**EXHIBIT 10.10****EMPLOYMENT AGREEMENT**     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated October 12, 2006, but effective as of July24, 2006 (the “Effective Date”) is by and between Zale Corporation, a Delaware corporation (the“Company”), and Mary Elizabeth Burton (“Executive”).     WHEREAS, Executive and Company desire to enter into an employment agreement which sets forththe terms and conditions for Executive’s continued employment with the Company,     NOW, THEREFORE, in consideration of the foregoing recital and of the mutual covenants setforth herein, and other good and valuable consideration, the receipt and sufficiency of which arehereby acknowledged, the parties agree as follows:1. Employment; Term.(a) Executive agrees to continue in the employment of the Company, and the Company agrees toemploy Executive, on the terms and conditions set forth in this Agreement. The term ofExecutive’s employment under this Agreement commenced on the Effective Date and, subject toits earlier termination as provided in Section 4, will continue through July 23, 2007 (the“Initial Term”).(b) Unless earlier terminated in accordance with Section 4 of this Agreement, at the end ofthe Term this Agreement shall be automatically renewed and extended for subsequent one yearterms (each, a “Renewal Term and collectively with the Initial Term, the “Term”) unless atleast ninety (90) days prior to the end of the Term or any Renewal Term either partyprovides written notice of termination to the other party.2. Position; Duties. During the Term, Executive will serve as the President and ChiefExecutive Officer of the Company and her duties will be those designated from time to time bythe Board of Directors of the Company (the “Board”). Executive agrees during the Term todevote her full time efforts, skills and abilities to the performance of her duties asdescribed herein and to the furtherance of the Company’s business. As consideration for thisAgreement and specifically in consideration for the promises described in Section 9, theCompany promises to provide Executive with confidential and proprietary information and tradesecrets, the receipt and sufficiency of which Executive acknowledges, including, withoutlimitation, Trade Secrets (as defined below) belonging to the Company for use in theperformance of Executive’s duties for the Company. Executive will report directly to theBoard. At the request of the Board, Executive further agrees to serve, without additionalcompensation, as an officer, director or both of any subsidiary, division or affiliate of theCompany or any other entity in which the Company holds a controlling equity interest,provided, however, that (i) the Company
 

 
  shall indemnify Executive from liabilities in connection with serving in any such positionto the same extent as her indemnification rights pursuant to the Company’s Certificate ofIncorporation, Bylaws and applicable Delaware law, and (ii) such service shall notmaterially detract from the responsibilities of Executive set forth herein or her ability toperform such responsibilities.3. Compensation.(a) Base Salary. During the Term, the Company will pay to Executive an annual basesalary of not less than $850,000 (“Base Salary”), which will be payable in arrears inaccordance with the Company’s normal payroll procedures and will be reviewed annually by theBoard and will be subject to increases at the discretion of the Board or an authorizedcommittee or representative thereof. After any such increase, the term “Base Salary” asutilized in this Agreement will thereafter refer to the adjusted amount.(b) Incentive Bonus. During the Term, Executive will be eligible to receive anannual incentive bonus as determined under the Company’s executive bonus program,established by the Board. The annual target bonus (“Target Bonus”) for Executive will be125% of Executive’s Base Salary. Executive’s annual incentive bonus for the fiscal yearending July 31, 2007 shall be no less than the full Target Bonus. The annual incentivebonus will be paid to Executive in accordance with the terms and conditions of the executivebonus program.(c) Equity and Long-Term Incentive Awards. In addition to all previous grants ofrestricted stock or units and stock options, Executive will be entitled to participate inequity and other long-term incentive award programs of the Company, including, withoutlimitation, the Equity Plan, on a basis generally consistent with that of other senior-levelexecutives.(d) Vacation. Executive will be entitled to at least four (4) paid weeks ofvacation per year during each fiscal year of the Term of this Agreement.(e) Executive Perquisites; Benefit; Expenses.     (i) Executive will be entitled to receive executive perquisites and fringe and otherbenefits on a basis which is no less favorable than the basis on which such perquisites andbenefits are provided to any other senior executive (including for this purpose, to theextent applicable, executive’s family) under any of the Company’s plans, policies,arrangements or programs in effect from time to time.     (ii) The Company will reimburse Executive for such reasonable and necessaryout-of-pocket business expenses as may be incurred by her in the performance of her dutieshereunder upon presentation of itemized expense statements and such other supportinginformation as may be required by the Company. In addition, the Company will reimburseExecutive for, or at Executive’s request pay directly on Executive’s behalf, the legal feesand other expenses incurred by her in connection with the negotiation and drafting of thisAgreement in an amount not to exceed $25,000 upon production of receipts and/or invoices tothe reasonable satisfaction of the Board, and the Company
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shall pay to Executive tax gross-up payments so that the net amount retained byExecutive after payment of all applicable income and employment taxes is equal to the agreedamount to be reimbursed for such legal fees and expenses, provided, however, that a gross uppayment shall not be made with respect to any reimbursement to the extent the relatedexpense is deductible or is otherwise excludable from Executive’s taxable income.(f) Tax Withholding. The Company has the right to deduct from any compensationpayable to Executive under this Agreement social security (FICA) taxes and all Federal,state and local income taxes and charges as are required by applicable law and regulations.4. Termination. Subject to the provisions of Section 5 hereof, the Term will terminateas specified in Section 1(b) or, if earlier, upon Executive’s termination of employment withthe Company as follows:(a) Death. Executive’s employment shall terminate upon the death of Executive.(b) Termination for Cause. The Company may terminate Executive’s employment at anytime for Cause (as hereinafter defined) by delivering a written termination notice toExecutive. For purposes of this Agreement, “Cause” shall mean any of the following:     (i) Executive’s indictment for a felony or a crime involving moral turpitude;     (ii) Executive’s commission of an act constituting fraud, deceit, or materialmisrepresentation with respect to the Company;     (iii) Executive’s recurrent use of alcohol or prescribed medications at work orotherwise such that Executive’s job performance is impaired or the use of any illegalsubstances or drug such that, in the Company’s sole discretion, Executive’s job performanceis impaired;     (iv) Executive’s embezzlement of Company assets or funds; or     (v) Executive commits any negligent or willful act or omission that causes materialdetriment (by reason, without limitation, of financial exposure or loss, damage toreputation or goodwill, or exposure to civil damages or criminal penalties or otherprosecutorial action by any governmental authority) to the Company or any parent orsubsidiary corporation thereof.(c) Termination Without Cause. The Company may terminate Executive’s employment atany time for any reason other than for Cause by delivering a written termination notice toExecutive.
