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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 16, 1996
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ZALE CORPORATION
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(Exact name of registrant as specified in its charter)
Delaware 0-21526 75-0675400
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
901 W. Walnut Hill Lane, Irving, Texas 75038-1003
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (214) 580-4000
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Not Applicable
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(Former name or former address, if changed since last report.)
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Item 5. Other Events.
On September 14, 1995, the Boards of Directors of Zale Corporation, a
Delaware corporation, and Zale Delaware, Inc., a Delaware corporation,
(hereafter referred to as the "Company") approved the preparation and
implementation of the Zale Delaware, Inc. Supplemental Executive Retirement
Plan (the "Plan"), which was executed on behalf of the Company February 23,
1996, to be effective as of September 15, 1995. The purpose of the Plan is to
provide eligible executives with the opportunity to receive payments each year
after retirement equal to a portion of their Final Average Pay as defined
below.
A participant becomes vested in benefits in the Plan after completing
five years of service with the Company after September 14, 1995. A participant
also becomes vested in Plan benefits upon a change of control of the Company or
the death or disability of the participant while an active employee. A retired
participant who is vested is entitled to monthly payments continuing over the
life of the participant (or, at the election of the participant, in a joint and
50% survivor annuity with his or her surviving spouse) commencing on the first
day of the month immediately following the participant's 65th birthday. The
amount of each payment is determined under the following formula:
Benefit Points x Final Average Pay
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100
Benefit Points are calculated based on a goal for earnings before
interest, taxes, appreciation and amortization established each plan year by
the Compensation Committee of the Company. The Final Average Pay means the
average of the monthly base salary received by the participant from the Company
in the 60-month period ending immediately prior to the participant's retirement
or other termination from the Company.
The Company plans to create a trust to be known as the "Zale Delaware,
Inc. Supplemental Executive Retirement Trust" (the "Trust") for the purpose of
holding assets contributed to the Trust to assist the Company in fulfilling its
obligations under the Plan.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
99 Zale Delaware, Inc. Supplemental Executive Retirement
Plan executed February 23, 1996, effective as of
September 15, 1995.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
ZALE CORPORATION
Registrant
By: /s/ Alan P. Shor
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Alan P. Shor
Senior Vice President,
General Counsel and Secretary
Date July 12, 1996
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EXHIBIT INDEX
Exhibit
Number Description
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99 Zale Delaware, Inc. Supplemental Executive Retirement Plan executed
February 23, 1996, effective as of September 15, 1995.
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ZALE DELAWARE, INC.
SUPPLEMENTAL EXECUTIVE RETIREMENT PLAN
ARTICLE I
ESTABLISHMENT AND PURPOSE
1.1 Establishment. Zale Delaware, Inc. (the "Company") hereby
establishes the Zale Delaware, Inc. Supplemental Executive Retirement Plan
(the "Plan"), effective September 15, 1995.
1.2 Purpose. The purpose of this Plan is to provide eligible
executives with the opportunity to receive each year after retirement, payments
equal to a portion of their final average pay. The Plan is meant to provide a
long-term reward for executives that recognizes their contribution to the
Company's success throughout their careers.
ARTICLE II
DEFINITIONS
Unless the context otherwise requires, the terms used herein shall
have the meanings set forth below:
2.1 "Base Salary" means the regular salary paid to a Participant
by the Company, excluding bonuses, benefits under employee benefit plans,
fringe benefits, and any other extra or additional payments made to or for the
benefit of such Participant.
2.2 "Benefit" means the monetary amount to be paid a vested
Participant under the Plan.
2.3 "Bonus Points" means the number of points awarded to a
Participant under the formula described in Section 4.2.
2.4 "Bonus Target" means a goal for earnings before interest,
taxes, appreciation and amortization established each Plan Year by the
Compensation Committee.
