Exhibit 4.5
    

    
      

      Execution Version
    

    
      

      SECURITY AGREEMENT
    

    
      EXECUTED by the parties hereto as of the 12th day of February,
      2009.
    

    
    	
          
            TO:
          

        	
          
            BANK OF AMERICA, N.A., a national banking association
            organized under the federal laws of the United States of America,
            having an office at 100 Federal Street, Floor 9, Boston,
            Massachusetts 02110, U.S.A., as administrative agent and
            collateral agent (in such capacity, including its successors and
            assigns, hereinafter the “Collateral Agent”) for the
            Secured Parties (as defined herein), in consideration of the
            mutual covenants contained herein and benefits derived herefrom;
          

        
	

        	
           
        
	
          
            GRANTED BY:
          

        	
          
            ZALE CANADA CO., a Nova Scotia unlimited liability
            company, having its registered office at 1959 Upper Water
            Street, Suite 900, Halifax, Nova Scotia, B3J 2N2 and its chief
            executive office and principal place of business at 901 West
            Walnut Hill Lane, Irving, Texas 75038 (hereinafter the “Grantor”).
          

        


    

    
      

      WITNESSETH
    

    
      Reference is made to the Credit Agreement dated July 23, 2003 (as such
      has been or may be further amended, supplemented, restated, replaced or
      otherwise modified from time to time, the “Credit Agreement”)
      by and among, amongst others, (i) Zale Delaware, Inc., Zale Corporation,
      DDCC, Inc. (predecessor-in-interest to ZGCO, LLC), and TXDC, L.P., as
      Borrowers, (ii) the Lenders party thereto from time to time, and (iii)
      Bank of America, N.A., as Collateral Agent, for itself and the Lenders.
    

    
      The Lenders have agreed to make Loans and otherwise extend credit
      support to the Borrowers pursuant to, and upon the terms and subject to
      the conditions specified in, the Credit Agreement.
    

    
      The Borrowers and the Lenders have agreed that the Grantor shall join as
      a Borrower under the Credit Agreement pursuant to a Joinder to Credit
      Agreement of even date herewith, executed by the Grantor, as Borrower,
      the other Borrowers and the Collateral Agent.
    

    
      The obligations of the Lenders to join the Grantor as a Borrower and to
      continue to make Loans and otherwise extend credit support are each
      conditioned upon, among other things, the execution and delivery by the
      Grantor of a security agreement in the form hereof to secure the Secured
      Obligations (as defined herein).
    

    
      Accordingly, the Grantor and the Collateral Agent, on behalf of itself
      and each other Secured Party (and each respective successors and
      assigns), hereby agree as follows:
    

    
      

      

      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -2-
    

    
      

      SECTION 1 – GRANT OF SECURITY INTEREST
    

    

    

    
    	
          1.1
        	
          
            Security Interest
          

        
	

        	

        	
           
        
	

        	
          
            As a general and continuing security for the payment and
            performance, as the case may be, in full of the Secured
            Obligations, the Grantor, IN CONSIDERATION THEREOF, and for other
            good and valuable consideration, the receipt and sufficiency of
            which are hereby acknowledged, hereby bargains, assigns,
            mortgages, pledges, hypothecates and transfers to the Collateral
            Agent, including its successors and assigns, for the benefit of
            the Secured Parties, and hereby grants to the Collateral Agent,
            including its successors and assigns, for the benefit of the
            Secured Parties, a continuing security interest in, all of the
            Grantor’s right, title and interest in, to and under the following
            property of the Grantor, whether now owned or hereafter-acquired
            by or on behalf of the Grantor, wherever located (hereinafter,
            collectively, the “Collateral”):
          

        
	

        	

        	
           
        
	

        	
          (a)
        	
          all Accounts;
        
	

        	

        	
           
        
	

        	
          (b)
        	
          all Inventory;
        
	

        	

        	
           
        
	

        	
          (c)
        	
          all Deposit Accounts and Concentration Accounts;
        
	

        	

        	
           
        
	

        	
          (d)
        	
          all Documents of Title relating to the Grantor’s Inventory;
        
	

        	

        	
           
        
	

        	
          (e)
        	
          all Chattel Paper arising from the sale of the Grantor’s Inventory;
        
	

        	

        	
           
        
	

        	
          (f)
        	
          all Instruments, Intangibles, Supporting Obligations and Letter of
          Credit Rights arising from the sale of Inventory;
        
	

        	

        	
           
        
	

        	
          (g)
        	
          all policies and certificates of insurance and all insurance
          proceeds, refunds, and premium rebates, including, without
          limitation, proceeds of fire and credit insurance, with respect to
          any of the foregoing;
        
	

        	

        	
           
        
	

        	
          (h)
        	
          all books, records, and information relating to any of the
          foregoing, and all rights of access to such books, records and
          information;
        
	

        	

        	
           
        
	

        	
          (i)
        	
          all liens, guaranties, rights, remedies, and privileges pertaining
          to any of the foregoing ((a) through (h)), including the right of
          stoppage in transit; and
        
	

        	

        	
           
        
	

        	
          (j)
        	
          any of the foregoing whether now owned or now due, or in which the
          Grantor has an interest, or hereafter acquired, arising, or to
          become due, or in which any Grantor obtains an interest, and all
          products, Proceeds, substitutions, and accessions of or to any of
          the foregoing.
        
	

        	

        	
           
        
	

        	
          
            Notwithstanding the foregoing, the term “Collateral”
            shall expressly exclude any Inventory or other Goods that have
            been delivered to the Grantor on a consignment basis (“Consigned
            Inventory”), or any Accounts, Documents of Title, Chattel
            Paper, Instruments, Intangibles, Supporting Obligations, Letter of
            Credit Rights or any other assets or properties described above,
            to the extent that any of the foregoing relate to, or arise out of
            the sale or other disposition of, any of the Consigned Inventory
            or Proceeds thereof.
          

        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -3-
    

    
      


    

    
    	

        	
          
            Without limiting the foregoing, the Grantor hereby designates the
            Collateral Agent as its true and lawful attorney, exercisable by
            the Collateral Agent whether or not an Event of Default exists,
            with full power of substitution, at the Collateral Agent’s option,
            to file one or more financing statements, financing change
            statements, or to sign other documents for the purpose of
            perfecting, confirming, continuing or protecting the security
            interest granted by the Grantor, without the signature of the
            Grantor (the Grantor hereby appointing the Collateral Agent as its
            attorney to sign the Grantor’s name to any such document, whether
            or not an Event of Default exists), and naming the Grantor as
            debtor and the Collateral Agent as secured party, provided,
            that the Collateral Agent shall have the same rights as the
            Grantor’s true and lawful attorney referred to above to enforce
            the security interest granted by the Grantor, but only if an Event
            of Default exists.
          

        
	

        	

        	
           
        
	
          1.2
        	
          
            Definition of Terms Used Herein
          

        
	

        	

        	
           
        
	

        	
          (a)
        	
          
            Terms used but not defined herein and defined in the PPSA shall
            have the same meanings herein as in the PPSA unless the context
            otherwise requires; for the purposes of this Security Agreement, “PPSA”
            means the Personal Property Security Act of Ontario (or any
            successor statute) or similar legislation of any other Canadian
            jurisdiction, the laws of which are required by such legislation
            to be applied in connection with the issue, perfection,
            enforcement, opposability, validity or effect of security
            interests;
          

        
	

        	

        	
           
        
	

        	
          (b)
        	
          
            Capitalized terms not otherwise defined herein shall have the same
            meanings as ascribed to them in the Credit Agreement;
          

        
	

        	

        	
           
        
	

        	
          (c)
        	
          
            Any reference to “Collateral” shall, unless the
            context otherwise requires, refer to “Collateral or any part
            thereof”;
          

        
	

        	

        	
           
        
	

        	
          (d)
        	
          
            The grant of the “security interest” herein provided
            for shall include, without limitation, a mortgage, hypothecation,
            pledge, charge and assignment of the Collateral in favour of the
            Collateral Agent (for itself and on behalf of the Secured Parties);
          

        
	

        	

        	
           
        
	

        	
          (e)
        	
          
            The term “encumbrance” shall include, without
            limitation, a security interest, lien, hypothec, claim, charge,
            deemed trust or encumbrance of any kind whatsoever;
          

        
	

        	

        	
           
        
	

        	
          (f)
        	
          
            “Accounts” shall mean all accounts, accounts
            receivable, receivables, and rights to payment (whether or not
            earned by performance) arising out of the sale, lease, license,
            assignment or other disposition of Inventory and/or arising out of
            the use of a credit or charge card or information contained on or
            used with that card;
          

        
	

        	

        	
           
        
	

        	
          (g)
        	
          
            “Canadian Plan” shall mean any pension or other
            employee benefit plan and which is: (a) a plan maintained by the
            Grantor or one of its Subsidiaries; (b) a plan to which the
            Grantor or any of its Subsidiaries contributes or is required to
            contribute; (c) a plan to which the Grantor or any of its
            Subsidiaries was required to make contributions at any time during
            the five (5) calendar years preceding the date of this Security
            Agreement; or (d) any other plan with respect to which the Grantor
            or any of its Subsidiaries or Affiliates has incurred or may incur
            liability, including contingent liability either to such plan or
            to any Person, administration or Governmental Authority, including
            the FSCO;
          

        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -4-
    

    
      


    

    
    	
           
        	
          (h)
        	
          
            “Chattel Paper” shall have the meaning given to the
            term “chattel paper” in the PPSA;
          

        
	

        	

        	
           
        
	

        	
          (i)
        	
          
            “Concentration Account” shall have the meaning
            assigned to such term in the Credit Agreement;
          