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(d) Termination by Executive For a Termination Reason. Executive may terminate heremployment with the Company at any time for a Termination Reason (as hereinafter defined) bydelivering a written termination notice to the Company. For purposes of this Agreement,“Termination Reason” shall mean any of the following:     (i) a material reduction by the Company in Executive’s Base Salary or bonus eligibilityunless similar reductions apply to senior executives of the Company and its subsidiariesgenerally;     (ii) the Company’s principal executive offices shall be moved to a location outside theDallas/Fort Worth, Texas Metroplex; or     (iii) the assignment to Executive by the Company of duties materially inconsistentwith, or the material reduction of the powers and functions associated with, Executive’spositions, duties, responsibilities and status with the Company or a material adverse changein Executive’s titles or offices, unless such action is in lieu of termination by theCompany of Executive’s employment for Executive’s Disability pursuant to Section 4(f).(e) Termination by Executive Without a Termination Reason. Executive may terminateher employment with the Company without a Termination Reason upon thirty (30) days’ priorwritten notice to the Company. In such instance, the Company may accelerate the effectivedate of such termination, but Executive shall receive all compensation and benefits underthis Agreement for the full thirty (30) day notice period.(f) Termination Following Disability. In the event that, in the Company’s solediscretion, Executive becomes mentally or physically impaired or disabled such that she isunable to perform her duties and responsibilities hereunder for a period of at least onehundred twenty (120) days in the aggregate during any one hundred fifty (150) consecutiveday period (a “Disability Event”), the Company may terminate Executive’s employment underthis Agreement by delivering a written termination notice to Executive.(g) Payments/Deductions. Following any expiration or termination of the Term, andin addition to any amounts owed pursuant to Section 5 hereof, the Company shall payExecutive all amounts earned by Executive hereunder up to the date of such expiration ortermination. Executive agrees that any advances to Executive by the Company outstanding atthe time of the expiration or termination of the Term may be deducted from her wages,including her final paycheck and/or any severance owed to Executive.
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5. Rights of Executive Upon Termination. Subject to Executive’s adherence to the termsof this Agreement, including but not limited to the non-competition, no-hire/non-solicitation,non-disclosure and non-disparagement provisions set forth in Sections 9, 10, 11 and 12,Executive shall be entitled to receive the following benefits in the event her employment isterminated pursuant to Section 4 above or the Company terminates Executive’s employment inconnection with its election not to renew this Agreement for an additional Term as specifiedin Section 1(b):(a) Death. In the event that Executive’s employment is terminated upon theoccurrence of her death as provided in Section 4(a), the Company shall continue to pay, inaccordance with its normal payroll procedures, the Base Salary to Executive’s estate for aperiod of twelve (12) months after the date of Executive’s death. All unvested restrictedstock or units granted to Executive will be immediately forfeited and all unvested stockoptions granted to Executive will be immediately terminated upon the date of Executive’sdeath and any vested stock options will remain exercisable for one (1) year afterExecutive’s date of death, subject to the earlier expiration of the term of such stockoption. For purposes of this Section 5(a) and elsewhere in this Agreement, StockAppreciation Rights shall be treated in the same manner as stock options.(b) Termination for Cause. In the event that Executive’s employment is terminatedby the Company for Cause as provided in Section 4(b) Executive shall not thereafter beentitled to any further compensation from the Company and all outstanding stock options,whether or not vested, and unvested restricted stock and units shall be immediatelyforfeited.(c) Termination By Non-Renewal Prior to Age 62, Without Cause or By Executive For aTermination Reason. In the event that the Company terminates Executive’s employment inconnection with the Company’s election of non-renewal of the Term as provided in Section1(b) prior to Executive attaining age 62 or without Cause as provided in Section 4(c) orExecutive terminates her employment for a Termination Reason as provided in Section 4(d),then Executive shall be entitled to the following:     (i) Severance. The Company shall pay to Executive (or Executive’s estate ifExecutive dies after termination) an amount equal to the sum of two (2) times Executive’sannual Base Salary as of the date of termination and two (2) times the average of the annualincentive bonus amount earned by Executive with respect to the three fiscal year periodpreceding the year in which this Agreement is terminated (or such shorter period as mayapply if this Agreement has been in effect for less than three years)(hereinafter, the“Severance Amount”); provided, however, that for purposes of this calculation, theguaranteed minimum bonus provided in Section 3(b) for the fiscal year ending July 31, 2007shall not be utilized and the actual bonus that would have been earned for such year shallbe utilized instead. The Severance Amount shall be payable in equal monthly installmentsover a twenty-four (24) month period commencing with the month following the month duringwhich termination of Executive’s employment occurs (hereinafter, the “Severance Period”).
