Exhibit 10.2


 


FORM OF INDEMNIFICATION AGREEMENT


 


INDEMNIFICATION AGREEMENT
between ZALE CORPORATION, a Delaware corporation (the “Corporation”), and                                   (the “Indemnitee”).


 


W I T N E
S S E T H:


 


WHEREAS, it is essential
to the Corporation to attract and retain as directors the most capable persons
available;


 


WHEREAS, the Indemnitee
has served as or the Corporation has requested that the Indemnitee become a
member of the Board of Directors of the Corporation and the Indemnitee has
served or agreed so to serve in part upon the basis of the indemnification and
other agreements provided for and referred to in this Agreement;


 


WHEREAS, both the
Corporation and the Indemnitee recognize the increased risk of litigation and
other claims being asserted against directors of public companies in today’s
environment;


 


WHEREAS, the Corporation’s
Restated Certificate of Incorporation requires the Corporation to indemnify its
directors as set forth therein and expressly authorizes the Corporation to
enter into agreements with its directors for the purpose of providing for such
indemnification, and the Indemnitee has served or agreed to serve as a director
of the Corporation in part in reliance on such provisions;


 


WHEREAS, in recognition
of the Indemnitee’s need for substantial protection against personal liability
in order to enhance the Indemnitee’s commencement of or  continued service to the Corporation in an
effective manner, the difficulty of finding adequate director and officer
liability insurance coverage and the Indemnitee’s reliance on the aforesaid
provisions in the Corporation’s Restated Certificate of Incorporation, and, in
part to provide the Indemnitee with specific contractual assurance that the
protection promised by such provisions will be available to the Indemnitee
(regardless of, among other things, any amendment to or revocation of such
provisions of the Restated Certificate of Incorporation, future financial
difficulties of the Corporation, any change in the composition of the
Corporation’s board of directors or the occurrence of any acquisition
transaction relating to the Corporation);


 


WHEREAS, the Corporation
wishes to provide in this Agreement for the effective indemnification of and
the advancing of expenses to the Indemnitee as set forth in this Agreement; and


 


WHEREAS, the Indemnitee
may have certain rights to indemnification provided by one or more shareholder
(the “Alternative Indemnitors”) which Indemnitee and the Alternative
Indemnitors intend to be secondary to the primary obligation of the Corporation
to indemnify Indemnitee as set forth in this Agreement;


 


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NOW, THEREFORE, in
consideration of the premises and of the Indemnitee agreeing to serve or
serving the Corporation directly or, at its request, with another enterprise,
and intending to be legally bound hereby, the parties hereto agree as follows:


 


1.                                       Indemnification


 


a.                                       Agreement to Indemnify. Subject to Section 3 hereof, the
Corporation shall indemnify the Indemnitee to the full extent permitted by law
against expenses (including attorneys’ and other professionals’ fees and other
out- of-pocket expenses), judgments, appeal bonds, fines and amounts paid in
settlement actually and reasonably incurred by the Indemnitee in connection
with any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative in nature (“Proceeding”) in
which the Indemnitee was or is or is threatened to be made a party or in which
the Indemnitee testifies by reason of (i) the fact that the Indemnitee is
or was a director, officer, employee or agent at any time or is or was at any
time serving at the request of the Corporation as a director, officer,
employee, trustee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise and (ii) any acts or
omissions by the Indemnitee in such capacity, so long as the Indemnitee acted
or omitted to act in good faith and in a manner that the Indemnitee (x) reasonably
believed to be in or not opposed to the best interests of the Corporation and (y) with
respect to any criminal action or proceeding, had reasonable cause to believe
was lawful; provided, however, that if a court of competent jurisdiction, after
exhaustion of all appeals there from, adjudges the Indemnitee to be liable to
the Corporation for any amount or if the Indemnitee pays an amount in
settlement to the Corporation, the Corporation may indemnify the Indemnitee for
such amount only with the approval of such court. The expenses indemnified
hereunder shall include any out of pocket expenses incurred by Indemnitee in
connection with any action, suit or proceeding to enforce the right of
indemnification under this Agreement.


