Exhibit 10.2
SETTLEMENT AND RELEASE
AGREEMENT
This Settlement and Release
Agreement (“Agreement”) is made and entered into by and
between Mary L. Forté (“Employee”), and Zale
Corporation (“Zale”) hereinafter collectively referred
to as the “Parties.”
RECITALS
WHEREAS, Employee was employed by
Zale as President and Chief Executive Officer of Zale, served as a
director of Zale, and served in other positions with Zale and its
subsidiaries;
WHEREAS, pursuant to that certain
letter, dated January 31, 2006, from Employee to the Company (the
“Letter”), Employee resigned as President and Chief
Executive Officer of Zale, as a director of Zale, and from any and
all other positions that she has with Zale or its subsidiaries,
effective as of January 31, 2006 (the “Separation
Date”);
WHEREAS, pursuant to the Letter, the
Parties agreed that Employee’s termination of employment on
the Separation Date shall be considered to be “without
cause” pursuant to Section 4(c) of that certain Employment
Agreement, dated as of September 21, 2005, between Zale and
Employee (the “Employment Agreement”);
WHEREAS, as a result of the
termination of her employment without cause under Section 4(c) of
the Employment Agreement, Employee shall be entitled to certain
benefits set forth in the Employment Agreement, provided that she
provide the release required by Section 5(j) of the Employment
Agreement; and
WHEREAS, Employee and Zale desire to
fulfill the requirements of Section 5(j) of the Employment
Agreement and to settle fully and finally, all differences between
them which have arisen, or which may arise, prior to, or at the
time of, the execution of this Agreement, including, but in no way
limited to, any and all claims and controversies arising out of the
employment relationship between Employee and Zale and the cessation
of Employee’s employment with Zale;
NOW, THEREFORE, in consideration of
the Recitals and the mutual promises, covenants, and agreements set
forth herein, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Employee
and Zale, intending to be legally bound, covenant and agree as
follows:
1.
(a) Employee shall be entitled to receive the following
post-termination benefits, and no others:
(i)
in cash on December 22, 2006, the sum of $3,600,000 (less customary
payroll deductions), consisting of (A) $1,600,000, representing two
times Employee’s base salary on the
Separation Date, and (B) $2,000,000,
representing two times Employee’s target bonus on the
Separation Date;
(ii)
through January 31, 2008, Zale will continue to allow Employee to
participate in the medical and dental insurance plans, Medical
Expense Reimbursement Plan (“MERP”), disability plans,
executive car program, life insurance plan, financial planning
program on the same terms and conditions under which Employee
participated in those plans on September 21, 2005, subject to
the provisions of Sections 5(h) and 5(i) of the Employment
Agreement, which sections are incorporated herein by reference;
provided, however, the continued medical insurance provided
pursuant to this Section 1(a)(ii) will count in satisfaction of
Employee’s right to continue such benefits pursuant to the
Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
and Employee shall pay an amount equal to the “employee
portion” of the premiums during such period, and provided
further that employee shall not be entitled to a new car during
such period but shall be entitled to the continued use of her
current car through the expiration of its lease term;
(iii)
the unvested stock options, restricted stock and other long-term
incentive awards listed on Schedule A hereto will be deemed to have
vested on the Separation Date and all such vested options and
awards involving the exercise of rights will continue to be
exercisable for the remainder of their respective terms, provided,
however, that any unvested restricted stock units that immediately
vest will be paid out on January 1, 2007, and other awards shall be
delivered promptly to the extent not previously
delivered;
(iv)
5,000 of the performance-based restricted stock units provided for
in Section 3(c)(A) of the Employment Agreement will be deemed to
have vested on the Separation Date and the 5,000 shares of Zale
common stock attributable thereto will be paid out January 1,
2007, and the remaining performance-based restricted stock units
shall be forfeited;
(v)
in cash on December 22, 2006, the lump-sum amount of
$473,697.13 (less customary payroll deductions), representing all
amounts due Employee under the terms of the Zale Supplemental
Employee Retirement Plan pursuant to such plan’s terms;
and
(vi)
any accrued, but unpaid, salary (including unpaid vacation pay
through the Separation Date) and expenses and benefits as of the
Separation Date.
