, in which event such representations and warranties are true and correct in all respects) on and as of the Report Date (except representations and warranties which relate solely to an earlier date or time which representations and warranties shall be true and correct in all material respects (unless qualified by materiality or reference to the absence of a Material Adverse Change, in which event such representations and warranties are true and correct in all respects) on and as of the specific date or times referred to in said representations and warranties).

2.
No Event of Default or Potential Default exists on the Report Date; no Event of Default or Potential Default has occurred or is continuing since the date of the previously delivered Compliance Certificate; no Event of Default or Potential Default shall exist immediately prior to and after giving effect to such Permitted Acquisition; no Material Adverse Change has occurred since the date of the most recently delivered Compliance Certificate.

[NOTE: If any Event of Default, Potential Default, Material Adverse Change has occurred or is continuing, set forth on an attached sheet the nature thereof and the action which the Loan Parties have taken, are taking or propose to take with respect thereto.]
3.
Maximum Leverage Ratio. After giving effect to such Permitted Acquisition (including in such computation Indebtedness or other liabilities assumed or incurred in connection with such Permitted Acquisition and calculated if such Permitted




Acquisition has been made in the applicable measurement period), the Leverage Ratio is _____ to 1.0 for the period equal to four (4) consecutive fiscal quarters most recently ended.

A.Total Funded Debt1 of the Lead Borrower and its Subsidiaries as of the Report Date equals $____________.

B.Consolidated EBITDAR2 calculated as of the Report Date for the period equal to the four (4) consecutive fiscal quarters then ended equals $__________, and is computed as follows3:

















































1 Total Funded Debt means, as of any date of determination, the sum of (i) all Indebtedness representing borrowed money (excluding any Hedge Liabilities or any other obligations (contingent or otherwise) under any Swap), including both current and long term portion thereof and guaranty obligations with respect thereto, Capital Lease Obligations and reimbursement obligations under letters of credit, in each case of the Lead Borrower on a Consolidated Basis, plus (ii) the aggregate current and long-term operating lease liabilities in accordance with FASB ASC 842, in each case determined and consolidated for the Lead Borrower and its Subsidiaries in accordance with GAAP.

2 For purposes of calculating Consolidated EBITDAR, (a) with respect to a business acquired by the Loan Parties pursuant to a Permitted Acquisition, Consolidated EBITDAR shall be calculated on a pro forma basis, using historical numbers, in accordance with GAAP as if the Permitted Acquisition had been consummated at the beginning of such period, and (b) with respect to a business liquidated, sold or disposed of by the Loan Parties pursuant to Section 7.2.7 [Dispositions of  Assets or Subsidiaries], Consolidated EBITDAR shall be calculated on a pro forma basis, using historical numbers, in accordance with GAAP as if such liquidation, sale or disposition had been consummated at the beginning of such period.

3 The following shall exclude the income (or deficit) of any Person (other than a Subsidiary) in which the Lead Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Lead Borrower or such Subsidiary in the form of dividends or similar distributions.




Component
Amount
(i)net income
$_______________
(ii)depreciation
$_______________
(iii)amortization
$_______________
(iv)non-cash expenses related to stock based compensation
$_______________
(v)other non-cash charges, non-cash expenses, or non-cash losses to net income (provided, however that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses shall be subtracted from consolidated net income in calculating Consolidated EBITDAR)
$_______________
(vi)interest expense
$_______________
(vii)income tax expense
$_______________
(viii)Consolidated Rental Expense
$_______________
(ix)transaction expenses incurred in connection with the Camuto Transactions and Permitted Acquisitions4
$_______________
(x)restructuring charges or expenses (including integration costs, restructuring costs and severance costs related to acquisitions and to closure or consolidation of plants, facilities or locations and any expense related to any reconstruction, recommissioning or reconfiguration of fixed assets for alternate use)5
$_______________
(xi)The sum of items (i) through (x)
$_______________
(xii)non-cash credits or non-cash gains to net income
$_______________
(xiii)The difference between item (xi) minus item (xii) equals Consolidated EBITDAR
$_______________

C.The ratio of item 3(A) to item 3(B) equals the Leverage Ratio.

Under Section 7.2.6(iv)(E) of the Credit Agreement, the Leverage Ratio is not permitted to be greater than the ratio of (i) 3.25 to 1.00 during all times other than an Acquisition Period and (ii) 3.50 to 1.00 during an Acquisition Period6 . Therefore, the Loan Parties ___________ [will/will not] be in compliance with Section 7.2.6(iv)(E) of the Credit Agreement after giving effect to such Permitted Acquisition.







[INTENTIONALLY LEFT BLANK]








4 Shall not exceed $40,000,000 in the aggregate during the term of the Credit Agreement.

5 Shall not exceed $20,000,000 in the aggregate during the term of the Credit Agreement.

6 In no event shall the Leverage Ratio modification that occurs in connection with an Acquisition Period occur more than once during the term of this Agreement.




IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has executed this Acquisition Compliance Certificate this ____ day of ________, 20__.
 
LEAD BORROWER:



Designer Brands Inc.


By: ________________________________
Name: ________________________________
Title: ________________________________


















EXHIBIT B
[See attached]
































EXHIBIT 7.3.3
FORM OF
COMPLIANCE CERTIFICATE
_________________________, 20___
PNC Bank, National Association, as Administrative Agent
155 East Broad Street
Columbus, Ohio 43215

Ladies and Gentlemen:
I refer to the Credit Agreement, dated as of August 25, 2017, by and among Designer Brands Inc. (f/k/a DSW Inc.), an Ohio corporation (the “Lead Borrower”), the Designated Borrowers party thereto, the Guarantors party thereto, the Lenders party thereto, and PNC Bank, National Association, in its capacity as administrative agent for the Lenders (the “Administrative Agent”), as amended by that certain (i) First Amendment to Credit Agreement, dated as of January 30, 2018 (the “First Amendment”), by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent, (ii) Second Amendment to Credit Agreement, dated as of October 10, 2018 (the “Second Amendment”), by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent and (iii) Third Amendment to Credit Agreement, dated as of March 16, 2020 (the “Third Amendment”), by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent (as so amended by the First Amendment, the Second Amendment and the Third Amendment and as may be further amended, modified, supplemented or restated from time to time, the “Credit Agreement”). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings.
I, the ____________________ [Responsible Financial Officer] of the Lead Borrower, do hereby certify on behalf of the Loan Parties as of the _________ [quarter/year] ended _______________ ___, 20___ (the “Report Date”), as follows:
1.
CHECK ONE:
______
The annual financial statements of the Lead Borrower, consisting of an audited consolidated balance sheet as of the end of such fiscal year, and related audited consolidated statements of income, shareholders' equity and cash flows, being delivered to the Administrative Agent and the Lenders with this Compliance Certificate (a) are all in reasonable detail and set forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and (b) comply with the reporting requirements for such financial statements as set forth in Section 7.3.2 [Annual Financial Statements] of the Credit Agreement
OR
______
The quarterly financial statements of the Lead Borrower, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statements of income and cash flows being delivered to the Administrative Agent and the Lenders with this Compliance Certificate (a) are all in reasonable detail and have been prepared in accordance with GAAP, consistently applied (subject to normal year-end audit adjustments), and set forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year, and (b) comply with the reporting requirements for such financial statements as set forth in Section 7.3.1 [Quarterly Financial Statements] of the Credit Agreement.
2.
The representations and warranties of the Loan Parties contained in Article 5 [Representations and Warranties] of the Credit Agreement and in each of the other Loan Documents to which they are a party are true and correct in all material respects (unless qualified by materiality or reference to the absence of a Material Adverse Change, in which event such representations and warranties are true and correct in all respects) on and as of the Report Date (except representations and warranties which relate solely to an earlier date or time which representations and warranties shall be true and correct in all material respects (unless qualified by materiality or reference to the absence of a Material Adverse Change, in which event such representations and warranties are true and correct in all respects) on and as of the specific date or times referred to in said representations and warranties). The Loan Parties are in compliance with, and since the date of the previously delivered Compliance Certificate have performed and complied with all covenants and conditions contained in the Credit Agreement.

3.No Event of Default or Potential Default exists on the Report Date; no Event of Default or Potential Default has occurred or is continuing since the date of the previously delivered Compliance Certificate; no Material Adverse Change has occurred since




the date of the previously delivered Compliance Certificate; and no event has occurred or is continuing since the date of the previously delivered Compliance Certificate that may reasonably be expected to result in a Material Adverse Change.

[NOTE: If any Event of Default, Potential Default, Material Adverse Change or event which may reasonably be expected to result in a Material Adverse Change has occurred or is continuing, set forth on an attached sheet the nature thereof and the action which the Loan Parties have taken, are taking or propose to take with respect thereto.]
4.
Indebtedness (Section 7.2.1(iii), Section 7.2.1(v) and Section 7.2.1(xiv)):

(A)    Indebtedness of the Loan Parties and their Subsidiaries, in the aggregate, as of the Report Date of $____________ which is in the form of Purchase Money Security Interests or Capital Leases, which is not more than the permitted maximum of Twenty Million and 00/100 Dollars ($20,000,000.00) in the aggregate at any time outstanding.
(B) Indebtedness of Domestic Loan Parties to Foreign Subsidiaries which is subordinated pursuant to the Intercompany Subordination Agreement, in the aggregate, as of the Report Date of $____________, which is not more than the permitted maximum of Sixty Million and 00/100 Dollars ($60,000,000.00) in the aggregate at any time outstanding.
(C)    Unsecured Indebtedness of the Loan Parties and their Subsidiaries not otherwise permitted in Section 7.2.1 of the Credit Agreement, in the aggregate as of the Report Date of $____________, which is not more than the permitted maximum of Seventy-Five Million and 00/100 Dollars ($75,000,000.00) at any time outstanding.
5.
Guaranties (Section 7.2.3(vi)). Guaranties by the Loan Parties and their Subsidiaries of Indebtedness of any Subsidiary that is not a Loan Party or any Joint Venture, in the aggregate as of the Report Date of $____________, which is not more than the permitted maximum of Twenty-Five Million and 00/100 Dollars ($25,000,000.00) at any time outstanding.

6.Liens; Lien Covenants (Clauses (xii) and (xvi) of the definition of Permitted Liens):

(A)    Proceeds secured by Liens granted in connection with securities lending transactions or reverse repurchase agreements involving United States Treasury bonds, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Ten Million and 00/100 Dollars ($10,000,000.00) at any one time outstanding.

(B)    Obligations secured by other Liens not otherwise permitted by the definition of Permitted Liens, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Twenty Million and 00/100 Dollars ($20,000,000.00) in the aggregate at any time outstanding.

7.
Loans and Investments (Section 7.2.4(viii), Section 7.2.4(ix) and Section 7.2.4(x)(a)):

(A)    Investments in the nature of seller financing or other consideration received in any disposition (including any sale, lease, sale-leaseback, assignment or transfer) of assets or property by any Loan Party or any Subsidiary of a Loan Party, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Ten Million and 00/100 Dollars ($10,000,000.00) at any time (based on the value at the time of acquisition thereof but reduced by payments or other realization thereon).

(B)    Loans, advances and investments not otherwise permitted by Section 7.2.4 of the Credit Agreement by Domestic Loan Parties in or to Foreign Subsidiaries and Joint Ventures, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Seventy-Five Million and 00/100 Dollars ($75,000,000.00) in the aggregate at any one time outstanding.

(C)    Loans, advances and investments by DSW Canada in or to Town Shoes, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of One Hundred Million and 00/100 Canadian Dollars (CAD $100,000,000.00) in the aggregate at any one time outstanding.



8.
Dispositions of Assets (Section 7.2.7(i) and Section 7.2.7(vii)):





(A)    In addition to sales of Inventory under subsection (a) of clause (i) of Section 7.2.7 of the Credit Agreement, the sale of slow moving inventory outside of the ordinary course (including in respect of a liquidation thereof) during the current fiscal year, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Five Million and 00/100 Dollars ($5,000,000) during such fiscal year.

(B)    The sale, transfer or lease of assets by the Lead Borrower and its Subsidiaries, other than those specifically excepted by Section 7.2.7 of the Credit Agreement (so long as in each case both immediately before and immediately after giving effect thereto there exists no Event of Default or Potential Default), during the current fiscal year, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Twenty Million and 00/100 Dollars ($20,000,000) during such fiscal year.

9.
Minimum Fixed Charge Coverage Ratio (Section 7.2.13). The Fixed Charge Coverage Ratio for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date is [Insert from item 9(C) below] to 1.0, which is not less than the required ratio for such period as determined by reference to Table 1.

TABLE 1

Fiscal Quarters Ending
Required Fixed Charge Coverage Ratio
October 28, 2017 through and including February 1, 2020
1.75 to 1.00
May 2, 2020 and thereafter
1.50 to 1.00

The Fixed Charge Coverage Ratio shall be computed as follows:

(A)    Consolidated EBITDAR1 of the Lead Borrower and its Subsidiaries for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date equals $____________, and is computed as follows2:
























1 For purposes of calculating Consolidated EBITDAR, (a) with respect to a business acquired by the Loan Parties pursuant to a Permitted Acquisition, Consolidated EBITDAR shall be calculated on a pro forma basis, using historical numbers, in accordance with GAAP as if the Permitted Acquisition had been consummated at the beginning of such period, and (b) with respect to a business liquidated, sold or disposed of by the Loan Parties pursuant to Section 7.2.7 [Dispositions of  Assets or Subsidiaries], Consolidated EBITDAR shall be calculated on a pro forma basis, using historical numbers, in accordance with GAAP as if such liquidation, sale or disposition had been consummated at the beginning of such period.

2 The following shall exclude the income (or deficit) of any Person (other than a Subsidiary) in which the Lead Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Lead Borrower or such Subsidiary in the form of dividends or similar distributions.




Component
Amount
(i)net income
$_______________
(ii)depreciation
$_______________
(iii)amortization
$_______________
(iv)non-cash expenses related to stock based compensation
$_______________
(v)other non-cash charges, non-cash expenses, or non-cash losses to net income (provided, however that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses shall be subtracted from consolidated net income in calculating Consolidated EBITDAR)
$_______________
(vi)interest expense
$_______________
(vii)income tax expense
$_______________
(viii)Consolidated Rental Expense
$_______________
(ix)transaction expenses incurred in connection with the Camuto Transactions and Permitted Acquisitions3
$_______________
(x)restructuring charges or expenses (including integration costs, restructuring costs and severance costs related to acquisitions and to closure or consolidation of plants, facilities or locations and any expense related to any reconstruction, recommissioning or reconfiguration of fixed assets for alternate use)4
$_______________
(xi)The sum of items (i) through (x)
$_______________
(xii)non-cash credits or non-cash gains to net income
$_______________
(xiii)The difference between item (xi) minus item (xii) equals Consolidated EBITDAR
$_______________

(B)    Fixed Charges5 calculated as of the Report Date for the period equal to the four (4) consecutive fiscal quarters then ended equals $__________.

(C)    the ratio of item 9(A) to item 9(B) equals the Fixed Charge Coverage Ratio.















3 Shall not exceed $40,000,000 in the aggregate during the term of the Credit Agreement.

4 Shall not exceed $20,000,000 in the aggregate during the term of the Credit Agreement.

5 Fixed Charges means for any period of determination, the sum of (a) cash interest expense, plus (b) Consolidated Rental Expense, in each case of the Lead Borrower on a Consolidated Basis.




10.
Maximum Leverage Ratio (Section 7.2.14). The Leverage Ratio for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date is [Insert from item 10(C) below] to 1.0, which is not greater than the required ratio of (i) 3.25 to 1.00 during all times other than an Acquisition Period and (ii) 3.50 to 1.00 during an Acquisition Period6.

(A)    Total Funded Debt7 of the Lead Borrower and its Subsidiaries as of the Report Date equals $____________.

(B)    Consolidated EBITDAR calculated as of the Report Date for the period equal to the four (4) consecutive fiscal quarters then ended equals $__________ (per item 9(A) above).    

(C)    The ratio of item 10(A) to item 10(B) equals the Leverage Ratio









































6 In no event shall the Leverage Ratio modification that occurs in connection with an Acquisition Period occur more than once during the term of this Agreement.
7 Total Funded Debt means, as of any date of determination, the sum of (i) all Indebtedness (excluding any Hedge Liabilities or any other obligations (contingent or otherwise) under any Swap) representing borrowed money, including both current and long term portion thereof and guaranty obligations with respect thereto, Capital Lease Obligations and reimbursement obligations under letters of credit, in each case of the Lead Borrower on a Consolidated Basis, plus (ii) the aggregate current and long-term operating lease liabilities in accordance with FASB ASC 842, in each case determined and consolidated for the Lead Borrower and its Subsidiaries in accordance with GAAP.




IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has executed this Compliance Certificate this ____ day of _______________, 20___.
Designer Brands Inc., as the Lead Borrower
    
By: ______________________________    
Name: ______________________________
Title: ______________________________




EXHIBIT 10.4.4 FOURTH AMENDMENT TO CREDIT AGREEMENT This Fourth Amendment to Credit Agreement is dated as of April 30, 2020, by and among Designer Brands Inc., an Ohio corporation (f/k/a DSW Inc.) (the “Lead Borrower”), the Guarantors party hereto, PNC Bank, National Association (“PNC Bank”) and the other Lenders party hereto, and PNC Bank, in its capacity as administrative agent for the Lenders (hereinafter referred to in such capacity as the “Administrative Agent”) (the “Fourth Amendment”). W I T N E S E T H: WHEREAS, the Lead Borrower, the Designated Borrowers from time to time party thereto, the Guarantors from time to time party thereto, the Lenders from time to time party thereto and the Administrative Agent have entered into that certain Credit Agreement, dated as of August 25, 2017 (as (i) amended by that certain First Amendment to Credit Agreement, dated as of January 30, 2018, by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent, (ii) amended by that certain Second Amendment to Credit Agreement, dated as of October 10, 2018, by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent (the “Second Amendment”), (iii) amended by that certain Third Amendment to Credit Agreement, dated as of March 16, 2020, by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent and (iv) may be further amended, restated, modified or supplemented from time to time (including, without limitation, by this Fourth Amendment), the “Credit Agreement”); and WHEREAS, the Lead Borrower, on behalf of itself and the other Loan Parties, hereby desires to amend certain provisions of the Credit Agreement, and the Lenders and the Administrative Agent shall permit such amendments pursuant to the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the premises contained herein and other valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows: 1. All capitalized terms used herein which are defined in the Credit Agreement shall have the same meanings herein as in the Credit Agreement unless the context clearly indicates otherwise. 2. (i) Effective as of the Effective Date (as defined below): (A) The Credit Agreement is hereby amended to delete the stricken text (indicated textually in the same manner as the following example: stricken text) and to add the double-underlined text (indicated textually in the same manner as the following example: double-underlined text) as set forth in the pages of the Credit Agreement attached hereto as Annex 1.

 
(B) The Credit Agreement is hereby amended by deleting Schedules 1.1(A), 5.1.2 and 7.2.3 to the Credit Agreement and replacing such schedules, respectively, with Schedules 1.1(A), 5.1.2 and 7.2.3 attached hereto as Annex 2. (C) The Credit Agreement is hereby amended by inserting a new Schedule 1.1(F) to the Credit Agreement in the form attached hereto as Annex 3. (D) The Credit Agreement is hereby amended and modified by deleting Exhibits 1.1(G) and 7.3.3 to the Credit Agreement and replacing such exhibits, respectively, with Exhibits 1.1(G) and 7.3.3 attached hereto as Annex 4. (E) The Credit Agreement is hereby amended by deleting Exhibit 7.2.6 in its entirety. (ii) Each party hereto hereby acknowledges, agrees and confirms that (a) the pricing grid referenced in the definitions of Applicable Commitment Fee Rate, Applicable Letter of Credit Fee Rate and Applicable Margin after giving effect to this Fourth Amendment is set forth on Schedule 1.1(A) to the Credit Agreement, which is attached hereto as Annex 2, and (b) the Revolving Credit Commitment of each Lender after giving effect to this Fourth Amendment is set forth in Part 1 of Schedule 1.1(B) to the Credit Agreement, as such Part 1 of Schedule 1.1(B) was previously amended and attached to the Second Amendment as Exhibit A thereto, and which became effective as of Effective Date 2 (as such term is defined in the Second Amendment). (iii) Notwithstanding anything to the contrary contained in the Credit Agreement or any other Loan Document (including, without limitation, Sections 2.12 and 6.2 of the Credit Agreement), the Lead Borrower and the other Loan Parties hereby acknowledge and agree that as of the Effective Date and thereafter, the Lead Borrower may not designate any Canadian Subsidiary as a Designated Borrower in accordance with the provisions of the Credit Agreement. 3. The provisions of Section 2 of this Fourth Amendment shall become effective on the date that the Administrative Agent has reasonably determined that it has received, or the Required Lenders have otherwise waived the requirement for the Administrative Agent to receive, each of the following, in each case in form and substance reasonably satisfactory to the Administrative Agent (the date of such effectiveness, the “Effective Date”): (i) this Fourth Amendment, duly executed by the Lead Borrower, the Guarantors, the Administrative Agent and the Required Lenders; (ii) the Pledge and Security Agreement, duly executed by each Loan Party; (iii) Account Control Agreements, duly executed by the applicable Loan Parties, PNC Bank and the Administrative Agent; - 2 -

 
(iv) a Guarantor Joinder executed by Camuto LLC, and such other documents required by Section 10.14 [Joinder] of the Credit Agreement with respect to such joinder; (v) a certificate of the Lead Borrower signed by an Authorized Officer, dated as of the Effective Date, stating that (a) all representations and warranties of the Loan Parties set forth in the Credit Agreement (excluding the representation in clause (iii) of Section 5.1.6 thereof) and each other Loan Document are true and correct in all material respects (without duplication of any materiality qualifier contained therein) (except to the extent any representation or warranty is stated to relate solely to an earlier date, in which case, such representation and warranty shall have been true and correct on such earlier date), (b) the Loan Parties are in compliance with each of the covenants and conditions under the Credit Agreement and the other Loan Documents in all material respects (without duplication of any materiality qualifier contained therein) and (c) no Event of Default or Potential Default exists; (vi) a certificate signed by the Secretary or an Assistant Secretary or other Authorized Officer of each of the Loan Parties, each dated as of the Effective Date, certifying as appropriate as to: (a) true copies of all corporate or other organizational action taken by each Loan Party relative to this Fourth Amendment and any other Loan Documents to be executed and delivered by such Loan Party in connection herewith; (b) the names of the Authorized Officers authorized to sign the Fourth Amendment and such other Loan Documents and their true signatures; and (c) copies of its organizational documents in effect certified (to the extent applicable) by the appropriate state official where such documents are filed in a state office (or in the alternative if applicable, certifying that such organizational documents have not been amended since the Closing Date) together with certificates from the appropriate state officials as to the continued existence and good standing of each Loan Party in each state where organized; (vii) certificates from the appropriate state officials as to the continued existence and good standing of each Loan Party in each state where organized; (viii) UCC lien searches with respect to each Loan Party in its jurisdiction of organization (and if necessary based on such results, evidence that all necessary termination statements in connection with all Liens (other than Permitted Liens) have been filed or satisfactory arrangements have been made for such filing); - 3 -

 
(ix) evidence that adequate insurance in compliance with Section 7.1.3 of the Credit Agreement is in full force and effect and that all premiums then due thereon have been paid, with applicable ACORD forms naming the Administrative Agent as additional insured and/or lender loss payee, as applicable; (x) legal opinions, dated as of the Effective Date, with respect to the Loan Parties from (a) Vorys, Sater, Seymour and Pease LLP, (b) Shipman & Goodwin LLP and (c) Evans & Dixon, LLC; (xi) that certain fee letter, dated of even date herewith, executed and delivered by the Administrative Agent and acknowledged and agreed to by the Lead Borrower in connection herewith (the “Fee Letter”); (xii) a duly completed pro forma Compliance Certificate of the Lead Borrower demonstrating (A) a Leverage Ratio not greater than 3.5 to 1.0, calculated as follows: (I) the numerator of which shall be calculated as of the Fourth Amendment Effective Date (for the avoidance of doubt, after giving effect to this Fourth Amendment) and (II) the denominator of which shall be calculated as of the fiscal year of the Lead Borrower ended February 1, 2020 (such modified calculation, the “Fourth Amendment Pro Forma Leverage Ratio”); and (B) a Fixed Charge Coverage Ratio (for the avoidance of doubt, without giving effect to this Fourth Amendment) equal to at least 1.25 to 1.0, calculated as of the fiscal year of the Lead Borrower ended February 1, 2020; (xiii) payment of (a) the fees due and payable under the Fee Letter and (b) all other reasonable fees and expenses owed to the Administrative Agent and its counsel and the Lenders in connection with this Fourth Amendment and the Credit Agreement as of the Effective Date to the extent an invoice in respect thereof has been delivered to the Lead Borrower at least one Business Day prior to the date of this Fourth Amendment; and (xiv) such other documents, deliverables and/or evidence reasonably required by the Administrative Agent in connection with the transactions contemplated hereby. 4. The Lead Borrower hereby reconfirms and reaffirms all representations and warranties made by the Lead Borrower and the other Loan Parties pursuant to the terms and conditions of the Credit Agreement (excluding the representation in clause (iii) of Section 5.1.6 thereof) and the other Loan Documents as of the Effective Date (except to the extent any representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty shall have been true and correct on such earlier date), except as such - 4 -

 
representations and warranties may have heretofore been amended, modified or waived in writing in accordance with the Credit Agreement. 5. The Lead Borrower hereby represents and warrants to the Lenders and the Administrative Agent as of the Effective Date that (i) it has the legal power and authority to execute and deliver this Fourth Amendment, (ii) the officer of the Lead Borrower executing this Fourth Amendment has been duly authorized to execute and deliver the same and bind the Lead Borrower with respect to the provisions hereof, (iii) the execution and delivery hereof by the Lead Borrower and the performance and observance by the Lead Borrower and the other Loan Parties of the provisions hereof and of the Credit Agreement and all documents executed or to be executed herewith or therewith, do not violate or conflict with (A) the organizational agreements of any Loan Party or (B) any Law applicable to such Loan Party or result in a breach of any provision of or constitute a default under any other agreement, instrument or document binding upon or enforceable against such Loan Party, in each case under clause (B) except as would not result in a Material Adverse Change, and (iv) this Fourth Amendment and the documents executed or to be executed by any Loan Party in connection herewith or therewith constitute valid and binding obligations of such Loan Party in every respect, enforceable in accordance with their respective terms, except to the extent that enforceability of thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors’ rights generally or limiting the right of specific performance or by general principles of equity. 6. The Lead Borrower represents and warrants that as of the Effective Date, after giving effect to the amendments set forth in this Fourth Amendment (i) no Event of Default exists under the Credit Agreement, nor will any occur as a result of the execution and delivery of this Fourth Amendment or the performance or observance of any provision hereof, and (ii) the schedules attached to and made a part of the Credit Agreement, are true and correct in all material respects as of the date hereof, except as such schedules may have heretofore been amended or modified in writing in accordance with the Credit Agreement. 7. To induce the Administrative Agent and the Lenders to enter into this Fourth Amendment, each Loan Party hereby releases, acquits and forever discharges the Administrative Agent and the Lenders, and all officers, directors, agents, employees, successors and assigns of the Administrative Agent and the Lenders, from any and all liabilities, claims, demands, actions or causes of action of any kind or nature (if there be any), whether absolute or contingent, disputed or undisputed, at law or in equity, or known or unknown, that such Loan Party now has or ever had against the Administrative Agent or any Lender arising under or in connection with any of the Loan Documents or otherwise, in each case arising prior to the Effective Date. Each Loan Party represents and warrants to the Administrative Agent and the Lenders that such Loan Party has not transferred or assigned to any Person any such claim that such Loan Party ever had or claimed to have against the Administrative Agent or any Lender. 8. Each reference to the Credit Agreement that is made in the Credit Agreement or any other document executed or to be executed in connection therewith shall hereafter be construed as a reference to the Credit Agreement as amended hereby. - 5 -

 
9. The agreements contained in this Fourth Amendment are limited to the specific agreements made herein. Except as amended hereby, all of the terms and conditions of the Credit Agreement and the other Loan Documents shall remain in full force and effect. This Fourth Amendment amends the Credit Agreement and is not a novation thereof. 10. This Fourth Amendment may be executed in any number of counterparts and by the different parties hereto on separate counterparts each of which, when so executed, shall be deemed to be an original, but all such counterparts shall constitute but one and the same instrument. Delivery of an executed counterpart of a signature page of this Fourth Amendment by e-mail or telecopy shall be effective as delivery of a manually executed counterpart of this Fourth Amendment. The words "execution," "signed," "signature," and words of like import in this Fourth Amendment shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act or any other similar state laws based on the Uniform Electronic Transactions Act. 11. This Fourth Amendment shall be deemed to be a contract under the Laws of the State of Ohio without regard to its conflict of laws principles. Each Loan Party hereby consents to the exclusive jurisdiction of the courts of the State of Ohio sitting in Franklin County, Ohio and of the United States District Court for the Southern District of Ohio, and any appellate court from any thereof, with respect to any suit arising out of or mentioning this Fourth Amendment. [INTENTIONALLY LEFT BLANK] - 6 -

 
IN WITNESS WHEREOF, and intending to be legally bound, the parties hereto have caused this Fourth Amendment to be duly executed by their duly authorized officers the day and year first above written. LEAD BORROWER: Designer Brands Inc., an Ohio corporation By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer GUARANTORS: 810 AC LLC, an Ohio limited liability company By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer Brand Card Services LLC, an Ohio limited liability company By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer DSW Shoe Warehouse, Inc., a Missouri corporation By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
DSW Information Technology LLC, an Ohio limited liability company By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer DSW MS LLC, an Ohio limited liability company By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer Ebuys, Inc. a California corporation By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer DSW Leased Business Division LLC, an Ohio limited liability company By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
eTailDirect LLC, a Delaware limited liability company By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer Retail Ventures Services, Inc., an Ohio corporation By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer Designer Brand Licensing LLC, an Ohio limited liability company By: /s/ Jared A. Poff Name: Jared A. Poff Title: Executive Vice President, Chief Financial Officer VCJS LLC, a Connecticut limited liability company By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer VCS Group LLC, a Delaware limited liability company By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
Vincent Camuto LLC, a Connecticut limited liability company By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer CCI Operations LLC, an Ohio limited liability company By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer VC Footwear LLC, a Connecticut limited liability company By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer VC Line Building Services LLC, a Connecticut limited liability company By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer Hot on Time LLC, a Connecticut limited liability company By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
Sole Society Group Inc., a Delaware corporation By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer Camuto LLC, an Ohio limited liability company By: /s/ Marla Walters Name: Marla Walters Title: Senior Vice President, Tax and Treasurer [Lender Signature Pages Follow] [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
ADMINISTRATIVE AGENT AND LENDERS: PNC Bank, National Association, as a Lender and as Administrative Agent By: /s/ George M. Gevas Name: George M. Gevas Title: Managing Director [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
Wells Fargo Bank, National Association, as a Lender By: /s/ Carl Hinrichs Name: Carl Hinrichs Title: Director [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
Truist Bank (formerly known as Branch Banking and Trust Company), as a Lender By: /s/ Matthew J. Davis Name: Matthew J. Davis Title: Senior Vice President [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
Bank of America, N.A., as a Lender By: /s/ Gregg Bush Name: Gregg Bush Title: Senior Vice President [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
The Huntington National Bank, as a Lender By: /s/ Dan Swanson Name: Dan Swanson Title: Vice President [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
BMO Harris Bank, N.A., as a Lender By: /s/ Joseph R. Jackson Name: Joseph R. Jackson Title: Vice President [Signature Page to Fourth Amendment to Credit Agreement – Designer Brands, Inc.]

 
ANNEX 1 [See attached]

 
Conformed Version incorporating: First– Annex 1 to Fourth Amendment to Credit Agreement, dated January 30, 2018 Second Amendment to Credit Agreement, dated October 10, 2018 Third Amendment to Credit Agreement, dated March 16, 2020 Published CUSIP Number: 23333VAC5 Revolving Credit CUSIP Number: 23333VAD3 $300,000,000400,000,000 REVOLVING CREDIT FACILITY CREDIT AGREEMENT by and among DSWDESIGNER BRANDS INC. (F/K/A DSW INC.), THE DESIGNATED BORROWERS PARTY HERETO, THE GUARANTORS PARTY HERETO, THE LENDERS PARTY HERETO, PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent, Swing Loan Lender and Issuing Lender, WELLS FARGO BANK, NATIONAL ASSOCIATION and BRANCH BANKING AND TRUST COMPANYTRUIST BANK, as Co-Syndication Agents, BANK OF AMERICA, N.A. and THE HUNTINGTON NATIONAL BANK, as Co-Documentation Agents, and PNC CAPITAL MARKETS LLC, WELLS FARGO SECURITIES, LLC and BB&T CAPITAL MARKETSSUNTRUST ROBINSON HUMPHREY, INC., as Joint Lead Arrangers and Joint Bookrunners DatedOriginally dated as of August 25, 2017 223667699

 
TABLE OF CONTENTS Page 1. CERTAIN DEFINITIONS 1 1.1 Certain Definitions 1 1.2 Construction 3335 1.3 Accounting Principles; Changes in GAAP 3435 1.4 Currency Calculations 3436 1.5 Designation of the Lead Borrower as Borrower Representative 3536 1.6 Euro-Rate Notification 3537 2. REVOLVING CREDIT AND SWING LOAN FACILITIES 3537 2.1 Revolving Credit Commitments 3537 2.1.1 Revolving Credit Loans; Optional Currency Loans 3537 2.1.2 Swing Loan Commitment 3637 2.2 Nature of Lenders' Obligations with Respect to Revolving Credit Loans 3637 2.3 Commitment Fee 3638 2.4 Revolving Credit Loan Requests; Swing Loan Requests 3638 2.4.1 Revolving Credit Loan Requests 3638 2.4.2 Swing Loan Requests 3739 2.5 Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay Swing Loans 3739 2.5.1 Making Revolving Credit Loans 3739 2.5.2 Presumptions by the Administrative Agent 3839 2.5.3 Making Swing Loans 3840 2.5.4 Repayment of Revolving Credit Loans 3840 2.5.5 Borrowings to Repay Swing Loans 3940 2.5.6 Swing Loans Under Cash Management Agreements 3940 2.6 Revolving Credit Notes and Swing Notes 3941 2.7 Letter of Credit Subfacility 4041 2.7.1 Issuance of Letters of Credit 4041 2.7.2 Letter of Credit Fees 4142 2.7.3 Disbursements, Reimbursement 4143 2.7.4 Repayment of Participation Advances 4344 2.7.5 Documentation 4345 2.7.6 Determinations to Honor Drawing Requests 4345 2.7.7 Nature of Participation and Reimbursement Obligations 4345 2.7.8 Indemnity 4547 2.7.9 Liability for Acts and Omissions 4547 2.7.10 Issuing Lender Reporting Requirements 4748 2.7.11 Replacement and Resignation of Issuing Lender. 4748 2.8 Termination or Reduction of Revolving Credit Commitments 4749 2.9 Increase in Revolving Credit Commitments 48 - i - 223667699

 
2.9.1 Increasing Lenders and New Lenders 48 2.9.2 Treatment of Outstanding Loans and Letters of Credit 49 2.8.1 Voluntary Termination or Reduction 49 2.8.2 Mandatory Reduction 49 2.9 Reserved 50 2.10 Utilization of Commitments in Optional Currencies 4950 2.10.1 Periodic Computations of Dollar Equivalent Amounts of Revolving Credit Loans that are Optional Currency Loans and Letters of Credit Outstanding; Repayment in Same Currency 4950 2.10.2 Notices from Lenders That Optional Currencies Are Unavailable to Fund New Loans 5051 2.10.3 Notices From Lenders That Optional Currencies Are Unavailable to Fund Renewals of the Euro-Rate Option 5051 2.10.4 European Monetary Union 51 2.10.5 Requests for Additional Optional Currencies 5152 2.11 Settlement Date Procedures 52 2.12 Designated Borrowers 5253 3. INTEREST RATES 53 3.1 Interest Rate Options 53 3.1.1 Revolving Credit Interest Rate Options; Swing Loan Interest Rate 5354 3.1.2 Swing Loan Interest Rate 54 3.1.3 Rate Calculations; Rate Quotations 54 3.1.4 Interest Act (Canada) 5455 3.1.5 Canadian Usury Provision 5455 3.2 Interest Periods 55 3.2.1 Amount of Borrowing Tranche 55 3.2.2 Renewals 55 3.2.3 No Conversion of Optional Currency Loans 55 3.3 Interest After Default 55 3.3.1 Loans and Letter of Credit Fees, Interest Rate 5556 3.3.2 Other Obligations 5556 3.3.3 Acknowledgment 5556 3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available 5556 3.4.1 Unascertainable 5556 3.4.2 Illegality; Increased Costs; Deposits Not Available 56 3.4.3 Optional Currency Loans Not Available 5657 3.4.4 Administrative Agent's and Lender's Rights 5657 3.5 Selection of Interest Rate Options 5758 3.6 Successor Euro-Rate Index 57. 58 4. PAYMENTS 5859 4.1 Payments 5859 4.2 Pro Rata Treatment of Lenders 59 4.3 Sharing of Payments by Lenders 5960 - ii - 223667699

 
4.4 Presumptions by the Administrative Agent 60 4.5 Interest Payment Dates 6061 4.6 Voluntary Prepayments 6061 4.6.1 Right to Prepay 6061 4.6.2 Replacement of a Lender 6162 4.6.3 Designation of a Different Lending Office 62 4.7 Mandatory Prepayments for Currency Fluctuations 6263 4.8 Increased Costs 63 4.8.1 Increased Costs Generally 63 4.8.2 Capital Requirements 6364 4.8.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans 64 4.8.4 Delay in Requests 64 4.8.5 Additional Reserve Requirements 64 4.9 Taxes 6465 4.9.1 Issuing Lender 6465 4.9.2 Payments Free of Taxes 65 4.9.3 Payment of Other Taxes by the Loan Parties 65 4.9.4 Indemnification by the Loan Parties 65 4.9.5 Indemnification by the Lenders 6566 4.9.6 Evidence of Payments 6566 4.9.7 Status of Lenders 66 4.9.8 Treatment of Certain Refunds 6768 4.9.9 Survival 68 4.10 Indemnity 6869 4.11 Currency Conversion Procedures for Judgments 69 4.12 Indemnity in Certain Events 69 4.13 Defaulting Lenders 6970 4.14 Designated Lenders 71 4.15 Illegality 71 5. REPRESENTATIONS AND WARRANTIES 7172 5.1 Representations and Warranties 7172 5.1.1 Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event of Default 7172 5.1.2 Capitalization; Subsidiaries; Investment Companies 72 5.1.3 Validity and Binding Effect 7273 5.1.4 No Conflict; Material Agreements; Consents 7273 5.1.5 Litigation 73 5.1.6 Financial Statements 73 5.1.7 Margin Stock 7374 5.1.8 Full Disclosure 74 5.1.9 Taxes 7475 5.1.10 Patents, Trademarks, Copyrights, Licenses, Etc 7475 5.1.11 Insurance 7475 5.1.12 ERISA Compliance 7475 - iii - 223667699

 
5.1.13 Environmental Matters 7576 5.1.14 Solvency 76 5.1.15 Anti-Terrorism Laws 76 5.1.16 EEA Financial Institution 76 5.1.17 Liens in the Collateral 76 5.2 Updates to Schedules 7677 6. CONDITIONS 7677 6.1 Conditions of Lending and Issuance of Letters of Credit 7677 6.1.1 First Loans and Letters of Credit 7677 6.1.2 Each Loan or Letter of Credit 78 6.2 Conditions to Designation of Designated Borrowers 7879 7. COVENANTS 7980 7.1 Affirmative Covenants 7980 7.1.1 Preservation of Existence, Etc 7980 7.1.2 Payment of Liabilities, Including Taxes, Etc 7980 7.1.3 Maintenance of Insurance 7980 7.1.4 Maintenance of Properties and Leases 8081 7.1.5 Visitation Rights 8081 7.1.6 Keeping of Records and Books of Account 8081 7.1.7 Compliance with Laws; Use of Proceeds 8081 7.1.8 Anti-Terrorism Laws; International Trade Law Compliance 81 7.1.9 Keepwell 8182 7.1.10 Further Assurances 82 7.2 Negative Covenants 8182 7.2.1 Indebtedness 8182 7.2.2 Liens; Lien Covenants 8283 7.2.3 Guaranties 8384 7.2.4 Loans and Investments 8384 7.2.5 Dividends and Related Distributions 8485 7.2.6 Liquidations, Mergers, Consolidations, Acquisitions 85 7.2.7 Dispositions of Assets 86 7.2.8 Affiliate Transactions 8786 7.2.9 Subsidiaries and Joint Ventures 87 7.2.10 Continuation of or Change in Business 87 7.2.11 Fiscal Year 8887 7.2.12 Changes in Organizational Documents 8887 7.2.13 Minimum Fixed Charge Coverage Ratio 8887 7.2.14 Maximum Leverage Ratio 8887 7.2.15 Limitation on Negative Pledges 88 7.2.16 Restrictions on Certain Subsidiaries 88 7.3 Reporting Requirements 8988 7.3.1 Quarterly Financial Statements 8988 7.3.2 Annual Financial Statements 89 7.3.3 Certificate of the Lead Borrower 89 7.3.4 Notices 89 - iv - 223667699

 
8. DEFAULT 90 8.1 Events of Default 90 8.1.1 Payments Under Loan Documents 90 8.1.2 Breach of Warranty 9190 8.1.3 Anti-Terrorism Laws 91 8.1.4 Breach of Certain Covenants 91 8.1.5 Breach of Other Covenants 91 8.1.6 Defaults in Other Agreements or Indebtedness 91 8.1.7 Final Judgments or Orders 91 8.1.8 Loan Document Unenforceable 91 8.1.9 Uninsured Losses; Proceedings Against Assets 9291 8.1.10 Events Relating to Pension Plans and Multiemployer Plans 92 8.1.11 Change of Control 92 8.1.12 Relief Proceedings 92 8.2 Consequences of Event of Default 92 8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings 92 8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings 9392 8.2.3 Set-off 93 8.2.4 Application of Proceeds 93 9. THE ADMINISTRATIVE AGENT 94 9.1 Appointment and Authority 94 9.2 Rights as a Lender 94 9.3 Exculpatory Provisions 95 9.4 Reliance by Administrative Agent 96 9.5 Delegation of Duties 96 9.6 Resignation of Administrative Agent 96 9.7 Non-Reliance on Administrative Agent and Other Lenders 97 9.8 No Other Duties, etc 9897 9.9 Administrative Agent's Fee 98 9.10 Authorization to Release Collateral and Guarantors 98 9.11 No Reliance on Administrative Agent's Customer Identification Program 98 9.12 Certain ERISA Matters. 98 10. MISCELLANEOUS 99 10.1 Modifications, Amendments or Waivers 99 10.1.1 Increase of Commitment 99 10.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment 10099 10.1.3 Release of Collateral or Guarantor 100 10.1.4 Miscellaneous 100 10.2 No Implied Waivers; Cumulative Remedies 101100 10.3 Expenses; Indemnity; Damage Waiver 101 - v - 223667699

 
10.3.1 Costs and Expenses 101 10.3.2 Indemnification by the Loan Parties 101 10.3.3 Reimbursement by Lenders 102 10.3.4 Waiver of Consequential Damages, Etc 102 10.3.5 Payments 102 10.3.6 Survival 103102 10.4 Holidays 103 10.5 Notices; Effectiveness; Electronic Communication 103 10.5.1 Notices Generally 103 10.5.2 Electronic Communications 103 10.5.3 Change of Address, Etc 104103 10.6 Severability 104103 10.7 Duration; Survival 104103 10.8 Successors and Assigns 104103 10.8.1 Successors and Assigns Generally 104103 10.8.2 Assignments by Lenders 104103 10.8.3 Register 106103 10.8.4 Participations 106103 10.8.5 Certain Pledges; Successors and Assigns Generally 107103 10.8.6 Disqualified Institutions. 107103 10.9 Confidentiality 109103 10.9.1 General 109103 10.9.2 Sharing Information With Affiliates of the Lenders 109103 10.10 Counterparts; Integration; Effectiveness 109103 10.10.1 Counterparts; Integration; Effectiveness 109103 10.10.2 Electronic Execution of Assignments 110103 10.11 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL 110103 10.11.1 Governing Law 110103 10.11.2 SUBMISSION TO JURISDICTION 110103 10.11.3 WAIVER OF VENUE 111103 10.11.4 SERVICE OF PROCESS 111103 10.11.5 WAIVER OF JURY TRIAL 112103 10.12 USA Patriot Act Notice 112103 10.13 Bifurcation of Obligations 112103 10.14 Joinder 112103 10.15 Canadian Anti-Money Laundering Legislation 113103 10.16 Acknowledgment and Consent to Bail-In of EEA Financial Institutions 114103 10.17 No Advisory or Fiduciary Responsibility 114103 10.18 Acknowledgment Regarding Any Supported QFCs 114103 11. LEAD BORROWER GUARANTEE. 115103 11.1 Guarantee 115103 11.2 No Subrogation 116103 11.3 Amendments, etc., with respect to the Guaranteed Obligations 116103 11.4 Guarantee Absolute and Unconditional 117103 - vi - 223667699

 
11.5 Reinstatement 118103 11.6 Payments 118103 - vii - 223667699

 
LIST OF SCHEDULES AND EXHIBITS SCHEDULES SCHEDULE 1.1(A) - PRICING GRID SCHEDULE 1.1(B) - COMMITMENTS OF LENDERS AND ADDRESSES FOR NOTICES SCHEDULE 1.1(E) - EXISTING LETTERS OF CREDIT SCHEDULE 1.1(F) - FOURTH AMENDMENT LETTERS OF CREDIT SCHEDULE 1.1(P) - PERMITTED LIENS SCHEDULE 5.1.2 - CAPITALIZATION; SUBSIDIARIES SCHEDULE 7.2.1 - PERMITTED INDEBTEDNESS SCHEDULE 7.2.3 - PERMITTED GUARANTIES SCHEDULE 7.2.4 - PERMITTED INVESTMENTS SCHEDULE 7.2.8 - AFFILIATE TRANSACTIONS EXHIBITS EXHIBIT 1.1(A) - ASSIGNMENT AND ASSUMPTION AGREEMENT EXHIBIT 1.1(D)(1) - DESIGNATED BORROWER AGREEMENT EXHIBIT 1.1(D)(2) - DESIGNATED BORROWER TERMINATION EXHIBIT 1.1(G) - GUARANTOR JOINDER EXHIBIT 1.1(L) - LENDER JOINDER EXHIBIT 1.1(N)(1) - REVOLVING CREDIT NOTE EXHIBIT 1.1(N)(2) - SWING LOAN NOTE EXHIBIT 2.4.1 - REVOLVING CREDIT LOAN REQUEST EXHIBIT 2.4.2 - SWING LOAN REQUEST EXHIBIT 4.9.7(A) - U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders That Are Not Partnerships For U.S. Federal Income Tax Purposes) EXHIBIT 4.9.7(B) - U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Not Partnerships For U.S. Federal Income Tax Purposes) EXHIBIT 4.9.7(C) - U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Participants That Are Partnerships For U.S. Federal Income Tax Purposes) EXHIBIT 4.9.7(D) - U.S. TAX COMPLIANCE CERTIFICATE (For Foreign Lenders That Are Partnerships For U.S. Federal Income Tax Purposes) EXHIBIT 7.2.6 - ACQUISITION COMPLIANCE CERTIFICATE EXHIBIT 7.3.3 - QUARTERLY COMPLIANCE CERTIFICATE - viii - 223667699

 
CREDIT AGREEMENT THIS CREDIT AGREEMENT is originally dated as of August 25, 2017, and is made by and among DESIGNER BRANDS INC. (F/K/A DSW INC.), an Ohio corporation (the “Lead Borrower”), the DESIGNATED BORROWERS from time to time party hereto, each of the GUARANTORS (as hereinafter defined) from time to time party hereto, the LENDERS (as hereinafter defined) from time to time party hereto, and PNC BANK, NATIONAL ASSOCIATION, in its capacity as the Administrative Agent (as hereinafter defined). The Borrowers have requested the Lenders to provide a revolving credit facility to the Borrowers in an aggregate principal amount, subject to Section 2.92.8.2 [Increase in Revolving Credit CommitmentsMandatory Reduction], not to exceed ThreeFour Hundred Million and 00/100 Dollars ($300,000,000.00400,000,000.00), including therein a Swing Loan (as hereinafter defined) subfacility to the Lead Borrower and a Letter of Credit (as hereinafter defined) subfacility. In consideration of their mutual covenants and agreements hereinafter set forth and intending to be legally bound hereby, the parties hereto covenant and agree as follows: 1. CERTAIN DEFINITIONS 1.1 Certain Definitions. In addition to words and terms defined elsewhere in this Agreement, the following words and terms have the following meanings, respectively, unless the context hereof clearly requires otherwise: Acquisition Period means a period of four consecutive fiscal quarters of the Lead Borrower beginning with a fiscal quarter during which (i) the Lead Borrower or one of its Subsidiaries consummates a Permitted Acquisition for which the aggregate Consideration payable exceeds the Dollar Equivalent of One Hundred Million and 00/100 Dollars ($100,000,000.00) or (ii) the Camuto Acquisition Closing occurs, and including such fiscal quarter and the immediately three succeeding fiscal quarters. The Lead Borrower may elect to designate in writing to the Administrative Agent the commencement of an Acquisition Period (which election shall be made prior to the last day of the fiscal quarter in which the relevant Permitted Acquisition is consummated or the Camuto Acquisition Closing occurs, as applicable), and only one Acquisition Period shall be designated during the term of this Agreement. Account Control Agreement means each control agreement executed and delivered pursuant to Section 6(j) of the Pledge and Security Agreement. Administrative Agent means PNC Bank, National Association, and its successors and assigns, in its capacity as administrative agent hereunder. Administrative Agent's Fee has the meaning specified in Section 9.9 [Administrative Agent's Fee]. Administrative Agent's Letter has the meaning specified in Section 9.9 [Administrative Agent's Fee]. Affiliate as to any Person means any other Person (i) which directly or indirectly controls, is controlled by, or is under common control with such Person, (ii) which beneficially 223667699

 
owns or holds twenty percent (20%) or more of any class of the voting or other equity interests of such Person, or (iii) twenty percent (20%) or more of any class of voting interests or other equity interests of which is beneficially owned or held, directly or indirectly, by such Person. For purposes of this definition, “control” of a Person means the power, directly or indirectly, to direct or cause the direction of the management and policies of such Person, whether by contract or otherwise. Agreement means this Credit Agreement, as amended by that certain (i) First Amendment to Credit Agreement, dated as of January 30, 2018, by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent, (ii) Second Amendment to Credit Agreement, dated as of October 10, 2018, by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent, (iii) Third Amendment to Credit Agreement, dated as of March 16, 2020, by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent, (iv) Fourth Amendment to Credit Agreement, dated April 30, 2020, by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent, and as the same may be further amended, supplemented, modified or restated from time to time, including all schedules and exhibits. AML Legislation has the meaning specified in Section 10.15 [Canadian Anti-Money Laundering Legislation]. Anti-Terrorism Laws means any Laws relating to terrorism, trade sanctions programs and embargoes, import/export licensing, money laundering or bribery, and any regulation, order, or directive promulgated, issued or enforced pursuant to such Laws, all as amended, supplemented or replaced from time to time (including, without limitation, any AML Legislation). Applicable Commitment Fee Rate means the percentage rate per annum based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Commitment Fees.” Applicable Letter of Credit Fee Rate means the percentage rate per annum based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Standby Letter of Credit Fee” or “Commercial Letter of Credit Fee”, as applicable. Applicable Margin means, as applicable: (A) the percentage spread to be added to the Base Rate applicable to Revolving Credit Loans under the Base Rate Option based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Base Rate Spread”, or (B) the percentage spread to be added to the Euro-Rate applicable to Revolving Credit Loans under the Euro-Rate Option based on the Leverage Ratio then in effect according to the pricing grid on Schedule 1.1(A) below the heading “Euro-Rate Spread”. Approved Fund means any fund that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of business and that is administered or managed by (i) a Lender, (ii) an Affiliate of a Lender or (iii) an entity or an Affiliate of an entity that administers or manages a Lender. 223667699

 
Article II JV means Article II JV, LLC, a Delaware limited liability company. Assignment and Assumption Agreement means an assignment and assumption agreement entered into by a Lender and an Eligible Assignee, in substantially the form of Exhibit 1.1(A). Authorized Officer means, with respect to any Loan Party, the Chief Executive Officer, President, Chief Financial Officer, Treasurer or Assistant Treasurer of such Loan Party, any other executive officer, including any Executive Vice President or Senior Vice President of such Loan Party, any Vice President of any Subsidiary of such Loan Party, any manager or the members (as applicable) in the case of any Loan Party which is a limited liability company, or such other individuals, designated by written notice to the Administrative Agent from the Lead Borrower, authorized to execute notices, reports and other documents on behalf of such Loan Party required hereunder. The Lead Borrower may amend such list of individuals from time to time by giving written notice of such amendment to the Administrative Agent. Available Currencies means, at any time, Dollars and all Optional Currencies at such time; each individually an “Available Currency”. Bail-In Action means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution. Bail-In Legislation means, with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule. Bankruptcy Event has the meaning specified in the definition of Defaulting Lender. Base Rate means, for any day, a fluctuating per annum rate of interest equal to the highest of (i) the Overnight Bank Funding Rate, plus fifty (50) basis points (0.5%), (ii) the Prime Rate, and (iii) the Daily LIBOR Rate, plus 100 basis points (1.0%). Any change in the Base Rate (or any component thereof) shall take effect at the opening of business on the day such change occurs. Notwithstanding the foregoing, if the Base Rate as determined above would be less than zero (0.00), such rate shall be deemed to be zero (0.00) for purposes of this Agreement. Base Rate Option means the option of the Borrowers to have Loans bear interest at the rate and under the terms set forth in Section 3.1.1(i) [Base Rate Option]. BC/VC means BC/VC Ventures LLC, a Delaware limited liability company. Benchmark Replacement means, with respect to any Available Currency, the sum of: (a) the alternate benchmark rate that has been selected by the Administrative Agent and the Lead Borrower for such Available Currency giving due consideration to (i) any selection or recommendation of a replacement rate or the mechanism for determining such a rate by the Relevant Governmental Body with respect to such Available Currency or (ii) any evolving or then-prevailing market convention for determining a rate of interest as a replacement to the Euro-Rate for (A) with respect to Dollar Loans under the Euro-Rate Option, U.S. 223667699

 
dollar-denominated credit facilities or (B) with respect to Optional Currency Loans, U.S. credit facilities providing for loans in such Optional Currency and (b) the Benchmark Replacement Adjustment; provided that, if the Benchmark Replacement as so determined would be less than zero, the Benchmark Replacement will be deemed to be zero for the purposes of this Agreement. Benchmark Replacement Adjustment means, with respect to any replacement of the Euro-Rate for any Available Currency with an alternate benchmark rate for each applicable Interest Period for such Available Currency, the spread adjustment, or method for calculating or determining such spread adjustment, (which may be a positive or negative value or zero) that has been selected by the Administrative Agent and the Lead Borrower giving due consideration to (i) any selection or recommendation of a spread adjustment, or method for calculating or determining such spread adjustment, for the replacement of the Euro-Rate in such Available Currency with the applicable Benchmark Replacement for such Available Currency (excluding such spread adjustment) by the Relevant Governmental Body with respect to such Available Currency or (ii) any evolving or then-prevailing market convention for determining a spread adjustment, or method for calculating or determining such spread adjustment, for such replacement of the Euro-Rate for (A) with respect to Dollar Loans under the Euro-Rate Option, U.S. dollar-denominated credit facilities at such time or (B) with respect to Optional Currency Loans, U.S. credit facilities providing for loans in such Optional Currency. Benchmark Replacement Conforming Changes means, with respect to any Benchmark Replacement for any Available Currency, any technical, administrative or operational changes (including changes to the definition of “Base Rate,” the definition of “Interest Period,” timing and frequency of determining rates and making payments of interest and other administrative matters) that the Administrative Agent decides may be appropriate to reflect the adoption and implementation of such Benchmark Replacement for such Available Currency and to permit the administration thereof by the Administrative Agent in a manner substantially consistent with market practice in the United States (or, if the Administrative Agent decides that adoption of any portion of such market practice is not administratively feasible or if the Administrative Agent determines that no market practice for the administration of the Benchmark Replacement exists, in such other manner of administration as the Administrative Agent decides is reasonably necessary in connection with the administration of this Agreement). Benchmark Replacement Date means the earlier to occur of the following events with respect to the Euro-Rate: (1) in the case of clause (1) or (2) of the definition of “Benchmark Transition Event,” the later of (a) the date of the public statement or publication of information referenced therein and (b) the date on which the administrator of the Euro-Rate for such Available Currency permanently or indefinitely ceases to provide the Euro-Rate for such Available Currency; or (2) in the case of clause (3) of the definition of “Benchmark Transition Event,” the date of the public statement or publication of information referenced therein. Benchmark Transition Event means the occurrence of one or more of the following events with respect to the Euro-Rate: (1) a public statement or publication of information by or on behalf of the administrator of the Euro-Rate for such Available Currency announcing that such administrator 223667699

 
has ceased or will cease to provide the Euro-Rate for such Available Currency, permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Euro-Rate for such Available Currency; (2) a public statement or publication of information by an Official Body having jurisdiction over the Administrative Agent, the regulatory supervisor for the administrator of the Euro-Rate for such Available Currency, the U.S. Federal Reserve System, an insolvency official with jurisdiction over the administrator for the Euro-Rate for such Available Currency, a resolution authority with jurisdiction over the administrator for the Euro-Rate for such Available Currency or a court or an entity with similar insolvency or resolution authority over the administrator for the Euro-Rate for such Available Currency, which states that the administrator of the Euro-Rate for such Available Currency has ceased or will cease to provide the Euro-Rate for such Available Currency permanently or indefinitely, provided that, at the time of such statement or publication, there is no successor administrator that will continue to provide the Euro-Rate for such Available Currency; or (3) a public statement or publication of information by the regulatory supervisor for the administrator of the Euro-Rate for such Available Currency or an Official Body having jurisdiction over the Administrative Agent announcing that the Euro-Rate for such Available Currency is no longer representative. Benchmark Unavailability Period means, with respect to any Available Currency, if a Benchmark Transition Event and its related Benchmark Replacement Date have occurred with respect to the Euro-Rate for such Available Currency and solely to the extent that the Euro-Rate for such Available Currency has not been replaced with a Benchmark Replacement, the period (x) beginning at the time that such Benchmark Replacement Date for such Available Currency has occurred if, at such time, no Benchmark Replacement for such Available Currency has replaced the Euro-Rate for such Available Currency for all purposes hereunder in accordance with Section 3.6 and (y) ending at the time that a Benchmark Replacement for such Available Currency has replaced the Euro-Rate for such Available Currency for all purposes hereunder pursuant to Section 3.6. Beneficial Ownership Regulation means 31 C.F.R. § 1010.230. Benefit Plan means any of (a) an “employee benefit plan” (as defined in ERISA) that is subject to Title I of ERISA, (b) a “plan” as defined in and subject to Section 4975 of the Code or (c) any Person whose assets include (for purposes of ERISA Section 3(42) or otherwise for purposes of Title I of ERISA or Section 4975 of the Code) the assets of any such “employee benefit plan” or “plan”. Borrower or Borrowers means, singularly or collectively as the context may require, the Lead Borrower and the Designated Borrowers. Borrowing Date means, with respect to any Loan, the date for the making thereof or the renewal or conversion thereof at or to the same or a different Interest Rate Option, which shall be a Business Day. Borrowing Tranche means specified portions of Loans outstanding as follows: (i) any Loans to which a Euro-Rate Option applies which become subject to the same Interest Rate Option under the same Revolving Credit Loan Request and which have the same Interest Period 223667699

 
shall constitute one Borrowing Tranche, and (ii) all Loans to which a Base Rate Option applies shall constitute one Borrowing Tranche. BRX means BRX DBI Joint Venture LLC, a Delaware limited liability company. Business Day means any day other than a Saturday or Sunday or a legal holiday on which commercial banks are authorized or required to be closed for business in Pittsburgh, Pennsylvania and if the applicable Business Day relates to any Loan to which the Euro-Rate Option applies, such day must also be a day on which dealings are carried on in the Relevant Interbank Market. Camuto Acquisition means the acquisition by the Lead Borrower, directly or through one or more of its Subsidiaries, of all of the outstanding membership interests of CG Opco LLC, a Delaware limited liability company, Camuto Overseas Holding Subsidiary, LLC, an Ohio limited liability company, and CCI Opco LLC, a Delaware limited liability company, and all related transactions pursuant to the Camuto Acquisition Agreement and the related Camuto Transaction Documents. Camuto Acquisition Agreement has the meaning given to such term in the definition of Camuto Transaction Documents. Camuto Acquisition Closing means the “Closing” (as defined in the Camuto Acquisition Agreement). Camuto Castillo means Camuto Castillo LLC, a Delaware limited liability company. Camuto Entities means, collectively, Camuto Group LLC, a Delaware limited liability company, Camuto Consulting Inc, a Connecticut corporation,. and any Person that is a Subsidiary thereof immediately prior to the Camuto Acquisition Closing (regardless of whether such Person subsequently ceases to be a Subsidiary thereof as a result of the Camuto Transactions or otherwise). For the avoidance of doubt, each of Camuto LLC, an Ohio limited liability company, CCI Operations LLC, an Ohio limited liability company, Camuto Overseas Holding Subsidiary, LLC, an Ohio limited liability company, Camuto IPCo, LLC, a Delaware limited liability company, Chaus IPCo, LLC, a Delaware limited liability company, Vincent Camuto LLC, a Connecticut limited liability company, Sole Society Group, Inc., a Delaware corporation, VCJS LLC, a Connecticut limited liability company, VCS Group LLC, a Delaware limited liability company, VCRK Holdings LLC, a Delaware limited liability company, VM Retail Ventures LLC, a Delaware limited liability company, Hot on Time LLC, a Connecticut limited liability company, VC Line Building Services LLC, a Connecticut limited liability company, VC Footwear LLC, a Connecticut limited liability company, Bernard Chaus Inc., a New York corporation, Camuto Overseas Holdings LLC, a Delaware limited liability company, the Article II JV, and BC/VC and Camuto Castillo shall constitute a Camuto Entity. Camuto Transaction Documents means (i) that certain Securities Purchase Agreement, dated as of October 10, 2018, by and among DSW Shoe Warehouse, Inc., a Missouri corporation, and IPCo JV, as buyers, Camuto Group LLC, a Delaware limited liability company, and Camuto Consulting Inc., a Connecticut corporation, as sellers, the Camuto Owners (as defined therein), Clear Thinking Group LLC, in the person of Stuart H. Kessler, as sellers’ representative, the Lead Borrower and Authentic Brands Group LLC (as amended, restated, 223667699

 
modified or supplemented from time to time, together with all schedules and exhibits with respect thereto, the “Camuto Acquisition Agreement”), (ii) that certain Limited Liability Company Agreement of IPCo JV, dated on or prior to the date on which the Camuto Acquisition Closing occurs (as amended, restated, modified or supplemented from time to time, together with all schedules and exhibits with respect thereto, the “IPCo JV LLC Agreement”) and (iii) the related agreements, instruments and other documents executed in connection with the foregoing. Camuto Transactions means, collectively, the transactions contemplated by the Camuto Transaction Documents, including, without limitation, the Camuto Acquisition and the IPCo JV Investments. Canadian Dollars means the official currency of Canada. Canadian Subsidiary means any Subsidiary of the Lead Borrower organized under the laws of Canada or any province or territory thereof. Capital Expenditures means expenditures made or liabilities incurred for the acquisition of any fixed assets or improvements (or of any replacements or substitutions thereof or additions thereto) which have a useful life of more than one year and which, in accordance with GAAP, would be classified as capital expenditures. Capital Lease means, with respect to any Person, any lease of (or other agreement conveying the right to use) any real or personal property by such Person that, in conformity with GAAP, is accounted for as a capital or finance lease on the balance sheet of such Person. Capital Lease Obligations means, with respect to any Person and a Capital Lease, the amount of the obligation of such Person as the lessee under such Capital Lease which would, in accordance with GAAP, appear as a liability on a balance sheet of such Person. Capital Stock means any and all shares, interests, participations or other equivalents (however designated) of capital stock of a corporation, any and all equivalent ownership interests in a Person (other than a corporation) and any and all warrants, rights or options to purchase any of the foregoing. Cash Equivalents means: (a) direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition; (b) commercial paper maturing in one (1) year or less rated not lower than A-1, by Standard & Poor's or P-1 by Moody's Investors Service, Inc. on the date of acquisition; (c) demand deposits, time deposits or certificates of deposit maturing within one year in commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor's on the date of acquisition; (d) money market or mutual funds whose investments are limited to those types of investments described in clauses (a)-(c) above; and (e) fully collateralized repurchase agreements with a term of not more than one hundred eighty (180) days for securities described in clause (a) above and entered into with commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor's on the date of acquisition. Cash Management Agreements has the meaning specified in Section 2.5.6 [Swing Loans Under Cash Management Agreements]. 223667699

