Document:

exv10w2

EXHIBIT 10.2

BLUE NILE, INC.

CHANGE OF CONTROL SEVERANCE PLAN

Section 1. Introduction.

          The Blue Nile, Inc. Change of Control Severance Plan (the “Plan”) is established effective
March 4, 2009. The purpose of the Plan is to provide for the payment of severance benefits to
certain eligible executives of Blue Nile, Inc. or, following a Change of Control (as defined
below), the surviving entity resulting from such transaction or the parent company of such
surviving entity (the “Company”). This Plan supersedes any severance plan, policy or practice with
respect to Qualifying Terminations (as defined below), whether formal or informal, written or
unwritten, previously announced or maintained by the Company. This Plan document also is the
Summary Plan Description for the Plan.

Section 2. Eligibility For Benefits.

          (a) General Rules. Subject to the requirements of the Plan, the Company will grant the
severance benefits described in Section 3 to Eligible Employees.

               (1) Definition of “Eligible Employee.” For purposes of this Plan, Eligible Employees are
those employees of the Company determined by the Plan Administrator, in its sole discretion, to be
eligible for severance benefits under the Plan. The Plan Administrator shall make the
determination of whether an employee is an Eligible Employee, and such determination shall be
binding and conclusive on all persons. The Plan Administrator shall maintain a current schedule of
Eligible Employees with the General Counsel of the Company or such other Company officer as may be
designated by the Plan Administrator. Temporary employees and independent contractors are not
eligible for severance benefits under the Plan.

               (2) Obligations of Eligible Employees. In order to receive any benefits under the Plan:

                    (i) the Eligible Employee must suffer a Qualifying Termination;

                    (ii) the Eligible Employee must remain on the job until the date of his or her Qualifying
Termination;

                    (iii) the Eligible Employee must execute and return to the Company a general waiver and
release in substantially the form attached hereto as Exhibit A, Exhibit B or Exhibit C, as
applicable, within the time frame set forth therein (the “Release”) and such release must become
effective in accordance with its terms — but not later than the 60th day following the
termination of employment — provided, however, the Plan Administrator has the authority, in its
discretion, to modify the form of the release as necessary to comply with changes in applicable
law and to incorporate the release into a termination agreement with the Eligible Employee; and

                    (iv) the Eligible Employee must remain in compliance with his or her continuing obligations
to the Company, including obligations under his or her Employee Nondisclosure, Proprietary
Information, Inventions, Nonsolicitation and Noncompetition Agreement (such form, or any similar
form, the “Proprietary Agreement”).

          (b) Exceptions to Benefit Entitlement. An employee who otherwise is an Eligible Employee will
not receive benefits under the Plan (or will receive reduced benefits under the Plan) in the
following circumstances, as determined by the Company in its sole discretion:

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               (1) The employee is covered by any other severance or separation pay plan, policy or practice
of the Company or has executed an individually negotiated employment contract or agreement with the
Company relating to severance benefits, in either case with respect to severance benefits payable
upon an event that constitutes a Qualifying Termination (used herein as defined herein), and such
agreement, plan, policy or practice is in effect on his or her termination date. In such case, the
employee’s severance benefit upon a Qualifying Termination, if any, shall be governed by the terms
of such agreement, plan, policy or practice.

               (2) The employee’s employment terminates other than as a result of a Qualifying Termination
(including a termination for Cause prior to the effective date of a previously scheduled Qualifying
Termination, or a termination as a result of death or disability, or the employee voluntarily
terminates employment with the Company other than as a Resignation for Good Reason). Voluntary
terminations include, but are not limited to, resignation, retirement, failure to return from a
leave of absence on the scheduled date and/or termination in order to accept employment with
another entity (including but not limited to any entity that is wholly or partly owned (directly or
indirectly) by the Company or an affiliate of the Company).

               (3) The employee has not signed an enforceable Proprietary Agreement covering the employee’s
period of employment with the Company (and with any predecessor) and does not confirm in writing
that he or she is and shall remain subject to the terms of that Proprietary Agreement.

          (c) Definition of “Cause”. “Cause” for termination includes one of the following events that
has a material negative impact on the business or reputation of the Company:

               (1) indictment or conviction of any felony or any crime involving dishonesty or moral
turpitude;

               (2) dishonesty which is not the result of an inadvertent or innocent mistake by employee with
respect to the Company;

               (3) employee’s continued willful violation of his or her obligations to the Company after
there has been delivered to employee a written demand for performance from the Company’s Board of
Directors (the “Board”) which describes the basis for the Board’s belief that employee has not
substantially satisfied his or her obligations to the Company;

               (4) employee’s violation or breach of any material written Company policy, agreement with the
Company, or any statutory or fiduciary duty to the Company; or

               (5) damaging or misappropriating or attempting to damage or misappropriate any property,
including any confidential or proprietary information, of the Company.

          (d) Definition of “Change of Control”. A “Change of Control” means the occurrence, in a
single transaction or in a series of related transactions, of any one or more of the following
events:

               (1) any Exchange Act Person becomes the Owner, directly or indirectly, of securities of the
Company representing more than fifty percent (50%) of the combined voting power of the Company’s
then outstanding securities other than by virtue of a merger, consolidation or similar transaction.
Notwithstanding the foregoing, a Change of Control shall not be deemed to occur solely because the
level of Ownership held by any Exchange Act Person (the “Subject Person”) exceeds the designated
percentage threshold of the outstanding voting securities as a result of a repurchase or other
acquisition of voting securities by the Company reducing the number of shares outstanding, provided
that if a Change of Control would occur (but for the operation
of this sentence) as a result of the acquisition of voting securities by the Company, and
after such share acquisition, the Subject Person becomes the Owner of any additional voting
securities that, assuming the repurchase or other acquisition had not occurred, increases the
percentage of the then outstanding voting securities Owned by the Subject Person over the
designated percentage threshold, then a Change of Control shall be deemed to occur;

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               (2) there is consummated a merger, consolidation or similar transaction involving (directly or
indirectly) the Company and, immediately after the consummation of such merger, consolidation or
similar transaction, the stockholders of the Company immediately prior thereto do not Own, directly
or indirectly, outstanding voting securities representing more than fifty percent (50%) of the
combined outstanding voting power of the surviving Entity in such merger, consolidation or similar
transaction or more than fifty percent (50%) of the combined outstanding voting power of the parent
of the surviving Entity in such merger, consolidation or similar transaction;

               (3) there is consummated a sale, lease, license or other disposition of all or substantially
all of the consolidated assets of the Company and its Subsidiaries, other than a sale, lease,
license or other disposition of all or substantially all of the consolidated assets of the Company
and its Subsidiaries to an Entity, more than fifty percent (50%) of the combined voting power of
the voting securities of which are Owned by stockholders of the Company in substantially the same
proportions as their Ownership of the Company immediately prior to such sale, lease, license or
other disposition; or

               (4) during any two (2) year period, individuals who, on the date this Plan is adopted by the
Board, are members of the Board (the “Incumbent Board”) cease for any reason to constitute at least
a majority of the members of the Board; (provided, however, that if the appointment or election (or
nomination for election) of any new Board member was approved or recommended by a majority vote of
the members of the Incumbent Board then still in office, such new member shall, for purposes of
this Plan, be considered as a member of the Incumbent Board).

