Exhibit
10.31




SEVERANCE
AGREEMENT AND GENERAL RELEASE




FINLAY
FINE JEWELRY CORPORATION, its parent corporation, affiliates, subsidiaries,
successors, assigns, current and former employees, directors and agents
(collectively "Finlay") and LESLIE PHILIP, whose address is 67 Orchard Street,
Manhasset, NY 11030, hereby agree that:




1.           Your
employment has terminated effective May 26, 2009 (the "Termination
Date").  You have been paid your salary earned through the Termination
Date in accordance with Finlay's regular payroll cycle (unless otherwise
required by local law).




2.           Under
Finlay's regular policies, you are eligible:




a.           To
receive your vested accounts, if any, under the 401(k) plan.  You will
receive more detailed information regarding your 401(k) benefits under separate
cover.




b.           To
receive payment for your accrued but unused vacation and personal
days.




c.           If
you are currently enrolled in Finlay's health insurance plans, to continue such
health insurance coverage in accordance with COBRA, for a minimum of eighteen
(18) months from the Termination Date, upon payment of the full applicable
premiums.  You have received under separate cover more detailed
information regarding insurance benefits under COBRA.  Nothing
contained in this Severance Agreement and General Release (the "Agreement and
Release") is intended to impair any of these rights.




3.           In
consideration for signing this Agreement and Release, in lieu of any other
severance, retention or bonus payments to which you might otherwise be entitled
under Finlay’s regular policies, commencing on Finlay's regular pay date
immediately following the last to occur of your execution of this Agreement and
Release, the Termination Date and the Employee Irrevocability Date, you will
receive, in six (6) installments, severance pay totaling twelve (12) weeks’
salary (i.e. $112,082.31), less applicable taxes and other withholding.




Notwithstanding
anything herein to the contrary, the payment of any benefits hereunder in excess
of two (2) months’ base salary (the “Mitigated Benefits”) shall be reduced by an
amount equal to the gross amounts you received or earned as compensation,
profits or otherwise from your employment or engagement in any business or
activity with Finlay (excluding any investment income or capital gains) with
respect to the same period for which such Mitigated Benefits are payable (“Other
Income”).  As a condition to receipt of payment of the Mitigated
Benefits, you shall, no later than seven (7) days prior to the date such payment
is due, certify in writing to the Senior Vice President, Human Resources of
Finlay, all amounts of Other Income earned by you during the preceding payroll
period so that the appropriate offsets can be made.


1




You
understand and agree that you would not receive the payment specified in this
section "3" above, except for your execution of this Agreement and Release and
the fulfillment of the promises contained herein.





4.           You
understand that Finlay makes no representation as to the income tax treatment of
any payments hereunder and that any and all payments (and all compensation,
benefits and/or other payments previously made to you by Finlay) will be subject
to such tax treatment and to such deductions, if any, as may be required under
applicable tax laws.




You
affirm that you have been paid and/or received all compensation, wages, bonuses,
commission, and/or benefits, to which you may be entitled and that no other
compensation, wages, bonuses, commissions and/or benefits are due to you except
as provided in this Agreement and Release.




5.           a.You
agree that you will take no action, which is intended, or would reasonably be
expected to harm Finlay, to impair Finlay's reputation, or to lead to unwanted
or unfavorable publicity to Finlay, nor will you disclose any confidential or
proprietary information obtained by you during the course of your
employment.




b.   In
consideration of the terms hereof, you hereby agree and forever waive any claims
you may have for re-employment by Finlay.




6.           It
is expressly understood and agreed that this Agreement and Release and the
effectuation of its terms do not constitute an admission or statement by any
party that Finlay has acted unlawfully or is otherwise liable in any
respect.  It is further agreed that evidence of this Agreement and
Release, its terms or the circumstances surrounding the parties entering into
this Agreement and Release, shall be inadmissible in any action or lawsuit of
any kind, except for an action for alleged breach of this Agreement and
Release.




7.           You
agree not to disclose any information regarding the existence or substance of
this Agreement and Release, except to an attorney with whom you choose to
consult regarding your consideration of this Agreement and Release, your
spouse/life partner or your tax advisor.


