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                                                                   Exhibit 10.45


                              EMPLOYMENT AGREEMENT

                                   dated as of

                                  March 1, 2003

                                     between

                       FEDERATED CORPORATE SERVICES, INC.

                                       and

                                TERRY J. LUNDGREN






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                              EMPLOYMENT AGREEMENT

            THIS AGREEMENT, made in the City of Cincinnati and State of Ohio, as
of the 1st day of March 2003, between FEDERATED CORPORATE SERVICES, INC., a
Delaware corporation (hereinafter called the "Employer"), and TERRY J. LUNDGREN
(hereinafter called the "Employee").

            In consideration of the premises, it is agreed by and between the
parties hereto as follows:

                                    ARTICLE I

                                   EMPLOYMENT

            1.1 TERM AND DUTIES. The Employer shall employ the Employee, and the
Employee shall serve the Employer, as an executive for the period (the "Term")
beginning on the date of this Agreement and ending on the later of (a) the date
set forth on Exhibit A hereto and (b) any later date to which the Term may have
been extended by agreement of the parties. During the Term the Employee shall
faithfully and in conformity with the directions of the Board of Directors of
the Employer (the "Board") or its delegate perform the duties of his employment
and shall devote to the performance of such duties his full time and attention.
During the Term the Employee shall serve in the office or offices of the
Employer to which the Board may from time to time elect or appoint him. The
Employee shall be excused from performing any services hereunder during periods
of temporary incapacity and during vacations in accordance with the Employer's
disability and vacation policies.

            1.2 COMPENSATION. In consideration of his services during the Term,
the Employer shall pay the Employee cash compensation at an annual rate not less
than the greater of his current base salary as set forth on Exhibit A hereto or
the base salary of the Employee

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most recently approved by the Board or its delegate ("Base Compensation").
Employee's Base Compensation shall be subject to such increases as may be
approved by the Board or its delegate.

            1.3 PAYMENT SCHEDULE. The Base Compensation specified in Section
1.2(a) hereof shall be payable as current salary, in installments not less
frequently than monthly, and at the same rate for any fraction of a month
unexpired at the end of the Term.

            1.4 EXPENSES. During the Term the Employee shall be allowed
reasonable traveling expenses and shall be furnished office space, assistance
and accommodations suitable to the character of his position with the Employer
and adequate for the performance of his duties hereunder.

            1.5 TERMINATION IN CASE OF DISABILITY. The Employee shall not be in
breach of this Agreement if he shall fail to perform his duties hereunder
because of physical or mental disability. If for a continuous period of 12
months during the Term the Employee fails to render services to the Employer
because of the Employee's physical or mental disability, the Board or its
delegate may end the Term prior to its stated termination date. If there should
be any dispute between the parties as to the Employee's physical or mental
disability at any time, such question shall be settled by the opinion of an
impartial reputable physician agreed upon for the purpose by the parties or
their representatives, or failing agreement within 10 days of a written request
therefor by either party to the other, then one designated by the then president
of the local Academy of Medicine. The written opinion of such physician as to
the matter in dispute shall be final and binding on the parties.

            1.6 TERMINATION OF SERVICES. If the Employer notifies the Employee
that his services will no longer be required during the Term or if the Employee
notifies the Employer that circumstances constituting Good Reason have occurred,
the Employee shall be entitled (except as otherwise provided in Section 1.5 or
Section 1.7 hereof) to continue to receive (i) his Base Compensation for the
remainder of the Term on the same periodic basis that he had been receiving Base
Compensation prior to such notice and (ii) his target annual bonus for the
remainder of the Term under the bonus plan applicable to him as of the date of
such notice,


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payable (i) in the fiscal year in which such notice is provided, on a monthly
basis commencing in the month following the month in which the notice is given
and for each month remaining in the Term occurring in that year and in an amount
equal to the number derived by dividing the months remaining in the Term and
occurring in that year by such annual target bonus and (ii) in any fiscal year
while the Term remains following the year in which such notice is given, on a
monthly basis for each month remaining in the Term in an amount equal to
one-twelfth of such annual target bonus.

            1.7 MITIGATION. If the Employee or the Employer receives notice from
the other pursuant to Section 1.6 hereof, the Employee (subject to Section 2.4
hereof) shall be free to become actively engaged with another business and shall
use his best efforts to find other comparable employment. Upon the payment to
the Employee of compensation for employment or other services by any
unaffiliated third party, the Employee shall automatically cease to be an
employee of the Employer. The Employee shall promptly notify the Employer of any
such employment or other services and of the compensation received, to be
received or receivable from his subsequent employer or such other party
attributable to the Term. All Base Compensation and Target Bonus otherwise
payable to the Employee by the Employer under this Agreement during the
remainder of the Term shall be reduced to the extent of similar base or bonus
compensation received, to be received or receivable from such other employment
or other services.