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     (ii) Benefits. For the duration of the Severance Period (i.e., twenty-four(24) months), Executive shall continue to receive the fringe benefits provided under Section3(e)(i) hereof on the same basis as such benefits were provided during Executive’semployment hereunder, provided that the continued participation of Executive under anybenefit plan including, without limitation, group healthcare, dental and life insurance ispossible under the general terms and provisions of such plans. Such period of coverageshall count against Executive’s continuation of coverage period required under theConsolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). All premiumpayments paid by Executive for such continuation coverage during the Severance Period andfor any subsequent COBRA period shall be paid directly to the appropriate insurer or serviceprovider for such benefit (which may be the Company). If Executive’s participation in anysuch plan is barred, the Company shall arrange to provide Executive with benefitssubstantially similar to those which Executive would otherwise have been entitled to receiveunder such plan or, alternatively at the option of the Company, reimburse Executive for thereasonable actual costs of purchasing in the marketplace substantially similar benefits;provided, however, that in either case Executive shall pay to the Company, or provide acredit against the Company’s reimbursement obligation for, the amount equal to the premiums,or portion thereof, that Executive was required to pay to maintain such benefits prior tothe date of termination of employment.     (iii) Equity and Long-Term Incentive Awards. All unvested restricted stock orunits granted to Executive will be immediately forfeited and all unvested stock optionsgranted to Executive will be immediately terminated upon such termination of Executive’semployment and any vested stock options granted to Executive will remain exercisable forthree months after such termination of Executive’s employment, subject to the earlierexpiration of the term of such stock option.     (iv) Offset. The payments due and payable in accordance with Section 5(c)(i)hereof shall be reduced by an amount equal to any amounts that Executive receives inconnection with any other employment or consultancy during the Severance Period; provided,however, that such payments shall not be reduced by any amounts that Executive receives inconnection with director fees or BB Capital, Inc. income. However, any benefits received byor available to Executive in connection with any other employment or consultancy that arereasonably comparable to the benefits then being provided by the Company pursuant to Section5(c)(ii) hereof, shall be deemed to be the equivalent thereof and shall terminate theCompany’s responsibility to continue providing the benefits then being provided by theCompany pursuant to Section 5(c)(ii) hereof.(d) Termination By Non-Renewal After Age 62. In the event that the Companyterminates Executive’s employment in connection with the Company’s election of non-renewalof the Term as provided in Section 1(b) on or after Executive attaining age 62, Executiveshall be entitled to fifty percent (50%) of the Severance Amount payable in equal monthlyinstallments over a twelve (12) month period (the “Modified Severance Period”) commencingwith the month following the month during which termination of Executive’s employmentoccurs. In addition, the provisions of Sections 4(c)(ii), 4(c)(iii) and 4(c)(iv) shallapply during the Modified Severance Period.
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(e) Termination by Executive Without a Termination Reason. In the event thatExecutive’s employment is terminated by Executive without a Termination Reason as providedin Section 4(e), Executive shall not thereafter be entitled to any further compensation fromthe Company and all outstanding unvested stock options and all unvested restricted stock andunits shall be immediately forfeited.(f) Disability. In the event that Executive’s employment is terminated due to aDisability Event as provided in Section 4(f), Executive shall be entitled to continue toreceive her salary and benefits (subject to the conditions regarding such benefits specifiedin Section 5(c)(ii) and 5(c)(iv)) under Section 3 of this Agreement for a period of twelve(12) months after the date of such termination. All unvested restricted stock or unitsgranted pursuant to Executive will be immediately forfeited and all unvested stock optionsgranted to Executive will be immediately terminated upon the date of such termination ofExecutive’s employment and any vested stock options will remain exercisable for one (1) yearafter such termination of Executive’s employment, subject to the earlier expiration of theterm of such stock option.6. Effect of Change of Control.(a) If within two (2) years following a Change of Control (as hereinafter defined),Executive terminates her employment with the Company for Good Reason (as hereinafterdefined) or the Company terminates Executive’s employment for any reason other than forCause (as defined in Section 4(b)) or a Disability Event, the Company shall pay to, andprovide for, Executive the following payments and benefits:     (i) An amount equal to three (3) times the sum of Executive’s Base Salary and TargetBonus as of the date of termination;     (ii) All benefits under the Company’s various benefit plans, including grouphealthcare, dental, and life for thirty-six (36) months from the date of termination,provided that the continued participation of Executive is possible under the general termsand provisions of such plans. If Executive’s participation in any such plan is barred, theCompany shall arrange to provide Executive with benefits substantially similar to thosewhich Executive would otherwise have been entitled to receive under such plan or,alternatively at the option of the Company, reimburse Executive for the reasonable actualcosts of purchasing in the marketplace substantially similar benefits; provided, however,that in either case Executive shall pay to the Company, or provide a credit against theCompany’s reimbursement obligation for, the amount equal to the premiums, or portionthereof, that Executive was required to pay to maintain such benefits prior to the date oftermination of employment. Further, any insurance or other benefits and benefits coverageprovided pursuant hereto shall be limited and reduced to the extent reasonably comparablecoverage or benefits are provided by or available from any other employer of Executive; and     (iii) All unvested restricted stock or units granted to Executive and all unvestedstock options granted to Executive will be immediately vested. Further, all vested stockoptions granted to Executive, including those vested by reason of the preceding sentence,