2




8.           You
knowingly and voluntarily release and forever discharge Finlay, of and from any
and all claims, known and unknown, which against Finlay you and your heirs,
executors, administrators, successors and assigns (referred to collectively
throughout this Agreement and Release as "you") have or may have as of the date
of execution of this Agreement and Release, including, but not limited to, any
alleged violation of:




*
            The
      National Labor Relations Act, as
amended;




*
              Title
      VII of the Civil Rights Act of 1964, as
amended;




*
              Sections
      1981 through 1988 of Title 42 of the United States Code, as
      amended;




*
            The
      Civil Rights Act of 1991;




*
              The
      Age Discrimination in Employment Act of 1967, as
  amended;




*
              The
      Employee Retirement Income Security Act of 1974, as
    amended;




*
              The
      Immigration Reform and Control Act, as
amended;




*
              The
      Americans with Disabilities Act of 1990, as
  amended;




*
            The
      Worker Adjustment and Retraining Notification Act, as
    amended;




*
              The
      Occupational Safety and Health Act, as
amended;




*
              The
      Family and Medical Leave Act of
1993;




*
              The
      Lilly Ledbetter Fair Pay Act of
2009;





*
              The
      New York Human Rights Law, as
amended;





*
              The
      New York Equal Pay Law, as
amended;





*
              The
      New York Smokers' Rights Law, as
amended;





*
              The
      New York Equal Rights Law, as
amended;




*
              any
      other federal, state or local civil or humanrights
      law or any other local, state or federallaw,
      regulation or ordinance;




*
              any
      public policy, contract, tort, or common law;
or


3




*
              any
      allegation for costs, fees, or other expenses including attorneys' fees
      incurred in these matters.




9.           You
affirm that you have not filed, caused to be filed or are presently a party to
any claim, complaint, or action against Finlay in any form or
forum.  You furthermore affirm that you have no known workplace
injuries.




10.         You
understand that if this Agreement and Release were not signed, you would have
the right to voluntarily assist other individuals or entities in bringing claims
against Finlay.  You hereby waive that right and you will not provide
any such assistance other than assistance in an investigation or proceeding
conducted by an agency of the United States government.  Moreover, you
shall not be entitled to receive any relief, recovery or monies, including
attorneys' fees, in connection with any complaint or charge brought against
Finlay, without regard as to who brought any said complaint or
charge.




11.         You
acknowledge that you returned to Finlay on the Termination Date, your keys,
identification and any other equipment, documents or materials belonging to
Finlay that you had in your possession, including any lists of customer names,
contact information and purchasing histories.




12.         In
the event that you breach any provision of this Agreement and Release, Finlay
will be entitled to obtain all relief provided by law or equity in addition to
its attorneys' fees and costs, including instituting an action against you to
obtain specific enforcement of the terms of this Agreement and
Release.




13.         This
Agreement and Release shall be binding on the parties and their respective
successors and assigns.




14.         This
Agreement and Release sets forth the entire agreement between the parties with
respect to the subject matter herein and fully supersedes any and all prior
agreements or understandings between them regarding such subject
matter.  You acknowledge that you have not relied on any
representations, promises, or agreements of any kind made to you in connection
with your decision to accept this Agreement and Release except for those set
forth in this Agreement and Release.




15.         This
Agreement and Release may not be modified, altered or changed except upon
express written consent of both parties wherein specific reference is made to
this Agreement and Release.




16.         If
any provision of this Agreement and Release should be held invalid or
unenforceable by operation of law or by any tribunal of competent jurisdiction,
or if compliance with or enforcement of any provision is restrained by such
tribunal, the application of any and all provisions other than those which have
been held invalid or unenforceable, shall not be effected, and the remainder of
this Agreement and Release shall be in full force and effect.


4




17.         This
Agreement and Release shall be governed and construed in accordance with the
laws of the State of New York (including Section 5-1401 of the New York General
Obligations Law).  Any dispute arising hereunder shall be brought
before a court of competent jurisdiction in the City, County and State of New
York.





