Document:

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                                                                   EXHIBIT 10.3c

                                ZALE CORPORATION

                          OMNIBUS STOCK INCENTIVE PLAN
                                  July 27, 1994
                      (as amended through November 3, 2000)

1.       PREAMBLE

         The Zale Corporation Stock Option Plan became effective on the
Effective Date (as defined in Section 2(j) below), having been, and having been
deemed to be, approved by a vote of the stockholders of Zale Corporation
pursuant to Sections 6.1(e) and (f) of the Bankruptcy Plan (as defined in
Section 2(a) below). Section 19 of the Stock Option Plan provides that the Board
of Directors of Zale Corporation may amend the Plan at any time, subject to
stockholder approval in certain circumstances. On June 15, 1994, the Board of
Directors adopted an amendment restating the Stock Option Plan in its entirety,
effective on the Effective Date, and renaming it the Zale Corporation Omnibus
Stock Incentive Plan. The restated plan is set forth in this document which
includes any amendments made since that time by the Board and/or the
Stockholders. This Zale Corporation Omnibus Stock Incentive Plan is intended to
promote the interests of the Company and its shareholders by providing officers
and other employees (including directors who are employees) of the Company with
appropriate incentives and rewards to encourage them to enter into and continue
in the employ of the Company and to acquire a proprietary interest in the
long-term success of the Company.

         2.       DEFINITIONS

         As used in the Plan, the following definitions apply to the terms
indicated below:

                  (a) "Bankruptcy Plan" means the Plan of Reorganization under
Chapter 11 of the Bankruptcy Code for the Company and its Affiliated Debtors
dated March 24, 1993, as modified, and confirmed by order, entered May 20, 1993,
of the United States Bankruptcy Court for the Northern District of Texas, Dallas
Division.

                  (b) "Board of Directors" shall mean the Board of Directors of
the Company.

                  (c) "Cause," when used in connection with the termination of a
Participant's employment by the Company, shall mean (i) the willful and
continued failure by the Participant substantially to perform his duties and
obligations to the Company (other than any such failure resulting from his
incapacity due to physical or mental illness) or (ii) the willful engaging by
the Participant in misconduct which is materially injurious to the Company. For
purposes of this Section 2 (c), no act, or failure to act, on a Participant's
part shall be considered "willful" unless done, or omitted to be done, by the
Participant in bad faith and without reasonable belief that his action or
omission was in the best interests of the Company. The Company shall determine
whether a termination of employment is for Cause and shall notify the Committee
of such a determination.

                  (d) "Change in Control" shall mean any of the following
occurrences:

                      (1) any "person," as such term is used in Sections 13(d)
and 14(d) of the Exchange Act (other than the Company or any trustee or other
fiduciary holding securities under an employee benefit plan of the Company), is
or becomes the "beneficial owner" (as defined in Rule

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13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company representing 50% or more of the combined voting power of the Company's
then outstanding securities;

                      (2) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board, and any
new director (other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in clause (1),
(3) or (4) of this definition) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either were directors
at the beginning of the period or whose election or nomination for election was
previously so approved, cease for any reason to constitute at least a majority
thereof;

                      (3) the stockholders of the Company approve a merger or
consolidation of the Company with any other entity, other than (i) a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) more than 50% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately after
such merger or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar transaction) in which no
"person" (as hereinabove defined) acquires more than 50% of the combined voting
power of the Company's then outstanding securities; or

                      (4) the stockholders of the Company approve a plan of
complete liquidation of the Company or an agreement for the sale or disposition
by the Company of all or substantially all of the Company's assets.

                  (e) "Code" shall mean the Internal Revenue Code of 1986, as
amended.

                  (f) "Committee" shall mean the Compensation Committee of the
Board of Directors or such other committee as the Board of Directors shall
appoint from time to time to administer the Plan; provided, that the Committee
shall at all times consist of two or more persons, each of whom shall be a
member of the Board of Directors. To the extent required for transactions under
the Plan to qualify for the exemptions available under Rule 16b-3, no person may
serve on the Committee if, during the year preceding such service, he was
granted or awarded equity securities of the Company (including options on such
securities) under the Plan or any other plan of the Company or any affiliate
thereof, other than a plan described in Rule 16b-3(c)(2)(ii). To the extent
required for compensation realized from Incentive Awards under the Plan to be
deductible by the Company pursuant to Section 162(m) of the Code, members of the
Committee (or any subcommittee thereof) shall be "outside directors" within the
meaning of such Section.

                  (g) "Company" shall mean Zale Corporation, a Delaware
corporation, and each of its subsidiaries.

                  (h) "Company Stock" shall mean the common stock of Zale
Corporation.

                  (i) "Disability" shall mean: (1) any physical or mental
condition that would qualify a Participant for a disability benefit under the
long-term disability plan maintained by the Company and applicable to him, or
(2) when used in connection with the exercise of an Incentive Stock Option
following termination of employment, disability within the meaning of Section
22(e)(3) of the Code.

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                  (j) "Effective Date" shall mean July 30, 1993, the effective
date of the Bankruptcy Plan.

                  (k) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.

                  (1) The "Fair Market Value" of a share of Company Stock with
respect to any day shall be the average of the high and low sale prices on the
immediately preceding business day as reported on the New York Stock Exchange or
on a national securities exchange if listed thereon. In the event that the price
of a share of Company Stock shall not be so reported, the Fair Market Value of a
share of Company Stock shall be determined by the Committee in its absolute
discretion.

                  (m) "Incentive Award" shall mean an Option, Tandem SAR,
Stand-Alone SAR, share of Restricted Stock, share of Phantom Stock or Stock
Bonus granted pursuant to the terms of the Plan.

                  (n) "Incentive Stock Option" shall mean an Option that is an
"incentive stock option" within the meaning of Section 422 of the Code.

                  (o) "Issue Date" shall mean the date established by the
Committee on which Certificates representing shares of Restricted Stock shall be
issued by the Company pursuant to the terms of Section 10(e).

                  (p) "Non-Qualified Stock Option" shall mean an Option that is
not an Incentive Stock Option.

                  (q) "Option" shall mean an option to purchase shares of
Company Stock granted pursuant to Section 7.

                  (r) "Participant" shall mean an employee of the Company to
whom an Incentive Award is granted pursuant to the Plan, and, upon his death,
his successors, heirs, executors and administrators, as the case may be.

                  (s) A share of "Phantom Stock" shall mean the right, granted
pursuant to Section 11, to receive in cash the Fair Market Value of a share of
Company Stock.

                  (t) "Plan" shall mean the Zale Corporation Omnibus Stock
Incentive Plan, as it may be amended from time to time.

                  (u) "Plan Agreement" shall mean the written agreement between
the Company and a Participant evidencing an Incentive Award.

                  (v) A share of "Restricted Stock" shall mean a share of
Company Stock which is granted pursuant to the terms of Section 10 hereof and
which is subject to the restrictions set forth in Section 10(c).

                  (w) "Rule 16b-3" shall mean the rule thus designated as
promulgated under the Exchange Act.

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                  (x) "Stand-Alone SAR" shall mean a stock appreciation right
granted pursuant to Section 9 which is not related to any Option.

                  (y) "Stock Bonus" shall mean a bonus payable in shares of
Company Stock granted pursuant to Section 12.

                  (z) "Subsidiary" shall mean any corporation in which, at the
time of reference, the Company owns, directly or indirectly, stock comprising
more than fifty percent of the total combined voting power of all classes of
stock of such corporation.

                  (aa) "Tandem SAR" shall mean a stock appreciation right
granted pursuant to Section 8 which is related to an Option.

                  (bb) "Vesting Date" shall mean the date established by the
Committee on which a share of Restricted Stock or Phantom Stock may vest.

         3.       STOCK SUBJECT TO THE PLAN

                  (a) Shares Available for Awards

                  The total number of shares of Company Stock with respect to
which Incentive Awards may be granted shall not exceed 8,305,000 shares. Such
shares may be authorized but unissued Common Stock or authorized and issued
Common Stock held in the Company's treasury or acquired by the Company for the
purposes of the Plan. The Committee may direct that any stock certificate
evidencing shares issued pursuant to the Plan shall bear a legend setting forth
such restrictions on transferability as may apply to such shares pursuant to the
Plan.

                  The grant of a Tandem SAR shall not reduce the number of
shares of Company Stock with respect to which Incentive Awards may be granted
pursuant to the Plan.

                  (b) Individual Limitation

                  The total number of shares of Company Stock subject to Options
and to Stand-Alone SARS, awarded to any one employee during any fiscal year of
the Company, shall not exceed 600,000 shares. Determinations under the preceding
sentence shall be made in a manner that is consistent with Section 162(m) of the
Code and regulations promulgated thereunder. The provisions of this Section 3(b)
shall not apply in any circumstance with respect to which the Committee
determines that compliance with Section 162(m) of the Code is not necessary.

