Document:

AMENDMENT
      NO. 1

     

    TO

     

    EMPLOYMENT
      AGREEMENT

     

    AMENDMENT
      (“Amendment”) made as of this 11th day of March 2008 to the employment agreement
      dated as of January 30, 2005 (the “Employment Agreement”) among Finlay
      Enterprises, Inc., a Delaware corporation (the “Parent”), Finlay Fine Jewelry
      Corporation, a Delaware corporation (the “Operating Company”), and Arthur E.
      Reiner (the “Executive”). The Parent and the Operating Company are hereinafter
      referred to at times collectively as the “Company”.

     

    WHEREAS,
      the
      Company and the Executive have previously entered into the Employment Agreement;
      

     

    WHEREAS,
      the
      Company and the Executive
      desire
      to amend the Employment Agreement.

     

    NOW,
      THEREFORE,
      effective March 11, 2008, the Employment Agreement is hereby amended as
      follows:

     

    1. Section
      9
      of the Employment Agreement is hereby amended to insert a new sentence at the
      end of the first sentence to read as follows:

     

    “Payment
      of the Severance Amount pursuant to this Section 9 shall be subject to the
      Delay
      Period under Section 15(c) hereof.”

     

    2. Clause
      (A) of Section 10(b)(ii) of the Employment Agreement is hereby amended to read
      as follows:

     

    “(F)
      subject to the Delay Period under Section 15(c), 50% of his Base Salary through
      the end of the Employment Term,”

     

    3. Clause
      (F) of Section 10(b)(ii) of the Employment Agreement is hereby amended to read
      as follows:

     

    “(F)
      subject to the Delay Period under Section 15(c), the Severance Amount
      and”

     

    4. Clause
      (E) of Section 10(c)(i) of the Employment Agreement is hereby amended to read
      as
      follows:

     

    “(E)
      receive the insurance and other benefits provided to Executive under Section
      5(b) and 5(e) hereof in accordance therewith, (F) be entitled to receive any
      amounts earned but unpaid prior to Executive’s date of termination pursuant to
      Sections 3, 4, and 5(a) hereof (including accrued but unused vacation), which
      amounts shall be payable within ten (10) days after such termination of
      employment and (G) receive reimbursement pursuant to Section 7 hereof for
      eligible expenses incurred prior to Executive’s date of termination, which
      reimbursements shall be made no later than March 15 of the calendar year next
      following the calendar year in which such reimbursable expenses are incurred
      (items (E) through (G), the “Accrued
      Amounts”),
      provided that payments pursuant to items (A) through (D) shall be subject to
      the
      Delay Period under Section 15(c) hereof.”

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    5. Section
      10(c)(ii) of the Employment Agreement is hereby amended in its entirety to
      read
      as follows:

     

    “(ii)
      Subject to Section 10(f), if Executive’s employment is terminated during the
      Employment Term (x) by the Company without Cause or by Executive for Good Reason
      coincident with or following a Change of Control, or (y) by Executive for any
      reason within ninety (90) days following a Change of Control, Executive shall
      be
      entitled to (A) subject to the Delay Period under Section 15(c) hereof, a cash
      lump sum payment, payable within 10 days after such termination of employment,
      equal to the product of (x) 2.99 times (y) Executive’s “base amount,” as defined
      in Section 280G(b)(3) of the Code (the “Executive Base Amount”), (B) subject to
      the Delay Period under Section 15(c) hereof, all of the Restricted Stock
      issuable under Sections 4(c) and 6 hereof for the entire stated Employment
      Term,
      and (C) the Accrued Amounts. All other benefits, if any, due Executive following
      Executive’s termination of employment pursuant to this Subsection 10(c)(ii)
      shall be determined in accordance with the plans, policies and practices of
      the
      Company.

     

    Subject
      to Section 10(f) and the Delay Period under Section 15(c) as applicable, if
      Executive’s employment is terminated during the Employment Term by the Company
      without Cause or by the Executive for Good Reason within ninety (90) days prior
      to a Change of Control, Executive shall (i) continue to be entitled to the
      benefits and payments provided under Section 10(c)(i) in the form and at the
      times provided thereunder, plus (ii) be entitled to the benefits and payments
      provided under Section 10(c)(ii) in the form and at the time provided under
      Section 10(c)(ii) payable on a Change of Control, solely to the extent that
      the
      benefits and payments under Section 10(c)(ii) exceed the benefits and payments
      under Section 10(c)(i).”

     

    
      
        
        

      

      
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    6. Section
      10(c)(iii) of the Employment Agreement is hereby amended to include a new
      subsection (E) following subsection (D) to read as follows:

     

    “(E)
      the
      failure of the acquirer or successor corporation following a Change of Control
      to expressly assume the Company’s obligations under this Agreement and extend
      the Employment Term so that the unexpired portion thereof is not less than
      3
      years or otherwise offer Executive a contract on terms no less favorable to
      Executive than those provided in this Agreement providing for a term lasting
      at
      least 3 years.”

     

    7. Section
      10(d) of the Employment Agreement is hereby amended in its entirety to read
      as
      follows:

     

    “(d)
      Termination by Executive. If Executive terminates his employment with the
      Company for any reason during the Employment Term (other than an early
      termination by Executive under Section 1 hereof, a termination by Executive
      for
      Good Reason or a termination by Executive for any reason within ninety (90)
      days
      following a Change of Control), Executive shall be entitled to the same payments
      he would have received if his employment had been terminated by the Company
      for
      Cause.”

     

    8. Section
      10(e)(ii) of the Employment Agreement is hereby amended to read as follows:
      

     

    “(ii)
      during any twelve (12) month period, individuals who at the beginning of such
      period constituted the Parent Board (together with any new directors whose
      election by the Parent Board or whose nomination for election by the Parent’s
      stockholders was approved by a vote of at least a majority of the directors
      then
      still in office who either were directors at the beginning of such period or
      whose election or nomination for election was previously so approved) cease
      for
      any reason to constitute a majority of the directors then in office unless
      such
      majority of the directors then in office has been elected or nominated for
      election by the Principal or his Related Parties or”

     

    9. Section
      10(f)(i) of the Employment Agreement is hereby amended in its entirety to read
      as follows:

     

    “(i)
      In
      the event it is determined pursuant to Clause (ii) below, that part or all
      of
      the consideration, compensation or benefits to be paid to Executive under this
      Agreement in connection with Executive's termination of employment whether
      prior
      to or following a Change of Control or under any other plan, arrangement or
      agreement in connection therewith, constitutes a “parachute payment” (or
      payments) under Section 280G(b)(2) of the Code, then, if the aggregate present
      value of such parachute payments (the “Parachute Amount”) exceeds 2.99 times the
      Executive Base Amount, the amounts constituting “parachute payments” which would
      otherwise be payable to or for the benefit of Executive shall be reduced in
      accordance with Clause (iii) below to the extent necessary so that the Parachute
      Amount is equal to 2.99 times the Executive Base Amount. Notwithstanding the
      foregoing, if it is determined that stockholder approval of the payment of
      such
      compensation and benefits will reduce the applicability of Section 280G of
      the
      Code to such payment, promptly after request by Executive, the Company will
      undertake reasonable efforts to hold such a meeting to obtain such approval
      or
      to solicit such approval by written consent, and to obtain such
      approval.”

     

    
      
        
        

      

      
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    10. Section
      10(f)(iii) of the Employment Agreement is hereby amended in its entirety to
      read
      as follows:

     

    “(iii)
      If
      the final determination made pursuant to Clause (ii) of this Section 10(f)
      results in a reduction of the payments that would otherwise be paid to Executive
      except for the application of Clause (i) of this Section 10(f), the benefits
      payable to Executive under 10(c)(ii)(B) shall be eliminated or reduced to the
      extent necessary in order to not exceed the limitation under Section 10(f)(i),
      and then to the extent necessary pursuant to Section 10(f)(i), the amounts
      payable to Executive under Section 10(c)(ii)(A) shall be reduced. Within ten
      days following such determination, the Parent shall pay to or distribute to
      or
      for the benefit of Executive such amounts as are then due to Executive under
      this Agreement and shall promptly pay to or distribute to or for the benefit
      of
      Executive in the future such amounts as become due to Executive under this
      Agreement.”

     

    11. The
      language “Unforeseen Personal Hardship” in Section 10(j) of the Agreement is
      hereby amended to read as follows:

     

    “for
      any
      reason within ninety (90) days following a Change of Control”

     

    12. A
      new
      sentence is hereby added to the end of Section 10(j) of the Agreement to read
      as
      follows:

     

    “The
      Executive shall pay the balance of such compensation and benefits expense no
      later than thirty (30) days following the close of the fiscal year in which
      the
      compensation and benefits expense is incurred.”

     

    
      
        
        

      

      
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    13. Clause
      (i) of Section 11(a) is amended to read as follows:

     

    “(i)
      in
      the event of a termination of Executive's employment with Cause or Executive's
      voluntary termination of employment (other than for Good Reason or for any
      reason within ninety (90) days following a Change of Control), for a period
      of
      eighteen months following such termination of employment and”

     

    14. The
      following language is hereby inserted following “Good Reason” in clause (ii) of
      Section 11(a):

     

    “or
      for
      any reason within ninety (90) days following a Change of Control”

     

    15. A
      new
      Section 15 is hereby added to the Agreement to read as follows:

     

    “15.
      Section 409A of the Code. 