          (e) Definition of “Entity”. “Entity” means a corporation, partnership, limited liability
company or other entity.

          (f) Definition of “Exchange Act Person”. An “Exchange Act Person” means any natural person,
entity or “group” (within the meaning of Section 13(d) or 14(d) of the Securities Exchange Act of
1934, as amended), except that “Exchange Act Person” shall not include (1) the Company or any
subsidiary of the Company, (2) any employee benefit plan of the Company or any subsidiary of the
Company or any trustee or other fiduciary holding securities under an employee benefit plan of the
Company or any subsidiary of the Company, (3) an underwriter temporarily holding securities
pursuant to an offering of such securities, (4) an entity owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their ownership of stock of
the Company; or (5) any natural person, entity or “group” (within the meaning of Section 13(d) or
14(d) of the Securities Exchange Act of 1934, as amended) that, as of the effective date of this
Plan, is the owner, directly or indirectly, of securities of the Company representing more than
fifty percent (50%) of the combined voting power of the Company’s then outstanding securities.

          (g) Definition of “Own,” “Owned,” “Owner,” “Ownership”. A person or Entity shall be deemed
to “Own,” to have “Owned,” to be the “Owner” of, or to have acquired “Ownership” of securities if
such person or Entity, directly or indirectly, through any contract, arrangement, understanding,
relationship or otherwise, has or shares voting power, which includes the power to vote or to
direct the voting, with respect to such securities.

          (h) Definition of “Qualifying Termination”. A “Qualifying Termination” means the Eligible
Employee suffers an involuntary termination without Cause or a Resignation for Good Reason, in
either case that (i) constitutes a “separation from service” (as defined under Treasury Regulation
Section 1.409A-1(h)), (ii) occurs other than as a result of death or disability, and (iii) occurs
on or (A) within twenty-four (24) months following the effective date of the Change of Control in
the case of the Executive Chairman and Chief Executive Officer or (B) within twelve (12) months
following the effective date of the Change of Control in the case of all other Eligible Employees.

          (g) Definition of “Resignation for Good Reason”. A “Resignation for Good Reason” means the
Eligible Employee has resigned from all positions he or she then holds with the Company (or any
successor thereto):

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               (1) because one of the following actions has been taken without his or her express written
consent:

                    (i) there is a material reduction (where material is considered greater than 10%) of the
Eligible Employee’s annual base salary;

                    (ii) there is a material change in the Eligible Employee’s position or responsibilities
(including the person or persons to whom the Eligible Employee has reporting responsibilities);

                    (iii) the Eligible Employee is required to relocate his or her principal place of employment
to a location that would increase his or her one way commute distance by more than twenty-five (25)
miles; or

                    (iv) the Company materially breaches its obligations under this Plan or any then-existing
employment agreement with the Eligible Employee; and

               (2) the Eligible Employee provides written notice to the Company’s Board within the 30-day
period immediately following such action; and

               (3) such action is not remedied by the Company within thirty (30) days following the Company’s
receipt of such written notice; and

               (4) the Eligible Employee’s resignation is effective not later than sixty (60) days after the
expiration of such thirty (30) day cure period.

Section 3. Amount Of Benefit.

          (a) Severance Benefits. Subject to the terms and conditions of the Plan, the Eligible
Employee shall receive the severance benefits set forth on the Participation Notice provided to the
Eligible Employee, in the substantially attached hereto as in Exhibit D, at the time such
individual is designated an Eligible Employee, or as may be amended thereafter by the Plan
Administrator. The Eligible Employee must sign and return the Participation Notice to the Company
within thirty (30) days after designation to agree to the terms and conditions of the Plan.

          (b) Additional Benefits. Notwithstanding the foregoing, the Company may, in its sole
discretion, authorize benefits in an amount in addition to those benefits set forth in Section 3(a)
to an Eligible Employee. The provision of any such benefits to an Eligible Employee shall in no
way obligate the Company to provide such benefits to any other Eligible Employee or to any other
employee, even if similarly situated. Receipt of benefits under this Plan pursuant to such
exceptions may be subject to a covenant of confidentiality and non-disclosure.

          (c) Certain Reductions. The Company shall reduce an Eligible Employee’s severance benefits
under this Plan, in whole or in part, by any other severance benefits, pay in lieu of notice, or
other similar benefits payable to the Eligible Employee by the Company in connection with the
Eligible Employee’s Qualifying Termination, including but not limited to any payments or benefits
that are due pursuant to (i) any other severance plan, policy or practice, or any individually
negotiated employment contract or agreement with the Company relating to severance benefits, in
each case, as is in effect on the Eligible Employee’s termination date, (ii) any applicable legal
requirement, including, without limitation, the Worker Adjustment and Retraining Notification Act
(the “WARN Act”), or (iii) any Company policy or practice providing for the Eligible Employee to
remain on the payroll without being in active service for a limited period of time after being
given notice of the termination of the Eligible Employee’s employment. The benefits provided under
this Plan are intended to satisfy, to the greatest
extent possible, any and all statutory obligations that may arise out of an Eligible
Employee’s termination of employment, and the Plan Administrator shall so construe and implement
the terms of the Plan. In the Company’s sole discretion, such reductions may be applied on a
retroactive basis, with severance benefits previously paid being recharacterized as payments
pursuant to the Company’s statutory obligation.

