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                                                                    Exhibit 10.4

                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                                    DSW INC.
                                       AND
                                PETER Z. HORVATH

This employment agreement ("Agreement") by and between DSW Inc. ("Company") and
Peter Z. Horvath ("Executive"), collectively, the "Parties," is effective as of
January 3, 2005 ("Effective Date") and supersedes and replaces any other oral or
written employment-related agreement between the Executive and the Company.

                                  1.00 DURATION

This Agreement will remain in effect from the Effective Date until it terminates
as provided in Section 5.00. Any notice of termination required to be given
under this Agreement must be given as provided in Section 6.00 and will be
effective on the date prescribed in Section 5.00.

                      2.00 EXECUTIVE'S EMPLOYMENT FUNCTION

2.01  POSITION. The Executive agrees to serve as the Executive Vice President
and Chief Operating Officer of DSW Inc., or its successor (collectively "DSW")
with authority and duties customarily associated with this position and to
discharge any other duties and responsibilities assigned by the Chief Executive
Officer of DSW ("Chief Executive Officer"). The Executive will report directly
to and be subject to the supervision, advice, and direction of the Chief
Executive Officer, or his designate. The Executive agrees at all times to
observe and be bound by all Company rules, policies, practices, procedures and
resolutions that generally apply to Company employees of comparable status and
which do not conflict with the specific terms of this Agreement.

2.02  PLACE OF PERFORMANCE. The Executive's duties will principally be performed
in the Columbus, Ohio area, except for required travel on the Company's
business.

                                3.00 COMPENSATION

The Company will pay the Executive the amounts described in Section 3.00 as
compensation for the services described in this Agreement and in exchange for
the duties and responsibilities described in Section 4.00.

3.01  BASE SALARY. The Company will pay to the Executive an annualized base
salary of $500,000, which will be increased annually by a minimum of 2.5 percent
over the
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previous year's base salary. The Executive's Base Salary will be paid in
installments that correspond with the Company's normal payroll practices.

3.02  CASH INCENTIVE BONUS.

      [1]   While employed thereunder and commencing with the 2005 Fiscal Year,
      the Executive will be eligible to receive a Cash Incentive Bonus under the
      terms of the Retail Ventures, Inc. Incentive Compensation Plan ("Incentive
      Plan"), as modified by the Company, with a target annual bonus per fiscal
      year of one hundred percent (100%) of Base Salary and a maximum annual
      bonus per fiscal year of two hundred percent (200%) of Base Salary. The
      actual performance metrics and goals shall be determined by the Company in
      its sole discretion.

      [2]   Executive will receive a signing bonus of $75,000 to be paid on or
      before June 15, 2005, and will not otherwise receive a cash incentive
      bonus for work performed in the 2004 Fiscal Year.

      [3]   Any Cash Incentive Bonus will be payable, in cash, consistent with
      the Company's normal bonus payment policy.

3.03  EQUITY INCENTIVE COMPENSATION. The Company shall negotiate in good faith
with Executive concerning Executive's equity incentive compensation to provide
equity incentive compensation to a level that is commensurate with Executive's
new position. It is agreed that these enhancements may include grants of stock
appreciation rights and/or restricted stock units and other equity or
equity-based compensation awards. Any award provided will subtract from the
agreed-upon vesting schedule the time the Executive has already served in his
position.

3.04  BENEFIT PLANS. Subject to their terms, the Executive may participate in
any Company sponsored employee pension or welfare benefit plan at a level
commensurate with the Executive's title and position.

3.05  VACATIONS. Subject to the terms of the Company's vacation policy, the
Executive is entitled to four weeks of vacation each calendar year to be taken
during periods approved by the Chief Executive Officer.

3.06  EXPENSES. The Executive is entitled to receive prompt reimbursement for
all normal and reasonable expenses incurred while performing services under this
Agreement, including all reasonable travel expenses. Reimbursement for these
expenses will be made as soon as administratively feasible after the date the
Executive submits appropriate evidence of the expenditure and otherwise complies
with the Company's business expense reimbursement policy. The Executive shall be
entitled to an annual perquisite allowance from the Company of $40,000 (which
amount already includes any associated tax gross-up), payable in equal
installments in accordance with the Company's payroll practices for executive
employees.

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3.07  TERMINATION BENEFITS. The Company also will provide the Executive with the
termination benefits described in Section 5.00.