                  (c) Adjustment for Change in Capitalization

                  If there is any change in the outstanding shares of Company
Stock by reason of a stock dividend or distribution, stock split-up,
recapitalization, combination or exchange of shares, or by reason of any merger,
consolidation, spinoff or other corporate reorganization in which the Company is
the surviving corporation, the number of shares available for issuance both in
the aggregate and with respect to each outstanding Incentive Award, the price
per share under each outstanding Incentive Award, and the limitation set forth
in Section 3(b), shall be proportionately adjusted by the Committee, whose
determination shall be final, binding and conclusive. After any adjustment made
pursuant to this Section 3(c), the number of shares subject to each outstanding
Incentive Award shall be rounded to the nearest whole number.

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                  (d) Re-use of Shares

                  The following shares of Company Stock shall again become
available for Incentive Awards: any shares subject to an Incentive Award that
remain unissued upon the cancellation or termination of such Award for any
reason whatsoever; any shares of Restricted Stock forfeited, provided that any
dividends paid on such shares are also forfeited; and any shares in respect of
which a stock appreciation right is settled for cash.

                  (e) Total Grants for Awards Other than Options

                  The total number of shares of Company Stock with respect to
which Tandem SARs, Stand Alone SARs, shares of Restricted Stock, shares of
Phantom Stock and Stock Bonuses may collectively be granted shall not exceed 10%
of the total number of shares of Company Stock with respect to which all
Incentive Awards have been or may be granted under the Plan.

         4.       ADMINISTRATION OF THE PLAN

         The Plan shall be administered by the Committee. The Committee shall
from time to time designate the employees of the Company who shall be granted
Incentive Awards and the amount, type and other features of each Incentive
Award.

         The Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and the
terms of any Incentive Award issued under it and to adopt such rules and
regulations for administering the Plan as it may deem necessary or appropriate.
The Committee shall determine whether an authorized leave of absence, or absence
in military or government service, shall constitute termination of employment.
Decisions of the Committee shall be final and binding on all parties.
Notwithstanding anything to the contrary contained herein, the Board of
Directors may, in its sole discretion, at any time and from time to time,
resolve to administer the Plan, in which case the term "Committee" as used
herein shall be deemed to mean the Board of Directors.

         The Committee may, in its absolute discretion, without amendment to the
Plan, (i) accelerate the date on which any Option or Stand-Alone SAR granted
under the Plan becomes exercisable, waive or amend the operation of Plan
provisions respecting exercise after termination of employment or otherwise
adjust any of the terms of such Option or Stand-Alone SAR, and (ii) accelerate
the Vesting Date or Issue Date, or waive any condition imposed hereunder, with
respect to any share of Restricted Stock or Phantom Stock or otherwise adjust
any of the terms applicable to such share.

         Absent Stockholder approval, neither the Committee nor the Board of
Directors shall have any authority, with or without the consent of the affected
holders of Incentive Awards, to reprice the Incentive Awards after the date of
their initial grant with a lower exercise price in substitution for the original
exercise price. This paragraph may not be amended, altered or repealed by the
Board of Directors or the Committee without approval of the Stockholders of the
Company.

         No member of the Committee shall be liable for any action, omission or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or expense
(including counsel fees) or liability (including any sum paid in settlement of a
claim with the approval of the Committee) arising out of any action, omission or
determination relating to the

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Plan, unless, in either case, such action, omission or determination was taken
or made by such member, director or employee in bad faith and without reasonable
belief that it was in the best interests of the Company.

         5.       ELIGIBILITY

         The persons who shall be eligible to receive Incentive Awards pursuant
to the Plan shall be such employees of the Company (including officers of the
Company, whether or not they are directors of the Company) as the Committee
shall select from time to time. Directors who are not employees or officers of
the Company shall not be eligible to receive Incentive Awards under the Plan.

         6.       AWARDS UNDER THE PLAN; PLAN AGREEMENTS

         The Committee may grant Options, Tandem SARS, Stand-Alone SARS, shares
of Restricted Stock, shares of Phantom Stock and Stock Bonuses, in such amounts
and with such terms and conditions as the Committee shall determine, subject to
the provisions of the Plan.

         Each Incentive Award granted under the Plan (except an unconditional
Stock Bonus) shall be evidenced by a Plan Agreement which shall contain such
provisions as the Committee may in its sole discretion deem necessary or
desirable. By accepting an Incentive Award, a Participant thereby agrees that
the Award shall be subject to all of the terms and provisions of the Plan and
the applicable Plan Agreement.

         7.       OPTIONS

                  (a) Identification of Options

                  Each Option shall be clearly identified in the applicable Plan
Agreement as either an Incentive Stock Option or a Non-Qualified Stock Option.

                  (b) Exercise Price

                  Each Plan Agreement with respect to an Option shall set forth
the amount (the "option exercise price") payable by the grantee to the Company
upon exercise of the Option. The option exercise price per share shall be
determined by the Committee but shall in no event be less than the Fair Market
Value of a share of Company Stock on the date the Option is granted.

                  (c) Term and Exercise of Options

                           (1) Unless the applicable Plan Agreement provides
otherwise, an Option shall become cumulatively exercisable as to 25% of the
shares covered thereby on each of the first, second, third and fourth
anniversaries of the date of grant. The Committee shall determine the expiration
date of each Option; provided, however, that no Incentive Stock Option shall be
exercisable more than ten years after the date of grant. Unless the applicable
Plan Agreement provides otherwise, no Option shall be exercisable prior to the
first anniversary of the date of grant.

                           (2) An Option may be exercised for all or any portion
of the shares as to which it is exercisable; provided, that no partial exercise
of an Option shall be for an aggregate

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exercise price of less than $1,000. The partial exercise of an Option shall not
cause the expiration, termination or cancellation of the remaining portion
thereof.

                           (3) An Option shall be exercised by delivering notice
to the Company's principal office, to the attention of its Secretary, no less
than one business day in advance of the effective date of the proposed exercise.
Such notice shall be accompanied by the applicable Plan Agreement, shall specify
the number of shares of Company Stock with respect to which the Option is being
exercised and the effective date of the proposed exercise and shall be signed by
the Participant or other person then having the right to exercise the Option.
Such notice may be withdrawn at any time prior to the close of business on the
business day immediately preceding the effective date of the proposed exercise.
Payment for shares of Company Stock purchased upon the exercise of an Option
shall be made on the effective date of such exercise by one or a combination of
the following means: (i) in cash, by certified check, bank cashier's check or
wire transfer; (ii) subject to the approval of the Committee, in shares of
Company Stock owned by the Participant for at least six months prior to the date
of exercise and valued at their Fair Market Value on the effective date of such
exercise; or (iii) subject to the approval of the Committee, by such other
provision as the Committee may from time to time authorize. Any payment in
shares of Company Stock shall be effected by the delivery of such shares to the
Secretary of the Company, duly endorsed in blank or accompanied by stock powers
duly executed in blank, together with any other documents and evidences as the
Secretary of the Company shall require.

                           (4) Certificates for shares of Company Stock
purchased upon the exercise of an Option shall be issued in the name of the
Participant or other person entitled to receive such shares, and delivered to
the Participant or such other person as soon as practicable following the
effective date on which the Option is exercised.

                  (d) Limitations on Incentive Stock Options

                           (1) To the extent that the aggregate Fair Market
Value of shares of Company Stock with respect to which Incentive Stock Options
are exercisable for the first time by a Participant during any calendar year
under the Plan and any other stock option plan of the Company (or any
"subsidiary corporation" of the Company within the meaning of Section 424 of the
Code) shall exceed $100,000, or such higher value as may be permitted under
Section 422 of the Code, such Options shall be treated as Non-Qualified Stock
Options. Such Fair Market Value shall be determined as of the date on which each
such Incentive Stock Option is granted.

                           (2) No Incentive Stock Option may be granted to an
individual if, at the time of the proposed grant, such individual owns stock
possessing more than 10% of the total combined voting power of all classes of
stock of the Company or any of its "subsidiary corporations" (within the meaning
of Section 424 of the Code), unless (i) the exercise price of such Incentive
Stock Option is at least 110% of the Fair Market Value of a share of Company
Stock at the time such Incentive Stock Option is granted and (ii) such Incentive
Stock Option is not exercisable after the expiration of five years from the date
such Incentive Stock Option is granted.