 
CDOR Rate has the meaning assigned to such term in the definition of Euro-Rate. CEA means the Commodity Exchange Act (7 U.S.C. §1 et seq.), as amended from time to time, and any successor statute. CFTC means the Commodity Futures Trading Commission. Change in Law means the occurrence, after the date of this Agreement, of any of the following: (i) the adoption or taking effect of any Law, (ii) any change in any Law or in the administration, interpretation, implementation or application thereof by any Official Body or (iii) the making or issuance of any request, rule, guideline or directive (whether or not having the force of Law) by any Official Body; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, regulations, guidelines, interpretations or directives thereunder or issued in connection therewith (whether or not having the force of Law) and (y) all requests, rules, regulations, guidelines, interpretations or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities (whether or not having the force of Law), in each case pursuant to Basel III, shall in each case be deemed to be a Change in Law regardless of the date enacted, adopted, issued, promulgated or implemented. Change of Control means (i) any “person” or “group” (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), shall have acquired beneficial ownership of (within the meaning of Rule 13d-3 promulgated by the SEC under the Exchange Act), directly or indirectly, of more than twenty-five percent (25%) of the voting Capital Stock of the Lead Borrower or (ii) the Lead Borrower ceases to own, directly or indirectly, one hundred percent (100%) of the fully diluted Capital Stock of any other Loan Party (including, without limitation, any Designated Borrower) except with respect to this clause (ii), in any transaction permitted hereunder or under any other Loan Document. CIP Regulations has the meaning specified in Section 9.11 [No Reliance Etc.]. Closing Compliance Certificate has the meaning assigned to that term in Section 6.1.1.1 [Deliveries]. Closing Date means the Business Day on which the first Loan shall be made, which shall be August 25, 2017. Code means the Internal Revenue Code of 1986, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect. Collateral means the personal property of any Person granted as collateral to secure the Obligations. Collateral Documents means the Pledge and Security Agreement and any other agreement, document or instrument granting a Lien in Collateral or executed and delivered pursuant to the terms of the Pledge and Security Agreement or any such other agreement, document or instrument. 223667699

 
Commercial Letter of Credit means any letter of credit which is a commercial letter of credit issued in respect of the purchase of goods or services by one or more of the Loan Parties or their Subsidiaries in the ordinary course of business. Commitment means as to any Lender the aggregate of its Revolving Credit Commitment (and in the case of the Swing Loan Lender, including its Swing Loan Commitment), and Commitments means the aggregate of the Revolving Credit Commitments of all of the Lenders. Commitment Fee has the meaning specified in Section 2.3 [Commitment Fee]. Compliance Certificate has the meaning specified in Section 7.3.3 [Certificate of the Lead Borrower]. Computation Date has the meaning specified in Section 2.10.1 [Periodic Computations of Dollar Equivalent Amounts, Etc.]. Connection Income Taxes means Other Connection Taxes that are imposed on or measured by net income (however denominated) or that are franchise Taxes or branch profits Taxes. Consideration means with respect to any Permitted Acquisition, the aggregate of (without duplication) (i) the cash paid by any of the Loan Parties, directly or indirectly, to the seller in connection therewith, (ii) the Indebtedness incurred or assumed by any of the Loan Parties, whether in favor of the seller or otherwise and whether fixed or contingent, in connection therewith, (iii) any Guaranty given or incurred by any Loan Party in connection therewith, and (iv) any other cash or equity consideration given or obligation incurred by any of the Loan Parties in connection therewith, as each of the foregoing is recorded by the Loan Parties in accordance with GAAP. Consolidated Adjusted EBITDAR means, for any period of determination, the sum of (i) Consolidated EBITDAR for such period plus (ii) if applicable for such period, the COVID Addback. Consolidated EBITDA means, for any period determination, the difference between (i) Consolidated EBITDAR for such period, minus (ii) Consolidated Rental Expense for such period. Consolidated EBITDAR means, for any period of determination, without duplication, consolidated net income plus (i) the following (to the extent deducted from such calculation of consolidated net income): (a) depreciation, (b) amortization, (c) non-cash expenses related to stock based compensation, (d) other non-cash charges, non-cash expenses, or non-cash losses to net income (provided, however that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses shall be subtracted from consolidated net income in calculating Consolidated EBITDAR), (e) interest expense, (f) income tax expense and Consolidated Rental Expense, transaction expenses incurred in connection with the Camuto Transactions and Permitted Acquisitions in an aggregate cumulative amount for the balance of the term of this Agreement not greater than $40,000,000 and(g) Reserved, (h) restructuring charges or expenses (including integration costs, restructuring costs and severance costs related to acquisitions and to closure or consolidation of plants, facilities or locations and 223667699

 
any expense related to any reconstruction, recommissioning or reconfiguration of fixed assets for alternate use) not to exceed (x) $20,000,000 in anthe aggregate cumulative amount for the balance of the term of this Agreementincurred prior to the Fourth Amendment Effective Date and (y) $20,000,000 in the aggregate incurred on or after the Fourth Amendment Effective Date, (i) inventory markdowns during the fiscal quarters of the Lead Borrower ending May 2, 2020 and August 1, 2020 and (j) with respect to any inventory classified for Spring 2020 or older, inventory markdowns related to the Camuto and Canada business segments only during the fiscal quarters of the Lead Borrower ending October 31, 2020 and January 30, 2021, minus (ii) non-cash credits or non-cash gains (to the extent included in such calculation of consolidated net income), in each case determined and consolidated for the Lead Borrower and its Subsidiaries in accordance with GAAP; provided that the foregoing shall exclude the income (or deficit) of any Person (other than a Subsidiary) in which the Lead Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Lead Borrower or such Subsidiary in the form of dividends or similar distributions. For purposes of calculating Consolidated EBITDAR, (a) with respect to a business acquired by the Loan Parties pursuant to a Permitted Acquisition, Consolidated EBITDAR shall be calculated on a pro forma basis, using historical numbers, in accordance with GAAP as if the Permitted Acquisition had been consummated at the beginning of such period, and (b) with respect to a business liquidated, sold or disposed of by the Loan Parties pursuant to Section 7.2.7 [Dispositions of Assets or Subsidiaries], Consolidated EBITDAR shall be calculated on a pro forma basis, using historical numbers, in accordance with GAAP as if such liquidation, sale or disposition had been consummated at the beginning of such period. Consolidated Rental Expense means, for any period of determination, the aggregate rental amounts payable by the Lead Borrower and its Subsidiaries during such period under any lease of real property having a remaining term (including any required renewals or any renewals at the option of the lessor or lessee) of one year or more (but does not include any amounts payable under Capital Leases or performance rents), in each case determined and consolidated for the Lead Borrower and its Subsidiaries in accordance with GAAP. Covered Entity means (a) each Loan Party and each Subsidiary of any Loan Party, and (b) each Person that, directly or indirectly, is in control of a Person described in clause (a) above. For purposes of this definition, control of a Person means the direct or indirect (x) ownership of, or power to vote, twenty-five percent (25%) or more of the issued and outstanding equity interests having ordinary voting power for the election of directors of such Person or other Persons performing similar functions for such Person, or (y) power to direct or cause the direction of the management and policies of such Person whether by ownership of equity interests, contract or otherwise. COVID Addback means (a) for the fiscal quarter of the Lead Borrower ending May 2, 2020, solely to the extent that Consolidated EBITDA for such fiscal quarter (“Q120 EBITDA”) is less than Zero and 00/100 Dollars ($0.00), COVID Losses for such fiscal quarter in an aggregate amount equal to the lesser of (i) Fifty Million and 00/100 Dollars ($50,000,000.00) and (ii) an amount that, when added to Q120 EBITDA, would cause Q120 EBITDA to equal Zero and 00/100 Dollars ($0.00) and (b) for the fiscal quarter of the Lead Borrower ending August 1, 2020, solely to the extent that Consolidated EBITDA for such fiscal quarter (“Q220 EBITDA”) is less than Zero and 00/100 Dollars ($0.00), COVID Losses for such fiscal quarter in an aggregate amount equal to the lesser of (i) Twenty-Five Million and 00/100 Dollars 223667699

 
($25,000,000.00) and (ii) an amount that, when added to Q220 EBITDA, would cause Q220 EBITDA to equal Zero and 00/100 Dollars ($0.00). COVID Losses means identifiable and factually supported operating losses of the Lead Borrower and its Subsidiaries attributable to, in connection with, or otherwise relating to COVID-19 and any remedial measures taken with respect thereto. Customary Bank Liens means customary rights of set off, banker’s lien, revocation, refund or chargeback or similar rights under deposit disbursement, concentration account agreements or under the UCC (or comparable foreign law) or arising by operation of law of banks or other financial institutions where the Lead Borrower or any of its Subsidiaries maintains deposit, disbursement or concentration accounts. Daily LIBOR Rate means, for any day, the rate per annum determined by the Administrative Agent as the Published Rate, as adjusted for any additional costs pursuant to Section 4.8.5 [Additional Reserve Requirements]. Notwithstanding the foregoing, if the Daily LIBOR Rate as determined above would be less than zero (0.00one hundred (100) basis points (1.00%), such rate shall be deemed to be zero (0.00one hundred (100) basis points (1.00%) for purposes of this Agreement. Debtor Relief Laws means the Bankruptcy Code of the United States of America, the Bankruptcy and Insolvency Act (Canada), the Companies’ Creditors Arrangement Act (Canada), the Winding Up and Restructuring Act (Canada), and all other liquidation, conservatorship, bankruptcy, assignment for the benefit of creditors, moratorium, rearrangement, receivership, insolvency, reorganization, or similar debtor relief Laws of the United States or other applicable jurisdictions from time to time in effect. Defaulting Lender means any Lender that (a) has failed, within two Business Days of the date required to be funded or paid, to (i) fund any portion of its Loans, (ii) fund any portion of its participations in Letters of Credit or Swing Loans or (iii) pay over to the Administrative Agent, the Issuing Lender, the Swing Loan Lender or any Lender any other amount required to be paid by it hereunder, unless, in the case of clause (i) above, such Lender notifies the Administrative Agent in writing that such failure is the result of such Lender's good faith determination that a condition precedent to funding (specifically identified and including the particular default, if any) has not been satisfied, (b) has notified the Lead Borrower or the Administrative Agent in writing, or has made a public statement to the effect, that it does not intend or expect to comply with any of its funding obligations under this Agreement (unless such writing or public statement indicates that such position is based on such Lender's good faith determination that a condition precedent (specifically identified and including the particular default, if any) to funding a loan under this Agreement cannot be satisfied) or generally under other agreements in which it commits to extend credit, (c) has failed, within two Business Days after request by the Administrative Agent or the Lead Borrower, acting in good faith, to provide a certification in writing from an authorized officer of such Lender that it will comply with its obligations (and is financially able to meet such obligations) to fund prospective Loans and participations in then outstanding Letters of Credit and Swing Loans under this Agreement, provided that such Lender shall cease to be a Defaulting Lender pursuant to this clause (c) upon the Administrative Agent's or the Lead Borrower's receipt of such certification in form and substance satisfactory to the Administrative Agent or the Lead Borrower, as the case may be, (d) has, or has a direct or indirect parent company that has, become the subject of a Bankruptcy 223667699

 
Event or a Bail-In Action or (e) has failed at any time to comply with the provisions of Section 4.3 [Sharing of Payments by Lenders] with respect to purchasing participations from the other Lenders, whereby such Lender's share of any payment received, whether by setoff or otherwise, is in excess of its Ratable Share of such payments due and payable to all of the Lenders. As used in this definition and in Section 4.13 [Defaulting Lenders], the term “Bankruptcy Event” means, with respect to any Person, such Person or such Person's direct or indirect parent company becoming the subject of a bankruptcy or insolvency proceeding, or having had a receiver, conservator, trustee, administrator, custodian, assignee for the benefit of creditors or similar Person charged with the reorganization or liquidation of its business appointed for it, or, in the good faith determination of the Administrative Agent, has taken any action in furtherance of, or indicating its consent to, approval of, or acquiescence in, any such proceeding or appointment, provided that a Bankruptcy Event shall not result solely by virtue of any ownership interest, or the acquisition of any ownership interest, in such Person or such Person's direct or indirect parent company by an Official Body or instrumentality thereof if, and only if, such ownership interest does not result in or provide such Person with immunity from the jurisdiction of courts within the United States or from the enforcement of judgments or writs of attachment on its assets or permit such Person (or such Official Body or instrumentality) to reject, repudiate, disavow or disaffirm any contracts or agreements made by such Person. Designated Borrower means any Canadian Subsidiary that becomes a Designated Borrower pursuant to Section 2.12 [Designated Borrowers] and that has not ceased to be a Designated Borrower pursuant to such Section. Designated Borrower Agreement means a Designated Borrower Agreement substantially in the form of Exhibit 1.1(D)(1). Designated Borrower Termination means a Designated Borrower Termination substantially in the form of Exhibit 1.1(D)(2). Designated Lender has the meaning specified in Section 4.14 [Designated Lenders]. Disqualified Institution means, on any date, (a) any Person designated by the Lead Borrower as a “Disqualified Institution” by written notice delivered to the Administrative Agent on or prior to the date hereof and (b) any other Person that is a competitor of the Lead Borrower or any of its Subsidiaries, which Person has been designated by the Lead Borrower as a “Disqualified Institution” by written notice to the Administrative Agent not less than five (5) Business Days prior to such date; provided that “Disqualified Institutions” shall exclude any Person that the Lead Borrower has designated as no longer being a “Disqualified Institution” by written notice delivered to the Administrative Agent from time to time; provided further that a “competitor” shall not include any bona fide debt fund or investment vehicle that is primarily engaged in making, purchasing, holding or otherwise investing in commercial loans and similar extensions of credit in the ordinary course of business which is managed, sponsored or advised by any person controlling, controlled by or under common control with such competitor or affiliate thereof, as applicable, and for which no personnel involved with the investment of such competitor, as applicable, (1) makes any investment decisions or (2) has access to any information (other than information publicly available) relating to the Lead Borrower or any 223667699

 
entity that forms a part of the Lead Borrower’s business (including Subsidiaries of the Lead Borrower). Dollar, Dollars, U.S. Dollars and the symbol $ means lawful money of the United States of America. Dollar Equivalent means, with respect to any amount of any currency, as of any Computation Date, the Equivalent Amount of such currency expressed in Dollars. Domestic Loan Party means any Loan Party that is a Domestic Person. Domestic Person means an entity organized under the laws of any state of the United States of America or the District of Columbia. Domestic Subsidiary means any Subsidiary of any Loan Party that is a Domestic Person (other than (i) any Excluded Domestic Subsidiary, (ii) Article II JV and (iii) BC/VC). DQ List has the meaning specified in Section 10.8.6 [Disqualified Institutions]. Drawing Date has the meaning specified in Section 2.7.3.1 [Disbursements, Reimbursement]. Early Opt-in Event means a determination by the Administrative Agent that (a) with respect to Dollar Loans under the Euro-Rate Option, U.S. dollar-denominated credit facilities being executed at such time, or that include language similar to that contained in this Section 3.6, are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace the Euro-Rate for loans in Dollars or (b) with respect to Optional Currency Loans, U.S. credit facilities providing for loans in such Optional Currency being executed at such time, or that include language similar to that contained in this Section 3.6, are being executed or amended, as applicable, to incorporate or adopt a new benchmark interest rate to replace the Euro-Rate for loans in such Optional Currency. Ebuys means Ebuys, Inc., a California corporation. EEA Financial Institution means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent. EEA Member Country means any member state of the European Union, Iceland, Liechtenstein and Norway. EEA Resolution Authority means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution. 223667699

 
Eligible Assignee means any Person other than a Person that is expressly prohibited from becoming an assignee of all or a portion of the rights and obligations of any Lender under this Agreement pursuant to Section 10.8 [Successors and Assigns]. Eligible Contract Participant means an “eligible contract participant” as defined in the CEA and the regulations thereunder. Eligibility Date means, with respect to each Loan Party and each Swap Obligation, the date on which this Agreement or any other Loan Document becomes effective with respect to such Swap Obligation (for the avoidance of doubt, the Eligibility Date shall be the date of execution of the agreements relating to such Swap Obligation if this Agreement or any other Loan Document is then in effect with respect to such Loan Party, and otherwise it shall be the effective date of this Agreement and/or such other Loan Document(s) to which such Loan Party is a party). Environmental Laws means all applicable federal, state, provincial, local, tribal, territorial and foreign Laws (including common law), constitutions, statutes, treaties, regulations, rules, ordinances and codes and any consent decrees, settlement agreements, judgments, orders, directives, policies or programs issued by or entered into with an Official Body pertaining or relating to: (i) pollution or pollution control; (ii) protection of human health from exposure to regulated substances; (iii) protection of the environment and/or natural resources; (iv) employee safety in the workplace; (v) the presence, use, management, generation, manufacture, processing, extraction, treatment, recycling, refining, reclamation, labeling, packaging, sale, transport, storage, collection, distribution, disposal or release or threat of release of regulated substances; (vi) the presence of contamination; (vii) the protection of endangered or threatened species; and (viii) the protection of environmentally sensitive areas. Equivalent Amount means, at any time, (a) with respect to any amount denominated in Dollars, such amount, and (b) with respect to any amount denominated in any other currency, as determined by the Administrative Agent (which determination shall be conclusive absent manifest error), with respect to an amount of any currency (the “Reference Currency”) which is to be computed as an equivalent amount of another currency (the “Equivalent Currency”), the amount of such Equivalent Currency converted from such Reference Currency at the Administrative Agent's spot selling rate (based on the market rates then prevailing and available to the Administrative Agent) for such Equivalent Currency for such Reference Currency at a time determined by the Administrative Agent on the second Business Day immediately preceding the event for which such calculation is made. Equivalent Currency has the meaning specified in the definition of “Equivalent Amount”. ERISA means the Employee Retirement Income Security Act of 1974, as the same may be amended or supplemented from time to time, and any successor statute of similar import, and the rules and regulations thereunder, as from time to time in effect. ERISA Event means (a) with respect to a Pension Plan, a reportable event under Section 4043 of ERISA as to which event (after taking into account notice waivers provided for in the regulations) there is a duty to give notice to the PBGC; (b) a withdrawal by the Lead Borrower or any member of the ERISA Group from a Pension Plan subject to Section 4063 of 223667699

 
ERISA during a plan year in which it was a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a cessation of operations that is treated as such a withdrawal under Section 4062(e) of ERISA; (c) a complete or partial withdrawal by the Lead Borrower or any member of the ERISA Group from a Multiemployer Plan, notification that a Multiemployer Plan is in reorganization, or occurrence of an event described in Section 4041A(a) of ERISA that results in the termination of a Multiemployer Plan; (d) the filing of a notice of intent to terminate a Pension Plan, the treatment of a Pension Plan amendment as a termination under Section 4041(e) of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension Plan; (e) an event or condition which constitutes grounds under Section 4042 of ERISA for the termination of, or the appointment of a trustee to administer, any Pension Plan; or (f) the imposition of any liability under Title IV of ERISA, other than for PBGC premiums due but not delinquent under Section 4007 of ERISA, upon the Lead Borrower or any member of the ERISA Group. ERISA Group means, at any time, the Lead Borrower and all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control and all other entities which, together with the Lead Borrower, are treated as a single employer under Section 414 of the Code or Section 4001(b)(1) of ERISA. Excluded Domestic Subsidiary means any Subsidiary of any Loan Party that is a Domestic Person if the execution of a Guaranty Agreement and/or Guarantor Joinder would cause material adverse tax consequences to any Loan Party or any Affiliate of a Loan Party (pursuant to Section 956 of the Internal Revenue Code and the United States Income Tax Regulations promulgated thereunder, or otherwise) as demonstrated to the reasonable satisfaction of the Administrative Agent. EU Bail-In Legislation Schedule means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor Person), as in effect from time to time. Euro shall refer to the lawful currency of the Participating Member States. Euro-Rate means the following: (a) with respect to the U.S. Dollar Loans comprising any Borrowing Tranche to which the Euro-Rate Option applies for any Interest Period, the interest rate per annum determined by the Administrative Agent as the rate which appears on the Bloomberg Page BBAM1 (or on such other substitute Bloomberg page that displays rates at which U.S. Dollar deposits are offered by leading banks in the London interbank deposit market), rounded upwards, if necessary, to the nearest 1/100th of one percent (1%) per annum (with .005% being rounded up), or, if such rate is not available, the rate which is quoted by another source selected by the Administrative Agent as an authorized information vendor for the purpose of displaying rates at which U.S. Dollar deposits are offered by leading banks in the London interbank deposit market at approximately 11:00 a.m., London time, two (2) Business Days prior to the commencement of such Interest Period as the Relevant Interbank Market offered rate for U.S. Dollars for an amount comparable to such Borrowing Tranche and having a borrowing date and a maturity comparable to such Interest Period; and 223667699

 
(b) with respect to Loans denominated in Canadian Dollars comprising any Borrowing Tranche for any Interest Period, the interest rate per annum (the “CDOR Rate”) as determined by the Administrative Agent, equal to the arithmetic average rate applicable to Canadian Dollar bankers’ acceptances (C$BAs) for the applicable Interest Period appearing on the Bloomberg page BTMM CA, rounded to the nearest 1/100th of one percent (1%) (with .005% being rounded up) per annum, at approximately 11:00 a.m. Eastern Time, two Business Days prior to the commencement of such Interest Period, or if such day is not a Business Day, then on the immediately preceding Business Day, provided that if such rate does not appear on the Bloomberg page BTMM CA on such day the CDOR Rate on such day shall be the rate for such period applicable to Canadian Dollar bankers’ acceptances quoted by a bank listed in Schedule I of the Bank Act (Canada), as selected by the Administrative Agent, as of 11:00 a.m. Eastern Time on such day or, if such day is not a Business Day, then on the immediately preceding Business Day. (c) If, at any time, the Administrative Agent and all of the Lenders approve an additional Optional Currency pursuant to Section 2.10.5 [Requests for Additional Optional Currencies], any reference in this Agreement to the Euro-Rate applicable to any Optional Currency Loan in such additional Optional Currency shall be a reference to a rate to be mutually agreed upon between the Administrative Agent and the Borrowers. Notwithstanding the foregoing, if the Euro-Rate as determined under any method above would be less than zero (0.00one hundred (100) basis points (1.00%), such rate shall be deemed to be zero (0.00one hundred (100) basis points (1.00%) for purposes of this Agreement. Euro-Rate Option means the option of the Borrowers to have Loans bear interest at the rate and under the terms set forth in Section 3.1.1(ii) [Euro-Rate Option]. Event of Default means any of the events described in Section 8.1 [Events of Default] and referred to therein as an “Event of Default.” Exchange Act has the meaning specified in the definition of Change of Control. Excluded Domestic Subsidiary means, collectively, (i) Camuto Overseas Holding Subsidiary LLC, an Ohio limited liability company, or any other Subsidiary of any Loan Party formed or otherwise acquired after the Fourth Amendment Effective Date that is a Domestic Person owning, directly or indirectly, no material assets other than the equity interests of one or more “controlled foreign corporations” within the meaning of Section 957 of the Code and (ii) any other Subsidiary of any Loan Party formed or otherwise acquired after the Fourth Amendment Effective Date that is a Domestic Person if the execution of a Guaranty Agreement and/or Guarantor Joinder (or, if applicable, a pledge of 100% of such Subsidiary’s issued and outstanding shares of Capital Stock entitled to vote) would cause material adverse tax consequences to any Loan Party or any Affiliate of a Loan Party (pursuant to Section 956 of the Internal Revenue Code and the United States Income Tax Regulations promulgated thereunder, or otherwise) as demonstrated to the reasonable satisfaction of the Administrative Agent. Excluded Hedge Liability or Liabilities means, with respect to each Loan Party, any Swap Obligations if, and only to the extent that, all or any portion of this Agreement or any other Loan Document that relates to such Swap Obligation (or any Guaranty thereof) is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, solely by virtue of 223667699

 
such Loan Party’s failure to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap Obligation. Notwithstanding anything to the contrary contained in the foregoing or in any other provision of this Agreement or any other Loan Document, the foregoing is subject to the following provisos: (a) if a Swap Obligation arises under a master agreement governing more than one Swap Obligation, this definition shall apply only to the portion of such Swap Obligation for which such guaranty or security interest is or becomes illegal under the CEA, or any rule, regulation or order of the CFTC, solely as a result of the failure by such Loan Party for any reason to qualify as an Eligible Contract Participant on the Eligibility Date for such Swap Obligation, (b) if a guarantee of a Swap Obligation would cause such obligation to be an Excluded Hedge Liability but the grant of a security interest would not cause such obligation to be an Excluded Hedge Liability, such Swap Obligation shall constitute an Excluded Hedge Liability for purposes of the guaranty but not for purposes of the grant of the security interest, and (c) if there is more than one Loan Party executing this Agreement or the other Loan Documents and a Swap Obligation would be an Excluded Hedge Liability with respect to one or more of such Persons, but not all of them, the definition of Excluded Hedge Liability or Liabilities with respect to each such Person shall only be deemed applicable to (i) the particular Swap Obligations that constitute Excluded Hedge Liabilities with respect to such Person, and (ii) the particular Person with respect to which such Swap Obligations constitute Excluded Hedge Liabilities. Excluded Taxes means any of the following Taxes imposed on or with respect to a Recipient or required to be withheld or deducted from a payment to a Recipient, (i) Taxes imposed on or measured by net income (however denominated), franchise Taxes, and branch profits Taxes, in each case, (a) imposed as a result of such Recipient being organized under the Laws of, or having its principal office or, in the case of any Lender, its applicable Lending Office located in, the jurisdiction imposing such Tax (or any political subdivision thereof) or (b) that are Other Connection Taxes, (ii) in the case of a Lender, U.S. federal withholding Taxes imposed on amounts payable to or for the account of such Lender with respect to an applicable interest in a Loan or Commitment pursuant to a Law in effect on the date on which (a) such Lender acquires such interest in such Loan or Commitment (other than pursuant to an assignment request by the Lead Borrower under Section 4.6.2 [Replacement of a Lender]) or (b) such Lender changes its Lending Office, except in each case to the extent that, pursuant to Section 4.9.7 [Status of Lenders], amounts with respect to such Taxes were payable either to such Lender's assignor immediately before such Lender became a party hereto or to such Lender immediately before it changed its lending office, (iii) Taxes attributable to such Recipient's failure to comply with Section 4.9.7 [Status of Lenders], and (iv) any U.S. federal withholding Taxes imposed under FATCA. Expiration Date means August 25, 2022. Existing Letters of Credit means the letters of credit set forth on Schedule 1.1(E) that were issued by the applicable financial institution set forth therein prior to the date hereof and are outstanding on the Closing Date. Factoring Agreements means receivables purchase or factoring agreements entered into by one or more Camuto Entities and The CIT Group/Commercial Services, Inc. or other factor prior to the Fourth Amendment Effective Date, as such agreements (i) have been amended, modified, supplemented or restated prior to the Fourth Amendment Effective Date and (ii) may be amended, modified, supplemented, or restated or replaced from time to timeafter the 223667699

 
Fourth Amendment Effective Date with the prior written consent of the Administrative Agent; provided that, other than pursuant to an unsecured guaranty by the Lead Borrower or any of its Subsidiaries of the obligations of one or more Camuto Entities thereunder, none of the Lead Borrower or any Subsidiary thereof (other than any Camuto Entity) shall become party to any such agreement pursuant to any such agreement, amendment, modification, supplement, restatement or replacement. FATCA means Sections 1471 through 1474 of the Code, as of the date of this Agreement (or any amended or successor version that is substantively comparable and not materially more onerous to comply with), any current or future regulations or official interpretations thereof and any agreements entered into pursuant to Section 1471(b)(1) of the Code. Federal Funds Effective Rate for any day means the rate per annum (based on a year of 360 days and actual days elapsed) announced by the Federal Reserve Bank of New York (or any successor) on such day as being the weighted average of the rates on overnight federal funds transactions arranged by federal funds brokers on the previous trading day, as computed and announced by such Federal Reserve Bank (or any successor) in substantially the same manner as such Federal Reserve Bank computes and announces the weighted average it refers to as the “Federal Funds Effective Rate” as of the date of this Agreement; provided, if such Federal Reserve Bank (or its successor) does not announce such rate on any day, the “Federal Funds Effective Rate” for such day shall be the Federal Funds Effective Rate for the last day on which such rate was announced. Fixed Charge Coverage Ratio means, for any period of determination, the ratio of (i) Consolidated Adjusted EBITDAR to (ii) Fixed Charges. Fixed Charges means for any period of determination, the sum of (a) cash interest expense, plus (b) Consolidated Rental Expense, in each case of the Lead Borrower on a Consolidated Basis. Foreign Benefit Event means, with respect to any Foreign Plan, (a) the existence of unfunded liabilities in excess of the amount permitted under any applicable Law, or in excess of the amount that would be permitted under any applicable Law absent a waiver from an Official Body, (b) the failure to make the required contributions, under any applicable Law, on or before the date such contributions are due, except where the failure to do so could not reasonably be expected to result in a material liability or is due to an administrative error that is corrected, (c) the receipt of a notice by an Official Body relating to the intention to terminate any such Foreign Plan or to appoint a trustee or similar official to terminate any such Foreign Plan, or alleging the insolvency of any such Foreign Plan, (d) the incurrence of any additional liability by any Borrower, any Subsidiary of a Borrower or any Loan Party under applicable Law on account of the complete or partial termination of such Foreign Plan or the complete or partial withdrawal of any participating employer therein or (e) the occurrence of any transaction that is prohibited under any applicable Law and that could reasonably be expected to result in the incurrence of any material liability by any Borrower or any Subsidiary of a Borrower. Foreign Currency Hedge means any foreign exchange transaction, including spot and forward foreign currency purchases and sales, listed or over-the-counter options on foreign currencies, non-deliverable forwards and options, foreign currency swap agreements, currency 223667699

 
exchange rate price hedging arrangements, and any other similar transaction providing for the purchase of one currency in exchange for the sale of another currency. Foreign Currency Hedge Liabilities has the meaning assigned in the definition of Lender Provided Foreign Currency Hedge. Foreign Lender means (i) if a Borrower is a US Person, a Lender that is not a US Person, and (ii) if a Borrower is not a US Person, a Lender that is resident or organized under the Laws of a jurisdiction other than that in which such Borrower is resident for Tax purposes. Foreign Plan means any plan established under the law of a jurisdiction other than the United States (or a state or local government thereof) primarily for employees or former employees outside the United States of America, that is established, maintained or contributed to by a Borrower or any of its Subsidiaries or Affiliates and which provides pension, retirement or savings benefits through a trust or other funding vehicle, other than any state social security arrangements. Foreign Subsidiary means (i) any Subsidiary of the Lead Borrower that is not a Domestic Person and (ii) any Excluded Domestic Subsidiary. Fourth Amendment means that certain Fourth Amendment to Credit Agreement, dated as of April 30, 2020, by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent. Fourth Amendment Effective Date means the Effective Date (as such term is defined in the Fourth Amendment). Fourth Amendment Letters of Credit means the letters of credit set forth on Schedule 1.1(F) that were issued by Bank of America, N.A. prior to the Fourth Amendment Effective Date and are outstanding on the Fourth Amendment Effective Date. GAAP means generally accepted accounting principles as are in effect from time to time in the United States of America, subject to the provisions of Section 1.3 [Accounting Principles; Changes in GAAP], and applied on a consistent basis both as to classification of items and amounts. Guarantor means, collectively, any Person that is from time to time party to a Guaranty Agreement and/or designated as a “Guarantor” on the signature page hereof (including, without limitation, each Person which joins any Guaranty Agreement and/or this Agreement as a Guarantor after the date hereof). Guarantor Joinder means a joinder by a Person as a Guarantor under the Loan Documents in substantially the form of Exhibit 1.1(G). Guaranteed Obligations has the meaning specified in Section 11.1 [Guarantee]. Guaranty of any Person means any obligation of such Person guaranteeing or in effect guaranteeing any liability or obligation of any other Person in any manner, whether directly or indirectly, including any agreement to indemnify or hold harmless any other Person, any performance bond or other suretyship arrangement and any other form of assurance against loss, 223667699

 
except endorsement of negotiable or other instruments for deposit or collection in the ordinary course of business. Guaranty Agreement or Guaranty Agreements means, singularly or collectively, as the context may require, any Guaranty and Suretyship Agreement executed and delivered on or after the date hereof by any Person to the Administrative Agent for the benefit of the Lenders with respect to the Obligations or any portion thereof, and any other agreement pursuant to which a Person guarantees the Obligations or any portion thereof, in each case in form and substance satisfactory to the Administrative Agent. Hedge Liabilities means collectively, the Foreign Currency Hedge Liabilities and the Interest Rate Hedge Liabilities. ICC has the meaning specified in Section 10.11.1 [Governing Law]. Increasing Lender has the meaning assigned to that term in Section 2.9.1 [Increasing Lenders and New Lenders]. Indebtedness means, as to any Person at any time, any and all indebtedness, obligations or liabilities (whether matured or unmatured, liquidated or unliquidated, direct or indirect, absolute or contingent, or joint or several) of such Person for or in respect of: (i) borrowed money, (ii) amounts raised under or liabilities in respect of any note purchase or acceptance credit facility, (iii) reimbursement obligations (contingent or otherwise) under any letter of credit agreement or bank guarantee, (iv) Hedge Liabilities, (v) any other transaction (including forward sale or purchase agreements, Capital Leases and conditional sales agreements) having the commercial effect of a borrowing of money entered into by such Person to finance its operations or capital requirements (but not including trade payables and accrued expenses incurred in the ordinary course of business), (vi) obligations representing the deferred purchase price of property or services (other than trade accounts payable in the ordinary course of business) on the balance sheet of such Person in accordance with GAAP or (vii) any Guaranty of Indebtedness for borrowed money. Indemnified Taxes means (i) Taxes, other than Excluded Taxes, imposed on or with respect to any payment made by or on account of any obligation of any Loan Party under any Loan Document, and (ii) to the extent not otherwise described in the preceding clause (i), Other Taxes. Indemnitee has the meaning specified in Section 10.3.2 [Indemnification by the Loan Parties]. Information means all information received from the Loan Parties or any of their Subsidiaries relating to the Loan Parties or any of such Subsidiaries or any of their respective businesses, other than any such information that is available to the Administrative Agent, any Lender or the Issuing Lender on a non-confidential basis prior to disclosure by the Loan Parties or any of their Subsidiaries. Insolvency Proceeding means, with respect to any Person, (a) a case, action or proceeding with respect to such Person (i) before any court or any other Official Body under any bankruptcy, insolvency, reorganization or other similar Law now or hereafter in effect, or (ii) for the appointment of a receiver, receiver and manager, interim receiver, monitor, liquidator, 223667699

 
assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or otherwise relating to the liquidation, dissolution, winding-up, arrangement, reorganization or relief of such Person, or (b) any general assignment for the benefit of creditors, composition, marshaling of assets for creditors, or other, similar arrangement in respect of such Person's creditors generally or any substantial portion of its creditors; undertaken under any Debtor Relief Law. Intercompany Subordination Agreement means the Intercompany Subordination Agreement, dated the Closing Date, among the Lead Borrower and its Subsidiaries, in form and substance satisfactory to the Administrative Agent. Interest Period means the period of time selected by the applicable Borrower in connection with (and to apply to) any election permitted hereunder by the Borrowers to have Revolving Credit Loans bear interest under the Euro-Rate Option. Subject to the last sentence of this definition, such period shall be one (1) Month with respect to Optional Currency Loans and one (1), two (2), three (3) or six (6) Months with respect to all other Loans. Such Interest Period shall commence on the effective date of such Interest Rate Option, which shall be (i) the Borrowing Date if the Borrowers are requesting new Loans, or (ii) the date of renewal of or conversion to the Euro-Rate Option if the Borrowers are renewing or converting to the Euro-Rate Option applicable to outstanding Loans. Notwithstanding the second sentence hereof: (A) any Interest Period which would otherwise end on a date which is not a Business Day shall be extended to the next succeeding Business Day unless such Business Day falls in the next calendar month, in which case such Interest Period shall end on the next preceding Business Day, and (B) no Borrower shall select, convert to or renew an Interest Period for any portion of the Loans that would end after the Expiration Date. Interest Rate Hedge means an interest rate exchange, collar, cap, swap, floor, adjustable strike cap, adjustable strike corridor, cross-currency swap or similar agreements entered into by any Loan Party in order to provide protection to, or minimize the impact upon, such Loan Party of increasing floating rates of interest applicable to Indebtedness. Interest Rate Option means the Base Rate Option or the Euro-Rate Option. IPCo JV means ABG-Camuto, LLC, a Delaware limited liability company. IPCo JV Investments means (i) the acquisition, by the Lead Borrower, directly or through one or more of its Subsidiaries, of 40% of the outstanding membership interests of the IPCo JV, (ii) the acquisition by the IPCo JV, directly or through one or more of its Subsidiaries, of all of the outstanding membership interests of CCI IPCo LLC, a Delaware limited liability company, (iii) the acquisition by the IPCo JV, directly or through one or more of its Subsidiaries, of 50% of the outstanding membership interests of BCI LLC, a Delaware limited liability company, and (iv) the acquisition by the IPCo JV, directly or through one or more of its Subsidiaries, of certain other assets of Camuto Group LLC, a Delaware limited liability company, Camuto Consulting Inc., a Connecticut corporation, and their respective subsidiaries, and all related transactions pursuant to the Camuto Transaction Documents. IPCo JV LLC Agreement has the meaning given to such term in the definition of Camuto Transaction Documents. IRS means the United States Internal Revenue Service. 223667699

 
ISP98 has the meaning specified in Section 10.11.1 [Governing Law]. Issuing Lender means, singularly or collectively as the context may require (and in the absence of such context, subject to the last sentence of this definition, collectively), (i) PNC in its individual capacity as issuer of Letters of Credit hereunder, (ii) Wells Fargo Bank, National Association, in its individual capacity as issuer of Letters of Credit hereunder, (iii) Bank of America, N.A., in its individual capacity as issuer of the Fourth Amendment Letters of Credit and (iiiiv) any other Lender that the Lead Borrower, Administrative Agent and such other Lender may agree may from time to time issue Letters of Credit hereunder. The term “Issuing Lender” when used with respect to a Letter of Credit or the Letter of Credit Obligations relating to a Letter of Credit shall refer to the Issuing Lender that issued such Letter of Credit or received a request to issue such Letter of Credit, as applicable. Joint Venture means a corporation, partnership, limited liability company or other entity (excluding any Subsidiary) in which any Person other than the Loan Parties and their Subsidiaries holds, directly or indirectly, an equity interest. Law means any law(s) (including common law), constitution, statute, treaty, regulation, rule, ordinance, issued opinion having the force of law, issued guidance, release, ruling, order, executive order, injunction, writ, decree, bond, judgment, authorization or approval, lien or award of or any settlement arrangement, by agreement, consent or otherwise, with any Official Body, foreign or domestic. Lead Borrower has the meaning specified in the Preamble hereof. Lead Borrower on a Consolidated Basis means the consolidation of the Lead Borrower and its Subsidiaries in accordance with GAAP. Lender Provided Foreign Currency Hedge means a Foreign Currency Hedge which is provided by any Person that was a Lender or its Affiliate at the time such Foreign Currency Hedge was entered into or which was in existence on the Closing Date and which: (a) is documented in a standard International Swaps and Derivatives Association Master Agreement or another reasonable and customary manner, and (b) is entered into for hedging (rather than speculative) purposes. The liabilities owing to the provider of any Lender Provided Foreign Currency Hedge (the “Foreign Currency Hedge Liabilities”) by any Loan Party that is party to such Lender Provided Foreign Currency Hedge shall, for purposes of this Agreement and all other Loan Documents be “Obligations” of such Person and of each other Loan Party, be guaranteed obligations under the Guaranty Agreement and otherwise treated as Obligations for purposes of the other Loan Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. Lender Provided Interest Rate Hedge means an Interest Rate Hedge which is provided by any Person that was a Lender or its Affiliate at the time such Interest Rate Hedge was entered into or which was in existence on the Closing Date and which: (a) is documented in a standard International Swaps and Derivatives Association Master Agreement, or another reasonable and customary manner, and (b) is entered into for hedging (rather than speculative) purposes. The liabilities owing to the provider of any Lender Provided Interest Rate Hedge (the “Interest Rate Hedge Liabilities”) by any Loan Party that is party to such Lender Provided Interest Rate Hedge shall, for purposes of this Agreement and all other Loan Documents be 223667699

 
“Obligations” of such Person and of each other Loan Party, be guaranteed obligations under any Guaranty Agreement and otherwise treated as Obligations for purposes of the other Loan Documents, except to the extent constituting Excluded Hedge Liabilities of such Person. Lenders means the financial institutions named on Schedule 1.1(B) and their respective successors and assigns as permitted hereunder, each of which is referred to herein as a Lender. Lending Office means, as to the Administrative Agent, the Issuing Lender or any Lender, the office or offices of such Person described as such in such Lender’s administrative questionnaire, or such other office or offices as such Person may from time to time notify the Lead Borrower and the Administrative Agent which office may include any Affiliate of such Person or any domestic or foreign branch of such Person or such Affiliate. Letter of Credit has the meaning specified in Section 2.7.1 [Issuance of Letters of Credit]. Letter of Credit Borrowing has the meaning specified in Section 2.7.3.3 [Disbursements, Reimbursement]. Letter of Credit Fee has the meaning specified in Section 2.7.2 [Letter of Credit Fees]. Letter of Credit Obligation means, as of any date of determination, the aggregate Dollar Equivalent amount available to be drawn under all outstanding Letters of Credit on such date (if any Letter of Credit shall increase in amount automatically in the future, such aggregate Dollar Equivalent amount available to be drawn shall currently give effect to any such future increase) plus the aggregate Dollar Equivalent amount of Reimbursement Obligations and Letter of Credit Borrowings on such date. Leverage Ratio means, as of the date of determination, the ratio of (A) the difference between (x) Total Funded Debt on such date minus (y) unencumbered (other than Liens in favor of the Administrative Agent securing the Obligations and Customary Bank Liens) cash and Cash Equivalents of the Lead Borrower and its Subsidiaries in excess of Twenty-Five Million and 00/100 Dollars ($25,000,000.00) held in any deposit account maintained with PNC Bank or any other deposit account maintained at any other financial institution with respect to which the Administrative Agent has “control” within the meaning of the UCC, to (B) Consolidated Adjusted EBITDAR (with respect to such calculation of Consolidated Rental Expense and ConsolidatedAdjusted EBITDAR (i) for the four (4) consecutive fiscal quarters then ending if such date is a fiscal quarter end or (ii) for the four (4) fiscal quarters most recently ended for which financial statements are available if such date is not a fiscal quarter end). Lien means any mortgage, deed of trust, pledge, lien, adverse claim or right, deemed trust, security interest, charge or other encumbrance or security arrangement of any nature whatsoever, whether voluntarily or involuntarily given, including any conditional sale or title retention arrangement, and any assignment, deposit arrangement or lease intended as, or having the effect of, security and any filed financing statement or other notice of any of the foregoing (whether or not a lien or other encumbrance is created or exists at the time of the filing). 223667699

 
Loan Documents means this Agreement, the Administrative Agent's Letter, each Guaranty Agreement, each Collateral Document, each Account Control Agreement, the Intercompany Subordination Agreement, each Note, each Designated Borrower Agreement, each Designated Borrower Termination and any other instruments, certificates or documents delivered in connection herewith or therewith, and Loan Document means any of the Loan Documents. Loan Parties means the Borrowers and the Guarantors. Loans means collectively and Loan means separately all Revolving Credit Loans and Swing Loans or any Revolving Credit Loan or Swing Loan. Material Adverse Change means any set of circumstances or events which (a) is or could reasonably be expected to be material and adverse to the business, properties, assets or financial condition of the Loan Parties taken as a whole, (b) impairs materially or could reasonably be expected to impair materially the rights and remedies of the Administrative Agent or any Lender under any Loan Document, or the ability of the Loan Parties taken as a whole to duly and punctually pay or perform any of the Obligations, or (c) has or could reasonably be expected to have a material adverse effect upon the legality, validity, binding effect or enforceability against any Loan Party of any Loan Document to which it is a party. Month, with respect to an Interest Period means the interval between the days in consecutive calendar months numerically corresponding to the first day of such Interest Period. If any Interest Period begins on a day of a calendar month for which there is no numerically corresponding day in the month in which such Interest Period is to end, the final month of such Interest Period shall be deemed to end on the last Business Day of such final month. Moody’s means Moody’s Investors Service, Inc. Multiemployer Plan means any employee pension benefit plan which is a “multiemployer plan” within the meaning of Section 4001(a)(3) of ERISA and to which the Lead Borrower or any member of the ERISA Group is then making or accruing an obligation to make contributions or, within the plan year including the Closing Date and the preceding five plan years, has made or had an obligation to make such contributions. New Lender has the meaning assigned to that term in Section 2.9.1 [Increasing Lenders and New Lenders]. Non-Consenting Lender has the meaning specified in Section 10.1 [Modifications, Amendments or Waivers]. Non-Defaulting Lender means, at any time, each Lender that is not a Defaulting Lender at such time. Non-Qualifying Party means any Loan Party that fails for any reason to qualify as an Eligible Contract Participant on the effective date of the applicable Swap. Notes means, collectively, the promissory notes in substantially the form of Exhibit 1.1(N)(1) evidencing the Revolving Credit Loans and in substantially the form of Exhibit 1.1(N)(2) evidencing the Swing Loans. 223667699

 
Obligation means any obligation or liability of any of the Loan Parties, howsoever created, arising or evidenced, whether direct or indirect, absolute or contingent, now or hereafter existing, or due or to become due, under or in connection with (i) this Agreement, the Notes, the Letters of Credit, the Administrative Agent's Letter or any other Loan Document whether to the Administrative Agent, any of the Lenders or their Affiliates or other persons provided for under such Loan Documents, (ii) any Lender Provided Interest Rate Hedge, (iii) any Lender Provided Foreign Currency Hedge, and (iv) any Other Lender Provided Financial Service Product. Notwithstanding anything to the contrary contained in the foregoing, the Obligations shall not include any Excluded Hedge Liabilities. Official Body means the government of the United States of America, Canada or any other nation, or of any political subdivision thereof, whether state, local or provincial (which shall be deemed to include territories), and any agency, authority, instrumentality, regulatory body, court, central bank or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government (including any supra-national bodies such as the European Union or the European Central Bank) and any group or body charged with setting financial accounting or regulatory capital rules or standards (including the Financial Accounting Standards Board, the Bank for International Settlements or the Basel Committee on Banking Supervision or any successor or similar authority to any of the foregoing). Optional Currency means any of the following lawful currencies: Canadian Dollars and any other currency approved by the Administrative Agent and all of the Lenders pursuant to Section 2.10.5 [Requests for Additional Optional Currencies]. Subject to Section 2.10.4, [European Monetary Union], each Optional Currency must be the lawful currency of the specified country. Optional Currency Loans shall have the meaning specified in Section 2.1.1 [Revolving Credit Loans; Optional Currency Loans]. Optional Currency Sublimit shall have the meaning specified in Section 2.1.1 [Revolving Credit Loans; Optional Currency Loans]. Order has the meaning specified in Section 2.7.9 [Liability for Acts and Omissions]. Original Currency has the meaning specified in Section 4.11 [Currency Conversion Procedures for Judgments]. Other Connection Taxes means, with respect to any Recipient, Taxes imposed as a result of a present or former connection between such Recipient (or an agent or affiliate thereof) and the jurisdiction imposing such Tax (other than connections arising solely from such Recipient having executed, delivered, become a party to, performed its obligations under, received payments under, received or perfected a security interest under, engaged in any other transaction pursuant to or enforced any Loan Document, or sold or assigned an interest in any Loan or Loan Document). Other Currency has the meaning specified in Section 4.11 [Currency Conversion Procedures for Judgments]. 223667699

 
Other Lender Provided Financial Service Product means agreements or other arrangements under which any Lender or Affiliate of a Lender provides any of the following products or services to any of the Loan Parties: (a) credit cards, (b) credit card processing services, (c) debit cards, (d) purchase cards, (e) ACH transactions, or (f) cash management, including controlled disbursement, accounts or services. Other Taxes means all present or future stamp, court or documentary, intangible, recording, filing or similar Taxes that arise from any payment made under, from the execution, delivery, performance, enforcement or registration of, from the receipt or perfection of a security interest under, or otherwise with respect to, any Loan Document, except any such Taxes that are Other Connection Taxes imposed with respect to an assignment (other than an assignment made pursuant to Section 4.6.2 [Replacement of a Lender]). Overnight Bank Funding Rate means, for any day, the rate comprised of both overnight federal funds and overnight Eurocurrency borrowings by U.S.-managed banking offices of depository institutions, as such composite rate shall be determined by the Federal Reserve Bank of New York (“NYFRB”), as set forth on its public website from time to time, and as published on the next succeeding Business Day as the overnight bank funding rate by the NYFRB (or by such other recognized electronic source (such as Bloomberg) selected by the Administrative Agent for the purpose of displaying such rate); provided, that if such day is not a Business Day, the Overnight Bank Funding Rate for such day shall be such rate on the immediately preceding Business Day; provided, further, that if such rate shall at any time, for any reason, no longer exist, a comparable replacement rate determined by the Administrative Agent at such time (which determination shall be conclusive absent manifest error). If the Overnight Bank Funding Rate determined as above would be less than zero, then such rate shall be deemed to be zero. The rate of interest charged shall be adjusted as of each Business Day based on changes in the Overnight Bank Funding Rate without notice to the Borrowers. Overnight Rate means for any day with respect to any Loans in an Optional Currency, the rate of interest per annum as determined by the Administrative Agent at which overnight deposits in such currency, in an amount approximately equal to the amount with respect to which such rate is being determined, would be offered for such day in the Relevant Interbank Market. Participant has the meaning specified in Section 10.8.4 [Participations]. Participant Register has the meaning specified in Section 10.8.4 [Participations]. Participating Member State means any member State of the European Communities that adopts or has adopted the euro as its lawful currency in accordance with legislation of the European Community relating to Economic and Monetary Union. Participation Advance has the meaning specified in Section 2.7.3.3 [Disbursements, Reimbursement]. Payment Date means the first day of each calendar quarter after the date hereof and on the Expiration Date or upon acceleration of the Notes. Payment In Full and Paid in Full means the indefeasible payment in full in cash of the Loans and other Obligations hereunder and under each other Loan Document (other than 223667699

 
contingent indemnification and reimbursement obligations which by their terms survive the termination of the Commitments and payment of the Loans), termination of the Commitments and expiration, termination or cash collateralization (in accordance with the terms of this Agreement) of all Letters of Credit. PBGC means the Pension Benefit Guaranty Corporation established pursuant to Subtitle A of Title IV of ERISA or any successor. Pension Plan means at any time an “employee pension benefit plan” (as such term is defined in Section 3(2) of ERISA) (including a “multiple employer plan” as described in Sections 4063 and 4064 of ERISA, but not a Multiemployer Plan) which is covered by Title IV of ERISA or is subject to the minimum funding standards under Section 412 or Section 430 of the Code and either (i) is sponsored, maintained or contributed to by any member of the ERISA Group for employees of any member of the ERISA Group or (ii) has at any time within the preceding five years been sponsored, maintained or contributed to by any entity which was at such time a member of the ERISA Group for employees of any entity which was at such time a member of the ERISA Group, excluding any such plans (a) that have been terminated through the standard termination process as described in Section 4041 of ERISA, and (b) with respect to which no member of the ERISA Group is reasonably expected to have any material liability, either actual or contingent, or in the case of a “multiple employer” or other plan described in Section 4064(a) of ERISA, has made contributions at any time during the immediately preceding five plan years. Permitted Acquisition has the meaning specified in Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions]. Permitted Investments means: (a) direct obligations of the United States of America or any agency or instrumentality thereof or obligations backed by the full faith and credit of the United States of America maturing in twelve (12) months or less from the date of acquisition; (b) commercial paper maturing in one (1) year or less rated not lower than A-1, by Standard & Poor's or P-1 by Moody's Investors Service, Inc. on the date of acquisition; (c) demand deposits, time deposits or certificates of deposit maturing within one year in commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor's on the date of acquisition; (d) money market or mutual funds whose investments are limited to those types of investments described in clauses (a)-(c) above; (e) investments made under any cash management agreements with any Lender or any commercial bank that satisfies the criteria set forth in clause (c) above; and (f) fully collateralized repurchase agreements with a term of not more than one hundred eighty (180) days for securities described in clause (ia) above and entered into with commercial banks whose obligations are rated A-1, A or the equivalent or better by Standard & Poor's on the date of acquisition; 223667699

 
(g) short term tax-exempt securities rated not lower than BBB by Standard & Poor's, Baa2 by Moody's or an equivalent rating by Fitch with provisions for liquidity or maturity accommodations of two (2) years or less; (h) investments in other readily marketable securities (excluding any equity or equity-linked securities other than auction rate preferred securities) which are rated P1 or P2 by Moody's, A1 or A2 by Standard & Poor's or F1 or F2 by Fitch (in lieu of a short term rating, a long term rating of not less than A2 by Moody's, A by Standard & Poor's or an equivalent rating by Fitch would qualify under this sub-clause (vii), provided that no such security position shall exceed five percent (5%) of the invested cash portfolio of the Loan Parties); and (i) in the case of investments by any Foreign Subsidiary, obligations of a credit quality and maturity comparable to that of the items referred to in clauses (a) through (h) above that are available in local markets; and (j) any investment existing on the date of this Agreement and described on Schedule 7.2.4. Permitted Liens means: (i) Liens for Taxes incurred in the ordinary course of business and which are not yet due and payable; (ii) Pledges or deposits made in the ordinary course of business to secure payment of workmen's compensation, or to participate in any fund in connection with workmen's compensation, unemployment insurance, old-age pensions or other social security programs; (iii) Liens of mechanics, materialmen, warehousemen, carriers, or other like Liens, securing obligations incurred in the ordinary course of business that are not yet due and payable, Liens of customs brokers, freight forwarders and common carriers incurred in the ordinary course of business that are not overdue and which attach solely to the property in their possession, inchoate Liens imposed pursuant to applicable Canadian federal or provincial pension standards legislation for amounts require to be remitted but not yet due, and statutory and common law Liens of landlords securing obligations to pay lease payments that are not yet due and payable or in default; (iv) Good-faith pledges or deposits made in the ordinary course of business to secure performance of bids, tenders, contracts (other than for the repayment of borrowed money) or leases, not in excess of the aggregate amount due thereunder, or to secure statutory obligations, or surety, appeal, indemnity, performance or other similar bonds required in the ordinary course of business; (v) Encumbrances consisting of zoning restrictions, easements or other restrictions on the use of real property, none of which materially impairs the use of such property or the value thereof, and none of which is violated in any material respect by existing or proposed structures or land use; 223667699

 
(vi) Any Lien existing on the date of this Agreement and described on Schedule 1.1(P), provided that the principal amount secured thereby is not hereafter increased, and no additional assets become subject to such Lien; (vii) Subject to any limitation set forth in Section 7.2.1 [Indebtedness] with respect to any related Indebtedness (including clause (iii) thereof), Purchase Money Security Interests and Capital Leases; provided that such Liens shall be limited to the assets acquired with such purchase money financing or leased pursuant to such Capital Lease; (viii) The following, (A) if the validity or amount thereof is being contested in good faith by appropriate and lawful proceedings diligently conducted so long as levy and execution thereon have been stayed and continue to be stayed or (B) if a final judgment is entered and such judgment is discharged within forty-five (45) days of entry, and in either case they do not, in the aggregate, materially impair the ability of any Loan Party to perform its Obligations hereunder or under the other Loan Documents or otherwise constitute an Event of Default: (1) claims or Liens for Taxes due and payable and subject to interest or penalty; provided that the applicable Loan Party maintains such reserves or other appropriate provisions as shall be required by GAAP and pays all such Taxes forthwith upon the commencement of proceedings to foreclose any such Lien; (2) claims, Liens or encumbrances upon, and defects of title to, real or personal property, including any attachment of personal or real property or other legal process prior to adjudication of a dispute on the merits; (3) claims or Liens of mechanics, materialmen, warehousemen, carriers, or other statutory nonconsensual Liens; or (4) Liens resulting from final judgments or orders to the extent not constituting an Event of Default pursuant to Section 8.1.7 [Final Judgments or Orders]; (ix) Liens on unearned insurance premiums in connection with insurance premium financing in the ordinary course of business; (x) Liens in favor of landlords on leasehold improvements financed by allowances or advances provided by such landlords pursuant to lease arrangements; (xi) Liens in favor of consignors on (A) inventory consigned by such consignors to a Loan Party, and (B) proceeds of such inventory; (xii) Liens on proceeds in an aggregate amount not to exceed Ten Million and 00/100 Dollars ($10,000,000.00) at any one time outstanding granted in connection with securities lending transactions or reverse repurchase agreements involving United States Treasury bonds; (xiii) Liens arising under any Factoring Agreement against accounts receivable and other property upon which Liens are customarily granted in connection with the financing or securitization of accounts receivable; provided that such Liens do not extend to any assets other than those of the Camuto Entities; 223667699

 
(xiv) Liens on cash collateral or backstop letters of credit securing letters of credit issued for the account of one or more Camuto Entities to the extent such letters of credit were outstanding as of the Camuto Acquisition Closing; (xv) Liens on property acquired pursuant to the Camuto Transactions or any Permitted Acquisition, or on property of a Subsidiary of the Lead Borrower in existence at the time such Subsidiary is acquired pursuant to the Camuto Transactions or a Permitted Acquisition so long as such Liens (x) are not incurred in connection with, or in contemplation or anticipation of, such acquisition, (y) do not extend to any categories of property other than those categories of property subject to such Liens at the time of the Camuto Acquisition Closing or the time such property or Subsidiary is acquired, as applicable, and (z) secure only those obligations which they secure at the time of the Camuto Acquisition Closing or the time such property or Subsidiary is acquired, as applicable (as such obligations may be amended, supplemented, modified or restated from time to time as permitted hereunder); and (xvi) Liens in favor of the Administrative Agent for the benefit of the Lenders and their Affiliates securing the Obligations; (xvii) Customary Bank Liens; and (xviii) Liens securing other obligations of the Loan Parties and their Subsidiaries in an aggregate amount not to exceed Twenty Million and 00/100 Dollars ($20,000,000.00) at any one time outstanding. Person means any individual, corporation, partnership, limited partnership, limited and unlimited liability company, association, joint-stock company, trust, unincorporated organization, joint venture, government or political subdivision or agency thereof, or any other entity. Plan has the meaning specified in Section 10.8.6 [Disqualified Institutions]. Pledge and Security Agreement means that certain Pledge and Security Agreement, dated as of the Fourth Amendment Effective Date, executed and delivered by each of the Loan Parties to the Administrative Agent for the benefit of the Lenders, in form and substance satisfactory to the Administrative Agent. PNC means PNC Bank, National Association, its successors and assigns. Potential Default means any event or condition which with notice or passage of time, or both, would constitute an Event of Default. Prime Rate means the interest rate per annum announced from time to time by the Administrative Agent at its Principal Office as its then prime rate, which rate may not be the lowest or most favorable rate then being charged commercial borrowers or others by the Administrative Agent. Any change in the Prime Rate shall take effect at the opening of business on the day such change is announced. Principal Office means the main banking office of the Administrative Agent in Pittsburgh, Pennsylvania. 223667699

 
Prior Security Interest means a valid and enforceable perfected (subject to any carve-out or exceptions set forth in the Pledge and Security Agreement) first-priority (subject only to Permitted Liens) security interest in the Collateral. Projections has the meaning specified in Section 5.1.6(ii) [Financial Projections]. PTE means a prohibited transaction class exemption issued by the U.S. Department of Labor, as any such exemption may be amended from time to time. Published Rate means the rate of interest published each Business Day in The Wall Street Journal “Money Rates” listing under the caption “London Interbank Offered Rates” for a one month period (or, if no such rate is published therein for any reason, then the Published Rate shall be the rate at which U.S. dollar deposits are offered by leading banks in the London interbank deposit market for a one month period as published in another publication selected by the Administrative Agent). Purchase Money Security Interest means Liens upon tangible personal property securing loans to any Loan Party or Subsidiary of a Loan Party or deferred payments by such Loan Party or Subsidiary for the purchase of such tangible personal property Qualified ECP Loan Party means each Loan Party that on the Eligibility Date is (a) a corporation, partnership, proprietorship, organization, trust, or other entity other than a “commodity pool” as defined in Section 1a(10) of the CEA and CFTC regulations thereunder that has total assets exceeding Ten Million and 00/100 Dollars ($10,000,000.00), or (b) an Eligible Contract Participant that can cause another person to qualify as an Eligible Contract Participant on the Eligibility Date under Section 1a(18)(A)(v)(II) of the CEA by entering into or otherwise providing a “letter of credit or keepwell, support, or other agreement” for purposes of Section 1a(18)(A)(v)(II) of the CEA. Ratable Share means: (i) with respect to a Lender’s obligation to make Revolving Credit Loans, participate in Letters of Credit and other Letter of Credit Obligations, participate in Swing Loans, and receive payments, interest, and fees related thereto, the proportion that such Lender’s Revolving Credit Commitment bears to the Revolving Credit Commitments of all of the Lenders, provided that if the Revolving Credit Commitments have terminated or expired, the Ratable Shares for purposes of this clause shall be determined based upon the Revolving Credit Commitments most recently in effect, giving effect to any subsequent assignments; and (ii) with respect to all other matters as to a particular Lender, the percentage obtained by dividing (A) such Lender’s Revolving Credit Commitment by (B) the sum of the aggregate amount of the Revolving Credit Commitments of all Lenders; provided however that if the Revolving Credit Commitments have terminated or expired, the computation in this clause shall be determined based upon the Revolving Credit Commitments most recently in effect, giving effect to any subsequent assignments, and not on the current amount of the Revolving Credit Commitments and provided further that in the case of Section 4.13 [Defaulting Lenders] when a Defaulting Lender shall exist, “Ratable Share” means the percentage of the aggregate Commitments (disregarding any Defaulting Lender's Commitment) represented by such Lender's Commitment. 223667699

