Document:

exv10w8

 

EXHIBIT 10.8

ZALE DELAWARE, INC

SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN

(As amended through July 31, 2006)

ARTICLE I

ESTABLISHMENT AND PURPOSE

     1.1 Establishment. Zale Delaware, Inc. (the “Company”) hereby establishes the Zale
Delaware, Inc. Supplemental Executive Retirement Plan (the “Plan’), effective September 15, 1995.

     1.2 Purpose. The purpose of this Plan is to provide eligible executives with the
opportunity to receive each year after retirement, payments equal to a portion of their final
average pay. The Plan is meant to provide a long-term reward for executives that recognizes their
contribution to the Company’s success throughout their careers.

ARTICLE II

DEFINITIONS

     Unless the context otherwise requires, the terms used herein shall have the meanings set forth
below:

     2.1 “Base Salary” means the regular salary paid to a Participant by the Company,
excluding bonuses, benefits under employee benefit plans, fringe benefits, and any other extra or
additional payments made to or for the benefit of such Participant.

     2.2 “Benefit” means the monetary amount to be paid a vested Participant under the
Plan.

     2.3 “Bonus Points” means the number of points awarded to a Participant under the
formula described in Section 4.2.

     2.4 “Bonus Target” means a goal for net income established each Plan Year by the
Compensation Committee.

     2.5 “Change of Control” shall be deemed to have occurred if, subsequent to the
Effective Date of this Plan,

     (a) any “person” (within the meaning of Section 13(d) of the Exchange Act) becomes the
beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act),
directly or indirectly, of either (I) a majority of the Company’s outstanding Common Stock
or (2) securities of the Company representing a majority of

 

 

the combined voting power of the Company’s then outstanding voting securities, except
that there shall be no Change of Control if such person (i) becomes such a beneficial owner
solely as the result of the acquisition of the outstanding Common Stock or other outstanding
voting securities by the Company or (ii) is an employee benefit plan or related trust
sponsored or maintained by the Company or any corporation or other entity controlled by the
Company;

     (b) during any period of two consecutive years, individuals who at the beginning of
such period constitute the Board of Directors of the Company cease, at any time after the
beginning of such period, for any reason to constitute a majority of the Board of Directors
of the Company, unless the election of any such new director was nominated, effected, or
ratified by at least two-thirds of the directors still in office who were directors at the
beginning of such two-year period or whose election was previously so nominated, effected,
or ratified;

     (c) a reorganization, merger, or consolidation of the Company with one or more other
corporations or other entities, unless, in any case, (1) at least a majority of the
Company’s outstanding Common Stock (or the equivalent equity security of the other surviving
or resulting corporation or other entity) and at least a majority of the combined voting
power of the Company’s or other surviving or resulting corporation’s or other entity’s
outstanding voting securities are beneficially owned, directly or indirectly, after such
reorganization, merger, or consolidation by all or substantially all of the persons who were
the beneficial owners, respectively, or majority of the Company’s outstanding Common Stock
and a majority of the combined voting power of the Company’s then outstanding voting
securities immediately before such reorganization, merger, or consolidation in substantially
the same proportions as their beneficial ownership thereof immediately before such
reorganization, merger or consolidation, and (2) at least a majority of the members of the
board of directors or other governing body of the Company or the other corporation or other
entity surviving or resulting from such reorganization, merger, or consolidation were, or
were approved by at least two-thirds of the, members of the Board of Directors of the
Company at the time of the execution of the initial agreement providing for such
reorganization, merger or consolidation;

     (d) the sale or other disposition of all or substantially all of the assets of the
Company to one or more other corporations or other entities, unless the conditions set forth
in subclauses (1) and (2) of subsection (c) above are satisfied with respect to the
acquiring corporation or other entity (and, as applicable, with respect to the time of the
initial agreement providing for such sale or other disposition of assets); or

     (e) the dissolution and complete liquidation of the Company.

     2.6 “Company” means Zale Delaware, Inc.

     2.7 “Compensation Committee” means the Compensation Committee of the Company.

     2.8 “Disabled” means the inability of a Participant to perform the duties of his or
her position as determined by a physician approved by the Compensation Committee.

2

 

     2.9 “Final Average Pay” means the average of the monthly Base Salary received by the
Participant from the Company in the 60-month period ending immediately prior to the Participant’s
retirement or other termination from the Company.

     2.10 “Maximum Bonus Target” means the highest goal for net income established each
year by the Compensation Committee.

     2.11 “Participant” means an executive who participates in the Plan as provided in Article III.

     2.12 “Plan” means the Zale Delaware, Inc. Supplemental Executive Retirement Plan set forth in
this document, as it may be amended from time to time.

     2.13 “Plan Year” means August 1 through July 31 except that the first Plan Year shall
commence September 15, 1995 and end July 31, 1996.

     2.14 “Years of Service” means a 12-month period of continuous service by a Participant
for the Company or (to the extent the Compensation Committee authorizes) an affiliate of the
Company. Only service after September 14, 1995 is counted for the purpose of calculating Years of
Service; provided, however, that for any Participant who was employed by the Company in an eligible
position for the entire period from September 14, 1995 to July 31, 1996, that Participant shall be
considered to have one full Year of Service as of July 31, 1996.

ARTICLE III

ELIGIBILITY

     3.1 Eligibility. The classes of executives who are designated by the Company as
members of the “Management Group” who hold the office of Corporate Vice President, Division Senior
Vice President, and all higher executive offices, are eligible to be Participants in the Plan.

     3.2 Loss of Eligibility. If an individual ceases to be an individual listed
in Section 3.1, he or she will no longer participate in the Plan. Loss of eligibility shall not
result in a forfeiture of a Participant’s Benefit previously earned under the Plan and a former
Participant, pursuant to the terms and conditions of the Plan, may continue to vest in such Benefit
based on Years of Service after loss of eligibility.

ARTICLE IV

DETERMINATION OF BENEFITS

     4.1 Calculation of Benefit. A Participant who is vested as determined in
Section 4.3 is entitled to payment of his Benefit at the time and in the form described in Article
V. The Participant’s Benefit shall be monthly payments continuing over the life of the Participant
commencing on the first day of the month immediately following the Participant’s 65th birthday,
with the amount of each payment determined under the following formula:

3

 

Benefit Points x Final Average Pay

100

If a Participant requests, as allowed in Article V. that his Benefit commence other than on the
first day of the month immediately following the Participant’s 65th birthday, or that his Benefit
be paid in a form other than monthly payments for the life of the Participant, then the Benefit to
be paid to the Participant and, if applicable, his surviving spouse, shall be the actuarial
equivalent of the Benefit payable to the Participant commencing on the first day of the month
immediately following the Participant’s 65th birthday and ending on the last day of the month in
which the Participant dies. Actuarial equivalence shall be determined using the following
actuarial assumptions. The applicable interest rate shall be that of 30-year Treasury securities
as of the first day of the calendar year in which the Benefits commence. The mortality assumption
shall be based on the 1983 group annuity mortality tables.

     4.2 Benefit Points. Each Plan Year the Compensation Committee shall set a Bonus
Target and a Maximum Bonus Target. In each Plan Year that the Company achieves at least its Bonus
Target, each Participant will be credited with a number of Benefit Points based on the following
schedule:

(a) No points if below Bonus Target;

(b) I point at Bonus Target;

(e) 2 points at 50% of Maximum Bonus Target; or

(d) 3 points at 100% of Maximum Bonus Target.

