Exhibit 10.1

 

SETTLEMENT AND RELEASE AGREEMENT

 

 

This Settlement and Release Agreement (“Agreement”) is made and entered into by
and among John A. Zimmermann (“Employee”) on the one hand, and Zale Corporation
and Zale Delaware, Inc. (collectively, “Zale” or the “Company”) on the other,
hereinafter collectively referred to as the “Parties” or individually as a
“Party.”

 

RECITALS

 

WHEREAS, Employee had been employed by Zale as Group President, Zale North
America; and

 

WHEREAS, the Parties desire to settle fully and finally, in the manner set forth
herein, all differences between them which have arisen, or which may arise,
prior to, or at the time of, the execution of this Agreement, including, but in
no way limited to, any and all claims and controversies arising out of the
employment relationship between Employee and Zale, and the cessation of
Employee’s employment with Zale, effective August 6, 2007 (the “Separation
Date”).

 

NOW, THEREFORE, in consideration of the Recitals and the mutual promises,
covenants, and agreements set forth herein, the Parties covenant and agree as
follows:

 

1.             EMPLOYEE, FOR HIMSELF AND ON BEHALF OF HIS ATTORNEYS, HEIRS,
ASSIGNS, SUCCESSORS, EXECUTORS, AND ADMINISTRATORS, HEREBY GENERALLY RELEASES,
ACQUITS, AND DISCHARGES ZALE CORPORATION, ZALE DELAWARE, INC. AND THEIR
RESPECTIVE CURRENT AND FORMER PARENT, SUBSIDIARY, AFFILIATED, AND RELATED
CORPORATIONS, FIRMS, ASSOCIATIONS, PARTNERSHIPS, AND ENTITIES (COLLECTIVELY, ALL
OF THE ZALE ENTITIES ARE REFERRED TO AS THE “COMPANY PARTIES”), THEIR SUCCESSORS
AND ASSIGNS, AND THE CURRENT AND FORMER OWNERS, SHAREHOLDERS, DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS, ATTORNEYS, REPRESENTATIVES, AND INSURERS OF SAID
CORPORATIONS, FIRMS, ASSOCIATIONS, PARTNERSHIPS, AND ENTITIES, AND THEIR
GUARDIANS, SUCCESSORS, ASSIGNS, HEIRS, EXECUTORS, AND ADMINISTRATORS
(HEREINAFTER COLLECTIVELY REFERRED TO AS THE “RELEASEES”) FROM AND AGAINST ANY
AND ALL CLAIMS, COMPLAINTS, GRIEVANCES, LIABILITIES, OBLIGATIONS, PROMISES,
AGREEMENTS, DAMAGES, CAUSES OF ACTION, RIGHTS, DEBTS, DEMANDS, CONTROVERSIES,
COSTS, LOSSES, AND EXPENSES (INCLUDING, WITHOUT LIMITATION, ATTORNEYS’ FEES AND
EXPENSES) WHATSOEVER, UNDER ANY MUNICIPAL, LOCAL, STATE, OR FEDERAL LAW, COMMON
OR STATUTORY — INCLUDING, BUT IN NO WAY LIMITED TO, CLAIMS ARISING UNDER THE
EMPLOYMENT AGREEMENT (AS DEFINED BELOW), THE AGE DISCRIMINATION IN EMPLOYMENT
ACT OF 1967, 29 U.S.C. § 621, ET SEQ., AS AMENDED, THE OLDER WORKERS BENEFIT
PROTECTION ACT, 29 U.S.C. § 626(F) ET SEQ., TITLE VII OF THE CIVIL RIGHTS ACT OF
1964, 42 U.S.C. § 2000E, ET SEQ., AS AMENDED (INCLUDING THE CIVIL RIGHTS ACT OF
1991), THE AMERICANS WITH DISABILITIES ACT OF 1990, 42 U.S.C. §§ 12101, ET SEQ.,
AS AMENDED, THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, (ERISA), 29
U.S.C. §§ 1001 ET SEQ., AS AMENDED, THE LABOR MANAGEMENT RELATIONS ACT, 29
U.S.C. §§ 141 ET SEQ., AS AMENDED, THE OCCUPATIONAL SAFETY AND HEALTH ACT
(“OSHA”), 29 U.S.C. §§ 651 ET SEQ., AS AMENDED, THE RACKETEER INFLUENCED AND
CORRUPT ORGANIZATIONS ACT (RICO), 18 U.S.C. §§ 1961 ET SEQ., AS AMENDED, THE
SARBANES OXLEY ACT OF 2002, THE SABINE PILOT DOCTRINE, THE

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

 