     

    (a)
      It is
      intended that the payments and benefits under this Agreement be exempt from,
      or
      comply with, Section 409A of Code and the regulations and guidance promulgated
      thereunder (collectively “Code Section 409A”), and all provisions of this
      Agreement shall be construed in a manner consistent with the requirements for
      avoiding taxes or penalties under Code Section 409A. If any provision of this
      Agreement (or of any award of compensation, including equity compensation or
      benefits) would cause Executive to incur any additional tax or interest under
      Code Section 409A, the Company shall, upon the specific request of
      Executive, use its reasonable business efforts to in good faith reform such
      provision to comply with Code Section 409A; provided, that to the maximum
      extent practicable, the original intent and economic benefit to Executive and
      the Company of the applicable provision shall be maintained, but the Company
      shall have no obligation to make any changes that could create any additional
      economic cost or loss of benefit to the Company. The Company shall have no
      liability with regard to any failure to comply with Code Section
      409A.

     

    (b)
      A
      termination of employment shall not be deemed to have occurred for purposes
      of
      any provision of this Agreement providing for the payment of any amounts or
      benefits upon or following a termination of employment unless such termination
      is also a “Separation from Service” within the meaning of Section 409A and, for
      purposes of any such provision of this Agreement, references to a “termination,”
“termination of employment” or like terms shall mean Separation from Service.

     

    
      
        
        

      

      
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    (c)
      If
      Executive is deemed on the date of termination of his employment to be a
“specified employee,” within the meaning of that term under Section
      409A(a)(2)(B) of the Code and using the identification methodology selected
      by
      the Company from time to time, or if none, the default methodology, then with
      regard to any payment or the providing of any benefit made subject to this
      Section 15(c), to the extent required to be delayed in compliance with
      Section 409A(a)(2)(B) of the Code, and any other payment, the provision of
      any
      other benefit or any other distribution of equity that is required to be delayed
      in compliance with Section 409A(a)(2)(B) of the Code, such payment, benefit
      or
      distribution shall not be made or provided prior to the earlier of (i) the
      expiration of the six-month period measured from the date of Executive’s
      Separation from Service or (ii) the date of Executive’s death (the “Delay
      Period”). On the first day of the seventh month following the date of
      Executive’s Separation from Service or, if earlier, on the date of his death,
      all payments delayed pursuant to this Section 15(c) (whether they would
      have otherwise been payable in a single sum or in installments in the absence
      of
      such delay) shall be paid or reimbursed to Executive in a lump sum, and any
      remaining payments and benefits due under this Agreement shall be paid or
      provided in accordance with the normal payment dates specified for them
      herein.
      Promptly following the expiration of such six-month period, all compensation
      suspended pursuant to the foregoing sentence (whether it would have otherwise
      been payable in a single sum or in installments in the absence of such
      suspension) shall be paid or reimbursed to Executive in a lump sum.

     

    (d)
      With
      regard to any provision herein that provides for reimbursement of costs and
      expenses or in-kind benefits, except as permitted by Code Section 409A, (i)
      the
      right to reimbursement or in-kind benefits shall not be subject to liquidation
      or exchange for another benefit, (ii) the amount of expenses eligible for
      reimbursement, or in-kind benefits, provided during any taxable year shall
      not
      affect the expenses eligible for reimbursement, or in-kind benefits to be
      provided, in any other taxable year, provided,
      that
      the foregoing clause (ii) shall not be violated with regard to expenses
      reimbursed under any arrangement covered by Section 105(b) of the Code solely
      because such expenses are subject to a limit related to the period the
      arrangement is in effect and (iii) such payments shall be made on or before
      the
      last day of Executive’s taxable year following the taxable year in which the
      expense was incurred.”

     

    
      
        
        

      

      
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    IN
      WITNESS WHEREOF,
      the
      undersigned has caused this Amendment to be executed this 11th day of March,
      2008.

    
 

    
      
        	 	
                EXECUTIVE

              
	 	 
	 	
                /s/
                  Arthur E.
                  Reiner                                                               
                  

              
	 	
                Arthur
                  E. Reiner

              
	 	 
	 	 
	 	
                FINLAY
                  ENTERPRISES, INC.

              
	 	 
	 	 
	 	
                By:
                  /s/ Bruce E.
                  Zurlnick                                                    
                  

              
	 	
                Title: Senior
                  Vice President, Treasurer and Chief 

              
	 	
                Financial
                  Officer 

              
	 	 
	 	 
	 	
                FINLAY
                  FINE JEWELRY CORPORATION

              
	 	 
	 	
                By:
                  /s/ Bruce E.
                  Zurlnick                                                      
                  

              
	 	
                Title: Senior
                  Vice President, Treasurer and Chief

              
	 	
                Financial
                  Officer 

              

      

    

    

     

    
      
        
        

      

      
        7FINLAY
      FINE JEWELRY CORPORATION

    CHANGE
      OF CONTROL 

    EXECUTIVE
      SEVERANCE PLAN

     

    Effective
      March
      11, 2008

     

    INTRODUCTION

     

    The
      purpose of the Plan is to enable the Company to offer certain protections to
      executives if their employment with the Employer is terminated without Cause
      or
      for Good Reason in connection with a Change of Control. Accordingly, to
      accomplish this purpose, the Plan has been adopted effective as of March
      11, 2008. 

     

    Unless
      otherwise expressly provided in the Plan or unless otherwise agreed to in
      writing between the Company or an Affiliate and a Participant on or after the
      date hereof, Participants covered by the Plan shall not be eligible to
      participate in any other severance or termination plan, policy or practice
      of
      the Employer that would otherwise apply under the circumstances described
      herein. This Plan is intended to be a “top-hat” pension benefit plan within the
      meaning of U.S. Department of Labor Regulation Section 2520.104-23. This Plan
      document shall constitute both the plan document and summary booklet and shall
      be distributed to Participants in this form. Capitalized terms and phrases
      used
      herein shall have the meanings ascribed thereto in Article I.

     

    ARTICLE
      I

     

    DEFINITIONS

     

    For
      purposes of the Plan, capitalized terms and phrases used herein shall have
      the
      meanings ascribed in this Article.

     

    1.1 “Affiliate”
      shall
      mean (a)
      Parent,
(b)
      any
      subsidiary corporation of the Company within the meaning of Section 424(f)
      of
      the Code, (c)
      any
      corporation, trade or business (including, without limitation, a partnership
      or
      limited liability company) which is directly or indirectly controlled 50% or
      more (whether by ownership of stock, assets or an equivalent ownership interest
      or voting interest) by the Company or Parent, or (d)
      any
      other entity which is designated as an Affiliate by the Parent Board or the
      Committee.

     

    1.2 “Base
      Salary”
      shall
      mean a Participant’s annual base compensation rate for services paid by the
      Employer to the Participant at the time immediately prior to the Participant’s
      termination of employment, as reflected in the Employer’s payroll records or, if
      higher, the Participant’s annual base compensation rate immediately prior to a
      Change of Control. Base Salary shall not include commissions, bonuses, overtime
      pay, incentive compensation, benefits paid under any qualified plan, any group
      medical, dental or other welfare benefit plan, non-cash compensation or any
      other additional compensation but shall include amounts reduced pursuant to
      a
      Participant’s salary reduction agreement under Section 125, 132(f)(4) or 401(k)
      of the Code, if any, or a nonqualified elective deferred compensation
      arrangement, if any, to the extent that in each such case the reduction is
      to
      base salary.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.3 “Board”
      shall
      mean the Board of Directors of the Company.

     

    1.4 “Bonus”
      shall
      mean the average of the Participant’s annual bonus paid for the three fiscal
      years preceding the year in which a Change of Control shall occur, as set forth
      under the Participant’s individual employment agreement with the Employer or in
      any written bonus plan, program or arrangement approved by the Board or the
      Compensation
      Committee of the
      Parent
      Board. Bonus shall not include a Special Bonus or any other bonus to be paid
      upon the completion of any specified project or upon the occurrence of a
      specified event, including without limitation, a Change of Control.

     

    1.5 “Cause”
      shall
      mean the occurrence of any of the following:

     

    (a) the
      Participant’s failure to substantially perform his customary duties within ten
      (10) business days after written notice to the Participant of such
      failure; 

     

    (b) willful
      misconduct or willful malfeasance by the Participant in connection with his
      employment; 

     

    (c) the
      Participant’s conviction of, or plea of guilty or nolo contendere to, any crime
      constituting a felony under the laws of the United States or any State thereof,
      or any crime constituting a misdemeanor under any such law involving moral
      turpitude; or 

     

    (d) the
      Participant’s breach of any of the provisions of his employment agreement, which
      breach the Participant has failed to cure within 10 business days after written
      notice to the Participant of such breach. 

