TERMINATION AND SETTLEMENT AGREEMENT

         This TERMINATION AND SETTLEMENT AGREEMENT (the "Agreement") is made and
entered into as of this 3rd day of January, 1997, by and between Town & Country
Corporation ("Town & Country"), a Massachusetts corporation, and C. William
Carey ("Carey").

         WHEREAS, over an extended period of time, Carey has been employed by
Town & Country in various capacities, including as its President and Chief
Executive Officer, and has served each as a Director and Chairman of the Board.

         WHEREAS, the Board of Directors ("the Board") of Town & Country
believes it to be in the best interest of Town & Country to terminate Carey's
employment without cause, effective upon execution of this Agreement and payment
of the obligations to Carey, as set forth herein;

         WHEREAS, the Board believes that, in view of Carey's high personal
stature in the jewelry industry and his intimate knowledge of Town & Country, it
would be in Town & Country's best interest if Carey would agree to restrictions
as to his ability, directly or indirectly, to compete with Town & Country and
its subsidiaries, and on his ability, directly and indirectly, to solicit for
employment current employees of Town & Country and its subsidiaries;

         WHEREAS, the Board believes that it is in the best interest of Town &
Country, in order to provide for a more harmonious period of transition
subsequent to Carey's departure, that Carey tender his resignations, and that
such resignations be accepted, as a member of the Board and as

<PAGE>

Chairman of the Board;

         WHEREAS, the Board recognizes the economic disadvantage to Carey in
agreeing to restrict his ability to earn gainful employment in the jewelry
industry, since for over 41 years Carey's professional life has been
concentrated in the jewelry industry;

         WHEREAS, after considerable negotiations, the Board and Carey have
agreed to enter into this Agreement for the purpose of resolving the terms of
Carey's termination from Town & Country his resignation as a member and Chairman
of the Board and his agreement to refrain from competition with Town & Country,
which Agreement will supersede any other agreement of the parties on the subject
matter addressed herein;

         WHEREAS, in order to assist Town & Country, including its subsidiaries,
during the transition period subsequent to Carey's departure, the Board desires
to retain Carey during a two year consulting period following the termination of
Carey's employment, and further desires to limit certain voting rights which
Carey currently has as a holder of shares of Class B Common Stock of Town &
Country, all as more fully set forth in a Consulting Agreement and Side Letter
Agreements of even date herewith (together, the "Ancillary Agreements"), which
Carey is entering into in consideration of rights granted to Carey in this
Agreement and the Ancillary Agreements; and

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<PAGE>

         WHEREAS, Town & Country, acting through its Board, and Carey believe it
to be in the best interest of each to set forth in writing their understandings
as to their respective rights and obligations upon the termination of Carey's
employment, without Cause, from Town & Country as set forth in this Agreement.

         NOW, THEREFORE, in consideration of the following terms and conditions,
which the parties hereby acknowledge and agree are in satisfaction of any and
all obligations of Town & Country and Carey with respect to and in any way
relating to or arising out of Carey's employment and the termination of Carey's
employment, the parties agree as follows:

         1. "Town & Country" Defined. The parties acknowledge and agree that the
term "Town & Country" includes Town & Country Corporation and each of its
divisions, affiliates and subsidiaries, including, but not limited to, Fine
Jewelry Group, Inc., and its and their respective officers, directors,
employees, agents, successors and assigns.

         2. Termination Status; Effective Date. Carey's employment with Town &
Country is terminated without cause, as such term is defined in the Employment
Agreement, as of the date of execution of this Agreement (the "Termination
Date").

         3. Compensation Payments and Expense Reimbursement.

            (a) Reimbursable Expenses. Contemporaneously with the execution of
this Agreement, Town & Country has paid Carey $__________ via wire transfer in
immediately

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payable funds, representing reimbursement for all expenses incurred on behalf of
Town & Country for which Carey has submitted appropriate forms for reimbursement
through and including the Termination Date. Town & Country shall promptly pay
Carey, upon submission of appropriate reimbursement forms, for such additional
reasonable expenses incurred on behalf of Town & Country through the Termination
Date as and when Carey submits evidence of incurring such expenses to Town &
Country.

            (b) Lump Sum Payment. Contemporaneously upon the execution of this
Agreement and in consideration of the cancellation of Carey's rights under any
agreement with Town & Country, Town & Country has paid Carey $3,568,191, via
wire transfer in immediately available funds, representing the lump sum payment
required to be paid to Carey upon his termination. The parties agree that no tax
withholding shall be required in connection with this payment and that Town &
Country will issue Carey a Form 1099 in connection therewith.

