CONFIDENTIAL SEPARATION AND RELEASE AGREEMENT

Exhibit 10.1

CONFIDENTIAL SEPARATION AND RELEASE AGREEMENT

          The following document is a Confidential Release Agreement (the “Agreement”) required in order for you to receive severance and other benefits under your Employment Security Agreement dated December 22, 2008 (the “ESA”).  Please review the Agreement carefully.  If you wish to accept the terms of the Agreement, you must deliver it to Mary Ann Doran, Senior Vice President Human Resources, within 47 days following the Separation Date, as defined in the Agreement.  Thus, the Agreement must be delivered to Mary Ann Doran, Senior Vice President Human Resources, by 5:00 p.m. on March 9, 2009.

If you choose not to execute the Agreement or if you fail to execute and deliver the Agreement within the timeframe described above, you will not be entitled to any of the severance payments or separation benefits provided for in the event of a Qualifying Termination under your ESA other than earned wages and any rights you may have under COBRA.

Please contact Mary Ann Doran, Senior Vice President Human Resources, if you have any questions regarding the Confidential Separation and Release Agreement:

Mary Ann Doran
Senior VP Human Resources
901 W. Walnut Hill Lane
Irving, TX  75038
972.580.4583
mdoran@zalecorp.com

CONFIDENTIAL SEPARATION AND RELEASE AGREEMENT

This Confidential Release Agreement (“ Agreement ”) is made and entered into by and between Rodney Carter (“ Employee ”) on the one hand, Zale Delaware, Inc. (“ Zale ” or the “ Company ”) on the other, hereinafter collectively referred to as the “Parties.”

RECITALS

             WHEREAS, Employee was employed by Zale;

             WHEREAS, Employee’s last day of employment is January 20, 2009 (the “ Separation Date ”);

NOW, THEREFORE, in consideration of the Recitals and the mutual promises, covenants, and agreements set forth herein and in the Employment Security Agreement between Employee and Zale dated December 22, 2008 (the “ESA”), the receipt and sufficiency of which are hereby acknowledged, and to fulfill Employee’s obligation under Section 2.1 of the ESA, the Parties covenant and agree as follows:

1.        RELEASE OF CLAIMS

(a)       Employee, individually and on behalf of Employee’s attorneys, heirs, assigns, successors, executors, and administrators, hereby GENERALLY RELEASES, ACQUITS, AND DISCHARGES Zale and its respective current and former parent (including, but not limited to Zale Corporation), 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 “ Releasees ” and individually as a Releasee ”) from and against any and all claims, complaints, grievances, liabilities, obligations, promises, agreements, damages, wages, bonuses, 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 (“ ADEA ”), 29 U.S.C. § 621, et seq. , as amended, 29 U.S.C. §626(f) et seq ., 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, state/local anti-discrimination and anti-retaliation laws, Employee Retirement Income Security Act of 1974, (“ ERISA ”), 29 U.S.C. §§ 1001 et seq. , as amended, the Labor Management Relations Act, 29 U.S.C. §§ 141 et seq. , as amended, the Occupational Safety and Health Act , 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 Worker Adjustment and Retraining Notification Act, 29 U.S.C. 2101 et seq., as amended, Texas Labor Code §§ 21.001 et seq ., as amended, Texas Labor Code §§ 61.001 et seq ., as amended, or any other claims, including claims in equity or common law claims -- for any actions or omissions whatsoever, whether known or unknown and whether connected with the employment relationship between Employee and Zale, the cessation of Employee’s employment with Zale which existed or may have existed prior to, or contemporaneously with, the execution of this Agreement (collectively, the “ Released Claim(s) ”).   Employee agrees that this Agreement includes a release of any and all negligence claims, contractual claims, wrongful discharge claims, and claims of discrimination or retaliation of every possible kind.

(b)         Employee understands that nothing in this Agreement is intended to interfere with or deter Employee’s right to challenge the waiver of an ADEA claim or state law age discrimination claim or the filing of an ADEA charge or ADEA complaint or state law age discrimination complaint or charge with the EEOC or any state discrimination agency or commission or to participate in any investigation or proceeding conducted by those agencies.  Further, Employee understands that nothing in this Agreement would require Employee to tender back the money received under this Agreement if Employee seeks to challenge the validity of the ADEA or state law age discrimination waiver, nor does the Employee agree to ratify any ADEA or state law age discrimination waiver that fails to comply with the Older Workers’ Benefit Protection Act by retaining the money received under the Agreement.  Further, nothing in this Agreement is intended to require the payment of damages, attorneys’ fees or costs to Zale should Employee challenge the waiver of an ADEA or state law age discrimination claim or file an ADEA or state law age discrimination suit except as authorized by federal or state law.  Notwithstanding the foregoing two sentences, as provided above Employee also waives any right to recover from any Releasee in a civil suit brought by any governmental agency or any other individual on Employee behalf with respect to any Released Claim.

(c)       This release excludes any claim which cannot be released by private agreement, such as workers’ compensation claims, claims after the Effective Date of this Agreement, and the right to file administrative charges with certain government agencies.  Nothing in this Agreement shall be construed to prohibit Employee from filing a charge with or participating in any investigation or proceeding conducted by the Equal Employment Opportunity Commission, National Labor Relations Board, or a comparable state or local agency.  Notwithstanding the previous two sentences, Employee agrees to waive any right to recover monetary damages in any charge, complaint, or lawsuit against Zale filed by Employee or by anyone else on Employee’s behalf.

(d)       This general release covers both claims that Employee knows about and those that Employee may not know about, except that it does not waive any rights or claims, including claims under the ADEA, that may arise after the Effective Date of this Agreement (as defined below).  Employee further represents and warrants that: (i) Employee has been fully and properly paid for all hours worked, (ii) Employee has received all leave in accordance with applicable law; and (iii) Employee has not suffered any on the job injury for which Employee has not already filed a claim.  Employee further acknowledges, agrees and hereby stipulates that: (i) during Employee’s employment with the Company, Employee was allowed to take all leave and afforded all other rights to which Employee was entitled under the Family and Medical Leave Act (“ FMLA ”); and (ii)  the Company has not in any way interfered with, restrained or denied the exercise of (or attempt to exercise) any FMLA rights, nor terminated or otherwise discriminated against Employee for exercising (or attempting to exercise) any such rights.

          2.        Employee acknowledges and agrees that Employee will keep the terms, amount, and facts of, and any discussions leading up to, this Agreement STRICTLY AND COMPLETELY CONFIDENTIAL, and that Employee will not communicate or otherwise disclose to any employee of Zale (past, present, or future), or to any member of the general public, the terms, amounts, copies, or fact of this Agreement, except as may be required by law or compulsory process; provided, however , that Employee may make such disclosures to Employee’s tax/financial advisors or legal counsel as