-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, qQ4A2UTbhuYnmz8/ghte7FagNjESA1zAnonE5cXnt3y4DGxkmKiApi6bz/yXcXa5 IeYmMndFgFgaSdmOpLJ0bw== 0000950123-95-002532.txt : 19950906 0000950123-95-002532.hdr.sgml : 19950906 ACCESSION NUMBER: 0000950123-95-002532 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 2 FILED AS OF DATE: 19950905 SROS: NONE SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: ZALE CORP CENTRAL INDEX KEY: 0000109156 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-JEWELRY STORES [5944] IRS NUMBER: 750675400 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-12429 FILM NUMBER: 95570135 BUSINESS ADDRESS: STREET 1: 901 W WALNUT HILL LN CITY: IRVING STATE: TX ZIP: 75038 BUSINESS PHONE: 2145804000 MAIL ADDRESS: STREET 1: 901 WEST WALNUT HILL LANE CITY: IRVING STATE: TX ZIP: 75038-1003 FORMER COMPANY: FORMER CONFORMED NAME: ZALE JEWELRY CO INC DATE OF NAME CHANGE: 19710510 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: SWAROVSKI INTERNATIONAL HOLDING AG CENTRAL INDEX KEY: 0000940267 STANDARD INDUSTRIAL CLASSIFICATION: [] STATE OF INCORPORATION: V8 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: GENERAL-WILLE-STRASSE 88 CH-8706 STREET 2: SWITZERLAND CITY: FELDMEILEN STATE: V8 BUSINESS PHONE: 0114119257111 MAIL ADDRESS: STREET 1: GENERAL-WILLE-STRASSE 88 CH-8706 STREET 2: SWITZERLAND CITY: FELDMEILEN STATE: V8 SC 13D/A 1 FINAL AMENDMENT TO SCHEDULE 13D 1 Page 1 of 9 Pages UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. 1)* (FINAL) ZALE CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK - -------------------------------------------------------------------------------- (Title of Class of Securities) 988858 10 6 - -------------------------------------------------------------------------------- (CUSIP Number) Ronald Greenberg, Esq. Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 212 698 7710 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) August 31, 1995 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement / /. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). Although this Amendment No. 1 is a final Amendment, pursuant to Rule 101(a)(2)(ii) of Regulation S-T the original Schedule 13D (without exhibits) is attached as an appendix to this Amendment No. 1. 2 SCHEDULE 13D - ------------------------ -------------------- CUSIP NO. 988858 10 6 PAGE 2 OF 9 PAGES - ------------------------ -------------------- - ------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS Swarovski International Holding A.G. - ------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / - ------------------------------------------------------------------------------- 3 SEC USE ONLY - ------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* Not applicable - ------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - ------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Switzerland - ------------------------------------------------------------------------------- NUMBER OF 7 SOLE VOTING POWER None SHARES ------------------------------------------------------ BENEFICIALLY 8 SHARED VOTING POWER None OWNED BY ------------------------------------------------------ EACH 9 SOLE DISPOSITIVE POWER None REPORTING ------------------------------------------------------ PERSON 10 SHARED DISPOSITIVE POWER None WITH - ------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON None - ------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* / / - ------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0% - ------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - ------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION. 3 Page 3 of 9 pages This Amendment No. 1 amends and supplements the Schedule 13D, dated September 9, 1993 (the "Schedule 13D"), filed by Swarovski International Holding A.G. ("Holding") with regard to the common stock, par value $.01 per share (the "Common Stock"), of Zale Corporation, a Delaware corporation ("Zale"). Capitalized terms used without definition have the meanings assigned to them in the Schedule 13D. Item 5. Interest in Securities of the Issuer. Items 5(a), (b) and (c). Pursuant to a letter agreement, dated August 31, 1995 (the "Letter Agreement"), on August 31, 1995 Zale redeemed, and Holding assigned and delivered to Zale, all of Holding's 1,852,884 Warrants to purchase Common Stock, Series B (the "Series B Warrants"), and Zale acquired all of Holding's right, title and interest under or with respect to the Series B Warrants, in consideration of Zale's payment