Item 1.01 Entry into a Material Definitive Agreement.
On October 31, 2012, DSW Inc., an Ohio corporation ("DSW"), entered into an
agreement of purchase and sale (the "Purchase Agreement") with 4300 East Fifth
Avenue LLC, an Ohio limited liability company, 4300 Venture 34910 LLC, a
Delaware limited liability company, and 4300 Venture 6729 LLC, a Delaware
limited liability company (each a "Seller" and collectively "Sellers"), pursuant
to which DSW acquired on November 1, 2012 all of Sellers' ownership interest in
810 AC LLC, an Ohio limited liability company (the "Acquisition"). Prior to the
closing of the Acquisition, Sellers transferred certain Properties (as defined
in the Purchase Agreement) to 810 AC LLC, portions of which Properties were
previously leased by DSW for its corporate office headquarters, its 700,000
square foot distribution center, and a trailer parking lot. DSW expects certain
portions of the Properties to continue to be leased by third parties. As
consideration for the Acquisition, DSW paid to Sellers an aggregate of $72
million, subject to credits and adjustments as provided in the Purchase
Agreement.
The foregoing description of the Purchase Agreement is not a complete
description of all of the parties' rights and obligations under the Purchase
Agreement and is qualified in its entirety by reference to the Purchase
Agreement, which is filed as Exhibit 2.1 and is incorporated by reference.
On November 1, 2012, in connection with the completion of the Acquisition, 4300
East Fifth Avenue LLC and DSW's wholly owned subsidiary, 810 AC LLC, entered
into a cost sharing agreement (the "Cost Sharing Agreement") pursuant to which
810 AC LLC will contribute $3 million to the cost of replacing the roof of a
building on the Properties. Also on November 1, 2012, 810 AC LLC and
Schottenstein Property Group, LLC, an Ohio limited liability company ("SPG"),
entered into a management agreement (the "Management Agreement") pursuant to
which SPG will provide management, operation, repair, maintenance, replacement,
and supervision services with respect to the properties that are the subject of
the Management Agreement, collect rent from other tenants, and provide other
landlord services with respect to such tenants. SPG has previously managed the
Properties. As compensation DSW will pay SPG 4% of rents collected from lessees
of certain portions of the Properties, plus reimbursement for certain costs
pursuant to the Management Agreement.
The foregoing description of the Cost Sharing Agreement and the Management
Agreement is not a complete description of all of the parties' rights and
obligations under these agreements and is qualified in its entirety by reference
to the Cost Sharing Agreement, which is filed as Exhibit 10.1 and is
incorporated by reference, and the Management Agreement, which is filed as
Exhibit 10.2 and is incorporated by reference.
Each of the Sellers and Schottenstein Property Group, LLC is an affiliate of
Schottenstein Stores Corporation ("SSC"), which has numerous material
relationships with DSW. Following the Acquisition, DSW continues to lease office
space from entities affiliated with SSC, and continues to purchase services and
products from such entities. SSC is controlled by Jay L. Schottenstein, the
executive chairman of DSW's board of directors, and Mr. Schottenstein and
members of his family own a majority of the combined voting power of DSW's
outstanding common shares. The audit committee of DSW's board of directors has
reviewed and approved the Purchase Agreement, the Acquisition, the Cost Sharing
Agreement, and the Management Agreement, consistent with DSW's related party
transaction policy.
Item 1.02 Termination of a Material Definitive Agreement.
The information in this Current Report set forth under Item 1.01 is incorporated
by reference. On November 1, 2012, in connection with the Acquisition, DSW
terminated the following three leases for the Properties acquired by DSW
pursuant to the Purchase Agreement:
• Agreement of Lease, dated November 30, 2006, as amended October 1, 2007,
between DSW and 810 AC LLC as successor to 4300 Venture 34910 LLC for the
premises that currently serves as DSW's home office (originally filed as
Exhibit 10.3 to Form 10-Q (file no. 1-32545) filed December 6, 2006, and
Exhibit 10.2 to Form 8-K (file no. 1-32545) filed March 6, 2008,
respectively);
• Lease, dated March 22, 2000, as amended November 30, 2006, and October 1,
2007, between DSW and 810 AC LLC as successor to 4300 Venture 6729 LLC,
for the premises that currently serves as DSW's corporate headquarters and
distribution center (originally filed as Exhibit 10.60 to Retail Ventures
Inc.'s
Form 10-K (file no. 1-10767) filed April 28, 2000, Exhibit 10.5 to Form 10-Q
(file no. 1-32545) filed December 6, 2006, and Exhibit 10.4 to Form 8-K (file
no. 1-32545) filed March 6, 2008, respectively); and
• Agreement of Lease, dated November 30, 2006, as amended October 1, 2007,
between DSW and 810 AC LLC as successor to 4300 East Fifth Avenue LLC for
the premises that currently serves as DSW's trailer parking lot
(originally filed as Exhibit 10.4 to Form 10-Q (file no. 1-32545) filed
December 6, 2006, and Exhibit 10.3 to Form 8-K (file no. 1-32545) filed
March 6, 2008, respectively).
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