         4. Insurance and Other Benefits.

            (a) Health and Medical Benefits. Town & Country shall continue to
provide Carey, through and including February 28, 2001, the term of the
Employment all health and medical benefits which may be maintained by the
Company for its most senior executives, either by including Carey in any group
medical plan it may maintain, or by providing comparable coverage through an
individual plan. Carey agrees that the first 18 months of such coverage shall be
the coverage continuation provided for by COBRA (to be paid by Town & Country)
and to execute any documents necessary to continue such


                                     - 4 -
<PAGE>

coverage, as may be prepared by Town & Country. The parties agree that the
provision of such benefits shall be taxable income to Carey under Internal
Revenue Code Section 106.

            (b) Key Man Life Insurance Policy. Town & Country shall
contemporaneously upon the execution of this Agreement assign to Carey, at his
election, all of its rights to the key man life insurance policy currently
maintained by the Company on Carey's life, provided Carey tenders to the Company
the sum equal to the cash surrender value of such key man life insurance policy
plus an amount equal to any paid but unearned premiums on such policy.

            (c) Split Dollar Life Insurance Policy. Town & Country hereby
assigns to Carey all of its rights to the split dollar life insurance policy,
including assigning the cash surrender value thereof, currently maintained by
the Company on Carey's life, and Town & Country shall immediately take such
actions as are necessary to eliminate Town & Country's collateral assignment of
such split dollar life insurance policy. Further, contemporaneously upon the
execution of this Agreement, Town & County has paid to Carey via wire transfer
in immediately available funds, the sum of $107,154.64, representing the
remaining premium payments due on such split dollar life insurance policy.

            (d) Stock Option Grants Confirmed; Exercise Period Extended. All
stock options granted to Carey by Town & Country and vested as of the
Termination Date under any Town & Country stock option plan, incentive plan or
otherwise, including, but not limited to, the Town & Country 1995 Stock Option
and Incentive Plan, as identified in Schedule A attached hereto, are hereby
confirmed, and each applicable Stock Option Agreement is hereby amended such
that the Exercise Period of each such stock option shall


                                     - 5 -
<PAGE>

be extended until the fifth (5th) anniversary of the date of this Agreement.
Each stock option, together with the underlying shares of Town & Country Class A
Common Stock, shall continue to be registered with the Securities and Exchange
Commission throughout such five year period.

         5. Resignation as Director and Chairman of the Boards. Effective
immediately, Carey hereby tenders his resignation as a member of the Board of
Town & Country and the Board of Directors of each subsidiary of Town & Country
other than Essex Public Company Limited (Town & Country's subsidiary based in
Thailand), and further tenders his resignation as Chairman of the Board of Town
& County and of each subsidiary of Town & Country for which he may hold such
office (except the Chairmanship of Essex Public Company Limited), Town &
Country, on behalf of itself and each of its subsidiaries, hereby accepts each
such resignation.

         6. Release. In exchange for the mutual covenants and agreements set
forth in this Agreement, and other good and valuable consideration provided for
in this Agreement, the parties hereby agree to the following:

            (a) Carey hereby releases and forever waives his right to assert any
form of legal claim against Town & Country of any kind whatsoever arising from
any events, acts or omissions to act from the beginning of time through the date
hereof. Carey's waiver and release herein is intended to bar any form of legal
claim, charge, complaint or any other form of action (jointly referred to as
"Claims") against Town & Country seeking any form of relief including, without
limitation, equitable relief (whether declaratory, injunctive or


                                     - 6 -
<PAGE>

otherwise) or the recovery of any damages or any other form of monetary recovery
whatsoever (including, without limitation, back pay, front pay, compensatory
damages, emotional distress damages, punitive damages, liquidated damages,
attorneys fees (except as provided in paragraph 20 hereof) and any other costs)
against or from Town & Country, relating to any such events, actions or
omissions to act. This release of claims includes, without limitation, any
claims Carey may have under the Age Discrimination in Employment Act. Carey's
waiver and release herein is not intended to, nor does it bar any form of Claim
against Town & Country for breach of this Agreement or any of the Ancillary
Agreements.