        
	

        	

        	
           
        
	

        	
          (j)
        	
          
            “Deposit Account” shall mean any chequing or other
            demand deposit account into which proceeds of Collateral are
            deposited;
          

        
	

        	

        	
           
        
	

        	
          (k)
        	
          
            “Document of Title” shall have the meaning given to
            the term “document of title” in the PPSA;
          

        
	

        	

        	
           
        
	

        	
          (l)
        	
          
            “FSCO” shall mean the Financial Services Commission
            of Ontario and any Person succeeding to the functions thereof and
            includes the Superintendent under such statute and any other
            Governmental Authority empowered or created by the Supplemental
            Pensions Act (Québec) or the Pension Benefits Act
            (Ontario) or any Governmental Authority of any other Canadian
            jurisdiction exercising similar functions in respect of any
            Canadian Plan of the Grantor or any of its Subsidiaries or
            Affiliates and any Governmental Authority succeeding to the
            functions thereof;
          

        
	

        	

        	
           
        
	

        	
          (m)
        	
          
            “Goods” shall have the meaning given to the term
            “goods” in the PPSA;
          

        
	

        	

        	
           
        
	

        	
          (n)
        	
          
            “Instrument” shall have the meaning given to the term
            “instrument” in the PPSA;
          

        
	

        	

        	
           
        
	

        	
          (o)
        	
          
            “Intangibles” shall have the meaning given to the
            term “intangibles” in the PPSA, and shall also include, without
            limitation, all: intangibles under which the account debtor’s
            principal obligation is a monetary obligation; rights to payment
            for credit extended; deposits; amounts due to the Grantor; credit
            memoranda in favour of the Grantor, tax refunds and abatements;
            insurance refunds and premium rebates, records; customer lists;
            telephone numbers; causes of actions; judgments; payments under
            any settlement or other agreement; licenses; internet addresses
            and domain names; computer software programs; trade names,
            trademarks, service marks, together with all goodwill connected
            with and symbolized by any of the foregoing; all other intangible
            property of the Grantor in the nature of intellectual property,
            and any warranty claims;
          

        
	

        	

        	
           
        
	

        	
          (p)
        	
          
            “Inventory” shall include, without limitation,
            “inventory” as defined in the PPSA and also all: (a) Goods which
            (i) are leased by a Person as lessor, (ii) are held by a Person
            for sale or lease or to be furnished under a contract of service,
            (iii) are furnished by a Person under a contract of service, or
            (iv) consist of raw materials, work in process, or materials used
            or consumed in a business; (b) Goods of said description in
            transit; (c) Goods of said description which are returned,
            repossessed and rejected; (d) packaging and shipping materials
            related to any of the foregoing; and (e) all Documents of Title
            which represent any of the foregoing;
          

        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -5-
    

    
      


    

    
    	

        	
          (q)
        	
          
            “Letter of Credit Right” shall mean a right to
            payment or performance under a letter of credit, whether or not
            the beneficiary has demanded or is at the time entitled to demand
            payment or performance;
          

        
	

        	

        	
           
        
	

        	
          (r)
        	
          
            “Perfection Certificate” shall mean the certificate
            substantially in the form of Annex 1 hereto, completed and
            supplemented with the schedules and attachments contemplated
            thereby and duly executed by a Financial Officer of the Grantor;
          

        
	

        	

        	
           
        
	

        	
          (s)
        	
          
            “Proceeds” shall have the meaning given to the term
            “proceeds” in the PPSA;
          

        
	

        	

        	
           
        
	

        	
          (t)
        	
          
            “Secured Obligations” shall mean the Obligations as
            defined in the Credit Agreement;
          

        
	

        	

        	
           
        
	

        	
          (u)
        	
          
            “Secured Parties” shall mean (a) the Lenders, (b) the
            Agents and their Affiliates, (c) the Issuing Bank, (d) the
            Arranger, (e) the beneficiaries of each indemnification obligation
            undertaken by the Grantor under any Loan Document, (f) any other
            Person to whom Obligations are owed, and (g) the successors and
            assigns of each of the foregoing; and
          

        
	

        	

        	
           
        
	

        	
          (v)
        	
          
            “Supporting Obligations” shall mean a Letter of
            Credit Right and all other secondary obligation, including,
            namely, lien notes, judgments, chattel mortgages, mortgages,
            security interests, hypothecs, assignments, guarantees,
            suretyships, accessories, bills of exchange, negotiable
            instruments, invoices, that supports the payment or performance of
            an Account, Chattel Paper, a Document of Title, an Intangible, an
            Instrument or investment property, and all other rights, benefits
            and documents now or hereafter taken, vested in or held by the
            Grantor in respect of or as security for the same and the full
            benefit and advantage thereof.
          

        
	

        	

        	
           
        
	
          1.3
        	
          
            Rules of Interpretation.
          

        
	

        	

        	
           
        
	
          The rules of interpretation specified in Section 1.2 of the Credit
          Agreement shall be applicable to this Agreement.
        
	

        	

        	
           
        
	
          1.4
        	
          
            Grantor Remains Liable
          

        
	

        	

        	
           
        
	
          Notwithstanding anything herein to the contrary:
        
	

        	

        	
           
        
	

        	
          (a)
        	
          the Grantor shall remain liable under the contracts and agreements
          included in the Collateral to the extent set forth therein to
          perform all its duties and obligations thereunder to the same extent
          as if this Security Agreement had not been executed;
        
	

        	

        	
           
        
	

        	
          (b)
        	
          the exercise by the Collateral Agent of any of the rights or
          remedies hereunder shall not release the Grantor from any of its
          duties or obligations under the contracts and agreements included in
          the Collateral; and
        
	

        	

        	
           
        
	

        	
          (c)
        	
          the Collateral Agent shall not have any obligation or liability
          under the contracts and agreements included in the Collateral by
          reason of this Security Agreement, nor shall the Collateral Agent be
          obligated to perform any of the obligations or duties of the Grantor
          thereunder or to take any action to collect or enforce any claim for
          payment assigned hereunder.
        


    

    

    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -6-
    

    
      

      SECTION 2 – REPRESENTATIONS AND WARRANTIES
    

    
      The Grantor does hereby represent and warrant that each representation,
      warranty, covenant and agreement made in the Credit Agreement by the
      Grantor is hereby reiterated as if incorporated by reference herein
      (except to the extent that such representation, warranty, covenant and
      agreement expressly relate to an earlier date or to a Plan, a
      Multiemployer Plan, a Guaranteed Pension Plan or any other matter
      relating to ERISA), and (subject to the foregoing parenthetical
      exception) is hereby confirmed as true and correct as of the date hereof,
      and further represents and warrants to the Collateral Agent that as
      of the date hereof:
    

    
    	
          2.1
        	
          
            Title and Authority
          

        


    

    
      The Grantor has good and valid rights in, and title to, the Collateral
      with respect to which it has purported to grant a security interest
      hereunder and has full power and authority to grant to the Collateral
      Agent the security interest in such Collateral pursuant hereto and to
      execute, deliver and perform its obligations in accordance with the
      terms of this Security Agreement, without the consent or approval of any
      other Person other than any consent or approval which has been obtained.
    

    
    	
          2.2
        	
          
            Filings
          

        


    

    
      The Perfection Certificate has been duly prepared, completed and
      executed, and the information set forth therein is correct and complete
      in all material respects. Fully executed PPSA financing statements or
      other appropriate filings, recordings or registrations containing a
      description of the Collateral (as and if required) have been filed in
      each governmental, municipal or other office as is necessary to publish
      notice of and protect the validity of and to establish a legal, valid
      and perfected security interest in favour of the Collateral Agent (for
      the benefit of the Secured Parties) in respect of all Collateral in
      which the security interest may be perfected by filing, recording or
      registration in all the Provinces, other than Québec, and Territories of
      Canada (or any political subdivision thereof) and its territories and
      possessions, and no further or subsequent filing, refiling, recording,
      rerecording, registration or reregistration is necessary in any such
      jurisdiction, except as provided under applicable law with respect to
      the filing of continuation statements.
    

    
    	
          2.3
        	
          
            Validity and Priority of Security Interest
          

        


    

    
      The security interest constitutes (a) a legal and valid security
      interest in all of the Collateral securing the payment and performance
      of the Secured Obligations, and (b) subject to the filings described in
      Section 2.2 above, a perfected security interest in all of the
      Collateral, to the extent that perfection of the security interest can
      be achieved by filings or recordings. The security interest is and shall
      be prior to any other Lien on any of the Collateral, subject only to
      those Liens expressly permitted pursuant to Section 6.2 of the Credit
      Agreement.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -7-
    

    
      


    

    
    	
          2.4
        	
          
            Absence of Other Liens
          

        


    

    
      The Collateral is owned by the Grantor free and clear of any Lien,
      except for Liens expressly permitted pursuant to Section 6.2 of the
      Credit Agreement. Except as provided herein and in the Credit Agreement
      or disclosed in the Perfection Certificate, the Grantor has not filed or
      consented to the filing of (a) a registration application, financing
      statement or analogous document under the Civil Code of Québec,
      the PPSA (or any successor statute) or similar legislation of any other
      jurisdiction, the Uniform Commercial Code, or any other applicable law
      covering any Collateral, (b) any assignment or hypothecation in which
      the Grantor assigns or hypothecates any Collateral or any security
      agreement or similar instrument covering any Collateral with the United
      States Patent and Trademark Office, the United States Copyright Office
      or the Canadian Intellectual Property Office, or (c) any assignment or
      hypothecation in which the Grantor assigns or hypothecates any
      Collateral or any security agreement or similar instrument covering any
      Collateral with any foreign governmental, municipal or other office,
      which registration application, financing statement or analogous
      document, assignment, hypothecation, security agreement or similar
      instrument is still in effect, except, in each case, for Liens expressly
      permitted pursuant to Section 6.2 of the Credit Agreement.
    