2.5 "Change of Control" shall be deemed to have occurred if,
subsequent to the Effective Date of this Plan,
(a) any "person" (within the meaning of Section 13(d) of
the Exchange Act) becomes the beneficial owner (within the meaning of
Rule 13d-3 promulgated under the Exchange Act), directly or
indirectly, of either (1) a majority of the Company's outstanding
Common Stock or (2) securities of the Company representing a majority
of the combined voting power of the Company's then outstanding voting
securities, except that there shall be no Change of Control if such
person (i) becomes such a beneficial owner solely as the result
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of the acquisition of the outstanding Common Stock or other
outstanding voting securities by the Company or (ii) is an employee
benefit plan or related trust sponsored or maintained by the Company
or any corporation or other entity controlled by the Company;
(b) during any period of two consecutive years,
individuals who at the beginning of such period constitute the Board
of Directors of the Company cease, at any time after the beginning of
such period, for any reason to constitute a majority of the Board of
Directors of the Company, unless the election of any such new director
was nominated, effected, or ratified by at least two-thirds of the
directors still in office who were directors at the beginning of such
two-year period or whose election was previously so nominated,
effected, or ratified;
(c) a reorganization, merger, or consolidation of the
Company with one or more other corporations or other entities, unless,
in any case, (1) at least a majority of the Company's outstanding
Common Stock (or the equivalent equity security of the other surviving
or resulting corporation or other entity) and at least a majority of
the combined voting power of the Company's or other surviving or
resulting corporation's or other entity's outstanding voting
securities are beneficially owned, directly or indirectly, after such
reorganization, merger, or consolidation by all or substantially all
of the persons who were the beneficial owners, respectively, of a
majority of the Company's outstanding Common Stock and a majority of
the combined voting power of the Company's then outstanding voting
securities immediately before such reorganization, merger, or
consolidation in substantially the same proportions as their
beneficial ownership thereof immediately before such reorganization,
merger or consolidation, and (2) at least a majority of the members of
the board of directors or other governing body of the Company or the
other corporation or other entity surviving or resulting from such
reorganization, merger, or consolidation were, or were approved by at
least two-thirds of the, members of the Board of Directors of the
Company at the time of the execution of the initial agreement
providing for such reorganization, merger or consolidation;
(d) the sale or other disposition of all or
substantially all of the assets of the Company to one or more other
corporations or other entities, unless the conditions set forth in
subclauses (1) and (2) of subsection (c) above are satisfied with
respect to the acquiring corporation or other entity (and, as
applicable, with respect to the time of the initial agreement
providing for such sale or other disposition of assets); or
(e) the dissolution and complete liquidation of the
Company.
2.6 "Company" means Zale Delaware, Inc..
2.7 "Compensation Committee" means the Compensation Committee of
the Company.
2.8 "Disabled" means the inability of a Participant to perform
the duties of his or her position as determined by a physician approved by the
Compensation Committee.
Zale Delaware, Inc. Supplemental Executive Retirement Plan Page 2
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2.9 "Final Average Pay" means the average of the monthly Base
Salary received by the Participant from the Company in the 60-month period
ending immediately prior to the Participant's retirement or other termination
from the Company.
2.10 "Maximum Bonus Target" means the highest goal for earnings
before interest, taxes, appreciation and amortization established each year by
the Compensation Committee.
2.11 "Participant" means an executive who participates in the
Plan as provided in Article III.
2.12 "Plan" means the Zale Delaware, Inc. Supplemental Executive
Retirement Plan set forth in this document, as it may be amended from time to
time.
2.13 "Plan Year" means August 1 through July 31 except that the
first Plan Year shall commence September 15, 1995 and end July 31, 1996.
2.14 "Years of Service" means a 12-month period of continuous
service by a Participant for the Company or (to the extent the Compensation
Committee authorizes) an affiliate of the Company. Only service after
September 14, 1995 is counted for the purpose of calculating Years of Service;
provided, however, that for any Participant who was employed by the Company in
an eligible position for the entire period from September 14, 1995 to July 31,
1996, that Participant shall be considered to have one full Year of Service as
of July 31, 1996.
ARTICLE III
ELIGIBILITY
3.1 Eligibility. The following classes of executives are
Participants in the Plan:
(a) Chairman and Chief Executive Officer;
(b) President and Chief Operating Officer;
(c) Executive Vice President, Finance and
Administration;
(d) Division Presidents; and
(e) Corporate Senior Vice Presidents.
3.2 Loss of Eligibility. If an individual ceases to be an
individual listed in Section 3.1, he or she will no longer participate in the
Plan. Loss of eligibility shall not result in a forfeiture of a Participant's
Benefit previously earned under the Plan and a former Participant, pursuant to
the terms and conditions of the Plan, may continue to vest in such Benefit
based on Years of Service after loss of eligibility.