of $9,264,420 to Holding. As previously reported in the Schedule 13D, Holding had acquired the Series B Warrants on September 3, 1993 pursuant to a Settlement Agreement approved by the Bankruptcy Court which confirmed the Plan of Reorganization for Zale and its Affiliated Debtors (the "Plan"), which Plan became effective July 30, 1993. In addition, between July 11 and July 13, 1995, Swarovski America Limited ("SAL"), a wholly-owned indirect subsidiary of Holding, sold in the open market 22,890 shares of Common Stock at a price per share of $13.50. These shares had been issued to SAL pursuant to the Plan. Effective August 31, 1995, Holding no longer beneficially owns any shares of the Common Stock. 4 Page 4 of 9 pages Item 5(e). As a result of the redemption by Zale of the Series B Warrants, on August 31, 1995 Holding ceased to beneficially own 5% or more of the shares of Common Stock. Item 6. Contracts, Arrangements, Undertakings or Relationships With Respect to Securities of the Issuer. The first sentence of the amendment to the response to Items 5(a), (b) and (c) set forth above, describing the Letter Agreement, is incorporated herein by reference. Item 7. Material to be Filed as Exhibits. Item 7 is hereby amended by the addition of the following: (5) Letter Agreement, dated August 31, 1995, between Holding and Zale. 5 Page 5 of 9 pages SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: August 31, 1995 SWAROVSKI INTERNATIONAL HOLDING, A.G. By:/s/ Gernot Langes-Swarovski ---------------------------------------------- Name: Gernot Langes-Swarovski Title: Chairman of the Board By:/s/ Christian Schwemberger-Swarovski ---------------------------------------------- Name: Christian Schwemberger-Swarovski Title: Vice Chairman of the Board 6 Page 1 of 177 Pages UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. _)* ZALE CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK - -------------------------------------------------------------------------------- (Title of Class of Securities) 988858 10 6 ------------------------------------------------------------------------------- (CUSIP Number) Ronald Greenberg, Esq. Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza New York, New York 10112 212 698 7710 - -------------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) September 9, 1993 - -------------------------------------------------------------------------------- (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box / /. Check the following box if a fee is being paid with the statement /x/. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7.) NOTE: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. *The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). 7 SCHEDULE 13D - ------------------------ --------------------- CUSIP NO. 988858 10 6 PAGE 2 OF 177 PAGES - ------------------------ --------------------- - -------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSONS Swarovski International Holding A.G. - -------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / / (b) / / - -------------------------------------------------------------------------------- 3 SEC USE ONLY - -------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* 00; WC - -------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) / / - -------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Switzerland - -------------------------------------------------------------------------------- 7 SOLE VOTING POWER 1,874,044 shares of Common Stock (including 1,852,884 issuable upon exercise of Series NUMBER OF B Warrant) SHARES ------------------------------------------------------------- BENEFICIALLY 8 SHARED VOTING POWER OWNED BY ------------------------------------------------------------- EACH 9 SOLE DISPOSITIVE POWER 1,874,044 shares of Common REPORTING Stock (including 1,852,884 issuable upon exercise of PERSON Series B Warrant) WITH ------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER - -------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 1,874,044 shares of Common Stock (including 1,852,884 issuable upon exercise of Series B Warrant) - -------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* / / - -------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.08% - -------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -------------------------------------------------------------------------------- *SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE AND THE SIGNATURE ATTESTATION. 