                          4.00 EXECUTIVE'S OBLIGATIONS

The amounts described in Sections 3.00 and 5.00 are provided by the Company in
exchange for (and have a value to the Company equivalent to) the Executive's
performance of the obligations described in this Agreement, including
performance of the duties and the covenants and releases made and entered into
by and between the Executive and the Company in this Agreement.

4.01  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 4.01[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 4.05], 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 Chief Executive Officer.

4.02  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 4.02[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.

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      [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 Executive Vice President of Human Resources confirms to the
      Executive that the information is public knowledge or an arbitrator,
      acting under Section 9.00, 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
      4.02[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.

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4.03  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.

4.04  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.

4.05  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 off-price and discount merchandise, including discount and off-price shoes
and accessories. Illustrations of businesses that compete with the Group's
business include The TJX Companies, Inc. (T.J. Maxx; Marshall's; HomeGoods; A.J.
Wright; Marmaxx; Winners); Shoe Carnival; MJM Designer Shoes; Ross Stores, Inc;
Payless ShoeSource; Off-Broadway Shoes; Famous Footwear; Footstar; and Big Lots
Stores, Inc.; and Burlington Coat Factory Warehouse Corporation and any of its
affiliates. 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.

4.06  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

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      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 pretrial 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 4.02[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 Executive 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
      4.02[2]) as a result of employment with the Group (or any Group Member).
      The Executive also agrees to notify the Executive Vice President of Human
      Resources immediately after being contacted by any member of the media
      with respect to any matter affected by this section.

4.07  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 4.06[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 5.04[5] (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.

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4.08  NOTICE OF SUBSEQUENT EMPLOYMENT. The Executive agrees to notify the
Company of any subsequent employment during the period of salary continuation
after employment terminates.

4.09  NONDISCLOSURE. The Executive agrees not to disclose the terms of this
Agreement in any manner to any person other than the Chief Executive Officer,
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.

4.10  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 4.00. For this reason, any disputes arising under
Section 4.00 will not be subject to arbitration under Section 9.00. Instead, if
the Executive breaches or threatens to breach any provision of Section 4.00, 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 4.00.

4.11  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.

                      5.00 TERMINATION AND RELATED BENEFITS

This Agreement will terminate upon the occurrence of any of the events described
in this section.

5.01  RULES OF GENERAL APPLICATION. The following rules apply generally to the
      implementation of Section 5.00:

      [1]   METHOD OF PAYMENT. The Company, at its option, may elect to pay, as
      a lump sum, any installment payments due under Section 5.00. If the
      Company decides to accelerate payment of any installment obligation due
      under Section 5.00, the amount paid will be reduced to reflect the value
      of the accelerated payment. This reduction will be based on the rate paid
      under 90-day U.S. Treasury Bills issued on the first issue date after this
      Agreement terminates.

      [2]   APPLICATION OF PRO RATA. Any pro rata share required to be paid
      under Section 5.00 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.

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5.02  TERMINATION DUE TO EXECUTIVE'S DEATH. This Agreement will terminate
automatically on the date the Executive dies. As of that date, and subject to
Section 5.04[6], the Company will make the following payments to the person the
Executive designates on the attached Beneficiary designation form or, with
respect to any Equity Incentive, the beneficiary the Executive designates under
the Stock Incentive Plan under which the award was issued ("Beneficiary"):

      [1]   BASE SALARY. The unpaid Base Salary the Executive earned to the date
      of termination.

      [2]   CASH INCENTIVE BONUS. The pro rata share of any Cash Incentive Bonus
      that would have been paid to the Executive had the Executive not died
      based on the extent to which performance standards are met on the last day
      of the year in which the Executive dies.

      [3]   EQUITY INCENTIVE. Subject to the terms of any applicable agreement,
      [a] the Executive's Beneficiary may exercise any outstanding stock options
      that are then vested when the Executive dies and [b] those that would have
      been vested on the last day of the fiscal year during which the Executive
      dies if the Executive had not died.

      [4]   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.

5.03  TERMINATION DUE TO EXECUTIVE'S DISABILITY. The Company may terminate this
Agreement after ascertaining that the Executive is Disabled (as defined below -
"Disability") by delivering to the Executive a written notice of termination for
Disability that includes the date termination for Disability is to be effective.
Subject to Section 5.04[6], if that notice is given and if all requirements of
this Agreement are met (including those imposed under Section 7.00), the Company
will make the following payments to the Executive:

      [1]   BASE SALARY. The unpaid Base Salary the Executive earned to the date
      of termination.