In the event of Employee’s
death prior to her receipt in full of the payments and benefits to
which she (or her family) is entitled as described in this Section
1(a), any such payment or benefit to the extent not made or
provided at or prior to the time of her death shall, except for
benefits to her family as provided in the next sentence, be made to
her estate or other legal representative. Healthcare, dental
and welfare benefits to Employee’s family shall be provided
for the period remaining from the date of death to January 31, 2008
on the same basis as such benefits are provided under Section
1(a)(ii) prior to Employee’s death. Any stock options
outstanding at the time of Employee’s death shall continue to
be exercisable for the remainder of their terms. Any
long-term incentive awards that are due hereunder and not yet paid
shall be paid as provided in clauses (iii), (iv) and (v)
above. In making any of the payments or taking any
2
of the actions contemplated by this
provision or elsewhere in this Agreement, Zale shall be fully
protected in the event that it makes a payment or takes an action
based upon instructions received from Employee’s executor or
other legal representative.
(b)
In addition, Employee and Zale shall continue to be subject to
Sections 6 through 24 of the Employment Agreement. The
Parties expressly agree that except for Sections 5(g), 5(h), 5(i),
6 and 7 through 24, which are incorporated herein by reference and
shall be applicable to the provisions of this Agreement, neither
Party shall have any further obligations under the Employment
Agreement.
2.
Employee, for herself and on behalf of her attorneys, heirs,
assigns, successors, executors, and administrators, hereby
irrevocably (subject to Section 9 of this Agreement) and
unconditionally GENERALLY RELEASES, ACQUITS, AND FOREVER DISCHARGES
Zale, its current and former subsidiary, affiliated, and related
corporations, firms, associations, partnerships, and entities,
their successors and assigns, and the current and former owners,
shareholders, directors, officers, employees, agents, attorneys,
representatives, and insurers of said corporations, firms,
associations, partnerships, and entities, and their guardians,
successors, assigns, heirs, executors, and administrators
(hereinafter collectively referred to as the “Zale
Releasees”) from any and all claims, complaints, grievances,
liabilities, obligations, promises, agreements, damages, causes of
action, rights, debts, demands, controversies, costs, losses, and
expenses (including attorneys’ fees and expenses) whatsoever,
under any municipal, local, state, or federal law, common or
statutory — including, but in no way limited to, claims
arising under the Age Discrimination in Employment Act of 1967, 29
U.S.C. § 621, et seq. , as amended, Title VII of the
Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq., as
amended (including the Civil Rights Act of 1991), the Americans
with Disabilities Act of 1990, 42 U.S.C. §§ 12101, et
seq., as amended, the Employee Retirement Income Security Act of
1974, (ERISA), 29 U.S.C. §§ 1001 et seq., as amended, the
Family and Medical Leave Act (“FMLA”), 29 U.S.C.
§§ 2601 et seq., as amended, the Labor Management
Relations Act, 29 U.S.C. §§ 141 et seq., as amended, the
Occupational Safety and Health Act (“OSHA”), 29 U.S.C.
§§ 651 et seq., as amended, the Racketeer Influenced and
Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961 et
seq., as amended, the Sarbanes Oxley Act of 2002, the Sabine Pilot
Doctrine, the American Jobs Creation Act of 2004, the Texas
Commission on Human Rights Act (“TCHRA”‘), Texas
Labor Code §§ 1.001 et seq. , as amended, the
Texas Pay Day Law, Texas Labor Code §§ 61.001 et
seq. , as amended, and/or the Texas Worker’s.
Compensation Discrimination Law, Texas Labor Code §§
451.001 et seq. , as amended — for any actions or
omissions whatsoever, whether known or unknown, and whether
connected with the employment relationship between Employee and
Zale, and/or the cessation of Employee’s employment with
Zale, or not, which existed or may have existed prior to, or
contemporaneously with, the execution of this Agreement (the
“Released Claim(s)”); provided, however, nothing in
this Section 2 shall release any claim for indemnifi