 
Recipient means (i) the Administrative Agent, (ii) any Lender and (iii) the Issuing Lender, as applicable. Reduced Commitment Amount has the meaning specified in Section 2.8.2 [Mandatory Reduction]. Reduction Date has the meaning specified in Section 2.8.2 [Mandatory Reduction]. Reference Currency has the meaning specified in the definition of “Equivalent Amount.” Reimbursement Obligation has the meaning specified in Section 2.7.3.1 [Disbursements, Reimbursement]. Related Parties means, with respect to any Person, such Person's Affiliates and the partners, directors, officers, employees, agents and advisors of such Person and of such Person's Affiliates. Relevant Governmental Body means (a) the Federal Reserve Board and/or the Federal Reserve Bank of New York, or a committee officially endorsed or convened by the Federal Reserve Board and/or the Federal Reserve Bank of New York or any successor thereto and (b) with respect to Optional Currency Loans, in addition to the Persons named in clause (a) of this definition, the comparable Official Body or other applicable Person for loans in such Optional Currency as determined by the Administrative Agent in its sole discretion. Relevant Interbank Market means, with respect to any currency the London interbank market or other applicable offshore interbank market. Relief Proceeding means any proceeding seeking a decree or order for relief in respect of any Loan Party or Subsidiary of a Loan Party in a voluntary or involuntary case under any applicable bankruptcy, insolvency, reorganization or other similar law now or hereafter in effect, or for the appointment of a receiver, receiver and manager, interim receiver, monitor, liquidator, assignee, custodian, trustee, sequestrator, conservator (or similar official) of any Loan Party or Subsidiary of a Loan Party for any substantial part of its property, or for the winding-up, reorganization, arrangement or liquidation of its affairs, or an assignment for the benefit of its creditors. Reportable Compliance Event means that any Covered Entity becomes a Sanctioned Person, or is charged by indictment, criminal complaint or similar charging instrument, arraigned, or custodially detained in connection with any Anti-Terrorism Law or any predicate crime to any Anti-Terrorism Law, or has knowledge of facts or circumstances to the effect that it is reasonably likely that any aspect of its operations is in actual or probable violation of any Anti-Terrorism Law. Required Lenders means (A) If there exists fewer than three (3) Lenders (for purposes of such calculation, any Lenders that are Affiliates of each other shall constitute one (1) Lender), all Lenders (other than any Defaulting Lender), and 223667699

 
(B) If there exist three (3) or more Lenders (for purposes of such calculation, any Lenders that are Affiliates of each other shall constitute one (1) Lender), Lenders (other than any Defaulting Lender) having more than fifty percent (50%) of the aggregate amount of the Revolving Credit Commitments of the Lenders (excluding any Defaulting Lender) or, after the termination of the Revolving Credit Commitments, the outstanding Revolving Credit Loans and Ratable Share of Letter of Credit Obligations of the Lenders (excluding any Defaulting Lender). Required Share has the meaning assigned to such term in Section 2.11 [Settlement Date Procedures]. Responsible Financial Officer means with respect to the Lead Borrower, its President, Chief Executive Officer, Chief Financial Officer, Treasurer or Controller, or other duly elected officer of the Lead Borrower reasonably acceptable to the Administrative Agent. Revolving Credit Commitment means, as to any Lender at any time, the amount initially set forth opposite its name as of the Effective Date 2 (as defined in the Second Amendment) on Schedule 1.1(B) (as such Schedule 1.1(B) was amended on such Effective Date 2 by the terms of the Second Amendment) in the column labeled “Amount of Commitment for Revolving Credit Loans,” as such Commitment is thereafter assigned, increasedautomatically decreased pursuant to Section 2.92.8.2 [Increase in Revolving Credit CommitmentsMandatory Reduction] or otherwise modified, and Revolving Credit Commitments means the aggregate Revolving Credit Commitments of all of the Lenders (as of the Effective Date 2 (as defined in the Second Amendment), the aggregate Revolving Credit Commitments equaled Four Hundred Million and 00/100 Dollars ($400,000,000.00)). Revolving Credit Loan Request has the meaning specified in Section 2.4 [Revolving Credit Loan Requests]. Revolving Credit Loans means collectively and Revolving Credit Loan means separately all Revolving Credit Loans or any Revolving Credit Loan made by the Lenders or one of the Lenders to the Borrowers pursuant to Section 2.1 [Revolving Credit Commitments] or 2.7.3 [Disbursements, Reimbursement]. Revolving Facility Usage means at any time the sum of the Dollar Equivalent amount of the outstanding Revolving Credit Loans to the Borrowers, the outstanding Swing Loans, and the Letter of Credit Obligations. Sanctioned Country means a country subject to a sanctions program maintained under any Anti-Terrorism Law. Sanctioned Person means any individual person, group, regime, entity or thing listed or otherwise recognized as a specially designated, prohibited, sanctioned or debarred person, group, regime, entity or thing, or subject to any limitations or prohibitions (including but not limited to the blocking of property or rejection of transactions), under any Anti-Terrorism Law. SEC means the United States Securities and Exchange Commission. 223667699

 
Second Amendment means that certain Second Amendment to Credit Agreement, dated as of October 10, 2018, by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent. Settlement Date means the applicable Business Day on which the Administrative Agent elects to effect settlement pursuant Section 2.11 [Settlement Date Procedures]. Solvent means, with respect to any Person on any date of determination, taking into account any right of reimbursement, contribution or similar right available to such Person from other Persons, that on such date (i) the fair value of the property of such Person is greater than the total amount of liabilities, including contingent liabilities, of such Person, (ii) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (iii) such Person is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and other commitments as they mature in the normal course of business, (iv) such Person does not intend to, and does not believe that it will, incur debts or liabilities beyond such Person's ability to pay as such debts and liabilities mature, and (v) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person's property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which such Person is engaged. In computing the amount of contingent liabilities at any time, it is intended that such liabilities will be computed at the amount which, in light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability. Standard & Poor's means Standard & Poor's Ratings Services, a division of The McGraw-Hill Companies, Inc. Standby Letter of Credit means a Letter of Credit (including a direct pay letter of credit) issued to support obligations of one or more of the Loan Parties or their Subsidiaries, contingent or otherwise, which finance the working capital and business needs of the Loan Parties or their Subsidiaries, but excluding any Letter of Credit (a) under which the stated amount of such Letter of Credit increases automatically over time or (b) that is a Commercial Letter of Credit. Statements has the meaning specified in Section 5.1.6(i) [Historical Statements]. Subsidiary of any Person at any time means any corporation, trust, partnership, limited liability company or other business entity (i) of which more than fifty percent (50%) of the outstanding voting securities or other interests normally entitled to vote for the election of one or more directors or trustees (regardless of any contingency which does or may suspend or dilute the voting rights) is at such time owned directly or indirectly by such Person or one or more of such Person's Subsidiaries, or (ii) which is controlled or capable of being controlled by such Person or one or more of such Person's Subsidiaries. Notwithstanding the foregoing or anything herein to the contrary, none of the Article II JV, BC/VC, Camuto Castillo, theneither BRX nor IPCo JV and, or any of their respective Subsidiaries shall constitute a Subsidiary of the Lead Borrower or any Subsidiary of the Lead Borrower for purposes of this Agreement, but shall each be considered a Joint Venture for purposes hereof. 223667699

 
Subsidiary Equity Interests has the meaning specified in Section 5.1.2 [Capitalization; Subsidiaries; Investment Companies]. Swap means any “swap” as defined in Section 1a(47) of the CEA and regulations thereunder, other than (a) a swap entered into, or subject to the rules of, a board of trade designated as a contract market under Section 5 of the CEA, or (b) a commodity option entered into pursuant to CFTC Regulation 32.3(a). Swap Obligation means any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap which is also a Lender Provided Interest Rate Hedge, or a Lender Provided Foreign Currency Hedge. Swing Loan Commitment means the Swing Loan Lender's commitment to make Swing Loans to the Lead Borrower pursuant to Section 2.1.2 [Swing Loan Commitment] hereof in an aggregate principal amount up to Fifteen Million and 00/100 Dollars ($15,000,000.00). Swing Loan Lender means PNC, in its capacity as the lender of Swing Loans. Swing Loan Note means the Swing Loan Note of the Lead Borrower in substantially the form of Exhibit 1.1(N)(2) evidencing the Swing Loans, together with all amendments, extensions, renewals, replacements, refinancings or refundings thereof in whole or in part. Swing Loan Request means a request for Swing Loans made in accordance with Section 2.4.2 [Swing Loan Requests]. Swing Loans means collectively and Swing Loan means separately all Swing Loans or any Swing Loan made by the Swing Loan Lender to the Lead Borrower pursuant to Section 2.1.2 [Swing Loan Commitment]. Taxes means all present or future taxes, levies, imposts, duties, deductions, withholdings (including backup withholding), assessments, fees or other charges imposed by any Official Body, including any interest, additions to tax or penalties applicable thereto. Total Funded Debt means, as of any date of determination, the sum of (i) all Indebtedness (excluding any Hedge Liabilities or any other obligations (contingent or otherwise) under any Swap) representing borrowed money, including both current and long term portion thereof and guaranty obligations with respect thereto, Capital Lease Obligations and reimbursement obligations under letters of credit, in each case of the Lead Borrower on a Consolidated Basis, plus (ii) the aggregate current and long-term operating lease liabilities in accordance with FASB ASC 842, in each case determined and consolidated for the Lead Borrower and its Subsidiaries in accordance with GAAP. Trade Date has the meaning specified in Section 10.8.6 [Disqualified Institutions]. UCC means the Uniform Commercial Code as adopted in the State of Ohio from time to time, as amended; provided that, if perfection or the effect of perfection or non-perfection or the priority of any security interest in any Collateral is governed by the Uniform Commercial Code as in effect in a jurisdiction other than the State of Ohio, UCC means the Uniform 223667699

 
Commercial Code as in effect from time to time in such other jurisdiction for purposes of the provisions hereof relating to such perfection, effect of perfection or non-perfection or priority. UCP has the meaning specified in Section 10.11.1 [Governing Law]. Unpaid Drawing means, with respect to any Letter of Credit, the aggregate Dollar Equivalent amount of the draws made on such Letters of Credit that have not been reimbursed by the Borrowers. USA Patriot Act means the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001, Public Law 107-56, as the same has been, or shall hereafter be, renewed, extended, amended or replaced. US Person means any Person that is a “United States Person” as defined in Section 7701(a)(30) of the Code. US Tax Compliance Certificate has the meaning specified in Section 4.9.7 [Status of Lenders]. Withholding Agent means any Loan Party and the Administrative Agent. Write-down and Conversion Powers means, with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule. 1.2 Construction. Unless the context of this Agreement otherwise clearly requires, the following rules of construction shall apply to this Agreement and each of the other Loan Documents: (i) references to the plural include the singular, the plural, the part and the whole and the words “include,”“includes” and “including” shall be deemed to be followed by the phrase “without limitation”; (ii) the words “hereof,”“herein,”“hereunder,”“hereto” and similar terms in this Agreement or any other Loan Document refer to this Agreement or such other Loan Document as a whole; (iii) article, section, subsection, clause, schedule and exhibit references are to this Agreement or other Loan Document, as the case may be, unless otherwise specified; (iv) reference to any Person includes such Person's successors and assigns; (v) reference to any agreement, including this Agreement and any other Loan Document together with the schedules and exhibits hereto or thereto, document or instrument means such agreement, document or instrument as amended, modified, replaced, substituted for, superseded or restated; (vi) relative to the determination of any period of time, “from” means “from and including,”“to” means “to but excluding,” and “through” means “through and including”; (vii) the words “asset” and “property” shall be construed to have the same meaning and effect and to refer to any and all tangible and intangible assets and properties, including cash, securities, accounts and contract rights, (viii) section headings herein and in each other Loan Document are included for convenience and shall not affect the interpretation of this Agreement or such Loan Document, (ix) unless otherwise specified, all references herein to times of day shall constitute references to Eastern Time and (x) references to “any fiscal quarter ended or ending” as of or on a specific date (and words of similar import) in this Agreement or any other Loan Document shall be deemed to refer to the fiscal quarter of the Lead Borrower ended or ending on or nearest to such specific date. 223667699

 
1.3 Accounting Principles; Changes in GAAP. Except as otherwise provided in this Agreement, all computations and determinations as to accounting or financial matters and all financial statements to be delivered pursuant to this Agreement shall be made and prepared in accordance with GAAP (including principles of consolidation where appropriate), and all accounting or financial terms have the meanings ascribed to such terms by GAAP; provided, however, that all accounting terms used in Section 7.2 [Negative Covenants] (and all defined terms used in the definition of any accounting term used in Section 7.2) shall have the meaning given to such terms (and defined terms) under GAAP as in effect on the Closing Date applied on a basis consistent with those used in preparing the Statements referred to in Section 5.1.6(i) [Historical Statements]. Notwithstanding the foregoing, if the Lead Borrower notifies the Administrative Agent in writing that the Loan Parties wish to amend any financial covenant in Section 7.2 of this Agreement, any related definition and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any change in GAAP occurring after the Closing Date on the operation of such financial covenants and/or interest, Letter of Credit Fee or Commitment Fee determinations (or if the Administrative Agent notifies the Lead Borrower in writing that the Required Lenders wish to amend any financial covenant in Section 7.2, any related definition and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee and Commitment Fee determinations to eliminate the effect of any such change in GAAP), then the Administrative Agent, the Lenders and the Loan Parties shall negotiate in good faith to amend such ratios or requirements to preserve the original intent thereof in light of such change in GAAP (subject to the approval of the Required Lenders); provided that, until so amended, the Loan Parties' compliance with such covenants and/or the definition of the term Leverage Ratio for purposes of interest, Letter of Credit Fee, and Commitment Fee determinations shall be determined on the basis of GAAP in effect immediately before the relevant change in GAAP became effective (and applied on a basis consistent with those used in preparing the Statements referred to in Section 5.1.6(i) [Historical Statements]), until either such notice is withdrawn or such covenants or definitions are amended in a manner satisfactory to the Loan Parties and the Required Lenders, and the Loan Parties shall provide to the Administrative Agent, when they deliver their financial statements pursuant to Section 7.3.1 [Quarterly Financial Statements] and 7.3.2 [Annual Financial Statements] of this Agreement, such reconciliation statements as shall be reasonably requested by the Administrative Agent. If an amendment has not occurred as set forth above, to the extent a change in GAAP occurs (whether or not such change is, as of the date hereof, already scheduled to occur after the date hereof) which results in operating leases being treated or classified as Capital Leases, (i) such change shall not be given effect under the Loan Documents (including, without limitation, in any computation of financial covenants), and (ii) the Lead Borrower and its Subsidiaries shall continue to provide financial reporting which differentiates between operating leases and Capital Leases (and otherwise treat consistently with the treatment thereof as of the date hereof) in each case in accordance with GAAP as in effect on the date hereof. 1.4 Currency Calculations. Unless stated otherwise, all calculations, comparisons, measurements or determinations under this Agreement, shall be made in Dollars. For the purpose of such calculations, comparisons, measurements or determinations, amounts denominated in other currencies shall be converted to the Dollar Equivalent thereof on the date of calculation, comparison, measurement or determination. All financial statements and Compliance Certificates shall be set forth in Dollars. For purposes of preparing the financial statements, calculating financial covenants and determining compliance with covenants expressed in Dollars, Optional Currencies and other non-Dollar currencies shall be converted to Dollars on a weighted average basis in accordance with GAAP. 223667699

 
1.5 Designation of the Lead Borrower as Borrower Representative. For purposes of this Agreement and the other Loan Documents, each Borrower (i) authorizes the Lead Borrower to make such requests, give such notices or furnish such certificates to the Administrative Agent or any Lender as may be required or permitted by this Agreement and any other Loan Document for the benefit of such Borrower and (ii) authorizes the Administrative Agent and each Lender to treat such requests, notices, certificates or consents given or made by the Lead Borrower to have been made, given or furnished by the applicable Borrower for purposes of this Agreement and any other Loan Document. Any request, notice, certificate, or consent required to be given by or to the Borrowers shall be satisfied if the request, notice, certificate or consent is given to or by the Lead Borrower, whether or not specifying to be given to or by the Lead Borrower on behalf of any other Borrower. The Administrative Agent and each Lender shall be entitled to rely on each such request, notice, certificate or consent made, given or furnished by the Lead Borrower pursuant to the provisions of this Agreement or any other Loan Document as being made or furnished on behalf of, and with the effect of irrevocably binding, each Borrower. Each warranty, covenant, agreement and undertaking made on its behalf by the Lead Borrower shall be deemed for all purposes to have been made by each Borrower (except as otherwise expressly set forth herein) and shall be binding upon and enforceable against each Borrower to the same extent as if the same had been made directly by each Borrower. 1.6 Euro-Rate Notification. Section 3.6 of this Agreement provides a mechanism for determining an alternative rate of interest in the event that one or more Relevant Interbank Market offered rates is no longer available or in certain other circumstances. The Administrative Agent does not warrant or accept any responsibility for and shall not have any liability with respect to, the administration, submission or any other matter related to any Relevant Interbank Market offered rate or other rates in the definition of "Euro- Rate" or with respect to any alternative or successor rate thereto, or replacement rate therefor. 2. REVOLVING CREDIT AND SWING LOAN FACILITIES 2.1 Revolving Credit Commitments. 2.1.1 Revolving Credit Loans; Optional Currency Loans. Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, each Lender severally agrees to make Revolving Credit Loans in either Dollars or one or more Optional Currencies to the Borrowers at any time or from time to time on or after the date hereof to, but not including, the Expiration Date; provided that after giving effect to each such Loan (i) the aggregate Dollar Equivalent amount of Revolving Credit Loans from such Lender shall not exceed such Lender's Revolving Credit Commitment minus such Lender's Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations, (ii) the Revolving Facility Usage shall not exceed the Revolving Credit Commitments, (iii) no Revolving Credit Loan to which the Base Rate Option applies shall be made in an Optional Currency and (iv) the aggregate Dollar Equivalent principal amount of Revolving Credit Loans made in an Optional Currency (each an “Optional Currency Loan”) plus the aggregate Dollar Equivalent amount of all Letter of Credit Obligations denominated in an Optional Currency shall not exceed Seventy-Five Million and 00/100 Dollars ($75,000,000.00) (the “Optional Currency Sublimit”). Within such limits of time and amount and subject to the other provisions of this Agreement, the Borrowers may borrow, repay and reborrow pursuant to this Section 2.1 [Revolving Credit Commitments]. 223667699

 
2.1.2 Swing Loan Commitment. Subject to the terms and conditions hereof and relying upon the representations and warranties herein set forth, and in order to facilitate loans and repayments between Settlement Dates, the Swing Loan Lender may, at its option, cancelable at any time for any reason whatsoever, make swing loans in Dollars (the “Swing Loans”) to the Lead Borrower at any time or from time to time after the date hereof to, but not including, the Expiration Date, in an aggregate principal amount up to but not in excess of the Swing Loan Commitment, provided that after giving effect to such Loan, the Revolving Facility Usage shall not exceed the Revolving Credit Commitments. Within such limits of time and amount and subject to the other provisions of this Agreement, the Lead Borrower may borrow, repay and reborrow pursuant to this Section 2.1.2 [Swing Loan Commitment]. 2.2 Nature of Lenders' Obligations with Respect to Revolving Credit Loans. Each Lender shall be obligated to participate in each request for Revolving Credit Loans pursuant to Section 2.4 [Revolving Credit Loan Requests; Swing Loan Requests] in accordance with its Ratable Share. The aggregate Dollar Equivalent of each Lender's Revolving Credit Loans outstanding hereunder to the Borrowers at any time shall never exceed its Revolving Credit Commitment minus its Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations. The obligations of each Lender hereunder are several. The failure of any Lender to perform its obligations hereunder shall not affect the Obligations of the Borrowers to any other party nor shall any other party be liable for the failure of such Lender to perform its obligations hereunder. The Lenders have no obligation to make Revolving Credit Loans hereunder on or after the Expiration Date. 2.3 Commitment Fee. Accruing at all times from the Closing Date until the Expiration Date (and without regard to whether the conditions to making Revolving Credit Loans are then met), the Borrowers agree to pay to the Administrative Agent for the account of each Lender according to its Ratable Share, a nonrefundable commitment fee in Dollars (the “Commitment Fee”) equal to the Applicable Commitment Fee Rate (computed on the basis of a year of three hundred sixty five (365) or three hundred sixty six (366) days, as the case may be, and actual days elapsed) multiplied by the average daily difference between the amount of (i) the Revolving Credit Commitments and (ii) the Revolving Facility Usage (computed to exclude therefrom the full amount of the outstanding Swing Loans); provided, however, that subject to Section 4.13 [Defaulting Lenders], no Defaulting Lender shall be entitled to receive any Commitment Fee for any period during which that Lender is a Defaulting Lender (and the Borrowers shall not be required to pay any such Commitment Fee that otherwise would have been required to have been paid to that Defaulting Lender). Subject to the proviso in the directly preceding sentence, all Commitment Fees shall be payable in arrears on each Payment Date. 2.4 Revolving Credit Loan Requests; Swing Loan Requests. 2.4.1 Revolving Credit Loan Requests. Except as otherwise provided herein, the applicable Borrower, or the Lead Borrower on behalf of the applicable Borrower, may from time to time prior to the Expiration Date request the Lenders to make Revolving Credit Loans, or renew or convert the Interest Rate Option applicable to existing Revolving Credit Loans pursuant to Section 3.2 [Interest Periods], by delivering to the Administrative Agent, not later than 1:00 p.m., (i) three (3) Business Days prior to the proposed Borrowing Date with respect to the making of Revolving Credit Loans in Dollars to which the Euro-Rate Option applies or the conversion to or the renewal of the Euro-Rate Option for any Loans in Dollars; (ii) not later than 1:00 p.m., (i) four (4) Business Days prior to the proposed Borrowing Date with respect to the 223667699

 
making of Optional Currency Loans or the date of renewal of the Euro-Rate Option for any Optional Currency Loan, and (iii) the same Business Day of the proposed Borrowing Date with respect to the making of a Revolving Credit Loan to which the Base Rate Option applies or the last day of the preceding Interest Period with respect to the conversion to the Base Rate Option for any Loan, of a duly completed request therefor substantially in the form of Exhibit 2.4.1 or a request by telephone immediately confirmed in writing by letter, facsimile, or e-mail (in “pdf”, “tif” or similar format) in such form (each, a “Revolving Credit Loan Request”), it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Revolving Credit Loan Request shall be irrevocable and shall specify (A) the name of the applicable Borrower, (B) the proposed Borrowing Date, (C) the aggregate amount of the proposed Loans comprising each applicable Borrowing Tranche, which amount shall be in integral multiples of One Million and 00/100 Dollars ($1,000,000.00) (or the Dollar Equivalent thereof) and not less than Five Million and 00/100 Dollars ($5,000,000.00) (or the Dollar Equivalent thereof) for each Borrowing Tranche under the Euro-Rate Option, and in integral multiples of Five Hundred Thousand and 00/100 Dollars ($500,000.00) and not less than the lesser of One Million and 00/100 Dollars ($1,000,000.00) or the maximum amount available for each Borrowing Tranche under the Base Rate Option, (D) whether the Euro-Rate Option or Base Rate Option shall apply to the proposed Loans comprising the applicable Borrowing Tranche, (E) the currency in which such Revolving Credit Loans shall be funded if the applicable Borrower elects the Euro-Rate Option, and (F) in the case of a Borrowing Tranche to which the Euro-Rate Option applies, the Interest Period for the Loans comprising such Borrowing Tranche. 2.4.2 Swing Loan Requests. Except as otherwise provided herein, the Lead Borrower may from time to time prior to the Expiration Date request the Swing Loan Lender to make Swing Loans by delivery to the Swing Loan Lender not later than 1:00 p.m. on the proposed Borrowing Date of a duly completed request therefor substantially in the form of Exhibit 2.4.2 hereto or a request by telephone immediately confirmed in writing by letter, facsimile, facsimile, or e-mail (in “pdf”, “tif” or similar format) (each, a “Swing Loan Request”), it being understood that the Administrative Agent may rely on the authority of any individual making such a telephonic request without the necessity of receipt of such written confirmation. Each Swing Loan Request shall be irrevocable and shall specify the proposed Borrowing Date and the principal amount of such Swing Loan, which shall be not less than One Hundred Thousand and 00/100 Dollars ($100,000.00). 2.5 Making Revolving Credit Loans and Swing Loans; Presumptions by the Administrative Agent; Repayment of Revolving Credit Loans; Borrowings to Repay Swing Loans. 2.5.1 Making Revolving Credit Loans. The Administrative Agent shall, promptly after receipt by it of a Revolving Credit Loan Request pursuant to Section 2.4 [Revolving Credit Loan Requests], notify the Lenders of its receipt of such Revolving Credit Loan Request specifying the information provided by the applicable Borrower, including the currency in which the Revolving Credit Loan is requested, and the apportionment among the Lenders of the requested Revolving Credit Loans as determined by the Administrative Agent in accordance with Section 2.2 [Nature of Lenders' Obligations with Respect to Revolving Credit Loans]. Each Lender shall remit the principal amount of each Revolving Credit Loan in Dollars or the requested Optional Currency to the Administrative Agent such that the Administrative Agent is able to, and the Administrative Agent shall, to the extent the Lenders have made funds 223667699

 
available to it for such purpose and subject to Section 6.1.2 [Each Loan or Letter of Credit], fund such Revolving Credit Loans to the applicable Borrower in U.S. Dollars or the requested Optional Currency (as applicable) and immediately available funds at the Principal Office prior to 2:00 p.m., on the applicable Borrowing Date; provided that if any Lender fails to remit such funds to the Administrative Agent in a timely manner, the Administrative Agent may elect in its sole discretion to fund with its own funds, including funds in the requested Optional Currency, the Revolving Credit Loans of such Lender on such Borrowing Date, and such Lender shall be subject to the repayment obligation in Section 4.4 [Presumptions by the Administrative Agent]. 2.5.2 Presumptions by the Administrative Agent. Unless the Administrative Agent shall have received notice from a Lender prior to the proposed date of any Loan that such Lender will not make available to the Administrative Agent such Lender's share of such Loan, the Administrative Agent may assume that such Lender has made such share available on such date in accordance with Section 2.5.1 [Making Revolving Credit Loans] and may, in reliance upon such assumption, make available to the applicable Borrowers a corresponding amount. In such event, if a Lender has not in fact made its share of the applicable Loan available to the Administrative Agent, then the applicable Lender and the applicable Borrowers severally agree to pay to the Administrative Agent forthwith on demand such corresponding amount with interest thereon, for each day from and including the date such amount is made available to the applicable Borrower to but excluding the date of payment to the Administrative Agent, at (i) in the case of a payment to be made by such Lender, the greater of the Federal Funds Effective Rate (or, for payments in an Optional Currency, the Overnight Rate) and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation and (ii) in the case of a payment to be made by a Borrower, the interest rate applicable to Loans under the Base Rate Option (or the Overnight Rate for Loans in an Optional Currency). If such Lender pays its share of the applicable Loan to the Administrative Agent, then the amount so paid shall constitute such Lender's Loan. Any payment by any Borrower shall be without prejudice to any claim such Borrower may have against a Lender that shall have failed to make such payment to the Administrative Agent. 2.5.3 Making Swing Loans. So long as the Swing Loan Lender elects to make Swing Loans, the Swing Loan Lender shall, after receipt by it of a Swing Loan Request pursuant to Section 2.4.2 [Swing Loan Requests], fund such Swing Loan to the Lead Borrower in U.S. Dollars and immediately available funds at the Principal Office prior to 4:00 p.m. on the Borrowing Date. A Swing Loan Note, if required by the Swing Loan Lender, shall evidence the Swing Loans. 2.5.4 Repayment of Revolving Credit Loans. The Borrowers shall repay the outstanding principal amount of all Revolving Credit Loans together with all outstanding interest thereon on the Expiration Date. 2.5.5 Borrowings to Repay Swing Loans. The Swing Loan Lender may, at its option, exercisable at any time for any reason whatsoever, demand repayment of the Swing Loans, and each Lender shall make a Revolving Credit Loan in an amount equal to such Lender's Ratable Share of the aggregate principal amount of the outstanding Swing Loans, plus, if the Swing Loan Lender so requests, accrued interest thereon, provided that no Lender shall be obligated in any event to make Revolving Credit Loans in excess of its Revolving Credit Commitment minus its Ratable Share of Letter of Credit Obligations. Revolving Credit Loans made pursuant to the preceding sentence shall bear interest at the Base Rate Option and shall be 223667699

 
deemed to have been properly requested in accordance with Section 2.4.1 [Revolving Credit Loan Requests] without regard to any of the requirements of that provision. The Swing Loan Lender shall provide notice to the Lenders (which may be telephonic or written notice by letter or facsimile) that such Revolving Credit Loans are to be made under this Section 2.5.5 [Borrowings to Repay Swing Loans] and of the apportionment among the Lenders, and the Lenders shall be unconditionally obligated to fund such Revolving Credit Loans (whether or not the conditions specified in Section 2.4.1 [Revolving Credit Loan Requests] are then satisfied) by the time the Swing Loan Lender so requests, which shall not be earlier than 3:00 p.m. on the Business Day next after the date the Lenders receive such notice from the Swing Loan Lender. 2.5.6 Swing Loans Under Cash Management Agreements. In addition to making Swing Loans pursuant to the foregoing provisions of Section 2.5.3 [Making Swing Loans], without the requirement for a specific request from the Lead Borrower pursuant to Section 2.4.2 [Swing Loan Requests], the Swing Loan Lender may make Swing Loans to the Lead Borrower in accordance with the provisions of the agreements between the Lead Borrower and such Swing Loan Lender relating to the Lead Borrower's deposit, sweep and other accounts at such Swing Loan Lender and related arrangements and agreements regarding the management and investment of the Lead Borrower's cash assets as in effect from time to time (the “Cash Management Agreements”) to the extent of the daily aggregate net negative balance in the Lead Borrower's accounts which are subject to the provisions of the Cash Management Agreements. Swing Loans made pursuant to this Section 2.5.6 in accordance with the provisions of the Cash Management Agreements shall (i) be subject to the limitations as to aggregate amount set forth in Section 2.1.2 [Swing Loan Commitment], (ii) not be subject to the limitations as to individual amount set forth in Section 2.4.2 [Swing Loan Requests], (iii) be payable by the Lead Borrower, both as to principal and interest, at the rates and times set forth in the Cash Management Agreements (but in no event later than the Expiration Date), (iv) not be made at any time after such Swing Loan Lender has received written notice of the occurrence of an Event of Default and so long as such shall continue to exist, or, unless consented to by the Required Lenders, a Potential Default and so long as such shall continue to exist, (v) if not repaid by the Lead Borrower in accordance with the provisions of the Cash Management Agreements, be subject to each Lender's obligation pursuant to Section 2.5.5 [Borrowings to Repay Swing Loans], and (vi) except as provided in the foregoing subsections (i) through (v), be subject to all of the terms and conditions of this Section 2. 2.6 Revolving Credit Notes and Swing Notes. The Obligation of the Borrowers to repay the aggregate unpaid principal amount of the Revolving Credit Loans and Swing Loans made to it by each Lender, together with interest thereon, shall be evidenced by a revolving credit Note and the Swing Loan Note, as applicable, payable to the order of such Lender in a face amount equal to the Revolving Credit Commitment or Swing Loan Commitment, as applicable, of such Lender. 2.7 Letter of Credit Subfacility. 2.7.1 Issuance of Letters of Credit. The Lead Borrower may at any time prior to the Expiration Date request the issuance of a letter of credit (each a “Letter of Credit”), which may be denominated in either Dollars or an Optional Currency, for its own account or the account of another Loan Party or any other Subsidiary of the Lead Borrower (it being understood that every Letter of Credit issued hereunder shall be an Obligation of the Lead Borrower), or the amendment or extension of an existing Letter of Credit, by delivering or transmitting 223667699

 
electronically, or having such other Loan Party deliver or transmit electronically to the Issuing Lender (with a copy to the Administrative Agent) a completed application for letter of credit, or request for such amendment or extension, as applicable, in such form as the Issuing Lender may specify from time to time by no later than 10:00 a.m. at least five (5) Business Days, or such shorter period as may be agreed to by the Issuing Lender, in advance of the proposed date of issuance. Each Letter of Credit may be a Standby Letter of Credit or a Commercial Letter of Credit. The Lead Borrower shall authorize and direct the Issuing Lender to name (i) the Lead Borrower, (ii) any Loan Party or (iii) any other Subsidiary of the Lead Borrower as the “Applicant” or “Account Party” of each Letter of Credit (in the case of the foregoing clauses (i) and (ii), the Lead Borrower and such Loan Party or other Subsidiary shall be co-applicants with respect to such Letter of Credit, unless otherwise agreed to by the Issuing Lender). 2.7.1.1 Unless the Issuing Lender has received notice from any Lender, the Administrative Agent or any Loan Party, at least one day prior to the requested date of issuance, amendment or extension of the applicable Letter of Credit, that one or more applicable conditions in Section 6 [Conditions] is not satisfied, then, subject to the terms and conditions hereof and in reliance on the agreements of the other Lenders set forth in this Section 2.7, the Issuing Lender or any of the Issuing Lender's Affiliates will issue the proposed Letter of Credit or agree to such amendment or extension, provided that each Letter of Credit shall (A) have a maximum maturity of twelve (12) months from the date of issuance; provided that (subject to the following clause (B)) the Letter of Credit may include a provision for the automatic extension of the Letter of Credit for additional twelve (12) month periods, and (B) in no event expire later than the Expiration Date (except that a Letter of Credit may expire up to one year beyond the Expiration Date if such Letter of Credit has been cash collateralized by the Lead Borrower in an amount equal to one hundred five percent (105%) of the face amount of such Letter of Credit on terms and conditions acceptable to the Administrative Agent and the Issuing Lender, each in its sole discretion, prior to the issuance thereof) and provided further that in no event shall (i) the Letter of Credit Obligations exceed, at any one time, Fifty Million and 00/100 Dollars ($50,000,000.00), (ii) the Revolving Facility Usage exceed, at any one time, the Revolving Credit Commitments, (iii) the Revolving Facility Usage for any individual Lender exceed such Lender’s Revolving Credit Commitment, (iv) the aggregate Dollar Equivalent principal amount of Optional Currency Loans plus the aggregate Dollar Equivalent amount of all Letter of Credit Obligations denominated in an Optional Currency exceed the Optional Currency Sublimit or (v) the aggregate Dollar Equivalent amount of all Letters of Credit issued by Wells Fargo Bank, National Association exceed Twenty-Five Million and 00/100 Dollars ($25,000,000.00). Each request by the Lead Borrower for the issuance, amendment or extension of a Letter of Credit shall be deemed to be a representation by the Lead Borrower that it shall be in compliance with the preceding sentence and with Section 6 [Conditions] after giving effect to the requested issuance, amendment or extension of such Letter of Credit. Promptly after its delivery of any Letter of Credit or any amendment to a Letter of Credit to the beneficiary thereof, the applicable Issuing Lender will also deliver to the Lead Borrower and the Administrative Agent a true and complete copy of such Letter of Credit or amendment. 2.7.1.2 Notwithstanding Section 2.7.1.1, the Issuing Lender shall not be under any obligation to issue any Letter of Credit if any order, judgment or decree of any Official Body or arbitrator shall by its terms purport to enjoin or restrain the Issuing Lender from issuing the Letter of Credit, or any Law applicable to the Issuing Lender or any request or directive (whether or not having the force of law) from any Official Body with jurisdiction over the Issuing Lender shall prohibit, or request that the Issuing Lender refrain from, the issuance of letters of 223667699

 
credit generally or the Letter of Credit in particular or shall impose upon the Issuing Lender with respect to the Letter of Credit any restriction, reserve or capital requirement (for which the Issuing Lender is not otherwise compensated hereunder) not in effect on the Closing Date, or shall impose upon the Issuing Lender any unreimbursed loss, cost or expense which was not applicable on the Closing Date and which the Issuing Lender in good faith deems material to it. Each Existing Letter of Credit and Fourth Amendment Letter of Credit shall be deemed to be a Letter of Credit for all purposes of this Agreement. 2.7.2 Letter of Credit Fees. The Lead Borrower shall pay in Dollars (i) to the Administrative Agent for the ratable account of the Lenders (subject to Section 4.13 [Defaulting Lenders]) a fee (the “Letter of Credit Fee”) equal to the Applicable Letter of Credit Fee Rate on the aggregate Dollar Equivalent amount available to be drawn under all outstanding Letters of Credit on such date, and (ii) to the Issuing Lender for its own account a fronting fee equal to one-eighth of one percent (0.125%) per annum (in each case computed on the basis of a year of three hundred sixty (360) days and actual days elapsed) on the aggregate Dollar Equivalent amount available to be drawn under all outstanding Letters of Credit on such date (or such other amount as agreed to in writing between the Issuing Lender, the fronting bank and the Lead Borrower), which fees shall be payable quarterly in arrears on each Payment Date following issuance of each Letter of Credit. The Lead Borrower shall also pay in Dollars to the Issuing Lender for the Issuing Lender's sole account the Issuing Lender's then in effect customary fees and administrative expenses payable with respect to the Letters of Credit as the Issuing Lender may generally charge or incur from time to time in connection with the issuance, maintenance, amendment (if any), assignment or transfer (if any), negotiation, and administration of Letters of Credit. 2.7.3 Disbursements, Reimbursement. Immediately upon the issuance of each Letter of Credit, each Lender shall be deemed to, and hereby irrevocably and unconditionally agrees to, purchase from the Issuing Lender a participation in such Letter of Credit and each drawing thereunder in a Dollar Equivalent amount equal to such Lender's Ratable Share of the maximum amount available to be drawn under such Letter of Credit and the amount of such drawing, respectively. 2.7.3.1 In the event of any request for a drawing under a Letter of Credit by the beneficiary or transferee thereof, the Issuing Lender will promptly notify the Lead Borrower and the Administrative Agent thereof. Provided that the Lead Borrower shall have received such notice by 10:00 a.m. on a date that an amount is paid by the Issuing Lender under any Letter of Credit (each such date, a “Drawing Date”), the Lead Borrower shall reimburse (such obligation to reimburse the Issuing Lender shall sometimes be referred to as a “Reimbursement Obligation”) the Issuing Lender prior to 12:00 noon on such Drawing Date by paying to the Administrative Agent for the account of the Issuing Lender an amount equal to the amount so paid by the Issuing Lender in the same currency as paid, unless otherwise required by the Administrative Agent or the Issuing Lender. If the Lead Borrower does not receive such notice until after 10:00 a.m. on a Drawing Date, the Lead Borrower shall reimburse the Issuing Lender no later than 12:00 noon on the next Business Day after the Drawing Date. In the event the Lead Borrower fails to timely reimburse the Issuing Lender (through the Administrative Agent) for the full amount of any drawing under any Letter of Credit, the Administrative Agent will promptly notify each Lender thereof, and the Lead Borrower shall be deemed to have requested that Revolving Credit Loans in the Dollar Equivalent amount of such drawing be made 223667699

 
by the Lenders to the Lead Borrower under the Base Rate Option to be disbursed on the Drawing Date under such Letter of Credit, subject to the amount of the unutilized portion of the Revolving Credit Commitment and subject to the conditions set forth in Section 6.1.2 [Each Loan or Letter of Credit] other than any notice requirements. Any notice given by the Administrative Agent or Issuing Lender pursuant to this Section 2.7.3.1 [Disbursements, Reimbursement] may be oral if immediately confirmed in writing; provided that the lack of such an immediate confirmation shall not affect the conclusiveness or binding effect of such notice. 2.7.3.2 Each Lender shall upon any notice pursuant to Section 2.7.3.1 [Disbursements, Reimbursement] make available to the Administrative Agent for the account of the Issuing Lender an amount in immediately available funds equal to its Ratable Share of the amount of the drawing, whereupon the participating Lenders shall (subject to Section 2.7.3 [Disbursement; Reimbursement]) each be deemed to have made a Revolving Credit Loan under the Base Rate Option to the Lead Borrower in that amount. If any Lender so notified fails to make available to the Administrative Agent for the account of the Issuing Lender the amount of such Lender's Ratable Share of such amount by no later than 2:00 p.m. on the Drawing Date, then interest shall accrue on such Lender's obligation to make such payment, from the Drawing Date to the date on which such Lender makes such payment (i) at a rate per annum equal to the Federal Funds Effective Rate during the first three (3) days following the Drawing Date and (ii) at a rate per annum equal to the rate applicable to Loans under the Revolving Credit Base Rate Option on and after the fourth (4th) day following the Drawing Date. The Administrative Agent and the Issuing Lender will promptly give notice (as described in Section 2.7.3.1 [Disbursements. Reimbursement]) of the occurrence of the Drawing Date, but failure of the Administrative Agent or the Issuing Lender to give any such notice on the Drawing Date or in sufficient time to enable any Lender to effect such payment on such date shall not relieve such Lender from its obligation under this Section 2.7.3.2 [Disbursements. Reimbursement]. 2.7.3.3 With respect to any unreimbursed drawing that is not converted into Revolving Credit Loans under the Base Rate Option to the Lead Borrower in whole or in part as contemplated by Section 2.7.3.1 [Disbursements. Reimbursement], because of the Lead Borrower's failure to satisfy the conditions set forth in Section 6.1.2 [Each Loan or Letter of Credit] other than any notice requirements, or for any other reason, the Lead Borrower shall be deemed to have incurred from the Issuing Lender a borrowing (each a “Letter of Credit Borrowing”) in the amount of such drawing (or for drawings in an Optional Currency, in the Dollar Equivalent amount of such drawing). Such Letter of Credit Borrowing shall be due and payable on demand (together with interest) and shall bear interest at the rate per annum applicable to the Revolving Credit Loans under the Base Rate Option. Each Lender's payment to the Administrative Agent for the account of the Issuing Lender pursuant to Section 2.7.3 [Disbursements, Reimbursement] shall be deemed to be a payment in respect of its participation in such Letter of Credit Borrowing (each a “Participation Advance”) from such Lender in satisfaction of its participation obligation under this Section 2.7.3 [Disbursements. Reimbursement]. 2.7.4 Repayment of Participation Advances. 2.7.4.1 Upon (and only upon) receipt by the Administrative Agent for the account of the Issuing Lender of immediately available funds from the Lead Borrower (i) in reimbursement of any payment made by the Issuing Lender under the Letter of Credit with respect to which any Lender has made a Participation Advance to the Administrative Agent, or 223667699

 
(ii) in payment of interest on such a payment made by the Issuing Lender under such a Letter of Credit, the Administrative Agent on behalf of the Issuing Lender will pay to each Lender, in the same funds as those received by the Administrative Agent, the amount of such Lender's Ratable Share of such funds, except the Administrative Agent shall retain for the account of the Issuing Lender the amount of the Ratable Share of such funds of any Lender that did not make a Participation Advance in respect of such payment by the Issuing Lender. 2.7.4.2 If the Administrative Agent is required at any time to return to any Loan Party, or to a trustee, receiver, receiver and manager, interim receiver, monitor liquidator, custodian, or any official in any Insolvency Proceeding, any portion of any payment made by any Loan Party to the Administrative Agent for the account of the Issuing Lender pursuant to this Section 2.7 [Letter of Credit Subfacility] in reimbursement of a payment made under the Letter of Credit or interest or fee thereon, each Lender shall, on demand of the Administrative Agent, forthwith return to the Administrative Agent for the account of the Issuing Lender the amount of its Ratable Share of any amounts so returned by the Administrative Agent plus interest thereon from the date such demand is made to the date such amounts are returned by such Lender to the Administrative Agent, at a rate per annum equal to the Federal Funds Effective Rate (or, for any payment in an Optional Currency, the Overnight Rate) in effect from time to time. 2.7.5 Documentation. Each Loan Party agrees to be bound by the terms of the Issuing Lender's application and agreement for letters of credit and the Issuing Lender's written regulations and customary practices relating to letters of credit, though such interpretation may be different from such Loan Party's own. In the event of a conflict between such application or agreement and this Agreement, this Agreement shall govern. It is understood and agreed that, except in the case of gross negligence or willful misconduct as determined by a final non-appealable judgment of a court of competent jurisdiction, the Issuing Lender shall not be liable for any error, negligence and/or mistakes, whether of omission or commission, in following any Loan Party's instructions or those contained in the Letters of Credit or any modifications, amendments or supplements thereto. 2.7.6 Determinations to Honor Drawing Requests. In determining whether to honor any request for drawing under any Letter of Credit by the beneficiary thereof, the Issuing Lender shall be responsible only to determine that the documents and certificates required to be delivered under such Letter of Credit have been delivered and that they comply on their face with the requirements of such Letter of Credit without responsibility for further investigation. 2.7.7 Nature of Participation and Reimbursement Obligations. Each Lender's obligation in accordance with this Agreement to make the Revolving Credit Loans or Participation Advances, as contemplated by Section 2.7.3 [Disbursements, Reimbursement], as a result of a drawing under a Letter of Credit, and the Obligations of the Lead Borrower to reimburse the Issuing Lender upon a draw under a Letter of Credit, shall be absolute, unconditional and irrevocable, and shall be performed strictly in accordance with the terms of this Section 2.7 [Letter of Credit Subfacility] under all circumstances, including the following circumstances: (i) any set-off, counterclaim, recoupment, defense or other right which such Lender may have against the Issuing Lender or any of its Affiliates, any Borrower or any other 223667699

 
Person for any reason whatsoever, or which any Loan Party may have against the Issuing Lender or any of its Affiliates, any Lender or any other Person for any reason whatsoever; (ii) the failure of any Loan Party or any other Person to comply, in connection with a Letter of Credit Borrowing, with the conditions set forth in Section 2.1 [Revolving Credit Commitments], Section 2.4 [Revolving Credit Loan Requests; Swing Loan Requests], Section 2.5 [Making Revolving Credit Loans and Swing Loans; Etc.] or Section 6.1.2 [Each Loan or Letter of Credit] or as otherwise set forth in this Agreement for the making of a Revolving Credit Loan, it being acknowledged that such conditions are not required for the making of a Letter of Credit Borrowing and the obligation of the Lenders to make Participation Advances under Section 2.7.3 [Disbursements, Reimbursement]; (iii) any lack of validity or enforceability of any Letter of Credit; (iv) any claim of breach of warranty that might be made by any Loan Party or any Lender against any beneficiary of a Letter of Credit, or the existence of any claim, set-off, recoupment, counterclaim, crossclaim, defense or other right which any Loan Party or any Lender may have at any time against a beneficiary, successor beneficiary any transferee or assignee of any Letter of Credit or the proceeds thereof (or any Persons for whom any such transferee may be acting), the Issuing Lender or its Affiliates or any Lender or any other Person, whether in connection with this Agreement, the transactions contemplated herein or any unrelated transaction (including any underlying transaction between any Loan Party or Subsidiaries of a Loan Party and the beneficiary for which any Letter of Credit was procured); (v) the lack of power or authority of any signer of (or any defect in or forgery of any signature or endorsement on) or the form of or lack of validity, sufficiency, accuracy, enforceability or genuineness of any draft, demand, instrument, certificate or other document presented under or in connection with any Letter of Credit, or any fraud or alleged fraud in connection with any Letter of Credit, or the transport of any property or provision of services relating to a Letter of Credit, in each case even if the Issuing Lender or any of its Affiliates has been notified thereof; (vi) payment by the Issuing Lender or any of its Affiliates under any Letter of Credit against presentation of a demand, draft or certificate or other document which does not comply with the terms of such Letter of Credit; (vii) the solvency of, or any acts or omissions by, any beneficiary of any Letter of Credit, or any other Person having a role in any transaction or obligation relating to a Letter of Credit, or the existence, nature, quality, quantity, condition, value or other characteristic of any property or services relating to a Letter of Credit; (viii) any failure by the Issuing Lender or any of its Affiliates to issue any Letter of Credit in the form requested by the Lead Borrower or any other Loan Party, unless the Issuing Lender has received written notice from the Lead Borrower or such other Loan Party of such failure within six (6) Business Days after the Issuing Lender shall have furnished the Lead Borrower and the Administrative Agent a copy of such Letter of Credit and such error is material and no drawing has been made thereon prior to receipt of such notice; (ix) any adverse change in the business, operations, properties, assets, condition (financial or otherwise) or prospects of any Loan Party or Subsidiaries of a Loan Party; 223667699

 
(x) any breach of this Agreement or any other Loan Document by any party thereto; (xi) the occurrence or continuance of an Insolvency Proceeding with respect to any Loan Party; (xii) the fact that an Event of Default or a Potential Default shall have occurred and be continuing; and (xiii) the fact that the Expiration Date shall have passed or this Agreement or the Commitments hereunder shall have been terminated. 2.7.8 Indemnity. The Loan Parties hereby agree to protect, indemnify, pay and save harmless each Issuing Lender and any of its Affiliates that has issued a Letter of Credit from and against any and all claims, demands, liabilities, damages, Taxes, penalties, interest, judgments, losses, costs, charges and expenses (including reasonable fees, expenses and disbursements of counsel and allocated costs of internal counsel) which the Issuing Lender or any of its Affiliates may incur or be subject to as a consequence, direct or indirect, of the issuance of any Letter of Credit, other than as a result of (A) the gross negligence or willful misconduct of the Issuing Lender, or material breach in bad faith of the Issuing Lender's obligations hereunder, in each case as determined by a final non-appealable judgment of a court of competent jurisdiction or (B) the wrongful dishonor by the Issuing Lender or any of Issuing Lender's Affiliates of a proper demand for payment made under any Letter of Credit, except if such dishonor resulted from any act or omission, whether rightful or wrongful, of any present or future de jure or de facto government or Official Body. 2.7.9 Liability for Acts and Omissions. As between any Loan Party and the Issuing Lender, or the Issuing Lender's Affiliates, such Loan Party assumes all risks of the acts and omissions of, or misuse of the Letters of Credit by, the respective beneficiaries of such Letters of Credit. In furtherance and not in limitation of the foregoing, the Issuing Lender shall not be responsible for any of the following, including any losses or damages to any Loan Party or other Person or property relating therefrom: (i) the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any party in connection with the application for an issuance of any such Letter of Credit, even if it should in fact prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged (even if the Issuing Lender or its Affiliates shall have been notified thereof); (ii) the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign any such Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; (iii) the failure of the beneficiary of any such Letter of Credit, or any other party to which such Letter of Credit may be transferred, to comply fully with any conditions required in order to draw upon such Letter of Credit or any other claim of any Loan Party against any beneficiary of such Letter of Credit, or any such transferee, or any dispute between or among any Loan Party and any beneficiary of any Letter of Credit or any such transferee; (iv) errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, e-mail or otherwise, whether or not they be in cipher; (v) errors in interpretation of technical terms; (vi) any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any such Letter of Credit or of the proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter of Credit of the proceeds of any drawing under such Letter of Credit; or (viii) any consequences arising from 223667699

 
causes beyond the control of the Issuing Lender or its Affiliates, as applicable, including any act or omission of any Official Body, and none of the above shall affect or impair, or prevent the vesting of, any of the Issuing Lender's or its Affiliates rights or powers hereunder. Nothing in the preceding sentence shall relieve the Issuing Lender from liability for the Issuing Lender's gross negligence, willful misconduct or bad faith in connection with actions or omissions described in such clauses (i) through (viii) of such sentence, in each case as determined by a final non-appealable judgment of a court of competent jurisdiction. In no event shall the Issuing Lender or its Affiliates be liable to any Loan Party for any indirect, consequential, incidental, punitive, exemplary or special damages or expenses (including without limitation attorneys' fees), or for any damages resulting from any change in the value of any property relating to a Letter of Credit. Without limiting the generality of the foregoing, the Issuing Lender and each of its Affiliates (i) may rely on any oral or other communication believed in good faith by the Issuing Lender or such Affiliate to have been authorized or given by or on behalf of the applicant for a Letter of Credit, (ii) may honor any presentation if the documents presented appear on their face substantially to comply with the terms and conditions of the relevant Letter of Credit; (iii) may honor a previously dishonored presentation under a Letter of Credit, whether such dishonor was pursuant to a court order, to settle or compromise any claim of wrongful dishonor, or otherwise, and shall be entitled to reimbursement to the same extent as if such presentation had initially been honored, together with any interest paid by the Issuing Lender or its Affiliate; (iv) may honor any drawing that is payable upon presentation of a statement advising negotiation or payment, upon receipt of such statement (even if such statement indicates that a draft or other document is being delivered separately), and shall not be liable for any failure of any such draft or other document to arrive, or to conform in any way with the relevant Letter of Credit; (v) may pay any paying or negotiating bank claiming that it rightfully honored under the laws or practices of the place where such bank is located; and (vi) may settle or adjust any claim or demand made on the Issuing Lender or its Affiliate in any way related to any order issued at the applicant's request to an air carrier, a letter of guarantee or of indemnity issued to a carrier or any similar document (each an “Order”) and honor any drawing in connection with any Letter of Credit that is the subject of such Order, notwithstanding that any drafts or other documents presented in connection with such Letter of Credit fail to conform in any way with such Letter of Credit. In furtherance and extension and not in limitation of the specific provisions set forth above, any action taken or omitted by the Issuing Lender or its Affiliates under or in connection with the Letters of Credit issued by it or any documents and certificates delivered thereunder, if taken or omitted in good faith, shall not put the Issuing Lender or its Affiliates under any resulting liability to any Borrower or any Lender. 2.7.10 Issuing Lender Reporting Requirements. Each Issuing Lender shall, on the first Business Day of each month, provide to the Administrative Agent a schedule of the Letters of Credit issued by it, in form and substance satisfactory to the Administrative Agent, showing the date of issuance of each Letter of Credit, the account party, the original face amount (if any), and the expiration date of any Letter of Credit outstanding at any time during the preceding month, and any other information relating to such Letter of Credit that the Administrative Agent may request. 2.7.11 Replacement and Resignation of Issuing Lender. 223667699

 
2.7.11.1 The Issuing Lender may be replaced at any time by written agreement among the Lead Borrower, the Administrative Agent, the replaced Issuing Lender and the successor Issuing Lender. The Administrative Agent shall notify the Lenders of any such replacement of the Issuing Lender. At the time any such replacement shall become effective, the Lead Borrower shall pay all unpaid fees accrued for the account of the replaced Issuing Lender pursuant to Section 2.7.2 [Letter of Credit Fees]. From and after the effective date of any such replacement, (i) the successor Issuing Lender shall have all the rights and obligations of the replaced Issuing Lender under this Agreement with respect to Letters of Credit to be issued thereafter and (ii) references herein to the term “Issuing Lender” shall be deemed to refer to such successor or to any previous Issuing Lender, or to such successor and all previous Issuing Lenders, as the context shall require. After the replacement of an Issuing Lender hereunder, the replaced Issuing Lender shall remain a party hereto and shall continue to have all the rights and obligations of an Issuing Lender under this Agreement with respect to Letters of Credit then outstanding and issued by it prior to such replacement, but shall not be required to issue additional Letters of Credit. 2.7.11.2 The Issuing Lender may resign as an Issuing Lender at any time upon thirty days’ prior written notice to the Administrative Agent, the Lead Borrower and the Lenders, in which case, such Issuing Lender shall be replaced in accordance with Section 2.7.11.1 above; provided, however, in the event that there is only one (1) Issuing Lender at any time during the term of this Agreement and such Issuing Lender desires to resign as an Issuing Lender, then resignation of such Issuing Lender shall not be effective until such time as a successor Issuing Lender has been appointed and accepted. 2.8 Termination or Reduction of Revolving Credit Commitments. 2.8.1 Voluntary Termination or Reduction. The Lead Borrower shall have the right, upon not less than three (3) Business Days' (or such shorter period to which the Administrative Agent may agree) notice to the Administrative Agent, to terminate the Revolving Credit Commitments or, from time to time, to reduce the aggregate amount of the Revolving Credit Commitments (ratably among the Lenders in proportion to their Ratable Shares); provided that no such termination or reduction of Revolving Credit Commitments shall be permitted if, after giving effect thereto and to any prepayments of the Revolving Credit Loans made on the effective date thereof, the Revolving Facility Usage would exceed the aggregate Revolving Credit Commitments of the Lenders. Any such reduction shall be permanent, and in an amount equal to Thirty Million and 00/100 Dollars ($30,000,000.00), or a whole multiple thereof. Any such reduction or termination shall be accompanied by prepayment of the revolving credit Notes, together with outstanding Commitment Fees, and the full amount of interest accrued on the principal sum to be prepaid (and all amounts referred to in Section 4.10 [Indemnity] hereof) to the extent necessary to cause the aggregate Revolving Facility Usage after giving effect to such prepayments to be equal to or less than the Revolving Credit Commitments as so reduced or terminated. Any notice to reduce the Revolving Credit Commitments under this Section 2.82.8.1 shall be irrevocable. 2.8.2 Mandatory Reduction. The aggregate amount of the Revolving Credit Commitments shall automatically and without further action permanently reduce ratably among the Lenders in proportion to their Ratable Shares, on the dates set forth in the following table (any such date, a “Reduction Date”), to the applicable amount set forth in such table below the 223667699

 
column entitled “Reduced Aggregate Revolving Credit Commitments” (any such amount, a “Reduced Commitment Amount”): Date of Revolving Credit Reduced Aggregate Commitment Reduction Revolving Credit Commitments October 31, 2020 $375,000,000.00 January 30, 2021 $350,000,000.00 May 1, 2021 $325,000,000.00 July 31, 2021 $300,000,000.00 Notwithstanding the foregoing, no such automatic reduction shall occur on any applicable Reduction Date if, as a consequence of any voluntary Revolving Credit Commitment reductions in accordance with Section 2.8.1 [Voluntary Termination or Reduction], the Revolving Credit Commitments on such Reduction Date are already less than the applicable Reduced Commitment Amount. Each reduction on the applicable Reduction Date shall be accompanied by prepayment of the Revolving Credit Loans, together with outstanding Commitment Fees, and the full amount of interest accrued on the principal sum to be prepaid (and all amounts referred to in Section 4.10 [Indemnity] hereof), to the extent necessary to cause the aggregate Revolving Facility Usage after giving effect to such prepayments to be equal to or less than the applicable Reduced Commitment Amount. 2.9 Increase in Revolving Credit CommitmentsReserved. 2.9.1 Increasing Lenders and New Lenders. The Lead Borrower may, on behalf of itself and the other Borrowers, at any time and from time to time, by written notice to the Administrative Agent, request that (1) any current Lender increase its Revolving Credit Commitment (any current Lender which elects to increase its Revolving Credit Commitment shall be referred to as an “Increasing Lender”) or (2) one or more new lenders (each, a “New Lender”) join this Agreement and provide a Revolving Credit Commitment hereunder, subject to the following terms and conditions: (A) No Obligation to Increase. No current Lender shall be obligated to increase its Revolving Credit Commitment and any increase in the Revolving Credit Commitment by any current Lender shall be in the sole discretion of such current Lender. (B) Defaults. There shall exist no Event of Default or Potential Default on the effective date of such increase after giving effect to such increase. (C) Aggregate Revolving Credit Commitments. After giving effect to such increase, the total Revolving Credit Commitments shall not exceed Four Hundred Million and 00/100 Dollars ($400,000,000.00). 223667699