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AMERICAN JOBS CREATION ACT OF 2004, TEXAS LABOR CODE §§ 21.001 ET SEQ., AS
AMENDED, TEXAS LABOR CODE §§ 61.001 ET SEQ., AS AMENDED,  OR ANY OTHER CLAIMS,
INCLUDING, WITHOUT LIMITATION, CLAIMS IN EQUITY — FOR ANY ACTIONS OR OMISSIONS
WHATSOEVER, WHETHER KNOWN OR UNKNOWN AND WHETHER CONNECTED WITH THE EMPLOYMENT
RELATIONSHIP BETWEEN EMPLOYEE AND ZALE, AND/OR THE CESSATION OF EMPLOYEE’S
EMPLOYMENT WITH ZALE, OR NOT, WHICH EXISTED OR MAY HAVE EXISTED PRIOR TO, OR
CONTEMPORANEOUSLY WITH, THE EXECUTION OF THIS AGREEMENT (COLLECTIVELY, THE
“RELEASED CLAIM(S)”).  FURTHERMORE, TO THE EXTENT PERMITTED BY LAW, EMPLOYEE
FOREVER WAIVES, RELEASES, AND COVENANTS NOT TO SUE OR FILE OR ASSIST WITH SUING
OR FILING ANY COMPLAINT OR CLAIM AGAINST ANY RELEASEE WITH ANY COURT,
GOVERNMENTAL AGENCY OR OTHER ENTITY BASED ON A RELEASED CLAIM, WHETHER KNOWN OR
UNKNOWN AT THE TIME OF EXECUTION.  EMPLOYEE ALSO WAIVES ANY RIGHT TO RECOVER
FROM ANY RELEASEE IN A CIVIL SUIT BROUGHT BY ANY GOVERNMENTAL AGENCY OR ANY
OTHER INDIVIDUAL ON HIS BEHALF WITH RESPECT TO ANY RELEASED CLAIM.  THIS GENERAL
RELEASE COVERS BOTH CLAIMS THAT EMPLOYEE KNOWS ABOUT AND THOSE HE MAY NOT KNOW
ABOUT, EXCEPT THAT IT DOES NOT RELEASE ANY CLAIMS OR RIGHTS THAT EMPLOYEE MAY
HAVE UNDER THE AGE DISCRIMINATION IN EMPLOYMENT ACT OF 1967 (AND ANY AMENDMENTS
THERETO) THAT ARISE AFTER THE DATE EMPLOYEE SIGNS THIS AGREEMENT.  EMPLOYEE
REPRESENTS AND WARRANTS THAT HE HAS NOT ASSIGNED OR OTHERWISE TRANSFERRED, IN
WHOLE OR IN PART, ANY OR ALL OF THE CLAIMS RELEASED BY HIM HEREUNDER.

 

EMPLOYEE ACKNOWLEDGES THAT THE AMOUNT BEING PAID PURSUANT TO PARAGRAPH 7 OF THIS
AGREEMENT CONSTITUTES COMPLETE SATISFACTION AND FULL COMPENSATION FOR ANY AND
ALL ALLEGED UNPAID  SALARY, VACATION, SEVERANCE, HOURS WORKED.

 

2.             EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE WILL KEEP THE
NEGOTIATIONS LEADING TO THIS AGREEMENT, AS WELL AS THE TERMS, AMOUNT, AND FACT
OF THIS AGREEMENT STRICTLY AND COMPLETELY CONFIDENTIAL, AND THAT HE WILL NOT
COMMUNICATE OR OTHERWISE DISCLOSE TO ANY EMPLOYEE OF ZALE (PAST, PRESENT, OR
FUTURE), OR TO ANY MEMBER OF THE GENERAL PUBLIC, THE TERMS, AMOUNTS, OR
EXISTENCE OF THIS AGREEMENT, EXCEPT AS MAY BE REQUIRED BY LAW OR COMPULSORY
PROCESS; PROVIDED, HOWEVER, DISCLOSURE OF THIS AGREEMENT AND ITS TERMS AND
CONDITIONS BY EMPLOYEE TO HIS TAX/FINANCIAL ADVISORS, SPOUSE, OR ATTORNEYS, EACH
OF WHOM OR WHICH AGREE TO MAINTAIN CONFIDENTIALITY, OR TO TAXING AUTHORITIES, OR
TO AN ARBITRATOR IN A PROCEEDING TO ENFORCE THE TERMS OF THIS AGREEMENT, SHALL
NOT BE A BREACH OF THIS AGREEMENT.  IF ASKED ABOUT ANY OF SUCH MATTERS,
EMPLOYEE’S RESPONSE SHALL BE THAT HE DOES NOT CARE TO DISCUSS ANY OF SUCH
MATTERS.  THE PARTIES AGREE THAT THIS PARAGRAPH IS A MATERIAL INDUCEMENT TO ZALE
ENTERING INTO THIS AGREEMENT.  ADDITIONALLY, THE PARTIES AGREE THAT ZALE MAY
ENFORCE THIS PARAGRAPH WITHOUT POSTING A BOND.

 

3.             EMPLOYEE EXPRESSLY ACKNOWLEDGES, AGREES, AND COVENANTS THAT HE
WILL NOT MAKE ANY PUBLIC OR PRIVATE STATEMENTS, COMMENTS, OR COMMUNICATION IN
ANY FORM, ORAL, WRITTEN, OR ELECTRONIC, WHICH IN ANY WAY COULD CONSTITUTE LIBEL,
SLANDER, OR DISPARAGEMENT OF ZALE OR ANY OTHER RELEASEE OR WHICH MAY BE
CONSIDERED TO BE DEROGATORY OR DETRIMENTAL TO THE GOOD NAME OR BUSINESS
REPUTATION OF ZALE OR ANY OTHER RELEASEE; PROVIDED, HOWEVER, THAT THE TERMS OF
THIS PARAGRAPH SHALL NOT APPLY TO COMMUNICATIONS BETWEEN EMPLOYEE AND HIS
SPOUSE, CLERGY, OR ATTORNEYS, WHICH ARE SUBJECT TO A CLAIM OF PRIVILEGE EXISTING
UNDER COMMON LAW, STATUTE, OR RULE OF PROCEDURE.  EMPLOYEE SPECIFICALLY AGREES
NOT TO ISSUE ANY PUBLIC STATEMENT CONCERNING HIS EMPLOYMENT AT ZALE AND/OR THE
CESSATION OF SUCH EMPLOYMENT.   THE PARTIES AGREE THAT THIS PROVISION IS A
MATERIAL INDUCEMENT TO ZALE ENTERING INTO THIS AGREEMENT.  ADDITIONALLY, THE
PARTIES AGREE THAT ZALE MAY ENFORCE THIS PARAGRAPH WITHOUT POSTING A BOND.