18.         You
may revoke this Agreement and Release for a period of seven (7) calendar days
following the day you execute this Agreement and Release.  Any
revocation within this period must be submitted, in writing, to Deborah A.
Dixon, and state, "I hereby revoke my acceptance of our Severance Agreement and
General Release."  The revocation must be personally delivered to Ms.
Dixon or her designee, or mailed to her at Finlay Fine Jewelry Corporation, 529
Fifth Avenue, 4th Floor, New York, NY  10017 and postmarked within
seven (7) calendar days of execution of this Agreement and
Release.  This Agreement and Release shall not become effective or
enforceable until the revocation period has expired (the "Employee
Irrevocability Date").  If the last day of the revocation period is a
Saturday, Sunday or legal holiday in New York, then the revocation period
shall not expire until the next following day which is not a Saturday, Sunday or
legal holiday.




19.         You
represent and affirm that you are able to execute this Agreement and to waive
any and all claims you have or may have against Finlay and that such execution
and waiver are not affected or impaired by illness, use of alcohol, drugs or
other substances.  You further represent and affirm that you have had
an opportunity to consult with your health care provider to confirm your
competency to execute this Agreement and Release and have either consulted with
your health care provider and confirmed you are competent to execute this
Agreement and Release or determined that it is not necessary to consult with
your health care provider about this issue.




20.         Attached
as Exhibit "A" is a list of the job titles and ages of all individuals eligible
for the severance package.  Attached as Exhibit "B" is a list of the
job titles and ages of all individuals ineligible for the severance
package.


5




YOU
ACKNOWLEDGE THAT YOU HAVE BEEN ADVISED IN WRITING THAT YOU HAVE AT LEAST
FORTY-FIVE (45) CALENDAR DAYS TO CONSIDER THIS SEVERANCE AGREEMENT AND GENERAL
RELEASE AND TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTION OF THIS SEVERANCE
AGREEMENT AND GENERAL RELEASE.




YOU
AGREE THAT ANY MODIFICATIONS, MATERIAL OR OTHERWISE, MADE TO THIS SEVERANCE
AGREEMENT AND GENERAL RELEASE DO NOT RESTART OR AFFECT IN ANY MANNER THE
ORIGINAL FORTY-FIVE (45) CALENDAR DAY CONSIDERATION PERIOD.




HAVING
ELECTED TO EXECUTE THIS SEVERANCE AGREEMENT AND GENERAL RELEASE, TO FULFILL THE
PROMISES SET FORTH HEREIN, AND TO RECEIVE THEREBY THE PAYMENT SET FORTH IN
SECTION "3" ABOVE, YOU FREELY AND KNOWINGLY, AND AFTER DUE CONSIDERATION, ENTER
INTO THIS SEVERANCE AGREEMENT AND GENERAL RELEASE INTENDING TO FOREVER WAIVE,
SETTLE AND RELEASE ALL CLAIMS YOU HAVE OR MIGHT HAVE AGAINST
FINLAY.







IN WITNESS WHEREOF, the
parties hereto knowingly and voluntarily execute this Agreement and Release as
of the date set forth below:





/s/ Leslie
      PhilipLeslie
      PhilipMay 21, 2009DateFINLAY
      FINE JEWELRY CORPORATIONBy
              /s/ Deborah A. DixonDeborah
      A. Dixon, Sr. VP, H.R.May 21,
      2009Date