    
    	
          2.5
        	
          
            Bailees, Warehousemen, Etc.
          

        


    

    
      Except as otherwise disclosed in the Perfection Certificate, no
      Inventory of the Grantor is in the care or custody of any third party or
      stored or entrusted with a bailee or other third party and none shall
      hereafter be placed under such care, custody, storage, or entrustment
      except for goods in transit.
    

    
    	
          2.6
        	
          
            Pension Matters
          

        


    

    
    	
           
        	
          (a)
        	
          Neither the Grantor nor any of its Subsidiaries have any Canadian
          Plan. Furthermore, no Canadian Plan has been terminated or partially
          terminated by any such Person, nor is it insolvent or in
          reorganization, nor have any proceedings been instituted to
          terminate, in whole or in part, or reorganize any Canadian Plan.
        
	
           
        
	

        	
          (b)
        	
          Neither the Grantor nor any of its Subsidiaries has ceased to
          participate (in whole or in part) as a participating employer in any
          Canadian Plan which is a pension plan or has withdrawn from any
          Canadian Plan which is a pension plan in a complete or partial
          withdrawal, nor has a condition occurred which if continued would
          result in a complete or partial withdrawal.
        
	
           
        
	

        	
          (c)
        	
          Neither the Grantor nor any of its Subsidiaries has any unfunded
          liability on windup or withdrawal liability, including contingent
          withdrawal or windup liability, to any Canadian Plan or any solvency
          deficiency in respect of any Canadian Plan.
        
	
           
        
	

        	
          (d)
        	
          Neither the Grantor nor any of its Subsidiaries has any unfunded
          liability on windup or any liability in respect of any Canadian Plan
          (including to the FSCO) other than for required insurance premiums
          or contributions or remittances which have been paid, contributed
          and remitted when due.
        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -8-
    

    
      


    

    
    	
           
        	
          (e)
        	
          The Grantor and its Subsidiaries have made all contributions to any
          Canadian Plan required by law or the terms thereof to be made by it
          when due, and it is not in arrears in the payment of any
          contribution, payment, remittance or assessment or in default in
          filing any reports, returns, statements, and similar documents in
          respect of such Canadian Plan required to be made or paid by it
          pursuant to said Canadian Plan, any law, act, regulation, directive
          or order or any employment, union, pension, deferred profit sharing,
          benefit, bonus or other similar agreement or arrangement.
        
	

        	

        	
           
        
	

        	
          (f)
        	
          Neither the Grantor nor any of its Subsidiaries is liable or, to the
          best of the Grantor’s knowledge, alleged to be liable, to any
          employee or former employee, director or former director, officer or
          former officer or other Person resulting from any violation or
          alleged violation of any Canadian Plan, any fiduciary duty, any law
          or agreement in relation to any Canadian Plan or has any unfunded
          pension or like obligations or solvency deficiency (including any
          past service or experience deficiency funding liabilities), other
          than accrued obligations not yet due, for which it has made full
          provision in its books and records.
        
	

        	

        	
           
        
	

        	
          (g)
        	
          All vacation pay, bonuses, salaries and wages, to the extent
          accruing due, are properly reflected in the Grantor’s and its
          Subsidiaries’ books and records.
        
	

        	

        	
           
        
	

        	
          (h)
        	
          Neither the Grantor nor any of its Subsidiaries has made any
          application for a funding waiver or extension of any amortization
          period in respect of any Canadian Plan.
        
	

        	

        	
           
        
	

        	
          (i)
        	
          There has been no prohibited transaction or violation of any
          fiduciary responsibilities with respect to any Canadian Plan.
        
	

        	

        	
           
        
	

        	
          (j)
        	
          There are no outstanding or pending or threatened investigations,
          claims, suits or proceedings in respect of any Canadian Plans
          (including to assert rights or claims to benefits) that could give
          rise to a Material Adverse Effect.
        


    

    

    

    
      SECTION 3 – COVENANTS OF THE GRANTOR
    

    
      The Grantor covenants and agrees with the Collateral Agent that so long
      as there shall remain any Secured Obligations:
    

    
    	
          3.1
        	
          
            Change of Name; Location of Collateral; Records; Place of
            Business
          

        


    

    
    	
           
        	
          (a)
        	
          The Grantor agrees to furnish the Collateral Agent (a) prompt
          written notice of any change in (i) the Grantor’s trade name used to
          identify it in the conduct of its business or in the ownership of
          its properties, (ii) any office in which it maintains books and
          records relating to Collateral owned by it and having a value in
          excess of $10,000,000 or any office or facility at which Collateral
          owned by it and having a value in excess of $10,000,000 is located
          (including the establishment of any such new office or facility) or
          (iii) the acquisition by the Grantor of any property for which
          additional filings, registrations, publications or recordings are
          necessary to perfect, set-up and maintain the Collateral Agent’s
          security interest therein, and (b) prior written notice of any
          change in (i) its corporate name the location of its chief executive
          office or its principal place of business, (iii) its identity or
          corporate structure, (iv) its jurisdiction of incorporation, Federal
          Taxpayer Identification Number or organizational identification
          number assigned to it by its jurisdiction of organization.
          Notwithstanding the foregoing, if the Grantor’s Federal Taxpayer
          Identification Number or organizational identification number
          assigned to it by its jurisdiction of organization is changed by the
          applicable Governmental Authority, the Grantor will furnish to the
          Collateral Agent prompt written notice of any such change not later
          that ten (10) days from the date the Grantor has been notified by
          such Governmental Authority of such change. The Grantor agrees not
          to effect or permit any change referred to in the preceding sentence
          unless all filings have been made under the PPSA or otherwise that
          are required in order for the Collateral Agent to continue at all
          times following such change to have a valid, legal and perfected
          first priority security interest in all of the Collateral.
        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
        -9-
    

    
      


    

    
    	
           
        	
          (b)
        	
          The Grantor agrees to maintain, or cause to be maintained, at its
          own cost and expense, such complete and accurate records with
          respect to the Collateral owned by it as is consistent with its
          current practices, but in any event to include complete accounting
          records indicating all payments and proceeds received with respect
          to any part of the Collateral.
        


    

    
    	
          3.2
        	
          
            Periodic Certification
          

        


    

    
      The Grantor shall deliver to the Collateral Agent, at least thirty (30)
      days prior to setting up a location in the Province of Québec in which
      it intends on maintaining tangible property, a deed of movable hypothec
      in form and substance and on terms and conditions reasonably
      satisfactory to the Collateral Agent which has been published in each
      governmental, municipal or other appropriate office in the Province of
      Québec to the extent necessary to protect, perfect and set-up the
      security interest and hypothec.
    

    
      Without limiting the scope of the foregoing, each year, at the time of
      delivery of annual financial statements with respect to the preceding
      fiscal year pursuant to Section 5.1 of the Credit Agreement, the Grantor
      shall deliver, or cause to be delivered, to the Collateral Agent a
      certificate executed by a Financial Officer of the Grantor confirming
      that there has been no change in the information contained in the
      Perfection Certificate since the date of the Perfection Certificate
      delivered on the date hereof or the date of the most recent certificate
      delivered pursuant to this Section 3.2 or, if any such change has
      occurred specifying such revised information.
    

    
    	
          3.3
        	
          
            Protection of Security
          

        


    

    
      The Grantor shall, at its own cost and expense, take any and all actions
      reasonably necessary to defend title to the Collateral against all
      Persons and to defend the security interest of the Collateral Agent in
      the Collateral and the priority thereof against any Lien not expressly
      permitted pursuant to Section 6.2 of the Credit Agreement.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -10-
    

    
      


    

    
    	
          3.4
        	
          
            Further Assurances
          

        


    

    
      The Grantor agrees, at its own expense, to execute, acknowledge, deliver
      and cause to be filed all such further instruments and documents and
      take all such actions as the Collateral Agent may from time to time
      reasonably request to assure, preserve, protect and perfect the security
      interest and the rights and remedies created hereby, including the
      payment of any fees and taxes required in connection with the execution
      and delivery of this Security Agreement, the granting of the security
      interest and the filing of any financing statements or other documents
      in connection herewith or therewith. If any amount payable under or in
      connection with any of the Collateral shall be or become evidenced by
      any promissory note or other instrument in an amount in excess of
      $5,000,000, such note or instrument shall be immediately pledged and
      delivered to the Collateral Agent, duly endorsed in a manner
      satisfactory to the Collateral Agent.
    

    
    	
          3.5
        	
          
            Taxes; Encumbrances
          

        


    

    
      At its option during the continuance of an Event of Default, the
      Collateral Agent may discharge past due taxes, assessments, charges,
      fees or Liens (other than Liens permitted under the Credit Agreement) at
      any time levied or placed on the Collateral, and may take any other
      action which the Collateral Agent may deem necessary or desirable to
      repair, maintain or preserve any of the Collateral to the extent the
      Grantor fails to do so as required by the Credit Agreement or this
      Security Agreement, and the Grantor agrees to reimburse the Collateral
      Agent on demand for any payment made or any expense incurred by the
      Collateral Agent pursuant to the foregoing authorization; provided,
      however, that the Collateral Agent shall not have any obligation
      to undertake any of the foregoing and shall have no liability on account
      of any action so undertaken except to the extent that any liability on
      account of any such action resulted from the gross negligence, bad
      faith, or breach of the contractual obligations of the Collateral Agent;
      and provided further that the making of any such payments or the taking
      of any such action by the Collateral Agent shall not be deemed to
      constitute a waiver of any Default or Event of Default arising from the
      Grantor’s failure to have made such payments or taken such action.
      Nothing in this Section 3.5 shall be interpreted as excusing the Grantor
      from the performance of any covenants or other promises of the Grantor
      with respect to taxes, assessments, charges, fees, Liens, security
      interests or other encumbrances and maintenance as set forth herein or
      in the other Loan Documents.
    