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

 

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4.             EMPLOYEE AGREES AND ACKNOWLEDGES THAT IN ADDITION TO THE
CESSATION OF HIS EMPLOYMENT WITH ZALE, HE SHALL CEASE FROM HOLDING ANY OTHER
POSITIONS AS A DIRECTOR, OFFICER, AND/OR EMPLOYEE WITH ZALE AND/OR ANY OF THE
RELEASEES, EFFECTIVE ON THE SEPARATION DATE.

 

5.             EMPLOYEE WAIVES AND RELEASES FOREVER ANY RIGHT AND/OR RIGHTS HE
MAY HAVE TO SEEK OR OBTAIN EMPLOYMENT, REEMPLOYMENT, AND/OR REINSTATEMENT WITH
ZALE OR ANY ONE OR MORE OTHER RELEASEES, AND AGREES NOT TO SEEK REEMPLOYMENT
WITH ANY OF THE SAME.

 

6.             EMPLOYEE AND ZALE SPECIFICALLY AGREE THAT FOLLOWING THE EXECUTION
OF THIS AGREEMENT, NEITHER PARTY SHALL BE BOUND BY THE TERMS OF THAT CERTAIN
EMPLOYMENT AGREEMENT EXECUTED BY AND BETWEEN THE PARTIES AS OF FEBRUARY 16, 2006
(THE “EMPLOYMENT AGREEMENT”), EXCEPT THAT EMPLOYEE SHALL CONTINUE TO BE BOUND BY
ALL OBLIGATIONS CONTAINED IN PARAGRAPHS 9, 10, 11, 12 AND 13 OF THE EMPLOYMENT
AGREEMENT, EXCEPT TO THE EXTENT SUCH PROVISIONS ARE IN CONFLICT WITH THIS
AGREEMENT.

 

7.             SUBJECT TO THE TERMS OF PARAGRAPHS 18, 20 AND 22 CONTAINED
HEREIN, EFFECTIVE  AFTER THE COMPLETE AND PROPER EXECUTION OF THIS AGREEMENT BY
EMPLOYEE AND IN EXCHANGE FOR THE GENERAL RELEASE SET FORTH IN THIS AGREEMENT AND
OTHER VALUABLE CONSIDERATION RECEIVED BY THE PARTIES, THE PARTIES AGREE AS
FOLLOWS:

 

(a)                                  Employee shall receive a total of total of
six hundred forty-eight thousand seven hundred fifty-eight dollars and
seventy-seven cents ($648,758.77) in “Severance Pay” representing Employee’s
base salary as of the Separation Date for the period from the Separation Date
through February 15, 2009.  The Severance Pay shall be paid as follows:
(i) within three (3) days after the expiration of the Revocation Period
(hereinafter defined), Zale will pay to Employee two hundred forty thousand six
hundred forty two dollars and twenty three cents ($240,642.23) (which represents
Employee’s Severance Pay from the Separation Date through February 28, 2008),
less deductions required by law; and (ii) beginning on the first regularly
scheduled payroll date that is after the expiration of the Revocation Period and
ending on February 15, 2009, Zale will pay to Employee the remaining four
hundred eight thousand one hundred sixteen dollars and twenty one cents
($408,116.21) in equal payments, less deductions required by law, at Zale’s
regular pay periods in consideration for the promises, covenants, agreements,
and releases set forth herein.  The Severance Pay described in this paragraph
will be paid to Employee pursuant to the direct deposit arrangement between
Employee and Zale in effect as of the Separation Date.

 

(b)                                 Within three (3) days after the expiration
of the Revocation Period (hereinafter defined), Zale will pay to Employee
$1,077.25 per month (less $470.86 per month for the aggregate amount of the
bi-monthly co-pays Employee was obligated to pay) for each month of COBRA
benefits Employee has paid for with his own money since August 6, 2007. 
Thereafter, through August 6, 2008, Zale will continue to provide Employee his
medical benefits, if any, in effect as of the Separation Date.  Any continued
medical benefits provided pursuant to this paragraph 7(b) will count in
satisfaction of Employee’s right to continue such benefits pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). 
Employee has elected to continue his benefits by

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

 

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                                                completing and submitting the
COBRA election forms to the Zale COBRA Administrator. From August 6, 2007,
through August 6, 2008, Employee’s premiums for coverage will be equal to the
amount that Company employees pay for such coverage and such premiums will be
submitted by Employee directly to the Zale COBRA Administrator.  Thereafter,
Employee will have the right to elect to continue such medical benefits for the
remainder of the COBRA eligibility period by paying the full cost of such
coverage to Zale’s COBRA Administrator.  Employee has been provided with a
notice of the interaction of the extended medical insurance benefits under this
Agreement and his COBRA rights following his Separation Date.

 

Any health or welfare benefits received by or available to Employee from or in
connection with any other employment of Employee that are reasonably comparable
to, but not necessarily as financially or otherwise beneficial to Employee as
the benefits provided to Employee by Company at the time of the Separation Date
will be deemed the equivalent thereof and will terminate Company’s obligation
under this Section 7(b) to provide medical coverage through August 6, 2008;
provided, however, that nothing in this paragraph will limit or terminate
Employee’s or Employee’s dependents’ right to continue any Company group health
plan coverage at Employee’s or such dependent’s cost for the remainder of the
COBRA period.  Employee agrees to advise Company of the availability of any such
subsequent benefit coverages within 30 days following such availability.

 

The provisions of this Section 7(b) will not prohibit Company from changing the
terms of any medical benefit programs provided that any such changes apply to
all employees of Company (e.g., Company may switch insurance carriers or
preferred provider organizations or change coverages).

 

(c)                                  The payments which would have been due and
payable in accordance with this Paragraph 7 shall be reduced by an amount equal
to any amounts that the Employee receives in connection with any other
employment from the Separation Date through February 15, 2009.  Any fringe
benefits received by or available to the Employee in connection with any other
employment that are reasonably comparable, but not necessarily as financially or
otherwise beneficial to the Employee as the fringe benefits then being provided
by the Company pursuant to this Paragraph 7 shall be deemed to be the equivalent
thereof and shall terminate the Company’s responsibility to continue providing
the fringe benefits then being provided by the Company pursuant to this
Paragraph 7.