                  (e) Effect of Termination of Employment

                           (1) Unless the applicable Plan Agreement provides
otherwise, in the event that the employment of a Participant with the Company
shall terminate for any reason other than Cause, Disability or death (i) Options
granted to such Participant, to the extent that they were

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exercisable at the time of such termination, shall remain exercisable until the
date that is three months after such termination, on which date they shall
expire, and (ii) Options granted to such Participant, to the extent that they
were not exercisable at the time of such termination, shall expire at the close
of business on the date of such termination. The three-month period described in
this Section 7(e)(1) shall be extended to one year in the event of the
Participant's death during such three-month period. Notwithstanding the
foregoing, no Option shall be exercisable after the expiration of its term.

                           (2) Unless the applicable Plan Agreement provides
otherwise, in the event that the employment of a Participant with the Company
shall terminate on account of the Disability or death of the Participant (i)
Options granted to such Participant, to the extent that they were exercisable at
the time of such termination, shall remain exercisable until the first
anniversary of such termination, on which date they shall expire, and (ii)
Options granted to such Participant, to the extent that they were not
exercisable at the time of such termination, shall expire at the close of
business on the date of such termination; provided, however, that no Option
shall be exercisable after the expiration of its term.

                           (3) In the event of the termination of a
Participant's employment for Cause, all outstanding Options granted to such
Participant shall expire at the commencement of business on the date of such
termination.

                  (f) Acceleration of Exercise Date Upon Change in Control

                  Upon the occurrence of a Change in Control, each Option
granted under the Plan and outstanding at such time shall become fully and
immediately exercisable and shall remain exercisable until its expiration,
termination or cancellation pursuant to the terms of the Plan.

         8.       TANDEM SARS

         The Committee may grant in connection with any Option granted hereunder
one or more Tandem SARS relating to a number of shares of Company Stock less
than or equal to the number of shares of Company Stock subject to the related
Option. A Tandem SAR may be granted at the same time as, or, in the case of a
Non-Qualified Stock Option, subsequent to the time that, its related Option is
granted.

                  (a) Benefit Upon Exercise

                  The exercise of a Tandem SAR with respect to any number of
shares of Company Stock shall entitle the Participant to a cash payment, for
each such share, equal to the excess of (i) the Fair Market Value of a share of
Company Stock on the exercise date over (ii) the option exercise price of the
related Option. Such payment shall be made as soon as practicable after the
effective date of such exercise.

                  (b) Term and Exercise of Tandem SAR

                           (1) A Tandem SAR shall be exercisable only if and to
the extent that its related Option is exercisable.

                           (2) The exercise of a Tandem SAR with respect to a
number of shares of Company Stock shall cause the immediate and automatic
cancellation of its related Option with respect to an equal number of shares.
The exercise of an Option, or the cancellation, termination

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or expiration of an Option (other than pursuant to this Section 8 (b) (2)), with
respect to a number of shares of Company Stock shall cause the automatic and
immediate cancellation of any related Tandem SARS to the extent that the number
of shares of Company Stock remaining subject to such Option is less than the
number of shares subject to such Tandem SARS.

                             Such Tandem SARS shall be cancelled in the order in
which they became exercisable.

                           (3) A Tandem SAR may be exercised for all or any
portion of the shares as to which it is exercisable; provided, that no partial
exercise of a Tandem SAR shall be for an aggregate exercise price of less than
$1,000. The partial exercise of a Tandem SAR shall not cause the expiration,
termination or cancellation of the remaining portion thereof.

                           (4) No Tandem SAR shall be assignable or transferable
otherwise than together with its related Option.

                           (5) A Tandem SAR shall be exercised by delivering
notice to the Company's principal office, to the attention of its Secretary, no
less than one business day in advance of the effective date of the proposed
exercise. Such notice shall be accompanied by the applicable Plan Agreement,
shall specify the number of shares of Company Stock with respect to which the
Tandem SAR is being exercised and the effective date of the proposed exercise
and shall be signed by the Participant or other person then having the right to
exercise the Option to which the Tandem SAR is related. Such notice may be
withdrawn at any time prior to the close of business on the business day
immediately preceding the effective date of the proposed exercise.

         9.       STAND-ALONE SARS

                  (a) Exercise Price

                  The exercise price per share of a Stand-Alone SAR shall be
determined by the Committee at the time of grant, but shall in no event be less
than the Fair Market Value of a share of Company Stock on the date of grant.

                  (b) Benefit Upon Exercise

                  The exercise of a Stand-Alone SAR with respect to any number
of shares of Company Stock shall entitle the Participant to a cash payment, for
each such share, equal to the excess of (i) the Fair Market Value of a share of
Company Stock on the exercise date over (ii) the exercise price of the
Stand-Alone SAR. Such payments shall be made as soon as practicable.

                  (c) Term and Exercise of Stand-Alone SARS

                           (1) Unless the applicable Plan Agreement provides
otherwise, a Stand-Alone SAR shall become cumulatively exercisable as to 25
percent of the shares covered thereby on each of the first, second, third and
fourth anniversaries of the date of grant. The Committee shall determine the
expiration date of each Stand-Alone SAR. Unless the applicable Plan Agreement
provides otherwise, no Stand-Alone SAR shall be exercisable prior to the first
anniversary of the date of grant.

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                           (2) A Stand-Alone SAR may be exercised for all or any
portion of the shares as to which it is exercisable; provided, that no partial
exercise of a Stand-Alone SAR shall be for an aggregate exercise price of less
than $1,000. The partial exercise of a Stand-Alone SAR shall not cause the
expiration, termination or cancellation of the remaining portion thereof.

                           (3) A Stand-Alone SAR shall be exercised by
delivering notice to the Company's principal office, to the attention of its
Secretary, no less than one business day in advance of the effective date of the
proposed exercise. Such notice shall be accompanied by the applicable Plan
Agreement, shall specify the number of shares of Company Stock with respect to
which the Stand-Alone SAR is being exercised, and the effective date of the
proposed exercise, and shall be signed by the Participant. The Participant may
withdraw such notice at any time prior to the close of business on the business
day immediately preceding the effective date of the proposed exercise.

                  (d) Effect of Termination of Employment

                  The provisions set forth in Section 7 (e) with respect to the
exercise of Options following termination of employment shall apply as well to
such exercise of Stand-Alone SARS.

                  (e) Acceleration of Exercise Date Upon Change in Control

                  Upon the occurrence of a Change in Control, any Stand-Alone
SAR granted under the Plan and outstanding at such time shall become fully and
immediately exercisable and shall remain exercisable until its expiration,
termination or cancellation pursuant to the terms of the Plan.

         10.      RESTRICTED STOCK

                  (a) Issue Date and Vesting Date

                  At the time of the grant of shares of Restricted Stock, the
Committee shall establish an Issue Date or Issue Dates and a Vesting Date or
Vesting Dates with respect to such shares. The Committee may divide such shares
into classes and assign a different Issue Date and/or Vesting Date for each
class. If the grantee is employed by the Company on an Issue Date (which may be
the date of grant), the specified number of shares of Restricted Stock shall be
issued in accordance with the provisions of Section 10(e). Provided that all
conditions to the vesting of a share of Restricted Stock imposed pursuant to
Section 10(b) are satisfied, and except as provided in Section 10(g), upon the
occurrence of the Vesting Date with respect to a share of Restricted Stock, such
share shall vest and the restrictions of Section 10(c) shall cease to apply to
such share.

                  (b) Conditions to Vesting

                  At the time of the grant of shares of Restricted Stock, the
Committee may impose such restrictions or conditions to the vesting of such
shares as it, in its absolute discretion, deems appropriate. By way of example
and not by way of limitation, the Committee may require, as a condition to the
vesting of any class or classes of shares of Restricted Stock, that the
Participant or the Company achieve such performance goals as the Committee may
specify.

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                  (c) Restrictions on Transfer Prior to Vesting

                  Prior to the vesting of a share of Restricted Stock, no
transfer of a Participant's rights with respect to such share, whether voluntary
or involuntary, by operation of law or otherwise, shall be permitted.
Immediately upon any attempt to transfer such rights, such share, and all of the
rights related thereto, shall be forfeited by the Participant.

                  (d) Dividends on Restricted Stock

                  The Committee in its discretion may require that any dividends
paid on shares of Restricted Stock shall be held in escrow until all
restrictions on such shares have lapsed.

                  (e) Issuance of Certificates

                           (1) Reasonably promptly after the Issue Date with
respect to shares of Restricted Stock, the Company shall cause to be issued a
stock certificate, registered in the name of the Participant to whom such shares
were granted, evidencing such shares; provided, that the Company shall not cause
such a stock certificate to be issued unless it has received a stock power duly
endorsed in blank with respect to such shares. Each such stock certificate shall
bear the following legend:

                  The transferability of this certificate and the shares of
                  stock represented hereby are subject to the restrictions,
                  terms and conditions (including forfeiture provisions and
                  restrictions against transfer) contained in the Zale
                  Corporation Omnibus Stock Incentive Plan and a Plan Agreement
                  entered into between the registered owner of such shares and
                  Zale Corporation. A copy of the Plan and Agreement is on file
                  in the office of the Secretary of Zale Corporation, 901 West
                  Walnut Hill Lane, Irving, Texas 75038-1003.