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will remain exercisable for ninety (90) days after such termination of Executive’semployment, subject to the earlier expiration of the term of such stock options.     (b) Change of Control. For purposes of this Agreement, “Change of Control” meansthe earliest to occur of the following:     (i) any “person,” as such term is used in Sections 3(a)(9) and 13(d) of the SecuritiesExchange Act of 1934 (“Person”), becomes a “beneficial owner,” as such term is used in Rule13d-3 promulgated under that act, of 30% or more of the Voting Stock of the Company;     (ii) the majority of the Board consists of individuals other than “incumbent”directors, which term means the members of the Board on the Effective Date; provided thatany person becoming a director subsequent to such date whose election or nomination forelection was supported by two-thirds of the directors who then comprised the incumbentdirectors will be considered to be an incumbent director;     (iii) the Company adopts any plan of liquidation providing for the distribution of allor substantially all of its assets;     (iv) all or substantially all of the assets or business of the Company is disposed ofpursuant to a merger, consolidation or other transaction (unless the stockholders of theCompany immediately prior to such merger, consolidation or other transaction beneficiallyown, directly or indirectly, in substantially the same proportion as they owned the VotingStock of the Company, all of the Voting Stock or other ownership interests of the entity orentities, if any, that succeed to the business of the Company); or     (v) the Company combines with another company and is the surviving corporation but,immediately after the combination, the stockholders of the Company immediately prior to thecombination hold, directly or indirectly, 50% or less of the Voting Stock of the combinedcompany (there being excluded from the number of shares held by such stockholders, but notfrom the Voting Stock of the combined company, any shares received by affiliates of suchother company in exchange for stock of such other company).  For purposes of the Change of Control definition, “Company” will include any entity thatsucceeds to all or substantially all, of the business of the Company and “Voting Stock” willmean securities of any class or classes having general voting power under ordinarycircumstances, in the absence of contingencies, to elect the directors of a corporation.(c) “Good Reason” shall mean any of the following actions taken by the Companywithout Executive’s written consent after a Change of Control:     (i) the assignment to Executive by the Company of duties inconsistent with, or thereduction, other than due solely to the fact that the Company no longer is a publicly tradedCompany, of the powers and functions associated with, Executive’s position, duties,responsibilities and status with the Company immediately prior to a Change of Control orPotential Change of Control (as defined below), or a material adverse change
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in Executive’s titles or offices as in effect immediately prior to a Change of Controlor Potential Change of Control, or any removal of Executive from or any failure to re-electExecutive to any of such positions, except in connection with the termination of heremployment (A) by the Company for a Disability Event or Cause or as a result of Executive’sdeath or (B) by Executive other than for the reasons set forth in this Section 6(c);     (ii) a reduction by the Company in Executive’s Base Salary as in effect on the date ofa Change of Control or Potential Change of Control;     (iii) the Company’s principal executive offices shall be moved to a location outsidethe Dallas/Fort Worth, Texas Metroplex area;     (iv) the Company shall require Executive to be based anywhere other than at theCompany’s principal executive offices in the Dallas/Fort Worth, Texas Metroplex area, or ifExecutive agrees to a relocation outside the area, the Company fails to reimburse Executivefor moving and all other expenses incurred with such move;     (v) the Company shall fail to continue in effect any Company-sponsored plan that is ineffect on the date of a Change of Control or Potential Change of Control (or replacementplans therefore that in the aggregate provide the same or more favorable benefits) thatprovides (A) incentive or bonus compensation, (B) reimbursement for reasonable expensesincurred by Executive in connection with the performance of duties with the Company, and (C)pension benefits such as Section 401(k) plan within the meaning of the Internal Revenue Codeof 1986, as amended (the “Code”);     (vi) any material breach by the Company of any provision of this Agreement; and     (vii) any failure by the Company to obtain the assumption of this Agreement by anysuccessor or assign of the Company effected in accordance with the provisions of thisSection 6.(d) “Potential Change of Control” shall mean the earliest to occur of the followingevents within six months prior to a Change of Control:     (i) the Company enters into an agreement the consummation of which, or the approval bystockholders of which, would constitute a Change of Control;     (ii) proxies for the election of members of the Board are solicited by any person otherthan the Company;     (iii) any person (including, but not limited to, any individual partnership, jointventure, corporation, association or trust) publicly announces an intention to take or toconsider taking actions which, if consummated, would constitute a Change of Control; or
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     (iv) any other event occurs which is deemed to be a Potential Change of Control by theBoard and the Board adopts a resolution to the effect that a Potential Change of Control hasoccurred.(e) Excise Tax.     (i) Gross-Up. In the event that the “Total Payments” (defined below) would besubject to the “Excise Tax” (defined below) the Company shall pay to Executive an additionalamount (the “Gross-Up Payment”) such that after payment by Executive of all taxes (includingany Excise Tax) imposed upon the Gross-Up Payment and any interest or penalties imposed withrespect to such taxes, Executive retains from the Gross-Up Payment an amount equal to theExcise Tax imposed upon the Total Payments.(a) For purposes of determining whether any of the Total Payments will be subject tothe Excise Tax and the amount of such Excise Tax, (A) all “excess parachutepayments” within the meaning of Section 280G(b)(l) of the Code shall be treated assubject to the Excise Tax unless, in the opinion of Tax Counsel, such excessparachute payments (in whole or in part) represent reasonable compensation forservices actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code)in excess of the base amount (within the meaning of Section 280G(b)(3) of the Code)allocable to such reasonable compensation, or are otherwise not subject to theExcise Tax, and (B) the value of any noncash benefits or any deferred payment orbenefit shall be determined by the Auditor in accordance with the principles ofSections 280G(d)(3) and (4) of the Code. If the Auditor is prohibited by applicablelaw or regulation from performing the duties assigned to it hereunder, then adifferent auditor, acceptable to both the Company and Executive, shall be selected.The fees and expenses of Tax Counsel and the Auditor shall be paid by the Company.For purposes of determining the amount of the Gross-Up Payment, Executive shall bedeemed to pay federal income tax at the highest marginal rate of federal incometaxation in the calendar year in which the Gross-Up Payment is to be made and stateand local income taxes at the highest marginal rate of taxation in the state andlocality of Executive’s residence on the date of termination (or if there is no dateof termination, then the date on which the Gross-Up Payment is calculated forpurposes of this Section), net of the maximum reduction in federal income taxeswhich could be obtained from deduction of such state and local taxes.(b) In the event that the Excise Tax is subsequently determined to be less than theamount taken into account hereunder in calculating the Gross-Up Payment, Executiveshall repay to the Company, within five (5) business days following the time thatthe amount of such reduction in the Excise Tax is finally determined, the portion ofthe Gross-Up Payment attributable to such reduction. In the event that the ExciseTax is determined to exceed the amount taken into account hereunder in calculatingthe Gross-Up Payment (including by reason of any payment the existence or amount ofwhich cannot be determined at the time of the Gross-Up Payment), the Company shallmake an additional Gross-Up Payment in respect of such excess within five (5)business days following the time that the amount of