8 Page 3 of 177 Pages Statement Pursuant to Rule 13d-1 of the General Rules and Regulations under the Securities Exchange Act of 1934, as amended ITEM 1. SECURITY AND ISSUER. This Statement on Schedule 13D relates to the Common Stock, par value $.01 per share (the "Common Stock") of Zale Corporation, a Delaware corporation ("Zale"). The address of the principal executive offices of Zale is 901 West Walnut Hill Lane, Irving, Texas 75038-1003 ITEM 2. IDENTITY AND BACKGROUND. This statement is filed by Swarovski International Holding A.G., a Swiss corporation ("Holding"). The business address and principal offices of Holding are located at General Wille Strasse 88, CH-8706, Feldmeilen, Switzerland. Holding is a holding company which is engaged, through its subsidiaries, in the manufacture and marketing of precious and synthetic jewelry stones, crystal, optical products, grinding wheels and abrasives and in specialty retailing of costume jewelry, and which holds investments (either directly or through subsidiaries) in other entities. The capital stock of Holding is privately held by members of the Swarovski family, none of whom individually control Holding. The directors and executive officers of Holding, each of whom has the same business address as Holding unless otherwise indicated, and their present principal occupation or employment are: Manfred Swarovski Chairman of the Board of Directors of Holding Gernot Langes-Swarovski Vice-Chairman of the Board of Directors of Holding Christian Schwemberger-Swarovski Director of Holding Gerhard Swarovski Director of Holding Helmut Swarovski Director of Holding 9 Page 4 of 177 Pages Andreas Schiestl-Swarovski Director of Holding Marina Giori Director of Holding Carl Burckhardt Director of Holding Heinz B. Molan Executive Officer of Holding Dr. Michael Semerad-Radulescu Executive Officer of Holding Raymond A. Baliatico Executive Officer of Holding Reinhard Dallarosa Executive Officer of Holding Dieter A. Kattge Executive Officer of Holding Werner Trattner Executive Officer of Holding All of the above persons, with the exception of Mr. Radulescu, Mrs. Giori, Mr. Burckhardt and Mr. Baliatico, are Austrian citizens. Dr. Radulescu is a German citizen, Mrs. Giori and Mr. Burckhardt are Swiss citizens, and Mr. Baliatico is a United States citizen. During the last five years, neither Holding nor any of the executive officers or directors referred to above has been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or was a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. ITEM 3. SOURCE AND AMOUNT OF FUNDS AND OTHER CONSIDERATION. The Plan of Reorganization under Chapter 11 of the Bankruptcy Code for Zale and its Affiliated Debtors, jointly administered under Case No. 392-30001-SAF-11 (the "Plan"), was confirmed by the Bankruptcy Court for the Northern District of Texas, Dallas Division (the "Bankruptcy Court"), on May 20, 1993, 10 Page 5 of 177 Pages and became effective on July 30, 1993 (the "Effective Date"). Under the Plan, Swarovski America Limited, a wholly-owned indirect subsidiary of Holding, is to be issued 21,160 shares of Common Stock in discharge of prepetition claims against Zale and its Affiliated Debtors in the amount of $1,197,007.58, arising out of the sale of goods in the ordinary course of business. On May 21, 1993, the Bankruptcy Court approved the execution by Zale and its Affiliated Debtors of a Settlement Agreement, dated as of April 30, 1993 (the "Settlement Agreement"), with Holding which provides for (i) the settlement of all claims of Zale and its Affiliated Debtors (including claims of creditors of Zale and its Affiliated Debtors assigned to Zale pursuant to the Plan) against Holding and its directors, officers and affiliates, including claims arising out of, among other things, the guaranty by Holding of indebtedness owed to Zale (aggregating at least $37.5 million), (ii) the delivery of general releases to Holding from Zale and its subsidiaries, and (iii) the issuance to Holding of Warrants to purchase Common Stock, Series B (the "Series B Warrants"), entitling Holding initially to purchase 1,852,884 shares of Common Stock on full exercise thereof, in consideration of the payment by Holding to Zale of the sum of $70,000,000. On September 9, 1993, the transactions under the Settlement Agreement were consummated and the Series B Warrants were issued to Holding. The terms of the Series B Warrants are governed by a Warrant Agreement, dated as of September 9, 1993, between Zale, Holding and the Warrant Agent named therein (the "Series B Warrant Agreement"). Prior to the Effective Date, Holding owned 50% of Jewelers Holding Corporation ("JHC"), which, in turn, owned 97.5% of Zale Holding Corporation ("ZHC"), which, in turn, owned 100% of Zale. On the Effective Date, ZHC's equity interest in Zale was cancelled and JHC was merged into a subsidiary of Zale. There is no separate allocation of the consideration paid by Holding under the Settlement Agreement to the settlement of claims (including satisfaction of guarantee obligations), general releases and Series B Warrants to be received by Holding thereunder. The funds paid under the Settlement Agreement were paid from funds of Holding and funds provided by affiliated companies. No portion of the Series B Warrants is required to be distributed to such affiliated companies. ITEM 4. PURPOSE OF TRANSACTION. Holding acquired beneficial ownership of the shares of Common Stock and Series B Warrants described in Item 3 to which this Statement on Schedule 13D relates as a result of the consummation of the Plan and the consummation of the transactions contemplated under the Settlement Agreement. If Holding were to 11 Page 6 of 177 Pages exercise the Series B Warrants, its ownership of Common Stock might give Holding the ability to influence the affairs of Zale. Holding may acquire additional shares from time to time, in the open market or otherwise, subject to, among other things, market conditions. Pursuant to the Series B Warrant Agreement, Zale has agreed to register, pursuant to Section 5 of the Securities Act of 1933, as amended (the "Act"), an exchange offer (the "Exchange Offer"), whereby Holding will be offered the opportunity to exchange some or all of its Series B Warrants for an equal number of Warrants to Purchase Common Shares, Series C, of Zale (the "Series C Warrants"). The terms of the Series C Warrants will be substantially similar to the Series B Warrants and are set forth in the form of Warrant Agreement attached as Annex B to the Series B Warrant Agreement (the "Series C Warrant Agreement"). If Zale fails to consummate the Exchange Offer, or, in certain circumstances, fails to cause a shelf registration with respect to the Series B Warrants to become effective, by the 180th day following the date of issuance of the Series B Warrants (September 9, 1993), Zale has agreed to issue additional warrants (the "Penalty Warrants") to Holding, on a quarterly basis, until either the Exchange Offer is consummated or the shelf registration has been declared effective, until approximately 27 months after the date the Series B Warrants were issued. In addition, under the Series C Warrant Agreement Zale has agreed to maintain in effect a registration statement pursuant to Rule 415 under the Act for a delayed or continuous offering of Common Stock issuable upon exercise of the Series C Warrants for a period of approximately five years from the date of issuance of the Series B Warrants. If Zale fails to maintain this registration statement in effect for a period in excess of 30 calendar days (whether or not consecutive) in any period of 365 days, Holding will be entitled to additional Penalty Warrants. The maximum aggregate amount of Penalty Warrants issuable to Holding under the Series B Warrant Agreement and the Series C Warrant Agreement can not exceed Penalty Warrants to purchase 730,450 shares of Common Stock. As of the date hereof, no Penalty Warrants have been issued or are issuable to Holding. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. Holding acquired beneficial ownership of the shares of Common Stock described in Item 3 to which this Statement on Schedule 13D relates as a result of the consummation of the Plan and the consummation of the transactions contemplated pursuant to the Settlement Agreement. (a) Holding beneficially owns an aggregate of 1,874,044 shares of Common Stock (including 1,852,884 shares issuable upon exercise of Series B Warrants but excluding shares issuable upon exercise of Penalty Warrants not yet issued), or 12 Page 7 of 177 Pages 5.08% of the Common Stock outstanding upon consummation of the transactions contemplated pursuant to the Settlement Agreement. Beneficial ownership of such shares was acquired as described in Item 3 and Item 4. (b) The number of shares of Common Stock as to which there is sole power to vote or to direct the vote, shared power to vote or to direct the vote, sole power to dispose or direct the disposition, or shared power to dispose or direct the disposition for Holding is set forth in the cover pages and such information is incorporated herein by reference. (c) There have been no reportable transactions with respect to the Common Stock within the last 60 days by Holding except for the acquisition of beneficial ownership of the shares of Common Stock being reported on this Statement. (d) Not applicable. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIP WITH RESPECT TO THE SECURITIES OF THE ISSUER. The responses to Item 3 and Item 4 are incorporated herein by reference. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS. (1) Plan of Reorganization, as amended and supplemented to date (incorporated by reference to Disclosure Statement Pursuant to Section 1125 of the Bankruptcy Code with Respect to the Plan of Reorganization under Chapter 11 of the Bankruptcy Code for Zale Corporation and its Affiliated Debtors dated March 22, 1993, as filed with the Securities and Exchange Commission with the Company's Form T-3 (no. 22-24068) on April 2, 1993). (2) Warrant Agreement, among Zale Corporation, Zale Corporation, as Warrant Agent, and Swarovski International Holding A.G., dated as of September 9, 1993, with respect to Warrants to Purchase Common Stock, Series B. (3) Form of Warrant Certificates for Series B Warrants. (4) Form of Warrant Agreement with respect to Warrants to Purchase Common Stock, Series C. 13 Page 8 of 177 Pages SIGNATURE After reasonable inquiry and to the best of its knowledge and belief, the undersigned certifies that the information set forth in this statement is true, complete and correct. Dated: September 9, 1993 SWAROVSKI INTERNATIONAL HOLDING, AG By: /s/ Gernot Langes-Swarovski ------------------------------------ Name: Gernot Langes-Swarovski Title: Vice-Chairman By: /s/ Andreas Schiestl-Swarovski ------------------------------------ Name: Andreas Schiestl-Swarovski Title: Director 14 EXHIBIT INDEX (5) Letter Agreement, dated August 31, 1995, between Holding and Zale. EX-99.5 2 LETTER AGREEMENT 1 Page 6 of 9 pages Exhibit 5 Swarovski International Holding AG General-Wille-Strasse 88 CH-8706 Feldmeilen Switzerland August 31, 1995 Zale Corporation 901 West Walnut Hill Lane Irving, Texas 75038-1003 Gentlemen: Reference is made to that certain Warrant Certificate, No. 1 issued by Zale Corporation ("Zale") to Swarovski International Holding AG ("SIH"), or registered assigns, representing 1,852,884 Warrants to Purchase Common Stock, Series B (the "Series B Warrants"). Reference is further made to that certain Warrant Agreement, dated September 9, 1993, among Zale, SIH and Zale, as Warrant Agent (the "Warrant Agreement"), pursuant to which the Series B Warrants were issued and delivered and setting forth certain provisions with respect thereto. The purpose of this letter agreement is to set forth the terms and conditions upon which Zale has agreed to redeem the Series B Warrants and acquire all of SIH's right, title and interest under or with respect to the Series B Warrants and the Warrant Agreement (the "SIH Rights"). SIH and Zale hereby agree as follows: 1. On the terms and subject to the conditions hereinafter set forth, simultaneously with the execution hereof, the Series B Warrants shall be redeemed by Zale and SIH shall assign, transfer, convey and deliver to Zale, and Zale shall acquire and accept, the Series B Warrants and the SIH Rights, all free and clear of all liens, pledges and encumbrances ("Liens"). 2. Zale shall pay to SIH, in consideration of the redemption and assignment referred to in paragraph 1 above, the sum of $9,264,420, payable by wire transfer of immediately available funds to the account of SIH set forth on Exhibit A annexed hereto and in accordance with the wire transfer instructions set forth therein. At the time of such wire transfer, SIH shall deliver to Zale the originally executed Warrant Certificate No. 1 evidencing the Series B Warrants, accompanied by an assignment instrument in form and substance reasonably satisfactory to Zale, as well as a separate instrument, in form and substance reasonably satisfactory to Zale, 2 Page 7 of 9 pages assigning to Zale the SIH Rights, each such assignment to be free and clear of all Liens and to be effective as of the payment to SIH of the amount set forth above. The wire transfer and delivery of the Series B Warrants and Assignment shall occur no later than 5:00 P.M. (CST) Thursday, August 31, 1995. As a result of such redemption, the Series B Warrants shall be cancelled and shall no longer be outstanding. 