Such legend shall not be removed until such shares vest pursuant to the terms
hereof.

                           (2) Each certificate issued pursuant to this Section
10(e), together with the stock powers relating to the shares of Restricted Stock
evidenced by such certificate, shall be held by the Company unless the Committee
determines otherwise.

                  (f) Consequences of Vesting

                  Upon the vesting of a share of Restricted Stock pursuant to
the terms hereof, the restrictions of Section 10(c) shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests, the Company
shall cause to be delivered to the Participant to whom such shares were granted,
a certificate evidencing such share, free of the legend set forth in Section
10(e).

                  (g) Effect of Termination of Employment

                           (1) Subject to such other provision as the Committee
may set forth in the applicable Plan Agreement, and to the Committee's amendment
authority pursuant to Section 4, during the 90 days following termination of a
Participant's employment for any reason other

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than Cause, the Company shall have the right to require the return of any shares
to which restrictions on transferability apply, in exchange for which the
Company shall repay to the Participant (or the Participant's estate) any amount
paid by the Participant for such shares. In the event that the Company requires
such a return of shares, it shall also have the right to require the return of
all dividends paid on such shares, whether by termination of any escrow
arrangement under which such dividends are held or otherwise.

                           (2) In the event of the termination of a
Participant's employment for Cause, all shares of Restricted Stock granted to
such Participant which have not vested as of the date of such termination shall
immediately be returned to the Company, together with any dividends paid on such
shares, in return for which the Company shall repay to the Participant any
amount paid for such shares.

                  (h) Effect of Change in Control

                  Upon the occurrence of a Change in Control, all outstanding
shares of Restricted Stock which have not theretofore vested shall immediately
vest.

         11.      PHANTOM STOCK

                  (a) Vesting Date

                  At the time of the grant of shares of Phantom Stock, the
Committee shall establish a Vesting Date or Vesting Dates with respect to such
shares. The Committee may divide such shares into classes and assign a different
Vesting Date for each class. Provided that all conditions to the vesting of a
share of Phantom Stock imposed pursuant to Section 11(c) are satisfied, and
except as provided in Section 11(d), upon the occurrence of the Vesting Date
with respect to a share of Phantom Stock, such share shall vest.

                  (b) Benefit Upon Vesting

                  Upon the vesting of a share of Phantom Stock, the Participant
shall be entitled to receive in cash, within 30 days of the date on which such
share vests, an amount equal to the sum of (i) the Fair Market Value of a share
of Company Stock on the date on which such share of Phantom Stock vests and (ii)
the aggregate amount of cash dividends paid with respect to a share of Company
Stock during the period commencing on the date on which the share of Phantom
Stock was granted and terminating on the date on which such share vests.

                  (c) Conditions to Vesting

                  At the time of the grant of shares of Phantom Stock, the
Committee may impose such restrictions or conditions to the vesting of such
shares as it, in its absolute discretion, deems appropriate. By way of example
and not by way of limitation, the Committee may require, as a condition to the
vesting of any class or classes of shares of Phantom Stock, that the Participant
or the Company achieve such performance goals as the Committee may specify.

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                  (d) Effect of Termination of Employment

                           (1) Subject to such other provision as the Committee
may set forth in the applicable Plan Agreement and to the Committee's amendment
authority pursuant to Section 4, shares of Phantom Stock that have not vested,
together with any dividends credited on such shares, shall be forfeited upon the
Participant's termination of employment for any reason other than Cause.

                           (2) In the event of the termination of a
Participant's employment for Cause, all shares of Phantom Stock granted to such
Participant which have not vested as of the date of such termination shall
immediately be forfeited, together with any dividends credited on such shares.

                  (e) Effect of Change in Control

                  Upon the occurrence of a Change in Control all outstanding
shares of Phantom Stock which have not theretofore vested shall immediately
vest.

         12.      STOCK BONUSES

         In the event that the Committee grants a Stock Bonus, a certificate for
the shares of Company Stock comprising such Stock Bonus shall be issued in the
name of the Participant to whom such grant was made and delivered to such
Participant as soon as practicable after the date on which such Stock Bonus is
payable.

         13.      RIGHTS AS A STOCKHOLDER

         No person shall have any rights as a stockholder with respect to any
shares of Company Stock covered by or relating to any Incentive Award until the
date of issuance of a stock certificate with respect to such shares.

         Except as otherwise expressly provided in Section 3(c), no adjustment
to any Incentive Award shall be made for dividends or other rights for which the
record date occurs prior to the date such stock certificate is issued.

         14.      NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO INCENTIVE AWARD

         Nothing contained in the Plan or any Plan Agreement shall confer upon
any Participant any right with respect to the continuation of employment by the
Company or interfere in any way with the right of the Company, subject to the
terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant.

         No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant any other Incentive Award
to such Participant or other person at any time nor preclude the Committee from
making subsequent grants to such Participant or any other person.

         15.      SECURITIES MATTERS

                  (a) The Company shall be under no obligation to effect the
registration pursuant to the Securities Act of 1933 of any interests in the Plan
or any shares of Company Stock to be issued hereunder or to effect similar
compliance under any state laws. Notwithstanding

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<PAGE>   14

anything herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any certificates evidencing shares of Company Stock
pursuant to the Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance with all
applicable laws, regulations of governmental authority and the requirements of
the New York Stock Exchange and any other securities exchange on which shares of
Company Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Company Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.

                  (b) The transfer of any shares of Company Stock hereunder
shall be effective only at such time as counsel to the Company shall have
determined that the issuance and delivery of such shares is in compliance with
all applicable laws, regulations of governmental authority and the requirements
of the New York Stock Exchange and any other securities exchange on which shares
of Company Stock are traded. The Committee may, in its sole discretion, defer
the effectiveness of any transfer of shares of Company stock hereunder in order
to allow the issuance of such shares to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. The Committee shall inform the Participant in
writing of its decision to defer the effectiveness of a transfer. During the
period of such a deferral in connection with the exercise of an Option, the
Participant may, by written notice, withdraw such exercise and obtain the refund
of any amount paid with respect thereto.

         16.      WITHHOLDING TAXES

         Whenever cash is to be paid pursuant to an Incentive Award, the Company
shall have the right to deduct therefrom an amount sufficient to satisfy any
federal, state and local withholding tax requirements related thereto.

         Whenever shares of Company Stock are to be delivered pursuant to an
Incentive Award, the Company shall have the right to require the Participant to
remit to the Company in cash an amount sufficient to satisfy any federal, state
and local withholding tax requirements related thereto. With the approval of the
Committee, which it shall have sole discretion to grant, a Participant may
satisfy the foregoing requirement by electing to have the Company withhold from
delivery shares of Company Stock having a value equal to the amount of tax to be
withheld. Such shares shall be valued at their Fair Market Value on the date as
of which the amount of tax to be withheld is determined (the "Tax Date").
Fractional share amounts shall be settled in cash. Such a withholding election
may be made with respect to all or any portion of the shares to be delivered
pursuant to an Incentive Award. To the extent required for such a withholding of
stock to qualify for the exemption available under Rule 16b-3, such an election
by a grantee whose transactions in Common Stock are subject to Section 16(b) of
the Exchange Act shall be: (a) subject to the approval of the Committee in its
sole discretion; (b) irrevocable; (c) made no sooner than six months after the
grant of the award with respect to which the election is made; and (d) made at
least six months prior to the Tax Date unless such withholding election is in
connection with exercise of an Option and both the election and the exercise
occur prior to the Tax Date in a "window period" of ten business days beginning
on the third day following release of the Company's quarterly or annual summary
statement of sales and earnings.

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<PAGE>   15

         17.      NOTIFICATION OF ELECTION UNDER SECTION 83(b) OF THE CODE

         If any Participant shall, in connection with the acquisition of shares
of Company Stock under the Plan, make the election permitted under Section 83(b)
of the Code (i.e., an election to include in gross income in the year of
transfer the amounts specified in Section 83(b)), such Participant shall notify
the Company of such election within 10 days of filing notice of the election
with the Internal Revenue Service, in addition to any filing and notification
required pursuant to regulations issued under the authority of Code Section
83(b).

         18.      NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION
421(b) OF THE CODE

         Each Plan Agreement with respect to an Incentive Stock Option shall
require the Participant to notify the Company of any disposition of shares of
Company Stock issued pursuant to the exercise of such Option under the
circumstances described in Section 421(b) of the Code (relating to certain
disqualifying dispositions), within 10 days of such disposition.