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such excess is finally determined. Executive and the Company shall each reasonablycooperate with the other in connection with any administrative or judicialproceedings concerning the existence or amount of liability for Excise Tax withrespect to the Total Payments.     (ii) Other Terms. At the time that payments are made under Section 5(c) or 6(a)of this Agreement, if requested by Executive, the Company shall provide Executive with awritten statement setting forth the manner in which such payments were calculated and thebasis for such calculations including, without limitation, any opinions, or other advice theCompany has received from Tax Counsel, the Auditor or other advisors or consultants (and allsuch opinions or advice shall be in writing, shall be attached to the statement and shallexpressly state that Executive may rely thereon). Executive and the Company shall eachreasonably cooperate with the other in connection with any administrative or judicialproceeding concerning the existence or amount of liability for Excise Tax with respect tothe Total Payments. Notwithstanding anything herein to the contrary, this Section 6(e)shall be interpreted (and, if determined by the Company to be necessary, reformed) to theextent necessary to fully comply with the Sarbanes-Oxley Act; provided that the Corporationagrees to maintain, to the maximum extent practicable, the original intent and economicbenefit to the Executive of the applicable provision without violating the provisions of theSarbanes-Oxley Act.     (iii) Definitions. “Total Payments” shall mean the payments andbenefits received or to be received by Executive, whether pursuant to the terms of thisAgreement or any other plan, arrangement or agreement that constitute “parachute payments”as defined in Section 280G of the Code (excluding the Gross-UpPayment) (“ParachutePayments”). For this purposes, all of the payments and benefits received by Executive or tobe received by Executive in connection with a Change of Control or in connection withExecutive’s termination of employment in respect of a Change of Control (whether pursuant tothe terms of this Agreement or any other plan, arrangement or agreement with the Company,and Person whose actions result in a Change of Control or any Person affiliated with Companyor such Person shall be treated as Parachute Payments unless, in the opinion of tax counsel(“Tax Counsel”) reasonably acceptable to Executive and selected by the accounting firm whichwas, immediately prior to the Change of Control, the Company’s independent auditor (the“Auditor”), such payments or benefits (in whole or in part) do not constitute ParachutePayments, including by reason of Section 280G(b)(4)(A) of the Code. “Excise Tax”shall mean the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986,as amended (the “Code”).7. Time of Payment; Section 409A.(a) Unless expressly provided otherwise, all of the payments due to Executive under Sections5 or 6 above shall be made within fifteen (15) days following the date of termination;(b) Notwithstanding any provision in this Agreement to the contrary, if the payment of anycompensation or benefit hereunder (including, without limitation, any severance benefit)would be subject to additional taxes and interest under Section 409A of the Code
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because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B) ofthe Code, then any such payment or benefit that Executive would otherwise be entitled toduring the first six months following the date of Executive’s termination of employmentshall be accumulated and paid or provided, as applicable, on the date that is six months andone day after the date of Executive’s termination of employment (or if such date does notfall on a business day of the Company, the next following business day of the Company), orsuch earlier date upon which such amount can be paid or provided under Section 409A of theCode without being subject to such additional taxes and interest. The preceding sentenceshall apply only to the extent required to avoid Executive’s incurrence of any additionaltax or interest under Section 409A of the Code or the regulations or Treasury guidancepromulgated thereunder; and(c) Notwithstanding anything to the contrary in this Agreement, if any payment, distributionor provision of a benefit by the Company to or for the benefit of Executive, whether paid orpayable, distributed or distributable or provided or to be provided pursuant to the terms ofthis Agreement or otherwise (a “Payment”), would be subject to an additional tax pursuant toSection 409A of the Code that would not have been imposed absent such Payment, or anyinterest or penalties with respect to such additional tax or otherwise imposed pursuant toSection 409A of the Code (such additional tax, together with any such interest or penalties,are hereinafter collectively referred to as the “Additional Taxes”), the Company shall payto Executive an additional payment (a “409A Gross-up Payment”) in an amount such that afterpayment by Executive of all Additional Taxes, including any income taxes and AdditionalTaxes imposed on any 409A Gross-up Payment, Executive retains an amount of the 409A Gross-upPayment (taking into account any similar gross-up payments to Executive under any stockincentive or other benefit plan or program of the Company) equal to the Additional Taxesimposed upon the Payments. The Company and Executive shall make an initial determination asto whether a 409A Gross-up Payment is required and the amount of any such 409A Gross-upPayment. Executive shall notify the Company in writing of any claim by the Internal RevenueService which, if successful, would require the Company to make a 409A Gross-up Payment (ora 409A Gross-up Payment in excess of that, if any, initially determined by the Company andExecutive) within ten business days after the receipt of such claim. The Company shallnotify Executive in writing at least ten business days prior to the due date of any responserequired with respect to such claim if it plans to contest the claim. If the Companydecides to contest such claim, Executive shall cooperate fully with the Company in suchaction; provided, however, the Company shall bear and pay directly or indirectly all costsand expenses (including additional interest and penalties) incurred in connection with suchaction and shall indemnify and hold Executive harmless, on an after-tax basis, for anyAdditional Taxes or income tax, including interest and penalties with respect thereto,imposed as a result of the Company’s action. If, as a result of the Company’s action withrespect to a claim, Executive receives a refund of any amount paid by the Company withrespect to such claim, Executive shall promptly pay such refund to the Company. If theCompany fails to timely notify Executive whether it will contest such claim or the Companydetermines not to contest such claim, then the Company shall immediately pay to Executivethe portion of such claim, if any, which it has not previously paid to Executive.