 

(d)                                 Within three (3) days after the expiration
of the Revocation Period (hereinafter defined), Zale will pay to Employee the
value of his remaining four (4) weeks unused and accrued vacation time through
August 6, 2007, in the amount of $32,519.22, less deductions required by law. 
On August, 11, 2008, Zale shall pay to Employee his Supplemental Executive
Retirement Plan (“SERP”) benefit to the extent such benefit was fully vested as
of December 31, 2004, in the amount of $25,099.61, less deductions required by
law, subject to the terms of that certain letter dated December 20, 2006, from
Zale to Employee, such payments to be

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

 

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                                                made in accordance with the
terms of such letter and the SERP.  Zale shall pay to Employee $152,621.92 (the
“Bonus Amount”) in full satisfaction of all amounts owed to Employee under any
bonus plans, including, without limitation, Zale’s FY 2007 Management Bonus
Plan.  The Bonus Amount will be paid by Zale to the Employee within three
(3) days after the expiration of the Revocation Period (hereinafter defined),
less deductions required by law, pursuant to the direct deposit arrangement
between Employee and Zale as of the Separation Date.  Employee represents and
warrants that he as returned to Zale his employee identification badge, keys,
and all Company-owned equipment and documents, and that he does not have and
will not maintain copies of the same.

 

(e)                                  Employee has reconciled his outstanding
expenses and advances with Zale and paid Zale any outstanding balance owed after
all agreed offsets were taken.

 

(f)                                    Zale shall provide Employee with three
(3) months of outplacement services with an entity designated by Zale.  Zale
will pay the outplacement provider directly for the cost of such outplacement
services.  Such outplacement services will commence on the first business day
following the expiration of the Revocation Period (hereinafter defined), and
will end on the three (3) month anniversary thereof.

 

8.             EMPLOYEE PREVIOUSLY AGREED IN HIS EMPLOYMENT AGREEMENT AND, FOR
INDEPENDENT CONSIDERATION, NOW ACKNOWLEDGES AND AGREES THAT FOR A PERIOD OF
THREE (3) YEARS FROM THE SEPARATION DATE, EMPLOYEE SHALL NOT, ON HIS OWN BEHALF
OR ON BEHALF OF ANY OTHER PERSON, PARTNERSHIP, ASSOCIATION, CORPORATION, OR
OTHER ENTITY, (A) DIRECTLY, INDIRECTLY, OR THROUGH A THIRD PARTY HIRE OR CAUSE
TO BE HIRED; (B) DIRECTLY, INDIRECTLY OR THROUGH A THIRD PARTY SOLICIT; OR
(C) IN ANY MANNER ATTEMPT TO INFLUENCE OR INDUCE ANY EMPLOYEE OF THE COMPANY OR
ITS SUBSIDIARIES OR AFFILIATES TO LEAVE THE EMPLOYMENT OF THE COMPANY OR ITS
SUBSIDIARIES OR AFFILIATES, NOR SHALL HE USE OR DISCLOSE TO ANY PERSON,
PARTNERSHIP, ASSOCIATION, CORPORATION OR OTHER ENTITY ANY INFORMATION OBTAINED
CONCERNING THE NAMES AND ADDRESSES OF THE COMPANY’S EMPLOYEES.  THE RESTRICTIONS
CONTAINED IN THIS PARAGRAPH 8 SHALL BE TOLLED ON A DAY-FOR-DAY BASIS FOR EACH
DAY DURING WHICH THE EMPLOYEE PARTICIPATES IN ANY ACTIVITY IN VIOLATION OF SUCH
RESTRICTIONS.  THE PARTIES AGREE THAT THE ABOVE RESTRICTIONS ON HIRING AND
SOLICITATION ARE COMPLETELY SEVERABLE AND INDEPENDENT AGREEMENTS SUPPORTED BY
GOOD AND VALUABLE CONSIDERATION AND, AS SUCH, SHALL SURVIVE THE TERMINATION OF
THIS AGREEMENT FOR WHATEVER REASON.  THE PARTIES FURTHER AGREE THAT ANY
INVALIDITY AND UNENFORCEABILITY OF ANY ONE OR MORE OF SUCH RESTRICTIONS ON
HIRING AND SOLICITATION SHALL NOT RENDER INVALID OR UNENFORCEABLE ANY REMAINING
RESTRICTIONS ON HIRING AND SOLICITATION.  ADDITIONALLY, SHOULD AN ARBITRATOR
AND/OR COURT OF COMPETENT JURISDICTION DETERMINE THAT THE SCOPE OF ANY PROVISION
OF THIS PARAGRAPH 8 IS TOO BROAD TO BE ENFORCED AS WRITTEN, THE PARTIES INTEND
THAT THE ARBITRATOR AND/OR COURT REFORM THE PROVISION TO SUCH NARROWER SCOPE AS
IT DETERMINES TO BE REASONABLE AND ENFORCEABLE.

 

9.             EMPLOYEE AGREES TO COOPERATE FULLY WITH ZALE, SPECIFICALLY
INCLUDING ANY ATTORNEY OR OTHER CONSULTANT RETAINED BY ZALE, IN CONNECTION WITH
ANY PENDING OR FUTURE LITIGATION, ARBITRATION, BUSINESS, OR INVESTIGATORY
MATTER.  THE PARTIES ACKNOWLEDGE AND AGREE THAT SUCH COOPERATION MAY INCLUDE,
BUT SHALL IN NO WAY BE LIMITED TO, EMPLOYEE’S MAKING HIMSELF AVAILABLE FOR
INTERVIEW BY ZALE, OR ANY ATTORNEY OR OTHER CONSULTANT RETAINED BY ZALE, AND
PROVIDING TO ZALE

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

 

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ANY DOCUMENTS IN HIS POSSESSION OR UNDER HIS CONTROL.  ZALE AGREES TO PROVIDE
EMPLOYEE WITH REASONABLE NOTICE OF THE NEED FOR ASSISTANCE WHEN FEASIBLE.  ZALE
ADDITIONALLY AGREES TO SCHEDULE SUCH ASSISTANCE IN SUCH A MANNER AS NOT TO
INTERFERE WITH ANY ALTERNATIVE EMPLOYMENT OBTAINED BY EMPLOYEE WHEN POSSIBLE.