      [2]   CASH INCENTIVE BONUS. The pro rata share of any Cash Incentive Bonus
      that would have been paid to the Executive had the Executive not become
      Disabled based on the extent to which performance standards are met on the
      last day of the year in which the Executive becomes Disabled.

      [3]   EQUITY INCENTIVE. Subject to the terms of any applicable agreement,
      [a] the Executive may exercise any outstanding stock options that are
      vested when the Executive became Disabled and [b] those that would have
      been vested on

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      the last day of the fiscal year during which the Executive becomes
      Disabled if the Executive had not become Disabled.

      [4]   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.

      [5]   DEFINITION OF DISABILITY. For these purposes, Disability means that,
      for more than six consecutive months, the Executive is unable, with a
      reasonable accommodation, to perform the duties described in Section 4.01
      on a full-time basis due to a physical or mental disability or infirmity.

5.04 TERMINATION FOR CAUSE. The Company may terminate the Executive's employment
for Cause (as defined below - "Cause") by delivering to the Executive a written
notice describing the basis for this termination and the date the termination
for Cause is to be effective. If the Executive is terminated for Cause and if
all requirements of this Agreement are met (including those imposed under
Section 7.00), the Company will make the following payments to the Executive:

      [1]   BASE SALARY. The unpaid Base Salary the Executive earned to the date
      of termination.

      [2]   CASH INCENTIVE BONUS. Any unpaid Cash Incentive Bonus earned for the
      fiscal year that ends before the fiscal year during which the Executive is
      terminated for Cause (but no Cash Incentive Bonus will be given with
      respect to the fiscal year during which the Executive is terminated for
      Cause).

      [3]   EQUITY INCENTIVE. The Executive's entitlement to Equity Incentive
      will be limited to those specifically described in the Company's Stock
      Incentive Plan and any applicable stock option and restricted stock
      agreements.

      [4]   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.

      [5]   DEFINITION OF CAUSE. For these purposes, Cause means the Executive's
      [a] failure to substantially perform the duties associated with employment
      under this Agreement, but only if [i] before issuing the notice of
      termination for Cause, the Company makes a written demand upon the
      Executive for substantial performance and specifically describes the basis
      for this demand and [ii] if the failure is one that can be cured, the
      Executive does not comply within 60 days after receiving that demand; [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

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      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]
      breach of Section 4.00 of this Agreement; [g] involvement in any act of
      moral turpitude that has an injurious effect on the Company (or any Group
      Member) or its reputation; or [h] breach of the terms of any
      non-solicitation or confidentiality clauses contained in an employment
      agreement(s) with a former employer. The Company's dissatisfaction with
      the Executive's performance, or the business results achieved, shall not
      constitute Cause under this Section.

      [6]   SUBSEQUENT INFORMATION. The terms of Section 5.04 will apply if,
      within one year after the Executive terminates under any other provision
      of Section 5.00, the Company learns and notifies Executive 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 under any
      other provision of Section 5.00 reduced by the amount the Executive is
      entitled to receive under Section 5.04.

5.05  VOLUNTARY TERMINATION BY EXECUTIVE. The Executive may voluntarily
terminate employment with the Company at any time, in which case the Company
will make the following payments to the Executive if all requirements of this
Agreement are met (including those imposed under Section 7.00):

      [1]   BASE SALARY. The unpaid Base Salary the Executive earned to the date
      of termination.

      [2]   CASH INCENTIVE BONUS. Any unpaid Cash Incentive Bonus earned for the
      fiscal year that ends before the fiscal year during which the Executive
      voluntarily terminates (but no Cash Incentive Bonus will be given with
      respect to the fiscal year during which the Executive voluntarily
      terminates).

      [3]   EQUITY INCENTIVE. The Executive's entitlement to Equity Incentive
      will be limited to those specifically described in the Company's Stock
      Incentive Plan and any applicable stock option and restricted stock
      agreements.

      [4]   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.

5.06  INVOLUNTARY TERMINATION WITHOUT CAUSE. The Company may terminate the
Executive's employment at any time Without Cause (as defined below) by
delivering to the

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Executive a written notice specifying the date termination is to be effective.
Subject to Section 5.04[6], if this notice is given and if all requirements of
this Agreement are met (including those imposed under Section 7.00), the Company
will make the following payments to the Executive as of the effective date of
termination Without Cause:

      [1]   BASE SALARY.