 
(D) Minimum Increase. The Lead Borrower may request an increase pursuant to this Section 2.9 [Increase in Revolving Credit Commitments] up to two (2) times after the Closing Date during the term of this Agreement; provided, however, subject to the other terms of this Section 2.9 [Increase in Revolving Credit Commitments], each such increase shall be in an amount equal to or greater than Twenty Five Million and 00/100 Dollars ($25,000,000.00) (or, if less, the difference of (a) One Hundred Million and 00/100 Dollars ($100,000,000.00) minus (b) the aggregate increases in the Revolving Credit Commitments theretofore requested). (E) Resolutions; Opinion. The Loan Parties shall deliver to the Administrative Agent, if reasonably requested by the Administrative Agent, on or before the effective date of such increase the following documents in a form reasonably acceptable to the Administrative Agent: (1) certifications of their corporate secretaries with attached resolutions certifying that the increase in the Revolving Credit Commitment has been approved by such Loan Parties, and (2) opinion(s) of counsel addressed to the Administrative Agent and the Lenders addressing the authorization and execution of the Loan Documents by, and enforceability of the Loan Documents against, the Loan Parties. (F) Notes and Other Documents. The Borrowers shall execute and deliver (1) to each Increasing Lender a replacement revolving credit Note reflecting the new amount of such Increasing Lender's Revolving Credit Commitment after giving effect to the increase (and the prior Note issued to such Increasing Lender shall be deemed to be terminated); (2) to each New Lender a revolving credit Note reflecting the amount of such New Lender's Revolving Credit Commitment; and (3) an amendment or modification to this Agreement providing for such increased or additional Revolving Credit Commitments, to be executed by the Borrowers, the Administrative Agent and any Lenders (including any New Lender) agreeing to increase their existing Revolving Credit Commitment or extend a new Revolving Credit Commitment, as the case may be. (G) Approval of New Lenders. Any New Lender shall be subject to the approval of the Administrative Agent and the Issuing Lender, which approval shall not be unreasonably withheld, delayed or conditioned. (H) Increasing Lenders. Each Increasing Lender shall confirm its agreement to increase its Revolving Credit Commitment pursuant to an acknowledgement in a form acceptable to the Administrative Agent, signed by it and the Borrowers and delivered to the Administrative Agent at least five (5) days before the effective date of such increase. (I) New Lenders; Joinder. Each New Lender shall execute and deliver to the Administrative Agent a lender joinder, substantially in the form of Exhibit (L), pursuant to which such New Lender shall join and become a party to this Agreement and the other Loan Documents with a Revolving Credit Commitment in the amount set forth in such lender joinder. 2.9.2 Treatment of Outstanding Loans and Letters of Credit. 2.9.2.1 Repayment of Outstanding Loans; Borrowing of New Loans. On the effective date of such increase of Revolving Credit Commitments, the Borrowers shall repay all Revolving Credit Loans then outstanding, subject to the Borrowers’ indemnity 223667699

 
obligations under Section 4.10 [Indemnity]; provided that they may borrow new Revolving Credit Loans with a Borrowing Date on such date. Each of the Lenders shall participate in any new Revolving Credit Loans made on or after such date in accordance with their respective Ratable Shares after giving effect to the increase in Revolving Credit Commitments contemplated by this Section 2.9 [Increase in Revolving Credit Commitments]. 2.9.2.2 Outstanding Letters of Credit; Repayment of Outstanding Revolving Credit Loans; Borrowing of New Revolving Credit Loans. On the effective date of such increase of Revolving Credit Commitments, each Increasing Lender and each New Lender (i) will be deemed to have purchased a participation in each then outstanding Letter of Credit equal to its Ratable Share of such Letter of Credit and the participation of each other Lender in such Letter of Credit shall be adjusted accordingly and (ii) will acquire (and will pay to the Administrative Agent, for the account of each Lender, in immediately available funds, an amount equal to) its Ratable Share of all outstanding Participation Advances. 2.10 Utilization of Commitments in Optional Currencies. 2.10.1 Periodic Computations of Dollar Equivalent Amounts of Revolving Credit Loans that are Optional Currency Loans and Letters of Credit Outstanding; Repayment in Same Currency. For purposes of determining utilization of the Revolving Credit Commitments, the Administrative Agent will determine the Dollar Equivalent amount of (i) the proposed Revolving Credit Loans that are Optional Currency Loans and Letters of Credit to be denominated in an Optional Currency as of the requested Borrowing Date or date of issuance, as the case may be, (ii) the outstanding Letter of Credit Obligations denominated in an Optional Currency as of the last Business Day of each month, (iii) the outstanding Revolving Credit Loans denominated in an Optional Currency as of the end of each Interest Period and (iv) any Revolving Credit Loan, Letter of Credit Obligation, fee, payment or other obligation under this Agreement or any other Loan Document on any date on which the Administrative Agent reasonably determines it is necessary or advisable to make such computation in its sole discretion (each such date under clauses (i) through (iv) is referred to as a “Computation Date”). Unless otherwise provided in this Agreement or agreed to by the Administrative Agent or the Issuing Lender (in the case of any Reimbursement Obligation) and the applicable Borrower, each Loan and Reimbursement Obligation shall be repaid or prepaid in the same currency in which the Loan or Reimbursement Obligation was made. Notwithstanding the foregoing or anything contained herein to the contrary, if it is impossible or illegal for any Borrower to effect payment of a Loan in the currency in which such Loan was made, or if the applicable Borrower defaults in its obligation to do so, the Required Lenders may at their option permit such payment to be made (i) at and to a different location, subsidiary, affiliate or correspondent of the Administrative Agent, (ii) in the Dollar Equivalent amount of such payment, or (iii) in an Equivalent Amount of such other currency (freely convertible into Dollars) as the Required Lenders may solely at their option designate. Upon any events described in (i) through (iii) of the preceding sentence, the applicable Borrower shall make such payment and such Borrower agrees to hold each Lender harmless from and against any loss incurred by such Lender arising from the cost to such Lender of any premium, any costs of exchange, the cost of hedging and covering the currency in which such Loan was originally made, and from any change in the value of Dollars, or such other currency, in relation to the currency that was due and owing 2.10.2 Notices from Lenders That Optional Currencies Are Unavailable to Fund New Loans. The Lenders shall be under no obligation to make the Revolving Credit Loans 223667699

 
requested by a Borrower which are denominated in an Optional Currency other than Canadian Dollars if any Lender notifies the Administrative Agent by 5:00 p.m. four (4) Business Days prior to the Borrowing Date for such Revolving Credit Loans that such Lender cannot provide its Ratable Share of such Revolving Credit Loans in such Optional Currency. In the event the Administrative Agent timely receives a notice from a Lender pursuant to the preceding sentence, the Administrative Agent will notify the applicable Borrower no later than 12:00 noon three (3) Business Days prior to the Borrowing Date for such Revolving Credit Loans that such Optional Currency is not then available for such Revolving Credit Loans, and the Administrative Agent shall promptly thereafter notify the Lenders of the same and the Lenders shall not make such Revolving Credit Loans requested by the applicable Borrower under its Revolving Credit Loan Request. 2.10.3 Notices From Lenders That Optional Currencies Are Unavailable to Fund Renewals of the Euro-Rate Option. If a Borrower delivers a Revolving Credit Loan Request requesting that the Lenders renew the Euro-Rate Option with respect to an outstanding Borrowing Tranche of Revolving Credit Loans denominated in an Optional Currency other than Canadian Dollars, the Lenders shall be under no obligation to renew such Euro-Rate Option if any Lender delivers to the Administrative Agent a notice by 5:00 p.m. four (4) Business Days prior to the effective date of such renewal that such Lender cannot continue to provide Revolving Credit Loans in such Optional Currency. In the event the Administrative Agent timely receives a notice from a Lender pursuant to the preceding sentence, the Administrative Agent will notify the applicable Borrower no later than 12:00 noon three (3) Business Days prior to the renewal date that the renewal of such Revolving Credit Loans in such Optional Currency is not then available, and the Administrative Agent shall promptly thereafter notify the Lenders of the same. If the Administrative Agent shall have so notified a Borrower that any such continuation of such Revolving Credit Loans in such Optional Currency is not then available, any notice of renewal with respect thereto shall be deemed withdrawn, and such Loans shall be redenominated into Loans in Dollars at the Base Rate Option or Euro-Rate Option, at the applicable Borrower’s option (subject, in the case of the Euro-Rate Option, to compliance with Section 2.5 [Making Revolving Credit Loans, Etc.] and Section 3.1 [Interest Rate Options]), with effect from the last day of the Interest Period with respect to any such Loans. The Administrative Agent will promptly notify the applicable Borrower and the Lenders of any such redenomination, and in such notice, the Administrative Agent will state the aggregate Dollar Equivalent amount of the redenominated Revolving Credit Loans in such Optional Currency as of the applicable Computation Date with respect thereto and such Lender’s Ratable Share thereof. 2.10.4 European Monetary Union. (A) Payments In Euros Under Certain Circumstances. If (i) any Optional Currency ceases to be lawful currency of the nation issuing the same and is replaced by the Euro or (ii) any Optional Currency and the Euro are at the same time recognized by any governmental authority of the nation issuing such currency as lawful currency of such nation and the Administrative Agent or the Required Lenders shall so request in a notice delivered to the Lead Borrower, then any amount payable hereunder by any party hereto in such Optional Currency shall instead be payable in the Euro and the amount so payable shall be determined by translating the amount payable in such Optional Currency to the Euro at the exchange rate established by that nation for the purpose of implementing the replacement of the relevant Optional Currency by the Euro (and the provisions governing payments in Optional Currencies in this Agreement shall apply to such payment in the Euro as if such payment in the Euro were a 223667699

 
payment in an Optional Currency). Prior to the occurrence of the event or events described in clause (i) or (ii) of the preceding sentence, each amount payable hereunder in any Optional Currency will, except as otherwise provided herein, continue to be payable only in that currency. (B) Additional Compensation Under Certain Circumstances. Each Borrower agrees, at the request of any Lender, to compensate such Lender for any loss, cost, expense or reduction in return that such Lender shall reasonably determine shall be incurred or sustained by such Lender as a result of the replacement of any Optional Currency by the Euro and that would not have been incurred or sustained but for the transactions provided for herein. A certificate of any Lender setting forth such Lender’s determination of the amount or amounts necessary to compensate such Lender shall be delivered to the Borrowers and shall be conclusive absent manifest error so long as such determination is made on a reasonable basis. The Borrowers shall pay such Lender the amount shown as due on any such certificate within thirty (30) days after receipt thereof. 2.10.5 Requests for Additional Optional Currencies. The Lead Borrower may deliver to the Administrative Agent a written request that Revolving Credit Loans hereunder also be permitted to be made and Letters of Credit permitted to be issued in any other lawful currency (other than Dollars), in addition to the currencies specified in the definition of “Optional Currency” herein, provided (A) such written request must be delivered to the Administrative Agent not later than (i) four (4) Business Days prior to the date on which the Borrowers intend to request a Revolving Credit Loan denominated in the new currency, or (ii) five (5) Business Days on which the Loan Parties intend a Letter of Credit to be issued in the new currency, and (B) that such currency must be freely traded in the offshore interbank foreign exchange markets, freely transferable, freely convertible into Dollars and available to the Lenders or the Issuing Lender, as applicable, in the Relevant Interbank Market. The Administrative Agent will promptly notify the Lenders or the Issuing Lender, as applicable, of any such request promptly after the Administrative Agent receives such request. The Administrative Agent will promptly notify the Borrowers of the acceptance or rejection by the Administrative Agent and each of the Lenders or the Issuing Lender, as applicable, of the Lead Borrower’s request. The requested currency shall be approved as an Optional Currency hereunder only if the Administrative Agent and all of the Lenders or the Issuing Lender, as applicable, approve of the Lead Borrower’s request. 2.11 Settlement Date Procedures. In order to minimize the transfer of funds between the Lenders and the Administrative Agent, the Lead Borrower may borrow, repay and reborrow Swing Loans and the Swing Loan Lender may make Swing Loans as provided in Section 2.1.2 [Swing Loan Commitments] hereof during the period between Settlement Dates. On any relevant date the Administrative Agent shall notify each Lender of its Ratable Share of the total of the Revolving Credit Loans and the Swing Loans (each a “Required Share”). On such Settlement Date, each Lender shall pay to the Administrative Agent the amount equal to the difference between its Required Share and its Revolving Credit Loans, and the Administrative Agent shall pay to each Lender its Ratable Share of all payments made by the Lead Borrower to the Administrative Agent with respect to the Revolving Credit Loans. The Administrative Agent shall also effect settlement in accordance with the foregoing sentence on the proposed Borrowing Dates for Revolving Credit Loans and may at its option effect settlement on any other Business Day. These settlement procedures are established solely as a matter of administrative convenience, and nothing contained in this Section 2.11 [Settlement Date Procedures] shall relieve the Lenders of their obligations to fund Revolving Credit Loans on dates other than a Settlement Date pursuant to Section 2.1.1 [Revolving Credit Loans; Optional Currency Loans]. 223667699

 
The Administrative Agent may at any time at its option for any reason whatsoever require each Lender to pay immediately to the Administrative Agent such Lender's Ratable Share of the outstanding Revolving Credit Loans and each Lender may at any time require the Administrative Agent to pay immediately to such Lender its Ratable Share of all payments made by the Borrowers to the Administrative Agent with respect to the Revolving Credit Loans. 2.12 Designated Borrowers. The Lead Borrower may at any time and from time to time designate any Canadian Subsidiary as a Designated Borrower by delivery to the Administrative Agent of a Designated Borrower Agreement executed by such Canadian Subsidiary and the Lead Borrower and the satisfaction of the other conditions precedent set forth in Section 6.2 [Conditions to Designation of Designated Borrowers], and upon such delivery and satisfaction such Canadian Subsidiary shall for all purposes of this Agreement be a Designated Borrower and a party to this Agreement until the Lead Borrower shall have executed and delivered to the Administrative Agent a Designated Borrower Termination with respect to such Canadian Subsidiary, whereupon such Canadian Subsidiary shall cease to be a Designated Borrower and a party to this Agreement. Notwithstanding the preceding sentence, no Designated Borrower Termination will become effective as to any Designated Borrower at a time when any principal of or interest on any Loan to such Borrower shall be outstanding hereunder, provided that such Designated Borrower Termination shall be effective to terminate the right of such Designated Borrower to make further Borrowings under this Agreement. As soon as practicable upon receipt of a Designated Borrower Agreement, the Administrative Agent shall furnish a copy thereof to each Lender. 3. INTEREST RATES 3.1 Interest Rate Options. The Borrowers shall pay interest in respect of the outstanding unpaid principal amount of (a) Loans denominated in Dollars as selected by it from the Base Rate Option or Euro-Rate Option set forth in Section 3.1.1(i) [Base Rate Option] or Section 3.1.1(ii) [Euro-Rate Option], and (b) Optional Currency Loans pursuant to the Euro-Rate Option set forth in Section 3.1.1(ii) [Euro-Rate Option], it being understood that, subject to the provisions of this Agreement, the Borrowers may select different Interest Rate Options and different Interest Periods to apply simultaneously to the Loans comprising different Borrowing Tranches and may convert to or renew one or more Interest Rate Options with respect to all or any portion of the Loans comprising any Borrowing Tranche; provided that there shall not be at any one time outstanding more than six (6) Borrowing Tranches in the aggregate among all of the Loans and provided further that if an Event of Default or Potential Default exists and is continuing, the Borrowers may not request, convert to, or renew the Euro-Rate Option for any Loans and the Required Lenders may demand that all existing Borrowing Tranches bearing interest under the Euro-Rate Option shall be converted immediately to the Base Rate Option as to Loans advanced in Dollars and to Loans bearing interest at the Overnight Rate plus the Applicable Margin for Euro-Rate Loans as to any Loans advanced in an Optional Currency, subject to the obligation of the Borrowers to pay any indemnity under Section 4.10 [Indemnity] in connection with such conversion. If at any time the designated rate applicable to any Loan made by any Lender exceeds such Lender’s highest lawful rate, the rate of interest on such Lender’s Loan shall be limited to such Lender’s highest lawful rate. Interest on the principal amount of each Optional Currency Loan shall be paid by the Borrowers in such Optional Currency. Notwithstanding any provisions to the contrary contained in this Agreement or any other Loan Document, the Borrowers shall not be required to pay, and the Lenders shall not be permitted to collect, any amount of interest in excess of the maximum amount of interest permitted by applicable Law 223667699

 
(“Excess Interest”). If any Excess Interest is provided for or determined by a court of competent jurisdiction to have been provided for in this Agreement or in any other Loan Document, then, in such event: (1) the provisions of this subsection shall govern and control; (2) the Borrowers shall not be obligated to pay any Excess Interest; (3) any Excess Interest that the Lenders may have received hereunder shall be, at the option of the Required Lenders, (a) applied as a credit against the outstanding principal balance of the Obligations or accrued and unpaid interest (not to exceed the maximum amount permitted by Law), (b) refunded to the payor thereof, or (c) any combination of the foregoing; (4) the interest rates provided for herein shall be automatically reduced to the maximum lawful rate allowed from time to time under applicable Law, and this Agreement and the other Loan Documents shall be deemed to have been and shall be reformed and modified to reflect such reduction; and (5) the Borrowers shall have no action against the Administrative Agent or any Lender for any damages arising out of the payment or collection of any Excess Interest (other than to enforce this Section 3.1 [Interest Rate Options]). 3.1.1 Revolving Credit Interest Rate Options; Swing Loan Interest Rate. The Borrowers shall have the right to select from the following Interest Rate Options applicable to the Revolving Credit Loans denominated in Dollars and Optional Currency Loans, as applicable: (i) Base Rate Option: A fluctuating rate per annum applicable to Loans denominated in Dollars equal to the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate; or (ii) Euro-Rate Option: A rate per annum applicable to Loans denominated in Dollars and Optional Currency Loans equal to the Euro-Rate as determined for each applicable Interest Period plus the Applicable Margin. 3.1.2 Swing Loan Interest Rate. Each Swing Loan shall bear interest at a rate per annum equal to (i) the Base Rate plus the Applicable Margin, such interest rate to change automatically from time to time effective as of the effective date of each change in the Base Rate, (ii) an interest rate per annum as agreed to by PNC and the Lead Borrower from time to time, or (iii) if applicable, at the applicable rate set forth in any Cash Management Agreement. 3.1.3 Rate Calculations; Rate Quotations. All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Daily LIBOR Rate) and Euro-Rate Loans in Canadian Dollars (and, in the discretion of the Administrative Agent, Euro-Rate Loans in any other Optional Currency) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of fees and interest shall be made on the basis of a 360-day year and actual days elapsed or, in the case of interest in respect of Loans denominated in a currency as to which market practice differs from the foregoing, in accordance with such market practice. Any Borrower may call the Administrative Agent on or before the date on which a Revolving Credit Loan Request is to be delivered to receive an indication of the rates then in effect, but it is acknowledged that such projection shall not be binding on the Administrative Agent or the Lenders nor affect the rate of interest which thereafter is actually in effect when the election is made. 3.1.4 Interest Act (Canada). For purposes of the Interest Act (Canada): (i) whenever any interest or fee under this Agreement is calculated on the basis of a period other than a calendar year, such rate used in such calculation, when expressed as an annual rate, is 223667699

 
equivalent to (x) such rate, multiplied by (y) the actual number of days in the calendar year in which the period for which such interest or fee is calculated ends, and divided by (z) the number of days in such period of time, (ii) the principle of deemed reinvestment of interest shall not apply to any interest calculation under this Agreement, and (iii) the rates of interest stipulated in this Agreement are intended to be nominal rates and not effective rates or yields. 3.1.5 Canadian Usury Provision. If any provision of this Agreement would oblige a Designated Borrower to make any payment of interest or other amount payable to any Lender in an amount or calculated at a rate which would be prohibited by law or would result in a receipt by that Lender of “interest” at a “criminal rate” (as such terms are construed under the Criminal Code (Canada)), then, notwithstanding such provision, such amount or rate shall be deemed to have been adjusted with retroactive effect to the maximum amount or rate of interest, as the case may be, as would not be so prohibited by applicable law or so result in a receipt by that Lender of “interest” at a “criminal rate”, such adjustment to be effected, to the extent necessary (but only to the extent necessary), as follows: (i) first, by reducing the amount or rate of interest; and (ii) thereafter, by reducing any fees, commissions, costs, expenses, premiums and other amounts required to be paid which would constitute interest for purposes of Section 347 of the Criminal Code (Canada). 3.2 Interest Periods. At any time when a Borrower shall select, convert to or renew a Euro-Rate Option, such Borrower shall notify the Administrative Agent thereof by delivering a Revolving Credit Loan Request (i) at least three (3) Business Days prior to the effective date of such Euro-Rate Option with respect to a Loan denominated in Dollars, and (ii) at least four (4) Business Days prior to the effective date of such Euro-Rate Option with respect to an Optional Currency Loan. The notice shall specify an Interest Period during which such Interest Rate Option shall apply. Notwithstanding the preceding sentence, the following provisions shall apply to any selection of, renewal of, or conversion to a Euro-Rate Option: 3.2.1 Amount of Borrowing Tranche. Each Borrowing Tranche of Loans under the Euro-Rate Option shall be in integral multiples of Five Hundred Thousand and 00/100 Dollars ($500,000.00) and not less than One Million and 00/100 Dollars ($1,000,000.00) (or in each case, the Dollar Equivalent thereof); and 3.2.2 Renewals. In the case of the renewal of a Euro-Rate Option at the end of an Interest Period, the first day of the new Interest Period shall be the last day of the preceding Interest Period, without duplication in payment of interest for such day. 3.2.3 No Conversion of Optional Currency Loans. Notwithstanding anything to the contrary herein, no Optional Currency Loan may be converted into a Loan with a different Interest Rate Option or a Loan denominated in a different currency unless otherwise permitted herein. 3.3 Interest After Default. To the extent permitted by Law, upon the occurrence of an Event of Default and until such time such Event of Default shall have been cured or waived, at the discretion of the Administrative Agent or upon written demand by the Required Lenders to the Administrative Agent: 223667699

 
3.3.1 Loans and Letter of Credit Fees, Interest Rate. The rate of interest otherwise applicable to the outstanding principal amounts of the Loans (pursuant to Section 3.1 [Interest Rate Options]) and the Letter of Credit Fees (pursuant to Section 2.7.2 [Letter of Credit Fees]), respectively, shall be increased by two percent (2.0%) per annum; 3.3.2 Other Obligations. Each other Obligation hereunder if not paid when due (including overdue interest) shall bear interest at a rate per annum equal to the sum of the rate of interest applicable under the Base Rate Option plus an additional two percent (2.0%) per annum from the time such Obligation becomes due and payable and until it is paid in full; and 3.3.3 Acknowledgment. The Borrowers acknowledge that the increase in rates referred to in this Section 3.3 [Interest After Default] reflects, among other things, the fact that such Loans or other amounts have become a substantially greater risk given their default status and that the Lenders are entitled to additional compensation for such risk; and all such interest shall be payable by Borrowers upon demand by the Administrative Agent. 3.4 Euro-Rate Unascertainable; Illegality; Increased Costs; Deposits Not Available. 3.4.1 Unascertainable. If on any date on which a Euro-Rate would otherwise be determined, the Administrative Agent shall have determined that: (i) adequate and reasonable means do not exist for ascertaining such Euro-Rate, or (ii) a contingency has occurred which materially and adversely affects the London interbank eurodollar market relating to the Euro-Rate, then the Administrative Agent shall have the rights specified in Section 3.4.4 [Administrative Agent's and Lender's Rights]. 3.4.2 Illegality; Increased Costs; Deposits Not Available. If at any time any Lender shall have determined that: (i) the making, maintenance or funding of any Loan to which a Euro-Rate Option applies has been made impracticable or unlawful by compliance by such Lender in good faith with any Law or any interpretation or application thereof by any Official Body or with any request or directive of any such Official Body (whether or not having the force of Law), or (ii) such Euro-Rate Option will not adequately and fairly reflect the cost to such Lender of the establishment or maintenance of any such Loan, or (iii) after making all reasonable efforts, deposits of the relevant amount in Dollars or in the Optional Currency, as applicable, for the relevant Interest Period for a Loan, or to banks generally, to which a Euro-Rate Option applies, respectively, are not available to such Lender with respect to such Loan, or to banks generally, in the Relevant Interbank Market, then the Administrative Agent shall have the rights specified in Section 3.4.4 [Administrative Agent's and Lender's Rights]. 3.4.3 Optional Currency Loans Not Available. If at any time the Administrative Agent shall have determined that a fundamental change has occurred in the 223667699

 
foreign exchange or interbank markets with respect to any Optional Currency (including, without limitation, changes in national or international financial, political or economic conditions or currency exchange rates or exchange controls), then (i) the Administrative Agent shall notify the Borrowers of any such determination, and (ii) the Administrative Agent shall have the rights specified in Section 3.4.4 [Administrative Agent's and Lender's Rights. 3.4.4 Administrative Agent's and Lender's Rights. In the case of any event specified in Section 3.4.1 [Unascertainable] above, the Administrative Agent shall promptly so notify the Lenders and the Borrowers thereof, in the case of an event specified in Section 3.4.2 [Illegality; Increased Costs; Deposits Not Available], and in the case of an event specified in Section 3.4.3 [Optional Currency Loans Not Available] above, such Lender shall promptly so notify the Administrative Agent and endorse a certificate to such notice as to the specific circumstances of such notice, and the Administrative Agent shall promptly send copies of such notice and certificate to the other Lenders and the Borrowers. Upon such date as shall be specified in such notice (which shall not be earlier than the date such notice is given), the obligation of (A) the Lenders, in the case of such notice given by the Administrative Agent, or (B) such Lender, in the case of such notice given by such Lender, to allow the Borrowers to select, convert to or renew a Euro-Rate Option or select an Optional Currency, as applicable, shall be suspended until the Administrative Agent shall have later notified the Borrowers, or such Lender shall have later notified the Administrative Agent, of the Administrative Agent's or such Lender's, as the case may be, determination that the circumstances giving rise to such previous determination no longer exist. If at any time the Administrative Agent makes a determination under Section 3.4.1 [Unascertainable] and the Borrowers have previously notified the Administrative Agent of its selection of, conversion to or renewal of a Euro-Rate Option and such Interest Rate Option has not yet gone into effect, such notification shall be deemed to provide for selection of, conversion to or renewal of the Base Rate Option otherwise available with respect to such Loans. If any Lender notifies the Administrative Agent of a determination under Section 3.4.2 [Illegality; Increased Costs; Deposits Not Available], the Borrowers shall, subject to the Borrowers' indemnification Obligations under Section 4.10 [Indemnity], as to any Loan of the Lender to which a Euro-Rate Option applies, on the date specified in such notice either (i) as applicable, convert such Loan to the Base Rate Option otherwise available with respect to such Loan or select a different Optional Currency or Dollars, or (ii) prepay such Loan in accordance with Section 4.6 [Voluntary Prepayments]. Absent due notice from the Borrowers of conversion or prepayment, such Loan shall automatically be converted to the Base Rate Option otherwise available with respect to such Loan upon such specified date. If the Administrative Agent makes a determination under Section 3.4.3 [Optional Currency Loans Not Available] then, until the Administrative Agent notifies the Borrowers that the circumstances giving rise to such determination no longer exist, (i) the availability of Loans in the applicable Optional Currency shall be suspended, and (ii) the outstanding Loans in the applicable Optional Currency shall be converted into Dollar Loans (in an amount equal to the Dollar Equivalent of such outstanding Optional Currency Loans) (x) on the last day of the then current Interest Period if the Lenders may lawfully continue to maintain Loans in such Optional Currency to such day, or (y) immediately if the Lenders may not lawfully continue to maintain Loans in such Optional Currency, and interest thereon shall thereafter accrue at the Base Rate Option. 3.5 Selection of Interest Rate Options. If the Borrowers fail to select a new Interest Period to apply to any Borrowing Tranche of Loans under the Euro-Rate Option at the expiration 223667699

 
of an existing Interest Period applicable to such Borrowing Tranche in accordance with the provisions of Section 3.2 [Interest Periods], the applicable Borrower shall be deemed to have converted such Borrowing Tranche to the Base Rate Option commencing upon the last day of the existing Interest Period, and any such currency conversion to U.S. Dollars shall be determined by the Administrative Agent at the time of such conversion. 3.6 Successor Euro-Rate Index. (a) Benchmark Replacement. Notwithstanding anything to the contrary herein or in any other Loan Document, upon the occurrence of a Benchmark Transition Event or if an Early Opt-in Event has occurred with respect to the Euro-Rate for any Available Currency, the Administrative Agent and the Lead Borrower may amend this Agreement to replace the Euro-Rate for such Available Currency with a Benchmark Replacement for such Available Currency; and any such amendment will become effective at 5:00 p.m. New York City time on the fifth (5th) Business Day after the Administrative Agent has provided such proposed amendment to all Lenders, so long as the Administrative Agent has not received, by such time, written notice of objection to such amendment from Lenders comprising the Required Lenders. Until the Benchmark Replacement with respect to the Euro-Rate for any Available Currency is effective, each advance, conversion and renewal of a Loan in such Available Currency under the Euro-Rate Option will continue to bear interest with reference to the Euro-Rate for such Available Currency; provided however, during a Benchmark Unavailability Period with respect to any Available Currency (i) any pending selection of, conversion to or renewal of a Loan in such Available Currency bearing interest under the Euro-Rate Option that has not yet gone into effect shall be deemed to be a selection of, conversion to or renewal of the Base Rate Option with respect to such Loan in the Dollar Equivalent amount of such Loan, (ii) all outstanding Loans in such Available Currency bearing interest under the Euro-Rate Option shall automatically be (A) if in Dollars, converted to the Base Rate Option at the expiration of the existing Interest Period (or sooner, if Administrative Agent cannot continue to lawfully maintain such affected Loan under the Euro-Rate Option) (B) if in an Optional Currency, converted to a Loan in Dollars under the Base Rate Option in the Dollar Equivalent amount of such Loan at the expiration of the existing Interest Period (or sooner, if the Administrative Agent cannot continue to lawfully maintain such affected Loan under the Euro-Rate Option in such Optional Currency) and (iii) the component of the Base Rate based upon the Euro-Rate will not be used in any determination of the Base Rate. (b) Benchmark Replacement Conforming Changes. In connection with the implementation of a Benchmark Replacement, the Administrative Agent will have the right to make Benchmark Replacement Conforming Changes from time to time and, notwithstanding anything to the contrary herein or in any other Loan Document, any amendments implementing such Benchmark Replacement Conforming Changes will become effective without any further action or consent of any other party to this Agreement. (c) Notices; Standards for Decisions and Determinations. The Administrative Agent will promptly notify the Lead Borrower and the Lenders of (i) the implementation of any Benchmark Replacement, (ii) the effectiveness of any Benchmark Replacement Conforming Changes and (iii) the commencement of any Benchmark Unavailability Period. Any determination, decision or election that may be made by the Administrative Agent or the Lenders pursuant to this Section 3.6 including any determination with respect to a tenor, rate or adjustment or of the occurrence or non-occurrence of an event, circumstance or date and any 223667699

 
decision to take or refrain from taking any action, will be conclusive and binding absent manifest error and may be made in its or their sole discretion and without consent from any other party hereto, except, in each case, as expressly required pursuant to this Section 3.6. 4. PAYMENTS 4.1 Payments. All payments and prepayments to be made in respect of principal, interest, Commitment Fees, Letter of Credit Fees, Administrative Agent's Fee or other fees or amounts due from the Borrowers hereunder shall be payable prior to 1:00 p.m. on the date when due without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived by the Borrowers, and without set-off, counterclaim or other deduction of any nature, and an action therefor shall immediately accrue. Such payments shall be made to the Administrative Agent at the Principal Office for the account of the Swing Loan Lender with respect to the Swing Loans and for the ratable accounts of the Lenders with respect to the Revolving Credit Loans in immediately available funds, and the Administrative Agent shall promptly distribute such amounts to the Lenders in immediately available funds; provided that in the event payments are received by 1:00 p.m. by the Administrative Agent with respect to the Loans and such payments are not distributed to the Lenders on the same day received by the Administrative Agent, the Administrative Agent shall pay the Lenders interest at the Federal Funds Effective Rate in the case of Loans or other amounts due in Dollars, or the Overnight Rate in the case of Loans or other amounts due in an Optional Currency, with respect to the amount of such payments for each day held by the Administrative Agent and not distributed to the Lenders. The Administrative Agent's and each Lender's statement of account, ledger or other relevant record shall, in the absence of manifest error, be conclusive as the statement of the amount of principal of and interest on the Loans and other amounts owing under this Agreement (including the Equivalent Amounts of the applicable currencies where such computations are required) and shall be deemed an “account stated”. Subject to Section 2.10.1 [Periodic Computations, Etc.], all payments of principal and interest made in respect of the Loans must be repaid in the same currency (whether Dollars or the applicable Optional Currency) in which such Loan was made and all Unpaid Drawings with respect to each Letter of Credit shall be made in the same currency (whether Dollars or an Optional Currency) in which such Letter of Credit was issued. The Administrative Agent may (but shall not be obligated to) debit the amount of any such payment which is not made by such time to any ordinary deposit account of the applicable Borrower(s) with the Administrative Agent. 4.2 Pro Rata Treatment of Lenders. Each borrowing of Revolving Credit Loans shall be allocated to each Lender according to its Ratable Share, and each selection of, conversion to or renewal of any Interest Rate Option and each payment or prepayment by the Borrowers with respect to principal, interest, Commitment Fees and Letter of Credit Fees (but excluding the Administrative Agent's Fee and the Issuing Lender's fronting fee) shall (except as otherwise may be provided with respect to a Defaulting Lender and except as provided in Section 3.4.4 [Administrative Agent's and Lender's Rights] in the case of an event specified in Section 3.4 [Euro-Rate Unascertainable; Etc.], Section 4.6.2 [Replacement of a Lender] or Section 4.8 [Increased Costs]) be payable ratably among the Lenders entitled to such payment in accordance with the amount of principal, interest, Commitment Fees and Letter of Credit Fees, as set forth in this Agreement. Notwithstanding any of the foregoing, each borrowing or payment or prepayment by the Lead Borrower of principal, interest, fees or other amounts from the Lead Borrower with respect to Swing Loans shall be made by or to the Swing Loan Lender according to Section 2.5.5 [Borrowings to Repay Swing Loans]. 223667699

 
4.3 Sharing of Payments by Lenders. If any Lender shall, by exercising any right of setoff, counterclaim or banker's lien, by receipt of voluntary payment, by realization upon security, or by any other non-pro rata source, obtain payment in respect of any principal of or interest on any of its Loans or other obligations hereunder resulting in such Lender's receiving payment of a proportion of the aggregate amount of its Loans and accrued interest thereon or other such obligations greater than the pro-rata share of the amount such Lender is entitled thereto, then the Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans and such other obligations of the other Lenders, or make such other adjustments as shall be equitable, so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of principal of and accrued interest on their respective Loans and other amounts owing them, provided that: (i) if any such participations are purchased and all or any portion of the payment giving rise thereto is recovered, such participations shall be rescinded and the purchase price restored to the extent of such recovery, together with interest or other amounts, if any, required by Law (including court order) to be paid by the Lender or the holder making such purchase; and (ii) the provisions of this Section 4.3 [Sharing of Payments by Lenders] shall not be construed to apply to (x) any payment made by the Loan Parties pursuant to and in accordance with the express terms of the Loan Documents or (y) any payment obtained by a Lender as consideration for the assignment of or sale of a participation in any of its Loans or Participation Advances to any assignee or participant, other than to the Borrowers or any Subsidiary of a Borrower (as to which the provisions of this Section 4.3 [Sharing of Payments of Lender] shall apply). Each Loan Party consents to the foregoing and agrees, to the extent it may effectively do so under applicable Law, that any Lender acquiring a participation pursuant to the foregoing arrangements may exercise against each Loan Party rights of setoff and counterclaim with respect to such participation as fully as if such Lender were a direct creditor of each Loan Party in the amount of such participation. 4.4 Presumptions by the Administrative Agent. Unless the Administrative Agent shall have received notice from a Borrower prior to the date on which any payment is due to the Administrative Agent for the account of the Lenders or the Issuing Lender hereunder that the applicable Borrower will not make such payment, the Administrative Agent may assume that the applicable Borrower has made such payment on such date in accordance herewith and may, in reliance upon such assumption, distribute to the Lenders or the Issuing Lender, as the case may be, the amount due. In such event, if the applicable Borrower has not in fact made such payment, then each of the Lenders or the Issuing Lender, as the case may be, severally agrees to repay to the Administrative Agent forthwith on demand the amount so distributed to such Lender or the Issuing Lender, with interest thereon, for each day from and including the date such amount is distributed to it to but excluding the date of payment to the Administrative Agent, at the greater of the Federal Funds Effective Rate (or, for payments in an Optional Currency, the Overnight Rate) and a rate determined by the Administrative Agent in accordance with banking industry rules on interbank compensation. 4.5 Interest Payment Dates. Interest on Loans to which the Base Rate Option applies shall be due and payable in arrears on each Payment Date. Interest on Loans to which the 223667699

 
Euro-Rate Option applies shall be due and payable on the last day of each Interest Period for those Loans and, if such Interest Period is longer than three (3) Months, also on the 90th day of such Interest Period. Interest on mandatory prepayments of principal under Section 4.7 [Mandatory Prepayments] shall be due on the date such mandatory prepayment is due. Interest on the principal amount of each Loan or other monetary Obligation shall be due and payable on demand after such principal amount or other monetary Obligation becomes due and payable (whether on the stated Expiration Date, upon acceleration or otherwise). 4.6 Voluntary Prepayments. 4.6.1 Right to Prepay. The Borrowers shall have the right at their option from time to time to prepay the Loans in whole or part without premium or penalty (except as provided in Section 4.6.2 [Replacement of a Lender], in Section 4.8 [Increased Costs] and Section 4.10 [Indemnity]). Whenever any Borrower desires to prepay any part of the Loans, it shall provide a prepayment notice to the Administrative Agent by 2:00 p.m. at least one (1) Business Day prior to the date of prepayment of the Revolving Credit Loans denominated in Dollars, and at least four (4) Business Days prior to the date of prepayment of Optional Currency Loans, or no later than 2:00 p.m. on the date of prepayment of Swing Loans, setting forth the following information: (i) the applicable Borrower making the payment; (ii) the date, which shall be a Business Day, on which the proposed prepayment is to be made; (iii) the currency in which such payment shall be made; (iv) if such prepayment is to be made in Dollars, a statement indicating the application of the prepayment between the Swing Loans (if the applicable Borrower is the Lead Borrower) and the Revolving Credit Loans; (v) if such prepayment is to be made in Dollars, a statement indicating the application of the prepayment between Loans to which the Base Rate Option applies and Loans to which the Euro-Rate Option applies; and (vi) the total principal amount of such prepayment, which (i) with respect to Revolving Credit Loans shall be in integral multiples of One Million and 00/100 Dollars ($1,000,000.00) and not less than Five Million and 00/100 Dollars ($5,000,000.00) (or in each case, the Dollar Equivalent thereof) for each Borrowing Tranche to which the LIBOR Rate Option applies and in integral multiples of Five Hundred Thousand and 00/100 Dollars ($500,000.00) and not less than the lesser of One Million and 00/100 Dollars ($1,000,000.00) or the outstanding principal amount of Revolving Credit Loans to which the Base Rate Option applies and (ii) with respect to Swing Loans, not less than the lesser of One Hundred Thousand and 00/100 Dollars ($100,000.00) or the outstanding principal amount of the Swing Loans. All prepayment notices shall be irrevocable. The principal amount of the Loans for which a prepayment notice is given, together with interest on such principal amount, shall be due and payable on the date specified in such prepayment notice as the date on which the proposed prepayment is to be made. Except as provided in Section 3.4.4 [Administrative Agent's and Lender's Rights] and subject to Section 10.13 [Bifurcation of Obligations], if any Borrower 223667699

 
prepays a Loan but fails to specify the applicable Borrowing Tranche which such Borrower is prepaying, the prepayment shall be applied, after giving effect to the allocations in the preceding sentence, first to the Revolving Credit Loans to which the Base Rate Option applies, then to Revolving Credit Loans which are not Optional Currency Loans to which the Euro-Rate Option applies, then to Optional Currency Loans, then to Swing Loan. Any prepayment hereunder shall be subject to the Borrowers' obligation to indemnify the Lenders under Section 4.10 [Indemnity]. Prepayments shall be made in the currency in which such Loan was made unless otherwise directed by the Administrative Agent. 4.6.2 Replacement of a Lender. In the event any Lender (i) gives notice under Section 3.4 [Euro-Rate Unascertainable, Etc.], (ii) requests compensation under Section 4.8 [Increased Costs], or requires the Borrowers to pay any additional amount to any Lender or any Official Body for the account of any Lender pursuant to Section 4.9 [Taxes], (iii) is a Defaulting Lender, (iv) becomes subject to the control of an Official Body (other than normal and customary supervision), or (v) is a Non-Consenting Lender referred to in Section 10.1 [Modifications, Amendments or Waivers], then in any such event the Borrowers may, at their sole expense, upon notice to such Lender and the Administrative Agent, require such Lender to assign and delegate, without recourse (in accordance with and subject to the restrictions contained in, and consents required by, Section 10.8 [Successors and Assigns]), all of its interests, rights (other than existing rights to payments pursuant to Sections 4.8 [Increased Costs] or 4.9 [Taxes]) and obligations under this Agreement and the related Loan Documents to an Eligible Assignee that shall assume such obligations (which assignee may be another Lender, if a Lender accepts such assignment), provided that: (i) the Borrowers shall have paid to the Administrative Agent the assignment fee specified in Section 10.8 [Successors and Assigns]; (ii) such Lender shall have received payment of an amount equal to the outstanding principal of its Loans and Participation Advances, accrued interest thereon, accrued fees and all other amounts payable to it hereunder and under the other Loan Documents (including any amounts under Section 4.10 [Indemnity]) from the assignee (to the extent of such outstanding principal and accrued interest and fees) or the Borrowers (in the case of all other amounts); (iii) in the case of any such assignment resulting from a claim for compensation under Section 4.8.1 [Increased Costs Generally] or payments required to be made pursuant to Section 4.9 [Taxes], such assignment will result in a reduction in such compensation or payments thereafter; and (iv) such assignment does not conflict with applicable Law. A Lender shall not be required to make any such assignment or delegation if, prior thereto, as a result of a waiver by such Lender or otherwise, the circumstances entitling the Borrowers to require such assignment and delegation cease to apply. 4.6.3 Designation of a Different Lending Office. If any Lender requests compensation under Section 4.8 [Increased Costs], or a Borrower is or will be required to pay any Indemnified Taxes or additional amounts to any Lender or any Official Body for the account of any Lender pursuant to Section 4.9 [Taxes], then such Lender shall (at the request of the Lead Borrower) use reasonable efforts to designate a different lending office for funding or booking its 223667699

 
Loans hereunder or to assign its rights and obligations hereunder to another of its offices, branches or affiliates, if, in the reasonable judgment of such Lender, such designation or assignment (i) would eliminate or reduce amounts payable pursuant to Section 4.8 [Increased Costs] or Section 4.9 [Taxes], as the case may be, in the future, and (ii) would not subject such Lender to any material unreimbursed cost or expense and would not otherwise be materially disadvantageous to such Lender. The Borrowers hereby agree to pay all reasonable costs and expenses incurred by any Lender in connection with any such designation or assignment. 4.7 Mandatory Prepayments for Currency Fluctuations. If on any Computation Date, the aggregate Dollar Equivalent amount of Optional Currency Loans exceeds the Optional Currency Sublimit as a result of a change in the exchange rates between one or more Optional Currencies and Dollars, then the Administrative Agent shall notify the Borrowers of the same and the Borrowers shall pay or prepay (subject to the Borrowers’ indemnity obligations under Sections 4.8 [Increased Costs] and Section 4.10 [Indemnity]) the Optional Currency Loans within one (1) Business Day after receiving such notice in an amount such that the aggregate Dollar Equivalent amount of Optional Currency Loans shall not exceed the Optional Currency Sublimit after giving effect to such payments or prepayments. Notwithstanding the foregoing, if on any Computation Date the Revolving Facility Usage is equal to or greater than the Revolving Credit Commitments as a result of a change in exchange rates between one or more Optional Currencies and Dollars, then the Administrative Agent shall notify the Borrowers of the same and the Borrowers shall pay or prepay (subject to the Borrowers’ indemnity obligations under Sections 4.8 [Increased Costs] and Section 4.10 [Indemnity]) within one (1) Business Day after receiving such notice in an amount such that the Revolving Facility Usage shall not exceed the aggregate Revolving Credit Commitments after giving effect to such payments or prepayments. All prepayments required pursuant to the immediately preceding sentence shall first be applied among the Interest Rate Options to the principal amount of the Revolving Credit Loans subject to the Base Rate Option, then to Revolving Credit Loans denominated in Dollars and subject to a Euro-Rate Option, then to Optional Currency Loans. 4.8 Increased Costs. 4.8.1 Increased Costs Generally. If any Change in Law shall: (i) impose, modify or deem applicable any reserve, special deposit, compulsory loan, insurance charge or similar requirement against assets of, deposits with or for the account of, or credit extended or participated in by, any Lender (except any reserve requirement reflected in the Euro-Rate) or the Issuing Lender; (ii) subject any Recipient to any Taxes (other than (A) Indemnified Taxes, (B) Taxes described in clauses (ii) through (iv) of the definition of Excluded Taxes and (C) Connection Income Taxes) on its loans, loan principal, letters of credit, commitments, or other obligations, or its deposits, reserves, other liabilities or capital attributable thereto; or (iii) impose on any Lender, the Issuing Lender or the London interbank market any other condition, cost or expense (other than Taxes) affecting this Agreement or Loans made by such Lender or any Letter of Credit or participation therein; and the result of any of the foregoing shall be to increase the cost to such Lender or such other Recipient of making, converting to, continuing or maintaining any Loan or of maintaining its obligation to make any such Loan, or to increase the cost to such Lender, the Issuing Lender or 223667699

 
such other Recipient of participating in, issuing or maintaining any Letter of Credit (or of maintaining its obligation to participate in or to issue any Letter of Credit), or to reduce the amount of any sum received or receivable by such Lender, the Issuing Lender or other Recipient hereunder (whether of principal, interest or any other amount) then, upon request of such Lender, the Issuing Lender or other Recipient, the Borrowers will pay to such Lender, the Issuing Lender or other Recipient, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or other Recipient, as the case may be, for such additional costs incurred or reduction suffered. 4.8.2 Capital Requirements. If any Lender or the Issuing Lender determines that any Change in Law affecting such Lender or the Issuing Lender or any Lending Office of such Lender or such Lender's or the Issuing Lender's holding company, if any, regarding capital or liquidity requirements has or would have the effect of reducing the rate of return on such Lender's or the Issuing Lender's capital or on the capital of such Lender's or the Issuing Lender's holding company, if any, as a consequence of this Agreement, the Commitments of such Lender or the Loans made by, or participations in Letters of Credit or Swing Loans held by, such Lender, or the Letters of Credit issued by the Issuing Lender, to a level below that which such Lender or the Issuing Lender or such Lender's or the Issuing Lender's holding company could have achieved but for such Change in Law (taking into consideration such Lender's or the Issuing Lender's policies and the policies of such Lender's or the Issuing Lender's holding company with respect to capital adequacy and liquidity), then from time to time the Borrowers will pay to such Lender or the Issuing Lender, as the case may be, such additional amount or amounts as will compensate such Lender or the Issuing Lender or such Lender's or the Issuing Lender's holding company for any such reduction suffered. 4.8.3 Certificates for Reimbursement; Repayment of Outstanding Loans; Borrowing of New Loans. A certificate of a Lender or the Issuing Lender setting forth the amount or amounts necessary to compensate such Lender or the Issuing Lender or its holding company, as the case may be, as specified in Section 4.8.1 [Increased Costs Generally] or Section 4.8.2 [Capital Requirements] and delivered to the Lead Borrower shall be conclusive absent manifest error. The Borrowers shall pay such Lender or the Issuing Lender, as the case may be, the amount shown as due on any such certificate within ten (10) days after receipt thereof. 4.8.4 Delay in Requests. Failure or delay on the part of any Lender or the Issuing Lender to demand compensation pursuant to this Section shall not constitute a waiver of such Lender's or the Issuing Lender's right to demand such compensation, provided that the Borrowers shall not be required to compensate a Lender or the Issuing Lender pursuant to this Section for any increased costs incurred or reductions suffered more than nine months prior to the date that such Lender or the Issuing Lender, as the case may be, notifies the Lead Borrower of the Change in Law giving rise to such increased costs or reductions and of such Lender's or the Issuing Lender's intention to claim compensation therefor (except that, if the Change in Law giving rise to such increased costs or reductions is retroactive, then the nine (9) month period referred to above shall be extended to include the period of retroactive effect thereof). 4.8.5 Additional Reserve Requirements. The Borrowers shall pay to each Lender (i) as long as such Lender shall be required to maintain reserves with respect to liabilities or assets consisting of or including eurocurrency funds or deposits, additional interest on the unpaid principal amount of each Loan under the Euro-Rate Option equal to the actual costs of such reserves allocated to such Loan by such Lender (as determined by such Lender in good 223667699

 
faith, which determination shall be conclusive absent manifest error), and (ii) as long as such Lender shall be required to comply with any reserve ratio requirement under Regulation D or under any similar, successor or analogous requirement of the Board of Governors of the Federal Reserve System (or any successor) or any other central banking or financial regulatory authority imposed in respect of the maintenance of the Commitments or the funding of the Loans under the Euro-Rate Option, such additional costs (expressed as a percentage per annum and rounded upwards, if necessary, to the nearest five decimal places) equal to the actual costs allocated to such Commitment or Loan by such Lender (as determined by such Lender in good faith, which determination shall be conclusive absent manifest error), which in each case shall be due and payable on each date on which interest is payable on such Loan; provided that in each case the Lead Borrower shall have received at least ten days’ prior notice (with a copy to the Administrative Agent) of such additional interest or costs from such Lender. If a Lender fails to give notice ten days prior to the relevant Payment Date, such additional interest or costs shall be due and payable ten days from receipt of such notice. 4.9 Taxes. 4.9.1 Issuing Lender. For purposes of this Section 4.9, the term “Lender” includes the Issuing Lender and the term “applicable Law” includes FATCA. 4.9.2 Payments Free of Taxes. Any and all payments by or on account of any obligation of any Loan Party under any Loan Document shall be without deduction or withholding for any Taxes, except as required by applicable Law. If any applicable Law (as determined in the good faith discretion of an applicable Withholding Agent) requires the deduction or withholding of any Tax from any such payment by a Withholding Agent, then the applicable Withholding Agent shall be entitled to make such deduction or withholding and shall timely pay the full amount deducted or withheld to the relevant Official Body in accordance with applicable Law and, if such Tax is an Indemnified Tax, then the sum payable by the applicable Loan Party shall be increased as necessary so that after such deduction or withholding has been made (including such deductions and withholdings applicable to additional sums payable under this Section 4.9 [Taxes]) the applicable Recipient receives an amount equal to the sum it would have received had no such deduction or withholding been made. 4.9.3 Payment of Other Taxes by the Loan Parties. The Loan Parties shall timely pay to the relevant Official Body in accordance with applicable Law, or at the option of the Administrative Agent timely reimburse it for the payment of, any Other Taxes. 4.9.4 Indemnification by the Loan Parties. The Loan Parties shall jointly and severally (subject to Section 10.13 [Bifurcation of Obligations]) indemnify each Recipient, within ten (10) days after demand therefor, for the full amount of any Indemnified Taxes (including Indemnified Taxes imposed or asserted on or attributable to amounts payable by a Loan Party under this Section 4.9 [Taxes]) payable or paid by such Recipient or required to be withheld or deducted from a payment to such Recipient and any reasonable expenses arising therefrom or with respect thereto, whether or not such Indemnified Taxes were correctly or legally imposed or asserted by the relevant Official Body. A certificate as to the amount of such payment or liability delivered to the Lead Borrower by a Lender (with a copy to the Administrative Agent), or by the Administrative Agent on its own behalf or on behalf of a Lender, shall be conclusive absent manifest error. 223667699

 
4.9.5 Indemnification by the Lenders. Each Lender shall severally indemnify the Administrative Agent, within ten (10) days after demand therefor, for (i) any Indemnified Taxes attributable to such Lender (but only to the extent that any Loan Party has not already indemnified the Administrative Agent for such Indemnified Taxes and without limiting the obligation of any of the Loan Parties to do so), (ii) any Taxes attributable to such Lender's failure to comply with the provisions of Section 10.8.4 [Participations] relating to the maintenance of a Participant Register, and (iii) any Excluded Taxes attributable to such Lender, in each case, that are payable or paid by the Administrative Agent in connection with any Loan Document, and any reasonable expenses arising therefrom or with respect thereto, whether or not such Taxes were correctly or legally imposed or asserted by the relevant Official Body. A certificate as to the amount of such payment or liability delivered to any Lender by the Administrative Agent shall be conclusive absent manifest error. Each Lender hereby authorizes the Administrative Agent to set off and apply any and all amounts at any time owing to such Lender under any Loan Document or otherwise payable by the Administrative Agent to the Lender from any other source against any amount due to the Administrative Agent under this Section 4.9.5 [Indemnification by the Lenders]. 4.9.6 Evidence of Payments. As soon as practicable after any payment of Taxes by any Loan Party to an Official Body pursuant to this Section 4.9 [Taxes], such Loan Party shall deliver to the Administrative Agent the original or a certified copy of a receipt issued by such Official Body evidencing such payment, a copy of the return reporting such payment or other evidence of such payment reasonably satisfactory to the Administrative Agent 4.9.7 Status of Lenders. (i) Any Lender that is entitled to an exemption from or reduction of withholding Tax with respect to payments made under any Loan Document shall deliver to the Lead Borrower and the Administrative Agent, at the time or times reasonably requested by the Lead Borrower or the Administrative Agent, such properly completed and executed documentation reasonably requested by the Lead Borrower or the Administrative Agent as will permit such payments to be made without withholding or at a reduced rate of withholding. In addition, any Lender, if reasonably requested by the Lead Borrower or the Administrative Agent, shall deliver such other documentation prescribed by applicable Law or reasonably requested by the Lead Borrower or the Administrative Agent as will enable the Lead Borrower or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements. Notwithstanding anything to the contrary in the preceding two sentences, the completion, execution and submission of such documentation (other than such documentation set forth in Section 4.9.7(ii)(A), 4.9.7(ii)(B) and 4.9.7(ii)(D) below) shall not be required if in the Lender's reasonable judgment such completion, execution or submission would subject such Lender to any material unreimbursed cost or expense or would materially prejudice the legal or commercial position of such Lender. (ii) Without limiting the generality of the foregoing, in the event that any Borrower is a U.S. Borrower, (A) any Lender that is a US Person shall deliver to the Lead Borrower and the Administrative Agent on or prior to the date on which such Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Lead 223667699

 
Borrower or the Administrative Agent), executed originals of IRS Form W-9 certifying that such Lender is exempt from U.S. federal backup withholding tax; (B) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Lead Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Lead Borrower or the Administrative Agent), whichever of the following is applicable: (i) in the case of a Foreign Lender claiming the benefits of an income tax treaty to which the United States is a party (x) with respect to payments of interest under any Loan Document, executed originals of IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “interest” article of such tax treaty and (y) with respect to any other applicable payments under any Loan Document, IRS Form W-8BEN-E (or W-8BEN, as applicable) establishing an exemption from, or reduction of, U.S. federal withholding Tax pursuant to the “business profits” or “other income” article of such tax treaty; (ii) executed originals of IRS Form W-8ECI; (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under Section 881(c) of the Code, (x) a certificate substantially in the form of Exhibit 4.9.7(A) to the effect that such Foreign Lender is not (A) a “bank” within the meaning of Section 881(c)(3)(A) of the Code, (B) a “10 percent shareholder” of the Lead Borrower within the meaning of Section 881(c)(3)(B) of the Code, or (C) a “controlled foreign corporation” described in Section 881(c)(3)(C) of the Code (a “US Tax Compliance Certificate”) and (y) executed originals of IRS Form W-8BEN-E (or W-8BEN, as applicable); or (iv) to the extent a Foreign Lender is not the beneficial owner, executed originals of IRS Form W-8IMY, accompanied by IRS Form W-8ECI, IRS Form W-8BEN-E (or W-8BEN, as applicable), a US Tax Compliance Certificate substantially in the form of Exhibit 4.9.7(B) or Exhibit 4.9.7(C), IRS Form W-9, and/or other certification documents from each beneficial owner, as applicable; provided that if the Foreign Lender is a partnership and one or more direct or indirect partners of such Foreign Lender are claiming the portfolio interest exemption, such Foreign Lender may provide a US Tax Compliance Certificate substantially in the form of Exhibit 4.9.7(D) on behalf of each such direct and indirect partner; (C) any Foreign Lender shall, to the extent it is legally entitled to do so, deliver to the Lead Borrower and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the reasonable request of the Lead Borrower or the Administrative Agent), executed originals of any other form prescribed by applicable Law as a basis for claiming exemption from or a reduction in U.S. federal withholding Tax, duly completed, together with such supplementary documentation as may be prescribed by applicable Law to permit the applicable Borrower or the Administrative Agent to determine the withholding or deduction required to be made; and 223667699

 
(D) if a payment made to a Lender under any Loan Document would be subject to U.S. federal withholding Tax imposed by FATCA if such Lender were to fail to comply with the applicable reporting requirements of FATCA (including those contained in Section 1471(b) or 1472(b) of the Code, as applicable), such Lender shall deliver to the Lead Borrower and the Administrative Agent at the time or times prescribed by law and at such time or times reasonably requested by the Lead Borrower or the Administrative Agent such documentation prescribed by applicable law (including as prescribed by Section 1471(b)(3)(C)(i) of the Code) and such additional documentation reasonably requested by the applicable Borrower or the Administrative Agent as may be necessary for the Borrowers and the Administrative Agent to comply with their obligations under FATCA and to determine that such Lender has complied with such Lender's obligations under FATCA or to determine the amount to deduct and withhold from such payment. Solely for purposes of this clause (D), “FATCA” shall include any amendments made to FATCA after the date of this Agreement. Each Lender agrees that if any form or certification it previously delivered expires or becomes obsolete or inaccurate in any respect, it shall update such form or certification or promptly notify the Lead Borrower and the Administrative Agent in writing of its legal inability to do so. 4.9.8 Treatment of Certain Refunds. If any party determines, in its sole discretion exercised in good faith, that it has received a refund of any Taxes as to which it has been indemnified pursuant to this Section 4.9 [Taxes] (including by the payment of additional amounts pursuant to this Section 4.9 [Taxes]), it shall pay to the indemnifying party an amount equal to such refund (but only to the extent of indemnity payments made under this Section 4.9 [Taxes] with respect to the Taxes giving rise to such refund), net of all out-of-pocket expenses (including Taxes) of such indemnified party and without interest (other than any interest paid by the relevant Official Body with respect to such refund). Such indemnifying party, upon the request of such indemnified party incurred in connection with obtaining such refund, shall repay to such indemnified party the amount paid over pursuant to this Section 4.9.8 [Treatment of Certain Refunds] (plus any penalties, interest or other charges imposed by the relevant Official Body) in the event that such indemnified party is required to repay such refund to such Official Body. Notwithstanding anything to the contrary in this Section 4.9.8 [Treatment of Certain Refunds]), in no event will the indemnified party be required to pay any amount to an indemnifying party pursuant to this Section 4.9.8 [Treatment of Certain Refunds] the payment of which would place the indemnified party in a less favorable net after-Tax position than the indemnified party would have been in if the Tax subject to indemnification and giving rise to such refund had not been deducted, withheld or otherwise imposed and the indemnification payments or additional amounts with respect to such Tax had never been paid. This paragraph shall not be construed to require any indemnified party to make available its Tax returns (or any other information relating to its Taxes that it deems confidential) to the indemnifying party or any other Person. 4.9.9 Survival. Each party's obligations under this Section 4.9 [Taxes] shall survive the resignation of the Administrative Agent or any assignment of rights by, or the replacement of, a Lender, the termination of the Commitments and the repayment, satisfaction or discharge of all Obligations. 4.10 Indemnity. In addition to the compensation or payments required by Section 4.8 [Increased Costs] or Section 4.9 [Taxes], the Borrowers shall indemnify each Lender against all 223667699

 
liabilities, losses or expenses (including loss of anticipated profits, any foreign exchange losses and any loss or expense arising from the liquidation or reemployment of funds obtained by it to maintain such Loan, from fees payable to terminate the deposits from which such funds were obtained or from the performance of any foreign exchange contract) which such Lender sustains or incurs as a consequence of any: (i) payment, prepayment, conversion or renewal of any Loan to which a Euro-Rate Option applies on a day other than the last day of the corresponding Interest Period (whether or not such payment or prepayment is mandatory, voluntary or automatic and whether or not such payment or prepayment is then due), or any voluntary prepayment without the required notice, (ii) attempt by any Borrower to revoke (expressly, by later inconsistent notices or otherwise) in whole or part any Revolving Credit Loan Requests under Section 2.4 [Revolving Credit Loan Requests; Swing Loan Requests] or Section 3.2 [Interest Periods] or notice relating to prepayments under Section 4.6 [Voluntary Prepayments], or (iii) any assignment of any Loan to which a Euro-Rate Option applies on a day other than the last day of the corresponding Interest Period as a result of a request of the Borrowers pursuant to Section 4.6.2 [Replacement of a Lender]. If any Lender sustains or incurs any such loss or expense, it shall from time to time notify the Lead Borrower of the amount determined in good faith by such Lender (which determination may include such assumptions, allocations of costs and expenses and averaging or attribution methods as such Lender shall deem reasonable) to be necessary to indemnify such Lender for such loss or expense. Such notice shall set forth in reasonable detail the basis for such determination. Such amount shall be due and payable by the Borrowers to such Lender ten (10) Business Days after such notice is given. 4.11 Currency Conversion Procedures for Judgments. If for the purposes of obtaining judgment in any court it is necessary to convert a sum due hereunder in any currency (the “Original Currency”) into another currency (the “Other Currency”), the parties hereby agree, to the fullest extent permitted by Law, that the rate of exchange used shall be that at which in accordance with normal lending procedures each Lender could purchase the Original Currency with the Other Currency after any premium and costs of exchange on the Business Day preceding that on which final judgment is given. 4.12 Indemnity in Certain Events. The obligation of a Borrower in respect of any sum due from such Borrower to any Lender hereunder shall, notwithstanding any judgment in an Other Currency, whether pursuant to a judgment or otherwise, be discharged only to the extent that, on the Business Day following receipt by any Lender of any sum adjudged to be so due in such Other Currency, such Lender may in accordance with normal lending procedures purchase the Original Currency with such Other Currency. If the amount of the Original Currency so purchased is less than the sum originally due to such Lender in the Original Currency, the applicable Borrower agrees, as a separate obligation and notwithstanding any such judgment or payment, to indemnify such Lender against such loss. 223667699

 
4.13 Defaulting Lenders. Notwithstanding any provision of this Agreement to the contrary, if any Lender becomes a Defaulting Lender, then the following provisions shall apply for so long as such Lender is a Defaulting Lender: (i) fees shall cease to accrue on the unfunded portion of the Revolving Credit Commitment of such Defaulting Lender pursuant to Section 2.3 [Commitment Fees]; (ii) the Commitment and outstanding Loans of such Defaulting Lender shall not be included in determining whether the Required Lenders have taken or may take any action hereunder (including any consent to any amendment, waiver or other modification pursuant to Section 10.1 [Modifications, Amendments or Waivers]); provided, that this clause (ii) shall not apply to the vote of a Defaulting Lender in the case of an amendment, waiver or other modification requiring the consent of such Lender pursuant to the terms of this Agreement; (iii) if any Swing Loans are outstanding or any Letter of Credit Obligations exist at the time such Lender becomes a Defaulting Lender, then: (A) all or any part of the Ratable Share of the outstanding Swing Loans and Letter of Credit Obligations of such Defaulting Lender shall be reallocated among the Non-Defaulting Lenders in accordance with their respective Ratable Shares but only to the extent that the Revolving Facility Usage does not exceed the total of all Non-Defaulting Lenders' Revolving Credit Commitments; (B) if the reallocation described in clause (A) above cannot, or can only partially, be effected, the Borrowers shall within one Business Day following notice by the Administrative Agent (x) first, prepay such outstanding Swing Loans, and (y) second, cash collateralize for the benefit of the Issuing Lender the Borrowers' obligations corresponding to such Defaulting Lender's Letter of Credit Obligations (after giving effect to any partial reallocation pursuant to clause (a) above) in a deposit account held at the Administrative Agent for so long as such Letter of Credit Obligations are outstanding; (C) if the Borrowers cash collateralize any portion of such Defaulting Lender's Letter of Credit Obligations pursuant to clause (B) above, the Borrowers shall not be required to pay any fees to such Defaulting Lender pursuant to Section 2.7.2 [Letter of Credit Fees] with respect to such Defaulting Lender's Letter of Credit Obligations during the period such Defaulting Lender's Letter of Credit Obligations are cash collateralized; (D) if the Letter of Credit Obligations of the Non-Defaulting Lenders are reallocated pursuant to clause (A) above, then the fees payable to the Lenders pursuant to Section 2.7.2 [Letter of Credit Fees] shall be adjusted in accordance with such Non-Defaulting Lenders' Ratable Share; and (E) if all or any portion of such Defaulting Lender's Letter of Credit Obligations are neither reallocated nor cash collateralized pursuant to clause (A) or (B) above, then, without prejudice to any rights or remedies of the Issuing Lender or any other Lender hereunder, all Letter of Credit Fees payable under Section 2.7.2 [Letter of Credit Fees] with respect to such Defaulting Lender's Letter of Credit Obligations shall be payable to the Issuing Lender (and not to such Defaulting Lender) until and to the extent that such Letter of Credit Obligations are reallocated and/or cash collateralized; and 223667699