    
    	
          3.6
        	
          
            Assignment of Security Interest
          

        


    

    

    

    
    	
           
        	
          (a)
        	
          If at any time the Grantor shall take a security interest in any
          property of an account debtor or any other Person to secure payment
          and performance of an Account and the property securing payment and
          performance of the Account has a value in excess of $5,000,000, the
          Grantor shall promptly assign such security interest to the
          Collateral Agent. Such assignment need not be filed of public record
          unless necessary to continue the perfected status of the security
          interest against creditors of, and transferees from, the account
          debtor or other Person granting the security interest.
        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -11-
    

    
      


    

    
    	
           
        	
          (b)
        	
          To the extent that the Grantor is a beneficiary under any written
          letter of credit relating to the Collateral in an amount in excess
          of $5,000,000 now or hereafter issued in favour of the Grantor, the
          Grantor shall deliver such letter of credit to the Collateral Agent.
          The Collateral Agent shall from time to time, at the request and
          expense of the Grantor, make such arrangements with the Grantor as
          are in the Collateral Agent’s reasonable judgment necessary and
          appropriate so that the Grantor may make any drawing to which the
          Grantor is entitled under such letter of credit, without impairment
          of the Collateral Agent’s perfected security interest in the
          Grantor’s rights to proceeds of such letter of credit or in the
          actual proceeds of such drawing. At the Collateral Agent’s request,
          the Grantor shall, for any letter of credit relating to the
          Collateral in an amount in excess of $5,000,000, whether or not
          written, now or hereafter issued in favour of the Grantor as
          beneficiary, execute and deliver to the issuer and any confirmer of
          such letter of credit an assignment of proceeds form, in favour of
          the Collateral Agent and satisfactory to the Collateral Agent and
          such issuer or (as the case may be) such confirmer, requiring the
          proceeds of any drawing under such letter of credit to be paid
          directly to the Collateral Agent.
        


    

    
    	
          3.7
        	
          
            Continuing Obligations of the Grantor
          

        


    

    
      The Grantor shall remain liable to observe and perform all the
      conditions and obligations to be observed and performed by it under each
      contract, agreement or instrument relating to the Collateral, all in
      accordance with the terms and conditions thereof, except where the
      failure to do so would not have a Material Adverse Effect, and the
      Grantor agrees to indemnify and hold harmless the Collateral Agent and
      the Secured Parties from and against any and all liability for such
      performance.
    

    
    	
          3.8
        	
          
            Limitation on Modification of Accounts
          

        


    

    
      The Grantor will not, without the Collateral Agent’s prior written
      consent, grant any extension of the time of payment of any of the
      Accounts, compromise, compound or settle the same for less than the full
      amount thereof, release, wholly or partly, any Person liable for the
      payment thereof or allow any credit or discount whatsoever thereon,
      other than extensions, releases, credits, discounts, compromises or
      settlements granted or made in the ordinary course of business and
      consistent with its current practices.
    

    
    	
          3.9
        	
          
            Insurance
          

        


    

    
      The Grantor hereby irrevocably makes, constitutes and appoints the
      Collateral Agent (and all officers, employees or agents designated by
      the Collateral Agent) as the Grantor’s true and lawful agent,
      exercisable after the occurrence and during the continuance of any Event
      of Default, for the purpose of making, settling and adjusting claims in
      respect of Collateral under policies of insurance, endorsing the name of
      the Grantor on any cheque, draft, instrument or other item of payment
      for the proceeds of such policies of insurance and for making all
      determinations and decisions with respect thereto. In the event that the
      Grantor at any time or times shall fail to obtain or maintain any of the
      policies of insurance required hereby or to pay any premium in whole or
      in part relating thereto, the Collateral Agent may, without waiving or
      releasing any obligation or liability of the Grantor hereunder or any
      Default or Event of Default, in its sole discretion, obtain and maintain
      such policies of insurance and pay such premium and take any other
      actions with respect thereto as the Collateral Agent deemed advisable.
      All sums disbursed by the Collateral Agent in connection with this
      Section 3.9 including reasonable attorney’s fees, court costs, expenses
      and other charges relating thereto shall be payable, upon demand, by the
      Grantor to the Collateral Agent and shall be additional Secured
      Obligations secured hereby.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -12-
    

    
      


    

    
    	
          3.10
        	
          
            Legend
          

        


    

    
      At the request of the Collateral Agent if an Event of Default shall
      occur and be continuing, the Grantor shall legend, in form and manner
      satisfactory to the Collateral Agent, its Accounts and its books,
      records and documents evidencing or pertaining thereto with an
      appropriate reference to the fact that such Accounts have been assigned
      to the Collateral Agent for the benefit of the Secured Parties and that
      the Collateral Agent has a security interest therein.
    

    
    	
          3.11
        	
          
            Payment
          

        


    

    
      The Grantor will pay duly and punctually all sums of money owed by it to
      the Collateral Agent or any other Secured Party under this Security
      Agreement at the times and places and in the manner provided for herein,
      the Credit Agreement or any other Loan Document, as applicable.
    

    
    	
          3.12
        	
          
            Credit Agreement
          

        


    

    
      The Grantor acknowledges having reviewed the covenants contained in the
      Credit Agreement which relate to the Grantor and its business, and
      hereby covenants and agrees to observe and perform all covenants
      provided for in the Credit Agreement which relate to it and to do all
      things necessary or appropriate to ensure that it is in compliance with
      such covenants at all times.
    

    
    	
          3.13
        	
          
            Canadian Plans.
          

        


    

    
      Neither the Grantor nor any of its Affiliates will permit any of the
      following:
    

    

    

    
    	
           
        	
          (a)
        	
          the existence of any unfunded, solvency, or deficiency on windup
          liability or any accumulated funding deficiency (whether or not
          waived), or of any amount of unfunded benefit liabilities in respect
          of any Canadian Plan;
        
	

        	

        	
           
        
	

        	
          (b)
        	
          failure to pay any amounts required to be paid by it or them when
          due;
        
	

        	

        	
           
        
	

        	
          (c)
        	
          the existence of any liability upon it or them or Lien on any of its
          or their property in respect of any Canadian Plan;
        
	

        	

        	
           
        
	

        	
          (d)
        	
          failure to make all required contributions to any Canadian Plan when
          due; and
        
	

        	

        	
           
        
	

        	
          (e)
        	
          engaging in a prohibited transaction or violation of the fiduciary
          responsibility rules with respect to any Canadian Plan that could
          reasonably be expected to result in liability.
        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -13-
    

    
      

      SECTION 4 – COLLECTIONS
    

    
    	
          4.1
        	
          
            Collections
          

        


    

    
    	
           
        	
          (a)
        	
          The Grantor shall at all times comply with the Cash Receipts
          provisions of Section 2.21 of the Credit Agreement including,
          without limitation, after the occurrence and during the continuation
          of an Event of Default or a Cash Control Event, the provisions of
          Section 2.21(f) causing the sweep on each Business Day of all Cash
          Receipts into the Fleet Concentration Account.
        
	

        	

        	
           
        
	

        	
          (b)
        	
          
            Without the prior written consent of the Collateral Agent, the
            Grantor shall not modify or amend the instructions pursuant to any
            of the Credit Card Notifications or the Blocked Account
            Agreements. So long as no Event of Default or Cash Control Event
            occurs and is then continuing, the Grantor shall have sole control
            over the manner of disposition of the funds in the Concentration
            Accounts (except for the Fleet Concentration Account), for the
            benefit and on behalf of the Collateral Agent and the other
            Secured; provided, however, that such privilege may,
            at the option of the Collateral Agent, be terminated upon the
            occurrence and during the continuance of any Event of Default or
            Cash Control Event in accordance with Section 2.21 of the Credit
            Agreement.
          

        


    

    
    	
          4.2
        	
          
            Power of Attorney
          

        


    