            (b) Carey will not knowingly assist, aid, participate, encourage or
solicit (directly and indirectly) any person(s), including, but not limited to,
any shareholder(s) of Town & Country, in connection with any contemplated or
actual legal proceedings against Town & Country including, without limitation,
any shareholders' derivative suit or other claim under the Massachusetts
Business Corporation Law, or any claim under the Securities Act of 1933, the
Securities Exchange Act of 1934 and Massachusetts "Blue Sky" statutes and
regulations, all as amended. In the event Carey is contacted (formally or
informally) in connection with any such contemplated or actual legal proceedings
against Town & Country including, without limitation, receiving any legal
process, he shall immediately inform the Board of such contact. In the event of
any suit against Town & Country, Carey will assist Town & Country in the
investigation and defense thereof at Town & Country's request and expense.

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<PAGE>

            (c) Town & Country hereby releases and forever waives its right to
assert any form of legal claim against Carey of any kind whatsoever arising from
any events, acts or omissions to act from the beginning of time through the date
hereof. Town & Country's waiver and release herein is intended to bar any form
of Claim against Carey seeking any form of relief including, without limitation,
equitable relief (whether declaratory, injunctive or otherwise) or the recovery
of any damages or any other form of monetary recovery whatsoever against or from
Carey, relating to any such events, actions or omissions to act. Town &
Country's waiver and release herein is not intended to bar any form of Claim
against Carey for breach of this Agreement or any of the Ancillary Agreements.

         7. Company Documents, Property, Mail and Phone Calls.

            (a) Upon the request of the Chairman of the Board of Town & Country,
Carey shall return as necessary all Town & Country documents and property (other
than those specifically agreed to be transferred in connection with the
establishment of the consulting arrangement pursuant to the Consulting Agreement
of even date herewith) including, without limitation, all computer software and
documentation, all computer disks, all sales reports, sales projections,
customer lists and company financial information (the "Company Information");
provided, however, that Carey may use the Company Information on a confidential
basis in connection with the performance of his duties under the Consulting
Agreement.

            (b) Town & Country shall use its best efforts to forward immediately
any personal mail or telephone calls to a local address and telephone number
provided by


                                     - 8 -
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Carey. Carey shall use his best efforts to forward any company mail or telephone
calls to Town & Country.

            (c) Carey shall be provided access, during normal business hours, of
records of Town & Country which may directly relate to Carey, including personal
tax matters, litigation in which Carey is a named party and similar records.

         8.       Confidentiality.

            (a) Carey expressly acknowledges and agrees that all information
relating in any way to the subject matter of this Agreement, including the
existence of and terms of this Agreement, shall be held confidential by him and
shall not be publicized or disclosed to any person (other than an immediate
family member, legal counsel or financial advisor, provided that any such
individual to whom disclosure is made agrees to be bound by these
confidentiality obligations), business entity or government agency, except to
comply with state or federal law, including, but not limited to, the Securities
and Exchange Commission and the Internal Revenue Service, and in addition, Carey
may use this Agreement in any litigation or proceeding brought against Carey in
connection with this Agreement or any payments made hereunder.

            (b) Carey agrees that he will not use for his own benefit nor
disclose to third persons any trade secrets and/or confidential information,
except to the extent that such trade secrets and/or confidential information (i)
were known to Carey prior to his employment by Town & Country, (ii) are
authorized in writing by Town & Country to be used or disclosed, (iii) were in
or became part of the public domain (other than through


                                     - 9 -
<PAGE>

Carey in breach of this provision), or (iv) were required to be disclosed by a
court or governmental agency.

         9.       Non-Competition Agreement.

            (a) Noncompetition. For a period of two years after the Termination
Date, Carey will not, anywhere in the United States of America (excluding any
territory or possession thereof): (i) compete with Town & Country in the Jewelry
Business (as hereinafter defined), or (ii) otherwise interfere with, disrupt, or
attempt to interfere with or disrupt the relationship between Town & Country and
any customer, supplier, lessor, licensor, manufacturer, contractor, designer or
employee of Town & Country.

            (b) "Compete". The term "compete", used in this Section shall mean
directly or indirectly, or by association with any entity or business, either as
a proprietor, partner, employee, agent, consultant, director, officer,
stockholder (other than of a corporation whose stock is listed on a national
securities exchange, provided that Carey at no time owns directly or indirectly
more than 4.9% of the outstanding voting securities of any class of any such
corporation).