     

    Termination
      of the Participant’s for Cause shall be made by delivery to the Participant of a
      copy of a resolution duly adopted by the affirmative vote of not less than
      a
      majority of the Parent Board at a meeting of the Parent Board called and held
      for that purpose (after 30 days prior written notice to the Participant and
      a
      reasonable opportunity for the Participant to be heard before the Parent Board
      prior to such vote) finding that in the good faith judgment of the Parent Board,
      the Participant was guilty of conduct set forth in any of clauses (a)
      through
(d)
      above
      and specifying the particulars thereof. 

     

    1.6 “Change
      of Control”
      shall
      mean (e)(a)
      any
      transaction or series of transactions (including, without limitation, a tender
      offer, merger or consolidation) the result of which is that any “person” or
“group” (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act),
      other than the Principal and his Related Parties (as defined below) or an entity
      controlled by the Principal and his Related Parties, becomes the “beneficial”
owners (as defined in Rule 13(d)(3) under the Exchange Act) of more than 50
      percent (50%) of the total aggregate voting power of all classes of the voting
      stock of the Parent or the Company and/or warrants or options to acquire such
      voting stock, calculated on a fully diluted basis; (b)
      during
      any twelve (12) month period, individuals who at the beginning of such period
      constituted the Parent Board (together with any new directors whose election
      by
      the Parent Board or whose nomination for election by the Parent’s stockholders
      was approved by a vote of at least a majority of the directors then still in
      office who either were directors at the beginning of such period or whose
      election or nomination for election was previously so approved) cease for any
      reason to constitute a majority of the directors then in office unless such
      majority of the directors then in office has been elected or nominated for
      election by the Principal or his Related Parties or (c)
      a sale
      of assets constituting all or substantially all of the assets of the Parent
      or
      the Company (each determined on a consolidated basis). For purposes hereof,
      (x)
“Principal” means Arthur E. Reiner, and (y) “Related Party” with respect to the
      Principal means (i) any controlling stockholder, general or limited partner,
      80%
      (or more) owned subsidiary, or spouse or immediate family member (in the case
      of
      an individual) of the Principal or (ii) any trust, corporation, partnership
      or
      other entity, the beneficiaries, stockholders, partners, owners or persons
      beneficially holding an 80% or more controlling interest of which consist of
      the
      Principal and/or such other persons referred to in the immediately preceding
      clause (i). Only one Change of Control may occur under the Plan.

     

    
      
        
        

      

      
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    1.7 “COBRA”
shall
      mean the Consolidated Omnibus Budget Reconciliation Act of 1985, as
      amended.

     

    1.8 “Code”
      shall
      mean the Internal Revenue Code of 1986, as amended.

     

    1.9 “Code
      Section 409A”
      shall
      mean Section 409A of the Code together with the treasury regulations and other
      official guidance promulgated thereunder.

     

    1.10 “Committee”
      shall
      mean the Compensation Committee of the Parent Board or such other committee
      appointed by the Parent Board from time to time to administer the
      Plan.

     

    1.11 “Company”
      shall
      mean Finlay Fine Jewelry Corporation, a Delaware corporation, and any successor
      as provided in Article VI hereof.

     

    1.12 “Continuation
      Period”
      shall
      mean a period commencing on the date of a Participant’s termination of
      employment until the earliest of: 

     

    (a) eighteen
      (18) months from the Participant’s date of termination;

     

    (b) the
      date
      the Participant becomes eligible for coverage under the health insurance plan
      of
      a subsequent employer; and 

     

    (c) the
      date
      the Participant or the Participant’s eligible dependents, as the case may be,
      cease to be eligible under COBRA.

     

    1.13 “Continued
      Health Coverage”
shall
      mean the benefit set forth in Section 2.2(b)
      below.

     

    1.14 “Delay
      Period”
      shall
      mean the period commencing on the date the Participant incurs a Separation
      from
      Service from the Employer until the earlier of (a) the six (6)-month anniversary
      of the date of such Separation from Service and (b) the date of the
      Participant’s death.

     

    1.15 “Disability”
      shall
      mean a Participant’s disability that would qualify as such under the Employer’s
      long-term disability plan without regard to any waiting periods set forth in
      such plan.

     

    
      
        
        

      

      
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    1.16 “Effective
      Date”
      shall
      mean March 11, 2008.

     

    1.17 “Eligible
      Employee”
      shall
      mean any executive-level employee of the Company or an Affiliate designated
      in
      writing by the Committee to participate in the Plan.

     

    1.18 “Employer”
      shall
      mean the Company and any Affiliate.

     

    1.19 “Equity
      Vesting”
      shall
      mean the benefit set forth in Section 2.2(c)
      below.

     

    1.20 “ERISA”
      shall
      mean the Employee Retirement Income Security Act of 1974, as
      amended.

     

    1.21 “Exchange
      Act” shall
      mean the Securities Exchange Act of 1934, as amended.

     

    1.22 “Good
      Reason”
      shall
      mean the occurrence of any of the following events on or following a Change
      of
      Control without the Participant’s express written consent, provided the
      Participant gives notice to the Employer of the Good Reason event within ninety
      (90) days after the Participant has knowledge of the Good Reason event and
      such
      events are not fully corrected in all material respects by the Employer within
      ten (10) days following receipt of the Participant’s written
      notification:

     

    (a) any
      material breach by the Employer of the provisions of the Participant’s
      employment agreement;

     

    (b) a
      reduction by the Employer in the Participant’s Base Salary or annual bonus
      opportunity; 

     

    (c) the
      relocation of the Participant’s office to a location more than 30 miles outside
      of Manhattan, New York City; or 

     

    (d) the
      failure of the acquirer or successor corporation following a Change of Control
      to expressly assume the Employer’s obligations under the Participant’s
      employment agreement and extend the employment term thereof so that the
      unexpired portion is not less than three (3) years or otherwise offer the
      Participant a contract on terms no less favorable to the Participant than those
      provided in the Participant’s employment agreement providing for a term lasting
      at least three (3) years.

     

    1.23 “Parent”
      shall
      mean Finlay Enterprises, Inc., a Delaware corporation, and any successor as
      provided in Article VI hereof.

     

    1.24 “Parent
      Board” shall
      mean the Parent’s Board of Directors.

     

    1.25 “Participant”
      shall
      mean any Eligible Employee who is employed on the date of the Change of
      Control.

     

    1.26 “Plan”
      shall
      mean the Finlay Fine Jewelry Corporation Change of Control Executive Severance
      Plan.

     

    
      
        
        

      

      
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    1.27 “Separation
      from Service”
      shall
      mean a Participant’s termination of employment with the Employer, provided that
      such termination constitutes a separation from service within the meaning of
      Code Section 409A and the guidance issued thereunder. All references in the
      Plan
      to a “termination,” “termination of employment” or like terms shall mean
      Separation from Service. 

     

    1.28 “Severance
      Benefits”
      shall
      mean collectively, the Severance Payments, the Continued Health Coverage and
      the
      Equity Vesting.

     

    1.29 “Severance
      Payments”
      shall
      mean the payments set forth in Section 2.2(a) below.

     

    1.30 “Special
      Bonus”
      shall
      mean the special bonus, if any, that would be due and payable to the Participant
      by the Employer pursuant to the Participant’s employment agreement upon the
      Participant’s continued employment with the Employer through a specified
      date.

     

    1.31 “Specified
      Employee” shall
      mean a Participant who, as of the date of his or her Separation from Service,
      is
      deemed to be a “specified employee” within the meaning of that term under
      Section 409A(a)(2)(B) of the Code and using the identification methodology
      selected by the Employer from time to time in accordance therewith, or if none,
      the default methodology set forth therein.

     

     

     

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    ARTICLE
      II

     

    SEVERANCE
      BENEFITS

     

    2.1 Eligibility
      for Severance Benefits.

     

    (a) Qualifying
      Event for an Eligible Employee.
      If,
      during the period commencing on the date of the Change of Control and ending
      eighteen (18) months thereafter, the employment of a Participant is terminated
      by the Employer without Cause or by the Participant for Good Reason, then the
      Employer shall pay or provide the Participant with the Severance Benefits
      pursuant to the terms set forth herein.

     

    (b) Non-Qualifying
      Events.
      A
      Participant shall not be entitled to Severance Benefits under the Plan if the
      Participant’s employment is terminated (i) by the Employer for Cause, (ii) by a
      Participant for any reason other than for Good Reason, or (iii) on account
      of
      the Participant’s death or Disability.

     

    2.2 Amount
      of Severance Benefits.
      In the
      event that a Participant becomes entitled to benefits pursuant to Section
2.1
      hereof,
      the Employer shall pay or provide the Participant with the Severance Benefits
      as
      follows:

     

    (a) Severance
      Payment.
      The
      Employer shall pay to the Participant the following amounts:

     

    (i) subject
      to the provisions of Sections 2.3
      through
      2.8, an amount equal to two (2) times the sum of the Participant’s Base Salary
      plus Bonus;

     

    (ii) subject
      to the provisions of Sections 2.3
      through
      2.8, the Participant’s Special Bonus, as applicable, provided that such Special
      Bonus has not previously been paid to the Participant; and

     

    (iii) the
      Participant’s Accrued Amounts. “Accrued
      Amounts”
shall
      mean (x) any earned but unpaid Base Salary through the date of termination,
      paid
      in accordance with the Employer’s standard payroll practices, (y) reimbursement
      for any unreimbursed eligible business expenses properly incurred through the
      date of termination, payable no later than March 15 of the year following the
      year in which such expenses were incurred, and (z) such vested accrued benefits,
      and other payments, if any, as to which the Participant (and his eligible
      dependents) may be entitled under, and in accordance with the terms and
      conditions of, the employee benefit arrangements, plans and programs of the
      Employer as of the Date of Termination. 

