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ELIGIBILITY
    
    Management of Zale Corporation, as selected by the
Compensation Committee.MEASURES
    
    The Management Bonus Plan has three Components:AND
WEIGHTING
    
    1. Annual Company Performance Bonus is based on the following
performance measures:
 Consolidated
    
    BrandOrganization
    
    Net Income
    
    Operating EarningsCorporate
    
    50%
    
    50%Brand
    
    20%
    
    80%
 Consolidated net income and Brand operating earnings targets shall be
established by the Compensation Committee of Zale Corporations Board of
Directors (the Compensation Committee) on an annual basis prior to the
commencement of a fiscal year, except to the extent permitted by Section
162(m) to be established subsequently.Following are the payout percentages:
 
    
    Threshold/minimum
    
    
    50
    %
    
    Target/Plan
    
    
    100
    %
    
    Stretch
    
    
    200
    %
 2.
    The Quarterly Comparable Store Sales Bonus performance measures are:




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3. Stretch Achievement Pool 10% Net Income over Stretch will be pooled and distributed
based on individual percent payoutBONUS OPPORTUNITY
    
    The Compensation Committee shall establish one or more
bonus opportunities between 5% and 150%. The bonus
opportunities may be applicable either to classes of employees,
such as Brand Presidents or to individual employees, as the
Compensation Committee may determine.MAXIMUM PAYOUT
    
    No employee shall be entitled to receive a bonus of more than
$2,000,000 with respect to a fiscal year.




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ADDITIONAL
ELIGIBILITY
REQUIREMENTS
    
    
    
    Must have joined Zale Corporation in a bonus eligible
position on or before February 1st of the
applicable fiscal year. A pro-rated payout will be based on
earnings in the eligible position through July 31st
of the applicable fiscal year.
    
    Must be actively on payroll, or on an approved leave
of absence, on July 31st of the applicable fiscal
year.
    
    If promoted to bonus eligible position on or before
February 1st of a fiscal year, bonus will be
pro-rated based on earnings in the eligible position through
July 31st of the applicable year.
    
    If changed to non-bonus eligible position after
February 1st of a fiscal year, but on active
payroll on July 31st of the applicable fiscal year,
bonus will be pro-rated based upon earnings in the eligible
position.
    
    Participants terminated due to a broadly based
reduction in force after February 1st of a fiscal
year will be eligible for a pro-rated payout based upon
earnings in a bonus eligible position. Those terminated due
to a broadly based reduction in force before February
1st of a fiscal year and those terminated for any
other reason during the fiscal year will not be eligible to
receive a bonus payout.
    
    In the event of death, approved long-term disability
or approved retirement prior to February 1st of a
fiscal year, a pro-rated payment will be made to the
participant or the participants estate based upon earnings in
a bonus eligible position.
    
    Participants will be notified of their eligibility
level at the beginning of the fiscal year or when they become
bonus eligible. A Bonus Participant Agreementin such form
as Zale Corporation shall approve must be signed at that time.
    
    A participant who received an overall IR rating for
the previous fiscal year will not be eligible. The last
performance rating on file will determine eligibility to
receive the Management Bonus.




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ADMINISTRATION
    
    
    
    Management, for purposes of eligibility for participation
in this plan, shall include the Chief Executive Officer, President,
any vice president, any director level, and any manager level
employee (or the equivalents thereto even if designated by a
different title) of Zale Corporation and its subsidiaries.
    
    The Compensation Committee may, at its sole discretion,
adjust bonus awards to reflect special or unusual circumstances of
any individual or individuals
    
    Any employee on an approved leave of absence may, at the
Compensation Committees sole discretion, have his or her bonus
reduced, pro rata, to reflect the period of absence.
    
    All bonuses pursuant to this plan must be approved by the
Compensation Committee.
    
    Payouts will occur within 60 days following the end of the
fiscal year to which the bonuses were earned.
    
    At its election, prior, during or following completion of a
fiscal year, the Compensation Committee may pay bonuses with
respect to such fiscal year in Zale Corporation common stock.
    
    This plan may be implemented using one or more documents
designated for classes of employees or individual employees
    
    This plan shall be interpreted and administered in a manner
consistent with the awards hereunder constituting qualified
performance-based compensation for purposes of Section 162(m) of
the Internal Revenue Code.Zale Corporation reserves the right to amend, modify, suspend or
terminate this plan and payouts hereunder in its sole discretion,
provided that stockholder approval shall be sought with respect to
any amendment that, absent stockholder approval, would negatively
impact the status of payouts under this plan for purposes of
Section 162(m) of the Internal Revenue Code.Nothing in this plan shall be construed as a contract of employment.