            1.8 TERMINATION FOR CAUSE. The Employer may terminate the employment
of the Employee and this Agreement and all of its obligations hereunder, except
for obligations accrued but unpaid to the effective date of termination, for
Cause upon notice given pursuant to this Section. As used in this Agreement, the
term "Cause" shall mean:

                (a) an intentional act of fraud, embezzlement, theft or any
other material violation of law in connection with the Employee's duties or in
the course of his employment with the Employer;

                (b) intentional wrongful damage to material assets of the
Employer;

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                (c) intentional wrongful disclosure of material confidential
information of the Employer;

                (d) intentional wrongful engagement in any competitive activity
which would constitute a material breach of the duty of loyalty; or

                (e) intentional breach of any stated material employment policy
of the Employer.

                  No act, or failure to act, on the part of an Employee shall be
deemed "intentional" if it was due primarily to an error in judgment or
negligence, but shall be deemed "intentional" only if done, or omitted to be
done, by the Employee not in good faith and without reasonable belief that his
action or omission was in or not opposed to the best interest of the Employer.
Failure to meet performance standards or objectives of the Employer shall not
constitute Cause for purposes hereof.

            1.9   THE TERM "GOOD REASON" MEANS:

                  A. The assignment to the Employee of any duties materially
inconsistent with the Employee's position (including status, offices, titles and
reporting requirements), authority, duties or responsibilities as contemplated
in Article I of this Agreement, or any other action by the Employer which
results in a material diminution in such position, authority, duties or
responsibilities, excluding for this purpose an action not taken in bad faith
and which is remedied by the Employer within ten (10) days after receipt of
written notice thereof given by the Employee, provided that repeated instances
of such action shall be evidence of the bad faith of the Employer;

                  B. any material failure by the Employer to comply with any of
the provisions of this Agreement, other than a failure not occurring in bad
faith and which is remedied by the Employer within ten (10) days after receipt
of written notice thereof given by the Employee, provided that repeated failures
shall be evidence of the bad faith of the Employer;

                  C. failure of the Employee to be elected or reelected Chief
Executive Officer (and the failure of the Employee to be elected or reelected
Chairman following the


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retirement of James A. Zimmerman) of Federated or to be elected or reelected to
membership on the Federated's Board of Directors; or


                D. any purported termination by the Employer of the Employee's
employment otherwise than as expressly permitted by this Agreement.

                                   ARTICLE II

                     CERTAIN OBLIGATIONS OF THE EMPLOYEE


            2.1   NO PARTICIPATION IN OTHER BUSINESSES.  During the Term
(except as otherwise expressly provided in Section 1.7 hereof) the Employee
shall not, without the consent of the Board or its delegate, become actively
associated with or engaged in any business other than that of the Employer or a
division or affiliate of the Employer, and he shall do nothing inconsistent with
his duties to the Employer.

            2.2 TRADE SECRETS AND CONFIDENTIAL INFORMATION. Employee shall not
(either during the Term or thereafter) without the consent of the Employer
disclose to anyone outside of the Employer, or use in other than the Employer's
business, trade secrets or confidential information relating to the Employer's
business in any way obtained by him while employed by the Employer.

            2.3 NONCOMPETITION. It is recognized by the Employee and the
Employer that Employee's duties hereunder will entail the receipt of trade
secrets and confidential information, which include not only information
concerning the Employer's current operations, procedures, suppliers and other
contacts, but also its short-range and long-range plans, and that such trade
secrets and confidential information have been developed by the Employer and its
affiliates at substantial cost and constitute valuable and unique property of
the Employer. Accordingly, the Employee acknowledges that the foregoing makes it
reasonably necessary for the protection of the Employer's business interests
that the Employee not compete with the Employer or any of its affiliates during
the Term and for a reasonable and limited period thereafter. Therefore, during
the Term and for a period of one year thereafter, the Employee shall not have an
investment of


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$100,000 or more in a Competing Business (as hereinafter defined) and shall not
render personal services to any such Competing Business in any manner,
including, without limitation, as owner, partner, director, trustee, officer,
employee, consultant or advisor thereof. The noncompete provisions of this
section shall not be applicable to Employee if he has been notified pursuant to
Section 1.6 hereof that his services will no longer be required during the Term
or if Employee has been advised that his services will no longer be required
after the expiration of the Term.