     

    Unless
      otherwise indicated in Section 2.2(a)(iii),
      such
      amounts shall be payable, subject to Section 2.5, in a cash lump sum on the
      Employer’s first payroll date on or following the sixtieth (60th)
      day
      following the Participant’s date of termination. Notwithstanding the foregoing
      or anything in the Plan to the contrary, payment of the foregoing amounts (other
      than the Accrued Amounts) shall be subject to the Delay Period as provided
      in
      Section 7.8(b)
      hereof.

     

    
      
        
        

      

      
        6

        
          

        

      

      
        
        

      

    

    (b) Continued
      Health Coverage.
      Subject
      to the provisions of Sections 2.3
      through
      2.8 and a Participant’s timely election pursuant to COBRA and timely payment of
      health premiums at the applicable active employee rate, during the Continuation
      Period the Employer shall pay the remaining cost for continued coverage pursuant
      to COBRA, for the Participant and the Participant’s eligible dependents, under
      the Employer’s group health plans in which the Participant participated
      immediately prior to the date of termination of the Participant’s employment.
      Following the Continuation Period, the Participant (or, if applicable, the
      Participant’s qualified beneficiaries under COBRA) shall be entitled to such
      continued coverage for the remainder of the COBRA period, if any, on a full
      self-pay basis to the extent eligible under COBRA. 

     

    (c) Accelerated
      Vesting of Equity Awards.
      Subject
      to the provisions of Sections 2.3
      and 2.4
      and Sections 2.6 through 2.8, to the extent not vested immediately prior to
      a
      Change of Control, all stock based awards granted to the Participant prior
      to
      the Change of Control under the Parent’s equity plans, each as amended,
      including, but not limited to, the Finlay Enterprises Inc. 2007 Long Term
      Incentive Plan, or any predecessor or successor plan(s) thereto, that are
      outstanding as of the date of the Change of Control shall become fully vested
      as
      of the date of the Participant’s termination.
      Any
      stock option, stock appreciation right or similar award that provides for a
      Participant-elected exercise shall become fully exercisable and will remain
      exercisable for the applicable period following termination as specified in
      the
      applicable equity plan and/or the applicable award agreement. In the case of
      restricted stock or similar awards that are not subject to a Participant-elected
      exercise, the Company shall remove any restrictions (other than restrictions
      required by Federal securities law) or conditions in respect of such award
      as of
      the date of the Participant’s termination. For the avoidance of doubt, this
      Section shall apply to any equity awards that, in connection with a Change
      of
      Control, are granted as replacement of the equity awards held by the Participant
      immediately prior to the Change of Control.

     

    2.3 Effect
      of Prior Agreements. The
      Severance Benefits paid and provided under this Plan shall supersede and be
      in
      lieu of any benefits and/or payments provided under any other agreements,
      arrangements or severance plans by and between the Participant and the Employer,
      including, but not limited to, the Participant’s employment agreement and the
      Finlay Executive Severance Pay Plan.

     

    2.4 No
      Duty to Mitigate/Set-off.
      No
      Participant entitled to receive Severance Benefits hereunder shall be required
      to seek other employment or to attempt in any way to reduce any amounts payable
      to the Participant by the Company or Employer pursuant to the Plan and, except
      as provided in Sections 2.2(b)
      hereof,
      there shall be no offset against any amounts due to the Participant under the
      Plan on account of any remuneration attributable to any subsequent employment
      that the Participant may obtain or otherwise. The amounts payable hereunder
      shall not be subject to setoff, counterclaim, recoupment, defense or other
      right
      which the Employer may have against the Participant. In the event of the
      Participant’s breach of any provision hereunder, including without limitation,
      Sections 2.5
      (other
      than as it applies to a release of claims under the Age Discrimination in
      Employment Act, as amended), 2.7
      and
2.8
      hereof,
      the Company shall be entitled to recover any payments previously made to the
      Participant hereunder. Severance Benefits shall be reduced (offset) by any
      amounts payable under
      any
      statutory entitlement (including notice of termination, termination pay and/or
      severance pay) of the Participant upon a termination of employment, including,
      without limitation, any payments related to an actual or potential liability
      under the Worker Adjustment and Retraining Notification Act (WARN) or similar
      state or local law.

     

    
      
        
        

      

      
        7

        
          

        

      

      
        
        

      

    

    2.5 Release
      Required.
      Any
      Severance Benefits (other than the Accrued Amounts and Equity Vesting) payable
      pursuant to the Plan shall be conditioned upon the Participant’s execution and
      non-revocation, within sixty (60) days following the effective date of
      termination, of a release in the form attached as Appendix
      A
      hereto
      (with such changes thereon as are legally necessary at the time of execution
      to
      make it enforceable)
      (the
“Release”).
      The
      Company shall provide the release to the Participant within seven (7) days
      following the Participant’s date of termination. The Participant will be
      required to sign the release within 45 days after the date it is provided to
      him
      or her and not revoke it within the seven (7) day period following the date
      on
      which it is signed. All payments delayed pursuant to this Section 2.5, except
      to
      the extent delayed pursuant to Section 7.8(b), shall be paid to the Participant
      in a lump sum on the Employer’s first payroll date on or following the sixtieth
      (60th)
      day
      after the Participant’s date of termination, and any remaining payments due to
      the Participant under the Plan shall be paid or provided in accordance with
      the
      normal payment dates specified for them herein.

     

    2.6 Code
      Section 280G.  

     

    (a) In
      the
      event it is determined pursuant to clause (b) below, that part or all of the
      consideration, compensation or benefits to be paid to the Participant under
      the
      Plan in connection with the Participant’s termination of employment following a
      Change of Control or under any other plan, arrangement or agreement in
      connection therewith, constitutes a “parachute payment” (or payments) under
      Section 280G(b)(2) of the Code, then, if the aggregate present value of such
      parachute payments (the “Parachute
      Amount”)
      exceeds 2.99 times the Participant’s “base amount,” as defined in Section
      280G(b)(3) of the Code (the “Participant
      Base Amount”),
      the
      amounts constituting “parachute payments” which would otherwise be payable to or
      for the benefit of the Participant shall be reduced to the extent necessary
      so
      that the Parachute Amount is equal to 2.99 times the Participant Base
      Amount. 

     

    (b) Any
      determination that a payment constitutes a parachute payment and any calculation
      described in this Section 2.6 (“determination”)
      shall
      be made by the independent public accountants for the Parent, and may, at the
      Parent’s election, be made prior to termination of the Participant’s employment
      where the Parent determines that a Change of Control is imminent. Such
      determination shall be furnished in writing no later than thirty (30) days
      following the date of the Change of Control by the accountants to the
      Participant. If the Participant does not agree with such determination, he
      may
      give notice to the Parent within ten (10) days of receipt of the determination
      from the accountants and, within fifteen (15) days thereafter, accountants
      of
      the Participant’s choice must deliver to the Parent their determination that in
      their judgment complies with the Code. If the two accountants cannot agree
      upon
      the amount to be paid to the Participant pursuant to this Section 2.6
      within
      ten days of the delivery of the statement of the Participant’s accountants to
      the Parent, the two accountants shall choose a third accountant who shall
      deliver their determination of the appropriate amount to be paid to the
      Participant pursuant to this Section 2.6,
      which
      determination shall be final. If the final determination provides for the
      payment of a greater amount than that proposed by the accountants of the Parent,
      then the Parent shall pay all of the Participant’s costs incurred in contesting
      such determination and all other costs incurred by the Parent with respect
      to
      such determination. However, if the determination of the accountants of the
      Parent is supported by the third accountant, the Participant shall pay all
      reasonable costs incurred by both the Parent and the Participant with respect
      to
      the determination.

     

    
      
        
        

      

      
        8

        
          

        

      

      
        
        

      

    

    (c) If
      the
      final determination made pursuant to clause (b) above results in a reduction
      of
      the payments that would otherwise be paid to the Participant except for the
      application of Section 2.6(a),
      the
      Equity Vesting shall be eliminated or reduced to the extent necessary in order
      to not exceed the limitation under Section 2.6(a), and then, to the extent
      necessary pursuant to Section 2.6(a), the Severance Payments (other than the
      Accrued Amounts) shall be reduced. Within ten days following such determination,
      the Parent shall pay to or distribute to or for the benefit of the Participant
      such amounts as are then due to the Participant under the Plan and shall
      promptly pay to or distribute to or for the benefit of the Participant in the
      future such amounts as become due to the Participant under the
      Plan.