6


EXHIBIT
A





INDIVIDUALS
ELIGIBLE AND/OR SELECTED FOR SEVERANCE PACKAGE





Position
                                  
                                  Age
                                  
                                  Position
                                  
                                  AgeFinancial
      Analyst
                                  
                                  31
                                  
                                  Marketing
      Assistant
                                  
                                  26Traffic
      Manager
                                  
                                  50
                                  
                                  Accountant
                                  
                                  54Marketing
      Coordinator
                                  
                                  24
                                  
                                  Merchandise
      Special Order Coordinator
                                  
                                  27Housekeeper
      and Office Services Support
                                  
                                  60
                                  
                                  Accounts
      Payable Associate
                                  
                                  40Accounts
      Payable Associate
                                  
                                  53
                                  
                                  Programmer/Analyst
                                  
                                  52Vendor
      Analyst
                                  
                                  69
                                  
                                  Merchandise
      Payables Supervisor
                                  
                                  58Loss
      Prevention Regional Investigator
                                  
                                  49
                                  
                                  Traffic
      Coordinator
                                  
                                  28Assistant
      Production Manager
                                  
                                  28
                                  
                                  Vendor
      Financial Relations Supervisor
                                  
                                  47Applications
      Manager, IS&T
                                  
                                  67
                                  
                                  UNIX
      Administrator
                                  
                                  34Assistant
      Merchandise Planner
                                  
                                  23
                                  
                                  Assistant
      Merchandise Buyer
                                  
                                  45Sr.
      Vendor Analyst
                                  
                                  50
                                  
                                  Director
      of Customer Relationship Management
                                  
                                  34Staffing
      Analyst
                                  
                                  32
                                  
                                  Employee
      Communications Coordinator & Recruiter
                                  
                                  27Assistant
      Merchandise Planner
                                  
                                  26
                                  
                                  Director
      of IT Architecture & Operations
                                  
                                  46Sr.
      Financial Analyst
                                  
                                  41
                                  
                                  VP
      of Expense Control & Profit Improvement
                                  
                                  57Data
      Center/MIS Manager
                                  
                                  54
                                  
                                  Staffing
      Analyst
                                  
                                  33Merchandise
      Planner
                                  
                                  36
                                  
                                  Assistant
      Merchandise Buyer
                                  
                                  27Merchandise
      Analyst
                                  
                                  53
                                  
                                  Administrative
      Assistant
                                  
                                  43Vendor
      Financial Relations Supervisor
                                  
                                  35
                                  
                                  Public
      Relations & Special Events Manager
                                  
                                  31Merchandise
      Special Order Coordinator
                                  
                                  23
                                  
                                  Programmer
      & Jr. DBA
                                  
                                  65HRIS
      & Sr. Sales Staffing Analyst
                                  
                                  37
                                  
                                  Programmer/Analyst
                                  
                                  49Sales
      & Use Tax Accountant
                                  
                                  39
                                  
                                  Jr.
      Tax Accountant
                                  
                                  28Moissanite
      Buyer
                                  
                                  37
                                  
                                  Merchandise
      Sr. Buyer
                                  
                                  44UNIX
      Sr. Systems Administrator
                                  
                                  58
                                  
                                  Assistant
      Merchandise Planner
                                  
                                  22Assistant
      Merchandise Planner
                                  
                                  43
                                  
                                  Accounts
      Payable Associate
                                  
                                  38Director
      of Repair
                                  
                                  54
                                  
                                  EVP,
      Merchandising
                                  
                                  62Moissanite
      Buyer
                                  
                                  57
                                  
                                  Assistant
      Merchandise Planner
                                  
                                  25Assistant
      Merchandise Buyer
                                  
                                  26
                                  
                                  Assistant
      Merchandise Buyer
                                  
                                  24Director
      of Training & Performance Management
                                  
                                  42
                                  
                                  Assistant
      Merchandise Planner
                                  
                                  25Accounts
      Payable Clerk
                                  
                                  40
                                  
                                  Loss
      Prevention Regional Investigator
                                  
                                  45Sr.
      Programmer/Analyst
                                  
                                  40
                                  
                                  Desktop
      Support Analyst
                                  
                                  27Staff
      Accountant
                                  
                                  60
                                  
                                  Special
      Events Buyer
                                  
                                  39Assistant
      Merchandise Planner
                                  
                                  40
                                  
                                  Vice
      President of Store Design & Construction
                                  
                                  46Programmer/Analyst
                                  
                                  42
                                  
                                  Merchandising
      Assistant
                                  
                                  23Vendor
      Analyst
                                  
                                  41
                                  
                                  Administrative
      Assistant
                                  
                                  52Assistant
      Marketing Manager
                                  
                                  37
                                  
                                  Administrative
      Assistant
                                  
                                  43Database
      Service Manager
                                  
                                  47
                                  
                                  Administrative
      Assistant
                                  
                                  28Sr.
      Graphic Designer
                                  
                                  48
                                  
                                  Merchandise
      Buyer
                                  
                                  84Executive
      Assistant to our President & CEO
                                  
                                  51
                                  
                                  Sr.
      Manager for Public Relations & Special Events
                                  
                                  50Assistant
      Merchandise Buyer
                                  
                                  42
                                  
                                  Assistant
      Special Events Buyer
                                  
                                  25Business
      Analyst Manager
                                  
                                  34
                                  
                                  Sr.
      Programmer/Analyst
                                  
                                  44




7





EXHIBIT
A (continued)





