<PAGE>
 
                                                                   EXHIBIT 10.6
 
                                                              Sarah M. Gallivan
 
                             EMPLOYMENT AGREEMENT
 
  AGREEMENT dated as of April 13, 1995 between Sarah M. Gallivan, whose
address is 35 Prentiss Street, Cambridge, Massachusetts 02140 ("Executive")
and Waban Inc., a Delaware corporation, whose principal office is in Natick,
Massachusetts ("Employer" or "Company").
 
  The parties hereto, in consideration of the mutual agreements hereinafter
contained and intending to be legally bound hereby, agree as follows:
 
  1. Employment. The Executive is currently an employee of the Company.
Employer will employ Executive and Executive will be an employee of Employer
under the terms and conditions hereinafter set forth. This Agreement
supersedes and replaces any prior employment agreement between Executive and
Employer or its subsidiaries or divisions, except for any Change of Control
Severance Agreement between Executive and Employer.
 
  2. Term. Executive's employment under the terms of this Agreement shall
commence on the date hereof and shall continue until April 12, 1996 and
thereafter until terminated by either Executive or Employer, subject to
earlier termination as provided herein (such period of employment hereinafter
called the "Employment Period").
 
  3. Duties. Executive shall diligently perform the duties of General Counsel,
Vice President and Secretary of the Company or such executive duties and
responsibilities as shall from time to time be assigned to Executive by the
President or Board of Directors of Employer.
 
  4. Extent of Services. Except for illnesses and vacation periods, Executive
shall devote substantially all Executive's working time and attention and
Executive's best efforts to the performance of Executive's duties and
responsibilities under this Employment Agreement; provided, however, that
nothing herein contained shall be deemed to prevent or limit the right of
Executive (a) to make any passive investments where Executive is not obligated
or required to, and shall not in fact, devote any managerial efforts or (b) to
participate in charitable or community activities or in trade or professional
organizations, except only that the President of Employer shall have the right
to limit such participation if the President believes that the time spent on
such activities infringes upon the time required by Executive for the
performance of Executive's duties under this Agreement or is otherwise
incompatible with those duties.
 
  5. Base Salary. During the Employment Period, Executive shall receive a base
salary at the rate of $135,000.00 per year, or such higher amount as Employer
shall determine from time to time. Base salary shall be payable in such manner
at such times as Employer shall pay base salary to other executive employees.
 
  6. Policies and Fringe Benefits. Executive shall be subject to Employer
policies applicable to its executives generally, and Executive shall be
entitled to receive all such fringe benefits as Employer shall from time to
time make available to other Employer executives generally (subject to the
terms of any applicable fringe benefit plan).
 
  7. Termination of Employment; in General.
 
  a) Employer shall have the right to end Executive's employment at any time
and for any reason, with or without cause. Cause shall mean dishonesty by
Executive in the performance of Executive's duties, conviction of a felony
(other than a conviction arising solely under a statutory provision
<PAGE>
 
imposing criminal liability upon Executive on a per se basis due to the
Company offices held by Executive, so long as any act or omission of Executive
with respect to such matter was not taken or omitted in contravention of any
applicable policy or directive of the Board of Directors of the Company),
gross neglect of duties (other than as a result of Disability or death), or
conflict of interest which conflict shall continue for 30 days after the
Company gives written notice to Executive requesting the cessation of such
conflict.
 
  b) The Employment Period shall terminate when Executive becomes entitled to
receive long-term disability compensation pursuant to Employer's long-term
disability plan. In addition, if by reason of any incapacity, Executive is
unable to perform Executive's duties for at least six months in any 12 month
period, upon written notice by Employer to Executive, the Employment Period
will be terminated for incapacity.
 
  c) Whenever the Employment Period shall terminate, Executive shall resign
all offices or other positions Executive shall hold with Employer or any
parent corporation and any subsidiaries or divisions of Employer or any such
parent.
 
