Exhibit 10.1
ZALE CORPORATION
NON-EMPLOYEE DIRECTOR
EQUITY COMPENSATION PLAN
( As amended through November 2008 )
1.
PREAMBLE
This Zale Corporation Non-Employee Director Equity Compensation
Plan, as it may be amended from time to time (the
“Plan”), is intended to promote the interests of Zale
Corporation, a Delaware corporation (the “Company”),
and its stockholders by providing directors of the Company who are
not employees of the Company with appropriate incentives and
rewards to serve on the board of directors of the Company and to
acquire a proprietary interest in the long-term success of the
Company.
2.
DEFINITIONS
As used in the Plan, the following definitions apply to the terms
indicated below:
(a)
“Board of
Directors” shall mean the Board of Directors of the
Company.
(b)
“Cause,” when
used in connection with a Participant’s removal or
resignation as a member of the Board of Directors, shall mean
(i) the willful and continued failure by the Participant
substantially to perform his or her duties and obligations to the
Company (other than any such failure resulting from his or her
incapacity due to physical or mental illness) or (ii) the
willful engaging by the Participant in misconduct which is
materially injurious to the Company. For purposes of this
Section 2(b), no act, or failure to act, on a
Participant’s part shall be considered “willful”
unless done, or omitted to be done, by the Participant in bad faith
and without reasonable belief that his or her action or omission
was in the best interests of the Company. The Board of
Directors shall determine whether a Participant’s removal or
resignation as a member of the Board of Directors is for
Cause.
(c)
“Change in
Control” shall mean the first to occur of the
following:
(i)
any
“person,” as such term is used in
Sections 13(d) and 14(d) of the Exchange Act (other
than the Company or any trustee or other fiduciary holding
securities under an employee benefit plan of the Company), is or
becomes the “beneficial owner” (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company representing 50% or more of the combined
voting power of the Company’s then outstanding
securities;
(ii)
during any period
of two consecutive years, individuals who at the beginning of such
period constitute the Board of Directors, and any new director
(other than a director designated by a person who has entered into
an agreement with the Company to effect a transaction described in
clause (i), (iii) or (iv) of this
definition) whose
election by the Board of Directors or nomination for election by
the Company’s stockholders was approved by a vote of at least
two-thirds (2/3) of the directors then still in office who either
were directors at the beginning of the period or whose election or
nomination for election was previously so approved, cease for any
reason to constitute at least a majority thereof;
(iii)
the stockholders
of the Company approve a merger or consolidation of the Company
with any other entity, other than (i) a merger or
consolidation that would result in the voting securities of the
Company outstanding immediately prior thereto continuing to
represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) more than 50% of
the combined voting power of the voting securities of the Company
or such surviving entity outstanding immediately after such merger
or consolidation or (ii) a merger or consolidation effected to
implement a recapitalization of the Company (or similar
transaction) in which no “person” (as hereinabove
defined) acquires more than 50% of the combined voting power of the
Company’s then outstanding securities; or
(iv)
the stockholders
of the Company approve a plan of complete liquidation of the
Company or an agreement for the sale or disposition by the Company
of all or substantially all of the Company’s
assets.
(d)
“Code” shall mean
the Internal Revenue Code of 1986, as amended.
(e)
“Company
Stock” shall mean the common stock, par value $.01 per share,
of the Company.
(f)
A “Deferred
Stock Unit” shall mean a unit which is granted pursuant to
the terms of Section 6 and as described in
Section 8B.
(g)
“Disability”
shall mean any physical or mental condition that would qualify a
Participant for a disability benefit under the long-term disability
plan maintained by the Company and applicable to him or
her.
(h)
“Effective
Date” shall mean November 11, 2005.
(i)
“Equity
Award” shall mean a Deferred Stock Unit, an Option, a share
of Restricted Stock or a Restricted Stock Unit granted pursuant to
the terms of the Plan.
(j)
“Exchange
Act” shall mean the Securities Exchange Act of 1934, as
amended.
(k)
The “Fair
Market Value” of a share of Company Stock with respect to any
day shall be the closing price of Company Stock on the day of the
award as reported on the New York Stock Exchange or on such other
securities exchange or reporting system as may be designated by the
Board of Directors. In the event that the price of a share of
Company Stock shall not be so reported, the Fair Market Value of a
share of Company Stock shall be determined by the Board of
Directors in its absolute discretion.
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(l)
“Option” shall
mean an option to purchase shares of Company Stock granted pursuant
to Section 6(a) and as described in
Section 7.
(m)
“Participant”
shall mean a member of the Board of Directors who is not an
employee of the Company or a Subsidiary.
(n)
A share of
“Restricted Stock” shall mean a share of Company Stock
which is granted pursuant to the terms of Section 6 and as
described in Section 8.