A Participant may accrue from 0 to 30 points, depending on Company performance and the number of
Plan Years he or she participates in the Plan.

     4.3 Vesting. A Participant vests in his or her Benefit after completing five Years of
Service following September 15, 1995. Service prior to September 15, 1995 does not count as Years
of Service. However, in its sole and absolute discretion, the Compensation Committee may
accelerate vesting for any Participant. in the event of a Change of Control, the Benefits of all
Participants will automatically vest irrespective of each Participant’s Years of Service. Further,
a Participant’s Benefit will become fully vested if he dies or becomes Disabled while employed by
the Company.

     4.4 Transferred Liability. In addition to the amount, if any, payable to Max Brown
(“Brown”) as provided in Section 4.1 of the Plan, Brown shall also be entitled to benefits
calculated in the following manner: The liability assumed by the Company from Zale Corporation
shall be the initial additional benefit payable under the Plan. Such amount shall be credited to a
bookkeeping account maintained by the Compensation Committee for the benefit of Brown. Thereafter,
on each July 31, interest shall be credited to such bookkeeping account at the prime interest rate,
plus one percent. The prime interest rate to be used shall be the prime interest rate as of such
July 31 or, if higher, as of the preceding August 1 as listed in The Wall Street Journal
for such date or if The Wall Street Journal is not published on such date, on the
immediately preceding date on which it was published. As of August 1, 1996, the benefit being
assumed by the Company to be paid pursuant to the Plan was $89,948.91 to be paid in two annual
installments with one half of the amount payable on August 1, 1998 and the balance of the amount
(including interest earned after august 1, 1998) payable on August 1, 1999, and $102,448.00 to be
paid in two annual installments with one half of the amount payable on

4

 

August 1, 1999) payable on August 1, 2000. The payments to be made to Brown under the Plan will be
paid wider the foregoing payment schedules, but the amounts payable will include interest earned
under the Executive Deferred Compensation Plan through January 3, 1997, and interest earned under
the Plan from January 3, 1997 to the date of payment.

ARTICLE V

PAYMENT OF BENEFITS

     5.1 Retirement. If a Participant retires on or after attaining age 65, benefits will
begin on the first day of the month after the Participant’s retirement. The normal form of payment
is an annuity providing monthly benefits for the life of the Participant. If the Participant
retires after attaining age 62, hut before attaining age 65, the Compensation Committee, in its
sole and absolute discretion, may authorize payments commencing as of the first day of any month
after the Participant’s retirement.

     5.2 Death. If a Participant dies while actively employed, the Participant’s surviving
spouse will be eligible to begin receiving the Participant’s Benefit in the form of monthly
payments for the life of the surviving spouse, commencing on the first day of the month following
the date the Participant would have attained age 65. In its sole and absolute discretion, the
Compensation Committee may authorize payments to the Participant’s surviving spouse commencing on
an earlier date. The Benefits payable to the surviving spouse shall have an actuarial value
(calculated using the assumptions prescribed in Section 4.1) equal to the Benefits that would have
been paid to the Participant commencing at age 65, based on the Participant’s Final Average Pay and
Bonus Points as of the date of the Participant’s death. If the Participant has no surviving spouse,
no death benefits are payable.

     5.3 Disability. If a Participant becomes Disabled, his Benefit will become payable commencing
on the first day of the month after his or her Company-provided disability benefits cease.

     5.4 Other Termination of Service. If the employment of a Participant terminates for a
reason other than death or Disability, prior to the date the Participant attains age 62, the
payment of his or her vested Benefits, if any, will commence on the first day of the month
immediately after he or she attains age 65, unless the Compensation Committee, in its sole and
absolute discretion, elects to commence payments on an earlier date.

     5.5 Form of Payment. The normal form of payment of the Benefit is monthly payments
for the life of the Participant. If the Participant prefers, he or she may elect to receive the
Benefit in the form of a joint and survivor annuity calculated as provided in Section 4.1. A joint
and survivor annuity is a form of payment providing monthly payments for the life of the
Participant, followed by payments to the Participant’s surviving spouse, if any, after the
Participant’s death for the remainder of the surviving spouse’s life, equal to 50% of the monthly
amount payable during the life of the Participant.

     5.6 Withholding of Taxes. The Company shall withhold from payments made hereunder any
taxes required to be withheld by any law or regulation of the federal, state, or local government.

5

 

ARTICLE VI

ADMINISTRATION

     6.1 Authority of Compensation Committee. The Compensation
Committee shall have sole and absolute power and authority to interpret, construe and administer
the Plan. The Compensation Committee’s interpretation and construction of the Plan and actions
hereunder shall be binding and conclusive on all persons and for all purposes. The Compensation
Committee may designate certain Company employees to assist in the administration of the Plan. In
addition, the Compensation Committee may employ attorneys, accountants, actuaries and other
professional advisors to assist the Compensation Committee in its administration of the Plan. The
Company shall pay the reasonable fees of any such advisor employed by the Compensation Committee.
To the extent permitted by law, the Compensation Committee, the Board or any employee of the
Company shall not he liable to any person for any action taken or omitted in connection with the
interpretation and administration of the Plan unless attributable to his or her own willful
misconduct or lack or good faith.

     6.2  Indemnification of Employees of the Company. The Company hereby agrees to
indemnify, jointly and severally, the Compensation Committee and all employees of the Company
against arty and all claims, losses, damages or expenses, including, counsel fees, incurred by
them, and any Liability, including any amounts paid in settlement with theft approval arising from
their action or failure to act with respect to any matter relating to the Plan, except when the
same is judicially determined to be attributable to their willful misconduct or lack of good faith.
The indemnification provided by this Section 6.2 shall survive the termination of the Plan and
shall be binding on the Company’s successors and assigns.

     6.3 Cost of Administration. The cost of this Plan and the expenses of administering
the Plan shall be paid by the Company.

ARTICLE VII

CLAIMS PROCEDURE

     7.1 Claim. Any person claiming a benefit, requesting an interpretation or ruling
under the Plan, or requesting information under the Plan shall present the request in writing to
the Compensation Committee, which shall respond in writing as soon as possible.

     7.2 Denial of Claim. If the claim or request is denied, the written notice of denial
shall state:

     (a) The reasons for denial, with specific reference to the Plan provisions on which the
denial is based.

     (b) A description of any additional material or information required and an explanation
of why it is necessary.

6

 

     (c) An explanation of the Plan’s claim review procedure.

     7.3 Review of Claim. Any person whose claim or request is denied or who has
not received a response within thirty (30) days, may request review by notice in writing received
by the Compensation Committee within seventy-five (75) days after the date of the notice of denial.
The claim or request shall be reviewed by the Compensation Committee, who may, but shall not be
required to, grant the claimant a hearing. On review, the claimant may have representation,
examine pertinent documents and submit issues and comments in writing. The decision on review
shall normally be made within sixty (60) days. If an extension of time is required for a hearing
or other special circumstance, the claimant shall be notified and the time limit shall be one
hundred twenty (120) days. The decision shall be in writing; shall state the reasons for denial
and shall reference the relevant plan provisions.

     7.4 Appeal of Decision on Review. If the claimant does not agree with the decision of
the Compensation Committee on review of the claim, the claimant may appeal the decision of the
Compensation Committee to the Board of Directors of the Company by notice in writing received by
the Board of Directors within seventy-five (75) days after the date of the decision on review.