Zale Delaware, Inc. Supplemental Executive Retirement Plan Page 3
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ARTICLE IV
DETERMINATION OF BENEFITS
4.1 Calculation of Benefit. A Participant who is vested as
determined in Section 4.3 is entitled to payment of his Benefit at the time and
in the form described in Article V. The Participant's Benefit shall be monthly
payments continuing over the life of the Participant commencing on the first
day of the month immediately following the Participant's 65th birthday, with
the amount of each payment determined under the following formula:
Benefit Points x Final Average Pay
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100
If a Participant requests, as allowed in Article V, that his Benefit commence
other than on the first day of the month immediately following the
Participant's 65th birthday, or that his Benefit be paid in a form other than
monthly payments for the life of the Participant, then the Benefit to be paid
to the Participant and, if applicable, his surviving spouse, shall be the
actuarial equivalent of the Benefit payable to the Participant commencing on
the first day of the month immediately following the Participant's 65th
birthday and ending on the last day of the month in which the Participant dies.
Actuarial equivalence shall be determined using the following actuarial
assumptions. The applicable interest rate shall be that of 30-year Treasury
securities as of the first day of the calendar year in which the Benefits
commence. The mortality assumption shall be based on the 1983 group annuity
mortality tables.
4.2 Benefit Points. Each Plan Year the Compensation Committee
shall set a Bonus Target and a Maximum Bonus Target. In each Plan Year that
the Company achieves at least its Bonus Target, each Participant will be
credited with a number of Benefit Points based on the following schedule:
(a) No points if below Bonus Target;
(b) 1 point at Bonus Target;
(c) 2 points at 50% of Maximum Bonus Target; or
(d) 3 points at 100% of Maximum Bonus Target.
A Participant may accrue from 0 to 30 points, depending on Company performance
and the number of Plan Years he or she participates in the Plan.
4.3 Vesting. A Participant vests in his or her Benefit after
completing five Years of Service following September 15, 1995. Service prior
to September 15, 1995 does not count as Years of Service. However, in its sole
and absolute discretion, the Compensation Committee may accelerate vesting for
any Participant. In the event of a Change of Control, the Benefits of all
Participants will automatically vest irrespective of each Participant's Years
of Service Further, a Participant's Benefit will become fully vested if he
dies or becomes Disabled while employed by the Company.
Zale Delaware, Inc. Supplemental Executive Retirement Plan Page 4
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ARTICLE V
PAYMENT OF BENEFITS
5.1 Retirement. If a Participant retires on or after attaining
age 65, benefits will begin on the first day of the month after the
Participant's retirement. The normal form of payment is an annuity providing
monthly benefits for the life of the Participant. If the Participant retires
after attaining age 62, but before attaining age 65, the Compensation
Committee, in its sole and absolute discretion, may authorize payments
commencing as of the first day of any month after the Participant's retirement.
5.2 Death. If a Participant dies while actively employed, the
Participant's surviving spouse will be eligible to begin receiving the
Participant's Benefit in the form of monthly payments for the life of the
surviving spouse, commencing on the first day of the month following the date
the Participant would have attained age 65. In its sole and absolute
discretion, the Compensation Committee may authorize payments to the
Participant's surviving spouse commencing on an earlier date. The Benefits
payable to the surviving spouse shall have an actuarial value (calculated using
the assumptions prescribed in Section 4.1) equal to the Benefits that would
have been paid to the Participant commencing at age 65, based on the
Participant's Final Average Pay and Bonus Points as of the date of the
Participant's death. If the Participant has no surviving spouse, no death
benefits are payable.
5.3 Disability. If a Participant becomes Disabled, his Benefit
will become payable commencing on the first day of the month after his or her
Company-provided disability benefits cease.
5.4 Other Termination of Service. If the employment of a
Participant terminates for a reason other than death or Disability, prior to
the date the Participant attains age 62, the payment of his or her vested
Benefits, if any, will commence on the first day of the month immediately after
he or she attains age 65, unless the Compensation Committee, in its sole and
absolute discretion, elects to commence payments on an earlier date.