 
(iv) so long as such Lender is a Defaulting Lender, the Swing Loan Lender shall not be required to fund any Swing Loans and the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless the Issuing Lender is satisfied that the related exposure and the Defaulting Lender's then outstanding Letter of Credit Obligations will be one hundred percent (100%) covered by the Revolving Credit Commitments of the Non-Defaulting Lenders and/or cash collateral will be provided by the Borrowers in accordance with Section 4.13(iii), and participating interests in any newly made Swing Loan or any newly issued or increased Letter of Credit shall be allocated among Non-Defaulting Lenders in a manner consistent with Section 4.13(iii)(A) (and such Defaulting Lender shall not participate therein). If (i) a Bankruptcy Event with respect to a parent company of any Lender shall occur following the date hereof and for so long as such event shall continue, or (ii) the Swing Loan Lender or the Issuing Lender has a good faith belief that any Lender has defaulted in fulfilling its obligations under one or more other agreements in which such Lender commits to extend credit, the Swing Loan Lender shall not be required to fund any Swing Loan and the Issuing Lender shall not be required to issue, amend or increase any Letter of Credit, unless the Swing Loan Lender or the Issuing Lender, as the case may be, shall have entered into arrangements with the Borrowers or such Lender, satisfactory to the Swing Loan Lender or the Issuing Lender, as the case may be, to defease any risk to it in respect of such Lender hereunder. In the event that the Administrative Agent, the Lead Borrower, the Swing Loan Lender and the Issuing Lender agree in writing that a Defaulting Lender has adequately remedied all matters that caused such Lender to be a Defaulting Lender, then the Administrative Agent will so notify the parties hereto, and the Ratable Share of the Swing Loans and Letter of Credit Obligations of the Lenders shall be readjusted to reflect the inclusion of such Lender's Commitment, and on such date such Lender shall purchase at par such of the Loans of the other Lenders (other than Swing Loans) as the Administrative Agent shall determine may be necessary in order for such Lender to hold such Loans in accordance with its Ratable Share. 4.14 Designated Lenders. Notwithstanding anything herein to the contrary, each of the Administrative Agent, the Issuing Lender and each other Lender at its option may make any Loan or otherwise perform its obligations hereunder through any Lending Office (each, a “Designated Lender”); provided that any exercise of such option shall not affect the obligation of the Borrowers to repay any Loan in accordance with the terms of this Agreement. Any Designated Lender shall be considered a Lender; provided that in the case of an Affiliate or branch of a Lender, all provisions applicable to a Lender shall apply to such Affiliate or branch of such Lender to the same extent as such Lender. 4.15 Illegality. If, in any applicable jurisdiction, the Administrative Agent, the Issuing Lender, any other Lender or its applicable Designated Lender determines that any Law has made it unlawful, or that any Official Body has asserted that it is unlawful, for the Administrative Agent, the Issuing Lender, any other Lender or its applicable Designated Lender to (i) perform any of its obligations hereunder or under any other Loan Document, (ii) fund or maintain its participation in any Loan, or (iii) issue, make, maintain, fund or charge interest with respect to any Loan or other extension of credit hereunder to any Designated Borrower, such Person shall promptly notify the Administrative Agent, then, upon the Administrative Agent notifying the Lead Borrower, and until such notice by such Person is revoked, any obligation of such Person to issue, make, maintain, fund or charge interest with respect to any such Loan or other extension of credit 223667699

 
hereunder shall be suspended, and to the extent required by applicable Law, cancelled. Upon receipt of such notice, the Loan Parties shall, (A) repay that Person’s participation in the Loans or other applicable Obligations on the last day of the Interest Period for each Loan or other Obligation occurring after the Administrative Agent has notified the Lead Borrower or, if earlier, the date specified by such Person in the notice delivered to the Administrative Agent (being no earlier than the last day of any applicable grace period permitted by applicable Law) and (B) take all reasonable actions requested by such Person to mitigate or avoid such illegality. 5. REPRESENTATIONS AND WARRANTIES 5.1 Representations and Warranties. The Loan Parties, jointly and severally, represent and warrant to the Administrative Agent and each of the Lenders as follows: 5.1.1 Organization and Qualification; Power and Authority; Compliance With Laws; Title to Properties; Event of Default. Each Loan Party and each Subsidiary of each Loan Party (i) is a corporation, partnership, limited liability company or unlimited liability company duly organized, validly existing and in good standing under the laws of its jurisdiction of organization, (ii) has the lawful power to own or lease its properties and to engage in the business it presently conducts or proposes to conduct, (iii) is duly licensed or qualified and in good standing in each jurisdiction where the property owned or leased by it or the nature of the business transacted by it or both makes such licensing or qualification necessary, except where the failure to be so licensed or qualified and in good standing would not constitute a Material Adverse Change, (iv) has full power to enter into, execute, deliver and carry out this Agreement and the other Loan Documents to which it is a party, to incur the Indebtedness contemplated by the Loan Documents and to perform its Obligations under the Loan Documents to which it is a party, and all such actions have been duly authorized by all necessary proceedings on its part, (v) is in compliance in all material respects with all applicable Laws (other than Environmental Laws which are specifically addressed in Section 5.1.13 [Environmental Matters]) in all jurisdictions in which any Loan Party or Subsidiary of any Loan Party is presently or will be doing business except where the failure to do so would not constitute a Material Adverse Change, and (vi) has good and marketable title to or valid leasehold interest in all material properties, assets and other rights which it purports to own or lease or which are reflected as owned or leased on its books and records, free and clear of all Liens and encumbrances except Permitted Liens. No Event of Default or Potential Default exists or is continuing. No Loan Party is a Covered Person (as such term is defined in Section 10.18). 5.1.2 Capitalization; Subsidiaries; Investment Companies. Schedule 5.1.2 states (i) the name of each of the Lead Borrower's Subsidiaries, its jurisdiction of organization and the amount, percentage and type of equity interests in such Subsidiary (the “Subsidiary Equity Interests”), and (ii) any options, warrants or other rights outstanding to purchase any such Subsidiary Equity Interests. The Lead Borrower and each Subsidiary of the Lead Borrower has good and marketable title to all of the Subsidiary Equity Interests it purports to own, free and clear in each case of any Lien (other than Permitted Liens) and all such Subsidiary Equity Interests have been validly issued, fully paid and nonassessable. None of the Loan Parties or Subsidiaries of any Loan Party is an “investment company” registered or required to be registered under the Investment Company Act of 1940 or under the “control” of an “investment company” as such terms are defined in the Investment Company Act of 1940 and shall not become such an “investment company” or under such “control.” 223667699

 
5.1.3 Validity and Binding Effect. This Agreement and each of the other Loan Documents (i) has been duly and validly executed and delivered by each Loan Party that is a party thereto, and (ii) constitutes, or will constitute, legal, valid and binding obligations of each Loan Party that is a party thereto, enforceable against such Loan Party in accordance with its terms, except to the extent that enforceability of this Agreement or any other Loan Document may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws affecting the enforceability of creditors' rights generally or limiting the right of specific performance or by general principles of equity. 5.1.4 No Conflict; Material Agreements; Consents. Neither the execution and delivery of this Agreement or the other Loan Documents by any Loan Party nor the consummation of the transactions herein or therein contemplated or compliance with the terms and provisions hereof or thereof by any of them will conflict with, constitute a default under or result in any breach of (i) the terms and conditions of the articles or certificate of incorporation, code of regulations, bylaws, certificate of limited partnership, partnership agreement, certificate of formation, operating agreement, limited liability company agreement or other organizational documents of any Loan Party or (ii) any Law or any agreement or instrument or order, writ, judgment, injunction or decree to which any Loan Party or any of its Subsidiaries is a party or by which it or any of its Subsidiaries is bound or to which it is subject, or result in the creation or enforcement of any Lien, charge or encumbrance whatsoever upon any property (now or hereafter acquired) of any Loan Party or any of its Subsidiaries, in each case under clause (ii) except as would not result in a Material Adverse Change. None of the Loan Parties or their Subsidiaries is bound by any contractual obligation, or subject to any restriction in any organization document, or any requirement of Law which results in a Material Adverse Change. No consent, approval, exemption, order or authorization of, or a registration or filing with, any Official Body or any other Person is required by any Law or any agreement in connection with the execution, delivery and carrying out of this Agreement and the other Loan Documents other than those which have been obtained. 5.1.5 Litigation. There are no actions, suits, proceedings or investigations pending or, to the knowledge of any Loan Party, threatened against such Loan Party or any Subsidiary of such Loan Party at law or in equity before any Official Body which individually or in the aggregate results in any Material Adverse Change. None of the Loan Parties or any Subsidiaries of any Loan Party is in violation of any order, writ, injunction or any decree of any Official Body which constitutes Material Adverse Change. 5.1.6 Financial Statements. (i) Historical Statements. The Loan Parties have delivered or caused to be delivered to the Administrative Agent copies of the (i) audited consolidated year-end financial statements of the Lead Borrower and its Subsidiaries for and as of the end of the fiscal year ended January 28, 2017 and (ii) unaudited consolidated interim financial statements of the Lead Borrower and its Subsidiaries for and as of the end of the fiscal quarter ended April 29, 2017 (such annual and interim statements being collectively referred to as the “Statements”). The Statements were compiled from the books and records maintained by the Loan Parties’ management, are correct and complete in all material respects and fairly represent in all material respects the consolidated financial condition of the Lead Borrower and its Subsidiaries as of the respective dates thereof and the results of operations for the fiscal periods then ended and have 223667699

 
been prepared in accordance with GAAP consistently applied, subject (in the case of the interim statements) to normal year-end audit adjustments. (ii) Financial Projections. The Loan Parties have delivered to the Administrative Agent summary projected financial statements (including, without limitation, statements of operations and cash flow together with a detailed explanation of the assumptions used in preparing such projected financial statements) of the Lead Borrower and its Subsidiaries for fiscal year 2017 through fiscal year 2022 derived from various assumptions of the Loan Parties’ management (the “Projections”). The Projections represent a reasonable range of possible results in light of the history of the business, present and foreseeable conditions and the intentions of the Loan Parties’ management, it being understood that such Projections are (a) as to future events and not to be viewed as facts, (b) are subject to significant uncertainties and contingencies, many of which are beyond the Loan Parties’ control, and (c) no assurance can be given that the Projections will be realized. (iii) Accuracy of Financial Statements. As of the respective dates of the Statements, no Loan Party nor any Subsidiary thereof has any liabilities, contingent or otherwise, or forward or long-term commitments that are not disclosed in the Statements or in the notes thereto, and except as disclosed therein there are no unrealized or anticipated losses from any commitments of any Loan Party or any Subsidiary thereof and, in each case, which constitutes a Material Adverse Change. Since January 28February 2, 20172019, no Material Adverse Change has occurred. 5.1.7 Margin Stock. None of the Loan Parties or any Subsidiaries of any Loan Party engages or intends to engage principally, or as one of its important activities, in the business of extending credit for the purpose, immediately, incidentally or ultimately, of purchasing or carrying margin stock (within the meaning of Regulation U, T or X as promulgated by the Board of Governors of the Federal Reserve System). No part of the proceeds of any Loan has been or will be used, immediately, incidentally or ultimately, to purchase or carry any margin stock or to extend credit to others for the purpose of purchasing or carrying any margin stock or which is inconsistent with the provisions of the regulations of the Board of Governors of the Federal Reserve System. None of the Loan Parties or any Subsidiary of any Loan Party holds or intends to hold or, after giving effect to the use of proceeds of any Loan or drawing of any Letter of Credit, will hold, margin stock in such amounts that more than twenty-five (25%) of the reasonable value of the assets of any Loan Party or Subsidiary of any Loan Party are or will be represented by margin stock. 5.1.8 Full Disclosure. Neither this Agreement nor any other Loan Document, nor any certificate, statement, agreement or other documents furnished to the Administrative Agent or any Lender in connection herewith or therewith, taken as a whole, contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained herein and therein, in light of the circumstances under which they were made, not misleading. There is no fact known to any Loan Party which materially adversely affects the business, property, assets, financial condition, results of operations or prospects of any Loan Party or Subsidiary of any Loan Party which has not been set forth in this Agreement or in the certificates, statements, agreements or other documents furnished in writing to the Administrative Agent and the Lenders prior to or at the date hereof in connection with the transactions contemplated hereby. 223667699

 
5.1.9 Taxes. All federal and other material tax returns required to have been filed with respect to each Loan Party and each Subsidiary of each Loan Party have been filed, and payment or adequate provision has been made for the payment of all taxes, fees, assessments and other governmental charges which have or may become due pursuant to said returns or to assessments received, except to the extent that (a) the amount thereof is not individually or in the aggregate material or (b) such taxes, fees, assessments and other charges are being contested in good faith by appropriate proceedings diligently conducted and for which such reserves or other appropriate provisions, if any, as shall be required by GAAP shall have been made. 5.1.10 Patents, Trademarks, Copyrights, Licenses, Etc. Each Loan Party and each Subsidiary of each Loan Party owns or possesses all the material patents, trademarks, service marks, trade names, copyrights, licenses, registrations, franchises, permits and rights necessary to own and operate its properties and to carry on its business as presently conducted and planned to be conducted by such Loan Party or Subsidiary, without known possible, alleged or actual conflict with the rights of others, except with respect to any conflict that does not, individually or in the aggregate, result in a Material Adverse Change. 5.1.11 Insurance. The properties of each Loan Party and each of its Subsidiaries are insured pursuant to policies and other bonds which are valid and in full force and effect and which provide adequate coverage from reputable and financially sound insurers in amounts sufficient to insure the assets and risks of each such Loan Party and Subsidiary in accordance with prudent business practice in the industry of such Loan Parties and Subsidiaries. 5.1.12 ERISA Compliance. (i) Each Pension Plan is in compliance in all respects with the applicable provisions of ERISA, the Code and other federal or state Laws, except where the failure to comply does not result in a Material Adverse Change. Each Pension Plan that is intended to qualify under Section 401(a) of the Code has received from the IRS a favorable determination or opinion letter, which has not by its terms expired, that such Pension Plan is so qualified, or such Pension Plan is entitled to rely on an IRS advisory or opinion letter with respect to an IRS-approved master and prototype or volume submitter plan, or a timely application for such a determination or opinion letter is currently being processed by the IRS with respect thereto; and, to the best knowledge of the Lead Borrower, nothing has occurred which would prevent, or cause the loss of, such qualification. Except as would not result in a Material Adverse Change, (a) the Lead Borrower and each member of the ERISA Group have made all required contributions to each Pension Plan subject to Sections 412 or 430 of the Code, and (b) no application for a funding waiver or an extension of any amortization period pursuant to Sections 412 or 430 of the Code has been made with respect to any Pension Plan. (ii) Except as would not, either individually or in the aggregate, result in a Material Adverse Change, (a) no ERISA Event has occurred or is reasonably expected to occur; (b) no Pension Plan has any unfunded pension liability (i.e., excess of benefit liabilities over the current value of that Pension Plan's assets, determined pursuant to the assumptions used for funding the Pension Plan for the applicable plan year in accordance with Section 430 of the Code); (c) neither the Lead Borrower nor any member of the ERISA Group has incurred, or reasonably expects to incur, any liability under Title IV of ERISA with respect to any Pension Plan (other than premiums due and not delinquent under Section 4007 of ERISA); (d) neither the Lead Borrower nor any member of the ERISA Group has incurred, or reasonably expects to 223667699

 
incur, any liability (and no event has occurred which, with the giving of notice under Section 4219 of ERISA, would result in such liability) under Section 4201 of ERISA, with respect to a Multiemployer Plan; (e) neither the Lead Borrower nor any member of the ERISA Group has received notice pursuant to Section 4242(a)(1)(B) of ERISA that a Multiemployer Plan is in reorganization and that additional contributions are due to the Multiemployer Plan pursuant to Section 4243 of ERISA; and (f) neither the Lead Borrower nor any member of the ERISA Group has engaged in a transaction that could be subject to Sections 4069 or 4212(c) of ERISA. (iii) Each Foreign Plan is duly registered under all applicable Laws which require registration and, as applicable, is approved for tax purposes by the relevant tax authorities in the jurisdiction in which such Foreign Plans are registered. Each Loan Party and any Subsidiary thereof have complied with and performed in all material respects all of its obligations under and in respect of the Foreign Plans under the terms thereof, any funding agreements and all applicable Laws (including any fiduciary, funding, investment and administration obligations). (iv) No Foreign Benefit Event has occurred and no Borrower, no Subsidiary of a Borrower or any Loan Party is aware of any fact, event or circumstance existing as of the Closing Date that could reasonably be expected to constitute or result in a Foreign Benefit Event. 5.1.13 Environmental Matters. Each Loan Party and each Subsidiary of each Loan Party is and has been in compliance with applicable Environmental Laws except to the extent that any non-compliance would not in the aggregate constitute a Material Adverse Change. 5.1.14 Solvency. Before and after giving effect to the transactions contemplated by this Agreement and the other Loan Documents, including all Indebtedness incurred thereby and the payment of all fees related thereto, the Loan Parties, taken as a whole are Solvent. 5.1.15 Anti-Terrorism Laws . (i) No Covered Entity is a Sanctioned Person, and (ii) no Covered Entity, either in its own right or through any third party, (a) has any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law, (b) does business in or with, or derives any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; or (c) engages in any dealings or transactions prohibited by any Anti-Terrorism Law. 5.1.16 EEA Financial Institution. No Loan Party is an EEA Financial Institution. 5.1.17 Liens in the Collateral. The Liens in the Collateral granted to the Administrative Agent for the benefit of the Lenders pursuant to the Collateral Documents constitute and will continue to constitute Prior Security Interests. All filing fees and other expenses in connection with the perfection of such Liens have been or will be paid by the Borrowers. 5.2 Updates to Schedules. Should any of the information or disclosures provided on any of the Schedules attached hereto become outdated or incorrect in any material respect, the Lead Borrower shall promptly provide the Administrative Agent in writing with such revisions or updates to such Schedule as may be necessary or appropriate to update or correct same. No 223667699

 
Schedule shall be deemed to have been amended, modified or superseded by any such correction or update, nor shall any breach of warranty or representation resulting from the inaccuracy or incompleteness of any such Schedule be deemed to have been cured thereby, unless and until the Required Lenders, in their sole and absolute discretion, shall have accepted in writing such revisions or updates to such Schedule; provided however, that the Lead Borrower may update Schedule 5.1.2 without any Lender approval in connection with any transaction permitted under Sections 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], 7.2.7 [Dispositions of Assets or Subsidiaries] and 7.2.9 [Subsidiaries and Joint Ventures]. 6. CONDITIONS 6.1 Conditions of Lending and Issuance of Letters of Credit. The obligation of each Lender to make Loans and of the Issuing Lender to issue Letters of Credit hereunder is subject to the performance by each of the Loan Parties of its Obligations to be performed hereunder at or prior to the making of any such Loans or issuance of such Letters of Credit and to the satisfaction of the following further conditions: 6.1.1 First Loans and Letters of Credit. 6.1.1.1 Deliveries. On the Closing Date, the Administrative Agent shall have received each of the following in form and substance reasonably satisfactory to the Administrative Agent: (A) A certificate of the Lead Borrower signed by an Authorized Officer of the Lead Borrower, dated the Closing Date stating that (a) all representations and warranties of the Loan Parties set forth in this Agreement and the other Loan Documents are true and correct in all material respects as of the Closing Date (unless qualified by materiality or reference to the absence of a Material Adverse Change, in which event such representations and warranties are true and correct in all respects), (b) no Event of Default or Potential Default exists and (c) no Material Adverse Change shall have occurred since January 28, 2017; (B) A certificate dated the Closing Date and signed by an Authorized Officer of each Loan Party, certifying as appropriate as to: (a) resolutions authorizing all action taken by such Loan Party in connection with this Agreement and the other Loan Documents; (b) the names of the Authorized Officers of such Loan Party authorized to sign the Loan Documents and their true signatures; and (c) copies of such Loan Party’s organizational documents as in effect on the Closing Date certified by the appropriate state official where such documents are filed in a state office together with certificates from the appropriate state officials as to the continued existence and good standing of each Loan Party in its state of organization; (C) This Agreement and each of the other Loan Documents signed by an Authorized Officer; (D) Written opinions of counsel for the Loan Parties, dated the Closing Date for the benefit of the Administrative Agent and each Lender; (E) Evidence that adequate insurance required to be maintained under this Agreement is in full force and effect, and with respect to liability insurance coverage, with additional insured special endorsements attached thereto in form and substance reasonably 223667699

 
satisfactory to the Administrative Agent and its counsel naming the Administrative Agent as additional insured; (F) Evidence that all Indebtedness not permitted under Section 7.2.1 [Indebtedness] shall have been paid in full (and all commitments in respect thereof terminated) and that all necessary termination statements, release statements and other releases in connection with all Liens (other than Permitted Liens) have been filed or satisfactory arrangements have been made for such filing (including payoff letters, if applicable, in form and substance reasonably satisfactory to the Administrative Agent); (G) The Statements and the Projections; (H) A duly completed Compliance Certificate as of the last day of the fiscal quarter of the Lead Borrower most recently ended prior to the Closing Date for which financial statements are available evidencing compliance with the financial covenants set forth in Section 7.2.13 [Minimum Fixed Charge Coverage Ratio] and Section 7.2.14 [Maximum Leverage Ratio], signed by an Authorized Officer of Borrower (the “Closing Compliance Certificate”); (I) A certificate of an Authorized Officer of the Lead Borrower as to the Solvency of each of the Loan Parties taken as a whole after giving effect to the transactions contemplated by this Agreement; (J) All material regulatory approvals and material consents and licenses necessary for the consummation of the transactions contemplated hereunder shall have been completed and there shall be an absence of any legal or regulatory prohibitions or restrictions in respect of the transactions contemplated hereunder; (K) Lien searches in acceptable scope and with acceptable results; (L) All documentation and other information required by bank regulatory authorities under applicable “know-your-customer” and anti-money laundering rules and regulations, including the USA Patriot Act; and (M) Such other documents in connection with such transactions as the Administrative Agent or said counsel may reasonably request. 6.1.1.2 Payment of Fees. The Borrowers shall have paid all fees payable on or before the Closing Date as required by this Agreement, the Administrative Agent's Letter or any other Loan Document. 6.1.2 Each Loan or Letter of Credit. At the time of making any Loans or issuing, extending or increasing any Letters of Credit and after giving effect to the proposed extensions of credit: (i) the representations and warranties of the Loan Parties shall be true and correct in all material respects (unless qualified by materiality or reference to the absence of a Material Adverse Change, in which event such representations and warranties shall be true and correct in all respects) on such date, (ii) no Event of Default or Potential Default shall have occurred and be continuing, and (iii) the applicable Borrower shall have delivered to the Administrative Agent a duly executed and completed Revolving Credit Loan Request or to the Issuing Lender an application for a Letter of Credit, as the case may be. 223667699

 
6.2 Conditions to Designation of Designated Borrowers. The designation of a Designated Borrower pursuant to Section 2.12 [Designated Borrowers] is subject to the condition precedent that the Lead Borrower or such proposed Designated Borrower shall have furnished or caused to be furnished to the Administrative Agent, in each case in form and substance reasonably satisfactory to the Administrative Agent: (i) Copies, certified by the Secretary or Assistant Secretary of such Subsidiary (or if such Subsidiary has not appointed a Secretary or Assistant Secretary, any Authorized Officer of such Subsidiary), of its the board of directors’ (or other equivalent governing body) resolutions (and resolutions of other bodies, if any are deemed necessary by counsel for the Administrative Agent) approving the Designated Borrower Agreement and any other Loan Documents to which such Subsidiary is becoming a party and such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing of such Subsidiary; (ii) An incumbency certificate, executed by the Secretary or Assistant Secretary of such Subsidiary (or if such Subsidiary has not appointed a Secretary or Assistant Secretary, any Authorized Officer of such Subsidiary), which shall identify by name and title and bear the signature of the officers of such Subsidiary authorized to request Revolving Credit Loans hereunder and sign the Designated Borrower Agreement and the other Loan Documents to which such Subsidiary is becoming a party, upon which certificate the Administrative Agent and the Lenders shall be entitled to rely until informed of any change in writing by the Lead Borrower or such Subsidiary; (iii) Opinions of counsel to such Subsidiary, in form and substance reasonably satisfactory to the Administrative Agent and its counsel, with respect to the laws of its jurisdiction of organization and such other matters as are reasonably requested by counsel to the Administrative Agent and addressed to the Administrative Agent and the Lenders; (iv) (a) A replacement revolving credit Note in favor of each Lender reflecting the addition of such Subsidiary as an obligor thereunder (and the prior Note issued to such Lender shall be deemed to be terminated), (b) if requested by the Administrative Agent, an amendment or modification to this Agreement providing for additional Canadian specific representations, warranties, covenants and/or other provisions, and (c) any other instruments and documents reasonably requested by the Administrative Agent; and (v) The Administrative Agent and each Lender shall have received all documentation and other information relating to such Designated Borrower reasonably requested by the Administrative Agent or any such Lender prior to the effective date of such Designated Borrower’s Designated Borrower Agreement under applicable “know your customer” and anti-money laundering rules and regulations including, without limitation, the USA Patriot Act, the AML Legislation and, solely to the extent applicable to the Designated Borrower (without any exemption or exception therefrom being applicable to the Designated Borrower), the Beneficial Ownership Regulation. 7. COVENANTS The Loan Parties, jointly and severally, covenant and agree that until Payment In Full, the Loan Parties shall comply at all times with the following covenants: 223667699

 
7.1 Affirmative Covenants. 7.1.1 Preservation of Existence, Etc. Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain its legal existence as a corporation, limited partnership, limited liability company or unlimited liability company and its license or qualification and good standing (a) in its jurisdiction of incorporation or organization, and (b) in each jurisdiction in which its ownership or lease of property or the nature of its business makes such license or qualification necessary, except as otherwise expressly permitted in Section 7.2.6 [Liquidations, Mergers, Etc.] and, with respect to clause (b), except where the failure to so maintain any license or qualification is not reasonably likely to result in a Material Adverse Change. 7.1.2 Payment of Liabilities, Including Taxes, Etc. Each Loan Party shall, and shall cause each of its Subsidiaries to, duly pay and discharge all liabilities to which it is subject or which are asserted against it, promptly as and when the same shall become due and payable, including all Taxes and governmental charges upon it or any of its properties, assets, income or profits, prior to the date on which penalties attach thereto to the extent that failure to pay or discharge any such liabilities would result in a Material Adverse Change, except to the extent that such liabilities, including Taxes or similar charges, are being contested in good faith and by appropriate and lawful proceedings diligently conducted and for which such reserve or other appropriate provisions, if any, as shall be required by GAAP shall have been made. 7.1.3 Maintenance of Insurance. Each Loan Party shall, and shall cause each of its Subsidiaries to, insure its properties and assets against loss or damage by fire and such other insurable hazards as such assets are commonly insured (including fire, extended coverage, property damage, workers' compensation, public liability and business interruption insurance) and against other risks (including errors and omissions) in such amounts as similar properties and assets are insured by prudent companies in similar circumstances carrying on similar businesses, and with reputable and financially sound insurers, including self-insurance to the extent customary, all as reasonably determined by the Administrative Agent. At the request of the Administrative Agent, the Loan Parties shall deliver to the Administrative Agent (x) on the Fourth Amendment Effective Date and annually thereafter an original certificate of insurance signed by the Loan Parties' independent insurance broker describing and certifying as to the existence of the insurance on the Collateral required to be maintained by this Agreement and the other Loan Documents, (y) a copy of the endorsement described in the next sentence attached to such certificate, and (z) from time to time a summary schedule indicating all insurance then in force with respect to each of the Loan Parties. Such policies of insurance shall contain special endorsements which are in a form acceptable to the Administrative Agent in its reasonable discretion. The applicable Loan Parties shall notify the Administrative Agent promptly of any occurrence causing a material loss or decline in value of the Collateral and the estimated (or actual, if available) amount of such loss or decline. Any monies received by the Administrative Agent constituting insurance proceeds may, at the option of the Administrative Agent, be applied by the Administrative Agent to the payment of the Obligations in accordance with the terms of this Agreement. 7.1.4 Maintenance of Properties and Leases. Each Loan Party shall, and shall cause each of its Subsidiaries to, maintain in good repair, working order and condition (ordinary wear and tear excepted) in accordance with the general practice of other businesses of similar character and size, all of those properties useful or necessary to its business, and from time to time, such Loan Party will make or cause to be made all appropriate repairs, renewals or 223667699

 
replacements thereof, except where the failure to do so would not result in a Material Adverse Change. 7.1.5 Visitation Rights. Each Loan Party shall, and shall cause each of its Subsidiaries to, permit any of the officers or authorized employees or representatives of the Administrative Agent or any of the Lenders to visit, no more than twice per year (unless an Event of Default has occurred and is continuing), during normal business hours and inspect any of its properties and to examine and make excerpts from its books and records and discuss its business affairs, finances and accounts with its officers, all in such detail and at such times and as often as any of the Lenders may reasonably request, provided that each Lender shall provide the Lead Borrower and the Administrative Agent with reasonable notice prior to any visit or inspection; provided, further, that such visit or inspection shall be conducted during normal business hours and shall not unreasonably interfere with the business or operations of the applicable Loan Party and all information obtained or observed during such visit or inspection shall be subject to the confidentiality obligations in Section 10.9 [Confidentiality]; and provided further that the foregoing shall include Collateral audits and field examinations to audit the Collateral at the Administrative Agent’s discretion, which shall be conducted by an independent examiner selected by the Administrative Agent. In the event any Lender desires to visit and inspect any Loan Party, such Lender shall make a reasonable effort to conduct such visit and inspection contemporaneously with any visit and inspection to be performed by the Administrative Agent. 7.1.6 Keeping of Records and Books of Account. Each Loan Party shall, and shall cause each Subsidiary of such Loan Party to, maintain and keep proper books of record and account which enable such Loan Party and its Subsidiaries to issue financial statements in accordance with GAAP and as otherwise required by applicable Laws of any Official Body having jurisdiction over such Loan Party or any Subsidiary of such Loan Party, and in which full, true and correct entries shall be made in all material respects of all its dealings and business and financial affairs. 7.1.7 Compliance with Laws; Use of Proceeds. Each Loan Party shall, and shall cause each of its Subsidiaries to, comply with all applicable Laws, including all Environmental Laws and Anti-Terrorism Laws, in all respects; provided that it shall not be deemed to be a violation of this Section 7.1.7 if any failure to comply with any Law would not result in fines, penalties, remediation costs, other similar liabilities or injunctive relief which in the aggregate constitutes a Material Adverse Change. The Loan Parties will use the Letters of Credit and the proceeds of the Loans to (a) refinance existing Indebtedness on the Closing Date, (b) provide working capital to the Borrowers, and (c) for general corporate purposes of the Borrowers, including investments, repurchases and/or dividends in respect of the Lead Borrower’s stock, Capital Expenditures, and the Camuto Transactions and Permitted Acquisitions, in each case to the extent not prohibited under the terms of this Agreement or any other Loan Document. 7.1.8 Anti-Terrorism Laws; International Trade Law Compliance. (a) No Covered Entity will become a Sanctioned Person, (b) no Covered Entity, either in its own right or through any third party, will (A) have any of its assets in a Sanctioned Country or in the possession, custody or control of a Sanctioned Person in violation of any Anti-Terrorism Law; (B) do business in or with, or directly derive any of its income from investments in or transactions with, any Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law; (C) engage in any dealings or transactions prohibited by any Anti-Terrorism 223667699

 
Law or (D) use the Loans or Letters of Credit or any proceeds therefrom to fund any operations in, finance any investments or activities in, or, make any payments to, a Sanctioned Country or Sanctioned Person in violation of any Anti-Terrorism Law or would otherwise result in any violation of any Anti-Terrorism Laws, (c) the funds used to repay the Obligations will not be derived from any unlawful activity, (d) each Covered Entity shall comply with all Anti-Terrorism Laws, and (e) the Lead Borrower shall promptly notify the Administrative Agent in writing upon the occurrence of a Reportable Compliance Event. 7.1.9 Keepwell. Each Qualified ECP Loan Party jointly and severally (together with each other Qualified ECP Loan Party) hereby absolutely unconditionally and irrevocably (a) guarantees the prompt payment and performance of all Swap Obligations owing by each Non-Qualifying Party (it being understood and agreed that this guarantee is a guaranty of payment and not of collection), and (b) undertakes to provide such funds or other support as may be needed from time to time by any Non-Qualifying Party to honor all of such Non Qualifying Party's obligations under this Agreement or any other Loan Document in respect of Swap Obligations (provided, however, that each Qualified ECP Loan Party shall only be liable under this Section 7.1.9 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 7.1.9, or otherwise under this Agreement or any other Loan Document, voidable under applicable law, including applicable law relating to fraudulent conveyance or fraudulent transfer, and not for any greater amount). The obligations of each Qualified ECP Loan Party under this Section 7.1.9 shall remain in full force and effect until payment in full of the Obligations and termination of this Agreement and the other Loan Documents. Each Qualified ECP Loan Party intends that this Section 7.1.9 constitute, and this Section 7.1.9 shall be deemed to constitute, a guarantee of the obligations of, and a “keepwell, support, or other agreement” for the benefit of each other Loan Party for all purposes of Section 1a(18(A)(v)(II) of the CEA. 7.1.10 Further Assurances. Each Loan Party shall, from time to time at its expense, faithfully preserve and protect the Administrative Agent's Lien on and Prior Security Interest in the Collateral as a continuing perfected Lien, subject only to Permitted Liens, and shall do such other acts and things as the Administrative Agent may reasonably request from time to time in order to preserve, perfect and protect the Liens granted under the Loan Documents and to exercise and enforce its rights and remedies thereunder with respect to the Collateral. 7.2 Negative Covenants. 7.2.1 Indebtedness. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Indebtedness, except: (i) Indebtedness under the Loan Documents; (ii) Existing Indebtedness as set forth on Schedule 7.2.1 (including any extensions or renewals thereof; provided there is no increase in the amount thereof or other significant change in the terms thereof unless otherwise specified on Schedule 7.2.1); (iii) Indebtedness incurred with respect to Purchase Money Security Interests and Capital Leases in an aggregate principal amount not to exceed Twenty Million and 00/100 Dollars ($20,000,000.00) at any time outstanding; 223667699

 
(iv) Indebtedness of a Domestic Loan Party to another Domestic Loan Party which is subordinated pursuant to the Intercompany Subordination Agreement; (v) Indebtedness of a Domestic Loan Party to a Foreign Subsidiary in an aggregate principal amount not to exceed Sixty Million and 00/100 Dollars ($60,000,000.00) at any time outstanding which is subordinated pursuant to the Intercompany Subordination Agreement;[Reserved]; (vi) Indebtedness of a Foreign Subsidiary to a Domestic Loan Party so long as such Indebtedness is incurred within the parameters of clause (ixx) of Section 7.2.4 [Loans and Investments]; (vii) Guaranties permitted by Section 7.2.3 [Guaranties]; (viii) Any (i) Lender Provided Interest Rate Hedge, (ii) Lender Provided Foreign Currency Hedge or (iii) Indebtedness under any Other Lender Provided Financial Services Product; provided however, the Loan Parties shall enter into an Interest Rate Hedge or Foreign Currency Hedge only for hedging (rather than speculative) purposes; (ix) Indebtedness in respect of financing of insurance premiums incurred in the ordinary course of business; (x) Indebtedness to customs brokers, freight forwarders, common carriers, landlords and like persons incurred in the ordinary course of business; (xi) Indebtedness with respect to indemnities, warranties, statutory obligations, and surety, appeal and supersedes bonds incurred in the ordinary course of business and which is not overdue; (xii) letters of credit issued for the account of one or more Camuto Entities to the extent such letters of credit were outstanding as of the Camuto Acquisition Closing; (xiii) (a) Indebtedness of a Subsidiary of the Lead Borrower acquired pursuant to the Camuto Transactions or a Permitted Acquisition so long as such Indebtedness was not incurred in connection with, or in anticipation or contemplation of, the Camuto Transactions or any such Permitted Acquisition and (b) unsecured Indebtedness of the Lead Borrower or any Subsidiary thereof in respect of any earnout obligation or similar deferred or contingent obligation of any Loan Party or any Subsidiary incurred or created in connection with the Camuto Transactions or any Permitted Acquisition; and (xiv) Any unsecured Indebtedness not otherwise permitted above which does not exceed Seventy-FiveFifteen Million and 00/100 Dollars ($75,000,000.0015,000,000.00) in the aggregate at any time outstanding. 7.2.2 Liens; Lien Covenants. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time create, incur, assume or suffer to exist any Lien on any of its property or assets, tangible or intangible, now owned or hereafter acquired, or agree or become liable to do so, except Permitted Liens. 223667699

 
7.2.3 Guaranties. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time, directly or indirectly, become or be liable in respect of any Guaranty, or assume, guarantee, become surety for, endorse or otherwise agree, become or remain directly or contingently liable upon or with respect to any obligation or liability of any other Person, except for (i) Guaranties of Indebtedness of the Loan Parties permitted hereunder, (ii) existing Guaranties as set forth on Schedule 7.2.3 (including any extensions or renewals thereof; provided there is no increase in the amount thereof or other significant change in the terms thereof unless otherwise specified on Schedule 7.2.3), (iii) contingent liabilities arising from the endorsement of negotiable or other instruments for deposit or collection or similar transactions in the ordinary course of business, (iv) Contingent Obligations arising with respect to indemnification obligations in favor of sellers in connection with the Camuto Transactions or Permitted Acquisitions; (v) guaranties by the Lead Borrower or any Subsidiary thereof of performance or other obligations (other than Indebtedness) of the Lead Borrower, any Subsidiary thereof or any Joint Venture to the extent such obligations are not prohibited hereunder; and (vi) guaranties by any Loan Party or any Subsidiary thereof of Indebtedness of any Subsidiary that is not a Loan Party or any Joint Venture in an aggregate amount of such guarantees under this subsection (vi) not to exceed Twenty-FiveTen Million and 00/100 Dollars ($25,000,000.0010,000,000.00) at any one time. 7.2.4 Loans and Investments. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, at any time make or suffer to remain outstanding any loan or advance to, or purchase, acquire or own any stock, bonds, notes or securities of, or any partnership interest (whether general or limited) or limited liability company interest in, or any other investment or interest in, or make any capital contribution to, any other Person, or agree, become or remain liable to do any of the foregoing, except: (i) trade credit extended on usual and customary terms in the ordinary course of business; (ii) advances to employees, officers or managers of a Loan Party in the ordinary course of business to meet expenses incurred by such Persons in the ordinary course of business (including, without limitation, relocation expenses); (iii) Permitted Investments; (iv) transactions permitted by Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] (including, without limitation, loans, advances and investments in Foreign Subsidiaries and Joint Ventures held by any Person acquired pursuant to the Camuto Transactions or a Permitted Acquisition immediately prior to the Camuto Acquisition Closing or the consummation of such Permitted Acquisition, as applicable); (v) loans, advances and investments by Domestic Loan Parties in other Domestic Loan Parties; (vi) loans, advances and investments by Foreign Subsidiaries in Domestic Loan Parties, subject to the provisions of Section 7.2.1(v) [Indebtedness]; (vii) investments in notes and other securities received in settlement of overdue Indebtedness and accounts payable owed to a Loan Party or a Subsidiary of a Loan Party in the 223667699

 
ordinary course of business and for amounts which, individually and in the aggregate, are not material to the Loan Parties or their Subsidiaries; (viii) investments in the nature of seller financing or other consideration received in any disposition (including any sale, lease, sale-leaseback, assignment or transfer) of assets or property by any Loan Party or any Subsidiary of a Loan Party, provided that the aggregate value of all such investments at any time (based on the value at the time of acquisition thereof but reduced by payments or other realization thereon) shall not exceed Ten Million and 00/100 Dollars ($10,000,000.00);investments in Article II JV and BC/VC existing as of the Fourth Amendment Effective Date; (ix) loans, advances and investments by Foreign Subsidiaries in other Foreign Subsidiaries; and (x) (ix) loans, advances and investments not otherwise permitted above or below by Domestic Loan Parties in or to Foreign Subsidiaries and Joint Ventures in an amount, measured at the time any such loan, advance or investment is made, which shall not exceed Seventy-FiveFifty Million and 00/100 Dollars ($75,000,000.0050,000,000.00) in the aggregate at any one time outstanding; (x) (a) loans, advances and investments by DSW Canada TS Inc., a Canadian corporation (“DSW Canada”), in or to Town Shoes Limited, an Ontario corporation (“Town Shoes”), in an amount, measured at the time any such loan, advance or investment is made, which shall not exceed One Hundred Million and 00/100 Canadian Dollars (CAD $100,000,000.00) in the aggregate at any one time outstanding, and (b) loans, advances and investments by a Domestic Loan Party in or to DSW Canada, in an amount necessary to allow DSW Canada to acquire the remaining equity interests of Town Shoes in accordance with clause (iii) of Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions]; (xi) loans, advances and investments by Foreign Subsidiaries in other Foreign Subsidiaries; (xii) the IPCo JV Investments and investments in Article II JV, BC/VC, Camuto Castillo and their respective Subsidiaries in connection with the Camuto Transactions; and (xiii) loans by the Lead Borrower or any of its Subsidiaries to one or more Camuto Entities (such loans, “Interim Loans”) in an aggregate amount not to exceed Fifteen Million and 00/100 Dollars ($15,000,000.00) at any time outstanding; provided that no Interim Loan permitted under this subsection may remain outstanding following the earlier of (a) the Camuto Acquisition Closing and (b) December 3, 2018; provided further that the termination of the foregoing permission in respect of Interim Loans shall not limit the ability of the Lead Borrower or any of its Subsidiaries from making loans to any Camuto Entity acquired pursuant to the Camuto Transactions that are otherwise permitted by Section 7.2.4. 7.2.5 Dividends and Related Distributions. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, make or pay, or agree to become or remain liable to make or pay, any dividend or other distribution of any nature (whether in cash, property, securities or otherwise) on account of or in respect of its shares of Capital Stock, on account of 223667699

 
the purchase, redemption, retirement or acquisition of its shares of Capital Stock (or warrants, options or rights therefor), except (i) dividends or other distributions payable to a Loan Party, (ii) the Lead Borrower may declare, pay and make (as applicable) any other dividends, distributions or share repurchases so long as both immediately before and immediately after giving effect thereto there exists no Event of Default, and (iii) Subsidiaries of any Loan Party may declare, pay and make (as applicable) any dividends or distributions to any holder of its equity interests so long as, if such Subsidiary is not wholly-owned, the Lead Borrower or the applicable Subsidiary thereof receives at least its pro rata share of such dividend or distribution.. 7.2.6 Liquidations, Mergers, Consolidations, Acquisitions. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, dissolve, liquidate or wind-up its affairs, or become a party to any merger, amalgamation or consolidation, or acquire by purchase, lease or otherwise all or substantially all of the assets or Capital Stock or other ownership interests of any other Person; provided that: (i) upon prior written notice by the Lead Borrower, any Domestic Loan Party other than a Borrower may consolidate or merge into another Domestic Loan Party which is wholly-owned by one or more of the other Loan Parties; (ii) upon prior written notice by the Lead Borrower, any Domestic Loan Party may dispose of all or any of its assets (upon voluntary liquidation, dissolution winding up or otherwise) to any other Domestic Loan Party; provided that with respect to any such disposition, the consideration for such disposition shall not exceed the fair market value of such assets; (iii) DSW Canada TS Inc., a Canadian corporation, may acquire the remaining equity interests of Town Shoes Limited, an Ontario corporation, so long as no Event of Default or Potential Default shall exist immediately prior to or after giving effect to such acquisition; and (iv) any Loan Party may acquire (by purchase, merger or other acquisition) (x) all or substantially all of the ownership interests of another Person or (y) all or substantially all of the assets of another Person or of a business, division, product line or line of business of another Person (each, a “Permitted Acquisition”); provided that each of the following requirements is met: (A) if a Loan Party is acquiring the ownership interests in a Domestic Person (other than any Excluded Domestic Subsidiary), such Person shall execute a Guarantor Joinder and such other documents required by Section 10.14 [Joinder] and join this Agreement as a Guarantor pursuant to Section 10.14 [Joinder]; (B) the board of directors or other equivalent governing body of such Person shall have approved such Permitted Acquisition and the Loan Parties also shall have delivered to the Administrative Agent and the Lenders written evidence of the approval of the board of directors (or equivalent body) of such Person for such Permitted Acquisition; (C) each applicable Official Body shall have approved such Permitted Acquisition and the Loan Parties shall have delivered to the Administrative Agent and the Lenders written evidence of the approval of such Official Body or such Permitted Acquisition; (D) the business, division, product line or line of business acquired, or the business conducted by the Person whose ownership interests are being acquired, as 223667699

 
applicable, shall be engaged in a business otherwise permitted to be engaged in by a Loan Party under this Agreement; (E) except if the applicable Permitted Acquisition is for Consideration less than Twenty-Five Million and 00/100 Dollars ($25,000,000.00), the Lead Borrower shall deliver to the Administrative Agent a compliance certificate in the form of Exhibit 7.2.6 (an “Acquisition Compliance Certificate”) at least five (5) days prior to such Permitted Acquisition, which shall demonstrate that the Loan Parties shall be in pro forma compliance with the Leverage Ratio after giving effect to such Permitted Acquisition (including in such computation Indebtedness or other liabilities assumed or incurred in connection with such Permitted Acquisition); (F) except if the applicable Permitted Acquisition is for Consideration less than Twenty-Five Million and 00/100 Dollars ($25,000,000.00), the Loan Parties shall deliver to the Administrative Agent at least five (5) days before (or such shorter timeframe as may be agreed to by the Administrative Agent in its sole discretion) such Permitted Acquisition copies of (x) any agreements entered into or proposed to be entered into by such Loan Parties in connection with such Permitted Acquisition, (y) such other information about such Person or its assets as the Administrative Agent or any Lender may reasonably require; and (G) no Event of Default or Potential Default shall exist immediately prior to or after giving effect to such Permitted Acquisition; and (iv) (v) the Lead Borrower and its Subsidiaries may execute and deliver the Camuto Transaction Documents and consummate the Camuto Transactions; provided that, for the avoidance of doubt, nothing herein will affect the Loan Parties’ obligations to deliver Guarantor Joinders and related items following the Camuto Transactions pursuant to Section 10.14. 7.2.7 Dispositions of Assets. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, sell, convey, assign, lease, abandon or otherwise transfer or dispose of, voluntarily or involuntarily, any of its properties or assets, tangible or intangible (including sale, assignment, discount or other disposition of accounts, contract rights, chattel paper, equipment or general intangibles) with or without recourse, except: (i) transactions involving (a) the sale of inventory in the ordinary course of business, (b) in addition to sales of Inventory under subsection (a), the sale of slow moving inventory outside of the ordinary course (including in respect of a liquidation thereof); provided that such amount shall be capped, commencing with the fiscal year of the Lead Borrower commencing January 31, 2021, in an amount not to exceed Five Million and 00/100 Dollars ($5,000,000) during anysuch fiscal year and in each fiscal year ending thereafter, and (c) the transfer, license or other conveyance of intellectual property and other intangible assets in the ordinary course of business; (ii) any sale, transfer or lease of assets in the ordinary course of business which are no longer necessary or required in the conduct of such Loan Party's or such Subsidiary's business; (iii) any sale, transfer or lease of assets by any Domestic Loan Party or any wholly owned Subsidiary of such Domestic Loan Party to another Domestic Loan Party; 223667699

 
(iv) any sale, transfer or lease of assets in the ordinary course of business which are replaced by substitute assets acquired or leased within the parameters of this Agreement; (v) the leasing or subleasing of assets of any Loan Party or any Subsidiary of any Loan Party in the ordinary course of business or the termination of leases or subleases by any Loan Party or any Subsidiary of any Loan Party; (vi) subject to Section 8.1.11 [Change of Control], any sale or transfer by the Lead Borrower of the capital stock or other equity interests of the Lead Borrower; (vii) dispositions of receivables pursuant to any Factoring Agreement; and (viii) (vii) any sale, transfer or lease of assets, other than those specifically excepted above or below, so long as both immediately before and immediately after giving effect thereto there exists no Event of Default or Potential Default; provided that the aggregate value of all assets sold by the Lead Borrower and its Subsidiaries shall not exceed TwentyTen Million and 00/100 Dollars ($20,000,000.0010,000,000.00) during any fiscal year; and (viii) dispositions of receivables pursuant to any Factoring Agreement. 7.2.8 Affiliate Transactions. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, enter into or carry out any transaction with any Affiliate of any Loan Party (including purchasing property or services from or selling property or services to any Affiliate of any Loan Party or other Person) unless such transaction is not otherwise prohibited by this Agreement, is entered into in the ordinary course of business uponon fair and reasonable arm's-length terms and conditions which are fully disclosed to the Administrative Agentnot less favorable to such Loan Party or Subsidiary than could be obtained on an arm’s-length basis from unrelated third parties and is in accordance with all applicable Law; provided that the foregoing restriction shall not apply to (a) a transaction between or among the Loan Parties, (b) transactions disclosed on Schedule 7.2.8 hereto, (c) advances for commissions, travel and similar purposes in the ordinary course of business to directors, officers and employees, (d) the payment of reasonable fees and out-of-pocket costs to directors, and compensation and employee benefit arrangements paid to, and indemnities provided for the benefit of, directors, officers or employees of any Borrower or its Subsidiaries and (e) transactions permitted by Section 7.2.6. 7.2.9 Subsidiaries and Joint Ventures. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to own or create directly or indirectly any Subsidiaries other than (i) any Domestic Subsidiary which has joined this Agreement as a Guarantor on the Closing Date, (ii) any Foreign Subsidiary as of the Closing Date; (iii) Article II JV and BC/VC, (iv) any Domestic Subsidiary created, acquired or otherwise formed after the Closing Date in compliance with this Agreement (including, without limitation, Section 7.2.4 [Loans and Investments] so long as such Domestic Subsidiary joins this Agreement as a Guarantor pursuant to Section 10.14 [Joinder of Guarantors], and (ivv) any Foreign Subsidiary created, acquired or otherwise formed after the Closing Date in compliance with this Agreement (including, without limitation, Section 7.2.4 [Loans and Investments]). Except as permitted pursuant to Section 7.2.4 [Loans and Investments] hereof, each of the Loan Parties shall not become or agree to become a party to a Joint Venture. 223667699

 
7.2.10 Continuation of or Change in Business. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, engage in any business other than (i) operation of designer and name brand shoe stores and related accessories or operation of licensed shoe departments substantially as conducted and operated by such Loan Party or Subsidiary during the present fiscal year, (ii) marketing, designing, sourcing and distributing footwear, handbags, accessories and apparel and licensing related intellectual property and (iii) any other business reasonably related or complementary thereto, and such Loan Party or Subsidiary shall not permit any fundamental change in such business. 7.2.11 Fiscal Year. Each Loan Party shall not, and shall not permit any of its Subsidiaries to, change its fiscal year from the fifty-two (52)/fifty-three (53) week fiscal year beginning on the Sunday closest to February 1 of each calendar year and ending on the Saturday closest to January 31 of the following calendar year. 7.2.12 Changes in Organizational Documents. Each of the Loan Parties shall not, and shall not permit any of its Subsidiaries to, amend in any respect its certificate of incorporation (including any provisions or resolutions relating to capital stock), by-laws, certificate of limited partnership, partnership agreement, certificate of formation, limited liability company agreement or other organizational documents in the event such change would be materially adverse to the Lenders, without obtaining the prior written consent of the Required Lenders. 7.2.13 Minimum Fixed Charge Coverage Ratio. The Loan Parties shall not permit the Fixed Charge Coverage Ratio to be less than (i) 1.75 to 1.00, calculated as of October 28, 2017 and as of the end of each fiscal quarter thereafter through and including February 1, 2020, and (ii) 1.501.25 to 1.00, calculated as of May 2, 2020 for the four (4) fiscal quarters then ended and (ii) 1.05 to 1.00, calculated as of August 1, 2020 and as of the end of each fiscal quarter thereafter, in each case for the four (4) fiscal quarters then ended. 7.2.14 Maximum Leverage Ratio. The Loan Parties shall not permit the Leverage Ratio to exceed (i) 3.50 to 1.00, calculated as of May 2, 2020 for the four (4) fiscal quarters then ended, (ii) 4.00 to 1.00, calculated as of August 1, 2020 for the four (4) fiscal quarters then ended, (iii) 3.75 to 1.00, calculated as of October 2831, 20172020 for the four (4) fiscal quarters then ended and (iv) 3.50 to 1.00, calculated as of January 30, 2021 and as of the end of each fiscal quarter thereafter, in each case for the four (4) fiscal quarters then ended, to exceed (i) 3.25 to 1.00 during all times other than during the Acquisition Period and (ii) 3.50 to 1.00 during the Acquisition Period. In no event shall the Leverage Ratio modification that occurs in connection with an Acquisition Period occur more than once during the term of this Agreement.. 7.2.15 Limitation on Negative Pledges. Each of the Loan Parties shall not, and shall not permit any Subsidiary, to enter into or suffer to exist or become effective any agreement that prohibits or limits the ability of such Loan Party or any of its Subsidiaries to create, incur, assume or suffer to exist any Lien upon any of its property or revenues, whether now owned or hereafter acquired, to secure the Obligations, other than (a) this Agreement and the other Loan Documents (b) with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with a disposition of assets permitted under this Agreement of all or substantially all of the equity interests or assets of such Subsidiary, (c) any agreements governing Purchase Money Security Interests or Capital Lease Obligations otherwise permitted hereby (in 223667699

 
which case, any prohibition or limitation shall only be effective against the assets financed thereby), (d) customary provisions restricting assignment of any licensing agreement (in which a Loan Party or its Subsidiaries are the licensee) with respect to a contract entered into by a Loan Party or its Subsidiaries in the ordinary course of business, (e) customary provisions restricting granting Liens on, or subletting, sublicensing or assignment of, any intellectual property license (or any inventory subject thereto) or any lease governing any leasehold interests of a Loan Party and its Subsidiaries, (f) customary provisions restricting the transfer of, or the grant of Liens on, any equity interest held in a Joint Venture or any Subsidiary that is not wholly-owned, directly or indirectly, by the Lead Borrower, (g) any agreement of any Subsidiary acquired in connection with the Camuto Transactions or any Permitted Acquisition so long as agreements are not entered into in connection with, or in contemplation or anticipation of, the Camuto Transactions or any such Permitted Acquisition and (h) the Factoring Agreements (in the case of this clause (h), so long as any such prohibition or limitation shall only apply against accounts receivable and other property customarily subject to such prohibitions or limitations in connection with the financing or securitization of accounts receivable). 7.2.16 Restrictions on Certain Subsidiaries. Each of Ebuys, Article II JV and BC/VC shall not own, acquire, lease, possess or otherwise maintain any assets except those held by such entities on the Fourth Amendment Effective Date. 7.3 Reporting Requirements. The Loan Parties will furnish or cause to be furnished to the Administrative Agent and each of the Lenders: 7.3.1 Quarterly Financial Statements. As soon as available and in any event within forty-five (45i) calendar days after the end of each offor the first three (3) fiscal quarters in eachof the Lead Borrower ending May 2, 2020 and August 1, 2020, no later than the date by which the Lead Borrower is required to file its quarterly report on form 10-Q with the SEC after the close of such fiscal quarter and (ii) for each fiscal quarter of the Lead Borrower ending thereafter (excluding any such fiscal quarter that is the last fiscal quarter in any fiscal year of the Lead Borrower), no later than forty-five (45) calendar days after the end of any such fiscal quarter, financial statements of the Lead Borrower and its Subsidiaries, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statements of income and cash flows for the fiscal quarter then ended and the fiscal year through that date, all in reasonable detail and certified (subject to normal year-end audit adjustments) by a Responsible Financial Officer of the Lead Borrower as having been prepared in accordance with GAAP, consistently applied, and setting forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year. 7.3.2 Annual Financial Statements. As soon as available and in any event within(i) for the fiscal year of the Lead Borrower ended February 1, 2020, no later than the date by which the Lead Borrower is required to file its annual report on form 10-K with the SEC after the close of such fiscal year and (ii) for each fiscal year of the Lead Borrower ending thereafter, no later than ninety (90) calendar days after the close of eachsuch fiscal year of the Lead Borrower, financial statements of the Lead Borrower and its Subsidiaries consisting of an audited consolidated balance sheet as of the end of such fiscal year, and related consolidated statements of income, shareholders' equity and cash flows for the fiscal year then ended, all in reasonable detail and setting forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and certified by independent certified public accountants of nationally recognized standing reasonably satisfactory to the Administrative Agent. The certificate or 223667699

 
report of accountants shall be free of qualifications (other than any consistency qualification that may result from a change in the method used to prepare the financial statements as to which such accountants concur) and shall not indicate the occurrence or existence of any event, condition or contingency which would materially impair the prospect of payment or performance of any covenant, agreement or duty of any Loan Party under any of the Loan Documents. 7.3.3 Certificate of the Lead Borrower. Concurrently with the financial statements of the Lead Borrower and its Subsidiaries furnished to the Administrative Agent and to the Lenders pursuant to (i) Sections 7.3.1 [Quarterly Financial Statements] and (ii) 7.3.2 [Annual Financial Statements] (with respect to this clause (ii) commencing with the financial statements due for the fiscal quarteryear ending October 28January 30, 20172021), a certificate (each a “Compliance Certificate”) of the Lead Borrower signed by a Responsible Financial Officer of the Lead Borrower, in the form of Exhibit 7.3.3. 7.3.4 Notices. 7.3.4.1 Default. Promptly after any Authorized Officer of any Loan Party has learned of the occurrence of an Event of Default, a certificate signed by an Authorized Officer setting forth the details of such Event of Default and the action which such Loan Party proposes to take with respect thereto. 7.3.4.2 Litigation. Promptly after the commencement thereof, notice of all actions, suits, proceedings or investigations before or by any Official Body or any other Person against any Loan Party or Subsidiary of any Loan Party which involve a claim or series of claims which results in a Material Adverse Change. 7.3.4.3 Erroneous Financial Information. Promptly in the event that any Loan Party or its accountants conclude or advise that any previously issued financial statement, audit report or interim review should no longer be relied upon or that disclosure should be made or action should be taken to prevent future reliance. 7.3.4.4 ERISA Event. Promptly upon the occurrence of any ERISA Event or Foreign Benefit Event. 7.3.4.5 Other Reports. Promptly upon their becoming available to the Loan Parties: (i) Annual Budget. TheCommencing in 2021, the annual budget and any forecasts or projections of the Lead Borrower and its Subsidiaries, to be supplied no later than the earlier of (a) five (5) Business Days following the approval thereof by the Lead Borrower’s board of directors or (b) March 31 of each year; (ii) Management Letters. Any reports including management letters submitted to any Loan Party by independent accountants in connection with any annual or interim audit of financial statements; (iii) SEC Reports; Shareholder Communications. Reports, including Forms 10-K, 10-Q and 8-K, registration statements and prospectuses and other shareholder communications, filed by any Loan Party with the SEC; and 223667699

 
(iv) Other Information. Such other reports and information relating to Lead Borrower’s and its Subsidiaries’ business or financial condition as any of the Lenders may from time to time reasonably request. Documents required to be delivered pursuant Section 7.3.1 [Quarterly Financial Statements], Section 7.3.2 [Annual Financial Statements] and Section 7.3.4.5 [Other Reports] may be delivered electronically and, if so delivered (to the extent that any Loan Party is required to file Annual Reports or Quarterly Reports with the SEC), shall be deemed to have been delivered on the date on which such documents are filed for public availability on the EDGAR website; provided that the Lead Borrower shall (i) notify (which may be by facsimile or electronic mail) the Administrative Agent of the filing of any such documents, and (2) provide to the Administrative Agent by electronic mail electronic versions (i.e., soft copies) of such documents. Notwithstanding anything to the contrary contained herein, in every instance the Lead Borrower shall be required to provide paper copies of the compliance certificate required by Section 7.3.3 [Certificate of the Lead Borrower] to the Administrative Agent. 8. DEFAULT 8.1 Events of Default. An Event of Default means the occurrence or existence of any one or more of the following events or conditions (whatever the reason therefor and whether voluntary, involuntary or effected by operation of Law): 8.1.1 Payments Under Loan Documents. Any Borrower shall fail to pay (i) any principal of any Loan (including scheduled installments, mandatory prepayments or the payment due at maturity), Reimbursement Obligation or Letter of Credit Obligation on the date on which such principal amount becomes due in accordance with the terms hereof or (ii) any interest on any Loan, Reimbursement Obligation or Letter of Credit Obligation or any fee or other amount owing hereunder (other than principal which is specifically addressed in the foregoing clause (i)) or under the other Loan Documents within three (3) Business Days after the date on which such interest, fee or other amount becomes due in accordance with the terms hereof or thereof; 8.1.2 Breach of Warranty. Any representation or warranty made at any time by any of the Loan Parties herein or by any of the Loan Parties in any other Loan Document, or in any certificate, other instrument or statement furnished pursuant to the provisions hereof or thereof, shall prove to have been false or misleading in any material respect (other than a representation, warranty, certification or statement qualified by materiality or reference to the absence of a Material Adverse Change, in which event such representation, warranty, certification or statement shall prove to have been false or misleading in any respect) as of the time it was made or furnished; 8.1.3 Anti-Terrorism Laws. Any representation or warranty contained in Section 5.1.15 [Anti-Terrorism Laws] is or becomes false or misleading at any time; 8.1.4 Breach of Certain Covenants. Any of the Loan Parties shall default in the observance or performance of any covenant contained in Section 7.1.1(a) [Preservation of Existence, Etc.] (with respect to the Lead Borrower only), Section 7.1.5 [Visitation Rights], Section 7.1.8 [Anti-Terrorism Laws; International Trade Law Compliance] or Section 7.2 [Negative Covenants]; 223667699

 
8.1.5 Breach of Other Covenants. Any of the Loan Parties shall default in the observance or performance of any other covenant, condition or provision hereof or of any other Loan Document and such default shall continue unremedied for a period of fifteen (15) Business Days following the earlier to occur of (i) the Administrative Agent’s (given at the request of any Lender) notifying an Authorized Officer of the Lead Borrower of such default, or (ii) the obtaining of knowledge of such default by any Authorized Officer of any Loan Party; 8.1.6 Defaults in Other Agreements or Indebtedness. A default or event of default shall occur at any time under the terms of any other agreement involving Indebtedness for borrowed money under which any Loan Party or Subsidiary of any Loan Party may be obligated as a borrower or guarantor in excess of Thirty Million and 00/100 Dollars ($30,000,000.00) in the aggregate, and such breach, default or event of default consists of the failure to pay (beyond any period of grace permitted with respect thereto, whether waived or not) any such Indebtedness when due (whether at stated maturity, by acceleration or otherwise) or if such breach or default permits or causes the acceleration of any such Indebtedness (whether or not such right shall have been waived) or the termination of any commitment to lend; 8.1.7 Final Judgments or Orders. Any final judgments or orders for the payment of money in excess of Thirty Million and 00/100 Dollars ($30,000,000.00) in the aggregate shall be entered against any Loan Party or Subsidiary of any Loan Party by a court having jurisdiction in the premises, which judgment is not discharged, vacated, bonded or stayed pending appeal within a period of forty-five (45) days from the date of entry; 8.1.8 Loan Document Unenforceable. Any of the Loan Documents shall cease to be legal, valid and binding agreements enforceable against the party executing the same or such party's successors and assigns (as permitted under the Loan Documents) in accordance with the respective terms thereof or shall in any way be terminated (except in accordance with its terms) or become or be declared ineffective or inoperative or shall in any way be challenged or contested by the Lead Borrower or any of its Affiliates or cease to give or provide the respective material rights, titles, interests, remedies, powers or privileges intended to be created thereby; 8.1.9 Uninsured Losses; Proceedings Against Assets. AnyThere shall occur any material uninsured damage to or loss, theft or destruction of any of the Collateral with a book value (determined in accordance with GAAP) in excess of Ten Million and 00/100 Dollars ($10,000,000.00) in the aggregate, or any of the Loan Parties' or any of their Subsidiaries' assets with a book value (determined in accordance with GAAP) in excess of Ten Million and 00/100 Dollars ($10,000,000.00) in the aggregate are attached, seized, levied upon or subjected to a writ or distress warrant; or such come within the possession of any receiver, manager, receiver and manager, trustee, custodian or assignee for the benefit of creditors and the same is not cured within forty-five (45) days thereafter; 8.1.10 Events Relating to Pension Plans and Multiemployer Plans. (i) An ERISA Event occurs with respect to a Pension Plan which constitutes a Material Adverse Change, (ii) the Lead Borrower or any member of the ERISA Group fails to pay when due, after the expiration of any applicable grace period, any installment payment with respect to its withdrawal liability under Section 4201 of ERISA under a Multiemployer Plan, where the aggregate amount of unamortized withdrawal liability has resulted in a Material Adverse Change or (iii) with respect to any Foreign Plan, one or more Foreign Benefit Events occur that individually or in the aggregate results in a Material Adverse Change; 223667699