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          (d) Best After Tax. If any payment or benefit (including payments and benefits pursuant to
this Plan) that an Eligible Employee would receive in connection with a Change of Control from the
Company or otherwise (“Payment”) would (i) constitute a “parachute payment” within the meaning of
Section 280G of the Internal Revenue Code of 1986, as amended (the “Code”), and (ii) but for this
sentence, be subject to the excise tax imposed by Section 4999 of the Code (the “Excise Tax”), then
the Company shall cause to be determined, before any amounts of the Payment are paid to the
Eligible Employee, which of the following two alternative forms of payment would maximize the
Eligible Employee’s after-tax proceeds: (i) payment in full of the entire amount of the Payment (a
“Full Payment”), or (ii) payment of only a part of the Payment so that the Eligible Employee
receives the largest payment possible without the imposition of the Excise Tax (a “Reduced
Payment”), whichever amount results in the
Participant’s receipt, on an after-tax basis, of the
greater amount of the Payment notwithstanding that all or some portion of the Payment may be
subject to the Excise Tax. For purposes of determining whether to make a Full Payment or a Reduced
Payment, the Company shall cause to be taken into account all applicable federal, state and local
income and employment taxes and the Excise Tax (all computed at the highest applicable marginal
rate, net of the maximum reduction in federal income taxes which could be obtained from a deduction
of such state and local taxes). If a Reduced Payment is made, (i) the Payment shall be paid only
to the extent permitted under the Reduced Payment alternative, and the Eligible Employee shall have
no rights to any additional payments and/or benefits constituting the Payment, and (ii) reduction
in payments and/or benefits shall occur in the following order: (1) reduction of cash payments; (2)
cancellation of accelerated vesting of equity awards other than stock options; (3) cancellation of
accelerated vesting of stock options; and (4) reduction of other benefits paid to the Eligible
Employee. In the event that acceleration of compensation from the Eligible Employee’s equity
awards is to be reduced, such acceleration of vesting shall be canceled in the reverse order of the
date of grant.

               The independent professional firm engaged by the Company for general tax audit purposes as of
the day prior to the effective date of the Change of Control shall make all determinations required
to be made under this Section 3(d). If the firm so engaged by the Company is serving as accountant
or auditor for the individual, entity or group effecting the Change of Control, the Company shall
appoint a nationally recognized independent professional firm to make the determinations required
hereunder. The Company shall bear all expenses with respect to the determinations by such firm
required to be made hereunder.

               The firm engaged to make the determinations hereunder shall provide its calculations, together
with detailed supporting documentation, to the Company and the Eligible Employee within thirty (30)
calendar days after the date on which the Eligible Employee’s right to a Payment is triggered (if
requested at that time by the Company or the Eligible Employee) or such other time as requested by
the Company or the Eligible Employee. If the firm determines that no Excise Tax is payable with
respect to a Payment, either before or after the application of the Reduced Amount, it shall
furnish the Company and the Eligible Employee with a statement reasonably acceptable to the
Eligible Employee that no Excise Tax will be imposed with respect to such Payment. Any good faith
determinations of the firm made hereunder shall be final, binding and conclusive upon the Company
and the Eligible Employee.

          (e) Code Section 409A. The Company intends that each installment of the payments and benefits
provided under the Plan (the “Plan Payments”) is a separate “payment” for purposes of Code Section
409A (together, with any state law of similar effect, “Section 409A”), and that all payments under
this Plan are exempt from Section 409A, to the greatest extent possible, pursuant to Treasury
Regulation Sections 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-1(b)(9). However, if the Company
determines that some or all of the Plan Payments constitute “deferred compensation” under Section
409A and at the time of a Qualifying Termination an Eligible Employee is a “specified employee” of
the Company or any successor entity thereto, as such term is defined in Section 409A(a)(2)(B)(i) (a
“Specified Employee”), then, solely to the extent necessary to avoid the incurrence of the adverse
personal tax consequences under Section 409A, the timing of the Plan Payments shall be delayed as
follows: on the earlier to occur of (i) the date that is six months and one day after the
termination date or (ii) the date of the Eligible Employee’s death (such earlier date, the “Delayed
Initial Payment Date”), the Company shall
(A) pay to the Eligible Employee a lump sum amount equal to the sum of the Plan Payments that
the Eligible Employee would otherwise have received through the Delayed Initial Payment Date
(including reimbursement for any premiums paid by the Eligible Employee for health insurance
coverage under COBRA) if the commencement of the payment of the Plan Payments had not been delayed
pursuant to this paragraph and (B) commence paying the balance of the Plan Payments in accordance
with the applicable payment schedules set forth on Exhibit D.

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Section 4. Company Property.

          (a) Return of Company Property. An Eligible Employee will not be entitled to any severance
under the Plan unless and until the Eligible Employee returns all Company Property, unless
otherwise expressly permitted by the Company to retain one or more items of Company Property. For
this purpose, “Company Property” means all paper and electronic company documents (and all copies
thereof) created and/or received by the Eligible Employee during his or her period of employment
with the Company and other Company Property which the Eligible Employee had in his or her
possession or control at any time, including, but not limited to, Company and/or Employer files,
notes, drawings records, plans, forecasts, reports, studies, analyses, proposals, agreements,
financial information, research and development information, sales and marketing information,
operational and personnel information, specifications, code, software, databases, computer-recorded
information, tangible property and equipment (including, but not limited to, leased vehicles,
computers, computer equipment, software programs, facsimile machines, mobile telephones, servers),
credit and calling cards, entry cards, identification badges and keys; and any materials of any
kind which contain or embody any proprietary or confidential information of the Company and/or an
Employer (and all reproductions thereof in whole or in part). As a condition to receiving benefits
under the Plan, Eligible Employees must not make or retain copies, reproductions or summaries of
any such Company Property. However, an Eligible Employee is not required to return his or her
personal copies of documents evidencing the Eligible Employee’s hire, termination, compensation,
benefits and stock options and any other documentation received as a shareholder of the Company.

          (b) Transition of Work. An Eligible Employee will not be entitled to any severance benefit
under the Plan unless and until the Eligible Employee (1) has satisfactorily transitioned his or
her work and information concerning his or her work to the Company to the extent reasonably
requested in writing by the Company and (2) has provided the Company with all logins, passwords,
passcodes and similar information created by the Eligible Employee for documents, email and
electronic files that the Eligible Employee created or used on Company systems.

Section 5. Withholdings and Deductions.

          All payments under the Plan will be subject to applicable withholding for federal, state and
local taxes. If an Eligible Employee is indebted to the Company at his or her termination date,
the Company reserves the right to offset any Play Payments by the amount of such indebtedness.
Additionally, if an Eligible Employee is subject to withholding for taxes related to any non-Plan
benefits, the Company may offset any Plan Payments by the amount of such withholding taxes.
However, Plan Payments will not be subject to any other deductions such as, but not limited to,
401(k) plan contributions and/or 401(k) loan repayments or other employee benefit and benefit plan
contributions.

Section 6. Right To Interpret Plan; Amendment and Termination.