5.5 Form of Payment. The normal form of payment of the Benefit
is monthly payments for the life of the Participant. If the Participant
prefers, he or she may elect to receive the Benefit in the form of a joint and
survivor annuity calculated as provided in Section 4.1. A joint and survivor
annuity is a form of payment providing monthly payments for the life of the
Participant, followed by payments to the Participant's surviving spouse, if
any, after the Participant's death for the remainder of the surviving spouse's
life, equal to 50% of the monthly amount payable during the life of the
Participant.
5.6 Withholding of Taxes. The Company shall withhold from
payments made hereunder any taxes required to be withheld by any law or
regulation of the federal, state, or local government.
Zale Delaware, Inc. Supplemental Executive Retirement Plan Page 5
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ARTICLE VI
ADMINISTRATION
6.1 Authority of Compensation Committee. The Compensation
Committee shall have sole and absolute power and authority to interpret,
construe and administer the Plan. The Compensation Committee's interpretation
and construction of the Plan and actions hereunder shall be binding and
conclusive on all persons and for all purposes. The Compensation Committee may
designate certain Company employees to assist in the administration of the
Plan. In addition, the Compensation Committee may employ attorneys,
accountants, actuaries and other professional advisors to assist the
Compensation Committee in its administration of the Plan. The Company shall
pay the reasonable fees of any such advisor employed by the Compensation
Committee. To the extent permitted by law, the Compensation Committee, the
Board or any employee of the Company shall not be liable to any person for any
action taken or omitted in connection with the interpretation and
administration of the Plan unless attributable to his or her own willful
misconduct or lack of good faith.
6.2 Indemnification of Employees of the Company. The Company
hereby agrees to indemnify, jointly and severally, the Compensation Committee
and all employees of the Company against any and all claims, losses, damages or
expenses, including counsel fees, incurred by them, and any liability,
including any amounts paid in settlement with their approval arising from their
action or failure to act with respect to any matter relating to the Plan,
except when the same is judicially determined to be attributable to their
willful misconduct or lack of good faith. The indemnification provided by this
Section 6.2 shall survive the termination of the Plan and shall be binding on
the Company's successors and assigns.
6.3 Cost of Administration. The cost of this Plan and the
expenses of administering the Plan shall be paid by the Company.
ARTICLE VII
CLAIMS PROCEDURE
7.1 Claim. Any person claiming a benefit, requesting an
interpretation or ruling under the Plan, or requesting information under the
Plan shall present the request in writing to the Compensation Committee, which
shall respond in writing as soon as possible.
7.2 Denial of Claim. If the claim or request is denied, the
written notice of denial shall state:
(a) The reasons for denial, with specific reference to
the Plan provisions on which the denial is based.
Zale Delaware, Inc. Supplemental Executive Retirement Plan Page 6
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(b) A description of any additional material or
information required and an explanation of why it is necessary.
(c) An explanation of the Plan's claim review procedure.
7.3 Review of Claim. Any person whose claim or request is denied
or who has not received a response within thirty (30) days, may request review
by notice in writing received by the Compensation Committee within seventy-
five (75) days after the date of the notice of denial. The claim or request
shall be reviewed by the Compensation Committee, who may, but shall not be
required to, grant the claimant a hearing. On review, the claimant may have
representation, examine pertinent documents and submit issues and comments in
writing. The decision on review shall normally be made within sixty (60) days.
If an extension of time is required for a hearing or other special
circumstance, the claimant shall be notified and the time limit shall be one
hundred twenty (120) days. The decision shall be in writing, shall state the
reasons for denial and shall reference the relevant plan provisions.
7.4 Appeal of Decision on Review. If the claimant does not agree
with the decision of the Compensation Committee on review of the claim, the
claimant may appeal the decision of the Compensation Committee to the Board of
Directors of the Company by notice in writing received by the Board of
Directors within seventy-five (75) days after the date of the decision on
review.
7.5 Final Decision. The decision on appeal shall normally be
made within sixty (60) days. If an extension of time is required for a hearing
or other special circumstance, the claimant shall be notified and the time
limit shall be one hundred twenty (120) days. The decision of the Board of
Directors on appeal shall be in writing and shall state the reasons for denial
and shall reference the relevant Plan provisions. All decisions on appeal
shall be final and bind all parties concerned.