 


b.                                      Primacy of the Corporation’s
Indemnification Obligation.  The
Corporation acknowledges that the Indemnitee may have certain rights to
indemnification provided by the Alternative Indemnitors.  The Corporation agrees that (i) it is
the indemnitor of first resort (i.e., its obligations to Indemnitee are primary
and any obligation of the Alternative Indemnitors to provide indemnification to
the Indemnitee are secondary), (ii) it shall be liable for the full amount
of expenses (including attorneys’ and other professionals’ fees and other out-
of-pocket expenses), judgments, fines and amounts paid in settlement actually
and reasonably incurred by the Indemnitee in connection with any Proceeding,
without regard to any rights Indemnitee may have against the Alternative Indemnitors,
and (iii) it 


 


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irrevocably waives,
relinquishes and releases the Alternative Indemnitors from any and all claims
against the Alternative Indemnitors for contribution, subrogation or any other
recovery of any kind.


 


c.                                       Exclusions. The Corporation shall not be liable under this
Agreement to make any payment to the Indemnitee:


 


i.                                          for which payment has previously been
actually made to the  Indemnitee under a
valid and collectible insurance policy, except in respect of any excess beyond
the amount of payment under such insurance;


 


ii.                                       for which payment has previously been
actually made to the Indemnitee by the Corporation other than pursuant to this
Agreement, except in respect of any excess beyond the amount of such payment;
and


 


iii.                                    for an accounting of profits made from
the purchase or sale by the  Indemnitee
of securities of the Corporation within the meaning of Section 16(b) of
the Securities Exchange Act of 1934, as amended, or similar provisions of any
state law.


 


d.                                      Standards of Indemnification. In connection with any determination as
to whether the Indemnitee is entitled to be indemnified or advanced expenses
hereunder, to the maximum extent permitted by law, the burden of proof shall be
on the Corporation to establish that Indemnitee is not so entitled.  In connection with any action by the
Indemnitee to enforce this  Agreement, to
the maximum extent permitted by law, neither the failure of the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of any
action by the Indemnitee under Section 5 hereof that indemnification of
the claimant is proper under the circumstances because the Indemnitee has met
the applicable standard of conduct, nor an actual determination by the
Corporation (including its Board of Directors, independent legal counsel, or
its stockholders) that the Indemnitee has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that the
Indemnitee has not met the applicable standard of conduct. For purposes of this
Agreement, the termination of any Proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Indemnitee did not act in
good faith and in a manner which the Indemnitee reasonably believed to be in or
not opposed to the best interests of the Corporation or with respect to any
criminal Proceeding, had reasonable cause to believe that the conduct of the
Indemnitee was unlawful.


 


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2.                                       Indemnification Against Expenses of
Successful Party.


 


Notwithstanding the other
provisions of this Agreement, after the Indemnitee has been successful on the
merits or otherwise, including the dismissal of a Proceeding without prejudice
or the settlement of a Proceeding without admission of liability, in defense of
any Proceeding or in defense of any claim, issue or matter therein, the
Corporation, in accordance with Section 145(c) of the General
Corporation Law of the State of Delaware, shall indemnify the Indemnitee
against all expenses (including attorneys’ and other professionals’ fees and
other out-of-pocket expenses) actually and reasonably incurred by the
Indemnitee in connection therewith.


 


3.                                       Determination of Right of Indemnification.


 


Any indemnification under
Section 1 (unless otherwise ordered by a court) shall be made by the
Corporation only following receipt of a written demand by the Indemnitee and
only (x) if, in the specific case there has been no determination that
indemnification of the Indemnitee is not proper in the circumstances because
the Indemnitee has not met the applicable standard of conduct set forth in Section 1
or (y) if (but only if) required by Delaware law, upon a determination
that indemnification of the Indemnitee is proper in the circumstances because
the Indemnitee has met the  applicable
standard of conduct set forth in Section 1. Any such determination shall
be made within 30 days from the date the written request of the Indemnitee is
received by the Corporation either (i) by the Board of Directors by a
majority vote of a quorum  consisting of
directors who are not or were not parties to such Proceeding, (ii) if such
a quorum is not obtainable or, even if obtainable if a quorum of disinterested
directors so directs, or, if a change in control (as defined below) has
occurred, by the written opinion of independent legal counsel selected by the
Board of Directors of the Corporation (or if a change of control has so
occurred, selected by the Indemnitee with the consent of the Corporation, which
consent shall not be unreasonably withheld) or (iii) by the stockholders
of the Corporation.