(o)
A
“Restricted Stock Unit” shall mean a unit which is
granted pursuant to the terms of Section 6 and as described in
Section 8A.
(p)
“Rule 16b-3”
shall mean the rule thus designated as promulgated under the
Exchange Act.
(q)
“Subsidiary”
shall mean any corporation or other entity in which, at the time of
reference, the Company owns, directly or indirectly, stock or
similar interests comprising more than 50 percent of the
combined voting power of all outstanding securities of such
entity.
(r)
“Vesting
Date” shall mean the date established by the Board of
Directors on which Restricted Stock and Restricted Stock Units
vest.
3.
STOCK SUBJECT TO THE
PLAN
(a)
Shares Available
for EquityAwards
The total number of shares of Company Stock with respect to which
EquityAwards may be granted shall not exceed 250,000 shares, with
not more than 100,000 shares to be granted as Deferred Stock Units,
Restricted Stock or Restricted Stock Unit awards. Such shares
may be authorized but unissued Company Stock or authorized and
issued Company Stock held in the Company’s treasury or
acquired by the Company for the purposes of the Plan. The
Board of Directors may direct that any stock certificate evidencing
shares of Company Stock issued pursuant to the Plan shall bear a
legend setting forth such restrictions on transferability as may
apply to such shares pursuant to the Plan.
(b)
Adjustment for
Change in Capitalization
If
there is any change in the outstanding shares of Company Stock by
reason of a stock dividend or distribution, stock split-up,
recapitalization, combination or exchange of shares, or by reason
of any merger, consolidation, spin-off or other corporate
reorganization in which the Company is the surviving corporation,
the number of shares available for issuance both in the aggregate
and with respect to each outstanding EquityAward, and the price per
share under each outstanding Option, shall be proportionately
adjusted by the Board of Directors, whose determination shall be
final and binding. After any adjustment made pursuant to this
Section 3(b), the number of shares subject to each outstanding
EquityAward shall be rounded to the nearest whole number.
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(c)
Re-use of
Shares
Any
shares subject to an EquityAward that remain unissued upon the
cancellation or termination of such EquityAward for any reason
whatsoever shall again become available for EquityAwards under the
Plan.
(d)
No
Repricing
Absent
stockholder approval, the Board of Directors shall not have any
authority, with or without the consent of the affected holders of
Options, to “reprice” an Option after the date of its
initial grant with a lower exercise price in substitution for the
original exercise price. This paragraph may not be amended,
altered or repealed by the Board of Directors without approval of
the stockholders of the Company.
4.
ADMINISTRATION OF THE
PLAN
The
Plan shall be administered by the Board of Directors. The
Board of Directors shall have full authority to administer the
Plan, including authority to interpret and construe any provision
of the Plan and the terms of any EquityAwards issued under it and
to adopt such rules and regulations for administering the Plan
as it may deem necessary or appropriate. Decisions of the
Board of Directors shall be final and binding on all parties.
Unless determined otherwise by the Board of Directors, the
authority of the Board of Directors to administer the Plan is
delegated to the Compensation Committee of the Board of
Directors.
No
member of the Board of Directors shall be liable for any action,
omission or determination relating to the Plan, and the Company
shall indemnify and hold harmless each member of the Board of
Directors and each other director or employee of the Company to
whom any duty or power relating to the administration or
interpretation of the Plan has been delegated against any cost or
expense (including counsel fees) or liability (including any sum
paid in settlement of a claim with the approval of the Board of
Directors) arising out of any action, omission or determination
relating to the Plan, unless, in either case, such action, omission
or determination was taken or made by such member, director or
employee in bad faith and without reasonable belief that it was in
the best interests of the Company.
5.
ELIGIBILITY
The
persons who shall be eligible to receive EquityAwards pursuant to
the Plan shall be such members of the Board of Directors who are
not employees of the Company or a Subsidiary.
6.
EQUITYAWARDS UNDER THE
PLAN
EquityAwards
granted under the Plan shall be subject to the terms and conditions
set forth in the Plan, and shall be evidenced by an EquityAward
Agreement which shall not be inconsistent with the provisions of
the Plan.
(a)
Annual
Awards. Following each annual meeting of stockholders,
Participants shall receive such combination of Options, Restricted
Stock and Restricted
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Stock Units as
the Board of Directors shall from time-to-time determine (the
“Annual Award”).
(b)
Other
Awards. Upon the initial election to the Board of Directors
of any person who is a Participant (other than through an initial
election by the Company’s stockholders at an annual meeting
of stockholders), such person shall be granted a pro rata portion
of the Annual Award based upon the number of full calendar months
elapsed since the most recent annual meeting of
stockholders.
(c)
Elective
Awards. At the election of the Board of Directors or
individual Participants, a Participant shall receive a grant of
Deferred Stock Units in lieu of a portion or all of the cash
retainer and meeting and other fees payable to the Participant for
serving on the Board of Directors, provided that such election is
made in accordance with the requirements of Section 409A of
the Code.