     7.5 Final Decision. The decision on appeal shall normally be made within sixty (60)
days. If an extension of time is required for a hearing or other special circumstance, the
claimant shall be notified and the time limit shall be one hundred twenty (120) days. The decision
of the Board of Directors on appeal shall be in writing and shall state the reasons for denial and
shall reference the relevant Plan provisions. All decisions on appeal shall be final and bind all
parties concerned.

ARTICLE VIII

AMENDMENT AND TERMINATION

     8.1 Amendment. Subject to the consent requirements of this Section 8.1, the Board of
Directors of the Company, on a favorable vote of at least 75% of the directors, shall have the
right to amend this Plan at any time and from time to time, including a retroactive amendment. Any
such amendment shall become effective upon the date stated therein, except as otherwise provided in
such amendment. No amendment shall decrease or restrict Benefits, whether vested or not, earned as
of the date of execution of such amendment without the consent of the affected Participant or
Participants. Further, no amendment may extend the date that nonvested benefits would otherwise
become vested without the consent of the affected Participant or Participants. Any amendment
approved by the Board of Directors may be signed by the Chief Executive Officer or the Secretary of
the Company.

     8.2 Termination of the Plan. The Company has established this Plan with the bona fide
intention and expectation that it will deem it advisable to continue it in effect. However, the
Board of Directors of the Company, on a favorable vote of 75% of at least the directors, may
terminate the Plan in its entirety at any time. In such event each Participant shall become fully
vested in his Benefit earned as of the date of termination.

7

 

ARTICLE IX

GENERAL PROVISIONS

     9.1 Rights Against the Company. The Plan shall not be deemed to constitute a contract
between the Company and any Participant. Nothing contained in the Plan shall be deemed to
interfere with the right of the Company to terminate any Participant at any time, without regard to
the effect such termination may have on any rights under the Plan.

     9.2 Funding. The Company intends that the Plan shall constitute an “unfunded plan”
for purposes of the Internal Revenue Code of 1986, as amended (the “Code”) and, to the extent
applicable, Title I of the Employee Retirement Income Security Act of 1974, as amended, and that
any employee or spouse of an employee eligible to receive benefits under the Plan shall have the
status of an unsecured general creditor of the Company as to the benefits provided pursuant to the
Plan or assets identified specifically by the Company as a reserve for the discharge of its
obligations under the Plan.

     9.3 Payment Due to an Individual Who is Incapable of Managing His or Her Affairs. If
the Compensation Committee shall find that any person to whom any payment is payable under the Plan
is unable to care for his or her affairs because of mental or physical illness, accident, or death,
or is a minor, any payment due (unless a prior claim therefor shall have been made by a duly
appointed guardian, committee or other legal representative) may be paid to the spouse, a child, a
parent, a brother or sister or any person deemed by the Compensation Committee, in its sole
discretion, to have incurred expenses for such person otherwise entitled to payment, in such manner
and proportions as the Compensation Committee may determine. Such payments shall be a complete
discharge of the liabilities of the Company under this Plan, and the Company shall have no further
obligation to see to the application of any money so paid.

     9.4 Spendthrift Clause. No right, title or interest of any kind in the Plan shall be
transferable or assignable by any Participant or surviving spouse of a Participant or be subject to
alienation, anticipation, encumbrance, garnishment, attachment., execution or levy of any kind,
whether voluntary or involuntary, nor subject to the debts, contracts, liabilities, engagements, or
torts of the Participant or surviving spouse. Any attempt to alienate, anticipate, encumber, sell,
transfer, assign, pledge, garnish, attach or otherwise subject to legal or equitable process or
encumber or dispose of any interest in the Plan shall be void.

     9.5 Severability. In the event that any provision of this Plan shall be declared
illegal or invalid for any reason, said illegality or invalidity shall not affect the remaining
provisions of this Plan but shall be fully severable and this Plan shall be construed and enforced
as if said illegal or invalid provision had never been inserted herein.

     9.6 Construction. The article and section headings and numbers are included only for
convenience of reference and are not to be taken as limiting or extending the meaning of any of the
terms and provisions of this Plan. Whenever appropriate, words used in the singular shall include
the plural or the plural may be read as the singular. When used herein, the masculine gender
includes the feminine gender.

8

 

9.7 Governing Law. The validity and effect of this Plan, and the rights and obligations of
all persons affected hereby, shall be construed and determined in accordance with the laws of the
State of Texas.

     IN WITNESS WHEREOF, the Company has executed this Plan on the 23 day of February, 1996,
effective as of the 15th day of September, 1995.

	 	 	 
	 

	 	ZALE DELAWARE, INC.

9exv10w10

 

EXHIBIT 10.10

EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT (this “Agreement”), dated October 12, 2006, but effective as of July
24, 2006 (the “Effective Date”) is by and between Zale Corporation, a Delaware corporation (the
“Company”), and Mary Elizabeth Burton (“Executive”).

     WHEREAS, Executive and Company desire to enter into an employment agreement which sets forth
the terms and conditions for Executive’s continued employment with the Company,

     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; Term.

(a) Executive agrees to continue in the employment of the Company, and the Company agrees to
employ Executive, on the terms and conditions set forth in this Agreement. The term of
Executive’s employment under this Agreement commenced on the Effective Date and, subject to
its earlier termination as provided in Section 4, will continue through July 23, 2007 (the
“Initial Term”).

(b) Unless earlier terminated in accordance with Section 4 of this Agreement, at the end of
the Term this Agreement shall be automatically renewed and extended for subsequent one year
terms (each, a “Renewal Term and collectively with the Initial Term, the “Term”) unless at
least ninety (90) days prior to the end of the Term or any Renewal Term either party
provides written notice of termination to the other party.

	2.	 	Position; Duties. During the Term, Executive will serve as the President and Chief
Executive Officer of the Company and her duties will be those designated from time to time by
the Board of Directors of the Company (the “Board”). Executive agrees during the Term to
devote her full time efforts, skills and abilities to the performance of her duties as
described herein and to the furtherance of the Company’s business. As consideration for this
Agreement and specifically in consideration for the promises described in Section 9, the
Company promises to provide Executive with confidential and proprietary information and trade
secrets, the receipt and sufficiency of which Executive acknowledges, including, without
limitation, Trade Secrets (as defined below) belonging to the Company for use in the
performance of Executive’s duties for the Company. Executive will report directly to the
Board. At the request of the Board, Executive further agrees to serve, without additional
compensation, as an officer, director or both of any subsidiary, division or affiliate of the
Company or any other entity in which the Company holds a controlling equity interest,
provided, however, that (i) the Company

 

 

	 	 	shall indemnify Executive from liabilities in connection with serving in any such position
to the same extent as her indemnification rights pursuant to the Company’s Certificate of
Incorporation, Bylaws and applicable Delaware law, and (ii) such service shall not
materially detract from the responsibilities of Executive set forth herein or her ability to
perform such responsibilities.

	3.	 	Compensation.

(a) Base Salary. During the Term, the Company will pay to Executive an annual base
salary of not less than $850,000 (“Base Salary”), which will be payable in arrears in
accordance with the Company’s normal payroll procedures and will be reviewed annually by the
Board and will be subject to increases at the discretion of the Board or an authorized
committee or representative thereof. After any such increase, the term “Base Salary” as
utilized in this Agreement will thereafter refer to the adjusted amount.

(b) Incentive Bonus. During the Term, Executive will be eligible to receive an
annual incentive bonus as determined under the Company’s executive bonus program,
established by the Board. The annual target bonus (“Target Bonus”) for Executive will be
125% of Executive’s Base Salary. Executive’s annual incentive bonus for the fiscal year
ending July 31, 2007 shall be no less than the full Target Bonus. The annual incentive
bonus will be paid to Executive in accordance with the terms and conditions of the executive
bonus program.