    
      The Grantor hereby irrevocably makes, constitutes and appoints the
      Collateral Agent (and all officers, employees or agents designated by
      the Collateral Agent) as the Grantor’s true and lawful agent and
      attorney-in-fact, and in such capacity the Collateral Agent shall have
      the right, with power of substitution for the Grantor and in the
      Grantor’s name or otherwise, for the use and benefit of the Collateral
      Agent and the Secured Parties, (a) at any time, whether or not a Default
      or Event of Default has occurred, to take actions required to be taken
      by the Grantor under Section 1.1 of this Security Agreement, (b) upon
      the occurrence and during the continuance of an Event of Default or Cash
      Control Event or as otherwise permitted under the Credit Agreement, (i)
      to take actions required to be taken by the Grantor under Section 4.1 of
      this Security Agreement, (ii) to receive, endorse, assign and/or deliver
      any and all notes, acceptances, checks, drafts, money orders or other
      evidences of payment relating to the Collateral or any part thereof;
      (iii) to demand, collect, receive payment of, give receipt for and give
      discharges and releases of all or any of the Collateral; and (c) upon
      the occurrence and during the continuance of an Event of Default or as
      otherwise permitted in the Credit Agreement (i) to sign the name of the
      Grantor on any invoices, schedules of Collateral, freight or express
      receipts, or bills of lading storage receipts, warehouse receipts or
      other documents of title relating to any of the Collateral; (ii) to sign
      the name of the Grantor on any notice to its account debtors; (iii) to
      sign the name of the Grantor on any proof of claim in bankruptcy against
      account debtors; (iv) to the extent relating to the Collateral, to sign
      change of address forms to change the address to which the Grantor’s
      mail is to be sent to such address as the Collateral Agent shall
      designate; (v) to receive and open the Grantor’s mail, remove any
      Proceeds of Collateral therefrom and turn over the balance of such mail
      either to any of the Borrowers or to any trustee in bankruptcy or
      receiver of the Grantor, or other legal representative of the Grantor
      whom the Collateral Agent determines to be the appropriate person to
      whom to so turn over such mail; (vi) to commence and prosecute any and
      all suits, actions or proceedings at law or in equity in any court of
      competent jurisdiction to collect or otherwise realize on all or any of
      the Collateral or to enforce any rights in respect of any Collateral;
      (vii) to settle, compromise, compound, adjust or defend any actions,
      suits or proceedings relating to all or any of the Collateral; (viii) to
      take all such action as may be necessary to obtain the payment of any
      letter of credit and/or banker’s acceptance of which the Grantor is a
      beneficiary to the extent relating to Collateral; (ix) to repair,
      manufacture, assemble, complete, package, deliver, alter or supply
      goods, if any, necessary to fulfill in whole or in part the purchase
      order of any customer of any Grantor; (x) to use for the purposes
      permitted by Section 6, any or all Intangibles of the Grantor relating
      to the Collateral, provided that the Collateral Agent’s use of such
      Intangibles will comply with all applicable law; and (xi) to use, sell,
      assign, transfer, pledge, make any agreement with respect to or
      otherwise deal with all or any of the Collateral, and to do all other
      acts and things necessary to carry out the purposes of this Security
      Agreement, as fully and completely as though the Collateral Agent were
      the absolute owner of the Collateral for all purposes; provided, however,
      that nothing herein contained shall be construed as requiring or
      obligating the Collateral Agent or any other Secured Party to make any
      commitment or to make any inquiry as to the nature or sufficiency of any
      payment received by the Collateral Agent or any other Secured Party, or
      to present or file any claim or notice. It is understood and agreed that
      the appointment of the Collateral Agent as the agent and
      attorney-in-fact of the Grantor for the purposes set forth above is
      coupled with an interest and is irrevocable.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -14-
    

    
      


    

    
    	
          4.3
        	
          
            No Obligation to Act
          

        


    

    
      The Collateral Agent shall not be obligated to do any of the acts or to
      exercise any of the powers authorized by Section 4.2 hereof, but if the
      Collateral Agent elects to do any such act or to exercise any of such
      powers, it shall not be accountable for more than it actually receives
      as a result of such exercise of power, and shall not be responsible to
      the Grantor for any act or omission to act except for any act or
      omission to act which constitutes gross negligence, bad faith, or breach
      of the contractual obligations of the Collateral Agent. The provisions
      of Section 4.2 hereof shall in no event relieve the Grantor of any of
      its obligations hereunder or under any other Loan Document with respect
      to the Collateral or any part thereof or impose any obligation on the
      Collateral Agent or any other Secured Party to proceed in any particular
      manner with respect to the Collateral or any part thereof, or in any way
      limit the exercise by the Collateral Agent or any other Secured Party of
      any other or further right which it may have on the date of this
      Security Agreement or hereafter, whether hereunder, under any other Loan
      Document, by law or otherwise.
    

    
      SECTION 5 – DEFAULT
    

    
      The Grantor agrees that, upon the occurrence and during the continuance
      of an Event of Default, the security interests hereby constituted shall
      become enforceable and the Collateral Agent shall be entitled to
      exercise and enforce any or all of the remedies herein provided or which
      may otherwise be available to the Collateral Agent by statute, at law or
      in equity and all amounts secured hereby shall immediately be paid to
      the Collateral Agent (for itself and on behalf of the Secured Parties)
      by the Grantor.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -15-
    

    
      

      SECTION 6 – REMEDIES ON DEFAULT
    

    
      If the security interests hereby constituted become enforceable, the
      Collateral Agent shall have, in addition to any other rights, remedies
      and powers which it may have at law, in equity or under the PPSA, the Civil
      Code of Quebec (the “CCQ”) or the Uniform Commercial
      Code (the “Code”) (whether or not the CCQ or the Code
      applies to the affected Collateral), the following rights, remedies and
      powers:
    

    
    	
          6.1
        	
          
            Power of Entry
          

        


    

    
      The Grantor shall forthwith upon demand assemble and deliver to the
      Collateral Agent possession of all of the Collateral at such place as
      may be specified by the Collateral Agent. The Collateral Agent may take
      such steps as it considers necessary or desirable to obtain possession
      of all or any part of the Collateral and, to that end, the Grantor
      agrees that the Collateral Agent, its servants or agents or Receiver (as
      hereinafter defined) may, at any time, during the day or night, enter
      upon lands and premises where the Collateral may be found for the
      purpose of taking possession of and/or removing the Collateral or any
      part thereof. In the event of the Collateral Agent taking possession of
      the Collateral, or any part thereof, the Collateral Agent shall have the
      right to maintain the same upon the premises on which the Collateral may
      then be situate.
    

    
    	
          6.2
        	
          
            Power of Sale
          

        


    

    
      The Collateral Agent may sell, lease or otherwise dispose of all or any
      part of the Collateral, as a whole or in separate parcels, by public
      auction, private tender or by private contract, with or without notice,
      except as otherwise required by applicable law, with or without
      advertising and without any other formality, all of which are hereby
      waived by the Grantor. Such sale, lease or disposition shall be on such
      terms and conditions as to credit and otherwise and as to upset or
      reserve bid or price as the Collateral Agent, in its sole discretion,
      may deem advantageous. If such sale, transfer or disposition is made on
      credit or part cash and part credit, the Collateral Agent need only
      credit against the Secured Obligations the actual cash received at the
      time of the sale. Any payments made pursuant to any credit granted at
      the time of the sale shall be credited against the Secured Obligations
      as they are received. The Collateral Agent may buy in or rescind or vary
      any contract for sale of all or any of the Collateral and may reasonably
      resell without being answerable for any loss occasioned thereby. Any
      such sale, lease or disposition may take place whether or not the
      Collateral Agent has taken possession of the Collateral. The Collateral
      Agent may, before any such sale, lease or disposition, perform any
      commercially reasonable repair, processing or preparation for
      disposition and the amount so paid or expended shall be deemed advanced
      to the Grantor by the Collateral Agent, shall become part of the Secured
      Obligations, shall bear interest at the highest rate per annum charged
      by the Collateral Agent on the Secured Obligations or any part thereof
      and shall be secured by this Security Agreement.
    

    
    	
          6.3
        	
          
            Validity of Sale
          

        


    

    
      No person dealing with the Collateral Agent or its servants or agents
      shall be concerned to inquire whether the security hereby constituted
      has become enforceable, whether the powers which the Collateral Agent is
      purporting to exercise have become exercisable, whether any money
      remains due on the security of the Collateral, as to the necessity or
      expedience of the stipulations and conditions subject to which any sale,
      lease or disposition shall be made, otherwise as to the propriety or
      regularity of any sale or any other dealing by the Collateral Agent with
      the Collateral or to see to the application of any money paid to the
      Collateral Agent. In the absence of fraud on the part of such persons,
      such dealings shall be deemed, so far as regards the safety and
      protection of such person, to be within the powers hereby conferred and
      to be valid and effective accordingly.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -16-
    

    
      


    

    
    	
          6.4
        	
          
            Receiver-Manager
          

        


    

    
      The Collateral Agent may, in addition to any other rights it may have,
      appoint by instrument in writing a receiver, an interim receiver or
      receiver and manager (each of which are herein called a “Receiver”)
      of all or any part of the Collateral or may institute proceedings in any
      court of competent jurisdiction for the appointment of such a Receiver.
      Any such Receiver is hereby given and shall have the same powers and
      rights and exclusions and limitations of liability as the Collateral
      Agent has under this Security Agreement, at law or in equity. In
      exercising any such powers, any such Receiver shall, to the extent
      permitted by law, act as and for all purposes shall be deemed to be the
      agent of the Grantor and the Collateral Agent and the other Secured
      Parties shall not be responsible for any act or default of any such
      Receiver. The Collateral Agent may appoint one or more Receivers
      hereunder and may remove any such Receiver or Receivers and appoint
      another or others in his or their stead from time to time. Any Receiver
      so appointed may be an officer or employee of the Collateral Agent. A
      court need not appoint, ratify the appointment by the Collateral Agent
      of or otherwise supervise in any manner the actions of any Receiver.
      Upon the Grantor receiving notice from the Collateral Agent of the
      taking of possession of the Collateral or the appointment of a Receiver,
      all powers, functions, rights and privileges of each of the directors
      and officers of the Grantor with respect to the Collateral shall cease,
      unless specifically continued by the written consent of the Collateral
      Agent.
    

    
    	
          6.5
        	
          
            Carrying on Business
          

        


    

    
      The Collateral Agent may carry on, or concur in the carrying on of, all
      or any part of the business or undertaking of the Grantor, may, to the
      exclusion of all others, including the Grantor, enter upon, occupy and
      use all or any of the premises, buildings, plant and undertaking of or
      occupied or used by the Grantor and may use all or any of the tools,
      machinery, equipment and intangibles of the Grantor for such time as the
      Collateral Agent sees fit, free of charge, to carry on the business of
      the Grantor and, if applicable, to manufacture or complete the
      manufacture of any Inventory and to pack and ship the finished product.
    