          (a) Exclusive Discretion. The Plan Administrator is the Compensation Committee of the Board
of Directors. As Plan Administrator, the Company is the named fiduciary charged with the
responsibility for administering the Plan. The Plan Administrator shall have the exclusive
discretion and authority to establish rules, forms, and procedures for the administration of the
Plan and to construe and interpret the Plan and to decide any and all questions of fact,
interpretation, definition, computation or administration arising in connection with the operation
of the Plan, including, but not limited to, the eligibility to participate in the Plan and amount
of benefits paid under the Plan. The Plan Administrator may delegate any or all of its
administrative duties to an officer of the Company and any such delegation shall convey with it the
full discretionary authority of the Plan Administrator to carry out the delegated duties. The
Company or the Plan Administrator shall indemnify and hold harmless any
person to whom it delegated its responsibilities; provided, however, such person does not act
with gross negligence or willful misconduct. The rules, interpretations, computations and other
actions of the Plan Administrator or its delegate shall be binding and conclusive on all persons.

          (b) Termination; Amendment.

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               (1) This Plan will automatically terminate on the third anniversary of the adoption of the
Plan if no Change of Control has occurred by that date. If a Change of Control has occurred by
that date, this Plan will terminate on the date that is twenty-four (24) months and one (1) day
after the effective date of the Change of Control; provided, however, that no such termination
shall affect the right to any unpaid benefit of any Eligible Employee whose Qualifying Termination
date has occurred prior to such date, and such unpaid benefit rights shall continue to be governed
by the terms of this Plan.

               (2) The Company reserves the right to amend this Plan (including the Exhibits hereto) and the
benefits provided hereunder at any time prior to a Change of Control of the Company; provided,
however, that no such amendment shall affect the right to any unpaid benefit of any Eligible
Employee whose Qualifying Termination date has occurred prior to amendment of the Plan.

               (3) Any purported amendment or termination of this Plan (and the exhibits and appendices
hereto) upon or following a Change of Control of the Company will not be effective as to any
Eligible Employee who has not consented, in writing, to such amendment or termination. Any action
amending or terminating the Plan shall be in writing and executed by a duly authorized executive
officer of the Company.

Section 7. No Implied Employment Contract.

          The Plan shall not be deemed (i) to give any employee or other person any right to be retained
as an employee of or other service provider to the Company or (ii) to interfere with the right of
the Company to discharge any employee or other person at any time, with or without cause, which
right is hereby reserved.

Section 8. Legal Construction.

          This Plan is intended to be governed by and shall be construed in accordance with the Employee
Retirement Income Security Act of 1974 (“ERISA”) and, to the extent not preempted by ERISA, the
laws of the State of Washington (without regard to principles of conflict of laws).

Section 9. Claims, Inquiries And Appeals.

          (a) Applications for Benefits and Inquiries. Any application for benefits, inquiries about
the Plan or inquiries about present or future rights under the Plan must be submitted to the Plan
Administrator in writing by an applicant (or his or her authorized representative). The Plan
Administrator is:

The Compensation Committee of the Board of Directors

Attn: General Counsel

705 Fifth Avenue S., Suite 900

Seattle, WA 98104

          (b) Denial of Claims. In the event that any application for benefits is denied in whole or in
part, the Plan Administrator must provide the applicant with written or electronic notice of the
denial of the application, and of the applicant’s right to review the denial. Any electronic
notice will comply with the regulations
of the U.S. Department of Labor. The notice of denial will be set forth in a manner designed
to be understood by the applicant and will include the following:

               (1) the specific reason or reasons for the denial;

               (2) references to the specific Plan provisions upon which the denial is based;

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               (3) a description of any additional information or material that the Plan Administrator needs
to complete the review and an explanation of why such information or material is necessary; and

               (4) an explanation of the Plan’s review procedures and the time limits applicable to such
procedures, including a statement of the applicant’s right to bring a civil action under Section
502(a) of ERISA following a denial on review of the claim, as described in Section 10(d) below.

          This notice of denial will be given to the applicant within ninety (90) days after the Plan
Administrator receives the application, unless special circumstances require an extension of time,
in which case, the Plan Administrator has up to an additional ninety (90) days for processing the
application. If an extension of time for processing is required, written notice of the extension
will be furnished to the applicant before the end of the initial ninety (90) day period.

          This notice of extension will describe the special circumstances necessitating the additional
time and the date by which the Plan Administrator is to render its decision on the application.

          (c) Request for a Review. Any person (or that person’s authorized representative) for whom an
application for benefits is denied, in whole or in part, may appeal the denial by submitting a
request for a review to the Plan Administrator within sixty (60) days after the application is
denied. A request for a review shall be in writing and shall be addressed to:

Blue Nile, Inc.

Attn: General Counsel

705 Fifth Avenue S., Suite 900

Seattle, WA 98104

          A request for review must set forth all of the grounds on which it is based, all facts in
support of the request and any other matters that the applicant feels are pertinent. The applicant
(or his or her representative) shall have the opportunity to submit (or the Plan Administrator may
require the applicant to submit) written comments, documents, records, and other information
relating to his or her claim. The applicant (or his or her representative) shall be provided, upon
request and free of charge, reasonable access to, and copies of, all documents, records and other
information relevant to his or her claim. The review shall take into account all comments,
documents, records and other information submitted by the applicant (or his or her representative)
relating to the claim, without regard to whether such information was submitted or considered in
the initial benefit determination.

          (d) Decision on Review. The Plan Administrator will act on each request for review within
sixty (60) days after receipt of the request, unless special circumstances require an extension of
time (not to exceed an additional sixty (60) days), for processing the request for a review. If an
extension for review is required, written notice of the extension will be furnished to the
applicant within the initial sixty (60) day period. This notice of extension will describe the
special circumstances necessitating the additional time and the date by which the Plan
Administrator is to render its decision on the review. The Plan Administrator will give prompt,
written or electronic
notice of its decision to the applicant. Any electronic notice will comply with the
regulations of the U.S. Department of Labor. In the event that the Plan Administrator confirms the
denial of the application for benefits in whole or in part, the notice will set forth, in a manner
calculated to be understood by the applicant, the following:

               (1) the specific reason or reasons for the denial;

               (2) references to the specific Plan provisions upon which the denial is based;

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               (3) a statement that the applicant is entitled to receive, upon request and free of charge,
reasonable access to, and copies of, all documents, records and other information relevant to his
or her claim; and

               (4) a statement of the applicant’s right to bring a civil action under Section 502(a) of
ERISA.

          (e) Rules and Procedures. The Plan Administrator will establish rules and procedures,
consistent with the Plan and with ERISA, as necessary and appropriate in carrying out its
responsibilities in reviewing benefit claims. The Plan Administrator may require an applicant who
wishes to submit additional information in connection with an appeal from the denial of benefits to
do so at the applicant’s own expense.