7.
OPTIONS
(a)
Exercise
Price
The
exercise price per share of an Option shall be the Fair Market
Value of a share of Company Stock on the date the Option is
granted.
(b)
Term and Exercise
of Options
(i)
Unless the Board,
in its discretion, determines otherwise, each Option shall become
fully exercisable on the earlier of the first anniversary of the
date of grantor the next annual meeting of stockholders of the
Company following the date of grant. The expiration date of
each Option shall be ten years after the date of grant;
provided , however , that if the expiration date
would occur during a period in which the Participant is prohibited
from trading in the Company Stock pursuant to the provisions of the
Company’s insider trading policy, then the expiration date
shall be extended and such Option shall expire on the 30
th
day after the prohibition
against trading under the Company’s insider trading policy
has ceased to be in effect.
(ii)
An Option may be
exercised for all or any portion of the shares as to which it is
exercisable; provided, that no partial exercise of an Option shall
be for an aggregate exercise price of less than $1,000. The
partial exercise of an Option shall not cause the expiration,
termination or cancellation of the remaining portion
thereof.
(iii)
An Option shall
be exercised by delivering notice to the Company’s principal
office, to the attention of its Secretary (or the Secretary’s
designee), no less than one business day in advance of the
effective date of the proposed exercise. Such notice shall
specify the number of shares of Company Stock with respect to which
the Option is being exercised and the effective date of
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the proposed
exercise and shall be signed by the Participant or other person
then having the right to exercise the Option. Such notice may
be withdrawn at any time prior to the close of business on the
business day immediately preceding the effective date of the
proposed exercise. Payment for shares of Company Stock
purchased upon the exercise of an Option shall be made on the
effective date of such exercise by one or a combination of the
following means: (i) in cash, by certified check, bank
cashier’s check or wire transfer; (ii) subject to the
approval of the Board of Directors, in shares of Company Stock
owned by the Participant for at least six months prior to the date
of exercise and valued at their Fair Market Value on the effective
date of such exercise; or (iii) subject to the approval of the
Board of Directors, by such other provision as the Board of
Directors may from time to time authorize. Any payment in
shares of Company Stock shall be effected by the delivery of such
shares to the Secretary (or the Secretary’s designee) of the
Company, duly endorsed in blank or accompanied by stock powers duly
executed in blank, together with any other documents and evidences
as the Secretary (or the Secretary’s designee) of the Company
shall require.
(iv)
Certificates for
shares of Company Stock purchased upon the exercise of an Option
shall be issued in the name of the Participant or other person
entitled to receive such shares, and delivered to the Participant
or such other person as soon as practicable following the effective
date on which the Option is exercised.
(c)
Effect of
Termination of Directorship
(i)
Unless the Board
of Directors shall determine otherwise, in the event of a
Participant’s removal or resignation as a member of the Board
of Directors for any reason other than Cause, Disability or death:
(i) Options granted to such Participant, to the extent that
they were exercisable at the time of such removal or resignation,
shall remain exercisable until the date that is three months after
such removal or resignation, on which date they shall expire; and
(ii) Options granted to such Participant, to the extent that
they were not exercisable at the time of such removal or
resignation, shall expire at the close of business on the date of
such removal or resignation. The three-month period described
in this Section 7(c)(i) shall be extended to one year in
the event of the Participant’s death during such three-month
period. Notwithstanding the foregoing, no Option shall be
exercisable after the expiration of its term.
(ii)
Unless the Board
of Directors shall determine otherwise, in the event of a
Participant’s removal or resignation as a member of the Board
of Directors on account of the Disability or death of the
Participant: (i) Options granted to such Participant, to the
extent that they were exercisable at the time of such removal or
resignation, shall remain exercisable until the first anniversary
of such removal or resignation, on which date they shall expire;
and (ii) Options granted to such Participant, to the extent
that they were not exercisable at the time of such removal or
resignation, shall expire at the close of business on the date
of
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such removal or
resignation. Notwithstanding the foregoing, no Option shall
be exercisable after the expiration of its term.
(iii)
In the event of a
Participant’s removal or resignation as a member of the Board
of Directors for Cause, all outstanding Options granted to such
Participant shall expire at the commencement of business on the
date of such removal or resignation.
(d)
Acceleration of
Exercise Date Upon Change in Control
Upon
the occurrence of a Change in Control, each Option granted under
the Plan and outstanding at such time shall become fully and
immediately exercisable and shall remain exercisable until its
expiration, termination or cancellation pursuant to the terms of
the Plan. In addition, in the event of a potential Change in
Control, the Board of Directors may in its discretion, cancel any
outstanding Options and pay to the holders thereof, in cash or
stock, or any combination thereof, the value of such Options based
upon the price per share of Company Stoc
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