     

    (d) As
      a
      result of the uncertainty in the application of Section 280G of the Code at
      the
      time of a determination hereunder, it is possible that payments will be made
      by
      the Parent which should not have been made under Section 2.6(a)
      (an
“Overpayment”)
      or
      that additional payments which are not made by the Parent pursuant to Section
      2.6(a)
      above
      should have been made (an “Underpayment”).
      In
      the event that there is a final determination by the Internal Revenue Service,
      or a final determination by a court of competent jurisdiction, that an
      Overpayment has been made, any such Overpayment shall be treated for all
      purposes as a loan to the Participant to the extent permitted by law, which
      the
      Participant shall repay to the Parent together with interest at the applicable
      Federal rate provided for in Section 7872(f)(2) of the Code. Nothing in this
      Section 2.6 is intended to violate the Sarbanes-Oxley Act of 2002 and to the
      extent that any advance or repayment obligation hereunder would do so, such
      obligation shall be modified so as to make the advance a nonrefundable payment
      to the Participant and the repayment obligation null and void to the extent
      required by such Act. In the event that there is a final determination by the
      Internal Revenue Service, a final determination by a court of competent
      jurisdiction or a change in the provisions of the Code or regulations pursuant
      to which an Underpayment arises under the Plan, any such Underpayment shall
      be
      promptly paid by the Parent to or for the benefit of the Participant, together
      with interest at the applicable Federal rate provided for in Section 7872(f)(2)
      of the Code. 

     

    2.7 Restrictive
      Covenants.
      As
      a
      condition to receiving Severance Benefits (other than the Accrued Amounts and
      Equity Vesting), the Participant shall be subject to the restrictive covenants
      described in the Release.
      Upon the
      Participant’s timely execution and non-revocation of the Release, the
      restrictive covenants contained therein shall supersede the restrictive
      covenants contained in the Participant’s employment agreement. 

     

    2.8 Cooperation.
      By
      accepting the Severance Benefits under the Plan (other than the Accrued
      Amounts), subject to the Participant’s other commitments, the Participant agrees
      to be reasonably available to cooperate (but only truthfully) with the Employer
      and provide information as to matters which the Participant was personally
      involved, or has information on, during the Participant’s employment with the
      Employer and which are or become the subject of litigation or other
      dispute.

     

    
      
        
        

      

      
        9

        
          

        

      

      
        
        

      

    

    ARTICLE
      III

     

    UNFUNDED
      PLAN

     

    3.1 Unfunded
      Status.
      The Plan
      shall be “unfunded” for the purposes of ERISA and the Code, and Severance
      Payments shall be paid out of the general assets of the Employer as and when
      Severance Payments are payable under the Plan. All Participants shall be solely
      unsecured general creditors of the Company and the Employer. If the Company
      decides in its sole discretion to establish any advance accrued reserve on
      its
      books against the future expense of the Severance Payments payable hereunder,
      or
      if the Company decides in its sole discretion to fund a trust under the Plan,
      such reserve or trust shall not under any circumstances be deemed to be an
      asset
      of the Plan.

     

    ARTICLE
      IV

     

    ADMINISTRATION
      OF THE PLAN

     

    4.1 Plan
      Administrator.
      The
      general administration of the Plan on behalf of the Company (as plan
      administrator under Section 3(16)(A) of ERISA) shall be placed with the
      Committee.

     

    4.2 Reimbursement
      of Expenses of Plan Committee.
      The
      Company may, in its sole discretion, pay or reimburse the members of the
      Committee for all reasonable expenses incurred in connection with their duties
      hereunder, including, without limitation, expenses of outside legal
      counsel.

     

    4.3 Action
      by the Plan Committee.
      Decisions of the Committee shall be made by a majority of its members attending
      a meeting at which a quorum is present (which meeting may be held
      telephonically), or by written action in accordance with applicable law. Subject
      to the terms of the Plan and provided that the Committee acts in good faith,
      the
      Committee shall have complete authority to determine a Participant’s
      participation and Severance Benefits under the Plan, to interpret and construe
      the provisions of the Plan, and to make decisions in all disputes involving
      the
      rights of any person interested in the Plan.

     

    4.4 Delegation
      of Authority.
      Subject
      to the limitations of applicable law, the Committee may delegate any and all
      of
      its powers and responsibilities hereunder to other persons by formal resolution
      filed with and accepted by the Parent Board. Any such delegation shall not
      be
      effective until it is accepted by the Parent Board and the persons designated,
      and may be rescinded at any time by written notice from the Committee to the
      person to whom the delegation is made.

     

    4.5 Retention
      of Professional Assistance.
      The
      Committee may employ such legal counsel, accountants and other persons as may
      be
      required in carrying out its work in connection with the Plan.

     

    4.6 Accounts
      and Records.
      The
      Committee shall maintain such accounts and records regarding the fiscal and
      other transactions of the Plan and such other data as may be required to carry
      out its functions under the Plan and to comply with all applicable
      laws.

     

    
      
        
        

      

      
        10

        
          

        

      

      
        
        

      

    

    4.7 Indemnification.
      The
      Committee, its members and any person designated pursuant to Section 4.4 above
      shall not be liable for any action or determination made in good faith with
      respect to the Plan. The Employer shall, to the fullest extent permitted by
      law,
      indemnify and hold harmless each member of the Committee and each director,
      officer and employee of the Employer for liabilities or expenses they and each
      of them incur in carrying out their respective duties under the Plan, other
      than
      for any liabilities or expenses arising out of such individual’s willful
      misconduct or fraud.

     

    ARTICLE
      V

     

    AMENDMENT
      AND TERMINATION

     

    5.1 Amendment
      and Termination.
      The
      Company reserves the right to amend or terminate, in whole or in part, any
      or
      all of the provisions of the Plan by action of the Parent Board (or a duly
      authorized committee thereof) at any time, provided that in no event shall
      any
      amendment reducing the Severance Benefits provided hereunder or any Plan
      termination be effective prior to the third (3rd)
      anniversary of the Effective Date, and further provided that the Company shall
      not amend or terminate the Plan at any time after (i) the occurrence of a Change
      of Control or (ii) the date the Company enters into a definitive agreement
      which, if consummated, would result in a Change of Control, unless the potential
      Change of Control is abandoned (as publicly announced by the Parent or Company),
      in either case until two (2) years after the occurrence of a Change of Control,
      provided that all Severance Benefits under the Plan have been paid.

     

    ARTICLE
      VI

     

    SUCCESSORS

     

    For
      purposes of the Plan, the Company and Parent shall include any and all
      successors or assignees, whether direct or indirect, by purchase, merger,
      consolidation or otherwise, to all or substantially all the business or assets
      of the Company or the Parent, respectively, and such successors and assignees
      shall perform the Company’s or Parent’s obligations under the Plan, as
      applicable, in the same manner and to the same extent that the Company or
      Parent, as applicable, would be required to perform if no such succession or
      assignment had taken place. In the event the surviving corporation in any
      transaction to which the Company or the Parent is a party is a subsidiary of
      another corporation, then the ultimate parent corporation of such surviving
      corporation shall cause the surviving corporation to perform the Plan in the
      same manner and to the same extent that the Company or the Parent, as
      applicable, would be required to perform if no such succession or assignment
      had
      taken place. In such event, the term “Company” and “Parent” as used in the Plan,
      shall mean the Company and Parent, respectively, as hereinbefore defined and
      any
      successor or assignee (including the ultimate parent corporation) to the
      business or assets of the Company or Parent, respectively, which by reason
      hereof becomes bound by the terms and provisions of the Plan.

     

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    ARTICLE
      VII

     

    MISCELLANEOUS

     

    7.1 Minors
      and Incompetents.
      If the
      Committee shall find that any person to whom Severance Benefits are payable
      under the Plan is unable to care for his or her affairs because of illness
      or
      accident, or is a minor, any Severance Benefits due (unless a prior claim
      therefore shall have been made by a duly appointed guardian, committee or other
      legal representative) may be paid to the spouse, child, parent, or brother
      or
      sister, or to any person deemed by the Committee to have incurred expense for
      such person otherwise entitled to the Benefits, in such manner and proportions
      as the Committee may determine in its sole discretion. Any such Severance
      Benefits shall be a complete discharge of the liabilities of the Company, the
      Employer, the Committee, the Parent Board and the Board under the
      Plan.

     

    7.2 Limitation
      of Rights.
      Nothing
      contained herein shall be construed as conferring upon a Participant the right
      to continue in the employ of the Employer as an employee in any other capacity
      or to interfere with the Employer’s right to discharge him or her at any time
      for any reason whatsoever.

     

    7.3 Payment
      Not Salary.
      Any
      Severance Benefits payable under the Plan shall not be deemed salary or other
      compensation to the Participant for the purposes of computing benefits to which
      he or she may be entitled under any pension plan or other arrangement of the
      Employer maintained for the benefit of its employees, unless such plan or
      arrangement provides otherwise.

     

    7.4 Severability.
      In case
      any provision of the Plan shall be illegal or invalid for any reason, said
      illegality or invalidity shall not affect the remaining parts hereof, but the
      Plan shall be construed and enforced as if such illegal and invalid provision
      never existed.