 


A “change in control”
shall be deemed to have occurred if (i) any “person” (as  such term is used in Sections 13(d) and
14(d) of the Securities Exchange Act of 1934, as amended), other than a
Trustee or other fiduciary holding securities under an employee benefit plan of
the Corporation or a corporation owned directly or indirectly by  the stockholders of the Corporation in
substantially the same proportions as their ownership of stock in the
Corporation, is or becomes the “beneficial owner” (as defined in Rule 13d-3
under such Act), directly or indirectly of securities of the Corporation
representing 51% or more of the total voting power represented by the
Corporation’s then outstanding Voting Securities, (ii) during any period
of two consecutive years, individuals who at the beginning of such period
constitute the board of directors of the Corporation and any new director whose
election by the board of directors or nomination for election by the
Corporation’s stockholders was approved by a vote of at least two-thirds of the
directors then still in office who either were directors at the beginning of
the period or whose election or nomination for election was previously so
approved, cease for any reason to constitute a majority thereof, or (iii) the
stockholders 


 


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of the Corporation
approve a merger or consolidation of the Corporation with any other
corporation, other than a merger or consolidation which would result in the
Voting Securities of the Corporation outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into Voting Securities of the surviving entity) at least 80% of the total
voting power represented by the Voting Securities of the Corporation or such
surviving entity outstanding immediately after such merger or consolidation, or
the stockholders of the Corporation approve a plan of  complete liquidation and dissolution of the
Corporation or an agreement for the sale or disposition by the Corporation of
all or substantially all the Corporation’s assets; provided, however, that any
transaction that would otherwise be a change in control under clause (iii) hereof
which is approved and recommended in advance by the Corporation’s board of
directors shall not be deemed a change in control. For purpose of the
definition of change in control, the term “Voting Securities” shall mean any
securities of the Corporation which vote generally in the election of
directors.


 


The term “independent
legal counsel” as used herein, means a law firm, an attorney or a member of a
law firm that is experienced in matters of corporate law and neither at the
time of engagement is, nor at any time during the five years preceding the  date of the engagement by the Indemnitee has
been, retained to represent (i) either the Corporation or the Indemnitee
in any matter material to either party or (ii) any other party to a
Proceeding giving rise to a claim for indemnification hereunder. The term “independent
legal counsel” shall not include any person who, under the applicable standards
of professional conduct prevailing at the time of the representation, would
have a conflict of interest in representing either the Corporation or the
Indemnitee in an action to determine the Indemnitee’s rights under the
provisions of the Corporation’s Restated Certificate of Incorporation, Bylaws
or any agreement upon which the Indemnitee relies to establish the Indemnitee’s
right to indemnification or advancement of expenses.


 


The Corporation agrees to
pay the reasonable fees of the independent legal counsel and to indemnify fully
such independent legal counsel against any and all expenses (including
attorneys’ fees), claims, liabilities and damages arising out of or relating to
this Agreement or the engagement of such independent legal counsel pursuant
hereto.


 


4.                                       Advancement of Expenses; Control of
Defense; Counsel Costs; Settlement.


 


a.                                       Advancement of Expenses. 
Expenses (including attorneys’ fees) incurred by the Indemnitee in
defending any Proceeding shall be paid by the Corporation upon written request
of the Indemnitee in advance of the final disposition of such Proceeding if the
Corporation has received an undertaking by or on behalf of the Indemnitee, in
substantially the form attached hereto as Annex A. The obligation of the
Corporation to advance expenses pursuant to this Section 4(a) shall
be subject to the condition that if, when and to the extent a determination is
made as provided under Section 3 hereof that the Indemnitee would not be
permitted  to be


 


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indemnified as
provided therein, then the Corporation shall be entitled to be reimbursed by
the Indemnitee as provided in Annex A for all amounts theretofore paid in
advance; provided, however, that if Indemnitee has commenced legal proceedings
in a court of competent jurisdiction to secure a determination that the
Indemnitee should be indemnified under applicable law, any determination made
pursuant to this Agreement that the Indemnitee would not be permitted to be
indemnified under applicable law shall not be binding and the Indemnitee shall
not be required to reimburse the Corporation for any advances hereunder until a
final judicial determination is made with respect thereto as to which all
appeals therefrom have been exhausted.