    
    	
          6.6
        	
          
            Dealing with Collateral
          

        


    

    
      The Collateral Agent may seize, collect, realize, dispose of, enforce,
      release to third parties or otherwise deal with the Collateral or any
      part thereof in such manner, upon such terms and conditions and at such
      time or times as may seem to it advisable, all of which without notice
      to the Grantor except as otherwise required by any applicable law. The
      Collateral Agent may demand, sue for and receive any Accounts Receivable
      with or without notice to the Grantor, give such receipts, discharges
      and extensions of time and make such compromises in respect of any
      Accounts Receivable which may, in the Collateral Agent’s absolute
      discretion, seem bad or doubtful. The Collateral Agent may charge on its
      own behalf and pay to others, sums for costs and expenses incurred
      including, without limitation, legal fees and expenses on a solicitor
      and his own client scale and Receivers’ and accounting fees, in or in
      connection with seizing, collecting, realizing, disposing, enforcing or
      otherwise dealing with the Collateral and in connection with the
      protection and enforcement of the rights of the Collateral Agent
      hereunder including, without limitation, in connection with advice with
      respect to any of the foregoing. The amount of such sums shall be deemed
      advanced to the Grantor by the Collateral Agent, shall become part of
      the Secured Obligations, shall bear interest at the highest rate per
      annum charged by the Collateral Agent on the Secured Obligations or any
      part thereof and shall be secured by this Security Agreement.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -17-
    

    
      


    

    
    	
          6.7
        	
          
            Right to Use
          

        


    

    
      For the purpose of enabling the Collateral Agent to exercise the
      Collateral Agent’s Rights and Remedies (as hereinafter defined) under
      Section 6 (including, without limitation, in order to take possession
      of, hold, preserve, process, assemble, prepare for sale, market for
      sale, complete production of, advertise for sale and sell or otherwise
      dispose of or alienate the Collateral) at such time as the Collateral
      Agent shall be lawfully entitled to exercise the Collateral Agent’s
      Rights and Remedies under Section 6, upon the Collateral Agent’s
      request, the Grantor shall, and by the terms hereof hereby, (i) grants
      to the Collateral Agent (for itself and on behalf of the Secured
      Parties) a royalty-free, non-exclusive, irrevocable license , such
      license being with respect to the Collateral Agent’s exercise of the
      Collateral Agent’s Rights and Remedies under Section 6 including,
      without limitation, in connection with any completion of the manufacture
      of Inventory or any sale or other disposition of Inventory (a) to use,
      apply, and affix any trademark, trade name, logo, or the like in which
      the Grantor now or hereafter has rights, (b) to use, license, sublicense
      any intellectual property, computer software now owned, held or
      hereafter acquired by the Grantor, including in such license access to
      all media such and to the extent to which any of the licensed items may
      be recorded or stored and to all computer software programs such and to
      the extent used for the compilation or print out thereof, provided that
      the Collateral Agent’s use of the property described in subclauses (a)
      and (b) above will comply with all applicable law, and (c) to use any
      and all furniture, fixtures and equipment contained in any premises
      owned or occupied by the Grantor in connection with the exercise of the
      Collateral Agent’s Rights and Remedies under Section 6, and (ii) without
      limiting the provisions of Section 6.1, above, agrees to provide the
      Collateral Agent and/or its agents with access to, and the right to use,
      any such premises owned or occupied by the Grantor.
    

    
    	
          6.8
        	
          
            Retention of Collateral
          

        


    

    
      Upon notice to the Grantor and subject to any obligation to dispose of
      any of the Collateral, as provided in the PPSA, the Collateral Agent may
      elect to retain all or any part of the Collateral in satisfaction of the
      Secured Obligations or any of them.
    

    
    	
          6.9
        	
          
            Pay Encumbrances
          

        


    

    
      The Collateral Agent may pay any encumbrance that may exist or be
      threatened against the Collateral. In addition, the Collateral Agent may
      borrow money, at standard commercial rates, required for the
      maintenance, preservation or protection of the Collateral or for the
      carrying on of the business or undertaking of the Grantor and may grant
      further security interests in the Collateral in priority to the security
      interest created hereby as security for the money so borrowed. In every
      such case the amounts so paid or borrowed together with costs, charges
      and expenses incurred in connection therewith shall be deemed to have
      been advanced to the Grantor by the Collateral Agent, shall become part
      of the Secured Obligations, shall bear interest at the highest rate per
      annum charged by the Collateral Agent on the Secured Obligations or any
      part thereof and shall be secured by this Security Agreement.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -18-
    

    
      


    

    
    	
          6.10
        	
          
            Application of Payments Against Secured Obligations
          

        


    

    
      Any and all payments made in respect of the Secured Obligations from
      time to time and moneys realized on the Collateral may be applied to
      such part or parts of the Secured Obligations as the Collateral Agent
      may see fit, subject to the terms of the Credit Agreement. The
      Collateral Agent shall, at all times and from time to time, have the
      right to change any appropriation as it may see fit, subject to the
      terms of the Credit Agreement. Any insurance moneys received by the
      Collateral Agent pursuant to this Security Agreement may, at the option
      of the Collateral Agent, be applied to rebuilding or repairing the
      Collateral or be applied against the Secured Obligations in accordance
      with the provisions of this Section.
    

    
    	
          6.11
        	
          
            Set-Off
          

        


    

    
      The Secured Obligations will be paid by the Grantor without regard to
      any equities between the Grantor and the Collateral Agent and/or any
      other Secured Party or any right of set-off or cross-claim. Any
      indebtedness owing by the Collateral Agent and/or any other Secured
      Party to the Grantor may be set off and applied by the Collateral Agent
      against the Secured Obligations at any time or from time to time either
      before or after maturity, without demand upon or notice to anyone.
    

    
    	
          6.12
        	
          
            Deficiency
          

        


    

    
      If the proceeds of the realization of the Collateral are insufficient to
      repay the Collateral Agent and the other Secured Parties all moneys due
      to them, the Grantor shall forthwith pay or cause to be paid to the
      Collateral Agent (either for itself or on behalf of the Secured Parties)
      such deficiency.
    

    
    	
          6.13
        	
          
            Collateral Agent Not Liable
          

        


    

    
      Neither the Collateral Agent nor any of the other Secured Parties shall
      be liable or accountable for any failure to seize, collect, realize,
      dispose of, enforce or otherwise deal with the Collateral. The
      Collateral Agent and the other Secured Parties shall not be bound to
      institute proceedings for any such purposes or for the purpose of
      preserving any rights of the Collateral Agent, the Grantor or any other
      person, firm or corporation in respect of the Collateral and shall not
      be liable or responsible for any loss, cost or damage whatsoever which
      may arise in respect of any such failure including, without limitation,
      resulting from the negligence of the Collateral Agent or any of its
      officers, servants, agents, solicitors, attorneys, Receivers or
      otherwise other than for any loss, cost or damage arising as a result of
      any such person’s wilful misconduct or gross negligence. Neither the
      Collateral Agent nor any of the other Secured Parties, nor their
      respective officers, servants, agents or Receivers shall be liable by
      reason of any entry into possession of the Collateral or any part
      thereof, to account as a mortgagee in possession, for anything except
      actual receipts, for any loss on realization, for any act or omission
      for which a mortgagee in possession might be liable, for any negligence
      in the carrying on or occupation of the business or undertaking of the
      Grantor as provided in Section 6.5 or for any loss, cost, damage or
      expense whatsoever which may arise in respect of any such actions,
      omissions or negligence other than for any loss, cost or damage arising
      as a result of any such person’s wilful misconduct or gross negligence.
    

    
    	
          6.14
        	
          
            Extensions of Time
          

        


    

    
      The Collateral Agent and any of the other Secured Parties may grant
      renewals, extensions of time and other indulgences, take and give up
      securities, accept compositions, grant releases and discharges, perfect
      or fail to perfect any securities, release any part of the Collateral to
      third parties and otherwise deal or fail to deal with the Grantor,
      debtors of the Grantor, guarantors, sureties and others and with the
      Collateral and other securities as the Collateral Agent may see fit, all
      without prejudice to the liability of the Grantor to the Collateral
      Agent and the other Secured Parties or the Collateral Agent’s and the
      other Secured Parties’ rights and powers under this Security Agreement.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -19-
    

    
      


    

    
    	
          6.15
        	
          
            Rights in Addition
          

        


    

    
      The rights and powers conferred by this Section 6 are in supplement of
      and in addition to and not in substitution for any other rights or
      powers the Collateral Agent may have from time to time under this
      Security Agreement or under applicable law. The Collateral Agent may
      proceed by way of any action, suit, remedy or other proceeding at law or
      in equity and no such remedy for the enforcement of the rights of the
      Collateral Agent shall be exclusive of or dependent on any other such
      remedy. Any one or more of such remedies may from time to time be
      exercised separately or in combination.
    

    
      SECTION 7 – PERFECTION OF SECURITY INTEREST
    

    
    	
          7.1
        	
          
            Perfection by Filing.
          

        


    

    
      The Grantor hereby authorizes the Collateral Agent, pursuant to the
      provisions of Section 1 and Section 4.2, to file one or more financing
      or continuation statements, and amendments thereto, relative to all or
      any part of the Collateral, in such filing offices as the Collateral
      Agent shall deem appropriate, and the Grantor shall pay the Collateral
      Agent’s reasonable costs and expenses incurred in connection
      therewith.  The Grantor hereby further agrees that, where applicable, a
      carbon, photographic, or other reproduction of this Security Agreement
      shall be sufficient as a financing statement and may be filed as a
      financing statement in any and all jurisdictions.
    

    
    	
          7.2
        	
          
            Other Perfection, etc.
          