            (c) "Jewelry Business". The term "Jewelry Business", as used in this
Section, shall mean the business of manufacturing and distributing jewelry
products in which Town & Country is engaged on the Termination Date, provided,
however, that the term "Jewelry Business" shall not include the procurement and
distribution of rough diamonds or loose diamonds (including diamonds in settings
of three stones or less).

                                     - 10 -
<PAGE>

            (d) Enforcement. Carey acknowledges that Town & Country will suffer
irreparable harm and substantial damages not readily ascertainable or
compensable in terms of money in the event of a breach of any of Carey's
obligations under this Section. Carey therefore agrees that Town & Country shall
be entitled (in addition to and not in lieu of any other remedies or rights
otherwise available to Town & Country) to obtain an injunction in a court of
competent jurisdiction prohibiting the breach of this Section 9, and Carey
specifically submits himself to the jurisdiction and venue of the courts of the
Commonwealth of Massachusetts for the purposes of any such action.

            (e) Notwithstanding any of the foregoing provisions contained in
this Section, Town & Country expressly acknowledges and agrees that Carey shall
be permitted to own stock in and act as a director, officer, employee or
consultant to Little Switzerland, Inc. and L.S. Wholesale, Inc., and shall be
permitted to act in accordance with the Ancillary Agreements.

         10. Non-Disparagement.

            (a) Carey agrees that he will not make any statements that are
disparaging about or adverse to Town & Country's business interests (including
its officers, directors and employees) or which are intended to harm Town &
Country's reputation, including, but not limited to, any statements that
disparage any operations, products, services, finances, capability or any other
aspect of Town & Country's business.

            (b) Town & Country agrees that it will not make any statements that
are disparaging about Carey's business performance or adverse to Carey's
professional reputation or which are intended to harm Carey's professional or
personal reputation. All


                                     - 11 -
<PAGE>

statements by Town & Country's Directors and executive officers made to the
investment community, current employees, customers. media and others regarding
Carey's departure shall be consistent with the press release and related written
statements jointly approved and issued contemporaneously with this Agreement.

         11. Indemnification and Insurance. Town & Country shall continue to
indemnify Carey, to the fullest extent provided under its Articles of
Incorporation, with respect to any matter pertaining to his association with
Town & Country, including his past service as an officer and Director; and Town
& Country shall continue to include Carey's past service as an officer and
Director for period of not less than five years following the Termination Date,
under directors and officers' insurance coverage with the same insurance
carrier, in the same amount and to the same extent provided to other Directors
and officers of Town & Country. From time to time, at Carey's request, Town &
Country shall cause its insurance carrier to certify that Carey is so covered.

         In case any proceeding (including any governmental investigation) shall
be instituted involving Carey in respect of which indemnity may be sought
pursuant to this Section 11, Carey shall promptly notify Town & Country in
writing. In case any such proceeding shall be brought against Carey and he shall
notify Town & Country of the commencement thereof, Town & Country shall be
entitled to participate therein and, to the extent that it shall desire, to
assume the defense thereof, with counsel selected by Town & Country and
reasonably satisfactory to Carey, and shall pay as incurred the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, Carey shall have the right to retain his own counsel at his own
expense.


                                     - 12 -
<PAGE>

Notwithstanding the foregoing, Town & Country shall pay as incurred the fees and
expenses of the counsel retained by Carey in the event (i) Town & Country and
Carey shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both Town & Country and Carey and representation of both parties by the same
counsel would be inappropriate due to actual or potential differing interests
between them. Town & Country shall not be liable for any settlement of any claim
or proceeding effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, Town & Country agrees
to indemnify Carey under this Section 11 from and against any loss or liability
by reason of such settlement or judgment.

         12. Entire Agreement; Governing Law. Except as expressly provided for
in this Agreement, this Agreement supersedes any and all prior oral and/or
written agreements between Town & Country and Carey, including but not limited
to the Employment Agreement and any and all correspondence relating to such
employment, and sets forth the entire agreement between Town & Country and Carey
with respect to the matters addressed herein. This Agreement shall take effect
as an instrument under seal and shall be governed and construed in accordance
with the laws of the Commonwealth of Massachusetts.

         13. Further Assurances. From and after the date of this Agreement, upon
the request of Carey or Town & Country, Carey and Town & Country shall execute
and deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm or to carry out and effectuate fully the
intent and purposes of this Agreement and the Ancillary


                                     - 13 -
<PAGE>

Agreements.

         14. Modifications and Amendments. The terms and provisions of this
Agreement may be modified or amended only by written agreement executed by all
parties hereto.