  8. Benefits Upon Termination of Employment.
 
  a) Termination by Employer Other Than for Cause, Disability or
Incapacity. If the Employment Period shall have been terminated by Employer
for any reason other than cause, disability or incapacity, no compensation or
other benefits shall be payable to or accrue to Executive hereunder except as
follows:
 
    (i) Vested vacation pay accrued at date of termination shall be paid one
  week after date of termination.
 
    (ii) Employer will continue to pay to Executive Executive's then base
  salary for a period of 12 months from the date of termination, which base
  salary shall be reduced after three months for compensation earned from
  other employment or self-employment.
 
    (iii) Until the expiration of the period of base salary payments
  described in (ii) immediately above or until Executive shall commence other
  employment or self-employment, whichever shall first occur, Employer will
  provide such medical and hospital insurance and term life insurance (but
  not long-term disability insurance) for Executive and Executive's family,
  comparable to the insurance provided for executives generally, as Employer
  shall determine, and upon the same terms and conditions as shall be
  provided for Employer's executives generally.
 
    (iv) Executive shall be entitled to payment, if any, pursuant to the
  terms of Employer's Management Incentive Plan ("MIP"), or, if greater, such
  amount as Executive would have earned under MIP if Executive's employment
  had continued until the end of the fiscal year (pro-rated for the period of
  active employment during such year).
 
    (v) Executive shall also be entitled to payments or benefits under other
  Employer plans to the extent therein provided in the circumstances.
 
  b) Termination for Death, Disability or Incapacity. If the Employment Period
shall terminate at any time by reason of death, disability or incapacity, no
compensation or other benefits shall be payable to or accrue to Executive
hereunder except as follows:
 
    (i) Vested vacation pay accrued at date of termination shall be paid one
  week after date of termination.
 
    (ii) Executive shall be entitled to payment, if any, pursuant to terms of
  MIP, or, if greater, such amount as Executive would have earned under MIP
  if Executive's employment had continued until the end of the fiscal year
  (pro-rated for the period of active employment during such year).
 
 
                                       2
<PAGE>
 
    (iii) Executive shall also be entitled to payments or benefits under
  other Employer plans, including any long-term disability plan, to the
  extent therein provided in the circumstances.
 
  c) Voluntary Termination; Termination for Cause; Violation of Certain
Covenants. If Executive should end Executive's employment voluntarily or if
Employer should end Executive's employment for cause, or if Executive should
violate the protected persons or noncompetition provisions of Section 9, all
compensation and benefits otherwise payable pursuant to this Agreement shall
cease. Employer does not waive any rights it may have for damages or for
injunctive relief.
 
  9. Agreement Not to Solicit or Compete.
 
  (a) Upon the termination of the Employment Period at any time for any
reason, Executive shall not during the Prohibited Period under any
circumstances employ, solicit the employment of, or accept unsolicited the
services of, any "protected person", or recommend the employment of any
"protected person" to any other business organization in which Executive has
any direct or indirect interest (other than a less-than-one precent equity
interest in the entity), with which Executive is affiliated or for which
Executive renders any services. "Prohibited Period" shall mean a period
coterminous with the period of base salary continuation (without regard to
reduction for income from other employment or self-employment) which is
applicable or which would have been applicable had the termination been
pursuant to Section 8(a). A "protected person" shall be a person known by
Executive to be employed by Employer or its subsidiaries at or within six
months prior to the commencement of conversations with such person with
respect to employment.
 
  As to (i) each "protected person" to whom the foregoing applies, (ii) each
limitation on (A) employment of, (B) solicitation of, and (C) unsolicited
acceptance of services from, each "protected person" and (iii) each month of
the period during which the provisions of this subsection (a) apply to each of
the foregoing, the provisions set forth in this subsection (a) are deemed to
be separate and independent agreements and in the event of unenforceability of
any such agreement, such unenforceable agreement shall be deemed automatically
deleted from the provisions hereof and such deletion shall not affect the
enforceability of any other provision of this subsection (a) or any other term
of this Agreement.
 