     

    7.5 Withholding.
      The
      Company and/or the Employer shall have the right to make such provisions as
      it
      deems necessary or appropriate to satisfy any obligations it may have to
      withhold federal, state or local income or other taxes incurred by reason of
      payments pursuant to the Plan. In lieu thereof, the Company and/or the Employer
      shall have the right to withhold the amounts of such taxes from any other sums
      due or to become due from the Company and/or the Employer to the Participant
      upon such terms and conditions as the Committee may prescribe.

     

    7.6 Non-Alienation
      of Benefits.
      The
      Severance Benefits payable under the Plan shall not be subject to alienation,
      transfer, assignment, garnishment, execution or levy of any kind, and any
      attempt to cause any Severance Benefits to be so subjected shall not be
      recognized.

     

    7.7 Governing
      Law.
      To the
      extent legally required, the Code and ERISA shall govern the Plan and, if any
      provision hereof is in violation of any applicable requirement thereof, the
      Company reserves the right to retroactively amend the Plan to comply therewith.
      To the extent not governed by the Code and ERISA, the Plan shall be governed
      by
      the laws of the State of New York, without reference to rules relating to
      conflicts of law.

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

    7.8 Code
      Section 409A. 

     

    (a) General.
      Although the Employer makes no guarantee with respect to the tax treatment
      of
      payments hereunder and shall
      not
      be responsible in any event with regard to non-compliance with Code Section
      409A, the
      Plan
      is intended to either comply with, or be exempt from, the requirements of Code
      Section 409A. To the extent that the Plan is not exempt from the requirements
      of
      Code Section 409A, the Plan is intended to comply with the requirements of
      Code
      Section 409A and shall be limited, construed and interpreted in accordance
      with
      such intent. Accordingly, the Company reserves the right to amend the provisions
      of the Plan at any time and in any manner without the consent of Participants
      solely to comply with the requirements of Code Section 409A and to avoid the
      imposition of an excise tax under Code Section 409A on any payment to be made
      hereunder, provided that there is no reduction in the Severance Benefits
      hereunder. Notwithstanding the foregoing, in no event whatsoever shall the
      Employer be liable for any additional tax, interest or penalty that may be
      imposed on a Participant by Code Section 409A or any damages for failing to
      comply with Code Section 409A.

     

    (b) Separation
      from Service; Specified Employees.
      A
      termination of employment shall not be deemed to have occurred for purposes
      of
      any provision of the Plan providing for the payment of any amounts or benefits
      upon or following a termination of employment unless such termination is also
      a
      Separation from Service. If a Participant is deemed on the date of termination
      to be a Specified Employee, then with regard to any payment that is specified
      as
      subject to this Section, such payment shall not be made prior to the expiration
      of the Delay Period. All payments delayed pursuant to this Section 7.8(b)
      (whether
      they would have otherwise been payable in a single lump sum or in installments
      in the absence of such delay) shall be paid to the Participant in a single
      lump
      sum on the first Company payroll date on or following the first day following
      the expiration of the Delay Period, and any remaining payments and benefits
      due
      under the Plan shall be paid or provided in accordance with the normal payment
      dates specified for them herein.

     

    7.9 Legal
      Fees.
      A
      Participant shall be entitled to reimbursement (but not advancement) of
      reasonable legal fees, costs and disbursements incurred in connection with
      any
      legal proceeding concerning Severance Benefits under the Plan, provided that
      in
      any such event, an arbitrator, judge or magistrate, as applicable, determines
      that the Participant substantially
      prevailed with respect to the
      claims subject to such proceeding or dispute. Reimbursements, if any, pursuant
      to this Section 7.9
      shall be
      made no later than March 15 of the calendar year next following the calendar
      year in which such determination is made.

     

    7.10 Non-Exclusivity.
      The
      adoption of the Plan by the Company shall not be construed as creating any
      limitations on the power of the Company to adopt such other supplemental
      retirement income arrangements as it deems desirable, and such arrangements
      may
      be either generally applicable or limited in application.

     

    7.11 Non-Employment.
      The Plan
      is not an agreement of employment and it shall not grant the Participant any
      rights of employment.

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    7.12 Headings
      and Captions.
      The
      headings and captions herein are provided for reference and convenience only.
      They shall not be considered part of the Plan and shall not be employed in
      the
      construction of the Plan.

     

    7.13 Gender
      and Number.
      Whenever
      used in the Plan, the masculine shall be deemed to include the feminine and
      the
      singular shall be deemed to include the plural, unless the context clearly
      indicates otherwise.

     

    7.14 Communications.
      All
      announcements, notices and other communications regarding the Plan will be
      made
      by the Company and/or the Employer in writing.

     

    ARTICLE
      VIII

     

    WHAT
      ELSE A PARTICIPANT NEEDS

    TO
      KNOW ABOUT THE PLAN

     

    8.1 Claims
      Procedure. Any
      claim
      by a Participant with respect to eligibility, participation, contributions,
      benefits or other aspects of the operation of the Plan shall be made in writing
      to a person designated by the Committee from time to time for such purpose.
      If
      the designated person receiving a claim believes, following consultation with
      the Chairman of the Committee, that the claim should be denied, he or she shall
      notify the Participant in writing of the denial of the claim within ninety
      (90)
      days after his or her receipt thereof. This period may be extended an additional
      ninety (90) days in special circumstances and, in such event, the Participant
      shall be notified in writing of the extension, the special circumstances
      requiring the extension of time and the date by which the Committee expects
      to
      make a determination with respect to the claim. If the extension is required
      due
      to the Participant’s failure to submit information necessary to decide the
      claim, the period for making the determination will be tolled from the date
      on
      which the extension notice is sent until the date on which the Participant
      responds to the Plan’s request for information.

     

    If
      a
      claim is denied in whole or in part, or any adverse benefit determination is
      made with respect to the claim, the Participant will be provided with a written
      notice setting forth (a) the specific reason or reasons for the denial making
      reference to the pertinent provisions of the Plan or of Plan documents on which
      the denial is based, (b) a description of any additional material or information
      necessary to perfect or evaluate the claim, and explain why such material or
      information, if any, is necessary, and (c) inform the Participant of his or
      her
      right to request review of the decision. The notice shall also provide an
      explanation of the Plan’s claims review procedure and the time limits applicable
      to such procedure, as well as a statement of the Participant’s right to bring a
      civil action under Section 502(a) of ERISA following an adverse benefit
      determination on review. If a Participant is not notified (of the denial or
      an
      extension) within ninety (90) days from the date the Participant notifies the
      Plan Administrator, the Participant may request a review of the application
      as
      if the claim had been denied.

     

    A
      Participant may appeal the denial of a claim by submitting a written request
      for
      review to the Committee, within
      sixty (60) days
      after
      written notification of denial is received. Receipt of such denial shall be
      deemed to have occurred if the notice of denial is sent via first class mail
      to
      the Participant’s last
      shown
      address on the books of the Employer. Such
      period may be extended by the Committee for good cause shown. The claim will
      then be reviewed by the Committee. In connection with this appeal, the
      Participant (or his or her duly authorized representative) may (a) be provided,
      upon written request and free of charge, with reasonable access to (and copies
      of) all documents, records, and other information relevant to the claim, and
      (b)
      submit to the Committee written comments, documents, records, and other
      information related to the claim. If the Committee deems it appropriate, it
      may
      hold a hearing as to a claim. If a hearing is held, the Participant shall be
      entitled to be represented by counsel.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    The
      review by the Committee will take into account all comments, documents, records,
      and other information the Participant submits relating to the claim. The
      Committee will make a final written decision on a claim review, in most cases
      within sixty (60) days after receipt of a request for a review. In some cases,
      the claim may take more time to review, and an additional processing period
      of
      up to sixty (60) days may be required. If that happens, the Participant will
      receive a written notice of that fact, which will also indicate the special
      circumstances requiring the extension of time and the date by which the
      Committee expects to make a determination with respect to the claim. If the
      extension is required due to the Participant’s failure to submit information
      necessary to decide the claim, the period for making the determination will
      be
      tolled from the date on which the extension notice is sent to the Participant
      until the date on which the Participant responds to the Plan’s request for
      information.

     

    The
      Committee’s decision on the claim for review will be communicated to the
      Participant in writing. If an adverse benefit determination is made with respect
      to the claim, the notice will include: (a) the specific reason(s) for any
      adverse benefit determination, with references to the specific Plan provisions
      on which the determination is based; (b) a statement that the Participant is
      entitled to receive, upon request and free of charge, reasonable access to
      (and
      copies of) all documents, records and other information relevant to the claim;
      and (c) a statement of the Participant’s right to bring a civil action under
      Section 502(a) of ERISA. A Participant may not start a lawsuit to obtain
      benefits until after he or she has requested a review and a final decision
      has
      been reached on review, or until the appropriate timeframe described above
      has
      elapsed since the Participant filed a request for review and the Participant
      has
      not received a final decision or notice that an extension will be necessary
      to
      reach a final decision. These procedures must be exhausted before a Participant
      (or any beneficiary) may bring a legal action seeking payment of benefits.
      In
      addition, no lawsuit may be started more than two years after the date on which
      the applicable appeal was denied. If there is no decision on appeal, no lawsuit
      may be started more than two years after the time when the Committee should
      have
      decided the appeal. The law also permits the Participant to pursue his or her
      remedies under Section 502(a) of ERISA without exhausting these appeal
      procedures if the Plan has failed to follow them.