          (f) Exhaustion of Remedies. No legal action for benefits under the Plan may be brought until
the applicant (i) has submitted a written application for benefits in accordance with the
procedures described by Section 9(a) above, (ii) has been notified by the Plan Administrator that
the application is denied, (iii) has filed a written request for a review of the application in
accordance with the appeal procedure described in Section 9(c) above, and (iv) has been notified
that the Plan Administrator has denied the appeal. Notwithstanding the foregoing, if the Plan
Administrator does not respond to an applicant’s claim or appeal within the relevant time limits
specified in this Section 9, the applicant may bring legal action for benefits under the Plan
pursuant to Section 502(a) of ERISA.

Section 10. Basis Of Payments To And From Plan.

          The Plan shall be unfunded, and all benefits under the Plan shall be paid only from the
general assets of the Company. An Eligible Employee’s right to receive payments under the Plan is
no greater than that of the Company’s unsecured general creditors. Therefore, if the Company were
to become insolvent, the Eligible Employee might not receive benefits under the Plan.

Section 11. Other Plan Information.

          (a) Employer and Plan Identification Numbers. The Employer Identification Number assigned to
the Company (which is the “Plan Sponsor” as that term is used in ERISA) by the Internal Revenue
Service is 91-1963165. The Plan Number assigned to the Plan by the Plan Sponsor pursuant to the
instructions of the Internal Revenue Service is 510.

          (b) Ending Date for Plan’s Fiscal Year and Type of Plan. The date of the end of the fiscal
year for the purpose of maintaining the Plan’s records is December 31. The Plan is a welfare
benefit plan.

          (c) Agent for the Service of Legal Process. The agent for the service of legal process with
respect to the Plan is:

Blue Nile, Inc.

Attn: General Counsel

705 Fifth Avenue S., Suite 900

Seattle, WA 98104

          (d) Plan Sponsor and Administrator. The Plan Sponsor and the “Plan Administrator” of the Plan
is:

9

 

Blue Nile, Inc.

Attn: General Counsel

705 Fifth Avenue S., Suite 900

Seattle, WA 98104

          The Plan Sponsor’s and Plan Administrator’s telephone number is (206) 336-6700 and facsimile
number is (206) 336-6809.

Section 12. Statement Of ERISA Rights.

          Participants in this Plan are entitled to certain rights and protections under ERISA. If you
are an Eligible Employee, you are considered a participant in the Plan and, under ERISA, you are
entitled to:

          (a) Receive Information About Your Plan and Benefits

               (1) Examine, without charge, at the Plan Administrator’s office and at other specified
locations, such as worksites, all documents governing the Plan and a copy of the latest annual
report (Form 5500 Series), if applicable, filed by the Plan with the U.S. Department of Labor and
available at the Public Disclosure Room of the Employee Benefits Security Administration;

               (2) Obtain, upon written request to the Plan Administrator, copies of documents governing the
operation of the Plan and copies of the latest annual report (Form 5500 Series), if applicable, and
an updated (as necessary) Summary Plan Description. The Administrator may make a reasonable charge
for the copies; and

               (3) Receive a summary of the Plan’s annual financial report, if applicable. The Plan
Administrator is required by law to furnish each participant with a copy of this summary annual
report.

          (b) Prudent Actions by Plan Fiduciaries. In addition to creating rights for Plan
participants, ERISA imposes duties upon the people who are responsible for the operation of the
employee benefit plan. The people who operate the Plan, called “fiduciaries” of the Plan, have a
duty to do so prudently and in the interest of you and other Plan participants and beneficiaries.
No one, including your employer, your union or any other person, may fire you or otherwise
discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your
rights under ERISA.

          (c) Enforce Your Rights. If your claim for a Plan benefit is denied or ignored, in whole or
in part, you have a right to know why this was done, to obtain copies of documents relating to the
decision without charge, and to appeal any denial, all within certain time schedules as set forth
in detail in Section 10 herein.

               Under ERISA, there are steps you can take to enforce the above rights. For instance, if you
request a copy of Plan documents or the latest annual report from the Plan, if applicable, and do
not receive them within 30 days, you may file suit in a Federal court and you are not required to
follow the claims procedure set forth in Section 10 herein. In such a case, the court may require
the Plan Administrator to provide the materials and pay you up to $110 a day until you receive the
materials, unless the materials were not sent because of reasons beyond the control of the Plan
Administrator.

               If you have completed the claims and appeals procedure described in Section 10 and have a
claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or
Federal court.

10

 

               If you are discriminated against for asserting your rights, you may seek assistance from the
U.S. Department of Labor, or you may file suit in a Federal court. The court will decide who
should pay court costs and legal fees. If you are successful, the court may order the person you
have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and
fees, for example, if it finds your claim is frivolous.

          (d) Assistance with Your Questions. If you have any questions about the Plan, you should
contact the Plan Administrator. If you have any questions about this statement or about your
rights under ERISA, or if you need assistance in obtaining documents from the Plan Administrator,
you should contact the nearest office of the Employee Benefits Security Administration, U.S.
Department of Labor, listed in your telephone directory or the Division of Technical Assistance and
Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution
Avenue N.W., Washington, D.C. 20210. You may also obtain certain publications about your rights
and responsibilities under ERISA by calling the publications hotline of the Employee Benefits
Security Administration or accessing its website at http://www.dol.gov/ebsa/.

Section 13. GENERAL PROVISIONS.

          (a) Notices. Any notice, demand or request required or permitted to be given by either the
Company or an Eligible Employee pursuant to the terms of this Plan shall be in writing and shall be
deemed given when delivered personally or deposited in the U.S. mail, with postage prepaid, and
addressed to the parties, in the case of the Company, at the address set forth in Section 12(d)
and, in the case of an Eligible Employee, at the address as set forth in the Company’s employment
file maintained for the Eligible Employee as previously furnished by the Eligible Employee or such
other address as a party may request by notifying the other in writing.

          (b) Transfer and Assignment. The rights and obligations of an Eligible Employee under this
Plan may not be transferred or assigned without the prior written consent of the Company. This
Plan shall be binding upon any person who is a successor by merger, acquisition, consolidation or
otherwise to the business formerly carried on by the Company without regard to whether or not such
person or entity actively assumes the obligations hereunder. Following a Change of Control, any
references to the “Company” in this Plan shall be deemed to be references also to any successor to
the company.