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8. Complete Release. Executive acknowledges and agrees that she will not receive any ofthe payments described in Sections 5 or 6 above unless Executive signs and returns to theCompany a full and complete release of any and all claims related to her employment ortermination of employment that Executive or her estate, heirs or assigns may have against theCompany, its subsidiaries and affiliates and its and their officers, directors, employees andagents in a form acceptable to and provided by the Company at or around the time ofExecutive’s termination.9. Non-Competition. As a material inducement for the Company’s promise to provide thetrade secrets and confidential and proprietary information described in Section 11 below,Executive agrees that during the Term and for a period of three (3) years from the date ofcessation or termination of Executive’s employment with the Company for any reason whatsoever,she will not, directly or indirectly, compete with the Company by providing services relatingto retail sales of jewelry to any other person, partnership, association, corporation, orother entity that is in a “Competing Business.” As used herein, a “Competing Business” is anybusiness that engages in whole or in material part in the retail sale of jewelry in the UnitedStates, Canada and/or Puerto Rico, including, but not limited to, specialty jewelry retailersand other retailers having jewelry divisions or departments. The restrictions contained inthis Section 9 shall be tolled on a day-for-day basis for each day during which Executiveparticipates in any activity in violation of such restrictions. The parties agree that theabove restrictions on competition are completely severable and independent agreementssupported by good and valuable consideration and, as such, shall survive the termination ofthis Agreement for whatever reason. The parties further agree that any invalidity orunenforceability of any one or more of such restrictions on competition shall not renderinvalid or unenforceable any remaining restrictions on competition. Additionally, should acourt of competent jurisdiction determine that the scope of any provision of this Section 9 istoo broad to be enforced as written, the parties intend that the court reform the provision tosuch narrower scope as it determines to be reasonable and enforceable.10. No Hire/Non-Solicitation of Employees. During the Term and for a period of three (3)years after the termination or cessation of her employment with the Company for any reasonwhatsoever, Executive shall not, on her own behalf or on behalf of any other person,partnership, association, corporation, or other entity, (a) directly, indirectly, or through athird party hire, cause to be hired or solicit any employee of the Company or its subsidiariesor affiliates or (b) in any manner attempt to influence or induce any employee of the Companyor its subsidiaries or affiliates to leave the employment of the Company or its subsidiariesor affiliates, nor shall she use or disclose to any person, partnership, association,corporation or other entity any information obtained concerning the names and addresses of theCompany’s employees. The restrictions contained in this Section 10 shall be tolled on aday-for-day basis for each day during which Executive participates in any activity inviolation of such restrictions. The parties agree that the above restrictions on hiring andsolicitation are completely severable and independent agreements supported by good andvaluable consideration and, as such, shall survive the termination of this Agreement forwhatever reason. The parties further agree that any invalidity or unenforceability of any oneor more of such restrictions on hiring and solicitation shall not render invalid orunenforceable any remaining restrictions or hiring
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  and solicitation. Additionally, should a court of competent jurisdiction determine that thescope of any provision of this Section 10 is too broad to be enforced as written, theparties intend that the court reform the provision to such narrower scope as it determinesto be reasonable and enforceable.11. Nondisclosure of Trade Secrets. The Company promises to disclose to Executive andExecutive acknowledges that in and as a result of her employment with the Company, she willreceive, make use of, acquire, have access to and/or become familiar with various tradesecrets and proprietary and confidential information of the Company, its subsidiaries andaffiliates, including, but not limited to, processes, computer programs, compilations ofinformation, records, financial information, sales reports, sales procedures, customerrequirements, pricing techniques, customer lists, methods of doing business, identities,locations, performance and compensation levels of employees and other confidential informationwhich are owned by the Company, its subsidiaries and/or affiliates and regularly used in theoperation of its business, and as to which the Company, its subsidiaries and/or affiliatestake precautions to prevent dissemination to persons other than certain directors, officersand employees (collectively, “Trade Secrets”). Executive acknowledges and agrees that theTrade Secrets:     (i) are secret and not known in the industry;     (ii) give the Company or its subsidiaries or affiliates an advantage over competitorswho do not know or use the Trade Secrets;     (iii) are of such value and nature as to make it reasonable and necessary to protectand preserve the confidentiality and secrecy of the Trade Secrets; and     (iv) are valuable, special and unique assets of the Company or its subsidiaries oraffiliates, the disclosure of which could cause substantial injury and loss of profits andgoodwill to the Company or its subsidiaries or affiliates.     Executive promises not to use in any way or disclose any of the Trade Secrets, directlyor indirectly, either during or after the Term, except as required in the course of heremployment under this Agreement, if required in connection with a judicial or administrativeproceeding, or if the information becomes public knowledge other than as a result of anunauthorized disclosure by Executive. All files, records, documents, information, datacompilations and similar items containing non-public and confidential information relatingto the business of the Company, whether prepared by Executive or otherwise coming into herpossession, will remain the exclusive property of the Company and may not be removed fromthe premises of the Company under any circumstances without the prior written consent of theCompany (except in the ordinary course of business during Executive’s period of activeemployment under this Agreement), and in any event must be promptly delivered to the Companyupon termination of Executive’s employment with the Company. Executive agrees that upon herreceipt of any subpoena, process or other request to produce or divulge, directly orindirectly, any Trade Secrets to any entity, agency, tribunal or person, whether receivedduring or after the term of Executive’s employment with the Company, Executive shall timelynotify and promptly