3. SIH hereby agrees that from time to time and at the request of Zale, and without further consideration, it will duly execute, acknowledge, deliver and perform all such further acts, assignments, transfers, conveyances and assurances as may be reasonably required to convey to and vest in Zale good title to the Series B Warrants and the SIH Rights. 4. SIH hereby represents and warrants to Zale as follows: (a) it owns all right, title and interest in and to the Series B Warrants and the SIH Rights, free and clear of all Liens; (b)it has not exercised any of the Series B Warrants; (c) the execution, delivery and performance by SIH of this Letter Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of SIH and do not and will not violate any law binding on SIH or conflict with or result in the breach of, or constitute a default under, the certificate of incorporation or by-laws of SIH or, to its knowledge, any agreement or instrument to which it is a party or by which it is bound, or result in or require the creation of any Lien on any of its properties; (d) this Letter Agreement has been duly executed and delivered by SIH, and constitutes the legal, valid and binding obligation of SIH, enforceable against it in accordance with its terms, except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors rights generally and by general principles of equity; and (e) it has received and reviewed all necessary disclosure materials and has been afforded the opportunity to ask such questions of representatives of Zale, and has received answers thereto, as it deemed necessary in connection with its decision to sell the series B Warrants. 5. Zale hereby represents and warrants to SIH as follows: (a) the execution, delivery and performance by Zale of this Letter Agreement and the consummation of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Zale and do not and will not violate any law binding on Zale or conflict with or result in the breach of, or constitute a default under, the certificate of incorporation or by-laws of Zale or, to its knowledge, any agreement or instrument to which it is a party or by which it is bound, or result in or require the creation of any Lien on any of its properties; and (b) this Letter Agreement has been duly executed and delivered by Zale, and constitutes the legal, valid and binding obligation of Zale, enforceable against it -2- 3 Page 8 of 9 pages in accordance with its terms, except insofar as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization or other similar laws affecting the enforcement of creditors rights generally and by general principles of equity. 6. This Letter Agreement contains the entire understanding between the parties hereto concerning the subject matter hereof and may not be changed, modified or altered, except by an agreement in writing, executed by the parties hereto. 7. This Letter agreement shall be construed in accordance with the internal laws of the State of Texas without regard to principles of conflicts of law. 8. All notices required or permitted to be given under this Letter Agreement shall be in writing and shall be given to the person entitled thereto, by hand, by telecopier, or by certified or registered mail, return receipt requested, sent, transmitted or posted to the address for that person specified in writing by a notice given in accordance with the provisions thereof: If to SIH to it at: Swarovski International Holding AG General-Wille-Strasse 88 CH-8706 Feldmeilen Switzerland Attention: Heinz Molan With a copy to: Rubin Baum Levin Constant & Friedman 30 Rockefeller Plaza - 29th Floor New York, New York 10112 Attention: Ronald Greenberg, Esq. It to Zale to it at: Zale Corporation 901 West Walnut Hill Lane Irving, Texas 75038-1003 Attention: General Counsel 9. In case any provision of this Letter Agreement shall be held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such -3- 4 Page 9 of 9 pages provision in every other respect and the remaining provisions shall not in anyway be affected or impaired thereby. 10. This Letter Agreement may be executed in several counterparts, each of which shall constitute an original, but all of which together shall constitute one of the same instrument. Very truly yours, SWAROVSKI INTERNATIONAL HOLDING AG By: /s/Gernot Langes-Swarovski ----------------------------- By: /s/Heinz Molan ----------------------------- Agreed as of the date first above written: ZALE CORPORATION By: /s/Merrill Wertheimer ----------------------- -4- -----END PRIVACY-ENHANCED MESSAGE-----