                  If the Employee shall breach the covenants contained in this
Section 2.3 or in Section 2.2 hereof, the Employer shall have no further
obligation to make any payment to the Employee pursuant to this Agreement and
may recover from the Employee all such damages as it may be entitled to at law
or in equity. In addition, the Employee acknowledges that any such breach is
likely to result in immediate and irreparable harm to the Employer for which
money damages are likely to be inadequate. Accordingly, the Employee consents to
injunctive and other appropriate equitable relief upon the institution of
proceedings therefor by the Employer in order to protect the Employer's rights
hereunder. Such relief may include, without limitation, an injunction to prevent
the Employee from disclosing any trade secrets or confidential information
concerning the Employer to any Competing Business, to prevent any Competing
Business from receiving from the Employee or using any such trade secrets or
confidential information and/or to prevent any such Competing Business from
retaining or seeking to retain any other employees of the Employer. Employer
agrees, however, that it will not seek injunctive relief for the purposes of
preventing Employee from competing with Employer after the expiration of the
Term. The provisions of the foregoing sentence shall not apply, however, to
injunctions of the type described in the preceding sentence.

                  (a) As used in this Agreement, the term "affiliate" shall
mean, with respect to a particular person, a person that directly, or indirectly
through one or more intermediaries, controls, or is controlled by, or is under
common control with, such person.

                  (b) As used in this Agreement, the term "Competing Business"
shall mean any business which:

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                        (i)   at the time of determination, is substantially
similar to the whole or a substantial part of the business conducted by the
Employer or any of its divisions or affiliates;

                        (ii)  at the time of determination, is operating a
store or stores which, during its or their fiscal year preceding the
determination, had aggregate net sales, including sales in leased and licensed
departments, in excess of $10,000,000, if such store or any of such stores is or
are located in a city or within a radius of 25 miles from the outer limits of a
city where the Employer, or any of its division's or affiliates, is operating a
store or stores which, during its or their fiscal year preceding the
determination, had aggregate net sales, including sales in leased and licensed
departments, in excess of $10,000,000; and

                        (iii) had aggregate net sales at all its locations,
including sales in leased and licensed departments and sales by its divisions
and affiliates, during its fiscal year preceding that in which the Employee made
such an investment therein, or first rendered personal services thereto, in
excess of $25,000,000.

            2.4 CONFLICTS OF INTEREST. The Employee shall not engage in any
activity that would violate the Conflict of Interest or Business Ethics
Statement signed from time to time by the Employee.

            2.5 NON-SOLICITATION. During the Term and for a period of one year
hereafter (such period is referred to as the "No Recruit Period"), the Employee
will not solicit, either directly or indirectly, any person that he or she knows
or should reasonably know to be an employee of Federated Department Stores, Inc.
or any of its subsidiaries, divisions or affiliates (collectively referred to in
this Agreement as the "Federated Affiliates") (whether any such employees are
now or hereafter through the No Recruit Period so employed or engaged) to
terminate their employment with any of the Federated Affiliates. The foregoing
undertaking is not intended to limit any legal rights or remedies that any of
the Federated Affiliates may have under common law with regard to any
interference by Employee at any time with the contractual relationship the
Federated Affiliates may have with any of their employees.

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                                   ARTICLE III

                                  MISCELLANEOUS

            3.1 ASSIGNMENT. This Agreement may be assigned by the Employer to
any of its affiliates. This Agreement shall not otherwise be assignable by the
Employer without the consent of the Employee, except that, if the Employer shall
merge or consolidate with, or transfer all or any substantial portion of its
assets, including goodwill, to another corporation or other form of business
organization, this Agreement shall (or, in the case of any such transfer, may)
be assigned to and shall bind and run to the benefit of the successor of the
Employer resulting from such merger, consolidation or transfer. The Employee may
not assign, pledge or encumber his interest in this Agreement or any part
hereof.

            3.2 GOVERNING LAW. This Agreement has been executed on behalf of the
Employer by an officer of the Employer located in the City of Cincinnati, Ohio.
This Agreement and all questions arising in connection herewith shall be
governed by the internal substantive laws of the State of Ohio. The Employer and
the Employee each consent to the jurisdiction of, and agree that any controversy
between them arising out of this Agreement shall be brought in, the United
States District Court for the Southern District of Ohio, Western Division; the
Court of Common Pleas for Hamilton County, Ohio; or such other court venued
within Hamilton County, Ohio as may have subject matter jurisdiction over the
controversy.

            3.3 SEVERABILITY. If any portion of this Agreement is held to be
invalid or unenforceable, such holding shall not affect any other portion of
this Agreement.

            3.4 ENTIRE AGREEMENT. This Agreement comprises the entire agreement
between the parties hereto and as of the date hereof, supersedes, cancels and
annuls any and all prior agreements between the parties hereto. This Agreement
may not be modified, renewed or extended orally, but only by a written
instrument referring to this Agreement and executed by the parties hereto.

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            3.5 GENDER AND NUMBER. Words in the masculine herein may be
interpreted as feminine or neuter, and words in the singular as plural, and vice
versa, where the sense requires.