         19.      AMENDMENT OR TERMINATION OF THE PLAN

         The Board of Directors may, at any time, suspend or terminate the Plan
or revise or amend it in any respect whatsoever; provided, however, that
stockholder approval shall be required if and to the extent required by Rule
16b-3 or by any comparable or successor exemption under which the Board of
Directors believes it is appropriate for the Plan to qualify, or if and to the
extent the Board of Directors determines that such approval is appropriate for
purposes of satisfying Section 162 (m) or 422 of the Code. Incentive Awards may
be granted under the Plan prior to the receipt of such shareholder approval but
each such grant shall be subject in its entirety to such approval and no award
may be exercised, vested or otherwise satisfied prior to the receipt of such
approval. Nothing herein shall restrict the Committee's ability to exercise its
discretionary authority pursuant to Section 4, which discretion may be exercised
without amendment to the Plan. No action hereunder may, without the consent of a
Participant, reduce the Participant's rights under any outstanding Incentive
Award.

         20.      NO OBLIGATION TO EXERCISE

         The grant to a Participant of an Option, Tandem SAR or Stand-Alone SAR
shall impose no obligation upon such Participant to exercise such Option, Tandem
SAR or Stand-Alone SAR.

         21.      TRANSFERS UPON DEATH; NONASSIGNABILITY

         Upon the death of a Participant outstanding Incentive Awards granted to
such Participant may be exercised only by the executor or administrator of the
Participant's estate or by a person who shall have acquired the right to such
exercise by will or by the laws of descent and distribution. No transfer of an
Incentive Award by will or the laws of descent and distribution shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will and/or such evidence
as the Committee may deem necessary to establish the validity of the transfer
and (b) an agreement by the transferee to comply with all the terms and
conditions of the Incentive Award that are or would have been applicable to the
Participant and to be bound by the acknowledgments made by the Participant in
connection with the grant of the Incentive Award.

         During a Participant's lifetime, the Committee may permit the transfer,
assignment or other encumbrance of an outstanding Option or outstanding shares
of Restricted Stock unless (y) such Option is an Incentive Stock Option and the
Committee and the Participant intend that it shall

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<PAGE>   16

retain such status, or (z) the award is meant to qualify for the exemptions
available under Rule 16b-3 and the Committee and the Participant intend that it
shall continue to so qualify.

         22.      EXPENSES AND RECEIPTS

         The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used for
general corporate purposes.

         23.      FAILURE TO COMPLY

         In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant (or beneficiary) to comply with any of the
terms and conditions of the Plan or the applicable Plan Agreement, unless such
failure is remedied by such Participant (or beneficiary) within ten days after
notice of such failure by the Committee, shall be grounds for the cancellation
and forfeiture of such Incentive Award, in whole or in part, as the Committee,
in its absolute discretion, may determine.

         24.      EFFECTIVE DATE AND TERM OF PLAN

         The Plan became effective on the Effective Date. Unless earlier
terminated by the Board of Directors, the right to grant Incentive Awards under
the Plan will terminate on the tenth anniversary of the Effective Date.
Incentive Awards outstanding at Plan termination will remain in effect according
to their terms and the provisions of the Plan.

         25.      APPLICABLE LAW

         Except to the extent preempted by any applicable federal law, the Plan
will be construed and administered in accordance with the laws of the State of
Texas, without reference to the principles of conflicts of law.

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                                                                  EXHIBIT 10.11d

                              EMPLOYMENT AGREEMENT

         THIS AGREEMENT, dated as of August 1, 2001, is by and between ZALE
CORPORATION, a Delaware corporation ("Company"), and ROBERT J. DINICOLA
("Executive").

         WHEREAS, Executive and Company desire to enter into a new employment
agreement;

         NOW, THEREFORE, in consideration of the foregoing recital and of the
mutual covenants set forth herein, and other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:

         1. Employment. Executive agrees to enter into the continued employment
of the Company, and the Company agrees to employ Executive, on the terms and
conditions set forth in this Agreement. Executive agrees during the Term (as
hereinafter defined) to devote substantially all of his business time, efforts,
skills and abilities to the performance of his duties as stated in this
Agreement and to the furtherance of the Company's business.

                  Executive's job title will be Chairman of the Board and Chief
Executive Officer, and his duties will be those as are designated by the Board
of Directors of the Company ("Board"), consistent with the position of Chairman
of the Board and Chief Executive Officer. Executive further agrees to serve,
without additional compensation, as an officer or director, or both, of any
subsidiary, division or affiliate of the Company or any other entity in which
the Company holds an equity interest, provided, however, that (a) the Company
shall indemnify Executive from liabilities in connection with serving in any
such position to the same extent as his indemnification rights pursuant to the
Company's Certificate of Incorporation, By-laws and applicable Delaware law, and
(b) such other position shall not materially detract from the responsibilities
of Executive pursuant to this Section 1 or his ability to perform such
responsibilities.

         2. Compensation.

                  (a) Base Salary. During the Term of Executive's employment
with the Company pursuant to this Agreement, the Company shall pay to Executive
as compensation for his services an annual base salary of not less than
$1,250,000 (One million, two hundred-fifty thousand) payable bi-weekly ("Base
Salary"). Executive's Base Salary will be payable in arrears in accordance with
the Company's normal payroll procedures and will be reviewed annually and
subject to upward adjustment at the discretion of the Board or an authorized
Committee or representative thereof. Such Base Salary shall be applied
retroactively to the date of Executive's reinstatement with the Company,
February 21, 2001.

                                       1
<PAGE>   2

                  (b) Incentive Bonus. Executive's incentive compensation
program for the term of this Agreement shall be determined under the Company's
Executive Bonus Program, established by the Board in its discretion. Executive
is eligible to receive up to 125% of his Base Salary in accordance with the
terms and conditions of the Executive Bonus Program.

                  (c) Vacation. Executive shall be entitled to a reasonable
vacation of not less than 5 weeks each year of the term of this Agreement.

                  (d) Executive Perquisites. Executive shall be entitled to
receive such executive perquisites and fringe benefits as are provided to the
senior most executives and their families under any of the Company's plans
and/or programs in effect from time to time and such other benefits as are
customarily available to executives of the Company and their families.

                  (e) Club Membership. The Company shall pay all fees for
membership by Executive in a club of his choice, together with the dues therefor
for use by Executive for conferences, meetings and entertainment within the
scope of his employment.

                  (f) Tax Withholding. The Company has the right to deduct from
any compensation payable to Executive under this Agreement social security
(FICA) taxes and all federal, state, municipal or other such taxes or charges as
may now be in effect or that may hereafter be enacted or required.

                  (g) Life Insurance. In addition to the company's group life
insurance coverage, the Company shall provide Executive with additional life
insurance coverage in the amount of $2,000,000.

                  (h) Medical Insurance. In addition to the Company's group
medical insurance coverage and/or Executive Medical Insurance Plan ("Medical
Plans"), the Company shall reimburse Executive for all additional medical
expenses incurred by Executive which are defined as reimbursable under the
Company's Medical Plans.

                  (i) Expense Reimbursements. The Company shall pay or reimburse
Executive for all reasonable business expenses incurred or paid by Executive in
the course of performing his duties hereunder, including but not limited to
reasonable travel expenses for Executive and his spouse. As a condition to such
payment or reimbursement, however, Executive shall maintain and provide to the
Company reasonable documentation and receipts for such expenses.

         3. Term. Unless sooner terminated pursuant to Section 4 of this
Agreement, and subject to the provisions of Section 5 hereof, the term of this
Agreement shall commence as of the date hereof and shall continue for an initial
period of five (5) years (the "Initial Term"). At the end of the Initial Term
and each subsequent "Renewal Term" (as hereinafter defined), the term of this
Agreement shall be automatically renewed and extended for a period of five (5)
years

                                       2
<PAGE>   3

("Renewal Term"), unless either party hereto delivers a written termination
notice to the other party at least ninety (90) days prior to the end of the
Initial Term or the then current Renewal Term (as the case may be).

         4. Termination. Notwithstanding the provisions of Section 3 hereof, but
subject to the provisions of Section 5 hereof, this Agreement (and Executive's
employment hereunder) shall terminate as follows:

                  (a) Death. This Agreement shall terminate upon the death of
Executive.