            [a]   IF TERMINATION OCCURS BEFORE JANUARY, 2007 FISCAL YEAR END:
            The Company will continue to pay the Executive's Base Salary at the
            rate in effect on the date of termination Without Cause through the
            Fiscal Year ending January, 2008.

            [b]   IF TERMINATION OCCURS ON OR AFTER JANUARY, 2007 FISCAL YEAR
            END: For 12 months beginning on the date of termination Without
            Cause, the Company will continue to pay the Executive's Base Salary
            at the rate in effect on the date of termination Without Cause.

      [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 18 months following the date of termination, 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 pro rata share of any Cash Incentive Bonus
      that would have been paid to the Executive had the Executive not been
      terminated Without Cause based on the extent to which performance
      standards are met on the last day of the year in which the Executive is
      terminated Without Cause.

      [4]   EQUITY INCENTIVE. Subject to the terms of the Company's Stock
      Incentive Plan and any applicable agreement, the Executive may exercise
      any outstanding stock options that are vested on the date of termination
      Without Cause and those that would have vested during the one year
      following the effective date of termination Without Cause as if the
      Executive had remained employed throughout that one-year period.

      [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.

      [6]   DEFINITION OF WITHOUT CAUSE. 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 5.02, 5.03 or 5.04.

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5.07  TERMINATION FOR GOOD REASON: Executive may terminate employment for Good
Reason (as defined in this section). If Executive terminates employment for Good
Reason Executive shall be entitled to all of the payments described in Section
5.06 pertaining to an Involuntary Termination Without Cause. "Good Reason" means
without the Executive's express prior written consent, the occurrence of any one
or more of the following events during the term of this Agreement and which is
not corrected to the Executive's reasonable satisfaction within 60 days after he
gives notice to the Chief Executive Officer of the circumstance that he believes
does or may constitute Good Reason:

      [1]   A material reduction in the Executive's duties, responsibilities or
            status with respect to the Company, as compared to those in effect
            on the effective date of this Agreement (but will not include any
            changes resulting directly from implementation of a plan that
            restructures the business organization of the Company and its
            affiliates, including, without limitation, by way of disaffiliation
            or liquidation of a subsidiary or division), it being understood
            that the mere occurrence of a sale of the Company or of a
            controlling interest therein to a third party shall not constitute
            such a material reduction as a result of the Company ceasing to be
            publicly traded or because the Company becomes a subsidiary of
            another entity;

      [2]   Deprivation of the Executive of the titles of Executive Vice
            President and Chief Operating Officer of the Company without a
            simultaneous grant of a more senior title;

      [3]   The permanent assignment to the Executive of job duties materially
            inconsistent with those contemplated by this Agreement;

      [4]   The failure of the Company to maintain the Executive's relative
            level of coverage under the employee benefit or retirement plans,
            policies, practices or arrangements as in effect on the effective
            date of this Agreement, both in terms of the amount of benefits
            provided and the relative level of the Executive's participation.
            However, Good Reason will not arise under this subsection if the
            Company eliminates and/or modifies any of these programs if required
            by law to do so, to the extent needed to preserve the tax-character
            of the plan, policy, practice or arrangement, or if such elimination
            and/or modification applies uniformly to other Company employees
            similarly situated to the Executive;

      [5]   The requirement that the Executive's principal place of performing
            the duties of Executive's position be moved more than 60 miles
            outside of the Columbus, Ohio area.

      [6]   Any material breach of this Agreement including failure to make any
            payment or grant provided under this Agreement when due by or on or
            in

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<PAGE>
            behalf of the Company.

                                   6.00 NOTICE

6.01  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 and any other reputable professional delivery service that
maintains a confirmation of delivery system. Any delivery must be addressed to
the Company's Executive 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.

6.02  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 6.01.

                                  7.00 RELEASE

In exchange for the payments and benefits described in this Agreement, as well
as any and all other mutual promises made in this Agreement, the Executive and
the Executive's personal or legal representatives, executors, administrators,
successors, heirs, distributees, devisees, legatees and assigns agree to release
and forever discharge 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. This Release does not include any claim by Executive that the
Company has breached this Agreement. 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 Executive
agrees, upon termination of employment with all Group Members, to reaffirm and
execute this release in writing. If the Executive fails to reaffirm and execute
this release, the Executive agrees to forego any payment from the Company, other
than those described in Section 5.06, as if the Executive had terminated
employment voluntarily under Section 5.05. Specifically, the Executive agrees
that a necessary condition for the payment of any of the amounts described in
Section 5.00 in the event of termination (except termination under Section 5.02)
is the Executive's reaffirmation of this release upon termination of employment.
The Executive acknowledges that the Executive is an experienced senior executive
knowledgeable about the claims that