 
8.1.11 Change of Control. A Change of Control shall occur; or 8.1.12 Relief Proceedings. A Relief Proceeding shall have been instituted against any Loan Party or Subsidiary of a Loan Party and such Relief Proceeding shall remain undismissed or unstayed and in effect for a period of sixty (60) consecutive days or such court shall enter a decree or order granting any of the relief sought in such Relief Proceeding, (ii) any Loan Party or Subsidiary of a Loan Party institutes, or takes any action in furtherance of, a Relief Proceeding, or (iii) the Loan Parties, taken as a whole, cease to be Solvent or admit in writing their inability, taken as a whole, to pay their debts as they mature. 8.2 Consequences of Event of Default. 8.2.1 Events of Default Other Than Bankruptcy, Insolvency or Reorganization Proceedings. If an Event of Default specified under Section 8.1.1 [Payments Under Loan Documents] through 8.1.11 [Change of Control] shall occur and be continuing, the Lenders and the Administrative Agent shall be under no further obligation to make Loans and the Issuing Lender shall be under no obligation to issue Letters of Credit and the Administrative Agent may, and upon the request of the Required Lenders, shall (i) by written notice to the Lead Borrower, declare the unpaid principal amount of the Notes then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Lenders hereunder and thereunder to be forthwith due and payable, and the same shall thereupon become and be immediately due and payable to the Administrative Agent for the benefit of each Lender without presentment, demand, protest or any other notice of any kind, all of which are hereby expressly waived, and (ii) require the Borrowers to, and the Borrowers shall thereupon, deposit in a non-interest-bearing account with the Administrative Agent, as cash collateral for its Obligations under the Loan Documents, an amount equal to the maximum amount currently or at any time thereafter available to be drawn on all outstanding Letters of Credit, and the Borrowers hereby pledge to the Administrative Agent and the Lenders, and grant to the Administrative Agent and the Lenders a security interest in, all such cash as security for such Obligations. Upon the waiving of all existing Events of Default to the satisfaction of the Required Lenders, the Administrative Agent shall return such cash collateral to the applicable Borrower; and 8.2.2 Bankruptcy, Insolvency or Reorganization Proceedings. If an Event of Default specified under Section 8.1.12 [Relief Proceedings] shall occur, the Lenders shall be under no further obligations to make Loans hereunder and the Issuing Lender shall be under no obligation to issue Letters of Credit and the unpaid principal amount of the Loans then outstanding and all interest accrued thereon, any unpaid fees and all other Indebtedness of the Borrowers to the Lenders hereunder and thereunder shall be immediately due and payable, without presentment, demand, protest or notice of any kind, all of which are hereby expressly waived; and 8.2.3 Set-off. If an Event of Default shall have occurred and be continuing, each Lender, the Issuing Lender, and each of their respective Affiliates and any participant of such Lender or Affiliate which has agreed in writing to be bound by the provisions of Section 4.3 [Sharing of Payments by Lenders] is hereby authorized at any time and from time to time, to the fullest extent permitted by applicable Law, to set off and apply any and all deposits (general or special, time or demand, provisional or final, in whatever currency) at any time held and other obligations (in whatever currency) at any time owing by such Lender, the Issuing Lender or any such Affiliate or participant to or for the credit or the account of any Loan Party against any and 223667699

 
all of the Obligations of such Loan Party now or hereafter existing under this Agreement or any other Loan Document to such Lender, the Issuing Lender, Affiliate or participant, irrespective of whether or not such Lender, Issuing Lender, Affiliate or participant shall have made any demand under this Agreement or any other Loan Document and although such Obligations of such Borrower or such Loan Party may be contingent or unmatured or are owed to a branch or office of such Lender or the Issuing Lender different from the branch or office holding such deposit or obligated on such Indebtedness. The rights of each Lender, the Issuing Lender and their respective Affiliates and participants under this Section are in addition to other rights and remedies (including other rights of setoff) that such Lender, the Issuing Lender or their respective Affiliates and participants may have. Each Lender and the Issuing Lender agrees to notify the Lead Borrower and the Administrative Agent promptly after any such setoff and application; provided that the failure to give such notice shall not affect the validity of such setoff and application; and 8.2.4 Application of Proceeds. From and after the date on which the Administrative Agent has taken any action pursuant to this Section 8.2 [Consequences of Event of Default] and until Payment In Full, and subject to the provisions of Section 10.13 [Bifurcation of Obligations], any and all proceeds received by the Administrative Agent from any sale or other disposition of the Collateral, or any part thereof, or the exercise of any other remedy by the Administrative Agent, shall be applied as follows: (A) First, to payment of that portion of the Obligations constituting fees (other than Letter of Credit Fees), indemnities, expenses and other amounts, including attorney fees, payable to the Administrative Agent in its capacity as such, the Issuing Lender in its capacity as such and the Swing Loan Lender in its capacity as such, ratably among the Administrative Agent, the Issuing Lender and Swing Loan Lender in proportion to the respective amounts described in this clause First payable to them; (B) Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal, interest and Letter of Credit Fees) payable to the Lenders under the Loan Documents, including attorney fees, ratably among the Lenders in proportion to the respective amounts described in this clause Second payable to them; (C) Third, to payment of that portion of the Obligations constituting accrued and unpaid Letter of Credit Fees and interest on the Loans and Reimbursement Obligations, ratably among the Lenders and the Issuing Lenders in proportion to the respective amounts described in this clause Third payable to them; (D) Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, Reimbursement Obligations and payment obligations then owing under any Lender Provided Interest Rate Hedge, Lender Provided Foreign Currency Hedge and Other Lender Provided Financial Service Products, ratably among the Lenders, the Issuing Lender, and the Lenders or Affiliates of Lenders which provide Lender Provided Interest Rate Hedges, Lender Provided Foreign Currency Hedges and Other Lender Provided Financial Service Products, in proportion to the respective amounts described in this clause Fourth held by them; 223667699

 
(E) Fifth, to the Administrative Agent for the account of the Issuing Lender, to cash collateralize any undrawn amounts under outstanding Letters of Credit (to the extent not otherwise cash collateralized pursuant to this Agreement); and (F) Last, the balance, if any, after all of the Obligations have been indefeasibly paid in full to the Borrowers or as otherwise required by Law. Notwithstanding anything to the contrary in this Section 8.2.4, no Swap Obligations of any Non-Qualifying Party shall be paid with amounts received from such Non-Qualifying Party under its Guaranty Agreement (including sums received as a result of the exercise of remedies with respect to such Guaranty Agreement) or from the proceeds of such Non-Qualifying Party’s Collateral if such Swap Obligations would constitute Excluded Hedge Liabilities; provided, however, that to the extent possible appropriate adjustments shall be made with respect to payments and/or the proceeds of Collateral from other Loan Parties that are Eligible Contract Participants with respect to such Swap Obligations to preserve the allocation to Obligations otherwise set forth above in this Section 8.2.4. 9. THE ADMINISTRATIVE AGENT 9.1 Appointment and Authority. Each of the Lenders and the Issuing Lender hereby irrevocably appoints PNC to act on its behalf as the Administrative Agent hereunder and under the other Loan Documents and authorizes the Administrative Agent to take such actions on its behalf and to exercise such powers as are delegated to the Administrative Agent by the terms hereof or thereof, together with such actions and powers as are reasonably incidental thereto. The provisions of this Section 9.1 are solely for the benefit of the Administrative Agent, the Lenders and the Issuing Lender, and no Loan Party shall have rights as a third party beneficiary of any of such provisions. 9.2 Rights as a Lender. The Person serving as the Administrative Agent hereunder shall have the same rights and powers in its capacity as a Lender as any other Lender and may exercise the same as though it were not the Administrative Agent and the term “Lender” or “Lenders” shall, unless otherwise expressly indicated or unless the context otherwise requires, include the Person serving as the Administrative Agent hereunder in its individual capacity. Such Person and its Affiliates may accept deposits from, lend money to, act as the financial advisor or in any other advisory capacity for and generally engage in any kind of business with any Loan Party or any Subsidiary or other Affiliate thereof as if such Person were not the Administrative Agent hereunder and without any duty to account therefor to the Lenders. 9.3 Exculpatory Provisions. The Administrative Agent shall not have any duties or obligations except those expressly set forth herein and in the other Loan Documents. Without limiting the generality of the foregoing, the Administrative Agent: (a) shall not be subject to any fiduciary or other implied duties, regardless of whether a Potential Default or Event of Default has occurred and is continuing; (b) shall not have any duty to take any discretionary action or exercise any discretionary powers, except discretionary rights and powers expressly contemplated hereby or by the other Loan Documents that the Administrative Agent is required to exercise as directed in writing by the Required Lenders (or such other number or percentage of the Lenders as shall be expressly provided for herein or in the other Loan Documents); provided that the Administrative 223667699

 
Agent shall not be required to take any action that, in its opinion or the opinion of its counsel, may expose the Administrative Agent to liability or that is contrary to any Loan Document or applicable Law; and (c) shall not, except as expressly set forth herein and in the other Loan Documents, have any duty to disclose, and shall not be liable for the failure to disclose, any information relating to any Loan Party or any of its Affiliates that is communicated to or obtained by the Person serving as the Administrative Agent or any of its Affiliates in any capacity. The Administrative Agent shall not be liable for any action taken or not taken by it (i) with the consent or at the request of the Required Lenders (or such other number or percentage of the Lenders as shall be necessary, or as the Administrative Agent shall believe in good faith shall be necessary, under the circumstances as provided in Sections 10.1 [Modifications, Amendments or Waivers] and 8.2 [Consequences of Event of Default]) or (ii) in the absence of its own bad faith, gross negligence or willful misconduct. The Administrative Agent shall be deemed not to have knowledge of any Potential Default or Event of Default unless and until notice describing such Potential Default or Event of Default is given to the Administrative Agent by the Lead Borrower, or any other Borrower, a Lender or the Issuing Lender. The Administrative Agent shall not be responsible for or have any duty to ascertain or inquire into (i) any statement, warranty or representation made in or in connection with this Agreement or any other Loan Document, (ii) the contents of any certificate, report or other document delivered hereunder or thereunder or in connection herewith or therewith, (iii) the performance or observance of any of the covenants, agreements or other terms or conditions set forth herein or therein or the occurrence of any Potential Default or Event of Default, (iv) the validity, enforceability, effectiveness or genuineness of this Agreement, any other Loan Document or any other agreement, instrument or document or (v) the satisfaction of any condition set forth in Section 6 [Conditions] or elsewhere herein, other than to confirm receipt of items expressly required to be delivered to the Administrative Agent. The Administrative Agent shall not be responsible or have any liability for, or have any duty to ascertain, inquire into, monitor or enforce, compliance with the provisions hereof relating to Disqualified Institutions. Without limiting the generality of the foregoing, the Administrative Agent shall not (x) be obligated to ascertain, monitor or inquire as to whether any Lender or Participant or prospective Lender or Participant is a Disqualified Institution or (y) have any liability with respect to or arising out of any assignment or participation of Loans, or disclosure of confidential information, to any Disqualified Institution. 9.4 Reliance by Administrative Agent. The Administrative Agent shall be entitled to rely upon, and shall not incur any liability for relying upon, any notice, request, certificate, consent, statement, instrument, document or other writing (including any electronic message, Internet or intranet website posting or other distribution) believed by it to be genuine and to have been signed, sent or otherwise authenticated by the proper Person. The Administrative Agent also may rely upon any statement made to it orally or by telephone and believed by it to have been made by the proper Person, and shall not incur any liability for relying thereon. In determining compliance with any condition hereunder to the making of a Loan, or the issuance of a Letter of Credit, that by its terms must be fulfilled to the satisfaction of a Lender or the Issuing Lender, the Administrative Agent may presume that such condition is satisfactory to such Lender or the 223667699

 
Issuing Lender unless the Administrative Agent shall have received notice to the contrary from such Lender or the Issuing Lender prior to the making of such Loan or the issuance of such Letter of Credit. The Administrative Agent may consult with legal counsel (who may be counsel for the Loan Parties), independent accountants and other experts selected by it, and shall not be liable for any action taken or not taken by it in accordance with the advice of any such counsel, accountants or experts. 9.5 Delegation of Duties. The Administrative Agent may perform any and all of its duties and exercise its rights and powers hereunder or under any other Loan Document by or through any one or more sub-agents appointed by the Administrative Agent. The Administrative Agent and any such sub-agent may perform any and all of its duties and exercise its rights and powers by or through their respective Related Parties. The exculpatory provisions of this Section 9 shall apply to any such sub-agent and to the Related Parties of the Administrative Agent and any such sub-agent, and shall apply to their respective activities in connection with the syndication of the credit facilities provided for herein as well as activities as Administrative Agent. 9.6 Resignation of Administrative Agent. The Administrative Agent may at any time give notice of its resignation to the Lenders, the Issuing Lender and the Lead Borrower. Upon receipt of any such notice of resignation, the Required Lenders shall have the right, with approval from the Lead Borrower (so long as no Event of Default has occurred and is continuing), to appoint a successor, such approval not to be unreasonably withheld or delayed. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within thirty (30) days after the retiring Administrative Agent gives notice of its resignation, then the retiring Administrative Agent may on behalf of the Lenders and the Issuing Lender, appoint a successor Administrative Agent; provided that in no event shall any such successor Administrative Agent be a Defaulting Lender or a Disqualified Institution; provided further that if the Administrative Agent shall notify the Lead Borrower and the Lenders that no qualifying Person has accepted such appointment, then such resignation shall nonetheless become effective in accordance with such notice and (i) the retiring Administrative Agent shall be discharged from its duties and obligations hereunder and under the other Loan Documents (except that in the case of any collateral security held by the Administrative Agent on behalf of the Lenders or the Issuing Lender under any of the Loan Documents, the retiring Administrative Agent shall continue to hold such collateral security until such time as a successor Administrative Agent is appointed) and (ii) all payments, communications and determinations provided to be made by, to or through the Administrative Agent shall instead be made by or to each Lender and the Issuing Lender directly, until such time as the Required Lenders appoint a successor Administrative Agent as provided for above in this Section 9.6. Upon the acceptance of a successor's appointment as Administrative Agent hereunder, such successor shall succeed to and become vested with all of the rights, powers, privileges and duties of the retiring (or retired) Administrative Agent, and the retiring Administrative Agent shall be discharged from all of its duties and obligations hereunder or under the other Loan Documents (if not already discharged therefrom as provided above in this Section). The fees payable by the Borrowers to a successor Administrative Agent shall be the same as those payable to its predecessor unless otherwise agreed between the Borrowers and such successor. After the retiring Administrative Agent's resignation hereunder and under the other Loan Documents, the provisions of this Section 9.6 and Section 10.3 [Expenses; Indemnity; Damage Waiver] shall continue in effect for the benefit of such retiring Administrative Agent, its sub-agents and their respective Related Parties in respect of any actions taken or omitted to be taken by any of them while the retiring Administrative Agent was acting as Administrative Agent. 223667699

 
If the Person serving as the Administrative Agent is a Defaulting Lender pursuant to clause (d) of the definition thereof, the Required Lenders may, to the extent permitted by applicable law, by notice in writing to the Lead Borrower and such Person remove such Person as the Administrative Agent and, in consultation with the Borrowers, appoint a successor. If no such successor shall have been so appointed by the Required Lenders and shall have accepted such appointment within 30 days (or such earlier day as shall be agreed by the Required Lenders) (the “Removal Effective Date”), then such removal shall nonetheless become effective in accordance with such notice on the Removal Effective Date. If PNC resigns as Administrative Agent under this Section 9.6, PNC shall also resign as an Issuing Lender. Upon the appointment of a successor Administrative Agent hereunder, such successor shall (i) succeed to all of the rights, powers, privileges and duties of PNC as the retiring Issuing Lender and Administrative Agent and PNC shall be discharged from all of its respective duties and obligations as Issuing Lender and Administrative Agent under the Loan Documents, and (ii) issue letters of credit in substitution for the Letters of Credit issued by PNC, if any, outstanding at the time of such succession or make other arrangement satisfactory to PNC to effectively assume the obligations of PNC with respect to such Letters of Credit. 9.7 Non-Reliance on Administrative Agent and Other Lenders. Each Lender and the Issuing Lender acknowledges that it has, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it has deemed appropriate, made its own credit analysis and decision to enter into this Agreement. Each Lender and the Issuing Lender also acknowledges that it will, independently and without reliance upon the Administrative Agent or any other Lender or any of their Related Parties and based on such documents and information as it shall from time to time deem appropriate, continue to make its own decisions in taking or not taking action under or based upon this Agreement, any other Loan Document or any related agreement or any document furnished hereunder or thereunder. 9.8 No Other Duties, etc. Anything herein to the contrary notwithstanding, to the extent applicable, no syndication agent, documentation agent, lead arranger or bookrunner, whether acting individually or jointly, listed on the cover page hereof shall have any powers, duties or responsibilities under this Agreement or any of the other Loan Documents, except in its capacity, as applicable, as the Administrative Agent, a Lender or the Issuing Lender hereunder. 9.9 Administrative Agent's Fee. The Lead Borrower shall pay to the Administrative Agent a nonrefundable fee (the “Administrative Agent's Fee”) under the terms of a letter (the “Administrative Agent's Letter”) among the Lead Borrower and Administrative Agent, as amended from time to time. 9.10 Authorization to Release Collateral and Guarantors. The Lenders and Issuing Lenders authorize the Administrative Agent to release (i) any Collateral consisting of assets or equity interests sold or otherwise disposed of in a sale or other disposition or transfer permitted under Section 7.2.7 [Dispositions of Assets or Subsidiaries] or Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], and (ii) any Guarantor from its obligations hereunder and under the Guaranty Agreement if the ownership interests in such Guarantor are sold or otherwise disposed of or transferred to persons other than Loan Parties or Subsidiaries of the Loan Parties in a transaction permitted under Section 7.2.7 [Dispositions of Assets or Subsidiaries] or Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions]. 223667699

 
9.11 No Reliance on Administrative Agent's Customer Identification Program. Each Lender acknowledges and agrees that neither such Lender, nor any of its Affiliates, participants or assignees, may rely on the Administrative Agent to carry out such Lender's, Affiliate's, participant's or assignee's customer identification program, or other obligations required or imposed under or pursuant to the USA Patriot Act or the regulations thereunder, including the regulations contained in 31 CFR 103.121 (as hereafter amended or replaced, the “CIP Regulations”), or any other Anti-Terrorism Law or Anti-Corruption Law, including any programs involving any of the following items relating to or in connection with any of the Loan Parties, their Affiliates or their agents, the Loan Documents or the transactions hereunder or contemplated hereby: (i) any identity verification procedures, (ii) any recordkeeping, (iii) comparisons with government lists, (iv) customer notices or (v) other procedures required under the CIP Regulations or such other Laws. 9.12 Certain ERISA Matters. (a) Each Lender (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrowers or any other Loan Party, that at least one of the following is and will be true: (i) such Lender is not using “plan assets” (within the meaning of Section 3(42) of ERISA or otherwise) of one or more Benefit Plans with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments or this Agreement, (ii) the transaction exemption set forth in one or more PTEs, such as PTE 84-14 (a class exemption for certain transactions determined by independent qualified professional asset managers), PTE 95-60 (a class exemption for certain transactions involving insurance company general accounts), PTE 90-1 (a class exemption for certain transactions involving insurance company pooled separate accounts), PTE 91-38 (a class exemption for certain transactions involving bank collective investment funds) or PTE 96-23 (a class exemption for certain transactions determined by in-house asset managers), is applicable with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, (iii) (A) such Lender is an investment fund managed by a “Qualified Professional Asset Manager” (within the meaning of Part VI of PTE 84-14), (B) such Qualified Professional Asset Manager made the investment decision on behalf of such Lender to enter into, participate in, administer and perform the Loans, the Letters of Credit, the Commitments and this Agreement, (C) the entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement satisfies the requirements of sub-sections (b) through (g) of Part I of PTE 84¬14 and (D) to the best knowledge of such Lender, the requirements of subsection (a) of Part I of PTE 84-14 are satisfied with respect to such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement, or (iv) such other representation, warranty and covenant as may be agreed in writing between the Administrative Agent, in its sole discretion, and such Lender. 223667699

 
(b) In addition, unless either (1) sub-clause (i) in the immediately preceding clause (a) is true with respect to a Lender or (2) a Lender has provided another representation, warranty and covenant in accordance with sub-clause (iv) in the immediately preceding clause (a), such Lender further (x) represents and warrants, as of the date such Person became a Lender party hereto, to, and (y) covenants, from the date such Person became a Lender party hereto to the date such Person ceases being a Lender party hereto, for the benefit of, the Administrative Agent and not, for the avoidance of doubt, to or for the benefit of the Borrower or any other Loan Party, that the Administrative Agent is not a fiduciary with respect to the assets of such Lender involved in such Lender’s entrance into, participation in, administration of and performance of the Loans, the Letters of Credit, the Commitments and this Agreement (including in connection with the reservation or exercise of any rights by the Administrative Agent under this Agreement, any Loan Document or any documents related hereto or thereto). 10. MISCELLANEOUS 10.1 Modifications, Amendments or Waivers. With the written consent of the Required Lenders (or as expressly contemplated by Section 2.9 [Increase in Revolving Credit Commitments]), the Administrative Agent, acting on behalf of all the Lenders, and the Borrowers, on behalf of the Loan Parties, may from time to time enter into written agreements amending or changing any provision of this Agreement or any other Loan Document or the rights of the Lenders or the Loan Parties hereunder or thereunder, or may grant written waivers or consents hereunder or thereunder. Any such agreement, waiver or consent made with such written consent shall be effective to bind all the Lenders and the Loan Parties; provided, that no such agreement, waiver or consent may be made which will: 10.1.1 Increase of Commitment. Increase the amount of the Revolving Credit Commitment of any Lender hereunder without the consent of such Lender; 10.1.2 Extension of Payment; Reduction of Principal Interest or Fees; Modification of Terms of Payment. Whether or not any Loans are outstanding, extend the Expiration Date or the time for payment of principal or interest of any Loan (excluding the due date of any mandatory prepayment of a Loan), the Commitment Fee or any other fee payable to any Lender, or reduce the principal amount of or the rate of interest borne by any Loan (other than as a result of waiving the applicability of any post-default increase in interest rates) or reduce the Commitment Fee or any other fee payable to any Lender, without the consent of each Lender directly affected thereby; 10.1.3 Release of Collateral or Guarantor. Subject to Section 9.10 [Authorization to Release Collateral or Guarantors], except for sales of assets permitted by Section 7.2.7 [Dispositions of Assets or Subsidiaries] or transactions otherwise permitted by Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions], release all or substantially all of the Collateral or release any Guarantor from its Obligations under any Guaranty Agreement without the consent of all Lenders (other than Defaulting Lenders); or 10.1.4 Miscellaneous. Amend Section 4.2 [Pro Rata Treatment of Lenders], Section 4.3 [Sharing of Payments by Lenders], Section 8.2.4 [Application of Proceeds], Section 9.3 [Exculpatory Provisions] or this Section 10.1, alter any provision regarding the pro rata treatment of the Lenders or requiring all Lenders to authorize the taking of any action or amend 223667699

 
the definition of Required Lenders, in each case without the consent of all of the Lenders; provided that no agreement, waiver or consent which would modify the interests, rights or obligations of the Administrative Agent, the Issuing Lender, or the Swing Loan Lender may be made without the written consent of the Administrative Agent, the Issuing Lender or the Swing Loan Lender, as applicable and provided, further that this Section 10.1 shall not be construed as prohibiting any amendment or other modification permitted under Section 2.9 [Increase in Revolving Credit Commitments], and provided, further that, if in connection with any proposed waiver, amendment or modification referred to in Sections 10.1.1 through 10.1.4 above, the consent of the Required Lenders is obtained but the consent of one or more of such other Lenders whose consent is required is not obtained (each a “Non-Consenting Lender”), then the Lead Borrower shall have the right to replace any such Non-Consenting Lender with one or more replacement Lenders pursuant to Section 4.6.2 [Replacement of a Lender]. Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Commitment of any Defaulting Lender may not be increased or extended without the consent of such Lender, and (y) any waiver, amendment or modification requiring the consent of all Lenders or each affected Lender that by its terms affects any Defaulting Lender disproportionately adversely relative to other affected Lenders shall require the consent of such Defaulting Lender. Notwithstanding the foregoing, the Administrative Agent, with the consent of the Lead Borrower, may amend, modify or supplement any Loan Document without the consent of any Lender or the Required Lenders (i) in order to correct or cure any ambiguity, inconsistency or defect or correct any typographical or ministerial error in any Loan Document or (ii) pursuant to the provisions of Section 6.2 (provided that in each case with respect to the foregoing clauses (i) and (ii), any such amendment, modification or supplement shall not be materially adverse to the interests of the Lenders taken as a whole). 10.2 No Implied Waivers; Cumulative Remedies. No course of dealing and no delay or failure of the Administrative Agent or any Lender in exercising any right, power, remedy or privilege under this Agreement or any other Loan Document shall affect any other or future exercise thereof or operate as a waiver thereof, nor shall any single or partial exercise thereof preclude any further exercise thereof or of any other right, power, remedy or privilege. The enumeration of the rights and remedies of the Administrative Agent and the Lenders specified in this Agreement is not intended to be exhaustive and the exercise by the Administrative Agent and the Lenders of any right or remedy shall not preclude the exercise of any other rights or remedies, all of which shall be cumulative, and shall be in addition to any other right or remedy given hereunder or under the other Loan Documents or that may now or hereafter exist at law or in equity or by suit or otherwise. No reasonable delay or failure to take action on the part of the Administrative Agent or any Lender in exercising any right, power or privilege shall operate as a waiver thereof, nor shall any single or partial exercise of any such right, power or privilege preclude any other or further exercise thereof or the exercise of any other right, power or privilege or shall be construed to be a waiver of any Event of Default. 10.3 Expenses; Indemnity; Damage Waiver. 10.3.1 Costs and Expenses. The Borrowers shall pay (i) all costs and expenses incurred by the Administrative Agent and its Affiliates (including the reasonable fees, charges 223667699

 
and disbursements of outside counsel for the Administrative Agent, but excluding all fees and time charges and disbursements for attorneys who may be employees of the Administrative Agent), in connection with the syndication of the credit facilities provided for herein, the preparation, negotiation, execution, delivery and administration of this Agreement and the other Loan Documents or any amendments, modifications or waivers of the provisions hereof or thereof (whether or not the transactions contemplated hereby or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses incurred by the Issuing Lender in connection with the issuance, amendment, renewal or extension of any Letter of Credit or any demand for payment thereunder, (iii) all reasonable out-of-pocket expenses incurred by the Administrative Agent, any Lender or the Issuing Lender (including the fees, charges and disbursements of one primary counsel and of any special and local counsel for the Administrative Agent and the Issuing Lenders and one additional counsel for all Lenders other than the Administrative Agent and additional counsel in light of actual or potential conflicts of interest or the availability of different claims or defenses, but excluding all fees and time charges for attorneys who may be employees of the Administrative Agent, any Lender or the Issuing Lender), in connection with the enforcement or protection of its rights (A) in connection with this Agreement and the other Loan Documents, including its rights under this Section, or (B) in connection with the Loans made or Letters of Credit issued hereunder, including all such expenses incurred during any workout, restructuring or negotiations in respect of such Loans or Letters of Credit, and (iv) all reasonable out-of-pocket expenses of the Administrative Agent to the extent provided in Section 7.1.5 [Visitation Rights]. 10.3.2 Indemnification by the Loan Parties. The Loan Parties shall, jointly and severally, indemnify the Administrative Agent (and any sub-agent thereof), each Lender and the Issuing Lender, and each Related Party of any of the foregoing Persons (each such Person being called an “Indemnitee”) against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities, penalties and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee), and shall indemnify and hold harmless each Indemnitee from all reasonable fees and disbursements for attorneys who may be employees of any Indemnitee, incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any other Loan Party arising out of, in connection with, or as a result of (i) the execution or delivery of this Agreement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance or nonperformance by the parties hereto of their respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Lender to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) breach of representations, warranties or covenants of the Loan Parties under the Loan Documents, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, including any such items or losses relating to or arising under Environmental Laws or pertaining to environmental matters, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any other Loan Party, and regardless of whether any Indemnitee is a party thereto; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses (x) are determined by a court of competent jurisdiction by final and non-appealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnitee or (y) arise from a dispute among Indemnitees. 223667699

 
10.3.3 Reimbursement by Lenders. To the extent that the Loan Parties for any reason fail to indefeasibly pay any amount required under Section 10.3.1 [Costs and Expenses] or Section 10.3.2 [Indemnification by the Loan Parties] to be paid by it to the Administrative Agent (or any sub-agent thereof), the Issuing Lender or any Related Party of any of the foregoing, each Lender severally agrees to pay to the Administrative Agent (or any such sub-agent), the Issuing Lender or such Related Party, as the case may be, such Lender's Ratable Share (determined as of the time that the applicable unreimbursed expense or indemnity payment is sought) of such unpaid amount, provided that the unreimbursed expense or indemnified loss, claim, damage, liability or related expense, as the case may be, was incurred by or asserted against the Administrative Agent (or any such sub-agent) or the Issuing Lender in its capacity as such, or against any Related Party of any of the foregoing acting for the Administrative Agent (or any such sub-agent) or Issuing Lender in connection with such capacity. 10.3.4 Waiver of Consequential Damages, Etc. To the fullest extent permitted by applicable Law, no Loan Party shall assert, and hereby waives, any claim against any Indemnitee, on any theory of liability, for special, indirect, consequential or punitive damages (as opposed to direct or actual damages) arising out of, in connection with, or as a result of, this Agreement, any other Loan Document or any agreement or instrument contemplated hereby, the transactions contemplated hereby or thereby, any Loan or Letter of Credit or the use of the proceeds thereof. No Indemnitee referred to in Section 10.3.2 [Indemnification by Loan Parties] shall be liable for any damages arising from the use by unintended recipients of any information or other materials distributed by it through telecommunications, electronic or other information transmission systems in connection with this Agreement or the other Loan Documents or the transactions contemplated hereby or thereby other than for direct or actual damages resulting from the gross negligence or willful misconduct of such Indemnitee as determined by a final and non-appealable judgment of a court of competent jurisdiction. 10.3.5 Payments. All amounts due under this Section shall be payable not later than ten (10) days after written demand therefor. 10.3.6 Survival. Each party’s obligations under this Section 10.3 shall survive the termination of the Loan Documents and payment of the obligations hereunder. 10.4 Holidays. Whenever payment of a Loan to be made or taken hereunder shall be due on a day which is not a Business Day such payment shall be due on the next Business Day (except as provided in Section 3.2 [Interest Periods]) and such extension of time shall be included in computing interest and fees, except that all Loans shall be due on the Business Day preceding the Expiration Date if the Expiration Date is not a Business Day. Whenever any payment or action to be made or taken hereunder (other than payment of the Loans) shall be stated to be due on a day which is not a Business Day, such payment or action shall be made or taken on the next following Business Day, and such extension of time shall not be included in computing interest or fees, if any, in connection with such payment or action. 10.5 Notices; Effectiveness; Electronic Communication. 10.5.1 Notices Generally. Except in the case of notices and other communications expressly permitted to be given by telephone (and except as provided in Section 10.5.2 [Electronic Communications]), all notices and other communications provided for herein shall be in writing and shall be delivered by hand or overnight courier service, mailed by certified 223667699

 
or registered mail or sent by facsimile (i) if to a Lender, to it at its address set forth in its administrative questionnaire, or (ii) if to any other Person, to it at its address set forth on Schedule 1.1(B). Notices sent by hand or overnight courier service, or mailed by certified or registered mail, shall be deemed to have been given when received; notices sent by facsimile shall be deemed to have been given when sent (except that, if not given during normal business hours for the recipient, shall be deemed to have been given at the opening of business on the next Business Day for the recipient). Notices delivered through electronic communications to the extent provided in Section 10.5.2 [Electronic Communications], shall be effective as provided in such Section. 10.5.2 Electronic Communications. Notices and other communications to the Lenders and the Issuing Lender hereunder may be delivered or furnished by electronic communication (including e-mail and Internet or intranet websites) pursuant to procedures approved by the Administrative Agent; provided that the foregoing shall not apply to notices to any Lender or the Issuing Lender if such Lender or the Issuing Lender, as applicable, has notified the Administrative Agent that it is incapable of receiving notices under such Article by electronic communication. The Administrative Agent or any Loan Party may, in its discretion, agree to accept notices and other communications to it hereunder by electronic communications pursuant to procedures approved by it; provided that approval of such procedures may be limited to particular notices or communications. Unless the Administrative Agent otherwise prescribes, (i) notices and other communications sent to an e-mail address shall be deemed received upon the sender's receipt of an acknowledgement from the intended recipient (such as by the “return receipt requested” function, as available, return e-mail or other written acknowledgement); provided that if such notice or other communication is not sent during the normal business hours of the recipient, such notice or communication shall be deemed to have been sent at the opening of business on the next Business Day for the recipient, and (ii) notices or communications posted to an Internet or intranet website shall be deemed received upon the deemed receipt by the intended recipient at its e-mail address as described in the foregoing clause (i) of notification that such notice or communication is available and identifying the website address therefor. 10.5.3 Change of Address, Etc. Any party hereto may change its address, e-mail address or facsimile number for notices and other communications hereunder by notice to the other parties hereto. 10.6 Severability. The provisions of this Agreement are intended to be severable. If any provision of this Agreement shall be held invalid or unenforceable in whole or in part in any jurisdiction, such provision shall, as to such jurisdiction, be ineffective to the extent of such invalidity or unenforceability without in any manner affecting the validity or enforceability thereof in any other jurisdiction or the remaining provisions hereof in any jurisdiction. 10.7 Duration; Survival. All representations and warranties of the Loan Parties contained herein or made in connection herewith shall survive the execution and delivery of this Agreement, the completion of the transactions hereunder and Payment In Full. All covenants and agreements of the Loan Parties contained herein relating to the payment of principal, interest, premiums, additional compensation or expenses and indemnification, including those set forth in the Notes, Section 4 [Payments] and Section 10.3 [Expenses; Indemnity; Damage Waiver], shall 223667699

 
survive Payment In Full. All other covenants and agreements of the Loan Parties shall continue in full force and effect from and after the date hereof and until Payment In Full. 10.8 Successors and Assigns. 10.8.1 Successors and Assigns Generally. The provisions of this Agreement shall be binding upon, and inure to the benefit of, the parties hereto and their respective successors and assigns permitted hereby, except that no Loan Party may assign or otherwise transfer any of its rights or obligations hereunder without the prior written consent of the Administrative Agent and each Lender and no Lender may assign or otherwise transfer any of its rights or obligations hereunder except (i) to an assignee in accordance with the provisions of Section 10.8.2 [Assignments by Lenders], (ii) by way of participation in accordance with the provisions of Section 10.8.4 [Participations], or (iii) by way of pledge or assignment of a security interest subject to the restrictions of Section 10.8.5 [Certain Pledges; Successors and Assigns Generally] (and any other attempted assignment or transfer by any party hereto shall be null and void). Nothing in this Agreement, expressed or implied, shall be construed to confer upon any Person (other than the parties hereto, their respective successors and assigns permitted hereby, Participants to the extent provided in Section 10.8.4 [Participations] and, to the extent expressly contemplated hereby, the Related Parties of each of the Administrative Agent and the Lenders) any legal or equitable right, remedy or claim under or by reason of this Agreement. 10.8.2 Assignments by Lenders. Any Lender may at any time assign to one or more Eligible Assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Commitment and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions: (i) Minimum Amounts. (A) in the case of an assignment of the entire remaining amount of the assigning Lender's Commitment and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and (B) in any case not described in clause (i)(A) of this Section 10.8.2, the aggregate amount of (x) the Commitments (which for this purpose includes Loans outstanding thereunder) or, (y) if any applicable Commitment is not then in effect, the principal outstanding balance of the Loans made under such Commitment plus the aggregate amount of any other Commitments (which for this purpose includes Loans outstanding thereunder), in each case of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption Agreement with respect to such assignment is delivered to the Administrative Agent or, if “Trade Date” is specified in the Assignment and Assumption Agreement, as of the Trade Date) shall not be less than Five Million and 00/100 Dollars ($5,000,000.00), unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Lead Borrower otherwise consents (each such consent not to be unreasonably withheld or delayed). (ii) Proportionate Amounts. Each partial assignment shall be made as an assignment of a proportionate part of all the assigning Lender's rights and obligations under this Agreement with respect to the Loan or the Commitment assigned. 223667699

 
(iii) Required Consents. No consent shall be required for any assignment except for the consent of the Administrative Agent (which shall not be unreasonably withheld or delayed) if such assignment is to a Person that is not a Lender, an Affiliate of such Lender or an Approved Fund with respect to such Lender, and: (A) the consent of the Lead Borrower (such consent not to be unreasonably withheld or delayed) shall be required unless (x) an Event of Default has occurred and is continuing at the time of such assignment or (y) such assignment is to a Lender, an Affiliate of a Lender or an Approved Fund; provided that the Lead Borrower shall be deemed to have consented to any such assignment unless it shall object thereto by written notice to the Administrative Agent within five (5) Business Days after having received notice thereof; and (B) the consent of the Issuing Lender (such consent not to be unreasonably withheld or delayed) shall be required for any assignment that increases the obligation of the assignee to participate in exposure under one or more Letters of Credit (whether or not then outstanding). (iv) Assignment and Assumption Agreement. The parties to each assignment shall execute and deliver to the Administrative Agent an Assignment and Assumption Agreement, together with a processing and recordation fee of Three Thousand Five Hundred and 00/100 Dollars ($3,500.00), and the assignee, if it is not a Lender, shall deliver to the Administrative Agent an administrative questionnaire. (v) No Assignment to Certain Persons. No such assignment shall be made to (A) any Loan Party or any of such Loan Party's Affiliates or Subsidiaries or (B) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or a Subsidiary thereof. (vi) No Assignment to Natural Persons. No such assignment shall be made to a natural person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person). Subject to acceptance and recording thereof by the Administrative Agent pursuant to 10.8.3 [Register], from and after the effective date specified in each Assignment and Assumption Agreement, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption Agreement, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption Agreement, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption Agreement covering all of the assigning Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 3.4 [Euro-Rate Unascertainable; Etc.], 4.8 [Increased Costs], and 10.3 [Expenses, Indemnity; Damage Waiver] with respect to facts and circumstances occurring prior to the effective date of such assignment; provided, that except to the extent otherwise expressly agreed by the affected parties, no assignment by a Defaulting Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender’s having been a Defaulting Lender. Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this Section 10.8.2 shall be treated for purposes of this Agreement as a sale by 223667699

 
such Lender of a participation in such rights and obligations in accordance with Section 10.8.4 [Participations]. 10.8.3 Register. The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain a record of the names and addresses of the Lenders, and the Commitments of, and principal amounts of the Loans owing to, each Lender pursuant to the terms hereof from time to time. Such register shall be conclusive, and the Borrowers, the Administrative Agent and the Lenders may treat each Person whose name is in such register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, notwithstanding notice to the contrary. Such register shall be available for inspection by the Borrowers and any Lender, at any reasonable time and from time to time upon reasonable prior notice. 10.8.4 Participations. Any Lender may at any time, without the consent of, or notice to, any Borrower or the Administrative Agent, sell participations to any Person (other than (a) a natural person (or a holding company, investment vehicle or trust for, or owned and operated for the primary benefit of, a natural person), (b) any Loan Party or any of such Loan Party's Affiliates or Subsidiaries, (c) to any Defaulting Lender or any of its Subsidiaries, or any Person who, upon becoming a Lender hereunder, would constitute a Defaulting Lender or a Subsidiary thereof or (d) a Disqualified Institution) (each, a “Participant”) in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Commitment and/or the Loans owing to it); provided that (i) such Lender's obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Lenders, and the Issuing Lender shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement. Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the Participant, agree (other than as is already provided for herein) to any amendment, modification or waiver with respect to Sections 10.1.1 [Increase of Commitment], 10.1.2 [Extension of Payment, Etc.], or 10.1.3 [Release of Collateral or Guarantor]) that affects such Participant. The Borrowers agree that each Participant shall be entitled to the benefits of Sections 3.4 [Euro Rate Unascertainable, Etc.], 4.8 [Increased Costs], 4.10 [Indemnity] and 4.9 [Taxes] (subject to the requirements and limitations therein, including the requirements under Section 4.9.7 [Status of Lenders] (it being understood that the documentation required under Section 4.9.7 [Status of Lenders] shall be delivered to the participating Lender)) to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to Section 10.8.2 [Assignments by Lenders]; provided that such Participant (A) agrees to be subject to the provisions of Section 4.6.2 [Replacement of a Lender] and Section 4.6.3 [Designation of a Different Lending Office] as if it were an assignee under Section 10.8.2 [Assignments by Lenders]; and (B) shall not be entitled to receive any greater payment under Sections 4.8 [Increased Costs] or 4.9 [Taxes], with respect to any participation, than its participating Lender would have been entitled to receive, except to the extent such entitlement to receive a greater payment results from a Change in Law that occurs after the Participant acquired the applicable participation. Each Lender that sells a participation agrees, at the Lead Borrower's request and expense, to use reasonable efforts to cooperate with the Borrowers to effectuate the provisions of Section 4.6.2 [Replacement of a Lender] and 223667699

 
Section 4.6.3 [Designation of Different Lending Office] with respect to any Participant. To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 8.2.3 [Set-off] as though it were a Lender; provided that such Participant agrees to be subject to Section 4.3 [Sharing of Payments by Lenders] as though it were a Lender. Each Lender that sells a participation shall, acting solely for this purpose as a non-fiduciary agent of the Borrowers, maintain a register on which it enters the name and address of each Participant and the principal amounts (and stated interest) of each Participant's interest in the Loans or other obligations under the Loan Documents (the “Participant Register”); provided that no Lender shall have any obligation to disclose all or any portion of the Participant Register (including the identity of any Participant or any information relating to a Participant's interest in any commitments, loans, letters of credit or its other obligations under any Loan Document) to any Person except to the extent that such disclosure is necessary to establish that such commitment, loan, letter of credit or other obligation is in registered form under Section 5f.103-1(c) of the United States Treasury Regulations. The entries in the Participant Register shall be conclusive absent manifest error, and such Lender shall treat each Person whose name is recorded in the Participant Register as the owner of such participation for all purposes of this Agreement notwithstanding any notice to the contrary. For the avoidance of doubt, the Administrative Agent (in its capacity as Administrative Agent) shall have no responsibility for maintaining a Participant Register. 10.8.5 Certain Pledges; Successors and Assigns Generally. Any Lender may at any time pledge or assign a security interest in all or any portion of its rights under this Agreement to secure obligations of such Lender, including any pledge or assignment to secure obligations to a Federal Reserve Bank; provided that no such pledge or assignment shall release such Lender from any of its obligations hereunder or substitute any such pledgee or assignee for such Lender as a party hereto. 10.8.6 Disqualified Institutions. (i) No assignment or participation shall be made to any Person that was a Disqualified Institution as of the date (the “Trade Date”) on which the assigning Lender entered into a binding agreement to sell and assign all or a portion of its rights and obligations under this Agreement to such Person (unless the Lead Borrower has consented to such assignment in writing in its sole and absolute discretion, in which case such Person will not be considered a Disqualified Institution for the purpose of such assignment or participation). For the avoidance of doubt, with respect to any assignee that becomes a Disqualified Institution after the applicable Trade Date (including as a result of the delivery of a notice pursuant to, and/or the expiration of the notice period referred to in, the definition of “Disqualified Institution”), (x) such assignee shall not retroactively be disqualified from becoming a Lender and (y) the execution by the Borrowers of an Assignment and Assumption with respect to such assignee will not by itself result in such assignee no longer being considered a Disqualified Institution. Any assignment in violation of this Section 10.8.6(i) shall not be void, but the other provisions of this Section 10.8.6 shall apply. (ii) If any assignment or participation is made to any Disqualified Institution without the Lead Borrower’s prior written consent in violation of clause (i) above, or if any Person becomes a Disqualified Institution after the applicable Trade Date, the Borrowers may, at their sole expense and effort, upon notice to the applicable Disqualified Institution and the Administrative Agent, (A) terminate any Revolving Credit Commitment of such Disqualified Institution and repay all obligations of the Borrowers owing to such Disqualified Institution in 223667699

 
connection with such Revolving Credit Commitment, and/or (B) require such Disqualified Institution to assign, without recourse (in accordance with and subject to the restrictions contained in this Section 10.8 [Successors and Assigns]), all of its interest, rights and obligations under this Agreement to one or more Eligible Assignees at the lesser of (x) the principal amount thereof and (y) the amount that such Disqualified Institution paid to acquire such interests, rights and obligations, in each case plus accrued interest, accrued fees and all other amounts (other than principal amounts) payable to it hereunder. (iii) Notwithstanding anything to the contrary contained in this Agreement, Disqualified Institutions (A) will not (x) have the right to receive information, reports or other materials provided to the Lenders by the Borrowers, the Administrative Agent or any other Lender, (y) attend or participate in meetings attended by the Lenders and the Administrative Agent, or (z) access any electronic site established for the Lenders or confidential communications from counsel to or financial advisors of the Administrative Agent or the Lenders and (B) (x) for purposes of any consent to any amendment, waiver or modification of, or any action under, and for the purpose of any direction to the Administrative Agent or any Lender to undertake any action (or refrain from taking any action) under this Agreement or any other Loan Document, each Disqualified Institution will be deemed to have consented in the same proportion as the Lenders that are not Disqualified Institutions consented to such matter, and (y) for purposes of voting any plan of reorganization or plan of liquidation pursuant to any Debtor Relief Laws (a “Plan”), each Disqualified Institution party hereto hereby agrees (1) not to vote on such Plan, (2) if such Disqualified Institution does vote on such Plan notwithstanding the restriction in the foregoing clause (1), such vote will be deemed not to be in good faith and shall be “designated” pursuant to Section 1126(e) of the U.S. Bankruptcy Code (or any similar provision in any other Debtor Relief Laws), and such vote shall not be counted in determining whether the applicable class has accepted or rejected such Plan in accordance with Section 1126(c) of the U.S. Bankruptcy Code (or any similar provision in any other Debtor Relief Laws) and (3) not to contest any request by any party for a determination by the Bankruptcy Court (or other applicable court of competent jurisdiction) effectuating the foregoing clause (2). (iv) The Administrative Agent shall have the right, and the Lead Borrower hereby expressly authorizes the Administrative Agent, to (A) post the list of Disqualified Institutions provided by the Lead Borrower and any updates thereto from time to time (collectively, the “DQ List”) on Syndtrak or a substantially similar electronic transmission system, including that portion of such electronic transmission system that is designated for “public side” Lenders and/or (B) provide the DQ List to each Lender requesting the same. 10.9 Confidentiality. 10.9.1 General. Each of the Administrative Agent, the Lenders and the Issuing Lender agrees to maintain the confidentiality of the Information, except that Information may be disclosed (i) to its Affiliates and to its and its Affiliates' respective partners, directors, officers, employees, agents, advisors and other representatives (it being understood that the Persons to whom such disclosure is made will be informed of the confidential nature of such Information and bound thereby), (ii) to the extent required or requested by any regulatory authority purporting to have jurisdiction over it (including any self-regulatory authority, such as the National Association of Insurance Commissioners), (iii) to the extent required by applicable Laws or regulations or by any subpoena or similar legal process, (iv) to any other party hereto, (v) in connection with the exercise of any remedies hereunder or under any other Loan Document or 223667699

 
any action or proceeding relating to this Agreement or any other Loan Document or the enforcement of rights hereunder or thereunder, (vi) subject to an agreement containing provisions substantially the same as those of this Section, to (A) any Eligible Assignee of or Participant in, or any prospective Eligible Assignee of or Participant in, any of its rights or obligations under this Agreement or (B) any actual or prospective counterparty (or its advisors) to any swap or derivative transaction relating to any Borrower and its obligations, (vii) with the consent of the Lead Borrower or (viii) to the extent such Information (Y) becomes publicly available other than as a result of a breach of this Section or (Z) becomes available to the Administrative Agent, any Lender, the Issuing Lender or any of their respective Affiliates on a nonconfidential basis from a source other than a Borrower or the other Loan Parties. Any Person required to maintain the confidentiality of Information as provided in this Section shall be considered to have complied with its obligation to do so if such Person has exercised the same degree of care to maintain the confidentiality of such Information as such Person would accord to its own confidential information. 10.9.2 Sharing Information With Affiliates of the Lenders. Each Loan Party acknowledges that from time to time financial advisory, investment banking and other services may be offered or provided to a Loan Party or one or more of its Affiliates (in connection with this Agreement or otherwise) by any Lender or by one or more Subsidiaries or Affiliates of such Lender and each of the Loan Parties hereby authorizes each Lender to share any information delivered to such Lender by such Loan Party and its Subsidiaries pursuant to this Agreement to any such Subsidiary or Affiliate subject to the provisions of Section 10.9.1 [General]. 10.10 Counterparts; Integration; Effectiveness. 10.10.1 Counterparts; Integration; Effectiveness. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Agreement and the other Loan Documents, and any separate letter agreements with respect to fees payable to the Administrative Agent, constitute the entire contract among the parties relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof including any prior confidentiality agreements and commitments. Except as provided in Section 6 [Conditions Of Lending And Issuance Of Letters Of Credit], this Agreement shall become effective when it shall have been executed by the Administrative Agent and when the Administrative Agent shall have received counterparts hereof that, when taken together, bear the signatures of each of the other parties hereto. Delivery of an executed counterpart of a signature page of this Agreement by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Agreement. 10.10.2 Electronic Execution of Assignments. The words “execution,”“signed,” “signature,” and words of like import herein, in any other Loan Document or in any Assignment and Assumption shall be deemed to include electronic signatures or the keeping of records in electronic form, each of which shall be of the same legal effect, validity or enforceability as a manually executed signature or the use of a paper-based recordkeeping system, as the case may be, to the extent and as provided for in any applicable Law, including the Federal Electronic Signatures in Global and National Commerce Act or any other similar state laws based on the Uniform Electronic Transactions Act. 223667699

 
10.11 CHOICE OF LAW; SUBMISSION TO JURISDICTION; WAIVER OF VENUE; SERVICE OF PROCESS; WAIVER OF JURY TRIAL. 10.11.1 Governing Law. This Agreement shall be deemed to be a contract under the Laws of the State of Ohio without regard to its conflict of laws principles. Each standby Letter of Credit issued under this Agreement shall be subject either to the rules of the Uniform Customs and Practice for Documentary Credits, as most recently published by the International Chamber of Commerce (the “ICC”) at the time of issuance (“UCP”) or the rules of the International Standby Practices (ICC Publication Number 590) (“ISP98”), as determined by the Issuing Lender, and each trade Letter of Credit shall be subject to UCP, and in each case to the extent not inconsistent therewith, the Laws of the State of Ohio without regard to its conflict of laws principles. 10.11.2 SUBMISSION TO JURISDICTION. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY SUBMITS, FOR ITSELF AND ITS PROPERTY, TO THE EXCLUSIVE JURISDICTION OF THE COURTS OF THE STATE OF OHIO SITTING IN FRANKLIN COUNTY, OHIO AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO, AND ANY APPELLATE COURT FROM ANY THEREOF, IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND EACH OF THE PARTIES HERETO IRREVOCABLY AND UNCONDITIONALLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH OHIO STATE COURT OR, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, IN SUCH FEDERAL COURT. EACH OF THE PARTIES HERETO AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. 10.11.3 WAIVER OF VENUE. EACH PARTY HERETO IRREVOCABLY AND UNCONDITIONALLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT IN ANY COURT REFERRED TO IN THIS SECTION 10.11.1 [GOVERNING LAW]. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING IN ANY SUCH COURT AND AGREES NOT ASSERT ANY SUCH DEFENSE. 10.11.4 SERVICE OF PROCESS. EACH PARTY HERETO IRREVOCABLY CONSENTS TO SERVICE OF PROCESS IN THE MANNER PROVIDED FOR NOTICES IN SECTION 10.5 [NOTICES; EFFECTIVENESS; ELECTRONIC COMMUNICATION]. NOTHING IN THIS AGREEMENT WILL AFFECT THE RIGHT OF ANY PARTY HERETO TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY APPLICABLE LAW. Each Designated Borrower irrevocably designates and appoints the Lead Borrower, as its authorized agent, to accept and acknowledge on its behalf, service of any and all 223667699

 
process which may be served in any suit, action or proceeding of the nature referred to in Section 10.11.2 in any court of the State of Ohio sitting in Franklin County, Ohio and of the United States District Court for the Southern District of Ohio, and any appellate court from any thereof. The Lead Borrower hereby represents, warrants and confirms that the Lead Borrower has agreed to accept such appointment. Said designation and appointment shall be irrevocable by each such Designated Borrower until all Loans, all reimbursement obligations, interest thereon and all other amounts payable by such Designated Borrower hereunder and under the other Loan Documents shall have been paid in full in accordance with the provisions hereof and thereof and such Designated Borrower shall have been terminated as a Borrower hereunder pursuant to Section 2.12 [Designated Borrowers]. Each Designated Borrower hereby consents to process being served in any suit, action or proceeding of the nature referred to in Section 10.11.2 in any court of the State of Ohio sitting in Franklin County, Ohio and of the United States District Court for the Southern District of Ohio, and any appellate court from any thereof, by service of process upon the Lead Borrower as provided in this Section 10.11.4; provided that, to the extent lawful and possible, notice of said service upon such agent shall be mailed by registered or certified air mail, postage prepaid, return receipt requested, to the Lead Borrower and (if applicable to) such Designated Borrower at its address set forth in the Designated Borrower Agreement to which it is a party or to any other address of which such Designated Borrower shall have given written notice to the Administrative Agent (with a copy thereof to the Lead Borrower). Each Designated Borrower irrevocably waives, to the fullest extent permitted by law, all claim of error by reason of any such service in such manner and agrees that such service shall be deemed in every respect effective service of process upon such Designated Borrower in any such suit, action or proceeding and shall, to the fullest extent permitted by law, be taken and held to be valid and personal service upon and personal delivery to such Designated Borrower. To the extent any Designated Borrower has or hereafter may acquire any immunity from jurisdiction of any court or from any legal process (whether from service or notice, attachment prior to judgment, attachment in aid of execution of a judgment, execution or otherwise), each Designated Borrower hereby irrevocably waives such immunity in respect of its obligations under the Loan Documents. 10.11.5 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PERSON HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PERSON WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION. 10.12 USA Patriot Act Notice. Each Lender that is subject to the USA Patriot Act and the Administrative Agent (for itself and not on behalf of any Lender) hereby notifies Loan Parties that pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies the Loan Parties, which information includes the name and address of 223667699

 
Loan Parties and other information that will allow such Lender or Administrative Agent, as applicable, to identify the Loan Parties in accordance with the USA Patriot Act. 10.13 Bifurcation of Obligations. The parties hereto acknowledge and agree that, notwithstanding anything to the contrary in this Agreement or any of the other Loan Documents, and notwithstanding that certain Domestic Loan Parties are Guarantors or are liable with respect to the Obligations of Foreign Subsidiaries, the Obligations of the Foreign Subsidiaries under this Agreement or any of the other Loan Documents shall be separate and distinct from the Obligations of any Domestic Loan Party and shall be expressly limited to the Obligations of the Foreign Subsidiaries. In furtherance of the foregoing, each of the parties hereto acknowledges and agrees that (a) the liability of any Foreign Subsidiary for the payment and performance of its covenants, representations and warranties set forth in this Agreement and the other Loan Documents shall be several from but not joint with the Obligations of the Domestic Loan Parties, (b) Foreign Subsidiaries shall not guarantee any Obligations of any Domestic Loan Party (and for the avoidance of doubt, any Guaranty delivered by an Excluded Domestic Subsidiary to the extent that such Guaranty is not required by Section 7.2.9 shall be null and void ab initio). and (c) the present and future assets of the Foreign Subsidiaries shall not be subject to any Lien, claim or action by the Administrative Agent to satisfy any Obligations of any Domestic Loan Party. No amount paid by any Foreign Subsidiary or value derived from its assets shall be applied to the Obligations of any Domestic Loan Party. 10.14 Joinder. Any Person which is required to join this Agreement pursuant to Section 7.2.6 [Liquidations, Mergers, Consolidations, Acquisitions] or Section 7.2.9 [Subsidiaries and Joint Ventures] shall execute and deliver to the Administrative Agent (i) a Guarantor Joinder, and (ii) documents in the forms described in Section 6.1.1 [First Loans and Letters of Credit] that the Administrative Agent may reasonably require, modified as appropriate to relate to such Subsidiary, including, without limitation, organizational documents and, legal opinions and documents necessary to grant and perfect Prior Security Interests to the Administrative Agent (for its benefit and for the benefit of the Lenders) in all Collateral held by such Person. The Loan Parties shall deliver such Guarantor Joinder and all related documents required by this Section 10.14 [Joinder] to the Administrative Agent (a) with respect to any Subsidiary incorporated or otherwise formed pursuant to Section 7.2.9 [Subsidiaries and Joint Ventures], within thirty (30) days after the date of the filing of such Subsidiary's articles of incorporation if the Subsidiary is a corporation, the date of the filing of its certificate of limited partnership if it is a limited partnership or the date of its organization if it is an entity other than a limited partnership or corporation, and (b) with respect to any Subsidiary acquired pursuant to Section 7.2.6) [Liquidations, Mergers, Consolidations, Acquisitions], within thirty (30) days after the date of consummation of the applicable acquisition; provided that, notwithstanding the foregoing and solely in respect of the formation of any Subsidiary to consummate the Camuto Transactions, such Subsidiary shall not be required to deliver such Guarantor Joinder and all related documents until thirty (30) days following the Camuto Acquisition Closing. 10.15 Canadian Anti-Money Laundering Legislation. (i) Each Loan Party acknowledges that, pursuant to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act, S.C. 2000, c.17 and other applicable anti-money laundering, anti-terrorist financing, government sanction and “know your client” laws (collectively, including any guidelines or orders thereunder, “AML Legislation”), the Administrative Agent and the Lenders may be required to obtain, verify and record information 223667699

 
regarding the Loan Parties and their respective directors, authorized signing officers, direct or indirect shareholders or other Persons in control of the Loan Parties, and the transactions contemplated hereby. Each Loan Party shall promptly provide all such information, including supporting documentation and other evidence, as may be reasonably requested by the Administrative Agent, any Lender, any Issuing Lender or any of their respective prospective assignees or participants, in order to comply with any applicable AML Legislation, whether now or hereafter in existence. (ii) If the Administrative Agent has ascertained the identity of any Loan Party or any authorized signatories of any Loan Party for the purposes of applicable AML Legislation, then the Administrative Agent: (A) shall be deemed to have done so as an agent for itself, each Lender and each Issuing Lender, and this Agreement shall constitute a “written agreement” in such regard between each Lender, each Issuing Lender and the Administrative Agent within the meaning of the applicable AML Legislation; and (B) shall provide to each Lender and each Issuing Lender copies of all information obtained in such regard without any representation or warranty as to its accuracy or completeness. Notwithstanding the preceding sentence and except as may otherwise be agreed in writing, each of the Lenders and each of the Issuing Lenders agrees that the Administrative Agent has no obligation to ascertain the identity of the Loan Parties or any authorized signatories of the Loan Parties on behalf of any of the Lenders or any of the Issuing Lenders, or to confirm the completeness or accuracy of any information it obtains from any Loan Party or any such authorized signatory in doing so. 10.16 Acknowledgment and Consent to Bail-In of EEA Financial Institutions. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the write-down and conversion powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by: (i) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an EEA Financial Institution; and (ii) the effects of any Bail-in Action on any such liability, including, if applicable: (A) a reduction in full or in part or cancellation of any such liability; (B) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or 223667699

 
(C) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority. 10.17 No Advisory or Fiduciary Responsibility. In connection with all aspects of each transaction contemplated hereby (including in connection with any amendment, waiver or other modification hereof or of any other Loan Document), the Borrowers acknowledge and agree that: (i) (A) the arranging and other services regarding this Agreement provided by the Lenders are arm’s-length commercial transactions between the Borrowers and their Affiliates, on the one hand, and the Lenders, on the other hand, (B) the Borrowers have consulted their own legal, accounting, regulatory and tax advisors to the extent they have deemed appropriate, and (C) the Borrowers are capable of evaluating, and understands and accepts, the terms, risks and conditions of the transactions contemplated hereby and by the other Loan Documents; (ii) (A) each of the Lenders is and has been acting solely as a principal and, except as expressly agreed in writing by the relevant parties, has not been, is not, and will not be acting as an advisor, agent or fiduciary for any Borrower or any of its Affiliates, or any other Person and (B) no Lender has any obligation to any Borrower or any of its Affiliates with respect to the transactions contemplated hereby except those obligations expressly set forth herein and in the other Loan Documents; and (iii) each of the Lenders and their respective Affiliates may be engaged in a broad range of transactions that involve interests that differ from those of the Borrowers and their Affiliates, and no Lender has any obligation to disclose any of such interests to the Borrowers or their Affiliates. To the fullest extent permitted by law, the Borrowers hereby waive and release any claims that they may have against each of the Lenders with respect to any breach or alleged breach of agency or fiduciary duty in connection with any aspect of any transaction contemplated hereby. 10.18 Acknowledgment Regarding Any Supported QFCs. To the extent that the Loan Documents provide support, through a guarantee or otherwise, for any agreement evidencing Hedge Liabilities or any other agreement or instrument that is a QFC (such support, "QFC Credit Support", and each such QFC, a "Supported QFC"), the parties acknowledge and agree as follows with respect to the resolution power of the Federal Deposit Insurance Corporation under the Federal Deposit Insurance Act and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (together with the regulations promulgated thereunder, the "U.S. Special Resolution Regimes") in respect of such Supported QFC and QFC Credit Support (with the provisions below applicable notwithstanding that the Loan Documents and any Supported QFC may in fact be stated to be governed by the laws of the State of New York and/or of the United States or any other state of the United States): (a) In the event a Covered Person that is party to a Supported QFC (each, a "Covered Party") becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer of such Supported QFC and the benefit of such QFC Credit Support (and any interest and obligation in or under such Supported QFC and such QFC Credit Support, and any rights in property securing such Supported QFC or such QFC Credit Support) from such Covered Party will be effective to the same extent as the transfer would be effective under the U.S. Special Resolution Regime if the Supported QFC and such QFC Credit Support (and any such interest, obligation and rights in property) were governed by the laws of the United States or a state of the United States. In the event a Covered Party or a BHC Act Affiliate of a Covered Party becomes subject to a proceeding under a U.S. Special Resolution Regime, Default Rights under the Loan Documents that might otherwise apply to such Supported QFC or any QFC Credit Support that may be exercised against such Covered Party are permitted to be exercised to no greater extent than such Default Rights could be exercised under the U.S. Special Resolution Regime if the 223667699