     

    

     

    
      
        
        

      

      
        15

        
          

        

      

      
        
        

      

       

    

    APPENDIX
      A

    

    AGREEMENT
      AND
      RELEASE

    

    Finlay
      Fine Jewelry Corporation (“Company”)
      and
[name]
      (“Employee”),
      agree
      to the terms and conditions set forth below:

    

    1. Employee’s
      employment with the
      Employer (as defined under the Finlay
      Fine Jewelry Corporation Change of Control Executive Severance Plan (the
“Severance
      Plan”))
      is
      terminated as of ________________ ___, 20__ (the “Termination
      Date”).
      Employee acknowledges that the Termination Date is the termination date of
      [his/her] employment
      for purposes of participation in and coverage under all benefit plans and
      programs sponsored by or through the Employer. Employee acknowledges and agrees
      that the Employer shall not have any obligation to rehire Employee, nor shall
      the Employer have any obligation to consider [him/her]
      for
      employment, after the Termination Date. All capitalized terms used herein,
      unless defined otherwise herein, shall have the meaning set forth in the
      Severance Plan.

    

    2. In
      exchange for the general release in paragraph 4 below and other promises
      contained herein, and in accordance with the terms of the Severance Plan, which
      Employee hereby acknowledges receiving, including
      without limitation, Section 7.8(b) of the Severance Plan to the extent
      applicable, Employee will receive (collectively, the “Severance
      Benefits”):

    

    (a) a
      Severance Payment (as defined in the Severance Plan) in the total gross amount
      of $[amount]
      (the
“Severance
      Payment”),
      which
      shall be paid in a single cash lump sum payment on the Employer’s first payroll
      date on or following the sixtieth (60th)
      day
      following the Termination Date, subject to all applicable payroll withholding
      deductions; and

     

    (b) the
      Continued Health Coverage (as defined in the Severance Plan) pursuant to Section
      2.2(b) of the Severance Plan.

     

    3. Employee
      hereby agrees and acknowledges that the Severance Benefits exceed any payment,
      benefit or other thing of value to which Employee might otherwise be entitled
      under any policy, plan or procedure of the Employer or its Parent or Affiliates
      or pursuant to any prior agreement or contract with the Employer or its Parent
      or Affiliates. 

    

    4. (a) In
      exchange for the Severance Benefits and other valuable consideration, Employee,
      for [himself/herself]
      and
      for
[his/her]
      heirs,
      executors, administrators and assigns (referred to collectively as “Releasors”),
      forever releases and discharges the Employer and any and all of the Employer’s
      parent companies, partners, subsidiaries, affiliates, successors and assigns
      and
      any and all of its and their past and/or present officers, directors, partners,
      agents, employees, representatives, counsel, employee benefit plans and their
      fiduciaries and administrators, successors and assigns (referred to collectively
      as the “Releasees”),
      from
      any and all claims, demands, causes of action, fees and liabilities of any
      kind
whatsoever,
      whether known or unknown, which Releasors ever had, now have or may have against
      Releasees by reason of any actual or alleged act, omission, transaction,
      practice, conduct, occurrence or other matter up to and including the date
      Employee signs this Agreement and
      Release.

     

    
      
        
        

      

      
        B-1

        
          

        

      

      
        
        

      

    

     

    (b) Without
      limiting the generality of the foregoing, this Agreement and
      Release is intended to and shall release Releasees from any and all claims,
      whether known or unknown, that Releasors ever had, now have or may have against
      Releasees arising out of Employee’s employment with the Employer or any of the
      Releasees, the terms and conditions of such employment and/or the termination
      of
      such employment, including but not limited to: any claim under the Age
      Discrimination in Employment Act, as amended (“ADEA”),
      and/or the Older Workers Benefit Protection Act which laws prohibit
      discrimination on account of age; (ii) any claim under Title VII of the
      Civil Rights Act of 1964, as amended, which, among other things, prohibits
      discrimination/retaliation on account of race, color, religion, sex, and
      national origin; (iii) any claim under the Americans with Disabilities Act
      (“ADA”)
      or
      Sections 503 and 504 of the Rehabilitation Act of 1973, each as amended;
      (iv) any claim under the Employee Retirement Income Security Act of 1974,
      as amended (“ERISA”);
      (v) any claim under the Family and Medical Leave Act; (vi) any claim
      or other action under the National Labor Relations Act, as amended; (vii) any
      claim under the Workers’ Adjustment and Retraining Notification Act;
      (viii) any claim under the New York State Human Rights Law, the New York
      Executive Law, the New York Labor Law, the New York City Administrative Code
      or
      any other applicable state or local labor or human rights laws; (ix) the
      Sarbanes-Oxley Act of 2002; (x) any other claim of discrimination,
      harassment or retaliation in employment (whether based on federal, state or
      local law, regulation, or decision; (xi) any other claim (whether based on
      federal, state or local law, statutory or decisional) arising out of the terms
      and conditions of Employee’s employment with and termination from the Employer
      and/or the Released Parties; (xii) any claims for wrongful discharge,
      whistleblowing, constructive discharge, promissory estoppel, detrimental
      reliance, negligence, defamation, emotional distress, compensatory or punitive
      damages, and/or equitable relief; (xiii) any claims under federal, state,
      or local occupational safety and health laws or regulations, all as amended;
      and
      (xiv) any claim for attorneys’ fees, costs, disbursements and/or the
      like.
      By
      virtue of the foregoing, Employee agrees that [he/she]
      has
      waived any damages and other relief available to [him/her]
      (including, without limitation, money damages, equitable relief and
      reinstatement) under the claims waived in this paragraph 4. Notwithstanding
      anything herein to the contrary, the sole matters to which this Agreement of
      Release does not apply are: (i)
      claims
      to the Severance Benefits; (ii) claims under the Consolidated Omnibus Budget
      Reconciliation Act of 1985, as amended; (iii) claims arising after the date
      Employee signs this Agreement and Release;
      (iv)
      claims to the Accrued Amounts; (v) claims
      relating to any rights of indemnification under the Employer’s organizational
      documents or otherwise, (vi) claims relating to any outstanding stock options
      or
      other equity-based award on the Termination Date, including, without limitation,
      the Equity Vesting; or (vii) claims relating to an approved, executed, agreement
      between the Employer and Employee that provides for specific severance in
      connection with a termination of employment which such agreement has not expired
      or been replaced on or prior to the termination of the Employee’s employment.
      Employee acknowledges that Employee has been informed that Employee might have
      specific rights
      and/or claims under the ADEA. Employee specifically waives such rights and/or
      claims under the ADEA to the extent such rights and/or claims arose on or prior
      to the date this Agreement of Release is executed by Employee.

    

    
      
        
        

      

      
        B-2

        
          

        

      

      
        
        

      

    

    5. Employee
      agrees that at no time will [he/she]
      engage
      in any form of conduct or make any statements or representations that disparage
      or otherwise impair the reputation, goodwill or commercial interests of the
      Releasees. Nothing in this Agreement and Release shall prohibit or restrict
      Employee from: (i) making any disclosure of information, as required by law,
      in
      a proceeding or lawsuit in which the Employer is a party, or additionally in
      any
      other civil proceeding or lawsuit upon ten (10) business days prior written
      notice to the Employer; (ii) providing information to, or testifying or
      otherwise assisting in an investigation or proceeding brought by any federal
      regulatory or law enforcement agency or legislative body or the Employer’s
      designated legal, compliance, or human resources officers; (iii) filing,
      testifying, participating or otherwise assisting in a proceeding relating to
      an
      alleged violation of any federal, state or municipal law relating to fraud
      or
      any rule or regulation of the Securities and Exchange Commission; or (iv)
      challenging the validity of this Agreement and Release as it applies to a
      release of claims under ADEA.

    

    6. Employee
      agrees to make [himself/herself]
      reasonably available at times and for durations reasonably acceptable to both
      parties to assist the Employer with respect to any issues wherein the Employer
      considers Employee’s knowledge or expertise reasonably beneficial. The Employer
      will reimburse Employee for all reasonable out of pocket expenses that incurred
      while [he/she]
      is
      engaged in such activity. Employee will also cooperate fully with the Employer
      in the defense or prosecution of any claims or actions now in existence or
      which
      may be brought in the future against or on behalf of the Employer that relate
      to
      events or occurrences that transpired while the Employee was employed by the
      Employer. Employee’s full cooperation in connection with such claims or actions
      shall include, but not be limited to, being available to meet with counsel
      to
      prepare for discovery or trial and to act as a witness on behalf of the Employer
      at mutually convenient times. Employee shall also cooperate fully with the
      Employer in connection with any such investigation or review of any federal,
      state or local regulatory authority as any such investigation or review relates
      to events or occurrences that transpired while Employee was employed by the
      Employer. The Employer shall pay for any reasonable out-of-pocket expenses
      incurred by Employee in connection with [his/her]
      performance of the obligations pursuant to this paragraph 6. Employee’s
      performance under this paragraph 6 following the Termination Date shall be
      subject to [his/her]
      then
      current employment obligations.