  (b) During the course of Executive's employment, Executive will have learned
many trade secrets of the Company and will have access to confidential
information and business plans of the Employer. Therefore, if Executive should
end Executive's employment voluntarily at any time, including by reason of
retirement, disability or incapacity, or if Employer should end Executive's
employment at any time for cause, then during the Prohibited Period, Executive
will not engage, either as a principal, employee, partner, consultant or
investor (other than a less-than-one percent equity interest in an entity), in
a business which is a competitor of Employer. A business shall be deemed a
competitor of Employer if it shall then be so regarded by retailers or
wholesalers generally, or if it shall operate a warehouse outlet (such as
HomeBase, BJ's Wholesale Club, Home Depot, Sam's Club, Price/Costco or similar
warehouse merchandisers) within 10 miles of any "then existing" Waban Inc.
warehouse location. The term "then existing" in the previous sentence shall
refer to any such location that is, at the time of termination of the
Employment Period, operated by Waban Inc. or any of its subsidiaries or
divisions or under lease for operation as aforesaid. Nothing herein shall
restrict the right of Executive to engage in a business that operates
exclusively conventional or full mark-up department stores, or apparel stores.
Executive agrees that if, at any time, pursuant to action of any court,
administrative or governmental body or other arbitral tribunal, the operation
of any part of this paragraph shall be determined to be unlawful or otherwise
unenforceable, then the coverage of this paragraph shall be deemed to be
restricted as to duration, geographical scope or otherwise, to the extent, and
only to the extent, necessary to make this paragraph lawful and enforceable in
the particular jurisdiction in which such determination is made.
 
  If the Employment Period terminates, Executive agrees (i) to notify Employer
immediately upon Executive's securing employment or becoming self-employed
during any period when Executive's
 
                                       3
<PAGE>
 
compensation from Employer shall be subject to reduction or Executive's
benefits provided by Employer shall be subject to termination as provided in
Section 8, and (ii) to furnish to Employer written evidence of Executive's
compensation earned from any such employment or self-employment as Employer
shall from time to time request. In addition, upon termination of the
Employment Period for any reason other than the death of Executive, Executive
shall immediately return all written trade secrets, confidential information
and business plans of Employer and shall execute a certificate certifying that
Executive has returned all such items in Executive's possession or under
Executive's control.
 
  10. Assignment. The rights and obligations of Employer shall inure to the
benefit of and shall be binding upon the successors and assigns of Employer.
The rights and obligations of Executive are not assignable except only that
payments payable to Executive after Executive's death shall be made to
Executive's estate.
 
  11. Notices. All notices and other communications required hereunder shall
be in writing and shall be given either by personal delivery or by mailing the
same by certified or registered mail, return receipt requested, postage
prepaid. If sent to Employer, the same shall be mailed to Employer at One
Mercer Road, Natick, MA 01760, Attention: President, or such other address as
Employer may hereafter designate by notice to Executive; and if sent to
Executive, the same shall be mailed to Executive at his address set forth
above, or at such other address as Executive may hereafter designate by notice
to Employer. Notices shall be effective upon receipt.
 
  12. Governing Law. This Agreement and the rights and obligations of the
parties hereunder shall be governed by the laws of the Commonwealth of
Massachusetts.
 
  13. Arbitration. In the event that there is any claim or dispute arising out
of or relating to this Agreement, or the breach thereof, and the parties
hereto shall not have resolved such claim or dispute within 60 days after
written notice from one party to the other setting forth the nature of such
claim or dispute, then such claim or dispute shall be settled exclusively by
binding arbitration in Boston, Massachusetts in accordance with the Commercial
Arbitration Rules of the American Arbitration Association by an arbitrator
mutually agreed upon by the parties hereto or, in the absence of such
agreement, by an arbitrator selected according to such Rules, and judgement
upon the award rendered by the arbitrator shall be entered in any Court having
jurisdiction thereof upon the application of either party.
 
  WITNESS the execution hereof the day and year first above written.
 
                                                     Sarah M. Gallivan
                                          _____________________________________
                                                         Executive
 
                                          WABAN INC.
 
                                                     Herbert J. Zarkin
                                          By __________________________________
                                                     Herbert J. Zarkin
                                                         President
 
                                       4