Position
                                  
                                  Age
                                  
                                  Position
                                  
                                  AgeBenefits
      Administrator
                                  
                                  45
                                  
                                  Group
      Manager, Bon Ton
                                  
                                  36Administrative
      Assistant
                                  
                                  59
                                  
                                  Vice
      President/Group Manager, Macy's Central
                                  
                                  50Group
      Manager, Dillard's
                                  
                                  45
                                  
                                  Sr.
      Programmer/Analyst
                                  
                                  45Assistant
      Merchandise Planner
                                  
                                  27
                                  
                                  Applications
      Manager, IS&T
                                  
                                  55Director
      of Benefits
                                  
                                  31
                                  
                                  Sr.
      Programmer/Analyst
                                  
                                  58Senior
      Vice President of Operations & Loss Prevention
                                  
                                  56
                                  
                                  Executive
      Assistant to our Chairman
                                  
                                  47President
      & CEO
                                  
                                  58
                                  
                                  Senior
      Vice President of Human Resources
                                  
                                  46Director
      of Human Resources
                                  
                                  46
                                  
                                  Accountant
                                  
                                  22Assistant
      Merchandise Planner
                                  
                                  26
                                  
                                  Desktop
      Support & Telecomm Manager
                                  
                                  52Assistant
      Merchandise Planner
                                  
                                  24
                                  
                                  Systems
      Analyst
                                  
                                  30Merchandise
      Analyst
                                  
                                  45
                                  
                                  Loss
      Prevention Regional Investigator
                                  
                                  49Construction
      Manager
                                  
                                  36
                                  
                                  Vice
      President of Systems Development
                                  
                                  51Financial
      Analyst
                                  
                                  35
                                  
                                  Vice
      President, Secretary & General Counsel
                                  
                                  51Benefits
      Manager
                                  
                                  46
                                  
                                  Sr.
      Security Engineer/Architect
                                  
                                  50Vendor
      Analyst
                                  
                                  53
                                  
                                  Paralegal/Secretary
                                  
                                  31Merchandise
      Planner for Watches
                                  
                                  41
                                  
                                  Payroll
      Clerical
                                  
                                  45Clerical
      in our Finance Department
                                  
                                  54
                                  
                                  SQL
      DBA
                                  
                                  42Vendor
      Analyst
                                  
                                  59
                                  
                                  Accounts
      Payable Associate
                                  
                                  62Sales
      Audit
                                  
                                  30
                                  
                                  Sr.
      Manager/DBA
                                  
                                  44Payroll
      Supervisor
                                  
                                  31
                                  
                                  Systems
      Analyst
                                  
                                  38Vendor
      Analyst
                                  
                                  64
                                  
                                  Lab
      Technician
                                  
                                  53Vice
      President & DMM
                                  
                                  47
                                  
                                  Vendor
      Financial Relations Supervisor
                                  
                                  36Business
      Analyst
                                  
                                  30
                                  
                                  Technical
      Accounts Payable Manager
                                  
                                  45Loss
      Prevention Auditor
                                  
                                  55
                                  
                                  Computer
      Room Supervisor
                                  
                                  50Sr.
      Merchandise Planner
                                  
                                  46
                                  
                                  UNIX
      Administrator
                                  
                                  50Merchandise
      Buyer
                                  
                                  29
                                  
                                  Vice
      President & Controller
                                  
                                  41Associate
      Merchandise Buyer
                                  
                                  45
                                  
                                  General
      Accounting Supervisor
                                  
                                  36Loss
      Prevention Auditor
                                  
                                  31
                                  
                                  Assistant
      Controller & Sales Audit
                                  
                                  59Executive
      Assistant to Regional Vice President
                                  
                                  64
                                  
                                  Director
      of Vendor Financial Relations
                                  
                                  58Desktop
      Technician
                                  
                                  37
                                  
                                  Vice
      President of Tax
                                  
                                  58Assistant
      Merchandise Buyer
                                  
                                  35





8





EXHIBIT
B





INDIVIDUALS
INELIGIBLE FOR SEVERANCE PACKAGE





Position
                                  
                                  Age
                                  
                                  Position
                                  
                                  AgeSystem