(c) Equity and Long-Term Incentive Awards. In addition to all previous grants of
restricted stock or units and stock options, Executive will be entitled to participate in
equity and other long-term incentive award programs of the Company, including, without
limitation, the Equity Plan, on a basis generally consistent with that of other senior-level
executives.

(d) Vacation. Executive will be entitled to at least four (4) paid weeks of
vacation per year during each fiscal year of the Term of this Agreement.

(e) Executive Perquisites; Benefit; Expenses.

     (i) Executive will be entitled to receive executive perquisites and fringe and other
benefits on a basis which is no less favorable than the basis on which such perquisites and
benefits are provided to any other senior executive (including for this purpose, to the
extent applicable, executive’s family) under any of the Company’s plans, policies,
arrangements or programs in effect from time to time.

     (ii) The Company will reimburse Executive for such reasonable and necessary
out-of-pocket business expenses as may be incurred by her in the performance of her duties
hereunder upon presentation of itemized expense statements and such other supporting
information as may be required by the Company. In addition, the Company will reimburse
Executive for, or at Executive’s request pay directly on Executive’s behalf, the legal fees
and other expenses incurred by her in connection with the negotiation and drafting of this
Agreement in an amount not to exceed $25,000 upon production of receipts and/or invoices to
the reasonable satisfaction of the Board, and the Company

2

 

shall pay to Executive tax gross-up payments so that the net amount retained by
Executive after payment of all applicable income and employment taxes is equal to the agreed
amount to be reimbursed for such legal fees and expenses, provided, however, that a gross up
payment shall not be made with respect to any reimbursement to the extent the related
expense is deductible or is otherwise excludable from Executive’s taxable income.

(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 and local income taxes and charges as are required by applicable law and regulations.

	4.	 	Termination. Subject to the provisions of Section 5 hereof, the Term will terminate
as specified in Section 1(b) or, if earlier, upon Executive’s termination of employment with
the Company as follows:

(a) Death. Executive’s employment shall terminate upon the death of Executive.

(b) Termination for Cause. The Company may terminate Executive’s employment at 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 the following:

     (i) Executive’s indictment for a felony or a crime involving moral turpitude;

     (ii) Executive’s commission of an act constituting fraud, deceit, or material
misrepresentation with respect to the Company;

     (iii) Executive’s recurrent use of alcohol or prescribed medications at work or
otherwise such that Executive’s job performance is impaired or the use of any illegal
substances or drug such that, in the Company’s sole discretion, Executive’s job performance
is impaired;

     (iv) Executive’s embezzlement of Company assets or funds; or

     (v) Executive commits any negligent or willful act or omission that causes material
detriment (by reason, without limitation, of financial exposure or loss, damage to
reputation or goodwill, or exposure to civil damages or criminal penalties or other
prosecutorial action by any governmental authority) to the Company or any parent or
subsidiary corporation thereof.

(c) Termination Without Cause. The Company may terminate Executive’s employment at
any time for any reason other than for Cause by delivering a written termination notice to
Executive.

3

 

(d) Termination by Executive For a Termination Reason. Executive may terminate her
employment with the Company at any time for a Termination Reason (as hereinafter defined) by
delivering a written termination notice to the Company. For purposes of this Agreement,
“Termination Reason” shall mean any of the following:

     (i) a material reduction by the Company in Executive’s Base Salary or bonus eligibility
unless similar reductions apply to senior executives of the Company and its subsidiaries
generally;

     (ii) the Company’s principal executive offices shall be moved to a location outside the
Dallas/Fort Worth, Texas Metroplex; or

     (iii) the assignment to Executive by the Company of duties materially inconsistent
with, or the material reduction of the powers and functions associated with, Executive’s
positions, duties, responsibilities and status with the Company or a material adverse change
in Executive’s titles or offices, unless such action is in lieu of termination by the
Company of Executive’s employment for Executive’s Disability pursuant to Section 4(f).

(e) Termination by Executive Without a Termination Reason. Executive may terminate
her employment with the Company without a Termination Reason upon thirty (30) days’ prior
written notice to the Company. In such instance, the Company may accelerate the effective
date of such termination, but Executive shall receive all compensation and benefits under
this Agreement for the full thirty (30) day notice period.

(f) Termination Following Disability. In the event that, in the Company’s sole
discretion, Executive becomes mentally or physically impaired or disabled such that she is
unable to perform her duties and responsibilities hereunder for a period of at least one
hundred twenty (120) days in the aggregate during any one hundred fifty (150) consecutive
day period (a “Disability Event”), the Company may terminate Executive’s employment under
this Agreement by delivering a written termination notice to Executive.

(g) Payments/Deductions. Following any expiration or termination of the Term, and
in addition to any amounts owed pursuant to Section 5 hereof, the Company shall pay
Executive all amounts earned by Executive hereunder up to the date of such expiration or
termination. Executive agrees that any advances to Executive by the Company outstanding at
the time of the expiration or termination of the Term may be deducted from her wages,
including her final paycheck and/or any severance owed to Executive.

4

 

	5.	 	Rights of Executive Upon Termination. Subject to Executive’s adherence to the terms
of this Agreement, including but not limited to the non-competition, no-hire/non-solicitation,
non-disclosure and non-disparagement provisions set forth in Sections 9, 10, 11 and 12,
Executive shall be entitled to receive the following benefits in the event her employment is
terminated pursuant to Section 4 above or the Company terminates Executive’s employment in
connection with its election not to renew this Agreement for an additional Term as specified
in Section 1(b):

(a) Death. In the event that Executive’s employment is terminated upon the
occurrence of her death as provided in Section 4(a), the Company shall continue to pay, in
accordance with its normal payroll procedures, the Base Salary to Executive’s estate for a
period of twelve (12) months after the date of Executive’s death. All unvested restricted
stock or units granted to Executive will be immediately forfeited and all unvested stock
options granted to Executive will be immediately terminated upon the date of Executive’s
death and any vested stock options will remain exercisable for one (1) year after
Executive’s date of death, subject to the earlier expiration of the term of such stock
option. For purposes of this Section 5(a) and elsewhere in this Agreement, Stock
Appreciation Rights shall be treated in the same manner as stock options.

(b) Termination for Cause. In the event that Executive’s employment is terminated
by the Company for Cause as provided in Section 4(b) Executive shall not thereafter be
entitled to any further compensation from the Company and all outstanding stock options,
whether or not vested, and unvested restricted stock and units shall be immediately
forfeited.

(c) Termination By Non-Renewal Prior to Age 62, Without Cause or By Executive For a
Termination Reason. In the event that the Company terminates Executive’s employment in
connection with the Company’s election of non-renewal of the Term as provided in Section
1(b) prior to Executive attaining age 62 or without Cause as provided in Section 4(c) or
Executive terminates her employment for a Termination Reason as provided in Section 4(d),
then Executive shall be entitled to the following:

     (i) Severance. The Company shall pay to Executive (or Executive’s estate if
Executive dies after termination) an amount equal to the sum of two (2) times Executive’s
annual Base Salary as of the date of termination and two (2) times the average of the annual
incentive bonus amount earned by Executive with respect to the three fiscal year period
preceding the year in which this Agreement is terminated (or such shorter period as may
apply if this Agreement has been in effect for less than three years)(hereinafter, the
“Severance Amount”); provided, however, that for purposes of this calculation, the
guaranteed minimum bonus provided in Section 3(b) for the fiscal year ending July 31, 2007
shall not be utilized and the actual bonus that would have been earned for such year shall
be utilized instead. The Severance Amount shall be payable in equal monthly installments
over a twenty-four (24) month period commencing with the month following the month during
which termination of Executive’s employment occurs (hereinafter, the “Severance Period”).