                  (b) Termination for Cause. The Company may terminate this
Agreement at any time for "Cause" (as hereinafter defined) by delivering a
written termination notice to Executive. For purposes of this Agreement, "Cause"
shall mean any of: (i) Executive's conviction of a felony or a crime involving
moral turpitude; (ii) Executive commits an act constituting fraud, deceit or
material misrepresentation with respect to the company; (iii) Executive
embezzles funds or assets from the Company; (iv) Executive becomes addicted to
any alcoholic, controlled or illegal substance or drug; (v) Executive commits
any act or omission which would give the Company the right to terminate
Executive's employment under applicable law; or (vi) Executive fails to correct
or cure any material breach of or default under this Agreement within ten (10)
days after receiving written notice of such breach or default from the Company.

                  (c) Termination Without Cause. The Company may terminate this
Agreement at any time by delivering a written termination notice to Executive.

                  (d) Termination by Executive. Executive may terminate this
Agreement at any time by delivering a written termination notice to the Company;
provided, however, that Executive shall receive the benefits specified in
Section 5 hereof if such termination is made for any of the following reasons:

                           (i) a reduction by the Company in the Executive's
                  Base Salary, unless such reduction is the result of (A) a
                  hiring or salary freeze uniformly applied to all employees or
                  (B) Executive's failure to meet preestablished and objective
                  performance criteria;

                           (ii) Company's principal executive offices shall be
                  moved to a location outside Dallas County, Texas or Executive
                  is required to be based anywhere other than the Company's
                  principal executive offices;

                           (iii) the assignment to the Executive by the Company
                  of duties inconsistent with, or the reduction of the powers
                  and functions associated with, Executive's position, duties,
                  responsibilities and status with the Company or an adverse
                  change in Executive's titles or offices, unless such action is
                  the result of

                                       3
<PAGE>   4

                  Executive's failure to meet preestablished and objective
                  performance criteria or termination of employment for
                  Disability or Cause; or

                           (iv) any material breach by the Company of any
                  provision of this Agreement.

                  (e) Termination Following Disability. In the event, Executive
becomes mentally or physically impaired or disabled and is unable to perform his
material duties and responsibilities hereunder for a period of at least ninety
(90) days in the aggregate during any one hundred twenty (120) consecutive day
period, the Company may terminate this Agreement by delivering a written
termination notice to Executive.

                  (f) Payments. Following any expiration or termination of this
Agreement, and in addition to any amounts owed pursuant to Section 5 hereof, the
Company shall pay to Executive all amounts earned by Executive hereunder prior
to the date of such expiration or termination.

         5. Certain Termination Benefits. Notwithstanding anything else
contained herein to the contrary, in the event (i) the Company elects not to
renew the term of this Agreement pursuant to Section 3 hereof; (ii) Executive
dies; (iii) the Company terminates this Agreement pursuant to Section 4(c) or
(e); or (iv) Executive terminates this Agreement pursuant to Section 4(d)
(i)-(iv), then, to the extent applicable:

                  (a) Severance. The Company shall continue to pay (in
accordance with its normal payroll procedures) the Base Salary to Executive (or
Executive's estate if Executive dies) for a sixty (60) month period (the
"Severance Period") after the effective date of such expiration or termination.

                  (b) Benefits. During the first twelve (12) months of the
Severance Period, Executive shall continue to receive the benefits provided
under Sections 2(b)-2(e) hereof.

                  (c) Stock. On and as of the effective date of the expiration
or termination of this Agreement, all of Executive's outstanding stock options
and restricted stock grants under the Zale Corporation Omnibus Stock Incentive
Plan shall immediately vest. If such expiration or termination is the result of
one of those circumstances described in the opening paragraph of this Section 5
or for Good Reason under Section 6 below, or Executive elects not to renew this
Agreement pursuant to Section 3, then Executive, or his estate as the case may
be, shall have four (4) years from the date of such expiration or termination in
which to exercise any vested stock options granted to him under the Stock
Incentive Plan.

                  (d) Supplemental Executive Retirement Plan. On and as of the
effective date of the expiration or termination of this Agreement, all of
Executive's benefits under the Zale Delaware, Inc. Supplemental Executive
Retirement Plan ("SERP") shall immediately vest. In

                                       4
<PAGE>   5

addition, Executive shall have a period of sixty (60) days after the effective
date of such termination or expiration to require the Company (by delivering
written notice thereof) to make a cash payment to Executive in an amount equal
to the value of such benefits, in which case the Company shall make such payment
within ninety (90) days after the effective date of such termination or
expiration. In the event Executive fails to require the Company to make such
cash payment in accordance with the preceding sentence, then Executive shall be
entitled to receive such benefits as and when provided in the SERP.

                  (e) Life Insurance. The Company shall continue to provide
Executive with life insurance coverage pursuant to Section 2(g) until
Executive's death.

                  (f) Medical Insurance. The Company shall continue to provide
Executive and his family with group medical insurance coverage under the
Company's Medical Plans (as the same may change from time to time) or other
substantially similar health insurance, and shall reimburse Executive for all
additional medical expenses incurred by Executive which are defined as
reimbursable under such Medical Plans, until Executive's death.

                  (g) Group Disability. If the Consulting Agreement contemplated
by subsection 5(k) below becomes effective, the Company shall continue to
provide Executive coverage under the Company's group disability plan at all
times during the term of such Consulting Agreement.

                  (h) Office. Executive shall be entitled to retain the cellular
telephone and the home office computer equipment provided to him by the Company;
provided, however, that Executive shall be responsible for the payment of all of
his cellular telephone bills, except for those expenses incurred for the
Company's business purposes. In addition, if Executive elects not to renew this
Agreement pursuant to Section 3 and at Executive's request, the Company shall
provide Executive with an office at the Company's principal executive offices.

                  (i) Automobile. During the forty-five (45) day period
following the expiration or termination of this Agreement, Executive shall be
entitled to purchase from the Company, at the Company's book value thereof, the
automobile provided to him by the Company. In the event Executive does not elect
to purchase the automobile within such forty-five (45) day period, then
Executive agrees to promptly return the automobile to the Company.

                  (j) Relocation. In the event that Executive desires to
relocate his home and family to an area outside of Dallas County, Texas, within
the twelve (12) month period following the expiration or termination of the
Consulting Agreement described in Section 5(k) below, then Company shall
reimburse Executive for all reasonable and appropriate moving and other expenses
actually incurred by him in connection with such move and approved by the
Compensation Committee of the Board.

                                       5
<PAGE>   6

                  (k) Consulting Agreement. Only, in the event Executive elects
not to renew this Agreement pursuant to Section 3, Executive and Company shall
enter into, as of the effective date of the expiration or termination of this
Agreement, a Consulting Agreement in the form attached hereto as Exhibit A. In
addition, in the event the Executive elects not to renew this Agreement pursuant
to Section 3, the Executive shall be entitled to those benefits set forth in
Sections 5(b)-(j) above.

                  (l) Offset. The payments which would have been due and payable
in accordance with Section 5(a) hereof shall be reduced by an amount equal to
any amounts that Executive receives in connection with any other employment
during the Severance Period. Any fringe benefits received by Executive in
connection with any other employment that are reasonably comparable, but not
necessarily as beneficial, to Executive as the fringe benefits then being
provided by the Company pursuant to Section 5(b) hereof, shall be deemed to be
the equivalent of, and shall terminate the Company's responsibility to continue
providing the fringe benefits then being provided by the Company pursuant to
Section 5(b) hereof. The Company acknowledges that, if Executive's employment
with the Company is terminated under 4(c), Executive shall have no duty to
mitigate damages.

                  (m) General Release. Acceptance by Executive of any amounts
pursuant to this Section 5 shall constitute a full and complete release by
Executive of any and all claims Executive may have against the Company, its
officers, directors and affiliates, including, but not limited to, claims he
might have relating to Executive's cessation of employment with the Company;
provided, however, that there may properly be excluded from the scope of such
general release the following:

                           (i) claims that Executive may have against the
         Company for reimbursement of ordinary and necessary business expenses
         incurred by him during the course of his employment;

                           (ii) claims that may be made by the Executive for
         payment of Base Salary, fringe benefits or stock options properly due
         to him; or

                           (iii) claims respecting matters for which the
         Executive is entitled to be indemnified under the Company's Certificate
         of Incorporation or Bylaws, respecting third party claims asserted or
         third party litigation pending or threatened against the Executive.

A condition to Executive's receipt of any amounts pursuant to this Section 5
shall be Executive's execution and delivery of a general release as described
above. In exchange for such release, the Company shall, if Executive's
employment is terminated without Cause, provide a release to Executive, but only
with respect to claims against Executive which are actually known to the Company
as of the time of such termination.