 


In any event, the
obligation of the Indemnitee to reimburse the Corporation for advances shall be
unsecured and no interest will be charged thereon.


 


b.                                      Control of Defense; Counsel Costs. 
In connection with paying the expenses (including attorneys’ fees) of
any Proceeding against Indemnitee under Section 4(a), the Corporation
shall be entitled to elect to assume the defense of such Proceeding, with
counsel approved by Indemnitee, which approval shall not be unreasonably
withheld, by the delivery to Indemnitee of written notice of its election to do
so. After delivery of such notice, approval of such counsel by Indemnitee and
the retention of such counsel by the Corporation, the Corporation shall not be
liable to Indemnitee under this Agreement for any fees of separate counsel
subsequently incurred by Indemnitee with respect to the same Proceeding;
provided, however, that (i) Indemnitee shall have the right to employ
counsel in any such Proceeding at Indemnitee’s expense; and (ii) if (A) the
employment of counsel by Indemnitee has been authorized by the Corporation, or (B) Indemnitee
shall have concluded that a significant issue or a conflict of interest or
position between the Corporation and Indemnitee is reasonably likely, or (C) the
Corporation shall not have employed counsel to assume the defense of such
Proceeding within a reasonable period of time, or (D) with respect to any
claim brought by or in the right of the Corporation, then in any such event the
reasonable fees and expenses of Indemnitee’s counsel shall be at the expense of
the Corporation.  The Corporation shall
not be entitled to assume the defense of any Proceeding brought in the name of
or on behalf of the Corporation or as to which Indemnitee shall have made the
conclusion provided for in (ii)(B) above, in which case Indemnitee shall
have the right to employ counsel in such Proceeding and the reasonable fees and
expenses of Indemnitee’s counsel shall be at the expense of the Corporation.
Notwithstanding the foregoing, if at any time the Corporation fails to pay any
expenses with respect to any Proceeding in accordance with Section 4(a) hereof,
Indemnitee shall immediately be entitled to assume and control his own defense
in such Proceeding with counsel of his own choice (by notice to the
Corporation), and will have all rights to 


 


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advancement of
expenses and indemnification of those expenses hereunder.


 


If two or more persons,
including the Indemnitee, may be entitled to indemnification from the
Corporation as parties to any Proceeding, the Corporation may require the
Indemnitee to use the same legal counsel as the other parties. The Indemnitee
shall have the right to use separate legal counsel in the Proceeding, but the
Corporation shall not be liable to the Indemnitee under this Agreement for the
fees and expenses of separate legal counsel incurred after the notice from the
Corporation of the requirement to use the same legal counsel as the other parties,
unless the Indemnitee reasonably concludes that there may be a conflict of
interest between the Indemnitee and any of the other parties required by the
Corporation to be so represented by the same legal counsel.


 


c.                                       Settlement.  The
Corporation shall not settle any action or claim in any manner that would
impose any limitation, obligation or unindemnified payment on Indemnitee
without Indemnitee’s written consent, which consent shall not be unreasonably
withheld.


 


5.                                       Procedure for Making Demand.


 


a.                                       Payments for any indemnification to which
the Indemnitee is entitled pursuant to Section 1 hereof shall be made by
the Corporation no later than 30 days after the receipt of a written demand
made by the Indemnitee as provided in Section 3 hereof.


 


b.                                      Payments of expenses to which the
Indemnitee is entitled pursuant to Section 2 hereof shall be made by the
Corporation no later than ten days after receipt by the Corporation of the
written demand for payment from the Indemnitee.


 


c.                                       Advancement of expenses to the extent
provided by Section 4(a) hereof shall be made by the Corporation no
later than 30 days after receipt by the Corporation of the written undertaking
referred to in Section 4(a) hereof.


 


d.                                      The right to indemnification or advances
hereunder shall be enforceable by each Indemnitee in any court of competent
jurisdiction if the Board of Directors, independent legal counsel or
stockholders improperly denies the claim, in whole or in part or if
indemnification or advancement of expenses is not made within the time
specified herein. In any such event, or if there has been no determination
under Section 3, the Indemnitee shall have the right to commence
litigation in any such court in the States of Delaware or Texas or the state(s) of
director’s residence or employment, having subject matter jurisdiction thereof,
and in which venue is proper, seeking an initial determination by the court or 


 


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challenging any
such determination under this Agreement or any aspect thereof, and the
Corporation hereby consents to service of process and to appear in any such
proceeding. Any determination as to the right to indemnification, including
expense reimbursement, hereunder shall otherwise be conclusive and binding on
the Corporation and the Indemnitee.