5

 

     (ii) Benefits. For the duration of the Severance Period (i.e., twenty-four
(24) months), Executive shall continue to receive the fringe benefits provided under Section
3(e)(i) hereof on the same basis as such benefits were provided during Executive’s
employment hereunder, provided that the continued participation of Executive under any
benefit plan including, without limitation, group healthcare, dental and life insurance is
possible under the general terms and provisions of such plans. Such period of coverage
shall count against Executive’s continuation of coverage period required under the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”). All premium
payments paid by Executive for such continuation coverage during the Severance Period and
for any subsequent COBRA period shall be paid directly to the appropriate insurer or service
provider for such benefit (which may be the Company). If Executive’s participation in any
such plan is barred, the Company shall arrange to provide Executive with benefits
substantially similar to those which Executive would otherwise have been entitled to receive
under such plan or, alternatively at the option of the Company, reimburse Executive for the
reasonable actual costs of purchasing in the marketplace substantially similar benefits;
provided, however, that in either case Executive shall pay to the Company, or provide a
credit against the Company’s reimbursement obligation for, the amount equal to the premiums,
or portion thereof, that Executive was required to pay to maintain such benefits prior to
the date of termination of employment.

     (iii) Equity and Long-Term Incentive Awards. All unvested restricted stock or
units granted to Executive will be immediately forfeited and all unvested stock options
granted to Executive will be immediately terminated upon such termination of Executive’s
employment and any vested stock options granted to Executive will remain exercisable for
three months after such termination of Executive’s employment, subject to the earlier
expiration of the term of such stock option.

     (iv) Offset. The payments due and payable in accordance with Section 5(c)(i)
hereof shall be reduced by an amount equal to any amounts that Executive receives in
connection with any other employment or consultancy during the Severance Period; provided,
however, that such payments shall not be reduced by any amounts that Executive receives in
connection with director fees or BB Capital, Inc. income. However, any benefits received by
or available to Executive in connection with any other employment or consultancy that are
reasonably comparable to the benefits then being provided by the Company pursuant to Section
5(c)(ii) hereof, shall be deemed to be the equivalent thereof and shall terminate the
Company’s responsibility to continue providing the benefits then being provided by the
Company pursuant to Section 5(c)(ii) hereof.

(d) Termination By Non-Renewal After Age 62. In the event that the Company
terminates Executive’s employment in connection with the Company’s election of non-renewal
of the Term as provided in Section 1(b) on or after Executive attaining age 62, Executive
shall be entitled to fifty percent (50%) of the Severance Amount payable in equal monthly
installments over a twelve (12) month period (the “Modified Severance Period”) commencing
with the month following the month during which termination of Executive’s employment
occurs. In addition, the provisions of Sections 4(c)(ii), 4(c)(iii) and 4(c)(iv) shall
apply during the Modified Severance Period.

6

 

(e) Termination by Executive Without a Termination Reason. In the event that
Executive’s employment is terminated by Executive without a Termination Reason as provided
in Section 4(e), Executive shall not thereafter be entitled to any further compensation from
the Company and all outstanding unvested stock options and all unvested restricted stock and
units shall be immediately forfeited.

(f) Disability. In the event that Executive’s employment is terminated due to a
Disability Event as provided in Section 4(f), Executive shall be entitled to continue to
receive her salary and benefits (subject to the conditions regarding such benefits specified
in Section 5(c)(ii) and 5(c)(iv)) under Section 3 of this Agreement for a period of twelve
(12) months after the date of such termination. All unvested restricted stock or units
granted pursuant to Executive will be immediately forfeited and all unvested stock options
granted to Executive will be immediately terminated upon the date of such termination of
Executive’s employment and any vested stock options will remain exercisable for one (1) year
after such termination of Executive’s employment, subject to the earlier expiration of the
term of such stock option.

	6.	 	Effect of Change of Control.

(a) If within two (2) years following a Change of Control (as hereinafter defined),
Executive terminates her employment with the Company for Good Reason (as hereinafter
defined) or the Company terminates Executive’s employment for any reason other than for
Cause (as defined in Section 4(b)) or a Disability Event, the Company shall pay to, and
provide for, Executive the following payments and benefits:

     (i) An amount equal to three (3) times the sum of Executive’s Base Salary and Target
Bonus as of the date of termination;

     (ii) All benefits under the Company’s various benefit plans, including group
healthcare, dental, and life for thirty-six (36) months from the date of termination,
provided that the continued participation of Executive is possible under the general terms
and provisions of such plans. If Executive’s participation in any such plan is barred, the
Company shall arrange to provide Executive with benefits substantially similar to those
which Executive would otherwise have been entitled to receive under such plan or,
alternatively at the option of the Company, reimburse Executive for the reasonable actual
costs of purchasing in the marketplace substantially similar benefits; provided, however,
that in either case Executive shall pay to the Company, or provide a credit against the
Company’s reimbursement obligation for, the amount equal to the premiums, or portion
thereof, that Executive was required to pay to maintain such benefits prior to the date of
termination of employment. Further, any insurance or other benefits and benefits coverage
provided pursuant hereto shall be limited and reduced to the extent reasonably comparable
coverage or benefits are provided by or available from any other employer of Executive; and

     (iii) All unvested restricted stock or units granted to Executive and all unvested
stock options granted to Executive will be immediately vested. Further, all vested stock
options granted to Executive, including those vested by reason of the preceding sentence,

7

 

will remain exercisable for ninety (90) days after such termination of Executive’s
employment, subject to the earlier expiration of the term of such stock options.

     (b) Change of Control. For purposes of this Agreement, “Change of Control” means
the earliest to occur of the following:

     (i) any “person,” as such term is used in Sections 3(a)(9) and 13(d) of the Securities
Exchange Act of 1934 (“Person”), becomes a “beneficial owner,” as such term is used in Rule
13d-3 promulgated under that act, of 30% or more of the Voting Stock of the Company;

     (ii) the majority of the Board consists of individuals other than “incumbent”
directors, which term means the members of the Board on the Effective Date; provided that
any person becoming a director subsequent to such date whose election or nomination for
election was supported by two-thirds of the directors who then comprised the incumbent
directors will be considered to be an incumbent director;

     (iii) the Company adopts any plan of liquidation providing for the distribution of all
or substantially all of its assets;

     (iv) all or substantially all of the assets or business of the Company is disposed of
pursuant to a merger, consolidation or other transaction (unless the stockholders of the
Company immediately prior to such merger, consolidation or other transaction beneficially
own, directly or indirectly, in substantially the same proportion as they owned the Voting
Stock of the Company, all of the Voting Stock or other ownership interests of the entity or
entities, if any, that succeed to the business of the Company); or

     (v) the Company combines with another company and is the surviving corporation but,
immediately after the combination, the stockholders of the Company immediately prior to the
combination hold, directly or indirectly, 50% or less of the Voting Stock of the combined
company (there being excluded from the number of shares held by such stockholders, but not
from the Voting Stock of the combined company, any shares received by affiliates of such
other company in exchange for stock of such other company).