 

10.           EMPLOYEE ACKNOWLEDGES THAT HE HAS HAD ACCESS TO AND BECOME
FAMILIAR WITH VARIOUS TRADE SECRETS AND PROPRIETARY AND CONFIDENTIAL INFORMATION
OF ZALE, ITS SUBSIDIARIES AND AFFILIATES, INCLUDING, BUT NOT LIMITED TO:
IDENTITIES, RESPONSIBILITIES, CONTACT INFORMATION, PERFORMANCE AND/OR
COMPENSATION LEVELS OF EMPLOYEES, COSTS AND METHODS OF DOING BUSINESS, SYSTEMS,
PROCESSES, COMPUTER HARDWARE AND SOFTWARE, COMPILATIONS OF INFORMATION,
THIRD-PARTY IT SERVICE PROVIDERS AND OTHER COMPANY VENDORS, RECORDS, SALES
REPORTS, SALES PROCEDURES, FINANCIAL INFORMATION, CUSTOMER REQUIREMENTS, PRICING
TECHNIQUES, CUSTOMER LISTS, PRICE LISTS, INFORMATION ABOUT PAST, PRESENT,
PENDING AND/OR PLANNED COMPANY TRANSACTIONS, AND OTHER CONFIDENTIAL INFORMATION
(COLLECTIVELY, REFERRED TO AS “TRADE SECRETS”) WHICH ARE OWNED BY ZALE, ITS
SUBSIDIARIES AND/OR AFFILIATES AND REGULARLY USED IN THE OPERATION OF ITS
BUSINESS, AND AS TO WHICH ZALE, ITS SUBSIDIARIES AND/OR AFFILIATES TAKE
PRECAUTIONS TO PREVENT DISSEMINATION TO PERSONS OTHER THAN CERTAIN DIRECTORS,
OFFICERS AND EMPLOYEES.  EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE TRADE SECRETS
(1) ARE SECRET AND NOT KNOWN IN THE INDUSTRY; (2) GIVE THE COMPANY OR ITS
SUBSIDIARIES AND/OR AFFILIATES AN ADVANTAGE OVER COMPETITORS WHO DO NOT KNOW OR
USE THE TRADE SECRETS; (3) ARE OF SUCH VALUE AND NATURE AS TO MAKE IT REASONABLE
AND NECESSARY TO PROTECT AND PRESERVE THE CONFIDENTIALITY AND SECRECY OF THE
TRADE SECRETS; AND (4) ARE VALUABLE AND SPECIAL AND UNIQUE ASSETS OF ZALE OR ITS
SUBSIDIARIES AND/OR AFFILIATES, THE DISCLOSURE OF WHICH COULD CAUSE SUBSTANTIAL
INJURY AND LOSS OF PROFITS AND GOODWILL TO ZALE OR ITS SUBSIDIARIES AND/OR
AFFILIATES.

 

(A)                                  EMPLOYEE SHALL NOT USE IN ANY WAY OR
DISCLOSE ANY OF THE TRADE SECRETS, DIRECTLY OR INDIRECTLY, AT ANY TIME IN THE
FUTURE, UNLESS THE INFORMATION BECOMES PUBLIC KNOWLEDGE OTHER THAN AS A RESULT
OF AN UNAUTHORIZED DISCLOSURE BY THE EMPLOYEE.  ALL FILES, RECORDS, DOCUMENTS,
INFORMATION, DATA, AND SIMILAR ITEMS RELATING TO THE BUSINESS OF ZALE, WHETHER
PREPARED BY EMPLOYEE OR OTHERWISE COMING INTO HIS POSSESSION, WILL REMAIN THE
EXCLUSIVE PROPERTY OF ZALE.  EMPLOYEE REPRESENTS AND WARRANTS THAT HE HAS
DELIVERED TO ZALE ALL OF THE FOREGOING WHICH WERE IN HIS POSSESSION.

 

(B)                                 EMPLOYEE AGREES THAT UPON HIS RECEIPT OF ANY
FORMAL OR INFORMAL REQUEST, REQUIREMENT, SUBPOENA, PROCESS, OR OTHER ACTION
SEEKING EMPLOYEE’S DIRECT OR INDIRECT DISCLOSURE OR PRODUCTION OF ANY TRADE
SECRETS TO ANY ENTITY, AGENCY, TRIBUNAL, OR PERSON, IN CONNECTION WITH A
JUDICIAL, ADMINISTRATIVE OR OTHER PROCEEDING, EMPLOYEE SHALL PROMPTLY AND TIMELY
NOTIFY ZALE, AND PROMPTLY AND TIMELY PROVIDE A DESCRIPTION AND, IF APPLICABLE,
HAND DELIVER A COPY OF SUCH REQUEST, REQUIREMENT, SUBPOENA, PROCESS OR OTHER
ACTION TO ZALE.  IN ALL SUCH INSTANCES, EMPLOYEE IRREVOCABLY NOMINATES AND
APPOINTS ZALE (INCLUDING ANY ATTORNEY RETAINED BY ZALE) AS HIS TRUE AND LAWFUL
ATTORNEY-IN-FACT TO ACT IN EMPLOYEE’S NAME, PLACE AND STEAD TO PERFORM ANY ACT
THAT EMPLOYEE MIGHT PERFORM TO DEFEND AND PROTECT AGAINST ANY DISCLOSURE OF ANY
TRADE SECRET.  FOR PURPOSES OF THIS PARAGRAPH 10, THIS AGREEMENT SHALL BE
CONSIDERED A TRADE SECRET.