    

    7. Employee
      represents that [he/she]
      has
      returned (or will return) to Employer all property belonging to the Employer,
      including but not limited to electronic devices (e.g., Blackberry and/or laptop
      computer), keys, card access to buildings and office floors, and business
      information and documents. 

    

    
      
        
        

      

      
        B-3

        
          

        

      

      
        
        

      

    

    8. If
      any
      provision of this Agreement and Release is held to be illegal, void, or
      unenforceable, such provision shall be of no force or effect. However, the
      illegality or unenforceability of such provision shall have no effect upon,
      and
      shall not impair the enforceability of, any other provision of this Agreement
      and
      Release. Further, to the extent any provision of this Agreement and Release
      is
      deemed to be overbroad or unenforceable as written, such provision shall be
      given the maximum effect permissible under law.

    

    9. This
      Agreement and
      Release represents the entire understanding between the parties hereto with
      respect to the subject matter hereof, and may not be changed or modified except
      by a written agreement signed by both of the parties hereto after the Effective
      Date of this Agreement and
      Release. In the event of any conflict between any of the provisions of this
      Agreement and
      Release and the provisions of the Severance Plan, the terms of the Severance
      Plan shall govern.

    

    10. Except
      as
      may be preempted by federal law, this Agreement and
      Release shall
      be
      governed by the laws of the State of New York, without regard to conflict of
      laws principles, and the parties in any action arising out of this Agreement
      and
      Release shall
      be
      subject to the personal jurisdiction and venue of the federal and state courts,
      as applicable, in the County of New York, State of New York.

    

    11. The
      parties agree that this Agreement and Release and its terms are confidential
      and
      shall be accorded the utmost confidentiality. Employee
      hereby agrees to keep confidential and not disclose the terms and conditions
      of
      this Agreement to any person or entity without the prior written consent of
      the
      Employer,
      except
      to Employee’s accountants, attorneys and/or spouse, provided that they also
      agree to maintain the confidentiality of this Agreement. Employee shall be
      responsible for any disclosure by them. Employee further represent that Employee
      has not disclosed the terms and conditions of this Agreement to anyone other
      than Employee’s attorneys, accountants and/or spouse. This Section 11 does not
      prohibit disclosure of this Agreement by any party if required by law, provided
      that if Employee is required to make such disclosure the Employee has given
      the
Employer
      prompt
      written notice of any legal process and cooperated with the
      Employer’s
      efforts
      to seek a protective order.

    

    12. Employee
      acknowledges that during the course of Employee’s employment with the Employer,
      Employee has had access to information relating to the Employer and its business
      that is not generally known by persons not employed by the Employer and that
      could not easily be determined or learned by someone outside of the Employer
      (“Confidential
      Information”).
      Such
      information is confidential or proprietary and may include but not be limited
      to
      customer or client contact lists, trade secrets, patents, copyrighted materials,
      proprietary computer software and programs, products, systems analyses, lists
      of
      suppliers and supplier contracts, internal policies and marketing strategies,
      financial information relating to the Employer and its employees, and other
      documents and information that provide the Employer with a competitive advantage
      and that could not be easily determined or learned or obtained by someone
      outside the Employer. Employee further acknowledges that: (i) such confidential
      and proprietary information is the exclusive, unique, and valuable property
      of
      the Employer; (ii) the businesses of the Employer depend on such confidential
      and proprietary information; and (iii) the Employer wishes to protect such
      confidential and proprietary information by keeping it confidential for the
      use
      and benefit of the Employer. Employee agrees not to disclose or use such
      Confidential Information at any time in the future, except if authorized by
      the
      Employer in writing or if required in connection
      with a subpoena or other legal process or investigation by any governmental,
      regulatory or self-regulatory agency or in connection with any legal proceeding
      brought against Employee, or in connection with a proceeding to enforce this
      Agreement.

    

    
      
        
        

      

      
        B-4

        
          

        

      

      
        
        

      

    

    13. Employee
      agrees that for a period of two (2) years following Employee’s Termination Date
      (the “Restricted
      Period”),
      [he/she]
      will
      not,
      directly or indirectly, as an officer, director, stockholder, partner,
      associate, employee, consultant, owner, agent, creditor, co-venturer or
      otherwise, become or be interested in or be associated with any other
      corporation, firm or business engaged, in any geographical area in which the
      Employer is engaged during the term of
      [his/her] employment
      or at the date of
      [his/her] termination
      of employment, in a “Competitive Business” (as defined below) with that of the
      Employer at such time. Furthermore, the Employee agrees that during the
      Restricted Period [he/she]
      shall
      not, on behalf of himself or any business
      [he/she] is
      interested in or associated with, employ or otherwise engage, or seek to employ
      or engage, any individual employed by the Employer at any time during the
      preceding twelve months, or solicit any business in the fine jewelry field
      from
      any person the Employer was doing business with at any time during
      [his/her] employment
      hereunder, including without limitation any lessor from which the Employer
      leases or leased a department or departments.

     

    A
      “Competitive
      Business”
shall
      mean any business which derives 30% or more of its revenue directly or
      indirectly from the sale of fine jewelry. The Employee’s ownership, directly or
      indirectly, of not more than five percent of the issued and outstanding stock
      of
      any corporation, the shares of which are regularly traded on a national
      securities exchange or in the over-the-counter market, shall not in any event
      be
      deemed to be a violation of the provisions of this Section 13
      and the
      ownership of securities by the Employee of the Employer shall not be deemed
      to
      be a violation of this Section 13.
      

    

    14. Employee
      acknowledges and agrees that the Employer will suffer irreparable damage if
      any
      of the provisions of paragraphs 5, 12 or 13 of this Agreement and Release are
      breached and that the Employer’s remedies at law for a breach of such provisions
      would be inadequate and, in recognition of this fact, Employee agrees that,
      in
      the event of such a breach, in addition to any remedies at law, the Employer
      will be entitled to obtain equitable relief in the form of specific performance,
      temporary restraining order, a temporary or permanent injunction or any other
      equitable remedy which may then be available.

    

    15. This
      Agreement and
      Release is binding upon, and shall inure to the benefit of, the parties and
      their respective heirs, executors, administrators, successors and
      assigns.

    

    16. Employee
      acknowledges that [he/she]:
      (a) has
      carefully read this Agreement and
      Release in its entirety; (b) has had an opportunity to consider the terms of
      this Agreement and
      Release [insert
      only if employees are over 40: and
      the
      disclosure information attached hereto as
      Exhibit I (which is provided pursuant to the Older Workers Benefit Protection
      Act)]
      for at
      least [twenty-one (21)] [forty-five (45)] days; (c) is hereby advised by the
      Company in writing to consult with an attorney of [his/her]
      choice
      in connection with this Agreement and
      Release; (d) fully understands the significance of all of the terms and
      conditions of this Agreement and
      Release and has discussed them with an attorney of [his/her]
      choice,
      or has had a reasonable opportunity to do so; and (e) is signing this Agreement
      and
      Release voluntarily and of [his/her]
      own free
      will and agrees to abide by all the terms and conditions contained
      herein.

    

    
      
        
        

      

      
        B-5

        
          

        

      

      
        
        

      

    

    17. Employee
      may accept this Agreement and
      Release by signing it before a notary public and delivering it to [INSERT
      NAME AND ADDRESS OF CONTACT]
      on or
      before the [twenty-first (21st)]
      [forty-fifth (45th)]
      day
      after [he/she]
      receives
      this Agreement and
      Release. Notwithstanding the foregoing, Employee may not sign this Agreement
      and
      Release before [his/her]
      last day
      of employment and this Agreement and
      Release will not be accepted or effective if signed before the Termination
      Date.
      After signing this Agreement and
      Release, Employee shall have seven (7) days (the “Revocation
      Period”)
      to
      revoke [his/her]
      decision
      by indicating [his/her]
      desire
      to do so in writing delivered to [INSERT
      NAME]
      at the
      above address by no later than the last day of the Revocation Period. If the
      last day of the Revocation Period falls on a Saturday, Sunday or holiday, the
      last day of the Revocation Period will be deemed to be the next business day.
      Provided Employee does not revoke this Agreement and
      Release during the Revocation Period, the Effective Date of this Agreement
      and
      Release shall be the later of the eighth (8th)
      day
      after Employee signs this Agreement and
      Release or the day
      after
      the last day of the Revocation Period (the “Effective
      Date”).
      

    

    

    
      	Dated:
              	
                 
                

            	 	  

	 	 	 	
              (signature)

            
	 	 	 	
               

              [Employee]

            

    

    

    
 

    FINLAY
      FINE JEWELRY CORPORATION

    

     

    
      	Accepted
              by:	
                 
                

            	
              Dated:

            	
                 
                

            
	 	 	 	 
	Name:	
                  
                

            	 	 

    

    

     

    
      
        
        

      

      
        B-6

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