	 	 	For purposes of the Change of Control definition, “Company” will include any entity that
succeeds to all or substantially all, of the business of the Company and “Voting Stock” will
mean securities of any class or classes having general voting power under ordinary
circumstances, in the absence of contingencies, to elect the directors of a corporation.

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

     (i) the assignment to Executive by the Company of duties inconsistent with, or the
reduction, other than due solely to the fact that the Company no longer is a publicly traded
Company, of the powers and functions associated with, 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 a material adverse change

8

 

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 Executive from or any failure to re-elect
Executive to any of such positions, except in connection with the termination of her
employment (A) by the Company for a Disability Event or Cause or as a result of Executive’s
death or (B) by Executive other than for the reasons set forth in this Section 6(c);

     (ii) a reduction by the Company in Executive’s Base Salary as in effect on the date of
a Change of Control or Potential Change of Control;

     (iii) the Company’s principal executive offices shall be moved to a location outside
the Dallas/Fort Worth, Texas Metroplex area;

     (iv) the Company shall require Executive to be based anywhere other than at the
Company’s principal executive offices in the Dallas/Fort Worth, Texas Metroplex area, or if
Executive agrees to a relocation outside the area, the Company fails to reimburse Executive
for moving and all other expenses incurred with such move;

     (v) the Company shall fail to continue in effect any Company-sponsored plan that is in
effect on the date of a Change of Control or Potential Change of Control (or replacement
plans therefore that in the aggregate provide the same or more favorable benefits) that
provides (A) incentive or bonus compensation, (B) reimbursement for reasonable expenses
incurred by Executive in connection with the performance of duties with the Company, and (C)
pension benefits such as Section 401(k) plan within the meaning of the Internal Revenue Code
of 1986, as amended (the “Code”);

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

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

	(d)	 	“Potential Change of Control” shall mean the earliest to occur of the following
events within six months prior to a Change of Control:

     (i) the Company enters into an agreement the consummation of which, or the approval by
stockholders of which, would constitute a Change of Control;

     (ii) proxies for the election of members of the Board are solicited by any person 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

9

 

     (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)	 	Excise Tax.

     (i) Gross-Up. In the event that the “Total Payments” (defined below) would be
subject to the “Excise Tax” (defined below) the Company shall pay to Executive an additional
amount (the “Gross-Up Payment”) such that after payment by Executive of all taxes (including
any Excise Tax) imposed upon the Gross-Up Payment and any interest or penalties imposed with
respect to such taxes, Executive retains from the Gross-Up Payment an amount equal to the
Excise Tax imposed upon the Total Payments.

(a) For purposes of determining whether any of the Total Payments will be subject to
the Excise Tax and the amount of such Excise Tax, (A) all “excess parachute
payments” within the meaning of Section 280G(b)(l) of the Code shall be treated as
subject to the Excise Tax unless, in the opinion of Tax Counsel, such excess
parachute payments (in whole or in part) represent reasonable compensation for
services actually rendered (within the meaning of Section 280G(b)(4)(B) of the Code)
in excess of the base amount (within the meaning of Section 280G(b)(3) of the Code)
allocable to such reasonable compensation, or are otherwise not subject to the
Excise Tax, and (B) the value of any noncash benefits or any deferred payment or
benefit shall be determined by the Auditor in accordance with the principles of
Sections 280G(d)(3) and (4) of the Code. If the Auditor is prohibited by applicable
law or regulation from performing the duties assigned to it hereunder, then a
different auditor, acceptable to both the Company and Executive, shall be selected.
The fees and expenses of Tax Counsel and the Auditor shall be paid by the Company.
For purposes of determining the amount of the Gross-Up Payment, Executive shall be
deemed to pay federal income tax at the highest marginal rate of federal income
taxation in the calendar year in which the Gross-Up Payment is to be made and state
and local income taxes at the highest marginal rate of taxation in the state and
locality of Executive’s residence on the date of termination (or if there is no date
of termination, then the date on which the Gross-Up Payment is calculated for
purposes of this Section), net of the maximum reduction in federal income taxes
which could be obtained from deduction of such state and local taxes.

(b) In the event that the Excise Tax is subsequently determined to be less than the
amount taken into account hereunder in calculating the Gross-Up Payment, Executive
shall repay to the Company, within five (5) business days following the time that
the amount of such reduction in the Excise Tax is finally determined, the portion of
the Gross-Up Payment attributable to such reduction. In the event that the Excise
Tax is determined to exceed the amount taken into account hereunder in calculating
the Gross-Up Payment (including by reason of any payment the existence or amount of
which cannot be determined at the time of the Gross-Up Payment), the Company shall
make an additional Gross-Up Payment in respect of such excess within five (5)
business days following the time that the amount of

10

 

such excess is finally determined. Executive and the Company shall each reasonably
cooperate with the other in connection with any administrative or judicial
proceedings concerning the existence or amount of liability for Excise Tax with
respect to the Total Payments.

     (ii) Other Terms. At the time that payments are made under Section 5(c) or 6(a)
of this Agreement, if requested by Executive, the Company shall provide Executive with a
written statement setting forth the manner in which such payments were calculated and the
basis for such calculations including, without limitation, any opinions, or other advice the
Company has received from Tax Counsel, the Auditor or other advisors or consultants (and all
such opinions or advice shall be in writing, shall be attached to the statement and shall
expressly state that Executive may rely thereon). Executive and the Company shall each
reasonably cooperate with the other in connection with any administrative or judicial
proceeding concerning the existence or amount of liability for Excise Tax with respect to
the Total Payments. Notwithstanding anything herein to the contrary, this Section 6(e)
shall be interpreted (and, if determined by the Company to be necessary, reformed) to the
extent necessary to fully comply with the Sarbanes-Oxley Act; provided that the Corporation
agrees to maintain, to the maximum extent practicable, the original intent and economic
benefit to the Executive of the applicable provision without violating the provisions of the
Sarbanes-Oxley Act.

     (iii) Definitions. “Total Payments” shall mean the payments and
benefits received or to be received by Executive, whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement that constitute “parachute payments”
as defined in Section 280G of the Code (excluding the Gross-Up
Payment) (“Parachute
Payments”). For this purposes, all of the payments and benefits received by Executive or to
be received by Executive in connection with a Change of Control or in connection with
Executive’s termination of employment in respect of a Change of Control (whether pursuant to
the terms of this Agreement or any other plan, arrangement or agreement with the Company,
and Person whose actions result in a Change of Control or any Person affiliated with Company
or such Person shall be treated as Parachute Payments unless, in the opinion of tax counsel
(“Tax Counsel”) reasonably acceptable to Executive and selected by the accounting firm which
was, immediately prior to the Change of Control, the Company’s independent auditor (the
“Auditor”), such payments or benefits (in whole or in part) do not constitute Parachute
Payments, including by reason of Section 280G(b)(4)(A) of the Code. “Excise Tax”
shall mean the excise tax imposed under Section 4999 of the Internal Revenue Code of 1986,
as amended (the “Code”).