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provide a copy of the subpoena, process or other request to the Company. For thispurpose, Executive irrevocably nominates and appoints the Company (including any attorneyretained by the Company), as her true and lawful attorney-in-fact, to act in Executive’sname, place and stead to perform any reasonable and prudent act that Executive might performto defend and protect against any disclosure of any Trade Secrets.     The parties agree that the above restrictions on confidentiality and disclosure arecompletely severable and independent agreements supported by good and valuable considerationand, as such, shall survive the termination of this Agreement for whatever reason. Theparties further agree that any invalidity or unenforceability of any one or more of suchrestrictions on confidentiality and disclosure shall not render invalid or unenforceable anyremaining restrictions on confidentiality and disclosure. Additionally, should a court ofcompetent jurisdiction determine that the scope of any provision of this Section 11 is toobroad to be enforced as written, the parties intend that the court reform the provision tosuch narrower scope as it determines to be reasonable and enforceable.12. Non-Disparagement. Executive expressly acknowledges, agrees, and covenants that shewill not make any public or private statements, comments, or communications in any form, oral,written, or electronic (all of the foregoing, for purposes of this paragraph,“Communications”), which in any way could constitute libel, slander, or disparagement of theCompany, its subsidiaries, affiliates or parent, its and/or their employees, officers, and/ordirectors, or which may be considered to be derogatory or detrimental to its or their goodname or business; provided, however, that the terms of this paragraph shall not (a) apply toCommunications between Executive and her spouse, clergy, or attorneys, which are subject to aclaim of privilege existing under common law, statute, or rule of procedure; (b) apply toCommunications required by law or made in response to a valid subpoena or other lawful ordercompelling Executive to provide testimony or information; provided, however, that inresponding to a valid subpoena or other lawful order, Executive agrees to provide the Companywith advance notice and an opportunity to seek a protective order or other safeguard for itsconfidential information; (c) be construed to inhibit or limit Executive’s ability to initiateor cooperate with any investigation by a governmental or regulatory agency or official.Executive specifically agrees not to issue any public statement concerning her employment atZale and/or the cessation of such employment; or (d) prohibit Executive from responding to anyderogatory or inaccurate statement contained in a press release of the Company concerningExecutive for the purpose of correcting such inaccuracies or defending her reputation.13. Executive Representations and Agreements. Executive agrees that Executive and theCompany are engaged in a highly competitive business and, due to Executive’s position with theCompany and the nature of Executive’s work, Executive’s engaging in any business which iscompetitive with that of the Company will cause the Company great and irreparable harm.Executive represents and warrants that the time, scope and geographic area restricted by theforegoing Sections 9, 10, 11, and 12 pertaining to no hire/non-solicitation, non-competition,confidentiality and nondisclosure, and non-disparagement are reasonable, that the enforcementof the restrictions contained in
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  such Sections would not be unduly burdensome to Executive, and that Executive will be ableto earn a reasonable living while abiding by the terms included herein. Executive agreesthat the restraints created by the covenants in Sections 9, 10, 11, and 12 pertaining to nohire/non-solicitation, non-competition, confidentiality and nondisclosure, andnon-disparagement are no greater than necessary to protect the legitimate interests of theCompany, including its confidential business or proprietary information and trade secrets,including but not limited to, the Trade Secrets. Similarly, Executive agrees that the needof the Company for the protection afforded by the covenants of Sections 9, 10, 11, and 12pertaining to no hire/non-solicitation, non-competition, confidentiality and nondisclosure,and non-disparagement are not outweighed by either the hardship to Executive or any injurylikely to the public. Executive agrees that any breach by her of Sections 9, 10, 11, and 12pertaining to no hire/non-solicitation, non-competition, confidentiality and nondisclosureand non-disparagement will entitle the Company to discontinue any payments specified inSections 3, 5 or 6 above, for which Executive might be eligible based on the terms of thoseSections and to any other remedy available at law or in equity. Notwithstanding thesuspension or discontinuation of any such payments, Executive agrees that the Company isentitled to insist on full compliance by Executive with the full terms, including timeperiods, described in her promises not to hire/solicit, compete, disclose confidentialinformation or Trade Secrets or disparage. Any delay by the Company in discontinuingpayment shall not be construed as a waiver of any rights to discontinue payment.14. Severability. If any provision of this Agreement is held to be illegal, invalid orunenforceable under present or future laws effective during the term of this Agreement, suchprovision shall be fully severable and this Agreement shall be construed and enforced as ifsuch illegal, invalid or unenforceable provision never constituted a part of this Agreement;and the remaining provisions of this Agreement shall remain in full force and effect and shallnot be affected by the illegal, invalid or unenforceable provision or by its severance herefrom. Furthermore, in lieu of such illegal, invalid or unenforceable provision, there shall beadded as part of this Agreement, a provision as similar in its terms to such illegal, invalidor enforceable provision as may be possible and be legal, valid and enforceable.