 


e.                                       The Corporation shall indemnify the
Indemnitee against any and all expenses (including attorneys’ and other
professionals’ fees and other out-of-pocket expenses) and, if requested by the
Indemnitee, shall, within ten days of such request, advance such expenses to
Director which are incurred by the Indemnitee in connection with any claim
asserted against or action brought by the Indemnitee for (i) indemnification
hereunder or advance payment of expenses by the Corporation under this
Agreement (or the Corporation’s Restated Certificate of Incorporation or
By-laws now or hereafter in effect) and/or (ii) recovery under any
director and officer liability insurance policies maintained by the
Corporation, regardless of whether the Indemnitee ultimately is determined to
be entitled to such indemnification, advance expense payment or insurance
recovery, as the case may be.


 


6.                                       Subrogation.


 


Subject to the provisions
of Section 1(b) hereof, in the event of payment under this Agreement,
the Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of the Indemnitee who shall execute all papers required and
shall do everything that may be necessary to secure such rights, including the
execution of such documents necessary to enable the Corporation effectively to
bring suit to enforce such rights.


 


7.                                       Effect of Changes in Law or Corporate
Documents.


 


No change in the
Corporation’s Restated Certificate of Incorporation or Bylaws or the Delaware
General Corporation law subsequent to the date first above written shall have
the effect of limiting or eliminating the indemnification or advances of
expenses available under this Agreement as to any act, omission or capacity for
which this Agreement provides indemnification or advances of expenses at the
time of such act, omission or capacity. If any change after the date of this
Agreement in any applicable law, statute or rule expands the power of the
Corporation to indemnify the Indemnitee, such change shall be within the
purview of the Indemnitee’s rights and the Corporation’s obligations under this
Agreement. If any change in applicable law, statute or rule narrows the
right of the Corporation to indemnify the Indemnitee, such change, except to
the extent otherwise required by law, statute or rule to be applied to
this Agreement, shall have no effect on this Agreement or the parties’ rights
or obligations hereunder.


 


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8.                                       Definition of “Corporation.”


 


For
purposes of this Agreement, references to “the Corporation” shall include,
in  addition to the resulting or
surviving corporation, any constituent corporation (including any constituent
of a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director of such constituent corporation after the Effective Date or is or was
serving at the request of such constituent corporation as a director, officer,
employee, trustee or agent of another corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise after the Effective Date,
shall stand in the same position under this Agreement with respect to the
resulting or surviving corporation as he would have with respect to such
constituent corporation if its separate existence had continued.


 


9.             Partial lndemnity.


 


If the
Indemnitee is entitled under any provision of this Agreement to indemnification
by the Corporation for some or a portion of the expenses, judgments, fines and
amounts paid in settlement but not, however, for all of the total amount
thereof, the Corporation shall nevertheless indemnify the Indemnitee for the
portion thereof to which the Indemnitee is entitled.


 


10.           Successors.


 


The indemnification and
advancement of expenses and other rights granted and obligations undertaken
pursuant to this Agreement shall continue after the Indemnitee has ceased to be
a director, officer, employee or agent as referred to in clause (i) of Section 1
(a) hereof and shall be binding upon the successors and assigns of the
Corporation and shall inure to the benefit of the heirs, executors,
administrators and legal representatives of the Indemnitee and the Corporation.


 


11.           Contract Rights Not Exclusive.


 


The
contract rights conferred by this Agreement shall be in addition to, but not
exclusive of, any other right which the Indemnitee may have or may hereafter
acquire under any statute, the Restated Certificate of Incorporation or Bylaws
of the Corporation, any agreement by the vote of stockholders or disinterested
directors of the Corporation or otherwise, both as to action in the Indemnitee’s
official capacity and as to action in another capacity while holding such
office. The rights granted in this Agreement supersede any similar right
granted under any previous Agreement between the Corporation and the Indemnitee
with respect to the subject matter hereof.