        


    

    
      The Grantor shall at any time and from time to time take such steps as
      the Collateral Agent may reasonably request for the Collateral Agent
      (a) to obtain an acknowledgment, in form and substance reasonably
      satisfactory to the Collateral Agent, of any bailee having possession of
      any of the Collateral that the bailee holds such Collateral for the
      Collateral Agent, (b) to obtain, where applicable, “control” of any
      Deposit Accounts, Letter of Credit Rights, or Chattel Paper (electronic
      or otherwise), with any agreements establishing control to be in form
      and substance satisfactory to the Collateral Agent, and (c) otherwise to
      ensure the continued perfection of the Collateral Agent’s security
      interest in any of the Collateral with the priority described in
      Section 2.3 and of the preservation of its rights therein.
    

    
    	
          7.3
        	
          
            Savings Clause.
          

        


    

    
      Nothing contained in this Section 7 shall be construed to narrow the
      scope of the Collateral Agent’s security interest in any of the
      Collateral or the perfection or priority thereof or to impair or
      otherwise limit any of the Collateral Agent’s Rights and Remedies (as
      hereinafter defined) hereunder except (and then only to the extent) as
      mandated by the PPSA.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -20-
    

    
      

      SECTION 8 – GENERAL
    

    
    	
          8.1
        	
          
            Notices
          

        


    

    
      All communications and notices hereunder shall (except as otherwise
      expressly permitted herein) be in writing and given as provided in
      Section 9.1 of the Credit Agreement.
    

    
    	
          8.2
        	
          
            Security Interest Absolute
          

        


    

    
      All rights of the Collateral Agent hereunder, the security interest and
      all obligations of the Grantor hereunder shall be absolute and
      unconditional irrespective of (a) any lack of validity or enforceability
      of the Credit Agreement, any other Loan Document, any agreement with
      respect to any of the Secured Obligations or any other agreement or
      instrument relating to any of the foregoing, (b) any change in the time,
      manner or place of payment of, or in any other term of, all or any of
      the Secured Obligations, or any other amendment or waiver of or any
      consent to any departure from the Credit Agreement, any other Loan
      Document, or any other agreement or instrument, (c) any exchange,
      release or non-perfection of any Lien on other collateral, or any
      release or amendment or waiver of or consent under or departure from any
      guarantee, securing or guaranteeing all or any of the Secured
      Obligations, or (d) any other circumstance that might otherwise
      constitute a defence available to, or a discharge of, the Grantor in
      respect of the Secured Obligations or this Security Agreement.
    

    
    	
          8.3
        	
          
            Suretyship Waivers by Grantor
          

        


    

    
      The Grantor waives demand, notice, protest, notice of acceptance of this
      Security Agreement, notice of loans made, credit extended, Collateral
      received or delivered or other action taken in reliance hereon and all
      other demands and notices of any description. With respect to both the
      Secured Obligations and the Collateral, the Grantor assents to any
      extension or postponement of the time of payment or any other
      indulgence, to any substitution, exchange or release of or failure to
      perfect any security interest in any Collateral, to the addition or
      release or any party or person primarily or secondarily liable, to the
      acceptance of partial payment thereon and the settlement, compromising
      or adjusting of any thereof, all in such manner and at such time or
      times as the Collateral Agent may deem advisable. The Collateral Agent
      shall have no duty as to the collection or protection of the Collateral
      or any income therefrom, the preservation of rights against prior
      parties, or the preservation of any rights pertaining thereto. The
      Grantor further waives any and all other suretyship defences.
    

    
    	
          8.4
        	
          
            Marshalling
          

        


    

    
      Neither the Collateral Agent nor any other Secured Party shall be
      required to marshal any present or future collateral security (including
      but not limited to the Collateral) for, or other assurances of payment
      of, the Secured Obligation or any of them or to resort to such
      collateral security or other assurances of payment in any particular
      order, and all of the rights and remedies of the Collateral Agent or any
      Secured Party hereunder and of the Collateral Agent or any other Secured
      Party in respect of such collateral security and other assurances of
      payment shall be cumulative and in addition to all other rights and
      remedies, however existing or arising. To the extent that it lawfully
      may, the Grantor hereby agrees that it will not invoke any law relating
      to the marshalling of collateral which might cause delay in or impede
      the enforcement of the Collateral Agent’s Rights and Remedies under this
      Security Agreement or under any other instrument creating evidencing any
      of the Secured Obligations or under which any of the Secured Obligations
      is outstanding or by which any of the Secured Obligations is secured or
      payment thereof is otherwise assured, and, to the extent that it
      lawfully may, the Grantor hereby irrevocably waives the benefits of all
      such laws.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -21-
    

    
      


    

    
    	
          8.5
        	
          
            Survival of Agreement
          

        


    

    
      All covenants, agreements, representations and warranties made by the
      Grantor herein and in the certificates or other instruments prepared or
      delivered in connection with or pursuant to this Security Agreement or
      any other Loan Document shall be considered to have been relied upon by
      the Collateral Agent and the other Secured Parties and shall survive the
      execution and delivery of this Security Agreement and the other Loan
      Documents and the making of any Loans and the issuance of any Letters of
      Credit, and shall continue in full force and effect as long as the
      Secured Obligations are outstanding and unpaid or the Letter of Credit
      Outstandings do not equal zero, or are not fully cash collateralized in
      a manner satisfactory to the Issuing Bank and the Collateral Agent, and
      as long as the Commitments have not expired or terminated.
    

    
    	
          8.6
        	
          
            Binding Effect; Several Agreement; Assignments
          

        


    

    
      Whenever in this Security Agreement any of the parties hereto is
      referred to, such reference shall be deemed to include the successors
      and assigns of such party (subject to the provisions of the Credit
      Agreement), and all covenants, promises and agreements by or on behalf
      of the Grantor that are contained in this Security Agreement shall bind
      and inure to the benefit of the Grantor and its successors and assigns.
      This Security Agreement shall be binding upon the Grantor and the
      Collateral Agent and their respective successors and assigns, and shall
      inure to the benefit of the Grantor, the Collateral Agent and the other
      Secured Parties and their respective successors and assigns, except that
      the Grantor shall not have the right to assign or transfer its rights or
      obligations hereunder or any interest herein or in the Collateral (and
      any such attempted assignment or transfer shall be void) except as
      expressly permitted by this Security Agreement or the Credit Agreement.
    

    
    	
          8.7
        	
          
            Collateral Agent’s Fees and Expenses; Indemnification
          

        


    

    

    

    
    	
           
        	
          (a)
        	
          Without limiting any of its obligations under the Credit Agreement
          or the other Loan Documents, the Grantor agrees to pay all
          reasonable out-of-pocket expenses reasonably incurred by the
          Collateral Agent, including the reasonable and documented fees,
          charges and disbursements of any counsel and any outside consultants
          for the Collateral Agent, in connection with (i) the administration
          of this Security Agreement, (ii) the custody or preservation of, or
          the sale of, collection from or other realization upon any of the
          Collateral, (iii) the exercise, enforcement or protection of any of
          the Collateral Agent’s Rights and Remedies hereunder or (iv) the
          failure of the Grantor to perform or observe any of the provisions
          hereof.
        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -22-
    

    
      


    

    
    	
           
        	
          (b)
        	
          
            Without limiting any of its indemnification obligations under the
            Credit Agreement or the other Loan Documents, the Grantor agrees
            to indemnify each Secured Party and their respective Affiliates
            (each such Person being called an “Indemnitee”), and
            hold each Indemnitee harmless from, any and all losses, claims,
            damages, liabilities and related expenses, including the
            reasonable and documented fees, charges and disbursements of any
            counsel for any Indemnitee, incurred by or asserted against any
            Indemnitee arising out of, in connection with, or as a result of,
            (i) the execution or delivery or performance of this Security
            Agreement or any other Loan Document, the performance by the
            Grantor of its obligations under this Security Agreement or any
            other Loan Document, or the consummation of the transactions
            contemplated by the Loan Documents or any other transactions
            contemplated hereby, or (ii) any actual prospective claim,
            litigation, investigation or proceeding relating to any of the
            foregoing or to the Collateral, whether based on contract, tort or
            any other theory and regardless of whether any Indemnitee is a
            party thereto; provided that such indemnity shall not, as to any
            Indemnitee, be available to the extent that such losses, claims,
            damages, liabilities or related expenses resulted from the gross
            negligence, wilful misconduct bad faith, or breach of the
            contractual obligations of such Indemnitee or any Affiliate of
            such Indemnitee (or of any officer, director, employee, advisor or
            agent of such Indemnitee or any such Indemnitee’s Affiliates) or
            with respect to a claim by one Indemnified Party against another
            Indemnified Party.
          

        
	

        	

        	
           
        
	

        	
          (c)
        	
          Any such amounts payable as provided hereunder shall be additional
          Secured Obligations secured hereby and by the other Security
          Documents. All amounts due under this Section 8.7 shall be payable
          on written demand therefor.
        


    

    
    	
          8.8
        	
          
            Governing Law
          

        


    

    
      This Security Agreement shall be governed by and construed in accordance
      with the laws of the Province of Ontario and the laws of Canada
      applicable therein, except as required by mandatory provisions of law.
    

    
    	
          8.9
        	
          
            Waivers; Amendment.
          