      Analyst
                                  
                                  35
                                  
                                  Special
      Order Coordinator - Watches
                                  
                                  45System
      Analyst
                                  
                                  35
                                  
                                  Clerical
      - Ad Samples for Precious, Semi, & Pearls
                                  
                                  67Lease
      Administrator
                                  
                                  32
                                  
                                  Merchandise
      Coordinator
                                  
                                  51Production
      Manager
                                  
                                  42
                                  
                                  Clerical
                                  
                                  54Payroll
      Tax Accountant
                                  
                                  52
                                  
                                  Office
      Services Assistant
                                  
                                  57Budget
      & Staffing Analyst
                                  
                                  28
                                  
                                  Benefits
      Assistant
                                  
                                  24Supervisor,
      Expense Payables
                                  
                                  51
                                  
                                  Office
      Services Assistant
                                  
                                  53Programmer
                                  
                                  41
                                  
                                  Clerical
      - Received Merchandise
                                  
                                  58Art
      Director
                                  
                                  33
                                  
                                  Chairman
      & CEO
                                  
                                  68Supervisor,
      Sales Audit
                                  
                                  44
                                  
                                  EVP,
      Administration
                                  
                                  54Merch.
      Analyst - Richemont
                                  
                                  33
                                  
                                  SVP,
      CFO
                                  
                                  57Supervisor,
      Accounting
                                  
                                  56
                                  
                                  SVP,
      CIO
                                  
                                  53Merch.
      Analyst - Designer
                                  
                                  38
                                  
                                  RVP
                                  
                                  51Manager,
      Office Services
                                  
                                  49
                                  
                                  RVP/Group
      Manager
                                  
                                  44Associate
      Buyer Diamond Fashion
                                  
                                  26
                                  
                                  Applications
      Manager, IS&T
                                  
                                  35Coordinator,
      PR & Special Events
                                  
                                  27
                                  
                                  Assistant
      Tax Director
                                  
                                  51Merch
      Analyst - Dept. Store Diamonds
                                  
                                  26
                                  
                                  Director,
      Loss Prevention
                                  
                                  62Jr.
      Business Analyst
                                  
                                  26
                                  
                                  Director,
      Financial Reporting
                                  
                                  38Asst.
      Buyer Semi-Precious
                                  
                                  23
                                  
                                  Director,
      Group Operations
                                  
                                  38Asst.
      Buyer Bridal & Solitaire
                                  
                                  23
                                  
                                  Sr.
      Planner Bridal & Solitaire
                                  
                                  53Administrative
      Assistant
                                  
                                  34
                                  
                                  VP,
      Staffing
                                  
                                  49Tax
      Accountant
                                  
                                  49
                                  
                                  Director,
      Corporate Accounting
                                  
                                  52Telecomm
      Analyst
                                  
                                  37
                                  
                                  Manager,
      Vendor Financial Relations
                                  
                                  55Vendor
      Analyst
                                  
                                  53
                                  
                                  Marketing
      Director
                                  
                                  47Staff
      Accountant - Gen. Accounting
                                  
                                  36
                                  
                                  Asst.
      Controller, Payroll
                                  
                                  58Fixed
      Assets Auditor
                                  
                                  59
                                  
                                  Buyer
      Precious & Semi
                                  
                                  40A/P
      Associate - Expense
                                  
                                  58
                                  
                                  Director,
      Credit
                                  
                                  63A/P
      Associate - Merch. Payables
                                  
                                  61
                                  
                                  Planner
      - Gold Dept. Store
                                  
                                  49HR
      Assistant
                                  
                                  26
                                  
                                  Assistant
      Director, Loss Prevention
                                  
                                  47Administrative
      Assistant
                                  
                                  47
                                  
                                  Cash
      Manager
                                  
                                  46Accountant
                                  
                                  28
                                  
                                  Buyer
      - Gold Dept. Store
                                  
                                  33Jr.
      Accountant
                                  
                                  34
                                  
                                  Associate
      Buyer Diamond Fashion
                                  
                                  25Clerical
                                  
                                  41
                                  
                                  Group
      Manager - Gottschalk's
                                  
                                  37




9