                                       6
<PAGE>   7

         6. Effect of Change in Control.

                  (a) In lieu of Section 5 above, if, within two years following
a "Change of Control" (as hereinafter defined), Executive terminates his
employment with the Company for Good Reason (as hereinafter defined) or the
Company terminates Executive's employment for any reason other than Cause or
disability, the Company shall pay to the Executive: (1) an amount equal to five
times the Executive's Base Salary as of the date of termination; (2) an amount
equal to five times the average annual cash bonus paid to Executive for the two
fiscal years immediately preceding the date of termination; (3) all benefits
under the Company's various benefit plans, including group healthcare, dental,
disability and life, for the period equal to thirty-six (36) months from the
date of termination; and (4) a lump sum payment equal to the actuarial
equivalent (determined by the Company in good faith with assistance of its
accountants or actuaries), of the benefit which would have accrued under the
Zale Delaware, Inc. Supplemental Executive Retirement Plan ("SERP") if (i)
Executive remained a participant in the SERP for the three (3) year period
commencing on the first day of the SERP's plan year ("Plan Year") in which the
Executive's employment with the Company terminated ("Measurement Period"), (ii)
during each Plan Year in the Measurement Period the Executive earned benefit
points equal to the highest number of the benefit points earned by such
Executive in a Plan Year during the three (3) year period ending on the last day
of the Plan Year immediately preceding the Plan Year in which his employment
with the Company terminated, and (iii) the Executive's final average pay during
the Measurement Period is the greater of his monthly Base Salary on the date of
(a) a Potential Change of Control, (b) the Change of Control or (c) the date of
his termination of employment. In addition, the Company shall provide Executive
with those severance benefits provided in Section 5(c), (e), (f), (i) and (j).

                  (b) "Change of Control" shall mean the date as of which: (i)
there shall be consummated (1) any consolidation or merger of the Company in
which the Company is not the continuing or surviving corporation or pursuant to
which shares of the Company's common stock would be converted into cash,
securities or other property, other than a merger of the Company in which the
holders of the Company's common stock immediately prior to the merger have the
same proportionate ownership of common stock of the surviving corporation
immediately after the merger, or (2) any sale, lease, exchange or other transfer
(in one transaction or a series of related transactions) of all, or
substantially all, of the assets of the Company; or (ii) the stockholders of the
Company approve any plan or proposal for the liquidation or dissolution of the
Company; or (iii) any person ( as such term is used in Sections 13(d) and
14(d)(2) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), shall become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 30% of the Company's outstanding common stock; or
(iv) during any period of two consecutive years, individuals who at the
beginning of such period constitute the entire board of directors of the Company
shall cease for any reason to constitute a majority thereof unless the election,
or the nomination for election by the Company's stockholders, of each new
director was approved by a vote of at least two-thirds of the directors then
still in office who were directors at the beginning of the period.

                                       7
<PAGE>   8

                  (c) "Good Reason" shall mean any of the following actions
taken by the Company without the Executive's written consent after a Change of
Control:

                           (i) the assignment to the Executive by the Company of
         duties inconsistent with, or the reduction of the powers and functions
         associated with, the Executive's position, duties, responsibilities and
         status with the Company immediately prior to a Change of Control or
         Potential Change of Control (as defined below), or an adverse change in
         Executive's titles or offices as in effect immediately prior to a
         Change of Control or Potential Change of Control, or any removal of the
         Executive from or any failure to re-elect Executive to any of such
         positions, except in connection with the termination of his employment
         for Disability or Cause, as a result of Executive's death or by the
         Executive other than for Good Reason;

                           (ii) A reduction by the Company in the Executive's
         Base Salary as in effect on the date of a Change of Control or
         Potential Change of Control, or as the same may be increased from time
         to time during the term of this Agreement, or the Company's failure to
         increase (within 12 months of Executive's last increase in base salary)
         the Executive's base salary after a Change of Control or Potential
         Change of Control, unless such failure is the result of (A) a hiring or
         salary freeze uniformly applied to all employees or (B) Executive's
         failure to meet preestablished and objective performance criteria;

                           (iii) Company's principal executive offices shall be
         moved to a location outside Dallas County, Texas;

                           (iv) Company shall require the Executive to be based
         anywhere other than at the Company's principal executive offices or the
         location where the Executive is based on the date of a Change of
         Control or Potential Change of Control, or if Executive agrees to such
         relocation, the Company fails to reimburse the Executive for moving and
         all other expenses incurred with such move;

                           (v) The Company shall fail to continue in effect any
         Company-sponsored plan or benefit that is in effect on the date of a
         Change of Control or Potential Change of Control, or fail to provide
         (A) an incentive or bonus compensation program, (B) fringe benefits
         such as vacation, medical benefits, life insurance and accident
         insurance, (C) reimbursement for reasonable expenses incurred by the
         Executive in connection with the performance of duties with the
         Company, and (D) pension benefits such as a Code Section 401(k) or
         similar plan;

                           (vi) Any material breach by the Company of any
         provision of this Agreement; and

                                       8
<PAGE>   9

                           (vii) Any failure by the Company to obtain the
         assumption of this Agreement by any successor or assign of the Company
         effected in accordance with the provisions of Section 6.

                  (d) "Potential Change of Control" shall mean the date as of
which (1) the Company enters into an agreement the consummation of which, or the
approval by shareholders of which, would constitute a Change of Control; (ii)
proxies for the election of Directors of the Company are solicited by anyone
other than the Company; (iii) any person (including, but not limited to, any
individual, partnership, joint venture, corporation, association or trust)
publicly announces an intention to take or to consider taking actions which, if
consummated, would constitute a Change of Control; or (iv) any other event
occurs which is deemed to be a Potential Change of Control by the Board and the
Board adopts a resolution to the effect that a Potential Change of Control has
occurred.

                  (e) In the event that (i) Executive would otherwise be
entitled to the compensation and benefits described in Section 6(a) hereof
("Compensation Payments"), and (ii) the Company determines, based upon the
advice of tax counsel selected by the Company's independent auditors and
acceptable to Executive, that, as a result of such Compensation Payments and any
other benefits or payments required to be taken into account under Code Section
280G(b)(2) ("Parachute Payments"), any of such Parachute Payments would be
reportable by the Company as "excess parachute payments", such Compensation
Payments shall be reduced to the extent necessary to cause Executive's Parachute
Payments to equal 2.99 times the "base amount" as defined in Code Section
280G(b)(3) with respect to such Executive. However, such reduction in the
Compensation Payments shall be made only if, in the opinion of such tax counsel,
it would result in a larger Parachute Payment to the Executive than payment of
the unreduced Parachute Payments after deduction of tax imposed on and payable
by the Executive under Section 4999 of the Code ("Excise Tax"). The value of any
non-cash benefits or any deferred payment or benefit for purposes of this
paragraph shall be determined by the Company's independent auditors.

                  (f) The parties hereto agree that the payments provided under
Section 6(a) above, as the case may be, are reasonable compensation in light of
Executive's services rendered to the Company and that neither party shall
contest the payment of such benefits as constituting an "excess parachute
payment" within the meaning of Section 280G(b)(1) of the Code.

                  (g) Unless the Company determines that any Parachute Payments
made hereunder must be reported as "excess parachute payments" in accordance
with Section 6(e) above, neither party shall file any return taking the position
that the payment of such benefits constitutes an "excess parachute payment"
within the meaning of Section 280G(b)(1) of the Code.

                                       9
<PAGE>   10

         7. Non-Competition. Executive agrees that during the Term and for a
period of the lesser of the balance of the Term or eighteen (18) months from the
date of the termination of Executive's employment with the Company pursuant to
Sections 4(b)-(e) or 6 hereof, he will not, directly or indirectly, compete
with the Company by providing to any company that is in a "Competing Business"
services substantially similar to the services currently being provided by
Executive. Competing Business shall be defined as any business that engages, in
whole or in part, in the wholesale or retail sale of jewelry in the United
States, and Executive's employment function or affiliation is directly or
indirectly in such business of jewelry. Executive shall not be obligated to
abide by the foregoing covenant if the Company defaults in the payment of any
severance compensation or benefits.

         8. Nonsolicitation of Employees. For a period of two years after the
termination or cessation of his employment with the Company for any reason
whatsoever, Executive shall not, on his own behalf or on behalf of any other
person, partnership, association, corporation, or other entity, solicit or in
any manner attempt to influence or induce any employee of the Company or its
subsidiaries or affiliates (known by the Executive to be such) to leave the
employment of the Company or its subsidiaries or affiliates, nor shall he use or
disclose to any person, partnership, association, corporation or other entity
any information obtained while an employee of the Company concerning the names
and addresses of the Company's employees.

