Employment Agreement - Zale Corp. and Robert J. DiNicola
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.
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(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
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("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
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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
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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.
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(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.
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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.
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(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
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(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.
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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
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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.
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(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).
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(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.
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(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
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