Exhibit 10.1


 


January 22, 2008


 


Mr. Theo Killion


250 W. 91st
Street, Apt. 5S


New York, NY  10024


 


Dear Theo:


 


On behalf of Zale
Corporation, I am pleased to make you the following offer as Executive Vice
President of Human Resources, Legal and Corporate Strategy.  This letter outlines the terms of your offer:


 


	
  Reporting to:

  	
   

  	
  President and Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
  Base Compensation:

  	
   

  	
  Twenty-one thousand one
  hundred fifty-three dollars ($21,153) per bi-weekly pay period which, if
  annualized, is equal to approximately five hundred fifty thousand dollars
  ($550,000).

  
	
   

  	
   

  	
   

  
	
  Signing Bonus:

  	
   

  	
  Three hundred
  seventy-five thousand dollars ($375,000) payable within 30 days of reporting
  to work. If you were to leave the Company prior to one year of service, you
  would repay the above amount pursuant to the terms of the Company’s standard
  sign-on bonus agreement.

  
	
   

  	
   

  	
   

  
	
  Sign-On Equity Grant: 

  	
   

  	
  100,000 options for
  shares of Zale stock with an exercise price equal to the price at the close
  of market on the Hire Date. Shares will vest over four years at 25% on each
  anniversary of your Hire Date. 

  
	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  30,000 restricted stock
  units that will vest 25% on year two, an additional 25% on year three, with
  the remaining 50% to vest on year four, each on the anniversary of the Hire
  Date.

  



 


 

















 


	
  Incentive Compensation:

  	
   

  	
  You will be eligible
  for participation in the Company’s Annual Bonus Program (as may be amended
  from time to time) at a target level of 75% and a maximum level of 175% of
  base salary, based on achievement of our financial plan. For the balance of
  FY’08 (February 2008 — July 2008), you will be eligible for a
  pro-rata portion of any earned bonus for FY’08; provided that for the
  remainder of fiscal ‘08 you will be guaranteed a minimum bonus of $206,000.

  
	
   

  	
   

  	
   

  
	
  Benefits: 

  	
   

  	
  Participation in all
  benefits generally available to the Company’s Executives: 

  
	
   

  	
   

  	
  ·  Company’s medical plans

  
	
   

  	
   

  	
  ·  Executive life insurance (2x base salary)

  
	
   

  	
   

  	
  ·  401(k) Savings and Investment Plan (after one
  year of service)

  
	
   

  	
   

  	
  ·  Executive LTD

  
	
   

  	
   

  	
   

  
	
  Vacation:

  	
   

  	
  You will receive 4
  weeks (160 hours) of vacation per fiscal year.

  
	
   

  	
   

  	
   

  
	
  Relocation:

  	
   

  	
  See attached
  Corporate Relocation Policy.

  



 


Employment at Zale is
subject to the terms and conditions contained in Zale’s Management Policies and
Guidelines, is not for a specific time and can be terminated by your or by Zale
at any time for any reason with or without cause.  This offer of employment is contingent upon
the completion of a background check satisfactory to Zale.  This letter is a summary of the terms of your
employment by Zale.  We agree to provide
you on or about February 29, 2008, an Employment Security Agreement,
effective as of the Hire Date, which will include severance in a non-change of
control and change of control context and indemnification.  These agreements are under review by the Compensation
Committee of the Board of Directors but it is agreed that at a minimum you will
be entitled to severance of 18 months of salary and average earned bonus and in
the case of a change of control 36 months of salary and average earned bonus
subject in the case of the change of control to the maximum amounts payable
under section 280G of the Internal Revenue Code without imposition of excise
tax.


 


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Theo, I am delighted to
extend this offer and I look forward to you joining us.


	
   

  	
   

  
	
   

  	
  Sincerely,

  
	
   

  	
   

  
	
   

  	
  /s/ Neal Goldberg

  
	
   

  	
   

  
	
   

  	
  Neal Goldberg

  
	
   

  	
  President and

  
	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
  Accepted:

  	
   

  
	
   

  	
   

  
	
  /s/ Theo Killion

  	
   

  	
   

  
	
  Theo Killion

  	
   

  	
   

  
	
  Dated: 

  	
          1/23/08

  	
   

  	
   

  
							



 


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