 


12.                                 Directors’ and
Officers’ Liability Insurance.


 


a.                                       Maintaining
Insurance Coverage.  The
Corporation shall use commercially reasonable efforts to obtain and maintain on
an ongoing basis a policy or 


 


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policies of insurance on commercially reasonable terms with reputable
insurance companies (with an A.M. Best rating of “A” or better) providing
liability insurance for directors and officers, including Indemnitee, in
respect of acts or omissions occurring while serving in such capacity, whether
or not the Corporation would have the power to indemnify Indemnitee against the
liability under this Agreement, and to ensure the Corporation’s performance of
its indemnification obligations under this Agreement, on terms with respect to coverage and amount. To the extent
that the Corporation maintains a policy or policies of insurance pursuant to
this Section 12(a), Indemnitee shall be covered by such policy or policies
in accordance with its or their terms to the maximum extent of the coverage
available for any director or officer under such policy or policies. Such
insurance policy shall have coverage terms and policy limitations at least as
favorable to the Indemnitee as any insurance policy for any other officer or
director.


 


b.                                      Evidence of
Coverage. Upon request by Indemnitee, the Corporation shall
provide copies of any and all directors’ and officers’ liability insurance
policies obtained and maintained in accordance with Section 12(a) of
this Agreement. The Corporation shall notify Indemnitee of any significant
changes in the Corporation’s directors’ and officers’ liability insurance
coverage.


 


c.                                       Notice to
Insurers.  At the time of the receipt of
any notice of any Proceeding,  the Corporation shall give prompt notice of the commencement of such
Proceeding to the directors’ and officers’ liability insurers in accordance
with the procedures set forth in the respective policies. The Corporation shall
thereafter take all necessary or appropriate action to cause such insurers to
pay, on behalf of Indemnitee, all amounts payable as a result of such
Proceeding in accordance with the terms of such policies. The failure or
refusal of such insurers to pay any such amount shall not affect or impair the
obligations of the Corporation under this Agreement.


 


13.                                 The Indemnitee’s Obligations.


 


The Indemnitee shall
promptly advise the Corporation in writing of the institution of any Proceeding
that is or may be subject to this Agreement and keep the Corporation generally
informed of and consult with the Corporation with respect to, the status and
defense of any such Proceeding.


 


14.                                 Contribution.


 


In order to provide for
just and equitable contribution in circumstances in which the indemnification
provided for herein is held by a court of competent jurisdiction to be
unavailable to Indemnitee in whole or part, the parties agree that, in such
event, the 


 


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Corporation shall
contribute to the payment of Indemnitee’s expenses (including attorneys’ and
other professionals’ fees and other out- of-pocket expenses), judgments, fines
and amounts paid in settlement in an amount that is just and equitable in the
circumstances, taking into account, among other things, contributions by other
directors and officers of the Corporation pursuant to indemnification
agreements or otherwise. The Corporation and Indemnitee agree that, in the
absence of personal enrichment of Indemnitee, or acts of intentional fraud or
dishonest or criminal conduct on the part of Indemnitee, it would not be just
and equitable for Indemnitee to contribute to the payment of such expenses,
judgments, fines and amounts paid in settlement arising out of a Proceeding in
an amount greater than: (i) in a case where Indemnitee is a director of
the Corporation but not an officer, the amount of fees paid to Indemnitee for
serving as a director during the 12 months preceding the commencement of such
Proceeding; or (ii) in a case where Indemnitee is a director of the Corporation
and is an officer, the amount set forth in clause (i) plus 5 percent of
the aggregate cash compensation paid to Indemnitee for serving as such officer
during the 12 months preceding the commencement of such Proceeding. The
Corporation shall contribute to the payment of expenses, judgments, fines and
amounts paid in settlement covered hereby to the extent not payable by
Indemnitee pursuant to the contribution provisions set forth in the preceding
sentence.


 


15.                                 Severability.


 


If any
provision of this Agreement is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, such prohibition
shall not affect the validity of the remaining provisions of this Agreement.


 


16.                                 Modification and Waiver.


 


No
supplement, modification or amendment of this Agreement shall be binding unless
executed in writing by both of the parties hereto.


 


17.                                 Headings.


 


The descriptive headings
of the Sections of this Agreement are inserted for convenience and shall not
control or affect the meaning or construction of any of the  provisions hereof.


