ZALE CORPORATION

Reporting to:

Chief Executive Officer

Base Compensation:

Fourteen thousand four hundred twenty-three dollars and eight cents ($14,423.08) per bi-weekly pay period which, if annualized, is equal to Three hundred seventy-five thousand dollars ($375,000).

Stock Grant:

50,000 options for shares of Zale stock with an exercise price equal to the price at the close of market on the day you join the Company or $4.00 per share, whichever is greater. Shares will vest over four years at 25% on each anniversary of your award.

15,000 restricted stock units, with vesting contingent upon continued employment (25% on 2nd anniversary of issue date, 25% on 3rd anniversary, 50% on 4'1' anniversary).

Incentive Compensation:

Beginning with FY’10 (August 1, 2009 — July 31, 2010) you will be eligible for participation in the Company’s Annual Bonus Program (as may be amended from time to time) at a target level of 75% and a maximum level of 150% of base salary, based on achievement of our financial plan. We agree to guarantee $125,000 of the FY’10 bonus, payable in two installments: $62,500 within 30 days of hire, and $62,500 in February 2010.

Relocation:

Zale Corporation will provide benefits subject to your execution of a Relocation Agreement which provides for repayment to Zale according to the following schedule if you leave Zale voluntarily or are terminated for cause in the first year after the relocation:

1st - 2nd month

100

%

3rd - 4th month

85

%

5th - 6th month

70

%

7th - 8th month

55

%

9th - 12th month

40

%

These specific benefits are:

·              A lump sum relocation allowance of $7,500.00 to offset your miscellaneous relocation expenses.

·              Zale Corporation will arrange and pay expenses for a van line move with a full pack for the movement of your household property from New York, New York to Dallas, Texas.

·              Reimbursement of 6% of realtor fees on the sale of your New York, New York home up to a maximum of $15,000.00, if needed.

·              Closing costs on the purchase of a new home in the Dallas area based upon the following items:

·              Reimbursable closing costs: legal fees, title changes, recording fees, transfer tax, documentary stamps, termite or other required building inspection, 1% loan origination fee and 1% discount point.

·              Costs not reimbursable: pre-paids for taxes, mortgage, assumption fees, escrow, etc., repairs and excess origination and/or discount points.

·              Ninety days temporary living.

·              If necessary, up to sixty days of storage for your household goods.

·              Tax gross up.

Benefits:

Participation in all benefits generally available to the Company’s Executives:

·      Company’s medical/dental plans (first of the month following 60 days of service)

·      Group life insurance (2x base salary)

·      401(k) Savings and Investment Plan (after one year of service)

·      Executive LTD

Vacation:

You will receive 4 weeks (160 hours) of vacation per fiscal year.

/s/ NEAL GOLDBERG

Neal Goldberg

Chief Executive Officer

Accepted:

/s/ RICHARD LENNOX

Richard Lennox

Dated:

July 9, 2009