         15. Waivers and Consents. The terms and provisions of this Agreement
may be waived, or consent for the departure therefrom granted, only by written
document executed by the party entitled to the benefits of such terms or
provisions. No such waiver or consent shall be deemed to be or shall constitute
a waiver or consent with respect to any other terms or provisions of this
Agreement, whether or not similar. Each such waiver or consent shall be
effective only in the specific instance and for the purpose for which it was
given, and shall not constitute a continuing waiver or consent.

         16. Severability. In the event that any court of competent jurisdiction
shall determine that any provision, or any portion thereof, contained in this
Agreement shall be unenforceable in any respect, then such provision shall be
deemed limited to the extent that such court deems it enforceable, and as so
limited shall remain in full force and effect. In the event that such court
shall deem any such provision, or portion thereof, wholly unenforceable, the
remaining provisions of this Agreement shall nevertheless remain in full force
and effect.

         17. Notices. The parties expressly agree that any notices to be given
hereunder shall be in writing and shall be sent by U.S. Registered or Certified
Mail, Return Receipt Requested, or via


                                     - 14 -
<PAGE>

a delivery service providing evidence of delivery, addressed to the parties at
their addresses set forth below, or at such other address as either may
designate by notice as aforesaid.

                  Address for Town & Country:

                           Town & Country Corporation
                           25 Union Street
                           Chelsea, MA  02150
                           Attn:  Chairman of the Board

                  With a copy to:

                           Goodwin, Procter & Hoar
                           Exchange Place
                           53 State Street
                           Boston, MA 02109
                           Attn:  Richard E. Floor, Esq.


                  Address for Carey:

                           C. William Carey
                           20 Rowes Wharf, PH 8
                           Boston, MA  02110

                  With a copy to:

                           Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.
                           One Financial Center
                           Boston, MA 02111
                           Attn:  Stanford N. Goldman, Jr., Esq.


         18. Representation of Carey. Carey hereby acknowledges that he has read
this Agreement carefully, that he has been afforded sufficient time to
understand the terms and effects of this Agreement, that he has been advised and
encouraged to consult with legal and/or other counsel and in fact he has
consulted with legal counsel, that he voluntarily is entering into and


                                     - 15 -
<PAGE>

executing this Agreement and that neither Town & Country nor its agents or
representatives have made any representations inconsistent with the terms and
effects of this Agreement.

         19. Opinion of Counsel, Statement of Officers. Town & Country has
caused to be provided to Carey: (i) a certificate of the Clerk or Assistant
Clerk of Town & Country certifying the due adoption of resolutions approving the
terms of this Agreement; and (ii) a statement signed by an authorized officer of
Town & Country familiar with its financial condition, stating that Town &
Country has a positive net worth as of the date hereof.

         20. Expenses. Town & Country shall reimburse Carey for legal (and
accounting) fees and expenses incurred by Carey in connection with matters
associated with his termination.

         22. Headings. The section and paragraph headings contained in this
Agreement are for convenience only and will not be deemed to affect in any way
the language of the provisions to which they refer.

         23. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed to be an original, and all such
counterparts shall constitute one instrument.

         IN WITNESS WHEREOF, the parties have executed this Agreement as a
document under seal as of the date first written above.

                                     - 16 -
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TOWN & COUNTRY CORPORATION:                  EMPLOYEE:

                                             /s/ C. William Carey

By: /S/ William Schawbel                     ______________________________
    ___________________________   
                                             C. William Carey
Name:   William Schawbel          
      _________________________   
                                  
Title:  Interim President         
       ________________________   
                                  
TOWN & COUNTRY FINE JEWELRY
GROUP, INC.


By: /S/ William Schawbel          
    ___________________________   
                                  
Name:   William Schawbel          
      _________________________   
                                  
Title:  Interim President         
       ________________________   
                                  



                                     - 17 -
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                                   SCHEDULE A

                            Schedule of Stock Options


         1.  Non-Qualified Stock Option Agreement dated as of March 1, 1996 for
             206,545 fully vested shares at an option exercise price per share
             of $0.6875.

         2.  Non-Qualified Stock Option Agreement dated as of March 1, 1996 for
             360,000 fully vested shares at an option exercise price per share
             of $0.625.

         3.  Non-Qualified Stock Option Agreement dated May 14, 1993 for
             1,000,000 fully vested shares at an option exercise price per share
             of $2.75, repriced to an option exercise price of $0.8125 on
             September 18, 1995.