 

11.           THE COMPANY AND EMPLOYEE EXPRESSLY AGREE THAT TRADE SECRETS WERE
PROVIDED TO EMPLOYEE DURING HIS EMPLOYMENT WITH ZALE.  AS A MATERIAL INDUCEMENT
FOR THE COMPANY

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

 

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providing such Trade Secrets, the Employee previously agreed in his Employment
Agreement and, for independent consideration, now acknowledges and agrees that
for a period of three (3) years from the Separation Date, he will not, directly
or indirectly, compete with the Company by providing services to any other
person, partnership, association, corporation, or other entity that is in a
“Competing Business.”  “Competing Business,” as used herein, is defined to mean
any business that engages in whole or in part in the retail sale of jewelry in
the United States and/or Puerto Rico, including, but not limited to, specialty
jewelry retailers and other retailers having jewelry divisions or departments,
and the Employee’s employment function or affiliation with the Competing
Business is directly or indirectly related to such business of jewelry.  The
three (3) year period shall expire on August 6, 2010; provided, however, that
such three (3) year period shall be tolled on a day-for-day basis for each day
during which the Employee participates in any activity in violation of such
restrictions.  The Parties agree that the above restrictions on competition are
completely severable and independent agreements supported by good and valuable
consideration and, as such, shall survive the termination of this Agreement for
whatever reason.  The Parties further agree that any invalidity or
unenforceability of any one or more of such restrictions on competition shall
not render invalid or unenforceable any remaining restrictions on competition. 
Additionally, should an arbitrator or court of competent jurisdiction determine
that the scope of any provision of this Paragraph 11 is too broad to be enforced
as written, the Parties intend that the arbitrator and/or court reform the
provision to such narrower scope as it determines to be reasonable and
enforceable.

 

12.           BY ENTERING INTO THIS AGREEMENT, THE PARTIES DO NOT ADMIT, AND DO
SPECIFICALLY DENY, ANY VIOLATION OF ANY CONTRACT, LOCAL, STATE, OR FEDERAL LAW,
COMMON OR STATUTORY.  NEITHER THE EXECUTION OF THIS AGREEMENT NOR COMPLIANCE
WITH ITS TERMS, NOR THE CONSIDERATION PROVIDED FOR HEREIN SHALL CONSTITUTE OR BE
CONSTRUED AS AN ADMISSION BY ANY PARTY (OR ANY PARTY’S AGENTS, REPRESENTATIVES,
ATTORNEYS, OR EMPLOYERS) OF ANY FAULT, WRONGDOING, OR LIABILITY WHATSOEVER, AND
THE PARTIES ACKNOWLEDGE THAT ALL SUCH LIABILITY IS EXPRESSLY DENIED.  THIS
AGREEMENT HAS BEEN ENTERED INTO IN RELEASE AND COMPROMISE OF CLAIMS AS STATED
HEREIN AND TO AVOID THE EXPENSE AND BURDEN OF DISPUTE RESOLUTION.

 

13.           IF ANY PROVISION OR TERM OF THIS AGREEMENT IS HELD TO BE ILLEGAL,
INVALID, OR UNENFORCEABLE, SUCH PROVISION OR TERM SHALL BE FULLY SEVERABLE; THIS
AGREEMENT SHALL BE CONSTRUED AND ENFORCED AS IF SUCH ILLEGAL, INVALID, OR
UNENFORCEABLE PROVISION HAD NEVER COMPRISED PART OF THIS AGREEMENT; AND THE
REMAINING PROVISIONS OF THIS AGREEMENT SHALL REMAIN IN FULL FORCE AND EFFECT AND
SHALL NOT BE AFFECTED BY THE ILLEGAL, INVALID, OR UNENFORCEABLE PROVISION OR BY
ITS SEVERANCE FROM THIS AGREEMENT.  FURTHERMORE, IN LIEU OF EACH SUCH ILLEGAL,
INVALID, OR UNENFORCEABLE PROVISION OR TERM THERE SHALL BE ADDED AUTOMATICALLY
AS A PART OF THIS AGREEMENT ANOTHER PROVISION OR TERM AS SIMILAR TO THE ILLEGAL,
INVALID, OR UNENFORCEABLE PROVISION AS MAY BE POSSIBLE AND THAT IS LEGAL, VALID,
AND ENFORCEABLE.

 

14.           THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT OF THE PARTIES,
AND SUPERSEDES ALL PRIOR AND CONTEMPORANEOUS NEGOTIATIONS AND AGREEMENTS, ORAL
OR WRITTEN, WITH RESPECT TO ITS SUBJECT MATTER, EXCEPT THAT THIS AGREEMENT
SPECIFICALLY INCORPORATES AS IF FULLY SET FORTH HEREIN PARAGRAPHS 9, 10, 11, 12
AND 13 OF THE EMPLOYMENT AGREEMENT; PROVIDED, HOWEVER, THAT TO THE EXTENT A
CONFLICT EXISTS BETWEEN THE TERMS OF THIS AGREEMENT AND THE TERMS OF PARAGRAPHS
9, 10, 11, 12 AND 13 OF THE EMPLOYMENT AGREEMENT, THE TERMS OF THIS AGREEMENT
SHALL AND HEREBY DO CONTROL.  SUBJECT TO THE FOREGOING SEVERANCE, ALL PRIOR AND
CONTEMPORANEOUS NEGOTIATIONS AND AGREEMENTS ARE DEEMED INCORPORATED AND MERGED
INTO THIS AGREEMENT.  NO REPRESENTATIONS, ORAL

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

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OR WRITTEN, ARE BEING RELIED UPON BY ANY PARTY IN EXECUTING THIS AGREEMENT OTHER
THAN THE EXPRESS REPRESENTATIONS OF THIS AGREEMENT.  THIS AGREEMENT CANNOT BE
CHANGED OR TERMINATED WITHOUT THE EXPRESS WRITTEN CONSENT OF THE PARTIES. 
EMPLOYEE AGREES AND ACKNOWLEDGES THAT, EXCEPT AS SET FORTH HEREIN, ZALE AND THE
OTHER RELEASEES HAVE NO FURTHER OBLIGATIONS TO EMPLOYEE.