 
Supported QFC and the Loan Documents were governed by the laws of the United States or a state of the United States. Without limitation of the foregoing, it is understood and agreed that rights and remedies of the parties with respect to a Defaulting Lender shall in no event affect the rights of any Covered Party with respect to a Supported QFC or any QFC Credit Support. (b) As used in this Section 10.18, the following terms have the following meanings: BHC Act Affiliate of a party means an “affiliate” (as such term is defined under, and interpreted in accordance with, 12 U.S.C. 1841(k)) of such party. Covered Person means any of the following: (i) a "covered entity" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 252.82(b); (ii) a "covered bank" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a "covered FSI" as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). Default Right has the meaning assigned to that term in, and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. QFC has the meaning assigned to the term "qualified financial contract" in, and shall be interpreted in accordance with, 12 U.S.C. 5390(c)(8)(D). 11. LEAD BORROWER GUARANTEE. 11.1 Guarantee. (i) The Lead Borrower hereby unconditionally and irrevocably guarantees to the Administrative Agent, for the ratable benefit of the Lenders and their respective successors, indorsees, transferees and assigns, the prompt and complete payment and performance by the Designated Borrowers when due (whether at the stated maturity, by acceleration or otherwise) of the Obligations of the Designated Borrowers (the “Guaranteed Obligations”). (ii) The Lead Borrower agrees that the Guaranteed Obligations may at any time and from time to time exceed the amount of the liability of the Lead Borrower hereunder that would exist in the absence of this Section 11 without impairing the guarantee under this Section 11 (this “Guarantee”) or affecting the rights and remedies of the Administrative Agent or any Lender hereunder. (iii) This Guarantee shall remain in full force and effect until Payment In Full, notwithstanding that from time to time during the term of this Guarantee the Designated Borrowers may be free from any Guaranteed Obligations. (iv) No payment made by any Borrower, any other guarantor or any other Person or received or collected by the Administrative Agent or any Lender from any Borrower, any guarantor or any other Person by virtue of any action or proceeding or any set-off or appropriation or application at any time or from time to time in reduction of or in payment of the Guaranteed Obligations shall be deemed to modify, reduce, release or otherwise affect the liability of the Lead Borrower hereunder which shall, notwithstanding any such payment (other than any payment made by the Lead Borrower in respect of the Guaranteed Obligations or any 223667699

 
payment received or collected from the Lead Borrower in respect of the Guaranteed Obligations), remain liable for the Guaranteed Obligations until Payment In Full. 11.2 No Subrogation. Notwithstanding any payment made by the Lead Borrower hereunder or any set-off or application of funds of the Lead Borrower by the Administrative Agent or any Lender, the Lead Borrower shall not be entitled to be subrogated to any of the rights of the Administrative Agent or any Lender against the Designated Borrowers or any guarantor or any collateral security or guarantee or right of offset held by the Administrative Agent or any Lender for the payment of the Guaranteed Obligations nor shall the Lead Borrower seek or be entitled to seek any contribution or reimbursement from the Designated Borrowers or any guarantor in respect of payments made by the Lead Borrower under this Guarantee, until Payment In Full. If any amount shall be paid to the Lead Borrower on account of such subrogation rights at any time when all of the Guaranteed Obligations shall not have been Paid in Full, such amount shall be held by the Lead Borrower for the benefit of the Administrative Agent and the Lenders, and shall, forthwith upon receipt by the Lead Borrower, be turned over to the Administrative Agent in the exact form received by the Lead Borrower (duly indorsed by the Lead Borrower to the Administrative Agent, if required), to be applied against the Guaranteed Obligations whether matured or unmatured, in such order as the Administrative Agent may determine. 11.3 Amendments, etc., with respect to the Guaranteed Obligations. The Lead Borrower shall remain obligated under this Guarantee notwithstanding that, without any reservation of rights against the Lead Borrower and without notice to or further assent by the Lead Borrower, any demand for payment of any of the Guaranteed Obligations made by the Administrative Agent or any Lender may be rescinded by the Administrative Agent or such Lender and any of the Guaranteed Obligations continued, and the Guaranteed Obligations or the liability of any other Person upon or for any part thereof, or any collateral security or guarantee therefor or right of offset with respect thereto, may, from time to time, in whole or in part, be renewed, extended, amended, modified, accelerated, compromised, waived, surrendered or released by the Administrative Agent or any Lender, and this Agreement and any other documents executed and delivered in connection therewith may be amended, modified, supplemented or terminated, in whole or in part, in accordance with Section 10.1 [Modifications, Amendments or Waivers], as the Administrative Agent (or the Required Lenders or all Lenders, as the case may be) may deem advisable from time to time, and any collateral security, guarantee or right of offset at any time held by the Administrative Agent or any Lender for the payment of the Guaranteed Obligations may be sold, exchanged, waived, surrendered or released without affecting the Lead Borrower’s obligations under this Section 11. Neither the Administrative Agent nor any Lender shall have any obligation to protect, secure, perfect or insure any Lien at any time held by it as security for the Guaranteed Obligations or for this Guarantee. 11.4 Guarantee Absolute and Unconditional. The Lead Borrower waives any and all notice of the creation, renewal, extension or accrual of any of the Guaranteed Obligations and notice of or proof of reliance by the Administrative Agent or any Lender upon this Guarantee or acceptance of this Guarantee; the Guaranteed Obligations, and any of them, shall conclusively be deemed to have been created, contracted or incurred, or renewed, extended, amended or waived, in reliance upon this Section 11; and all dealings between the Lead Borrower, on the one hand, and the Administrative Agent and the Lenders, on the other hand, likewise shall be conclusively presumed to have been had or consummated in reliance upon this Section 11. The Lead Borrower waives diligence, presentment, protest, demand for payment and notice of default or nonpayment to or upon the Designated Borrowers with respect to the Guaranteed Obligations. The Lead 223667699

 
Borrower understands and agrees that this Guarantee shall be construed as a continuing, absolute and unconditional guarantee of payment without regard to (a) the validity or enforceability of this Agreement, any of the Guaranteed Obligations or any other collateral security therefor or guarantee or right of offset with respect thereto at any time or from time to time held by the Administrative Agent or any Lender, (b) any defense, set-off or counterclaim (other than a defense of payment or performance) which may at any time be available to or be asserted by any Designated Borrower or any other Person against the Administrative Agent or any Lender, or (c) any other circumstance whatsoever (with or without notice to or knowledge of any Borrower) which constitutes, or might be construed to constitute, an equitable or legal discharge of the Designated Borrowers for the Guaranteed Obligations, or of the Lead Borrower under this Section 11, in bankruptcy or in any other instance, other than Payment in Full. When making any demand hereunder or otherwise pursuing its rights and remedies hereunder against the Lead Borrower, the Administrative Agent or any Lender may, but shall be under no obligation to, make a similar demand on or otherwise pursue such rights and remedies as it may have against the Designated Borrowers or any guarantor or any other Person or against any collateral security or guarantee for the Guaranteed Obligations or any right of offset with respect thereto, and any failure by the Administrative Agent or any Lender to make any such demand, to pursue such other rights or remedies or to collect any payments from any Designated Borrower, any guarantor or any other Person or to realize upon any such collateral security or guarantee or to exercise any such right of offset, or any release of any Designated Borrower, any guarantor or any other Person or any such collateral security, guarantee or right of offset, shall not relieve the Lead Borrower of any obligation or liability under this Section 11, and shall not impair or affect the rights and remedies, whether express, implied or available as a matter of law, of the Administrative Agent or any Lender against the Lead Borrower under this Section 11. For the purposes hereof “demand” shall include the commencement and continuance of any legal proceedings. 11.5 Reinstatement. This Section 11 shall continue to be effective, or shall be reinstated, as the case may be, if at any time payment, or any part thereof, of any of the Guaranteed Obligations is rescinded or must otherwise be restored or returned by the Administrative Agent or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of any Borrower, or upon or as a result of the appointment of a receiver, intervenor or conservator of, or trustee or similar officer for, any Borrower or any substantial part of its property, or otherwise, all as though such payments had not been made. 11.6 Payments. The Lead Borrower hereby guarantees that payments hereunder will be paid to the Administrative Agent without set-off or counterclaim in Dollars or the applicable Optional Currency in accordance with Section 4.1 [Payments]. [INTENTIONALLY LEFT BLANK] 223667699

 
ANNEX 2 SCHEDULE 1.1(A) PRICING GRID-- VARIABLE PRICING AND LETTER OF CREDIT FEES BASED ON LEVERAGE RATIO (ALL PRICING AND FEES EXPRESSED IN BASIS POINTS) Standby Commercial Base Euro- Letter of Letter of Rate Rate Level Leverage Ratio Credit Fee Credit Fee Spread Spread Commitment Fees I Less than 2.00 225 112.5 125 225 20 to 1.0 Greater than or 250 125 150 250 22.5 II equal to 2.00 to 1.0 but less than 2.50 to 1.0 Greater than or 275 137.5 175 275 25 III equal to 2.50 to 1.0 but less than 3.00 to 1.0 Greater than or 300 150 200 300 27.5 IV equal to 3.00 to 1.0 but less than 3.50 to 1.0 Greater than or 325 162.5 225 325 30.0 V equal to 3.50 to 1.0 For purposes of determining the Applicable Margin, the Applicable Letter of Credit Fee Rate and the Applicable Commitment Fee Rate: (a) As of the Fourth Amendment Effective Date, the Applicable Margin, the Applicable Letter of Credit Fee Rate and the Applicable Commitment Fee Rate shall be set at Level II based on the Fourth Amendment Pro Forma Leverage Ratio (as such term is defined in the Fourth Amendment) calculation. (b) The Applicable Margin, the Applicable Letter of Credit Fee Rate and the Applicable Commitment Fee Rate shall be recomputed based on the actual Leverage Ratio as of

 
May 2, 2020 and the actual Leverage Ratio as of the end of each fiscal quarter ending thereafter. Any increase or decrease in the Applicable Margin, the Applicable Letter of Credit Fee Rate or the Applicable Commitment Fee Rate computed as of a quarter end shall be effective on the date on which the Compliance Certificate evidencing such computation is due to be delivered under Section 7.3.3 [Certificate of the Lead Borrower]. If a Compliance Certificate is not delivered when due in accordance with such Section 7.3.3, then the rates in Level V shall apply as of the first Business Day after the date on which such Compliance Certificate was required to have been delivered and shall remain in effect until the date on which such Compliance Certificate is delivered. (c) If, as a result of any restatement of or other adjustment to the financial statements of the Loan Parties or for any other reason, the Loan Parties or the Lenders determine that (i) the Leverage Ratio as calculated by the Loan Parties as of any applicable date was inaccurate and (ii) a proper calculation of the Leverage Ratio would have resulted in higher or lower pricing for such period, (A) in the case of higher pricing, the Borrowers shall immediately and retroactively be obligated to pay to the Administrative Agent for the account of the applicable Lenders, promptly on demand by the Administrative Agent (or, after the occurrence of an actual or deemed entry of an order for relief with respect to any Loan Party under any Relief Proceeding, automatically and without further action by the Administrative Agent, any Lender or the Issuing Lender), an amount equal to the excess of the amount of interest and fees that should have been paid for such period over the amount of interest and fees actually paid for such period, or (B) in the case of lower pricing, the Lenders shall immediately and retroactively be obligated to pay to the Borrowers, promptly on demand by the Borrowers (if demand is made during the term of this Agreement), the amount of interest and fees paid by the Borrowers for such period over the amount of interest and fees that should have been paid for such period. This paragraph shall not limit the rights of the Administrative Agent, any Lender or the Issuing Lender, as the case may be, under Section 2.7 [Letter of Credit Subfacility], Section 3.3 [Interest After Default] or Section 8 [Default]. The Borrowers' obligations under this paragraph shall survive the termination of the Commitments and the repayment of all other Obligations hereunder.

 
SCHEDULE 5.1.2 CAPITALIZATION; SUBSIDIARIES [This Schedule 5.1.2 has been omitted pursuant to Item 601(a)(5) of Regulation S-K. Schedule 5.1.2 contains information related to the Company’s subsidiaries and capitalization. The Company will provide a copy of Schedule 5.1.2 upon the request of the Securities and Exchange Commission or its staff.]

 
SCHEDULE 7.2.3 PERMITTED GUARANTIES As described in Lead Borrower’s Form 10-K for the fiscal year ended February 2, 2019, DSW MS LLC provided a guarantee for a lease commitment that is scheduled to expire in 2024 of a location that has been leased to a third party. If the third party does not pay the rent or vacates the premise, DSW MS LLC may be required to make full rent payments to the landlord. Guaranty, effective October 1, 2007, for the benefit of eTailDirect LLC, made by DSW Inc. (nka Designer Brand Inc.) to 4300 Venture 34910 LLC, for a lease commitment.

 
ANNEX 3 [See attached]

 
SCHEDULE 1.1(F) FOURTH AMENDMENT LETTERS OF CREDIT Instrument No. Amount Beneficiary Expiration Date Issuer 68107327 200,000.00 LEE COUNTY AND POLITICAL SUBDIVISION OF THE 12/31/2020 Bank of America STATE OF FLORIDA 68106068 433,332.00 530 BROADWAY ONE, LLC 10/03/2020 Bank of America 68106069 440,407.97 AVENUE OF AMERICAS, LLC 10/31/2020 Bank of America 68133235 557,098.00 SRI ELEVEN 1407 BROADWAY OPERATOR LLC 05/12/2021 Bank of America

 
ANNEX 4 [See attached]

 
EXHIBIT 1.1(G) FORM OF GUARANTOR JOINDER AND ASSUMPTION AGREEMENT This Guarantor Joinder and Assumption Agreement ("Joinder") is made this ____ day of __________, 202_, by __________________________, a(n) _________________ [limited liability company/limited partnership/general partnership/corporation] (the "New Guarantor"). Background Reference is made to (i) that certain Credit Agreement, dated as of August 25, 2017 (as may be amended, modified, supplemented or restated from time to time, the "Credit Agreement"), by and among Designer Brands Inc. (f/k/a DSW Inc.), an Ohio corporation (the "Lead Borrower"), the DESIGNATED BORROWERS (as defined therein) (the Lead Borrower and Designated Borrowers are each, a "Borrower" and collectively, the "Borrowers"), each of the GUARANTORS (as defined therein), the LENDERS (as defined therein), and PNC BANK, NATIONAL ASSOCIATION, in its capacity as administrative agent for the Lenders (the "Administrative Agent"), (ii) the Guaranty and Suretyship Agreement, dated as of August 25, 2017 (as may be amended, modified, supplemented or restated from time to time, the "Guaranty Agreement"), made by 810 AC LLC, an Ohio limited liability company, Brand Card Services LLC, an Ohio limited liability company, DSW Shoe Warehouse, Inc., a Missouri corporation, DSW Information Technology LLC, an Ohio limited liability company, DSW MS LLC, an Ohio limited liability company, Ebuys, Inc., a California corporation, DSW Leased Business Division LLC (a/k/a Affiliated Business Group), an Ohio limited liability company, eTailDirect LLC, a Delaware limited liability company, Retail Ventures Services, Inc., an Ohio corporation, Designer Brand Licensing LLC, an Ohio limited liability company, VCJS LLC, a Connecticut limited liability company, VCS Group LLC, a Delaware limited liability company, Vincent Camuto LLC, a Connecticut limited liability company, CCI Operations LLC, an Ohio limited liability company, VC Footwear LLC, a Connecticut limited liability company, VC Line Building Services LLC, a Connecticut limited liability company, Hot on Time LLC, a Connecticut limited liability company, Sole Society Group Inc., a Delaware corporation and each other Person that joins thereunder as a guarantor, in favor of the Administrative Agent and the Lenders, (iii) the Pledge and Security Agreement (as defined in the Credit Agreement), (iv) the Intercompany Subordination Agreement (as defined in the Credit Agreement) and (v) the other Loan Documents referred to in the Credit Agreement, as the same may be modified, supplemented, amended or restated. Agreement Capitalized terms defined in the Credit Agreement are used herein as defined therein. In consideration of the New Guarantor becoming a Guarantor under the terms of the Credit Agreement and in consideration of the value of the synergistic benefits received by New Guarantor as a result of becoming affiliated with the Borrowers and the Guarantors, the New Guarantor hereby agrees that: (i) on the date hereof, it shall execute and deliver to the Administrative Agent for the benefit of the Lenders any applicable documents as set forth in this

 
Joinder; and (ii) effective as of the date hereof, it hereby is, and shall be deemed to be, and assumes the obligations of, a "Guarantor" and a "Loan Party" jointly and severally with the existing Guarantors and Loan Parties under the Credit Agreement, a "Guarantor" jointly and severally with the existing Guarantors under the Guaranty Agreement, a "Grantor" jointly and severally with the existing Grantors under the Pledge and Security Agreement, a "Company" jointly and severally with the existing Companies under the Intercompany Subordination Agreement and a "Guarantor" or "Loan Party" (or other applicable term), as the case may be, under each of the other Loan Documents to which the Guarantors or Loan Parties are a party and agrees that from the date hereof and until Payment In Full, the New Guarantor shall perform, comply with and be subject to and bound by, jointly and severally, each of the terms, provisions and waivers of the Credit Agreement, the Guaranty Agreement, the Pledge and Security Agreement, the Intercompany Subordination Agreement and each of the other Loan Documents which are stated to apply to or are made by a Guarantor or a Loan Party. Without limiting the generality of the foregoing, the New Guarantor hereby represents and warrants that (i) each of the representations and warranties with respect to the Guarantors set forth in Section 5 of the Credit Agreement is true and correct as to the New Guarantor on and as of the date hereof as if made on and as of the date hereof by the New Guarantor (except representations and warranties which relate solely to an earlier date or time which representations and warranties shall be true and correct on and as of the specific date or times referred to in said representations and warranties) and (ii) the New Guarantor has heretofore received a true and correct copy of the Credit Agreement, the Guaranty Agreement, the Pledge and Security Agreement, the Intercompany Subordination Agreement and each of the other Loan Documents (including any modifications thereof or supplements or waivers thereto) as in effect on the date hereof. The New Guarantor hereby makes, affirms, and ratifies in favor of the Lenders and the Administrative Agent the Credit Agreement, the Guaranty Agreement, the Pledge and Security Agreement, the Intercompany Subordination Agreement and each of the other Loan Documents given by the Guarantors to the Administrative Agent and any of the Lenders. The New Guarantor expressly ratifies and confirms the waiver of jury trial provisions contained in the Credit Agreement, the Guaranty Agreement, the Pledge and Security Agreement, the Intercompany Subordination Agreement and the other Loan Documents, as applicable. The New Guarantor is simultaneously delivering to the Administrative Agent the following documents together with this Joinder required under Section 10.14 [Joinder of Guarantors] of the Credit Agreement. - 2 -

 
Document [Opinion of Counsel Certified copy of the [Articles of Incorporation/Certificate of Organization] of the New Guarantor, certified by the Department of State of its state of [incorporation/organization]. Copy of the [Bylaws/Operating Agreement] of the New Guarantor certified by the Secretary of the New Guarantor. Good Standing Certificate of the New Guarantor from the Department/Secretary of State of its state of [incorporation/organization] and each jurisdiction in which it is registered to do business as a foreign corporation. Officer’s Certificate Secretary’s Certificate Lien Searches Evidence of Insurance [Original Pledged Share certificates issued or owned by New Guarantor] [Original instruments evidencing Pledged Debt] - 3 -

 
Assignment for Security [Trademarks] [Patents] [Copyrights] Solvency Certificate1] Schedules to Credit Agreement Schedule 5.1.1 Qualifications to Do Business Schedule 5.1.2 Subsidiaries Schedules to Pledge and Security Agreement Schedule I – Legal Names, Etc. Schedule II – Intellectual Property, Etc. Schedule III – Locations of Grantors Schedule IV – Deposit Accounts, Securities Accounts and Commodities Accounts Schedule V – Commercial Tort Claims Schedule VI – Pledged Debt Schedule VII – Pledged Shares In furtherance of the foregoing, the New Guarantor shall execute and deliver or cause to be executed and delivered at any time and from time to time such further instruments and documents and do or cause to be done such further acts as may be reasonably requested by the Administrative Agent to carry out more effectively the provisions and purposes of this Joinder and the other Loan Documents. Delivery of an executed counterpart of a signature page of this Joinder by telecopy or e-mail shall be effective as delivery of a manually executed counterpart of this Joinder. [INTENTIONALLY LEFT BLANK] 1 Administrative Agent to identify the full list of documents required pursuant to Section 10.14 of the Credit Agreement. - 4 -

 
IN WITNESS WHEREOF, and intending to be legally bound, the New Guarantor has duly executed this Joinder and delivered the same to the Administrative Agent for the benefit of the Lenders, on the date and year first above written. NEW GUARANTOR: ___________________________ By: _______________________________ Name: Title: Acknowledged and accepted: PNC BANK, NATIONAL ASSOCIATION, as Administrative Agent By: Name: Title:

 
EXHIBIT 7.3.3 FORM OF COMPLIANCE CERTIFICATE _________________________, 20___ PNC Bank, National Association, as Administrative Agent 155 East Broad Street Columbus, Ohio 43215 Ladies and Gentlemen: I refer to the Credit Agreement, dated as of August 25, 2017, by and among Designer Brands Inc. (f/k/a DSW Inc.), an Ohio corporation (the “Lead Borrower”), the Designated Borrowers party thereto, the Guarantors party thereto, the Lenders party thereto, and PNC Bank, National Association, in its capacity as administrative agent for the Lenders (the “Administrative Agent”), as amended by that certain (i) First Amendment to Credit Agreement, dated as of January 30, 2018 (the “First Amendment”), by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent, (ii) Second Amendment to Credit Agreement, dated as of October 10, 2018 (the “Second Amendment”), by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent, (iii) Third Amendment to Credit Agreement, dated as of March 16, 2020 (the “Third Amendment”), by and among the Lead Borrower, the Lenders party thereto and the Administrative Agent and (iv) Fourth Amendment to Credit Agreement, dated as of April 30, 2020 (the “Fourth Amendment”), by and among the Lead Borrower, the Guarantors party thereto, the Lenders party thereto and the Administrative Agent (as so amended by the First Amendment, the Second Amendment, the Third Amendment and the Fourth Amendment, and as may be further amended, modified, supplemented or restated from time to time, the “Credit Agreement”). Unless otherwise defined herein, terms defined in the Credit Agreement are used herein with the same meanings. I, the ____________________ [Responsible Financial Officer] of the Lead Borrower, do hereby certify on behalf of the Loan Parties as of the _________ [quarter/year] ended _______________ ___, 20___ (the “Report Date”), as follows: 1. CHECK ONE: ______ The annual financial statements of the Lead Borrower, consisting of an audited consolidated balance sheet as of the end of such fiscal year, and related audited consolidated statements of income, shareholders' equity and cash flows, being delivered to the Administrative Agent and the Lenders with this Compliance Certificate (a) are all in reasonable detail and set forth in comparative form the financial statements as of the end of and for the preceding fiscal year, and (b) comply with the reporting requirements for such financial statements as set forth in Section 7.3.2 [Annual Financial Statements] of the Credit Agreement

 
OR ______ The quarterly financial statements of the Lead Borrower, consisting of a consolidated balance sheet as of the end of such fiscal quarter and related consolidated statements of income and cash flows being delivered to the Administrative Agent and the Lenders with this Compliance Certificate (a) are all in reasonable detail and have been prepared in accordance with GAAP, consistently applied (subject to normal year-end audit adjustments), and set forth in comparative form the respective financial statements for the corresponding date and period in the previous fiscal year, and (b) comply with the reporting requirements for such financial statements as set forth in Section 7.3.1 [Quarterly Financial Statements] of the Credit Agreement. 2. No Event of Default or Potential Default exists on the Report Date, and no Event of Default or Potential Default has occurred or is continuing since the date of the previously delivered Compliance Certificate. [NOTE: If any Event of Default or Potential Default has occurred or is continuing, set forth on an attached sheet the nature thereof and the action which the Loan Parties have taken, are taking or propose to take with respect thereto.] 3. Indebtedness (Section 7.2.1(iii) and Section 7.2.1(xiv)): (A) Indebtedness of the Loan Parties and their Subsidiaries, in the aggregate, as of the Report Date of $____________ which is in the form of Purchase Money Security Interests or Capital Leases, which is not more than the permitted maximum of Twenty Million and 00/100 Dollars ($20,000,000.00) in the aggregate at any time outstanding. (B) Unsecured Indebtedness of the Loan Parties and their Subsidiaries not otherwise permitted in Section 7.2.1 of the Credit Agreement, in the aggregate as of the Report Date of $____________, which is not more than the permitted maximum of Fifteen Million and 00/100 Dollars ($15,000,000.00) at any time outstanding. 4. Guaranties (Section 7.2.3(vi)). Guaranties by the Loan Parties and their Subsidiaries of Indebtedness of any Subsidiary that is not a Loan Party or any Joint Venture, in the aggregate as of the Report Date of $____________, which is not more than the permitted maximum of Ten Million and 00/100 Dollars ($10,000,000.00) at any time outstanding. 5. Liens; Lien Covenants (Clauses (xii) and (xviii) of the definition of Permitted Liens): (A) Proceeds secured by Liens granted in connection with securities lending transactions or reverse repurchase agreements involving United States Treasury bonds, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Ten Million and 00/100 Dollars ($10,000,000.00) at any one time outstanding. (B) Obligations secured by other Liens not otherwise permitted by the definition of Permitted Liens, in the aggregate, as of the Report Date equals $____________, which is - 2 -

 
not more than the permitted maximum of Twenty Million and 00/100 Dollars ($20,000,000.00) in the aggregate at any time outstanding. 6. Loans and Investments (Section 7.2.4(x)): Loans, advances and investments not otherwise permitted by Section 7.2.4 of the Credit Agreement by Domestic Loan Parties in or to Foreign Subsidiaries and Joint Ventures, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Fifty Million and 00/100 Dollars ($50,000,000.00) in the aggregate at any one time outstanding. 7. Dispositions of Assets (Section 7.2.7(i) and Section 7.2.7(viii)): (A) [In addition to sales of Inventory under subsection (a) of clause (i) of Section 7.2.7 of the Credit Agreement, the sale of slow moving inventory outside of the ordinary course (including in respect of a liquidation thereof) during the current fiscal year, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Five Million and 00/100 Dollars ($5,000,000) during such fiscal year.]1 (B) The sale, transfer or lease of assets by the Lead Borrower and its Subsidiaries, other than those specifically excepted by Section 7.2.7 of the Credit Agreement (so long as in each case both immediately before and immediately after giving effect thereto there exists no Event of Default or Potential Default), during the current fiscal year, in the aggregate, as of the Report Date equals $____________, which is not more than the permitted maximum of Ten Million and 00/100 Dollars ($10,000,000) during such fiscal year. 8. Minimum Fixed Charge Coverage Ratio (Section 7.2.13). The Fixed Charge Coverage Ratio for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date is [Insert from item 8(E) below] to 1.0, which is not less than the required ratio for such period as determined by reference to Table 1. TABLE 1 Fiscal Quarters Ending Required Fixed Charge Coverage Ratio May 2, 2020 1.25 to 1.00 August 1, 2020 and thereafter 1.05 to 1.00 The Fixed Charge Coverage Ratio shall be computed as follows: 1 Include commencing with the May 1, 2021 Report Date and thereafter. - 3 -

 
(A) Consolidated EBITDAR of the Lead Borrower and its Subsidiaries for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date equals $____________, and is computed as follows2: Component Amount (i) net income $_______________ (ii) depreciation $_______________ (iii) amortization $_______________ (iv) non-cash expenses related to stock based $_______________ compensation (v) other non-cash charges, non-cash expenses, $_______________ or non-cash losses to net income (provided, however that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses shall be subtracted from consolidated net income in calculating Consolidated EBITDAR) (vi) interest expense $_______________ (vii) income tax expense $_______________ (viii) Consolidated Rental Expense $_______________ (ix) restructuring charges or expenses $_______________ (including integration costs, restructuring costs and severance costs related to acquisitions and to closure or consolidation of plants, facilities or locations and any expense related to any reconstruction, recommissioning or reconfiguration of fixed assets for alternate use)3 (x) inventory markdowns during the fiscal $_______________ quarters of the Lead Borrower ending May 2, 2020 and August 1, 2020 (xi) with respect to any inventory classified for $_______________ Spring 2020 or older, inventory markdowns related to the Camuto and Canada business segments only during the fiscal quarters of the Lead Borrower ending October 31, 2020 and January 30, 2021 (xii) The sum of items (i) through (xi) $_______________ 2 The following shall exclude the income (or deficit) of any Person (other than a Subsidiary) in which the Lead Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Lead Borrower or such Subsidiary in the form of dividends or similar distributions. 3 Shall not exceed (x) $20,000,000 in the aggregate incurred prior to the Fourth Amendment Effective Date and (y) $20,000,000 in the aggregate incurred on or after the Fourth Amendment Effective Date. - 4 -

 
(xiii) non-cash credits or non-cash gains to net $_______________ income (xiv) The difference between item (xii) minus $_______________ item (xiii) equals Consolidated EBITDAR (B) If applicable, the COVID Addback for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date equals $____________, and is calculated as set forth in Exhibit[s] A [and B] hereto. (C) Consolidated Adjusted EBITDAR calculated as of the Report Date for the period equal to the four (4) consecutive fiscal quarters then ended equals $__________ (the sum of items 8(A) and item 8(B)). (D) Fixed Charges4 calculated as of the Report Date for the period equal to the four (4) consecutive fiscal quarters then ended equals $__________. (E) the ratio of item 8(C) to item 8(D) equals the Fixed Charge Coverage Ratio. 9. Maximum Leverage Ratio (Section 7.2.14). The Leverage Ratio for the period equal to the four (4) consecutive fiscal quarters ending as of the Report Date is [Insert from item 9(E) below] to 1.0, which is not greater than the required ratio for such period as determined by reference to Table 2. TABLE 2 Fiscal Quarters Ending Required Leverage Ratio May 2, 2020 3.50 to 1.00 August 1, 2020 4.00 to 1.00 October 31, 2020 3.75 to 1.00 January 30, 2021 and thereafter 3.50 to 1.00 (A) Total Funded Debt5 of the Lead Borrower and its Subsidiaries as of the Report Date equals $____________. 4 Fixed Charges means for any period of determination, the sum of (a) cash interest expense, plus (b) Consolidated Rental Expense, in each case of the Lead Borrower on a Consolidated Basis. 5 Total Funded Debt means, as of any date of determination, the sum of (i) all Indebtedness (excluding any Hedge Liabilities or any other obligations (contingent or otherwise) under any Swap) representing borrowed money, including both current and long term portion thereof and guaranty obligations with respect thereto, Capital Lease Obligations and reimbursement obligations under letters of credit, in each case of the Lead Borrower on a Consolidated Basis, plus (ii) the aggregate current and long-term - 5 -

 
(B) Unencumbered (other than Liens in favor of the Administrative Agent securing the Obligations and Customary Bank Liens) cash and Cash Equivalents of the Lead Borrower and its Subsidiaries in excess of Twenty-Five Million and 00/100 Dollars ($25,000,000.00)6 as of the Report Date equals $____________. (C) The difference between item 9(A) minus item 9(B) equals $__________. (D) Consolidated Adjusted EBITDAR calculated as of the Report Date for the period equal to the four (4) consecutive fiscal quarters then ended equals $__________ (per item 8(C) above). (E) The ratio of item 9(C) to item 9(D) equals the Leverage Ratio. operating lease liabilities in accordance with FASB ASC 842, in each case determined and consolidated for the Lead Borrower and its Subsidiaries in accordance with GAAP. 6 Such cash and Cash Equivalents must be held in a deposit account maintained with PNC Bank or any other deposit account maintained at any other financial institution with respect to which the Administrative Agent has “control” within the meaning of the UCC - 6 -

 
IN WITNESS WHEREOF, and intending to be legally bound, the undersigned has executed this Compliance Certificate this ____ day of _______________, 20___. Designer Brands Inc., as the Lead Borrower By: Name: Title:

 
EXHIBIT A COVID Addback Calculation – Fiscal Quarter Ended May 2, 2020 The COVID Addback for the fiscal quarter of the Lead Borrower ended May 2, 2020 is $____________ (per item (D) below), and is computed as follows: (A) Consolidated EBITDA7 of the Lead Borrower and its Subsidiaries for the fiscal quarter of the Lead Borrower ended May 2, 2020 is8: Component Amount (i) net income $_______________ (ii) depreciation $_______________ (iii) amortization $_______________ (iv) non-cash expenses related to stock based $_______________ compensation (v) other non-cash charges, non-cash expenses, $_______________ or non-cash losses to net income (provided, however that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses shall be subtracted from consolidated net income in calculating Consolidated EBITDAR) (vi) interest expense $_______________ (vii) income tax expense $_______________ (viii) restructuring charges or expenses $_______________ (including integration costs, restructuring costs and severance costs related to acquisitions and to closure or consolidation of plants, facilities or locations and any expense related to any reconstruction, recommissioning or reconfiguration of fixed assets for alternate use)9 (ix) inventory markdowns during the fiscal $_______________ quarters of the Lead Borrower ending May 2, 2020 (x) The sum of items (i) through (ix) $_______________ 7 Consistent with Consolidated EBITDAR calculation for such period, but without the addition of Consolidated Rental Expense. 8 The following shall exclude the income (or deficit) of any Person (other than a Subsidiary) in which the Lead Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Lead Borrower or such Subsidiary in the form of dividends or similar distributions. 9 Shall not exceed (x) $20,000,000 in the aggregate incurred prior to the Fourth Amendment Effective Date and (y) $20,000,000 in the aggregate incurred on or after the Fourth Amendment Effective Date.

 
(xi) non-cash credits or non-cash gains to net $_______________ income (xii) The difference between item (x) minus $_______________ item (xi) equals Consolidated EBITDA (B) COVID Losses10 of the Lead Borrower and its Subsidiaries for the fiscal quarter of the Lead Borrower ended May 2, 2020 is: $____________________ (C) The lesser of (i) item (B) above and (ii) Fifty Million and 00/100 Dollars ($50,000,000.00) is: $____________________ (D) The lesser of (i) item (C) above and (ii) the amount that, when added to item (A)(xii) above, would cause item (A)(xii) above to equal Zero and 00/100 Dollars ($0.00), is: $____________________ 10 COVID Losses means identifiable and factually supported operating losses of the Lead Borrower and its Subsidiaries attributable to, in connection with, or otherwise relating to COVID-19 and any remedial measures taken with respect thereto. - 9 -

 
EXHIBIT B COVID Addback Calculation – Fiscal Quarter Ended August 1, 2020 The COVID Addback for the fiscal quarter of the Lead Borrower ended August 1, 2020 is $____________ (per item (D) below), and is computed as follows: (A) Consolidated EBITDA11 of the Lead Borrower and its Subsidiaries for the fiscal quarter of the Lead Borrower ended August 1, 2020 is12: Component Amount (i) net income $_______________ (ii) depreciation $_______________ (iii) amortization $_______________ (iv) non-cash expenses related to stock based $_______________ compensation (v) other non-cash charges, non-cash expenses, $_______________ or non-cash losses to net income (provided, however that cash payments made in such period or in any future period in respect of such non-cash charges, expenses or losses shall be subtracted from consolidated net income in calculating Consolidated EBITDAR) (vi) interest expense $_______________ (vii) income tax expense $_______________ (viii) restructuring charges or expenses $_______________ (including integration costs, restructuring costs and severance costs related to acquisitions and to closure or consolidation of plants, facilities or locations and any expense related to any reconstruction, recommissioning or reconfiguration of fixed assets for alternate use)13 (ix) inventory markdowns during the fiscal $_______________ quarters of the Lead Borrower ending August 1, 2020 (x) The sum of items (i) through (ix) $_______________ 11 Consistent with Consolidated EBITDAR calculation for such period, but without the addition of Consolidated Rental Expense. 12 The following shall exclude the income (or deficit) of any Person (other than a Subsidiary) in which the Lead Borrower or any of its Subsidiaries has an ownership interest, except to the extent that any such income is actually received by the Lead Borrower or such Subsidiary in the form of dividends or similar distributions. 13 Shall not exceed (x) $20,000,000 in the aggregate incurred prior to the Fourth Amendment Effective Date and (y) $20,000,000 in the aggregate incurred on or after the Fourth Amendment Effective Date.

 
(xi) non-cash credits or non-cash gains to net $_______________ income (xii) The difference between item (x) minus $_______________ item (xi) equals Consolidated EBITDA (B) COVID Losses14 of the Lead Borrower and its Subsidiaries for the fiscal quarter of the Lead Borrower ended August 1, 2020 is: $____________________ (C) The lesser of (i) item (B) above and (ii) Twenty-Five Million and 00/100 Dollars ($25,000,000.00) is: $____________________ (D) The lesser of (i) item (C) above and (ii) the amount that, when added to item (A)(xii) above, would cause item (A)(xii) above to equal Zero and 00/100 Dollars ($0.00), is: $____________________ 14 COVID Losses means identifiable and factually supported operating losses of the Lead Borrower and its Subsidiaries attributable to, in connection with, or otherwise relating to COVID-19 and any remedial measures taken with respect thereto. - 11 -

 

EXHIBIT 10.4.5


PLEDGE AND SECURITY AGREEMENT
PLEDGE AND SECURITY AGREEMENT (this “Agreement”), dated as of April 30, 2020 (the “Effective Date”), made by each of the Grantors referred to below, in favor of PNC Bank, National Association, in its capacity as administrative and collateral agent for the Secured Parties referred to below (in such capacity, together with its successors and assigns in such capacity, if any, the “Agent”).
W I T N E S S E T H:
WHEREAS, Designer Brands Inc. (f/k/a DSW Inc.), an Ohio corporation (the “Lead Borrower”), the Designated Borrowers (as defined therein), each subsidiary of the Lead Borrower listed as a “Guarantor” on the signature pages thereto (together with each other Person (as defined in the Credit Agreement) that guarantees all or any portion of the Obligations (as defined in the Credit Agreement) from time to time, each a “Guarantor” and collectively, the “Guarantors”, and together with the Lead Borrower, the Designated Borrowers and each other Person that executes a Guarantor Joinder and becomes an “Additional Grantor” hereunder, each a “Grantor” and collectively, the “Grantors”), the lenders from time to time party thereto (each a “Lender” and collectively, the “Lenders”), and the Agent are parties to a Credit Agreement, dated as of August 25, 2017 (such agreement, as amended, restated, supplemented, modified or otherwise changed from time to time, including any replacement agreement therefor, being hereinafter referred to as the “Credit Agreement”);
WHEREAS, pursuant to the Credit Agreement, the Lenders have agreed to make certain revolving loans, which revolving loans include a sub-facility for the issuance of letters of credit (each a “Loan” and collectively, the “Loans”), to the Borrowers;
WHEREAS, each Guarantor has unconditionally guaranteed all or a portion of the Obligations;
WHEREAS, this Agreement is given by each Grantor in favor of the Agent for the benefit of the Secured Parties (as hereinafter defined) to secure the payment and performance of all of the Secured Obligations (as hereinafter defined);
WHEREAS, it is a condition precedent to the Lenders continuing to make Loans and provide any other financial accommodation to the Borrowers pursuant to the Credit Agreement that each Grantor shall have executed and delivered to the Agent this Agreement; and
WHEREAS, each Grantor has determined that the execution, delivery and performance of this Agreement directly benefit, and are in the best interest of, such Grantor;
NOW, THEREFORE, in consideration of the premises and the agreements herein and in order to induce the Agent and the Lenders to continue to make and maintain the Loans and to assist in providing Letters of Credit and to provide other financial accommodations to the Borrowers pursuant to the Credit Agreement, the Grantors hereby jointly and severally agree with the Agent, for the benefit of the Secured Parties, as follows:


Section 1.Definitions.
(a)Reference is hereby made to the Credit Agreement for a statement of the terms thereof. All capitalized terms used in this Agreement and the recitals hereto which are defined in the Credit Agreement or in Article 8 or 9 of the Uniform Commercial Code as in effect from time to time in the State of Ohio (the “Code”) and which are not otherwise defined herein shall have the same meanings herein as set forth therein.
(b)The following terms shall have the respective meanings provided for in the Code: “Accounts”, “Account Debtor”, “Cash Proceeds”, “Certificate of Title”, “Chattel Paper”, “Commercial Tort Claim”, “Commodity Account”, “Commodity Contracts”, “Deposit Account”, “Documents”, “Electronic Chattel Paper”, “Equipment”, “Fixtures”, “General Intangibles”, “Goods”, “Instruments”, “Inventory”, “Investment Property”, “Letter-of-Credit Rights”, “Noncash Proceeds”, “Payment Intangibles”, “Proceeds”, “Promissory Notes”, “Record”, “Security Account”, “Software”, “Supporting Obligations” and “Tangible Chattel Paper”.
(c)As used in this Agreement, the following terms shall have the respective meanings indicated below, such meanings to be applicable equally to both the singular and plural forms of such terms:
“Copyright Licenses” means all written licenses, contracts or other agreements, naming any Grantor as licensee or licensor and providing for the grant of any right to use or sell any works covered by any Copyright (including, without limitation, all material Copyright Licenses set forth in Schedule II hereto).
“Copyrights” means all domestic and foreign copyrights, whether registered or unregistered, including, without limitation, all copyright rights (whether now or hereafter arising) in any and all media (whether now or hereafter developed), in and to all original works of authorship fixed in any tangible medium of expression (including computer software and internet website content) now or hereafter owned, acquired, developed or used by any Grantor (including, without limitation, all copyrights described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Copyright Office or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.
“Excluded Securities” means any of the following: (a) any Capital Stock or Indebtedness to the extent, and for so long as, the pledge thereof would be prohibited by any applicable Law; (b) any Capital Stock in a Joint Venture or any Subsidiary that is not wholly-owned, directly or indirectly by the Lead Borrower; (c) any margin stock and (d) with respect to any Subsidiary of any Grantor organized under the laws of a jurisdiction other than the United States, any of the states thereof or the District of Columbia, or that is an Excluded Domestic Subsidiary (in each case, a “Foreign Subsidiary”), amounts in excess of 65% (or such greater percentage that, due to a change in applicable law after the date hereof, (i) would not reasonably be expected to cause the undistributed earnings of any “controlled foreign corporation” (within the meaning of Section 957 of the Code) as determined for United States federal income tax purposes to be treated as a deemed dividend to such controlled foreign corporation's United States





parent and (ii) would not reasonably be expected to cause any material adverse tax consequences) of the issued and outstanding shares of Capital Stock entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) (it being understood and agreed that the term “Collateral” shall include 100% of the issued and outstanding shares of Capital Stock not entitled to vote (within the meaning of Treas. Reg. Section 1.956-2(c)(2)) of such Foreign Subsidiary).
“Existing Issuer” has the meaning specified therefor in the definition of the term “Pledged Shares”.
“Intellectual Property” means all Copyrights, Patents, Trademarks and Other Intellectual Property.
“Licenses” means the Copyright Licenses, the Patent Licenses and the Trademark Licenses.
“Material Intellectual Property” means, with respect to any Grantor, any Intellectual Property registered with any United States Official Body, and any other items of Intellectual Property of such Grantor that are material to the conduct of the business or operations of such Grantor or that of the Grantors (taken as a whole).
“Other Intellectual Property” means all trade secrets, ideas, concepts, methods, techniques, processes, proprietary information, technology, know-how, formulae, rights of publicity and privacy and other general intangibles of like nature, now or hereafter acquired, owned, developed or used by any Grantor.
“Patent Licenses” means all written licenses, contracts or other agreements, naming any Grantor as licensee or licensor and providing for the grant of any right to manufacture, use or sell any invention covered by any Patent (including, without limitation, all material Patent Licenses set forth in Schedule II hereto).
“Patents” means all domestic and foreign letters patent, design patents, utility patents, industrial designs and inventions, now existing or hereafter acquired (including, without limitation, all domestic and foreign letters patent, design patents, utility patents, industrial designs, and inventions described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office, or in any similar office or agency of the United States or any other country or any political subdivision thereof), and all reissues, divisions, continuations, continuations in part and extensions or renewals thereof.
“Pledged Debt” means, with respect to each Grantor, the Specified Pledged Debt described in Schedule VI hereto and all other Indebtedness from time to time owned or acquired, the promissory notes and other Instruments evidencing any or all of such Indebtedness; provided, however, that Pledged Debt shall not include Indebtedness owed by one Loan Party to another Loan Party.
“Pledged Interests” means, collectively, (a) the Pledged Debt, (b) the Pledged Shares and (c) all security entitlements in any and all of the foregoing.





“Pledged Issuer” has the meaning specified therefor in the definition of the term “Pledged Shares”.
“Pledged Shares” means (a) the issued and outstanding shares of Capital Stock described in Schedule VII hereto, whether or not evidenced or represented by any stock certificate, certificated security or other Instrument, issued by the Persons described in such Schedule VII (the “Existing Issuers”), (b) the issued and outstanding shares of Capital Stock at any time and from time to time acquired by a Grantor of any and all Persons now or hereafter existing (such Persons, together with the Existing Issuers, being hereinafter referred to collectively as the “Pledged Issuers” and each individually as a “Pledged Issuer”), whether or not evidenced or represented by any stock certificate, certificated security or other Instrument, and (c) the certificates representing such shares of Capital Stock, all options and other rights, contractual or otherwise, in respect thereof and all dividends, distributions, cash and all other property (including, without limitation, any stock dividend and any distribution in connection with a stock split) from time to time received, receivable or otherwise distributed in respect of or in exchange for any or all of such Capital Stock; provided that Pledged Shares shall not include any Excluded Securities.
“Secured Parties” means, collectively, the Agent, the Lenders and the Issuing Lenders.
“Secured Obligations” has the meaning specified therefor in Section 3 hereof.
“Specified Pledged Debt” has the meaning specified therefor in Section 4(a) hereof.
“Trademark Licenses” means all written licenses, contracts or other agreements, naming any Grantor as licensor or licensee and providing for the grant of any right concerning any Trademark, together with any goodwill connected with and symbolized by any such trademark licenses, contracts or agreements and the right to prepare for sale or lease and sell or lease any and all Inventory now or hereafter owned by any Grantor and now or hereafter covered by such licenses (including, without limitation, all material Trademark Licenses described in Schedule II hereto).
“Trademarks” means all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a's, Internet domain names, trade styles, designs, logos and other source or business identifiers, now or hereafter owned, adopted, acquired or used by any Grantor (including, without limitation, all domestic and foreign trademarks, service marks, collective marks, certification marks, trade names, business names, d/b/a's, Internet domain names, trade styles, designs, logos and other source or business identifiers described in Schedule II hereto), all applications, registrations and recordings thereof (including, without limitation, applications, registrations and recordings in the United States Patent and Trademark Office or in any similar office or agency of the United States, any state thereof or any other country or any political subdivision thereof), and all reissues, extensions or renewals thereof, together with all goodwill of the business symbolized by such marks and other Records of any Grantor relating to the distribution of products and services in connection with which any of such marks are used.
Section 2.Grant of Security Interest. As collateral security for the payment, performance and observance of all of the Secured Obligations, each Grantor hereby pledges and





grants to the Agent for the benefit of the Secured Parties, a continuing security interest in, all personal property and Fixtures of such Grantor, wherever located and whether now or hereafter existing and whether now owned or hereafter acquired, of every kind and description, tangible or intangible, including, without limitation, the following (all being collectively referred to herein as the “Collateral”):
(a)all Accounts;
(b)all Chattel Paper (whether tangible or electronic);
(c)the Commercial Tort Claims specified on Schedule V;
(d)all Deposit Accounts, all cash, and all other property from time to time deposited therein or otherwise credited thereto and the monies and property in the possession or under the control of the Agent or any Lender;
(e)all Documents;
(f)all General Intangibles (including, without limitation, all Payment Intangibles, Intellectual Property and Licenses);
(g)all Goods, including, without limitation, all Equipment, Fixtures and Inventory;
(h)all Instruments (including, without limitation, Promissory Notes);
(i)all Investment Property;
(j)all Letter-of-Credit Rights;
(k)all Pledged Interests;
(l)all Supporting Obligations;
(m)all other tangible and intangible personal property of such Grantor (whether or not subject to the Code), including, without limitation, all bank and other accounts and all cash and all investments therein, all proceeds, products, offspring, accessions, rents, profits, income, benefits, substitutions and replacements of and to any of the property of such Grantor described in the preceding clauses of this Section 2 hereof (including, without limitation, any proceeds of insurance thereon and all causes of action, claims and warranties now or hereafter held by such Grantor in respect of any of the items listed above), and all books, correspondence, files and other Records, including, without limitation, all tapes, disks, cards, Software, data and computer programs in the possession or under the control of such Grantor or any other Person from time to time acting for such Grantor that at any time evidence or contain information relating to any of the property described in the preceding clauses of this Section 2 hereof or are otherwise necessary or helpful in the collection or realization thereof; and

(n)all Proceeds, including all Cash Proceeds and Noncash Proceeds,





and products of any and all of the foregoing Collateral;
in each case howsoever such Grantor's interest therein may arise or appear (whether by ownership, security interest, claim or otherwise).

Notwithstanding anything herein to the contrary, the term “Collateral” shall not include, and no Grantor is pledging, nor granting a security interest hereunder in (i) real property interests (other than Fixtures), (ii) governmental licenses or state or local franchises, charters and authorizations and any other property and assets to the extent that the Agent may not validly possess a security interest therein under applicable Laws (including, without limitation, rules and regulations of any governmental authority or agency) or the pledge or creation of a security interest in which would require governmental consent, approval, license or authorization not obtained, other than to the extent such prohibition or limitation is rendered ineffective under the Code or other applicable Law notwithstanding such prohibition and other than proceeds and receivables thereof, the assignment of which is expressly deemed effective under the Code or other applicable Law notwithstanding such prohibition, (iii) any of such Grantor's right, title or interest in any license, contract or agreement to which such Grantor is a party as of the date hereof or any of its right, title or interest thereunder to the extent, but only to the extent, that such a grant would, under the express terms of such license, contract or agreement on the date hereof result in a breach of the terms of, or constitute a default under, such license, contract or agreement (other than to the extent that any such term (a) has been waived or (b) would be rendered ineffective pursuant to Sections 9-406, 9-408, 9-409 of the Code or other applicable provisions of the UCC of any relevant jurisdiction or any other applicable law (including any Debtor Relief Law) or principles of equity); provided, that (x) immediately upon the ineffectiveness, lapse, termination or waiver of any such provision, the Collateral shall include, and such Grantor shall be deemed to have granted a security interest in, all such right, title and interest as if such provision had never been in effect and (y) the foregoing exclusion shall in no way be construed so as to limit, impair or otherwise affect the Agent's unconditional continuing security interest in and liens upon any rights or interests of a Grantor in or to the proceeds of, or any monies due or to become due under, any such license, contract or agreement, (iv) letter of credit rights, except to the extent a security interest therein can be accomplished by the filing of a UCC financing statement, (v) any intent-to-use United States trademark applications for which an amendment to allege use or statement of use has not been filed under 15 U.S.C. § 1051(c) or 15 U.S.C. § 1051(d), respectively, or if filed, has not been deemed in conformance with 15 U.S.C. § 1051(a) or examined and accepted, respectively, by the United States Patent and Trademark Office, provided that, upon such filing and acceptance, such intent-to-use applications shall be included in the definition of Collateral, and (vi) any Excluded Securities.

Section 3.Security for Secured Obligations. The security interest created hereby in the Collateral constitutes continuing collateral security for all of the following obligations, whether now existing or hereafter incurred (the “Secured Obligations”):
(a)(i) in the case of the Lead Borrower, all of the Obligations and Guaranteed Obligations and (ii) in the case of a Guarantor, all Debtor Liabilities (as defined in any Guaranty Agreement); and





(b)In the case of all the Grantors, the due performance and observance by each Grantor of all of its other obligations from time to time existing in respect of the Loan Documents including without limitation all interest, fees, commissions, charges, expense reimbursements, indemnifications and all other amounts due or to become due under any Loan Document (including, without limitation, all interest, fees, commissions, charges, expense reimbursements, indemnifications and other amounts that accrue after the commencement of any Relief Proceeding of any Loan Party, whether or not the payment of such interest, fees, commissions, charges, expense reimbursements, indemnifications and other amounts are unenforceable or are not allowable, in whole or in part, due to the existence of such Relief Proceeding).
Section 4.Delivery of the Pledged Interests.
(a)(i) Each promissory note currently evidencing the Pledged Debt with a current principal balance greater than $10,000,000 (the “Specified Pledged Debt”) and all certificates currently representing the Pledged Shares shall be delivered to the Agent within 90 days of the Effective Date or such later date as may be agreed by the Agent. Each other promissory note, certificate and Instrument constituting Specified Pledged Debt and all other certificates representing Pledged Shares from time to time required to be pledged to the Agent pursuant to the terms of this Agreement or the Credit Agreement (the “Additional Collateral”) shall be delivered to the Agent promptly upon, but in any event within five (5) Business Days of, receipt thereof by or on behalf of any of the Grantors. All such promissory notes, certificates and Instruments shall be held by or on behalf of the Agent pursuant hereto and shall be delivered in suitable form for transfer by delivery or shall be accompanied by duly executed instruments of transfer or assignment or undated stock powers executed in blank, all in form and substance reasonably satisfactory to the Agent.
(ii) Within five (5) Business Days of the receipt by a Grantor of any Additional Collateral, a Pledge Amendment, duly executed by such Grantor, in substantially the form of Exhibit A hereto (a “Pledge Amendment”), shall be delivered to the Agent, in respect of the Additional Collateral that must be pledged pursuant to this Agreement and the Credit Agreement. The Pledge Amendment shall from and after delivery thereof constitute part of Schedules VI and VII hereto. Each Grantor hereby authorizes the Agent to attach each Pledge Amendment to this Agreement and agrees that all Additional Collateral listed on any Pledge Amendment delivered to the Agent shall for all purposes hereunder constitute Pledged Interests and such Grantor shall be deemed upon delivery thereof to have made the representations and warranties set forth in Section 5 hereof with respect to such Additional Collateral.
(b)If any Grantor shall receive, by virtue of such Grantor's being or having been an owner of any Pledged Interests, any (i) stock certificate (including, without limitation, any certificate representing a stock dividend or distribution in connection with any increase or reduction of capital, reclassification, merger, consolidation, sale of assets, combination of shares, stock split, spin-off or split-off), promissory note or other Instrument, (ii) option or right, whether as an addition to, substitution for, or in exchange for, any Pledged Interests, or otherwise, (iii) dividends payable in cash (except such dividends permitted to be retained by any such Grantor





pursuant to Section 7 hereof) or in securities or other property or (iv) other dividends or distributions, cash, Instruments, Investment Property and other property in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus, such Grantor shall receive such stock certificate, promissory note, Instrument, option, right, payment or distribution in trust for the benefit of the Agent, shall segregate it from such Grantor's other property and shall deliver it forthwith to the Agent, in the exact form received, with any necessary indorsement and/or appropriate stock powers duly executed in blank, to be held by the Agent as Pledged Interests and as further collateral security for the Secured Obligations.
Section 5.Representations and Warranties. Each Grantor jointly and severally represents and warrants as follows:
(a)Schedule I hereto sets forth (i) the exact legal name of each Grantor, (ii) the state or jurisdiction of organization of each Grantor, (iii) the type of organization of each Grantor and (iv) the organizational identification number of each Grantor or states that no such organizational identification number exists.
(b)All Equipment, Fixtures, Inventory and other Goods now existing are, and all Equipment, Fixtures, Inventory and other Goods hereafter existing will be, located at the addresses specified therefor in Schedule III hereto (as amended, supplemented or otherwise modified from time to time in accordance with Section 6(b)). Each Grantor's chief place of business and chief executive office, the place where such Grantor keeps its Records concerning Accounts and all originals of all Chattel Paper are located at the addresses specified therefor in Schedule III hereto (as amended, supplemented or otherwise modified from time to time in accordance with the terms hereof). None of the Accounts is evidenced by Promissory Notes or other Instruments. Set forth in Schedule IV hereto is a complete and accurate list of each Deposit Account, Securities Account and Commodities Account of each Grantor, together with the name of each institution at which each such Account is maintained, the account number for each such Account and a description of the purpose of each such Account (as such schedule may be amended, supplemented or otherwise modified from time to time in accordance with Section 6(j)).
(c)Each Grantor has delivered to the Agent complete and correct copies of each material License described in Schedule II hereto, including all schedules and exhibits thereto, which represents all of the material Licenses existing on the date of this Agreement. Each such License sets forth the entire agreement and understanding of the parties thereto relating to the subject matter thereof, and there are no other written agreements, arrangements or understandings, relating to the matters covered thereby or the rights of any Grantor or any of its Affiliates in respect thereof. Each material License now existing and required to be described in Schedule II is the legal, valid and binding obligation of the parties thereto, enforceable against such parties in accordance with its terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws. To the knowledge of the Lead Borrower, no default under any material License by any such party has occurred, nor does any defense, offset, deduction or counterclaim exist thereunder in favor of any such party, in each case, that would reasonably be expected to cause a Material Adverse Change. No party to any material License has given any Grantor written notice of its intention to cancel, terminate or fail to renew





any material License.
(d)The Grantors own and control, or otherwise possess adequate rights to use, all Material Intellectual Property necessary to conduct their business in substantially the same manner as conducted as of the date hereof. Schedule II hereto sets forth a true and complete list of all Material Intellectual Property (other than Other Intellectual Property) owned or used by each Grantor as of the date hereof. All such Material Intellectual Property is subsisting and in full force and effect, has not been adjudged invalid or unenforceable, is valid and enforceable except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws and has not been abandoned in whole or in part. Except as set forth in Schedule II hereto, no such Material Intellectual Property is the subject of any licensing or franchising agreement. No Grantor has any knowledge of any conflict with the rights of others to any Material Intellectual Property and, to the knowledge of each Grantor, no Grantor is now infringing or in conflict with any such rights of others, and to the knowledge of each Grantor, no other Person is now infringing or in conflict in any material respect with any such properties, assets and rights owned or used by any Grantor. No Grantor has received any written notice that it is violating or has violated in any material respect the Intellectual Property rights of any third party.
(e)(i) None of the Other Intellectual Property of any Grantor has been used, divulged, disclosed or appropriated to the detriment of such Grantor for the benefit of any other Person other than such Grantor; (ii) no employee, independent contractor or agent of any Grantor has misappropriated any Other Intellectual Property of any other Person in the course of the performance of his or her duties as an employee, independent contractor or agent of such Grantor; and (iii) no employee, independent contractor or agent of any Grantor is in default or breach of any term of any non-disclosure agreement, assignment of inventions agreement or similar agreement, or contract relating to the protection, ownership, development, use or transfer of such Grantor's Material Intellectual Property Collateral, in each case of (i), (ii) and (iii), that would be reasonably expected to cause a Material Adverse Change.
(f)The Existing Issuers set forth in Schedule VII identified as a Subsidiary of a Grantor are each such Grantor's only direct Subsidiaries existing on the date hereof. The Pledged Shares have been duly authorized and validly issued and are fully paid and nonassessable and the holders thereof are not entitled to any preemptive, first refusal or other similar rights. Except as noted in Schedule VII hereto, the Pledged Shares constitute 100% of the issued shares of Capital Stock of the Pledged Issuers as of the date hereof. All other shares of Capital Stock constituting Pledged Interests will be duly authorized and validly issued, fully paid and nonassessable.
(g)The promissory notes currently evidencing the Pledged Debt, if any, have, to the Lead Borrower’s knowledge, been, and all other promissory notes from time to time evidencing Pledged Debt, if any, when executed and delivered, will have been, duly authorized, executed and delivered by the respective makers thereof, and all such promissory notes are or will be, as the case may be, legal, valid and binding obligations of such makers, enforceable against such makers in accordance with their respective terms, except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws.





(h)The Grantors are and will be at all times the sole and exclusive owners of, or otherwise have and will have adequate rights in, the Collateral free and clear of any Lien except for the Permitted Liens. No effective financing statement or other instrument similar in effect covering all or any part of the Collateral is on file in any recording or filing office except such as may have been filed to perfect or protect any Permitted Lien.
(i)No authorization or approval or other action by, and no notice to or filing with, any Official Body or any other Person, is required for (i) the due execution, delivery and performance by any Grantor of this Agreement, (ii) the grant by any Grantor of the security interest purported to be created hereby in the Collateral or (iii) the exercise by the Agent of any of its rights and remedies hereunder, except, in the case of this clause (iii), (x) as may be required in the Credit Agreement, (y) in respect of the Perfection Requirements (defined below) or (z) in connection with any sale of any Pledged Interests by laws affecting the offering and sale of securities generally. No authorization or approval or other action by, and no notice to or filing with, any Official Body or any other Person, is required for the perfection of the security interest purported to be created hereby in the Collateral, except (A) as provided for in the Credit Agreement, (B) for the UCC financing statements necessary to perfect Agent’s Liens granted hereunder in the Collateral, to the extent such Liens may be perfected by such filings, (C) with respect to the perfection of the security interest created hereby in the United States Material Intellectual Property and Licenses, for the recording of the appropriate Assignment for Security, substantially in the form of Exhibit B hereto in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, (D) with respect to the perfection of the security interest created hereby in foreign Intellectual Property and Licenses, for registrations and filings in jurisdictions located outside of the United States and covering rights in such jurisdictions relating to such foreign Intellectual Property and Licenses, (E) with respect to the perfection of the security interest created hereby in any Collateral for which the title to such Collateral is governed by a certificate of title or certificate of ownership in commercial motor vehicles (collectively, “Titled Collateral”) only to the extent required pursuant to Section 6(a), for registrations and filings with the appropriate Official Body, (F) with respect to any action that may be necessary to obtain control of Collateral constituting Deposit Accounts, Electronic Chattel Paper, Investment Property or Letter-of-Credit Rights, the taking of such actions and (G) the Agent's having possession of all Documents, Chattel Paper, Instruments and cash constituting Collateral (subclauses (A), (B), (C), (D), (E), (F) and (G), each a “Perfection Requirement” and collectively, the “Perfection Requirements”).
(j)This Agreement creates a legal, valid and enforceable (except as may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or other similar laws) security interest in favor of the Agent, for the benefit of the Secured Parties, in the Collateral, as security for the Secured Obligations. Upon the completion of all necessary Perfection Requirements, such security interests are, or in the case of Collateral in which any Grantor obtains rights after the date hereof, will be, Prior Security Interests.
(k)As of the date hereof, no Grantor holds any Commercial Tort Claims with a value of greater than $10,000,000 or, to the knowledge of Lead Borrower, is aware of any such pending claims with a potential value of greater than $10,000,000, except for such claims described in Schedule V.