                                       13
<PAGE>
might arise in the course of employment with the Company and knowingly agrees
that the payments upon termination (except those payable upon the Executive's
death) 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. The Executive acknowledges that 21
days have been given to consider this release. The Executive may revoke consent
to this Agreement by delivering a written notice of such revocation to the
Company within seven days of signing this Agreement. If the Executive revokes
this consent, this Agreement will become null and void and the Executive must
return any compensation received under it, except salary earned for actual work.

                                 8.00 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.

                                9.00 ARBITRATION

9.01  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.

9.02  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.

9.03  EFFECT OF ARBITRATION. The Parties intend that any arbitration award
relating to any matter described in Section 9.00 will be final and binding on
them and that a judgment on the award may be entered in any court of competent
jurisdiction, and

                                       14
<PAGE>
enforcement may be had according to the terms of that award. This section will
survive the termination or expiration of this Agreement.

9.04  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 then in effect. 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.

9.05  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 9.00. 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 9.00 and [2] unless the issue is
resolved otherwise, the complaining Party intends to submit the matter to
arbitration under the terms of Section 9.00.

9.06  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.

9.07  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 9.00, 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.

                                       15
<PAGE>
9.08  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.

                            10.00 GENERAL PROVISIONS

10.01 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.

10.02 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. The Executive and Company
agree that Section 10.02 does not affect the Executive's payment under the Value
Creation Program.

10.03 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.

10.04 NO WAIVER. Except as otherwise provided in Section 9.05, failure to insist
upon strict compliance with any term of this Agreement will not be considered a
waiver of any such term.

10.05 WITHHOLDING. All payments made to the Executive under this Agreement will
be reduced by any amount:

                                       16
<PAGE>
      [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 10.06[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 10.06[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 10.06[2].

10.06 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.

10.07 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.

10.08 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.

                                       17
<PAGE>
      IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Agreement, which includes an arbitration provision, and consists of 20 pages.

                                        EXECUTIVE


                                        /s/ Peter Z. Horvath
                                        ---------------------------------------

                                        Signed: June 1, 2005

                                        DSW Inc.

                                        By: /s/ Deborah Lynn Ferree
                                            -----------------------------------

                                        Signed: June 1, 2005


                                       18
<PAGE>
                                   ATTACHMENT

                                       TO

                              EMPLOYMENT AGREEMENT

                          DSW INC. AND PETER Z. HORVATH

                             BENEFICIARY DESIGNATION

PRIMARY BENEFICIARY DESIGNATION. I designate the following persons as my Primary
Beneficiary or Beneficiaries to receive any amounts payable on my death under
this Agreement. This benefit will be paid, in the proportion specified, to:

______% to ________________________________________ ____________________
                            (Name)                     (Relationship)

Address: _______________________________________________________________

______% to ________________________________________ ____________________
                            (Name)                     (Relationship)

Address: _______________________________________________________________

______% to ________________________________________ ____________________
                            (Name)                     (Relationship)

Address: _______________________________________________________________

______% to ________________________________________ ____________________
                            (Name)                     (Relationship)

Address: ________________________________________________________________

                                       19
<PAGE>
NOTE: You are not required to name more than one Primary Beneficiary but if you
do, the sum of these percentages may not be larger than 100 percent.

CONTINGENT BENEFICIARY DESIGNATION. If one or more of my Primary Beneficiaries
dies before I die, I direct that any amounts payable on my death under this
Agreement that might otherwise have been paid to that Beneficiary:

      _____ Be paid to my other named Primary Beneficiaries in proportion to the
      allocation given above (ignoring the interest allocated to the deceased
      Primary Beneficiary); or

      _____ Be distributed among the following Contingent Beneficiaries.

      ______% to ________________________________________ ____________________
                                  (Name)                     (Relationship)

      Address: _______________________________________________________________

      ______% to ________________________________________ ____________________
                                  (Name)                     (Relationship)

      Address: _______________________________________________________________

      ______% to ________________________________________ ____________________
                                  (Name)                     (Relationship)

      Address: ________________________________________________________________

NOTE: You are not required to name more than one Contingent Beneficiary but if
you do, the sum of these percentages may not be larger than 100 percent.

                                       20