 

15.           THIS AGREEMENT SHALL BE EXCLUSIVELY GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAWS OF THE LAWS OF TEXAS OR OF ANY OTHER JURISDICTION, EXCEPT
WHERE PREEMPTED BY FEDERAL LAW.

 

The Parties hereby agree that any action to enforce an arbitrator’s award
pursuant to Section 16 shall be filed exclusively in a state or federal court of
competent jurisdiction in Dallas County, Texas and the Parties hereby consent to
the exclusive jurisdiction of such court; provided, however, that nothing herein
shall preclude the Parties’ rights to conduct collection activities in the
courts of any jurisdiction with respect to the order or judgment entered upon
the arbitrator’s award by the Texas court.

 

16.           THE PARTIES AGREE THAT ANY CONTROVERSY OR CLAIM (INCLUDING ALL
CLAIMS PURSUANT TO COMMON AND STATUTORY LAW) ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ARISING OUT OF OR RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT
OR THE EMPLOYMENT AGREEMENT SHALL BE RESOLVED EXCLUSIVELY THROUGH ARBITRATION
PURSUANT TO THE NATIONAL RULES FOR THE RESOLUTION OF EMPLOYMENT DISPUTES OF THE
AMERICAN ARBITRATION ASSOCIATION (“AAA”).  ANY SUCH ARBITRATION PROCEEDING SHALL
TAKE PLACE IN DALLAS COUNTY, TEXAS.  ALL DISPUTES SHALL BE RESOLVED BY A SINGLE
ARBITRATOR.  THE ARBITRATOR WILL HAVE THE AUTHORITY TO AWARD THE SAME REMEDIES,
DAMAGES AND COSTS THAT A COURT COULD AWARD.  THE ARBITRATOR SHALL ISSUE A
REASONED AWARD EXPLAINING THE DECISION, THE REASONS FOR THE DECISION AND ANY
DAMAGES AWARDED.  THE ARBITRATOR’S DECISION WILL BE FINAL AND BINDING.  THE
JUDGMENT ON THE AWARD RENDERED BY THE ARBITRATOR MAY BE ENTERED IN ANY COURT
HAVING JURISDICTION THEREOF.  THIS PROVISION CAN BE ENFORCED UNDER THE FEDERAL
ARBITRATION ACT.

 

(a)                                  As the sole exception to the exclusive and
binding nature of the arbitration commitment set forth above, the Employee and
the Company agree that the Company shall have the right to initiate an action in
a court of competent jurisdiction to request temporary, preliminary and
permanent injunctive or other equitable relief, including specific performance,
to enforce the terms of paragraphs 2, 3, 5, 6, 7, 8, 9, 10, 11, 16, 18 and 19 of
this Agreement and paragraphs 9, 10, 11, 12 and 13 of the Employment Agreement
without the necessity of proving inadequacy of legal remedies or irreparable
harm or posting bond.  Nothing in this paragraph should be construed to
constitute a waiver of the Parties’ rights and obligations to arbitrate
regarding matters other than those specifically addressed in this paragraph.

 

(b)                                 Should a court of competent jurisdiction
determine that the scope of the arbitration and related provisions of this
Agreement are too broad to be enforced as written, the Parties intend that the
court reform the provision in question to such narrower scope as it determines
to be reasonable and enforceable.

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

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17.           ONE OR MORE WAIVERS OF A BREACH OF ANY COVENANT, TERM, OR
PROVISION OF THIS AGREEMENT BY ANY PARTY SHALL NOT BE CONSTRUED AS A WAIVER OF A
SUBSEQUENT BREACH OF THE SAME COVENANT, TERM, OR PROVISION, NOR SHALL IT BE
CONSIDERED A WAIVER OF ANY OTHER THEN EXISTING OR SUBSEQUENT BREACH OF A
DIFFERENT COVENANT, TERM, OR PROVISION.

 

18.           BY EXECUTING THIS AGREEMENT, EMPLOYEE ACKNOWLEDGES THAT (A) THIS
AGREEMENT HAS BEEN REVIEWED WITH HIM BY A REPRESENTATIVE OF ZALE; (B) HE HAS HAD
AT LEAST TWENTY-ONE (21) DAYS TO CONSIDER THE TERMS OF THIS AGREEMENT AND HAS
CONSIDERED ITS TERMS FOR THAT PERIOD OF TIME OR HAS KNOWINGLY AND VOLUNTARILY
WAIVED HIS RIGHT TO DO SO; (C) HE HAS BEEN ADVISED BY ZALE TO CONSULT WITH AN
ATTORNEY REGARDING THE TERMS OF THIS AGREEMENT; (D) HE HAS CONSULTED WITH AN
ATTORNEY OF HIS OWN CHOOSING REGARDING THE TERMS OF THIS AGREEMENT; (E) ANY AND
ALL QUESTIONS REGARDING THE TERMS OF THIS AGREEMENT HAVE BEEN ASKED AND ANSWERED
TO HIS COMPLETE SATISFACTION; (F) HE HAS READ THIS AGREEMENT AND FULLY
UNDERSTANDS ITS TERMS AND THEIR IMPORT; (G) EXCEPT AS PROVIDED BY THIS
AGREEMENT, HE HAS NO CONTRACTUAL RIGHT OR CLAIM TO THE BENEFITS DESCRIBED
HEREIN; (H) THE CONSIDERATION PROVIDED FOR HEREIN IS GOOD AND VALUABLE; AND
(I) HE IS ENTERING INTO THIS AGREEMENT VOLUNTARILY, OF HIS OWN FREE WILL, AND
WITHOUT ANY COERCION, UNDUE INFLUENCE, THREAT, OR INTIMIDATION OF ANY KIND OR
TYPE WHATSOEVER.