ARTICLE VIII
AMENDMENT AND TERMINATION
8.1 Amendment. Subject to the consent requirements of this
Section 8.1, the Board of Directors of the Company, on a favorable vote of at
least 75% of the directors, shall have the right to amend this Plan at any time
and from time to time, including a retroactive amendment. Any such amendment
shall become effective upon the date stated therein, except as otherwise
provided in such amendment. No amendment shall decrease or restrict Benefits,
whether vested or not, earned as of the date of execution of such amendment
without the consent of the affected Participant or Participants. Further, no
amendment may extend the date that nonvested benefits would otherwise become
vested without the consent of the affected Participant or Participants Any
amendment approved by the Board of Directors may be signed by the Chief
Executive Officer or the Secretary of the Company.
Zale Delaware, Inc. Supplemental Executive Retirement Plan Page 7
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8.2 Termination of the Plan. The Company has
established this Plan with the bona fide intention and expectation
that it will deem it advisable to continue it in effect. However, the
Board of Directors of the Company, on a favorable vote of 75% of at
least the directors, may terminate the Plan in its entirety at any
time. In such event each Participant shall become fully vested in his
benefit earned as of the date of termination.
ARTICLE IX
GENERAL PROVISIONS
9.1 Rights Against the Company. The Plan shall not be deemed to
constitute a contract between the Company and any Participant. Nothing
contained in the Plan shall be deemed to interfere with the right of the
Company to terminate any Participant at any time, without regard to the effect
such termination may have on any rights under the Plan.
9.2 Funding. The Company intends that the Plan shall constitute
an "unfunded plan" for purposes of the Internal Revenue Code of 1986, as
amended (the "Code") and, to the extent applicable, Title I of the Employee
Retirement Income Security Act of 1974, as amended, and that any employee or
spouse of an employee eligible to receive benefits under the Plan shall have
the status of an unsecured general creditor of the Company as to the benefits
provided pursuant to the Plan or assets identified specifically by the Company
as a reserve for the discharge of its obligations under the Plan.
9.3 Payment Due to an Individual Who is Incapable of Managing His
or Her Affairs. If the Compensation Committee shall find that any person to
whom any payment is payable under the Plan is unable to care for his or her
affairs because of mental or physical illness, accident, or death, or is a
minor, any payment due (unless a prior claim therefor shall have been made by a
duly appointed guardian, committee or other legal representative) may be paid
to the spouse, a child, a parent, a brother or sister or any person deemed by
the Compensation Committee, in its sole discretion, to have incurred expenses
for such person otherwise entitled to payment, in such manner and proportions
as the Compensation Committee may determine. Such payments shall be a complete
discharge of the liabilities of the Company under this Plan, and the Company
shall have no further obligation to see to the application of any money so
paid.
9.4 Spendthrift Clause. No right, title or interest of any kind
in the Plan shall be transferable or assignable by any Participant or surviving
spouse of a Participant or be subject to alienation, anticipation, encumbrance,
garnishment, attachment, execution or levy of any kind, whether voluntary or
involuntary, nor subject to the debts, contracts, liabilities, engagements, or
torts of the Participant or surviving spouse. Any attempt to alienate,
anticipate, encumber, sell, transfer, assign, pledge, garnish, attach or
otherwise subject to legal or equitable process or encumber or dispose of any
interest in the Plan shall be void.
Zale Delaware, Inc. Supplemental Executive Retirement Plan Page 8
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9.5 Severability. In the event that any provision of this Plan
shall be declared illegal or invalid for any reason, said illegality or
invalidity shall not affect the remaining provisions of this Plan but shall be
fully severable and this Plan shall be construed and enforced as if said
illegal or invalid provision had never been inserted herein.
9.6 Construction. The article and section headings and
numbers are included only for convenience of reference and are not to be taken
as limiting or extending the meaning of any of the terms and provisions of this
Plan. Whenever appropriate, words used in the singular shall include the
plural or the plural may be read as the singular. When used herein, the
masculine gender includes the feminine gender.
9.7 Governing Law. The validity and effect of this Plan, and the
rights and obligations of all persons affected hereby, shall be construed and
determined in accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the Company has executed this Plan on the 23 day
of February, 1996, effective as of the 15th day of September, 1995.
ZALE DELAWARE, INC.
By:/s/ Robert J. DiNicola
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Robert J. DiNicola
Chairman and Chief Executive Officer
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(Title)
Zale Delaware, Inc. Supplemental Executive Retirement Plan Page 9