          (c) Waiver. Any party’s failure to enforce any provision or provisions of this Plan shall not
in any way be construed as a waiver of any such provision or provisions, nor prevent any party from
thereafter enforcing each and every other provision of this Plan. The rights granted the parties
herein are cumulative and shall not constitute a waiver of any party’s right to assert all other
legal remedies available to it under the circumstances.

          (d) Severability. Should any provision of this Plan be declared or determined to be invalid,
illegal or unenforceable, the validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired.

          (e) Section Headings. Section headings in this Plan are included for convenience of reference
only and shall not be considered part of this Plan for any other purpose.

Section 14. Circular 230 Disclaimer.

          THE FOLLOWING DISCLAIMER IS PROVIDED IN ACCORDANCE WITH THE INTERNAL REVENUE SERVICE’S
CIRCULAR 230 (21 CFR PART 10). ANY ADVICE IN THIS PLAN IS NOT INTENDED OR WRITTEN TO BE USED, AND
IT CANNOT BE USED BY YOU FOR THE PURPOSE OF AVOIDING ANY PENALTIES THAT MAY BE IMPOSED ON YOU. ANY
ADVICE IN THIS PLAN WAS WRITTEN TO SUPPORT THE PROMOTION OR MARKETING OF PARTICIPATION IN THE
COMPANY’S CHANGE OF CONTROL SEVERANCE PLAN. YOU SHOULD SEEK ADVICE BASED ON YOUR PARTICULAR
CIRCUMSTANCES FROM AN INDEPENDENT TAX ADVISOR.

11

 

Section 15. Execution.

          To record the adoption of the Plan as set forth herein, effective as of March 4, 2009, Blue
Nile, Inc. has caused its duly authorized officer to execute the same this 4th day of
March, 2009.

Blue Nile, Inc.

By:
/s/ Diane Irvine

Title: Chief Executive Officer

12

 

For Employees Age 40 or Older

Individual Termination

Exhibit A

RELEASE AGREEMENT

     I understand and agree completely to the terms set forth in the Blue Nile, Inc. Change of
Control Severance Plan (the “Plan”).

     I understand that this Release, together with the Plan, constitutes the complete, final and
exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me
with regard to the subject matter hereof. I am not relying on any promise or representation by the
Company that is not expressly stated therein. Certain capitalized terms used in this Release are
defined in the Plan.

     I hereby confirm my obligations under my Proprietary Agreement with the Company.

     Except as otherwise set forth in this Release, I hereby generally and completely release the
Company and their current and former directors, officers, employees, stockholders, shareholders,
partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers,
affiliates, and assigns (collectively, the “Released Parties”) from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in any way related
to events, acts, conduct, or omissions occurring prior to my signing this Agreement (collectively,
the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims
arising out of or in any way related to my employment with the Company or its affiliates, or the
termination of that employment; (2) all claims related to my compensation or benefits, including
salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other ownership interests in the Company or its affiliates;
(3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of
good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all federal, state, and
local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’
fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967
(as amended) (“ADEA”), the federal Employee Retirement Income Security Act of 1974 (as amended),
the Washington Law Against Discrimination, the Washington Family Leave Act, as amended, the
Washington Minimum Wage Act, as amended, and Chapter 49.60 of the Revised Code of Washington.
Notwithstanding the foregoing, the following are not included in the Released Claims (the
“Excluded Claims”): (1) any rights or claims for indemnification I may have pursuant to any
written indemnification agreement with the Company to which I am a party, the charter, bylaws, or
operating agreements of the Company, or under applicable law; or (2) any rights which are not
waivable as a matter of law. In addition, nothing in this Release prevents me from filing,
cooperating with, or participating in any proceeding before the Equal Employment Opportunity
Commission or the Department of Labor, except that I hereby waive my right to any monetary
benefits in connection with any such claim, charge or proceeding. I hereby represent and warrant
that, other than the Excluded Claims, I am not aware of any claims I have or might have against
any of the Released Parties that are not included in the Released Claims.

     I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the ADEA. I also acknowledge that the consideration given for the Released Claims is in
addition to anything of value to which I was already entitled. I further acknowledge that I have
been advised by this writing, as required by the ADEA, that: (a) the Released Claims do not apply
to any rights or claims that arise after the date I sign this Release; (b) I should consult with an
attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have
twenty-one (21) days to consider this Release (although I may choose to voluntarily to sign it
sooner); (d) I have seven (7) days following the date I sign this Release to revoke the Release by
providing written notice to an officer of the Company; and (e) the Release will not be effective
until the date upon which the revocation period has expired unexercised, which will be the eighth
day after I sign this Release (“Effective Date”).

     I hereby represent that I have been paid all compensation owed and for all hours worked, I
have received all the leave and leave benefits and protections for which I am eligible, and I have
not suffered any on-the-job injury for which I have not already filed a workers’ compensation
claim.

1.

 

 

For Employees Age 40 or Older

Individual Termination

     I acknowledge that to become effective, I must sign and return this Release to the Company so
that it is received not later than twenty-one (21) days following the date it is provided to me,
and I must not revoke it thereafter.

	 	 	 	 	 	 	 
	 	 	Employee	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

2.

 

 

For Employees Age 40 or Older

Group Termination

Exhibit B

RELEASE AGREEMENT

     I understand and agree completely to the terms set forth in the Blue Nile, Inc. Change of
Control Severance Plan (the “Plan”).

     I understand that this Release, together with the Plan, constitutes the complete, final and
exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me
with regard to the subject matter hereof. I am not relying on any promise or representation by the
Company that is not expressly stated therein. Certain capitalized terms used in this Release are
defined in the Plan.

     I hereby confirm my obligations under my Proprietary Agreement with the Company.

     Except as otherwise set forth in this Release, I hereby generally and completely release the
Company and their current and former directors, officers, employees, stockholders, shareholders,
partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers,
affiliates, and assigns (collectively, the “Released Parties”) from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in any way related
to events, acts, conduct, or omissions occurring prior to my signing this Agreement (collectively,
the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims
arising out of or in any way related to my employment with the Company or its affiliates, or the
termination of that employment; (2) all claims related to my compensation or benefits, including
salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other ownership interests in the Company or its affiliates;
(3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of
good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all federal, state, and
local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’
fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the federal Age Discrimination in Employment Act of 1967
(as amended) (“ADEA”), the federal Employee Retirement Income Security Act of 1974 (as amended),
the Washington Law Against Discrimination, the Washington Family Leave Act, as amended, the
Washington Minimum Wage Act, as amended, and Chapter 49.60 of the Revised Code of Washington.
Notwithstanding the foregoing, the following are not included in the Released Claims (the
“Excluded Claims”): (1) any rights or claims for indemnification I may have pursuant to any
written indemnification agreement with the Company to which I am a party, the charter, bylaws, or
operating agreements of the Company, or under applicable law; or (2) any rights which are not
waivable as a matter of law. In addition, nothing in this Release prevents me from filing,
cooperating with, or participating in any proceeding before the Equal Employment Opportunity
Commission or the Department of Labor, except that I hereby waive my right to any monetary
benefits in connection with any such claim, charge or proceeding. I hereby represent and warrant
that, other than the Excluded Claims, I am not aware of any claims I have or might have against
any of the Released Parties that are not included in the Released Claims.