	7.	 	Time of Payment; Section 409A.

(a) Unless expressly provided otherwise, all of the payments due to Executive under Sections
5 or 6 above shall be made within fifteen (15) days following the date of termination;

(b) Notwithstanding any provision in this Agreement to the contrary, if the payment of any
compensation or benefit hereunder (including, without limitation, any severance benefit)
would be subject to additional taxes and interest under Section 409A of the Code

11

 

because the timing of such payment is not delayed as provided in Section 409A(a)(2)(B) of
the Code, then any such payment or benefit that Executive would otherwise be entitled to
during the first six months following the date of Executive’s termination of employment
shall be accumulated and paid or provided, as applicable, on the date that is six months and
one day after the date of Executive’s termination of employment (or if such date does not
fall on a business day of the Company, the next following business day of the Company), or
such earlier date upon which such amount can be paid or provided under Section 409A of the
Code without being subject to such additional taxes and interest. The preceding sentence
shall apply only to the extent required to avoid Executive’s incurrence of any additional
tax or interest under Section 409A of the Code or the regulations or Treasury guidance
promulgated thereunder; and

(c) Notwithstanding anything to the contrary in this Agreement, if any payment, distribution
or provision of a benefit by the Company to or for the benefit of Executive, whether paid or
payable, distributed or distributable or provided or to be provided pursuant to the terms of
this Agreement or otherwise (a “Payment”), would be subject to an additional tax pursuant to
Section 409A of the Code that would not have been imposed absent such Payment, or any
interest or penalties with respect to such additional tax or otherwise imposed pursuant to
Section 409A of the Code (such additional tax, together with any such interest or penalties,
are hereinafter collectively referred to as the “Additional Taxes”), the Company shall pay
to Executive an additional payment (a “409A Gross-up Payment”) in an amount such that after
payment by Executive of all Additional Taxes, including any income taxes and Additional
Taxes imposed on any 409A Gross-up Payment, Executive retains an amount of the 409A Gross-up
Payment (taking into account any similar gross-up payments to Executive under any stock
incentive or other benefit plan or program of the Company) equal to the Additional Taxes
imposed upon the Payments. The Company and Executive shall make an initial determination as
to whether a 409A Gross-up Payment is required and the amount of any such 409A Gross-up
Payment. Executive shall notify the Company in writing of any claim by the Internal Revenue
Service which, if successful, would require the Company to make a 409A Gross-up Payment (or
a 409A Gross-up Payment in excess of that, if any, initially determined by the Company and
Executive) within ten business days after the receipt of such claim. The Company shall
notify Executive in writing at least ten business days prior to the due date of any response
required with respect to such claim if it plans to contest the claim. If the Company
decides to contest such claim, Executive shall cooperate fully with the Company in such
action; provided, however, the Company shall bear and pay directly or indirectly all costs
and expenses (including additional interest and penalties) incurred in connection with such
action and shall indemnify and hold Executive harmless, on an after-tax basis, for any
Additional Taxes or income tax, including interest and penalties with respect thereto,
imposed as a result of the Company’s action. If, as a result of the Company’s action with
respect to a claim, Executive receives a refund of any amount paid by the Company with
respect to such claim, Executive shall promptly pay such refund to the Company. If the
Company fails to timely notify Executive whether it will contest such claim or the Company
determines not to contest such claim, then the Company shall immediately pay to Executive
the portion of such claim, if any, which it has not previously paid to Executive.

12

 

	8.	 	Complete Release. Executive acknowledges and agrees that she will not receive any of
the payments described in Sections 5 or 6 above unless Executive signs and returns to the
Company a full and complete release of any and all claims related to her employment or
termination of employment that Executive or her estate, heirs or assigns may have against the
Company, its subsidiaries and affiliates and its and their officers, directors, employees and
agents in a form acceptable to and provided by the Company at or around the time of
Executive’s termination.

	9.	 	Non-Competition. As a material inducement for the Company’s promise to provide the
trade secrets and confidential and proprietary information described in Section 11 below,
Executive agrees that during the Term and for a period of three (3) years from the date of
cessation or termination of Executive’s employment with the Company for any reason whatsoever,
she will not, directly or indirectly, compete with the Company by providing services relating
to retail sales of jewelry to any other person, partnership, association, corporation, or
other entity that is in a “Competing Business.” As used herein, a “Competing Business” is any
business that engages in whole or in material part in the retail sale of jewelry in the United
States, Canada and/or Puerto Rico, including, but not limited to, specialty jewelry retailers
and other retailers having jewelry divisions or departments. The restrictions contained in
this Section 9 shall be tolled on a day-for-day basis for each day during which Executive
participates in any activity in violation of such restrictions. The parties agree that the
above restrictions on competition are completely severable and independent agreements
supported by good and valuable consideration and, as such, shall survive the termination of
this Agreement for whatever reason. The parties further agree that any invalidity or
unenforceability of any one or more of such restrictions on competition shall not render
invalid or unenforceable any remaining restrictions on competition. Additionally, should a
court of competent jurisdiction determine that the scope of any provision of this Section 9 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.

	10.	 	No Hire/Non-Solicitation of Employees. During the Term and for a period of three (3)
years after the termination or cessation of her employment with the Company for any reason
whatsoever, Executive shall not, on her own behalf or on behalf of any other person,
partnership, association, corporation, or other entity, (a) directly, indirectly, or through a
third party hire, cause to be hired or solicit any employee of the Company or its subsidiaries
or affiliates or (b) in any manner attempt to influence or induce any employee of the Company
or its subsidiaries or affiliates to leave the employment of the Company or its subsidiaries
or affiliates, nor shall she use or disclose to any person, partnership, association,
corporation or other entity any information obtained concerning the names and addresses of the
Company’s employees. The restrictions contained in this Section 10 shall be tolled on a
day-for-day basis for each day during which Executive participates in any activity in
violation of such restrictions. The parties agree that the above restrictions on hiring and
solicitation are completely severable and independent agreements supported by good and
valuable consideration and, as such, shall survive the termination of this Agreement for
whatever reason. The parties further agree that any invalidity or unenforceability of any one
or more of such restrictions on hiring and solicitation shall not render invalid or
unenforceable any remaining restrictions or hiring

13

 

	 	 	and solicitation. Additionally, should a court of competent jurisdiction determine that the
scope of any provision of this Section 10 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.

	11.	 	Nondisclosure of Trade Secrets. The Company promises to disclose to Executive and
Executive acknowledges that in and as a result of her employment with the Company, she will
receive, make use of, acquire, have access to and/or 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, financial information, sales reports, sales procedures, customer
requirements, pricing techniques, customer lists, methods of doing business, identities,
locations, performance and compensation levels of employees and other confidential information
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 (collectively, “Trade Secrets”). Executive acknowledges and agrees that the
Trade Secrets:

     (i) are secret and not known in the industry;

     (ii) give the Company or its subsidiaries or affiliates an advantage over competitors
who do not know or use the Trade Secrets;

     (iii) 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

     (iv) 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 promises not to use in any way or disclose any of the Trade Secrets, directly
or indirectly, either during or after the Term, except as required in the course of her
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 Executive. All files, records, documents, information, data
compilations and similar items containing non-public and confidential information relating
to the business of the Company, whether prepared by Executive or otherwise coming into her
possession, will remain the exclusive property of the Company and may not be removed from
the premises of the Company under any circumstances without the prior written consent of the
Company (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 her
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, whether received
during or after the term of Executive’s employment with the Company, Executive shall timely
notify and promptly

14

 

provide a copy of the subpoena, process or other request to the Company. For this
purpose, Executive irrevocably nominates and appoints the Company (including any attorney
retained by the Company), as her true and lawful attorney-in-fact, to act in Executive’s
name, place and stead to perform any reasonable and prudent act that Executive might perform
to defend and protect against any disclosure of any Trade Secrets.