         9. Nondisclosure of Trade Secrets. During the term of this Agreement,
Executive will have access to and become familiar with various trade secrets and
proprietary and confidential information of the Company, its subsidiaries and
affiliates, including, but not limited to, processes, computer programs,
compilations of information, records, sales procedures, customer requirements,
pricing techniques, customer lists, methods of doing business and other
confidential information (collectively, referred to as "Trade Secrets") which
are owned by the Company, its subsidiaries and/or affiliates and regularly used
in the operation of its business, and as to which the Company, its subsidiaries
and/or affiliates take precautions to prevent dissemination to persons other
than certain directors, officers and employees. Executive acknowledges and
agrees that the Trade Secrets (1) are secret and not known in the industry; (2)
give the Company or its subsidiaries or affiliates an advantage over competitors
who do not know or use the Trade Secrets; (3) are of such value and nature as to
make it reasonable and necessary to protect and preserve the confidentiality and
secrecy of the Trade Secrets; and (4) are valuable, special and unique assets of
the Company or its subsidiaries or affiliates, the disclosure of which could
cause substantial injury and loss of profits and goodwill to the Company or its
subsidiaries or affiliates. Executive may not use in any way or disclose any of
the Trade Secrets, directly or indirectly, either during the term of this
Agreement or at any time thereafter, except as required in the course of his
employment under this Agreement, if required in connection with a judicial or
administrative proceeding, or if the information becomes public knowledge other
than as a result of an unauthorized disclosure by the Executive. All files,
records, documents, information, data and similar items relating to the business
of the Company, whether prepared by Executive or otherwise coming into his
possession, will remain the exclusive property of the Company and may not be
removed from the premises of the Company under any circumstances

                                       10
<PAGE>   11

without the prior written consent of the Board (except in the ordinary course of
business during Executive's period of active employment under this Agreement),
and in any event must be promptly delivered to the Company upon termination of
Executive's employment with the Company. Executive agrees that upon his receipt
of any subpoena, process or other request to produce or divulge, directly or
indirectly, any Trade Secrets to any entity, agency, tribunal or person,
Executive shall timely notify and promptly hand deliver a copy of the subpoena,
process or other request to the Board. For this purpose, Executive irrevocably
nominates and appoints the Company (including any attorney retained by the
Company), as his true and lawful attorney-in-fact, to act in Executive's name,
place and stead to perform any act that Executive might perform to defend and
protect against any disclosure of any Trade Secrets.

         10. Severability. The parties hereto intend all provisions of Sections
7, 8 and 9 hereof to be enforced to the fullest extent permitted by law.
Accordingly, should a court of competent jurisdiction determine that the scope
of any provision of Sections 7, 8 or 9 hereof is too broad to be enforced as
written, the parties intend that the court reform the provision to such narrower
scope as it determines to be reasonable and enforceable. In addition, however,
Executive agrees that the nonsolicitation and nondisclosure agreements set forth
above each constitute separate agreements independently supported by good and
adequate consideration shall be severable from the other provisions of, and
shall survive, this Agreement. The existence of any claim or cause of action of
Executive against the Company, whether predicated on this Agreement or
otherwise, shall not constitute a defense to the enforcement by the Company of
the covenants of Executive contained in the nonsolicitation and nondisclosure
agreements. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term hereof,
such provision shall be fully severable and this Agreement shall be construed
and enforced as if such 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 shall not 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 be added as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or enforceable provision as may be possible and be legal,
valid and enforceable.

         11. Arbitration - Exclusive Remedy.

                  (a) The parties agree that the exclusive remedy or method of
resolving all disputes or questions arising out of or relating to this Agreement
shall be arbitration. Arbitration shall be held in Dallas, Texas by three
arbitrators, one to be appointed by the Company, a second to be appointed by
Executive, and a third to be appointed by those two arbitrators. The third
arbitrator shall act as chairman. Any arbitration may be initiated by either
party by written notice ("Arbitration Notice") to the other party specifying the
subject of the requested arbitration and appointing that party's arbitrator.

                                       11
<PAGE>   12

                  (b) If (i) the non-initiating party fails to appoint an
arbitrator by written notice to the initiating party within ten days after the
Arbitration Notice, or (ii) the two arbitrators appointed by the parties fail to
appoint a third arbitrator within ten days after the date of the appointment of
the second arbitrator, then the American Arbitration Association, upon
application of the initiating party, shall appoint an arbitrator to fill that
position.

                  (c) The arbitration proceeding shall be conducted in
accordance with the rules of the American Arbitration Association. A
determination or award made or approved by at least two of the arbitrators shall
be the valid and binding action of the arbitrators. The costs of arbitration
(exclusive of the expense of a party in obtaining and presenting evidence and
attending the arbitration and of the fees and expenses of legal counsel to a
party, all of which shall be borne by that party) shall be borne by the Company
only if Executive receives substantially the relief sought by him in the
arbitration, whether by settlement, award or judgment; otherwise, the costs
shall be borne equally between the parties. The arbitration determination or
award shall be final and conclusive on the parties, and judgment upon such award
may be entered and enforced in any court of competent jurisdiction.

         12. Miscellaneous.

                  (a) Notices. Any notices, consents, demands, requests,
approvals and other communications to be given under this Agreement by either
party to the other must be in writing and must be either (i) personally
delivered, (ii) mailed by registered or certified mail, postage prepaid with
return receipt requested, (iii) delivered by overnight express delivery service
or same-day local courier service, or (iv) delivered by telex or facsimile
transmission, to the address set forth below, or to such other address as may be
designated by the parties from time to time in accordance with this Section
11(a):

                  If to the Company:  Zale Corporation
                                      901 W. Walnut Hill Lane
                                      Irving, Texas 75038
                                      Attention: Susan Lanigan, Senior
                                      Vice-President General Counsel

                  If to Executive:    Robert DiNicola
                                      6211 St. Andrew's Drive
                                      Dallas, Texas 75205

                  Notices delivered personally or by overnight express delivery
service or by local courier service are deemed given as of actual receipt.
Mailed notices are deemed given three business days after mailing. Notices
delivered by telex or facsimile transmission are deemed given upon receipt by
the sender of the answer back (in the case of a telex) or transmission
confirmation (in the case of a facsimile transmission).

                                       12
<PAGE>   13

         (b) Entire Agreement. This Agreement supersedes any and all other
employment or consulting agreements, either oral or written, between the parties
with respect to the subject matter of this Agreement and contains all of the
covenants and agreements between the parties with respect to the subject matter
of this Agreement. Notwithstanding the foregoing, the following agreements shall
remain in full force and effect:

                  1.       First Amendment to Plan Agreement, dated November 3,
                           2000, between Zale and Executive.

                  2.       December 4, 2000, Promissory Note made by Executive
                           to Zale Delaware, Inc. as Holder.

                  3.       Pledge and Security Agreement, dated December 4,
                           2000, by Executive in favor of Zale Delaware, Inc.

                  4.       Real Estate Lien Note dated April 6, 2001 between
                           Executive and Company and related documents.

         (c) Modification. No change or modification of this Agreement is valid
or binding upon 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 this Agreement.

         (d) Governing Law and Venue. The parties acknowledge and agree that
this Agreement and the obligations and undertakings of the parties under this
Agreement will be performable in Irving, Dallas County, Texas. This Agreement is
governed by, and construed in accordance with, the laws of the State of
Delaware. If any action is brought to enforce or interpret this Agreement, venue
for the action will be in Dallas County, Texas.

         (e) Counterparts. This Agreement may be executed in counterparts, each
of which constitutes an original, but all of which constitutes one document.

         (f) Costs. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, each party shall bear its own costs and
expenses.

         (g) Estate. If Executive dies prior to the expiration of the term of
employment or during a period when monies are owing to him, any monies that may
be due him from the Company under this Agreement as of the date of his death or
thereafter shall be paid to his estate as and when otherwise payable.

         (h) Assignment. The Company shall have the right to assign this
Agreement to its successors 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's assets or all of its stock, or with which
the Company merges or consolidates. The rights, duties and benefits to Executive
hereunder are personal to him, and no such right or benefit may be assigned by
him.

                                       13
<PAGE>   14

         (i) Binding Effect. This Agreement is binding upon the parties hereto,
together with their respective executors, administrators, successors, personal
representatives, heirs and permitted assigns.

         (j) Waiver of Breach. The waiver by the Company or Executive of a
breach of any provision of this Agreement by Executive or the Company may not
operate or be construed as a waiver of any subsequent breach.

         IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

                                       By: /s/ ROBERT J. DINICOLA
                                          --------------------------------------
                                          Robert J. DiNicola

                                       ZALE CORPORATION

                                       By: /s/ ALAN P. SHOR
                                          --------------------------------------

                                       Its: Alan P. Shor
                                           -------------------------------------

                                       Compensation Committee of the Zale
                                       Corporation Board of Directors

                                       By: /s/ RICHARD C. MARCUS
                                          --------------------------------------
                                          Richard C. Marcus, Chairman

                                       14

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