     I acknowledge that I am knowingly and voluntarily waiving and releasing any rights I may have
under the ADEA. I also acknowledge that the consideration given for the Released Claims is in
addition to anything of value to which I was already entitled. I further acknowledge that I have
been advised by this writing, as required by the ADEA, that: (a) the Released Claims do not apply
to any rights or claims that arise after the date I sign this Release; (b) I should consult with an
attorney prior to signing this Release (although I may choose voluntarily not to do so); (c) I have
forty-five (45) days to consider this Release (although I may choose to voluntarily to sign it
sooner); (d) I have seven (7) days following the date I sign this Release to revoke the Release by
providing written notice to an officer of the Company; and (e) the Release will not be effective
until the date upon which the revocation period has expired unexercised, which will be the eighth
day after I sign this Release (“Effective Date”).

     I have received with this Release all of the information required by the ADEA, including
without limitation a detailed list of the job titles and ages of all employees who were terminated
in this group termination and the ages of all employees of the Company in the same job
classification or organizational unit who were not terminated,

1.

 

 

For Employees Age 40 or Older

Group Termination

along with information on the eligibility factors used to select employees for the group
termination and any time limits applicable to this group termination program.

     I hereby represent that I have been paid all compensation owed and for all hours worked, I
have received all the leave and leave benefits and protections for which I am eligible, and I have
not suffered any on-the-job injury for which I have not already filed a workers’ compensation
claim.

     I acknowledge that to become effective, I must sign and return this Release to the Company so
that it is received not later than forty-five (45) days following the date it is provided to me,
and I must not revoke it thereafter.

	 	 	 	 	 	 	 
	 	 	Employee	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

2.

 

For
Employees Under Age 40

Individual
and Group Termination

Exhibit C

RELEASE AGREEMENT

     I understand and agree completely to the terms set forth in the Blue Nile, Inc. Change of
Control Severance Plan (the “Plan”).

     I understand that this Release, together with the Plan, constitutes the complete, final and
exclusive embodiment of the entire agreement between the Company, affiliates of the Company and me
with regard to the subject matter hereof. I am not relying on any promise or representation by the
Company that is not expressly stated therein. Certain capitalized terms used in this Release are
defined in the Plan.

     I hereby confirm my obligations under my Proprietary Agreement with the Company.

     Except as otherwise set forth in this Release, I hereby generally and completely release the
Company and their current and former directors, officers, employees, stockholders, shareholders,
partners, agents, attorneys, predecessors, successors, parent and subsidiary entities, insurers,
affiliates, and assigns (collectively, the “Released Parties”) from any and all claims,
liabilities and obligations, both known and unknown, that arise out of or are in any way related
to events, acts, conduct, or omissions occurring prior to my signing this Agreement (collectively,
the “Released Claims”). The Released Claims include, but are not limited to: (1) all claims
arising out of or in any way related to my employment with the Company or its affiliates, or the
termination of that employment; (2) all claims related to my compensation or benefits, including
salary, bonuses, commissions, vacation pay, expense reimbursements, severance pay, fringe
benefits, stock, stock options, or any other ownership interests in the Company or its affiliates;
(3) all claims for breach of contract, wrongful termination, and breach of the implied covenant of
good faith and fair dealing; (4) all tort claims, including claims for fraud, defamation,
emotional distress, and discharge in violation of public policy; and (5) all federal, state, and
local statutory claims, including claims for discrimination, harassment, retaliation, attorneys’
fees, or other claims arising under the federal Civil Rights Act of 1964 (as amended), the federal
Americans with Disabilities Act of 1990, the Washington Law Against Discrimination, the Washington
Family Leave Act, as amended, the Washington Minimum Wage Act, as amended, and Chapter 49.60 of
the Revised Code of Washington. Notwithstanding the foregoing, the following are not included in
the Released Claims (the “Excluded Claims”): (1) any rights or claims for indemnification I may
have pursuant to any written indemnification agreement with the Company to which I am a party, the
charter, bylaws, or operating agreements of the Company, or under applicable law; or (2) any
rights which are not waivable as a matter of law. In addition, nothing in this Release prevents
me from filing, cooperating with, or participating in any proceeding before the Equal Employment
Opportunity Commission or the Department of Labor, except that I hereby waive my right to any
monetary benefits in connection with any such claim, charge or proceeding. I hereby represent and
warrant that, other than the Excluded Claims, I am not aware of any claims I have or might have
against any of the Released Parties that are not included in the Released Claims.

     I hereby represent that I have been paid all compensation owed and for all hours worked, I
have received all the leave and leave benefits and protections for which I am eligible, and I have
not suffered any on-the-job injury for which I have not already filed a workers’ compensation
claim.

     I acknowledge that to become effective, I must sign and return this Release to the Company so
that it is received not later than fourteen (14) days following the date it is provided to me.

	 	 	 	 	 	 	 
	 	 	Employee	 	 
	 
	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 

	 	Date:	 	 	 	 
	 

	 	 	 	 	 	 

1.

 

 

Exhibit D

Blue Nile, Inc.