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15. Arbitration.(a) The parties agree that any controversy or claim (including all claims pursuant to commonand statutory law) relating to this Agreement or arising out of Executive’s employment withthe Company, shall be resolved exclusively through arbitration pursuant to the NationalRules for the Resolution of Employment Disputes of the American Arbitration Association(“AAA”). Any such arbitration proceeding shall take place in Dallas County, Texas. Alldisputes shall be resolved by a single arbitrator. The arbitrator will have the authorityto award the same remedies, damages and costs that a court could award. The arbitratorshall issue a reasoned award explaining the decision, the reasons for the decision and anydamages awarded. The arbitrator’s decision will be final and binding. The judgment on theaward rendered by the arbitrator may be entered in any court having jurisdiction thereof.This provision can be enforced under the Federal Arbitration Act.(b) As the sole exception to the exclusive and binding nature of the arbitration commitmentset forth above, Executive and the Company agree that the Company shall have the right toinitiate an action in a court of competent jurisdiction in order to request temporary,preliminary and permanent injunctive or other equitable relief, including, withoutlimitation, specific performance, to enforce the terms of Sections 9, 10, 11, 12 or 13,above, without the necessity of proving inadequacy of legal remedies or irreparable harm orposting bond. However, nothing in this section should be construed to constitute a waiver ofthe parties’ rights and obligations to arbitrate regarding matters other than thosespecifically addressed in this paragraph.(c) Should a court of competent jurisdiction determine that the scope of any provision ofthis Section 15 is too broad to be enforced as written, the parties intend that the courtreform the provision to such narrower scope as it determines to be reasonable andenforceable.16. Survival. Executive acknowledges and agrees that this Agreement, including but notlimited to Sections 9, 10, 11, 12, 13, 14, 15, 17, and 17(c), shall survive the termination ofExecutive’s employment under this Agreement for whatever reason. The existence of any claimor cause of action of Executive against the Company, whether predicated on this Agreement orotherwise, shall not constitute a defense to the enforcement by the Company of the covenantsof Executive contained in this Agreement, including but not limited to those contained inSections 9, 10, 11, 12, 13, and 15. 17. Miscellaneous. (a) Notices. Any notices, consents, demands, requests, approvals and othercommunications to be given under this Agreement by either party to the other must be inwriting and must be either:     (i) personally delivered;     (ii) mailed by registered or certified mail, postage prepaid with return receiptrequested;
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     (iii) delivered by overnight express delivery service or same-day local courierservice; or     (iv) delivered by telex or facsimile transmission, to the address set forth below, orto such other address as may be designated by the parties from time to time in accordancewith this Section 17:   If to the Company:   Zale Corporation  901 W. Walnut Hill Lane  Irving, Texas 75038  Attention: General Counsel   If to Executive: Mary Elizabeth Burton  1000 Lake Carolyn Parkway, #4216  Irving, Texas 75039     Notices delivered personally or by overnight express delivery service or by localcourier service are deemed given as of actual receipt. Notices mailed within thecontinental United States are deemed given three (3) business days after mailing. Noticesdelivered by telex or facsimile transmission are deemed given upon receipt by the sender ofthe answer back (in the case of a telex) or transmission confirmation (in the case of afacsimile transmission).(b) Entire Agreement. This Agreement supersedes any and all other agreements,either oral or written, between the parties with respect to the subject matter of thisAgreement and contains all of the covenants and agreements between the parties with respectto the subject matter of this Agreement.(c) Modification. No change or modification of this Agreement is valid or bindingupon the parties, nor will any waiver of any term or condition in the future be so binding,unless the change or modification or waiver is in writing and signed by the parties to thisAgreement.(d) Governing Law and Venue. The parties acknowledge and agree that this Agreementand the obligations and undertakings of the parties under this Agreement will be performablein Irving, Dallas County, Texas. This Agreement is governed by, and construed in accordancewith, the laws of the State of Texas. If any action is brought to enforce or interpret thisAgreement, venue for the action will be in Dallas County, Texas.(e) Counterparts. This Agreement may be executed in counterparts, each of whichconstitutes an original, but all of which constitutes one document.(f) Costs. If any action at law or in equity is necessary to enforce or interpretthe terms of this Agreement, each party shall bear its own costs and expenses unlessExecutive prevails on at least one major issue, in which case Executive’s costs shall beborne by the Company.
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(g) Estate. If Executive dies prior to the expiration of the Term or during aperiod when monies are owing to her, any monies that may be due her from the Company underthis Agreement as of the date of her death shall be paid to her estate and as when otherwisepayable.(h) Assignment. The Company shall have the right to assign this Agreement to itssuccessors or assigns. The terms “successors” and “assigns” shall include any person,corporation, partnership or other entity that buys all or substantially all of the Company’sassets or all of its stock, or with which the Company merges or consolidates. The rights,duties and benefits to Executive hereunder are personal to her, and no such right or benefitmay be assigned by her.(i) Binding Effect. This Agreement is binding upon the parties hereto, togetherwith their respective executors, administrators, successors, personal representatives, heirsand permitted assigns.(j) Waiver of Breach. The waiver by the Company or Executive of a breach of anyprovision of this Agreement by Executive or the Company may not operate or be construed as awaiver of any subsequent breach.[Signature Page Follows]
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     IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first abovewritten.      EXECUTIVE