Exhibit 10.1
STANDARD EXECUTIVE EMPLOYMENT AGREEMENT
BETWEEN
DSW Inc.
AND
KEVIN M. LONERGAN
This Standard Executive Employment Agreement (“Agreement”) by and between DSW
Inc. (“Company”) and KEVIN M. LONERGAN (“Executive”), collectively, the
“Parties,” is effective as of the date signed (“Effective Date”) and supercedes
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 Company’s Executive Vice
President, Chief Operating Officer with the authority and duties assigned to
this position and to discharge any other duties and responsibilities assigned by
the position to be held by Peter Horvath (title not yet known) (hereinafter
referred to as “Horvath Position”), DSW Inc. The Executive will report directly
to and be subject to the supervision, advice and direction of the Horvath
Position, DSW Inc., or his designate. The Executive will be appointed to and
begin working at this position on January 30, 2006 as a transition period in
which he will spend time preparing for this appointment. 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 Columbus, Ohio and by traveling to the Company’s store locations throughout
the United States, and other 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 after Executive begins working for the Company (“Base
Salary”), which will be increased annually by a minimum of 2.5 percent over the
previous year’s base salary. The

 

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Executive’s Base Salary will be paid in installments that correspond with the
Company’s normal payroll practices.

3.02   Cash Incentive Bonus.       [1] From the time that Executive begins
working for the Company, the Executive will be eligible to receive a Cash
Incentive Bonus under the terms of the DSW Inc. Cash Incentive Compensation Plan
(“Cash Incentive Plan”), as modified by the Company. The Company intends to
provide the Executive with a cash bonus of 80 percent of Base Salary based on
the Executive’s achievement of the incentive goals in the annual Management
Incentive Plan (MIP) established by the Company, up to a maximum of 160% of Base
Salary under the MIP formula. The actual performance metrics and goals shall be
determined by the Company in its sole discretion.       [2] Payment of Cash
Bonus. Any Cash Incentive Bonus will be payable, in cash, consistent with the
Company’s normal bonus payment policy.   3.03   Equity Incentive.       [1]
Standard Stock Options. Subject to the terms of the DSW Inc. 2005 Equity
Incentive Plan and any applicable stock option agreement and the approval of the
DSW Compensation Committee, the Company will grant to the Executive options to
purchase 50,000 shares of the Company’s common stock at a per share exercise
price determined by the closing price of DSW stock on the date the option grant
is approved by the DSW Compensation Committee. These options would typically
become exercisable pursuant to the terms set forth in the Company’s standard
five(5)-year vesting schedule, vesting to begin from the time Executive begins
working for the Company.       [2] Restricted Stock Units. Subject to the terms
of the DSW Inc. 2005 Equity Incentive Plan and any applicable Restricted Stock
Unit grant agreement and the approval of the DSW Compensation Committee, the
Company will grant to the Executive 10,000 DSW Restricted Stock Units with cliff
vesting of 100% as of June 29, 2009.       [3] Additional Restricted Stock
Units. In consideration of the unvested value of stock options and restricted
stock grants from Executive’s current employer, and subject to the terms of the
DSW Inc. 2005 Equity Incentive Plan and any applicable Restricted Stock Unit
grant agreement and the approval of the DSW Compensation Committee, the Company
will grant to the Executive 20,000 DSW Restricted Stock Units with a two(2)-
year annual vesting schedule, vesting to begin from the time Executive begins
working for the Company .

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 as of the time he begins
working for the Company. During the waiting time for benefits the Company will
reimburse Executive for any necessary COBRA payments that he makes for this time
period.
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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 Horvath Position, DSW Inc.
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.
3.07 Relocation . The Company will provide Executive with a comprehensive
relocation package through SIRVA, the Company’s relocation provider, which will
include relocation of the physical goods from up to two households to a new city
of residence. Executive agrees to repay to the Company in full the net amount of
any relocation benefit or reimbursement if Executive voluntarily resigns or is
terminated for Cause (see Section 5.04) within the first twelve months after
Executive receives the relocation benefit or reimbursement.
3.08 Perquisite Allowance. The Company will provide Executive with a perquisite
allowance of $25,000 per year after Executive begins working for the Company,
paid on a pro-rata basis in Executive’s bi-weekly paychecks, which already
includes a grossed-up amount for taxes at the 45 percent tax rate. (The term
“grossed up” as used in this Agreement refers to a payment to Executive that,
after reduction for any income or excise taxes due, is equal to the net amount
payable.)
3.09 Termination Benefits. After Executive begins working for the Company, 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. Once Executive begins working for the Company, 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
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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 Horvath
Position, DSW Inc.

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.       [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 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

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    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.

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 or plans to directly
compete with the Group’s (or any Group Member’s) business, which is understood
by the Parties to be the sale of discount and off-price shoes and accessories.
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; Marmaxx;
Winners); Shoe Carnival; MJM Designer Shoes; The Shoe Dept.; Payless ShoeSource;
Off-Broadway Shoes; Famous Footwear; and Footstar. 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.
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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 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 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
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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.
4.08 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.
4.09 Nondisclosure. The Executive agrees not to personally disclose the terms of
this Agreement in any manner to any person other than the Horvath Position, DSW
Inc., 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 the Company 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 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 the Company will be distributed or made available
as required by the terms of the plan fund or program or as required by law.
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[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 the Company 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
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 mere
dissatisfaction with the Executive’s performance, or the business results
achieved, shall not constitute Cause under this Section.
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[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 by delivering to the Company a written
notice specifying the date termination is to be effective, 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 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 after January 30, 2006 but before January, 2008 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, 2009.
[b] If termination occurs on or after January, 2008 fiscal year end: For
12 months beginning on the date of termination Without Cause, the Company will
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     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
12 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 Equity 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 the Company 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, 5.04 or 5.07.

5.07   Termination for Good Reason: After he has been appointed to his position
and has begun working for the Company, 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 when he
begins working for the Company (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

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      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]   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 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 or any other reputable professional delivery service that maintains a
confirmation of delivery system. Any delivery must be addressed to the Company’s
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.
Initials                      Date                     

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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, other than any claim 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 5.05, 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 other 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 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.
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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 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. 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
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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.
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.
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
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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 IRC Section 409A. The parties agree that if necessary the method of making
payments under this agreement will be modified, and this agreement amended, to
comply with IRC Section 409A and to prevent Executive from being subject to
excise taxes on severance payments. The parties agree that any such modification
will not result in a reduction of total monies owed to Executive under any
applicable provision of this Agreement. The parties further agree that if a
delay of the severance payments is necessary to comply with IRC
Section 409A(a)(2)((B)(i), as amended, the aggregate amount of the payments that
would have been paid during the 6 month delay period (or such other delay period
required by Section 409A or the regulations promulgated under Section 409A) will
be paid on the first day of the month following the delay period (i.e., the
seventh month).
10.06 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 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].
10.07 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.

10.08   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.

Initials                      Date                     

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[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.
10.09 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.
     IN WITNESS WHEREOF, the Parties have duly executed and delivered this
Agreement, which includes an arbitration provision, and consists of 19 pages.

              Kevin M. Lonergan
 
            /s/ Kevin M. Lonergan      
 
            Signed: December 1, 2005
 
            DSW Inc.
 
       
 
  By:   /s/ Peter Z. Horvath
 
       
 
            Signed: December 1, 2005

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ATTACHMENT
TO
STANDARD EXECUTIVE EMPLOYMENT AGREEMENT
DSW INC. and KEVIN J. LONERGAN
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:
                 

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.

                 
 
  Initials       Date    
 
               

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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.

                 
 
  Initials       Date    
 
               

19