            3.6 NOTICES. Any notice or consent required or permitted to be given
under this Agreement shall be in writing and shall be effective when given by
personal delivery or five business days after being sent by certified U.S. mail,
return receipt requested, to the Secretary of Federated Department Stores, Inc.
at its principal place of business in the City of Cincinnati or to the Employee
at his last known address as shown on the records of the Employer.

            3.7 WITHHOLDING TAXES. The Employer may withhold from any amounts
payable under this Agreement all federal, state, city or other taxes as shall be
required pursuant to any law or governmental regulation or ruling.

            3.8 WAIVER AND RELEASE. In consideration of the Employer's entering
into this Agreement, and the receipt of other good and valuable consideration,
the sufficiency of which is expressly acknowledged, the Employee, for himself
and his successors, assigns, heirs, executors and administrators, hereby waives
and releases and forever discharges the Employer and its affiliates and their
officers, directors, agents, employees, shareholders, successors and assigns
from all claims, demands, damages, actions and causes of action whatsoever which
he now has on account of any matter, whether known or unknown to him and whether
or not previously disclosed to the Employee or the Employer, that relates to or
arises out of (a) any existing or former employment agreement (written or oral)
entered into between the Employee and the Employer or any of its affiliates (or
any amendment or supplement to any such agreement), (b) any agreement providing
for a payment or payments or extension of the employment relationship triggered
by a merger or sale or other disposition of the stock or assets or restructuring
of the Employer or any affiliate of the Employer, or (c) any applicable
severance plan.

            3.9 ENFORCEMENT OF AGREEMENT. If the Employee incurs legal and other
fees and expenses in an effort to establish entitlement to benefits under this
Agreement,

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regardless of whether the Employee ultimately prevails, the Employer shall
reimburse him for such fees and expenses, unless a court of competent
jurisdiction determines that the Employee made such effort in bad faith.

                        Reimbursement of fees and expenses described in the
preceding paragraph shall be made monthly during the course of any action upon
the written submission of a request for reimbursement together with proof that
the fees and expenses were incurred.

            IN WITNESS WHEREOF, the parties hereto have hereunto and to a
duplicate hereof set their signatures as of the day and year first above
written.

                                 FEDERATED CORPORATE SERVICES, INC.


                                 By:  /s/ Dennis J. Broderick
                                      -------------------------------
                                 Name:  Dennis J. Broderick
                                 Title: President

                                    /s/ Terry J. Lundgren
                                    ---------------------------------
                                    TERRY J. LUNDGREN


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                                    EXHIBIT A

                                       TO

                              EMPLOYMENT AGREEMENT

                        DATED AS OF MARCH 1, 2003 BETWEEN

                                TERRY J. LUNDGREN

                                       AND

                       FEDERATED CORPORATE SERVICES, INC.

NAME:                        Terry J. Lundgren

END OF TERM:                 February 28, 2007

ANNUAL BASE COMPENSATION:    $1,200,000


            ANNUAL BONUS: Commencing in respect of the 2003 fiscal year, the
annual bonus payable (if any) under the terms of the 1992 Incentive Bonus Plan
(as such may be amended from time to time) of Federated Department Stores, Inc.
("Federated") will be based on performance goals established for the senior
executives of the Employer on an annual basis by the Board of Directors of
Federated or a Committee thereof, with the amount of bonus equal to a sliding
percent of Employee's annual base compensation in effect as of the last day of
the performance period based on performance against the targeted annual goals.

                  Such sliding percent, and the targeted annual goals in respect
                  of fiscal 2003, are set out in Schedule 1 hereto.

STOCK OPTIONS:    Federated shall grant, to Employee, effective February 24,
                  2003 (the "Grant Date"), options for 250,000 shares, with
                  vesting of 62,500 shares on February 24, 2004 (the "Option
                  Vesting Date"), 62,500 shares on the first anniversary of
                  the Option Vesting Date, 62,500 shares on the second
                  anniversary of the Option Vesting Date, and 62,500 shares
                  on the third anniversary of the Option Vesting Date; the
                  options will be issued at one hundred percent of the
                  closing market price of Federated's common stock on the New
                  York Stock Exchange as listed in The Wall Street Journal on

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                  the trading day immediately preceding the Grant Date; the
                  term of the grant shall expire ten years from the Grant
                  Date; the grant is subject to the terms of the attached
                  form of Non-Qualified Stock Option Agreement with Federated.

RESTRICTED STOCK
AWARD:            Federated shall grant to Employee, effective February 24, 2003
                  (The Grant Date"), 50,000 restricted shares of Federated's
                  Common Stock, with restrictions as to all such shares to lapse
                  on the fourth anniversary of the Grant Date; the grant is
                  subject to the terms of the attached form of Restricted Stock
                  Agreement.

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