(l)With respect to each Grantor and its Subsidiaries that is a partnership or a limited liability company, the partnership interests or membership interests of each such Person is not, except as set forth on Schedule VII (A) dealt in or traded on securities exchanges or in securities markets, (B) securities for purposes of Article 8 of any relevant UCC, (C) investment company securities within the meaning of Section 8-103 of any relevant UCC and (D) evidenced by a certificate. Such partnership interests or membership interests constitute General Intangibles.
Section 6.Covenants as to the Collateral. Until Payment in Full, unless the Agent shall otherwise consent in writing:
(a)Further Assurances. Each Grantor will at its expense, at any time and from time to time, promptly execute and deliver all further instruments and documents and take all further action that may be necessary, upon request of the Agent (i) to perfect and protect, or maintain the perfection of, the security interest and Lien purported to be created hereby; (ii) to enable the Agent to exercise and enforce its rights and remedies hereunder in respect of the Collateral; or (iii) to  otherwise to effect the purposes of this Agreement, including, without limitation: (A) marking conspicuously all material Chattel Paper, Instruments and Licenses and, at the reasonable request of the Agent, all of its Records pertaining to the Collateral with a legend, in form and substance satisfactory to the Agent, indicating that such Chattel Paper, Instrument, License or Collateral is subject to the security interest created hereby, (B) if any Account shall be evidenced by a Promissory Note or other Instrument or Chattel Paper and if required hereunder, delivering and pledging to the Agent such Promissory Note, other Instrument or Chattel Paper, duly endorsed and accompanied by executed instruments of transfer or assignment, all in form and substance satisfactory to the Agent, (C) executing and filing (to the extent, if any, that such Grantor's signature is required thereon) or authenticating the filing of, such financing or continuation statements, or amendments thereto, (D) with respect to Material Intellectual Property hereafter existing and not covered by an appropriate security interest grant, the executing and recording in the United States Patent and Trademark Office or the United States Copyright Office, as applicable, appropriate instruments granting a security interest, as may be necessary or that the Agent may reasonably request in order to perfect and preserve the security interest purported to be created hereby, (E) delivering to the Agent irrevocable proxies in respect of the Pledged Interests, (F) furnishing to the Agent from time to time statements and schedules further identifying and describing the Collateral and such other reports in connection with the Collateral as the Agent may reasonably request, all in reasonable detail, (G) within thirty (30) days of the Effective Date or such longer period as may be permitted by the Agent,]obtain a landlord waiver for the fulfilment centers located at Block 203, Lot 2 situated in Westampton Township, Burlington County, New Jersey in form and substance reasonably satisfactory to the Agent (and the Agent agrees that, so long as an Event of Default shall not have occurred and be then continuing, no other third party landlord, warehouse, bailee or other similar waivers shall be required, except if so reasonably requested by Agent with respect to any other distribution or fulfillment center of any Grantor), (H) if at any time after the date hereof, any Grantor acquires or holds any Commercial Tort Claim with value greater than $10,000,000, promptly notifying the Agent in a writing signed by such Grantor setting forth a brief description of such Commercial Tort Claim and granting to the Agent a security interest therein and in the proceeds thereof, which writing shall incorporate the provisions hereof and shall be in form and substance satisfactory to the Agent, (I) if reasonably requested by





the Agent during the continuance of an Event of Default, causing any Titled Collateral to note the Agent’s Lien thereon and delivering to the Agent (or its custodian) originals of all applicable certificates of title or certificates of ownership for such Titled Collateral and (J) taking all actions required by law in any relevant UCC jurisdiction, or by other law as applicable in any foreign jurisdiction. No Grantor shall take or fail to take any action which would in any manner impair the validity or enforceability of the Agent's security interest in and Lien on any Collateral.
(b)Location of Equipment and Inventory. Each Grantor will keep the Equipment and Inventory (other than Equipment and Inventory sold in accordance with Section 6(h) hereof) at the locations specified in Schedule III hereto or, upon not less than thirty (30) days' prior written notice to the Agent accompanied by a new Schedule III hereto indicating each new location of the Equipment and Inventory, at such other locations in the continental United States as the Grantors may elect, provided that all action has been taken to grant to the Agent a Prior Security Interest.
(c)Condition of Equipment. Each Grantor will use commercially reasonable efforts to maintain or cause the Equipment which is necessary or useful in the proper conduct of its business to be maintained and preserved in good condition, repair and working order as when acquired and in accordance in all material respects with any manufacturer's manual, ordinary wear and tear excepted, and will forthwith, or in the case of any material loss or damage to any Equipment promptly after the occurrence thereof, use commercial reasonable efforts to make or cause to be made all repairs, replacements and other improvements in connection therewith which are necessary, consistent with past practice, or which the Agent may reasonable request to such end.
(d)Taxes, Etc. Each Grantor jointly and severally agrees to pay promptly when due all property and other taxes, assessments and governmental charges or levies imposed upon, and all claims (including claims for labor, materials and supplies) against, the Equipment and Inventory, except to the extent otherwise provided in the Credit Agreement.
(e)Insurance. Each Grantor will, at its own expense, maintain insurance with respect to the Collateral in accordance with the terms of the Credit Agreement.
(f)Provisions Concerning the Accounts and the Licenses.
(i)Each Grantor will, except as otherwise provided in this subsection (f), continue to collect, at its own expense, all amounts due or to become due under the Accounts. In connection with such collections, each Grantor may (and, upon the occurrence and continuation of an Event of Default, at the Agent's direction, will) take such action as such Grantor (or, if an Event of Default has occurred and is continuing, the Agent) may deem necessary to enforce collection or performance of the Accounts; provided, however, that the Agent shall have the right at any time, upon the occurrence and during the continuance of an Event of Default, to notify the Account Debtors or obligors under any Accounts of the assignment of such Accounts to the Agent and to direct such Account Debtors or obligors to make payment of all amounts due or to become due to such Grantor thereunder directly to the Agent or its designated agent and, upon such notification and at the expense of such Grantor and to the extent permitted by law, to enforce





collection of any such Accounts and to adjust, settle or compromise the amount or payment thereof, in the same manner and to the same extent as such Grantor might have done. After the occurrence and continuation of an Event of Default and the receipt by any Grantor of a written notice from the Agent that the Agent has notified, intends to notify, or has enforced or intends to enforce a Grantor's rights against the Account Debtors or obligors under any Accounts as referred to in the proviso to the immediately preceding sentence, (A) all amounts and proceeds (including Instruments) received by such Grantor in respect of the Accounts shall be received in trust for the benefit of the Agent hereunder, shall be segregated from other funds of such Grantor and shall be forthwith paid over to the Agent or its designated agent in the same form as so received (with any necessary endorsement) to be held as cash collateral and applied as specified in Section 9(d) hereof, and (B) such Grantor will not adjust, settle or compromise the amount or payment of any Account or release wholly or partly any Account Debtor or obligor thereof or allow any credit or discount thereon without the prior written consent of the Agent. In addition, upon the occurrence and during the continuance of an Event of Default, with respect to any account subject to the Account Control Requirements (as defined below), the Agent may (in its sole and absolute discretion) direct any or all of the banks and financial institutions that maintains such account to send immediately to the Agent or its designated agent by wire transfer (to such account as the Agent shall specify, or in such other manner as the Agent shall direct) all or a portion of such securities, cash, investments and other items held by such institution. Any such securities, cash, investments and other items so received by the Agent or its designated agent shall (in the sole and absolute discretion of the Agent) be held as additional Collateral for the Secured Obligations or distributed in accordance with Section 9 hereof.
(ii)Upon the occurrence and during the continuance of any material breach or default under any material License by any party thereto other than a Grantor, (A) the relevant Grantor will, promptly after obtaining knowledge thereof, give the Agent written notice of the nature and duration thereof, specifying what action, if any, it has taken and proposes to take with respect thereto, (B) no Grantor will, without the prior written consent of the Agent, declare or waive any such breach or default or affirmatively consent to the cure thereof or exercise any of its remedies in respect thereof, and (C) each Grantor will, upon written instructions from the Agent and at such Grantor's expense, take such action as the Agent may deem necessary in respect thereof.
(iii)Each Grantor will, at its expense, promptly deliver to the Agent a copy of each notice or other communication received by it by which any other party to any material License (A) declares a breach or default by a Grantor of any material term thereunder, (B) terminates such License or (C) purports to exercise any of its rights or affect any of its obligations thereunder, together with a copy of any reply by such Grantor thereto.
(iv)Each Grantor will exercise promptly and diligently each and every right which it may have under each material License (other than any right of termination) and will duly perform and observe in all material respects all of its obligations under each material License and will take all action necessary to maintain the Licenses in full force and effect in accordance with their respective terms but, in each case, only to the extent that the failure to do so would reasonably be expected to cause a Material Adverse Change. No Grantor will, without the





prior written consent of the Agent, cancel, terminate, amend or otherwise modify in any respect, or waive any provision of, any material License unless the failure to do so would reasonably be expected to cause a Material Adverse Change.
(g)Provisions Concerning the Pledged Interests. Each Grantor will
(i)at the Grantors' joint and several expense, promptly deliver to the Agent a copy of each notice or other communication received by it in respect of the Pledged Interests that would reasonably be expected to materially and adversely affect the Secured Parties interest therein;
(ii)at the Grantors' joint and several expense, defend the Agent's right, title and security interest in and to the Pledged Interests against the claims of any Person that would reasonably be expected to materially adversely affect the Secured Parties interest therein;
(iii)not make or consent to any amendment or other modification or waiver with respect to any Pledged Interests or enter into any agreement or permit to exist any restriction with respect to any Pledged Interests other than pursuant to the Credit Agreement and the other Loan Documents; and
(iv)not permit the issuance of (A) any additional shares of any class of Capital Stock of any Pledged Issuer, (B) any securities convertible voluntarily by the holder thereof or automatically upon the occurrence or non-occurrence of any event or condition into, or exchangeable for, any such shares of Capital Stock or (C) any warrants, options, contracts or other commitments entitling any Person to purchase or otherwise acquire any such shares of Capital Stock.
(h)Transfers and Other Liens.
(i)Except to the extent expressly permitted by Section 7.2.7 of the Credit Agreement, no Grantor will sell, assign (by operation of law or otherwise), lease, license, exchange or otherwise transfer or dispose of any of the Collateral.
(ii)Except to the extent expressly permitted by Section 7.2.2 of the Credit Agreement, no Grantor will create, suffer to exist or grant any Lien upon or with respect to any Collateral.
(i)Intellectual Property.
(i)With respect to United States Material Intellectual Property consisting of Trademarks owned by any Grantor on the date hereof, such Grantor has duly executed and delivered an Assignment for Security in the form attached hereto as Exhibit B. Each Grantor (either itself or through licensees) will, and will use commercially reasonable efforts to cause each licensee thereof to, take all action necessary to maintain all of the Material Intellectual Property in full force and effect, including, without limitation, using the proper statutory notices and markings and using the material Trademarks on each applicable trademark class of goods in order





to so maintain the material Trademarks in full force, free from any claim of abandonment for non-use, and no Grantor will (nor permit any licensee thereof to) do any act or knowingly omit to do any act whereby any material Intellectual Property may become invalidated.
(ii)Notwithstanding the foregoing, so long as no Event of Default has occurred and is continuing, no Grantor shall have an obligation to use or to maintain any Intellectual Property (A) that relates solely to any product or work, that has been, or is in the process of being, discontinued, abandoned or terminated, (B) that is being replaced with Intellectual Property substantially similar to the Intellectual Property that may be abandoned or otherwise become invalid, so long as the failure to use or maintain such Intellectual Property does not materially adversely affect the validity of such replacement Intellectual Property and so long as such replacement Intellectual Property is subject to the Lien created by this Agreement or (C) that is substantially the same as any other Intellectual Property that is in full force, so long as the failure to use or maintain such Intellectual Property does not constitute a Material Adverse Change.
(iii)Each Grantor will cause to be taken all necessary steps in any proceeding before the United States Patent and Trademark Office and the United States Copyright Office or any similar office or agency in any other country or political subdivision thereof to maintain each registration of the Material Intellectual Property (other than the Intellectual Property described in the proviso to the immediately preceding sentence), including, without limitation, filing of renewals, affidavits of use, affidavits of incontestability and opposition, interference and cancellation proceedings and payment of maintenance fees, filing fees, taxes or other governmental fees but only to the extent that the failure to do so would reasonable be expected to create a Material Adverse Change. If any Material Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Grantors shall (x) upon obtaining knowledge of such infringement, misappropriation, dilution or other violation, promptly notify the Agent and (y) to the extent the Grantors shall deem appropriate under the circumstances, promptly sue for infringement, misappropriation, dilution or other violation, seek injunctive relief where appropriate and recover any and all damages for such infringement, misappropriation, dilution or other violation, or take such other actions as the Grantors shall deem appropriate under the circumstances to protect such Material Intellectual Property.
(iv)Each Grantor shall furnish to the Agent statements and schedules further identifying and describing the Material Intellectual Property and material Licenses and such other reports in connection with the Material Intellectual Property and material Licenses as the Agent may reasonably request, all in reasonable detail and promptly upon request of the Agent, following receipt by the Agent of any such statements, schedules or reports, the Grantors shall modify this Agreement by amending Schedule II hereto to include any Material Intellectual Property and material Licenses, as the case may be, which become part of the Collateral under this Agreement, and shall execute and authenticate such documents and do such acts as shall be necessary desirable to subject such Material Intellectual Property and material Licenses to the Lien and security interest created by this Agreement.
(v)Notwithstanding anything herein to the contrary, upon the occurrence and during the continuance of an Event of Default, no Grantor may abandon or otherwise





permit any Material Intellectual Property to become invalid without the prior written consent of the Agent, and if any Material Intellectual Property is infringed, misappropriated, diluted or otherwise violated in any material respect by a third party, the Grantors will take such action as the Agent shall deem appropriate under the circumstances to protect such Intellectual Property.
(vi)In the event that any Grantor shall (A) obtain rights to any new Material Intellectual Property, the provisions of Section 2 hereof shall automatically apply thereto and such Grantor shall give to the Agent prompt notice thereof in accordance with the terms of this Agreement and the Credit Agreement. Except as otherwise provided herein or in the Credit Agreement, each Grantor, either itself or through any agent, employee, licensee or designee, shall give the Agent written notice of each application submitted by it for the registration of any Material Intellectual Property with the United States Patent and Trademark Office or the United States Copyright Office, as applicable, or in any similar office or agency of the United States or any country or any political subdivision thereof.
(vii)Each Grantor shall execute, authenticate and deliver any and all assignments, agreements, instruments, documents and papers as the Agent may reasonably request to evidence the Agent's security interest hereunder in such Material Intellectual Property and the General Intangibles of such Grantor relating thereto or represented thereby, and, upon the occurrence and continuation of an Event of Default, each Grantor hereby appoints the Agent its attorney-in-fact to execute and/or authenticate and file all such writings for the foregoing purposes, and all such acts of such attorney being hereby ratified and confirmed, and such power (being coupled with an interest) shall be irrevocable until Payment in Full.
(j)Deposit, Commodities and Securities Accounts. On or before the date that is 30 days following the Effective Date (or such later date as may be agreed in writing by the Agent) or as otherwise provided in this Section, each Grantor shall cause each bank and other financial institution with an account referred to in Schedule IV hereto on the date hereof to (the following being referred to as the “Account Control Requirement”) execute and deliver to the Agent (or its designee) a control agreement, in form and substance reasonably satisfactory to the Agent, duly executed by such Grantor and such bank or financial institution, or enter into other arrangements in form and substance satisfactory to the Agent, pursuant to which such institution shall irrevocably agree, among other things, that (i) it will comply at any time with the instructions originated by the Agent (or its designee) to such bank or financial institution directing the disposition of cash, Commodity Contracts, securities, Investment Property and other items from time to time credited to such account, without further consent of such Grantor, which instructions the Agent (or its designee) will not give to such bank or other financial institution in the absence of a continuing Event of Default, (ii) all cash, Commodity Contracts, securities, Investment Property and other items of such Grantor deposited with such institution shall be subject to a Prior Security Interest in favor of the Agent (or its designee), and (iii) upon receipt of written notice from the Agent upon the occurrence and during the continuance of an Event of Default, such bank or financial institution shall send to the Agent (or its designee) by wire transfer (to such account as the Agent (or its designee) shall specify, or in such other manner as the Agent (or its designee) shall direct) all such cash, the value of any Commodity Contracts, securities, Investment Property and other items held by it. No Grantor shall make or maintain any Deposit Account, Commodity Account or Securities





Account except for the accounts set forth in Schedule IV hereto unless (A) within forty five (45) days after the opening of any new account, the Grantors provide an updated Schedule IV to this Agreement containing the information required by Section 5(b) with respect to such account (ii) within forty five (45) days after the opening of any such account (or such later date as may be agreed to in writing by the Agent), the applicable Grantor complies with the Account Control Requirement with respect to such account. Notwithstanding the foregoing, the Account Control Requirement shall not apply to (x) any Deposit Account, Commodity Account or Securities Account having an average monthly balance or value of less than $500,000 (“Excluded Accounts”); provided that to the extent the average monthly balance or value maintained in all Excluded Accounts exceeds $7,500,000, the Grantors shall comply with the Account Control Requirement with respect to one or more Excluded Accounts in order to eliminate such excess and (y) Deposit Accounts specially and exclusively used for payroll, payroll taxes and other employee wage and benefit payments to or for the benefit of a Grantor's salaried employees, provided that the funds on deposit in such Deposit Accounts shall at no time exceed the actual payroll, payroll taxes and other employee wage and benefit payments then owing by such Grantor for the immediately succeeding payroll period. Notwithstanding anything herein to the contrary, at any time any Excluded Account becomes subject to the Account Control Requirement, the applicable Grantor shall have forty five (45) days (or such longer period as may be agreed by the Agent) to comply with the Account Control Requirement.
(k)Control. Except as expressly limited herein, each Grantor hereby agrees to take any or all action that may be necessary or that the Agent may reasonably request in order for the Agent to obtain control in accordance with Sections 9-104, 9-105, 9-106, and 9-107 of the Code with respect to the following Collateral: (i) Deposit Accounts, (ii) Electronic Chattel Paper, (iii) Investment Property and (iv) Letter-of-Credit Rights. Each Grantor hereby acknowledges and agrees that any agent or designee of the Agent shall be deemed to be a “secured party” with respect to the Collateral under the control of such agent or designee for all purposes.
(l)Records; Inspection and Reporting.
(i)Each Grantor shall keep adequate records concerning the Accounts, Chattel Paper and Pledged Interests and shall comply with the provisions of Section 7.1.5 of the Credit Agreement with respect to the Agent’s and the Lender’s rights to visit and/or inspect the properties of such Grantor.
(ii)Except as otherwise expressly permitted by the terms of the Credit Agreement, no Grantor shall, without the prior written consent of the Agent, change (A) its name, identity or organizational structure, (B) its jurisdiction of incorporation or organization as set forth in Schedule I hereto or (C) its chief executive office as set forth in Schedule III hereto. Each Grantor shall promptly notify the Agent upon obtaining an organizational identification number, if on the date hereof such Grantor did not have such identification number.
(m)Partnership and Limited Liability Company Interest. Except as set forth on Schedule VII, no Grantor that is a partnership or a limited liability company shall, nor shall any Grantor with any Subsidiary that is a partnership or a limited liability company, permit such partnership interests or membership interests to (i) be dealt in or traded on securities exchanges





or in securities markets, (ii) become a security for purposes of Article 8 of any relevant UCC, (iii) become an investment company security within the meaning of Section 8-103 of any relevant UCC or (iv) be evidenced by a certificate. Each Grantor agrees that such partnership interests or membership interests shall constitute General Intangibles.
Section 7.Voting Rights, Dividends, Etc. in Respect of the Pledged Interests.
(a)So long as no Event of Default shall have occurred and be continuing:
(i)each Grantor may exercise any and all voting and other consensual rights pertaining to any Pledged Interests for any purpose not inconsistent with the terms of this Agreement, the Credit Agreement or the other Loan Documents;
(ii)each of the Grantors may receive and retain any and all dividends, interest or other distributions paid in respect of the Pledged Interests to the extent permitted by the Credit Agreement; provided, however, that any and all (A) dividends and interest paid or payable other than in cash in respect of, and Instruments and other property received, receivable or otherwise distributed in respect of or in exchange for, any Pledged Interests, (B) dividends and other distributions paid or payable in cash in respect of any Pledged Interests in connection with a partial or total liquidation or dissolution or in connection with a reduction of capital, capital surplus or paid-in surplus, and (C) cash paid, payable or otherwise distributed in redemption of, or in exchange for, any Pledged Interests, together with any dividend, interest or other distribution or payment which, in each case of (A), (B) and (C), at the time of such payment was not permitted by the Credit Agreement, shall be, and shall forthwith be delivered to the Agent, to hold as, Pledged Interests and shall, if received by any of the Grantors, be received in trust for the benefit of the Agent, shall be segregated from the other property or funds of the Grantors, and shall be forthwith delivered to the Agent in the exact form received with any necessary indorsement and/or appropriate stock powers duly executed in blank, to be held by the Agent as Pledged Interests and as further collateral security for the Secured Obligations; and
(iii)the Agent will execute and deliver (or cause to be executed and delivered) to a Grantor all such proxies and other instruments as such Grantor may reasonably request for the purpose of enabling such Grantor to exercise the voting and other rights which it is entitled to exercise pursuant to Section 7(a)(i) hereof and to receive the dividends, interest and/or other distributions which it is authorized to receive and retain pursuant to Section 7(a)(ii) hereof.
(b)Upon the occurrence and during the continuance of an Event of Default:
(i)all rights of each Grantor to exercise the voting and other consensual rights which it would otherwise be entitled to exercise pursuant to Section 7(a)(i) hereof, and to receive the dividends, distributions, interest and other payments that it would otherwise be authorized to receive and retain pursuant to Section 7(a)(ii) hereof, shall cease, and all such rights shall thereupon become vested in the Agent, which shall thereupon have the sole right to exercise such voting and other consensual rights and to receive and hold as Pledged Interests such dividends, distributions and interest payments;





(ii)the Agent is authorized to notify each debtor with respect to the Pledged Debt to make payment directly to the Agent (or its designee) and may collect any and all moneys due or to become due to any Grantor in respect of the Pledged Debt, and each of the Grantors hereby authorizes each such debtor to make such payment directly to the Agent (or its designee) without any duty of inquiry;
(iii)without limiting the generality of the foregoing, the Agent may at its option exercise any and all rights of conversion, exchange, subscription or any other rights, privileges or options pertaining to any of the Pledged Interests as if it were the absolute owner thereof, including, without limitation, the right to exchange, in its discretion, any and all of the Pledged Interests upon the merger, consolidation, reorganization, recapitalization or other adjustment of any Pledged Issuer, or upon the exercise by any Pledged Issuer of any right, privilege or option pertaining to any Pledged Interests, and, in connection therewith, to deposit and deliver any and all of the Pledged Interests with any committee, depository, transfer agent, registrar or other designated agent upon such terms and conditions as it may determine; and
(iv)all dividends, distributions, interest and other payments that are received by any of the Grantors contrary to the provisions of Section 7(b)(i) hereof shall be received in trust for the benefit of the Agent, shall be segregated from other funds of the Grantors, and shall be forthwith paid over to the Agent as Pledged Interests in the exact form received with any necessary indorsement and/or appropriate stock powers duly executed in blank, to be held by the Agent as Pledged Interests and as further collateral security for the Secured Obligations.
Section 8.Additional Provisions Concerning the Collateral.
(a)To the maximum extent permitted by applicable Law, and for the purpose of taking any action that the Agent may deem reasonably necessary to accomplish the purposes of this Agreement prior to the Payment in Full, each Grantor hereby (i) authorizes the Agent to execute any such agreements, instruments or other documents in such Grantor's name and to file such agreements, instruments or other documents in such Grantor's name and in any appropriate filing office, (ii) authorizes the Agent at any time and from time to time to file, one or more financing or continuation statements and amendments thereto, relating to the Collateral (including, without limitation, any such financing statements that (A) describe the Collateral as “all assets” or “all personal property” (or words of similar effect) or that describe or identify the Collateral by type or in any other manner as the Agent may determine, regardless of whether any particular asset of such Grantor falls within the scope of Article 9 of the Code or whether any particular asset of such Grantor constitutes part of the Collateral, and (B) contain any other information required by Part 5 of Article 9 of the Code for the sufficiency or filing office acceptance of any financing statement, continuation statement or amendment, including, without limitation, whether such Grantor is an organization, the type of organization and any organizational identification number issued to such Grantor) and (iii) ratifies such authorization to the extent that the Agent has filed any such financing statements, continuation statements, or amendments thereto, prior to the date hereof. A photocopy or other reproduction of this Agreement or any financing statement covering the Collateral or any part thereof shall be sufficient as a financing statement where permitted by law.





(b)Each Grantor hereby irrevocably appoints the Agent as its attorney-in-fact and proxy, with full authority in the place and stead of such Grantor and in the name of such Grantor or otherwise, from time to time in the Agent's discretion after the occurrence and continuation of an Event of Default, to take any action and to execute any instrument that the Agent may deem necessary to accomplish the purposes of this Agreement (subject to the rights of a Grantor under Section 6 hereof and Section 7(a) hereof), including, without limitation, (i) to obtain and adjust insurance required to be paid to the Agent pursuant to the Credit Agreement, (ii) to ask, demand, collect, sue for, recover, compound, receive and give acquittance and receipts for moneys due and to become due under or in respect of any Collateral, (iii) to receive, endorse, and collect any drafts or other Instruments, Documents and Chattel Paper in connection with clause (i) or (ii) above, (iv) to receive, indorse and collect all Instruments made payable to such Grantor representing any dividend, interest payment or other distribution in respect of any Pledged Interests and to give full discharge for the same, (v) to file any claims or take any action or institute any proceedings which the Agent may deem necessary for the collection of any Collateral or otherwise to enforce the rights of the Agent and the Lenders with respect to any Collateral, (vi) to execute assignments, licenses and other documents to enforce the rights of the Agent and the Lenders with respect to any Collateral, (vii) to pay or discharge taxes or Liens levied or placed upon or threatened against the Collateral, the legality or validity thereof and the amounts necessary to discharge the same to be determined by the Agent in its sole discretion, and such payments made by the Agent to become Obligations of such Grantor to the Agent, due and payable immediately without demand, and (viii) to sign and endorse any invoices, freight or express bills, bills of lading, storage or warehouse receipts, assignments, verifications and notices in connection with Accounts, Chattel Paper and other documents relating to the Collateral. This power is coupled with an interest and is irrevocable until Payment in Full.
(c)For the purpose of enabling the Agent to exercise rights and remedies hereunder, upon the occurrence and continuation of an Event of Default and solely to the extent that the Agent shall be lawfully entitled to exercise such rights and remedies, and for no other purpose, each Grantor hereby (i) grants to the Agent an irrevocable, non-exclusive license (exercisable without payment of royalty or other compensation to any Grantor) to use, assign, license or sublicense any Intellectual Property now or hereafter owned by any Grantor, wherever the same may be located, including in such license reasonable access to all media in which any of the licensed items may be recorded or stored and to all computer programs used for the compilation or printout thereof; and (ii) assigns to the Agent, to the extent assignable, all of its rights to any Intellectual Property now or hereafter licensed or used by any Grantor. Notwithstanding anything contained herein to the contrary, but subject to the provisions of the Credit Agreement that limit the right of a Grantor to dispose of its property and Section 6(i) hereof, so long as no Event of Default shall have occurred and be continuing, each Grantor may exploit, use, enjoy, protect, license, sublicense, assign, sell, dispose of or take other actions with respect to the Intellectual Property in the ordinary course of its business. In furtherance of the foregoing, unless an Event of Default shall have occurred and be continuing, the Agent shall from time to time, upon the request of a Grantor, execute and deliver any instruments, certificates or other documents, in the form so requested, which such Grantor shall have certified are appropriate (in such Grantor's judgment) to allow it to take any action permitted above (including relinquishment of the license provided pursuant to this clause (c) as to any Intellectual Property). Further, upon Payment in Full,





Agent shall release and reassign to the Grantors all of the Agent's right, title and interest in and to the Intellectual Property, and the Licenses, all without recourse, representation or warranty whatsoever and at the Grantors' sole expense. The exercise of rights and remedies hereunder by the Agent shall not terminate the rights of the holders of any licenses or sublicenses theretofore granted by any Grantor in accordance with the second sentence of this clause (c). Each Grantor hereby releases the Agent from any claims, causes of action and demands at any time arising out of or with respect to any actions taken or omitted to be taken by the Agent under the powers of attorney granted herein other than actions taken or omitted to be taken through the Agent's gross negligence or willful misconduct, as determined by a final determination of a court of competent jurisdiction.
(d)If any Grantor fails to perform any agreement or obligation contained herein, the Agent may, upon the occurrence and continuation of an Event of Default, itself perform, or cause performance of, such agreement or obligation, in the name of such Grantor or the Agent, and the expenses of the Agent incurred in connection therewith shall be jointly and severally payable by the Grantors pursuant to Section 10 hereof and shall be secured by the Collateral.
(e)The powers conferred on the Agent hereunder are solely to protect its interest in the Collateral and shall not impose any duty upon it to exercise any such powers. Other than the exercise of reasonable care to assure the safe custody of any Collateral in its possession and the accounting for moneys actually received by it hereunder, the Agent shall have no duty as to any Collateral or as to the taking of any necessary steps to preserve rights against prior parties or any other rights pertaining to any Collateral and shall be relieved of all responsibility for any Collateral in its possession upon surrendering it or tendering surrender of it to any of the Grantors (or whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct). The Agent shall be deemed to have exercised reasonable care in the custody and preservation of any Collateral in its possession if such Collateral is accorded treatment substantially equal to that which the Agent accords its own property, it being understood that the Agent shall not have responsibility for ascertaining or taking action with respect to calls, conversions, exchanges, maturities, tenders or other matters relating to any Collateral, whether or not the Agent has or is deemed to have knowledge of such matters. The Agent shall not be liable or responsible for any loss or damage to any of the Collateral, or for any diminution in the value thereof, by reason of the act or omission of any warehouseman, carrier, forwarding agency, consignee or other agent or bailee selected by the Agent in good faith unless such loss or damage was caused by Agent’s gross negligence or willful misconduct, as determined by a final determination of a court of competent jurisdiction.
(f)Anything herein to the contrary notwithstanding (i) each Grantor shall remain liable under the Licenses and otherwise in respect of the Collateral to the extent set forth therein to perform all of its obligations thereunder to the same extent as if this Agreement had not been executed, (ii) the exercise by the Agent of any of its rights hereunder shall not release any Grantor from any of its obligations under the Licenses or otherwise in respect of the Collateral, and (iii) the Agent shall not have any obligation or liability by reason of this Agreement under the Licenses or otherwise in respect of the Collateral, nor shall the Agent be obligated to perform any of the obligations or duties of any Grantor thereunder or to take any action to collect or enforce





any claim for payment assigned hereunder.
(g)The Agent may at any time in its discretion after the occurrence and continuation of an Event of Default (i) without notice to any Grantor, transfer or register in the name of the Agent or any of its nominees any or all of the Pledged Interests, subject only to the revocable rights of such Grantor under Section 7(a) hereof, and (ii) exchange certificates or Instruments constituting Pledged Interests for certificates or Instruments of smaller or larger denominations.
Section 9.Remedies Upon Default. If any Event of Default shall have occurred and be continuing:
(a)The Agent may (or upon the request of the Required Lenders, shall) exercise in respect of the Collateral, in addition to any other rights and remedies provided for herein or otherwise available to it, all of the rights and remedies of a secured party upon default under the Code (whether or not the Code applies to the affected Collateral), and also may (i) take absolute control of the Collateral, including, without limitation, transfer into the Agent's name or into the name of its nominee or nominees (to the extent the Agent has not theretofore done so) and thereafter receive, for the benefit of the Agent and the Lenders, all payments made thereon, give all consents, waivers and ratifications in respect thereof and otherwise act with respect thereto as though it were the outright owner thereof, (ii) require each Grantor to, and each Grantor hereby agrees that it will at its expense and upon request of the Agent forthwith, assemble all or part of the Collateral as directed by the Agent and make it available to the Agent at a place or places to be designated by the Agent that is reasonably convenient to both parties, and the Agent may enter into and occupy any premises owned or leased (to the extent permitted by the landlord thereof) by any Grantor where the Collateral or any part thereof is located or assembled for a reasonable period in order to effectuate the Agent's rights and remedies hereunder or under law, without obligation to any Grantor in respect of such occupation, and (iii) without notice except as specified below and without any obligation to prepare or process the Collateral for sale, (A) sell the Collateral or any part thereof in one or more parcels at public or private sale, at any of the Agent's offices, at any exchange or broker's board or elsewhere, for cash, on credit or for future delivery, and at such price or prices and upon such other terms as the Agent may deem commercially reasonable and/or (B) lease, license or otherwise dispose of the Collateral or any part thereof upon such terms as the Agent may deem commercially reasonable. Each Grantor agrees that, to the extent notice of sale or any other disposition of the Collateral shall be required by law, at least ten (10) days' prior notice to the applicable Grantor of the time and place of any public sale or the time after which any private sale or other disposition of the Collateral is to be made shall constitute reasonable notification. The Agent shall not be obligated to make any sale or other disposition of Collateral regardless of notice of sale having been given. The Agent may adjourn any public or private sale from time to time by announcement at the time and place fixed therefor, and such sale may, without further notice, be made at the time and place to which it was so adjourned. Each Grantor hereby waives any claims against the Agent and the Lenders arising by reason of the fact that the price at which the Collateral may have been sold at a private sale was less than the price which might have been obtained at a public sale or was less than the aggregate amount of the Secured Obligations, even if the Agent accepts the first offer received and does not offer the Collateral to more than one





offeree, and waives all rights that such Grantor may have to require that all or any part of the Collateral be marshaled upon any sale (public or private) thereof. Each Grantor hereby acknowledges that (i) any such sale of the Collateral by the Agent shall be made without warranty, (ii) the Agent may specifically disclaim any warranties of title, possession, quiet enjoyment or the like, (iii) the Agent may bid (which bid may be, in whole or in part, in the form of cancellation of indebtedness), if permitted by law, for the purchase, lease, license or other disposition of the Collateral or any portion thereof for the account of the Agent (on behalf of itself and the Lenders) and (iv) such actions set forth in clauses (i), (ii) and (iii) above shall not adversely affect the commercial reasonableness of any such sale of the Collateral. In addition to the foregoing, (i) upon written notice to any Grantor from the Agent, each Grantor shall cease any use of the Intellectual Property or any trademark, patent or copyright similar thereto for any purpose described in such notice; (ii) the Agent may, at any time and from time to time, upon ten (10) days' prior notice to any Grantor, license, whether general, special or otherwise, and whether on an exclusive or non-exclusive basis, any of the Intellectual Property, for such term or terms, on such conditions, and in such manner, as the Agent shall in its sole discretion determine; and (iii) the Agent may, at any time, pursuant to the authority granted in Section 8 hereof (such authority being effective upon the occurrence and during the continuance of an Event of Default), execute and deliver on behalf of a Grantor, one or more instruments of assignment of the Intellectual Property (or any application or registration thereof), in form suitable for filing, recording or registration in any country.
(b)In the event that the Agent determines to exercise its right to sell all or any part of the Pledged Interests pursuant to Section 9(a) hereof, each Grantor will, at such Grantor's expense and upon request by the Agent: (i) execute and deliver, and cause each issuer of such Pledged Interests and the directors and officers thereof to execute and deliver, all such instruments and documents, and do or cause to be done all such other acts and things, as may be necessary to register such Pledged Interests under the provisions of the Securities Act of 1933, as amended (the “Securities Act”), and to cause the registration statement relating thereto to become effective and to remain effective for such period as prospectuses are required by law to be furnished, and to make all amendments and supplements thereto and to the related prospectus which, in the opinion of the Agent, are necessary, all in conformity with the requirements of the Securities Act and the rules and regulations of the SEC applicable thereto, (ii) cause each issuer of such Pledged Interests to qualify such Pledged Interests under the state securities or “Blue Sky” laws of each jurisdiction, and to obtain all necessary governmental approvals for the sale of the Pledged Interests, as requested by the Agent, (iii) cause each Pledged Issuer to make available to its securityholders, as soon as practicable, an earnings statement which will satisfy the provisions of Section 11(a) of the Securities Act, and (iv) do or cause to be done all such other acts and things as may be reasonably necessary to make such sale of such Pledged Interests valid and binding and in compliance with applicable Law.
(c)Notwithstanding the provisions of Section 9(b) hereof, each Grantor recognizes that the Agent may deem it impracticable to effect a public sale of all or any part of the Pledged Shares or any other securities constituting Pledged Interests and that the Agent may, therefore, determine to make one or more private sales of any such securities to a restricted group of purchasers who will be obligated to agree, among other things, to acquire such securities for their own account, for investment and not with a view to the distribution or resale thereof. Each





Grantor acknowledges that any such private sale may be at prices and on terms less favorable to the seller than the prices and other terms which might have been obtained at a public sale and, notwithstanding the foregoing, agrees that such private sales shall be deemed to have been made in a commercially reasonable manner and that the Agent shall have no obligation to delay the sale of any such securities for the period of time necessary to permit the issuer of such securities to register such securities for public sale under the Securities Act.
(d)Any cash held by the Agent (or its agent or designee) as Collateral and all Cash Proceeds received by the Agent (or its agent or designee) in respect of any sale of or collection from, or other realization upon, all or any part of the Collateral may, in the discretion of the Agent, be held by the Agent (or its agent or designee) as collateral for, and/or then or at any time thereafter applied (after payment of any amounts payable to the Agent pursuant to Section 10 hereof) in whole or in part by the Agent against, all or any part of the Secured Obligations consistent with the provisions of the Credit Agreement. Any surplus of such cash or Cash Proceeds held by the Agent (or its agent or designee) and remaining after Payment in Full shall be paid over to whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct.
(e)In the event that the proceeds of any such sale, collection or realization are insufficient to pay all amounts to which the Agent and the Lenders are legally entitled, the Grantors shall be jointly and severally liable for the deficiency, together with interest thereon at the rate specified in any applicable Loan Document for interest on overdue principal thereof or such other rate as shall be fixed by applicable law, together with the out-of-pocket costs of collection and the reasonable fees, costs, expenses and other client charges of any attorneys employed by the Agent to collect such deficiency.
(f)Each Grantor hereby acknowledges that if the Agent complies with any applicable requirements of law in connection with a disposition of the Collateral, such compliance will not adversely affect the commercial reasonableness of any sale or other disposition of the Collateral.
(g)The Agent shall not be required to marshal any present or future collateral security (including, but not limited to, this Agreement and the Collateral) for, or other assurances of payment of, the Secured Obligations or any of them or to resort to such collateral security or other assurances of payment in any particular order, and all of the Agent's rights hereunder and in respect of such collateral security and other assurances of payment shall be cumulative and in addition to all other rights, however existing or arising. To the extent that any Grantor lawfully may, such Grantor hereby agrees that it will not invoke any law relating to the marshalling of collateral which might cause delay in or impede the enforcement of the Agent's rights under this Agreement or under any other instrument creating or evidencing any of the Secured Obligations or under which any of the Secured Obligations is outstanding or by which any of the Secured Obligations is secured or payment thereof is otherwise assured, and, to the extent that it lawfully may, each Grantor hereby irrevocably waives the benefits of all such laws.
Section 10.Expenses. Each Grantor jointly and severally agrees to pay to the Agent upon demand the amount of any and all reasonable out-of-pocket costs and expenses,





including the reasonable fees, costs, expenses and disbursements of counsel for the Agent and of any experts and agents (including, without limitation, any collateral trustee which may act as agent of the Agent), which the Agent may incur in connection with (i) the preparation, negotiation, execution, delivery, recordation, administration, amendment, waiver or other modification or termination of this Agreement, (ii) the custody, preservation, use or operation of, or the sale of, collection from, or other realization upon, any Collateral, (iii) the exercise or enforcement of any of the rights of the Agent hereunder, or (iv) the failure by any Grantor to perform or observe any of the provisions hereof.
Section 11.Notices, Etc. All notices and other communications provided for hereunder shall be given in accordance with the notice provision of the Credit Agreement.
Section 12.Security Interest Absolute; Joint and Several Obligations.
(a)All rights of the Secured Parties, all Liens and all obligations of each of the Grantors hereunder shall be absolute and unconditional irrespective of (i) any lack of validity or enforceability of the Credit Agreement or any other Loan Document, (ii) any change in the time, manner or place of payment of, or in any other term in respect of, all or any of the Secured Obligations, or any other amendment or waiver of or consent to any departure from the Credit Agreement or any other Loan Document, (iii) any exchange or release of, or non-perfection of any Lien on any Collateral, or any release or amendment or waiver of or consent to departure from any guaranty, for all or any of the Secured Obligations, or (iv) any other circumstance that might otherwise constitute a defense available to, or a discharge of, any of the Grantors in respect of the Secured Obligations (other than Payment in Full). All authorizations and agencies contained herein with respect to any of the Collateral are irrevocable and powers coupled with an interest.
(b)Each Grantor hereby waives (i) promptness and diligence, (ii) notice of acceptance and notice of the incurrence of any Obligation by any Borrower, (iii) notice of any actions taken by the Agent, any Lender, any Guarantor or any other Person under any Loan Document or any other agreement, document or instrument relating thereto, (iv) all other notices, demands and protests, and all other formalities of every kind in connection with the enforcement of the Obligations, the omission of or delay in which, but for the provisions of this subsection (b), might constitute grounds for relieving such Grantor of any such Grantor's obligations hereunder and (v) any requirement that the Agent or any Lender protect, secure, perfect or insure any security interest or other lien on any property subject thereto or exhaust any right or take any action against any Grantor or any other Person or any collateral.
(c)All of the obligations of the Grantors hereunder are joint and several. The Agent may, in its sole and absolute discretion, enforce the provisions hereof against any of the Grantors and shall not be required to proceed against all Grantors jointly or seek payment from the Grantors ratably. In addition, the Agent may, in its sole and absolute discretion, select the Collateral of any one or more of the Grantors for sale or application to the Secured Obligations, without regard to the ownership of such Collateral, and shall not be required to make such selection ratably from the Collateral owned by all of the Grantors. The release or discharge of any Grantor by the Agent shall not release or discharge any other Grantor from the obligations of such Person hereunder.





Section 13.Miscellaneous.
(a)No amendment of any provision of this Agreement (including any Schedule attached hereto) shall be effective unless it is in writing and signed by each Grantor effected thereby and the Agent, and no waiver of any provision of this Agreement, and no consent to any departure by any Grantor therefrom, shall be effective unless it is in writing and signed by the Agent, and then such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.
(b)No failure on the part of the Secured Parties to exercise, and no delay in exercising, any right hereunder or under any other Loan Document shall operate as a waiver thereof; nor shall any single or partial exercise of any such right preclude any other or further exercise thereof or the exercise of any other right. The rights and remedies of the Secured Parties provided herein and in the other Loan Documents are cumulative and are in addition to, and not exclusive of, any rights or remedies provided by law. The rights of the Secured Parties under any Loan Document against any party thereto are not conditional or contingent on any attempt by such Person to exercise any of its rights under any other Loan Document against such party or against any other Person, including but not limited to, any Grantor.
(c)This Agreement shall create a continuing security interest in the Collateral and shall (i) remain in full force and effect, subject to paragraph (e) below, until Payment in Full and (ii) be binding on each Grantor all other Persons who become bound as debtor to this Agreement in accordance with Section 9-203(d) of the Code, and shall inure, together with all rights and remedies of the Secured Parties hereunder, to the benefit of the Secured Parties and their respective successors, transferees and assigns. Without limiting the generality of clause (ii) of the immediately preceding sentence, the Secured Parties may assign or otherwise transfer their respective rights and obligations under this Agreement and any other Loan Document to any other Person pursuant to the terms of the Credit Agreement, and such other Person shall thereupon become vested with all of the benefits in respect thereof granted to the Secured Parties herein or otherwise. Upon any such assignment or transfer, all references in this Agreement to any Secured Party shall mean the assignee of any such Secured Party. Subject to the provisions of the Credit Agreement, none of the rights or obligations of any Grantor hereunder may be assigned or otherwise transferred without the prior written consent of the Agent, and any such assignment or transfer shall be null and void.
(d)Upon Payment in Full, (i) subject to paragraph (e) below, this Agreement and the security interests and licenses created hereby shall terminate and all rights to the Collateral shall revert to the Grantors and (ii) the Agent will, upon the Grantors' request and at the Grantors' expense, without any representation, warranty or recourse whatsoever, (A) promptly return to the Grantors (or whomsoever shall be lawfully entitled to receive the same or as a court of competent jurisdiction shall direct) such of the Collateral as shall not have been sold or otherwise disposed of or applied pursuant to the terms hereof and (B) execute and deliver to the Grantors such documents as the Grantors shall reasonably request to evidence such termination.
(e)This Agreement shall remain in full force and effect and continue to be effective should any petition be filed by or against any Grantor for liquidation or





reorganization, should any Grantor become insolvent or make an assignment for the benefit of any creditor or creditors or should a receiver or trustee be appointed for all or any significant part of any Grantor's assets, and shall continue to be effective or be reinstated, as the case may be, if at any time payment or performance of the Secured Obligations, or any part thereof, is, pursuant to applicable law, rescinded or reduced in amount, or must otherwise be restored or returned by any obligee of the Secured Obligations, whether as a “voidable preference,” “fraudulent conveyance,” or otherwise, all as though such payment or performance had not been made. In the event that any payment, or any part thereof, is rescinded, reduced, restored or returned, the Secured Obligations shall be reinstated and deemed reduced only by such amount paid and not so rescinded, reduced, restored or returned.
(f)Upon the execution and delivery, or authentication, by any Person of a Guarantor Joinder, (i) such Person shall be referred to as an “Additional Grantor” and shall be and become a Grantor, and each reference in this Agreement to “Grantor” shall also mean and be a reference to such Additional Grantor, and each reference in this Agreement and the other Loan Documents to “Collateral” shall also mean and be a reference to the Collateral of such Additional Grantor, and (ii) the supplemental Schedules I-VII attached to each Guarantor Joinder shall be incorporated into and become a part of and supplement Schedules I-VII, respectively, hereto, and the Agent may attach such Schedules as supplements to such Schedules, and each reference to such Schedules shall mean and be a reference to such Schedules, as supplemented pursuant hereto.
(g)THIS AGREEMENT SHALL BE GOVERNED BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF OHIO, EXCEPT AS REQUIRED BY MANDATORY PROVISIONS OF LAW AND EXCEPT TO THE EXTENT THAT THE VALIDITY AND PERFECTION OR THE PERFECTION AND THE EFFECT OF PERFECTION OR NON-PERFECTION OF THE SECURITY INTEREST CREATED HEREBY, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE GOVERNED BY THE LAW OF A JURISDICTION OTHER THAN THE STATE OF OHIO.
(h)In addition to and without limitation of any of the foregoing, this Agreement shall be deemed to be a Loan Document and shall otherwise be subject to all of terms and conditions contained in Section 10.11 of the Credit Agreement, mutatis mutandi.
(i)Each Grantor irrevocably and unconditionally waives any right it may have to claim or recover in any legal action, suit or proceeding with respect to this Agreement any special, exemplary, punitive or consequential damages.
(j)Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining portions hereof or thereof or affecting the validity or enforceability of such provision in any other jurisdiction.
(k)Section headings herein are included for convenience of reference only and shall not constitute a part of this Agreement for any other purpose.





(l)This Agreement may be executed in any number of counterparts and by the different parties hereto on separate counterparts, each of which shall be deemed an original, but all of such counterparts taken together shall constitute one and the same agreement. Delivery of an executed counterpart of this Agreement by facsimile or electronic mail shall be equally effective as delivery of an original executed counterpart.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]






IN WITNESS WHEREOF, each Grantor has caused this Agreement to be executed and delivered by its officer thereunto duly authorized, as of the date first above written.
        
GRANTORS:
Designer Brands Inc., an Ohio corporation
By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
810 AC LLC,
an Ohio limited liability company

By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
Brand Card Services LLC,     
an Ohio limited liability company

By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
DSW Shoe Warehouse, Inc.,     
a Missouri corporation

By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer                    
                        






DSW Information Technology LLC,    
an Ohio limited liability company


By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
DSW MS LLC,     
an Ohio limited liability company


By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
Ebuys, Inc.     
a California corporation


By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
DSW Leased Business Division LLC,     
an Ohio limited liability company


By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer











eTailDirect LLC,     
a Delaware limited liability company


By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
Retail Ventures Services, Inc.,     
an Ohio corporation


By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
Designer Brand Licensing LLC,     
an Ohio limited liability company


By: /s/ Jared A. Poff    
Name: Jared A. Poff
Title: Executive Vice President, Chief Financial Officer
VCJS LLC,     
a Connecticut limited liability company


By: /s/ Marla Walters    
Name: Marla Walters
Title: Senior Vice President, Tax and Treasurer
VCS Group LLC,     
a Delaware limited liability company


By: /s/ Marla Walters    
Name: Marla Walters
Title: Senior Vice President, Tax and Treasurer     





Vincent Camuto LLC,     
a Connecticut limited liability company


By: /s/ Marla Walters    
Name: Marla Walters    
Title: Senior Vice President, Tax and Treasurer
CCI Operations LLC,     
an Ohio limited liability company


By: /s/ Marla Walters    
Name: Marla Walters
Title: Senior Vice President, Tax and Treasurer
VC Footwear LLC,     
a Connecticut limited liability company


By: /s/ Marla Walters    
Name: Marla Walters
Title: Senior Vice President, Tax and Treasurer
VC Line Building Services LLC,     
a Connecticut limited liability company


By: /s/ Marla Walters    
Name: Marla Walters
Title: Senior Vice President, Tax and Treasurer
Hot on Time LLC,     
a Connecticut limited liability company


By: /s/ Marla Walters    
Name: Marla Walters
Title: Senior Vice President, Tax and Treasurer
    






Sole Society Group Inc.,     
a Delaware corporation


By: /s/ Marla Walters    
Name: Marla Walters
Title: Senior Vice President, Tax and Treasurer
                    
Camuto LLC,     
an Ohio limited liability company


By: /s/ Marla Walters    
Name: Marla Walters
Title: Senior Vice President, Tax and Treasurer






























SCHEDULE I
LEGAL NAMES; ORGANIZATIONAL IDENTIFICATION NUMBERS; STATES OR JURISDICTIONS OF ORGANIZATION
[This Schedule I has been omitted pursuant to Item 601(a)(5) of Regulation S-K. Schedule I contains organizational information related to the Company and its subsidiaries. The Company will provide a copy of Schedule I upon the request of the Securities and Exchange Commission or its staff.]







































SCHEDULE II
MATERIAL INTELLECTUAL PROPERTY AND MATERIAL LICENSES
[This Schedule II has been omitted pursuant to Item 601(a)(5) of Regulation S-K. Schedule II contains information related to the Company’s intellectual property, including its license agreements. The Company will provide a copy of Schedule II upon the request of the Securities and Exchange Commission or its staff.]








































SCHEDULE III
LOCATIONS OF GRANTORS

[This Schedule III has been omitted pursuant to Item 601(a)(5) of Regulation S-K. Schedule III contains information related to the Company’s business locations, as well its locations containing equipment, fixtures inventory and other goods as set forth in the Agreement. The Company will provide a copy of Schedule III upon the request of the Securities and Exchange Commission or its staff.]








































SCHEDULE IV
DEPOSIT ACCOUNTS, SECURITIES ACCOUNTS AND COMMODITIES ACCOUNTS
[This Schedule IV has been omitted pursuant to Item 601(a)(5) of Regulation S-K. Schedule IV contains information related to the Company’s accounts. The Company will provide a copy of Schedule IV upon the request of the Securities and Exchange Commission or its staff.]










































SCHEDULE V
COMMERCIAL TORT CLAIMS
[This Schedule V has been omitted pursuant to Item 601(a)(5) of Regulation S-K. Schedule V contains information related to commercial tort claims. The Company will provide a copy of Schedule V upon the request of the Securities and Exchange Commission or its staff.]











































SCHEDULE VI
PLEDGED DEBT

[This Schedule VI has been omitted pursuant to Item 601(a)(5) of Regulation S-K. Schedule VI contains information related to the pledged debt of the Company, as set forth in the Agreement. The Company will provide a copy of Schedule VI upon the request of the Securities and Exchange Commission or its staff.]










































SCHEDULE VII
PLEDGED SHARES
[This Schedule VII has been omitted pursuant to Item 601(a)(5) of Regulation S-K. Schedule VII contains information related to the pledged shares and equity interests of the Company and its subsidiaries. The Company will provide a copy of Schedule VII upon the request of the Securities and Exchange Commission or its staff.]










































EXHIBIT A
PLEDGE AMENDMENT
This Pledge Amendment, dated _________ __, ___, is delivered pursuant to Section 4 of the Pledge and Security Agreement referred to below. The undersigned hereby agrees that this Pledge Amendment may be attached to the Pledge and Security Agreement, dated April __, 2020, as it may heretofore have been or hereafter may be amended, restated, supplemented, modified or otherwise changed from time to time (the “Security Agreement”) and that the promissory notes or shares listed on this Pledge Amendment shall be hereby pledged and assigned to the Agent and become part of the Pledged Interests referred to in such Pledge Agreement and shall secure all of the Secured Obligations referred to in such Security Agreement.
Pledged Debt
Grantor
Name of Maker
Description
Principal Amount
Outstanding as of
 
 
 
 
 
 
 
 

Pledged Shares
Grantor
Name of
Pledged Issuer
Number of Shares
Percentage of Outstanding Shares
Class
Certificate Number
 
 
 
 
 
 
 
 
 
 
 
 
[GRANTOR]
By:    _____________________________
Name:
Title:
[NAME OF AGENT],
as the Agent
By:    _____________________________
Name:
Title:





EXHIBIT B
ASSIGNMENT FOR SECURITY - - [TRADEMARKS] [PATENTS] [COPYRIGHTS]
WHEREAS, ________________ (the “Assignor”) [has adopted, used and is using, and holds all right, title and interest in and to, the trademarks and service marks listed on the attached Schedule A, which trademarks and service marks are registered or applied for in the United States Patent and Trademark Office (the “Trademarks”)] [holds all right, title and interest in the letter patents, design patents and utility patents listed on the attached Schedule A, which patents are issued or applied for in the United States Patent and Trademark Office (the “Patents”)] [holds all right, title and interest in the copyrights listed on the attached Schedule A, which copyrights are registered in the United States Copyright Office (the “Copyrights”)];
WHEREAS, the Assignor and certain of its Affiliates has entered into a Pledge and Security Agreement, dated April __, 2020 (as amended, restated, supplemented, modified or otherwise changed from time to time, the “Security Agreement”), in favor of PNC Bank, National Association, as the Agent for itself and the Secured Parties (as defined therein) (in such capacity, together with its successors and assigns, if any, the “Assignee”); and
WHEREAS, pursuant to the Security Agreement, the Assignor has assigned to the Assignee and granted to the Assignee for the benefit of the Secured Parties (as defined in the Security Agreement) a continuing security interest in all right, title and interest of the Assignor in, to and under the [Trademarks, together with, among other things, the good-will of the business symbolized by the Trademarks] [Patents] [Copyrights] and the applications and registrations thereof, and all proceeds thereof, including, without limitation, any and all causes of action which may exist by reason of infringement thereof and any and all damages arising from past, present and future violations thereof (the “Collateral”), to secure the payment, performance and observance of the Secured Obligations (as defined in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Assignor does hereby pledge, convey, sell, assign, transfer and set over unto the Assignee and grants to the Assignee for the benefit of the Assignee and the Lenders a continuing security interest in the Collateral to secure the prompt payment, performance and observance of the Secured Obligations.
The Assignor does hereby further acknowledge and affirm that the rights and remedies of the Assignee with respect to the Collateral are more fully set forth in the Security Agreement, the terms and provisions of which are hereby incorporated herein by reference as if fully set forth herein.








IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly executed by its officer thereunto duly authorized as of _____________ __, 20__.
[GRANTOR]
By: ____________________________________
Name:
Title:




STATE OF ____________
ss.:
COUNTY OF __________
On this ____ day of _______________, 20__, before me personally came ________________, to me known to be the person who executed the foregoing instrument, and who, being duly sworn by me, did depose and say that s/he is the ________________ of _______________________________________, a ____________________, and that s/he executed the foregoing instrument in the firm name of _______________________________________, and that s/he had authority to sign the same, and s/he acknowledged to me that he executed the same as the act and deed of said firm for the uses and purposes therein mentioned.
    




















SCHEDULE A TO ASSIGNMENT FOR SECURITY

[Trademarks and Trademark Applications]
[Patent and Patent Applications]
[Copyright and Copyright Applications]
Owned by ______________________________









EXHIBIT 10.20.1

FIRST AMENDMENT TO STANDARD EXECUTIVE SEVERANCE AGREEMENT

This First Amendment to Standard Executive Severance Agreement (“Amendment”) is made effective as of the date signed (“Effective Date”) by and between DSW Inc., an Ohio corporation (the “Company”) and Thomas Jessep (the “Executive”);

WHEREAS, Company and Executive are parties to a certain Standard Executive Severance Agreement effective April 17, 2014 (the “Employment Agreement”);
WHEREAS, Company and Executive have agreed to amend certain provisions of the Employment Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, and intending to be legally bound hereby, Company and Executive agree that the Agreement is amended as follows:
1.
Section 2.02 of the Agreement is hereby amended by replacing subsection [4] in its entirety with the following:

[4] Equity Incentive. Subject to the terms of the DSW Inc. 2005 Equity Incentive Plan, the DSW Inc. 2014 Equity Incentive Plan, any future shareholder approved Company equity plan (collectively the “Plans”), and any applicable agreement, the Executive shall have the following rights:

i.
For purposes of this Amendment, “Award” means any award granted under any of the Plans.

ii.
Executive may exercise any outstanding Awards that are vested on the date of Involuntary Termination Without Cause.

iii. With respect to Awards that would vest solely upon the passage of time and such vesting date would occur within the 12 month period following the date of Involuntary Termination Without Cause, such Award shall vest and, if applicable, be awarded to Executive as of the date of Involuntary Termination Without Cause.

iv. With respect to Awards that would vest upon the satisfaction of a specified requirement, and/or upon satisfaction of the passage of time and satisfaction of a specified requirement; in the event that all such requirements are satisfied prior to the expiration of the 12 month period following the date of Involuntary Termination Without Cause, such Award shall vest and be awarded to Executive upon the satisfaction of all applicable requirements.

In any event, Executive must exercise any vested Awards during the three-month period following the date of vesting.

2.
Except as specifically amended by the provisions of this Amendment, all terms of the Employment Agreement are unmodified and remain in full force and effect.

IN WITNESS WHEREOF, the Executive has hereunto set the Executive’s hand and the Company has caused these presents to be executed in its name and on its behalf.

        
DSW Inc.                     Executive    

By: /s/  Bill Jordan                                      /s/ Thomas Jessep_____________________
Bill Jordan                     Thomas Jessep
Its: EVP, General Counsel                                   
Effective Date: 3/9/2016                Effective Date: 2/12/2015






EXHIBIT 21.1

DESIGNER BRANDS INC.
LIST OF SUBSIDIARIES
Ref.
No.
 
Name
 
Jurisdiction of
Incorporation
 
Parent
Company No.
1
 
Designer Brands Inc.
 
Ohio
 
N/A
2
 
DSW Shoe Warehouse, Inc.
 
Missouri
 
1
3
 
Brand Card Services LLC
 
Ohio
 
1
4
 
DSW Information Technology LLC
 
Ohio
 
1
5
 
eTailDirect LLC
 
Delaware
 
2
6
 
Ebuys, Inc.
 
California
 
2
7
 
DSW MS LLC
 
Ohio
 
1
8
 
DSW Leased Business Division LLC aka Affiliated Business Group
 
Ohio
 
2
9
 
810 AC LLC
 
Ohio
 
1
10
 
DSW PR LLC
 
Puerto Rico
 
2
11
 
Retail Ventures Services, Inc.
 
Ohio
 
7
12
 
DSW Shoe Warehouse Lux S.a.r.l.
 
Luxembourg
 
2
13
 
Designer Brands Canada Inc.
 
Canada
 
12
14
 
Camuto LLC
 
Ohio
 
2
15
 
Designer Brand Licensing LLC
 
Ohio
 
2
16
 
Camuto Overseas Holding Subsidiary LLC
 
Ohio
 
14
17
 
Victory Assessoria EM Compras EIRELLA
 
Brazil
 
16
18
 
CGA Design Ltd
 
Hong Kong
 
16
19
 
CGA Dongguan Ltd
 
China
 
18
20
 
VCJS LLC
 
Connecticut
 
14
21
 
VCS Group LLC
 
Delaware
 
14
22
 
Article II JV, LLC
 
Delaware
 
21
23
 
BC/VC Ventures LLC
 
Delaware
 
21
24
 
Vince Camuto LLC
 
Connecticut
 
14
25
 
CCI Operations LLC
 
Ohio
 
14
26
 
VC Footwear LLC
 
Connecticut
 
25
27
 
Camuto Castillo LLC
 
Delaware
 
25
28
 
VC Line Building Services LLC
 
Connecticut
 
25
29
 
Hot on Time LLC
 
Connecticut
 
25
30
 
Sole Society Group Inc.
 
Delaware
 
25
31
 
ABG Camuto LLC
 
Delaware
 
15
32
 
BRX DBI Joint Venture LLC
 
Delaware
 
21









EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
We consent to the incorporation by reference in Registration Statement Nos. 333-126244, 333-159849, 333-172631 and 333-203015 on Form S-8, Registration Statement No. 333-213190 on Form S-3, Post-Effective Amendment No. 1 on Form S-8 and Post-Effective Amendment No. 2 on Form S-3 to the Registration Statement No. 333-172631 on Form S-4 of our report dated May 1, 2020, relating to the consolidated financial statements of Designer Brands Inc. and subsidiaries, and the effectiveness of Designer Brands Inc. and subsidiaries’ internal control over financial reporting, appearing in this Annual Report on Form 10-K of Designer Brands Inc. for the year ended February 1, 2020.

/s/ DELOITTE & TOUCHE LLP
Columbus, Ohio
May 1, 2020





 
 
EXHIBIT 24.1
POWER OF ATTORNEY
 
 
 
Each director and/or officer of Designer Brands Inc. (the "Corporation") whose signature appears below hereby appoints Jared Poff and Mark Haley as the undersigned's attorney or any of them individually as the undersigned's attorney, to sign, in the undersigned's name and behalf and in any and all capacities stated below, and to cause to be filed with the Securities and Exchange Commission (the "Commission"), the Corporation's Annual Report on Form 10-K (the "Form 10-K") for the fiscal year ended February 1, 2020, and likewise to sign and file with the Commission any and all amendments to the Form 10-K, and the Corporation hereby appoints such persons as its attorneys-in-fact and each of them as its attorney-in-fact with like authority to sign and file the Form 10-K and any amendments thereto granting to each attorney-in-fact full power of substitution and revocation, and hereby ratifying all that any such attorney-in-fact or the undersigned's substitute may do by virtue hereof.
 
 
 
IN WITNESS WHEREOF, we have hereunto set our hands effective as of the 3rd date of March 2020.
 
 
 
Signature
 
          Title
 
 
 
/s/ Jay L. Schottenstein       
 
Executive Chairman of the Board and Director
Jay L. Schottenstein
 
 
 
 
 
/s/ Roger Rawlins
 
Chief Executive Officer and Director
Roger Rawlins
 
(Principal Executive Officer)
 
 
 
/s/ Jared Poff
 
Executive Vice President and Chief Financial Officer
Jared Poff
 
(Principal Financial Officer)
 
 
 
/s/ Mark Haley
 
Senior Vice President and Controller
Mark Haley
 
(Principal Accounting Officer)
 
 
 
/s/ Peter Cobb     
 
Director
Peter Cobb
 
 
 
 
 
/s/ Elaine J. Eisenman
 
Director
Elaine J. Eisenman
 
 
 
 
 
/s/ Joanna T. Lau
 
Director
Joanna T. Lau
 
 
 
 
 
/s/ Carolee Lee
 
Director
Carolee Lee
 
 
 
 
 
/s/ Joseph A. Schottenstein
 
Director
Joseph A. Schottenstein
 
 
 
 
 
/s/ Ekta Singh-Bushell
 
Director
Ekta Singh-Bushell
 
 
 
 
 
/s/ Harvey L. Sonnenberg
 
Director
Harvey L. Sonnenberg
 
 
 
 
 
/s/ Allan J. Tanenbaum     
 
Director
Allan J. Tanenbaum
 
 
 
 
 
/s/ Joanne Zaiac
 
Director
Joanne Zaiac
 
 




EXHIBIT 31.1

CERTIFICATIONS

I, Roger Rawlins, certify that:
1.      I have reviewed this Annual Report on Form 10-K of Designer Brands Inc.;
2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.      The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.      The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:
May 1, 2020
By:
/s/ Roger Rawlins
 
 
 
Roger Rawlins
 
 
 
Chief Executive Officer
    
        
                                                                                          





EXHIBIT 31.2

CERTIFICATIONS

I, Jared Poff, certify that:
1.      I have reviewed this Annual Report on Form 10-K of Designer Brands Inc.;
2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.      The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.      The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
Date:
May 1, 2020
By:
/s/ Jared Poff
 
 
 
Jared Poff, Executive Vice President and
 
 
 
 Chief Financial Officer




EXHIBIT 32.1

SECTION 1350 CERTIFICATION*

In connection with the Annual Report of Designer Brands Inc. (the "Company") on Form 10-K for the fiscal year ended February 1, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Roger Rawlins, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated:
May 1, 2020
By:
/s/ Roger Rawlins
 
 
 
Roger Rawlins,
Chief Executive Officer

*
This Certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.





EXHIBIT 32.2

SECTION 1350 CERTIFICATION *

In connection with the Annual Report of Designer Brands Inc. (the "Company") on Form 10-K for the fiscal year ended February 1, 2020 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jared Poff, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

Dated:
May 1, 2020
By:
/s/ Jared Poff
 
 
 
Jared Poff,
 
 
 
Executive Vice President and Chief Financial Officer
*
This Certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.