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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
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