 

19.           BY EXECUTING THIS AGREEMENT, EMPLOYEE ACKNOWLEDGES THAT HE (I) IS
NOT RELYING UPON ANY STATEMENTS, UNDERSTANDINGS, REPRESENTATIONS, EXPECTATIONS,
OR AGREEMENTS OTHER THAN THOSE EXPRESSLY SET FORTH IN THIS AGREEMENT;  (II) HAS
MADE HIS OWN INVESTIGATION OF THE FACTS AND IS RELYING SOLELY UPON HIS OWN
KNOWLEDGE AND THE ADVICE OF HIS OWN LEGAL COUNSEL; AND (III) KNOWINGLY WAIVES
ANY CLAIM THAT THIS AGREEMENT WAS INDUCED BY ANY MISREPRESENTATION OR
NONDISCLOSURE AND ANY RIGHT TO RESCIND OR AVOID THIS AGREEMENT BASED UPON
PRESENTLY EXISTING FACTS, KNOWN OR UNKNOWN.  THE PARTIES STIPULATE THAT EACH
PARTY IS RELYING UPON THESE REPRESENTATIONS AND WARRANTIES IN ENTERING INTO THIS
AGREEMENT.  THESE REPRESENTATIONS AND WARRANTIES SHALL SURVIVE THE EXECUTION OF
THIS AGREEMENT.

 

20.           EMPLOYEE MAY REVOKE THIS AGREEMENT, IN WRITING, BY HAND DELIVERED
NOTICE TO ZALE’S SENIOR VICE PRESIDENT OF HUMAN RESOURCES, MARY ANN DORAN,
WITHIN SEVEN (7) DAYS OF THE DATE OF EMPLOYEE’S EXECUTION OF THIS AGREEMENT, AND
THE AGREEMENT SHALL NOT BECOME EFFECTIVE AND ENFORCEABLE UNTIL SUCH PERIOD HAS
EXPIRED (THE “REVOCATION PERIOD”).  EMPLOYEE ACKNOWLEDGES AND AGREES THAT HE
WILL NOT RECEIVE THE BENEFITS PROVIDED BY THIS AGREEMENT IF HE REVOKES THIS
AGREEMENT.  EMPLOYEE ALSO ACKNOWLEDGES AND AGREES THAT IF ZALE HAS NOT RECEIVED
HIS NOTICE OF REVOCATION OF THIS AGREEMENT PRIOR TO THE EXPIRATION OF THE
REVOCATION PERIOD, EMPLOYEE WILL HAVE FOREVER WAIVED HIS RIGHT TO REVOKE THIS
AGREEMENT, AND THIS AGREEMENT SHALL THEREAFTER BE ENFORCEABLE AND HAVE FULL
FORCE AND EFFECT.

 

21.           ANY TERM OR PROVISION OF THIS AGREEMENT WHICH MUST SURVIVE THE
TERMINATION OF THIS AGREEMENT IN ORDER TO BE EFFECTIVE SHALL SO SURVIVE SUCH
TERMINATION.

 

22.           THIS AGREEMENT IS BEING PROVIDED TO EMPLOYEE PURSUANT TO THE
REQUIREMENT, AS SET FORTH IN SECTION 8 OF THE EMPLOYMENT AGREEMENT, THAT IN
ORDER TO BE ENTITLED TO SEVERANCE AND OTHER SEPARATION PAYMENTS, EMPLOYEE MUST
SIGN AND RETURN A RELEASE OF CLAIMS IN FAVOR OF ZALE IN A FORM ACCEPTABLE TO AND
PROVIDED BY ZALE.  ANY RELEASE OF CLAIMS THAT IS EXECUTED AFTER MARCH 3, 2008,

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

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WILL NOT BE ACCEPTABLE TO ZALE.  ACCORDINGLY, IF THIS AGREEMENT IS NOT EXECUTED
BY EMPLOYEE AND DELIVERED TO ZALE ON OR BEFORE MARCH 3, 2008, THEN THIS
AGREEMENT WILL BE VOID AND OF NO FURTHER FORCE OR EFFECT, AND EMPLOYEE WILL NOT
BE ENTITLED TO ANY PAYMENTS UNDER THIS AGREEMENT OR UNDER THE EMPLOYMENT
AGREEMENT.

 

THIS AGREEMENT CONTAINS A PROVISION REQUIRING THE PARTIES TO RESOLVE ANY
DISPUTES BY ARBITRATION.

 

 

EXECUTED in               , Texas on this           day of             , 2008.

 

 

 

 

Date:

 

 

 

 

 

 

 

 

John A. Zimmermann

 

 

 

 

EXECUTED in Irving, Texas on this           day of             , 2008.

 

 

 

 

ZALE CORPORATION

 

 

 

Date:

 

 

By:

 

 

 

 

 

Its:

 

 

 

 

EXECUTED in Irving, Texas on this           day of             , 2008.

 

 

 

 

 

ZALE DELAWARE, INC.

 

 

 

Date:

 

 

By:

 

 

 

 

 

Its:

 

 

 

 

 

CONFIDENTIAL SETTLEMENT AND RELEASE AGREEMENT

 

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