Change of Control Severance Plan

Participation Notice

You,                     , have been designated as an Eligible Employees under the Blue Nile, Inc.
Change of Control Severance Plan (the “Plan”). You are eligible for the following severance
benefits upon a Qualifying Termination, subject to the terms and conditions of the Plan:

1. Severance Benefits.

     o Cash Severance. The Company shall make a lump sum payment of “Cash Severance” to the
Eligible Employee in an amount equal to [___] x (Base Salary + Target Bonus). The Cash Severance
will be paid in a lump sum on the 60th day after the date of the separation from
service.

     o COBRA Premium Benefit. If the Eligible Employee was enrolled in a group health plan (i.e.,
medical, dental, or vision plan) sponsored by the Company or an affiliate of the Company
immediately prior to the Qualifying Termination, the Eligible Employee may be eligible to continue
coverage under such group health plan (or to convert to an individual policy) at the time of the
Eligible Employee’s termination of employment under the Consolidated Omnibus Budget Reconciliation
Act of 1985 (together with any state law of similar effect, “COBRA”). The Company will notify the
Eligible Employee of any such right to continue such coverage at the time of termination pursuant
to COBRA. No provision of this Plan will affect the continuation coverage rules under COBRA,
except that the Company’s payment, if any, of applicable insurance premiums, or waiver of any cost
of coverage under any self-funded group health plan, will be credited as payment by the Eligible
Employee for purposes of the Eligible Employee’s payment required under COBRA. Therefore, the
period during which an Eligible Employee may elect to continue the Company’s or its affiliate’s
group health plan coverage at his or her own expense under COBRA, the length of time during which
COBRA coverage will be made available to the Eligible Employee, and all other rights and
obligations of the Eligible Employee under COBRA (except the obligation to pay insurance premiums
that the Company pays, if any, or, with respect to a self-funded plan, any obligation to pay the
cost of coverage to the Company that the Company waives, if any) will be applied in the same manner
that such rules would apply in the absence of this Plan.

If an Eligible Employee timely elects continued coverage under COBRA, the Company shall pay the
full amount of the Eligible Employee’s COBRA premiums, or shall provide coverage under any
self-funded plan, on behalf of the Eligible Employee for the Eligible Employee’s continued coverage
under the Company’s group health plans, including coverage for the Eligible Employee’s eligible
dependents, for up to [___] months following the Eligible Employee’s Qualifying Termination;
provided, however, that no such premium payments shall be made, and no coverage shall be provided
under any self-funded group health plan, following the date on which the Eligible Employee and his
eligible dependents cease (or would cease) to be eligible for continued coverage under COBRA. Each
Eligible Employee shall be required to notify the Company immediately if the Eligible Employee
becomes covered by a group health plan of a subsequent employer. Upon the conclusion of such
period of insurance premium payments made by the Company, or the provision of coverage under a
self-funded group health plan, the Eligible Employee will be responsible for the timely payment of
the full amount of premiums (or payment for the cost of coverage) required under COBRA for the
duration of the COBRA period. For purposes of this Section 1(b), any applicable insurance premiums
that are paid by the Company shall not include any amounts payable by the Eligible Employee under
an Internal Revenue Code Section 125 health care reimbursement plan, which amounts, if any, are the
sole responsibility of the Eligible Employee.

     o Accelerated Vesting. The vesting and exercisability of all then-outstanding compensatory
equity awards held by the Eligible Employee shall be accelerated such that the awards are fully
vested and exercisable as of the date of the Qualifying Termination.

     2. Timing of Payments: Notwithstanding the payment schedules set forth above, no benefits
will be paid prior to the effective date of the Release. Instead, on the first regular payroll pay
day following the effective date of the Release, the Company will pay the Eligible Employee the
benefits the Eligible Employee would otherwise have received on or prior to such date pursuant to
the original schedule but for the delay in payment related to the effectiveness of the Release,

1.

 

 

with the balance of the benefits being paid as originally scheduled. With respect to COBRA
payments, Executive may be required to pay the COBRA premiums directly until the Release is
effective, and the Company will reimburse the Executive on the first regular payroll pay date
following the effective date of the Release.

     3. Definitions: The following definitions shall apply for purposes of this Appendix A:

“Base Salary” shall mean the greater of the Eligible Employee’s base salary in
effect immediately prior to (i) the Change of Control or (ii) the date of the
Qualifying Termination. Base Salary does not include variable forms of compensation
such as bonuses, incentive compensation, commissions, expenses or expense allowances.

	 	o	 	“Target Bonus” shall mean the target annual incentive bonus, expressed in
dollars, which the Eligible Employee is eligible to earn in the fiscal year in which
(A) the Change of Control occurs or (B) the Qualifying Termination occurs, whichever of
(A) or (B) is greater.

     The foregoing severance benefits are subject to all of the terms and conditions of the Plan,
including reduction against any other severance owed to the Eligible Employee.

I accept my designation as an Eligible Employee and agree to be bound by the terms and conditions
of the Plan.

	 	 	 
	 

Signature

	 	 
	 
	 	 
	 

Print Name

	 	 

2.exv10w3

EXHIBIT 10.3

Blue Nile, Inc.

2009 Executive Bonus Plan

STRUCTURE: This 2009 Executive Bonus Plan (the “Plan”) is intended to be an incentive bonus plan.
The Company may, but is not obligated to, pay discretionary bonuses outside the Plan. This Plan is
intended to be exempt from Section 409A of the Internal Revenue Code under Treasury Regulation
Section 1.409A-1(b)(4) and will be construed and administered consistently therewith to the
greatest extent possible.

ELIGIBILITY. All executive officers, including the chief executive officer, are eligible for
participation in the Plan, subject to their continued employment throughout fiscal year 2009. No
bonus amounts will be paid under the Plan if an otherwise eligible executive’s employment
terminates prior to December 31, 2009. The Compensation Committee will determine whether newly
hired or promoted executives may be eligible for participation in the Plan, and if so, the
applicable terms of participation (consistent with the terms of this Plan).

ADMINISTRATION. The Plan is administered by the Compensation Committee. All determinations under
the Plan will be made by the Compensation Committee, whose decisions will be final and binding on
all parties.

PAYMENTS. Any earned bonus will be paid in a single lump sum payment not later than March 15,
2010.

DETERMINATION OF BONUS AMOUNTS.

Bonus Pool. The aggregate bonus pool for fiscal year 2009 is established through the achievement
of the Company’s objectives for Adjusted EBITDA (defined as net income before income taxes, other
income, net, depreciation, amortization and stock-based compensation). The target Adjusted EBITDA
shall be determined by the Compensation Committee and communicated to each participant in the Plan.
The bonus pool may be funded from 0% to 200%.

Target Bonus. The Compensation Committee established a target bonus amount for each executive
officer expressed as a percentage of the executive officer’s base salary. The Compensation
Committee may award the executive officer between 0% and 200% of such officer’s bonus target amount
based: (i) fifty percent on the achievement of financial performance objectives, including revenue
growth, earnings per share and free cash flow generation, and (ii) fifty percent on the achievement
of individual performance objectives based on the executive officer’s roles and responsibilities
within the Company. The Compensation Committee shall establish the financial targets and
individual objectives and communicate such targets and objectives to each executive.

Discretion to Reduce or Increase Amounts. The Compensation Committee has the authority, in its
sole discretion, to reduce the value of the bonus (including a reduction to zero) or increase the
value of the bonus otherwise earned under the formula described above, based on any factors it
considers material.

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