        


    

    

    

    
    	
           
        	
          (a)
        	
          
            The rights, remedies, powers, privileges, and discretions of the
            Collateral Agent hereunder (herein, the “Collateral
            Agent’s Rights and Remedies”) shall be cumulative and
            not exclusive of any rights or remedies which it would otherwise
            have. No delay or omission by the Collateral Agent in exercising
            or enforcing any of the Collateral Agent’s Rights and Remedies
            shall operate as, or constitute, a waiver thereof. No waiver by
            the Collateral Agent of any Event of Default or of any Default
            under any other agreement shall operate as a waiver of any other
            Event of Default or other Default hereunder or under any other
            agreement. No single or partial exercise of any of the Collateral
            Agent’s Rights or Remedies, and no express or implied agreement or
            transaction of whatever nature entered into between the Collateral
            Agent and any Person, at any time, shall preclude the other or
            further exercise of the Collateral Agent’s Rights and Remedies. No
            waiver by the Collateral Agent of any of the Collateral Agent’s
            Rights and Remedies on any one occasion shall be deemed a waiver
            on any subsequent occasion, nor shall it be deemed a continuing
            waiver. The Collateral Agent’s Rights and Remedies may be
            exercised at such time or times and in such order of preference as
            the Collateral Agent may determine. The Collateral Agent’s Rights
            and Remedies may be exercised without resort or regard to any
            other source of satisfaction of the Secured Obligations. No waiver
            of any provisions of this Security Agreement or any other Loan
            Document or consent to any departure by the Grantor therefrom
            shall in any event be effective unless the same shall be permitted
            by paragraph (b) below, and then such waiver or consent shall be
            effective only in the specific instance and for the purpose for
            which given. No notice to or demand on the Grantor in any case
            shall entitle the Grantor to any other or further notice or demand
            in similar or other circumstances.
          

        


    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -23-
    

    
      


    

    
    	
           
        	
          (b)
        	
          Neither this Security Agreement nor any provision hereof may be
          waived, amended or modified except pursuant to a written agreement
          entered into between the Collateral Agent and the Grantor with
          respect to such waiver, amendment or modification is to apply,
          subject to any consent required in accordance with Section 9.2 of
          the Credit Agreement.
        


    

    
    	
          8.10
        	
          
            WAIVER OF JURY TRIAL
          

        


    

    
      EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
      APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO TRIAL BY JURY IN ANY LEGAL
      PROCEEDINGS DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
      SECURITY AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
      CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER
      THEORY). EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE,
      COLLATERAL AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
      EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
      LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES
      THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO
      THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
      CERTIFICATIONS SET FORTH IN THIS SECTION 8.10.
    

    
    	
          8.11
        	
          
            Severability
          

        


    

    
      In the event any one or more of the provisions contained in this
      Security Agreement should be held invalid, illegal or unenforceable in
      any respect, the validity, legality and enforceability of the remaining
      provisions contained herein shall not in any way be affected or impaired
      thereby (it being understood that the invalidity of a particular
      provision in a particular jurisdiction shall not in and of itself affect
      the validity of such provision in any other jurisdiction).
    

    
    	
          8.12
        	
          
            Counterparts.
          

        


    

    
      This Security Agreement may be executed in two or more counterparts,
      each of which shall constitute an original but all of which, when taken
      together, shall constitute a single contract. Delivery of an executed
      counterpart of a signature page to this Security Agreement by facsimile
      or other electronic transmission shall be effective as delivery of a
      manually executed counterpart hereof.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -24-
    

    
      


    

    
    	
          8.13
        	
          
            Sections and Headings
          

        


    

    
      Article and Section headings used herein are for the purpose of
      reference only, are not part of this Security Agreement and are not to
      affect the construction of, or to be taken into consideration in
      interpreting, this Security Agreement.
    

    
    	
          8.14
        	
          
            Jurisdiction
          

        


    

    
    	
           
        	
          (a)
        	
          The Grantor agrees that any suit for the enforcement of this
          Security Agreement may be brought in the courts of the Province of
          Ontario and consent to the non-exclusive jurisdiction of such
          courts. The Grantor hereby waives any objection which it may now or
          hereafter have to the venue of any such suit or any such court or
          that such suit is brought in an inconvenient forum.
        
	

        	

        	
           
        
	

        	
          (b)
        	
          Each party to this Security Agreement irrevocable consents to
          service of process in the manner provided for notices in Section
          8.1. Nothing in this Security Agreement or any other Loan Document
          will affect the right of any party to this Security Agreement to
          serve process in any other manner permitted by law.
        


    

    
    	
          8.15
        	
          
            Termination; Release of Collateral
          

        


    

    
      Except for those provisions which expressly survive the termination
      thereof, the Credit Agreement, this Security Agreement and the security
      interest shall terminate when all the Secured Obligations have been paid
      in full, the Lenders have no further commitment to lend, the Letter of
      Credit Outstandings have been reduced to zero or fully cash
      collateralized in a manner reasonably satisfactory to the Issuing Bank
      and the Collateral Agent, and the Issuing Bank has no further obligation
      to issue Letters of Credit under the Credit Agreement, and any Other
      Liabilities have been fully cash collateralized in a manner reasonably
      satisfactory to the respective Lender to whom such Other Liabilities are
      owed, at which time the Collateral Agent shall execute and deliver to
      the Grantor, at the Grantor’s expense, all PPSA discharges, releases and
      similar documents that the Grantor shall reasonably request to evidence
      such termination. Any execution and delivery of discharges or documents
      pursuant to this Section 8.15 shall be without recourse to, or warranty
      by, the Collateral Agent.
    

    
    	
          8.16
        	
          
            No Merger
          

        


    

    
      Neither the taking of any judgment nor the exercise of any power of
      seizure or sale shall operate to extinguish the liability of the Grantor
      to make payment of or satisfy the Secured Obligations. The acceptance of
      any payment or alternate security shall not constitute or create any
      novation and the taking of a judgment or judgments under any of the
      covenants herein contained shall not operate as a merger of such
      covenants.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -25-
    

    
      


    

    
    	
          8.17
        	
          
            Security Interest Effective Immediately
          

        


    

    
      Neither the execution or registration of this Security Agreement nor any
      partial advances by the Collateral Agent shall bind the Collateral Agent
      to advance any other amounts to the Grantor. The parties intend the
      security interest created hereby to attach and take effect forthwith
      upon execution of this Security Agreement by the Grantor and the Grantor
      acknowledges that value has been given and that the Grantor has rights
      in the Collateral.
    

    
    	
          8.18
        	
          
            Provisions Reasonable
          

        


    

    
      The Grantor expressly acknowledges and agrees that the provisions of
      this Security Agreement and, in particular, those respecting remedies
      and powers of the Collateral Agent against the Grantor, its business and
      the Collateral upon default, are commercially reasonable and not
      manifestly unreasonable.
    

    
    	
          8.19
        	
          
            Number and Gender
          

        


    

    
      In this Security Agreement, words importing the singular number include
      the plural and vice-versa and words importing gender include all genders.
    

    
    	
          8.20
        	
          
            Precedence
          

        


    

    
      Except as limited herein, in the event that any provisions of this
      Security Agreement contradict and are otherwise incapable of being
      construed in conjunction with the provisions of the Credit Agreement,
      the provisions of the Credit Agreement, as applicable, shall take
      precedence over those contained in this Security Agreement.
    

    
    	
          8.21
        	
          
            Receipt of Copy
          

        


    

    
      The Grantor acknowledges receipt of an executed copy of this Security
      Agreement.
    

    
    	
          8.22
        	
          
            Judgment Currency
          

        


    

    
      If, for the purposes of obtaining or enforcing judgment in any court or
      for any other purpose hereunder or in connection herewith, it is
      necessary to convert a sum due hereunder in any currency into another
      currency, such conversion shall be carried out to the extent and in the
      manner provided in the Credit Agreement.
    

    
    	
          8.23
        	
          
            Waiver of The Limitation of Civil Rights Act (Saskatchewan)
          

        


    

    
      Without limiting the generality of the foregoing, the Grantor agrees
      that The Limitation of Civil Rights Act (Saskatchewan) will not
      apply to this Security Agreement or any rights, remedies or powers of
      the Collateral Agent, any Secured Party or any Receiver hereunder.
    

    
      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -26-
    

    
      


    

    
    	
          8.24
        	
          
            Language
          

        


    

    
      The parties hereto acknowledge that they have requested and are
      satisfied that the foregoing, as well as all notices, actions and legal
      proceedings be drawn up in the English language. Les parties à cette
      convention reconnaissent qu’elles ont exigé que ce qui précède ainsi que
      tous avis, actions et procédures légales soient rédigés et exécutés en
      anglais et s’en déclarent satisfaites.
    

    
      [signature page follows]
    

    
      

      

      

      

      

      

      

      

      

      

      Security Agreement – Zale Canada Co. (2009)
    

    
      
        

        

      

      
        

        

        
          


        

      

      
        

        

      

    

    
      -27-
    

    
      


    

    
      IN WITNESS WHEREOF, the Grantor has duly executed this Security
      Agreement as of the date first above written.
    

    
      


    

    
    	
           
        	
          
            ZALE CANADA CO.
          

        
	

        	

        	
           
        
	

        	
          Per:
        	
          
            /s/ David Sternblitz
          

        
	

        	
          Name:
        	
          
            David Sternblitz
          

        
	

        	
          Title:
        	
          
            Vice President & Treasurer
          

        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	

        	
           
        
	

        	
          
            BANK OF AMERICA, N.A.
          

        
	

        	
          on its own behalf and as Collateral Agent
        
	

        	

        	
           
        
	

        	
          Per:
        	
          
            /s/ Andrew Cerussi
          

        
	

        	
          Name:
        	
          
            Andrew Cerussi
          

        
	

        	
          
            Title:
          

        	
          
            SVP
          

        


    

    

    

    
      

      

      

      

      

      

      

      

      

      

      Security Agreement – Zale Canada Co. (2009)