 


18.                                 Notices.


 


Any
request, notice, direction, authorization, consent, waiver, demand or other
communication permitted or authorized by this Agreement to be made upon, given
or furnished to or filed with the Corporation or the Indemnitee by the other
party hereto shall be sufficient for every purpose hereunder if in writing
(including telecopy


 


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communication) and telecopied or delivered by hand (including by
courier service) as follows:


 


If to the
Corporation, to it at:


 


Zale Corporation


Attn: General
Counsel


901 West Walnut
Hill Lane


Irving, Texas
75038-1003


Telecopy No.:
(972) 580-4934


 


or


 


If to the Indemnitee, to
him at Indemnitee’s address or telecopy number as reflected in the records of
the Corporation.


 


or, in either case, such
other address as shall have been set forth in a notice delivered in accordance
with this Section. All such communications shall, when so telecopied or delivered
by hand, be effective when telecopied with confirmation of receipt or received
by the addressee, respectively. Any party that telecopies any communication
hereunder to the other party shall, on the same date as such telecopy is
transmitted, also send, by first class mail, postage prepaid and addressed to
such party as specified above, an original copy of the communication so
transmitted.


 


19.                                 Choice of Law.


 


This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware applicable to contracts made
and to be performed in such state, without giving effect to the principles of
conflicts of laws.


 


IN WITNESS WHEREOF, the
parties have executed this Agreement as of the
         day of
                ,
20    .


 


	
   

  	
  ZALE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By: Hilary Molay

  
	
   

  	
  Senior Vice President,
  General Counsel &

  
	
   

  	
  Corporate Secretary

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE INDEMNITEE

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  



 


12

















 


ANNEX A


 


UNDERTAKING AGREEMENT


 


AGREEMENT between Zale
Corporation, a Delaware corporation (the “Corporation”), and
                          ,
a member of the Board of Directors of the Corporation (the “Indemnitee”).


 


WHEREAS, the Indemnitee
has become involved in investigations, claims, actions, suits or proceedings (collectively,
“Proceedings”) which have arisen as a result of the Indemnitee’s service to the
Corporation;


 


WHEREAS, the Indemnitee
desires that the Corporation pay any and all expenses (including, but not
limited to, attorneys’ fees and court costs) actually and reasonably incurred
by the Indemnitee or on the Indemnitee’s behalf in defending or investigating
any such Proceedings and that such payment be made in advance of the final
disposition of such Proceedings to the extent that the Indemnitee has not been
previously reimbursed by insurance;


 


WHEREAS, the Corporation
is willing to make such payments but, in accordance with Section 145 of
the General Corporation Law of the State of Delaware, the Corporation may make
such payments only if it receives an undertaking to repay from the Indemnitee;
and


 


WHEREAS, the Indemnitee
is willing to give such an undertaking.


 


NOW, THEREFORE, in
consideration of the premises and mutual covenants and agreements herein
contained, the Corporation and the Indemnitee agree as follows:


 


1.             In regard to any advance payments made by the
Corporation to the Indemnitee pursuant to the terms of the Indemnification
Agreement dated as of
          
    , 20     between the Corporation
and the Indemnitee (the “Indemnification Agreement”) or pursuant to Article Seventh
of the Restated Certificate of Incorporation of the Corporation, the Indemnitee
hereby undertakes and agrees to repay to the Corporation any and all amounts so
paid promptly and in any event within 30 days after the disposition, including
exhaustion of all appeals therefrom of any litigation or threatened litigation
on account of which payments were made if it is determined that the Indemnitee
is not entitled to indemnification pursuant to the Indemnification Agreement,
the Restated Certificate of Incorporation or the General Corporation Law of the
State of Delaware.


 


2.             This Agreement shall not affect in any manner the rights
which the Indemnitee may have against the Corporation, any insurer or any other
person to seek  indemnification for or
reimbursement of any expenses referred to herein or any judgment which may be
rendered in any litigation or proceeding.


 


A-1

















 


IN WITNESS WHEREOF, the
parties have executed this Agreement as of the
       day of
                    ,
20    .


 


 


	
   

  	
  ZALE CORPORATION

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  THE INDEMNITEE

  
	
   

  	
   

  
	
   

  	
   

  



 


A-2