     The parties agree that the above restrictions on confidentiality and disclosure are
completely severable and independent agreements supported by good and valuable consideration
and, as such, shall survive the termination of this Agreement for whatever reason. The
parties further agree that any invalidity or unenforceability of any one or more of such
restrictions on confidentiality and disclosure shall not render invalid or unenforceable any
remaining restrictions on confidentiality and disclosure. Additionally, should a court of
competent jurisdiction determine that the scope of any provision of this Section 11 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.

	12.	 	Non-Disparagement. Executive expressly acknowledges, agrees, and covenants that she
will not make any public or private statements, comments, or communications in any form, oral,
written, or electronic (all of the foregoing, for purposes of this paragraph,
“Communications”), which in any way could constitute libel, slander, or disparagement of the
Company, its subsidiaries, affiliates or parent, its and/or their employees, officers, and/or
directors, or which may be considered to be derogatory or detrimental to its or their good
name or business; provided, however, that the terms of this paragraph shall not (a) apply to
Communications between Executive and her spouse, clergy, or attorneys, which are subject to a
claim of privilege existing under common law, statute, or rule of procedure; (b) apply to
Communications required by law or made in response to a valid subpoena or other lawful order
compelling Executive to provide testimony or information; provided, however, that in
responding to a valid subpoena or other lawful order, Executive agrees to provide the Company
with advance notice and an opportunity to seek a protective order or other safeguard for its
confidential information; (c) be construed to inhibit or limit Executive’s ability to initiate
or cooperate with any investigation by a governmental or regulatory agency or official.
Executive specifically agrees not to issue any public statement concerning her employment at
Zale and/or the cessation of such employment; or (d) prohibit Executive from responding to any
derogatory or inaccurate statement contained in a press release of the Company concerning
Executive for the purpose of correcting such inaccuracies or defending her reputation.

	13.	 	Executive Representations and Agreements. Executive agrees that Executive and the
Company are engaged in a highly competitive business and, due to Executive’s position with the
Company and the nature of Executive’s work, Executive’s engaging in any business which is
competitive with that of the Company will cause the Company great and irreparable harm.
Executive represents and warrants that the time, scope and geographic area restricted by the
foregoing Sections 9, 10, 11, and 12 pertaining to no hire/non-solicitation, non-competition,
confidentiality and nondisclosure, and non-disparagement are reasonable, that the enforcement
of the restrictions contained in

15

 

	 	 	such Sections would not be unduly burdensome to Executive, and that Executive will be able
to earn a reasonable living while abiding by the terms included herein. Executive agrees
that the restraints created by the covenants in Sections 9, 10, 11, and 12 pertaining to no
hire/non-solicitation, non-competition, confidentiality and nondisclosure, and
non-disparagement are no greater than necessary to protect the legitimate interests of the
Company, including its confidential business or proprietary information and trade secrets,
including but not limited to, the Trade Secrets. Similarly, Executive agrees that the need
of the Company for the protection afforded by the covenants of Sections 9, 10, 11, and 12
pertaining to no hire/non-solicitation, non-competition, confidentiality and nondisclosure,
and non-disparagement are not outweighed by either the hardship to Executive or any injury
likely to the public. Executive agrees that any breach by her of Sections 9, 10, 11, and 12
pertaining to no hire/non-solicitation, non-competition, confidentiality and nondisclosure
and non-disparagement will entitle the Company to discontinue any payments specified in
Sections 3, 5 or 6 above, for which Executive might be eligible based on the terms of those
Sections and to any other remedy available at law or in equity. Notwithstanding the
suspension or discontinuation of any such payments, Executive agrees that the Company is
entitled to insist on full compliance by Executive with the full terms, including time
periods, described in her promises not to hire/solicit, compete, disclose confidential
information or Trade Secrets or disparage. Any delay by the Company in discontinuing
payment shall not be construed as a waiver of any rights to discontinue payment.

	14.	 	Severability. If any provision of this Agreement is held to be illegal, invalid or
unenforceable under present or future laws effective during the term of this Agreement, 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 here
from. 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.

16

 

	15.	 	Arbitration.

(a) The parties agree that any controversy or claim (including all claims pursuant to common
and statutory law) relating to this Agreement or arising out of Executive’s employment with
the Company, shall be resolved exclusively through arbitration pursuant to the National
Rules for the Resolution of Employment Disputes of the American Arbitration Association
(“AAA”). Any such arbitration proceeding shall take place in Dallas County, Texas. All
disputes shall be resolved by a single arbitrator. The arbitrator will have the authority
to award the same remedies, damages and costs that a court could award. The arbitrator
shall issue a reasoned award explaining the decision, the reasons for the decision and any
damages awarded. The arbitrator’s decision will be final and binding. The judgment on the
award rendered by the arbitrator may be entered in any court having jurisdiction thereof.
This provision can be enforced under the Federal Arbitration Act.

(b) As the sole exception to the exclusive and binding nature of the arbitration commitment
set forth above, Executive and the Company agree that the Company shall have the right to
initiate an action in a court of competent jurisdiction in order to request temporary,
preliminary and permanent injunctive or other equitable relief, including, without
limitation, specific performance, to enforce the terms of Sections 9, 10, 11, 12 or 13,
above, without the necessity of proving inadequacy of legal remedies or irreparable harm or
posting bond. However, nothing in this section should be construed to constitute a waiver of
the parties’ rights and obligations to arbitrate regarding matters other than those
specifically addressed in this paragraph.

(c) Should a court of competent jurisdiction determine that the scope of any provision of
this Section 15 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.

	16.	 	Survival. Executive acknowledges and agrees that this Agreement, including but not
limited to Sections 9, 10, 11, 12, 13, 14, 15, 17, and 17(c), shall survive the termination of
Executive’s employment under this Agreement for whatever reason. 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 this Agreement, including but not limited to those contained in
Sections 9, 10, 11, 12, 13, and 15.
	 
	17.	 	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;

17

 

     (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 17:

	 	 	 
	If to the Company:  
	 	Zale Corporation

	 	 	901 W. Walnut Hill Lane

	 	 	Irving, Texas 75038

	 	 	Attention: General Counsel

	 	 	 

	If to Executive:
	 	Mary Elizabeth Burton

	 	 	1000 Lake Carolyn Parkway, #4216

	 	 	Irving, Texas 75039

     Notices delivered personally or by overnight express delivery service or by local
courier service are deemed given as of actual receipt. Notices mailed within the
continental United States are deemed given three (3) 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).

(b) Entire Agreement. This Agreement supersedes any and all other agreements,
either oral or written, between the parties with respect to the subject matter of this
Agreement and contains all of the covenants and agreements between the parties with respect
to the subject matter of this Agreement.

(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 Texas. 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 unless
Executive prevails on at least one major issue, in which case Executive’s costs shall be
borne by the Company.

18

 

(g) Estate. If Executive dies prior to the expiration of the Term or during a
period when monies are owing to her, any monies that may be due her from the Company under
this Agreement as of the date of her death shall be paid to her estate and as 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 her, and no such right or benefit
may be assigned by her.

(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.

[Signature Page Follows]

19

 

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

	 	 	 	 	 
	 	EXECUTIVE

 	 
	 	By:  	/s/ Mary Elizabeth Burton
 	 
	 	 	Mary Elizabeth Burton 	 
	 	 	 	 
	 
	 	ZALE CORPORATION

 	 
	 	By:  	/s/ Hilary Molay
 	 
	 	 	Its:                     Hilary Molay 	 
	 	 	Senior Vice President & General Counsel 	 
	 

20

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00111-of-00352.parquet"}]]